Share Name Share Symbol Market Type Share ISIN Share Description
Stanley Gibbons Group LSE:SGI London Ordinary Share GB0009628438 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.125p -3.33% 3.625p 3.50p 3.75p 3.875p 3.625p 3.875p 728,429 13:00:08
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 42.5 -30.2 -16.1 - 6.49

Stanley Gibbons Group PLC Interim Results

29/12/2017 11:07am

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Stanley Gibbons Group PLC

29 December 2017

THE STANLEY GIBBONS GROUP PLC

(the "Company")

Interim Results for the six months ended 30 September 2017

The Stanley Gibbons Group plc today announces its interim results for the six months ended 30 September 2017, the full text of which is set out below.

Enquiries:

 
 The Stanley Gibbons Group plc 
  Harry Wilson                            +44 (0)207 836 
  Andrew Cook                              8444 
 finnCap Ltd (Nomad and Broker) 
  Stuart Andrews / Christopher Raggett    +44 (0)20 7220 
  / Anthony Adams (corporate finance)      0500 
 Yellow Jersey PR (Financial PR)          +44 (0)7747 788 
  Charles Goodwin                          221 
                                           stanleygibbons@yellowjerseypr.com 
 
 

Chairman's Statement

Introduction

This report relates to the interim unaudited results for the six month period ended 30 September 2017.

As set out in the full year results released on the 1 October, the end of the period to which this interim statement relates, 2017 has been another difficult year for the Group. Throughout management has maintained a critical focus upon the restructuring programme, initiated in 2016, whilst seeking to stabilise our continuing core trading activities - stamps & coins.

Operating Review

 
                       6 months         6 months          6 months        6 months          12 months        12 months 
                      to 30 Sep            to 30             to 30           to 30              to 31            to 31 
                           2017              Sep               Sep             Sep                Mar              Mar 
                          Sales             2017              2016            2016               2017             2017 
                                          Profit             Sales          Profit              Sales           Profit 
                                                          restated        restated 
                         GBP000           GBP000            GBP000          GBP000             GBP000           GBP000 
Investments               6,810              390             6,732             789             18,778              989 
Philatelic                3,562            (399)             3,184           (391)              7,881            (419) 
Publishing                  988             (52)             1,078            (24)              2,043              122 
Coins & medals            2,068              380             2,631             574              4,975              955 
Interiors                 3,188            (942)             3,382         (2,056)              8,650          (5,174) 
Other & corporate 
 overheads                    -          (2,585)               312         (2,489)                136          (5,528) 
Finance charges               -            (311)                 -           (286)                  -            (318) 
-----------------  ------------  ---------------  ----------------  --------------  -----------------  --------------- 
Trading sales 
 and losses              16,616          (3,519)            17,319         (3.883)             42,464          (9,373) 
Pension service 
 and share option 
 charges                      -            (150)                 -           (150)                  -            (623) 
Exceptional cost 
 of sales                     -                -                 -               -                  -          (1,144) 
Exceptional 
 operating 
 income/(charges)             -              579                 -         (2,327)                  -         (19,017) 
-----------------  ------------  ---------------  ----------------  --------------  -----------------  --------------- 
Group total sales 
 and loss before 
 tax                     16,616          (3,090)            17,319         (6,360)             42,464         (30,157) 
-----------------  ------------  ---------------  ----------------  --------------  -----------------  --------------- 
 

Overview

The performance in the first half of the current year is slightly improved from that seen in the comparative period last year.

-- turnover for the six months ended 30 September 2017 down 4% at GBP16.6m (restated 2016: GBP17.3m).

-- trading losses before exceptional items and before pensions related finance charges, as detailed in the operating review, were GBP3.5m for the six months ended 30 September 2017 (restated 2016: loss of GBP3.9m):

-- gross margin at 40.1% (restated 2016: 46.5%) was lower due to the impact of continuing to run the business for cash generation;

-- the adjusted loss before tax was GBP3.1m, after exceptional income of GBP0.6m, (restated 2016 loss: GBP6.4m);

Investments

For the six months to 30 September 2017, the investments division which included SG Guernsey, made total sales of GBP6.8 million (2016: GBP6.7million) and a divisional profit, before exceptional costs, of GBP0.4 million (2016: GBP0.8million), across this period, the net cash outflows from the investments division were GBP2.0 million due to payments made under the investment plan buy-back obligations.

Further to an application made by the Board of Stanley Gibbons (Guernsey) Limited ("SG Guernsey"), to which the Group's bank (also the largest creditor of SG Guernsey) did not object, on 21 November an Administration Order was granted in respect of SG Guernsey pursuant to Part XXI of the Companies (Guernsey) Law 2008, as amended. PricewaterhouseCoopers LLP were appointed as administrators of SG Guernsey and their primary responsibility is to establish the liabilities of SG Guernsey and to realise its assets in order to make a distribution to its creditors.

SG Guernsey's assets primarily consisted of GBP12.6 million of philatelic stock held in Guernsey. It is likely that the administrators will seek to realise the value of this stock in order to make a distribution to the creditors of SG Guernsey.

