Scholium Group plc

Annual Report & Financial Statements

7 July 2016

Scholium is engaged in the business of art.  Its primary operating subsidiary is Shapero Rare Books which is one of the leading UK and international dealers in rare and antiquarian books and works on paper.

The group also trades alongside other third party dealers in the broader arts and collectibles business via its subsidiary, Scholium Trading.

Operational Highlights

• Stabilisation of performance in core operating areas
• Careful management of cash resources and costs
• Elimination of operating losses

Financial Highlights

Years  Ended 31 March  (all figures ‘000)		2016	2015
Revenue	+30.5%	6,742	5,166
Gross Profit	+25.5%	2,376	1,893
Gross Margin	-1.4%	35%	37%
Adjusted Operating Profit[1]		24	(523)
Cash		1,309	2,122
NAV/Share		74.6p	74.7p

Commenting on the results Jasper Allen, Chairman of Scholium, noted “We were pleased with the performance for the year.  A significant loss has been reversed and many of our core markets stabilised. There is some evidence of a return in confidence in our Russian customers.  Whilst the current year started well, the lead up to the UK referendum on EU membership adversely affected levels of business and we are actively seeking to take advantage of some of the opportunities that will be created.”

 

Scholium Group plc Jasper Allen, Chairman Simon Southwood, Chief Financial Officer	+44 (0)20 7493 0876
WH Ireland Ltd – Nominated Adviser Chris Fielding/Mark Leonard	+44 (0)20 7220 1666

 

Chairman’s Statement

I am very pleased to report, on behalf of your board, that the trend we saw in the first half of the financial year continued through to the second half: the market in our core areas stabilised, and we are actively seeking to take advantage of some of the opportunities that will be created.

The UK referendum on EU membership caused uncertainty in the first trading quarter, but we hope this trend is reversed with a number of new marketing initiatives.

The Group remains well capitalised with strong stock, over £1.3 million in cash and no debt at the year end.

Business Review

The Group’s ambition at the beginning of the financial year was to generate an increased gross return on its assets whilst managing costs in order to bring the group back to profitability.  This was achieved.

Sales increased due to greater activity generally both in rare books trading and in our wider trading activities.  Shapero Modern made a useful contribution to sales and profits in the year. There has been an increased emphasis on marketing the business more widely.

We have continued to attend the major trade fairs as in previous years, and are pleased with the results achieved generally through the production of high quality catalogues. We have increased the emphasis on publications relating to politics, philosophy, economics and modern first editions where we have had a number of successful results.

We are also very happy to have renewed our lease at 32 St. George Street for a further five years.  The property market in Central London has inflated in recent years but we have offset much of the increase in rent by licensing the third floor of the building to a third party.

Revenue for the year of £6.7 million (2015: £5.2 million) generated adjusted operating profit of £0.02 million.

 

Staff

As ever, our dedicated employees have contributed significantly to the restoration of operating profitability of the Group in the year and I would like to take this opportunity of thanking them again for their hard work and effort in what has been a challenging year.

Current Trading and Prospects

The business remains well capitalised with high quality stock and, at the year end, had net assets of £10.2 million including £1.3 million of cash.  These are equivalent to 75.0p and 9.5p per ordinary share respectively.

Despite a pleasing performance in the year ended 31 March 2016 compared with the previous year, we are aware of the requirement to make better returns from our strong asset base. We continue to seek opportunities for organic growth and to encourage bright and knowledgeable people with specialist knowledge of their markets to join us.

The financial year started slower than expected: levels of activity in our core markets continued to be positive but, consistent with the broader experience of business confidence in the UK leading up to the UK referendum on EU membership, our customers delayed material discretionary purchases.  In the current year, we hope increased marketing in international venues, including the US, will enable us to benefit from weaker Sterling.  We are also pleased to note that interest and activity in our Russian department has started to return.

Jasper Allen

6 July 2016

Strategic Report

This report provides an overview of our strategy and of our business model; gives a review of the performance of the business and of our financial position at the year-end; and sets out the principal risks to which the Group is exposed. In addition it comments on the future prospects of the business.

 

Principal Activities & Review of the Business

The Group is engaged in the business of fine art and collectibles.  It is typically engaged as a dealer — buying, owning and selling rare & collectible items objects for a profit.  It does this on its own or alongside third party dealers in rare and collectible goods.

Shapero Rare Books is the core of the Group.  It is a leading international dealer in rare and collectible antiquarian books and works on paper with special expertise in Natural History, Russian and Travel books.  It is also developing its Shapero Modern brand which deals in modern and contemporary prints and editions by better-known artists who already have commercial success.

Scholium Trading is the newest member of the Group.  Based upon recognition that art dealers are often undercapitalised, it works alongside these dealers in the broader rare and collectibles market where they have the expertise and the clients, but not the capital, to trade in their markets.

The Group maintains value from ownership of its stock and generates value through its expertise, astute buying and the profitable sale of stock.

 

Strategy & Key Objectives

The Company is seeking to grow its businesses organically through reinvestment of profits in high quality stock.  Our key objectives are to:

• Increase the profitable trade of Shapero Rare Books and Shapero Modern through increased sales, selective purchasing and management of the cost base;
• Develop Scholium Trading to be the ‘first call’ for dealers in high value rare and collectible items seeking support in their trading items which exceed their immediate financial capacity; and
• Seek to expand the group by encouraging new teams — that have specialist expertise in their markets and are seeking a well-capitalised company from which to trade — to join Scholium.

