TIDMSGI
RNS Number : 8620M
Stanley Gibbons Group PLC
19 September 2019
19 September 2019
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 2019 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 23 October 2019 at 11.30 a.m.
Enquiries:
The Stanley Gibbons Group plc
Harry Wilson
Graham Shircore +44 (0)207 836
Anthony Gee 8444
Liberum Capital Limited (Nomad and Broker)
Andrew Godber
Edward Thomas +44 (0)20 3100
Laura Hamilton 2000
Group Annual Report and Financial Statements
for the year ended 31 March 2019
Financial Highlights
Year ended Year ended
31 March 31 March
2019 2018
------------------------------------------------------- ---------- ----------
Group turnover from continuing operations (GBPm) 11.7 13.4
Trading loss from continuing operations (GBPm) (3.3) (5.4)
Loss before taxation from continuing operations (GBPm) (4.3) (8.0)
Adjusted (loss)/profit before taxation from continuing
operations (GBPm) (3.5) (6.7)
Basic earnings per share - continuing operations
(p) (1.01) (4.21)
Adjusted earnings per share - continuing operations
(p) (0.83) (3.58)
Dividend per share (p) - -
Total borrowings (GBPm) 11.5 10.0
Net assets per share (p) 1.7 2.9
------------------------------------------------------- ---------- ----------
Directors and Advisers
Current Directors H G Wilson Non-Executive Chairman
G E Shircore Chief Executive Officer
A M Gee Chief Finance Officer
L E Castro Non-Executive Director*
M West Non-Executive Director*
* Independent
Company Secretary R K Purkis
Registered Office 18 Hill Street
St. Helier
Jersey JE2 4UA
Tel: +44(0)20 7836
8444
Company Registration Registered and incorporated in Jersey
Number 13177
Legal Form Public Limited Company limited by shares
Nominated Adviser and Broker Liberum Capital Limited
25 Ropemaker Street
London EC2Y 9LY
Auditors Jeffreys Henry LLP
Finsgate
5-7 Cranwood Street
London EC1V 9EE
Legal Advisers Mourant Ozannes
22 Grenville Street
St Helier
Jersey JE4 8PX
Bird & Bird LLP
12 New Fetter Lane
EC4A 1JP
Bankers Barclays Bank PLC
1 Churchill Place
London
E14 5HP
Registrars Link Market Services (Jersey) Limited
Shareholder Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Tel: 0871 664 0300; from overseas +44 (0)37 1664
0300
Website Further financial, corporate and shareholder information
is available in the
Company information section of the Group's website:
www.stanleygibbonsplc.com
Chairman's Statement
Introduction
This report covers the audited results for the year ended 31
March 2019 of The Stanley Gibbons Group plc ("the Group" or "the
Company").
I am pleased to report that we are starting to see the results
of the financial restructuring and new strategy implemented in 2018
following the deal with Phoenix UK Fund Ltd ("Phoenix"). The large
one-off cleanup costs are mostly behind us and with the continued
support of Phoenix S. G. Limited we now have the financial headroom
to focus on improving the trading performance of the business. As
the financial results show, we still have a lot of work to do to
achieve sustainable profitability but for the first time in a
number of years we now have the tools to achieve this.
While things are improving the results reflect the transition
period we are going through, in particular the focus on rebuilding
margins and the ongoing reorganisation, Group turnover was GBP11.7m
for the year (2018: GBP13.4m) while gross margin increased to 51.0%
(2018; 40.0%) reflecting the renewed focus on profitable trading
rather than cash generation and reduction of inventory. The trading
loss from continuing operations over the period before adjustments
and exceptional items was reduced to GBP3.3m (2018; GBP5.4m)
primarily due to the improved margins and reduced cost base
following the Group reorganisation. The loss before tax from
continuing operations over the period was GBP4.3m (2018; GBP8.0m)
resulting in a reduction of net assets to GBP7.3m (2018; GBP12.2m).
Cash at the year end was GBP2.2m (2018; GBP4.6m) and borrowings
increased to GBP11.5m (2018; GBP10.0m).
The Group has achieved a further reduction in the corporate
overhead for the year of 7.4% to GBP3.1m. We continue to look for
further savings but recognise that this is becoming increasingly
difficult following the dramatic cuts over the last 2 years. The
headcount has also been reduced and at 31 March 2019 stood at 74
(2018: 93). Fortunately, we have been able to retain the majority
of specialists in Stanley Gibbons and Baldwins enabling us to
continue to provide the first-class service to our clients which
they expect. We will look to strengthen these teams as trading
improves.
In November 2017 Stanley Gibbons (Guernsey) Limited was put into
Administration in Guernsey. Stanley Gibbons (Guernsey) Limited was
the subsidiary company which offered various investment products
many with buy-back guarantees. The liabilities which grew from
these guarantees led to the Administration of Stanley Gibbons
(Guernsey) Limited. Over the last year the Group has provided
storage, insurance and commission free sales facilities to a large
number of former investment clients. We will continue to do our
best to help clients achieve the best realisation of their
holdings.
As mentioned in the Interim Results, Clive Whiley stood down and
Mark West joined the Board in December 2018. In March 2019 Andy
Cook resigned as Chief Finance Officer and has been recently
replaced by the internal appointment of Anthony Gee to the Board.
Andy joined the Board in 2016 and made a significant contribution
over the subsequent 3 years to the restructuring of the Group. I
would like to thank him on behalf of all the stakeholders and wish
him well in his new endeavours. Anthony has been with the company
since 2012 and has an in-depth knowledge of the Group's finance and
operational functions. In addition to these Board changes, we have
continued the reorganisation of the retail and auction divisions
with several senior internal appointments.
Outlook
Graham Shircore (our CEO) has spent the last year analysing the
business and continuing the internal restructuring. As you will see
from his letter on page 5, he has a clear vision of where the Group
should be heading and more importantly what needs to be done to get
there.
The collectibles business for stamps and coins remains strong
and our brands are highly regarded. We have already initiated our
rejuvenation plan most notably with the recent rebranding of the
whole Group and the launch of new trading websites which has been
well received. I recognise that this will take time to work through
to the financial results and in the meantime, would particularly
like to thank our staff and customers for their ongoing
perseverance and support. I look forward to being able to update
you with further news of our progress.
Harry Wilson
Chairman
18 September 2019
Chief Executive's Letter to Shareholders
Fellow shareholders,
The last twelve months have seen a continuation of the upheaval
and change the Group has experienced for several years now.
That is where the similarities end.
Following the recapitalisation of the business in March 2018,
instead of fighting an almost daily battle for survival and
focusing on short term results, we have worked hard to begin the
long journey of maximising the huge potential within the Group.
Having discussed in our last annual report how we would approach
this at a headline level, this report gives me the opportunity to
update you on the progress we have made and to share with you a bit
more detail about the path we expect to take.
A Year of Two Halves
While the concepts and over-arching principles for our
development were quickly established, beginning to put them into
practice was somewhat more challenging and only really began to get
moving in the second half of the year and beyond. There were three
main reasons for this:
-- In the last annual report, I highlighted a need for a greater
sense of urgency throughout the business. We are building momentum
in this regard, but we took a while to get going, something which
we have learned a lot from, but I also reflect on with a fair
degree of self-criticism.
-- The process of simplifying the business and dealing with the
legacy issues we inherited were more complex and took more time to
address than we had envisaged. For the first few months of the
year, these issues accounted for thousands of man hours across the
Group. I am glad to say that this has now significantly
reduced.
-- Finally, the progress which was being made, by necessity, was
largely in the form of preparatory work behind the scenes.
Necessary as this is, it isn't always obvious to the outside world
and indeed in some respects internally also.
As time went on however, the speed of progress began to
accelerate. We focused the business on the two main brands,
simplified our structure and have begun to improve efficiency.
While fiscal 2019 did not see many of our major initiatives come
to fruition, they are now beginning to do so and I am pleased to be
able to report on some significant developments since the financial
year end:
-- In April we launched a new look for Baldwin's along with a
new, far more user-friendly website and a broader range of
services.
-- We have very recently done the same for Stanley Gibbons, a
development which also came with a much-improved new range of
albums and accessories.
-- In May we launched a web-based version of our world-famous
stamp catalogues as well as an upgrade to our virtual collection
tool, My Collection.
-- We have finalised our plans for the redevelopment of our
retail premises at 399 Strand with the intention of turning it into
the world's best stamp and coin shop.
Where To Next
These initiatives are the foundations we need to give us the
best chance of achieving our goals but they are only the starting
point.
We continue to improve our operational efficiency and
continually seek to further our customer offering aiming to give
everybody unrivalled and ever better value for money - which does
not necessarily mean the cheapest prices - and exceptional levels
of service all of the time.
In doing so, we have established four areas on which we will
focus our time and resources:
-- Extend and strengthen our relationships with, and how we are
perceived by, existing collectors and the wider philatelic and
numismatic communities.
-- Encourage new collectors into the hobbies by making them less
intimidating and more appealing to a wider audience.
-- Build on our global brand recognition by increasing our
international profile and activities outside of the UK.
-- Become THE place to work in the philatelic and numismatic world.
I mentioned previously that in my view both of our brands share
some wonderful attributes. While we will strengthen these further
over time, they have existed for many years, we've simply neglected
to make the most of them. We have begun to put this right and will
continue to do so to a greater degree, building and continually
increasing our leadership in the following:
1. Quality of product and service: We are rightly recognised as
selling stamps and coins of particularly high quality, an attribute
which becomes increasingly important as we seek to bring new people
into the hobbies. This will be married with consistently great
service and the best ancillary products in their class.
2. Collective expertise and knowledge: The many hundreds of
years of expertise within the Group, combined with our extensive
reference material is unrivalled. They give customers confidence
and lead to us frequently being looked to for guidance even by the
most knowledgeable parts of the numismatic and philatelic
markets.
3. Range of products and services: We will continually increase
the strength and breadth of what we offer our customers. There are
many ways in which the hobbies can be better served, and we can
engage more effectively with our customers. In the areas we focus
on, we aim to give our customers no reason to shop anywhere
else.
4. Heritage: Both SG and Baldwin's benefit from their reputation
as British heritage brands. Combined with the Royal Warrant for the
former, we are in an enviable position which is rightly valued by
many.
5. Location and shopping experience: An amazing shopping
experience in central London combined with an engaging, user
friendly online presence is something which no one else in our
markets offers. We will work hard to draw people to both.
People
In sharing with you the most important information about the
Group, it would be remiss not to address more specifically, the two
most important parts of our business, namely our customers and my
colleagues.
While some of the tangible changes to our offering are rather
recent in nature, the desire to give our customers a better level
of service and a more engaging experience is not. We have begun to
make progress and this helps give us confidence that if we
consistently focus on the customer, the rewards will follow:
-- Footfall in the shop is up approximately 25% year on year,
showing steady and consistent progress since the end of last
summer.
-- Website visitors are up between 10%-20% for both brands with
customer conversion also up strongly through the Baldwin's website.
- These statistics do not incorporate the new Stanley Gibbons site
which has only just been launched.
-- Our following on social media has grown by nearly 30% in total across the two brands.
-- Customer numbers on our online auction system are increasing
consistently with approximately twice as many items now sold
through this channel compared to a year ago.
-- We are investing in further staff training aimed specifically
at making further improvements to customer service levels.
Moving onto our employees. We started from a low base in terms
of the level of focus and importance which was placed on staff in
recent years and began to try to rectify this almost immediately,
implementing an annual employee survey, appraisal process and
formal salary review structure as well as improving some ancillary
benefits. We have also made specific efforts to improve internal
communication and teamwork.
While the most recent staff survey showed that progress has been
made it is also clear that we need to do a lot more and we will. As
with the other three areas of focus I mentioned earlier, this is a
journey which is not completed overnight but is vitally important
to building a robust and successful business.
A Busy But Exciting Year In Prospect
Over the next twelve months we will see the decennial London
International Stamp Show, the redevelopment of the Home of Stamp
Collecting at 399 Strand and the business working increasingly to
make the most of the improvements which have been made over the
last twelve months.
Growing our revenue is fundamental to our future prospects, we
are now able to focus more consistently on achieving this and doing
so with a starting point which gives us more than a fighting
chance. I look forward to being able to report on the early results
of this in next year's annual report.
Graham Shircore
Chief Executive Officer
18 September 2019
Business Review
Summary Trading and Operations
Summary results:
-- Turnover from continuing operations of GBP11.7m was GBP1.7m
(12.6%) lower than last year with the majority of the reduction
attributable to Philatelic Division.
-- Gross margin for the year was 51.0% (2018: 40.0%) as focus
returned to profitable trading rather than raising cash and
reducing inventory.
-- Trading losses from continuing operations, before accounting
adjustments and exceptional costs reduced to GBP3.3m from GBP5.4m,
largely as a result of improved margins and realising the full year
benefit of cost savings from prior year business
reorganisation.
-- Loss for the financial year from continuing operations fell
by GBP3.6m at GBP4.3m compared to GBP7.9m last year.
-- Profit for the financial year from discontinued operations
was GBP0.1m compared to a GBP4.3m loss for last year.
-- A 40% reduction in net assets to GBP7.3m (2018: GBP12.2m) due
to the losses highlighted above.
-- Borrowings at the balance sheet date of GBP11.5m (2018:
GBP10.0m), offset by cash of GBP2.2m (2018: GBP4.6m).
Continuing operations
12 months to 12 months to
31 March 31 March
---------------- ----------------
2019 2019 2018 2018
Sales Profit Sales Profit
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------- ------- ------- -------
Philatelic 4,942 (487) 6,796 (2,101)
Publishing 2,199 53 2,213 (29)
A H Baldwin 3,216 538 3,213 502
Legacy interiors property & legal 1,320 161 1,136 33
Other & corporate overheads - (3,086) - (3,332)
Finance charges - (497) - (444)
------------------------------------------- ------- ------- ------- -------
Trading sales and losses 11,677 (3,318) 13,358 (5,371)
Amortisation of customer lists - (220) - (237)
Pension service & share option charges - (389) - (200)
Finance charges related to pensions - (133) - (152)
Exceptional operating charges - (203) - (6,332)
Gain on loan restructuring - - - 4,250
------------------------------------------- ------- ------- ------- -------
Group total sales and (loss)/profit before
tax 11,677 (4,263) 13,358 (8,042)
------------------------------------------- ------- ------- ------- -------
Overview
Following the completion of the Phoenix S.G. Limited (Phoenix)
refinancing in March 2018 the Group's focus returned to
re-establishing the trading divisions' profitable performance,
focusing on rebuilding margin which had been reduced in the
previous two years due the Group operating with limited cash
resources. This not only constrained our ability to buy new stock
but also meant we were at times trading to realise cash rather than
maximise profit.
Group turnover from continuing operations was GBP11.7m for the
year ended 31 March 2019 compared to GBP13.4m in the prior year.