SG Guernsey's potential liabilities primarily consisted of around GBP54 million contingent liabilities relating to the buy-back guarantees (or "investment products") that were offered by SG Guernsey (under previous management) prior to August 2016 and a further approximate GBP11 million of liabilities included on its balance sheet;

The outstanding indebtedness currently owed to the Group by SG Guernsey amounts to approximately GBP6.5 million and the Group will rank as an unsecured creditor in respect of that amount alongside other unsecured creditors of SG Guernsey.

Whilst the Board of the Company is disappointed that it was not possible to avoid the administration of SG Guernsey, it remains convinced that the Administration Order serves the wider interests of the Group and its shareholders, given that the effect was to ring-fence the Group's exposure to SG Guernsey's liabilities.

The Board believe that there is still a market for non-collectors to purchase stamps and coins as heritage investments even though all forms of guarantees ended in 2016.

Philatelic

Despite sales increasing slightly the overall loss from this division increased. In part this reflects the lower margins achieved as highlighted above and also that the cost cutting and restructuring of this division was completed after these results. This culminated with the appointment of the new Managing Director of Philately in November.

Publishing

The period on period results of the division were largely consistent but the Board believes that the increase of the on-line presence of this area, coupled with the digitalisation of some of its publications will improve returns from this division. The relaunch of the My Collection product is the first step of this change, however further cash investment and time will be required to progress.

Coins & Medals

Baldwins' was restructured in 2016 and has remained profitable across the period. The auction joint venture, Baldwins' of St James's was launched in January 2017 so the comparisons with the previous years' figures are not like for like.

Interiors

Following the sale of the majority of the businesses and brands within this division, the Group will effectively cease to trade in this area from January 2018. At that time all associated costs will also end.

Corporate Overheads

The Board has already far exceeded its original target of achieving GBP10m of annualised operating cost reductions, with monthly employment costs falling by some 75% since the inception of the restructuring programme in January 2016, alongside generating cash of over GBP6m from the sale of non-core businesses and assets: enabling total bank debt to remain unchanged whilst management implemented the dramatic changes deemed necessary. The corporate overheads include some costs associated with the restructuring plan and resolution of legacy issues.

Exceptional Operating Charges and Cost of Sales

Exceptional operating charges/(income) and cost of sales, can be further analysed as follows:

 
                                                                                              6 months      12 months 
                                                                                             to 30 Sep      to 31 Mar 
                                                            6 months to 30 Sep 2017      2016 restated           2017 
                                                                             GBP000             GBP000         GBP000 
Impairment of intangible 
 assets                                                                         150                  -         11,980 
Stock provisions                                                                244                  -          3,440 
Marketplace net costs and 
 intangible assets write off                                                      -              1,955          2,096 
Profit on disposal of investment                                            (1,394)                  -              - 
Impairment of receivables                                                         -                  -            650 
Reorganisation & restructuring 
 costs                                                                           50                672            589 
Professional fees for corporate 
 activity                                                                       221                  -            587 
Profit on disposal of tangible 
 fixed assets                                                                     -              (300)          (325) 
Loss on disposal of subsidiary                                                  150                  -              - 
                                                                              (579)              2,327         19,017 
-------------------------------------------------------------------  --------------  -----------------  ------------- 
 Losses on realising inventory 
  within interiors division                                                       -                  -          1,144 
-------------------------------------------------------------------  --------------  -----------------  ------------- 
 

Funding & Cash Flow

As disclosed in the annual report published on 1 October 2017, the Group is currently in default on its bank facilities due to the qualified audit report on the accounts for the year ended 31 March 2017, the Group net assets being below GBP20m and the Group stock held in the UK being below the required multiple of the total facility. The Group is therefore dependent upon the bank's ongoing support, particularly in the event of material adverse short-term cash movements and as during periods of default the facilities are repayable on demand, which has not been requested. The bank has continued to demonstrate this support to the Group in recent months and remains in constructive dialogue around future financing.

Cash outflows from operations for the six months ended 30 September 2017 were GBP3.3m (2016; GBP11.1m), of this total GBP2.0m related to the investment division largely as a result of the investment plan buy-back obligations.

As at the balance sheet date the Group had a revolving credit facility of GBP10.0m (2016: GBP10.0m) and an additional loan facility of GBP7.6m (2016: GBP8.3m), totalling GBP17.6m (2016: GBP18.3m). At the same date the utilised amounts were GBP9.6m and GBP7.6m respectively totalling GBP17.2m (2016: GBP18.9m).

Total bank debt stood at approximately GBP16.8m as at 27 December 2017.

Litigation

The Group continues to cooperate fully with the U.S. Securities and Exchange Commission (the "SEC") and the Department of Justice ("DOJ"), following the conclusion of the DOJ's criminal prosecution against a former client, (arising in part out of his dealings with Mallett Inc.) and a New York based former director of Mallett plc. No criminal or civil charges have been filed against Mallett Inc. or any Mallett group company to date. The Group continues to retain the services of US legal counsel to advise it in these matters. Given the former director's admitted criminal conduct, the Company is actively considering civil action against the former director and/or others in respect of losses it has incurred as a result of these matters, and anticipates that any claims would be brought in the coming months.

At present the Board's best estimate of the costs in assisting the US authorities with their investigations, as at 30 September 2017 total GBP0.7m. This amount is the total accrual at the year end.

