Collectors Universe (CLCT) Enters Multi-Year Services Agreement in China
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Collectors Universe, Inc. (NASDAQ: CLCT), a leading provider of value-added authentication and grading services for high-value collectibles today announced that its Chinese subsidiary, Collectors Universe (Shanghai) Company Limited (“CU”), has entered into a multi-year agreement with Guojin Gold Co., Ltd. (“Guojin”) for the provision by the Company’s PCGS Division of coin grading services to Guojin in China. Guojin is a large distributor of gold and silver products to the banking channel in China and will distribute the coin products graded by us through its existing bank distribution channels.
Under the terms of the agreement, commencing in the second half of calendar 2016 and continuing through 2020, Guojin is required to submit, on an annual basis, minimum quantities of coins for grading by us. Based on current exchange rates, we currently expect the minimum quantities of submissions will generate approximately $17 million of revenues in the aggregate during the term of the agreement. In the earlier years, minimum revenues are expected to average approximately $2.8 million per year and to ramp-up to approximately $4.6 million per year in the outer years. However, due to the normal uncertainties associated with any new customer relationship and potential changes in market conditions in China, there can be no assurance that we will ultimately succeed in generating revenues at these levels.
“Our agreement with Guojin demonstrates the significant progress we have made in establishing PCGS as a leading brand for coin grading in China,” said Don Willis, President of PCGS. “We look forward to a long-term relationship with Guojin and will work with Guojin in designing customized coin packages that it will market through its bank channels in mainland China, with the objective of driving submissions to levels that exceed the minimum quantities in the agreement.”
Liao Feiming, Chairman of Guojin added “In choosing PCGS, we recognized that PCGS is a leading worldwide brand in independent third party coin grading which we believe will add value to the coin products that we sell through our bank distribution channels. We look forward to a long-term relationship with PCGS that will drive growth in these distribution channels.”
“We are very pleased with our continued progress in mainland China and this agreement provides further evidence that our China business can provide a meaningful contribution to the Company’s top and bottom-line growth,” stated Robert Deuster, Chief Executive Officer of Collectors Universe, Inc. “Our objective when entering the China market was to grow that business to a level equal to our US coin business and we continue to believe that over time we can achieve that objective.”
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