RNS Number : 9298R
Scholium Group PLC
02 July 2015
Scholium Group plc
("Scholium", the "Company" or, together with its subsidiaries, the "Group")
Preliminary Results for the 12 months ended 31 March 2015
The board of Scholium, the fine art and collectibles trading company, presents its preliminary results for the 12 months ended 31 March 2015.
SUMMARY INFORMATION
Shapero Rare Books, the main operating brand, trades in rare books and other works on paper from Mayfair and through international fine art fairs. It also trades in modern and contemporary prints through its subsidiary trading brand, Shapero Modern.
The Group also trades alongside other third party dealers in the broader art and collectibles business via its brand, Scholium Trading.
On 2 April 2015 the Group announced the sale of its South Kensington operations, South Kensington Books and the Ultimate Library.
The Company's shares are admitted to trading on AIM, a market operated and regulated by the London Stock Exchange.
Operational Highlights in the year ending 31 March 2015
Building valuable stock in Shapero Rare Books following extensive buying programme and launch of Shapero Modern.
Challenging market conditions, particularly in Shapero Rare Books' Russian and Eastern European department.
Scholium Trading - trading in the first year completed profitably - initially lower than expected margins, but faster stock turnover than expected.
Financial Highlights
31 March 2015
31 March 2014
Revenue from continuing operations
5.16m
6.08m
Gross Profit from continuing operations
1.89m
2.44m
Inventory
7.5m
4.67m
Total Assets
11.82m
14.44m
Net Assets
10.16m
10.78m
NAV/Share
74.7p
79.3p
Dividend per ordinary share
0.5p
1.0p
Current Trading & Prospects
Revenue and gross profit for the first quarter of the current financial year (continuing operations) are ahead of the previous year. Both turnover and gross profits in June were greater than any other month since the Company's shares were admitted to trading on AIM. Nonetheless, the volatility of revenue that characterised the second half of our 2014/15 financial year in Shapero Rare Books remains -whilst we have had encouraging responses to new offerings of stock in the analytic tradition (Economics & Social Sciences) and modern literature, the antiquarian book markets are not yet showing the consistent vitality of 2013/14.
Jasper Allen, Chairman of Scholium, said "We have built up excellent stock at Shapero Rare Books and have a strong balance sheet. This places us on a firm footing to explore alternatives for taking our company forward both within the business and externally. The slow-down in our Russian and Eastern European book department has been a setback. Nonetheless, we have started to reposition our stock and, whilst trading remains volatile, we are starting to see initial returns."
For further information please contact:
Scholium Group plc
+44(0)20 7493 0876
Jasper Allen (Chairman)
Simon Southwood (Chief financial officer)
W H Ireland Limited (Nominated advisor)
+44(0)20 7220 1666
Chris Fielding/Mark Leonard
Whitman Howard Limited (Broker)
+44(0)20 7659 1234
Ranald McGregor-Smith/Niall Devins
CHAIRMAN'S STATEMENT
Whilst I am pleased to present the annual report and financial statements, they represent a year in which there was some uncertainty both within our company and within the markets in which we trade. We are working towards placing the business on a more stable and conservative footing where it is able to deploy its expertise in markets where there is less political uncertainty.
Business Review
During the year the Scholium group of companies traded under the following brands:
Shapero Rare Books, the principal trading brand, which deals in rare and antiquarian books and works on paper;
Shapero Modern, a unit within Shapero Rare books which deals in modern and contemporary prints;
Scholium Trading, which trades with third party dealers in the broader rare and collectible goods markets;
South Kensington Books, a local book store in South Kensington; and
Ultimate Library, a provider of libraries to hotels, guesthouses and exclusive private residences.
South Kensington Books and the Ultimate Library were sold just after the year ended 31 March 2015.
Summary
In the first half of the year under review our businesses sought to deploy the capital raised in the fundraising in areas expected to be profitable. Shapero Rare Books quickly built its stock up to c. 7 million (31 March 2014: 4.6 million) at which point the board felt it should be constrained pending proof of performance. Trading in the second half of the year was not as brisk as we anticipated; particularly due to a slow-down in our Russian and Eastern European department.
Our South Kensington Operations, whilst small in the context of the group, traded steadily.
Scholium Trading took a little time to gain traction. Nonetheless it engaged in a number of profitable transactions - access to capital is a major differentiator in this market.
