1 Apr 2021 07:00
The Stanley Gibbons Group plc
Trading Statement and Corporate Update
The Stanley Gibbons Group plc today issues an update on trading and other business developments.
Trading update for the year to 31 March 2021
Overall the trading patterns which we have previously seen in the first half of our financial year have continued. Namely increased levels of digital activity and remote selling of albums and accessories contrasting with lower levels of high ticket sales and in person activities as a result of the third lockdown.
While the patterns have been consistent with the above, underlying trading has however been better than in the first half of the financial year.
Although the philatelic side remains challenging there have been more 'less bad' months recently and as previously disclosed, we were also able to complete a very significant trade transaction of old stock towards the tail end of 2020. The main aspects impacting this part of the business are challenges with sourcing new material, the lack of exhibitions which often boost higher end sales and the overall impact on our auctions business which is skewed towards our physical location.
Our publishing business has benefitted from what we believe are significant market share gains as well as hobbies as a whole benefitting to some degree through the restrictions imposed on everyday life. This was partially offset by a failure to produce one of our annual catalogues towards the end of 2020. We continue to work on developing the digital elements of the business, something which has proven challenging at times but is increasingly giving us cause for optimism about the future. We are also extremely conscious that a lot of customers in this part of the business do not deal with our Philatelic department, something we are working to address.
Although challenged by our inability to open the shop, Baldwin's has continued to trade reasonably well through the last few months with the acquisition of some good material being helped by a strong underlying market. After a four year partnership with St James' Auctions, we have also jointly agreed to terminate our coin auction joint venture early, end of April 2021, and at no cost. This is a major milestone in the development of Baldwin's and we are very excited to be able to bring coin auctions back in house after a four year hiatus.
The shop itself has been closed for some time and even when we were allowed to open, Central London was particularly quiet. This is extremely frustrating having completed the redevelopment project and created what we believe is an unrivalled destination for those interested in our hobbies. The shop team have continued to serve customers remotely, ensuring that in conjunction with the other departments and our customer services team that we have been as accessible, helpful and responsive as possible to our customers.
We are hopeful that a vaccine led relaxing of restrictions is not only permanent but encourages activity levels to return at pace, however, this is hard to predict and we have plans in place if this is not how things develop.
Corporate Developments
Throughout the past year we have proactively engaged with many of the wider stakeholders in our business, taking the view that frequent and open conversation is paramount in trying to foster a collaborative approach to the challenges caused by COVID-19.
While many of these are ongoing, in the main this has proven successful and we are grateful to those parties for their approach.
Our primary creditor and majority shareholder has remained extremely supportive and engaged, the most tangible element of which being their willingness to once again waive the loan covenants which we are in default of. We have now received written confirmation of this waiver. The next financial covenant test of our loan facilities are in March 2022.
We continue to have a constructive dialogue with the pension scheme trustees and our landlords/lessors, with agreements in principle having been made for lease amendments on both of the properties we actively operate from and a reallocation of the lease to our sub-tenant for the third UK location.
As previously highlighted, regarding our leasehold property in the US, our sub-lessor, despite being backed by one of the largest and most profitable businesses in the world, is attempting to walk away from their lease commitments without making any form of restitution. We are challenging this and while the process is a long one, we are hopeful of a mediation driven resolution in the coming months.
Our insurance claim for business interruption due to the pandemic, which was originally denied, was reviewed by our insurer following the Supreme Court ruling but was unfortunately once again denied. We continue to believe that we may have a valid claim with arguments such as 'the coronavirus outbreak would not amount to an "emergency event"…..' giving us an unwelcome insight into how some insurers have treated their customers. We are currently taking legal advice and considering whether to take further action.
In contrast, we welcome the Government's continued support for business through the extension of the furlough scheme and in particular further business rates concessions. It is our hope that this is a prelude to a new, long overdue, more proportional approach to business rates.
In November 2020, as part of our interim announcement the Board's expectation was that we would draw down the remaining £2mn of our loan facility within the next 12 months. We are hopeful that this will now prove to have been too conservative. However it is important to note that at the current time the business continues to be cash negative, while trading conditions and the impact on our longer-term funding position remain uncertain with the latter influenced by our negotiations with our long term creditors.
Graham Shircore, Group CEO said;
'It is almost a year to the day that we prepared a plan for what we should expect as a result of the newly introduced Coronavirus restrictions.
At that time we would never have considered still being in lockdown 12 months later and we were similarly amiss in our financial assumptions. Our initial estimates were that we would have to draw down further on our debt facility by May of last year.
Despite increasing our spending on those initiatives which will help propel the business forward in future years, we are yet to do so.
This achievement is down to how our colleagues responded to the crisis and it is something I am extremely proud of. As shareholders, they all deserve our thanks.
The benefit of their achievements are however not just felt in the present. It allowed us to shift our focus far more heavily to coming out of the crisis relatively stronger than we went in and while we have undoubtedly been financially impacted by COVID-19, I am also confident that this is the case.
We are hopeful that the relaxation of restrictions, combined with greater participation in the hobbies we serve and our hard work bodes well for our prospects. However we are under no illusion that this is guaranteed and it is incumbent upon us to shape our own future, during these uncertain times. We must redouble our efforts in order to reap the benefits of the progress we have made, we cannot afford to take our foot off the pedal.'
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 Thomas