The reduced turnover for the year reflects the continuing
reorganisation of the Group and the increasing focus on rebuilding
margins. Continued success in reducing operating costs has reduced
the trading loss, for continuing operations, before accounting
adjustments including exceptional operating charges and finance
charges related to pensions, from GBP5.4m at 31 March 2018 to
GBP3.3m at 31 March 2019.
The process of rebuilding an underlying profitable business for
the future continue and to that end the Group agreed additional
funding of GBP5m with Phoenix in December 2018. This facility will
be used for business development and an outline of this plan is
included in the Chief Executives letter on page 5.
Philatelic
The Philatelic division contains our stamp dealing and auction
business. This division was significantly reorganised in the year
ending 31 March 2018 impacting financial performance, in the year
ending 31 March 2019. Despite a significant reduction in sales, as
a result of the reorganisation, the division was able to
substantially reduce its loss from GBP2.1m to GBP0.5m through
several positive actions. Firstly, the gross margin achieved by our
dealing teams improved from 27% to 45%; with the Phoenix investment
securing the business, the teams have been under less pressure to
liquidate stock at low margins to realise cash and instead are able
to maximise profit. Secondly, we have reorganised our auction
businesses under the Stanley Gibbons brand. This resulted in a
sales reduction of GBP2.0m but a profit improvement of GBP0.5m due
to a significant saving in overheads. The division also benefited
from full year savings from the reorganisation of its cost base
carried out in the previous year.
We are still carrying a higher stock of philatelic rarities than
is optimum and although an impairment for the net realisable value
of this stock was charged in the prior year the business is likely
to have periods in which margins will fluctuate as we sell down
some of this stock. Our aim is to sell through and rebalance our
stock holding but we are realistic and expect this to be achieved
over more than one financial period. We have put in place measures
to ensure the new stock that is purchased by our teams is more in
line with current customer wants and market trends and so should
turn over faster.
Publishing
The sales and profit from this division remain consistent year
on year, with profit improving by GBP82,000, as a result of
improved margins and lower costs. The monetisation of the wealth of
unique and historical intellectual property we have is one of our
key objectives and we continue to work on a number of projects
which should allow us to develop this business area to enable us to
realise the value of the asset.
Coins & Medals
Sales were in line with the previous year, with a stronger
second half to the year reflecting the improvement in our financial
position as we were able to restock our inventory. The coin
business suffered most from our need to sell inventory to realise
cash and although the second half showed that we could sell stock
that we had purchased our growth is now hampered by our ability to
build stock in a market limited by supply. We continue to work on
this in the current year but it will take time to build our
inventory to levels from which we can begin to grow sales levels
back to where they were prior to the Group's financial
difficulties. Baldwin's of St James's, the auction joint venture
that was launched in January 2017 generated GBP109,000, the Group's
share of the profit in the year, compared to GBP113,000 in the
previous period.
Legacy Interiors
The sales from this division all relate to rental income from
the leasehold property in New York which was vacated and sublet by
Mallett in 2016. The costs relate to the rents and other costs in
relation to the property.
Corporate Overheads
Corporate overheads continue to fall declining by a further 7.4%
to GBP3.1m. We continue to take steps to actively reduce our
corporate overheads further as we recognise that they continue to
be too high in relation to the current size of the trading
businesses. The restructuring over the previous two years
significantly reduced the corporate overheads and further savings
will be more difficult to achieve. We continue to review all our
costs and renegotiate all our contracts when they fall due and
remain optimistic that further cost savings can be achieved.
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 2019 were GBP0.7m (2018: GBP0.6m). In the opinion of
the Directors, such accounting charges do not form part of the
operating performance of the Group.
Exceptional Operating Charges
Exceptional operating charges/(income), can be further analysed
as follows:
Year ended Year ended
31 March 31 March
2019 2018
GBP'000 GBP'000
-------------------------------------------------- ---------- ----------
Stock provisions 8 4,202
Professional fees for corporate activity - 1,235
Other impairment of intangible assets - 541
Loss on disposal of tangible fixed assets - 392
Impairment of receivables - 288
Loss on disposal of philatelic approvals business - 171
Restructuring and redundancy costs - 119
Disposal of leased property 18 -
Exceptional legal fees 39 -
Legacy wind-down costs of overseas entities 138 -
Release of other payables excess provision - (616)
-------------------------------------------------- ---------- ----------
203 6,332
-------------------------------------------------- ---------- ----------
The level of exceptional charges was significantly reduced,
following the conclusion of the restructuring. The Group was
focused on its primary trading business and the above exceptional
costs relate to the costs of closing down a number of the Group's
overseas offices and subsidiaries.
The stock provisions in year ended 31 March 2018 largely related
to a review of our philatelic realisable values as highlighted
above. The professional fees relate to the significant corporate
activity carried out during the year including the Phoenix
transaction but exclude the element relating to the share issue.
The release represents an over provision relating to prior
periods.
Discontinued Operations
During the year ended 31 March 2018 the Group disposed of the
majority of the remaining trading assets of its Interiors division.
These disposals represented all the significant trading assets and
brands and its results were disclosed as discontinued operations.
During the year ended 31 March 2019 there was a small amount of
residual trading inventory which was sold and the revenue and costs
associated with this disclosed as discontinued operations in the
Consolidated statement of comprehensive income.
On 21 November 2017 the directors of Stanley Gibbons (Guernsey)
Limited applied for and were granted an administration order.
Stanley Gibbons (Guernsey) Limited was the entity through which the
Group's Investment division activities had been conducted. The
administration order meant the Group lost control of this business
and its assets and so the Investment division's results were
reclassified as discontinued operations. Stanley Gibbons (Guernsey)
Limited remained in administration during the year ended 31 March
2019. No costs have been incurred in relation to the administration
during the year. On 2 April 2019 the Royal Court of Guernsey
ordered that Stanley Gibbons (Guernsey) Limited enter liquidation,
this process is still ongoing. The Directors have made enquiries to
establish whether there are any uncertainties that would materially
impact the Group's cash flow over the foreseeable future.
Inventory
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 31 March
2019 2018
GBP'000 GBP'000
------------------------------------- -------- --------
Philatelic rarities 14,178 14,056
Philatelic stock (general) 1,176 1,457
Coins and medals 1,847 2,148
Antiques 383 417
Publications, albums and accessories 341 136
------------------------------------- -------- --------
Group owned stock 17,925 18,214
Inventory owned by third parties 76 89
------------------------------------- -------- --------
18,001 18,303
------------------------------------- -------- --------
The Group's management continues to focus on the rebalancing of
inventory to enable the Group to trade in the most profitable areas
of its collectibles businesses. It is likely that some of the
inventory will be sold at lower trading margins than normal but
following the provisions of the previous year we expect that
trading margins would still be positive.
On 10 September 2018 the Company announced that its subsidiary,
Stanley Gibbons Limited ("SGL") had entered in to an agreement with
Phoenix S. G. Limited to acquire approximately 1,900 items, for an
initial consideration of GBP5.20m, which is payable in cash to
Phoenix S. G. Limited over the term of the agreement, as and when
sales of the items are made to third parties and will be the net
proceeds, after deduction of a commission payment to be made to
SGL, on completed sales. The agreement is for a total term of 10
years and any sale at a value that is less than the base cost of an
inventory item can only be made with the specific permission of
Phoenix S. G. Limited. To the extent that all the inventory is sold
and the appropriate payments have been made by SGL to Phoenix S. G.
Limited no further consideration will be due. To the extent that
items remain to be sold at the end of the agreement the relevant
items will be returned to Phoenix S. G. Limited and no further
consideration will be due (see note 13).
Notwithstanding the fact that the agreement was written as a
sale from Phoenix S. G. Limited to SGL, the substance of the
transaction is that of a consignment stock arrangement and so has
been accounted for as such. The acquired items have therefore not
been included within inventories and there is no related creditor
due to Phoenix S. G. Limited within the balance sheet. The
commission due to SGL is recognised as revenue in the accounting
period of the sale to a third party. As at 31 March 2019 of the
initial items totaling GBP5.20m, GBP5.06m remained unsold.
Cash Resources
As at the balance sheet date the Group had cash balances of
GBP2.2m and a loan of GBP11.5m repayable in March 2023. The loan is
due to Phoenix S. G. Limited, the Group's controlling
shareholder.
On 21 December 2018 the Group announced it had agreed an
additional GBP5m of funding in the form of an extension of the
existing loan facility with Phoenix S.G. Limited. The terms of the
extension are the same as the existing loan. The intention is for
the Group to draw down this loan in several tranches to help it
fund its development plans over the next 12 to 24 months. The first
GBP1.0m was drawn on 10 January 2019 (see Note 18) and a further
GBP1m was drawn at 4 April 2019. Based on our current trading
forecast and development plans the new financing arrangement
provides sufficient financial headroom to fund the Group over the
coming year.
As detailed in note 18, during the year, the Group was in
default on its loan facilities as Stanley Gibbons (Guernsey)
Limited is in administration, a qualified audit report was issued
in the financial statements for the year ended 31 March 2018 and
the Group would also have failed to satisfy the financial covenants
in the loan agreements. During periods of default the loan
facilities become repayable on demand.
On 29 March 2019 Phoenix S.G. Limited issued a waiver letter to
the Group for the above defaults so that at the balance sheet date
the Group is no longer in default and the loan facilities are not
repayable on demand.
As at 17 September 2019 the Group had cash balances of GBP1.7m
and an outstanding loan balance of GBP12.8m.
Litigation
During the year the Group resolved the outstanding matters in
relation to the US Securities and Exchange Commissions (SEC) and
Department of Justice investigation in to the action of a former
Mallett Inc director. No charges related to this case are included
in the financial statements for the year ended 31 March 2019.
On 14 June 2019 the Group announced that all outstanding claims
involving certain former directors of Mallett plc had now been
resolved, bringing the matter to a full and final conclusion. The
sum of GBP850,000 resulting from this agreement has been received
in full by the Group.
Anthony Gee
Chief Finance Officer
18 September 2019
Corporate Governance
The Directors recognise the importance of and are committed to
high standards of corporate governance. The corporate governance
framework within which the Stanley Gibbons Group operates,
including Board leadership and effectiveness, Board remuneration
and internal control is based on practices which the Board believes
are appropriate to the size, risks, complexity and operation of the
business.
The Board decided to adhere to the Quoted Companies Alliance
Corporate Governance Code for small and mid-size quoted companies
(the QCA Code) on the basis that it is most suited to the size and
requirements of the business. The Board will apply the principles
of the QCA Code.
Full details of the application of the code are disclosed on our
corporate website: www.stanleygibbonsplc.com/corporate
governance.
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 June 2018, 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, 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).
The Audit Committee also reviews updates on significant
accounting policies and the impact that this has on the Group.
Members of the Audit Committee at the date of this report were
LE Castro and HG Wilson.
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 Non-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.
By order of the Board
RK Purkis
Secretary
18 September 2019
Report on Remuneration
Remuneration Committee
The Remuneration Committee comprises only Non-Executive
Directors. It reviews the performance of the Executive Directors
and sets the scale and structure of their remuneration and the
basis of their service agreements with due regard to the interests
of shareholders.
The Remuneration Committee has responsibility for making
recommendations to the Board on the Group's general policy on
remuneration and also specific packages for individual Directors.
It carries out the policy on behalf of the Board.
Members of the Remuneration Committee at the date of the report
were M West and LE Castro. 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.
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 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 2016 were granted at market value and are not
subject to a performance condition.
Options issued in 2018 were granted at market value and are not
subject to a performance condition.
Bonuses
Directors are awarded annual bonuses calculated on the basis of
defined criteria relating to Group performance compared to prior
year and budget and other specific objectives which contribute to
growth in earnings per share, cash generation and return on capital
employed.
Other benefits
The Company Secretary is a member of the Group's defined benefit
pension scheme, which is now closed. During the year contributions
were paid on behalf of A Cook 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 six months.
Directors' Remuneration
For each Director remuneration for the year to 31 March 2019 can
be analysed as follows:
2019
2019 Performance 2019 2019
Salary
& Related Other Pension 2019 2018
Fees Bonus Benefits* Contributions Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ------- ----------- --------- ------------- ------- -------
H Wilson 59 - 25 - 84 193
G Shircore - - - - - -
A Cook 150 - - 8 158 192
H Turcan - - - - - 34
L Castro 35 - - - 35 35
M West 12 - - - 12 -
----------- ------- ----------- --------- ------------- ------- -------
256 - 25 8 289 454
----------- ------- ----------- --------- ------------- ------- -------
* including share based payments of GBP25,000 (2018 :
GBP69,000)
The periods each Director served during the year are given on
page 21.
Directors' Share Options
Number Number
Earliest Exercise at at
Date of exercise Expiry Price 31 March Forfeited 31 March
grant date date (1p shares) 2018 in period 2019
--------- ---------- ---------- -------- ------------ --------- ----------- ---------
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) -
--------- ---------- ---------- -------- ------------ --------- ----------- ---------
4,000,000 (2,000,000) 2,000,000
---------------------------------------- ------------ --------- ----------- ---------
** Options granted under Group Share Option Plan 2010.
The highest paid director, being A Cook, did not exercise any
share options during the year.
The closing market price of the Company's shares at 31 March
2019 was 2.33p and the range of market prices during the twelve
month period was between 5p and 2.33p.
By order of the Board
RK Purkis
Secretary
18 September 2019
Directors' Report
for the year ended 31 March 2019
The Directors present their report and the consolidated audited
financial statements for the year ended 31 March 2019.
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;
-- Each of the Directors has 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;
-- The financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and loss of the
Group; and
-- The management report includes a fair review of the Group's development.
Principal activities
The principal activities of the Group are those of trading in
collectibles, auctioneering, the development and operation of
collectible websites, philatelic publishing, mail order, retailing,
and the manufacture of philatelic accessories.
Business review
Included within the Annual Report is a fair review of the
business of the Group during the year ended 31 March 2019 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 4 and the
Business Review on pages 8 to 13. 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 was 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 bore the risk in the event that the underlying
assets went down in value during the contract period and
continually monitored it.
On 21 November 2017 the directors of Stanley Gibbons (Guernsey)
Limited applied for and were granted an administration order. This
subsidiary was most exposed to investment product risk and
therefore with the deemed loss of control over the subsidiary the
level of this risk to the Group is now minimised.
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 and other collectibles 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.
Controlling interest
The Group's largest shareholder is also the Group's primary
lender. The Group is aware of the risk that continued support is
required from Phoenix S.G. Limited and ensures it complies with all
requirements of its lending agreement.
Brexit
The Director's do not believe that any of the potential
scenarios of Brexit have a specific risk to the Group. The Group
will be impacted by any changes in the general economic conditions
affecting both the UK and the European Union.
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 recovery plans 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 Business Review on pages 8 to 13.
