Source - LSE Regulatory
RNS Number : 3127H
Scholium Group PLC
27 July 2023
 

27 July 2023

Scholium Group plc

('Scholium' or the 'Group')

Preliminary Results for the year ended 31 March 2023

Scholium is pleased to announce the Group's audited results for the year ended 31 March 2023.

Scholium is engaged in the business of rare books, modern prints, art and collectibles.  Its wholly-owned operating subsidiary, Shapero Rare Books Limited, is one of the leading UK dealers trading internationally in rare and antiquarian books and works on paper, and also trades as Shapero Modern, a leading UK dealer in the growing marketplace for modern and contemporary prints.      

Operating Highlights  

·           An encouraging 12% increase in revenue to £9,060k from £8,129k

·           Profit before tax restored last year at £177k increases to £231k this year

·           Group net asset value per share continues to rise from 69p per share to 71p this year

·           Group continues to trade profitably in the first three months of the current year

Financial Highlights 

Years ended 31 March (£'000) 


2023 

2022 

 


 

 

Revenue 


9,060

8,129

Gross Profit 


3,447

3,071

Gross Margin 


38.1%

37.8%

Profit before tax


231

177

Total earnings pence per share


1.70p

1.13p

NAV/Share 


71p

69p

A copy of the 2022 Annual Report (including the notice of Annual General Meeting ("AGM") will be sent to shareholders and will also be available on the Company's website in due course at www.scholiumgroup.com.

The Company's AGM will be held at 10.00am at 106 New Bond Street, London W1S 1DN on 26 September 2022.

David Harland, Chairman of Scholium, noted "The Board is delighted with the continued turnaround and remains focused on further enhancing shareholder value to build upon this pleasing result. 

For further information, please contact:

Scholium Group plc                                               

David Harland, Chairman  

Bernard Shapero, Chief Executive

Philip Tansey, Finance Director

+44 (0)20 7493 0876 

WH Ireland Ltd - Nominated Adviser                           

Chris Fielding, Darshan Patel, Andrew de Andrade

 

+44 (0)20 7220 1666

 

 

 

Chairman's Statement

I am delighted to present my statement and to report that the Group's revenues for the year ended 31 March 2023 increased by 12% to £9.1 million (2022: £8.1 million). The Board's focus on driving revenue in both books and art has been successfully pursued and has resulted in a second successive profitable year, with a profit before tax of £231k (2022: £177k).  

The Board is pleased with the continuing turnaround of the business and remains focused on further enhancing shareholder value through evolving revenue channels, keener cost management, incentivising its staff and continuing to search for further opportunities in related areas.

Staff 

The Group's operations continue to rely on the hard work and dedication of our small number of employees and I would like to take this opportunity of thanking them for their contribution and effort, during the year. 

Current Trading and Prospects 

Trading conditions initially improved in the year under review, particularly for the first eight months. The trading environment then became far more challenging for the last four. However, trading for the first three months of the current year has been profitable, which is encouraging. Although the global outlook continues to be challenging, we remain cautiously optimistic.

Strategy

I and my Board are certain that there is still significant value that is not fully reflected in these financials which we are focused on quantifying and exploiting in the coming year with, it is anticipated, enhanced shareholder value. The first part of our 'job' which has been to secure the business and stabilize its platform following its exit from the problematic Covid era is nearing an end and now the second part, the drive towards that enhanced value, is in progress.

We can never be certain of the continuing effects on our businesses of Russia's war on Ukraine, or the general political and financial destablisation of the world. Interest rates continue to rise and the effects on consumers will be severe. But all of this is not necessarily bad for us, for our position as a trader in what might be termed alternative investments could be our salvation.

 

DAVID HARLAND

Chairman

27 July 2023

Chief Executive Officer's Report

This has been a year of achievement but also one that has presented its challenges which I expand on below and I am most thankful for the excellent team with whom I work and who have been so dedicated and proactive over the year resulting in a second consecutive year of increased annual Group profit.  

Overview

Scholium Group has built upon the success of the financial year 2021/22 with the highlights being;

-     12% increase in revenue;

-     Group profitability increased for a second consecutive year;

-     A return to a full calendar of major book and art fairs and exhibitions; and

-     The securing of our Bond Street offices and shop through to August 2024.

The Year 2022/23

Despite the war in Ukraine, the general state of the market for Books and Art remained encouraging as the year progressed over the first eight months. However, the market turned noticeably worse over the last four months, particularly in Art. Overall revenue increased by a robust 12% to £9,060k (2021: £8,129k) which could have been significantly higher but for the last four months of the year.

The return to a full calendar year of fairs clearly benefitted sales but not in all cases, and not without a major increase in distribution costs that were severely impacted by inflationary pressures in associated costs of carriage, insurance and others.  

Taking all this into account, the Group recorded an increased profit before tax of £231k (2022: £177k).  

