The roll-up strategy pursued by Stanley Gibbons in the UK seems to have gone badly off track with the FT’s news that the company’s auditors have resigned because the firm’s strategy of raising capital by issuing new shares is too risky:

Some of the money that Stanley Gibbons hopes to raise will be used to integrate the acquisition of Mallett, the 150-year-old Mayfair art dealer bought in late 2014 for £8.6m in cash. The rest will be used to repay the group’s £6m overdraft and restructure gross bank debt, which stands at £22.6m.

Stanley Gibbons has been hit hard by a slowdown in interest in collectibles, particularly among Asian collectors. It said on Tuesday that sales to wealthy clients were at a lower level than expected and trading had been particularly difficult in its interiors division selling art and antique furniture. The company failed to cut the costs as hoped when it bought Mallett and it has been spending money to expand online. As a result, it said it would report a loss before tax of between £1m and £2m for the full year to March.

In the half year to September, sales before the Mallett acquisition fell £5m to £22m and pre-tax profits were £400,000, against £6m the year before. The interim dividend was cancelled.

Stanley Gibbons auditors quit over high risks (FT.com)