Noted philatelic dealer and auctioneer Stanley Gibbons has 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.
Founded in 1856, Gibbons is in the middle of what’s described as an “unsettling” review, throughout which it was forced it to restate its previous financial results; scrap its dividend; and close its online store. The company has also recently laid off some employees; reduced its office space; and restructured its management team.
Gibbons chair Harry Wilson, who was appointed in May, commissioned the review following a year in which two profit warnings were issued and shareholders were asked for further funding.
In the most recent update, entitled “What went wrong?”, Wilson said the company was “badly adrift” under previous directors. The lengthy confessional said shareholders deserve an “explanation of the combination of events leading to the severely disappointing trading result.”
According to BDO accountants, there were errors in Gibbons’ reported revenue from the sale of investment plans in its stamp-trading business.
The resulting financial restatement caused the value of Gibbons’ assets to be cut by 43 per cent while its debt nearly doubled to £21.9 million ($36 million Cdn.).