The Stanley Gibbons Group plc
The Stanley Gibbons Group plc (“Stanley Gibbons” or the “Company”) today issues an update on trading and other business developments.
Trading update for the year to 31 March 2022
Trading during the second half of the year continued to improve across all areas of the business and revenue for the year ended 31 March 2022 is expected to be approximately £12m. While the reduced impact of COVID related restrictions and resultant consumer behaviour has undoubtedly played a part, there are a variety of internal elements which have also influenced this:
The Philatelic division has performed well in both the auction and dealing side with turnover and profitability significantly improved. Both parts of the business have shown good momentum in recent months with the second half being significantly ahead of the first half and we expect further progress to be made in the coming year.
The Numismatic division, which traded strongly through COVID, has benefitted from the return of the auction business, holding two successful auctions in the second half of the year and growing momentum in receiving consignments. The dealing side has suffered slightly as a result of capacity constraints around the time of our auctions but we are taking steps to ensure that this is much reduced going forward. The underlying business continues to trade well.
After a much reduced catalogue production schedule in recent years, the Publishing division is once again regularly producing stamp catalogues. Combined with increased efficiency in this part of the business, market share gains in magazines and further progress on the digital product side, we expect to see continued improvement in performance here.
For much of the year the shop was noticeably quieter as a result of COVID, however in recent months this has abated and we are hopeful of seeing a continued improvement. Through our partner Showpiece Technologies, in which we own a 20% stake, fractional ownership of the 1c Magenta, was made available in November 2021. This attracted over 1,000 customers within the first couple of weeks and led to significant publicity and interest not only in this venture but in the
hobby as a whole. Since then Showpiece has also offered a second item, an Edward VIII penny coin, which sold out in less than four days. They continue to look across a broad range of categories for further items which will interest and appeal to collectors.
Having hopefully seen the back of the most pronounced impacts of COVID, all businesses are now having to deal with the prospects of levels of inflation not seen in this country for several decades. We have begun working on mitigating actions and are hopeful that the impact can be minimised. There is also some evidence to suggest that both coins and stamps do well during periods of heightened inflation but we are by no means taking this for granted.
Our primary creditor and majority shareholder (Phoenix S.G. Limited) has remained extremely supportive and engaged. They have, as in previous years, once again formally waived the loan covenants which we are in default of. Further evidence of their support is through their provision of loan finance for the purchase of the British Guiana 1c Magenta as announced on 8 June 2021. Additionally, Phoenix S.G. Ltd has today agreed to extend the previously agreed (2018) secured loan
facility to the Company, by a further £1.3m (the “Loan Extension”). The Loan Extension has been agreed on the same terms as those entered into in the Debt Facility Restatement Agreement on 19 March 2018, namely that interest will accrue at a rate of 5.0 per cent. per annum but will not be payable as to principal and interest until 20 March 2023.
The Loan Extension will be drawn down over the term of the Loan and will be used to provide ongoing support to deliver the Group’s sustainable growth strategy.
We continue to be in active dialogue with the trustees of our defined benefit pension schemes. While tangible progress is yet to be made, the relationship remains a collaborative one and we are hopeful of being able to structure an agreement which would give the Group greater flexibility while we continue the job of rebuilding and more aggressively growing the business.
As previously reported in the Interim Report and Accounts, the Group’s wholly owned subsidiary, Mallett Inc, entered Chapter 11 in September 2021 following a protracted dispute with the landlord of our leasehold property in the US. The Chapter 11 process is expected to conclude during the summer. Also as previously reported in the Interim Report and Accounts, in September 2021 a previous investor of Stanley Gibbons (Guernsey) Ltd (In Liquidation) has lodged a claim against The Stanley Gibbons Group plc in Guernsey. The Board has sought counsel opinion in both the UK and Guernsey and continues to believe that the Group is in a good position to successfully defend the claim. Stanley Gibbons have partnered with Rawnet Ltd (“Rawnet”), a software development and digital marketing agency to develop the digital offering of the Group. Rawnet is a subsidiary of the Castelnau Group Limited which is itself part of the Phoenix Asset Management Group, making them a related party of the Company.
Graham Shircore, Group CEO said;
‘We are encouraged by elements of progress we have made in each of the operating businesses however it is clear that in order to really make the most of our wonderful brands and the rebuilding work of the past few years, we are going to have to work harder, faster and more aggressively. Our ambitions go far beyond delivering continued incremental improvement.’
Related Party Transaction
Phoenix S.G. Limited (“Phoenix SG”) is currently interested in 58.09 per cent. of the issued share capital of the Company. The provision of the Loan Extension constitutes a related party transaction for the purposes of AIM Rule 13. The Directors of the Company (excluding Graham Shircore who is the CEO of the Company, a Partner of Phoenix Asset Management Partners and an appointee of Phoenix SG) consider, having consulted with its nominated adviser, Liberum Capital Limited, that the terms of the Loan Extension are fair and reasonable insofar as the Company’s shareholders are concerned.
The Stanley Gibbons Group plc +44(0)207 836 8444
Graham Shircore (Chief Executive Officer)
Kevin Fitzpatrick (Chief Finance Officer)
Liberum Capital Limited (Nomad and Broker) +44(0)20 3100 2000