Looking forward

It is encouraging to report that the performance of the business in the first three months of the new financial year has been in line with our expectations and remains profitable. Global economic headwinds that really came to the fore in the latter part of the financial year ended March 2023 still present major challenges but a more forensic focus on costs, particularly around fairs and marketing, and the promotion of our multi-channel sales routes of retail premises, an extensive online presence and exhibitions at international trade fairs will, I believe, maintain the positive momentum going forward, in the current year.

Staff

I have a fabulous team around me without whom the positive results for the year could not have been achieved and I thank them for their dedication and hard work throughout the year.

Shareholders

I am delighted with the support and guidance received from my fellow Board members and our major shareholders and look forward to taking the Group to future success.

 

BERNARD SHAPERO

 

Group Chief Executive

 

 

27 July 2023

 

Strategic Report

This report provides an overview of the Group's strategy and business model; gives a review of the performance of the operating entities and of the financial position at 31 March 2023 and it sets out the principal risks to which the Group is exposed. In addition, it comments briefly on the future prospects of the business.  

Principal Activities & Review of the Business 

The Group comprises four legal entities; Scholium Group PLC (the "Company") which is the publicly traded holding company which incurs the central costs of the group and its three wholly owned subsidiaries, Shapero Rare Books Limited which is the only trading entity as detailed below and two dormant companies, Scholium Trading Limited and Mayfair Philatelic Limited. The four together are referred to as the "Group".

The Group is engaged in the business of dealing in rare books and fine art. The majority of the business transacted is as a dealer - buying, owning and selling items, either on its own or together with third parties who also deal as principals. The Group also conducts auctions where both its own stock and third-party consignments are available for sale.  The Group generates value through its expertise, astute buying and the profitable sale of stock. 

Shapero Rare Books is the main business of the Group.  It is a leading international dealer in rare and collectible books and works on paper with special expertise in Natural History, Illustrated, Travel and Exploration and Literature trading under the name of Shapero Rare Books. The business also trades as Shapero Modern in modern and contemporary prints and limited editions by established artists.    

Strategy & Key Objectives 

The Group's strategy is to:

•       build, organically or by acquisition, a portfolio of rare books and art focused businesses to enable further growth of its revenue and profit streams;

•       attract individuals or teams of specialists in markets complementary to the Group's existing businesses;

•       optimise working capital in existing businesses to provide funds for new business development; and,

•       trade alongside other dealers in high value rare books and art and participate in the acquisition for onward sale of large consignments.

Review of the year from continuing operations  

The Group's revenues increased to £9.1m from £8.1m in the prior year due to increased sales in each of the constituent businesses. The Group's core business was profit making during the both the first and second half of the financial year. Gross profit increased by 12% compared with the prior year ended 31 March 2022, and the margin made on sales rose from 37.8% last year to 38.1% in the year ended 31 March 2023 as a result of increased activity in the market and the active drive by management to improve such margins.  

Total expenses rose 22% to £3,175k (2022: £2,602k) driven by direct costs with the return of art fairs and accompanying marketing costs increasing over the year. Central costs, including the costs of the Company's membership of AIM, were reduced on account of the prior year incurring a one-off director payment.

The Group's profit before tax for the year to 31 March 2023 was £231k (2022: £177k).

An analysis of the Group's profit before tax for the year to 31 March 2023 between the two halves of the financial year is set out in the table below:

(£'000) 

H1*

H2 

Full year total

Revenue 

4,454 

 4,606 

9,060

Gross Profit 

1,731 

         1,716

3,447

Profit before tax 

179 

52  

231

*H1 Unaudited figures published November 2022

The value of the Group's stock at 31 March 2023 was £9,812k compared with the prior year's total of £9,584k and Group cash at 31 March 2023 was in net overdraft at £(54)k. Furthermore, the original £250k Covid bank loan, that was taken in 2020, was reduced by repayment over the year from £235k to £187k. The Group's overdraft facility of £500k remains in place and from time-to-time, depending on timing differences in significant purchases and onward sales, was drawn during the year.

Key Performance Indicators 

The Group is managed by and reports on a few key performance indicators (KPIs).  

The current principal KPIs are:

•               sales, gross profit, gross margin and profit before tax;

•               the breadth and distribution of the stock of rare books held by the Group;

•               stock turnover; and

•               cash position.

Key Performance Indicators (on continuing business)

Years ended 31 March (£'000) 


2023 

         2022 

 

 Variance 

Revenue 


9,060

8,129

12% 

 

Gross Profit 


 3,447 

 3,071 

12% 

 

Gross Margin 


38.1% 

37.8% 

1% 

 

Stock Turnover (months) 


21.0 

22.8 

-8% 

 

Net (borrowings) / Net cash  


(241) 

466 

n/a 

 

Net Profit before tax


231

177

64%

 

Group Performance 

Shapero Rare Books 

Shapero Rare Books Limited (SRB) traded profitably through the year ended 31 March 2023 off the back of increased activity in physical as well as on-line sales and an increasingly busy and full calendar of trade fairs. The year's sales were £9,060k, 12% above the prior year's sales of £8,129k, and gross profit at £3,447k for the year ended 31 March 2023 was, again, 12% above the prior year of £3,071k.  

