TIDMSGI
RNS Number : 3401S
Stanley Gibbons Group PLC
02 October 2017
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014
THE STANLEY GIBBONS GROUP PLC
(the "Group" or "Company")
Posting of Annual Report and Notice of Annual General
Meeting
The Company has today published its Annual Report and Accounts
for the year ended 31 March 2017 which is available on the
Company's website and is set out in full below.
The Annual Report contains a Notice of General meeting of
shareholders which will be held at 399 Strand, London WC2R 0LX on
Wednesday 1 November 2017 at 11.30 a.m.
Enquiries:
The Stanley Gibbons Group plc
Harry Wilson
Andrew Cook +44 (0)207 836 8444
finnCap Ltd (Nomad and Broker)
Stuart Andrews / Christopher Raggett / Anthony
Adams (corporate finance) +44 (0)20 7220 0500
Yellow Jersey PR (Financial PR)
Charles Goodwin +44 (0)7747 788 221
The Stanley Gibbons Group plc
Annual Report and Accounts
for the year ended 31 March 2017
The Stanley Gibbons Group plc
Group Annual Report and Financial Statements - Financial
Highlights
for the year ended 31 March 2017
Year ended 31 March Year ended
2017 31 March
2016 (restated)
Group Turnover (GBPm) 42.5 59.1
Trading loss (GBPm) (8.8) (3.9)
Loss before taxation (GBPm) (30.2) (27.9)
Adjusted (loss)/profit before taxation
(GBPm) (11.1) (4.9)
Basic earnings per share (p) (16.10) (60.03)
Adjusted earnings per share (p) (5.32) (10.06)
Dividend per share (p) - -
Total borrowings (GBPm) 16.5 21.9
Net assets per share (p) 10.1 73.0
Adjusted net assets per share (p)
as at 1 April 2016 n/a 19.2
Contents
Page
2 Directors and Advisers
3-5 Chairman's Statement
6-10 Business Review
11-12 Operating Review
13-14 Financial Review
15 Corporate Governance
16-18 Report on Remuneration
19-24 Directors' Report
25 Independent Auditors' Report
28 Consolidated statement of comprehensive income
29 Consolidated statement of financial position
30 Consolidated statement of changes in equity
31 Consolidated statement of cash flows
32-73 Notes to the Financial Statements
74-75 Directors' Biographical Details
76-81 Notice of Annual General Meeting
Financial Calendar
Annual General Meeting Wednesday 1 November 2017
The Stanley Gibbons Group plc
Directors and Advisers
for the year ended 31 March 2017
Directors H G Wilson Executive Chairman
A Cook Chief Finance Officer
C P Whiley Director
L E Castro Non-Executive Director*
H A J Turcan Non-Executive Director
* Independent
Company Secretary R K Purkis
Registered Office 18 Hill Street
St. Helier
Jersey JE2 4UA
Tel: 01534 766711
Company Registration Registered in Jersey
Number 13177
Nominated Adviser and finnCap Limited
Broker 60 New Broad Street
London EC2M 1JJ
Auditors BDO Limited
Windward House
La Route de la Liberation
St Helier
Jersey JE1 1BG
Legal Advisers Mourant Ozannes
22 Grenville Street
St Helier
Jersey JE4 8PX
Bird & Bird LLP
12 New Fetter Lane
EC4A 1JP
Bankers NatWest The Royal Bank of Scotland Group PLC
71 Bath Street 3 Hampshire Corporate Park
St Helier Templars Way
Jersey JE4 8PJ Chandlers Ford
SO53 3RY
Registrars 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
Chairman's Statement
for the year ended 31 March 2017
Introduction
This report relates to the audited results for the year ended 31
March 2017.
The year was another difficult period for the Group as the
accounts demonstrate. To recap, the Board went through wholesale
change during 2016 following a strategic review initiated to
address the very difficult trading and cash-flow position. As the
restructuring work progressed it became clear that the problems
identified were deeper than initially thought and new issues were
uncovered. There has been a further 48 % fall in net asset value as
shown in the table in the Financial Review on page 13. This has
resulted from a combination of one-off restructuring costs,
continued difficult trading conditions and the ongoing legacy of
the Group's investment contracts which included guaranteed
buy-backs.
Over the year a huge amount was achieved as detailed more fully
in the Business Review below. Most notably the annualised operating
costs were reduced by over GBP10m and receipts of GBP5.2m have been
successfully achieved from the sale of non-core assets. While
revenues have reduced by 28% during the rationalisation process,
some GBP8.3m of the reduction in sales and GBP5.2m of the trading
losses are associated with the Interiors division. These will
reduce dramatically in future periods as a direct result of the
disposal of the Interiors division referred to below. This will
allow the stamp & coin dealing activities to re-emerge
following the disposal of the various non-core businesses.
What has been achieved would not have been possible without the
support of the Group`s bank, over the last eighteen months, which
has allowed the new management team the latitude to accommodate the
decline in trading performance, at the same time as progressing the
restructuring of the business. Due to the qualified audit report in
these financial statements and the Group's net assets being below
GBP20m, the Group is currently in default on its bank facilities
and the Company remains dependent upon the bank's ongoing support.
There can be no guarantee that the bank will provide facilities
beyond 31 May 2018 and the Company is likely to require access to
further liquidity in the intervening period. The Company remains in
constructive discussions with the bank, regarding its short-term
liquidity requirements, and the terms of such funding in such form
as it may become available. Failing this the Board have reasonable
grounds to believe that alternative finance will be available via
further asset disposals or from an alternative finance
provider.
The Board is pleased to confirm the completion on 1 October 2017
of the sale of Dreweatts 1759 Limited, into which certain assets
and liabilities of Dreweatts and the intellectual property rights
and goodwill in respect of the Mallett brand, all part of the
Group's Interiors division, were transferred on 31July 2017. The
Mallett and Made by Meta brands, originally part of the agreed
disposal to Millicent Holdings Limited (which, as announced on 4
August 2017 failed to proceed to completion), have not been
included in the sale and those assets remain within the Group.
However the sale does include the Bloomsbury Auctions brand. The
purchaser of Dreweatts 1759 Limited is Gurr John's Limited and the
terms for the disposal comprise cash of GBP1.25m paid on
completion, plus a maximum additional consideration of GBP0.4m,
payable over the next 24 months (alongside the assumption of other
liabilities currently associated with the Interiors division).
In June 2017, the Board decided to initiate a full strategic
review including a Formal Sale Process ("FSP") to explore the
commercial options available in order to unlock incremental
long-term value within the Group. This review led to discussions
with various interested parties and is nearing completion. As
detailed in the Business Review, the Company has to date received a
number of proposals for all or some of the business. Given the
complicated restructuring which the business has gone through and
certain legacy liabilities which remain, it is the Board's current
view that an asset sale or strategic investment may potentially
provide a more favourable outcome for shareholders than an offer
for the Company as a whole. We remain in negotiation with several
parties in this regard and an offer for all of the shares in the
Company (though considered less likely) can not be discounted
entirely at this stage. We will provide a further update as these
discussions progress.
Trading and Operations
As announced in the results today, trading conditions have
remained difficult since the update given on 9 May 2017. Overall,
Group trading continues to be subdued in large part due to legacy
issues and, in particular, a reduction in investment sales of high
end collectibles.
Summary results:
-- a 48 % reduction in net assets to GBP18.0 m (2016: GBP34.4 m)
due primarily to the GBP12.0m impairment of goodwill and other
intangibles arising from historic acquisitions, GBP2.9m write-down
of stock related to the Interiors division and impairment of
receivables by GBP0.7m;
-- turnover of GBP42.5 m was 28 % lower than last year with half
of the reduction attributable to the Interiors division;
-- a substantial increase in trading losses, before accounting
adjustments to GBP8.8m (2016: trading loss of GBP3.9m) as a result
of a decline in trading performance in all trading divisions,
particularly investments and AH Baldwin;
-- the adjusted loss before tax and exceptional operational
charges was GBP11.1 m (2016: GBP4.9m loss) (after a prior year
adjustment reducing net assets by GBP4.0 m);
-- gross margin for the year was 32 % (2016: 40%) as we
continued to prioritise cash-flow in reducing the excess stock
position;
Despite the challenging environment, the Group has managed to
reduce the bank debt over the year from GBP21.9m to GBP16.5m at 31
March 2017 (currently at GBP17.0 m).
Annualised operating cost savings of over GBP10m have been
achieved to date through the restructuring programme and the full
benefit of this will be seen in the current financial year (to 31
March 2018). Further savings are expected to be made as the
restructuring programme reaches its conclusion. Over the last 18
months there has been a significant reduction in office premises
and annualised employment costs across the Group. The Board
recognise that this has been a particularly testing time for staff
and I would like to thank them for their commitment and loyalty
during this period.
Dividend
Given the results for the year, the Board is not recommending
the payment of a final dividend for the year ended 31 March 2017
(year ended 31 March 2016: nil). The Board will review the dividend
policy on a regular basis taking into account trading conditions,
working capital requirements and commercial opportunities for
reinvestment.
Management and Board Changes
As covered in previous reports, there has been a complete change
of directors on the Board during 2016. All of the executive team
are now London based.
More recently there has been significant restructuring of the
Philatelic division including management changes which we believe
will help to revitalise this core part of the Group. In order to
improve the efficiency of our philatelic auctions, Apex Auctions is
being amalgamated into Stanley Gibbons Auctions.
Strategy for the Future
The restructuring of the Group is allowing us to focus on our
core activities - stamps and coins. In these markets, we have two
key brands: Stanley Gibbons and Baldwin's. These businesses both
operate in large markets with a global presence where integrity,
expertise and heritage are at a premium. These attributes lie at
the heart of our business and are synonymous with our brands. Our
strategy is to improve the efficiency of our businesses while
maintaining disciplined capital allocation and growing brand
recognition in broader markets internationally. We believe this
will enable us to establish a sustainable and profitable business
model for the Group and deliver long term value to shareholders in
the process.
The Group's E-commerce capability has historically been weak and
we see improvements in this area as key to the future of the
business. Our website has undergone significant enhancements over
the last year and more recently we relaunched My Collection an
online programme for philatelists to catalogue and manage their
collections which has received very good reviews.
Investment products remain an important part of our business but
we no longer offer guaranteed portfolios and the emphasis in the
future will be on the heritage value of collectibles. Our plan is
to reconnect with collectors who have historically been the bedrock
support for the Group.
We recognise that the delivery of a premium service to our
customers is dependent on having specialist staff who are experts
in their field. Whilst we have maintained a strong specialist
capability, we have unfortunately lost a number of staff over the
last year as part of the restructuring. Our plan is to rebuild
these teams within the new structure as trading conditions
improve.
Outlook
Against a backdrop of political and market uncertainty, both
domestically and internationally, the market for rare collectibles
has remained surprisingly robust. In particular, the higher quality
items continue to be sought after and steadily increase in value
over the medium to long term. The key to identifying such items is
having specialists who know the difference - we are fortunate at
Stanley Gibbons to have a number of such specialists.
The last 18 months have been difficult for everyone involved
with Stanley Gibbons and the Directors would like to thank all our
stakeholders, particularly our hard-working staff, for their
continued support. The restructuring undertaken to date has put the
Group in a position where it is hoped its fortunes and reputation
can be restored, however there are immediate challenges that still
need to be overcome. It is hoped that the conclusion of the FSP
will finally allow a line to be drawn under the problems of the
past.
Harry Wilson
Chairman
1 October 2017
The Stanley Gibbons Group plc
Business Review
for the year ended 31 March 2017
The Board believes that, notwithstanding another difficult year
as highlighted above and the possible need for short-term
liquidity, we are close to reaching a turning point for the
Group.
This is as a direct result of the dramatic changes introduced
since early 2016, alongside the increasing impact of operating cost
savings, where the full benefits will be seen in the financial year
to 31 March 2018 . These measures are feeding through to day-to-day
trading, allowing management to build upon the core strengths of
our specialist staff. As it emerges, this culture change is
reinforcing the undoubted value of our brands.
Restructuring Update
The Company has now been comprehensively restructured.
Annualised operating costs have been reduced by over GBP10m and we
have generated cash of GBP5.2m from the sale of parts of the
Interiors Division to date. The Group has a clear focus and
understanding of its competitive advantages and achievable
corporate goals. The core activities of the Group are conducted via
Baldwin's, Stanley Gibbons and Murray Payne, which share similar
characteristics and benefit from commercial advantages associated
with being market leaders in the numismatic and philatelic markets
respectively, including:
-- large global markets;
-- brand integrity and leadership;
-- loyal collector customer base;
-- invaluable industry expertise which is revered worldwide;
and
-- heritage.
The Board's success in achieving divestments from non-core
assets to generate working capital for the Group and the subsequent
approach in June 2017, from Disruptive Capital, left the Board
determined to ensure that the underlying strength of the core
business is fully reflected in shareholder value.
The Directors believe that Stanley Gibbons with its heritage
brands and expertise, has significant strategic value, not only in
its existing core markets but also across the broader global
collectibles market, particularly the Middle East and Asia.
Unlocking this incremental long-term value is likely to require
further investment capital and the Directors believe that it is
likely therefore that this is best delivered within a larger group
or alongside a financially strong strategic partner.
Strategic Review and Formal Sale Process
On 12 June 2017, to maximise the effectiveness of the strategic
review initiated in 2016 , the Board announced that it had
commenced an FSP to be conducted in accordance with the Rules of
the Takeover Code. This was specifically designed to identify the
full bandwidth of parties with an interest in contributing to the
future development of the Group. The process has been run
throughout the summer and the Board and the Company's financial
advisors, finnCap, have identified the preferred parties with which
to progress.
We are pleased to report that the Company has received several
proposals. In the opinion of the Board, at this stage given the
complex restructuring and the legacy liabilities identified since
2016, those proposals which will provide the most favourable
outcome for shareholders are likely to entail the sale of assets or
a strategic investment in the Company rather than an offer for the
Company as a whole, although the latter cannot be ruled out at this
stage. We remain in negotiations with several parties as set out
above.
In the opinion of the Board, the FSP has facilitated a
significant level of interest in the future development of the core
stamp & coin dealing activities, which would allow a return to
a more normalised trading environment, unfettered by the obvious
cash constraints apparent over the last two years.
Sale of certain assets & liabilities of the Interiors
division
On 9 May 2017 the Board announced the sale of a major part of
the Interiors division to Millicent Holdings Limited ("Millicent"),
which transaction subsequently failed to complete as reported on 4
August 2017.
The Board is today pleased to confirm completion of the sale of
Dreweatts 1759 Limited. The sale is to Gurr John's Limited ("Gurr
Johns") for a consideration of GBP1.25m paid in cash on completion,
plus a maximum additional consideration of GBP0.4m, payable over
the next 24 months (alongside the assumption of certain other
liabilities currently associated with the Interiors division).
Certain assets and liabilities of Dreweatts and the intellectual
property rights and goodwill in respect of the Mallett brand, all
part of the Group's Interiors division, were transferred to
Dreweatts 1759 Limited on 31 July 2017 in anticipation of the
proposed sale to Millicent. However, the sale to Gurr Johns does
not include the Mallett and Made by Meta brands (which have been
transferred back to the Group) but it does include the Bloomsbury
Auctions brand.
In addition to the Mallett and Made by Meta brands, the Group
retains Mallett inventory, against which Gurr Johns has agreed an
interest free advance of GBP300,000 ahead of auction in November
2017. The Group also retains the benefit of the rental income from
the former Mallett New York premises, which will allow the Group to
derive additional benefit from the remaining assets of the
Interiors division in the coming years. As announced on 4 August, a
termination fee is now payable to the Company by Millicent under
the terms of the relevant agreement and the Company intends to seek
recovery of this by enforcing certain collateral that was provided
to the Company.