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 2019 is set out on page 30. The
Directors do not recommend a final dividend for the year ended 31
March 2019 (year ended 31 March 2018: nil).
Directors
The following Directors have held office since 1 April 2018:
H G Wilson (Non-Executive)
G E Shircore
L E Castro (Non-Executive)
M West (Non-Executive) (appointed 3 December 2018)
A Cook (resigned 29 March 2019)
C P Whiley (Non-Executive) (resigned 27 December 2018)
A M Gee (appointed 1 August 2019)
L Castro and M West are considered to be Independent.
Biographical details of the current Directors are given on pages
76 and 77.
Directors' interests
The interests of the Directors in the shares of the Company, all
of which are beneficial, at 31 March 2019 together with their
interests at 31 March 2018 were:
Ordinary Ordinary
1p 1p
Shares Shares
31 March 31 March
2019 2018
------------------ --------- ---------
HG Wilson (1) 2,000,000 2,000,000
GE Shircore (2) 705,741 705,741
A Cook - -
CP Whiley (3) (4) - 500,000
LE Castro - -
M West* - -
------------------ --------- ---------
* 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) Phoenix Asset Management Partners Limited, Mr Shircore's
ultimate employer, is the investment manager to Phoenix SG Limited
which holds 248,000,000 Ordinary shares representing 58.09% of the
Company's issued share capital.
(3) Held in the name of Zodiac Executive Pension Scheme, of
which CP Whiley is a beneficiary.
(4) Evolution Securities China Limited, Mr Whiley's former
employer, holds 1,800,000 ordinary shares, representing 1.006% of
the Company's issued share capital.
Details of the Directors' share options are given in the
Remuneration Report on page 17.
Apart from service contracts and the transactions referred to in
note 27 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 10.
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 26. 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 15
(Provision for impairment of receivables and collateral held) and
note 26 (Financial instruments).
Going concern
The Group's forecasts shows that it will remain within current
loan facility limits for the foreseeable future. Although the
Directors have built the forecast based on current trading trends
and historical knowledge of the business, the Directors recognise
that forecasts are dependent on the underlying assumptions and that
trading conditions can always be affected by unforeseen events.
The loan facilities are provided by the Group's controlling
party Phoenix S. G. Limited and due for repayment in March 2023. Up
until 29 March 2019 the Group has been in default of the
facilities, due to Stanley Gibbons (Guernsey) Limited being in
administration, the qualified audit report on the Group's 31 March
2018 financial statements and would have been in default of the
financial covenants at 31 March 2019, which would result in the
loan becoming payable on demand. On 29 March 2019 the Group sought
and was granted a waiver from Phoenix S.G. Limited for the above
defaults.
The Directors recognise that Phoenix S. G. Limited has granted
the waiver of the defaults, stated that it intends to be a long
term investor, is the Group's controlling party with an interest of
just over 58% and has given no indication that it would withdraw
its support before March 2023 when the loan facility is
repayable.
In previous years the Group had significant uncertainty
resulting from investment contract guarantees and undertakings
given by its subsidiary Stanley Gibbons (Guernsey) Limited. The
granting of the administration order on 21 November 2017 for
Stanley Gibbons (Guernsey) Limited resulted in the Group's loss of
control of the business and its assets and liabilities. This
resulted in significant contingent liability, approximately
GBP54,150,000 at 31 March 2017 (the last accounting date prior to
administration), relating to guarantees and undertakings having
been removed from the Group and fundamentally limited the exposure
of the Group to the related buyback liabilities and associated cash
outflows. On 2 April 2019 the Royal Court of Guernsey ordered that
Stanley Gibbons (Guernsey) Limited enter liquidation, this process
is still ongoing. The Directors have made enquiries to establish
whether there are any uncertainties that would materially impact
the Group's cash flow over the foreseeable future (see note
30).
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 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 17 September 2019, the Company had been notified of the
following interests in 3% or more of its issued share capital:
Phoenix SG Limited 58.09%
Lombard Odier Asset Management
(Europe) Limited 7.74%
The Company has one class of share being Ordinary Shares with a
par value of 1p each. This entitles the holder to participate in
dividends in proportion to the number of shares held. The holder is
also entitled to, on a show of hands of shareholders present at a
meeting in person or by proxy, one vote and upon a poll each share
is entitled to one vote.
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.
Capital Structure
Details of the issued share capital are set out in note 20.There
is one class of Ordinary Shares, which does not carry any right to
fixed income. Each share carries the right to one vote at a general
meeting of the Company.
Subject to the Companies (Jersey) Law and the provisions of the
Articles of Association, the Directors are generally and
unconditionally authorised to exercise all powers of the Company to
issue such number of Shares as the Company may from time to time by
Ordinary Resolution determine. The Annual General Meeting held in
2018 authorised the Directors to allot shares in the capital of the
Company within certain limits. A renewal of this authority will be
proposed at the forthcoming Annual General Meeting.
Articles of Association
In accordance with the Companies (Jersey) Law 1991, the
Company's Articles of Association may only be amended by a Special
Resolution of the Company's shareholders.
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 2019 and to the date of approval of the financial
statements.
Independent Auditors
BDO Limited resigned as auditors on 11 March 2019 following a
competitive tender process. Jeffreys Henry LLP were appointed with
effect from 15 March 2019. A resolution to reappoint them as
auditors to the Company and to authorise the Directors to fix their
remuneration will be proposed at the AGM.
By order of the board Registered office:
18 Hill Street
St Helier,
Jersey
JE2 4UA
R K Purkis
Secretary
18 September 2019
Independent Auditor's Report to the Members of The Stanley
Gibbons Group Plc
Opinion
We have audited the financial statements of The Stanley Gibbons
Group Plc (the 'parent company') and its subsidiaries (the 'group')
for the year ended 31 March 2019 which comprise the consolidated
statements of comprehensive income, the consolidated statements of
financial position, the consolidated statements of cash flows, the
consolidated statements of changes in equity and notes to the
financial statements, including a summary of significant accounting
policies.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union, and, as in accordance with the provisions of
the Companies Law (Jersey) 1991.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's affairs as at 31 March 2019 and of the group's
profits for the year then ended;
-- the Group's financial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union;
-- the financial statements have been prepared in accordance
with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs UK) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the group's or the parent company's ability to continue
to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
Key audit matter
Carrying value of Goodwill and other intangible assets
- The Group held a significant balance of goodwill and other
intangibles as at the year end, with a total carrying value of
GBP5,600,000 (2018: GBP5,977,000).
- Of these a number of balances relate to intangibles with an
indefinite estimated useful life, such as goodwill and publishing
rights and brands.
- The board undertakes impairment assessments annual for all
intangible assets, based on a number of assumptions and forecasts.
These require judgement and so are considered a key audit
matter.
Carrying value of inventories
- The Group held a significant balance of inventories as at the
year end, with a total carrying value of GBP18,001,000 (2018:
GBP18,303,000).
- Inventory is held at the lower of cost and net realisable
value. The nature of the inventory, being highly specialist, with
large inventory turnover times, means that the net realisable value
is highly subjective.
- The Group employ experts to value their stock on a regular
basis which are used to establish the net realisable value. Given
the judgement required in arriving at a value, inventories are
considered a key audit matter.
Valuation of defined benefit pension schemes' obligations
- The Group had a net retirement benefit obligations as at the
year end of GBP5,523,000 (2018: GBP5,329,000).
- The group employed external, independent actuaries to provide
the value of the obligations for the two defined benefit schemes in
operation.
- The actuaries employed valuation techniques based on a number
of assumptions (which can be seen in note 25). Given the magnitude
of the obligation any change in the assumptions could a have
significant impact on the obligations and so are considered to be a
key audit matter.
How our audit addressed the key audit matter
Our audit procedures:
- We discussed with management, and undertook a full review of
the underlying assets, to establish if there were any indication of
impairment.
- We reviewed management's impairment workings and agree their approach and methodology.
- We considered whether management had exercised any bias in
assumptions used or the outputs produced in the forecasts
prepared.
Our audit procedures:
- We discussed with management to establish how values were
allocated to individual items of inventory.
- A sample of inventory items have been vouched to expert
valuations to ensure they were being held at the lower of cost and
net realisable value.
- Review of expert evidence undertaken to ensure assumptions used are reasonable.
Our audit procedures:
- We undertook a review of the actuaries qualifications to
ensure that they were suitably competent to undertake the
valuation.
- Work undertaken to ensure the actuaries were independent of the company.
- A review was undertaken on the assumptions used to calculate
the obligations, including with reference to industry benchmarking
and other data available.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgment, we determined materiality
for the financial statements as a whole as follows:
Group financial statements
Overall materiality GBP250,000 (2018: not applicable)
How we determined it 2% of revenue.
Rationale for benchmark applied We believe that revenue is the
primary measure used by the shareholders in assessing the
performance of the Group, and is a generally accepted auditing
benchmark.
For each component in the scope of our Group audit, we allocated
a materiality that is less than our overall Group materiality. The
range of materiality allocated across components was between
GBP66,400 and GBP150,200.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above GBP12,500 (2018:
not applicable) as well as misstatements below those amounts that,
in our view, warranted reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the Company, the accounting processes and controls, and
the industry in which they operate.
The Group financial statements are a consolidation of numerous
reporting units, comprising the Group's operating businesses and
holding companies.
It is our responsibility for the direction, supervision and
performance of the group audit and we remain solely responsible for
the audit opinion.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies (Jersey) Law 1991 requires us to
report to you if, in our opinion:
-- that proper accounting records have not been kept by the parent company,
-- or returns adequate for our audit have not been received from
branches not visited by us; or
-- that the financial statements are not in agreement with the accounting records
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have failed to obtain all the information and explanations
which, to the best of our knowledge, are necessary for the purpose
of the audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 18, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and parent company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the consolidated financial statements is located on the Financial
Reporting Council's website at:
www.frc.or.uk/auditorsresponsibilities. This description forms part
of our audit report.
Use of this report
This report is made solely to the company's members, as a body,
in accordance 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 auditor's 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.
Sanjay Parmar
Senior Statutory Auditor
For and on behalf of Jeffreys Henry LLP, statutory auditor
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
United Kingdom
Date: 18 September 2019
Consolidated statement of comprehensive income
for the year ended 31 March 2019
Year ended Year ended
31 March 2019 31 March 2018
Notes GBP'000 GBP'000
--------------------------------------------------------------------- ----- ------------- -------------
Revenue 1, 3 11,677 13,358
Cost of sales (5,711) (8,011)
Gross Profit 5,966 5,347
--------------------------------------------------------------------- ----- ------------- -------------
Administrative expenses before defined benefit pension service
costs and exceptional operating costs (5,320) (5,517)
Defined benefit pension service costs 25 (438) (171)
Exceptional operating charges 5 (203) (6,332)
--------------------------------------------------------------------- ----- ------------- -------------
Total administrative expenses (5,961) (12,020)
--------------------------------------------------------------------- ----- ------------- -------------
Selling and distribution expenses (3,880) (5,288)
--------------------------------------------------------------------- ----- ------------- -------------
Operating loss 4 (3,875) (11,961)
Finance income 45 45
Finance costs 26 (542) (489)
Gain on loan restructuring - 4,250
Share of net profits of joint venture 109 113
--------------------------------------------------------------------- ----- ------------- -------------
Loss before tax (4,263) (8,042)
Taxation 8 (36) 133
--------------------------------------------------------------------- ----- ------------- -------------
Loss from continuing operations (4,299) (7,909)
Profit/(loss) from discontinued operations 28 74 (4,260)
--------------------------------------------------------------------- ----- ------------- -------------
Loss for the financial year (4,225) (12,169)
Other comprehensive income:
Amounts which may be subsequently reclassified to profit & loss
Exchange differences on translation of foreign operations - 24
Amounts which will not be subsequently reclassified to profit & loss
Actuarial (losses)/gains recognised in the pension scheme 25 (246) 448
Tax on actuarial (losses)/gains recognised in the pension scheme (465) (146)
--------------------------------------------------------------------- ----- ------------- -------------
Other comprehensive income/(loss) for the year net of tax (711) 326
--------------------------------------------------------------------- ----- ------------- -------------
Total comprehensive loss for the year (4,936) (11,843)
--------------------------------------------------------------------- ----- ------------- -------------
Loss per share from continuing operations
Basic loss per Ordinary share 9 (1.01)p (4.21)p
Diluted loss per Ordinary share 9 (1.01)p (4.21)p
Profit/(loss) per share from discontinued operations
Basic profit/(loss) per Ordinary share 9 0.02p (2.27)p
Diluted profit/(loss) per Ordinary share 9 0.02p (2.27)p
--------------------------------------------------------------------- ----- ------------- -------------
Total comprehensive loss is attributable to the owners of the
parent.
The notes on pages 34 to 75 are an integral part of these
consolidated financial statements.
Consolidated statement of financial position
for the year ended 31 March 2019
31 March 2019 31 March 2018
Assets Notes GBP'000 GBP'000
------------------------------- ----- ------------- -------------
Non-current assets
Intangible assets 10 5,600 5,977
Property plant and equipment 11 2,099 2,535
Deferred tax asset 19 281 1,190
Investments 12 95 113
------------------------------- ----- ------------- -------------
Total non-current assets 8,075 9,815
------------------------------- ----- ------------- -------------
Current Assets
Inventories 13 18,001 18,303
Trade and other receivables 14 2,187 3,610
Cash and cash equivalents 17 2,160 4,596
------------------------------- ----- ------------- -------------
Total current assets 22,348 26,509
------------------------------- ----- ------------- -------------
Total assets 30,423 36,324
------------------------------- ----- ------------- -------------
Current liabilities
Trade and other payables 16 6,040 8,404
Borrowings 18 - 10,000
------------------------------- ----- ------------- -------------
Total current liabilities 6,040 18,404
------------------------------- ----- ------------- -------------
Non-current liabilities
Borrowings 18 11,529 -
Retirement benefit obligations 25 5,523 5,329
Deferred tax liabilities 19 - 408
------------------------------- ----- ------------- -------------
Total non-current liabilities 17,052 5,737
------------------------------- ----- ------------- -------------
Total liabilities 23,092 24,141
------------------------------- ----- ------------- -------------
Net assets 7,331 12,183
------------------------------- ----- ------------- -------------
Equity
Called up share capital 20 4,269 4,269
Share premium account 22 78,217 78,217
Share compensation reserve 22 2,148 2,064
Capital redemption reserve 22 38 38
Revaluation reserve 22 346 346
Retained earnings 22 (77,687) (72,751)
Equity shareholders' funds 7,331 12,183
------------------------------- ----- ------------- -------------
The financial statements on pages 30 to 75 were approved by the
board of Directors on 18 September 2019, were authorised for issue
on that date and were signed on its behalf by:
A M Gee
G E Shircore
Directors
The notes on pages 34 to 75 are an integral part of these
consolidated financial statements.