As at 31 March 2015, the Group had net assets of 10.2 million (2014: 10.8 million) including cash of 2.1 million (2014: 7.6 million) and stock of 7.5 million (2014: 4.7 million).
Performance
Shapero Rare Books
In the first half of the financial year we allocated approximately 3m of the capital raised at the time of our IPO to Shapero Rare Books. This was used to acquire high quality stock, which is now one of the highest calibre stocks of rare books in London.
Unfortunately the market for rare books proved tricky. The major point of concern has been that our trade in Russian and Eastern European materials has been slower than anticipated -whereas this department made up 35% of gross profit in the year to March 2014, in the year to March 2015, the department made up only 19% of gross profit; a material decline. Whilst the overall number of clients of this department has increased, the average spend per customer through the business has declined to approximately 64,000 (2014: 94,000) with much of the business transacted on commission. We remain in touch with customers. The other departments of Shapero Rare Books performed satisfactorily - gross profit per customer increased to approximately 3,267 (2014: 3,060).
The decline in performance of the books business was offset by a contribution from Shapero Modern, our modern and contemporary prints department, which was launched during the year.
Revenue for the year from the Group's continuing operations amounted to 5.16 million (2014: 6.08 million in total), and a pre-tax loss of 0.5 million was incurred (2014: a loss of 0.37 million).
Scholium Trading
Trading by the Group alongside other dealers in the broader arts and collectibles market has developed, been profitable and now represents c. 12% of Group revenue. Whilst gross margins are in the region of 13%, stock turnover is higher than originally anticipated; the value-weighted average holding period of stock acquired for sale is approximately 65 days. During the year we traded alongside dealers in coins, sculpture, old master paintings, antiquarian books and oriental urns.
Revenue for the year from Scholium Trading amounted to 0.72 million generating gross profit of 0.09 million with an average holding period of 65 days.
South Kensington Operations
During the year South Kensington Operations (South Kensington & Ultimate Library) contributed net profits of 0.024 million (2014: 0.024 million) and were sold for 145,802 just after the year end.
Staff
As ever, our dedicated employees have contributed significantly to the development of the Group throughout 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. Philip Blackwell was instrumental in the listing of our group on AIM and we are delighted he has remained on the board of Scholium as a non-executive director.
Current Trading & Prospects
The group is well capitalised with good quality stock. Revenue and gross profit for the first quarter of the current financial year (continuing operations) are ahead of the previous year. Both turnover and gross profits in June were greater than any other month since the Company's shares were admitted to trading on AIM. Nonetheless, the volatility of revenue that characterised the second half of our 2014/15 financial year in Shapero Rare Books remains -whilst we have had encouraging responses to new offerings of stock in the analytic tradition (Economics & Social Sciences) and modern literature, the antiquarian book markets are not yet showing the consistent vitality of 2013/14.
Scholium Trading continues to be shown interesting opportunities, some of which we have participated in. We will pursue these on a case by case basis subject to the overall cash resources available to the business.
Our board remains committed to running the business on a profitable basis -we realise that, at current levels of activity, we are sub-scale for AIM and are actively seeking to stabilise and grow the business. This is being done both by managing the cost base and actively seeking opportunities to diversify and enhance the business in the markets in which we operate.
Jasper Allen
Chairman
1 July 2015
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 and review of the business
Scholium Group plc is the holding company of a group of businesses involved primarily in the trading and retailing of rare and collectible goods.
The group comprises:
Shapero Rare Books, a dealer in rare and antiquarian books and works on paper, and its subsidiary brand, Shapero Modern which trades in modern and contemporary prints, both located in Mayfair, London; and
Scholium Trading, a company set up to trade in conjunction with other dealers in high value rare and collectible goods.
Strategy
The Company seeks to create exposure to organisations that are engaged in the business of fine art and collectibles. It does this through its rare books and print dealers, Shapero Rare Books and Shapero Modern respectively; and through Scholium Trading which trades alongside other dealers in the broader art and collectibles market. It is seeking to grow its businesses organically through reinvestment of profits in high quality stock; and by diversification into new market areas through acquisition of companies and/or teams of expert dealers seeking a well-capitalised vehicle.
The Directors intend to provide an attractive level of dividends to shareholders along with stable asset-backed growth driven by opportunities in the markets in which the Group operates.