The proceeds of the sale from the disposal of the Interiors
division will be used to provide additional working capital for the
Group.
The Interiors division, which (for these purposes include the
Dreweatts, Malletts and Bloomsbury businesses), made an operating
loss before exceptional costs of GBP5.2m in the year to March
2017.
Funding
The total bank debt at 31 March 2017 was GBP16.5m (31 March
2016: GBP21.9m), reduced from a peak of GBP24m during March 2016.
Management have worked hard on improving the liquidity of the
Group's assets as the Board is determined to significantly further
reduce debt in the current year.
The Group has the following bank facilities, all of which are
secured and guaranteed by various members of the Group:
-- a GBP8.3m loan facility, originally GBP10m, taken out to
enable the acquisition of Noble in 2013 and currently benefiting
from a moratorium on capital repayments, which is scheduled to
recommence at GBP500,000 per quarter from December 2017 but subject
to earlier part-repayment in the event of a major asset disposal
(although this obligation does not apply to the proceeds of sale
from the Interiors disposal); and
-- a GBP10m revolving credit/overdraft facility, which is
available until 31 May 2018.
On 20 September 2016 the bank agreed a variation in the asset
cover covenants, necessary as a result of the reduction in net
asset value caused by the prior year adjustment, whilst the
restructuring programme is given time to take effect.
Support from the Group`s bank, over the last eighteen months,
has allowed the new management team the opportunity to accommodate
the decline in trading performance, at the same time as finalising
the restructuring of the business. Due to the qualified audit
report in these financial statements and the Group's net assets
being below GBP20m, the Group is currently in default on its bank
facilities and the Company remains dependent upon the bank's
ongoing support. There can be no guarantee that the bank will
provide facilities beyond 31 May 2018 and the Company is likely to
require access to further liquidity in the intervening period. The
Company remains in constructive discussions with the bank,
regarding its short-term liquidity requirements, and the terms of
such funding in such form as it may become available. Failing this,
the Board has reasonable grounds to believe that alternative
finance will be available via further asset disposals generated
through the FSP or from an alternative finance provider.
Group Corporate Structure
On 1 February 2017 the Board adopted new Articles of Association
at an Extraordinary General Meeting which, amongst other things,
allowed the Board to exercise management of the Company from within
the United Kingdom where all of the Directors and the vast majority
of the Company's management function is now located.
As a consequence of these changes the Company's tax residency
moved to the United Kingdom, allowing for the more efficient
management of the Company, outweighing any potential taxation
benefits that may occur in the future.
Management and Board Changes
The initial restructuring review in 2016, identified the need
for dramatic management changes across the Group which were long
overdue and all of which took place last year. Hence the Board
composition, as reinforced with specialist directors with change
management, financial, retail and collectibles experience, has now
been stable for the last year . In consequence, allowing the
introduction of a robust, cash-driven, UK based backbone to the
business.
Strategy for the Future
The objectives of our revised strategy remain 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,
long overdue, integration of the acquisitions made in recent years,
to derive the benefits which should have been gained earlier.
In January 2017 Baldwin's launched a joint-venture with St
James's, the well-established numismatic auction house, for its
auction activities. Trading as Baldwin's of St James's this
complemented the growth profile of our retail coin business already
reinvigorated by the appointment of a new Managing Director a year
ago.
This provided a useful template as to the options open to us for
an enhanced retail/auction model for the larger philatelic
activities, which were the final parts of the business to be
restructured.
The Board now has a clear line-of-sight to achieve its goal of a
market leading, capital light, stamp & coin dealing platform
designed to allow the intrinsic value of those activities to be
more readily identified.
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.
The Marketplace
A full review of Group E-Commerce strategy led to the closure of
The Marketplace, based in the USA, on 7 September 2016 bringing to
an end a project which had consumed some GBP10m cash over the last
few years.
The Board believes there remains an opportunity to grow online
revenues substantially. This will ultimately be best achieved via a
cohesive strategy linking online sales of the Group's own, high
quality collectibles assets, with our world renowned publications
business.
Significant accounting changes and balance sheet adjustments
Revenue Recognition
As has been previously announced the Group had, over several
years, been incorrectly recording and reporting sales and profits
in relation to some of the investment plans. Since the prior year
adjustment made in the March 2016 financial statements to correct
these errors, the Group has been validating the legacy information
used to quantify these adjustments. This exercise showed that there
were additional errors in relation to certain investment plans
which were offered by the Group in earlier years.
As stated in last year's financial statements 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 was corrected by way of a prior year
adjustment. The further adjustment made this year is for the same
reasons as detailed below.
The correction of the error impacts the opening net assets of
the Group at 1 April 2015 as explained below and detailed in note
31 a. The net impact of the review is to reduce net assets at 1
April 2015 by GBP5.0m.
The Group (through its subsidiary Stanley Gibbons Guernsey
Limited) 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 and in some cases with a guaranteed return,
to Stanley Gibbons Guernsey Limited.
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 recognising 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 these plans
should be reversed.
Depending on subsequent events (the decision that the client
makes at the end of the contract term), the value of outstanding
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.
A further prior year adjustment to that booked in the previous
year has therefore been made. The impact of which at 1 April 2015
is, an increase in the amount of creditors by GBP6.3m and a
decrease in debtors by GBP3.4m, 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, coupled with an increase
in stock by GBP4.7m 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)
Reclassification of bank borrowings
As a result of the default due to the breach in covenant as at
31 March 2016, described in note 20 the bank borrowings were
repayable on demand. Although the defaults were subsequently
rectified, the Group's borrowings were previously incorrectly
disclosed as non-current liabilities as at 31 March 2016, to
correct this error the borrowings of GBP16.8m have been
reclassified as current liabilities as at 31 March 2016.
Impairment of Goodwill and intangibles
Due to the disposal of elements of the Interiors division
highlighted above and the related decision not to continue to trade
some of the other Interior's brands, the goodwill and intangible
assets of the Interiors division were impaired by GBP11.0m. A
further GBP1.0m of goodwill relating to Baldwin's was also
impaired.
Additionally as in the previous year the intangible created in
relation to the Marketplace was fully impaired resulting in a
charge of GBP2.1m in the year.
Stock provisions and losses
The majority of the remaining stock held by Mallett will be
auctioned over the coming months. Mallett has not actively traded
for several months and this decision was made as the additional
costs incurred in selling this stock at retail prices are likely to
outweigh the incremental profits. The stock has therefore been
reduced in value to the expected hammer prices that will be
realised at auction and coupled with other stock from the Interiors
division that has been sold at a loss to realise cash, this has
resulted in a charge of GBP2.9m in the year within exceptional
charges and GBP1.1m within cost of sales, a total of GBP4.1m.
A full count of the Baldwin's stock was completed after the year
end. A full stock count had not been undertaken for approximately
10 years and the resultant loss was GBP0.4m. The Baldwin's stock
will now been included in the continuous rolling count process that
is performed on the philatelic rarities.
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 22 December 2016, the DOJ concluded its criminal prosecution
against the former client, (arising in part out of his dealings
with Mallett Inc.), when the former client was sentenced to two
years in prison, ordered to forfeit his interest in certain
antiques and pay US$657,000 in restitution.
On 28 April 2017 the DOJ concluded its criminal prosecution
(arising in part out of a former client's dealings with Mallett
Inc.), when Henry Neville, a New York based former director of
Mallett plc, was sentenced to two years' probation and ordered to
pay US$160,000 in restitution arising out of his dealings with the
former client, the court-appointed receiver and the Government's
investigation into his conduct.
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 .
At present the Board's best estimate of the costs in responding
to the subpoena from the SEC and/or assisting the US authorities
with their investigations, as at 31 March 2017 total GBP0.7m. This
amount is the total accrual at the year end.
The Stanley Gibbons Group plc
Operating Review
for the year ended 31 March 2017
12 months to 31
12 months to 31 March March
2017 2017 2016 2016
Sales Profit Sales Profit
restated restated
GBP'000 GBP'000 GBP'000 GBP'000
Investments 18,778 989 22,447 3,166
Philatelic 7,881 (419) 7,545 (113)
Publishing 2,043 122 3,039 370
AH Baldwin 4,975 955 8,213 2,139
Interiors 8,650 (5,174) 16,961 (4,320)
Other & corporate overheads 136 (4,967) 932 (4,770)
Finance charges - (318) - (392)
Trading sales and Profits 42,464 (8,812) 59,137 (3,920)
Amortisation of customer lists - (423) - (364)
Pension service and share
option charges - (623) - (437)
Finance charges related to
pensions - (138) - (176)
Exceptional cost of sales - (1,144) - -
Exceptional operating charges - (19,017) - (22,986)
Group total sales and (loss)/profit
before tax 42,464 (30,157) 59,137 (27,883)
Overview
Group turnover for the year ended 31 March 2017 was GBP42.5m
(2016: GBP59.1m), 28.2% lower than the prior year.
The gross margin percentage for the year ended 31 March 2017 was
31.6% (2016: 40.3%).
We have experienced reduced turnover across almost all divisions
in the Group but particularly at A H Baldwin (down 39%) and in
Interiors (down 49%), both of which have undergone substantial
restructuring and have suffered a temporary loss of business.
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.
In consequence, the operating profit from our trading divisions
has fallen by some GBP4.7m. Coupled with an increase in corporate
overheads of GBP0.2m associated with the restructuring plan and
resolution of legacy issues, this has resulted in the significantly
increased trading loss, before accounting adjustments including
exceptional operating charges and finance charges related to
pensions, of GBP8.8m for the year ended 31 March 2017 (2016:
trading loss GBP3.9m).
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 2017 were GBP1.2m (2016: GBP1.0m). In the opinion of
the Directors, such accounting charges do not form part of the
operating performance of the Group.
Exceptional Operating Charges and Cost of Sales
Exceptional operating charges/(income) and cost of sales, can be
further analysed as follows:
Year ended 31 March Year ended
2017 31 March
2016
GBP'000 (restated)
GBP'000
Impairment of intangible assets relating 10,980 -
to the Interiors division -
Other impairment of intangible assets 1,000 14,125
Marketplace intangible asset written
off 2,096 5,986
Pension scheme (recovery)/costs - (1,968)
Professional fees for corporate activity 587 819
Restructuring and redundancy costs 589 1,156
Other stock provisions 100 1,373
Profit on disposal of tangible fixed
assets (325) (189)
Stock provisions resulting from Interiors
disposal 2,934 -
Stock provisions resulting from historical 406 -
lost stock -
Impairment of receivables 650 610
Legal costs in relation to SEC investigation - 1,074
19,017 22,986
-
Losses on realising inventory within -
Interiors division 1,144 0
The impairment of intangible assets relating to the Interiors
division comprises The Fine Art Auction Group (GBP8.6m) and Mallett
(GBP2.4m).
The stock provisions and the cost of sale losses on realising
inventory within Interiors, relate to the decision to no longer
continue to trade certain brands in the Interiors division and the
resultant sale of the inventory in a much shorter time period.
C P Whiley
Director
1 October 2017
Statement of Financial Position
The table below shows the impact on net assets of the disposal
of the elements of the Interiors division coupled with the adjustments
required to correctly account for the historical legacy issues
that the Group has faced.
Year ended
31 March 2017
GBP'000
Impairment of intangible assets relating to the Interiors (10,980)
division -
Stock provisions and losses relating to the Interiors
division (4,078)
Impact on net assets of Interiors disposal (15,058)
Adjustment due to incorrect revenue recognition - prior
years (4,006)
Marketplace intangible asset written off (2,096)
Other impairment of intangible assets (1,000)
Stock provisions resulting from historical lost stock (406)
(22,566)
Consolidated net assets before adjustments
listed above 40,561
Consolidated net assets as at 31 March
2017 17,995
The Group continues to own some valuable assets. Apart from the
heritage brands, which are not wholly recognised within the balance
sheet, as only acquired brands can be recognised, the most
significant asset of the Group is its stock which is summarised
below:
31 March 2017 31 March
GBP'000 2016 (restated)
GBP'000
Philatelic rarities 31,039 33,417
Philatelic stock (general) 3,828 4,973
Coins and medals 4,408 6,987
Autographs, historical documents and
related memorabilia 365 3,027
Antiques 700 2,472
Publications, albums and accessories 243 326
Group owned stock 40,583 51,202
Inventory owned by third parties 14,642 14,719
55,225 65,921
The third party stock shown above is owned by holders of
investment plans that are not recognised as sales as explained
within Sale of goods - Investment contracts accounting policy in
note 1.
Cash Resources
As at the balance sheet date the Group had a revolving credit
facility of GBP10.0m and an additional loan facility of GBP8.3m,
totalling GBP18.3m. At the same date the utilised amounts were
GBP8.2m, GBP8.3m respectively totalling GBP16.5m (2016:
GBP22.9m).
On the 30 May 2017 the Group sold its interest in Masterpiece
London Limited and part of these proceeds were used to reduce the
loan to GBP7.6m.
As at 27 September 2017, before the receipt of the initial
consideration of GBP1.25m for the Interiors disposal, the Group had
GBP0.6m of headroom on the GBP10.0m revolving credit facility and
the loan facility was GBP7.6m.
As detailed in note 20 the Group is currently in default on its
bank facilities due to the qualified audit report in these
financial statements and the Group net assets being below GBP20m.
Additionally the facilities were in default as at March 2016 and so
should have been shown as a current liability in the balance sheet
at that date and accordingly have now been restated. The bank has
continued to support the Group throughout the period, by waiving
previous defaults and although during periods of default the
facilities are repayable on demand, they have not requested
repayment.
Finance costs
Finance costs of GBP0.6m (2016: GBP0.6m) comprise loan interest
and charges on the finance facilities with RBS of GBP0.4 (2016:
GBP0.4m) plus a cost of GBP0.2m (2016: GBP0.2m), representing the
interest on net defined benefit liabilities under IAS19 (Amendment)
"Employee Benefits".
Taxation
Due to repayments of previous tax overpayments, coupled with
overprovisions in previous years, for the year to 31 March 2017
(excluding deferred taxation & capital gains tax) there was a
tax credit of GBP0.9m (2016: charge of GBP0.3m). Profits from
Channel Island trading companies are currently subject to tax at
0%.
Prior year adjustment
These financial statements reflect prior year adjustments in
respect of the previously highlighted issues regarding the
treatment of revenue for some investment products. The adjustment
was necessary following further analysis of the legacy information
used to quantify the adjustments booked in the March 2016 Report
and Accounts. Details of this prior year adjustment are given in
note 31 a. The impact of the prior year adjust adjustment required
to reflect the error on the classification of the borrowings as at
31 March 2016 is detailed in note 31 b.
Accounting Policies
Accounting policies are detailed in note 1 to the Financial
Statements on pages 32 to 41.
Andrew Cook
Chief Finance Officer
1 October 2017
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 Non-Executive Directors.
The Committee met three times during the period since approval
of the previous financial statements. It has written terms of
reference, which were updated in October 2016, 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. The
Committee has concluded that this is the case and has reported this
to the Board.
Non-audit services are reviewed on a case by case basis and also
in terms of materiality of the fee. Note 4 to the Financial
Statements details the quantum and split of auditor fees.
In the course of its work the Audit Committee meets with the
external auditors and reviews the reports from them relating to the
financial statements. It also reviews the likely significant issues
in advance of publication both of the half and full year results
and in particular any critical accounting judgements identified by
both the Company and the external auditors most of which are
disclosed in note 2 to the Financial Statements (Critical
Accounting Estimates and Judgements).
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.
Members of the Audit Committee at the date of this report were
LE Castro and HAJ Turcan.
