Final Results

RNS Number : 9972K
Scholium Group PLC
01 July 2014
 



Scholium Group plc ("Scholium" or the "Company")

together with its subsidiaries (the "Group")

Final Results

1 July 2014

SUMMARY INFORMATION

Scholium Group plc ("Scholium" or the "Company") together with its subsidiaries (the "Group") is pleased to present a preliminary statement summarising its annual report and financial statements for the year ended 31 March 2014.  The Group is involved in the trading of rare and collectible goods.  Shapero Rare Books, its main operating brand, trades in rare books and other works on paper from Mayfair and through international fine art fairs.  The Group also retails art and literature from premises in South Kensington where it operates Ultimate Library, which provides bespoke libraries to hotels and private residences.

The Company's shares are admitted to trading on AIM, a market operated and regulated by the London Stock Exchange under stock (Symbol: SCHO).

Operational Highlights in the year ending 31 March 2014

·   Material increase in the stock and trade of Shapero Rare Books following acquisition in 2012

·   Strong growth in South Kensington Books and Ultimate Library

·   Admission to trading on AIM, raising £8 million before expenses

 

Financial Highlights


31 March 2014

31 March 2013

Revenue from operations (up 13.4%)

£6.73m

£5.94m

Gross Profit from operations (up 19.2%)

£2.78m

£2.33m

EBITDA (up 88%)

£0.61m

£0.33m




Stock (up 40%)

£4.67m

£3.33m

Total Assets (up 187%)

£14.44m

£5.04m

Net Assets (up 1100%)

£10.78m

£0.98m

Dividend per ordinary share

1p

-

 

Commenting on the final results Philip Blackwell, Chief Executive of the Group, noted "We are very pleased to report a strong performance for 2014.  Our business has grown materially on all fronts and culminated in admission to trading on AIM raising £8 million.

"We have made an encouraging start to the year with Shapero Rare Books and South Kensington Books ahead of the same period for the previous year and are looking forward to developing our business through selective deployment of new capital."

For further information, contact:

Scholium Group plc

Philip Blackwell, Chief Executive Officer

Simon Southwood, Chief Financial Officer

 

+44 (0)20 7493 0876

WH Ireland Ltd - Nominated Adviser

Chris Fielding / Nick Field

 

+44 (0)20 7220 1666

Whitman Howard Ltd - Broker

Ranald McGregor-Smith / Niall Devins

+44 (0)20 7087 4550

 

Notes to Editors

Shapero Rare Books

Shapero Rare Books was founded in 1979, is a dealer in rare and antiquarian books and works on paper. This includes maps of historic importance, vintage photographs and decorative and artistic prints. Mr Shapero is a well-known and established international dealer in rare books and maps. He developed his expertise from an initial focus on travel and illustrated books into a broad spectrum of rare and collectible works.

 

The management of Shapero Rare Books has experience in acquiring large consignments of rare and historically important antiquarian books for sale to an international client base. The business has operated since 1996 from its current leasehold premises in St George Street, Mayfair, London.

 

Scholium Trading

Scholium Trading acquires and trades in the wider market for rare and collectible goods alongside other specialist dealers.

 

South Kensington Books and Ultimate Library

South Kensington Books is the current trading name of a bookshop that has been operating from leasehold premises in Thurloe Street, South Kensington, London for several decades and which specialises in books valued at up to £150 in visual arts, architecture and photography.

 

Ultimate Library, which operates from the same premises, creates bespoke libraries on behalf of luxury hotels and resorts, and high-end personal residences around the world


 

CHAIRMAN'S STATEMENT

I am delighted to present our maiden set of financial statements as a public company for the year ending 31 March 2014.  It has been an eventful year for the Group. On the back of the strong performance of our principal operating subsidiary, Shapero Rare Books, we gained investor support to secure further funds for the business to facilitate future growth. This was achieved through a placing of new shares to raise £8 million and admission of the Company's shares to trading on AIM.

Revenue for the year amounted to £6.73 million (2013: £5.94 million) which delivered EBITDA1 of £0.61 million (2013: £0.33 million).

Business Review

During the year under review, the Group had two principal operating units:

·     Shapero Rare Books, a dealer in rare and antiquarian books and works on paper, located in Mayfair, London; and

·     South Kensington Books, a bookshop specialising primarily in art, and its sister business, Ultimate Library, which creates bespoke libraries for luxury hotels and private residences.