Direct costs, including the attendance at fairs, exhibitions, and catalogues, increased from £340k in the prior year to £815k in the year to 31 March 2023. This reflected the increasing return of exhibiting at fairs in the first full calendar year of events since exiting Covid. Administrative costs increased 4% from £1,853k in the prior year to £2,026k in the year to 31 March 2023. Financial expenses for the year were £41k (2022: £33k).

SRB therefore recorded a profit before tax of £565k compared with the £904k in the prior year.

Mayfair Philatelics - closed

The Board took the decision in the prior financial year to close the business. The results of that business have been presented and treated as discontinued business within these report and accounts and the impact of this treatment is fully explained in note 14 to these accounts. The full provision against future costs of closure taken in the prior year was sufficient to offset any incurred actual costs and consequently, with the exception of some immaterial items, there is no discontinued business impact in the results for this financial year.

Central Costs

Central costs, which are incurred by the holding company, Scholium Group PLC, include the Board members as well as those costs associated with the Group's AIM public status.  The central costs were £334k in the year to 31 March 2023, a decrease of £75k from the prior year's total of £409k on account of a one-off payment in the prior year, including associated social security costs, to a former director of £90k. These costs include the cost of managing the Group, its audit, tax and professional fees, as well as the costs of maintaining the AIM membership for the Company's shares.

Year ended 31 March 2023 (£'000) 


Shapero Rare Books

            Books                Gallery

Scholium Trading*

Central 

Continuing business 

Revenue 

7,283  

1,777

-

-  

9,060  

Gross Profit 

2,841  

606

-

-  

3,447  

Gross Margin 

39% 

34%

-

-  

38% 

Profit/(Loss) before tax

                565

                 -           

(334) 

231 

*Following the closure of the legal entity in 2020 the trading name of Scholium Trading was discontinued with any residual sales and costs being taken through the results of Shapero Rare Books.

Year ended 31 March 2022 (£'000) 


Shapero Rare Books

             Books             Gallery

Scholium Trading

Central 

Continuing business

Revenue 

6,088  

1,823

218  

-  

8,129  

Gross Profit 

2,418  

648

63  

-  

3,071  

Gross Margin 

39% 

35%

29% 

38% 

Profit/(Loss) before tax

              850

                 54

(409) 

494 

Dividend 

The Board does not propose to declare a dividend for the financial year ended 31 March 2023. (2022: £Nil)

Alternative accounting presentation 

The Board is focused on enhancing shareholder return. It is important therefore for an analysis of the core performance of the Group's trading business to be prepared excluding those costs that are more concerned with the non-trading elements such as the costs of maintaining its public company status and other non-directly related or one-off costs not typically expected to be incurred in a 'normal' year.

 

Year ended 31 March (£'000) 

2023

2022

2021

Pre-tax Profit / (Loss) for the year

231

177

(434)

Add back:




Central costs

334

409

314

Discontinued business losses

-

317

3

Depreciation & amortisation (Note 6)

347

231

322

Finance expenses (Note 11)

41

33

30

Re-stated EBITDA for the year

953

1,167

235

Principal Risks & Uncertainties 

Continuing supply of rare books, works on paper and prints.  

By definition, rare books and other works on paper and prints are not commonly available. The availability of fresh stock of such items onto the market is often driven by major life events, such as inheritance, unrecovered debt, divorce or downsizing due to economic malaise. The business of Shapero Rare Books is reliant upon individual works and collections of works coming onto the market and upon the Group being able to access those business opportunities. There is no guarantee that fresh stock will come onto the market in sufficient quantities to meet the Group's plans for continued growth.  

When works become available for sale or purchase, they are often dealt with privately and discretely and, accordingly, there is no guarantee that the Group's employees will be able to access such business opportunities or to negotiate successfully the purchase of fresh stock coming onto the market.  

Reliance on key international trade fairs  

A significant proportion of the Group's sales are made at international trade fairs. If these fairs were to be discontinued it would have a material effect on the ability of the Group to sell its stock. There are a limited number of stands at international trade fairs and as a result places are highly sought after. Whilst the Group have been exhibiting at these fairs for many years, there can be no certainty that it will continue to secure places in the future.  

Competition  

The market in the books and works on paper and prints in which the Group trades is competitive and the Group faces various competitive pressures from auctioneers as well as a wide range of dealers and smaller operators.  

The Group is likely to face continued and/or increased competition in the future both from established competitors and/or from new entrants to the market. The Group's competitors include businesses with greater financial and other resources than the Group. Such competitors may be in a better position than the Group to compete for future business opportunities. If the Group is unable to compete effectively in the markets in which it operates, it could lead to a material adverse effect on the Group's business, financial condition, and operations.  