Nomination Committee
A separate Nomination Committee is in operation. It has written
terms of reference, which were updated in October 2016, setting out
its responsibilities. It comprises the Executive Chairman and a
Non-Executive Director. The committee considers appointments to the
Board and is responsible for nominating candidates to fill Board
vacancies and for making recommendations on Board composition. A
Company wide policy exists on diversity. The Board recognises such
benefits of and will continue to appoint Executive and
Non-Executive Directors to ensure diversity of background and on
the basis of their skills and experience.
Members of the Nomination Committee at the date of this report
were HG Wilson and LE Castro.
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 HAJ Turcan and LE Castro.
H A J Turcan is employed by Lombard Odier Asset Management
(Europe) Limited, 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 are
exercisable between the third and tenth anniversaries of the date
of grant.
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
was 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
was 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
was achieved.
Options issued in 2014 required that the Company's compound
average Total Shareholder Return ("TSR") growth over the
performance period must match or exceed 8% per annum. The options
vest over a number of shares determined as follows:
Compound average annual TSR growth Percentage of Option
vestings
over the performance period (with straight line vesting between
each point)
Less than 8% 0%
8% 25%
15% or more 100%
Options issued in 2016 were granted at market value and are not
subject to a performance condition.
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 Maximum number of Ordinary Shares under
option
Michael Hall 559,174
Donal Duff 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. The performance condition was not achieved
on the sale of the Interiors Division and the awards under the plan
have therefore not vested.
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 H Wilson, A Cook, M Hall and D Duff to
defined contribution personal pension schemes.
Benefits also include the provision of family private healthcare
insurance and death in service insurance.
Service contracts
No Director has a notice period exceeding twelve months.
Directors' Remuneration
For each Director remuneration for the year to 31 March 2017 can
be analysed as follows:
2017 2017
Salary Performance 2017
& Fees Related 2017 Other Pension 2017
GBP'000 Bonus Benefits Contributions Total 2016 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
H Wilson 106 - - 3 109 -
A Cook 126 - - 2 128 -
C Whiley - - - - - -
L Castro 21 - - - 21 -
H Turcan 21 - - - 21 -
M Bralsford 23 - - - 23 60
M Hall 306 - - 20 326 303
D Duff 210 - - 9 219 203
J Byfield 88 - - 9 97 101
M Magee 20 - - - 20 35
S Perreé 10 - - - 10 35
C Jones 23 - - - 23 35
954 - - 43 997 772
The periods each Director served during the year are given on
page 21.
Directors' Share Options
Number Number
Earliest Exercise at 31 Granted at
Date of exercise Expiry Price March 2016 Exercised Forfeited 31 March
grant date date (1p shares)) 2016 in period in period in period 2017
H Wilson 5/10/16** 5/10/19 5/10/26 11p - 2,000,000 - - 2,000,000
A Cook 5/10/16** 5/10/19 5/10/26 11p - 2,000,000 - - 2,000,000
M Hall 27/1/14** 27/1/17 26/1/24 363.00p 137,741 - - (137,741) -
10/4/14** 10/4/17 10/4/24 316.50p 157,977 - - - 157,977
See Pg See Pg
30/9/14*** 17 17 See Pg17 559,174 - - - 559,174
D Duff* 27/1/14** 27/1/17 26/1/24 363.00p 97,796 - - (97,796) -
10/4/14** 10/4/17 10/4/24 316.50p 112,164 - - - 112,164
See Pg See Pg
30/9/14*** 17 17 See Pg17 372,782 - - - 372,782
1,437,634 4,000,000 - (235,537) 5,202,097
** Options granted under Group Share Option Plan 2010.
*** Options granted under the Stanley Gibbons plc Value Creation
Plan
The closing market price of the Company's shares at 31 March
2017 was 8.75p and the range of market prices during the twelve
month period was between 18.25p and 8.5p.
The Directors present their report and the consolidated audited
financial statements for the year ended 31 March 2017.
Incorporation
The Company was incorporated in Jersey, Channel Islands on 13
June 1977.
Directors' responsibilities for the financial statements
Directors are required by the Companies (Jersey) Law 1991 to
prepare financial statements for each financial period which give a
true and fair view of the state of affairs of the Group as at the
end of the financial period and of the Group profit or loss for
that period. In preparing these financial statements, the Directors
are required to:
-- Select suitable accounting policies and then apply them consistently;
-- Make judgements and estimates that are reasonable and prudent;
-- State whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Companies (Jersey) Law
1991. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud, error and non-compliance with law and
regulations.
The maintenance and integrity of the Stanley Gibbons web site is
the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the accounts since they were initially
presented on the web site.
Legislation in Jersey governing the preparation and
dissemination of accounts may differ from legislation in other
jurisdictions.
In so far as each of the Directors is aware:
-- There is no relevant audit information of which the Group's auditors are unaware; 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.
Business review
Included within this report is a fair review of the business of
the Group during the year ended 31 March 2017 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 11 to 14. 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.
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 11 to 12.
The diverse nature of the Group's activities dictates that
specific financial and non financial performance indicators and
reporting templates are in place unique to each department to
enable the successful management of each operating division.
Examples of some of the most important KPIs used in this reporting
environment are:
-- Sales and gross margins compared to last year and budget
-- Overhead variations against budget
-- Personnel and resource matters (eg. performance, attendance and training)
-- New customers recruited and marketing response rates
-- Value of stock purchases and stock levels at the end of each month against budget
-- Website visitor activity statistics
Results and dividends
The consolidated statement of comprehensive income of the Group
for the year ended 31 March 2017 is set out on page 28. The
Directors do not recommended a final dividend for the year ended 31
March 2017 (year ended 31 March 2016: nil).
Directors
The following Directors have held office since 1 April 2016:
D M Bralsford (resigned 14 July 2016)
M R M Hall (resigned 14 July 2016)
D P J Duff (resigned 14 July 2016)
M P Magee (Non-Executive) (resigned 27 October 2016)
S Perrée (Non-Executive) (resigned 14 July 2016)
C S Jones (Non-Executive) (resigned 13 September 2016)
C P Whiley (appointed 31 March 2016)
H G Wilson (appointed 16 May 2016)
H A J Turcan (Non-Executive) (appointed 23 May 2016)
A Cook (appointed 14 July 2016)
L E Castro (Non-Executive) (appointed 4 October 2016)
M Bralsford, M Magee, S Perrée, C Jones and L Castro 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
74 and 75.
Directors' interests
The interests of the Directors in the shares of the Company, all
of which are beneficial, at 31 March 2017 together with their
interests at 31 March 2016 were:
Ordinary 1p Ordinary
Shares 1p
31 March 2017 Shares
31 March
2016
HG Wilson (1) 2,000,000 2,000,000*
A Cook - -
CP Whiley (2),(3) 500,000 -
LE Castro - -
HASJ Turcan (4) - -
*On appointment
(1) Held in the name of Park Securities Limited for Roselea
Limited, both companies in which H Wilson is a director and
shareholder.
(2) Held in the name of Zodiac Executive Pension Scheme, of
which CP Whiley is a beneficiary.
(3) Evolution Securities China Limited, Mr Whiley's ultimate
employer, holds 1,800,000 ordinary shares, representing 1.006% of
the Company's issued share capital.
(4) HAJ Turcan does not have any beneficial interest in the
ordinary shares of the Company. Lombard Odier Asset Management
(Europe) Limited, Mr Turcan's ultimate employer, holds 52,173,988
ordinary shares, representing 29.161% of the Company's issued share
capital.
Details of the Directors' share options are given in the
Remuneration Report on page 18.
Apart from service contracts and the transactions referred to in
note 30 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 29. 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 29 (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 11 to 12. The
financial position of the Group, its cash resources and borrowing
facilities are described in the Financial Review on page 13. In
addition note 22 and note 29 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 within current
banking facility limits for the foreseeable future, until the
existing facilities have expired in May 2018. However as
highlighted above, the Group is currently in default on its banking
facilities, due to the qualified audit report in these financial
statements and the breach of the net asset covenant, as the Group's
net assets are currently below GBP20m. These facilities are due for
repayment before the end of May 2018. Additionally 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. In the event
that either these liabilities increased or trading deteriorates or
the Group is unable to renegotiate a new banking facility with the
existing lender, the Group would 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. They recognise that
the bank has remained supportive across the recent period and have
additionally anticipated a number of mitigating courses of actions,
including: a conclusion to the current formal sales process,
outlined on page 6 above, that results in the provision of the
required funding; use of the inventory as security or for sale to a
new provider of funds or investor and 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 consolidated statement
of financial position to the Group's brand names, the value of the
Stanley Gibbons stamp referencing system, editorial intellectual
property or its database of customer lists as an accurate valuation
of these items would be impractical to establish and the
capitalisation of internally generated assets is not allowed under
IAS38. External costs incurred in the development of the software
for the Digital Asset Management system and the redevelopment of
the Group's websites have been capitalised and are being amortised
in accordance with IAS38.
Substantial Shareholdings
As at 29 September 2017, the Company had been notified of the
following interests in 3% or more of its issued share capital:
Lombard Odier Asset Management (Europe) Limited 29.16%
FMR LLC and FIL Limited 9.04%
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.
Secretary
Mr R K Purkis has been secretary for the entire year ended 31
March 2017 and to the date of approval of the financial
statements.
Independent Auditors
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.
Registered office:
18 Hill Street
St Helier,
Jersey
JE2 4UA
By order of the board
R K Purkis
Secretary
1 October 2017
We have audited the consolidated financial statements (the
"financial statements") of The Stanley Gibbons Group plc ('the
Company', and together with its subsidiaries, 'the Group') for the
year ended 31 March 2017 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 34.
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 Standard 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 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 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 Property, Plant & Equipment, we were unable
to obtain sufficient appropriate audit evidence over the existence,
accuracy and valuation of fixed assets with a carrying value of
GBP1.5 million consisting of all of the fixed assets in Mallet,
Inc. within the total carrying value of Property, Plant &
Equipment of GBP4.3 million.
-- In respect of inventories, we were unable to obtain
sufficient appropriate audit evidence over the completeness and
accuracy of inventories with a carrying value of GBP1.3 million
consisting of all of the stock at Murray Payne Limited with a
carrying value of GBP0.6 million, and all of the stock in Mallet
& Son (Antiques) Limited of GBP0.7 million, within the total
carrying value of inventories of GBP55.2 million.
-- In respect of the GBP0.7 million of stock within Mallet &
Son (Antiques) Limited, this balance is presented after a GBP2.0
million impairment which is included in the exceptional operating
charges of GBP19.0 million. We were unable to obtain sufficient
appropriate audit evidence over the completeness and accuracy of
this impairment.
-- 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 GBP0.9
million. This consists of trade receivables in Mallett & Son
(Antiques) Limited with a carrying value of -GBP0.2 million and
trade receivables in Stanley Gibbons (Guernsey) Limited with a
carrying value of GBP1.1 million, within the Group total carrying
value of trade and other receivables of GBP4.0 million.
-- In respect of prepayments and accrued income, we were unable
to obtain sufficient appropriate audit evidence over the
recoverability of an amount of GBP0.2 million within Mallett &
Son (Antiques) Limited, within the Group total carrying value of
trade and other receivables of GBP4.0 million.
-- In respect of trade and other payables, we were unable to
obtain sufficient appropriate audit evidence over the completeness
and accuracy of trade payables and accruals with a carrying value
of GBP1.3 million within Mallett & Son (Antiques) Limited, and
trade payables of GBP0.8 million of trade payables within AH
Baldwins and Sons Limited, within Group trade and other payables
having a total carrying value of GBP29.2 million.
-- In respect of cost of sales, we were unable to obtain
sufficient appropriate audit evidence over existence and accuracy
of GBP0.9 million of cost of sales recorded in The Fine Art Auction
Group Limited, within the total Group cost of sales of GBP29.1
million.
-- In respect of operating expenses, we were unable to obtain
sufficient appropriate audit evidence over existence and accuracy
of GBP1.2 million of operating expenses recorded in The Fine Art
Auction Group Limited, within the total selling and distribution
expenses of GBP17.9 million.
-- In respect of the contingent liabilities arising from
investment products that were sold previously as disclosed in note
28a, 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 GBP54.2m.
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 2017 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.
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 is currently in default of its banking
facilities, which are due for repayment before the end of May 2018.
The board have produced forecasts which assume that the bank
facility is extended or refinanced. Whilst we are aware that
management are investigating numerous courses of action, at present
none of these are certain. These conditions, along with the other
matters referred to in note 2, indicate 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.
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
1 October 2017
Year ended Year ended
31 March 2017 31 March 2016
(restated)
Notes GBP'000 GBP'000
Revenue 1, 3 42,464 59,137
Cost of sales (29,060) (35,304)
Gross Profit 13,404 23,833
Administrative expenses before
defined benefit
pension service costs and exceptional
operating costs (6,048) (4,808)
Defined benefit pension service
costs 27 (188) 194
Exceptional operating charges 5 (19,017) (22,986)
Total administrative expenses (25,253) (27,600)
Selling and distribution expenses (17,852) (23,544)
Operating loss 4 (29,701) (27,311)
Finance income 170 39
Finance costs 29 (626) (611)
Loss before tax (30,157) (27,883)
Taxation 8 1,357 (403)
Loss for the financial year (28,800) (28,286)
Other comprehensive income:
Amounts which may be subsequently
reclassified to profit & loss
Exchange differences on translation
of foreign operations 319 89
Revaluation of financial assets
held for sale - (58)
Reclassification of realised loss
on disposal - 68
Amounts which will not be subsequently
reclassified to profit & loss
Revaluation of reference collection 12 70 22
Actuarial (losses)/gains recognised
in the pension scheme 27 (1,064) 132
Tax on actuarial gains recognised
in the pension scheme 166 121
Other comprehensive (loss)/income
for the year net of tax (509) 374
Total comprehensive loss for the
year (29,309) (27,912)
Basic loss per Ordinary share 10 (16.10)p (60.03)
Diluted loss per Ordinary share 10 (16.10)p (60.03)
Total comprehensive loss is attributable
to the owners of the parent.
The notes on pages 32 to 73 are an integral part of these
consolidated financial statements.
31 March 31 March
2017 2016 1 April 2015
(restated) (restated)
ASSETS Notes GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 11 7,772 19,631 37,846
Property, plant and equipment 12 4,332 4,916 7,974
Deferred tax asset 21 1,344 1,929 2,120
Available for sale financial assets 6 - 1,364
Total non-current assets 13,454 26,476 49,304
Current Assets
Inventories 13 55,225 65,921 77,776
Trade and other receivables 14 4,044 13,786 16,197
Assets held for sale 15 - 2,545 1,800
Current tax receivable - - -
Cash and cash equivalents (excluding
bank overdrafts) 19 2,349 1,542 -
Total current assets 61,618 83,794 95,773
Total assets 75,072 110,270 145,077
Current liabilities
Trade and other payables 17 29,260 34,837 36,419
Borrowings 20 16,501 21,947 2,522
Current tax payable - 392 569
Total current liabilities 45,761 57,176 39,510
Non-current liabilities
Other payables 18 4,676 11,709 26,275
Retirement benefit obligations 27 6,086 5,222 5,816
Borrowings 20 - - 9,173
Deferred tax liabilities 21 554 1,777 1,831
Total non-current liabilities 11,316 18,708 43,095
Total liabilities 57,077 75,884 82,605
Net assets 17,995 34,386 62,472
Equity
Called up share capital 22 1,789 471 471
Share premium account 24 74,847 63,682 63,682
Share compensation reserve 24 1,883 1,448 798
Capital redemption reserve 24 38 38 38
Revaluation reserve 24 346 276 244
Retained earnings 24 (60,908) (31,529) (2,761)
Equity shareholders' funds 17,995 34,386 64,472
The financial statements on pages 28 to 73 were approved by the
board of Directors on 1 October 2017, were authorised for issue on
that date and were signed on its behalf by:
H G Wilson
A Cook Directors
The notes on pages 32 to 73 are an integral part of these
consolidated financial statements.