 

Performance

Shapero Rare Books

Shapero Rare Books is a Mayfair-based dealer in rare and antiquarian books and works on paper.  It regularly exhibits at major international fairs and typically trades alongside other high-end art and collectibles dealers.

We are particularly pleased with the performance of Shapero Rare Books over the year.  It became clear to us, once the group had stabilised in early April 2013 that the business was undercapitalised and under stocked.  When we sought a route to more permanent capital during the year, interim financing by way of a £273,000 working capital loan was made available by shareholders in September 2013.  The resultant immediate increase in the stock and trade of Shapero Rare Books underpinned our confidence to raise further funds and formed the basis for our admission to trading on AIM in March 2014. 

Revenues in the year under review amounted to £6.08 million (2013: £5.38 million) and generated an EBITDA contribution of £0.56 million (2013: £ 0.27 million).  Continued investment in stock by the business resulted in material growth in stock at the year end to £4.57 million (31 March 2013: £3.33 million).

South Kensington Books

South Kensington Books and Ultimate Library made up approximately 10% of group turnover for the year (2013: 9%) and made a contribution of 9%.  Whilst the business is smaller than Shapero Rare Books, it goes from strength to strength; with turnover during the year of £0.65 million (2013: £0.55 million) generating EBITDA of £0.05 million (2013: £0.03 million).

_______________
1 EBITDA is stated before depreciation, amortization, loan related costs, foreign exchange losses, exceptional share-based payments and IPO costs.

 

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. Our new board has seen the appointment of Charles Sebag-Montefiore as senior independent non-executive and Simon Southwood as finance director.  Both of them bring a wealth of experience and I look forward to their contribution. 

Current Trading

Since the year-end performance at both our Mayfair and South Kensington operations has been encouraging, with both businesses ahead of prior-year trading.  In particular, Shapero Rare Books has been deploying capital and has made attractive acquisitions of new stock.  The Scholium Trading proposition continues to be active in building its market presence in the community.  The Group is advancing conversations with a number of dealers on material acquisitions/collections they are pursuing.

Dividend

Due to performance in the year, we are pleased to declare an interim dividend of 1 penny per ordinary share. Payment will be made on 25 July 2014 to shareholders on the Company's register on 11 July 2014.

Jasper Allen      

Chairman

30 June 2014

 

STRATEGIC REPORT

This report provides an overview of our strategy and of our business model; gives a review of how the business has performed 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 of the business

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

 

The group of businesses comprises:

·      Shapero Rare Books, a dealer in rare and antiquarian books and works on paper, located in Mayfair, London;

·      South Kensington Books, a bookshop specialising primarily in art, and its sister business, Ultimate Library, which creates bespoke libraries for luxury hotels and private residences; and

·      Scholium Trading, a company set up to trade in conjunction with other dealers in high value rare and collectible goods.

 

Revenue Streams

The Group earns revenue from:

•       the sale of rare books and works on paper through Shapero Rare Books;

•       the sale of art books and literature through South Kensington Books;

•       the sale of whole collections and libraries through Ultimate Library; and

•       the sale of other rare and collectible items through Scholium Trading.

 

Strategy

The Company raised new capital in a recent placing of new shares in order to:

·      increase the day-to-day stock and trade of Shapero Rare Books and broaden the product mix into Modern prints;

·      invest in developing Scholium Trading - a company created to trade alongside other dealers in high value rare and collectible items and participate in the acquisition for sale of large consignments; and

·      accelerate the growth of the South Kensington Books and Ultimate Library brands; the latter concomitant with the development of international hospitality groups and the demand for premium property in Central London. 

 

The directors intend to provide an attractive level of dividends to shareholders along with stable asset-backed growth driven by inefficiencies 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.  It trades from premises in Mayfair, at international art fairs in London, Continental Europe and America and through its website www.shapero.com.  The items for sale typically range in value from £100 up to £1.5 million. Shapero Rare Books particularly specialises in Natural History, travel and Russian materials.  Recently it has started to develop its Modern Prints department.

