TIDMSGI
RNS Number : 0789I
Stanley Gibbons Group PLC
10 August 2021
10 August 2021
THE STANLEY GIBBONS GROUP PLC
(the "Group" or "Company")
Final Results and Notice of Annual General Meeting
The Company has today published its Annual Report and Accounts
for the year ended 31 March 2021 which is available on the
Company's website www.stanleygibbonsplc.com 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 22 September 2021 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 +44 (0)20 3100
Edward Thomas 2000
The Stanley Gibbons Group plc
Annual Report and Accounts
for the year ended 31 March 2021
Group Annual Report and Financial Statements
for the year ended 31 March 2021
Financial Highlights
Year ended Year ended
31 March 31 March
2021 2020
-------------------------------------------------------- ---------- ----------
Group turnover from continuing operations (GBPm) 10.8 13.2
Trading loss from continuing operations (GBPm) (2.7) (2.5)
Loss before taxation from continuing operations (GBPm) (4.1) (2.5)
Adjusted (loss)/profit before taxation from continuing
operations (GBPm) (2.7) (2.6)
Basic earnings per share - continuing operations (p) (0.94) (0.59)
Adjusted earnings per share - continuing operations (p) (0.64) (0.62)
Dividend per share (p) - -
Total borrowings (GBPm) 14.6 14.2
Net assets per share (p) (0.2) 0.9
-------------------------------------------------------- ---------- ----------
Financial Calendar
Annual General Meeting Wednesday 22 September 2021
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 A M Gee
Registered Office 22 Grenville Street
St. Helier
Jersey JE4 8PX
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: 0371 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 31st
March 2021 for The Stanley Gibbons Group plc ("the Group" or "the
Company").
Over the last financial year we have had to work through a true
Black Swan event - the global pandemic crisis - which has impacted
every aspect of our business. We had to adapt quickly to an
exceedingly difficult situation and while I can say we swiftly made
highly effective changes to our day-to-day operations it will come
as no surprise that the financial performance was negatively
affected. It was particularly disappointing that our extensively
revamped shop and offices on the Strand were completed at the start
of a series of lockdowns which resulted in a massive drop in
footfall. The "rebuild" strategy which had delivered a progressive
financial improvement over the previous two years took a pause
while we concentrated on enhancing the business offering and our
delivery of service while seeking to minimize the financial impact
of the virus. Our online presence has been strengthened over the
year and unsurprisingly sales over the internet have continued to
increase as a percentage of the total to 19%, more than double the
figure for 2020. We also made the decision to bring Baldwin's
auctions back to the Strand and we will be holding our first
in-house sales later this year.
Sales over the last year continue to be driven by the longer
term plan to rebalance stock to fit better with our customers'
requirements. A single trade sale of GBP0.8m of long-held
philatelic items contributed significantly to the stock reduction
this year. Group turnover for the year of GBP10.8m was down 18%
from last year (2020: GBP13.2m) as a result of the viral pandemic
while gross margin was also lower at 44% (2020: 46%). The trading
loss from continuing operations before adjustments and exceptional
items slipped to GBP2.7m (2020: GBP2.5m) which included an adverse
impact of GBP0.6m from sub-let properties in our legacy interiors
division. The pre-tax loss from continuing operations also
increased to GBP4.1m (2020: GBP2.5m) resulting in the Group having
net liabilities of GBP1.0m at the balance sheet date (2020: net
assets GBP3.7m). Cash at the year-end was GBP2.1m (2020 GBP2.5m)
while borrowings were GBP14.6m (2020 GBP14.2m).
A further reduction in overheads for the year of 14% down to
GBP2.2m (2020 GBP2.6m) was achieved in part as a result of
government subsidy schemes but also due to a fall in headcount to
66 (2020: 71). The reduction in costs was also helped by the large
number of staff and directors who voluntarily took cuts in
remuneration during the year. Further overhead savings are likely
to be more modest following the substantial reductions achieved
during the restructuring of the Group over the last few years. The
Board has remained unchanged during the year however Richard Purkis
our Company Secretary has stepped down after over 30 years of
service to the Company. We wish him a long and happy
retirement.
Outlook
As we prepare this report, "Lockdown" has just ended, and we
look forward to things opening up and getting back to some form of
normality in the coming months. Within the enforced constraints
over the last 18 months, we have strengthened the foundations of
the Company and we will now resume the strategy of rebuilding the
improvements in financial performance which were achieved prior to
the most recent financial year. We have some good things ahead of
us - firstly the revamped shop in the Strand, where we hope so see
visitor numbers jump particularly once tourist travel becomes
easier. You will also have seen the press coverage of our very
recent acquisition of the famous British Guiana 1 cent Magenta
stamp. In addition to the prestige generated by simply owning this
unique item, it also demonstrates the continued strong support of
Phoenix SG Limited, our majority shareholder. We plan to offer
fractional ownership of this stamp which will be an exciting first
in the philatelic world. The re-launch of Baldwins auctions in the
autumn will also be something to watch.
The collectibles business has continued to be strong over the
last year and we have seen many "dormant" clients resuming their
collecting interests together with new customers who are making
contact. Stamps and coins have both made good prices this year
particularly the rarer and higher priced items which have moved
ahead. Our highly regarded specialist teams are increasingly
important to our clients who look for help with their collections
and see this as a key added-value from Stanley Gibbons. I would
like to thank all our staff for their amazing efforts in what has
been an incredibly difficult year for the Company - their
willingness to adapt where necessary and change working
arrangements at short notice have made a significant contribution
to the performance of the Group.
There is still a lot to do to achieve our goals of positive cash
flow and sustainable profitability but our strategy is clear and we
are now well set to deliver on this. On behalf of the Board, I
would like to thank all our stakeholders for their ongoing support
through what can only be described as a unique year, the likes of
which I hope we shall never see again. I look forward to being able
to update you with more news of our progress, but in the meantime
wish you and your families good health as things return, hopefully,
to some form of normality.
Annual General Meeting
As you will see from the Notice at the end of these Report &
Accounts, the Company's Annual General Meeting will be held at 399
Strand, London WC2R 0LX on Wednesday 22 September 2021, commencing
at 11:30am.
The Directors consider that the resolutions, as set out in the
Notice of Meeting, are in the best interests of the Company and its
shareholders as a whole and unanimously recommend shareholders to
vote in favour of the resolutions as they intend to do so in
respect of their own beneficial shareholdings. Accordingly we ask
all shareholders to appoint the Chairman of the Meeting as their
proxy to vote on the resolutions. Proxy voting instructions can be
found in the Notice of Annual General Meeting.
Harry Wilson
Chairman
9 August 2021
Chief Executive's Letter to Shareholders
Fellow shareholders
In what has inadvertently become a bit of a tradition in these
commentaries, I once again wish to discuss two contrasting elements
of our business and how these relate to the journey we are on.
Firstly, our operational progress and secondly, various
non-operational elements.
In combination, I believe that these will give you a
comprehensive picture of the business which you own a part of.
Putting Our Best Foot Forward
We have previously discussed the impact which COVID has had on
the different elements of our business.
Broadly speaking, these continued through the second half of the
financial year before beginning to reverse to some degree as things
started to open up. Footfall in the Strand for example is far
higher now than it was 6 months ago but remains significantly lower
than in a pre-COVID environment.
There are also one or two aspects of consumer behaviour which
appear to have experienced a degree of structural change, not least
when it comes to the digital world, something we have talked about
before and do so again in a different context below.
Despite the upheaval in the wider world, we have combined
consistency of overarching strategy with a desire to become more
experimental, more flexible and faster moving. A couple of examples
of the former are the production of our first catalogues through
our new digital database and bringing our Baldwin's auction
offering back in house.
There remains however an awful lot to do in this regard, speed
of execution continues to be something which we are pushing hard to
improve alongside a greater willingness to try new things. We have
made progress and increasingly the speed at which we can get things
done is limited by third parties. The source of the bottleneck has
begun to shift but it is a bottleneck nonetheless and more work is
needed in this area.
The other most pronounced impact of the last 12 months has been
in terms of the changes internally. It has been both interesting to
see how we have collectively responded to the challenge and we may
well look back in years to come and feel that the changing culture
was the most sustained outcome of the COVID-19 crisis. The benefits
of this for customers, colleagues and the business alike have
become increasingly apparent and we need to ensure that this rate
of progress doesn't slow - in a business built on long-term
relationships between all three of those parties, its value this
can be easily underestimated.
This is a direct function of the effort everybody at Stanley
Gibbons continues to put in and I once again want to thank all of
my colleagues on behalf of all shareholders for this.
The Biggest Individual Purchase In Our History
We must also discuss of course our purchase of the world's most
valuable and famous stamp - or perhaps more specifically the
motivations behind it and what comes next.
The profile, reputational and customer benefits are reasonably
obvious, it is up to us to make the most of these. It is however
the introduction of the concept of shared ownership into the
philatelic world which is most meaningful. While the offering is
still being worked on, it will be aimed at both existing collectors
and a new potential audience who have not traditionally collected
stamps physically. The scope to then bring this new audience
further into the hobby in either a traditional, or potentially,
digital only world is an exciting one. It is also a model which has
the potential to be applied in other areas too, not least the world
of numismatics in which Baldwin's is of course already highly
recognised and respected. You can learn more here:
www.1c-magenta.com.
How people collect more widely is changing while the concept of
shared ownership of collectibles, albeit quite nascent, is becoming
more established. It is a combination of these two cultural shifts
which we aim to be at the vanguard of helping to develop
further.
The Boring (but very important) Stuff
At the time of the interim report, we discussed our goal of not
drawing down further on our loan facility until after the financial
year end. I am pleased to say that we achieved this and more, only
drawing down on the loan this summer. This was a great achievement.
It also leads into a necessary discussion about the corporate side
of things.
The significant operational progress and exciting developments I
mention above, are in contrast to certain elements of a more
corporate nature which are less positive. The vast majority of
these can trace their roots back, directly or indirectly, to events
of the past, however they impact us every day in the present and
are a major drain on our resources and while we have spent a lot of
time on these in recent months, we have not made the progress we
would have hoped for.
The somewhat complex and multi-faceted legal situation regarding
our leasehold property on Madison Avenue is ongoing and complex. We
have, in the last few days, agreed a settlement with our tenant but
conversations with our landlord are ongoing as are the legal
proceedings which they have commenced. Further details can be found
in the Business Review section of this report and we are hopeful of
a more definitive outcome in the near future.
As we have previously mentioned, we have also been in active
dialogue with the trustees of our defined benefit pension schemes.
While certain elements of our discussions were put on hold
temporarily, this relationship is a very constructive one as
evidenced by their supportive stance with regard to the above
matter. It is also our intention that more in depth discussions
will recommence shortly as these would coincide with the upcoming
triennial revaluation process and it is clear that the current
contributions are not reflective of the business' financial
position.
Our majority shareholder is of course also our main creditor and
we are in frequent dialogue with them. This dialogue includes
regular discussions regarding our financial position and it is
important to note that they continue to be extremely supportive of
the business, including of course, making further capital available
in order for us to purchase the 1c Magenta.
In Summary
At the end of each year we aim to be able to say that we believe
we are a significantly better business than we were at the start of
it.
In a year such as the one we have just been through this becomes
even more subjective than normal. We have more active customers
than we did at the start of the year and I believe that they are
experiencing improved levels of service, however financially, we
have of course been bloodied by recent events.
My own view is that COVID and its impacts have been a short term
negative but that this year will prove to be a long term positive
for us from a business perspective. Perhaps only time will tell but
we already know that the current year will be an busy one which is
presenting us with exciting and potentially very meaningful
opportunities.
Graham Shircore
Chief Executive Officer
9 August 2021
Business Review
Summary Trading and Operations
Summary results:
-- Turnover from continuing operations of GBP10.8m was GBP2.4m
(18.3%) lower than last year. The Philatelic division contributed
GBP1.7m to this decline and the legacy interiors division GBP0.7m
both as a result of the COVID-19 pandemic.
-- Gross margin for the year was 43.8% (2020: 45.9%). The sales
impact on high margin business such as auction, and lack of
availability of new stock in some areas resulted in lower
margins.
-- Trading losses from continuing operations, before accounting
adjustments and exceptional costs increased to GBP2.7m from
GBP2.5m, although the issues with our legacy interiors sub-let
properties saw profits fall by GBP0.6m whilst the ongoing business
saw losses narrow by GBP0.4m.
-- Loss for the financial year from continuing operations
increased by GBP1.6m to GBP4.1m compared to GBP2.5m last year.
There was a GBP0.9m impairment charge for the New York leasehold
improvement assets.
-- Profit for the financial year from discontinued operations was GBP0.1m (2020: GBP0.1m).
-- At 31 March 2021 the Group had net liabilities of GBP971,000
as a result of the loss incurred in the year.
-- Borrowings at the balance sheet date of GBP14.6m (2020:
GBP14.2m) were partially offset by cash of GBP2.1m (2020: GBP2.5m).
There was no draw down from our loan facilities during the
financial year.
Continuing operations
12 months to 31 March 12 months to 31 March
----------------------- -----------------------
2021 2021 2020 2020
Sales Profit Sales Profit
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ---------- ----------- ----------
Philatelic 4,791 (71) 6,459 (90)
Publishing 1,989 102 1,946 (99)
A H Baldwin 3,335 321 3,425 553
Legacy interiors property & legal 647 (424) 1,345 222
Other & corporate overheads - (2,193) - (2,555)
Loan interest - (462) - (529)
--------------------------------------- ----------- ---------- ----------- ----------
Trading sales and losses 10,762 (2,727) 13,175 (2,498)
Amortisation of customer lists - (240) - (240)
Pension service & share option charges - - - -
Finance charges related to pensions - (135) - (126)
Exceptional operating income/(charges) - (980) - 353
--------------------------------------- ----------- ---------- ----------- ----------
Group total sales and loss before tax 10,762 (4,082) 13,175 (2,511)
--------------------------------------- ----------- ---------- ----------- ----------
Overview
Group turnover from continuing operations was GBP10.8m for the
year ended 31 March 2021 compared to GBP13.2m in the prior year.