Share
Called Shares to Capital
up Share premium compensation Revaluation redemption Retained
share capital account be issued reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2016 -
restated 471 63,682 - 1,448 276 38 (31,529) 34,386
(Loss)/profit for
the
financial year - - - - - - (28,800) (28,800)
Amounts which may
be
subsequently
reclassified
to profit & loss
Exchange
differences
on translation
of foreign
operations - - - - - - 319 319
Revaluation of - - - - - - - -
financial
asset
Reclassification - - - - - - - -
on sale
of financial
asset
Amounts which
will not
be subsequently
reclassified
to profit & loss
Revaluation of
reference
collection - - - - 70 - - 70
Remeasurement of
pension
scheme net of
deferred
tax - - - - - - (898) (898)
Total
comprehensive
income/(loss) - - - - 70 - (29,379) (29,309)
Dividends - - - - - - - -
Share issue 1,318 11,165 - - - - - 12,483
Cost of share
options - - - 435 - - - 435
Share options - - - - - - - -
exercised
At 31 March 2017 1,789 74,847 - 1,883 346 38 (60,908) 17,995
At 1 April 2015
(previously
stated) 471 63,682 - 798 244 38 2,253 67,486
Prior year
adjustment
(see note 31) - - - - - - (5,014) (5,014)
At 1 April 2015
(restated) 471 63,682 - 798 244 38 (2,761) 62,472
Profit for the
financial
year - - - - - - (28,286) (28,286)
Amounts which may
be
subsequently
reclassified
to profit & loss
Exchange
differences
on translation - - - - - - 89 89
Revaluation of
financial
assets - - - - (58) - - (58)
Reclass of
financial
asset - - - - 68 - - 68
Amounts which
will not
be subsequently
reclassified
to profit & loss
Remeasurement of
pension
scheme net of
deferred
tax - - - - - - 253 253
Revaluation of
reference
collection - - - - 22 - - 22
Total
comprehensive
income - - - - 32 - (27,944)) (27,912)
Dividends - - - - - - (824) (824)
Cost of share
options - - - 650 - - - 650
Share options - - - - - - - -
exercised
At 31 March 2016 471 63,682 - 1,448 276 38 (31,529) 34,386
Year ended Year ended
31 March 31 March
2017 2016 (restated)
Notes GBP'000 GBP'000
Cash outflow from operating activities 25 (8,248) (5,208)
Interest paid (626) (611)
Taxes repaid/(paid) 493 (322)
Net cash outflow from operating activities (8,381) (6,141)
Investing activities
Purchase of property, plant and equipment (301) (888)
Purchase of intangible assets (computer
software) (118) (2,450)
Acquisition of business - (218)
Sale of financial asset - 1,306
Proceeds from sale of freehold property 2,500 466
Interest received 170 39
Net cash used in investing activities 2,251 (1,745)
Financing activities
Proceeds from issue of ordinary share 12,383 -
capital
Dividends paid to company shareholders 9 - (824)
Net borrowings (823) (1,333)
Net cash generated from financing activities 11,560 (2,157)
Net increase/(decrease) in cash and
cash equivalents 5,430 (10,043)
Cash and cash equivalents at start
of year (11,282) (1,239)
Cash and cash equivalents at end of
year 19 (5,852) (11,282)
The notes on pages 32 to 73 are an integral part of these
consolidated financial statements.
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.
Standards, amendments and interpretations that are effective for
periods beginning on or after 1 April 2016 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 2018, 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 2017
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 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.
1 Accounting policies and presentation continued
Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicated
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the
consolidated statement of financial position, the acquiree's
identifiable assets, liabilities and contingent liabilities are
initially recognised at their fair values at the acquisition date.
The results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained. They are deconsolidated from the date on which control
ceases.
Impairment of non-financial assets (excluding inventories and
deferred tax assets)
Impairment tests on goodwill and intangible assets with
indefinite useful economic lives are undertaken annually at the
financial year end or more frequently if events or changes in
circumstances indicate that they might be impaired. Other
non-financial assets are subject to impairment tests whenever
events or changes in circumstances indicate that their carrying
value may not be recoverable. Where the carrying value of an asset
exceeds its recoverable amount (i.e the higher of value in use or
fair value less costs to sell), the asset is written down
accordingly.
Where it is not possible to estimate the recoverable amount of
an individual asset, the impairment test is carried out on the
smallest group of assets to which it belongs for which there are
separately identifiable cash flows; its cash generating units
('CGUs'). Goodwill is allocated on initial recognition to each of
the Group's CGUs that are expected to benefit from a business
combination that gives rise to the goodwill.
Impairment charges are included in profit or loss, except to the
extent they reverse gains previously recognised in other
comprehensive income. An impairment loss recognised for goodwill is
not reversed.
Intangible Assets
Goodwill
Goodwill is measured as the excess of the costs of a business
combination over the total acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities
acquired. Where the fair value of identifiable assets, liabilities
and contingent liabilities exceed the fair value of consideration
paid, the excess is credited in full to the consolidated statement
of comprehensive income on the acquisition date.
Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill is not amortised but it is tested for
impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Gains and losses on the
disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose. The units or groups of units are identified at the
lowest level at which goodwill is monitored for internal management
purposes, being the operating segments (note 3).
Internally generated goodwill is not recognised as an intangible
asset.
1 Accounting policies and presentation continued
Publishing rights
Publishing rights represent the cost paid to third parties to
acquire copyright of publications. Publishing rights are
not amortised but tested annually for impairment and carried at
cost less accumulated impairment losses.
Computer Software
Costs associated with maintaining software programmes are
recognised as an expense as incurred. In accordance with IAS 38,
purchased computer software that will generate economic benefit
beyond one year is capitalised as an intangible asset.
Development costs that are directly attributable to the design
and testing of identifiable and unique software products controlled
by the group are recognised as intangible assets when management
intends to use the software for its business operations, the
development costs can be reliably measured and that it is
technically feasible for the Group to complete the software so that
it will be available for use. The Group would also only recognise
the software as an intangible asset if it can be demonstrated that
the software will generate probable future economic benefits.
Directly attributable costs that are capitalised as part of the
software include employee costs and an appropriate portion of
relevant overheads. These development costs are recorded as an
intangible asset.
Capitalised software costs are amortised over its expected
useful economic life. For purchased computer software assets
impairment is charged to the consolidated statement of
comprehensive income on a straight-line basis over 4 years. The
purchase and development of software related to the Group's
websites and Digital Asset Management system is capitalised and
amortised over its expected useful economic life of between five
and ten years on a straight line basis.
Customer lists
In accordance with IAS 38, customer lists acquired have been
capitalised as an intangible asset and are amortised on a straight
line basis over 8 years. Internally generated customer lists are
not capitalised or shown as an intangible asset.
Brands
In accordance with IAS 38, brands acquired in a business
combination are recognised at fair value at the acquisition date.
The brands acquired are considered to have an indeterminate life
because of their longevity and heritage. As such, these brands are
not amortised but are the subject of an annual impairment
review.
Trademarks
Trademarks acquired in a business combination are recognised at
fair value at the acquisition date. They have a finite useful life
and are amortised using the straight line method over their
estimated useful life of 8 years. They are subsequently carried at
cost less accumulated amortisation and impairment losses.
Property, plant and equipment and depreciation
Tangible fixed assets other than the reference collection
Tangible fixed assets, other than the reference collection, are
stated at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items, their purchase price, including any
incidental expenses of acquisition. Depreciation is calculated to
write down the net book value of tangible fixed assets less their
residual value on a straight-line basis, over the expected useful
economic lives of the assets concerned. The principal annual rates
used for this purpose are:
1 Accounting policies and presentation continued
Freehold buildings 2%
Vehicles, plant and machinery 20-25%
Fixtures, fittings, tools and equipment 10-25%
Leasehold improvements Over period of lease
Freehold land is not depreciated.
Reference collection
Fixed assets include a reference collection of certain stamps
& coins held on a long term basis. The reference collection for
stamps is subject to a full valuation every five years by a
qualified external valuer. The carrying value of the numismatic
reference library is revalued each year. Therefore not all the
reference collection is valued annually.
Where a reference collection or part of a collection has been
revalued the assets will be carried at the revised valuation.
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.
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
consolidated 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.
1 Accounting policies and presentation continued
The balance held at 31 March 2017 relates to leasehold
properties held with Mallett that were disposed of in June 2016.
The balance as at 31 March 2016 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
2015.
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.
Financial Instruments
Financial assets and financial liabilities are recognised on the
consolidated statement of financial position when the
Group becomes a party to the contractual provisions of the
instrument.
Financial assets
Trade and other receivables and assets held for sale are
measured at initial recognition at fair value and are subsequently
measured at amortised cost using the effective interest method less
provision for impairment. A provision is established when there is
objective evidence that the Group will not be able to collect all
amounts due. The amount of any provision is recognised in the
consolidated statement of comprehensive income.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable. For trade receivables, which are reported net, such
provisions are recorded in a separate allowance account with the
loss being recognised as an exceptional item in the consolidated
statement of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value for
the asset is written off against the associated provision.
Cash and cash equivalents comprise cash held by the Group and
short term bank deposits with an original maturity of three months
or less. Bank overdrafts are shown within loans and borrowings in
current liabilities on the consolidated statement of financial
position.
1 Accounting policies and presentation continued
Financial liabilities
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is
capitalised as a prepayment and amortised over the period of the
facility to which it relates.
Borrowings are removed from the consolidated statement of
financial position when the obligation specified in the contract is
discharged, cancelled or expired. The difference between the
carrying amount of the financial liability that has been
extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities
assumed, is recognised in profit or loss as other income or finance
costs.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
Any investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for
capitalisation.
Other borrowing costs are expensed in the period in which they
are incurred.
Trade and other payables are initially measured at fair value
and are subsequently measured at amortised cost using the effective
interest rate method.
Financial liabilities issued by the Group are classified in
accordance with the contractual arrangements entered into and the
definitions of a financial liability.
Taxation
The tax expense represents the sum of the tax currently payable
and any deferred tax.
The tax currently payable is based on the taxable profit for the
year. Taxable profit differs from profit before tax as reported in
the statement of comprehensive income because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is recognised on temporary differences between the
carrying amount of assets and liabilities in the consolidated
statement of financial position and the amounts attributed to such
assets and liabilities for tax purposes. Deferred tax liabilities
are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that future taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax relating to charges made directly to equity is
recognised in other comprehensive income.
1 Accounting policies and presentation continued
Foreign currencies
Transactions entered into by Group entities in a currency other
than the currency of the primary economic environment in which they
operate (their "functional currency") are recorded at the rates
ruling when the transactions occur. Foreign currency monetary
assets and liabilities are translated at the rates ruling at the
reporting date.
On consolidation, the results of overseas operations are
translated at rates approximating to those ruling when the
transactions took place. All assets and liabilities of overseas
operations are translated at the rate ruling at the reporting date.
Exchange differences arising on translating the opening net assets
of foreign operations are recognised in the consolidated statement
of comprehensive income as other comprehensive income which may be
reclassified to profit and loss.
Retirement benefits
The Group operates two defined benefit pension schemes. The
assets of the schemes are held and managed separately from those of
the Group. In accordance with IAS 19 (Amendment) for Employee
Benefits, the liability in the consolidated statement of financial
position represents the present value of the defined benefit
obligations at that date less the fair value of plan assets. The
defined benefit obligation is calculated periodically by an
independent actuary.
Current service costs are recognised in administrative expenses
in the statement of comprehensive income. Interest costs on plan
liabilities and the expected return on plan assets are recognised
in finance charges. Actuarial gains and losses arising from
experience adjustments and changes in actuarial assumptions are
recognised in other comprehensive income.
Pension scheme assets are measured at their market value and
liabilities are measured on an actuarial basis using the projected
unit method and discounted at a rate equivalent to the current rate
of return on a high quality corporate bond of equivalent currency
and term to the scheme liabilities. The actuarial valuations are
performed by a qualified actuary on a triennial basis and are
updated at each balance sheet date. The resulting defined benefit
asset or liability is presented separately as a non-current asset
or liability on the face of the consolidated statement of financial
position.
Under IAS 19 the retirement benefit obligation is presented
gross of deferred tax.
The Group also maintains a number of defined contribution
pension schemes. For these schemes the Group has no further
obligations once the contributions have been paid. The
contributions are recognised as an employee benefit expense in the
statement of comprehensive income in the year when they are
due.
Share capital
Financial instruments issued by the Group are classified as
equity only to the extent that they do not meet the
definition of a financial liability of financial asset.
The Group's ordinary shares are classified as equity
instruments.
1 Accounting policies and presentation continued
Share options and awards
The fair value of share options and awards granted to certain
employees and Directors is recognised as an employee benefits
expense with a corresponding increase in equity. The total amount
to be apportioned is determined by reference to the fair value of
the options granted including the Group's share price, the impact
of the group's trading performance, the grantee remaining an
employee over a specified time period and any impact of non-vesting
conditions.
The total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the Group revises
its estimates of the number of options that are expected to vest
based on the Group's profitability and the number of remaining
employees in each grant. It recognises the impact of the revision
of original estimates, if any, in profit and loss, with a
corresponding adjustment to equity.
The proceeds received on exercise of the options are credited to
equity.
Dividends
Dividends are recognised when they become legally payable. In
the case of interim dividends to equity shareholders, this is when
declared by the Directors. In the case of final dividends, this is
when approved by the shareholders at the AGM.
Revenue
Revenue is measured at the fair value of the consideration
received or receivable. 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 recognised when the amount
of revenue can be reliably measured, it is probable that the future
economic benefits will flow to the Group and specific criteria have
been met for each of the Group's activities as described below.
The specific accounting policies for the Group's main types of
revenue are explained below.
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.
1 Accounting policies and presentation continued
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 Group 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 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 from the consolidated statement of financial
position.
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 1 April 2015, as described in note
31a). 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 to 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 historically include Capital Growth
Plans (CGP) and Flexible Trading Portfolios (FTP). 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 and are therefore recognised as a contingent
liability (see note 28a).
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.
1 Accounting policies and presentation continued
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 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 11 to 12.
Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation to transfer economic resources as a result
of past events and the amount can be reliable estimated. Provisions
are measured at management's best estimate of the expenditure
required to settle the present obligation at the balance sheet
date. Provisions are discounted if the effect of the time value of
money is material.
Rental income
The Group sublets some of its properties that it occupies under
operating leases. Lease income from operating leases where the
group is a lessor is recognised in the Income Statement on a
straight-line basis over the lease term). The respective leased
assets are included in the balance sheet in leasehold
properties.
Contingent liabilities
The Group recognises liabilities when there is a present
obligation as a result of past events and settlement is expected to
result in a payment. The Group disclose contingent liabilities
where there is a possible obligation depending on whether some
uncertain event occurs or there is a present obligation but the
payment is not probable or cannot be measure reliably.
The Group sold a number of investment products historically that
includes a buy back option of 75% of the Stanley Gibbons catalogue
value where appropriate or otherwise market value. The Directors
consider the likelihood of the plan holders exercising their right
as remote and therefore the Group has disclosed the possible
contingent liability (see note 28a).
Joint ventures
The Group accounts for joint ventures using the equity method of
accounting. The initial investment is recognised at cost and
adjusted thereafter to recognise the Group's share of
post-acquisition profits or losses and the Group's share of the
movements in other comprehensive income in the entity. Dividends
received or receivable from the joint ventures are recognised as a
reduction in the carrying amount of the investment. When the
Group's share of losses in an equity-accounted investment equal or
exceeds its interest in the entity the Group does not recognise
further losses, unless it incurs obligations or make payments on
behalf of the entity.
The carrying amount of equity-accounted investment is tested for
impairment in accordance with the Group's impairment policy.
