Mike Hall Chief Executive, Stanley Gibbons 16 April 2008

1. Alternative Investments In Collectibles Mike Hall Chief Executive, Stanley Gibbons 16 April 2008

2. Overview • Worldwide general economic conditions • The fundamentals – supply/demand of collectibles • Price histories and comparisons against other asset classes • The diversification benefits and low correlation with other asset classes • Liquidity • Tax benefits • Pride of ownership • The importance of quality and condition • Some recommended investments in collectibles • Some famous investors in collectibles

3. General economic conditions • The “credit crunch” catalyst – caused by greed • Credit tightening causes more difficult economic fundamentals • Media add fuel to difficult fundamentals – self fulfilling prophecy • Contagion factor creates whole scale fear • In times of fear most traditional investment mechanisms are wealth destructive • Collectibles market driven by neither fear nor greed – driven by passion

4. The Fundamentals • What are collectibles • Stamps • Historical signatures and documents • Coins • Art • Antiques • Wine • Comic Books • Milk bottles!!! • You can collect anything – whatever becomes your passion • But… very few will represent an investment

5. The Fundamentals Supply • Finite – rare collectibles cannot be re-produced • Perishable commodity – supply diminishes over time • Key pieces taken out of private hands permanently – museums, Royal Collection or “lost in attic” • Top rarities – limited number in existence or even unique

6. The Fundamentals Demand • Misconception – stigma attached, “the anorak” • The demographic of a collector – the ageing population • The impact of emerging economies – “BRIC” countries (Brazil, Russia, India and China) • Some collectible markets immature – value now beginning to be appreciated by a wider number of collectors and investors

7. Price Histories • Stick to collectibles with highly researched markets – recognised price history and provenance • 150 years of pricing history in stamps • Rare stamps have never went down in price in past 50 years • SG indices listed on Bloomberg – SG100, GB30, COM30, Autograph100 • Average long term compounded returns of approx. 10% per annum • Despite current “bubble” in housing market, stamp prices have delivered a higher return than property investment over past 50 years

8. Price Histories

9. Diversification • Reduce overall exposure to stock market and property market • No price correlation with traditional forms of investment (eg. shares, bonds, property etc.) • Alternative investments in collectibles avoid systematic pressures of macro economic and global events • Market prices are driven by passionate collectors not greedy or fearful investors • Collectibles provide a hedge against inflation • Merrill Lynch Wealth Report 2003 suggests high net-worth investors allocate 10% of their funds to alternative investments

10. Liquidity • The stamp market is underpinned by an estimated 30 million collectors worldwide based on UPU survey and a further 18 million in China alone • Collectibles are tangible assets and internationally traded in all currencies • Prices realised through worldwide auction houses • The internet has opened up the world of collectibles – stamps are the 3rd most traded category on Ebay

11. Tax benefits • Gains realised on investments represent a capital gain and not income – subject to capital gains tax • Recent budget changes have reduced tax rate payable on gains for higher rate tax payers from 40% to 18% • More scope for tax planning through use of annual capital gains tax exemption - £9,600 for 2008/09 • Further scope to reduce annual tax liabilities through use of spouse annual exemption • Portability improves ability for offshore tax planning

12. Pride of ownership • Collectibles are more interesting to look at than a share certificate • Pleasure derived from owning a piece of history • Trophy assets for the “mega-rich” • Many investors get the “collecting bug” providing years of pleasure and satisfaction whilst building an appreciating asset • Ability to invest in your passion

13. Quality and condition • Condition is everything when determining value – penny black between £10 and £10,000 depending on condition • Difference between rarity and scarcity • Quality and value remain long after the price is forgotten • The importance of using a reputable dealer – Stanley Gibbons offer lifetime guarantee of authenticity • Beware of auction bidding • Storage and insurance

14. Purchase Price (1997): £14,875 Current Value: £64,900 James Dean (sp) 1997: £1,500 2007: £7,500 Growth 400% The Beatles (sp) 1997: £4,950 2007: £22,500 Growth 355% England 1966 (sp) 1997: £1,200 2007: £3,500 Growth 192% Winston Churchill (sp) 1997: £2,500 2007: £6,950 Growth 178% Elvis Presley (sp) 1997: £600 2007: £3,500 Growth 483% Apollo 11 (sp) 1997: £1,750 2007: £9,500 Growth 443% Marlon Brando (sp) 1997: £875 2007: £2,500 Growth 186% Nelson (aps) 1997: £1,500 2007: £8,950 Growth 497%

15. Purchase Price (2003): £57,000 Current Value (2008): £112,000 SG 177a 1884 10s Ultramarine (Blued paper) 2003: £25,000 2008: £55,000 SG 176 1884 5s Rose (Blued paper) 2003: £6,000 2008: £14,000 SG 185 1884 £1 Brown-lilac (Wmk. Three Crowns) 2003: £20,000 2008: £28,000 SG 296 1911 6d Bright magenta (C) 2003: £6,000 2008: £15,000

16. Famous Investors in Collectibles Queen Elizabeth II Bill Gross Prince Albert of Monaco Warren Buffett