 

South Kensington operations

South Kensington Books is an independent bookshop operating from premises in Thurloe Street, South Kensington, serving its local professional community in the museums, Christie's, the Lycée and the vibrant tourist and local resident community. Ultimate Library operates from the same premises and supplies bespoke libraries for private residences, luxury resorts and hotels on four continents.

 

Scholium Trading

Scholium Trading is a new operation set up to trade in conjunction with dealers in high value rare and collectible goods.  It seeks to build on our experience of acquiring items or collections either as principal or in consortia with dealers who are expert in their own subject area; and to extend this expertise to working with a wider range of dealers in related areas of the collectibles market.

 

Key objectives and key performance indicators (KPIs)

Our key objectives are to:

•       increase the stock and trade of Shapero Rare Books through selective purchasing;

•       increase the trade of South Kensington operations through expanding its hotel client base to sell more libraries and grow the exclusive private residence market through working with more design groups ; and

•       develop Scholium Trading to be the 'first call' for high-end fine art and collectible dealers looking for partners to acquire and sell individual items or collections that 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

2014

2013

Revenue

6.73

5.94

Gross Profit

2.78

2.34

Gross Margin

41%

39%

Stock Turnover

12 months

11 months

Review of the year and current trading

Overall performance

We are pleased to report that the business has grown over the year.  Revenue has increased 13.4% to £6.73 million (2013: £5.94 million) whilst the gross margin has increased from 39% to 41%. Much of this margin improvement was due to an increased level of commission sales in Shapero Rare Books. EBITDA for the period increased to £0.61 million (2013: £0.33 million), reflecting the operational gearing that the group enjoys. 

 

Shapero Rare Books

Shapero Rare Books has been, in large part, responsible for the increase in growth and profitability of the Group.  Revenue for the year amounted to £6.1 million (2013: £5.4 million) which represented 90% of the overall revenues of the Group (2013: 91%).  The Operational EBITDA of Shapero Rare Books exceeded our initial expectations for the year with exceptional purchases and sales in the latter part of the year.  A strong final quarter was underpinned by sales at The European Fine Art Fair (TEFAF) and the success of our catalogue '50 Fine Books'.

 

The year has seen a marked increase in the stock holding of the group to £4.7 million (31 March 2013: £3.3 million). This increase in stock was largely in the last quarter of the year and was enabled by strong trading and a short-term loan from shareholders. In line with plan, we have continued to invest the proceeds of the listing to increase stock as a driver of future sales. We have been able to acquire some attractive new items as evidenced by the recent Natural History catalogue which carried books and prints valued at more than £4m at retail prices.

 

The development of the prints side of the business has seen a strategic investment in modern prints through the acquisition of a portfolio by Andy Warhol.

 

South Kensington operations

South Kensington Books enjoyed like-for-like sale growth of over 12% in last financial year and is trading to plan in the current year. The bookshop is not an inherently scalable business with just one location but it remains cash generative.  Ultimate Library grew by over 50% in the year to March 2014 and has started the current year strongly with a number of new clients in London, Greece, Vietnam, the Caribbean and mainland China. As planned we are recruiting to meet demand. The library business works off the buying expertise of the South Kensington Books team. 

 

Revenue for the year increased to £0.65 million (2013: £0.55 million) that drove an increase in EBITDA to £0.05 million (2013: £0.03 million).  The stock-turn of 4x per annum is typical for a business of this nature

 

Scholium Trading

The new operation, Scholium Trading was set up to trade in conjunction with dealers in high value rare and collectible goods and began trading in the current financial year.  It seeks to build on our previous experience of acquiring items or collections either as principal or in consortia with dealers who are expert in their own subject area; and to extend this expertise to working with a wider range of dealers in related areas of the collectibles market. We have been active in promoting the new business to our network of other dealers in the market and are looking at a number of interesting opportunities.   

 

Financial Position and Cash flow

As at 31 March 2014 our gross stock levels were £4.67 million (2013: £3.33 million) and gross assets were £14.44 million (2013: £5.04 million).  The increase in stock levels is largely due to the Group's policy of reinvestment in stock to drive turnover and return on capital.  The increase in gross assets is largely due to the fundraising undertaken concomitant with admission of the Company's shares to trading on AIM.  Cash at 31 March 2014 was £7.58 million. In the current year we are investing the proceeds of the listing to plan.