The COVID-19 pandemic both directly and indirectly affected
turnover in both our Philatelic and Numismatic divisions. Some
parts of the business such as auctions and the retail shop were
directly impacted by the movement restrictions imposed by the
"lockdowns". Trade shows and exhibitions were cancelled so our
ability to meet new customers face to face was curtailed although
our main trading divisions all saw an improvement in online sales
as a result of the improved online offering. Operating costs fell
by GBP1,039,000 during the year. The Group benefited from the UK
governments furlough scheme and business rates holiday and other
expenditure was reduced as a result of the impact on our ability to
trade with customers face to face. However with the adverse impact
of the pandemic on our legacy interior division the trading loss
for continuing operations, before accounting adjustments including
exceptional operating charges and finance charges related to
pensions increased to GBP2.7m (2020: GBP2.5m).
The COVID-19 pandemic has increased uncertainty for everyone and
Stanley Gibbons is not immune. The pandemic has increased the risk
to the Group's ability to forecast future events and has a direct
impact on the Group in regard to the properties we sub-let. As
discussed in the Chief Executive's Letter to Shareholders the Group
are aware that these are matters that need to be addressed with our
lender and pension trustees, all of which add to the difficulty to
predict future events. These uncertainties have been highlighted in
the going concern statement and in the auditors report. The
Directors have made reasonable enquires to ascertain that the Group
has adequate resources and the support of its lender and pension
trustees and will continue the work to move the Group forward.
Philatelic
The Philatelic division contains our stamp dealing and auction
business. The Philatelic Division was adversely impacted by the
pandemic restrictions. Its turnover was GBP1.7m lower in the year
at GBP4.8m. The biggest impact was on our auction business where
turnover of GBP0.7m was 52% down and retail where turnover was 60%
lower. We were only able to hold 7 auctions (2020: 11) and two of
these were smaller online stay at home auctions; although this was
a new venture for the Group and did prove popular with
collectors.
Our Philatelic dealing operations were not immune from the lack
of opportunities to meet with our customers and despite the
improved online experience and increase in online marketing, sales
were GBP0.4m down. The sales were boosted by a large GBP0.8m trade
sale of older stock.
Despite the impact on sales, losses for the division at GBP0.1m
were at the same level as in the previous year. Gross margin
percentage at 39% was up on the 35.7% achieved in the prior year
and with the tight control of costs, some of which was forced upon
us by the restrictions, losses were stabilised.
Publishing
Sales in this division increased by 2.2% during the year to
GBP2.0m. During the period of the lockdowns there was an increase
in collectors either taking up the hobby or returning to it. Our
Publications Division benefited from this. The performance could
have been even better, but our new database system took longer to
implement than was anticipated, which resulted in one of our big
four catalogues not being produced and a number of smaller titles
not being published. However, with the higher demand levels, strong
margins and some cost benefits from the introduction of the new
publications database the division returned to profit.
Coins & Medals
Sales decreased year on year by 2.7%, to GBP3.3m. There was a
strong demand for coins during the year but sales were restricted
by the lack of availability of supply, primarily a result of the
pandemic. The gross margin percentage was 5% points lower at 26%.
The previous years margins were boosted by a large trade sale of
GBP0.25m at 80% margin. Baldwin's of St James's, the auction joint
venture, generated GBP35,000, the Group's share of the profit, in
the year, compared to GBP50,000 in the previous period. The Group
agreed with its partner to terminate the joint venture early and
bring auctions back in house for the year ending 31 March 2022.
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 and a property in Pall Mall, London, where rental
income matched costs. In the year ended 31 March 2021 the Group
received no rent from its sub tenant at its New York property as
the sub-tenant was looking to vacate the property and close its
operations in the building. As a result the Group paid no rent to
its landlord. The Group did draw down the security deposit from the
sub-tenant and has used these funds to pay property taxes and
operating and security costs related to the building. As a result
of the non-payment of the rent, by the tenant, the Group has
generated a loss of GBP0.4m compared to a profit of GBP0.2m in the
previous year.
Corporate Overheads
Corporate overheads declined by a further 14% to GBP2.2m. Of the
GBP0.4m saving in the year, GBP0.3m was the Group's benefit from
the UK government's business rate holiday and furlough scheme.
Directors and management also took voluntary remuneration cuts or
deferrals.
We continue to identify areas where we can 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 last few years has significantly reduced the
corporate overheads and each year further savings are 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 identified.
Other Accounting Adjustments & Finance Charges related to
pensions
Amortisation of customer lists and finance charges related to
pensions for the year ended 31 March 2021 were GBP0.4m (2020:
GBP0.4m). In the opinion of the Directors, such accounting charges
do not form part of the operating performance of the Group.
Exceptional Operating Charges/(Income)
Exceptional operating charges/(income), can be further analysed
as follows:
Year ended Year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------------------------------------- ------------- -------------
Stock provisions - 286
Settlement of legal case - (850)
Accelerated impairment of intangible assets - 36
Loss on disposal of tangible fixed assets - 42
Impairment of receivables - 155
Dilapidations on Strand property - (26)
Impairment of leasehold assets - New York 930 -
Legal fees - New York property dispute 29 -
Redundancy and reorganisation 21 -
Legacy wind-down costs of overseas entities - 4
-------------------------------------------- ------------- -------------
980 (353)
-------------------------------------------- ------------- -------------
The tenants in our New York property have not paid rent since 1
April 2020. It is the opinion of the Directors that as a result of
these non-payment of rent the leasehold improvement assets are
fully impaired and therefore an impairment provision of GBP930,000
has been charged to the Consolidated Statement of Comprehensive
Income at 31 March 2021 in relation to the leasehold assets at the
New York property. This has been classified as an exceptional item.
The net carrying value of the leasehold improvement assets relating
to this property at 31 March 2021 was GBPnil (31 March 2020 -
carrying value of GBP994,000).
The Group has incurred GBP29,000 of fees in relation to the
legal cases related to the New York property. These have been
classified as an exceptional item.
A small number of redundancies were made during the year and the
GBP21,000 cost associated with these has been classified as an
exceptional item.
Discontinued Operations
We continue to sell items, through antique and art auctions, of
the remaining stock items from our Interiors division which was
discontinued in the year ended 31 March 2018. The levels of stock
are now minimal.
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 2021 31 March 2020
GBP'000 GBP'000
------------------------------------- ------------- -------------
Philatelic rarities 12,749 14,145
Philatelic stock (general) 691 760
Coins and medals 2,227 2,306
Antiques - 19
Publications, albums and accessories 296 283
------------------------------------- ------------- -------------
Group owned stock 15,963 17,513
------------------------------------- ------------- -------------
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. Overall net inventory holding has
decreased by GBP1,550,000 to GBP16.0m. One trade sale of long held
philatelic rarities, of GBP0.8m of inventory was a major
contribution to the stock reduction.
Cash Resources
As at the balance sheet date the Group had cash balances of
GBP2.1m and a loan of GBP14.6m repayable in March 2023. The loan is
due to Phoenix S. G. Limited, the Group's controlling shareholder.
During the year the Group did not draw down on its facility -
headroom of GBP2m remains to draw - to fund the day to day
operation of the business. On 6 May 2021 the Group requested a draw
down of GBP1m from its Facility C loan. GBP500,000 of the funds was
received in June 2021 and a further GBP500,000 received in August
2021.
The COVID-19 pandemic did adversely impact the Group's trading
performance but the Group was able to defer or waive approximately
GBP0.6m of cash payments, including GBP0.2m for business rates,
GBP0.1m for furlough schemes, GBP0.1m for pension payment and VAT
deferrals and GBP0.1m deferral of rent.
As detailed in note 18, as at 31 March 2021, the Group would
have been in default of its loan facilities as the Group would have
failed to satisfy the financial covenants in the loan
agreements.
On 24 March 2021 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.
The Directors are aware that there is only GBP1m headroom
remaining in the current loan facilities and that repayment of the
facilities is due in March 2023. The Directors have begun
discussions with the pension trustees over the long term funding of
the pension scheme, and it is the Directors intention to begin
discussions with Phoenix to address the longer term financing
position of the Group. Both of these parties have charges over the
Group's assets (see notes 15 and 24).
On 29 June 2021 the Group agreed a GBP6.5m loan with Phoenix
S.G. Limited to fund the purchase of the British Guiana 1c Magenta
and associated costs of the purchase.
As at 30 July 2021 the Group had cash balances of GBP1.4m and an
outstanding loan balances of GBP21.9m.
New York Property Litigation
Mallett Inc, the Group's subsidiary commenced legal proceedings
against the sub-tenant in the New York property for full settlement
of the rent that is due and that which is due for the period to
February 2027. Mallett Inc has had legal proceedings issued against
it for the amount owed to the landlord for the rent currently due.
On 6 August 2021 Mallett Inc agreed a settlement with the tenant.
The settlement was materially less than the rent due from the
tenant and will not fully settle the full lease liability to the
landlord. The landlord continues to progress litigation filing a
Motion for Summary judgment for the GBP1.0m of outstanding rent, in
August 2021. Discussions continue to try to reach an agreement with
the landlord, the remaining lease liability including the GBP1.0m
owed, is GBP4.5m (see notes 25 and 32).
Legal Claim
On 5 May 2021 the Group received a letter before action from a
previous investor of Stanley Gibbons (Guernsey) Limited (In
liquidation). The Group has sought counsel opinion on this and has
responded to the claim which, it believes is wholly without merit.
This opinion is based on advice previously sought in conjunction
with the liquidation of Stanley Gibbons (Guernsey) Limited and more
specific advice regarding the letter before action in question.
Anthony Gee
Chief Finance Officer
9 August 2021
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 continues 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: https://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.
The Board met 12 times during the year and the Directors'
attendance at those Board meetings was as follows:
Attendance
----------- ----------
H Wilson 12
G Shircore 12
A Gee 12
L Castro 11
M West 11
----------- ----------
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 and,
during the year, established a Cyber sub-committee with appropriate
in-house expertise to scrutinise this specialist subject.
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.
Directors Statement
A director of a company must act in the way he or she considers,
in good faith, would likely promote the success of the company for
the benefit of the shareholders. In doing so, the director must
have regard, amongst other matters, to the following issues:
-- likely consequences of any decisions in the long term;
-- interests of the Group's employees;
-- need to foster the company's business relationships with suppliers/customers and others;
-- impact of the company's operations on the community and environment;
-- the Group's reputation for high standards of business conduct; and
-- need to act fairly between members of the Group.
Culture
Our values and leadership behaviours are a vital part of our
culture to ensure that through good governance, our conduct and
decision making we do the right thing for the business and our
stakeholders. The Board acknowledges that every decision it makes
may not necessarily result in a positive short-term outcome for all
of the Group's stakeholders. We believe in creating solid
foundations for the future, so there is a balance between short
term success and longer-term prosperity.
Shareholders
The primary mechanism for engaging with our shareholders is
through the Company's AGM and also through the publication of the
Group's financial results for the half year and full year.
Shareholders showed their support for the Board and its strategy by
passing all resolutions at the AGM. We encourage our shareholders
to ask questions at the AGM and participate in discussion about our
performance and products.
Customers
Understanding our customers and what matters to them is key to
the success of the Group. We listen and talk to them at every
opportunity, including when COVID-19 restrictions allow, many
opportunities to meet with them as we attend shows around the
world. In addition to direct contact we have increased the flow of
digital communications, particularly during the COVID-19
"lockdown". Many of our philatelic customers also contribute to our
publications using their extensive knowledge of the hobbies.
Suppliers/Vendors
We operate in a way that safeguards against unfair business
practices and encourages suppliers to adopt reasonable business
practices for mutual benefit. Many of our customers are also our
vendors, whether that is collectors or other collectible dealers.
Relationships are the key to building a successful collectibles
business and vendors are a valued partner in our success.
Employees
We have an experienced, skilled and dedicated workforce which we
recognize as a crucial asset of the Group. A key to the Group's
renewed success has been its engaged workforce. The Group's
Directors, alongside our management teams, work hard to provide a
positive working environment. During the COVID-19 pandemic the
Directors introduced enhanced flexible working. Regular update
emails have been circulated together with online briefings. It is
important for us to provide opportunities for all of our staff to
allow them to grow and achieve their potential.
Community and environment
We are proud to employ people in the communities that we
operate. As a Group we offer the collecting community the assurance
of the authenticity of our products based on our experts knowledge
which enable the collecting community to be confident in the
provenance of material that bears the Group's trading names. We use
environmentally friendly suppliers and products where possible.
By order of the Board
AM Gee
Secretary
9 August 2021
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.
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
During the year contributions were paid on behalf of A Gee 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 2021 can
be analysed as follows:
2021
2021 Performance 2021 2021
Salary & Related Other Pension 2021 2020
Fees Bonus Benefits Contributions Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- -------- ----------- -------- ------------- ------- -------
H Wilson 45 - - - 45 60
G Shircore - - - - - -
A Gee 116 - - 12 128 135
L Castro 26 - - - 26 35
M West 26 - - - 26 35
213 - - 12 225 265
----------- -------- ----------- -------- ------------- ------- -------
The periods each Director served during the year are given in
the Directors' Report.