Consolidated statement of changes in equity
for the year ended 31 March 2019
Called up Share Share Capital
share premium compensation Revaluation redemption Retained
capital account reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- --------- ------- ------------ ----------- ---------- -------- --------
At 1 April 2018 4,269 78,217 2,064 346 38 (72,751) 12,183
Loss for the financial year - - - - - (4,225) (4,225)
Amounts which may be subsequently
reclassified to profit & loss
Exchange differences on translation
of foreign operations - - - - - - -
Amounts which will not be
subsequently reclassified to profit &
loss
Remeasurement of pension scheme net
of deferred tax - - - - - (711) (711)
------------------------------------- --------- ------- ------------ ----------- ---------- -------- --------
Total comprehensive loss - - - - - (4,936) (4,936)
Cost of share options - - 84 - - - 84
------------------------------------- --------- ------- ------------ ----------- ---------- -------- --------
At 31 March 2019 4,269 78,217 2,148 346 38 (77,687) 7,331
------------------------------------- --------- ------- ------------ ----------- ---------- -------- --------
At 1 April 2017 1,789 74,847 1,883 346 38 (60,908) 17,995
Loss for the financial year - - - - - (12,169) (12,169)
Amounts which may be subsequently
reclassified to profit & loss
Exchange differences on translation - - - - - 24 24
Amounts which will not be
subsequently reclassified to profit &
loss
Remeasurement of pension scheme net
of deferred tax - - - - - 302 302
------------------------------------- --------- ------- ------------ ----------- ---------- -------- --------
Total comprehensive loss - - - - - (11,843) (11,843)
Share issue 2,480 3,370 - - - - 5,850
Cost of share options - - 181 - - - 181
------------------------------------- --------- ------- ------------ ----------- ---------- -------- --------
At 31 March 2018 4,269 78,217 2,064 346 38 (72,751) 12,183
------------------------------------- --------- ------- ------------ ----------- ---------- -------- --------
The notes on pages 34 to 75 are an integral part of these
consolidated financial statements.
Consolidated statement of cash flows
for the year ended 31 March 2019
Year ended Year ended
31 March 2019 31 March 2018
Notes GBP'000 GBP'000
--------------------------------------------------------------- ----- ------------- -------------
Cash outflow from operating activities 23 (3,361) (2,168)
Interest paid (542) (489)
Taxes paid/(repaid) - 22
--------------------------------------------------------------- ----- ------------- -------------
Net cash outflow from operating activities (3,903) (2,635)
--------------------------------------------------------------- ----- ------------- -------------
Investing activities
Purchase of property, plant and equipment (1) (35)
Purchase of intangible assets (computer software) (124) (30)
Investment in joint venture 18 (113)
Disposal proceeds from discontinued operations - 2,681
Proceeds from sale of property plant & equipment - 236
Interest received 45 44
--------------------------------------------------------------- ----- ------------- -------------
Net cash (decrease)/generated from investing activities (62) 2,783
--------------------------------------------------------------- ----- ------------- -------------
Financing activities
Proceeds from issue of ordinary share capital - 5,850
Proceeds from disposal of loan of subsidiary in administration - 2,750
Repayment of bank loans - (8,300)
Proceeds from new borrowing 1,529 10,500
Repayment of new borrowing - (500)
Net cash generated from financing activities 1,529 10,300
--------------------------------------------------------------- ----- ------------- -------------
Net (decrease)/increase in cash and cash equivalents (2,436) 10,448
--------------------------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at start of year 4,596 (5,852)
--------------------------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at end of year 17 2,160 4,596
--------------------------------------------------------------- ----- ------------- -------------
The notes on pages 34 to 75 are an integral part of these
consolidated financial statements.
Notes to the Financial Statements
for the year ended 31 March 2019
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 Companies (Jersey) 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 Company's functional
currency.
Amounts are rounded to the nearest thousand, unless otherwise
stated.
New and amended statements adopted by the Group
There are no IFRSs or IFRIC interpretations that are effective
for the first time for the financial year beginning that would be
expected to have a material impact on the Company. The new IFRSs
adopted during the year are as follows:
-- IFRS 9 - Financial Instruments
-- IFRS 15 - Revenue from Contracts with Customers including amendments and clarifications
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial period beginning 1 April 2018 and have not been early
adopted. The Directors anticipate that the adoption of these
standard and the interpretations in future periods will have no
material impact, unless disclosed below, on the financial
statements of the Company.
The new standards include:
IFRS 3 Business Combinations(2)
IFRS 16 Leases(1)
IFRS 17 Insurance Contracts(3)
IAS 1 Presentation of Financial Statements(2)
Accounting Policies, Changes in Accounting Estimates
IAS 8 and Errors(2)
IAS 19 Employee Benefits (amendment)(1)
IAS 28 Investment in associates and joint ventures (amendment)(1)
IFRIC 23 Uncertainty over Income Tax Treatments(1)
Annual Improvements 2015-2017 Cycle1: Amendments to
Improvements to IFRSs 2 IFRSs and 2 IASs
1 Effective for annual periods beginning on or after 1 January 2019
2 Effective for annual periods beginning on or after 1 January 2020
3 Effective for annual periods beginning on or after 1 January 2021
The directors anticipate that the adoption of these standards
and interpretations in future periods will have no material effect
on the financial statements of the group with the exception of the
adoption of IFRS 16 - Leases.
The Directors have assessed the impact of IFRS 16 on the Group.
It will result in all leased assets being recognised on the balance
sheet as the distinction between operating and finance leases is
removed. Under the new standard an asset (the right to use the
leased item) and a financial liability to pay rentals are
recognised. The Group's primary non-cancellable lease commitments
are property leases and have commitments at 31 March 2019 of
GBP8,075,000. As a result of the application of IFRS 16 the Group
expects to recognise a right of use asset of GBP5,687,517 and lease
liabilities of GBP6,240,790. Overall net assets will be lower by
GBP733,273. The anticipated impact on net profit for the year would
be a reduction of GBP128,281.
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all years presented,
unless otherwise stated.
Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicated
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the
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.
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 four 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 three
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:
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, with
the revaluation amount being recognised in other comprehensive
income.
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.
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.
These items 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.
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 movements.
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.
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 or financial asset.
The Group's ordinary shares are classified as equity
instruments.
Share options and awards
The fair value of share options and awards granted to certain
employees and Directors is recognised as an 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 recognition
Revenue comprises the fair value of the consideration received
or receivable in relation to the proceeds of the sale of goods and
services provided during the year. Revenue is shown net of
value-added tax, returns, rebates and discounts and after
eliminating sales within the group. When a contract is entered into
with a customer, the contract value is allocated to specific
performance obligations. The criteria of allocating performance
obligations for different revenue streams are discussed below.
Revenue is recognised when these performance obligations are
satisfied. Standard payment terms are that payments are required
within 30 days of invoicing. The Group does not consider that any
contract assets or liabilities arise from the revenue recognition
policy.
The directors have elected to apply the 'modified retrospective'
approach to transition permitted by IFRS 15 under which comparative
financial information is not restated. The accounting of revenue
under IFRS 15 did not have a material effect on the financial
statements as at 1 April 2018 and so no transition adjustment has
been made as the Standard has not had a material impact on the
accounting policy adopted in respect to revenue as previously
disclosed in the 2018 financial statements. The company is applying
the practical expedient in relation to IFRS 15.120 as the
performance obligations.
The directors consider that there are four revenue generating
segments, being the sale of philatelic goods, publishing goods,
coins and medals, and rental income. Revenue from the sale of goods
are recognised in two separate ways, depending on transaction.
Sale of goods - retail
The Group sells assets both from its shop, by mail order and
online. 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 and the Group has delivered or the customer has
collected the goods. The Group sells philatelic and numismatic
goods to customers with a guarantee of authenticity of inventory
sold. The Group has been doing this for a number of years and has
details of returns. The returns the Group receive under this
guarantee are minimal and as a result no provision is currently
made. The performance obligation of the sale of retail goods is
considered satisfied when substantially all the risks and rewards
of ownership of goods have transferred to the customer. The
contract value is derived from the selling price of the assets
sold.
Sale of goods - auctions
In its role as auctioneer, the Group accepts property on
consignment and matches sellers to buyers through the auction
process. Following the auction, the Group invoices the buyer for
the purchase price of the property (including the commission owed
by the buyer), collects payment from the buyer, and remits to the
consignor the net sale proceeds after deducting its commissions,
expenses and applicable taxes and royalties.
The Groups auction commissions include those paid by the buyer
("buyer's premium") and those paid by the seller (vendors
commission") (collectively, "auction commission revenue"), both of
which are calculated as a percentage of the hammer price of the
property sold at auction.
On the fall of the auctioneer's hammer, the highest bidder
becomes legally obligated to pay the full purchase price, which
includes the hammer price of the property purchased plus the
buyer's premium, and the seller is legally obligated to relinquish
the property in exchange for the hammer price less any seller's
commissions. Therefore both buyer's premium and vendors commission
is recognised on the date of the auction sale upon the fall of the
auctioneer's hammer.
The Group is not obligated to pay the consignor for property
that has not been paid for by the buyer. If a buyer defaults on
payment, the sale may be cancelled, and the property will be
returned to the consignor.
The 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.
The performance obligation for the sale of auction goods is
considered satisfied when substantially all the risks and rewards
of ownership of goods have transferred to the customer. The
contract value is derived from the buyer's premium adjusted for by
the selling price of the assets sold.
Further detail of the Group's revenue streams can be found in
the Business Review on pages 8 to 13.
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 Directors consider
this in line with when the Company's performance obligation is
satisfied. The contract value is derived from gross rental income
over the terms of the leases.
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 reliably 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.
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 equals 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 and Judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
In the future, actual experience may deviate from these
estimates and assumptions. The estimates, assumptions and
management judgements that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Going concern
The Group's forecasts shows that it will remain within current
loan facility limits for the foreseeable future. Although the
Directors have built the forecasts based on current trading trends
and historical knowledge of the business, the Directors recognise
that forecasts are dependent on the underlying assumptions and that
trading conditions can always be affected by unforeseen events.
The loan facilities are provided by the Group's controlling
party Phoenix S. G. Limited and due for repayment in March 2023. Up
until 29 March 2019 the Group has been in default of the
facilities, due to Stanley Gibbons (Guernsey) Limited being in
administration, the qualified audit report on the Group's 31 March
2018 financial statements and would have been in default of the
financial covenants at 31 March 2019, which would result in the
loan becoming payable on demand. On 29 March 2019 the Group sought
and was granted a waiver from Phoenix S.G. Limited for the above
defaults.
The Directors recognise that Phoenix S. G. Limited has granted
the waiver of the defaults, stated that it intends to be a long
term investor, is the Group's controlling party with an interest of
just over 58% and has given no indication that it would withdraw
its support before March 2023 when the loan facility is
repayable.
In previous years the Group had significant uncertainty
resulting from investment contract guarantees and undertakings
given by its subsidiary Stanley Gibbons (Guernsey) Limited. The
granting of the administration order on 21 November 2017 for
Stanley Gibbons (Guernsey) Limited resulted in the Group's loss of
control of the business and its assets and liabilities. This
resulted in significant contingent liability, approximately
GBP54,150,000 at 31 March 2017 (the last accounting date prior to
administration), relating to guarantees and undertakings having
been removed from the Group and fundamentally limited the exposure
of the Group to the related buyback liabilities and associated cash
outflows. On 2 April 2019 the Royal Court of Guernsey ordered that
Stanley Gibbons (Guernsey) Limited enter liquidation, this process
is still ongoing. The Directors have made enquiries to establish
whether there are any uncertainties that would materially impact
the Group's cash flow over the foreseeable future (see note
30).
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.
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 25. 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 2019 was GBP2,310,000 (2018: GBP2,310,000). There was no
impairment provision made in the year (2018: GBP258,000). Details
of the carrying value of goodwill and the impairment losses are set
out in note 10.
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.
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.
-- Philatelic trading and retail operations;
-- Publishing and philatelic accessories;
-- Coins and medals
-- Legacy Interiors property & legal
Legacy Interiors includes continuing items from the discontinued
Interiors operation, specifically the leasehold property in New
York and the ongoing legal matters related to the Mallett entities.
The activities, products and services of the reportable segments
are detailed in the Business Review on pages 8 to 13.
Coins &
Philatelic Publishing Medals Legacy Interiors Unallocated Total
Segmental income statement GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ---------- ---------- -------- ---------------- ----------- --------
Year ended 31 March 2019
Sale of goods 4,064 1,779 3,149 - - 8,992
Sale of services (inc Commissions) 869 420 - - - 1,289
Other income 9 - 67 1,320 - 1,396
------------------------------------------- ---------- ---------- -------- ---------------- ----------- --------
Revenue 4,942 2,199 3,216 1,320 - 11,677
Operating costs (5,429) (2,146) (2,678) (1,159) (3,828) (15,240)
Exceptional - - (53) 61 (211) (203)
Net finance cost - - - (394) (103) (497)
------------------------------------------- ---------- ---------- -------- ---------------- ----------- --------
Profit/(loss) before tax (487) 53 485 (172) (4,142) (4,263)
Tax 34 - 17 - (87) (36)
------------------------------------------- ---------- ---------- -------- ---------------- ----------- --------
Profit loss for the year from continuing
operations (453) 53 502 (172) (4,229) (4,299)
------------------------------------------- ---------- ---------- -------- ---------------- ----------- --------
Segmental balance sheet
As at 31 March 2019
Total assets 20,004 - 8,464 1,719 236 30,423
Total liabilities (9,388) - (752) (939) (12,013) (23,092)
------------------------------------------- ---------- ---------- -------- ---------------- ----------- --------
Net assets 10,616 - 7,712 780 (11,777) 7,331
------------------------------------------- ---------- ---------- -------- ---------------- ----------- --------
Other segmental items
Depreciation 334 - 1 131 37 503
Amortisation of intangible items 281 - - - 220 501
Capital expenditure - 124 - - 1 125
------------------------------------------- ---------- ---------- -------- ---------------- ----------- --------
Coins & Legacy
Philatelic Publishing Medals Interiors Unallocated Total
Segmental income statement GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Year ended 31 March 2018
Sale of goods 6,006 1,820 3,180 - - 11,006
Sale of services (inc Commissions) 789 393 - - - 1,182
Other income 1 - 33 1,136 - 1,170
Revenue 6,796 2,213 3,213 1,136 - 13,358
Operating costs (8,897) (2,242) (2,711) (1,103) (3,921) (18,874)
Exceptional (4,017) 29 (582) (37) 2,525 (2,082)
Net finance cost - - - (126) (318) (444)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Profit/(loss) before tax (6,118) - (80) (130) (1,714) (8,042)
Tax (3) - 166 - (30) 133
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Profit loss for the year
from continuing operations (6,121) - 86 (130) (1,744) (7,909)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Segmental balance sheet
As at 31 March 2018
Total assets 16,163 - 18,111 383 1,667 36,324
Total liabilities (17,365) - (569) (55) (6,152) (24,141)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Net assets (1,202) - 17,542 328 (4,485) 12,183
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Other segmental items
Depreciation 327 - 1 - 350 678
Amortisation of intangible
items 307 - - - 237 544
Capital expenditure 65 - - - - 65
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Geographical information
Analysis of revenue by origin and destination
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2019 2019 2018 2018
Sales by Sales by Sales by Sales by
destination origin destination origin
GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------ ---------- ------------ ----------
Channel Islands 172 - 364 -
United Kingdom 7,130 10,553 9,178 12,222
Europe 796 - 522 -
North America 2,331 1,124 2,209 1,136
Asia 743 - 519 -
Rest of the World 505 - 566 -
------------------ ------------ ---------- ------------ ----------
11,677 11,677 13,358 13,358
------------------ ------------ ---------- ------------ ----------
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 2019 or 2018 from which the
Group earned more than 10% of its revenues.
