Stanley Gibbons upbeat on outlook after solid first half

Stanley Gibbons (LON:SGI) posted solid interim results and struck an upbeat note on outlook, saying the ongoing global economic instability, in particular, is expected to be highly supportive of its investment services in top quality rare collectables including stamps. Its new trading platform is on track for launch later this year.

Pretax profits before exceptions for the six months to June rose 12 per cent to £1.8 million on sales up 25 per cent to £15 million.

Earnings per share increased 11% to 6.18p from 5.58p last time and there is an interim dividend of 2.50p, up from 2.25p.

Cash generated from operating activities was little changed at £900,000 versus last time but this was after an increased investment of £900,000 in quality rare stamps to support second half growth.

Drilling down into the sales performance, philatelic trading and retail sales totalled £2 million, up 22 per cent on last time with profit contribution up by 15 per cent. Increased trade sales and sales of rare Chinese stamps, primarily to investment clients, were the primary contributors to growth in the first half.

Specialist stamp sales to collectors, excluding trade sales, were up by 13 per cent benefiting from the sale of £0.2 million "fine used" penny blacks to the Chinese market.

Sales to investment clients were up by 17% in the period, highlighting the growing acceptance of collectibles as an alternative asset class and the continued success of its international and online marketing campaigns to recruit new high net worth clients.

More broadly, the group assured investors its online trading platform remains on track for launch in late 2011.

The group continues to target global expansion to support long term growth, with China, home to 20 million stamp collectors, a third of the global estimate, a major focus.  It will be opening a new office in Hong Kong, the primary location for Chinese philatelic dealing, in September.

Stanley also revealed that following the excellent sales performance of its investment office in Jersey, it is moving to larger premises on the island in August. The increased gallery space available will enable it to display the range of its exceptional quality collectibles and to promote its brand and the company’s investment services more professionally.

The group is also expending considerable effort into diversifying its business into other collectible categories. Specialist expertise acquired in the first half is now enabling it offer rare coins, commemorative medals and military medals.

Martin Bralsford, non-executive chairman, says the results show the group continuing to deliver growth even as it focuses on in its future with ongoing investment in IT systems and recruitment of key management.

He adds: “Prevailing economic instability, together with inflationary concerns and low interest rates globally, is expected to result in continued demand for our investment services in top quality rare collectibles as a means of diversifying, protecting and growing wealth."

Michael Hall, chief executive of Stanley Gibbons, says that in terms of geographical expansion plans, the company will be focusing most of its attention in the second half on the opening of the new office in Hong Kong.

Hall adds: “The development of the online trading platform remains the most important priority and we are currently reviewing resource requirements to accelerate the delivery of what is our most important strategic project with the potential to deliver transformational levels of new business in the future.”

Much is also expected from the company’s new retail site, launched in May 2011. Growth in sales and visitor numbers since re-launch and to date are “encouraging”, with a “substantial” uplift in sales being experienced in the month of July.

Looking ahead, Hall says: “We enter the second half of the year excited about the opportunities we are working on and remain assured about the long term strength of the collectibles market. On this basis, we feel confident in our ability to deliver continued growth to shareholders in the second half of this trading year and beyond.”