Directors' Share Options
Exercise Number Number
Date of Earliest Expiry Price at 31 March Forfeited at 31 March
exercise
grant date date (1p shares) 2020 in period 2021
--------- ---------- --------- -------- ----------- ----------- --------- -----------
H Wilson 5/10/16** 5/10/19 5/10/26 11p 2,000,000 - 2,000,000
A Gee 5/10/16** 5/10/19 5/10/26 11p 400,000 - 400,000
--------- ---------- --------- -------- ----------- ----------- --------- -----------
2,400,000 - 2,400,000
--------------------------------------- ----------- ----------- --------- -----------
** Options granted under Group Share Option Plan 2010.
No Directors options forfeited or lapsed during the period.
The highest paid director, being A Gee, did not exercise any
share options during the year.
The closing market price of the Company's shares at 31 March
2021 was 3.10p and the range of market prices during the twelve
month period was between 1.55p and 4.15p.
By order of the Board
AM Gee
Secretary
9 August 2021
Directors' Report
for the year ended 31 March 2021
The Directors present their report and the consolidated audited
financial statements for the year ended 31 March 2021.
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 2021 and the
position of the Group at the end of the year. This review is
contained in the Chairman's Statement and the Business Review. 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 below by
the Executives, Senior Management team, Audit Committee and wider
Board and are regularly reviewed throughout the period.
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, focusing 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.
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 go down in value during the contract period and continually
monitors 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 minimized, except for the
risk from litigation from previous customers of Stanley Gibbons
(Guernsey) Limited (in liquidation).
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.
COVID-19
The COVID-19 pandemic and the subsequent lockdown impacted both
the Group's trading performance and the Group's leased properties
that it sub-leases to third party retailers. The lockdowns have
directly impacted the Group's trading due to the restrictions on
both employees and customers movement impacting both trading at the
Group's premises, including auctions, shows and exhibitions in both
the UK and overseas locations. The Directors have been and continue
to take actions to mitigate the impact on trading by minimizing
expenditure through all available options open to them. The risks
from the pandemic, despite the easing of restrictions, continue to
create uncertainty which the Directors have addressed in the going
concern review and estimates and assumptions in preparation of
financial statements (see note 2).
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 reports 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.
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 prior year
-- 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
-- Website visitor activity statistics
Results and dividends
The Consolidated Statement of Comprehensive Income of the Group
for the year ended 31 March 2021 is included in this document. The
Directors do not recommend a final dividend for the year ended 31
March 2021 (year ended 31 March 2020: nil).
Directors
The following Directors have held office since 1 April 2020:
H G Wilson (Non-Executive)
G E Shircore
L E Castro (Non-Executive)
M West (Non-Executive)
A M Gee
L Castro and M West are considered to be Independent.
Biographical details of the current Directors are given later in
this report.
Directors' interests
The interests of the Directors in the shares of the Company, all
of which are beneficial, at 31 March 2021 together with their
interests at 31 March 2020 were:
Ordinary Ordinary
1p 1p
Shares Shares
31 March 31 March
2021 2020
---------------- --------- ---------
HG Wilson (1) 2,000,000 2,000,000
GE Shircore (2) 705,741 705,741
AM Gee - -
LE Castro - -
M West - -
---------------- --------- ---------
(1) Held in the name of Park Securities Limited 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.
Details of the Directors' share options are given in the
Remuneration Report.
Apart from service contracts and the transactions referred to in
note 26 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 through a loan
from its major shareholder, Phoenix S.G. Limited and has no
interest rate exposure on financial liabilities except those
disclosed in note 25. 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 25 (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 forecasts based on current trading trends,
including loosening of restrictions related to the Covid--19
pandemic, and historical knowledge of the business, the Directors
recognise that its forecasts are dependent on underlying
assumptions and that trading conditions can always be affected by
unforeseen events.
The Covid-19 pandemic has increased the uncertainty of the
assumptions that the Directors use to forecast future liquidity.
The impact of the pandemic and particularly the restrictions
imposed by governments have over the past 12 months impacted the
financial performance of parts of the Group's operations and could
do so again if restrictions are re-imposed. The Directors have
mitigating courses of actions which are available to them to limit
the impact of the restrictions including operating cost
initiatives, the faster sell down of Group's large inventory
holding and approaching lenders for further short term funding.
The Directors are also fully aware of the potential impacts on
the business from potential litigation, particularly in connection
to the New York property lease held within Mallett Inc. The
Directors have gathered information from the Group's advisors to
understand the risk and uncertainties arising as a result of these
matters. These matters are not directly in the control of the
Directors and the Directors have therefore, made their judgment
based on the evidence provided to them when assessing the impact on
the going concern assumption.
The loan facilities are provided by the Group's controlling
party Phoenix S. G. Limited and due for repayment in March 2023.
The Group would have been in default of the financial covenants at
31 March 2021, which would result in the loan becoming payable on
demand. On 24 March 2021 the Group sought and was granted a waiver
from Phoenix S.G. Limited for the above defaults. The forecast,
taking into account of the implications on the Group's demand of
the Covid--19 pandemic, shows the Group will fail to meet its
financial covenants in March 2022.
The Directors recognise that Phoenix S. G. Limited has granted
the waiver of the defaults, stating that it intends to be a long
term investor, it is the Group's controlling party with an interest
of just over 58%, has granted a waiver of interest for the period
April to July 2020, has provided GBP6,500,000 of funds for the
purchase of the British Guiana 1c Magenta, and has given no
indication that it would withdraw its support before March 2023
when the loan facility is repayable.
The Directors are also aware that the Group needs to continue
discussions with its long term creditors, including pension
trustees and Phoenix S. G. Limited. This will include discussions
to review its long term capital requirements and reduce its longer
term liabilities and will be actively engaging with its lenders and
pension trustees over the next 12 months. The Directors realise
that the discussions are reliant on agreement with third parties
and outcomes are uncertain. However, the longer term creditors have
been supportive of the Group during the past 12 months and there is
no indication that they will not continue to do so.
In view of all of the above, the Directors believe there is a
material uncertainty relating to the Group's position as a going
concern. However, having regard to all of the matters above, and
after making all reasonable enquiries, the Directors currently have
a reasonable expectation that the Company and the Group will 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 2 August 2021, the Company had been notified of the
following interests in 3% or more of its issued share capital:
Phoenix SG Limited 58.09%
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. 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
general meeting in person or by proxy, one vote and upon a poll
each share is entitled to one vote.
Subject to the Companies (Jersey) Law 1991 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
2020 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.
Political Donations
The Group made no political donations during the current or
previous year.
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 was secretary of the company until his retirement
on 4 November 2020. On 4 November 2020 Mr A M Gee was appointed
secretary and has been secretary for the remainder of the year
ended 31 March 2021 and to the date of approval of the financial
statements.
Independent Auditors
Jeffreys Henry LLP have expressed their willingness to continue
as auditors and a resolution to reappoint them as auditors to the
Company and to authorise the Directors to fix their remuneration
will be proposed at the AGM.
By order of the board Registered office:
22 Grenville Street
St Helier,
Jersey
JE4 8PX
AM Gee
Secretary
9 August 2021
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 2021 which comprise the consolidated
statement of comprehensive income, the consolidated statement of
financial position, the consolidated statement of changes in
equity, the consolidated statement of cash flows and 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 2021 and of the group's
loss 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.
Material uncertainty relating to going concern
We draw attention to note 2 and note 32 in the financial
statements, which explains that the Group is dependent upon further
drawdowns of the loan facility held with the controlling
shareholder. The Covid-19 pandemic has increased the uncertainty of
the assumptions that the Directors use to forecast future
liquidity. The impact of the pandemic has impacted consumer
confidence in the wider economy, which has directly led to a fall
in the Group's revenue and impacted other areas of the Group's
operations. It remains difficult to assess reliably whether there
will be any material disruption in the future which could adversely
impact the Group's forecast.
There exists potential implications relating to the on-going
litigation relating to the New York property and its effect on the
Group's long-term creditors including the pension funds , where
discussions are currently being held with the Pension Trustees to
review long term liabilities. In addition the continued breach of
covenants on the Phoenix S.G. Limited loan where the Group have
obtained a waiver for breaches to loan covenants for the year to 31
March 2021 and have forecast to breach these again for the year
ended 31 March 2022. These indicate further uncertainty on the
Group's operations.
These events or conditions, along with the other matters as set
forth above, indicate that a material uncertainty exists that may
cast significant doubt on the Group's ability to continue as a
going concern. Our opinion is not modified in respect of this
matter.
Our evaluation of the directors' assessment of the entity's
ability to continue to adopt the going concern basis of accounting
included a detailed review of future forecasts and assessing the
assumptions utilised by management in preparing the forecast. These
assumptions were further assessed along with those used in the
prior year to determine reasonability. We have reviewed the cash
held at year end up to the date of signing of this report and have
further taken into account management's previous ability to raise
equity funding when required in order to maintain operations.
We have performed the following audit procedures in relation to
going concern:
-- Evaluated the suitability of management's model for the forecast.
The forecast includes a number of assumptions related to future
cash flows and associated risks. Our audit work has focused on
evaluating and challenging the reasonableness of these assumptions
and their impact on the forecast period and ensuring that all key
matters are correctly disclosed in the going concern note.
Specifically, we obtained, challenged and assessed management's
going concern forecast and performed procedures including:
-- Verifying the consistency of key inputs and fund raisers
relating to future costs to other financial and operational
information obtained during the audit.
-- Assessed the reasonableness of expenses and costs established.
-- Corroborated with management relating to future cash inflows.
-- We reviewed the latest management accounts to gauge the financial position.
-- We performed stress tests.
-- Considered the Group's controlling party's Phoenix S.G.
Limited, willingness to continue to waive the breaches in loan
covenants,
-- Considered Phoenix S.G. Limited willingness to continue to
provide support, for example the purchase of the British Guiana 1c
Magenta ,
-- Considered the Group's historic ability to raise funds, and
-- Reviewed the financing options available to the Group to
evaluate the ability of the Group to pay their debts as they become
due.
As such, in auditing the financial statements, we have concluded
that the directors' use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
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.
-- Carrying value of Goodwill and other intangible assets
-- Carrying value of inventories
-- Valuation of defined benefit pension schemes' obligations
As there is a material uncertainty for the going concern
assumption, this key audit matter has not been included within this
key audit matters section. This is in accordance with the guidance
set out within ISA (UK) 705.
These are explained in more detail below.
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
GBP4,985,000 (2020: GBP5,170,000).
- 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 annually for all
intangible assets, based on a number of assumptions and forecasts.
These require judgement and so are considered 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 was any indication of
impairment.
- We reviewed management's impairment workings such as forecasts
which included their approach and methodology.
- We considered whether management had exercised any bias in
assumptions used or the outputs produced in the forecasts
prepared.
- We considered the appropriateness of the Group's disclosures
in relation to intangibles in the financial statements.
Carrying value of inventories
- The Group held a significant balance of inventories as at the
year end, with a total carrying value of GBP15,963,000 (2020:
GBP17,513,000).
- 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.
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. The majority of valuations were based on
recent similar sales and so appear reasonable.
Valuation of defined benefit pension schemes' obligations
- The Group had a net retirement benefit obligation as at the
year-end of GBP6,687,000 (2020: GBP6,289,000).
- The group employed external, independent actuaries to provide
the value of the obligation for the two defined benefit schemes in
operation.
- The actuaries employed valuation techniques based on several
assumptions (which can be seen in note 24). Given the magnitude of
the obligation any change in the assumptions could a have
significant impact on the obligation and so are considered to be a
key audit matter.
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 GBP215,000 (2020: GBP292,000)
How we determined it 2% of revenue (2020: 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
GBP67,000 and GBP193,500.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above GBP10,750 (2020:
GBP14,600) 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.
We have audited all components within the Group, and no
unaudited components remain.
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:
-- proper accounting records have not been kept by the parent
company, or proper returns adequate for our audit have not been
received from branches not visited by us; or
-- the group and parent company's accounts are not in agreement
with the accounting records.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, 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.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below.
The extent to which the audit was considered capable of
detecting irregularities including fraud
Our approach to identifying and assessing the risks of material
misstatement in respect of irregularities, including fraud and
non-compliance with laws and regulations, was as follows:
-- the senior statutory auditor ensured the engagement team
collectively had the appropriate competence, capabilities and
skills to identify or recognise non-compliance with applicable laws
and regulations;
-- we identified the laws and regulations applicable to the
company through discussions with directors and other
management.
-- we focused on specific laws and regulations which we
considered may have a direct material effect on the financial
statements or the operations of the company, including taxation
legislation, data protection, anti-bribery, employment,
environmental, health and safety legislation and anti-money
laundering regulations.
-- we assessed the extent of compliance with the laws and
regulations identified above through making enquiries of management
and inspecting legal correspondence.
-- identified laws and regulations were communicated within the
audit team regularly and the team remained alert to instances of
non-compliance throughout the audit; and
-- we assessed the susceptibility of the company's financial
statements to material misstatement, including obtaining an
understanding of how fraud might occur, by:
-- making enquiries of management as to where they considered
there was susceptibility to fraud, their knowledge of actual,
suspected and alleged fraud;
-- considering the internal controls in place to mitigate risks
of fraud and non-compliance with laws and regulations.
-- To address the risk of fraud through management bias and override of controls, we:
-- performed analytical procedures to identify any unusual or unexpected relationships;
-- tested journal entries to identify unusual transactions;
-- assessed whether judgements and assumptions made in
determining the accounting estimates set out in note 2 of the Group
financial statements were indicative of potential bias;
-- investigated the rationale behind significant or unusual transactions.