 

Co-owned goods  

In the case of high value items or collections, the Group will often acquire the items jointly with another third-party bookseller or dealer and if not expressly provided for there is a risk that the Group will not be able to sell the entire asset without the agreement of all joint owners. In this and other respects the Group relies on the honesty and integrity of other dealers. Whilst the Group takes care to deal only with established counterparties and experienced dealers who are well known to senior management and/or the Directors, there can be no guarantee that co-owners will comply with the agreed terms (including, for example not changing the items) or that such co-owners will not enter into administration or other insolvency procedure, and in the event there is a loss of the co-owned goods it is uncertain the Group could claim on its insurance policy in relation thereto.  

Stock valuation and liquidity  

The Group trades in rare items, which may be highly illiquid. The value of goods acquired is difficult to assess and it may not be possible for the Group to sell the assets at or above the price for which they were acquired. The value of assets may not always represent the actual resale value achievable.  

Theft, loss or damage  

Rare and collectible items are highly mobile goods. Furthermore, such goods are frequently transported internationally for trade shows or other marketing opportunities. Whilst precautions are taken to ensure safe passage, the Group's assets may be lost, damaged or stolen. While the Group carries specialist insurance, there is no guarantee that the Group's insurance cover will be adequate in all circumstances. Assets of the Group will be placed with third parties for sale on commission. While the Group intends to take appropriate precautions when placing assets with third parties, there is a risk that these assets outside of the Group's direct control may be stolen or replaced by unscrupulous third parties with fakes or forgeries.  

Authenticity and export authority  

The Directors of the Group will ensure that due diligence is undertaken on the authenticity of the assets acquired for sale. Nonetheless fakes and forgeries do exist in the market and despite due diligence the Group may acquire these believing them to be authentic. Further, the attribution of works to a writer or artist is not always an exact science, and there can be no guarantee that assets of the Group will not have been mistakenly attributed in this way. Lack of authenticity is not covered by the Group's insurance. Whilst the Group takes appropriate care when acquiring works which may be of material importance in the state of origin, there can be no guarantee that works acquired by the Group are not subject to restrictions on export or sale.  

Insurance  

The Group carries a specialist insurance policy under the Antiquarian Booksellers Association Insurance Scheme which covers each of the businesses. The Directors believe that the Group carries appropriate insurance for a business of its size and nature but there can be no guarantee that the extent or value of the cover will be sufficient, in relation to stock in transit or on consignment. The Directors review the Group's insurance arrangements on an annual basis and endeavour to insure its stock adequately, but there is no certainty that future claims will not fall within the exclusions under the policy or that the insurer will pay out any claim if made. Further, there can be no guarantee that the necessary insurance will be available to the Group in the future at an acceptable cost or at all.  

Premises  

Like many of the established dealers in the market, the Group has publicly accessible galleries in Mayfair, London from where it operates and sells both books and works of art. Although there is a risk that the increasing demand for online retail will render 'high street' premises uneconomic, the Directors believe that a central London location is an important factor in the success of the business as a whole.  

Terms of sale  

In the past, the contractual arrangements which the Group has entered into with clients, customers and other dealers have not always included (amongst other things) terms dealing specifically with:  

1.   transfer of ownership and risk,  

2.   contract formation,  

3.   price and payment,  

4.   limitations and exclusions of liability, and  

5.   governing law and jurisdiction.  

There is no guarantee that the Group's arrangements with its customers will not be terminated on short notice or that the Group will not at some future time face challenges or disputes regarding the contractual or other arrangements with its clients.  

If the Group became involved in a contractual dispute and/or a third party was successful in any contractual dispute with the Group, any resultant loss of revenues or exposure to litigation costs or other claims could have a material adverse effect on the Group's reputation, business, financial condition and/or operations or financial results. The Group has revised its standard terms of sale to seek to ensure that, henceforth, the arrangements with clients, customers, dealers and others will include terms dealing with each of the aforementioned areas.  

Employees 

The Group is reliant on a small number of key employees, and in particular the Chief Executive Officer, for their knowledge and the reliance customers place on their integrity and service.  If a key employee was to leave, the business may suffer a short term decrease in performance whilst it adjusts to the level of resources available to it. 

Currency risk  

The Group conducts certain transactions other than in Pounds Sterling, its functional currency. Movements in foreign exchange rates may impact the Group's performance. The Group does not enter into any hedging contracts in respect of currency positions.  

Pandemics and government-imposed trading restrictions

The recent Covid-19 pandemics led to the closure of the Group's retail premises for several months and the cancellation of all fairs and exhibitions. The Group has other ways to market, including the internet, telephone and post, but it may be difficult for the Group to trade profitably while such a pandemic is present.

Future prospects

The Group has traded profitably in the first three months of the current year. The core business of Shapero Rare Books is one of the leading UK rare book dealers, with a solid international customer base. Further attention will be required in order to continue to improve its return on capital employed, particularly stock turnover. The Board has implemented several initiatives to target this.  

The Board continues to review the opportunity for further cost savings to improve the Group's profitability and create improved shareholder value. During the year ending 31 March 2024 the Board will assess opportunities for future property, enhanced selling channels and improving the sales of slower-moving and aged stock.