 

 

Review of the year from continuing operations

The Group had a welcome return to operating profitability (before exceptional items of expenditure) in the year.  Revenue increased by 30.5% to £6.8 million as a consequence of stabilisation in our core market and increased revenue and profits from new initiatives and the development of recently established departments.

Shapero Rare Books and Shapero Modern continued to provide valuable revenue streams, and we are happy with the support we have been able to give our market through Scholium Trading, where much of the trade has taken place amongst dealers known to us through our core books and works on paper expertise. Our current principal KPIs are:

• Gross margin, EBITDA, earnings per share;
• The breadth and distribution of the stock of assets held by the Group;
• Stock turnover of assets; and
• Various key risk indicators including capital resources, portfolio allocation and cash.

 

Key Performance Indicators Years  Ended 31 March  (all figures ‘000)		2016	2015	Variance
Revenue		6,742	5,166	+30.5%
Gross Profit		2,376	1,893	+25.5%
Gross Margin		35%	37%	-1.4%
Stock Turnover (months)		20.64	22.25	+7.2%
Gross Yield		32%	31%	+0.4%

 

Both Shapero Rare Books and Scholium Trading achieved profitably through the year.  Encouragingly, stock turnover dropped to 20.6 months (2015: 22 months) and the gross profit as a percentage of the average stock levels increased to 32% (2015: 31%). Gross margin reduced to 35% (2015: 37%) reflecting, in large part, a desire of management to generate increased profits at slightly lower margins.

Analysis of revenue and profit by department

Year ending March 2016 (all figures £’000)

	Shapero Rare Books	Scholium Trading	Central	Consolidated
Revenue	5,609	1,133	0	6,742
Gross Profit	2,172	204	0	2,376
Gross Margin	39%	18%	n/a	35%
Adjusted Operating Profit	192	188	-356	24

The business achieved growth across all business units.  Shapero Rare Books’ revenue grew to £5.6 million (2015: £4.4 million) delivering operating profit of £0.2 million (2015 loss of £0.2 million).  Gross margin in the year dropped to 39% (2015: 41%) as the team successfully sought to drive profits through margin reduction.

As expected, Scholium Trading’s business increased during the year (profitability up by more than 50%) and it provided a valuable contribution of £0.2 million (2015: £0.1 million) to group profitability. The gross margin in Trading increased to 18% (2015: 13%). As expected, this is lower than the margin in Shapero Rare Books and reflects the payment of incentives to partners that the Group trades alongside.

Management also reduced central costs to £0.4 million (2015: £0.5 million).  Overall, it is pleasing that almost all of our increase in gross profit has flowed to the bottom line.

 

Year ending March 2015 (all figures £’000)

	Shapero Rare Books	Scholium  Trading	Central	Consolidated
Revenue	4,440	720	–	5,160
Gross Profit	1,800	90	–	1,890
Gross Margin	41%	13%	0%	37%
Operating Profit	(130)	90	(483)	(523)

 

Dividend

The Board does not propose to declare a final dividend for the current year.

Simon   Southwood

Finance Director

6 July 2016

Independent Auditor’s Report to the Members of Scholium Group plc

We have audited the financial statements of Scholium Group Plc for the year ended 31 March 2016 which comprise the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows, the Company statement of financial position, the Company statement of changes in equity, the Company statement of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.  Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and Auditors

As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.  Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).  Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements

In our opinion:

• the financial statements give a true and fair view of the state of the Group’s and the parent Company’s affairs as at 31 March 2016 and of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
• the parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the strategic report and Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

 

Ajay Bahl BA FCA (Senior statutory auditor)

For and on behalf of Wenn Townsend Chartered Accountants (Statutory auditor)

Date: 6 July 2016

 

Consolidated Statement of Comprehensive Income

		Year ended	Year ended
		31 Mar	31 Mar
		2016	2015
	Note	£000	£000
Revenue	3	6,742	5,166
Cost of Sales		(4,366)	(3,273)
Gross profit		2,376	1,893
		–	–
Distribution costs		(345)	(268)
		–	–
		–	–
Administrative expenses		(2,007)	(2,148)
Group expenses/recharges		–	–
		–	–
Exceptional gains and losses		(24)	–
		–	–
Total  administrative expenses		(2,031)	(2,148)
Loss from operations		–	(523)
Adjusted operating profit before exceptional gains and losses		24	(523)
Exceptional gains and losses		(24)	–
Loss from operations		–	(523)
Financial income		2	–
Financial expenses		(5)	(6)
		–	–
Loss before taxation	4	(3)	(529)
		–	–
Income tax credit/(expense)		(3)	29
		–	–
Loss for the year from continuing operations		(6)	(500)
Discontinued operations
(Loss)/profit for the year from discontinued operations		(10)	24
Loss for the year and total comprehensive income attributable to equity holders of the parent company		(16)	(476)
Basic and diluted loss per share:
From continued operations – pence	6	(0.05)	(3.71)
From discontinued operations – pence	6	(0.07)	0.18
Total loss per share – pence	6	(0.12)	(3.53)

 

 

Consolidated Statement of Financial Position

		31 Mar	31 Mar
		2016	2015
	Note	£000	£000
Assets
Non-current assets
Property, plant and equipment		92	92
Deferred corporation tax asset	7	277	280
		369	372
Current assets
Inventories		7,550	7,471
Trade and other receivables		2,034	1,694
Cash and cash equivalents		1,309	2,122
		10,893	11,287
Assets of disposal group classified as held for sale		–	162
Total assets		11,262	11,821
Current liabilities
Trade and other payables		1,115	1,634
Total current liabilities		1,115	1,634
Liabilities of disposal group classified as held for sale		–	24
Total liabilities		1,115	1,658
Net assets/liabilities		10,147	10,163
Equity and liabilities
Equity attributable to owners of the parent
Ordinary shares		136	136
Share Premium		9,516	9,516
Merger reserve		82	82
Retained earnings/(deficit)		413	429
Total equity		10,147	10,163

 

The financial statements were approved by the Board of Directors and authorised for issue on 6 July 2015.