-- In response to the risk of irregularities and non-compliance
with laws and regulations, we designed procedures which included,
but were not limited to:
-- agreeing financial statement disclosures to underlying supporting documentation;
-- reading the minutes of meetings of those charged with governance;
-- enquiring of management as to actual and potential litigation and claims;
-- reviewing correspondence with HMRC and the group's legal advisors.
There are inherent limitations in our audit procedures described
above. The more removed those laws and regulations are from
financial transactions, the less likely it is that we would become
aware of noncompliance. Auditing standards also limit the audit
procedures required to identify non-compliance with laws and
regulations to enquiry of the directors and other management and
the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to
detect than those that arise from error as they may involve
deliberate concealment or collusion.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at:
http://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor's report.
Other matters which we are required to address
We were re-appointed by the board of directors on 10 September
2020 to audit the financial statements for the period ending 31
March 2021. Our total uninterrupted period of engagement is three
years, covering the period ending 31 March 2021.
The audit has been designed to detect all material
irregularities, including fraud. We believe our tests are
sufficient in this regard. The engagement team has remained alert
to any indication of fraud or non-compliance with laws and
regulations throughout the audit.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting our
audit.
Our audit opinion is consistent with the additional report to
the audit committee.
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: 9 August 2021
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2021
Year ended Year ended
31 March 31 March
2021 2020
Notes GBP'000 GBP'000
---------------------------------------------------- ----- ---------- ----------
Revenue 1, 3 10,762 13,175
Cost of sales (6,044) (7,132)
---------------------------------------------------- ----- ---------- ----------
Gross Profit 4,718 6,043
---------------------------------------------------- ----- ---------- ----------
Administrative expenses before defined benefit
pension service
costs and exceptional operating costs (4,079) (4,421)
Defined benefit pension service costs 24 (135) (126)
Exceptional operating charges 5 (980) 353
---------------------------------------------------- ----- ---------- ----------
Total administrative expenses (5,194) (4,194)
---------------------------------------------------- ----- ---------- ----------
Selling and distribution expenses (2,774) (3,480)
---------------------------------------------------- ----- ---------- ----------
Operating loss 4 (3,250) (1,631)
Finance income 10 113
Finance costs 25 (877) (1,043)
Share of net profits of joint venture 12 35 50
---------------------------------------------------- ----- ---------- ----------
Loss before tax (4,082) (2,511)
Taxation 8 78 11
---------------------------------------------------- ----- ---------- ----------
Loss from continuing operations (4,004) (2,500)
Profit from discontinued operations 27 87 132
---------------------------------------------------- ----- ---------- ----------
Loss for the financial year (3,917) (2,368)
Other comprehensive income:
Amounts which may be subsequently reclassified
to profit & loss
Exchange differences on translation of foreign
operations (30) 2
Amounts which will not be subsequently reclassified
to profit & loss
Actuarial (losses)/gains recognised in the
pension scheme 24 (741) (1,153)
Tax on actuarial (losses)/gains recognised
in the pension scheme - (95)
---------------------------------------------------- ----- ---------- ----------
Other comprehensive loss for the year net of
tax (771) (1,246)
---------------------------------------------------- ----- ---------- ----------
Total comprehensive loss for the year (4,688) (3,614)
---------------------------------------------------- ----- ---------- ----------
Loss per share from continuing operations
Basic loss per Ordinary share 9 (0.94)p (0.59)p
Diluted loss per Ordinary share 9 (0.94)p (0.59)p
Profit per share from discontinued operations
Basic profit per Ordinary share 9 0.02p 0.03p
Diluted profit per Ordinary share 9 0.02p 0.03p
---------------------------------------------------- ----- ---------- ----------
Total comprehensive loss is attributable to the owners of the
parent.
The notes are an integral part of these consolidated financial
statements.
Consolidated Statement of Financial Position
as at 31 March 2021
31 March 31 March
2021 2020
Assets Notes GBP'000 GBP'000
------------------------------------------------------ ----- -------- --------
Non-current assets
Intangible assets 10 4,985 5,170
Property, plant and equipment 11 1,600 2,376
Deferred tax asset 19 216 158
Right of use asset 28 6,796 7,762
Investments 12 37 39
------------------------------------------------------ ----- -------- --------
Total non-current assets 13,634 15,505
------------------------------------------------------ ----- -------- --------
Current Assets
Inventories 13 15,963 17,513
Trade and other receivables 14 2,045 1,957
Cash and cash equivalents (excluding bank overdrafts) 17 2,090 2,483
------------------------------------------------------ ----- -------- --------
Total current assets 20,098 21,953
------------------------------------------------------ ----- -------- --------
Total assets 33,732 37,458
------------------------------------------------------ ----- -------- --------
Current liabilities
Trade and other payables 16 4,666 4,238
Lease liability 28 1,780 810
------------------------------------------------------ ----- -------- --------
Total current liabilities 6,446 5,048
------------------------------------------------------ ----- -------- --------
Non-current liabilities
Borrowings 18 14,638 14,166
Lease liability 28 6,932 7,731
Retirement benefit obligations 24 6,687 6,289
Trade and other payables 16 - 507
------------------------------------------------------ ----- -------- --------
Total non-current liabilities 28,257 28,693
------------------------------------------------------ ----- -------- --------
Total liabilities 34,703 33,741
------------------------------------------------------ ----- -------- --------
Net (liabilities)/assets (971) 3,717
------------------------------------------------------ ----- -------- --------
Equity
Called up share capital 20 4,269 4,269
Share premium account 22 78,217 78,217
Share compensation reserve 22 225 2,122
Capital redemption reserve 22 38 38
Revaluation reserve 22 346 346
Retained earnings 22 (84,066) (81,275)
------------------------------------------------------ ----- -------- --------
Equity shareholders' (deficit)/funds (971) 3,717
------------------------------------------------------ ----- -------- --------
The financial statements were approved by the board of Directors
on 9 August 2021, were authorised for issue on that date and were
signed on its behalf by:
A M Gee
G E Shircore
Directors
The notes are an integral part of these consolidated financial
statements.
Consolidated Statement of Changes in Equity
for the year ended 31 March 2021
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 2020 4,269 78,217 2,122 346 38 (81,275) 3,717
Loss for the financial
year - - - - - (3,917) (3,917)
Amounts which may be subsequently
reclassified to profit
& loss
Exchange differences on
translation of foreign
operations - - - - - (30) (30)
Amounts which will not
be subsequently reclassified
to profit & loss
Remeasurement of pension
scheme net of deferred
tax - - - - - (741) (741)
---------------------------------- -------- -------- ------------- ----------- ----------- --------- --------
Total comprehensive loss - - - - - (4,688) (4,688)
Cost of share options - - (15) - - 15 -
Share option transfer (1,882) 1,882 -
---------------------------------- -------- -------- ------------- ----------- ----------- --------- --------
At 31 March 2021 4,269 78,217 225 346 38 (84,066) (971)
---------------------------------- -------- -------- ------------- ----------- ----------- --------- --------
At 1 April 2019 4,269 78,217 2,148 346 38 (77,687) 7,331
Loss for the financial
year - - - - - (2,368) (2,368)
Amounts which may be subsequently
reclassified to profit
& loss
Exchange differences on
translation - - - - - - -
Amounts which will not
be subsequently reclassified
to profit & loss
Remeasurement of pension
scheme net of deferred
tax - - - - - (1,246) (1,246)
---------------------------------- -------- -------- ------------- ----------- ----------- --------- --------
Total comprehensive loss - - - - - (3,614) (3,614)
Cost of share options - - (26) - - 26 -
---------------------------------- -------- -------- ------------- ----------- ----------- --------- --------
At 31 March 2020 4,269 78,217 2,122 346 38 (81,275) 3,717
---------------------------------- -------- -------- ------------- ----------- ----------- --------- --------
The notes are an integral part of these consolidated financial
statements.
Consolidated Statement of Cash Flows
for the year ended 31 March 2021
Year ended Year ended
31 March 31 March
2021 2020
Notes GBP'000 GBP'000
----------------------------------------------------- ----- ---------- ----------
Cash outflow from operating activities 23 259 (67)
Interest paid (877) (1,043)
Taxes received 19 46
----------------------------------------------------- ----- ---------- ----------
Net cash outflow from operating activities (599) (1,064)
----------------------------------------------------- ----- ---------- ----------
Investing activities
Purchase of property, plant and equipment (299) (541)
Purchase of intangible assets (computer software) (150) (155)
Investment in joint venture 2 56
Proceeds from sale of property plant & equipment - 123
Interest received 10 113
----------------------------------------------------- ----- ---------- ----------
Net cash (decrease)/generated from investing
activities (437) (404)
----------------------------------------------------- ----- ---------- ----------
Financing activities
Principal elements of lease payments 171 (845)
Proceeds from new borrowing 472 2,636
----------------------------------------------------- ----- ---------- ----------
Net cash generated from financing activities 643 1,791
----------------------------------------------------- ----- ---------- ----------
Net (decrease)/increase in cash and cash equivalents (393) 323
----------------------------------------------------- ----- ---------- ----------
Cash and cash equivalents at start of year 2,483 2,160
----------------------------------------------------- ----- ---------- ----------
Cash and cash equivalents at end of year 17 2,090 2,483
----------------------------------------------------- ----- ---------- ----------
The notes are an integral part of these consolidated financial
statements.
Notes to the Financial Statements
for the year ended 31 March 2021
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's shares are admitted to 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
The Group has applied the following standards and amendments for
the first time for their annual reporting period commencing 1 April
2020.
-- Definition of material - amendments to IAS1 and IAS 8
-- Definition of a Business - amendments to IFRS 3
-- Revised Conceptual Framework for Financial Reporting
None of the above materially impacted the amounts recognised in
prior periods and are not expected to significantly affect the
current or future periods.
Certain new accounting standards and interpretations have been
published that are not mandatory for the year ended 31 March 2021
and have not been adopted early by the Group.
-- IFRS 9 - Financial instruments
-- IAS 39 - Interest rate benchmark reform Phase 2
-- IFRS 7 - Financial instruments disclosure
The Directors believe that these standards are not expected to
have a material impact on the entity in the current or future
periods and foreseeable future transactions.
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 programs 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 capitalized, 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 valuer. The carrying value of the numismatic 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 value with the revaluation amount being recognised in
comprehensive income.
Leased assets
The group leases various offices and equipment. Rental contracts
are typically made for fixed periods of 3 to 12 years but may have
extension options as described in (i) below. Lease terms are
negotiated on an individual basis and contain a wide range of
different terms and conditions. The lease agreements do not impose
any covenants, but leased assets may not be used as security for
borrowing purposes.
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is
available for use by the group. Each lease payment is allocated
between the liability and finance cost. The finance cost is charged
to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability
for each period. The right-of-use asset is depreciated over the
shorter of the asset's useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate (5%) is used, being the rate
that the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability
-- any lease payments made at or before the commencement date
less any lease incentives received
-- any initial direct costs, and
-- restoration costs.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise
IT-equipment and small items of office furniture.
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 the Group's 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 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 from its retail premises, 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 receives 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 (vendor's
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 vendor's
commissions. Therefore, both buyer's premium and vendor's
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.
Rental income
The Group sublets some of its properties that it occupies. Lease
income from 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,
including loosening of restrictions related to the Covid--19
pandemic, and historical knowledge of the business, the Directors
recognise that its forecasts are dependent on underlying
assumptions and that trading conditions can always be affected by
unforeseen events.
The Covid-19 pandemic has increased the uncertainty of the
assumptions that the Directors use to forecast future liquidity.
The impact of the pandemic and particularly the restrictions
imposed by governments have over the past 12 months impacted the
financial performance of parts of the Group's operations and could
do so again if restrictions are re-imposed. The Directors have
mitigating courses of actions which are available to them to limit
the impact of the restrictions including operating cost
initiatives, the faster sell down of Group's large inventory
holding and approaching lenders for further short term funding.
The Directors are also fully aware of the potential impacts on
the business from potential litigation, particularly in connection
to the New York property lease, held within Mallett Inc. The
Directors have gathered information from the Group's advisors to
understand the risk and uncertainties arising as a result of these
matters. These matters are not directly in the control of the
Directors and the Directors have therefore, made their judgment
based on the evidence provided to them when assessing the impact on
the going concern assumption.
The loan facilities are provided by the Group's controlling
party Phoenix S. G. Limited and due for repayment in March 2023.
The Group would have been in default of the financial covenants at
31 March 2021, which would result in the loan becoming payable on
demand. On 24 March 2021 the Group sought and was granted a waiver
from Phoenix S.G. Limited for the above defaults. The forecast,
taking into account of the implications on the Group's demand of
the Covid-19 pandemic, shows the Group will fail to meet its
financial covenants in March 2022.
The Directors recognise that Phoenix S. G. Limited has granted
the waiver of the defaults, stating that it intends to be a long
term investor, it is the Group's controlling party with an interest
of just over 58%, has granted a waiver of interest for the period
April to July 2020, has provided GBP6,500,000 of funds for the
purchase of the British Guiana 1c Magenta, and has given no
indication that it would withdraw its support before March 2023
when the loan facility is repayable.
The Directors are also aware that the Group needs to continue
discussions with its long term creditors, including, pension
trustees and Phoenix S. G. Limited. This will include discussions
to review its long term capital requirements and reduce its longer
term liabilities and will be actively engaging with its lenders and
pension trustees over the next 12 months. The Directors realise
that the discussions are reliant on agreement with third parties
and outcomes are uncertain. However, the long term creditors have
been supportive of the Group during the past 12 months and there is
no indication that they will not continue to do so.
