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Stanley Gibbons - a curate's egg update

By Tom Winnifrith & Steve Moore | Saturday 13 May 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.

Stanley Gibbons (SGI) “is pleased to announce the sale of a major part of its Interiors division and to provide an update on its current trading and the restructuring”.

The sale is “of certain assets and liabilities of Dreweatts and the intellectual property rights and goodwill in respect of the Mallett and Made by Meta brands” - and for £2.25 million on completion and £0.15 million on 30th November. These sales from a loss-making division are likely though particularly ‘pleasing’ because “as at 31 March 2017, the group was utilising £17.2 million out of its total facilities of £18.3 million”, amidst overall trading which “remains subdued”.

However, it is also stated that “the business is currently broadly cash neutral” and that, in particular, the Baldwin's (coins and collectibles) business “has performed well” – with “we believe that this business model of a consolidated, capital light, specialist dealing and auction platform has established a template that is equally applicable to the stamp division”.

There remain clear issues – for example, “in pursuing certain debts, a significant debtor has indicated that it may wish to pursue a counterclaim against a subsidiary company”, the group retains the services of US legal counsel following a former client's dealings there and with “subdued” trading in conjunction with the debt.

These see the shares further below 9p, but the company also states “following the sale and taking into account the cost reduction measures that we have already taken the group can finally start to look to the future and focus on its core businesses” and that “the group is now in a clearer and stronger position, than for some considerable time”. Having stuck with it thus far, and anticipating further positive financial progress to be made from here, the stance currently remains 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 a new shorting piece from Lucian JUST OUT click HERE

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