On 9 May 2017 the Board announced the sale of a major part of the Interiors division to Millicent Holdings Limited ("Millicent"), which transaction subsequently failed to complete as reported on 4 August 2017. The Company is seeking recovery, by enforcing certain collateral, of a termination fee payable to the Company by Millicent, under the terms of the relevant agreement.

Dividend

As a result of the trading performance of the Group in the first half, the Board has not declared an interim dividend for the six months ended 30 September 2017.

Management Appointment

In November we were pleased to secure the services of Guy Croton as Managing Director of Philately. Guy is well respected following a 22 year career in the industry, the last 15 years at Spink, latterly as Head of The Philatelic Division.

Prior Year Adjustment

These financial statements reflect prior year adjustments in respect of the previously highlighted issues regarding the treatment of revenue for some investment products. The adjustment was necessary following further analysis of the legacy information used to quantify the adjustments booked in the September 2016 Report and Accounts. The figures for September 2016 have therefore been restated in these report and accounts,

Outlook

At the heart of the Group are two market leading brands and a core stamp and coin dealing business consisting of a team with invaluable industry expertise. In January 2017, Baldwins launched a joint-venture with St James' for its numismatic auction activities, and continues to trade profitably with a favourable outlook. The philatelic business has been affected by the ongoing restructuring, the build-up of excess inventory from the buy-backs and the continuing working capital constraints.

The administration of SG Guernsey has fundamentally limited the exposure of the Group to the buy-back liabilities and removed the cash-flow burden associated therewith.

Going forwards profitability is likely to remain constrained, notwithstanding having reached a stabilised operating cost platform, whilst working capital remains constricted.

Whilst the bank remains supportive of the ongoing efforts to stabilise the core business, the Board believes that it needs to refinance the existing facility prior to its expiry in May 2018, in order to take advantage of the significant restructuring that it has achieved. In addition to the refinancing of the debt, the Board believes that the Company requires further investment of approximately GBP5m in order to enable the growth of the core business and to normalise working capital. Whilst discussions with the bank remain constructive there is a risk that the quantum of debt which needs to be refinanced, together with the investment and working capital requirement cannot be obtained within the current capital structure. Whilst the Board has received offers of finance from both existing and new investors including an offer of equity conditional on the restructuring of the existing debt, the bank has requested that the Board explore improved financing options in the New Year in light of the administration of Guernsey and the significant reduction in contingent liabilities. As part of these discussions the Board will consider raising further equity or asset sales, however the Board is of the view that whilst alternative finance will be available it is likely to require restructuring of the current indebtedness as part of the solution.

Finally I would like to thank all staff and stakeholders for their commitment, contribution and patience in showing their continuing support for our Group.

Harry Wilson

Chairman

29 December 2017

Condensed statement of comprehensive income

for the 6 months ended 30 September 2017

   6 months      6 months      12 months 
   to 30 Sep      to 30 Sep        to 31 Mar 
   2017              2016                2017 
 
                                          (unaudited)  (unaudited)  (audited) 
                                                        (restated) 
----------------------------------------  -----------  -----------  --------- 
 
                                   Notes      GBP'000      GBP'000    GBP'000 
----------------------------------------  -----------  -----------  --------- 
Revenue                                  3     16,616       17,319     42,464 
Cost of sales                                 (9,832)      (9,259)   (29,060) 
---------------------------------------   -----------  -----------  --------- 
Gross Profit                                    6,784        8,060     13,404 
Administrative expenses 
 before defined benefit pension 
 service costs and exceptional 
 operating costs                              (2,401)      (1,925)    (6,048) 
Defined benefit pension 
 service cost                                       -            -      (188) 
Exceptional operating income/(charges)            579      (2,327)   (19,017) 
---------------------------------------   -----------  -----------  --------- 
Total administrative expenses                 (1,822)      (4,252)   (25,253) 
Selling and distribution 
 expenses                                     (7,741)      (9,882)   (17,852) 
---------------------------------------   -----------  -----------  --------- 
Operating Loss                                (2,779)      (6,074)   (29,701) 
Finance income                                      -            -        170 
Finance costs                                   (311)        (286)      (626) 
---------------------------------------   -----------  -----------  --------- 
Loss before tax                               (3,090)      (6,360)   (30,157) 
Taxation                                 4          -          529      1,357 
---------------------------------------   -----------  -----------  --------- 
Loss for the period/year                      (3,090)      (5,831)   (28,800) 
Other comprehensive (loss)/income: 
Exchange differences on 
 translation of 
 foreign operations                                18        (379)        319 
Actuarial losses recognised 
 in 
 the pension scheme                                 -            -    (1,064) 
Tax on actuarial gains/(losses) 
 recognised in the pension 
 scheme                                             -            -        166 
Revaluation of reference 
 collection                                         -            -         70 
Other comprehensive income/(loss) 
 for the period/year, net 
 of tax                                            18        (379)      (509) 
---------------------------------------   -----------  -----------  --------- 
Total comprehensive loss 
 for the period/year                          (3,072)      (6,210)   (29,309) 
---------------------------------------   -----------  -----------  --------- 
Basic earnings per Ordinary 
 Share                                   5    (1.73)p      (3.26)p   (16.10)p 
Diluted earnings per Ordinary 
 Share                                   5    (1.73)p      (3.26)p   (16.10)p 
---------------------------------------   -----------  -----------  --------- 
 

All profit and total comprehensive income is attributable to the owners of the parent; there are no non-controlling interests.