Property, plant and equipment of GBP2,099,000 was held in the UK
(2018: GBP2,492,000 in the UK GBP43,000 in the Channel Islands). No
assets were held in other countries.
Intangible assets of GBP5,600,000 (2018: GBP5,977,000) are all
held in the UK.
4 Operating loss
The following table shows the material costs by nature charged
to cost of sales, administrative expenses and selling and
distribution costs for the continuing operations for year ending 31
March 2019 and the comparative figures for the prior year.
Year ended Year ended
31 March 2019 31 March 2018
GBP'000 GBP'000
---------------------------------------------------------------------------------- ------------- -------------
Cost of inventories recognised as an expense 5,711 8,011
Employee benefit costs expensed (see note 7) 3,625 3,793
Depreciation of property plant and equipment 503 490
Amortisation of intangible assets 501 543
Advertising & marketing expenses 466 624
Distribution & transport costs 153 433
Operating lease charges - leased premises 1,254 1,207
IT operating expenses 537 535
Other property operating costs 803 817
Impairment of trade receivables 13 129
Other administrative expenses 1,254 1,282
Fees payable to the Group's auditor for the audit of the Group's annual accounts,
including subsidiaries 65 303
Fees payable to the Group's auditor for other advisory services 10 -
Other professional fees 658 758
Foreign exchange losses - 62
---------------------------------------------------------------------------------- ------------- -------------
15,553 18,987
---------------------------------------------------------------------------------- ------------- -------------
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 of the continuing operation for
the year ended 31 March 2019 and the comparative figures for the
prior year.
Year ended Year ended
31 March 2019 31 March 2018
GBP'000 GBP'000
-------------------------------------------------- -------------- --------------
Stock provisions 8 4,202
Professional fees for corporate activity - 1,235
Other impairment of intangible assets - 541
Loss on disposal of tangible fixed assets - 392
Impairment of receivables - 288
Loss on disposal of philatelic approvals business - 171
Restructuring and redundancy costs - 119
Disposal of leased property 18 -
Exceptional legal fees 39 -
Legacy wind-down costs of overseas subsidiaries 138 -
Release of other payables excess provision - (616)
-------------------------------------------------- -------------- --------------
203 6,332
-------------------------------------------------- -------------- --------------
The stock provisions at 31 March 2018 largely related to a
review of our philatelic realisable values as highlighted above.
The professional fees relate to the significant corporate activity
carried out during the year including the Phoenix transaction but
exclude the element relating to the share issue. The release
represents an over provision relating to prior periods.
6 Directors' emoluments
The remuneration paid to the Directors of The Stanley Gibbons
Group plc was:
Year ended Year ended
31 March 2019 31 March 2018
GBP'000 GBP'000
----------------------------------------------------------------------------- ------------- -------------
Fees - -
Salaries 256 369
----------------------------------------------------------------------------- ------------- -------------
Short-term employee benefits 256 369
Post-employment benefits 8 16
Share-based payment 25 69
----------------------------------------------------------------------------- ------------- -------------
Key management personnel compensation 289 454
----------------------------------------------------------------------------- ------------- -------------
Number of Directors included in the defined benefit pension scheme (note 25) - -
----------------------------------------------------------------------------- ------------- -------------
The detailed numerical analysis of Directors' remuneration is
included in the Report on Remuneration on page 17. The charge to
profit in respect of share options and awards issued to the
Directors was GBP25,000 (2018: GBP69,000).
During the year the Group made payments into the personal
pension schemes of A Cook. Total cost of these pension
contributions to the Group were GBP8,000 (2018: GBP16,000).
Details of share options forfeited by Directors during the
period are disclosed in the Report on Remuneration on page 17.
Management considers that the key management personnel comprise
the Directors.
GE Shircore's ultimate employer is Phoenix Asset Management
Partners Limited which is the investment manager to Phoenix SG
Limited which holds 248,000,000 Ordinary shares representing 58.09%
of the Company's issued share capital. Mr Shircore receive no
remuneration from the Group.
7 Employee information
The average number of persons (including executive Directors)
employed by the Group during the period was 74 (2018: 93).
Year ended Year ended
31 March 2019 31 March 2018
------------------------------ ------------- -------------
Management and Administration 30 35
Sales 22 38
Production and Editorial 21 17
Marketing 1 3
74 93
------------------------------ ------------- -------------
Staff costs relating to those persons during the year amounted
to:
Year ended Year ended
31 March 2019 31 March 2018
GBP'000 GBP'000
------------------------------------------------- ------------- -------------
Wages and salaries 2,714 3,020
Social security costs 278 323
Pension costs - defined benefit scheme (note 25) 438 171
Pension costs - defined contribution scheme 111 98
Share option cost 84 181
------------------------------------------------- ------------- -------------
3,625 3,793
------------------------------------------------- ------------- -------------
8 Taxation
UK corporation tax and overseas tax on profits for the year
Year ended Year ended
31 March 2019 31 March 2018
Current tax: GBP'000 GBP'000
--------------------------------------- -------------- --------------
UK corporation tax at 19% - -
Overseas tax - -
Deferred taxation (note 19) 36 (138)
--------------------------------------- -------------- --------------
Current year tax charge/(credit) 36 (138)
Adjustment relating to earlier periods - (22)
--------------------------------------- -------------- --------------
Tax charge/(credit) 36 (160)
--------------------------------------- -------------- --------------
Income tax attributable to:
Profit from continuing operations 36 (133)
Profit from discontinued operations - (27)
--------------------------------------- -------------- --------------
36 (160)
--------------------------------------- -------------- --------------
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
2019 2018
% %
----------------------------------------------- ---------- ----------
The standard rate of corporation tax in the UK 19.0 19.0
Effects of:
Disallowable items (2.9) (0.9)
Overseas profits taxable at lower rates (1.1) (7.0)
Losses for which no deferred asset recognised (12.0) (9.4)
Capital amortisation and provisions (1.0) (1.2)
Other permanent differences (2.9) 0.6
----------------------------------------------- ---------- ----------
Effective rate of corporation tax for year (0.9) 1.1
----------------------------------------------- ---------- ----------
The main rate of corporation tax in the UK was 19% for financial
years starting on or after 1 April 2017.
The Group has recognised a deferred tax asset (see note 19) of
GBP152,000 (2018: GBP509,000) relating to unutilised tax losses. At
the year end the usable tax losses within the Group were
GBP16,698,000 (2018: GBP13,606,000).
9 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.
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 Year ended
31 March 2019 31 March 2018
----------------------------------------------------------------- -------------- --------------
Weighted average number of ordinary shares in issue (No.) 426,916,643 184,749,520
Dilutive potential ordinary shares: Employee share options (No.) - 931,956
----------------------------------------------------------------- -------------- --------------
Continuing operations
Loss after tax (GBP) (4,299,000) (7,909,000)
Pension service cost (net of tax) 355,000 139,000
Cost of share options (net of tax) 68,000 147,000
Amortisation of customer lists (net of tax) 178,000 192,000
Exceptional operating costs (net of tax) 168,000 708,000
----------------------------------------------------------------- -------------- --------------
Adjusted loss after tax (GBP) (3,530,000) (6,723,000)
----------------------------------------------------------------- -------------- --------------
Basic loss per share - pence per share (p) (1.01)p (4.21)p
----------------------------------------------------------------- -------------- --------------
Diluted loss per share - pence per share (p) (1.01)p (4.21)p
----------------------------------------------------------------- -------------- --------------
Adjusted loss per share - pence per share (p) (0.83)p (3.58)p
----------------------------------------------------------------- -------------- --------------
Adjusted diluted loss per share - pence per share (p) (0.83)p (3.58)p
----------------------------------------------------------------- -------------- --------------
Discontinued operations
Loss after tax (GBP) 74,000 (4,260,000)
----------------------------------------------------------------- -------------- --------------
Basic loss per share - pence per share (p) 0.02p (2.27)p
----------------------------------------------------------------- -------------- --------------
Diluted loss per share - pence per share (p) 0.02p (2.27)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
2019 per note 20.
10 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 2017 24,268 19 9,861 3,593 6,052 43,793
Additions - internally developed - - 30 - - 30
Disposals (7,936) - (7,349) (1,386) (3,524) (20,195)
---------------------------------------- -------- ---------- --------- -------- ----------- --------
At 31 March 2018 16,332 19 2,542 2,207 2,528 23,628
---------------------------------------- -------- ---------- --------- -------- ----------- --------
Additions - internally developed - - 124 - - 124
Disposals - - - - - -
---------------------------------------- -------- ---------- --------- -------- ----------- --------
At 31 March 2019 16,332 19 2,666 2,207 2,528 23,752
---------------------------------------- -------- ---------- --------- -------- ----------- --------
Accumulated amortisation and impairment
At 1 April 2017 21,700 - 8,965 2,395 2,961 36,021
Impairment losses 258 19 - 167 97 541
Amortisation charge - - 307 237 - 544
Disposals (7,936) - (7,349) (1,386) (2,784) (19,455)
---------------------------------------- -------- ---------- --------- -------- ----------- --------
At 31 March 2018 14,022 19 1,923 1,413 274 17,651
---------------------------------------- -------- ---------- --------- -------- ----------- --------
Amortisation charge - - 281 220 - 501
---------------------------------------- -------- ---------- --------- -------- ----------- --------
At 31 March 2019 14,022 19 2,204 1,633 274 18,152
---------------------------------------- -------- ---------- --------- -------- ----------- --------
Net book value
At 31 March 2019 2,310 - 462 574 2,254 5,600
---------------------------------------- -------- ---------- --------- -------- ----------- --------
At 31 March 2018 2,310 - 619 794 2,254 5,977
---------------------------------------- -------- ---------- --------- -------- ----------- --------
The carrying value of goodwill of GBP2,310,000 related to the
acquisition of the Noble Investments Group (GBP2,200,000 - original
cost GBP15,746,000), the acquisition of the magazine 'Philatelic
Exporter' (GBP87,000 - carrying value and original cost), the album
producer 'Frank Godden' (GBP23,000 - carrying value and original
cost).
The carrying value of brands and trademarks of GBP2,254,000 is
the value of the brands purchased in the acquisition of Noble
Investment Group (GBP2,391,000 - original cost).
Goodwill and brands have 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 7.8% (2018: 11.0%), 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% (2018: 1% to 3%) over the period in question.
These assumptions are based on past experiences of management.
11 Property, plant and equipment
Fixtures,
Freehold Leasehold fittings, Vehicles,
Reference land and property and tools and plant and
collection buildings improvements equipment machinery Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
Cost
At 1 April 2017 1,672 - 4,841 1,057 994 8,564
Additions 6 - 17 10 2 35
Disposals (483) - (277) (461) (120) (1,341)
Exchange differences - - (159) - - (159)
Reclassification between asset
categories - 162 - (162) - -
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
At 31 March 2018 1,195 162 4,422 444 876 7,099
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
Additions - - - 1 - 1
Disposals - - (313) (71) (19) (403)
Exchange differences - - 198 - - 198
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
At 31 March 2019 1,195 162 4,307 374 857 6,895
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
Accumulated depreciation
At 1 April 2017 380 - 2,139 764 949 4,232
Charge for the year - - 519 153 6 678
Impairment for the year - - 151 - 2 153
Depreciation on disposal - - (83) (330) (86) (499)
Reclassification between asset
categories - - 154 (154) - -
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
At 31 March 2018 380 - 2,880 433 871 4,564
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
Charge for the year - - 475 24 4 503
Exchange differences - - 127 - - 127
Depreciation on disposal - - (292) (84) (22) (398)
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
At 31 March 2019 380 - 3,190 373 853 4,796
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
Net book value
At 31 March 2019 815 162 1,117 1 4 2,099
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
At 31 March 2018 815 162 1,542 11 5 2,535
------------------------------- ----------- ---------- ------------- ---------- ---------- --------
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
(2018: GBP436,000). 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 GBP379,000 (2018: GBP379,000).
Fully written down Property, Plant and Equipment with a cost of
GBP3,602,000 (2018: GBP1,706,000) remains in use by the Group.
12 Investments
On 6 January 2017, the Group launched a corporate joint-venture
with St James's Auctions, the well-established numismatic auction
house, named Baldwin's of St James's Limited. Baldwin's of St
James's Limited auctions coins, medals, medallions, bank notes,
tokens and other related items owned by the parties or by 3rd
parties wishing to auction material. The Group owns 50 A shares,
50% of the total issued A ordinary shares in Baldwin's of St
James's for a consideration of GBP50. The joint venture is
accounted for under the equity method as the Group does not have
control of the entity. Baldwin's of St James's is incorporated in
England and trades from a location in London. The company's
accounting date is 30 April 2019, as per the joint venture
agreement.
The investment in the joint venture is shown below:
31 March 2019 31 March 2018
GBP'000 GBP'000
------------------------------------------ ------------- -------------
As at 1 April 113 -
Share of profit retained by joint venture 109 113
Dividend paid by joint venture (127) -
------------------------------------------ ------------- -------------
95 113
------------------------------------------ ------------- -------------
The share of profit retained by the joint venture is an estimate
based on the management accounts at 30 April 2019. Based on the
audited financial statement at 30 April 2018 Baldwin's of St
James's generated GBP1,400,000 of revenue and GBP277,000 of profit.
The company had net assets of GBP100 with current assets of
GBP1,786,562 and current liabilities of GBP1,786,462.
13 Inventories
31 March 2019 31 March 2018
GBP'000 GBP'000
------------------------------------ ------------- -------------
Work in progress 1,086 200
Finished goods and goods for resale 16,915 18,103
------------------------------------ ------------- -------------
18,001 18,303
------------------------------------ ------------- -------------
As at 31 March 2019 GBP76,000 (2018 - GBP89,000) of the above
inventories were owned by third parties. As at 31 March 2019
GBP17,858,000 (2018: GBP14,990,000) of the above inventories were
part of the security given in relation to the borrowings detailed
in note 18.