 

Consolidated Statement of Comprehensive Income






Year ended

Year ended

 





31 Mar

31 Mar

 





2023

2022

 





 

 

 




Note

£000

£000

 







Revenue

 



5

9,060

8,129

Cost of Sales





(5,613)

(5,058)

Gross profit

 




3,447

3,071








Distribution expenses





(815)

(340)















Administrative expenses





(2,360)

(2,262)








Total expenses

 




(3,175)

(2,602)















Profit from operations

 




272

469








Financial (expense)




11

(41)

(33)

Other income




12

-

58








Profit before taxation

 




231

494








Income tax (expense)




13

-

-















Profit for the year from continuing operations and total comprehensive income attributable to equity holders of the parent company

 




231

494








Loss from discontinued operations




14

-

(317)








Profit for the year and total comprehensive income attributable to equity holders of the parent company

 




231

177

 

 






Earnings per share (in pence):

 



15



From continuing operations




 

1.70

3.63

From discontinued operations

 




-

(2.33)

Total Earnings per share

 




1.70

1.30

 

Scholium Group Plc         Company number 08833975

Consolidated Statement of Financial Position






31 Mar

31 Mar

 





2023

2022

 




Note

£000

£000

Assets

 






Non-current assets

 






Property, plant and equipment




16

877

970

Intangible assets




17

-

4

Deferred corporation tax asset




19

-

-






877

974








Current assets

 






Inventories




20

9,812

9,584

Trade and other receivables




21

2,058

2,219

Cash and cash equivalents




23

110

705






11,980

12,508

Total assets

 




12,857

13,482








Current liabilities

 






Bank overdrafts




23

164

-

Trade and other payables




24

1,973

2,868

Loans and borrowings




25

47

47

Right-of-use asset lease liabilities




28

227

193

Total current liabilities

 




2,411

3,108

 

Non-current liabilities







Loans and borrowings




25

140

188

Right-of-use asset lease liabilities




28

676

787

Total non-current liabilities




 

816

975








Total liabilities

 




3,217

4,083








Net assets/liabilities

 




9,630

9,399








Equity and liabilities

 






Equity attributable to owners of the parent

 






Ordinary shares




26

136

136

Share Premium





9,516

9,516

Merger reserve




27

82

82

Retained (loss)





(104)

(335)

Total equity

 




9,630

9,399

 

 

Consolidated Statement of Changes in Equity



Share

Share

Merger

Retained

Total

 


Capital

Premium

reserve

earnings

equity

 

 

£000

£000

£000

£000

£000

 







 

Balance at 31 March 2020

 

136

9,516

82

(75)

9,659








(Loss) for the year from continued and discontinued operations


-

-

-

(437)

(437)

Total comprehensive income for the period

 

-

-

-

(437)

(437)








 

Balance at 31 March 2021

 

136

9,516

82

(512)

9,222








 

Profit for the year from continued and discontinued operations


-

-

-

177

177

Total comprehensive income for the period

 

-

-

-

177

177








 

Balance at 31 March 2022

 

136

9,516

82

(335)

9,399

 

Profit for the year from continued and discontinued operations

 

-

-

-

231

231

Total comprehensive income for the period

 

-

-

-

231

231

 

Balance at 31 March 2023

 

136

9,516

82

(45)

9,630

 

 

 

 

 

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

Cumulative profit/(loss) of the Group attributable to equity shareholders.

 

 

Consolidated Statement of Cash Flows






31 Mar

31 Mar

 





2023

2022

 





 

 

 





£000

£000

 







Cash flows from operating activities

 






profit before tax





231

177

Depreciation of property, plant and equipment





353

231

Amortisation of intangible assets





4

4

Interest paid





41

33






629

445








(Increase)/decrease in inventories





(228)

(559)

Decrease/(increase) in trade and other receivables





161

(530)

Increase/(decrease) in trade and other payables





(895)

1,560

Net cash generated from operating activities

 




(333)

916








Cash flows from investing activities

 






Purchase of property, plant and equipment





(21)

(26)

Purchase of right-to -use assets





(239)

-

Net cash (used) in investing activities

 




(260)

(26)








Cash flows from financing activities

 






Lease repayments for right-of-use assets





(77)

(165)

Bank loan





(48)

(15)

Interest paid

 




(41)

(7)

Net cash (used) from financing activities

 




(166)

(187)








Net increase/(decrease) in cash and cash equivalents

 




(759)

703








Cash and cash equivalents at the beginning of the year

 




705

2








Cash and cash equivalents at the end of the year

 




(54)

705

Scholium Group Plc         Company number 08833975

Company Statement of Financial Position






31 Mar

31 Mar

 





2023

2022

 




Note

£000

£000

Assets

 






Non-current assets

 






Group Investments




18

2,391

2,391

Deferred tax asset




 

-

-






2,391

2,391








Current assets

 






Trade and other receivables




21

7,559

7,115

Cash and cash equivalents




22

(164)

(160)






7,395

6,955

Total assets

 