Condensed statement of financial position

as at 30 September 2017

 
                                       30 Sep                                   31 Mar 
                                         2017                           2017 (audited) 
                                                 30 Sep 2016 
                                                 (unaudited) 
                                  (unaudited)     (restated) 
                                      GBP'000        GBP'000                   GBP'000 
-------------------------------  ------------  -------------  ------------------------ 
Non-current assets 
Intangible assets                       6,906         19,460                     7,772 
Property, plant and 
 equipment                              3,318          4,783                     4,332 
Deferred tax asset                      1,344          1,923                     1,344 
-------------------------------  ------------  -------------  ------------------------ 
                                       11,568         26,166                    13,454 
-------------------------------  ------------  -------------  ------------------------ 
Current assets 
Inventories                            52,011         64,542                    55,225 
Trade and other receivables             4,221         13,703                     4,044 
Assets held for sale                      951              -                         - 
Cash and cash equivalents               1,081          2,389                     2,349 
-------------------------------  ------------  -------------  ------------------------ 
                                       58,264         80,634                    61,618 
-------------------------------  ------------  -------------  ------------------------ 
Total assets                           69,832        106,800                    75,072 
-------------------------------  ------------  -------------  ------------------------ 
Current liabilities 
Trade and other payables               27,846         24,555                    29,260 
Borrowings                             17,369         18,878                    16,501 
Current tax payable                         -            282                         - 
-------------------------------  ------------  -------------  ------------------------ 
                                       45,215         43,715                    45,761 
-------------------------------  ------------  -------------  ------------------------ 
Non-current liabilities 
Trade and other payables                2,904         15,205                     4,676 
Retirement benefit obligations          6,086          5,222                     6,086 
Deferred tax liabilities                  554          1,852                       554 
-------------------------------  ------------  -------------  ------------------------ 
                                        9,544         22,279                    11,316 
-------------------------------  ------------  -------------  ------------------------ 
Total liabilities                      54,759         65,994                    57,077 
-------------------------------  ------------  -------------  ------------------------ 
Net assets                             15,073         40,806                    17,995 
-------------------------------  ------------  -------------  ------------------------ 
Equity 
Called up share capital                 1,789          1,789                     1,789 
Share premium account                  74,847         74,847                    74,847 
Share compensation reserve              2,033          1,595                     1,883 
Capital redemption reserve                 38             38                        38 
Revaluation reserve                       346            276                       346 
Retained earnings                    (63,980)       (37,739)                  (60,908) 
-------------------------------  ------------  -------------  ------------------------ 
Equity shareholders' 
 funds                                 15,073         40,806                    17,995 
-------------------------------  ------------  -------------  ------------------------ 
 

Condensed statement of changes in equity

for the 6 months ended 30 September 2017

 
                            Called      Share   Share compensation                      Capital 
                          up share    premium              reserve    Revaluation    redemption    Retained 
                           capital    account              GBP'000        reserve       reserve    earnings      Total 
                           GBP'000    GBP'000                             GBP'000       GBP'000     GBP'000    GBP'000 
 At April 
  2017                       1,789     74,847                1,883            346            38    (60,908)     17,995 
 (Loss)/profit 
  for the financial 
  year                           -          -                    -              -             -     (3,090)    (3,090) 
 Exchange 
  differences 
  on translation 
  of foreign 
  operations                     -          -                    -              -             -          18         18 
----------------------  ----------  ---------  -------------------  -------------  ------------  ----------  --------- 
 Total Comprehensive 
  income/(loss)                  -          -                    -              -             -     (3,072)    (3,072) 
 Cost of share 
  options                        -          -                  150              -             -                    150 
----------------------  ----------  ---------  -------------------  -------------  ------------  ----------  --------- 
 At 30 September 
  2017                       1,789     74,847                2,033            346            38    (63,980)     15,073 
----------------------  ----------  ---------  -------------------  -------------  ------------  ----------  --------- 
 At April 
  2016                         471     63,682                1,448            276            38    (27,523)     38,932 
 Prior year 
  adjustment                                                                                        (4,006)    (4,006) 
----------------------  ----------  ---------  -------------------  -------------  ------------  ----------  --------- 
 At 1 April 
  2016 (restated)              471     63,682                1,448            276            38    (31,529)     33,508 
 Profit for 
  the period                     -          -                    -              -             -     (5,831)    (5,831) 
 Exchange 
  differences 
  on translation 
  of foreign 
  operations                     -          -                    -              -             -       (379)      (379) 
----------------------  ----------  ---------  -------------------  -------------  ------------  ----------  --------- 
 Total Comprehensive 
  income/(loss)                  -          -                    -              -             -     (6,210)    (6,210) 
 Issue of 
  new shares                 1,318     11,162                    -              -             -           -     12,480 
 Cost of share 
  options                        -          -                  150              -             -           -        150 
----------------------  ----------  ---------  -------------------  -------------  ------------  ----------  --------- 
 At 30 September 
  2016                       1,789     78,844                1,598            276            38    (37,739)     40,334 
----------------------  ----------  ---------  -------------------  -------------  ------------  ----------  --------- 
 At April 
  2016 (restated)              471     63,682                1,448            276            38    (31,529)     34,386 
 (Loss)/profit 
  for the financial 
  year                           -          -                    -              -             -    (28,800)   (28,800) 
 Amounts which 
  may be subsequently 
  reclassified 
  to profit 
  & loss 
 Exchange 
  differences 
  on translation 
  of foreign 
  operations                     -          -                    -              -             -         319        319 
 Amounts which 
  will not 
  be subsequently 
  reclassified 
  to profit 
  & loss 
 Revaluation 
  of reference 
  collection                     -          -                    -             70             -           -         70 
 Remeasurement 
  of pension 
  scheme net 
  of deferred 
  tax                            -          -                    -              -             -       (898)      (898) 
----------------------  ----------  ---------  -------------------  -------------  ------------  ----------  --------- 
 Total comprehensive 
  income/(loss)                  -          -                    -             70             -    (29,379)   (29,309) 
 Share issue                 1,318     11,165                    -              -             -           -     12,483 
 Cost of share 
  options                        -          -                  435              -             -           -        435 
----------------------  ----------  ---------  -------------------  -------------  ------------  ----------  --------- 
 At 31 March 
  2017                       1,789     74,847                1,883            346            38    (60,908)     17,995 
----------------------  ----------  ---------  -------------------  -------------  ------------  ----------  --------- 
 