Our business model
Shapero Rare Books
Shapero Rare Books trades in rare and antiquarian books and works on paper. The items for sale typically range in value from 100 up to 1.5 million with an average sale price during the year of 4,816 (2014: 4,270). Shapero Rare Books specialises in natural history, travel and Russian materials. During the year it created a modern prints department, Shapero Modern, which has shown encouraging performance.
Scholium Trading
Scholium Trading trades in conjunction with dealers in high value rare and collectible goods. It acquires items or collections either as principal or in consortia with dealers who are expert in their own subject area in the broader collectibles market.
Revenue Streams
The Group earns revenue from:
The sale of rare books and works on paper through Shapero Rare Books;
The sale of modern and contemporary prints through Shapero Modern; and
The sale of other rare and collectible items through Scholium Trading.
Key objectives and key performance indicators (KPIs)
Our key objectives are to:
Increase the profitable trade of Shapero Rare Books and Shapero Modern through increased sales and selective purchasing; and
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.
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.
Years ending March 31 Continuing operations
2015
2014
Revenue (millions)
5.16
6.08
Gross Profit (millions)
1.89
2.44
Gross Margin
36%
40%
Stock Turnover
22 months
11 months
Review of the year from continuing operations
Overall performance
Revenue has reduced to 5.16 million (2014: 6.08 million), primarily due to a lower level of activity in the Russian and Eastern European department of Shapero Rare Books. Gross margins are slightly reduced at 36% (2014: 40%) due to a different product mix of book sales revenue, commission income, and trade through Scholium Trading.
The year has also seen a marked increase in the stock holding of the group to 7.47 million (2014: 4.67 million) as the proceeds of the fundraising undertaken in March 2014 have been used to acquire new stock in Shapero Rare Books, Shapero Modern and Scholium Trading.
Stock turnover in the year slowed to 22 months as newly acquired stock was not readily converted into sales.
Financial Position and Cash
As at 31 March 2015 our gross stock levels were 7.47 million (2014: 4.67 million) and net assets were 10.2 million (2014: 10.7 million). The increase in stock levels is largely due to the Group's policy of measured investment in stock to drive turnover and return on capital. The reduction in net assets arises from the losses incurred in the year. The results and assets of the discontinued operations are disclosed in note 20.
Analysis of Profit by Department
12 months ending 31 March 2015 (continuing operations, all figures m)
Shapero Rare
Scholium
Central
Continuing
Books
Trading
Operations
Revenue
4.44
0.72
0.00
5.16
Cost of goods sold
(2.64)
(0.63)
0.00
(3.27)
Gross Profit
1.80
0.09
0.00
1.89
Pre Tax Profit
(0.13)
0.09
(0.49)
(0.53)
The table above shows the performance of each revenue and cost department of the Group as it will be continuing in 2015. Administrative costs for the group, including distribution costs, were 2.4 million (2014: 1.9 million), reflecting the increased overheads required for an AIM listing.
Shapero Rare Books
Shapero Rare Books achieved a turnover of 4.44 million (2014:6.08 million), excluding its South Kensington Operations which were sold shortly after the year end. The decline in performance, as compared to prior years, was predominantly due to a material slow-down in trade in the Russian and Eastern European department. In the year under review, the Russian and Eastern European department represented 19% of gross profit (2014: 35%). Shapero Modern has performed well in its first year, representing approximately 7.7% of Shapero Rare Books' turnover.
Scholium Trading
Trading by the Group alongside other dealers in the broader arts and collectibles market has developed, been profitable and now represents c. 12% of Group revenue. Whilst gross margins are in the region of 13%, stock turnover is higher than originally anticipated; the value-weighted average holding period of stock acquired for sale is approximately 65 days. We remain encouraged by these returns and are actively seeking further profitable trades with third party dealers.
During the year we traded alongside dealers in coins, sculpture, old master paintings, antiquarian books and oriental urns. We anticipate that, as this business develops, margins will increase along with the average holding period as dealers start to understand our offer better.
Dividend
The Board does not propose to declare a final dividend for the current year.