2 Critical Accounting Estimates, Judgements and Errors
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 11 to 12. The
financial position of the Group, its cash resources and borrowing
facilities are described in the Financial Review on page 13. In
addition note 29 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 within current
banking facility limits for the foreseeable future, until the
existing facilities have expired in May 2018. However as
highlighted above, the Group is currently in default on its banking
facilities, due to the qualified audit report in these financial
statements and the breach of the net asset covenant, as the Group's
net assets are currently below GBP20m. These facilities are due for
repayment before the end of May 2018. Additionally 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. In the event
that either these liabilities increased or trading deteriorates or
the Group is unable to renegotiate a new banking facility with the
existing lender, the Group would 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. They recognise that
the bank has remained supportive across the recent period and have
additionally anticipated a number of mitigating courses of actions,
including: a conclusion to the current formal sales process,
outlined on page 6 above, that results in the provision of the
required funding; use of the inventory as security or for sale to a
new provider of funds or investor and 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.
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.
2 Critical Accounting Estimates, Judgements and Errors continued
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 27. The Directors take
advice from independent actuaries relating to the appropriateness
of the assumptions and challenge the reasonableness and
appropriateness of these assumptions before adapting them in these
financial statements. It is important to note, however, that
comparatively small changes in the assumptions used may have a
significant effect on the consolidated statement of comprehensive
income and the consolidated statement of financial position.
Inventory valuation
Inventory is valued at the lower of cost and net realisable
value. Cost comprises all costs of purchase, including auction
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.
Goodwill Impairment
Determining whether goodwill is impaired requires an estimation
of the value in use of the cash-generating units to which goodwill
has been allocated. The value in use calculation requires the
Directors to estimate the future cash flows expected to arise from
the cash-generating units and a suitable discount rate in order to
calculate present value. The carrying amount of goodwill at 31
March 2017 was GBP2,568,000 (2016: GBP11,265,000) after an
impairment loss of GBP8,697,000 (2016: GBP 13,003,000) was
recognised in the year. Details of the carrying value of goodwill
and the impairment losses are set out in note 11.
Intangible Assets
IFRS 3 (revised) 'Business Combinations' requires that goodwill
arising on the acquisition of subsidiaries is capitalised and
included in intangible assets. IFRS 3 (revised) also requires the
identification of other intangible assets at acquisition. The
assumptions involved in valuing these intangible assets require the
use of estimates and judgments which may differ from the actual
outcome.
IAS 38 'Intangible Assets' requires that development costs,
arising from the application of research findings or other
technical knowledge to a plan or design of a new or substantially
improved product, are capitalised, subject to certain criteria
being met. Determining the technical feasibility and estimating the
future cash flows generated by the products in development requires
judgments which may differ from the actual outcome.
The estimates and judgments made in relation to both acquired
intangible assets and capitalised development costs, cover future
growth rates, expected inflation rates, re-assessing useful life of
the assets and the discount rate used.
2 Critical Accounting Estimates, Judgements and Errors continued
Trade receivables - investment sales
Included within trade receivables are GBP0m (2016 - GBP4.1m) 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 GBP0m (2016 - GBP1.7m). 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.
Errors - prior year adjustment
As previously announced the Group had, over several years, been
incorrectly recording and reporting sales and profits in relation
to some of the investment plans. Since the adjustments made in the
March 2016 financial statements, the Group has been validating the
legacy information used to quantify these adjustments. This
exercise showed that there were additional errors in relation to
certain investment plans which were offered by the Group in earlier
years. Full disclosure of this reversal of sale and the impact on
the prior periods result is included in note 31a.
Additionally as detailed in note 20 the bank facilities were in
default as at 31 March 2016 and the borrowings, which were
therefore incorrectly shown as non-current liabilities have now
been reclassified as current liabilities. The impact of this
adjustment is included in note 31b.
Fair value measurement
A number of assets and liabilities included in the Group's
financial statements require measurement at, and/or disclosure of,
fair value. The fair value measurement of the Group's financial and
non-financial assets and liabilities utilises market observable
inputs and data as far as possible. Inputs used in determining fair
value measurements are categorised into different levels based on
how observable the inputs used in the valuation technique utilised
are (the 'fair value hierarchy'):
- Level 1: Quoted prices in active markets for identical items
(unadjusted)
- Level 2: Observable direct or indirect inputs other than Level
1 inputs
- Level 3: Unobservable inputs (i.e. not derived from market
data).
The classification of an item into the above levels is based on
the lowest level of the inputs used that has a significant effect
on the fair value measurement of the item. Transfers of items
between levels are recognised in the period they occur. The
carrying amount of financial assets or financial liabilities is a
reasonable approximation of their fair value. Any differences
between these valuations would not be material.
3 Segmental Analysis
IFRS 8 requires operating segments to be identified based on
internal reporting. Accordingly, the determination of the Group's
operating segments is based on the following organisation units for
which management accounting information is reported to the Group's
management and used to make strategic decisions.
-- 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. The activities, products and services of the reportable
segments are detailed in the Operating Review on pages 11 to
12.
3 Segmental Analysis Coins
continued &
Investments Philatelic Publishing Medals Interiors Unallocated Total
Segmental income statement GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March
2017
Revenue 18,779 7,881 2,043 4,975 8,650 136 42,464
Operating costs (17,790) (8,300) (1,921) (4,020) (13,824) (7,293) (53,148)
Exceptional costs (1,199) (1,358) - (506) (1,290) (14,664) (19,017)
Net finance costs - (140) - (5) (354) 43 (456)
Profit/(loss) before
tax (210) (1,917) 122 444 (6,818) (21,778) (30,157)
Tax - 186 - 965 (1) 207 1,357
Profit/(loss) for the
year (210) (1,731) 122 1,409 (6,819) (21,571) (28,800)
Segmental balance sheet
as at 31 March 2017
Total assets 25,332 19,305 - 18,059 10,034 2,342 75,072
Total liabilities (21,449) (22,445) - (336) (24,304) 11,457 (57,077)
Net assets 3,883 (3,140) - 17,723 (14,270) 13,799 17,995
Other segmental items
Depreciation 51 359 - 30 120 59 619
Amortisation of other
intangible assets - 259 - 28 97 300 684
Capital expenditure - 102 - 29 265 23 419
Investments Coins
GBP'000 &
Segmental income statement Philatelic Publishing Medals Interiors Unallocated Total
restated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March
2016
Revenue 22,447 7,545 3,039 8,213 16,961 932 59,137
Operating costs (19,281) (7,658) (2,669) (6,074) (21,041) (6,740) (63,463)
Exceptional costs (1,007) - (50) (152) (3,225) (18,552) (22,986)
Net finance cost - - - - (240) (331) (571)
Profit/(loss) before
tax 2,159 (113) 320 1,987 (7,545) (24,691) (27,883)
Tax - (37) - (36) (201) (129) (403)
Profit/(loss) for the
year 2,159 (150) 320 1,951 (7,746) (24,820) (28,286)
Segmental balance sheet
as at 31 March 2016
Total assets 30,807 17,975 168 29,682 25,974 5,664 110,270
Total liabilities (31,329) (10,867) - (7,632) (24,928) (1,128) (75,884)
Net assets (522) 7,108 168 22,050 1,046 4,536 34,386
Other segmental items
Depreciation - 331 43 94 409 34 911
Amortisation of other
intangible assets - - - - - 1,002 1,002
Capital expenditure - 119 - - 847 2,590 3,556
3 Segmental Analysis continued
Geographical information
Analysis of revenue by origin and destination
Year ended 31 March Year ended Year ended Year ended
2017 31 March 31 March 31 March
Sales by destination 2017 2016 2016
GBP'000 Sales by Sales by Sales by
origin destination origin
GBP'000 GBP'000 GBP'000
Channel Islands 654 19,145 2,062 19,930
United Kingdom 31,235 21,888 34,549 36,562
Hong Kong 725 - 3,115 2,645
Europe 1,934 37 4,063 -
North America 4,838 1,394 10,678 -
Singapore 463 - 1,257 -
Rest of Asia 662 - 474 -
Rest of the World 1,953 - 2,939 -
42,464 42,464 59,137 59,137
Destination is defined as the location of the customer. Origin
is defined as the country of domicile of the Group company making
the sale. All of the sales relate to external customers.
There were no customers in either 2017 or 2016 from which the
Group earned more than 10% of its revenues.
Property, plant and equipment of GBP4,332,000 was split between
the UK GBP4,244,000 (2016: GBP4,766,000) and the Channel Islands
GBP88,000 (2016: GBP150,000).
Intangible assets and available for sale financial assets of
GBP7,772,000 were split between the UK GBP7,772,000 (2016:
GBP19,631,000) and the Channel Island GBPnil (2016: GBP nil).
4 Operating loss
The following table shows the material costs by nature charged
to cost of sales, administrative expenses and selling and
distribution costs.
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
Cost of inventories recognised as an expense 29,060 35,304
Employee benefit costs expensed (see note 7) 10,553 13,920
Depreciation of property plant and equipment 619 911
Amortisation of intangible assets 684 1,002
Advertising & marketing expenses 3,794 4,592
Distribution & transport costs 600 511
Operating lease charges - leased premises 1,276 2,685
IT operating expenses 985 936
Other property operating costs 1,342 1,213
Fees payable to the Group's auditor for the
audit of the Group's annual accounts, including
subsidiaries 460 420
Fees payable to the Group's auditor for other
advisory services 3 30
Other professional fees 1,477 636
Foreign exchange losses 107 170
Fees paid to the auditors in respect of non-audit work in the
year to 31 March 2017 are in respect of assisting in 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.
5 Exceptional operating charges
The items of income and expenditure listed below are either
non-recurring or unusual in size and therefore distort the view of
the normal trading activities of the Group. They have therefore
been separately identified to give more clarity on the underlying
trend of the trading performance.
Year ended 31 March Year ended
2017 31 March
2016
GBP'000 (restated)
GBP'000
Impairment of intangible assets relating 10,980 -
to the Interiors division
Other impairment of intangible assets 1,000 14,125
Marketplace intangible asset written
off 2,096 5,986
Pension scheme (recovery)/costs - (1,968)
Professional fees for corporate activity 587 819
Restructuring and redundancy costs 589 1,156
Other stock provisions 100 1,373
Profit on disposal of tangible fixed
assets (325) (189)
Stock provisions resulting from Interiors
disposal 2,934 -
Stock provisions resulting from historical
lost stock 406 -
Impairment of receivables 650 610
Legal costs in relation to SEC investigation - 1,074
19,017 22,986
6 Directors' emoluments
The remuneration paid to the Directors of The Stanley Gibbons
Group plc was:
Year ended Year ended
31 March 31 March
2017 2016
Fees 150 165
Salaries 804 546
Benefits - 6
Short-term employee benefits 954 717
Post-employment benefits 43 55
Share-based payment 181 140
Key management personnel compensation 1,178 912
Number of Directors included in the defined - -
benefit pension scheme (note 27)
The detailed numerical analysis of Directors' remuneration is
included in the Report on Remuneration on page 18. The charge to
profit in respect of share options and awards issued to the
Directors was GBP181,000 (2016: GBP140,000).
During the year the Group made payments into the personal
pension schemes of H Wilson, A Cook, M Hall and D Duff. Total cost
of these pension contributions to the Group were GBP43,000 (2016:
GBP55,000). The Group 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 18.
Management consider that the key management personnel comprise
the Directors.
7 Employee information
The average number of persons (including executive Directors)
employed by the Group during the period was 222 (2016: 252).
Year ended Year ended
31 March 31 March
2017 2016
Management and Administration 102 92
Sales 86 115
Production and Editorial 21 17
Distribution 2 16
Marketing 11 12
222 252
7 Employee information continued
Staff costs relating to those persons during the year amounted
to:
Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
Wages and salaries 8,640 11,868
Social security costs 844 1,284
Pension costs - defined benefit scheme (note
27) 188 (18)
Pension costs - defined contribution scheme 446 486
Share option cost 435 300
10,553 13,920
8 Taxation
UK corporation tax and overseas tax on profits for the year
Year ended 31 March Year ended
2017 31 March
GBP'000 2016
Current tax: GBP'000
UK corporation tax at 20% (2016: 20%) - 30
Capital gains tax on sale of property - -
Overseas tax - 115
Deferred taxation - 258
Current year tax charge - 403
Adjustment relating to earlier periods (885) -
Deferred taxation - amounts relating (472) -
to earlier periods (see note 21)
Tax (credit)/charge (1,357) 403
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 Year ended
Year ended 31 March 31 March
2017 2016
% %
The standard rate of corporation tax
in the UK 20.0 20.0
Effects of:
Item subject to capital gains tax (0.5) -
Disallowable items (0.9) (4.1)
Overseas profits taxable at lower rates (0.3) (16.2)
Losses for which no deferred asset recognised (10.0) (0.3)
Capital amortisation and provisions (8.3) -
Other permanent differences - (0.8)
Effective rate of corporation tax for
year/period - (1.4)
The main rate of corporation tax in the UK was 20% for financial
years starting on or after 1 April 2016.
9 Dividends
Year ended 31 Year ended
March 2017 31 March
GBP'000 2016
GBP'000
Amounts recognised as distribution to equity
holders in the period/year: Dividend declared
and paid in respect of prior year (GBP'000) - 824
Dividend paid per share - 1.75p
Dividend proposed but not paid at balance - -
sheet date (GBP'000)
Dividend proposed per share - -
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.
Year ended 31 Year ended
March 2017 31 March
2016
restated
Weighted average number of ordinary shares
in issue (No.) 178,916,643 47,120,357
Dilutive potential ordinary shares: Employee
share options (No.) 323,959 1,770,977
Loss after tax (GBP) (28,800,000) (28,286,000)
Pension service cost (net of tax) 150,000 (14,220)
Cost of share options (net of tax) 435,000 650,000
Amortisation of customer lists 423,000 360,000
Exceptional operating costs (net of tax) 18,276,000 22,548,710
Adjusted loss after tax (GBP) (9,516,000) (4,741,510)
Basic loss per share - pence per share (p) (16.10)p (60.03)p
Diluted loss per share - pence per share
(p) (16.10)p (60.03)p
Adjusted loss per share - pence per share
(p) (5.32)p (10.06)p
Adjusted diluted loss per share - pence
per share (p) (5.32)p (10.06)p
Weighted average number of ordinary shares
in issue (No.) 47,120,357
Dilutive potential ordinary shares: Employee
share options (No.) 1,770,977
Number of ordinary shares issued 1 April
2017 (No.) 131,796,286
Indicative new issue basic earnings per
share - pence per share (p) n/a (15.81)p
Indicative new issue diluted earnings per
share - pence per share (p) n/a (15.81)p
Net assets per share, as disclosed in the financial highlights,
are calculated using the net assets per the consolidated statement
of financial position divided by the number of shares at 31 March
2017 per note 22.
11 Intangible assets Publishing Computer Customer Brands &
Goodwill rights Software Lists trademarks Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April 2015 24,050 19 6,606 3,593 6,052 40,320
Additions - internally
developed - - 2,450 - - 2,450
Additions - business
combinations 218 - - - - 218
Disposals - - - - - -
At 31 March 2016 24,268 19 9,056 3,593 6,052 42,988
Additions - internally
developed - - 118 - - 118
Reclassification from
tangible assets business
combinations - - 687 - - 687
Disposals - - - - - -
At 31 March 2017 24,268 19 9,861 3,593 6,052 43,793
Accumulated amortisation
and
impairment
At 1 April 2015 - - 1,964 487 23 2,474
Impairment losses 13,003 - 6,202 676 - 19,881
Amortisation charge - - 538 447 17 1,002
At 31 March 2016 13,003 - 8,704 1,610 40 23,357
Impairment losses 8,697 - - 362 2,921 11,980
Amortisation charge - - 261 423 - 684
At 31 March 2017 21,700 - 8,965 2,395 2,961 36,021
Net book value
At 31 March 2017 2,568 19 896 1,198 3,091 7,772
At 31 March 2016 11,265 19 352 1,983 6,012 19,631
The brought forward goodwill of GBP24,268,000 related to the
acquisition of the Noble Investments Group (GBP23,682,000), the
acquisition of Murray Payne (GBP212,000), the acquisition of the
magazine 'Philatelic Exporter' (GBP87,000), the album producer
'Frank Godden' (GBP23,000), the trade of an independent stamp
dealer (GBP10,000), the acquisition of Stampwants.com (GBP36,000)
and the acquisition of Bid For Wine (GBP218,000).