 

Condensed statement of cash flows

for the 6 months ended 30 September 2017

   6 months       6 months           12 months 
   to 30 Sep        to 30 Sep            to 31 Mar 
   2017                  2016                  2017 
 
               (unaudited)                                  (unaudited)                                  (unaudited) 
                                                              (restated)    -------------  -------------  ----------- 
                               -------------  -------------  ----------- 
-------------  ------------  -------------------------------------------  ------------------------------------------- 
 
        Notes       GBP'000                                      GBP'000                                      GBP'000 
-------------  ------------  -------------------------------------------  ------------------------------------------- 
Cash outflow 
 from 
 operating 
 activities   6     (3,295)                                     (11,086)                                      (8,248) 
Interest 
 paid                 (311)                                        (286)                                        (626) 
Taxes paid                -                                          500                                          493 
------------   ------------  -------------------------------------------  ------------------------------------------- 
Net cash 
 outflows 
 from 
 operating 
 activities         (3,606)                                     (10,872)                                      (8,381) 
------------   ------------  -------------------------------------------  ------------------------------------------- 
Investing 
activities 
Purchase of 
 property, 
 plant 
 and 
 equipment              (6)                                         (92)                                        (301) 
Purchase of 
 intangible 
 assets                (24)                                            -                                        (118) 
Sale of 
 freehold 
 property                 -                                        2,500                                        2,500 
Sale of 
 financial 
 asset                1,400                                            -                                            - 
Disposal of 
 subsidiary             100                                            -                                            - 
Interest 
 received                 -                                            -                                          170 
------------   ------------  -------------------------------------------  ------------------------------------------- 
Net cash 
 generated 
 from/(used 
 in) 
 investing 
 activities           1,470                                        2,408                                        2,251 
------------   ------------  -------------------------------------------  ------------------------------------------- 
Financing 
activities 
Net proceeds 
 from issue 
 of ordinary 
 share 
 capital                  -                                       12,380                                       12,383 
Net 
 borrowings           (700)                                        (823)                                        (823) 
------------   ------------  -------------------------------------------  ------------------------------------------- 
Net cash 
 generated 
 from/(used 
 in) 
 financing 
 activities           (700)                                       11,557                                       11,560 
------------   ------------  -------------------------------------------  ------------------------------------------- 
Net decrease 
 in cash and 
 cash 
 equivalents        (2,836)                                        3,093                                        5,430 
------------   ------------  -------------------------------------------  ------------------------------------------- 
Cash and 
 cash 
 equivalents 
 at start of 
 period             (5,852)                                     (11,282)                                     (11,282) 
------------   ------------  -------------------------------------------  ------------------------------------------- 
Cash and 
 cash 
 equivalents 
 at end of 
 period             (8,688)                                      (8,189)                                      (5,852) 
------------   ------------  -------------------------------------------  ------------------------------------------- 
 

Notes to the Condensed Financial Statements

for the 6 months ended 30 September 2017

   1       Basis of preparation 

The interim financial information in this report has been prepared using accounting policies consistent with IFRS as adopted by the European Union. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be adopted by the European Union and applicable as at 31 March 2018.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Operating Review above. The Group's forecasts shows that it will remain within current banking facility limits for the foreseeable future, until the existing facilities have expired in May 2018. However as highlighted above, the Group is currently in default on its banking facilities, due to the qualified audit report in March 2017 financial statements, the breach of the net asset covenant, as the Group's net assets are currently below GBP20m and the value of the stock in the UK being below the required multiple of the total borrowings. In the event that either trading deteriorates or the Group is unable to renegotiate a new banking facility with the existing lender, the Group would require access to additional liquidity.

