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Stanley Gibbons - dire interims but...

By Tom Winnifrith & Steve Moore | Thursday 5 January 2017

Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

This is one of our worst share tips and also one of my (TW) worst investments of recent years. Collectibles group Stanley Gibbons (SGI) has announced further dire results - this time for the six months ended 30th September 2016 - though “is optimistic that the trading of the group is now beginning to reflect the giant strides made through the restructuring plan in a year of substantial transition” (including a completely new board of directors).

The results show a pre-tax loss of over £6 million on revenue more than 30% lower, at £20.2 million, and even after a net more than £12 million of new equity, net debt reduced by less than £4 million to £16.5 million.

However, the stated loss included a net £3.3 million of exceptional costs and current assets over total liabilities on the balance sheet increased by £6.9 million to £18.8 million. This largely the result of £59.4 million of inventories.

A need to significantly convert such inventories into cash is reflected in a previously qualified audit report – which sees the group in technical default of its finance facilities, though the bank remains supportive. This is with the company noting “an ambitious marketing plan and are in the process of initiating a range of sales initiatives… as the board is determined to reduce debt further in 2017”.

Last updating a couple of months ago, we again apologised for this dreadful recommendation, though suggested holding with the shares at little more than 11p as the new management looked to be making progress.

We apologise again, at a current 13p, capitalising the company at £23.3 million, but this remains our view as we now await positive financial evidence of the stated “giant strides made”. This could be a great recovery play - Hold.

This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tips from Tom & Steve and ahead of a new shorting idea from Lucian Miers click HERE

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