At 31 March 2019 the carrying value of the inventory held at
fair value was GBP3,928,000 (2018: GBP3,586,000).
During the year ended 31 March 2018 GBP4,202,000 was charged to
exceptional costs for the write down of inventories 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.
On 10 September 2018 the Group announced that its subsidiary,
Stanley Gibbons Limited ("SGL") had entered in to an agreement with
Phoenix S. G. Limited to acquire approximately 1,900 items, for an
initial consideration of GBP5.20m, which is payable in cash to
Phoenix S. G. Limited over the term of the agreement, as and when
sales of the items are made to third parties and will be the net
proceeds, after deduction of a commission payment to be made to
SGL, on completed sales. Phoenix S. G. Limited had acquired the
items from the administrators of Stanley Gibbons (Guernsey)
Limited. The agreement is for a total term of 10 years and any sale
at a value that is less than the base cost of an inventory item can
only be made with the specific permission of Phoenix S. G. Limited.
To the extent that all of the inventory is sold and the appropriate
payments have been made by SGL to Phoenix S. G. Limited no further
consideration will be due. To the extent that items remain to be
sold at the end of the agreement the relevant items will be
returned to Phoenix S. G. Limited and no further consideration will
be due.
Notwithstanding the fact that the agreement was written as a
sale from Phoenix S.G. Limited to SGL, the substance of the
transaction is that of a consignment stock arrangement and so has
been accounted for as such. The acquired items have therefore not
been included within inventories and there is no related creditor
due to Phoenix S.G. Limited within the balance sheet. The
commission due to SGL is recognised as revenue in the accounting
period of the sale to a third party. As at 31 March 2019 of the
initial items totaling GBP5.20m, GBP5,060,000 remained unsold.
14 Current trade and other receivables
31 March 2019 31 March 2018
GBP'000 GBP'000
------------------------------- ------------- -------------
Trade receivables 1,446 2,160
Provision for impairment (724) (593)
------------------------------- ------------- -------------
Net trade receivables 722 1,567
Other receivables 797 1,332
Prepayments and accrued income 668 711
------------------------------- ------------- -------------
2,187 3,610
------------------------------- ------------- -------------
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. The Group's impairment and other accounting policies for
trade and other receivables are outlined in note 1.
15 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 2019 31 March 2018
GBP'000 GBP'000
----------------------------- ------------- -------------
Opening provision 593 5,105
Discontinued operations - (4,812)
Impairments in the year 235 304
Amounts utilised in the year (104) (4)
----------------------------- ------------- -------------
Closing provision 724 593
----------------------------- ------------- -------------
As at 31 March 2019, excluding balances due under extended
payment terms and those provided for by the impairment provision,
GBP210,000 (2018: GBP477,000) of trade receivables, were past their
due settlement date but not impaired. The ageing analysis of these
trade receivables is as follows:
31 March
31 March 2019 2018
GBP'000 GBP'000
------------------------ ------------- --------
Up to 3 months past due 138 198
3 to 6 months past due 52 58
Over 6 months past due 20 221
------------------------ ------------- --------
210 477
------------------------ ------------- --------
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.
16 Current trade and other payables
31 March 31 March
2019 2018
GBP'000 GBP'000
-------------------------------- -------- --------
Trade payables 2,918 2,823
Other payables 344 1,837
Other taxes and social security 189 214
Accruals and deferred income 2,589 3,530
-------------------------------- -------- --------
6,040 8,404
-------------------------------- -------- --------
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.
17 Cash and cash equivalents
31 March
31 March 2019 2018
GBP'000 GBP'000
-------------------------- ------------- --------
Cash at bank and in hand 2,160 4,596
Bank overdrafts - -
-------------------------- ------------- --------
Cash and cash equivalents 2,160 4,596
-------------------------- ------------- --------
18 Borrowings
31 March
31 March 2019 2018
GBP'000 GBP'000
---------------------------- ------------- --------
Current liabilities
Loan - Facility A - 10,000
Long term liabilities
Loan - Facility A 10,518 -
Loan - Facility C 1,011 -
---------------------------- ------------- --------
Total long term liabilities 11,529 -
---------------------------- ------------- --------
The Facility A loan outstanding at 31 March 2019 of GBP10.5m is
due to Phoenix S. G. Limited, the controlling party of the Group.
Interest on the loan is 5% per annum added to the loan. The loan is
due for repayment in March 2023, provided there is no event of
default in the meantime.
On the 21 December 2018 the Group announced it had agreed an
additional GBP5m of funding (Facility C) in the form of an
extension to the existing loan facility with Phoenix S. G. Limited.
The terms of the extension are the same as the existing facility
and the intention is that it will be drawn down by the Group in
several tranches as needed.
In relation to the Phoenix S. G. Limited loan, the Group is
required to satisfy financial conditions relating to cashflow and
EBITDA. Commencing for the year ended 31 March 2019, the cashflow
and EBITDA each need to exceed GBP1.0m, increasing to GBP1.5m for
the year to 2020, GBP2.0m for the year to 2021, GBP2.5m for the
year to 2022.
Up until 29 March 2019 the Group was in default on its loan
facilities as Stanley Gibbons (Guernsey) Limited (in
administration) is in administration. The loan was also in default
due to the qualified audit report in these financial statements for
the year ended 31 March 2018. The Group would have also failed to
satisfy the loan's financial conditions at 31 March 2019. During
periods of default the facilities are repayable on demand and
classified as current borrowings.
On 29 March 2019 Phoenix S. G. Limited issued a waiver letter to
the Group for the above defaults and as a result at 31 March 2019
the Group is no longer in default and the loan has been classified
as a long term liability.
During the year the Group paid arrangement facility fees of
GBPnil (2018: GBPnil) for the above facilities. The borrowings are
secured by a full fixed and floating charge debenture over the core
assets of the group.
19 Deferred tax assets and liabilities
Assets Liabilities
------------------------------- ------------------------------ ----------------------------
31 March 2019 31 March 2018 31 March 2019 31 March 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------------- --------------- ------------- -------------
Defined benefit pension scheme
(note 25) 95 560 - -
Other timing differences 34 121 - -
Unutilised tax losses 152 509 - -
Deferred tax on revalued fixed
assets - - - 70
Accelerated capital allowances - - - 338
------------------------------- ------------- --------------- ------------- -------------
Full provision 281 1,190 - 408
------------------------------- ------------- --------------- ------------- -------------
(Charge)/credit
to
Profit and Comprehensive
31 March 2018 loss income 31 March 2019
GBP'000 GBP'000 GBP'000 GBP'000
Defined benefit pension scheme
(note 25) 560 - (465) 95
Other timing differences 121 (87) - 34
Unutilised tax losses 509 (357) - 152
Deferred tax on revalued fixed
assets (70) 70 - -
(338) 338 - -
------------------------------- ------------- --------------- ------------- -------------
Full provision 782 (36) (465) 281
------------------------------- ------------- --------------- ------------- -------------
Following the tri-annual valuation of the pension schemes (see
note 25), the Directors reviewed the carrying value of the deferred
tax asset in relation to the defined benefit pension scheme. Based
on the prior trading history and taking in to account the
anticipated profits in foreseeable future, the carrying value of
the asset was reduce to GBP95,000, resulting in a charge to other
comprehensive income of GBP465,000.
20 Called up share capital
31 March
31 March 2019 2018
GBP'000 GBP'000
--------------------------------------------------- ------------- --------
Authorised
500,000,000 (2018: 500,000,000) Ordinary Shares of
1p each 5,000 5,000
Allotted, issued and fully paid (all equity):
426,916,643 (2018: 426,916,643) Ordinary Shares of
1p each 4,269 4,269
--------------------------------------------------- ------------- --------
The Company has one class of share being Ordinary Shares with a
par value of 1p each. This entitles the holder to participate in
dividends and repayment of capital in proportion to the number of
shares held. The holder is also entitled to, on a show of hands of
shareholders present at a meeting in person or by proxy, one vote
and upon a poll each share is entitled to one vote.
On 16 March 2018 the Company increased its authorised share
capital to 500,000,000 ordinary shares of 1p each and on 19 March
issued a further 248,000,000 ordinary shares at an issue price of
2.5p a share. These shares were admitted to the Alternative
Investment Market on that date. The net proceeds of this issue were
GBP5,850,000.
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 21 and 22
provide details on equity. Details of loans at the year end are
disclosed on page 13 in the Business Review and further disclosure
can be found in note 18 and note 26. The external capital
requirements imposed on the Group in relation to borrowings, are
disclosed in note 18. Further detail on capital risk management can
be found in the Directors' Report on pages 18 to 24.
21 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 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 2016 and 2018 were granted at market value and
are not subject to performance condition.
All options are settled with the issue of equity.
Excluding the Directors' share options disclosed in the Report
on Remuneration on page 17, detailed below are options which have
been granted to employees together with the periods in which they
may be exercised:
Number Number
Earliest Exercise at at
Forfeited
exercise Expiry price 31 March Granted in in 31 March
Date of grant date date (1p shares) 2018 Year Year 2019
-------------- --------- --------- ----------- --------- ---------- --------- ---------
06/5/11 06/5/14 05/5/21 179.0p 52,498 - (17,499) 34,999
05/10/16 05/10/19 05/10/26 11.0p 9,010,000 - (225,000) 8,785,000
03/04/18 03/04/21 03/04/28 4.4p - 500,000 - 500,000
-------------- --------- --------- ----------- --------- ---------- --------- ---------
9,062,498 500,000 (242,499) 9,319,999
---------------------------------- ----------- --------- ---------- --------- ---------
The weighted average remaining contractual life of options
outstanding at 31 March 2019 is 5.7 years (2018: 6.7 years)
Movements in the number of share options outstanding including
Directors' share options and their related weighted average
exercise prices are as follows:
31 March 2019 31 March 2019 31 March 2018 31 March 2018
Average exercise Options Average exercise Options
price per price per
share (thousands) share (thousands)
----------------- ---------------- ------------- ---------------- -------------
At 1 April 12p 13,062 18p 16,018
Granted 4p 500 - -
Forfeited/lapsed 12p (2,242) 45p (2,956)
Exercised - - - -
----------------- ---------------- ------------- ---------------- -------------
At 31 March 12p 11,320 12p 13,062
----------------- ---------------- ------------- ---------------- -------------
Share options outstanding at the end of the period have the
following expiry date and exercise price:
Options Options
Exercise (thousands) (thousands)
price per
Expiry date share 31 March 2019 31 March 2018
--------------- --------- ------------- -------------
5 May 2021 179.0p 35 52
5 October 2026 11.0p 10,785 13,010
3 April 2028 4.4p 500 -
--------------- --------- ------------- -------------
11,320 13,062
--------------- --------- ------------- -------------
Stochastic and Black-Scholes models have been used to value the
awards. The awards issued and still outstanding in the year ended
31 March 2019 are set out below:
Options
(thousands)
Dates of grant 06/05/2011 05/10/2016 03/04/2018
---------------------------------------- ---------- ---------- -----------
Number of options granted 593,710 14,950,000 500,000
Weighted average fair value at date of
grant (per share) 48.45p 5.20p 2.81p
Weighted average share price on date of
grant 175p 11.25p 4.75p
Weighted average exercise price 179p 11.00p 4.42p
Expected term (from date of grant) 6.5 years 6.5 years 6.5 years
Expected volatility 36.6% 46.77% 60.37%
Expected dividend yield 3.15% 0.00% 0.00%
Risk-free interest rate 2.67% 0.42% 1.17%
---------------------------------------- ---------- ---------- -----------
Expected volatility was determined by calculating historical
volatility of the Group's share price over a minimum 10 year
period.
22 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.
23 Cash outflows from operating activities
Year ended Year ended
31 March 31 March
2019 2018
GBP'000 GBP'000
---------------------------------------------------- ---------- ----------
Operating loss (including discontinued operations) (3,802) (11,998)
Profit on sale of discontinued operations - (2,139)
Loss on sale of property, plant and equipment - 392
Depreciation of tangible assets 503 678
Amortisation of intangible assets 501 544
Impairment of intangible assets - 541
Impairment of tangible assets - 153
Decrease in provisions (52) (308)
Income from joint venture 109 113
Cost of share options 84 181
Decrease in inventories 302 14,522
Decrease/(Increase) in trade and other receivables 1,424 (487)
Decrease in trade and other payables (less deferred
consideration) (2,364) (4,543)
Net exchange differences (66) 183
---------------------------------------------------- ---------- ----------
Cash outflows from operating activities (3,361) (2,168)
---------------------------------------------------- ---------- ----------
24 Capital and other commitments
Lease commitments
At 31 March 2019 the Group had future minimum lease payments
under non-cancellable operating leases as follows:
31 March 31 March
2019 2018
Payable: GBP'000 GBP'000
--------------------------- -------- --------
Within one year 898 1,389
Between two and five years 3,691 3,459
In five years or more 3,486 4,211
--------------------------- -------- --------
8,075 9,059
--------------------------- -------- --------
These figures represent the aggregate payable until expiration
of all non-cancellable operating leases. The leases all relate to
properties at premises in the Strand and Pall Mall, London,
Ringwood Hampshire and Madison Avenue, New York. The leases expire
between December 2021 and August 2031, although the Pall Mall
property has a break clause in August 2026. The Strand lease
expired on 24 March 2019.
On 4 July 2019 the Group signed a new lease on its main trading
premises 399 Strand. (see note 29)
At 31 March 2019 the Group had future minimum rental payments
receivable under non-cancellable operating leases as follows:
Land and Buildings Land and Buildings
31 March 2019 31 March 2018
Receivable: GBP'000 GBP'000
-------------------------- ------------------ ------------------
Within one year 1,200 1,372
Between two and five year 4,664 5,040
In five years or more 3,527 5,042
-------------------------- ------------------ ------------------
9,391 11,454
-------------------------- ------------------ ------------------
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 Pall Mall, London, and Madison
Avenue, New York.
Included in the administrative expenses is GBP1,413,000 relating
to lease payments. Payments of rental due from tenants of our
sub-leases were GBP1,479,000, with GBP1,320,000 included in revenue
as rental income and GBP159,000 netted off against lease payments
in administrative expenses.
25 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. The scheme
is exposed to the following risks:
- Financial risks from changing economic conditions e.g. inflation and interest rate risks
- Longevity, i.e. the risk of benefits costing more due to members living longer
- Additional liabilities arising from the unknown factors such
as ineffective Scheme documentation or Regulatory change.