 

Dividend

The Board has resolved to pay an interim dividend of 1 penny per ordinary share to shareholders on the register as at 11 July 2014 (ex-dividend date of 9 July). Payment will be made on 25 July 2014.

 

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 continued growth of Shapero Rare Books' business is reliant upon individual works and collections of works coming onto the market and upon the Group being able to access those business opportunities. Oftentimes, such sales are dealt with privately and discreetly, thereby meaning access to such dealflow is not guaranteed.

 

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 this and other international trade fairs and as a result places are highly sought after. Whilst there can be no certainty that the Group will continue to secure a place in the future, members of the Group have been exhibiting at these fairs for many years and, as such, have a well-established presence.

 

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 Bonham's, as well as smaller auctioneers and a large number of dealers and smaller operators.

 

The other parts of the Group's business, including the business of South Kensington Books and Ultimate Library, also face various competitive pressures. While the directors believe that the art book market has been less impacted by e-readers and online retailers than the UK retail book market as a whole, the art book market is nonetheless highly competitive and the Group competes with large bookshop chains, smaller independent bookshops and large and small online retailers.

 

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 have a 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. In addition, the Group has a shop in South Kensington, London from where the South Kensington Books and Ultimate Library businesses operate. The directors believe that both locations are highly desirable and an important factor in the success of the business as a whole. However, both premises are leased and, unless extended, will terminate. Whilst discussions with the landlords have commenced, there can be no guarantee that the leases of either of the premises will be extended on terms acceptable to the Company or at all. In addition, the Group might incur dilapidation liabilities.

 

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

 

Philip Blackwell

Chief Executive Officer

30 June 2014

 

Responsibility statement

The Directors confirm that to the best of their knowledge:

o the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

o the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole.

Forward-looking statements

These financial statements contain forward-looking statements with respect to the financial condition, results, operations and businesses of the Company. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct.  Such statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by forward-looking statements and forecasts. Forward-looking statements and forecasts are based on the Directors' current view and information known to them at the date of this statement. The Directors do not make any undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

Consolidated statement of comprehensive income


 


Year

 ended

Year

 ended


 


31 March

31 March



 

2014

2013


 

Note

£'000

£000




 

 


Revenue

3

6,733

5,936


Cost of sales


(3,954)

(3,602)


Gross profit


2,779

2,334


 


 

 


Distribution expenses


(423)

(525)


 


 

 


Administrative expenses


(1,802)

(1,497)


Exceptional items:


 

 


Replacement share-based payment scheme

9

(385)

-


IPO expenses

9

(228)

-


 


 

 


Total administrative expenses


(2,415)

(1,496)




 

 


(Loss)/profit from operations


(59)

312



 

 


Adjusted profit from operations before IPO expenses and share-based payment expense


554

312


Replacement share-based payment scheme


(385)

-


IPO expenses


(228)

-


(Loss)/profit from operations


(59)

312



 

 


 


 

 


Financial income

 

1

1


Financial expenses

10

(290)

(239)




 

 


(Loss)/profit before taxation

4

(348)

74


 


 

 


Income tax credit/(expense)

11

251

-


 


 

 


(Loss)/profit  for the year and total comprehensive income attributable to equity holders of the parent company


(97)

74


 


 

 


Basic (loss)/earnings per share - pence

12

(36.5)

112.4


 


 

 


Diluted (loss)/earnings per share - pence

12

(36.5)

112.4


 

 

 

 


Basic (loss)/earnings per share calculated on full number of shares in issue - pence

12

(0.7)

0.6

 

 

All amounts relate to continuing activities.

There were no other recognised gains and losses in the year.

 

 

Consolidated statement of financial position

Registered company number:  08833975

 

 

31 March

31 March

31 March

 

 

 

2014

2013

2012

 

 

Note

£000

£000

£000

 

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment

 

104

119

135

 

Intangible assets

 

16

24

31

 

Deferred taxation

18

258

-

-

 

 

 

378

143

166

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Inventories

14

4,667

3,331

3,250

 

Trade and other receivables

15

1,816

1,368

764

 

Cash and cash equivalents

 

7,578

196

97

 

 

 

14,061

4,895

4,111

 

 

 

 

 

 

 

Total assets

 

14,439

5,038

4,277

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

16

3,111

1,599

924

 