In view of all of the above, the Directors believe there is a
material uncertainty relating to the Group's position as going
concern. However, having regard all of the matters above, and after
making all reasonable enquiries the Directors have a reasonable
expectation that the Company and the Group will 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 24. 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
buyer's 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
revaluation. Where the carrying value is above cost this is
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 2021 was GBP2,310,000 (2020: GBP2,310,000). There was no
impairment provision made in the year (2020: GBPnil). 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; and
-- Legacy Interiors property & legal
Legacy Interiors includes continuing items from the discontinued
Interiors operation, specifically the leasehold property in New
York and legal matters related to the Mallett entities. The
activities, products and services of the reportable segments are
detailed in the Business Review.
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 2021
Sale of goods 4,047 1,566 3,292 - - 8,905
Sale of services (inc Commissions) 713 354 - - - 1,067
Other income 31 69 43 647 - 790
----------------------------------- ---------- ---------- -------- ---------- ----------- --------
Revenue 4,791 1,989 3,335 647 - 10,762
Operating costs (4,862) (1,887) (3,014) (799) (2,435) (12,997)
Exceptional - (21) - (959) - (980)
Net finance cost - - - (551) (316) (867)
----------------------------------- ---------- ---------- -------- ---------- ----------- --------
Profit/(loss) before tax (71) 81 321 (1,662) (2,751) (4,082)
Tax (13) - 91 - - 78
----------------------------------- ---------- ---------- -------- ---------- ----------- --------
Profit/(loss) for the year
from continuing operations (84) 81 412 (1,662) (2,751) (4,004)
----------------------------------- ---------- ---------- -------- ---------- ----------- --------
Segmental balance sheet
As at 31 March 2021
Total assets 19,670 337 8,529 3,452 1,744 33,732
Total liabilities (14,636) - (561) (4,518) (14,988) (34,703)
----------------------------------- ---------- ---------- -------- ---------- ----------- --------
Net assets/(liabilities) 5,034 337 7,968 (1,066) (13,244) (971)
----------------------------------- ---------- ---------- -------- ---------- ----------- --------
Other segmental items
Depreciation 13 - - 63 69 145
Amortisation of intangible
items 22 63 10 - 240 335
Capital expenditure 12 150 - - 287 449
----------------------------------- ---------- ---------- -------- ---------- ----------- --------
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 2020
Sale of goods 5,493 1,501 3,425 - - 10,419
Sale of services (inc Commissions) 944 403 - - - 1,347
Other income 22 42 - 1,345 - 1,409
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Revenue 6,459 1,946 3,425 1,345 - 13,175
Operating costs (6,549) (2,045) (2,872) (829) (2,814) (15,109)
Exceptional (197) (162) (4) 691 25 353
Net finance cost - - - (693) (237) (930)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Profit/(loss) before tax (287) (261) 549 514 (3,026) (2,511)
Tax 9 - 2 - - 11
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Profit/(loss) for the year
from continuing operations (278) (261) 551 514 (3,026) (2,500)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Segmental balance sheet
As at 31 March 2020
Total assets 21,435 250 8,888 4,745 2,140 37,458
Total liabilities (14,522) - (575) (4,351) (14,293) (33,741)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Net assets/(liabilities) 6,913 250 8,313 394 (12,153) 3,717
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Other segmental items
Depreciation 4 - - 127 - 131
Amortisation of intangible
items 331 - 14 - 240 585
Capital expenditure 149 22 - - 525 696
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
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
2021 2021 2020 2020
Sales by Sales by Sales by Sales by
destination origin destination origin
GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------ ---------- ------------ ----------
Channel Islands 893 - 35 -
United Kingdom 6,691 10,224 7,806 12,018
Europe 518 - 1,290 -
North America 1,842 538 2,593 1,157
Asia 568 - 952 -
Rest of the World 250 - 499 -
------------------ ------------ ---------- ------------ ----------
10,762 10,762 13,175 13,175
------------------ ------------ ---------- ------------ ----------
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 2021 or 2020 from which the
Group earned more than 10% of its revenues.
Property, plant and equipment of GBP1,600,000 was held in the UK
(2020: GBP1,432,000 in the UK) and GBPnil (2020: GBP944,000) was
held in the USA. No assets were held in other countries.
Intangible assets of GBP4,985,000 (2020: GBP5,170,000) are all
held in the UK. Rights-of-use assets of GBP2,995,000 (2020:
GBP3,501,000) are held in the USA with GBP3,801,000 (2020:
GBP4,261,000) being 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 2021 and the comparative figures for the prior year.
Year ended Year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------------------------------------------------- ------------- -------------
Cost of inventories recognised as an expense 6,044 7,132
Employee benefit costs expensed (see note 7) 2,808 2,903
Government grant related to furlough scheme (117) -
Depreciation of property plant and equipment 145 131
Amortisation of intangible assets 335 585
Depreciation of IFRS16 Right of Use Asset 966 890
Advertising & marketing expenses 308 496
Distribution & transport costs 459 171
Operating lease charges - leased premises - 50
IT operating expenses 493 554
Other property operating costs 557 819
Impairment of trade receivables 115 15
Other administrative expenses 335 375
Fees payable to the Group's auditor for the audit
of the Group's annual accounts, including subsidiaries 64 65
Fees payable to the Group's auditor for other advisory
services 5 13
Impairment of leasehold assets 930 -
Redundancy and reorganisation 21 -
Other professional fees 544 607
-------------------------------------------------------- ------------- -------------
14,012 14,806
-------------------------------------------------------- ------------- -------------
5 Exceptional operating charges/(income)
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 2021 and the comparative figures for the
prior year.
Year ended Year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------------------------------------- -------------- --------------
Stock provisions - 286
Settlement of legal case - (850)
Accelerated impairment of intangible assets - 36
Loss on disposal of tangible fixed assets - 42
Impairment of leasehold assets (note 11) 930 -
Legal fees re lease dispute 29 -
Redundancy payments 21 -
Impairment of receivables - 155
Dilapidations on Strand property - (26)
Legacy wind-down costs of overseas entities - 4
-------------------------------------------- -------------- --------------
980 (353)
-------------------------------------------- -------------- --------------
On 14 June 2019 the Group announced that all outstanding claims
involving certain former directors of Mallett plc had been
resolved, bringing the matter to a full and final conclusion. The
Group received GBP850,000 in relation to this settlement, net of
fees and release of pension accruals relating to one of the
directors.
6 Directors' emoluments
The remuneration paid to the Directors of The Stanley Gibbons
Group plc was:
Year ended Year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
----------------------------------------------------------------------------- -------------- --------------
Fees - -
Salaries 213 253
----------------------------------------------------------------------------- -------------- --------------
Short-term employee benefits 213 253
Post-employment benefits 12 12
Share-based payment - -
----------------------------------------------------------------------------- -------------- --------------
Key management personnel compensation 225 265
----------------------------------------------------------------------------- -------------- --------------
Number of Directors included in the defined benefit pension scheme (note 24) - -
----------------------------------------------------------------------------- -------------- --------------
The detailed numerical analysis of Directors' remuneration is
included in the Report on Remuneration. The charge to profit in
respect of share options and awards issued to the Directors was
GBPnil (2020: GBPnil).
During the year the Group made payments into the personal
pension schemes of A Gee. Total cost of these pension contributions
to the Group were GBP12,000 (2020: GBP12,000).
Details of share options of Directors during the period are
disclosed in the Report on Remuneration.
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 received no
remuneration from the Group (2020: GBPnil).
7 Employee information
The average number of persons (including executive Directors)
employed by the Group during the period was 66 (2020: 71).
Year ended Year ended
31 March 2021 31 March 2020
------------------------------ -------------- --------------
Management and Administration 19 23
Sales 22 23
Production and Editorial 21 22
Marketing 4 3
------------------------------ -------------- --------------
66 71
------------------------------ -------------- --------------
Staff costs relating to those persons during the year amounted
to:
Year ended Year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
------------------------------------------------- -------------- --------------
Wages and salaries 2,355 2,451
Social security costs 247 252
Pension costs - defined benefit scheme (note 24) 135 126
Pension costs - defined contribution scheme 71 74
Share option cost - -
------------------------------------------------- -------------- --------------
2,808 2,903
------------------------------------------------- -------------- --------------
Staff costs are before amounts received under the UK Government
furlough scheme, relating to Covid-19. The Group received
GBP117,105 from the scheme in the year ending 31 March 2021.
8 Taxation
UK corporation tax and overseas tax on profits for the year
Year ended Year ended
31 March 2021 31 March 2020
Current tax: GBP'000 GBP'000
--------------------------------------- -------------- --------------
UK corporation tax at 19% - -
Overseas tax - -
Deferred taxation (note 19) (58) 28
--------------------------------------- -------------- --------------
Current year tax charge/(credit) (58) 28
Adjustment relating to earlier periods (20) (39)
--------------------------------------- -------------- --------------
Tax credit (78) (11)
--------------------------------------- -------------- --------------
Income tax attributable to:
Loss from continuing operations (78) (11)
Profit from discontinued operations (3) -
--------------------------------------- -------------- --------------
(81) (11)
--------------------------------------- -------------- --------------
The Company is registered in the Channel Islands and has
subsidiaries in the Channel Islands, the UK, Hong Kong 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 2021 31 March 2020
% %
------------------------------------------------------------ -------------- --------------
The standard rate of corporation tax in the UK 19.0 19.0
Effects of:
Disallowable items - (0.1)
Overseas profits taxable at lower rates (7.3) (1.6)
Losses for which no deferred asset recognised (10.9) (21.9)
Capital amortisation and provisions (1.1) (1.9)
Change in rate of UK corporation tax impact on deferred tax 1.5 -
Other permanent differences 0.2 6.9
------------------------------------------------------------ -------------- --------------
Effective rate of corporation tax for year 1.4 0.4
------------------------------------------------------------ -------------- --------------
The main rate of corporation tax in the UK was 19% for financial
years starting on or after 1 April 2017. The Group has recognized a
deferred tax asset of GBP216,000 (2020: GBP158,000) relating to
unutilised tax losses. At the year end the usable tax losses within
the Group are GBP19,663,000 (2020: GBP19,916,000).
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 2021 31 March 2020
----------------------------------------------------------------- -------------- --------------
Weighted average number of ordinary shares in issue (No.) 426,916,643 426,916,643
Dilutive potential ordinary shares: Employee share options (No.) - -
----------------------------------------------------------------- -------------- --------------
Continuing operations
Loss after tax (GBP) (4,004,000) (2,500,000)
Pension service cost (net of tax) 109,000 102,000
Amortisation of customer lists( net of tax) 194,000 194,000
Exceptional operating (income)/costs (net of tax) 977,000 (442,000)
----------------------------------------------------------------- -------------- --------------
Adjusted loss after tax (GBP) (2,724,000) (2,646,000)
----------------------------------------------------------------- -------------- --------------
Basic loss per share - pence per share (p) (0.94)p (0.59)p
----------------------------------------------------------------- -------------- --------------
Diluted loss per share - pence per share (p) (0.94)p (0.59)p
----------------------------------------------------------------- -------------- --------------
Adjusted loss per share - pence per share (p) (0.64)p (0.62)p
----------------------------------------------------------------- -------------- --------------
Adjusted diluted loss per share - pence per share (p) (0.64)p (0.62)p
----------------------------------------------------------------- -------------- --------------
Discontinued operations
Profit after tax (GBP) 87,000 132,000
----------------------------------------------------------------- -------------- --------------
Basic earnings per share - pence per share (p) 0.02p 0.03p
----------------------------------------------------------------- -------------- --------------
Diluted earnings per share - pence per share (p) 0.02p 0.03p
----------------------------------------------------------------- -------------- --------------
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
2021 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 2019 16,332 19 2,666 2,207 2,528 23,752
Additions - internally developed - - 155 - - 155
--------------------------------- -------- ---------- --------- -------- ----------- --------
At 31 March 2020 16,332 19 2,821 2,207 2,528 23,907
--------------------------------- -------- ---------- --------- -------- ----------- --------
Additions - internally developed - - 150 - - 150
--------------------------------- -------- ---------- --------- -------- ----------- --------
At 31 March 2021 16,332 19 2,971 2,207 2,528 24,057
--------------------------------- -------- ---------- --------- -------- ----------- --------
Accumulated amortisation and
impairment
At 1 April 2019 14,022 19 2,204 1,633 274 18,152
Amortisation charge - - 345 240 - 585
--------------------------------- -------- ---------- --------- -------- ----------- --------
At 31 March 2020 14,022 19 2,549 1,873 274 18,737
--------------------------------- -------- ---------- --------- -------- ----------- --------
Amortisation charge - - 95 240 - 335
--------------------------------- -------- ---------- --------- -------- ----------- --------
At 31 March 2021 14,022 19 2,644 2,113 274 19,072
--------------------------------- -------- ---------- --------- -------- ----------- --------
Net book value
At 31 March 2021 2,310 - 327 94 2,254 4,985
--------------------------------- -------- ---------- --------- -------- ----------- --------
At 31 March 2020 2,310 - 272 334 2,254 5,170
--------------------------------- -------- ---------- --------- -------- ----------- --------
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).
The Group carries out a review at each year end date to
establish the economic value of each asset in the portfolio. If the
economic value of the asset is believed to be lower than the
carrying value, the carrying value is reduced accordingly. The
economic value is based on estimated future income potential
considering risks and external information on the likely impact on
market demand.
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 10.4% (2020: 8.8%), when determining if any impairment
is likely. The key assumptions used by management derived from
current budgets and forecast, are the growth in revenue and costs
of between 0% and 5% (2020: 0% to 3%) over the period in question.
These assumptions are based on past experiences of management.