Under UK pensions legislation the Group subsidiary is
responsible for funding the Scheme benefits and for paying
contributions to make up any shortfall between the assets and the
liabilities of the Scheme. The Scheme liabilities are assessed at
least every three years by the Scheme Actuary. It is the Group's
subsidiary funding policy to annually contribute an amount agreed
between the Group's subsidiary and the Trustees of the Scheme in
accordance with UK legislative requirements if a funding deficit
exists. The amount of contributions required depends on the
assumptions used by the actuary and can therefore be volatile
between actuarial valuations. The volatility of contribution
amounts can be to the detriment of the Group's cashflows. The
volatility of the Scheme's liabilities against these assets held
impacts on the Group's balance sheet.
The assets of the scheme are held under the provisions of a
trust deed and are invested in a range of different asset classes
including equities, a diversified growth fund, property, corporate
bonds, absolute return bond funds and liability driven investment
funds. These funds are managed by different investment managers and
are all held on the Mobius Life Investment Platform. This
investment policy mitigates the actuarial risks that the scheme is
exposed to such as longevity, interest rate, inflation and
investment risks.
A full actuarial valuation was carried out at 30 June 2018. 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 2019 are based on
the results of the actuarial valuation as at 30 June 2018.
Scheme assets are stated at their market value at 31 March 2019.
The Group paid GBP268,800 (payable monthly) in the year to 31 March
2019. From 1 April 2019, the Group will pay contributions of
GBP282,240 per annum (payable monthly), increasing at 5% per annum,
until 1 November 2029, as noted in the Recovery Plan dated 29 March
2019, agreed as part of the actuarial valuation at 30 June
2018.
Following the recently published legal judgment in the UK the
scheme has to equalise Guaranteed Minimum Pensions built up after
17 May 1990. An estimate of the likely additional reserve has been
provided in the accounts at 31 March 2019.
(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 scheme is exposed to the following risks:
- Financial risks from changing economic conditions e.g. inflation and interest rate risks
- Longevity, i.e. the risk of benefits costing more due to members living longer
- Additional liabilities arising from the unknown factors such
as ineffective Scheme documentation or Regulatory change.
A full actuarial valuation was carried out as at 30 June 2018
and the funding of the plan is agreed between the Company and the
trustees in line with those requirements.
Under UK pensions legislation the Group subsidiary is
responsible for funding the Scheme benefits and for paying
contributions to make up any shortfall between the assets and the
liabilities of the Scheme. The Scheme liabilities are assessed at
least every three years by the Scheme Actuary. It is the Group's
subsidiary funding policy to annually contribute an amount agreed
between the Group's subsidiary and the Trustees of the Scheme in
accordance with UK legislative requirements if a funding deficit
exists. The amount of contributions required depends on the
assumptions used by the actuary and can therefore be volatile
between actuarial valuations. The volatility of contribution
amounts can be to the detriment of the Group's cashflows. The
volatility of the Scheme's liabilities against these assets held
impacts on the Group's balance sheet.
The Group paid annual contributions of GBP220,000 in the year to
31 March 2019. From 1 April 2019, the Group will pay contributions
of GBP214,200 per annum (payable monthly), increasing 5% per annum
until 1 May 2028, in line with the Recovery Plan dated 20 March
2019. In addition to this, the Group also pays administration
expenses and Group Life premiums.
The IAS19 disclosures for the year to 31 March 2019 are based on
the actuarial valuation as at 30 June 2018.
Following the recently published legal judgment in the UK the
scheme has to equalise Guaranteed Minimum Pensions built up after
17 May 1990. An estimate of the likely additional reserve has been
provided in the accounts at 31 March 2019.
The amounts recognised in the statement of financial position
for both schemes are as follows:
31 March
31 March 2018
2019 GBP'000 GBP'000
---------------------------------------------------- ------------- --------
Present value of funded obligation (19,612) (19,685)
Fair value of scheme assets 14,089 14,356
---------------------------------------------------- ------------- --------
Net obligation (5,523) (5,329)
Deferred tax asset 95 560
---------------------------------------------------- ------------- --------
Retirement benefit obligation (5,428) (4,769)
---------------------------------------------------- ------------- --------
GBP'000 GBP'000
---------------------------------------------------- ------------- --------
Cumulative amount of actuarial losses recognised in
other comprehensive income (2,697) (2,450)
---------------------------------------------------- ------------- --------
The amounts recognised in other comprehensive income are as
follows:
31 March 31 March
2019 GBP'000 2018 GBP'000
-------------------------------------------------------- ------------- -------------
Actuarial gains/(losses) on scheme obligations from
financial assumptions (812) 98
Actuarial gains/(losses) on scheme obligations from
demographic assumptions 66 101
Actuarial gains/(losses) on scheme obligations from
experience 739 251
Actuarial (losses)/gains on fair value of scheme assets (239) (2)
-------------------------------------------------------- ------------- -------------
Remeasurement (losses)/gains (246) 448
-------------------------------------------------------- ------------- -------------
Changes in the present value of the defined benefit obligation
are as follows:
31 March 31 March
2019 2018
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Present value of obligations at start of year 19,685 20,390
Liabilities acquired at fair value - -
Current service cost 5 19
Interest cost 500 520
Contributions by employees - -
Remeasurement losses/(gains) on scheme obligations 8 (450)
Charges paid (5) (19)
Benefits paid (881) (775)
Allowance for GMP equalisation 300 -
--------------------------------------------------- -------- --------
Present value of obligations at end of year 19,612 19,685
--------------------------------------------------- -------- --------
Changes in the fair value of scheme assets are as follows:
31 March 31 March
2019 2018
GBP'000 GBP'000
------------------------------------------------ -------- --------
Fair value of scheme assets at start of year 14,356 14,304
Assets acquired at fair value - -
Expected return on scheme assets 369 368
Actuarial losses on fair value of scheme assets (239) (2)
Contributions by employees - -
Contributions by company 489 480
Charges paid (5) (19)
Benefits paid (881) (775)
------------------------------------------------ -------- --------
Fair value of scheme assets at end of year 14,089 14,356
------------------------------------------------ -------- --------
The Group currently expects to contribute GBP496,000 to its
defined benefit schemes in the financial year to 31 March 2020.
The amounts recognised in the statement of comprehensive income
for the period are as follows:
31 March 31 March
2019 2018
GBP'000 GBP'000
------------------------------------------- -------- --------
Current service cost 5 19
Interest cost on net benefit obligations 133 152
Allowance for GMP equalisation 300 -
------------------------------------------- -------- --------
Total included in employee benefit expense 438 171
------------------------------------------- -------- --------
Actual return on scheme assets 129 366
------------------------------------------- -------- --------
The major categories of scheme assets as a percentage of the
fair value of total scheme assets are as follows:
31 March 31 March
2019 2018
% %
------------------------------------------------------ -------- --------
Assets with a quoted market price in an active market
Equities 15.3% 15.4%
Corporate bonds 12.3% 11.7%
LLDI 9.1% 9.3%
Multi Asset Credit 18.4% 18.5%
Diversified growth funds 22.8% 20.5%
Gilts/cash 1.1% 0.6%
Other
Insurance policies 13.0% 16.3%
Property 7.1% 6.7%
Insured Annuitants 1.0% 1.0%
------------------------------------------------------ -------- --------
Principal actuarial assumptions at the reporting date:
31 March 31 March
2019 2018
--------------------------------------------------------- -------- --------
Future salary increases 2.30% 2.15%
Price inflation - RPI 3.30% 3.15%
Price inflation - CPI 2.30% 2.15%
Revaluation of deferred pensions 2.30% 2.15%
Pension Increase - Non Directors
Pre 1988 GMP 0.00% 0.00%
Post 1988 GMP 3.00% 3.00%
Pre 1997 0.00% 0.00%
Post 1997 2.30% 2.15%
Post 2005 2.30% 2.15%
Pension Increase - Directors
Pre 1997 3.00% 3.00%
Post 1997 3.30% 3.15%
Post 2005 3.30% 3.15%
Discount rate 2.40% 2.60%
Equities (long term expected rate of return) 2.40% 2.60%
Corporate bonds (long term expected rate of return) 2.40% 2.60%
Fixed interest gilts (long term expected rate of return) 2.40% 2.60%
Cash (long term expected rate of return) 2.40% 2.60%
--------------------------------------------------------- -------- --------
The mortality assumptions adopted at 31 March 2019 imply the
following life expectations:
The Stanley Gibbons Holdings PLC Pension and Assurance
Scheme
31 March 31 March
2019 2018
In years In years
-------------------------------------------- -------- --------
Retiring at 65 at reporting date
Male 21.7 21.8
Female 23.9 23.7
-------------------------------------------- -------- --------
Retiring at 65 at reporting date + 20 years
Male 22.7 22.9
Female 25.0 24.9
-------------------------------------------- -------- --------
The Mallett Retirement Benefits Scheme
31 March 31 March
2019 2018
In years In years
-------------------------------------------- -------- --------
Retiring at 65 at reporting date
Male 21.7 21.8
Female 23.9 23.7
-------------------------------------------- -------- --------
Retiring at 65 at reporting date + 20 years
Male 22.7 22.9
Female 25.0 24.9
-------------------------------------------- -------- --------
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 (3,775)
0.25% p.a. reduction in discount rate 3.5% (4,217)
0.25% increase in CPI inflation 1.9% (4,021)
Pensions payable for 1 year longer due to
mortality assumptions 3.3% (4,194)
------------------------------------------- ----------- ---------
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 (1,749)
0.25% p.a. reduction in discount rate 4.4% 0.7% (2,006)
0.25% increase in inflation 2.6% 0.1% (1,918)
Pensions payable for 1 year longer due to
mortality assumptions* 4.0% 2.4% (1,895)
------------------------------------------ ----------- ----------- ---------
* 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.
The sensitivities show the effects of a change in the
significant actuarial assumptions used to measure the Scheme's
Defined Benefit Obligation. Limitations to the sensitivities are in
line with the limitations on actuarial assumptions, being that they
are estimates.
The average duration of the Schemes Obligation is approximately
14 years.
The weighted average duration of the Stanley Gibbons Holdings
Plc Pension and Assurance Scheme and the Mallett Retirement Benefit
scheme is 15.5 years.
Amounts for the current and previous four periods are as
follows:
31 March 31 March 31 March 31 March 31 December
2019 2018 2017 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------- -------- -------- -------- -----------
Present value of defined benefit
obligations (19,612) (19,685) (20,390) (18,232) (18,946)
Fair value of scheme assets 14,089 14,356 14,304 13,010 13,130
-------------------------------------- -------- -------- -------- -------- -----------
Deficit (5,523) (5,329) (6,086) (5,222) (5,816)
-------------------------------------- -------- -------- -------- -------- -----------
Experience adjustments on scheme
assets (239) (2) 895 (527) 978
-------------------------------------- -------- -------- -------- -------- -----------
Effects of changes in the demographic
and financial assumptions in the
underlying scheme liabilities
- Amount (746) 199 (2,456) 659 (2,077)
- Percentage of benefit obligation -3.8% 1.0% -12.0% 3.6% -10.9%
-------------------------------------- -------- -------- -------- -------- -----------
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
increased from GBP3,554,000 at 31 March 2018 to GBP3,775,000 at 31
March 2019 principally arising from changes in scheme data and a
change from the approximate methodology used in previous
disclosures.
Future profile of the Mallet Retirements Benefits Scheme
The Mallet Retirements benefits Scheme was closed to new members
in 2002. This will result in the age profile of the active
membership rising over time and hence, under the method required to
calculate IAS 19 liabilities, the future cost in relation to this
Scheme will rise in the long-term.
The Group has considered the impact of the IAS 19 deficit in
respect of the Group, its employees and pensioners. The deficit has
decreased from GBP1,775,000 at 31 March 2018 to GBP1,749,000 at 31
March 2019 principally arising from changes in scheme data and a
change from the approximate methodology used in previous
disclosures.
26 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 loan facilities and various items such as trade
receivables and trade payables which arise directly from
operations. The Group financed its operations until 16 March 2018
with a bank loan and overdrafts. Following the refinancing the
Group is financed by a fixed interest loan provided by Phoenix SG
Limited, details of the loan facility can be found in note 18. 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 Business Review on pages 8 to 13.
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 31 March
2019 2018
In years In years
------------------------------------------------- --------- ---------
Financial assets - Loans and receivables
Trade and other receivables 2,187 3,610
Cash at bank 2,160 4,596
------------------------------------------------- --------- ---------
4,347 8,206
------------------------------------------------- --------- ---------
Financial liabilities measured at amortised cost
Trade and other payables 6,040 8,404
Borrowings 11,529 10,000
------------------------------------------------- --------- ---------
17,569 18,404
------------------------------------------------- --------- ---------
(13,222) (10,198)
------------------------------------------------- --------- ---------
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or contractual party to a financial instrument fails to
meet its contractual obligations. The Group is mainly exposed to
credit risk from credit sales. In order to manage risk the Group
has implemented policies that require appropriate credit checks on
potential customers before sales are made. These checks are
performed at a local level. The amount of any exposure to any
individual counterparty is subject to a limit which is regularly
reviewed by the Directors.
Credit risk also arises from cash and cash equivalents and
deposits with banks and financial institutions. Risks associated
with cash deposits are limited as the banks used have high credit
ratings assigned by international credit rating agencies.
The Group's exposure to credit risk is limited to the carrying
amount of financial assets recognised in the 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 15 for more
information on financial assets that are past due settlement
dates.
Interest rate risk
The Group finances its operations through a combination of loans
(see note 18), 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 2019 of
GBP542,000 (2018: GBP489,000) comprised loan interest & charges
of GBP512,000 (2018: GBP444,000).
The bank loans in place until 16 March 2018 were linked to
LIBOR. The loan provided by Phoenix SG Limited from 16 March 2018
is a fixed interest loan (5% per annum).
Foreign exchange risk
The Group had no material exposure to foreign exchange risk in
the year ended 31 March 2019. The Group did have assets and
liabilities denominated in foreign currencies relating to USA
activities of Mallett Inc. This was deemed as a material exposure
to foreign currency risk for the Group. Liabilities that arise 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.
After the discontinuation of the Mallett trading business the
only significant foreign asset is a lease on a New York property.
The property is sub-let and generates income to cover associated
costs and therefore the foreign exchange risk is minimal.
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 current cash balance to meet liabilities as
they fall due. The forecasts are dependent upon the liabilities,
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 deteriorated the Group may require access to additional
liquidity.
The Group's financial liabilities have contractual maturities
(representing undiscounted contractual cash flows) as summarised
below:
Between Between
Within 6 and 12 1 and 5
6 months months years Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- --------- -------- -------
At 31 March 2019
Trade and other payables 6,040 - - 6,040
Borrowings - - 11,529 11,529
------------------------- --------- --------- -------- -------
6,040 - 11,529 17,569
------------------------- --------- --------- -------- -------
At 31 March 2018
Trade and other payables 8,404 - - 8,404
Borrowings 10,000 - - 10,000
------------------------- --------- --------- -------- -------
18,404 - - 18,404
------------------------- --------- --------- -------- -------
Included within trade and other payables is an amount of
GBP155,000 (2018: GBP189,000) relating to previous customers of
certain investment plans which will be payable if the customer
chooses not to hold their collectibles or reinvest in other
collectibles.
