Earlier this month, esteemed philatelic dealer and U.K.-based auction house Stanley Gibbons released its 2017 annual report, which shines a light on the company’s continuing financial difficulties.
The report, which is for the year ended March 31, shows the company posted an £8.8 million trading loss—up from £3.9 million in 2016. On a pre-tax basis, losses increased from £27.9 million to £30.2 million while revenue also fell from £59.1 million to £42.5 million. The report also contains a notice for a shareholders’ meeting, which will be held in London on Nov. 1.
“The year was another difficult period for the Group as the accounts demonstrate,” reads the reports introduction. “To recap, the Board went through wholesale change during 2016 following a strategic review initiated to address the very difficult trading and cash-flow position. As the restructuring work progressed it became clear that the problems identified were deeper than initially thought and new issues were uncovered. There has been a further 48 % fall in net asset value as shown in the table in the Financial Review on page 13. This has resulted from a combination of one-off restructuring costs, continued difficult trading conditions and the ongoing legacy of the Group’s investment contracts which included guaranteed buy-backs.”
Because the group’s net assets have fallen below £20 million, the group is currently in default on its bank facilities and Stanley Gibbons remains dependent upon the bank’s ongoing support.
“There can be no guarantee that the bank will provide facilities beyond 31 May 2018 and the Company is likely to require access to further liquidity in the intervening period. The Company remains in constructive discussions with the bank, regarding its short-term liquidity requirements, and the terms of such funding in such form as it may become available. Failing this the Board have reasonable grounds to believe that alternative finance will be available via further asset disposals or from an alternative finance provider.”
SALE OF DREWEATTS, MALLETT
This May, Stanley Gibbons announced the sale of its auction firm Dreweatts as well as its furniture dealer Mallett to a newly formed company.
“The Board is pleased to confirm the completion on 1 October 2017 of the sale of Dreweatts 1759 Limited, into which certain assets and liabilities of Dreweatts and the intellectual property rights and goodwill in respect of the Mallett brand, all part of the Group’s Interiors division, were transferred on 31 July 2017. The Mallett and Made by Meta brands, originally part of the agreed disposal to Millicent Holdings Limited (which, as announced on 4 August 2017 failed to proceed to completion), have not been included in the sale and those assets remain within the Group. However the sale does include the Bloomsbury Auctions brand. The purchaser of Dreweatts 1759 Limited is Gurr John’s Limited and the terms for the disposal comprise cash of £1.25m paid on completion, plus a maximum additional consideration of £0.4m, payable over the next 24 months (alongside the assumption of other liabilities currently associated with the Interiors division).”
‘FUNDAMENTAL ERRORS’
Last October, the company suffered £29 million ($47.67 million Cdn.) in pre-tax losses after several “fundamental errors” were discovered in the company’s accounts.
The announcement was made by accounting firm BDO, which said it lacked sufficient evidence to perform an audit and warned of “significant doubt about the group’s ability to continue as a going concern,” causing shares to drop 10 per cent on Oct. 3, 2016.
Founded in 1856, Gibbons has recently been forced it to restate its previous financial results; scrap its dividend; and close its online store. The company has also laid off some employees; reduced its office space; and restructured its management team.