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Under new chairman Harry Wilson, who joined in May, the 160-year-old firm last week restated their accounts for the previous year and revealed the value of its assets – from stamps to antique furniture – had nearly halved.

An 86-page document, belatedly reporting the company’s accounts for the year ending March 31, 2016, detailed the litany of errors that led to the group’s precarious financial situation.

Harry Wilson of Stanley Gibbons

Harry Wilson, new chairman at Stanley Gibbons.

Key among a trio of problem issues identified by Wilson was the wholesale failure to integrate Noble Investments – owner of AH Baldwin & Sons and Dreweatts & Bloomsbury – into the business after its £46m purchase in 2013.

The acquisition of Mallett for £8.6m the following year was also “poorly managed” which led to the “failure to integrate and derive synergies and opportunities”.

These deals also led to the group’s huge debt levels and prompted a “loss of confidence in the management and brands”.

Documents revealed the Gibbons’ interiors division, comprising auction businesses Dreweatts & Bloomsbury and dealer Mallett, made a £7.5m loss for the year on sales of £16.9m, compared with a profit of £1.1m in 2015.

The losses were attributed to lower than expected auction revenues at Dreweatts & Bloomsbury “during a substantial restructuring and the departure of senior executives within the team”.

Mallett had also been affected by the departure of executives – including former US director Henry Neville who now awaits sentencing after admitting charges in an embezzlement case.

Across the year, the inventory of the dealership – soon to move to new premises in Pall Mall – have dropped from £11.2m to £8.3m after two auctions to clear stock.

Marketplace Closed

The problems were not confined to The Fine Art Auction Group.

The biggest single cost to the group was the “ill-conceived, badly managed” launch of online auction platform The Marketplace. The project, which swallowed over £10m across three years of development, was closed in September as it was no longer deemed “economically viable”.

Another issue for the group has been the controversial ‘buy back’ scheme inherent in Gibbons’ investment portfolios.

The company’s philatelic investment products, guaranteeing customers at least 75% of the book value of their stamps at the end of a given period, were not approved by the UK financial authorities.

The group stopped offering these buy backs to customers in July of this year. However, its auditor put the potential liability to the group for these products at up to £64.3m.

Accountants BDO raised concerns about the ongoing finances of the group and said it had “significant doubt about the group’s ability to continue as a going concern”.

Wilson, who has 20 years’ experience with listed companies and is a keen stamp collector, said “things had gone badly adrift and urgent action was required to recover the situation”. He said £10m of annual cost savings had been earmarked which involved cutting staff across the group.

However, he sounded an upbeat tone on the outlook for the market and said: “The market for rare collectibles and fine art remains buoyant.”

Faring better in the melee was coin specialist AH Baldwin & Sons, which managed to make profits of £1.98m on £8.2m in sales, though this represented a 20% drop in profits on the previous year.

The group said trading had suffered following the departure of managing director Ian Goldbart last year.