Whilst the bank remains supportive of the ongoing efforts to stabilise the core business, the Board believes that it needs to refinance the existing facility prior to its expiry in May 2018 in order to take advantage of the significant restructuring that it has achieved. In addition to the refinancing of the debt, the Board believes that the Company requires further investment of approximately GBP5m in order to enable the growth of the core business and to normalise working capital. Whilst discussions with the bank remain constructive there is a risk that the quantum of debt which needs to be refinanced, together with the investment and working capital requirement cannot be obtained within the current capital structure. Whilst the Board has received offers of finance from both existing and new investors including an offer of equity conditional on the restructuring of the existing debt, the bank has requested that the Board explore improved financing options in the New Year in light of the administration of Guernsey and the significant reduction in contingent liabilities.

The Directors acknowledge that the above risks may be considered material uncertainties which could cast significant doubt on the Group's ability to continue as a going concern. They recognise that the bank has remained supportive across the recent period and have additionally anticipated a number of mitigating courses of action. As part of these discussions the Board will consider raising further equity or asset sales, however the Board is of the view that whilst alternative finance will be available it is likely to require restructuring of the current indebtedness as part of the solution.

As such, having regard to the matters above, and after making reasonable enquiries and taking account of uncertainties discussed above, the Directors have a reasonable expectation that the Company and the Group have access to adequate resources to continue operations and to meet its liabilities, as and when they fall due, for the foreseeable future. For that reason, they continue to adopt the going concern basis in the preparation of the accounts.

   2       Significant accounting policies 

The accounting policies applied by the Group in this interim report are the same as those applied by the Group in the consolidated financial statements for the year ended 31 March 2017.

Income tax

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

   3       Segmental analysis 

As outlined in the Operating Review the company has five main business segments, as shown below. This is based upon the Group's internal organisation and management structure and is the primary way in which the Board of Directors is provided with financial information.

Segmental income statement

 
                                                                        Coins 
                            Investments Philatelic       Publishing      & Medals      Interiors Unallocated     Total 
                           GBP'000              GBP'000     GBP'000       GBP'000   GBP'000          GBP'000   GBP'000 
---------------------  -----------  -------------------  ----------  ------------  --------  ---------------  -------- 
6 months to 
30 September 
 2017 
Revenue                      6,810              3,562           988         2,068     3,188                -    16,616 
Operating 
 costs                     (6,420)              (3,961)     (1,040)       (1,688)   (4,130)          (2,735)  (19,974) 
Exceptional 
 costs                        (40)                (209)           -          (72)     1,394            (494)       579 
Net finance 
 costs                           -                    -           -           (1)      (73)            (237)     (311) 
---------------------  -----------  -------------------  ----------  ------------  --------  ---------------  -------- 
Profit/(loss) 
 before tax                    350                (608)        (52)           307       379          (3,466)   (3,090) 
Tax                              -                    -           -             -         -                -         - 
---------------------  -----------  -------------------  ----------  ------------  --------  ---------------  -------- 
Profit/(loss) 
 for the period                350                (608)        (52)           307       379          (3,466)   (3,090) 
---------------------  -----------  -------------------  ----------  ------------  --------  ---------------  -------- 
6 months to 30 September 
 2016 (restated) 
Revenue                      6,732                3,184       1,078         2,631     3,382              312    17,319 
Operating 
 costs                     (5,943)              (3,575)     (1,102)       (2,057)   (5,438)          (2,951)  (21,066) 
Exceptional 
 costs                           -                    -           -             -       112          (2,439)   (2,327) 
Net finance 
 costs                           -                    -           -             -     (166)            (120)     (286) 
---------------------  -----------  -------------------  ----------  ------------  --------  ---------------  -------- 
Profit/(loss) 
 before tax                    789                (391)        (24)           574   (2,110)          (5,198)   (6,360) 
Tax                              -                    -           -           529         -                -       529 
---------------------  -----------  -------------------  ----------  ------------  --------  ---------------  -------- 
Profit/(loss) 
 for the period                789                (391)        (24)         1,103   (2,110)          (5,198)   (5,831) 
---------------------  -----------  -------------------  ----------  ------------  --------  ---------------  -------- 
12 months to 31 
 March 2017 
Revenue                     18,779                7,881       2,043         4,975     8,650              136    42,464 
Operating 
 costs                    (17,790)              (8,300)     (1,921)       (4,020)  (13,824)          (7,293)  (53,148) 
Exceptional 
 costs                     (1,199)              (1,358)           -         (506)   (1,290)         (14,664)  (19,017) 
Net finance 
 costs                           -                (140)           -           (5)     (354)               43     (456) 
---------------------  -----------  -------------------  ----------  ------------  --------  ---------------  -------- 
Profit/(loss) 
 before tax                  (210)              (1,917)         122           444   (6,818)         (21,778)  (30,157) 
Tax                              -                  186           -           965       (1)              207     1,357 
---------------------  -----------  -------------------  ----------  ------------  --------  ---------------  -------- 
Profit/(loss) 
 for the period              (210)              (1,731)         122         1,409   (6,819)         (21,571)  (28,800) 
---------------------  -----------  -------------------  ----------  ------------  --------  ---------------  -------- 
 