Loans and borrowings

17

533

350

350

 

Current corporation tax liabilities

 

14

7

3

 

Total current liabilities

 

3,658

1,956

1,277

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Loans and borrowings

17

-

2,104

2,096

 

 

 

-

2,104

2,096

 

 

 

 

 

 

 

Total liabilities

 

3,658

4,060

3,373

 

 

 

 

 

 

 

Net assets

 

10,781

978

904

 

 

 

 

 

 


Equity and liabilities

 

 

 

 


Equity attributable to owners of the Company

 

 

 

 


Ordinary shares

19

132

52

52


Share Premium

 

9,458

-

-


Merger reserve

 

82

2,047

2,047


Retained earnings/(deficit)

 

1,109

(1,121)

(1,195)


Total equity

 

10,781

978

904

 

The financial statements were approved by the Board of Directors and authorised for issue on 30 June 2014.

 

 

P Blackwell

Director

Consolidated statement of changes in equity

Note

Share

Share

Merger

Retained

Total

 

 

capital

premium

reserve

deficit

Equity

 

 

£000

£000

£000

£000

£000

At 1 April 2012 as originally stated

 

17

2,082

-

(1,195)

904

Effect of merger accounting

2

35

(2,082)

2,047

-

-

Balance at 1 April 2012 restated

 

52

-

2,047

(1,195)

904

 

 

 

 

 

 

 

Profit for the year

 

-

-

-

74

74

Total comprehensive income for the year

 

-

-

-

74

74

 

 

 

 

 

 

 

Shares issued by subsidiary undertaking in the period

 

-

-

-

-

-

Share-based payments

20

-

-

-

-

-

Total contributions by owners of the parent

 

-

-

-

-

-

 

 

 

 

 

 

 

Balance at 31 March 2013

 

52

-

2,047

(1,121)

978

 

 

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 deficit

Cumulative loss of the Group attributable to equity shareholders.

 

 

 

 

Consolidated statement of changes in equity continued

Note

Share

Share

Merger

Retained

Total

 

 

capital

premium

reserve

deficit

Equity

 

 

£000

£000

£000

£000

£000

At 1 April 2013 as originally stated

 

17

2,082

-

(1,121)

978

Effect of merger accounting

2

35

(2,082)

2,047

-

-

Balance at 1 April 2013 restated

 

52

-

2,047

(1,121)

978

 

 

 

 

 

 

 

Loss for the year

 

-

-

-

(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 from merger reserve

 

-

-

21

3

24

Share-based payments

20

-

-

-

338

338

Total contributions by owners of the parent

 

80

9,458

(1,965)

2,327

9,900

 

 

 

 

 

 

 

Balance 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 deficit

Cumulative loss of the Group attributable to equity shareholders.

 

 

 

Consolidated statement of cash flows

31 March

31 March

 

2014

2013

 

£000

£000

Cash flows from operating activities

 

 

(Loss)/profit before tax

(348)

74

Depreciation of property, plant and equipment

38

33

Amortisation of intangible assets

8

8

Share-based payment

338

-

 

36

115

 

 

 

Increase in inventories

(1,336)

(81)

Decrease in trade and other receivables

(448)

(604)

Increase in trade and other payables

2,211

817

Net cash generated from operating activities

463

247

 

 

 

Cash flows from investing activities

 

 

Purchase of property, plant and equipment

(22)

(17)

Interest received

1

1

Net cash generated used in investing activities

(21)

(16)

 

 

 

Cash flows from financing activities

8,000

-

Proceeds from the issuance of ordinary shares

(801)

-

Share issue expenses

-

-

Repayment of shareholder loans

-

-

Interest paid

(259)

(132)

Net cash generated from financing activities

6,940

(132)

 

 

 

 

 

 

Net increase in cash and cash equivalents

7,382

99

 

 

 

Cash and cash equivalents at the beginning of the year

196

97

 

 

 

Cash and cash equivalents at the end of the year

7,578

196

 

 

 

Company statement of financial position

Registered company number:  08833975

 

 

31 March

 

 

 

2014

 

Note

 

£000

Assets

 

 

 

Non-current assets

 

 

 

Investments

13

 

5,200

 

 

 

 

Current assets

 

 

 

Trade and other receivables

15

 

507

Cash and cash equivalents

 