Principal risks and uncertainties
Supply of antiquarian books and other items
By definition, rare and antiquarian books and other works on paper are rare. The availability of fresh stock of such items 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, such sales 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, and in particular The European Fine Art Fair. If this fair were to be discontinued it would have a material effect on the ability of the Group to sell goods. There are a limited number of stands at international trade fairs and as a result places are highly sought after. Whilst members of the Group have been exhibiting at these fairs for many years, there can be no certainty that it will continue to secure a place in the future.
Competition
The market in the books and other items in which the Group trades is competitive. In the market for antiquarian books and other items in which Shapero Rare Books trades, the Group faces various competitive pressures including from the major auctioneers, Sotheby's, Christie's and Bonhams, as well as smaller auctioneers and a large number 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 any of the markets in which it operates, it could lead to material adverse effect on the Group's business, financial condition, and operating.
Co-owned rare and collectible goods
In the case of high value items or collections, the Group will often acquire the items jointly with another bookseller 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 charging 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 not certain that the Group could claim under its insurance policy in relation thereto.
Stock valuation and liquidity
The Group will trade in rare and collectible items, which may be highly illiquid. The value of goods acquired is difficult to assess and it may not be possible for management to sell the assets at or above the price for which they were acquired. The value of assets in the balance sheet may not 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 Company 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 the Group may acquire these believing them to be authentic. Further, the attribution of works to a particular writer or artist is not 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 particular 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 a publicly accessible gallery in Mayfair, London from where Shapero Rare Books operates. The Directors believe that the location is highly desirable and an important factor in the success of the business as a whole. Since the year-end the Group has renewed its lease in Mayfair for a further 9 months and is actively investigating new premises in central London.
Terms of sale
To date, 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
(i) transfer of ownership and risk,
(ii) contract formation,
(iii) price and payment,
(iv) limitations and exclusions of liability, and
(v) governing law and jurisdiction.
In light of the foregoing, there can be 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 in relation to 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 is revising its standard terms of sale to seek to ensure that, going forward, the arrangements with clients, customers, dealers and others will include terms dealing with each of the aforementioned areas.
Currency risk
The Directors anticipate that the Group will conduct certain of its transactions other than in Pounds Sterling, the Company's functional currency. As a result, movements in foreign exchange rates may impact the Group's performance. The Group does not contract any hedging arrangements in respect of currency positions.
On behalf of the Board:
Simon Southwood
Chief Financial Officer
1 July 2015
Consolidated statement of comprehensive income
Year Ended 31 March
Year Ended 31 March
Restated
2015
2014
Continuing operations
Note
'000
000
Revenue
3
5,166
6,083
Cost of sales
(3,273)
(3,641)
Gross profit
1,893
2,442
Distribution expenses
(268)
(420)
Administrative expenses
(2,148)
(1,492)
Exceptional items:
Replacement share-based payment scheme
7
-
(385)
IPO expenses
7
-
(228)
Total administrative expenses
(2,148)
(2,105)
(Loss) from operations
(523)
(83)
Financial income
-
1
Financial expenses
8
(6)
(290)
(Loss)/profit before taxation
6
(529)
(372)
Income tax credit
9
29
251
Loss for the year from continuing operations
(500)
(121)
Discontinued operations
Profit for the year from discontinued operations
20
24
24
(Loss)/profit for the year and total comprehensive income attributable to equity holders of the parent company
(476)
(97)
Basic and diluted loss per share:
From continued operations - pence
10
(3.71)
(45.50)
From discontinued operations - pence
10
0.18
9.00
From loss for the year - pence
10
(3.53)
(36.50)
There were no other recognised gains and losses in the year.
Consolidated statement of financial position
Registered company number: 08833975
31 March
31 March
2015
2014
Note
000
000
Assets
Non-current assets
Property, plant and equipment
11
92
104
Intangible assets
12
-
16
Deferred taxation
17
280
258
372
378
Current assets
Inventories
13
7,471
4,667
Trade and other receivables
14
1,694
1,816
Cash and cash equivalents
2,122
7,578
11,287
14,061
Assets of disposal group classified as held for sale
20
162
-
11,449
Total assets
11,821
14,439
Current liabilities
Trade and other payables
15
1,634
3,111
Loans and borrowings
16
-
533
Current corporation tax liabilities
-
14
Total current liabilities
1,634
3,658
Liabilities of disposal group classified as held for sale
20
24
Total liabilities
1,658
Net assets
10,163
10,781
Equity and liabilities
Equity attributable to owners of the Company
Ordinary shares
18
136
132
Share Premium
9,516
9,458
Merger reserve
82
82
Retained earnings
429
1,109
Total equity
10,163
10,781
The financial statements were approved by the Board of Directors and authorised for issue on 1 July 2015.