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 10.9% (2016: 8.7%), 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 1% and 3% (2016: 0.5% to 3%) over the period in
question.
The cost of capital used for the impairment reviews was
increased to more appropriately reflect the risk position of the
Group. This increase coupled with revisions to the levels of
profits used in the impairment tests has resulted in an impairment
of goodwill relating to the Noble Investments Group of GBP1,000,000
as at 31 March 2017. The intangible assets relating to the elements
of the Interiors Division that were sold have been impaired down to
their realisable value. This resulted in an impairment of goodwill,
customer lists and brands relating to the Noble Group of
GBP7,697,000, GBP362,000 and GBP2,921,000 respectively as at 31
March 2017.
Assets of GBP687,000 which had previously been shown within
property, plant and equipment were transferred in to computer
software in the year to more accurately disclose the nature of the
assets.
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 2017 was GBPnil (2016: GBP nil).
12 Property, plant and equipment
Freehold Leasehold Fixtures,
land and property fittings, Vehicles,
Reference and tools and plant and
collection buildings improvements equipment machinery Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 April 2015 1,565 362 6,823 1,576 953 11,279
Additions - - 323 163 402 888
Revaluation 22 - - - - 22
Disposals - (362) - - - (362)
Assets written off
in the year - - (210) (320) (52) (582)
Transferred to current
assets - - (2,672) - - (2,672)
At 31 March 2016 1,587 - 4,264 1,419 1,303 8,573
Additions 15 - 222 64 - 301
Revaluation 70 - - - - 70
Disposals - - - (3) (45) (48)
Exchange differences - - 355 - - 355
Reclassification
to intangible assets - - - (423) (264) (687)
At 31 March 2017 1,672 - 4,841 1,057 994 8,564
Accumulated depreciation
At 1 April 2015 150 76 1,297 926 856 3,305
Charge for the year - 3 639 114 155 911
Impairment for year 230 - - - - 230
Depreciation on disposal - (79) (193) (338) (52) (662)
Transferred to current
assets - - (127) - - (127)
At 31 March 2016 380 - 1,616 702 959 3,657
Charge for the year - - 523 62 34 619
Impairment for year - - - - - -
Depreciation on disposal - - - - (44) (44)
Transferred to current - - - - - -
assets
At 31 March 2017 380 - 2,139 764 949 4,232
Net book value
At 31 March 2017 1,292 - 2,702 293 45 4,332
At 31 March 2016 1,207 - 2,648 717 344 4,916
The reference collection is subject to a full valuation every
five years by a qualified external valuer and an interim valuation
is carried out in year three by the Group's expert stamp
dealers.
The last independent valuation of a part of the reference
collection was carried out in March 2016 by A F Norris, Philatelic
Consultant for the collection in London and in July 2017 by D R
Seaby Philatelic Consultant for the Ringwood collection. The basis
of the revaluation used was replacement value. The surplus of
GBP70,000 was transferred to the revaluation reserve.
The revalued element of the reference collection is GBP436,000
(2016: GBP366,000). All other fixed assets are stated at historic
cost less depreciation. If the reference collection had not been
revalued it would have been included at a net book value based on
historic cost of GBP856,000 (2016: GBP841,000).
In the year ended 31 March 2016 a leasehold property was
transferred to current assets. This lease was subsequently assigned
with a lease premium of GBP2,500,000 in June 2016.
Fully written down Property, Plant and Equipment with a cost of
GBP691,000 (2016: GBP568,000) remains in use by the Group.
13 Inventories
31 March 1 April
31 March 2017 2016 (restated) 2015 (restated)
GBP'000 GBP'000 GBP'000
-
3,155
62,766
65,921
Work in progress 1,131 3,155 3,465
Finished goods and goods for resale 54,094 62,766 74,311
55,225 65,921 77,776
Included within the above inventories as at 31 March 2017 is
GBP14,642,000 owned by third parties (2016: GBP14,719,000). As at
31 March 2017 GBP27,683,000 (2016: GBP38,557,000) of the above
inventories were part of the security given in relation to the
borrowings detailed in note 20.
During the year GBP3,440,000 was charged to cost of sales for
the write down of inventories (2016: GBP1,373,000) 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 31a.
14 Current trade and other receivables
31 March 31 March 1 April
2017 2016 (restated) 2015 (restated)
GBP'000 GBP'000
GBP'000
Trade receivables 7,572 16,357 16,200
Provision for impairment (5,105) (5,210) (3,922)
Net trade receivables 2,467 11,147 12,278
Other receivables 129 972 1,042
Prepayments and accrued income 1,448 1,667 2,877
4,044 13,786 16,197
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business. Other
receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. If
collection of the amounts is expected in one year or less they are
classified as current assets. If not, they are presented as
non-current assets. Trade receivables are generally due for
settlement within 30 days and therefore are all classified as
current, unless specific agreement are in place for investment
sales (see note 2). The Group's impairment and other accounting
policies for trade and other receivables are outlined in note
1.
15 Current assets held for sale
31 March 2017 31 March
GBP'000 2016
GBP'000
Leasehold property - 2,545
Current assets held for sale at 31 March 2016 were the leasehold
property, Ely House, one of the Group's leased London premises.
This short life lease was sold in June 2016 for GBP2,500,000.
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 2017 31 March
GBP'000 2016
GBP'000
Opening provision 5,210 3,922
Impairments in the year - 1,288
Amounts utilised in the year (105) -
Closing provision 5,105 5,210
As at 31 March 2017, excluding balances due under extended
payment terms detailed below, GBP3,010,000 (2016: GBP2,249,000) 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:
31 March 2017 31 March
GBP'000 2016
GBP'000
Up to 3 months past due 1,594 644
3 to 6 months past due 398 926
Over 6 months past due 1,018 679
3,010 2,249
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
31 March 31 March
2017 2016 (restated)
GBP'000
GBP'000
Trade payables 11,204 15,259
Other payables 11,705 15,334
Other taxes and social security 1,587 1,246
Accruals and deferred income 4,764 1,924
Provisions - 1,074
29,260 34,837
These amounts represent liabilities for goods and services
provided to the Group prior to the end of financial year which are
unpaid. The amounts are unsecured and are usually paid within 30
days of recognition. Trade and other payables are presented as
current liabilities unless payment is not due within 12 months
after the reporting period.
18 Non-current other payables
31 March 2017 31 March
GBP'000 2016
GBP'000
Non-current
Due between 1 and 2 years 1,965 6,376
Due between 2 and 5 years 2,669 5,234
Due > 5 years 42 99
4,676 11,709
The above amounts, together with GBP11,705,000 (2016: 9,322,000)
within current payables are the liabilities recognised in relation
to 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 Cash and cash equivalents
31 March 2017 31 March
2016
(restated)
GBP'000 GBP'000
Cash at bank and in hand 2,349 1,542
Bank overdraft (8,201) (12,824)
Cash and cash equivalents (5,852) (11,282)
20 Borrowings
Current 31 March 2017 31 March
2016
(restated)
GBP'000 GBP'000
Bank loans 8,300 9,123
Bank overdraft 8,201 12,824
16,501 21,947
Interest on both the loans and overdrafts are charged at margins
over LIBOR ranging between 1.3% and 2.75%.
As at 31 March 2017 the loan was GBP8.3m, which was GBP9.5m as
at 31 March 2016. It was reduced from GBP9.5m to GBP8.3m after
applying 50% of the proceeds from the property sale in June 2016.
After the balance sheet date, the loan was further reduced by 50%
of the proceeds from the sale of Masterpiece in May 2017, reducing
the balance to GBP7.6m. Amortisation of this loan commences at
GBP0.5m per quarter from December 2017 until May 2018 when the loan
is due for repayment.
The Group also has a GBP10m revolving credit facility with The
Royal Bank of Scotland PLC repayable in May 2018.
The Group is required to satisfy stock cover and net asset cover
covenants. The stock covenant is to maintain 2 times cover for
total stock to the combined total of the 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 to maintain
Group consolidated net assets of at least GBP75m, was reduced to
GBP40m in September 2016 and then to GBP20m in March 2017. The
facility was therefore in default due to the breach of this
covenant as at March 2016 due to the prior year adjustments and
whilst it was rectified with the bank subsequently amending the
covenant level, the facility should have been shown as a current
liability in the balance sheet as at 31 March 2016 and has now been
restated. There are also fixed cost cover and interest cover
covenants to be calculated by reference to the Group's results for
the year ended 31 March 2018.
20 Borrowings continued
These facilities are currently in default due to the qualified
audit report in these financial statements for the year ended 31
March 2017 and the breach of the net asset covenant, as the Group's
net assets are currently below GBP20m. The qualified audit report
on the Group consolidated financial statements for the year to 31
March 2016, meant that the Group was in technical default on both
facilities until this default was rectified by a waiver from the
bank in March 2017.During a period of default and until the default
is rectified the facilities are repayable on demand, however the
bank has continued to support the Group and has not requested
repayment.
During the year the Group paid arrangement facility fees of
GBPnil (2016: GBP210,000) for the above facilities. The borrowings
are secured by a full fixed and floating charge debenture over the
core assets of the group.
21 Deferred tax assets and liabilities
Assets 2017 Liabilities
GBP'000 2017 2016
2016
GBP'000 GBP'000 GBP'000
Defined benefit pension scheme
(note 27) 706 940 - -
Other timing differences 165 238 - -
Unutilised tax losses 473 751 - -
Deferred tax on revalued fixed
assets - - 113 941
Accelerated capital allowances - - 441 836
Full provision 1,344 1,929 554 1,777
The movement on deferred tax assets is shown below
(Charge)/
credit to Comprehensive
comprehensive
2016 Profit and income 2017
loss
GBP,000 GBP,000 GBP,000 GBP,000
Defined benefit pension scheme
(note 27) 940 (400) 166 706
Other timing differences 238 (73) - 165
Unutilised tax losses 751 (278) - 473
Deferred tax on revalued fixed
assets (941) 828 - (113)
Accelerated capital allowances (836) 395 (441)
Full provision 152 472 166 790
22 Called up share capital
31 March 2017 31 March
GBP'000 2016
GBP'000
Authorised
250,000,000 (2016: 250,000,000) ordinary
shares of 1p each 2,500 2,500
Allotted, issued and fully paid (all equity):
178,916,643 (2016: 47,120,357) ordinary shares
of 1p each 1,789 471
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 Group.
Clive Whiley is managing director of ESCL, which company is his
ultimate employer. The net proceeds of this issue were
GBP12,350,000.
Capital risk management
Capital is managed to ensure that the entities within the Group
will be able to continue as a going concern whilst maximising the
returns to stakeholders through the optimisation of debt and equity
balances. Detail on capital structure is presented in the
consolidated statement of financial position. Notes 22 and 23
provide details on equity. Details of loans and overdrafts at the
year end are disclosed on page 13 in the Financial Review and
further disclosure can be found in note 20 and note 29. The
external capital requirements imposed on the Group in relation to
borrowings, are disclosed in note 20. Further detail on capital
risk management can be found in the Operating and Financial reviews
on pages 11 to 14.
23 Options in shares of The Stanley Gibbons Group plc
Executive Share options are granted to Directors and other
employees on a phased basis. The value of those options ensures
that this spreads any reward over a number of years, allied to
growth in shareholder value over the long term. Options granted
under the Group Share Option Plan 2010 are exercisable between the
third and tenth anniversaries of the date of grant.
Options issued in 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
was 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
was 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
was achieved.
23 Options in shares of The Stanley Gibbons Group plc
continued
Options issued in 2014 required that the Company's compound
average Total Shareholder Return (TSR) growth over the performance
period must match or exceed 8% per annum. The options vest over a
number of shares determined as follows:
Compound average annual TSR growth over the Percentage of Option
vesting (with straight line
performance period vesting between each point)
Less than 8% 0%
8% 25%
15% or more 100%
Options issued in 2016 were granted at market value and are not
subject to performance condition.
Excluding the Directors' share options disclosed in the Report
on Remuneration on page 18, detailed below are options which have
been granted to employees together with the periods in which they
may be exercised:
Number
Earliest Exercise Number at
Date of exercise Expiry Price at 31 March Granted Exercised Forfeited 31 March
grant date Date (1p shares) 2016 in year in Year in year 2017
01/6/10 01/6/13 31/5/20 123.5p 22,830 - - - 22,830
06/5/11 06/5/14 05/5/21 179.0p 116,398 - - - 116,398
06/12/11 06/12/14 05/12/21 165.0p 4,774 - - - 4,774
27/01/14 27/01/17 26/01/24 363.0p 427,264 - - (427,264) -
10/04/14 10/04/17 10/01/24 316.50p 160,819 - - (118,483) 42,336
See pg See pg
30/09/14 See pg 17 17 17 559,174 (559,174) -
18/12/14 18/12/14 18/12/24 294.5p 73,968 - - (73,968) -
05/10/16 05/10/19 05/10/26 11.0p - 10,950,000 - (320,000) 10,630,000
1,365,227 10,950,000 - (1,498,889) 10,816,338
Movements in the number of share options outstanding including
Directors share options and their related weighted average exercise
prices are as follows:
31 March 2017 Average 31 March 31 March 31 March
exercise price per 2017 2016 Average 2016
share Options (thousands) exercise Options
price per (thousands)
share
At 1 April 151p 2,803 169p 4,165
Granted 11p 14,950 - -
Forfeited/lapsed 175p (1,735) 206p (1,362)
Exercised - - - -
At 31 March 18p 16,018 151p 2,803
23 Options in shares of The Stanley Gibbons Group plc
continued
Share options outstanding at the end of the period have the
following expiry date and exercise price:
Options
Exercise Options (thousands) (thousands)
31 March 31 March
Expiry date price per share 2017 2016
31 May 2020 123.5p 23 23
30 September 2020 nil 932 1,491
5 May 2021 179.0p 116 116
5 December 2021 165.0p 5 5
26 January 2024 363.0p - 663
10 April 2024 316.5p 312 431
18 December 2024 294.5p - 74
5 October 2026 11.0p 14,630 -
16,018 2,803
Stochastic and Black-Scholes models have been used to value the
awards. The awards issued in the year ended 31 March 2017 and those
still outstanding for the year ended 31 March 2016 are set out
below:
Dates of grant 05/10/2016 30/09/14 10/04/14
Number of options granted 14,950,000 1,863,912 676,653
Weighted average fair value at date
of grant (per share) 5.20 nil 22.01p
Weighted average share price on date
of grant 11.25p 277.5p 314.0p
Weighted average exercise price 11.0p nil 316.5p
Expected term (from date of grant) 6.5 years 3 years 6.5 years
Expected volatility 46.77% 22.5% 31.8%
Expected dividend yield 0.00% 2.52% 2.23%
Risk-free interest rate 0.42% 1.22% 1.94%
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.
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 performance
condition was not achieved on the sale of the Interiors Division
and the awards under the plan have therefore not vested
24 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.