 

 

Consolidated Statement of Changes in Equity

		Share	Share	Merger	Retained	Total
		Capital	Premium	reserve	deficit	Equity
		£000	£000	£000	£000	£000
Balance at 1 April 2014		132	9,458	82	1,109	10,781
Loss for the year from continued and discontinued operations		–	–	–	(476)	(476)
Total comprehensive income for the period		–	–	–	(476)	(476)
Shares issued in the period		4	58	–	–	62
Dividends paid		–	–	–	(204)	(204)
Balance at 31 March 2015		136	9,516	82	429	10,163
Loss for the year		–	–	–	(16)	(16)
Total comprehensive income for the period		–	–	–	(16)	(16)
Balance at 31 March 2016		136	9,516	82	413	10,147

There were no transactions with owners in the year.

The following describes the nature and purpose of each reserve within owners’ equity:
Share capital	Amount subscribed for shares at nominal value.
Share premium	Amount subscribed for share capital in excess of nominal value less attributable share-issue expenses.
Merger reserve	Amounts attributable to equity in respect of merged subsidiary undertakings.
Retained earnings/(deficit)	Cumulative profit/( loss) of the Group attributable to equity shareholders.

 

.

 

Consolidated Statement of Cash Flows

		31 Mar	31 Mar
		2016	2015
		£000	£000
Cash flows from operating activities
Loss before tax		(16)	(505)
Depreciation of property, plant and equipment		31	44
Amortisation of intangible assets		–	8
Profit on disposal of discontinued operation		(8)	–
		7	(453)
Increase in inventories 1		(79)	(2,930)
(Increase)/decrease in trade and other receivables 1		(337)	102
Decrease in trade and other payables 1		(514)	(1,639)
Net cash generated from operating activities		(923)	(4,920)
Cash flows from investing activities
Purchase of property, plant and equipment		(31)	(38)
Disposal of discontinued operation		146	–
Net cash used in investing activities		115	(38)
Cash flows from financing activities
Proceeds from the issuance of ordinary shares		–	62
Repayment of shareholder loans		–	(350)
Dividends paid		–	(204)
Interest paid		(5)	(6)
Net cash used in financing activities		(5)	(498)
Net decrease in cash and cash equivalents		(813)	(5,456)
Cash and cash equivalents at the beginning of the year		2,122	7,578
Cash and cash equivalents at the end of the year		1,309	2,122

 

¹ Adjusted for inventories, other receivables and trade and other payables held in disposal group as at 31 March 2015.

 

Notes to the Consolidated Financial Statements

1       General information

Scholium Group plc and its subsidiaries (together ‘the Group’) are engaged in the trading and retailing of rare and antiquarian books and works on paper primarily in the United Kingdom. The Company is a public company domiciled and incorporated in England and Wales (registered number 08833975). The address of its registered office is 32 St George Street, London W1S 2EA.

2       Basis of preparation and accounting policies

The consolidated financial information, which represents the results of the Company and its subsidiaries, has been prepared in accordance with International Financial Reporting Standards and IFRC Interpretations issued by the International Accounting Standards Board

The principal accounting policies applied by the Group in the preparation of these consolidated financial statements for the years ended 31 March 2015 and 31 March 2016 are set out below.  These policies have been consistently applied to all periods presented.

The functional and presentational currency of the Group and the Company is pounds sterling. The financial information is shown to the nearest £1,000.

Revenue Recognition

Revenue for the Group is measured at the fair value of the consideration received or receivable.  The Group recognises revenue for services provided when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity.

The Group’s revenues from the sale of rare and antiquarian books and works on paper are recognised on completion of the relevant transaction. The Group’s commissions and other revenues are recognised when all performance conditions have been satisfied.

Inventories

Inventories are valued at the lower of cost and net realisable value. Cost incurred in bringing each product to its present location and condition is accounted for as follows:

Net realisable value is the estimated selling price in the ordinary course of business.

Operating profit and loss

Operating profit and loss comprises revenues less operating costs. Operating costs comprise adjustments for changes in inventories, employee costs including share-based payments, amortisation, depreciation and impairment and other operating expenses.

3       Revenue

					31 Mar	31 Mar
					2016	2015
					Group	Group
					£000	£000
Sales of books and other stock					6,727	5,057
Commissions					15	81
Other income					–	28
					6,742	5,166

 

4       Profit Before Taxation

Profit before taxation is after charging/(crediting):					31 Mar	31 Mar
					2016	2015
					Group	Group
					£000	£000
Depreciation of property, plant and equipment					31	44
Amortisation of intangible assets					–	8
Operating lease rentals					338	312
Foreign currency losses					1	8
Employee costs (note 7)					1,015	1,009
Fees payable to the Company’s auditor (note 9)					40	30

5       Employee costs including Directors

					31 Mar	31 Mar
					2016	2015
					Group	Group
					£000	£000
Wages					884	919
Compensation for loss of office					24	–
Social security costs					88	75
Pension costs					12	12
Other employee benefits					6	3
					1,015	1,009

 

6       Profit (Loss) per share

					31 Mar		31 Mar
					2016		2015
					Group		Group
					£000		£000
Loss used in calculating basic and diluted earnings per share attributable to the owners of the parent					(6)	(500)
(Loss)/profit from discontinued operation					(10)		24
					(16)		(476)
Number of shares
Weighted average number of shares for the purpose of basic and diluted earnings per share					13,600,000		13,498,165
Basic loss per share from continuing operations (pence per share)					0.05		(3.71)
Basic loss per share from discontinued operations (pence per share)					0.07		0.18
Total basic and diluted earnings per share – pence					0.12		(3.53)

 

All shares issued in the year ending March 2015 arose from the exercise of employee share options. For further information see note 23.