S Southwood
Director
Consolidated statement of changes in equity
Share
Share
Merger
Retained
Total
capital
Premium
reserve
Earnings/ (deficit)
Equity
000
000
000
000
000
At 1 April 2013
52
-
2,047
(1,121)
978
Loss for the year from continued and discontinued operations
-
-
-
(97)
(97)
Total comprehensive income for the year
-
-
-
(97)
(97)
Shares issued in the period
80
10,259
-
-
10,339
Share issue expenses
-
(801)
-
-
(801)
Capital reduction in subsidiary
-
-
(1,986)
1,986
-
Cancellation of shares in subsidiary
-
-
21
3
24
Share-based payments
-
-
-
338
338
Total transactions with owners
80
9,458
(1,965)
2,327
9,900
At 31 March 2014
132
9,458
82
1,109
10,781
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 changes in equity continued
Share
Share
Merger
Retained
Total
capital
premium
reserve
earnings
Equity
000
000
000
000
000
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 year
-
-
-
(476)
(476)
Shares issued in the period
4
58
-
-
62
Dividends
-
-
-
(204)
(204)
Total transactions with owners
4
58
-
-
(142)
At 31 March 2015
136
9,516
82
429
10,163
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 of the Group attributable to equity shareholders.
Consolidated statement of cash flows
31 March
31 March
2015
2014
000
000
Cash flows from operating activities
Loss before tax
(505)
(348)
Depreciation of property, plant and equipment
44
38
Amortisation of intangible assets
8
8
Share-based payment
-
338
(453)
36
Increase in inventories
(2,930)
(1,336)
Increase in trade and other receivables
102
(448)
Decrease in trade and other payables
(1,639)
2,211
Net cash (used)/generated from operating activities
(4,920)
463
Cash flows from investing activities
Purchase of property, plant and equipment
(38)
(22)
Interest received
-
1
Net cash used in investing activities
(38)
(21)
Cash flows from financing activities
Proceeds from the issuance of ordinary shares
62
8,000
Share issue expenses
-
(801)
Repayment of shareholder loans
(350)
-
Interest paid
(6)
(259)
Dividends paid
(204)
-
Net cash (used)/generated from financing activities
(498)
6,940
Net (decrease)/increase in cash and cash equivalents
(5,456)
7,382
Cash and cash equivalents at the beginning of the year
7,578
196
Cash and cash equivalents at the end of the year
2,122
7,578
Company statement of financial position
Registered company number: 08833975
31 March
31 March
2015
2014
Note
000
000
Assets
Non-current assets
Investments
5,200
5,200
Current assets
Trade and other receivables
14
5,527
507
Cash and cash equivalents
1,965
7,433
7,492
7,940
Total assets
12,692
13,140
Current liabilities
Trade and other payables
15
79
569
Current corporation tax liabilities
-
7
Total current liabilities
79
576
Total liabilities
79
576
Net assets
12,613
12,564
Equity and liabilities
Equity attributable to owners of the Company
Ordinary shares
18
136
132
Share Premium
9,516
9,458
Merger reserve
2,809
2,809
Retained earnings
152
165
Total equity
12,613
12,564
The financial statements were approved by the Board of Directors and authorised for issue on 1 July 2015.
S Southwood
Director
Company statement of changes in equity
Share
Share
Merger
Retained
Total
capital
premium
Reserve
Earnings/ (deficit)
Equity
000
000
000
000
000
At 7 January 2014
-
-
-
-
-
Loss for the period
-
-
-
(173)
(173)
Total comprehensive income for the period
-
-
-
(173)
(173)
Shares issued in the period
132
10,259
-
-
10,391
Share issue expenses
-
(801)
-
-
(801)
Investment in Shapero Rare Books Limited
-
-
2,809
-
2,809
Share-based payments
-
-
-
338
338
Total transactions with owners
132
9,458
2,809
338
12,737
Balance at 31 March 2014
132
9,458
2,809
165
12,564
Company statement of changes in equity
Share
Share
Merger
Retained
Total
capital
premium
Reserve
earnings
Equity
000
000
000
000
000
At 1 April 2014
132
9,458
2,809
165
12,564
Profit for the year
-
-
-
191
191
Total comprehensive income for the period
-
-
-
191
191
Shares issued in the period
4
58
-
-
62
Dividends
-
-
-
(204)
(204)
Total transactions with owners
4
58
-
(204)
(142)
Balance at 31 March 2015
136
9,516
2,809
152
12,613
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.