11 Property, plant and equipment
Leasehold Fixtures,
Freehold property fittings, Vehicles,
Reference land and 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 2019 1,195 162 4,307 374 857 6,895
Additions - - 525 16 - 541
Disposals - (162) - (33) - (195)
------------------------- ----------- ---------- ------------- ---------- ---------- --------
At 31 March 2020 1,195 - 4,832 357 857 7,241
------------------------- ----------- ---------- ------------- ---------- ---------- --------
Additions - - 263 - 36 299
Disposals - - (948) - - (948)
------------------------- ----------- ---------- ------------- ---------- ---------- --------
At 31 March 2021 1,195 - 4,147 357 893 6,592
------------------------- ----------- ---------- ------------- ---------- ---------- --------
Accumulated depreciation
At 1 April 2019 380 - 3,190 373 853 4,796
Charge for the year - - 127 - 4 131
Exchange differences - - (29) - - (29)
Depreciation on disposal - - - (33) - (33)
------------------------- ----------- ---------- ------------- ---------- ---------- --------
At 31 March 2020 380 - 3,288 340 857 4,865
------------------------- ----------- ---------- ------------- ---------- ---------- --------
Charge for the year - - 133 - 12 145
Impairment - - 930 - - 930
Depreciation on disposal - - (948) - - (948)
------------------------- ----------- ---------- ------------- ---------- ---------- --------
At 31 March 2021 380 - 3,403 340 869 4,992
------------------------- ----------- ---------- ------------- ---------- ---------- --------
Net book value
At 31 March 2021 815 - 744 17 24 1,600
------------------------- ----------- ---------- ------------- ---------- ---------- --------
At 31 March 2020 815 - 1,544 17 - 2,376
------------------------- ----------- ---------- ------------- ---------- ---------- --------
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 AF Norris, Philatelic
Consultant for the collection in London and in July 2017 by PR
Seaby, Philatelic Consultant for the Ringwood collection. The basis
of the revaluation used was replacement value. Due to COVID-19
restrictions, it was not possible to complete an external valuation
of the London collection in March 2021. The Directors asked the
Groups internal experts to assess the collection. The result of
which was that there was no indication of a requirement to change
the carrying value.
The revalued element of the reference collection is GBP436,000
(2020: 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 (2020: GBP379,000).
Fully written down Property, Plant and Equipment with a cost of
GBP4,376,000 (2020: GBP3,672,000) remains in use by the Group.
An impairment provision of GBP930,000 has been charged to the
Consolidated Statement of Comprehensive Income at 31 March 2021 in
relation to the leasehold assets at the New York property. This has
been classified as an exceptional item. The net carrying value of
the leasehold assets relating to this property at 31 March 2021 was
GBPnil (31 March 2020 - carrying value of GBP994,000).
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 joint-venture was
terminated on 30 April 2021. There will be no costs to the Group as
a result of the termination.
The company's accounting date is 30 April 2021, as per the joint
venture agreement. The investment in the joint venture is shown
below:-
31 March 2021 31 March 2020
GBP'000 GBP'000
------------------------------------------ ------------- -------------
As at 1 April 39 95
Share of profit retained by joint venture 35 50
Dividend paid by joint venture (37) (106)
------------------------------------------ ------------- -------------
37 39
------------------------------------------ ------------- -------------
The share of profit retained by the joint venture is an estimate
based on the management accounts at 30 April 2021. Based on the
audited financial statement at 30 April 2020 Baldwin's of St
James's generated GBP1,003,000 (2019: GBP1,298,000) of revenue and
GBP98,000 (2019:GBP232,000) of profit. The company had net assets
of GBP100 with current assets of GBP2,809,228 and current
liabilities of GBP2,809,128.
13 Inventories
31 March 2021 31 March 2020
GBP'000 GBP'000
------------------------------------ ------------- -------------
Work in progress 345 1,777
Finished goods and goods for resale 15,618 15,736
------------------------------------ ------------- -------------
15,963 17,513
------------------------------------ ------------- -------------
As at 31 March 2021 GBP15,963,000 (2020: GBP17,513,000) of the
above inventories were part of the security given in relation to
the borrowings detailed in note 18.
At 31 March 2021 the carrying value of the inventory held at
fair value was GBP3,055,000 (2020: GBP3,258,000).
On 10th 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 2021 of the
initial items totalling GBP5.20m, GBP4,249,000 (2020: GBP4,623,000)
remained unsold.
On 21st February 2020 the Group announced that its subsidiary,
Stanley Gibbons Limited ("SGL") had entered in to an agreement with
Phoenix S. G. Limited to acquire approximately 780 items, for an
initial consideration of GBP1.07m, 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 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 2021 of the
initial items totalling GBP1.07m, GBP919,000 (2020: GBP1,070,000)
remained unsold.
The cost of inventory recognised as an expense in the year was
GBP6,044,000 (2020: GBP7,132,000)
14 Current trade and other receivables
31 March 2021 31 March 2020
GBP'000 GBP'000
------------------------------- ------------- -------------
Trade receivables 1,765 1,480
Provision for impairment (406) (437)
------------------------------- ------------- -------------
Net trade receivables 1,359 1,043
Other receivables 180 321
Prepayments and accrued income 506 593
------------------------------- ------------- -------------
2,045 1,957
------------------------------- ------------- -------------
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 2021 31 March 2020
GBP'000 GBP'000
----------------------------- ------------- -------------
Opening provision 437 724
Impairments in the year 126 73
Amounts utilised in the year (157) (360)
----------------------------- ------------- -------------
Closing provision 406 437
----------------------------- ------------- -------------
As at 31 March 2021, excluding balances due under extended
payment terms and those provided for by the impairment provision,
GBP359,000 (2020: GBP526,000) 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
2021 2020
GBP'000 GBP'000
------------------------ -------- --------
Up to 3 months past due 112 110
3 to 6 months past due 30 186
Over 6 months past due 217 230
------------------------ -------- --------
359 526
------------------------ -------- --------
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 Trade and other payables
31 March 31 March
2021 2020
GBP'000 GBP'000
-------------------------------- -------- --------
Trade payables 2,151 2,888
Other payables 601 624
Other taxes and social security 162 45
Accruals and deferred income 1,752 681
-------------------------------- -------- --------
4,666 4,238
-------------------------------- -------- --------
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.
An amount of trade payables of GBPnil (2020: GBP507,000) is not
due within 12 months and has been classified as a long term
liability. In the prior year the Group has agreed extended credit
terms for a collection that it purchased in December 2019 to be
paid by instalment over the next 24 months.
The profile of payments are disclosed in note 25.
17 Cash and cash equivalents
31 March 31 March
2021 2020
GBP'000 GBP'000
-------------------------- -------- --------
Cash at bank and in hand 2,090 2,483
Bank overdrafts - -
-------------------------- -------- --------
Cash and cash equivalents 2,090 2,483
-------------------------- -------- --------
Included in the balance above is GBP122,000 (2020: GBP394,000)
of funds held on behalf of third party clients and auction vendors
for amounts that are due on items sold by the Group on their
behalf.
18 Borrowings
31 March 31 March
2021 2020
GBP'000 GBP'000
---------------------------- -------- --------
Long term liabilities
Loan - Facility A 11,412 11,045
Loan - Facility C 3,226 3,121
---------------------------- -------- --------
Total long term liabilities 14,638 14,166
---------------------------- -------- --------
The Facility A loan outstanding at 31 March 2021 of GBP11.4m 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 loans, the Group is
required to satisfy financial conditions relating to cashflow and
EBITDA. Commencing for the year ended 31 March 2021, the cashflow
and EBITDA each need to exceed GBP2.0m, and for the year to 2022
increasing to GBP2.5m.
On 24 March 2021 Phoenix S. G. Limited issued a waiver letter to
the Group for the failure to satisfy the financial conditions and
as a result at 31 March 2021 the Group was not in default and the
loan has been classified as a long term liability.
During the period from April and July 2020, Phoenix SG Limited
waived the interest on the loans. The interest waived was
GBP236,000.
During the year the Group paid arrangement facility fees of
GBPnil (2020: GBPnil) for the above facilities. The borrowings are
secured by a full fixed and floating charge debenture over the core
assets of the group, excluding the British Guiana 1c Magenta
against which a separate loan is secured. Phoenix S. G. Limited has
first charge against the secured assets. The subsidiaries listed in
note 30 are cross guarantors of the loan, excluding Stanley Gibbons
(Guernsey) Limited (in liquidation).
On 6 May 2021 the Group requested a further draw down of GBP1m
from the Facility C loan. The funds were received in two GBP500,000
payments in June and August 2021. A further GBP1m of headroom is
remaining in the Facility C loan.
On 29 June 2021 the Group entered in to a loan agreement for
GBP6.5m with Phoenix SG Limited for the purchase of the 1c Magenta
stamp. For further details see the Post Balance Sheet Events (note
32).
The Group did not take part in the UK government CBILS loan
scheme.
19 Deferred tax assets and liabilities
Assets Liabilities
---------------------------- ----------------------------
31 March 2021 31 March 2020 31 March 2021 31 March 2020
GBP'000 GBP'000 GBP'000 GBP'000
Defined benefit pension scheme (note 24) - - - -
Other timing differences - - - -
Unutilised tax losses 216 158 - -
----------------------------------------- ------------- ------------- ------------- -------------
Full provision 216 158 - -
----------------------------------------- ------------- ------------- ------------- -------------
(Charge)/credit to Comprehensive
31 March 2020 Profit and loss income 31 March 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ------------- ------------------ ------------- -------------
Defined benefit pension scheme (note 24) - - - -
Other timing differences - - - -
Unutilised tax losses 158 58 - 216
----------------------------------------- ------------- ------------------ ------------- -------------
Full provision 158 58 - 216
----------------------------------------- ------------- ------------------ ------------- -------------
20 Called up share capital
31 March 2021 31 March 2020
GBP'000 GBP'000
----------------------------------------------------------- ------------- -------------
Authorised
500,000,000 (2020: 500,000,000) Ordinary Shares of 1p each 5,000 5,000
Allotted, issued and fully paid (all equity):
426,916,643 (2020: 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.
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 in the Business Review and further disclosure can be
found in note 18 and note 25. 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.
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 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, detailed below are options which have been granted
to employees together with the periods in which they may be
exercised:
Earliest Exercise Number at Granted Forfeited Number at
exercise Expiry price 31 March in in 31 March
Date of grant date date (1p shares) 2020 year year 2021
-------------- ---------- --------- ------------ --------- ------- ----------- ---------
06/5/11 06/5/14 05/5/21 179.0p 34,999 - - 34,999
05/10/16 05/10/19 05/10/26 11.0p 8,285,000 - (6,450,000) 1,835,000
-------------- ---------- --------- ------------ --------- ------- ----------- ---------
8,319,999 - (6,450,000) 1,869,999
----------------------------------- ------------ --------- ------- ----------- ---------
The weighted average remaining contractual life of options
outstanding at 31 March 2021 is 3.7 years (2020: 4.7 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 2021 31 March 2021 31 March 2020 31 March 2020
Average exercise Options Average exercise Options
price per share (thousands) price per share (thousands)
----------------- ----------------- ------------- ----------------- -------------
At 1 April 12p 10,720 12p 11,320
Granted - - - -
Forfeited/lapsed 11p (6,450) 12p (600)
Exercised - - - -
----------------- ----------------- ------------- ----------------- -------------
At 31 March 12p 4,270 12p 10,720
----------------- ----------------- ------------- ----------------- -------------
Share options outstanding at the end of the period have the
following expiry date and exercise price:
Stochastic and Black-Scholes models have been used to value the
awards. The awards issued and still outstanding in the year ended
31 March 2021 are set out below:
Date of grant 06/05/2011 05/10/2016
-------------------------------------------------- ---------- ----------
Number of options granted 593,710 14,950,000
Weighted average fair value at date of grant (per
share) 48.45p 5.20p
Weighted average share price on date of grant 175p 11.25p
Weighted average exercise price 179p 11.00p
Expected term (from date of grant) 6.5 years 6.5 years
Expected volatility 36.6% 46.77%
Expected dividend yield 3.15% 0.00%
Risk-free interest rate 2.67% 0.42%
-------------------------------------------------- ---------- ----------
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 represent the accumulated profits not
distributed to shareholders.
23 Cash inflows/(outflows) from operating activities
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
------------------------------------------------------------------- ---------- ----------
Operating loss (including discontinued operations) (3,163) (1,499)
Loss on sale of property, plant and equipment - 38
Depreciation of tangible assets 145 131
Amortisation of intangible assets 335 585
Impairment of leasehold assets 930 -
Depreciation on IFRS16 Right of Use Asset 966 890
Decrease in provisions (343) (387)
Income from joint venture 35 50
Decrease in inventories 1,550 488
(Increase)/Decrease in trade and other receivables (88) 236
Decrease in trade and other payables (less deferred consideration) (79) (561)
Net exchange differences (29) (38)
------------------------------------------------------------------- ---------- ----------
Cash inflows/(outflows) from operating activities 259 (67)
------------------------------------------------------------------- ---------- ----------
24 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 2021 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
2021.
The Scheme has a debenture secured against the assets of Stanley
Gibbons Limited, A. H. Baldwin & Sons Limited, Milson Street
Limited and The Fine Art Auction Group. The Stanley Gibbons Group
plc also guarantees the obligations and liabilities of payments
under the Scheme. The charges relating to the Scheme rank behind
the charges of the assets related to the Phoenix S. G. Limited
loans (see note 18).
The Group paid GBP272,000 (payable monthly) in the year to 31
March 2021, a payment deferral was agreed for the period April 2020
to July 2020, during the first Covid-19 lockdown with the deferred
payments being paid from Jan 2021 to April 2021. From 1 April 2021,
the Group pays contributions of GBP311,000 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.