All shares shown above are authorised, issued and fully paid up. Ordinary shares carry the right to one vote per share at general meetings of the Company and the rights to share in any distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up.

7       Deferred Corporation Tax

 

	31 Mar	31 Mar
	2016	2015
	Group	Group
	£000	£000
Balance at the beginning of the year Income statement Balance at the end of the year   The deferred tax asset comprises:   Origination and reversal of temporary differences	(280)	(258)
Income statement	3	(22)
Balance at the end of the year	(277)	(280)
The deferred tax asset comprises:
Available losses	(280)	(283)
Other temporary and deductible differences	3	3
	(277)	(280)

 

Deferred tax is calculated in full on temporary differences under the liability method using the tax rates expected for future periods of 20%. The deferred tax has arisen due to the availability of trading losses The Group has unutilised tax allowances, at expected tax rates in future periods, of £370,000 (2015: £352,000) of which £280,000 has been recognised (2015 £283,000 recognised).

 

8       Post balance sheet date events

There have been no material events directly affecting the Group since the balance sheet date. The potential effect on the Group’s business of uncertainty arising from the UK referendum on EU membership is still being assessed by the Board.

 

 

9       Control

The company is controlled by a small number of shareholders, none of whom has overall control.

[1] Before exceptional  costs

Scholium Group plc

(“Scholium” or the “Company”)

Trading Update

13 May 2016

The Directors of Scholium are pleased to report encouraging trading in the year ended 31 March 2016.  Revenue is materially ahead of the prior year, as a result of which the pre-tax result is expected to be broadly break even.  This growth has been achieved without significant use of Group cash resources.

Shapero Rare Books continues to trade positively and has grown over the period.  Its Modern & Contemporary department provides a valuable revenue stream and has raised the exposure of the business.

Scholium Trading has had a good year working alongside a number of dealers and supporting their trade in higher value items.  The return on capital employed in this business has validated our investment in it.

The Group’s balance sheet remains strong, with net assets at the year-end in excess of £10 million (73.5p per share), including cash of approximately £1.3 million (9.5p per share).

The Company anticipates releasing a preliminary statement in respect of its full year results in early July 2016.

Jasper Allen, Chairman of Scholium, commented, “The second half of the year continued the welcome trend that started in the first half of the year – the market in our core areas of expertise has stabilised. We look forward to the new year with a strong balance sheet in a market which, we believe, will provide opportunities for growth either organically or by the acquisition of teams.”

Scholium Group plc Jasper Allen, Chairman Simon Southwood, Chief Financial Officer	+44 (0)20 7493 0876
WH Ireland Ltd – Nominated Adviser Chris Fielding/Mark Leonard	+44 (0)20 7220 1666

Notes to Editors

Scholium is engaged in the business of art.  Its primary operating subsidiary is Shapero Rare Books.  Shapero Rare Books is one of the leading UK and international dealers in rare and antiquarian books and works on paper.  It trades through premises in Mayfair where the bulk of its stock is on display to the general public.  With particular expertise in the great Travel, Natural History and Russian genres, Shapero Rare Books is welcomed at prestigious international art fairs where it shows alongside the most important international dealers in rare art and collectible goods.

The Group, via its Scholium Trading subsidiary, is also active in the industry buying art and collectibles alongside other dealers who have specific market knowledge, be it books outside its core areas of expertise, sculpture, old master paintings arms, armour etc. 

Scholium Group plc

Interim report and Financial Statements

9 December 2015

The directors of Scholium Group plc (“Scholium”, the “Company” or, together with its subsidiaries, the “Group”) present their report and financial statements for the company for the six months ended 30 September 2015.

Financial Highlights

• Revenue of £3.3 million (2014: £2.4 million) up 38.0%
• Gross profit of £1.1 million (2014: £0.9 million) up 19.7%
• EBITDA[1] of £45k (2014: -£215k)
• Return to profitability in our continuing businesses

 

Operational Highlights

• Careful management of costs
• Development of Shapero Rare Books and Shapero Modern Brands
• Scholium Trading increasingly recognised in the industry
• Completion of the sale of South Kensington business, a retailer of modern books

 

Jasper Allen, Chairman of Scholium, noted “The international political instability of the last twelve months which impacted a number of established customers created a challenge for the management team, but we are delighted that they have responded admirably and managed to reposition stock, increase revenue and gross profits, reduce the cost base and return the business to operational profitability.  The performance of the business over the first six months and the start of the second half is encouraging and we look forward to the prospects of the second half of the year.”

For further information, please contact

Scholium Group plc Jasper Allen, Chairman Simon Southwood, Finance Director	+44 (0) 20 7493 0876 info@scholiumgroup.com
WH Ireland (Nomad & Broker) Chris Fielding/Mark Leonard	+44 (0) 20 7220 1666

Business Review

Scholium Group companies are involved primarily in the trading and retailing of books and other works on paper, as well as dealing in rare and collectible items in the wider art market.