Company statement of cash flows
31 March
31 March
2015
2014
000
000
Cash flows from operating activities
Profit from operations
184
(165)
Share-based payment
-
338
184
173
Increase in trade and other receivables
(5,020)
(507)
Increase in trade and other payables
(490)
568
Net cash generated from operating activities
(5,326)
234
Cash flows from financing activities
Proceeds from the issuance of ordinary shares
62
8,000
Share issue expenses
-
(801)
Dividends
(204)
Net cash generated from financing activities
(142)
7,199
Net increase in cash and cash equivalents
(5,468)
7,433
Cash and cash equivalents at the beginning of the period
7,433
-
Cash and cash equivalents at the end of the period
1,965
7,433
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 32 St George Street, London W1S 2EA.
Additional Information The financial information included in this statement does not constitute the Group's statutory accounts (within the meaning of section 434 of the Companies Act 2006) for the years ended 31 March 2015 or 2014, but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006 or equivalent preceding legislation. The Annual General Meeting of Scholium Group plc will be held on [date].
2
Basis of preparation and accounting policies
The basis of preparation and the accounting policies applied by the Group and the Company have been prepared on the same basis as and are consistent with the previous financial year.
Operating Segments The Board considers that the Group's project activity constitutes one operating and one reporting segment, as defined under IFRS 8. The total profit measures are operating profit and profit for the year, both disclosed on the face of the consolidated income statement. No differences exist between the basis of preparation of the performance measures used by management and the figures in the Group financial information. All of the revenues generated relate to the trading and retailing of rare and antiquarian books and works on paper, other quality books, ancillary income including commission receivable and from the repair of books. An analysis of revenues appears in note 3 below. All revenues are wholly generated within the UK. Accordingly there are no additional disclosures provided to the financial information.
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.
Expenditure
Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provision is made when an obligation exists for a future liability relating to a past event and where the amount of the obligation can be reasonably estimated.
Exceptional items of expense
Exceptional items of expense are administrative costs which are large or unusual in nature and are not expected to recur on a regular basis.
3
Revenue
31 March
31 March
2015 Group
2014 Group
000
000
Rare books and other works in paper
5,057
5,827
Commissions
81
256
Other income
28
-
5,166
6,083
All revenues arising from the disposal group are excluded. See note 20.
4
Profit before taxation
Profit before taxation is after charging/(crediting):
31 March 2015 Group
31 March 2014 Group
000
000
Depreciation of property, plant and equipment
44
38
Amortisation of intangible assets
8
8
Operating lease rentals
312
351
Foreign currency losses
8
13
Share-based payment expense
-
338
Employee costs
791
1,015
Fees payable to the Company's auditor
30
39
In addition operating lease rentals of 65,000 were incurred within the disposal group (note 20).
5
Employee costs including Directors
31 March
31 March
2015 Group
2014 Group
000
000
Wages and salaries
704
880
Social Security Costs
75
123
Pension costs
12
12
Other employee benefits
-
-
Share-based payments
-
338
791
1,353
6
Directors' remuneration
31 March
31 March
2015 Group and Company
2014 Group and Company
000
000
Salaries and fees
310
220
Social Security Costs
26
-
Pension costs
-
-
336
220
Information regarding the highest paid Director which comprises salary and benefits is as follows:
125
100
7
Exceptional items of expenditure
31 March
31 March
2015 Group
2014 Group
Accelerated share-based for replacement option scheme on listing
-
385
IPO expenses
-
228
-
613
On 27 March 2014 the previous share option incentive scheme within the Group, based upon ordinary shares within Shapero Rare Books Limited (formerly Bookbank Limited was accelerated on listing and a new share-incentive scheme put in place. The options related to the previous scheme are vested and exercisable on the date of issue
On 28 March 2014 the Company was admitted to the AIM market and an associated placing of shares was made. The total costs were 1,029,000 of which 801,000 were attributed to share premium.