25 Cash outflows from operating activities Year ended Year ended
31 March 31 March
2017 2016
GBP'000 GBP'000
Operating (loss)/profit (29,701) (27,311)
Profit on sale of property (325) (183)
Depreciation 619 911
Amortisation 684 1,002
Loss on sale of financial asset - 58
Impairment of intangible assets 11,980 19,881
Impairment of tangible assets - 230
Decrease in provisions (200) (462)
Cost of share options 435 650
Decrease in inventories 10,696 11,855
Decrease in trade and other receivables 9,742 4,211
(Decrease)/increase in trade and other payables
(less deferred consideration) (12,141) (16,139)
Net exchange differences (37) 89
Cash outflows from operating activities (8,248) (5,208)
26 Capital and other commitments
Lease commitments
At 31 March 2017 the Group had future minimum lease payments
under non-cancellable operating leases as follows:
Payable: 31 March 2017 31 March
GBP'000 2016
GBP'000
Within one year 2,201 2,552
Between two and five years 4,877 6,691
In five years or more 6,892 7,145
13,970 16,388
These figures represent the aggregate payable until expiration
of all non-cancellable operating leases.
At 31 March 2017 the Group had future minimum rental payments
receivable under non-cancellable operating leases as follows:
Receivable: Land and Buildings Land and
31 March 2017 Buildings
GBP'000 31 March
2016
GBP'000
Within one year 1,344 907
Between two and five years 5,067 4,395
In five years or more 7,027 6,501
13,438 11,803
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, Maddison Avenue,
New York and Raleigh, North Carolina.
27 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 2017 are based on
the results of the actuarial valuation as at 30 June 2015.
27 Retirement benefits continued
Scheme assets are stated at their market value at 31 March 2017.
The Group currently pays deficit reduction contributions of
GBP256,000 per annum under a Recovery Plan agreed in April
2017.
(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 2016 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 GBP1,409,000. The Company agreed with the
trustees that it will aim to eliminate the deficit over a period of
9 years and 1 month from 1 May 2016 by the payment of monthly
contributions of GBP17,033 in respect of the deficit which includes
an allowance of GBP1,200 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 2017 are based on
the actuarial valuation as at 1 May 2016 and updated on an
approximate basis to 31 March 2017.
The amounts recognised in the statement of financial position
are as follows:
31 March 31 March
2017 2016
GBP'000 GBP'000
Present value of funded obligation (20,390) (18,232)
Fair value of scheme assets 14,304 13,010
Net obligation (6,086) (5,222)
Deferred tax asset 706 940
Retirement benefit obligation (5,380) (4,282)
GBP'000 GBP'000
Cumulative amount of actuarial losses recognised
in other comprehensive income (2,898) (1,748)
The amounts recognised in the statement of comprehensive income
for the period are as follows:
31 March 2017 31 March
GBP'000 2016
GBP'000
Current service cost 19 (194)
Interest cost on net benefit obligations 169 176
Total included in employee benefit
expense 188 (18)
Actual return on scheme assets 1,339 (106)
27 Retirement benefits continued
The amounts recognised in other comprehensive income are as
follows:
31 March 2017 31 March
GBP'000 2016
GBP'000
Actuarial gains/(losses) on scheme obligations from
financial assumptions (2,943) 659
Actuarial gains/(losses) on scheme obligations from
demographic assumptions 487 -
Actuarial gains/(losses) on scheme obligations from
experience 411 -
Actuarial (losses)/gains on fair value of scheme
assets 981 (527)
Remeasurement (losses)/gains (1,064) 132
Changes in the present value of the defined benefit
obligation are as follows:
31 March 2017 31 March
GBP'000 2016
GBP'000
Present value of obligations at start
of year/period 18,376 18,946
Liabilities acquired at fair value - -
Current service cost 19 (194)
Interest cost 613 596
Contributions by employees - -
Remeasurement losses/(gains) 2,045 (659)
Charges paid (19) 194
Benefits paid (644) (651)
Present value of obligations at end of
year/period 20,390 18,232
Changes in the fair value of scheme assets 31 March
are as follows: 31 March 2017 2016
GBP'000 GBP'000
Fair value of scheme assets at start of
year/period 13,154 13,130
Assets acquired at fair value - -
Expected return on scheme assets 444 420
Remeasurement gains/(losses) 895 (527)
Contributions by employees - -
Contributions by company 474 444
Charges paid (19) 194
Benefits paid (644) (651)
Fair value of scheme assets at end of year/period 14,304 13,010
The Group currently expects to contribute GBP446,000 to its
defined benefit schemes in the financial year to 31 March 2018.
The major categories of scheme assets as a percentage of the
fair value of total scheme assets are as follows:
31 March 2017 31 March
2016
% %
Equities 33.5% 26.4%
Corporate bonds 31.9% 33.9%
Property -% 0.8%
Gilts/cash 0.8% 4.8%
Insurance policies 19.3% 20.8%
Diversified growth funds 13.5% 13.3%
Insured Annuitants 1.0% -%
27 Retirement benefits continued
Principal actuarial assumptions at the reporting
date:
31 March 2017 31 March
2016
Future salary increases 2.20% 2.00%
Price inflation - RPI 3.20% 2.80%
Price inflation - CPI 2.20% 1.80%
Revaluation of deferred pensions 2.20% 1.80%
Pension in payment increases of CPI or 5%
p.a. if less 2.20% 1.80%
Pension in payment increases of CPI or 2.50%
p.a. if less 2.20% 1.80%
Pension in payment increases of CPI minimum
3.00% maximum 5% 3.00% 3.00%
Discount rate 2.60% 3.40%
Equities (long term expected rate of return) 2.60% 3.40%
Corporate bonds (long term expected rate of
return) 2.60% 3.40%
Fixed interest gilts (long term expected rate
of return) 2.60% 3.40%
Cash (long term expected rate of return) 2.60% 3.40%
Mortality Assumptions
The mortality trends of the scheme were assessed at 31 March
2017 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:
31 March
The Stanley Gibbons Holdings PLC Pension 31 March 2017 2016
and Assurance Scheme In years In years
Retiring at 65 at reporting date
Male 22.0 21.9
Female 23.8 24.5
Retiring at 65 at reporting date + 20 years
Male 23.0 23.8
Female 25.0 26.4
The Mallett Retirement Benefits Scheme
31 March 2017 31 March
2016
In years In years
Retiring at 65 at reporting date
Male 22.0 21.9
Female 23.8 24.5
Retiring at 65 at reporting date + 20 years
Male 23.0 23.8
Female 25.0 26.3
27 Retirement benefits continued
Sensitivity of results
The value placed on the benefit obligation is particularly
sensitive to changes in some of the key assumptions as detailed
below:
The Stanley Gibbons Holdings PLC Pension and Assurance
Scheme
Change in
the benefit (Deficit)
Obligation - % GBP'000s
Assumption as per IAS 19 disclosures n/a (3,832)
0.25% p.a. reduction in discount rate 3.6% (4,283)
0.25% increase in CPI inflation 2.0% (4,090)
Pensions payable for 1 year longer due to mortality assumptions
3.0% (4,208)
The Mallett Retirement Benefits Scheme
Change in Change in
the benefit the benefit (Deficit)
Obligation - % Asset - % GBP'000s
Assumption as per IAS 19 disclosures n/a n/a (2,254)
0.25% p.a. reduction in discount rate 4.5% 1.2% (2,536)
0.25% increase in inflation 2.5% 0.3% (2,431)
Pensions payable for 1 year longer due to mortality assumptions* 3.3%
2.2% (2,384)
*The change to the mortality assumption increase member's life
expectancy by assuming each member was born one year later and
therefore has the life expectancy of someone aged one year
younger.
Amounts for the current and previous four periods are as
follows:
31 March 31 March 31 March 31 December 31 December
2017 2016 2015 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of defined
benefit obligations (20,390) (18,232) (18,946) (10,579) (9,941)
Fair value of scheme assets 14,304 13,010 13,130 7,294 6,780
Deficit (6,086) (5,222) (5,816) (3,285) (3,161)
Experience adjustments on
scheme assets 895 (527) 978 544 544
Effects of changes in the
demographic and financial
assumptions underlying scheme
liabilities
- Amount (2,456) 659 (2,077) (297) (664)
- Percentage of benefit obligation -12.0% 3.6% -10.9% -2.80% -6.68%
27 Retirement benefits continued
Future profile of the Stanley Gibbons Holdings PLC Pension and
Assurance Scheme
The Stanley Gibbons Holdings PLC Pension and Assurance Scheme
closed to new members with effect from 1 September 2002. This will
result in the age profile of the active membership rising over time
and hence, under the method required to calculate IAS 19
liabilities, the future cost in relation to this Scheme will rise
in the long-term.
The Group has considered the impact of the IAS 19 deficit in
respect of the Group, its employees and pensioners. The deficit has
decreased from GBP3,911,000 at 31 March 2016 to GBP3,832,000 at 31
March 2017 principally arising from changes in scheme data and a
change from the approximate methodology used in previous
disclosures.
Future profile of the Mallet Retirements Benefits Scheme
The Mallet Retirements benefits Scheme was closed to new members
in 2002. This will result in the age profile of the active
membership rising over time and hence, under the method required to
calculate IAS 19 liabilities, the future cost in relation to this
Scheme will rise in the long-term.
The Group has considered the impact of the IAS 19 deficit in
respect of the Group, its employees and pensioners. The deficit has
increased from GBP1,311,000 at 31 March 2016 to GBP2,254,000 at 31
March 2017 principally arising from changes in scheme data and a
change from the approximate methodology used in previous
disclosures.
28 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 2017 the maximum potential liability was
GBP54,150,000 (2016: GBP64,300,000). 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.
28 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.
28 b Contingent liability - Litigation continued
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.
At the year end the Group had an accrual of GBP709,000m, 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.
29 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 20. 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 13 to 14.
Summary of financial assets and liabilities by category
The principal financial instruments used by the Group, from
which financial instrument risk arises are shown below
summarised by category:
31 March 2017 31 March
GBP'000 2016
GBP'000
restated
Financial assets - Loans and receivables
Available for sale financial assets - -
(see below)
Trade and other receivables 4,044 13,786
Cash at bank 2,349 1,542
6,393 15,328
Financial liabilities measured at amortised
cost
Trade and other payables 33,936 46,546
Borrowings 16,501 21,947
50,437 68,493
(44,044) (53,165)
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.
29 Financial instruments continued
Credit risk also arises from cash and cash equivalents and
deposits with banks and financial institutions. Risks associated
with cash deposits are limited as the banks used have high credit
ratings assigned by international credit rating agencies.
The Group's exposure to credit risk is limited to the carrying
amount of financial assets recognised in the consolidated statement
of financial position as noted in the above table.
The Directors of the Company consider that all the above
financial assets for each of the consolidated statement of
financial position dates under review are of a good credit quality,
including those past due settlement dates. See note 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 20), 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 2017 of
GBP456,000 (2016: GBP611,000) comprised loan interest & charges
of GBP318,000 (2016: GBP435,000) and net finance costs from its
defined benefit pension scheme liabilities of GBP138,000 (2016:
GBP176,000).
The bank loans are linked to LIBOR. A 0.05% (5 basis point
movement) (2016: 0.05%) movement in LIBOR would have resulted in an
additional interest charge of GBP8.000 (2016: GBP8,000).
Foreign exchange risk
The Group had no material exposure to foreign exchange risk in
the year ended 31 March 2017. 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 2017 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 within
current banking facility limits for the foreseeable future, until
the existing facilities have expired in May 2018. 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 these liabilities increased
or trading deteriorates or the Group is unable to renegotiate a new
banking facility with the existing lender, the Group would require
access to additional liquidity.
29 Financial instruments continued
The Group's financial liabilities have contractual maturities
(representing undiscounted contractual cash flows) as summarised
below:
Within Between Between
6 months 6 and 12 months 1 and 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2017
Trade and other payables 28,125 1,135 4,676 33,936
Borrowings 16,501 - - 16,501
44,626 1,135 4,676 50,437
At 31 March 2016 (restated)
Trade and other payables 26,036 8,801 11,709 46,546
Borrowings 21,947 - - 21,947
47,983 8,801 11,709 68,493
Included within trade and other payables is an amount of
GBP16,381,000 (2016 (restated): GBP25,416,000) 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 2017
GBP12,594,000 of these contracts fell due and of these contracts
GBP1,350,000 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 28a and relates to
investment plans which the Group has a GBP54,150,000 (2016:
GBP64,300,000) contingent liability exposure. The Director's
current opinion is that an event to crystalise this liability is
remote.
30 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 GBP2,221,000 in
the year to 31 March 2017 (2016: GBP3,239,000) 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 2017
M Hall and D Duff forfeited share options during the year to 31
March 2017 as follows:
Shares forfeited
No. Price
M Hall 137,741 363.0p
D Duff 97,796 363.0p
H G Wilson made purchases during the year to the value of
GBP31,126, he had a purchase ledger balance of GBP3,289 at the year
end.
30 Identity of related parties continued
The Group received rental income of GBP6,300 during the year
from Marbral Limited, a company 100% owned by Mr Bralsford.
During the year the Group paid GBP304,000 to Evolution
Securities China Ltd for corporate consultancy services.
C P Whiley is the Managing Director of this company.
Year ended 31 March 2016
M Hall & D Duff exercised share options during the year to
31 March 2016 as follows:
Shares acquired Shares disposed
No Price No Price
M Hall 112,000 179.0p 112,000 310.0p
D Duff 70,000 179.0p 70,000 310.0p
31 a Prior year adjustment - revenue recognition
As has been previously announced the Group had, over several
years, been incorrectly recording and reporting sales and profits
in relation to some of the investment plans. Since the prior year
adjustment made in the March 2016 financial statements to correct
these errors, the Group has been validating the legacy information
used to quantify these adjustments. This exercise showed that there
were additional errors in relation to certain investment plans
which were offered by the Group in earlier years.
As stated in last year's financial statements 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 was corrected by way of a prior year
adjustment. The further adjustment made this year is for the same
reasons as detailed below.
The correction of the error impacts the opening net assets of
the Group at 1 April 2015 as explained below. The net impact of the
review is to reduce net assets at 1 April 2015 by GBP5,014,000.
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 and in some cases with a guaranteed
return, to Stanley Gibbons.
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 recognising 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 these plans
should be reversed.
Depending on subsequent events (the decision that the client
makes at the end of the contract term), the value of outstanding
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 2015 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. Additionally the
value of the potential obligations are either recorded as a
liability on the balance sheet or for those plans that were sold on
extended credit, the debt previously recorded on the balance sheet
is fully impaired. Therefore a creditor was created for the
potential obligations to clients of GBP6,335,000. Inventory brought
back into stock as a result of these investment plans was
GBP4,728,000 and receivables of GBP3,407,000 were impaired.
31 a Prior year adjustment - revenue recognition continued
During the year ended March 2016, 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 impairment provisions charged to the consolidated statement of
comprehensive income in the year ended March 2016 against
receivables resulting from the sale of these plans on extended
credit of GBP1,008,000 has been reversed as these receivables are
now fully impaired as a result of the prior year adjustment. This
has resulted in an increase in profit before tax of GBP1,008,000 in
the year to 31 March 2016.
31 b Prior year adjustment - borrowings
As a result of the default due to the breach in covenant as at
31 March 2016, described in note 20 the bank borrowings were
repayable on demand. Although the defaults were subsequently
rectified, the Group's borrowings were previously incorrectly
disclosed as non-current liabilities as at 31 March 2016, to
correct this error the borrowings of GBP16,788,000 have been
reclassified as current liabilities as at 31 March 2016.