The group of businesses comprises:

• Shapero Rare Books, a dealer in rare and antiquarian books and works on paper, located in Mayfair, London; and
• Scholium Trading, a company set up to trade in conjunction with other dealers in high value rare and collectible items.

Revenue Streams

The Group earns revenue from:

• the sale of rare books and works on paper through Shapero Rare Books; and
• the sale of other rare and collectible items through Scholium Trading.

Key objectives and key performance indicators (KPIs)

The Group’s strategy is to:

• maintain the antiquarian stock and grow the trade of Shapero Rare Books including development of its Modern prints department; and
• continue to develop Scholium Trading by trading alongside other dealers in high value, rare and collectible items and by participating in the acquisition for onward sale of large consignments.

The directors intend to provide an attractive level of dividends to shareholders along with stable asset-backed growth driven by the markets in which the Group operates.

Our current principal KPIs are:

• gross margin, EBITDA, earnings per share;
• the breadth and distribution of the stock of assets held by the Group;
• stock turnover; and
• various key risk indicators including capital resources, portfolio allocation and cash.

 

Performance Review

Overall Performance

The Group has shown a 38% growth in revenue and, concomitantly with careful management of costs, has shown an encouraging return to profitability for the continuing businesses.

The Group has benefitted from the sale, completed in April 2015, of the South Kensington business as well as the decision to diversify the Group’s stock into areas that are less susceptible to international political risk; and Scholium Trading is starting to generate the type of return we intended.

The comparative figures for the six months ended 30 September 2014 presented below have been restated to exclude the contribution of the former South Kensington business.  This enables a truer like for like comparison to be made.

In the six months under review, the team at Shapero Rare Books successfully repositioned the stock in order to focus it on areas which are thought to be more resilient and of greater interest to the newer generation of book collectors, whilst not forgetting the Group’s traditional expertise in Travel, Natural History and Russian materials. This exercise led to the sale of some of the stock at lower margins than normal, but will be of greater benefit to the business in the future.

The two newer activities in the Group — Shapero Modern, which sells modern prints, and Scholium Trading are also beginning to show signs that early expectations can be met: they contributed 7.1% and 13.5% to Group turnover respectively.

At the operational level, the business was profitable for the first six months, helped significantly by more careful expenditure on marketing in Shapero Rare Books and management of Central Costs.

• Overall Performance (all figures £000 unless otherwise noted)

	Six months ended September			Variance
	2015	2014 (Restated)
Revenue	3,320	2,406		38.0%
Gross Profit	1,107	925		22.2%
Gross Margin	33.3%	38.4%		-5.1%
Direct Costs	(116)	(160)		-27.5%
Administration Costs	(961)	(1,002)		-4.1%
EBITDA	45	(215)
Stock	7,420	6,488
Cash	1,619	2,634
Net Asset Value	10,159	10,538
NAV/Share (pence)	74.70	78.65

 

The table below breaks down performance of the group by department.  The growth in contribution by Scholium Trading is notable, as well as the management of unallocated costs, which are largely made up of central costs and group overhead.

• Breakdown of EBITDA by Department (all figures £’000)

	Six months ended September			Variance
	2015	2014 (Restated)
Revenue
Shapero Rare Books	2,857	2,395		19.3%
Scholium Trading	463	11
	3,320	2,406		38.0%
EBITDA
Shapero Rare Books	86	(1)
Scholium Trading	147	5
Unallocated	(188)	(219)
	45	(215)

 

Shapero Rare Books

In the first six months of the financial year, the focus of the business was to grow sales and profitability with a view to moving part of the stock and trade of Shapero Rare Books into areas which are more attractive for the modern collector.  This drive to increase sales paid off and the business is well positioned for the second half of the financial year.  Gross Profit has increased in the division at the expense of the gross margin which was 33.1% as compared to 37.6% for the equivalent period in the 2014/15 financial year.  The modern prints department continues to perform to expectations.

• Shapero Rare Books KPIs (all figures £’000 unless otherwise noted)

	Six months ended September			Variance
Revenue	2015	2014
Own Stock	2,846	2,370		20.1%
Commission	11	25		-56.0%
	2,857	2,395
Gross Profit
Own Stock	941	890		5.7%
Commission	11	25		-56.0%
	952	915
Gross margin
Own Stock	33.1%	37.6%
Own Stock + Commission	33.3%	38.2%
EBITDA	86	(1)
Stock Value	6,911	6,274		10.1%

 

Scholium Trading

Scholium Trading trades alongside other third party dealers in rare and collectible goods.  We were encouraged by the performance of the division over the period as it generated a gross profit of £155k from c. £308k of stock (ROI ranging from 5.7% to 137.1%).  At the period end the division held £509k of stock alongside five third-party dealers.

• Scholium Trading KPIs (all figures £000 unless otherwise noted)

	Six months ended September
	2015	2014
Revenue
Own Stock	463	–
Commission	0	11
	463	11
Gross Profit
Own Stock	155	–
Commission	0	11
	155	11
Gross Margin
Own Stock + Commission	33.4%	100.0%
EBITDA contribution	147	5
Stock Value	509	214

 

Financial Position & Cashflow

The group remains very well capitalised. On 30 September 2015 the Group had a strong balance sheet with cash balances of £1.62 million (30 September 2014: £2.63 million) and stock of £7.4 million (30 September 2014: £6.5 million). These supported Net Assets of £10.2 million (30 September 2014: £10.5 million).  The Group had no debt but has a £0.5 million facility with Coutts.

