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What went wrong with Stanley Gibbons?

“Shareholders deserve an explanation of the combination of events leading to the severely disappointing trading result."
Stamps
Philately will get you nowhere

Stamp collector Stanley Gibbons Group PLC (LON:SGI) posted a £28mln loss before tax in the year to the end of March on revenues of £59mln, after taking one-off charges of £24mln.

In Monday’s announcement, the group listed a lengthy confession in a section entitled: “What went wrong?”  

“Shareholders deserve an explanation of the combination of events leading to the severely disappointing trading result,” said the group.

The new team wasted no time in pinning it all on the ousted management. Chairman Harry Wilson said the group had gone “badly adrift” under previous directors.

Following a year that saw two profit warnings and it going cap-in-hand to shareholders, the group embarked on a period of aggressive cost-cutting, slashing jobs and overhauling its management team.

The group shed almost the entire board, with chief executive Mike Hall and finance director Donal Duff parting ways with the company in July.

Accountancy firm BDO uncovered a number of mistakes in the way the group reported revenues from the sale of investment plans in its stamp trading arm.

Subsequently the value of its assets dropped 43% after a restatement of figures from previous years, while its bank debt doubled to £21.9mln.

Loss per share hit 62.17p, compared to diluted earnings per share of 1.47p. The group also scrapped its full year dividend.

Wilson blamed a number of “fundamental errors” in the management of the business.

He said the online collectables business “The Marketplace” - launched last year in an attempt to rival eBay for trading commemorative items like coins and stamps – was an “ill-conceived, badly managed project which was allowed to severely over-run budgeted expenditure”.

Meanwhile the twin acquisitions of the fine wine and antiques trader Noble Investments and the art and furniture specialist Mallett were “poorly managed” according to Wilson.  

“[The acquisitions] failed to instil a cohesive, UK based management structure with adequate challenge and competition for capital”.

He said the firms were not properly integrated, a drain on investment and left the business in too much debt.

Stanley Gibbons was primed to move on, however, with Wilson fairly confident going forward.

“The market for rare collectibles and fine art remains buoyant for collectors and given the low interest rate environment continues to offer an attractive alternative for investment,” said Wilson.

“Quality collectibles have traditionally maintained their value and appeal over the long term and particularly in times of uncertainty.”

Shares fell 10% in early morning trading to 11.75p.

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