9,786

9,346








Current liabilities

 






Trade and other payables

 



24

143

59

Loans and borrowings

 



25

47

47








Total current liabilities

 




190

106

 

 






Non-current liabilities

 






Loans and borrowings

 



25

140

188








Total liabilities

 




330

294








Net assets/liabilities

 




9,456

9,052








Equity and liabilities

 






Equity attributable to owners of the parent

 






Ordinary shares




26

136

136

Share Premium





9,516

9,516

Merger reserve




27

-

-

Retained earnings/(deficit)





(196)

(600)

Total equity

 




9,456

9,052

 

Statement of Changes in Company Equity



Share

Share

Merger

Retained

Total

 


Capital

Premium

reserve

earnings

equity

 


£000

£000

£000

£000

£000

Balance at 1 Apr 2020

 

136

9,516

-

40

9,962








Loss for the year


-

-

-

(231)

(231)

Total comprehensive income for the period

 

-

-

-

(231)

(231)








Write-off of merger reserve

Write-off of merger reserve


-

-

(2,809)

            -

(2,809)








Balance at 31 March 2021

 

136

9,516

-

(191)

9,461








(Loss) for the year


-

-

-

(409)

(409)

Total comprehensive income for the period

 

-

-

-

(231)

(231)

 

 







Balance at 31 March 2022

 

136

9,516

-

(600)

9,052








Profit for the year


-

-

-

404

404

Total comprehensive income for the period

 

-

-

-

404

404








 

Balance at 31 March 2023

 

136

9,516

-

(196)

9,456

 

 

 

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.


issue expenses.

Merger reserve

Amounts attributable to equity in respect of merged subsidiary undertakings.

Retained earnings

Cumulative profit/(loss) of the Group attributable to equity shareholders.

 


Company Cashflow






31 Mar

31 Mar

 





2023

2022

 





£000

£000

 







Cash flows from operating activities

 






Profit/(Loss) before tax





404

(409)

Interest paid





-

7






404

(402)








Decrease/(increase) in trade and other receivables





(444)

349

(Decrease)/increase in trade and other payables





84

(26)

Net cash generated from operating activities

 




44

(79)








Cash flows from investing activities

 






Dividends receivable from subsidiary undertakings





-

-

 

 






Net cash generated from investing activities

 




-

-








Cash flows from financing activities

 






Bank loan





(48)

(22)

 

 






Net cash (used)/generated from financing activities

 




(48)

(22)








Net (decrease) in cash and cash equivalents

 




(4)

(101)








Cash and cash equivalents at the beginning of the year

 




(160)

(59)








(Overdraft)/cash and cash equivalents at the end of the year

 




(164)

(160)

 

 

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 books, works on paper and stamps primarily in the United Kingdom. The Company is a public company limited by shares domiciled and incorporated in England and Wales (registered number 08833975). The address of its registered office is 106 New Bond Street, London W1S 1DN.

2      Basis of preparation and accounting policies

          The financial statements have been prepared in accordance with International Financial Reporting Standards including standards and interpretations issued by the International Accounting Standards Board and in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006.

          The consolidated and Company financial statements have been prepared on an historical cost basis.

          The preparation of financial statements in conformity with IFRSs requires the use of certain accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3 below.

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

          The principal accounting policies applied by the Group in the preparation of these consolidated financial statements for the years ended 31 March 2023 and 31 March 2022 are set out below.  These policies have been consistently applied to all periods presented.   

         

          Going concern

The Directors have reviewed the activities of the Group since 1 April 2022 with a view to determining whether there are any material uncertainties which may impact whether the Group can be considered to be a going concern. The Group's primary activities can be classified as retail, and therefore the Directors have considered the Group's position in the light of the retail industry as a whole as well as the Group's own circumstances. The Group's leases on its retail premises are at relatively low rents, and in the case of the New Bond Street lease, has a relatively short term date of August 2023 which is currently subject to a negotiated 12 month short-term lease extension. The Group therefore does not have any exposure to any onerous leases. The Group has an international customer base and is not dependent on footfall generating sales from its London premises, or its presence at international fairs.

The Group in 2020 made use of a government £250,000 Covid loan, which at the year-end date, following repayments made during the year, has £187,500k outstanding. This is repayable over five years and therefore is not exposed to any liabilities where the terms of repayment may change. The Group has no creditors over one year, and no liabilities to a defined benefit pension scheme.

The Group has enjoyed a second consecutive successful year and continues to expand sales channels with its own online auctions. The Directors have prepared revised "stressed" forecasts taking account of the results to date, current expected demand, and cost savings identified. This has been conducted together with an assessment of the liquidity headroom against the cash and bank facilities including the new Covid loan.

The Directors recognise that the current difficult geo-political and resulting economic environment could impact business but have concluded that there are no material uncertainties over the Group and Company's ability to continue as a going concern. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the next 12 months, therefore it is appropriate to adopt a going concern basis for the preparation of the Financial Statements. Accordingly, these financial statements do not include any adjustments to the carrying amount or classification of assets and liabilities that would result if the Group and Company were unable to continue as a going concern.