Outlook

The international political instability of the last twelve months which impacted a number of established customers created a challenge for the management team, but we are delighted that they have responded admirably and managed to reposition stock, increase revenue and gross profits, reduce the cost base and return the business to operational profitability.  The performance of the business over the first six months and the start of the second half is encouraging and we look forward to the prospects of the second half of the year.

Key Risks

Like all businesses, the Group faces risks and uncertainties that could impact on the Group’s strategy. The Board recognizes that the nature and scope of these risks can change and regularly reviews the risks faced by the Group and the systems and processes to mitigate such risks.

The principal risks and uncertainties affecting the continuing business activities of the Group were outlined in detail in the Strategic Report section of the annual report covering the year ended 31 March 2015.

In preparing this interim report for the six months ended 30 September 2015, the Board has reviewed these risks and uncertainties and considers that there have been no changes since the publication of the 2015 Annual Report.

 

Independent Review Report to Scholium Group plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the interim report for the six months ended 30th September 2015 which comprises the condensed consolidated statement of comprehensive income, the consolidated statement of changes in equity, the condensed consolidated statement of financial position and the consolidated statement of cash flows and the related explanatory notes.  We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement.  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors’ Responsibilities

The interim report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the interim report in accordance with the AIM rules.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IRFSs as adopted by the EU.  The condensed set of financial statements included in this interim report has been prepared in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU.

Our Responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim report for the six months ended 30th September 2015 is not prepared, in all material respects, in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU and the AIM rules.

 

 

---

A K Bahl BA FCA

For and on behalf of Wenn Townsend

Chartered Accountants

Oxford

United Kingdom

8 December 2015

Consolidated statement of total comprehensive income (unaudited)

		Six-month	Six-month	Year
		period ended	period ended	ended
		(Unaudited)	(Unaudited)	(Audited)
			Restated
		30 Sept	30 Sept	31 Mar
		2015	2014	2015
	Note	£000	£000	£000
Revenue	3	3,320	2,406	5,166
Cost of Sales		(2,213)	(1,481)	(3,273)
Gross profit		1,107	925	1,893
Distribution costs		(116)	(160)	(268)
Administrative expenses		(961)	(1,002)	(2,148)
Exceptional items:
Loss of office	4	(24)	–	–
Share-based payment schemes		–	(19)	–
Total  administrative expenses		(985)	(1,021)	(2,148)
Profit/(Loss) from operations		6	(256)	(523)
Financial income		1	–	–
Financial expenses		(1)	(6)	(6)
Profit/(loss) before taxation		6	(262)	(529)
Income tax credit/(expense)	5	–	47	29
Profit/(Loss) for the year from continuing operations		6	(215)	(500)
Discontinued operations
Profit for the year from discontinued operations		–	27	24
Profit/(loss) on sale of discontinued operations	6	(10)	–	–
Profit/(Loss) for the year and total comprehensive income attributable to equity holders of the parent company		(4)	(188)	(476)
Basic and diluted profit/(loss) per share:
From continuing operations – pence	7	0.04	(1.60)	(3.71)
From discontinued operations – pence		(0.07)	0.20	0.18
Total Diluted (loss)/profit per share – pence		(0.03)	(1.40)	(3.53)

 

 

 

 

 

 

 

Consolidated statement of financial position

		30 Sept	30 Sept	31 Mar
		2015	2014	2015
		£000 (unaudited)	£000 (unaudited)	£000 (audited)
Assets
Non-current assets
Property, plant and equipment		79	108	92
Deferred corporation tax asset		280	305	280
		359	413	372
Current assets
Inventories		7,420	6,488	7,471
Trade and other receivables	8	1,890	1,866	1,694
Cash and cash equivalents		1,619	2,634	2,122
		10,929	10,988	11,287
Assets of disposal group classified as held for sale		–	327	162
Total assets		11,288	11,728	11,821
Current liabilities
Trade and other payables	9	1,129	882	1,634
Current corporation tax liabilities		–	7	–
Total current liabilities		1,129	889	1,634
Liabilities of disposal group classified as held for sale		–	301	24
Total liabilities		1,129	1,190	1,658
Net assets		10,159	10,538	10,163
Equity and liabilities
Equity attributable to owners of the parent
Ordinary shares		136	136	136
Share Premium		9,516	9,516	9,516
Merger reserve		82	82	82
Retained earnings		425	804	429
Total equity		10,159	10,538	10,163

 

These interim financial statements were approved by the Board of Directors on 8 December 2015 and signed on its behalf by Simon Southwood

 

 

 

 

 

 

 

 

 

Statement of changes in equity		Share	Share	Merger	Retained	Total
		Capital	Premium	Reserve	earnings	equity
		£000	£000	£000	£000	£000
Balance at 1 Apr 2014		132	9,458	82	1,109	10,781
Loss for the period		–	–	–	(188)	(188)
Total comprehensive income for the period		–	–	–	(188)	(188)
Shares issued in the period		4	58			62
Share-based payments					19	19
Dividends paid					(136)	(136)
Total contributions by owners of the parent		4	58		(117)	(55)
Balance at 30 Sept 2014		136	9,516	82	804	10,538
Profit/(loss) for the period		–	–	–	(375)	(375)
Total comprehensive income for the period		–	–	–	–	–
Shares issued in the period
Share issue expenses		–	–	–	–	–
Share-based payments		–	–	–	–	–
Total contributions by owners of the parent		–	–	–	–	–
Balance at 31 March 2015		136	9,516	82	429	10,163
Balance at 1 Apr 2015		136	9,516	82	429	10,163
Profit/(loss) for the period		–	–	–	(4)	(4)
Total comprehensive income for the period		–	–	–	(4)	(4)
Shares issued in the period
Share-based payments		–		–	–	–
Dividends paid		–	–	–	–	–
Total contributions by owners of the parent		–	–	–	–	–
Balance at 30 September 2015		136	9,516	82	425	10,159

