Stanley Gibbons rare stamps and autographs still on a rising trend

by Harry Norman

proactiveinvestors.co.uk (02.06.09) - How many companies have been able to announce, in what would normally be their weakest trading quarter, that turnover was up 25% on the same period last year? This was Stanley Gibbons’ announcement on the 29th April - so what has Stanley Gibbons got going for it?

Stanley Gibbons’ GB30 Rare Stamp Index and Fraser’s 100 Autograph Index have both outperformed UK property, the Standard & Poors 500, the Dow Jones Index, the FTSE 100 Total Returns Index, the Hang Seng Index, and gold, over a ten year period - and Stanley Gibbons is in the stamps and autographs business!



Edward Stanley Gibbons was a philatelist (stamp collector) who worked in a Plymouth chemist’s shop, owned by his father, setting up a stamp-dealing desk there in 1856. Thirty-five years later, he sold his stamp dealing and stamp catalogues business, based at Gower St in London WC1, to Charles Phillips who became Managing Director, with Gibbons becoming Company Chairman. Nowadays, Stanley Gibbons Group plc, is the international brand leader in philatelic trading and is quoted on AIM. Acquired by Mr Phillips for £25,000 in 1891, Stanley Gibbons is valued by Mr Market at £31 million in 2009 and has just paid a 2.75p per share dividend to shareholders.

Stanley Gibbons-owned Fraser’s Autographs is the largest dealer in autographs and memorabilia in Europe, trading global collectibles, valuable manuscripts, signed memorabilia and celebrity autographs, and accounts for 12% of the revenue and 21% of the group’s profits. Philatelic publishing (catalogues and magazines) and accessories account for 13% of the company’s revenues and 12 % of its profits. This division capitalises on an in-house intellectual property - a unique stamp numbering system - which is the foundation of both the company’s cataloguing system and the famous Stanley Gibbons catalogues. Philatelic trading is the company’s core business and accounts for 74% of revenue and 67% of the company’s profits. Surprisingly, given the company’s global profile, it trades less than 10% of the market in British and Commonwealth stamps and less than 1% of the global market.
The company offers its high net worth investors in stamps three investment routes. Guaranteed minimum return contracts offer investors a minimum 20% gain over five years and unlimited upside potential. These contracts are very popular with investors, especially in the current low interest rate environment. Stanley Gibbons limits sales each year to 20% of the total of the company’s net assets. Investors in 3 year contracts taken out in 2005, returned an average of 28% when they cashed in during 2008 highlighting that actual performance significantly exceeded the minimum returns offered. The company also offers an arrangement for investors to actively manage philatelic investment portfolios with lower trading spreads.

In January the market was unnerved by a trading statement and the shares fell until they found support at 2005 levels. Stanley Gibbons communicated to the market the decision to defer revenue totalling £3.4m into 2009, based on transactions entered into with investors which provided the option for the investor to pull out in 12 months time. The decision to not include those sales in 2008 was a prudent one and in line with best accounting and market practice. The shares have recovered some ground and are now supported at 2006 levels, but still fall far short of the heights reached in 2007.

The company is reviewing the possibility of separating its investment services from the Stanley Gibbons Group. A dedicated Executive Board of the investment business could provide the independence and focus necessary to develop into this new market which is currently under-exploited.. Possibilities also under consideration include starting an investment fund and creating specific regulated investment products to open up investment services to a much larger marketplace.. This would enable the company to focus on what it does best: stamps, collectibles, publishing and autographs - markets that present the company with big opportunities.

The Universal Postal Union considers that the global philately market is worth £6 billion annually, with 48 million philatelists participating. The company generated 41% of its business overseas in 2008 but believes exoects this percentage to increase as emerging economies such as Russia, India and China are starting to figure in Stanley Gibbons sales.

The Internet offers the company the opportunity to trade with a thriving online philatelic community on a global scale. A recent addition to the company’s website is ‘My Collection’, which offers philatelists the facility to manage and value their collections online. The next step is to convert the famous 10,000 page Stanley Gibbons stamp catalogue into an online database, showing current prices and availability of stock, thus creating a market to buy stamps directly from Stanley Gibbons or indirectly through other online trading platforms, such as Amazon or eBay (capitalising on that unique stamp numbering system again!) At the moment, annually, 4 million visitors visit the Stanley Gibbons website and just browse! The company believes these visitors could be turned into an additional £10m profit each year; as the company already mails out newsletters to 120,000 email addresses, resulting in £3.3 million in revenue in 2008. The company’s goal is to launch its online trading platform in 2010. It then plans to launch a US version of its site, followed by Chinese, Indian and Russian versions.

Stanley Gibbons’ revenues in 2008 were down 4% to £19.39 million, profits before tax were down 18% to £3.7 million, earnings per share were down 2% to 13.22p per share. (However, if the £3.4 million of revenue that was deferred to 2009 is included - earnings per share were up 28% to 17.19p per share.) Net tangible assets per share were up 17% to 63p, and the company was able to increase its dividend by 6% to 4.75p per share. The company has reported a strong first quarter with turnover (unaudited) up 25% on the same period last year. Michael Hall, Chief Executive of Stanley Gibbons, attributes this quarter’s robust performance to its growing network of international sales agents. This network is seen as another route to international sales growth by the company, and having taken initial steps to build this network it is keen to continue to add more suitably qualified sales agents throughout the world - particularly in Asia and the Middle East.

The company has also strengthened its position by acquiring the major monthly philatelic trade magazine - the Philatelic Exporter - and has bolstered the team with the appointment of Donal Duff as Chief Operating Officer.

With a strong first quarter already under its belt, and a predicted profit from revenue deferred from 2008, Stanley Gibbons is in good shape and almost as fine an investment as its stamps.

(Quelle: http://www.proactiveinvestors.co.uk/companies/news/5899/stanley-gibbons-rare-stamps-and-autographs-still-on-a-rising-trend-5899.html)

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