(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 Scheme has a debenture secured against the assets of Stanley
Gibbons Limited, A. H. Baldwin & Sons Limited, Milson Street
Limited and The Fine Art Auction Group. The Stanley Gibbons Group
plc also guarantees the obligations and liabilities of payments
under the Scheme. The charges relating to the Scheme rank behind
the charges of the assets related to the Phoenix S. G. Limited
loans (see note 18).
The Group paid annual contributions of GBP206,000 in the year to
31 March 2021, a payment deferral was agreed for the period April
2020 to July 2020, during the first Covid-19 lockdown with the
deferred payments being paid from Jan 2021 to April 2021. From 1
April 2021, the Group will pay contributions of GBP236,000 p.a.
(payable monthly), increasing by 5% p.a. until 1 May 2028, in line
with the Recovery Plan dated 20 March 2019. In addition to this,
the Company also pays administration expenses and levies to the
Pension Protection Fund.
The IAS19 disclosures for the year to 31 March 2021 are based on
the actuarial valuation as at 30 June 2018.
The amounts recognised in the statement of financial position
for both schemes are as follows:
31 March 2021 31 March 2020
GBP'000 GBP'000
----------------------------------- ------------- -------------
Present value of funded obligation (21,992) (20,298)
Fair value of scheme assets 15,305 14,009
----------------------------------- ------------- -------------
Net obligation (6,687) (6,289)
Deferred tax asset (see note 19) - -
----------------------------------- ------------- -------------
Retirement benefit obligation (6,687) (6,289)
----------------------------------- ------------- -------------
GBP'000 GBP'000
---------------------------------------------------- ------- -------
Cumulative amount of actuarial losses recognised in
other comprehensive income (4,591) (3,850)
---------------------------------------------------- ------- -------
The amounts recognised in other comprehensive income are as
follows:
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------------------------------------------------- ------------- -------------
Actuarial gains/(losses) on scheme obligations from
financial assumptions (2,093) 518
Actuarial gains/(losses) on scheme obligations from
demographic assumptions 16 (53)
Actuarial gains/(losses) on scheme obligations from
experience 156 (1,352)
Actuarial (losses)/gains on fair value of scheme assets 1,180 (266)
-------------------------------------------------------- ------------- -------------
Remeasurement (losses)/gains (741) (1,153)
-------------------------------------------------------- ------------- -------------
Changes in the present value of the defined benefit obligation
are as follows:
31 March 31 March
2021 2020
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Present value of obligations at start of year 20,298 19,612
Current service cost - -
Interest cost 447 462
Contributions by employees - -
Remeasurement losses/(gains) on scheme obligations 1,921 870
Charges paid - -
Benefits paid (674) (646)
Allowance for GMP equalisation - -
--------------------------------------------------- -------- --------
Present value of obligations at end of year 21,992 20,298
--------------------------------------------------- -------- --------
Changes in the fair value of scheme assets are as follows:
31 March 31 March
2021 2020
GBP'000 GBP'000
-------------------------------------------------------- -------- --------
Fair value of scheme assets at start of year 14,009 14,089
Assets acquired at fair value - -
Expected return on scheme assets 312 336
Actuarial gains/(losses) on fair value of scheme assets 1,180 (283)
Contributions by employees - -
Contributions by company 478 513
Charges paid - -
Benefits paid (674) (646)
-------------------------------------------------------- -------- --------
Fair value of scheme assets at end of year 15,305 14,009
-------------------------------------------------------- -------- --------
The Group currently expects to contribute GBP591,000 to its
defined benefit schemes in the financial year to 31 March 2022.
The amounts recognised in the statement of comprehensive income
for the period are as follows:
31 March 2021 31 March 2020
GBP'000 GBP'000
------------------------------------------- ------------- -------------
Current service cost - -
Interest cost on net benefit obligations 135 126
Allowance for GMP equalisation - -
------------------------------------------- ------------- -------------
Total included in employee benefit expense 135 126
------------------------------------------- ------------- -------------
Actual return on scheme assets 1,492 53
------------------------------------------- ------------- -------------
The major categories of scheme assets as a percentage of the
fair value of total scheme assets are as follows:
31 March 2021 31 March 2020
% %
---------------------------- ------------- -------------
Assets with a quoted market
price in an active market
Equities 22.1% 16.7%
Corporate bonds 6.9% 7.0%
LLDI 19.4% 18.7%
Multi Asset Credit 13.9% 22.7%
Diversified growth funds 14.9% 12.0%
Gilts/cash 2.5% 1.0%
Other
Insurance policies 12.1% 13.4%
Property 8.2% 8.5%
Insured Annuitants -% -%
---------------------------- ------------- -------------
Principal actuarial assumptions at the reporting date:
31 March 2021 31 March 2020
---------------------------------------------------- ------------- -------------
Future salary increases 2.44% 1.81%
Price inflation - RPI* 3.44% 2.81%
Price inflation - CPI 2.44% 1.81%
Revaluation of deferred pensions 2.44% 1.81%
Pension Increase - Non Directors
Pre 1988 GMP 0.00% 0.00%
Post 1988 GMP 2.44% 3.00%
Pre 1997 0.00% 0.00%
Post 1997 2.44% 1.81%
Pension Increase - Directors
Pre 1997 3.00% 3.00%
Post 1997 ** 3.44% 3.00%
Discount rate 1.87% 2.24%
Equities (long term expected rate of return) 1.87% 2.24%
Corporate bonds (long term expected rate of return) 1.87% 2.24%
Fixed interest gilts (long term expected rate of
return) 1.87% 2.24%
Cash (long term expected rate of return) 1.87% 2.24%
---------------------------------------------------- ------------- -------------
* until 2030 and then 2.54% thereafter.
** - until 2030 and them 3.00% thereafter.
The mortality assumptions adopted at 31 March 2021 imply the
following life expectations:
The Stanley Gibbons Holdings PLC Pension and Assurance
scheme
31 March 31 March
2021 2020
In years In years
-------------------------------------------- -------- --------
Retiring at 65 at reporting date
Male 21.8 21.8
Female 24.1 24.1
-------------------------------------------- -------- --------
Retiring at 65 at reporting date + 20 years
Male 22.7 22.8
Female 25.3 25.2
-------------------------------------------- -------- --------
The Mallett Retirement Benefits Scheme
31 March 31 March
2021 2020
In years In years
-------------------------------------------- -------- --------
Retiring at 65 at reporting date
Male 21.8 21.8
Female 24.1 24.1
-------------------------------------------- -------- --------
Retiring at 65 at reporting date + 20 years
Male 22.7 22.8
Female 25.3 25.2
-------------------------------------------- -------- --------
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 (3,504)
0.25% p.a. reduction in discount rate 3.5% (3,555)
0.25% increase in CPI inflation 1.6% (3,486)
Pensions payable for 1 year longer due to mortality assumptions 3.8% (3,994)
---------------------------------------------------------------- ----------- ---------
The Mallett Retirement Benefits Scheme
Change in
the benefit (Deficit)
Obligation
- % GBP'000s
----------------------------------------------------------------- ----------- ---------
Assumption as per IAS 19 disclosures n/a (3,184)
0.25% p.a. reduction in discount rate 4.3% (3,312)
0.25% increase in inflation 2.1% (3,215)
Pensions payable for 1 year longer due to mortality assumptions* 4.1% (3,420)
----------------------------------------------------------------- ----------- ---------
* 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
13 years for the Stanley Gibbons Holding PLC Pension and Assurance
scheme and 17 years for the Mallett Retirement Benefit Scheme.
The weighted average duration of the Stanley Gibbons Holdings
Plc Pension and Assurance Scheme and the Mallett Retirement Benefit
scheme is 15 years.
Amounts for the current and previous four periods are as
follows:
31 March 31 March 31 March 31 March 31 March
2021 2020 2019 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- -------- --------
Present value
of defined
benefit obligations (21,992) (20,298) (19,612) (19,685) (20,390)
Fair value
of scheme assets 15,305 14,009 14,089 14,356 14,304
---------------------- -------- -------- -------- -------- --------
Deficit (6,687) (6,289) (5,523) (5,329) (6,086)
---------------------- -------- -------- -------- -------- --------
Experience
adjustments
on scheme assets 1,180 (283) (239) (2) 895
---------------------- -------- -------- -------- -------- --------
Effects of
changes in
the demographic
and
financial assumptions
in the underlying
scheme
liabilities
- Amount (2,077) 482 (746) 199 (2,456)
- Percentage
of benefit
obligation -9.4% 2.4% -3.8% 1.0% -12.0%
---------------------- -------- -------- -------- -------- --------
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 GBP3,468,000 at 31 March 2020 to GBP3,504,000 at 31
March 2021 principally arising from changes in scheme data and a
change from the approximate methodology used in previous
disclosures.
Future profile of the Mallet Retirements Benefits Scheme
The Mallet Retirements benefits Scheme was closed to new members
in 2002. This will result in the age profile of the active
membership rising over time and hence, under the method required to
calculate IAS 19 liabilities, the future cost in relation to this
Scheme will rise in the long-term.
The Group has considered the impact of the IAS 19 deficit in
respect of the Group, its employees and pensioners. The deficit has
increased from GBP2,821,000 at 31 March 2020 to GBP3,183,000 at 31
March 2021 principally arising from changes in scheme data and a
change from the approximate methodology used in previous
disclosures.
25 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 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.
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
2021 2020
GBP'000 GBP'000
------------------------------------------------- -------- --------
Financial assets - Loans and receivables
Trade and other receivables 1,539 1,364
Cash at bank 2,090 2,483
------------------------------------------------- -------- --------
3,629 3,847
------------------------------------------------- -------- --------
Financial liabilities measured at amortised cost
Trade and other payables 4,504 4,700
Borrowings 14,638 14,166
Lease liability 8,712 8,541
------------------------------------------------- -------- --------
27,854 27,407
------------------------------------------------- -------- --------
(24,225) (23,560)
------------------------------------------------- -------- --------
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.
The finance charge of the Group for the year to 31 March 2021 of
GBP877,000 (2020: GBP1,043,000) comprised loan interest &
charges of GBP472,000 (2020: GBP636,000), and lease finance charges
of GBP405,000 (2020: GBP401,000).
The loans provided by Phoenix SG Limited from 16 March 2018 are
a fixed interest loan (5% per annum). During the period of the
first UK lockdown between April and July 2021, Phoenix SG Limited
waived the interest on the loans. The interest waived was
GBP236,000.
Foreign exchange risk
The Group had no material exposure to foreign exchange risk in
the year ended 31 March 2021. 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 (see note 28 and 32) 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:
Within Between Between
6 and 12
6 months months 1 and 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- ------------- -------
At 31 March 2021
Trade and other payables 4,242 262 - 4,504
Borrowings - - 14,638 14,638
Lease liability 1,310 470 6,932 8,712
------------------------- -------- -------- ------------- -------
5,552 732 21,570 27,854
------------------------- -------- -------- ------------- -------
At 31 March 2020
Trade and other payables 3,978 215 507 4,700
Borrowings - - 14,166 14,166
Lease liability 403 407 7,731 8,541
4,381 622 22,404 27,407
------------------------- -------- -------- ------------- -------
26 Identity of related parties
The Company has a controlling related party relationship with
its subsidiary companies (see note 30). The Group also has a
related party relationship with its Directors.
Transactions between parent and subsidiaries
The parent company charged management fees of GBP477,000 in the
year to 31 March 2021 (2020: GBP550,000) to its subsidiaries.
Transactions between controlling party, parent and
subsidiaries
On 10th September 2018 the Group announced that its subsidiary,
Stanley Gibbons Limited had entered into an agreement with Phoenix
S.G. Limited (the Group's controlling party) 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)
On 21st February 2020 the Group announced that its subsidiary,
Stanley Gibbons Limited had entered into an agreement with Phoenix
S.G. Limited to acquire approximately 780 items, for an initial
consideration of GBP1.07m, 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.
On 29 June 2021, the Group entered a loan agreement with Phoenix
S.G. Limited (see note 32 for details). The loan of GBP6,500,000
was agreed for the purchase of the British Guiana 1c Magenta and
the associated costs of purchase.
On 18 February 2021, Phoenix Asset Management ("Phoenix")
acquired 100% of the share capital of Rawnet Limited. The Group has
used Rawnet Limited for the provision of software design and build
for both the Stanley Gibbons website and the catalogue database. As
result of the acquisition by Phoenix, Rawnet is now a related
party. There has been no change to the commercial terms since the
acquisition by Phoenix. The Group was invoiced GBP93,000 for
services by Rawnet in the year ending 31 March 2021, GBP39,473 of
which was after 18 February.
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.
G E 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 S.G. Limited which holds 248,000,000 Ordinary shares
representing 58.09% of the Company's issued share capital.
Year ended 31 March 2021
H G Wilson, the Group's Chairman, made purchases during the year
to the value of GBP12,744. The amount outstanding at 31 March 2021
of GBPnil.
G E Shircore made purchases of GBP4,919. There amount
outstanding was GBPnil at 31 March 2021.
A Gee, the Group's Chief Financial Officer purchased GBP299 of
goods from the Group during the year. GBP8.75 was outstanding at 31
March 2021.
Year ended 31 March 2020
H G Wilson, the Group's Chairman, made purchases during the year
to the value of GBP68,530; he had a sales ledger balance of
GBP9,390. Mr Wilson is owed an amount of GBP4,023 and the net
amount outstanding at 31 March 2020 of GBP5,367.
G E Shircore made purchases of GBP768 during the year. There
amount outstanding was GBPnil at 31 March 2020.
M West, a non-Executive director, purchased GBP277 of goods from
the Group during the year. No amount was outstanding at 31 March
2020.
27 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.