 

Consolidated statement of cash flows
		30 Sept	30 Sept	31 Mar
		2015	2014	2015
		£000	£000	£000
Cash flows from operating activities
(Loss)/profit before tax		(4)	(235)	(505)
Depreciation of property, plant and equipment		15	22	44
Amortisation of intangible assets		–	4	8
(Profit)/loss on disposal of discontinued operation		18	–	–
Interest payable		–	6	–
Share-based payment credit		–	19	–
		29	(184)	(453)
Decrease/(increase) in inventories		51	(1,938)	(2,930)
Decrease/(increase) in trade and other receivables		(196)	100	102
Increase/(decrease) in trade and other payables		(505)	(2,156)	(1,639)
Net cash generated from operating activities		(621)	(4,178)	(4,920)
Cash flows from investing activities
Purchase of property, plant and equipment		(2)	(33)	(38)
Interest received		–	–	–
Disposal of discontinued operation		120	–	–
Net cash used in investing activities		118	(33)	(38)
Cash flows from financing activities
Proceeds from the issuance of ordinary shares		–	62	62
Share issue expenses		–	–	–
(Repayment)/receipt of shareholder loans		–	(533)	(350)
Dividends paid		–	(136)	(204)
Interest paid		–	(6)	(6)
Net cash (used)/generated from financing activities		–	(613)	(498)
Net increase/(decrease) in cash and cash equivalents		(503)	(4,824)	(5,456)
Cash and cash equivalents at the beginning of the year		2,122	7,578	7,578
Cash and cash equivalents at the end of the year		1,619	2,754	2,122
Cash and cash equivalents- continuing operations		1,619	2,634	2,122
Cash and cash equivalents- discontinued operations			120
		1,619	2,754	2,122

 

 

 

 

 

 

 

 

 

 

 

 

1. General information

Scholium Group plc and its subsidiaries (together ‘the Group’) are engaged in the trading and retailing of rare and antiquarian books and works on paper primarily in the United Kingdom. The Company is a public company domiciled and incorporated in England and Wales (registered number 08833975). The address of its registered office is 32 St George Street, London W1S 2EA.

 

2. Basis of preparation

These condensed interim financial statements of the Group for the six months ended 30 September 2015 (the ‘Period’) have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group’s latest audited financial statements for the year ended 31 March 2015. Amendments made to IFRSs since 31 March 2015 have not had a material effect on the Group’s results or financial position for the six-month period ended 30 September 2015. While the financial figures included within this half-yearly report have been computed in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as set out in International Accounting Standard 34 Interim Financial Reporting. These condensed interim financial statements have not been audited, do not include all of the information required for full annual financial statements, and should be read in conjunction with the Group’s consolidated annual financial statements for the year ended 31 March 2015. The auditors’ opinion on these Statutory Accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.

 

3. Revenue

		30 Sept	30 Sept	31 Mar
		2015	2014	2015
		£000	£000	£000
Book Sales		3,309	2,369	5,057
Commissions		11	25	81
Other income		–	12	28
		3,320	2,406	5,166

 

 

4. Exceptional items

The group settled a sum of £24,000 on Philip Blackwell in compensation for his loss of office.

 

 

 

 

 

 

 

 

 

5. Income Tax

			30 Sept	30 Sept	31 Mar
			2015	2014	2015
			£000	£000	£000
	Current tax (credit)/expense
	Current tax		–	1	(7)
	Deferred tax
	Origination and reversal of temporary differences		–	(48)	(22)
	Total tax expense		–	(47)	(29)
	Attributable to continuing operations		–	(47)	(29)
	Attributable to discontinuing operations		–
	Total tax expense		–	(47)	(29)

 

The charge for the year can be reconciled to the profit/(loss) per the income statement as follows:

			30 Sept	30 Sept	31 Mar
			2015	2014	2015
			£000	£000	£000
	Profit/(loss) before tax		(4)	(235)	(505)
	Applied corporation tax rates:		20.00%	20.00%	20.00%
	Tax at the UK corporation tax rate of 20%:		–	(47)	(101)
	Expenses not deductible for tax purposes		–	–	6
	Utilisation of previously unrecognised tax losses			–	–
	Origination and reversal of temporary differences		–	–	66
	Current tax charge		–	(47)	(29)

 

 

6. Sale of Discontinued Operations

On 2 April 2015 the Group announced the sale of its South Kensington operations, South Kensington Books and the Ultimate Library, to a company controlled by Philip Blackwell a director of the company, for an aggregate consideration of £137,526. The resulting profit on the sale after the disposal of the assets before professional fees was approximately £6,000 but, after associated legal and professional costs, the sale resulted in a net loss of £10,869.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7. Earnings/(Loss) per Share

 

	Parent undertaking only		30 Sept	30 Sept	31 Mar
			2015	2014	2015
			£000	£000	£000
	Profit/(loss) used in calculating basic and diluted earning per share		6	(215)	(500)
	Profit from discontinued operation		(10)	27	24
			(4)	(188)	(476)
	Number of shares
	Weighted average number of shares for the purpose of basic and diluted earnings per share		13,600,000	13,399,070	13,498,165
	Basic (loss)/earnings per share from continuing operations (pence per share)		0.04	(1.60)	(3.71)
	Basic (loss)/earnings per share from discontinued operations (pence per share)		(0.07)	0.20	0.18
	Total basic and diluted earnings per share – pence		(0.03)	(1.40)	(3.53)

 

 

Basic earnings per share amounts are calculated by dividing net (loss)/profit for the year or period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

 

The Company has 704,000 potentially issuable shares all of which relate to share options issued in the year ended 31 March 2015 all of which have a strike price of 100p per share.  As a consequence, the basic and fully diluted number of shares in issue are equal.