 

7,433

 

 

 

7,940

 

 

 

 

Total assets

 

 

13,140

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

16

 

569

Current corporation tax liabilities

 

 

7

Total current liabilities

 

 

576

 

 

 

 

Total liabilities

 

 

576

 

 

 

 

Net assets

 

 

12,564

 

 

 

 

Equity and liabilities

 

 

 

Equity attributable to owners of the Company

 

 

 

Ordinary shares

19

 

132

Share Premium

 

 

9,458

Merger reserve

 

 

2,809

Retained deficit

 

 

165

Total equity

 

 

12,564

 

 

 

P Blackwell

Director

 

 

  

 

 

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 deficit

Cumulative loss of the Group attributable to equity shareholders.

 

 

 

 

Company statement of cash flows

 

31 March

 

 

2014

 

 

£000

Cash flows from operating activities

 

 

Loss from operations

 

(165)

Share-based payment

 

338

 

 

173

 

 

 

Increase in trade and other receivables

 

(507)

Increase in trade and other payables

 

568

Net cash generated from operating activities

 

234

 

 

 

Cash flows from financing activities

 

 

Proceeds from the issuance of ordinary shares

 

8,000

Share issue expenses

 

(801)

Net cash generated from financing activities

 

7,199

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

7,433

 

 

 

Cash and cash equivalents at the beginning of the period

 

-

 

 

 

Cash and cash equivalents at the end of the period

 

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. The Company was incorporated on 7 January 2014 for the purpose of becoming the new parent undertaking of the Group.

 

 

2

Basis of preparation and accounting policies

The Company's basis of preparation and accounting policies have not changed since admission of the Company's shares to trading on AIM and as reflected in the Company's AIM Admission Document.

 

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

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

Book sales

6,474

5,772

 

Commissions

256

152

 

Other income

3

12

 

 

6,733

5,936

 

 

4

Profit  before taxation

 

 

 

Profit before taxation is after charging/(crediting):

31 March

2014

Group

31 March 2013

Group

 

 

£000

£000

 

 

 

 

 

Depreciation of property, plant and equipment

38

33

 

Amortisation of intangible assets

8

8

 

Operating lease rentals

351

343

 

Foreign currency losses

13

14

 

Share-based payment expense (note 20)

338

-

 

Employee costs (note 5)

1,015

681

 

Fees payable to the Company's auditor (note 7)

39

9

 

 

5

Employee costs including Directors

31 March

31 March

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

Wages and salaries

880

611

 

Social Security Costs

123

55

 

Pension costs

12

12

 

Other employee benefits

-

3

 

Share-based payments

338

-

 

 

1,353

681

 

 

6

Average number of employees

31 March

31 March

 

 

2014

Group

2013

Group

 

 

Number

Number

 

 

 

 

 

Management

6

6

 

Operations

14

13

 

 

20

19

 

 

 

 

7

Auditors' remuneration

31 March

31 March

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

Fees payable to the Company's auditor for the audit of the Company's consolidated financial statements

4

-

 

Fees payable to the Company's auditor for the audit of subsidiary undertakings of the Company

14

7

 

Fees payable to the Company's auditor for taxation compliance services to the Group

1

2

 

Fees payable to the Company's auditor for services related to the institutional placing offer

20

-

 

 

39

9

 

Of the total auditors' remuneration for the year £4,350 has been charged directly to equity (2013: £nil).

 

 

8

Directors' remuneration

31 March

31 March

 

 

2014

Group and Company

2013

Group and Company

 

 

£000

£000

 

 

 

 

 

Salaries and fees

220

94

 

Social Security Costs

-

-

 

Pension costs

-

-

 

 

220

94

 

 

 

 

 

Information regarding the highest paid Director which comprises salary and benefits is as follows:

100

67

 

 

9

Exceptional items of expenditure

31 March

31 March

 

 

2014

Group

2013

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 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. The expense comprises a share-based payment expense of £338,000 (note 20) and the related national insurance liability of £47,000.

 

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.