Geographical Information

Analysis of revenue by origin and destination

 
                        6 months     6 months          6 months      6 months         12 months    12 months 
                           to 30    to 30 Sep             to 30         to 30             to 31        to 31 
                        Sep 2017   2017 Sales          Sep 2016      Sep 2016          Mar 2017     Mar 2017 
                           Sales    by origin             Sales         Sales             Sales        Sales 
                  by destination                 by destination     by origin    by destination    by origin 
                                                     (restated)    (restated) 
                         GBP'000      GBP'000           GBP'000       GBP'000           GBP'000      GBP'000 
---------------  ---------------  -----------  ----------------  ------------  ----------------  ----------- 
Channel 
 Islands                     391        6,811             7,139         6,732               654       19,145 
United Kingdom             9,486        9,230             7,210        10,498            31,235       21,888 
Hong Kong                    840            -               178            78               725        2,645 
Europe                       812            -             1,150             -             1,934           37 
North America              3,650          575               539             -             4,838        1,394 
Singapore                    293            -               161            11               463            - 
Asia                         304            -               258             -               662            - 
Rest of 
 the World                   840            -               684             -             1,953            - 
---------------  ---------------  -----------  ----------------  ------------  ----------------  ----------- 
                          16,616       16,616            17,319        17,319            42,464       42,464 
---------------  ---------------  -----------  ----------------  ------------  ----------------  ----------- 
 

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.

   4       Taxation 

The charge for taxation is based on the results for the period and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised on a full provision basis in respect of all temporary differences which have originated, but not reversed at the balance sheet date.

   5       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. 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.

 
                                                 6 months to 30                     6 months to              12 months 
                                                 Sep 2016                           30 Sep 2016              to 31 Mar 
                                                 (unaudited)                        (unaudited)         2017 (audited) 
                                                                                     (restated) 
-----------------------------------------------------------------  ----------------------------  --------------------- 
Weighted average number 
 of ordinary shares 
 in issue (No.) Dilutive 
 potential ordinary 
 shares: Employee share 
 options (No.)                                        178,916,643                   178,916,643            178,916,643 
                                                          323,959                     1,898,559                323,959 
-------------------------  --------------------------------------  ----------------------------  --------------------- 
(Loss)/profit after 
 tax (GBP)                                            (3,090,000)                   (5,831,000)           (28,800,000) 
Pension service costs 
 (net of tax)                                             150,000                       190,000                150,000 
Cost of share options 
 (net of tax)                                             150,000                       150,000                435,000 
Amortisation of customer 
 lists Exceptional 
 operating (income)/costs 
 (net of tax)                                             180,000                     180,000                  423,000 
                                                        (579,000)                     2,122,000             18,276,000 
-------------------------  --------------------------------------  ----------------------------  --------------------- 
Adjusted (loss)/profit 
 after tax (GBP)                                      (3,189,000)                   (3,189,000)            (9,516,000) 
-------------------------  --------------------------------------  ----------------------------  --------------------- 
Basic earnings per                  (1.73)p                                      (3.26)p                    (16.10)p 
 share -                             (1.73)p                                      (3.26)p                    (16.10)p 
 pence per share (p)                 (1.78)p                                      (1.78)p                    (5.32)p 
 Diluted earnings per                (1.78)p                                      (1.78)p                    (5.32)p 
 share - 
 pence per share (p) 
 Adjusted earnings 
 per share - 
 pence per share (p) 
 Adjusted diluted 
 earnings 
 per share - 
 pence per share (p) 
-------------------------  --------------------------------------  ----------------------------  --------------------- 
 
 
6. Cash outflows from operating 
 activities 
                                                6 months 
                                                      to 
                                                               6 months 
                                             30 Sep 2017             to 
                                                            30 Sep 2016               12 months 
                                                            (unaudited)               to 31 Mar 
                                             (unaudited)     (restated)          2017 (audited) 
                                                 GBP'000        GBP'000                 GBP'000 
--------------------------------  ----------------------  -------------  ---------------------- 
Operating (loss)/profit                          (2,779)        (6,074)                (29,701) 
Profit on sale of property                             -          (300)                   (325) 
Profit on disposal of 
 investment                                      (1,394)              -                       - 
Impairment of tangible                                 -              -                       - 
 assets 
Depreciation                                         201            225                     619 
Amortisation                                         340            171                     684 
Impairment of intangibles                            150              -                  11,980 
Increase/(decrease) in 
 provisions                                            -              -                   (200) 
Net exchange differences                              18          (379)                    (37) 
Cost of share options                                150            150                     435 
Decrease in inventories                            3,214          1,379                  10,696 
Increase/(decrease) in 
 trade and 
 other receivables                                 (177)             82                   9,742 
Decrease in trade and 
 other payables                                  (3,018)        (6,340)                (12,141) 
--------------------------------  ----------------------  -------------  ---------------------- 
Cash outflows from operating 
 activities                                      (3,295)       (11,086)                 (8,248) 
--------------------------------  ----------------------  -------------  ---------------------- 
 
   7           Post Balance Sheet Events 

Sale of certain assets and liabilities of the Interiors division

On 1 October the Group sold certain assets and liabilities of Dreweatts and the intellectual property rights and goodwill in respect of the Bloomsbury brands, part of the Group's Interiors division.