8
Financial expense
31 March
31 March
2015 Group
2014 Group
000
000
Interest on shareholder loan notes and director loans
6
259
Amortised loan expenses
-
31
6
290
9
Income tax
31 March
31 March
2015 Group
2014 Group
000
000
Current tax (credit)/expense
Current tax
(7)
7
Deferred tax:
Origination and reversal of temporary differences
(22)
(258)
Total tax(credit
(29)
(251)
The reasons for the difference between the actual tax (credit)/charge for the year and the standard rate of corporation tax in the United Kingdom applied to (loss)/profit for the year as follows:
31 March
31 March
2015 Group
2014 Group
000
000
(Loss)/profit before tax
(529)
(348)
Applied corporation tax rates:
20%
20%
Tax at the UK corporation tax rate of 20%
(106)
(70)
Expenses not deductible for tax purposes
6
53
Utilisation of previously unrecognised tax losses
-
(39)
Origination and reversal of temporary differences
71
(195)
Total tax credit
(29)
(251)
10
Loss per share
31 March
31 March
2015 Group
2014 Group
000
000
Loss from continuing operations attributable to owners of the parent
(476)
(121)
Profit from discontinued operations
24
24
Total loss
(500)
(97)
Number of shares
Weighted average number of shares for the purpose of basic and diluted earnings per share and from both continuing and discontinued operations
13,498,165
265,813
Basic and diluted loss per share from continuing operations - pence
(3.71)
(45.50)
Earnings per share from discontinued operations - pence
0.18
9.00
Total basic and diluted earnings per share - pence
(3.53)
(36.50)
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.
Where the Group has incurred a loss in a year or period the diluted earnings per share is the same as the basic earnings per share as the loss has an anti-dilutive effect. The diluted loss per share for 2014 and 2015 is therefore the same as the basic loss per share for these years and the diluted weighted average number of shares is the same as the basic weighted average number of shares.
Basic earnings per share calculated on the full number of shares in issue are calculated by dividing net (loss)/profit for the year or period attributable to ordinary equity holders of the parent by number of shares in issue at 31 March 2015, amounting to 13,600,000 shares (2014: 13,200,325 shares).
The Company has 704,000 potentially issuable shares all of which relate to the potential dilution from the Group's share-options issued to the Directors and certain employees.
11
Property, plant and equipment
31 March
31 March
31 March
31 March
2015 Group
2015 Group
2015 Group
2015 Group
Bibliography
Plant & Machinery
Fixtures & fittings
Total
000
000
000
000
Cost
At 1 April 2013
78
59
19
156
Acquired in the year
6
17
-
23
At 31 March 2014
84
76
19
179
Acquired in the year
4
12
22
38
Transferred to disposal group (note 20)
-
(5)
(11)
(16)
At 31 March 2015
88
83
30
201
Depreciation
At 1 April 2013
12
20
5
37
Charge for the year
12
22
4
38
At 31 March 2014
24
42
9
75
Charge for the year
13
25
6
44
Transferred to disposal group (note 20)
-
(3)
(7)
(10)
At 31 March 2015
37
64
8
109
Net book value
At 31 March 2015
51
19
22
92
At 31 March 2014
60
34
10
104
At 31 March 2013
66
39
14
119
There are no items of property, plant and equipment held under finance leases.
12
Intangible assets
31 March
2015 Group
Total
Customer lists and data
000
Cost
At 1 April 2013 and 31 March 2014
170
Transferred to disposal group (note 20)
(170)
At 31 March 2015
-
Amortisation
At 1 April 2013
146
Charge for the year
8
At 31 March 2014
154
Charge for the year
8
Transferred to disposal group (note 20)
(162)
At 31 March 2015
162
-
Net book value
At 31 March 2015
-
At 31 March 2014
16
At 1 April 2013
24
There have been no impairments indicated in the year to 31 March 2015.