 

No new shares were issued during the period, and the Company had 13.6 million shares in issue at the end of the period.

 

 

8. Trade and Other Receivables

	30 Sept	30 Sept	31 Mar
	2015	2014	2015
	£000	£000	£000
Trade debtors	1,551	1,350	1,164
Other debtors	28	200	221
Prepayments and accrued income	311	316	309
	1,890	1,866	1,694

 

 

9. Trade and Other Payables

	30 Sept	30 Sept	31 Mar
	2015	2014	2015
	£000	£000	£000
Trade creditors	754	595	1,136
Other taxes and social security	33	32	37
Accruals and deferred income	184	79	363
Other creditors	158	176	98
	1,129	882	1,634

 

[1] Earnings before interest, tax, depreciation and amortization stated for continuing operations before exceptional costs

Scholium Group plc

(“Scholium Group”)

Appointment of Broker

 Scholium Group is pleased to announce that it is pleased to announce that it has appointed WH Ireland Limited, its Nominated Adviser, as its sole Broker with immediate effect.

For further information please visit www.scholiumgroup.com  or contact: 

 Scholium Group plc 

 Jasper Allen, Chairman 

Simon Southwood, Chief Financial Officer      +44 (0)20 7493 0876

 

 WH Ireland Ltd – Nominated Adviser and Broker

Chris Fielding/Mark Leonard                            +44 (020) 7220 1666

Scholium Group plc

(“Scholium”

or, together with its subsidiaries, the “Group”)

Trading Update 

The Directors of Scholium are pleased to provide an update on trading in the first half of the Group’s financial year.  In the six months ended 30 September 2015 they expect that Scholium will show a substantial increase in turnover and have returned to profit before tax and share based charges. 

Shapero Rare Books continues to reposition its stock and trade into areas which are attractive to the contemporary collector but less susceptible to political and market turmoil.  Whilst trading can be variable, the Group is starting to see the fruits of this strategy.  For example, the Modern and Contemporary prints department is developing momentum and providing a valuable revenue stream for the Group, particularly from North American customers. 

Scholium Trading has entered into a number of transactions with other dealers, primarily in the rare book market.  The return on capital employed has been very encouraging and the management team continues to seek to expand this area of the business.

As a result of the above, the Directors anticipate that the Group will report a substantial increase in turnover relative to the 6 months ended 30 September 2014, albeit at a lower margin following the action taken to alter the profile of stock.  This is expected to result, following carefully controlled costs, in a return to profit before share based payments and tax.  

The Group’s balance sheet remains strong with net cash of more than £1.5 million, supporting a net asset value of the Group in excess of £10 million (equivalent to 73.5p per ordinary share).

The Directors expect to release the interim results for the six months ended 30 September 2015 in early December 2015.

Jasper Allen, Chairman of Scholium, said “The political instability of the last twelve months created a challenge for the management team, but we are delighted that they have responded admirably and managed to increase revenue and gross profits, reduce the cost base and deliver a profitable business.  The performance of the business over the first six months and into October is encouraging and we look forward to the prospects of the second half of the year.”

For further information, please contact:

Scholium Group plc Jasper Allen, Chairman Simon Southwood, Chief Financial Officer	+44 (0)20 7493 0876
WH Ireland Ltd – Nominated Adviser Chris Fielding/Mark Leonard	+44 (020) 7220 1666
Whitman Howard Ltd – Broker Ranald McGregor-Smith/Niall Devins	+44 (020) 7659 1234

Scholium Group plc 

(“Scholium Group” or the “Company”)

Results of Annual General Meeting 

 4 September 2015 

Scholium Group is pleased to announce that it held its Annual General Meeting for shareholders today at 10:30 a.m. in London. All resolutions proposed at the meeting were duly passed. 

For further information please visit www.scholiumgroup.com or contact: 

Scholium Group plc Jasper Allen, Chairman Simon Southwood, Chief Financial Officer	+44 (0)20 7493 0876
WH Ireland Ltd – Nominated Adviser Chris Fielding/Mark Leonard	+44 (020) 7220 1666
Whitman Howard Ltd – Broker Ranald McGregor-Smith / Niall Devins	+44 (020) 7659 1234

Scholium Group plc 

(“Scholium Group” or the “Company”)

AGM Notice and posting of results

 16 July 2015

Scholium Group is pleased to announce that it has today posted copies of its Annual Report and Financial Statements for the year ended 31 March 2015 to its shareholders.  A notice convening the Company’s Annual General Meeting (AGM) was included.  The AGM will be held at 32 St. George Street, London W1S 2EA on Friday, 4 September 2015 at 10:30 a.m. 

A copy of the Annual Report and Financial Statements for the year ended 31 March 2015 as well as the Notice of the AGM is available on the Company’s website, www.scholiumgroup.com 

For further information please visit www.scholiumgroup.com or contact:

Scholium Group plc Jasper Allen, Chairman Simon Southwood, Chief Financial Officer	+44 (0)20 7493 0876
WH Ireland Ltd – Nominated Adviser Chris Fielding/Mark Leonard	+44 (020) 7220 1666
Whitman Howard Ltd – Broker Ranald McGregor-Smith / Niall Devins	+44 (020) 7659 1234