 

 

10

Financial expense

31 March

31 March

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

Interest on shareholder loan notes and director loans

259

231

 

Amortised loan expenses

31

8

 

 

290

239

 

 

 

 

31 March

31 March

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

Net finance income/(expense)

(289)

(238)

 

 

 

 

 

 

 

11

Income tax

31 March

31 March

 

 

2014

Group

2013

Group

 

 

£000

£000

 

Current tax (credit)/expense

 

 

 

Current  tax

7

-

 

Deferred tax:

-

-

 

Origination and reversal of temporary differences

(258)

-

 

Total tax(credit

(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

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

(Loss)/profit before tax

(348)

74

 

 

 

 

 

Applied corporation tax rates:

20%

20%

 

 

 

 

 

Tax at the UK corporation tax rate of 20%

(70)

14

 

 

 

 

 

Expenses not deductible for tax purposes

53

7

 

Utilisation of previously unrecognised tax losses

(39)

2

 

Origination and reversal of temporary differences

(195)

(23)

 

Total tax credit

(251)

-

 

12

(Loss)/earnings per share

31 March

31 March

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

(Loss)/profit used in calculating basic and diluted (loss)/earnings per share

(97)

74

 

 

 

 

 

Number of shares

 

 

 

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

265,813

65,807

 

 

 

 

 

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

265,813

65,807

 

 

 

 

 

Basic (loss)/earnings per share (pence per share)

(36.5)

112.4

 

 

 

 

 

Diluted (loss)/ earnings per share (pence per share)

(36.5)

112.4

 

 

 

 

 

Basic (loss)/earnings per share calculated on full number of shares in issue (pence per share)

(0.7)

0.6

 

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 is therefore the same as the basic loss per share for the year 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 2014, amounting to 13,200,325 shares, to reflect the considerable number of new shares, including placing shares, issued in late March 2014. See also note 19.

 

The Company has 1,455,675 potentially issuable shares all of which relate to the potential dilution from the Group's share-options issued to the Directors and certain employees in the year (note 20).

 

13

Investments

 

31 March

 

 

 

2014

Company

 

 

 

£000

 

 

 

 

 

At 7 January 2014

 

-

 

Nominal value of shares issued

 

28

 

Fair-value adjustment taken to merger reserve

 

2,809

 

Deferred consideration

 

2,363

 

At 31 March 2013

 

5,200

 

The investment is in Bookbank Limited and is valued at fair-value on 20 March 2014 based upon quoted prices as at the date of the Group reorganisation. This is a Level 2 valuation under the fair-value hierarchy. On 22 March 2014 the deferred consideration was satisfied in full by the issue of ordinary shares in the Company (notes 2 and 19).

 

14

Inventories

31 March

31 March

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

Books & works on paper

4,667

3,331

 

 

Books & works on paper expensed in the year

3,954

3,602

 

 

  

 

15

Trade and other receivables

31 March

31 March

31 March

31 March

 

 

2014

Group

2013

Group

2014

Company

2013

Company

 

 

£000

£000

£000

£000

 

 

 

 

 

 

 

Trade and other receivables

1,412

1,018

-

-

 

Amounts due from Group undertakings

-

-

435

-

 

Other debtors

198

63

68

-

 

Prepayments and accrued income

206

287

4

-

 

 

1,816

1,368

507

-

 

The age profile trade and other receivables comprised:

 

 

£000

 

 

 

 

Current

846

 

One month past due

251

 

Two months past due

70

 

Three months past due

12

 

Over three months past due

237

 

Provision for doubtful debts

(4)

 

 

1,412

 

As at 31 March 2014, trade receivable of £4,000 (31 March 2013 and 31st March 2012 £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.

 

 

16

Trade and other payables

31 March

31 March

31 March

31 March

 

 

2014

Group

2013

Group

2014

Company

2013

Company

 

 

£000

£000

£000

£000

 

 

 

 

 

 

 

Trade creditors

2,355

980

197

-

 

Social security and other taxes

18

17

-

-

 

Accrued expenses

686

550

372

-

 

Other creditors

52

52

-

-

 

 

3,111

1,599

569

-

 

The directors consider the carrying value of trade and other payables approximate to their fair values.

 

 

 

  

 

17

Loans and borrowings

31 March

31 March

 

 

2014

Group

2013

Group

 

Current liabilities:

£000

£000

 

 

 

 

 

Loans from shareholders

350

350

 

Loans form directors

183

-

 

 

533

350

 

 

31 March

31 March

 

2014

Group

2013

Group

Non-current liabilities:

£000

£000

 

 

 

Loans from shareholders

-

2,104

 

-

2,104

 

The directors' and shareholders' loans of £350,000 carry interest at 5 per cent per annum and are secured by floating charges over the company's assets.  Subsequent to 10th February 2013 this loan has been repayable on demand.