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.
27 Identity of related parties
The Company has a controlling related party relationship with
its subsidiary companies (see note 31). The Group also has a
related party relationship with its Directors.
Transactions between parent and subsidiaries
The parent company charged management fees of GBP835,000 in the
year to 31 March 2019 (2018: GBP1,771,170) to its subsidiaries.
Transactions between controlling party, parent and
subsidiaries
On 10 September 2018 the Group announced that its subsidiary,
Stanley Gibbons Limited had entered in to an agreement with Phoenix
S.G. Limited to acquire approximately 1,900 items, for an initial
consideration of GBP5.20m, which is payable in cash to Phoenix SG
Limited over the term of the agreement, as and when sales of the
items are made to third parties and will be the net proceeds, after
deduction of a commission payment to be made to SGL, on completed
sales. (see note 13)
Details of the loan facility between the Group, its subsidiaries
and Phoenix S. G. Limited are disclosed in note 18.
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.
GE Shircore was appointed a Director on 19 March 2018 and Chief
Executive Officer on 4 June 2018. He does not receive any
remuneration from the Group. Phoenix Asset Management Partners
Limited, Mr Shircore's ultimate employer, is the investment manager
to Phoenix SG Limited which holds 248,000,000 Ordinary shares
representing 58.09% of the Company's issued share capital.
Year ended 31 March 2019
H G Wilson made purchases during the year to the value of
GBP49,052, he had a sales ledger balance of GBP11,333 at the year
end.
Year ended 31 March 2018
H G Wilson made purchases during the year to the value of
GBP23,514, he had a sales ledger balance of GBP5,818 at the year
end.
During the year the Group paid GBP254,820 to Evolution
Securities China Ltd for corporate consultancy services. C P Whiley
was the Managing Director of this company.
28 Discontinued Operations
During the year ended 31 March 2018 the company began to dispose
of various assets of its Interiors division resulting in the
cessation of trading in this segment. As a result the financial
information relating to the Interiors division has been reported as
a discontinued operation and that information is presented in the
note below.
On 21 November 2017 the directors of Stanley Gibbons (Guernsey)
Limited applied for and were granted an administration order.
Stanley Gibbons (Guernsey) Limited was the entity through which the
Group's Investment division activities had been conducted. The
administration order resulted in the Group losing control of this
business and its assets and so the Investment division's results
have been reclassified as discontinued operations. The assets and
liabilities of Stanley Gibbons (Guernsey) Limited that the Group
lost control of are shown below.
Financial performance and cash flow information
During the year ended 31 March 2019, the Group sold some of the
remaining inventory balance from the Interiors division, which
offset some of the costs associated in closing the remainder of the
division. The financial performance is shown below:
Investments Interiors Total Investments Interiors Total
31 March 31 March 31 March 31 March 31 March 31 March
2019 2019 2019 2018 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----------- --------- -------- ----------- --------- --------
Revenue - 250 250 8,420 3,828 12,248
Expenses - (176) (176) (13,030) (5,644) (18,674)
---------------------------- ----------- --------- -------- ----------- --------- --------
Profit/(loss) before
income tax - 74 74 (4,610) (1,816) (6,426)
Income tax credit - - - - 27 27
---------------------------- ----------- --------- -------- ----------- --------- --------
Profit/(loss) after
income tax of discontinued
operation - 74 74 (4,610) (1,789) (6,399)
Gain on disposal of
assets - - - 269 1,870 2,139
---------------------------- ----------- --------- -------- ----------- --------- --------
Profit/(loss) from
discontinued operation - 74 74 (4,341) 81 (4,260)
---------------------------- ----------- --------- -------- ----------- --------- --------
Net cash outflow from
operating activities - 74 74 (1,469) (2,802) (4,271)
Net cash - sales proceeds - - - (87) 2,740 2,653
---------------------------- ----------- --------- -------- ----------- --------- --------
Net decrease in cash
from discontinued
operations - 74 74 (1,556) (62) (1,618)
---------------------------- ----------- --------- -------- ----------- --------- --------
Details of the sale of assets
Details of the assets disposed of in the year ended 31 March
2018 and the detail of the balance sheet of the Investment division
at the date of administration are shown in the note below.
Investments Interiors Total
31 March 31 March 31 March
2018 2018 2018
GBP'000 GBP'000 GBP'000
---------------------------------------- ----------- --------- --------
Consideration received
Cash (87) 2,768 2,681
Fair value of consideration - (713) (713)
---------------------------------------- ----------- --------- --------
Total disposal consideration (87) 2,055 1,968
Amount of net (assets)/liabilities sold 356 (185) 171
---------------------------------------- ----------- --------- --------
Gain/(loss) on sale 269 1,870 2,139
---------------------------------------- ----------- --------- --------
The carrying value of assets and liabilities for the Investments
division is shown as at the date of administration, 21 November
2017. The Interiors division trade and assets was disposed of in a
number of transfers during the year. The assets and liabilities
below is the consolidation of those disposals.
Investments Interiors Total
31 March 31 March 31 March
2018 2018 2018
GBP'000 GBP'000 GBP'000
---------------------------- ----------- --------- --------
Property plant & equipment - 209 209
Intangible assets - 740 740
Investments - 11 11
Inventories 22,379 21 22,400
Trade and other receivables 11,748 320 12,068
---------------------------- ----------- --------- --------
Total assets 34,127 1,301 35,428
Liabilities
Trade and other payables (34,483) (1,116) (35,599)
---------------------------- ----------- --------- --------
Net assets/(liabilities) (356) 185 (171)
---------------------------- ----------- --------- --------
29 Post Balance Sheet Events
Claim against certain Mallett Directors
The Group announced on 14 June 2019 that all outstanding claims
involving certain former directors of Mallett plc have now been
resolved, bringing the matter to a full and final conclusion.
The Group has received GBP850,000 in full as result of this
agreement.
Lease of premises
On 4 July 2019 Stanley Gibbons Limited, a subsidiary of the
Company, signed a lease for the basement, ground and first floors
of 399 Strand, London, with the Company acting as guarantor. The
lease is a 15 year lease expiring on 30 June 2034 with a 10 year
break clause. Annual rental will be GBP300,000 until 1 July 2021
when the rent rises to GBP400,000 per annum.
30 Contingent liabilities
In previous years the Group had significant uncertainty
resulting from investment contract guarantees and undertakings
given by its subsidiary Stanley Gibbons (Guernsey) Limited. The
granting of the administration order on 21 November 2017 for
Stanley Gibbons (Guernsey) Limited resulted in the Group's loss of
control of the business and its assets and liabilities. This
resulted in a significant contingent liability, approximately
GBP54,150,000 at 31 March 2017 (the last accounting date prior to
administration), relating to guarantees and undertakings having
been removed from the Group and fundamentally limited the exposure
of the Group to the related buyback liabilities and associated cash
outflows.
On 2 April 2019 the Royal Court of Guernsey ordered that Stanley
Gibbons (Guernsey) Limited enter liquidation, this process is still
ongoing.
31 Principal subsidiaries
The principal subsidiary undertakings of the Company, all of
which are 100% owned are as follows:
Country of Description of
Name incorporation shares held Principal activity
------------------------------- -------------- -------------------- -----------------------
Stanley Gibbons (Guernsey) Guernsey Ordinary GBP1 shares Philatelic dealer and
Limited dealer in memorabilia
(in liquidation)**
Stanley Gibbons (Jersey) Jersey Ordinary GBP1 shares Philatelic dealer and
Limited dealer in memorabilia
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 and
Limited dealer in memorabilia
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 in rare coins
and other collectibles
Greenfield Auctions Limited* England Ordinary GBP1 shares Auctioneer of works
on paper
The Fine Art Auction Group England Ordinary GBP0.45 Auctioneer and valuer
Limited* shares of art, antiques and
Preferred GBP1 collectibles
shares
Preferred GBP0.25
shares
Deferred GBP0.25
shares
Dover Street Limited* (formerly England Ordinary GBP0.05 Holding company
Mallett Limited) shares
Milsom Street Limited* England Ordinary GBP1 shares Antique dealers
(formerly
Mallett & Son (Antiques)
Limited)
Octagon Chapel Limited* England Ordinary GBP1 shares Antique dealers
(formerly Mallett Overseas
Limited)
Mallett, Inc* United States Common stock US$1 Antique dealers
Corked Limited* England Ordinary shares Wine auctioneer
Stanley Gibbons Finance England Ordinary GBP1 shares Loan finance
Limited
------------------------------- -------------- -------------------- -----------------------
* Indirect holding
** Not controlled due to being in liquidation
32 Controlling party
In the opinion of the directors the controlling party of the
Group after the 19 March 2018 was Phoenix UK Fund Limited and after
27 March 2018 was Phoenix S. G. Limited. There was no controlling
party prior to 19 March 2018.
Directors' Biographical Details
Henry George Wilson, Director and Non-executive Chairman
Date of Appointment as Director: 16 May 2016.
Harry Wilson received a BSc in physics from Manchester
University in 1973. Following graduation he spent 17 years in
various roles at British Petroleum and attended the Executive
Programme at the INSEAD Business School in France in 1985.
Harry has over 35 years business experience, initially in the
oil industry but successively in a wide range of business sectors.
He has been founder, CEO and Chairman of a number of independent
oil companies and led public listings for five companies including
Dragon Oil Plc and Eland Oil & Gas Plc. He has been an
executive and non-executive director of listed companies in the UK
and abroad and has built up an extensive range of London and
international contacts in the investment, broking and advisory
communities.
Throughout his business career Harry has taken a keen interest
in collectibles, particularly stamps and antiques. He is a
longstanding member of the Royal Philatelic Society London, the
Malaya Study Group and the India Study Group.
Harry was appointed a Director on 16 May 2016 and became
Executive Chairman on 14 July 2016. Following completion of the
debt restructuring and subscription for new shares by Phoenix he
resumed his role as Non-Executive Chairman on 19 March 2018. He is
Chairman of the Nomination Committee and member of the Audit
Committee.
Graham Elliott Shircore, Chief Executive Officer
Date of Appointment as Director: 19 March 2018.
Graham Shircore graduated from Bath University with a BSc
(Hons.) degree in Business Administration in 2005. During his time
at University he completed internships with Fidelity, Principal
Investment Management and Motorola Finance as well as passing the
IMC exam.
Following graduation he joined Aviva Investors, subsequently
becoming a UK Equity Analyst there. Having passed all three levels
of the CFA exam he became a UK Equity Fund Manager in 2008 and
later also managed European funds before moving to Rothschild
Wealth Management in 2013 as a Senior Equity Analyst. There he
helped shape and implement the equity research process.
Graham joined Phoenix Asset Management Partners in January 2017
and was heavily involved in the due diligence process which
ultimately led to Phoenix taking a 58% equity stake in The Stanley
Gibbons Group.
Graham was appointed a Director on 19 March 2018 and Chief
Executive Officer on 4 June 2018.
Anthony Michael Gee FCA, Chief Finance Officer
Date of Appointment as Director: 1 August 2019.
Anthony Gee graduated in 1990 with a BSc in Accountancy and
qualified as a Chartered Accountant with Ernst & Young.
He joined the Stanley Gibbons Group in 2012 and has since held a
variety of finance and operational roles, most recently as Group
Chief Operating Officer. He was appointed Interim CFO on 29 March
2019 and joined the Board as Chief Finance Officer on 1 August
2019.
Mr Gee is an experienced finance executive having previously
held senior positions at Hilton International and latterly at
Flying Brands, where he became finance director.
Louis Emmanuel Castro BSc, BComm (Hons), FCA, Non- Executive
Director - Independent
Date of Appointment as Director: 3 October 2016.
Louis has over 30 years' experience in investment banking and
broking 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 board directors.
Previously he was Chief Executive 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 of several quoted companies.
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.
Mark West, MBA, Non-Executive Director - Independent
Date of Appointment as Director: 3 December 2018.
Mark is an experienced retail executive with a proven track
record of delivery across a range of product categories and
business disciplines. Most recently until June 2018 he was Chief
Technology Officer for JAB Luxury GmbH (LABELUX), a European
private luxury group, the former owner of Jimmy Choo and Belstaff
and shareholder of Bally.
Prior to this, Mark worked for more than 24 years in various
senior management and director roles at Harrods as well as working
as a Consultant/Advisor for a number of retail brands such as
Aquascutum, Burberry, Liberty, Hamleys and Fat Face. He is Chairman
of the Remuneration Committee.
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 23 October 2019 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.
NB: You will not receive a form of proxy for the Annual General
Meeting in the post. Instead, you will receive instructions to
enable you to vote electronically and how to register to do so. You
will still be able to vote in person at the Annual General Meeting,
and may request a hard copy proxy form directly from the
registrars, Link Asset Services, 34 Beckenham Road, Beckenham, BR3
4TU (telephone number: 0371 664 0391).
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 2019 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 GE Shircore, 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 AM Gee, 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 M West, 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 Jeffreys Henry LLP 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 64,000,000 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 2020; 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 73,083,357 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 142,000,000 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 142,000,000),
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 2020, 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:
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
106,500,000 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 2020 (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: 18 September 2019
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.
You can vote either:
-- online, by logging on to www.signalshares.com and following the instructions;
by requesting a hard copy form of proxy directly from the
registrars, Link Asset Services by calling tel: 0371 664 0391.
Calls cost 12p per minute plus your phone company's access charge.
Calls outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 09:00 - 17:30, Monday to
Friday excluding public holidays in England and Wales;
-- in the case of CREST members, by utilising the CREST
electronic proxy appointment service in accordance with the
procedures set out below.
In order for a proxy appointment to be valid a proxy instruction
must be completed. In each case the proxy instruction must be
received by Link Asset Services at 34 Beckenham Road, Beckenham,
Kent BR3 4ZF by 11.30 am on 21st October 2019.
2. 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).
3. 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.
4. 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.
5. 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.
6. 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.
7. 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 23 October 2019 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, Link 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.
8. 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 21 October 2019 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 21 October 2019 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.
9. 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.
10. 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.
11. 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, Graham
Shircore, Anthony Gee, Louis Castro and Mark West will retire from
office and offer itself for re-election, at this year's Annual
General Meeting.
Biographical details of the Directors seeking re-election are
contained in the Annual Report 2019.
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 73,083,357
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 142,000,000 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 142,000,000 Ordinary Shares.
Therefore, the maximum number of Ordinary Shares which may be
allotted under this resolution is 73,083,357 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 106,500,000 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR CKFDNPBKDOCD
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September 19, 2019 02:00 ET (06:00 GMT)
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