Financial performance and cash flow information
During the year ended 31 March 2021, the Group sold down further
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:
31 March 31 March
2021 2020
GBP'000 GBP'000
---------------------------------------------------- -------- --------
Revenue 247 180
Expenses (163) (48)
---------------------------------------------------- -------- --------
Profit before income tax 84 132
Income tax credit 3 -
---------------------------------------------------- -------- --------
Profit after income tax of discontinued operation 87 132
Gain on disposal of assets - -
---------------------------------------------------- -------- --------
Profit/(loss) from discontinued operation 87 132
---------------------------------------------------- -------- --------
Net cash inflow/(outflow) from operating activities 87 132
Net cash - sales proceeds - -
---------------------------------------------------- -------- --------
Net increase in cash from discontinued operations 87 132
---------------------------------------------------- -------- --------
28 Leases
This note provides information on the properties where the Group
is a lessee.
The balance sheet shows the following amounts in respect of
leases.
Right of use asset
Right-of use assets were measured at the amount equal to the
lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the balance
sheet as at 31 March 2019. There were no onerous lease contracts
that would have required an adjustment to the right-of-use assets
at the date of initial application. The recognised right-of-use
assets relate to the following types of assets:
31 March 2021 31 March 2020
GBP'000 GBP'000
----------- ------------- -------------
Properties 6,796 7,762
31 March 2021 31 March 2020
Lease liabilities GBP'000 GBP'000
------------------------------ ------------- -------------
Current lease liabilities 1,780 810
Non-current lease liabilities 6,932 7,731
------------------------------ ------------- -------------
8,712 8,541
------------------------------ ------------- -------------
The lease liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee's incremental
borrowing rate as of 1 April 2019. The weighted average lessee's
incremental borrowing rate applied to the lease liabilities on 1
April 2019 was 5%, the discount rate on the Group's borrowings. In
the Directors opinion this is the discount rate that the Group
would obtain any further borrowings, as this is the discount rate
applied to the Phoenix loan (see note 18). Phoenix has secured
these borrowings against the Group's assets. Without further
security available the Group would be unlikely to secure funding
from other sources and therefore the Directors believe the 5% rate
applied is the most appropriate basis on which to base the IFRS 16
calculations.
Minimal future rental payments for sub-let properties
The Group sub-lets two of its properties in Pall Mall, London
and Madison Avenue, New York. At 31 March 2021 the Group had future
minimum rental payments receivable under non-cancellable operating
leases as follows:
Land and Land and
Buildings Buildings
31 March
31 March 2021 2020
Receivable: GBP'000 GBP'000
--------------------------- ------------- ---------
Within one year 1,209 1,230
Between two and five years 5,212 4,623
In five years or more 1,283 2,339
--------------------------- ------------- ---------
7,704 8,192
--------------------------- ------------- ---------
Amounts recognized in the income statement
The income statement shows the following in terms of charges
relating to leasing:
31 March
31 March 2021 2020
GBP'000 GBP'000
-------------------------------- ------------- --------
Right of use asset depreciation 966 890
Finance charges 405 401
-------------------------------- ------------- --------
Impact of Covid-19 on the Group's leases
The Group leases 4 properties and operates out of 2 of these at
399 Strand, London and Ringwood, Hampshire. The other 2 properties
in Pall Mall, London and Madison Avenue, New York are sub-let.
There has been no impact of the pandemic on the lease in Ringwood,
where lease payments have been paid on time. At 399 Strand, in
agreement with the landlord, an amount of GBP101,000 of rent has
been deferred. The Group are currently negotiating with the
landlord of 399 Strand for more formal relief of the amounts
outstanding and a short term variation to the terms of the current
lease.
Pall Mall, London
Concurrent quarterly rent negotiations are in place between the
tenant, ourselves and our landlord regarding this property. The
tenants lease expires in August 2021 (our lease expires in July
2031). Included within the Group's statement of financial position
is a right of use asset of GBP1,352,000 (2020: GBP1,482,000) and a
lease liability of GBP1,500,000 (2020: GBP1,516,000) at 31 March
2021. Rental payments of GBP87,250 have been deferred during the 12
months to 31 March 2021 and GBP87,250 rent receivable from our sub
tenant has also been deferred. The Group are currently in the
process of negotiating to surrender this lease with the landlord
and a simultaneous surrender of the sub-lease.
Madison Avenue, New York
The tenants in our New York property have not paid rent since 1
April 2020. As a result the Group's subsidiary, Mallett Inc, has
issued legal proceedings against the tenant. Mallett Inc has drawn
down the security deposit from the tenant and these funds have been
used to maintain and protect the property and pay taxes as they
fall due. No impairment was charged as at 31 March 2021,
negotiations on a settlement of the lease were continuing and
Mallett Inc still had the right of use of the asset, including the
ability to sub-let out the premises to another tenant. Mallett Inc
agreed a settlement with the tenant on 6 August 2021 (see note
32).
No payment has been made to the landlord since 1 April 2020 and
the landlord has commenced legal proceeding against Mallett Inc,
the Group subsidiary that leases the premises. The lease and the
sub-lease expire in February 2027. Included within the Group's
statement of financial position is a right of use asset of
GBP2,994,000 (2020: GBP3,501,000) and a lease liability of
GBP4,470,000 (2020: GBP4,272,000) at 31 March 2021. Discussions
continue with the landlord regarding a settlement.
29 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 these guarantees and undertakings,
which have 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 and the winding up
process is continuing but has been delayed by the COVID-19
pandemic. At the balance sheet date and the date of this report the
winding up process is continuing.
30 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) Philatelic dealer and
Limited Guernsey Ordinary GBP1 shares dealer
(in liquidation)** in memorabilia
Stanley Gibbons Holdings Ordinary GBP0.25
Limited England shares Holding Company
Philatelic dealer and
Stanley Gibbons Limited* England Ordinary GBP1 shares retailer,
and dealer in memorabilia
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)
Limited England Ordinary 1p shares Holding Company
Dealer in rare coins
AH Baldwin & Sons Limited* England Ordinary GBP1 shares and other
collectibles
Auctioneer of works
Greenfield Auctions Limited* England Ordinary GBP1 shares on paper
The Fine Art Auction Group Ordinary GBP0.45 Auctioneer and valuer
Limited* England shares of art,
Preferred GBP1 shares antiques and collectibles
Preferred GBP0.25
shares
Deferred GBP0.25
shares
Ordinary GBP0.05
Dover Street Limited* England shares Holding company
(formerly Mallett Limited)
Milsom Street Limited* England Ordinary GBP1 shares Antique dealers
(formerly Mallett & Son
(Antiques) Limited)
Mallett, Inc* United States Common stock US$1 Antique dealers
Stanley Gibbons Finance
Limited* England Ordinary GBP1 shares Loan finance
* Indirect holding
** Not controlled due to being in liquidation
31 Controlling party
In the opinion of the directors the controlling party of the
Group was Phoenix S. G. Limited.
32 Post balance sheet events
Purchase of 1c Magenta at auction
On 8 June 2021, Stanley Gibbons Limited purchased the world's
most famous and valuable stamp - the 1856 1c Magenta from British
Guiana - the only one in existence. The 1c Magenta was purchased at
auction in the USA for a total consideration of US$8.307mn
(including buyer's premium and overhead fee).
On 29 June 2021, the Group agreed a loan of GBP6.5m with Phoenix
S.G. Limited , the Group's majority shareholder and lender, to
finance the purchase through an interest free loan from Phoenix
S.G. Ltd (PSG). The material terms of the loan are as follows:
-- Interest free with 50% of any profit made on the sale of the item due to PSG
-- Secured solely against the item with no further recourse to any group companies
-- An initial 5-year term, which can be extended by agreement between the parties
-- If the item is unsold at maturity, the loan can be settled
through return of the item to PSG
-- If the item is sold for less than the outstanding value of
the loan, the net proceeds of the sale will be deemed to be
sufficient consideration to satisfy the loan obligation in full
-- Sale of the item requires PSG approval.
The Group is also considering partnering with Castelnau Group
Ltd (Castelnau), a company controlled by Phoenix Asset Management
Partners, as Castelnau seek to develop a new digital platform on
which to buy, sell and most importantly, enjoy collectible assets.
The proposed partnership with Castelnau has the potential to
provide the Group with a minority shareholding in the new digital
platform at zero cost as well as cost free access to the platform
itself.
Leased property update
The Group through its subsidiary Mallett Inc, continues its
discussions with both tenant and landlord over the Madison Avenue
property in New York. On 6 August 2021, Mallett Inc agreed a
settlement with the tenant. This settlement was materially less
than the rent due from the tenant and due to the landlord for the
remaining life of the lease. This will impact on the Group's
negotiations with the landlord. The Group owes $1,300,000 to the
landlord at 31 July 2021. The landlord continues to pursue
litigation to recover the outstanding rent but discussions continue
to agree a settlement.
In relation to the Pall Mall property the proposal is the Group
surrender the lease and the sub lease, which expires on 26 August
2021. The Group currently has no financial exposure until 26 August
2021.
Legal claim
On 5 May 2021 the Group received a letter before action from a
previous investor Stanley Gibbons (Guernsey) Limited (In
liquidation). The letter indicate that the Group, in the form of
some of the investment adviser employed by various Group companies
had given advise that cause the investor to suffer a loss. The
Group has sought counsel opinion on this and has responded to the
claim. In the Director's opinion, at the balance sheet date, there
is no requirement for a provision for the amount claimed to be
provided for.
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 Circle.
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 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.
Louis has over 30 years' experience in investment banking and
broking both in the UK and overseas. He is currently Executive
Chairman of Orosur Mining Inc. and was previously the Chief
Financial Officer at Eland Oil & Gas, both AIM quoted
companies. 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.
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. 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 and successful Non-Executive Director and
Advisory Board Member, who has worked for more than 35 years within
the world's leading consumer industries.
Independent NED and Chairman of the Remuneration Committee at
The Stanley Gibbons Group plc and an active member of the Advisory
Boards for InBeta Ltd and doXray B.V.
Mark also Advises Activant Capital - a growth stage investor in
technology and software businesses specialising in internet of
things, data services and commerce, and is a Mentor to early stage
technology companies at the Plug and Play Technology Accelerator in
Paris.
Formerly, CEO of LLX Global Business Services SA (subsidiary of
JAB Holding Company S.a.r.l.) and CTO at JAB Luxury GmbH (LABELUX),
former owners of Jimmy Choo and Belstaff and retained shareholding
in Bally.
Mark has an MBA from Stirling University.
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting ("AGM")
of The Stanley Gibbons Group plc ("Company") will be held at 399
Strand, London WC2R 0LX on Wednesday 22 September 2021 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 AGM or any adjournment thereof.
You will not receive a form of proxy for the AGM in the post.
Instead, you will receive instructions to enable you to vote
electronically and how to register to do so. You may request a hard
copy proxy form directly from the registrars, 10(th) Floor Central
Square, 29 Wellington Street, Leeds, LS1 4DL (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 2021 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 2022; 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),
(c) 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 2022, save
that the Company may, before such expiry, make offers or agreements
which would or might require equity securities to be issued or
granted and the Directors may issue or grant equity securities in
pursuance of such offer or agreement notwithstanding that the
authority conferred by this resolution has expired."
To consider, and if thought fit, to pass the following
resolution as a Special Resolution:
Disapplication of pre-emption rights
10. "THAT, subject to the passing of the ordinary resolution
numbered 9 in this notice of Annual General Meeting, the Directors
be given the general power to issue or grant equity securities (as
defined in the Articles) for cash either pursuant to the authority
conferred by the ordinary resolution numbered 9 in this notice of
Annual General Meeting or by way of a sale of treasury shares, as
if the pre-emption rights contained in article 2.7 of the Articles
did not apply to any such issue or grant, provided that this power
shall be limited to:
(a) the allotment or grant of equity securities in connection
with an offer of equity securities (but, in the case of the
authority granted under sub-paragraph (a) of the ordinary
resolution numbered 9 in this notice of Annual General Meeting, by
way of a rights issue only):
(1) to the holders of Ordinary Shares in proportion (as nearly
as may be practicable) to their respective holdings; and
(2) to holders of other equity securities as required by the
rights of those securities or as the Directors otherwise consider
necessary,
but subject to such exclusions or other arrangements as the
Directors may deem necessary or expedient to deal with fractional
entitlements, record dates, legal or practical problems in or under
the laws of any territory or the requirements of any regulatory
body or stock exchange; and
(b) the allotment or grant (otherwise than pursuant to
sub-paragraph (a) above) of equity securities up to a maximum of
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 2022 (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
AM Gee, Secretary
Dated: 9 August 2021
Registered Office Address: 22 Grenville Street, St Helier,
Jersey JE4 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 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 Group by calling tel: 0371 664 0391. Calls are
charged at the standard geographic rate and will vary by provider.
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 Group, 10th Floor Central Square, 29 Wellington
Street, Leeds, LS1 4DL by 11.30 am on 20 September 2021.
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 appointments, 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 22 September 2021 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 Group (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 20 September 2021 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 22 September 2021 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
from the date of this Notice up to the conclusion of the AGM. Due
to restrictions, if shareholders wish to inspect any of these
documents they should email agee@stanleygibbons.com.
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 2021.
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.
The Stanley Gibbons Group plc
22 Grenville Street, St Helier,
Jersey JE4 8PX, Channel Islands
Tel: 01534 766711
and
399 Strand,
London WC2R 0LX
Tel: 020 7836 8444
Email: info@stanleygibbons.com
www.stanleygibbons.com
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END
FR PLMBTMTTMTAB
(END) Dow Jones Newswires
August 10, 2021 02:00 ET (06:00 GMT)
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