 

During the six months ended 30th September 2013 additional loans of £273,000 were advanced to the company. This amount carries interest at 12 per cent per year and was repayable in eight equal instalments.  By mutual agreement between the lenders and the company, repayments have been postponed, continuing to bear interest under the terms of the agreement.  On 3rd March 2014, £90,000 was repaid to the lenders.  Repayment of the remaining balance £183,000 was made after the year end.

 

18

Deferred tax

31 March

31 March

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

Included in non-current assets

258

-

 

 

 

Deferred tax gross movements

31 March

31 March

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

Opening balance

-

-

 

Credit to income statement

(258)

-

 

Closing balance

(258)

-

 

 

The deferred tax asset comprises:

31 March

31 March

 

 

2014

Group

2013

Group

 

 

£000

£000

 

 

 

 

 

Temporary differences on property, plant and equipment

-

-

 

Available losses

176

-

 

Other temporary and deductible differences

82

-

 

Closing balance

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 of £258,000 at expected tax rates in future periods.

 

19

Share capital

31 March

31 March

 

 

2014

Group and Company

2013

Group

 

 

Ordinary shares of £0.10 each

£000

£000

 

 

 

 

 

At the beginning of the year

52

52

 

Issued in the year

80

-

 

At the end of the year

132

52

 

 

Number of shares

31 March

31 March

 

 

2014

Group and Company

2013

Group

 

Ordinary shares of £0.10 each

Number

Number

 

 

 

 

 

At the beginning of the year

-

-

 

Issued in the year in exchange for Bookbank Limited shares

5,200,325

-

 

Placing of shares on admission to AIM

8,000,000

-

 

At the end of the year

13,200,325

-

 

The introduction of the new holding company constitutes a Group reconstruction and has been accounted for using merger accounting principles. Therefore the consolidated financial statements of Scholium Group plc are presented as if Scholium Group plc has always been the holding company for the Group and the share capital issued on this date treated as if issued in the earliest year presented.

 

Accordingly, the results of the Group for the entire year ended 31 March 2014 and the results for the comparative year ended 31 March 2013 are also prepared on this basis.

 

Share-issue costs of £801,000 have been deducted from the share premium in the year. A further £228,000 has been expensed (note 9).

 

20

Share-based payment arrangements

 

 

 

Scholium Group plc operates three equity-settled share based remuneration scheme for employees.

 

The first is a replacement option scheme on behalf of B Shapero and P Guillemet, both senior managers of the Company. The share options issued under this scheme are fully vested on 27 March 2014, the date of issue. They have been valued at the intrinsic value of the options on the date of issue being the market price of the Company's shares on admission to AIM of £1.00 and the share option prices of £0.154. These options are immediately exercisable.

 

The second scheme (EMI performance scheme) and the third scheme combine a long term incentive scheme and an unapproved scheme for certain senior management and executive Directors. These schemes were put in place on 27 March 2014 but effective from 1 April 2014. The options held under these schemes are subject to performance conditions and vest, subject to annual performance criteria, over three years.

 

Equity-settled share-based payments in respect of the second and third schemes are measured at fair value (excluding the effect of non-market-based vesting conditions) as determined through use of the Black-Scholes technique, at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group and Company's estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.

 

 

21

Commitments

There were no outstanding capital commitments at 31 March 2014 (31 March 2013: £nil).

 

 

22

Events after the balance sheet date

 

 

There are no significant post-balance sheet events.

 

 

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 2014 or 2013, but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for 2014 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 4 September 2014.

 

Company statement of changes in equity

Share

Share

Merger

Retained

Total

 

capital

premium

Reserve

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 Bookbank Limited (note 13)

-

-

2,809

-

2,809

Share-based payments

-

-

-

338

338

Total contributions by owners of the parent

132

9,458

2,809

338

12,737

 

 

 

 

 

 

Balance at 31 March 2014

132

9,458

2,809

165

12,564


This information is provided by RNS
The company news service from the London Stock Exchange
 
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