The sale was for a consideration of GBP1.25m million in cash payable on completion, plus a maximum additional consideration of GBP0.4m, payable over the next 24 months, alongside the assumption of other liabilities currently associated with the Interiors division.

On 8 December the Group sold the intellectual property rights and goodwill in respect of the Mallett brand, part of the Group's Interior division.

The sale was for a consideration of GBP100,000 in cash payable on completion.

Appointment of Administrators to Stanley Gibbons (Guernsey) Limited

On 21 November, following consultation with the Company and its bank, Stanley Gibbons (Guernsey) Limited ("SG Guernsey") made an application to the Royal Court of Guernsey for an administration order ("Administration Order") in respect of SG Guernsey and the Administration Order was granted in accordance with the laws of Guernsey.

The effect of the Administration Order was to place the operations of SG Guernsey, which comprises the investment division of the group, in the hands of the appointed joint administrators whose responsibility will now be to establish the liabilities of SG Guernsey (including its indebtedness to the Company) and realise the assets of that company in order to make a distribution to its creditors.

SG Guernsey's current assets principally comprise approximately GBP12.6 million of philatelic stock. This stock figure excludes approximately GBP14 million of stock owned by third parties. SG Guernsey's potential liabilities primarily consist of around GBP54 million contingent liabilities relating to the buy-back guarantees (or "investment products") that were offered by SG Guernsey (under previous management) prior to August 2016 and a further approximate GBP11 million of liabilities included on its balance sheet. SG Guernsey's liabilities also include outstanding indebtedness owed to the Company, amounting to approximately GBP6.5 million, which will rank alongside other unsecured creditors, mainly consisting of bank debt and payments due to holders of investment products.

For the six months to 30 September 2017, the investments division which included SG Guernsey, made total sales of GBP6.8 million and a divisional profit, before exceptional costs, of GBP0.35 million, across this period, the net cash outflows from the investments division were GBP2.0 million due to payments made under the investment plan buy-back obligations.

The following pro forma balance sheet shows what the estimated theoretical impact of the above events on the Group balance sheet would have been, if they had occurred on 30 September 2017.

 
 
                                 Interim      Interiors     Guernsey   Pro forma 
                                  GBP'000      GBP'000      GBP'000     GBP'000 
 Non-current assets 
 Intangible assets                  6,906               -          -       6,906 
 Property, plant and 
  equipment                         3,318               -          -       3,318 
 Deferred tax asset                 1,344               -          -       1,344 
                                   11,568               0          -      11,568 
                                ---------  --------------  ---------  ---------- 
 Current Assets 
 Inventories                       52,011            (46)   (26,459)      25,506 
 Trade and other receivables        3,957            (44)      (953)       2,960 
 Assets held for sale                 951           (951)          -           - 
 Cash and cash equivalents          1,081             740      (313)       1,508 
                                ---------  --------------  ---------  ---------- 
                                   58,264           (301)   (27,725)      30,238 
                                ---------  --------------  ---------  ---------- 
 
 Total assets                      69,832           (301)   (27,725)      41,806 
                                ---------  --------------  ---------  ---------- 
 
 Current liabilities 
 Trade and other payables          27,846           (653)   (17,746)       9,447 
 Borrowings                        17,369               -          -      17,369 
                                   45,215           (653)   (17,746)      28,816 
                                ---------  --------------  ---------  ---------- 
 
 Non-current liabilities 
 Other payables                     2,904               -    (2,904)           - 
 Retirement benefit 
  obligations                       6,086               -          -       6,086 
 Deferred tax liabilities             554               -          -         554 
                                ---------  --------------  ---------  ---------- 
                                    9,544               -    (2,904)       6,640 
                                ---------  --------------  ---------  ---------- 
 
 Total liabilities                 54,759             653   (20,650)      33,456 
                                ---------  --------------  ---------  ---------- 
 Net assets                        15,073             352    (7,075)       8,350 
                                ---------  --------------  ---------  ---------- 
 
 Equity 
 Called up share capital            1,789               -          -       1,789 
 Share premium account             74,847               -          -      74,847 
 Share compensation 
  reserve                           2,033               -          -       2,033 
 Capital redemption 
  reserve                              38               -          -          38 
 Revaluation reserve                  346               -          -         346 
 Retained earnings               (63,980)             352    (7,075)    (70,703) 
                                ---------  --------------  ---------  ---------- 
 Equity shareholders' 
  funds                            15,073             352    (7,075)       8,350 
                                ---------  --------------  ---------  ---------- 
 
 
   8             Further copies of this statement 

Copies of this statement are being sent to shareholders and can be viewed on the Company's website at www.stanleygibbons.com. Further copies are available on request from: The Company Secretary, The Stanley Gibbons Group plc, 18 Hill Street, St Helier, Jersey JE2 4UA.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR LLFILFSLAFID

(END) Dow Jones Newswires

December 29, 2017 06:07 ET (11:07 GMT)

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