13
Inventories
31 March
31 March
2015 Group
2014 Group
000
000
Stock
7,471
4,667
Stock expensed in the year
3,083
3,954
14
Trade and other receivables
31 March
31 March
31 March
31 March
2015 Group
2014 Group
2015 Company
2014 Company
000
000
000
000
Trade and other receivables
1,164
1,412
261
-
Amounts due from Group undertakings
-
-
5,084
435
Other debtors
221
198
175
68
Prepayments and accrued income
309
206
7
4
1,694
1,816
5,527
507
The age profile trade and other receivables comprise:
000
Current
839
One month past due
41
Two months past due
27
Three months past due
2
Over three months past due
255
Provision for doubtful debts
-
1,164
As at 31 March 2015, trade receivable of nil (31 March 2014 4,000) and 31st March 2013 nil) were considered past due and impaired. The other debtors' balances are categorised as loans and receivables. All amounts shown under trade and other receivables are due for payment within one year.
15
Trade and other payables
31 March
31 March
31 March
31 March
2015 Group
2014 Group
2015 Company
2014 Company
000
000
000
000
Trade creditors
1,136
2,355
-
197
Social security and other taxes
37
18
9
-
Accrued expenses
363
686
23
372
Other creditors
98
52
47
-
1,634
3,111
79
569
The directors consider the carrying value of trade and other payables approximate to their fair values.
16
Loans and borrowings
31 March
31 March
2015 Group
2014 Group
Current liabilities:
000
000
Loans from shareholders
-
350
Loans from directors
-
183
-
533
The directors' and shareholders' loans of 350,000 carried interest at 5 per cent per annum and were secured by floating charges over the company's assets. The loans were repaid in the year and the security released.
On 18 October 2014 the Company granted security over its fixed and floating assets to support a finance facility from Coutts & Company. This facility is undrawn at 31 March 2015.
17
Deferred tax
31 March
31 March
2015 Group
2014 Group
000
000
Included in non-current assets
280
258
Deferred tax gross movements
31 March
31 March
2015 Group
2014 Group
000
000
Opening balance
(258)
-
Credit to income statement
(22)
(258)
Closing balance
(280)
(258)
The deferred tax asset comprises:
31 March
31 March
2015 Group
2014 Group
000
000
Temporary differences on property, plant and equipment
-
-
Available losses
283
176
Other temporary and deductible differences
(3)
82
Closing balance
280
258
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 352,000 of which 280,000 has been recognised (2014: 258,000 recognised).
18
Share capital
31 March
31 March
2015 Group and Company
2014 Group
Ordinary shares of 0.10 each
000
000
At the beginning of the year
132
52
Issued in the year
4
80
At the end of the year
136
132
Number of shares
31 March
31 March
2015 Group and Company
2014 Group and Company
Ordinary shares of 0.10 each
Number
Number
At the beginning of the year
13,200,325
-
Issued in the year
399,675
5,200,325
Placing of shares on admission to AIM
-
8,000,000
At the end of the year
13,600,000
13,200,325
All shares issued in the year arose from the exercise of employee share options.
19
Events after the balance sheet date
On 2 April 2015 the Group entered into an agreement for the disposal of its South Kensington operations: South Kensington Books and Ultimate Library to a company controlled by Philip Blackwell a director of the company. The aggregate consideration will be 145,802. For further information see note 20.
20
Non-current assets held for sale and discontinued operations
On 2 April 2015 the Group entered into an agreement for the disposal of its South Kensington operations: South Kensington Books and Ultimate Library to a company controlled by Philip Blackwell a director of the company. The aggregate consideration will be 145,802.
Assets of the disposal group held for sale
31 March
2015 Group and Company
000
Property, plant and equipment
6
Other intangible assets
8
Inventory
126
Other current assets
22
162
Liabilities of the disposal group held for sale
Trade and other payables
24
Liabilities of the disposal group held for sale
Net assets of the disposal group
138
The disposal assets are stated at fair-value less costs to sell. There were no material adjustments to the carrying values of the disposal group assets and liabilities.
Analysis of the result of discontinued operations is as follows:
Statement of comprehensive income
31 March
31 March
2015 Group and Company
2014 Group and Company
000
000
Revenues
783
650
Expenses
(759)
(626)
Profit before tax of discontinued operations
24
24
Taxation
-
-
Profit after tax of discontinued operations
24
24
There were no other items of 'other comprehensive income'.
The cash flows attributable to the discontinued operations were as follows:
Cash flows
31 March
31 March
2015 Group and Company
2014 Group and Company
000
000
Operating cash flows
11
(174)
Investing cash flows
(6)
-
Financing cash flows
-
-
Total cash flows
5
(174)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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