 

 

3      Revenue 






31 Mar

31 Mar

 





2023

2022

 





Group

Group

 





£000

£000

 







Sales of Stock - Books





7,042

6,016

Sales of Stock - Gallery





1,777

1,823

Commissions





177

279

Other income





64

11





9,060

8,129

 

 

4      Profit Before Taxation

Profit before taxation is after charging/(crediting):





31 Mar

31 Mar

 





2023

2022

 





Group

Group

 





£000

£000

 







Depreciation of property, plant and equipment (note 16)





347

231

Amortisation of intangible assets





4

4

Foreign currency losses





-

2

Employee costs (note 7)





736

936

Fees payable to the Company's auditors (note 9)





38

38

5      Employee costs including Directors






31 Mar

31 Mar

 





2023

2022

 





Group

Group

 





£000

£000

Wages





663

819

Social security costs





50

70

Pension costs





15

32

Other employee benefits





8

15













736

936

 

All employee costs are included in administrative expenses.

 

Defined contribution pension schemes.

The Group operates a defined contribution retirement benefit scheme for qualifying employees. The total cost charged of £38k (2022: £32k) represents contributions payable to the scheme by the Group at rates specified in the plan rules. As at 31 March 2023, contributions due in respect of the current reporting period of £3k (2022: £3k) not paid over to the schemes are included within payables.

 

6      Directors' remuneration

 

 

31 Mar

31 Mar

 

 

2023

Group

2022

Group

 

 

£000

£000

Salaries and fees

 

375

192

Social security costs

 

43

26

Pension costs

 

23

6

Other employee benefits

 

15

8

One-off payments to an ex-Director

 

-

79

Total

 

456

311

Information regarding the highest paid Director, Bernard Shapero (2022: Jasper Allen):

 

 

 

Salary

 

204

120

Benefits

 

28

5

Total

 

232

125

There are two (2022 - two) directors accruing a defined contribution pension liability.

The Directors are considered to be the Company's key management personnel.

 

7      Income tax






31 Mar  

31 Mar

 





2023

2022

 





£000

£000

Current tax (credit)/expense

 






Current tax





-

-

Deferred tax

 




-

-

Total tax expense

 




-

-

 

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






31 Mar

31 Mar

 





2023

2022

 





£000

£000

 







Profit before tax





291

177








Applied corporation tax rates:





19%

19%

Tax at the UK corporation tax rate of 19% (2022: 19%):





44

34

Tax payable covered by available tax losses





(44)

(34)

Tax losses not recognised as deferred tax assets







Origination and reversal of temporary differences





-

-

Taxation charge

 




-

-

 

 

8      Discontinued Operations

In the year ended 31 March 2022 the Board determined that the Mayfair Philatelic business was not key to the future of the Group and in accordance with IFRS5 - Non-current assets held for sale and discontinued business, the results for Mayfair Philatelic were shown as Discontinued operations in the income  statement  of  the 2022 year-end and the prior period; its assets and liabilities were recorded at the lower of the carrying value and fair value less costs to sell in the financial statements for that financial year. The provisions taken in the accounts for the year-ended 31 March 2022 were sufficient to absorb losses incurred in closing the business in financial year ended 2022. An analysis of the individual line items are shown below,

 

Financial performance and cash flow information






31 Mar

31 Mar

 





2023

2022

 





Group

Group

 





£000

£000

Revenue





-

680

Cost of sales





-

374

Gross profit





-

306

Distribution expenses





-

(74)

Administration expenses





-

(409)

Impairment charge - debtors





-

(40)

Impairment charge - stock





-

(100)

Profit / (loss) before tax





-

(317)

Tax





-

-

Loss from discontinued operations





-

(317)

 

Net cash generated / (used) by the discontinued business was £nil (2022: (£77))

Assets and liabilities of discontinued business

No assets or liabilities relating to Mayfair Philatelic are included within the relevant line of the Group Consolidated statement of financial position as at 31 March 2023.

9      earnings per share






31 Mar

31 Mar

 





2023

2022

 





Group

Group

 





£000

£000

Profit used in calculating basic and diluted earnings per share attributable to the owners of the parent



Continuing operations

231

494

Discontinued operations

-

(317)

Total

231

177








Number of shares

 






Weighted average number of shares for the purpose of basic and diluted earnings per share


13.6m

13.6m















Basic earnings per share from continuing operations (pence per share)



1.70

3.63

Basic (loss) per share from discontinued operations (pence per share)



-

(2.33)

Total basic and diluted earnings pence per share





1.70

1.30

 

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. 

