29 Apr 2020 07:00
COVID-19 Update
The Stanley Gibbons Group provides an update on the impact of the Covid-19 pandemic on the business:
Graham Shircore, Group Chief Executive said:
'I'd particularly like to thank all of my colleagues who have shown resilience, flexibility and dedication in our collective battle to mitigate the impact of COVID-19. I am very proud of how everybody has responded and it is undeniable that this has had a material positive impact on our performance.
I would also like to thank all of our customers, old and new, for their understanding, continued engagement with us and the many messages of goodwill that we have received, I hope that we can continue to do more for you at this difficult time'.
Operational Update
The unprecedented situation in which the whole world now finds itself has unsurprisingly had a profound impact on the operating practices of the Group but we adapted rapidly and all areas of the business continue to function:
Our shop at 399 Strand was in the final stages of redevelopment at the start of the upheaval and building work was stopped on Friday March 20th. At the same time, in order to protect both staff and customers, we decided to close our temporary shop at 370 Strand. Following the introduction of the 'lockdown' the following week, we began to put in place the contingency measures which we had previously worked on and quickly moved to an operating model which is essentially consistent with how we are operating today:
· All areas of the business remain open and functioning other than the physical shop.
· Along with our Publications Department, Customer Services team, Rare Stamp and Baldwin's businesses, the shop remains open for telephone and email enquiries and orders.
· We did not have any auctions planned for late March or April. We have delayed our planned auction in May but will shortly be launching an online only auction with a view to potentially doing more of these hereafter.
· All phone and email lines across the business remain manned throughout normal business hours.
Other than the redevelopment work at 399 Strand we have not cancelled or paused any longer term projects or initiatives. This will be of significant benefit as and when things begin to return to some semblance of normality.
The coin market has remained quite robust in recent weeks and we have seen evidence of more people showing an interest in both coin and stamp collecting. The higher end of the stamp market has however seen a more pronounced impact from the current situation.
We have used this period to work on proactively engaging with new and existing customers both online and through phone and video based contact. Combined with further work on driving online traffic, this has resulted in a material increase in users of our websites and social media platforms.
We have seen a gratifying increase in both new and 'lapsed' customers coming back to the hobbies, and believe we are taking some market share from those who are unable to operate as effectively through this period.
Our Colleagues
Man hours on site have been reduced by approximately 96% with our office in Ringwood closed and the Strand open two days per week with a skeleton workforce. Almost 20% of our workforce has been furloughed. The business is making up the shortfall in salaries for those members of staff who are now on furlough.
The Non-Executive directors have temporarily reduced their remuneration by 25%, as has one senior employee. Another has volunteered to temporarily reduce their working hours to three days per week. Across the rest of the senior team, collectively they have volunteered to defer approximately 15% of their salary three months.
We have done all we can to protect our colleagues and minimise the impact the situation has had on them while adapting to significantly reduced levels of trading activity. Their response has been extremely gratifying with people working constructively together and many 'going the extra mile'.
Financial Update
Cash generation has unsurprisingly been a key focus and we have significantly reduced the level of outstanding debtors while doing our best to bring costs down where possible and defer as many of those which can't be taken out completely. We have deferred cash outflows of approximately £450,000 and have saved costs of approximately £300,000.*
Although we have traded better than we initially planned for and cash generation has been stronger, there is no denying the huge impact COVID-19 has had on our business. While in aggregate the impact on the fiscal year to end of March is immaterial, revenue since the penultimate week of March is down approximately 45% versus budget.
The mitigating actions we have taken mean that our cash balance is currently down only slightly compared to our expectations for this point prior to COVID-19.
This is gratifying but it is not sustainable without an improvement in trading and further actions on costs. In particular, the benefit of pushing harder on our trade debtors will not repeat to the same extent and we are conscious of the need to consider the reversal of deferred costs.
Based on current trading levels, we anticipate that our cash balances give us liquidity for approximately another 3 to 4 months without any further mitigating steps. In addition, we continue to have access to a further £2m through our debt facility.
This period has also highlighted a number of areas where we believe we may be able to operate more efficiently in future than we have done in the past. The extent of this remains to be seen but there is always something which can be done on costs and this period has allowed us to identify what some of these things are.
We have had constructive and mutually beneficial conversations with many of the people we work in conjunction with and we are grateful for the ongoing support we have received. The attitude of everybody doing what they can and an appreciation of the scale of the upheaval has frequently been in evidence.
We have also remained in regular dialogue with Phoenix, our majority shareholder and lender, and they remain supportive of the Group and the actions which we are taking.
The duration and longer-term effects of COVID-19 are unknown. Therefore we are not able to forecast in more detail the impact on the business at the current time. Our aim is to come out of this period relatively far stronger than we went into it and our efforts are having an effect. We will be relentless in continuing to push harder to ensure that they do not go to waste.
* Based on an assumption of a 3-month period before we return to more normal operating practices but including our expectation of rates relief for the full year.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014
Enquiries
The Stanley Gibbons Group plc +44(0)207 836 8444Graham Shircore (Chief Executive Officer)Anthony Gee (Chief Finance Officer)
Liberum Capital Limited (Nomad and Broker) +44(0)20 3100 2000Andrew GodberEdward ThomasLaura Hamilton
ENDS