31 March 2016 Increase/
(previously (Decrease) 31 31 March
stated) note 31a 2016 (restated)
Statement of comprehensive income (extract) GBP'000 GBP'000 GBP'000
Exceptional items (23,994) 1,008 (22,986)
Loss before tax (28,891) 1,008 (27,883)
Consolidated 31 March Increase/ 1 April
Statement 2016 (Decrease) Increase/ 2015 1 April
of financial (previously - note (Decrease) 31 March (previously Increase/ 2015
position stated) 31 a - note31b 2016 (Restated) stated (Decrease) (restated)
(extract) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Inventories 61,804 4,117 - 65,921 73,048 4,728 77,776
Trade and other
receivables 15,574 (1,788) - 13,786 19,604 (3,407) 16,197
Total assets 107,941 2,329 - 110,270 143,756 1,321 145,077
Trade and other
payables
- current (30,409) (4,428) (34,837) (31,991) (4,428) (36,419)
Borrowings -
current
liabilities (5,159) - (16,788) (21,947) (2,522) - (2,522)
Borrowings -
non current (16,788) - 16,788 - (9,173) - (9,173)
Other payable
non-current (9,802) (1,907) - (11,709) (24,368) (1,907) (26,275)
Total
liabilities (69,549) (6,335) - (75,884) (76,270) (6,335) (82,605)
Net assets 38,392 (4,006) - 34,386 67,486 (5,014) 62,472
Retained
earnings (27,523) (4,006) - (31,529) 2,253 (5,014) (2,761)
Total equity
shareholders
funds 38,392 (4,006) - 34,386 67,486 (5,014) 62,472
32 Post Balance Sheet Events
Sale of certain assets and liabilities of the Interiors
division
On 1 October the Group sold certain assets and liabilities of
Dreweatts and the intellectual property rights and goodwill in
respect of the Bloomsbury brands, all currently part of the Group's
Interiors division.
The sale was for a consideration of GBP1.25m million in cash
payable on completion, plus a maximum additional consideration of
GBP0.4m, payable over the next 24 months, alongside the assumption
of other liabilities currently associated with the Interiors
division.
Sale of interest in Masterpiece London Limited
In May 2017 the Group sold its 25 per cent. interest in
Masterpiece London Limited ("Masterpiece"), the operator of the
annual Masterpiece London art and antiques fair, to Masterpiece for
a total consideration of GBP1,400,000 payable in cash.
In the year to 31 March 2017 a dividend of GBP40,000 was
received from Masterpiece and the 25 per cent. interest was held on
the Group's balance sheet at GBP6,000.
33 Principal subsidiaries
The principal subsidiary undertakings of the Company, all of
which are 100% owned are as follows:
Country Description of
Name of incorporation shares held Principal activity
Stanley Gibbons (Guernsey) Guernsey Ordinary GBP1 shares Philatelic dealer
Limited and dealer in memorabilia
Stanley Gibbons (Jersey) Jersey Ordinary GBP1 shares Philatelic dealer
Limited and dealer in memorabilia
Stanley Gibbons E-commerce Limited Ordinary GBP1 shares E-commerce retailing
Jersey
Stanley Gibbons Holdings England Ordinary GBP0.25 Holding Company
Limited shares
Stanley Gibbons Limited* England Ordinary GBP1 shares Philatelic dealer
and retailer, and
dealer in memorabilia
Stanley Gibbons (Asia) Hong Kong Ordinary HK$1 shares Philatelic dealer
Limited and dealer in memorabilia
Stanley Gibbons (SEA) Singapore Ordinary S$1 shares Philatelic dealer
Pte Limited and dealer in memorabilia
Stanley Gibbons US, Inc* United States Common stock US$0.0001 Web development
Minden House Limited Jersey Ordinary GBP1 shares First day cover dealer
Concept Court Limited England Ordinary GBP1 shares First day cover dealer
Murray Payne Limited England Ordinary GBP1 shares Philatelic dealer
and auctioneer
Noble Investments (UK) England Ordinary 1p shares Holding Company
Limited
AH Baldwin & Sons Limited* England Ordinary GBP1 shares Dealer and auctioneer
in rare coins and
other collectibles
Greenfield Auctions Limited* England Ordinary GBP1 shares Auctioneers of works
on paper
33 Principal subsidiaries continued
Country of Description of
Name incorporation shares held Principal activity
The Fine Art Auction England Ordinary GBP0.45 Auctioneers and valuers
Group Limited* shares Preferred of art, antiques and
GBP1 shares collectibles
Preferred GBP0.25
shares
Deferred GBP0.25
shares
Mallett Limited* England Ordinary GBP0.05 Holding company
shares
Mallett & Son (Antiques) England Ordinary GBP1 Antique dealers
Limited* shares
Mallett Overseas Limited* England Ordinary GBP1 Antique dealers
shares
Mallett, Inc* United States Common stock US$1 Antique dealers
H J Hatfield & Sons Limited* England Ordinary GBP1 Restorers
(1) shares
Masterpiece London Limited* England Ordinary GBP1 Exhibition organiser
(2) shares
* Indirect holding
1 60% holding
2 25% holding
Subsidiary company audit exemption
Bid For Wine Limited is entitled to and has taken advantage of
the exemption from statutory audit conferred under
Section 479A of the Companies Act 2006.
Concept Court Limited is entitled to and has taken advantage of
the exemption from statutory audit conferred
under Section 479A of the Companies Act 2006.
Ely House Limited is entitled to and has taken advantage of the
exemption from statutory audit conferred under
Section 479A of the Companies Act 2006.
H J Hatfield & Sons Limited is entitled to and has taken
advantage of the exemption from statutory audit conferred
under Section 479A of the Companies Act 2006.
Mallett Limited is entitled to and has taken advantage of the
exemption from statutory audit conferred under
statutory audit conferred under Section 479A of the Companies
Act 2006.
Mallett Overseas Limited is entitled to and has taken advantage
of the exemption from statutory audit conferred
under Section 479A of the Companies Act 2006.
Murray Payne Limited is entitled to and has taken advantage of
the exemption from statutory audit conferred
under Section 479A of the Companies Act 2006.
Stanley Gibbons Holdings Limited is entitled to and has taken
advantage of the exemption from statutory
audit conferred under Section 479A of the Companies Act
2006.
34 Controlling party
In the opinion of the directors there was no single controlling
party of the Group in the current or prior period.
Henry George Wilson, Director and Executive Chairman
Date of Birth: 18 September 1952. Date of Appointment as
Director: 16 May 2017.
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 2017 and became
Executive Chairman on 14 July 2017. 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 2017.
Andrew Cook, who was appointed Group Managing Director on 31 May
2017, joined the Board as Chief Financial Officer on 14 July
2017.
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 2017.
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.
Henry Arthur John Turcan, Non-Executive
Date of Birth: 31 January 1974. Date of Appointment as Director:
23 May 2017.
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 and moved to Lombard Odier Asset Management in
2017. 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 and a
member of the Audit Committee.
Louis Emmanuel Castro BSc, BComm (Hons), FCA, Non- Executive
Director - Independent
Date of Birth: 12 August 1958 Date of Appointment as Director: 3 October 2016.
Louis has over 30 years' experience in accounting and corporate
finance both in the UK and overseas. Most recently he has been the
Chief Financial Officer at Eland Oil & Gas, a publicly quoted
company where he was one of two executive directors. Previously he
was the Managing Director of Northland Capital Partners in London
and before this he was Head of Corporate Finance at Matrix
Corporate Capital and at Insinger de Beaufort. He started his
career by qualifying as a Chartered Accountant with Coopers &
Lybrand (now PWC).
Louis has widespread international experience having advised the
Boards of companies worldwide including companies in the retail
sector. He has led on numerous public listings and has been a
non-executive director and chairman of the audit committee at Eland
Oil & Gas and at Pan European Terminals.
Mr Castro is a Fellow of the Institute of Chartered Accountants
in England and Wales. He graduated in 1980 from Birmingham
University with a BSc & BComm (Hons) in Engineering Production
& Economics. He is Chairman of the Audit Committee and a member
of the Remuneration and Nomination Committees.
The Stanley Gibbons Group plc
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 399 Strand,
London WC2R 0LX on Wednesday 1 November 2017 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:
Ordinary Business
To consider, and if thought fit, to pass the following
resolutions as Ordinary Resolutions:
1. "THAT the Company's audited accounts for the year ended 31
March 2017 and the Directors' and Auditors' Reports thereon be
approved and adopted."
2. "THAT HG Wilson, who retires in accordance with the Articles
of Association of the Company, and, being eligible, be re-elected
as a Director of the Company."
3. "THAT 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."
4. "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."
5. "THAT LE Castro, who retires in accordance with the Articles
of Association of the Company, and, being eligible, be re-elected
as a Director of the Company."
6. "THAT 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."
7. "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."
Special Business
To consider, and if thought fit, to pass the following
resolution as a Special Resolution:
Authority to purchase own Ordinary Shares
8. "THAT the Company be generally and unconditionally authorised
to make one or more market purchases of its own Ordinary Shares,
such purchases to be of Ordinary Shares of one pence (1p) each in
the capital of the Company ("Ordinary Shares"), provided that:
(a) the maximum number of Ordinary Shares authorised to be
purchased shall be 26,000,000 Ordinary Shares, being approximately
15 per cent of the issued capital of the Company; and
(b) the minimum price which may be paid for any such Ordinary
Shares shall be 1p per Ordinary Share (exclusive of expenses);
and
(c) the maximum price (exclusive of expenses) which may be paid
for such Ordinary Shares shall be an amount equal to 5 per cent
above the average middle market quotations of an Ordinary Share as
derived from the Daily Official List of the UKLA for the five
business days immediately preceding the day on which any such
Ordinary Shares are purchased or contracted to be purchased;
(d) unless otherwise varied renewed or revoked the authority
hereby conferred shall expire at the earlier of the expiry of 15
months from the date of this Resolution and the conclusion of the
Annual General Meeting of the Company to be held in 2018; and
(e) prior to expiry of the authority hereby conferred the
Company may enter into a contract or contracts for the purchase of
Ordinary Shares which may be executed in whole or in part after
such expiry and may purchase Ordinary Shares pursuant to such
contract or contracts as if the authority hereby conferred had not
so expired."
To consider, and if thought fit, to pass the following
resolution as an Ordinary Resolution:
Authority to allot Ordinary Shares
9. "THAT the Directors be generally and unconditionally
authorised to exercise all powers of the Company to issue or grant
equity securities (as defined in the articles of association of the
Company (the "Articles")) in accordance with article 2.2(b) of the
Articles:
(a) up to a maximum number of 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) to holders of Ordinary Shares in proportion (as nearly as
may be practicable) to their respective holdings; and
(2) to holders of other equity securities as required by the
rights of those securities or as the Directors otherwise consider
necessary,
but subject to such exclusions or other arrangements as the
Directors may deem necessary or expedient to deal with fractional
entitlements, record dates, legal or practical problems in or under
the laws of any territory or the requirements of any regulatory
body or stock exchange; and
(b) in any other case, up to a maximum of 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 at the earlier of the expiry of 15
months from the date of this Resolution and the conclusion of the
Annual General Meeting of the Company to be held in 2018, save that
the Company may, before such expiry, make offers or agreements
which would or might require equity securities to be issued or
granted and the Directors may issue or grant equity securities in
pursuance of such offer or agreement notwithstanding that the
authority conferred by this resolution has expired."
To consider, and if thought fit, to pass the following
resolution as a Special Resolution:
Disapplication of pre-emption rights
10. "THAT, subject to the passing of the ordinary resolution
numbered 9 in this notice of Annual General Meeting, the Directors
be given the general power to issue or grant equity securities (as
defined in the Articles) for cash either pursuant to the authority
conferred by the ordinary resolution numbered 9 in this notice of
Annual General Meeting or by way of a sale of treasury shares, as
if the pre-emption rights contained in article 2.7 of the Articles
did not apply to any such issue or grant, provided that this power
shall be limited to:
(a) the allotment or grant of equity securities in connection
with an offer of equity securities (but, in the case of the
authority granted under sub-paragraph (a) of the ordinary
resolution numbered 9 in this notice of Annual General Meeting, by
way of a rights issue only):
(1) to the holders of Ordinary Shares in proportion (as nearly
as may be practicable) to their respective holdings; and
(2) to holders of other equity securities as required by the
rights of those securities or as the Directors otherwise consider
necessary,
but subject to such exclusions or other arrangements as the
Directors may deem necessary or expedient to deal with fractional
entitlements, record dates, legal or practical problems in or under
the laws of any territory or the requirements of any regulatory
body or stock exchange; and
(b) the allotment or grant (otherwise than pursuant to
sub-paragraph (a) above) of equity securities up to a maximum of
44,500,000 Ordinary Shares.
The power granted by this resolution will expire at the earlier
of the expiry of 15 months from the date of this Resolution and the
conclusion of the Annual General Meeting of the Company to be held
in 2018 (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: 1 October 2017
Registered Office Address: 18 Hill Street, St Helier, Jersey JE2
4UA, Channel Islands.
NOTES:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. To be valid any proxy form or other instrument appointing a proxy must be:
-- 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 30 October 2017.
7. 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).
8. 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.
9. 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 an electronic proxy appointment to
be valid, your appointment must be received by no later than 11.30
am on 30 October 2017.
11. 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.
12. 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 1 November 2017 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.
14. 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 29 October 2017 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 29 October 2017 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.
15. Any corporation which is a member can appoint one or more
corporate representatives who may exercise on its behalf all of its
powers as a member provided that they do not do so in relation to
the same Ordinary Shares.
16. 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 - 6: Directors seeking re-election
The entire Board of Directors comprising Harry Wilson, Andrew
Cook, Clive Whiley, Louis Castro and Henry Turcan, will retire from
office and offer itself for re-election, at this year's Annual
General Meeting in accordance with the Company's Articles of
Association.
Biographical details of the Directors seeking re-election are
contained in the Annual Report 2017.
Resolution 7: Appointment of auditor
At each general meeting at which the accounts are laid before
the members, the Company is required to appoint an auditor to serve
until the next such meeting. The resolution also authorises the
Board to determine the remuneration of the Company's auditor.
Resolution 8: Authority for Company to purchase its own Ordinary
Shares
The previous authority granted by the shareholders to the
Directors for the Company to purchase its own Ordinary Shares will
shortly expire and the Directors recommend that a further authority
in this respect be obtained. The authority, if renewed at the
Annual General Meeting, would permit the Company to purchase up to
approximately 15% of its issued Ordinary Shares for a price
(exclusive of expenses) which is not less than the nominal value of
an Ordinary Share and not more than 5% above the average market
value of an Ordinary Share for the five business days prior to the
day the purchase is made. The authority granted by this resolution
will expire at the earlier of the expiry of 15 months from the date
of this Resolution and the conclusion of the next Annual General
Meeting of the Company.
The Board would only authorise such purchases after careful
consideration, taking account of other investment opportunities,
appropriate gearing levels, the overall financial position of the
group and whether the effect would be an increase on earnings per
share and in the best interests of shareholders generally.
Resolution 9: Authority to allot Ordinary Shares
This resolution deals with the Directors' authority to allot
Ordinary Shares in accordance with article 2.2 of the Articles and
will, if passed, authorise the Directors to allot: (a) in relation
to a pre-emptive rights issue only, up to a maximum of 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 at the earlier of
the expiry of 15 months from the date of this Resolution and the
conclusion of the next Annual General Meeting of the Company.
Resolution 10: Disapplication of pre-emption rights
This resolution will, if passed, give the Directors power,
pursuant to the authority to allot granted by resolution 9, to
allot Ordinary Shares or sell treasury shares for cash up to a
maximum of 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 at the earlier of the expiry
of 15 months from the date of this Resolution and the conclusion of
the next Annual General Meeting of the Company.
The Stanley Gibbons Group plc
18 Hill Street, St Helier, Jersey JE2 4UA, Channel Islands
Tel: 01534 766711
and
399 Strand,
London WC2R 0LX
Tel: 020 7836 8444
Email: info@stanleygibbons.com
www.stanleygibbons.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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