 

10    Investment in subsidiaries






 

31 Mar

 





 

2023

 





 

Company

 





 

£000

 

 





 

 

At 7 January 2014: nominal value of shares issued


28

Fair-value adjustment taken to merger reserve


2,809

Write-off of merger reserve on 31 March 2020


(2,809)

Deferred consideration


2,363

Balance at 31 March 2023


2,391

Balance at 31 March 2022


2,391

The investments in Group undertakings are originally recorded at cost which is the fair-value of the consideration paid. At 31 March 2019 the amount was £5,200,000. The Company's merger reserve was written off as at 31 March 2020 due to the assessment of the subsidiary company's value following the adverse impact of Covid-19. As such, the investment is now valued at £2,391,000.








The principal subsidiaries of the Company, all of which are incorporated in the UK and wholly owned have been included in the consolidated financial information, are: Shapero Rare Books Ltd (a dealer in rare books and art), Scholium Trading Ltd and Mayfair Philatelics Ltd. Scholium Trading Ltd and Mayfair Philatelics Ltd. are dormant companies, their activities having been transferred in to Shapero Rare Books Limited in 2020.

 

11    Deferred Corporation Tax

 






31 Mar

31 Mar

 





2023

2022

 





Group

Group

 





£000

£000

 





 

 

Balance at the beginning of the year





-

-

Income statement





-

-








Balance at the end of the year





-

-








Deferred tax has historically been calculated in full on temporary differences under the liability method using the tax rates expected for future periods of 19%. The deferred tax had arisen in past periods due to the availability of trading losses. The Group, on account of recent profits, has £238,000 unutilised tax allowances available at expected tax rates for use in future periods at the year-end date (2022: £282,000).

 

 

12    Inventories






31 Mar

31 Mar

 





2023

2022

 





Group

Group

 





£000

£000

 







Finished goods





9,812

9,584

Finished goods expensed in the year





5,613

5,058

 

Note that the cost of sales incurred in the year ended 31 March 2023 was £5.6million (2021: £5.1million) and there were no impairment charges taken in either year.

13    Trade & other receivables




31 Mar

31 Mar

31 Mar

31 Mar

 



2023

2022

2023

2022

 



Group

Group

Company

Company

 



£000

£000

£000

£000

 







Trade debtors



1,713

1,700

-

-

Other debtors



25

24

-

2

Amounts due from Group undertaking



-

-

7,460

7,102

Prepayments and accrued income



320

495

99

11




2,058

2,219

7,559

7,115

 

The age profile of trade debtors   comprises:






£000

Current






700

One month past due






152

Two months past due






355

Over three months past due






506

Provision for doubtful debts






-







1,713








At 31 March 2023, trade receivables of £nil (31 March 2022 £158k, 31 March 2021 £nil) were considered past due and impaired. The other debtor balances are categorised as loans and receivables. All amounts shown under trade and receivables are due for payment within one year. Some receivables will be settled against trade payables in due course.

Amounts due from Group undertakings are unsecured, interest-free, have no fixed date of repayment and are repayable on demand.

14    Loans and Borrowings






31 Mar

31 Mar

 





2023

2022

 





Group and Company

£000

Group and Company

£000

Bank loan

 




 


At the beginning of the year





235

250

(Repaid) in the year





(48)

(15)

At the end of the year





187

235

 

Bank loan liabilities maturity analysis

 




 


Due within one year





47

47

Due after more than one year





140

188

Total loans and borrowings





187

235

 

 

15    Share Capital






31 Mar

31 Mar

 





2023

2022

 





Group and Company

£000

Group and Company

£000

Ordinary shares of £0.01 each

 




 


At the beginning of the year





136

136

At the end of the year





136

136

 

 

 







Number of shares

 




31 Mar

31 Mar

 





2023

2022

 




Group and Company

Group and Company

Ordinary shares of £0.01 each





Number

Number

At the beginning of the year





13,600,000

13,600,000

At the end of the year





13,600,000

13,600,000

 







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.

 

16    Right of use Asset lease Liabilities







31 Mar

31 Mar

 





2023

2022

 





Group

Group

 





£000

£000

 

 






Land and buildings and motor vehicle





903

980


Lease liability maturity analysis

 




 


Due within one year





227

193

Due after more than one year





676

787

Total right-of-use lease liabilities





903

980

 

See also note 16 for the corresponding asset. All right-of-use liabilities were classified as current in the previous period. The charge for the year for depreciation of right of use assets was £317k (2021: £198k).

 

17    Post balance sheet date events

 

Property Leases

Following the year-end, the lease for the Group's property at 105 and 106 New Bond Street, which were due to come to an end in August 2023, were renegotiated with a revised term date of 31 August 2024.

 

Employee Option Scheme

In June 2023 the Company granted options under the Company's Enterprise Management Incentive Share Option Scheme ("EMI Option Scheme") over a total of 1,000,000 ordinary shares of 1 penny in the Company ("Option Shares") to certain employees of which 700,000 were granted to Directors as detailed within the Remuneration report. The Option Shares have an exercise price of 37.5p per share (being the closing mid-market share price on 16 June 2023), vest over the three years from the date of grant (ensuring the employees remain in continuous employment within the Group) and once vested, are exercisable at any time up to ten years after the date of grant.

 

There have been no other material events directly affecting the Group since the end of the financial year date.

 

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