Collectibles trader Stanley Gibbons (SGI:AIM) sinks to 9.5p, down 89% year-to-date, after it said it may write down the value of inventory as part of a new audit.

Gibbons ran into trouble in the latter of half of 2015 when high value auction sales needed to meet its financial targets failed to materialise.

Its departed management team forecast modest losses in the financial year as a result, though its new board, headed by executive chairman and stamp collector Harry Wilson, says the publication of financial statements will be delayed while it reviews accounting policies.

Gibbons has yet to report full year numbers for the 12 months to 31 March.

‘Whilst there are undoubtedly challenges ahead, at the heart of the business are some of the leading experts in their respective fields together with stock items that are the envy of our competitors the world over,’ said Wilson in an update today.

‘This combination is an excellent platform from which to restore the trading fortunes and reputation of the group.’


Gibbons, which in May received 220% take-up on an eight-for-10 equity placing to raise £13 million at 10p a share, is struggling because of weak demand for its products, particularly from customers in Asia according to its November interim statement.

It has also been investing in Stanley Gibbons Online Marketplace, a new internet platform which allows customers to trade collectibles.

Much of the business’ value in the short term is likely to centre around its inventory, which includes £32.6 million of rare stamps, as well as a further £11 million of coins, medals and antiques.

Gibbons reported tangible book value of £42.7 million at its latest interim results, which, given the increased number of shares in issue since the equity raise, now represents around 24.1p a share.

Gibbons was expected to have around £19.5 million of debt after it repaid £6 million of overdrafts with cash raised from shareholders in May.

Wilson says since then, through the disposal of some leasehold properties, Gibbons has further reduced debt and is trading within its banking facilities.


Book value is expected to fall when Gibbons’ new accounting policy is confirmed, Wilson said in today’s update.

Accounting changes centre around the recognition of revenue from investment plans, where customers have the right to sell their collections back to Stanley Gibbons at the end of the term.

Gibbons historically recognised revenue up front when investment plan contracts were signed but now appears to be moving to an approach where sales are recognised at a later date.

‘Although the trading results of later years are likely to be beneficially effected, the historic reported revenue and profit will be materially reduced as a consequence of the unwinding of a material part of the previously reported investment plan revenues and profits,’ says the corporate update.

In Gibbons’ last annual report, accountants Nexia Smith & Williamson drew attention to a number of areas in its financial statements where there was a risk of misstatement, though revenue recognition was not one of them.


Gibbon’s accountants did, however, point out there was uncertainty around a number of Gibbons’ investment plans including Guaranteed Minimum Return Contracts, Capital Protected Growth Plan and its Platinum Investment Portfolio.

The plans terms and conditions vary, though most appear to enable customers to sell back products purchased from Gibbons at the end of the term.

Nexia & Williamsons’ analysis of the cost of these guarantees do not look material, based on information in Gibbons’ annual report.

Another key risk highlighted was the sale of collectibles to customers on credit, with cash paid to Gibbons only when customers themselves had sold on the items.

Nexia & Williamson said around £5.7 million of sales had been conducted on these terms, with one contract as high as £3.6 million.

Full-year results are being audited by different accountants.

Issue Date: 15 Jul 2016