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SCHOLIUM GROUP PLC
Annual Report • Jul 28, 2023
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Annual Report
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National Storage Mechanism | Additional information 
RNS Number : 5471H
Scholium Group PLC
28 July 2023
28 July 2023
The following amendments have been made to the Preliminary Results for the year ended 31 March 2023 announcement released on 27 July 2023 at 7:00 under RNS No 3127H.
The wording "A copy of the 2022 Annual Report" was changed to "A copy of the 2023 Annual Report" and the wording "The Company's AGM will be held at 10.00am at 106 New Bond Street, London W1S 1DN on 26 September 2022" was changed to "The Company's AGM will be held at 10.30am at 106 New Bond Street, London W1S 1DN on 26 September 2023".
All other details remain unchanged.
The full amended text is shown below:
Scholium Group plc
('Scholium' or the 'Group')
Preliminary Results for the year ended 31 March 2023
Scholium is pleased to announce the Group's audited results for the year ended 31 March 2023.
Scholium is engaged in the business of rare books, modern prints, art and collectibles. Its wholly-owned operating subsidiary, Shapero Rare Books Limited, is one of the leading UK dealers trading internationally in rare and antiquarian books and works on paper, and also trades as Shapero Modern, a leading UK dealer in the growing marketplace for modern and contemporary prints.
Operating Highlights
· An encouraging 12% increase in revenue to £9,060k from £8,129k
· Profit before tax restored last year at £177k increases to £231k this year
· Group net asset value per share continues to rise from 69p per share to 71p this year
· Group continues to trade profitably in the first three months of the current year
Financial Highlights
| Years ended 31 March (£'000) | 2023 | 2022 | |
| Revenue | 9,060 | 8,129 | |
| Gross Profit | 3,447 | 3,071 | |
| Gross Margin | 38.1% | 37.8% | |
| Profit before tax | 231 | 177 | |
| Total earnings pence per share | 1.70p | 1.13p | |
| NAV/Share | 71p | 69p |
A copy of the 2023 Annual Report (including the notice of Annual General Meeting ("AGM") will be sent to shareholders and will also be available on the Company's website in due course at www.scholiumgroup.com.
The Company's AGM will be held at 10.00am at 106 New Bond Street, London W1S 1DN on 26 September 2023.
David Harland, Chairman of Scholium, noted "The Board is delighted with the continued turnaround and remains focused on further enhancing shareholder value to build upon this pleasing result."
For further information, please contact:
| Scholium Group plc David Harland, Chairman Bernard Shapero, Chief Executive Philip Tansey, Finance Director |
+44 (0)20 7493 0876 |
| WH Ireland Ltd - Nominated Adviser Chris Fielding, Darshan Patel, Andrew de Andrade |
+44 (0)20 7220 1666 |
Chairman's Statement
I am delighted to present my statement and to report that the Group's revenues for the year ended 31 March 2023 increased by 12% to £9.1 million (2022: £8.1 million). The Board's focus on driving revenue in both books and art has been successfully pursued and has resulted in a second successive profitable year, with a profit before tax of £231k (2022: £177k).
The Board is pleased with the continuing turnaround of the business and remains focused on further enhancing shareholder value through evolving revenue channels, keener cost management, incentivising its staff and continuing to search for further opportunities in related areas.
Staff
The Group's operations continue to rely on the hard work and dedication of our small number of employees and I would like to take this opportunity of thanking them for their contribution and effort, during the year.
Current Trading and Prospects
Trading conditions initially improved in the year under review, particularly for the first eight months. The trading environment then became far more challenging for the last four. However, trading for the first three months of the current year has been profitable, which is encouraging. Although the global outlook continues to be challenging, we remain cautiously optimistic.
Strategy
I and my Board are certain that there is still significant value that is not fully reflected in these financials which we are focused on quantifying and exploiting in the coming year with, it is anticipated, enhanced shareholder value. The first part of our 'job' which has been to secure the business and stabilize its platform following its exit from the problematic Covid era is nearing an end and now the second part, the drive towards that enhanced value, is in progress.
We can never be certain of the continuing effects on our businesses of Russia's war on Ukraine, or the general political and financial destablisation of the world. Interest rates continue to rise and the effects on consumers will be severe. But all of this is not necessarily bad for us, for our position as a trader in what might be termed alternative investments could be our salvation.
DAVID HARLAND
Chairman
27 July 2023
Chief Executive Officer's Report
This has been a year of achievement but also one that has presented its challenges which I expand on below and I am most thankful for the excellent team with whom I work and who have been so dedicated and proactive over the year resulting in a second consecutive year of increased annual Group profit.
Overview
Scholium Group has built upon the success of the financial year 2021/22 with the highlights being;
- 12% increase in revenue;
- Group profitability increased for a second consecutive year;
- A return to a full calendar of major book and art fairs and exhibitions; and
- The securing of our Bond Street offices and shop through to August 2024.
The Year 2022/23
Despite the war in Ukraine, the general state of the market for Books and Art remained encouraging as the year progressed over the first eight months. However, the market turned noticeably worse over the last four months, particularly in Art. Overall revenue increased by a robust 12% to £9,060k (2021: £8,129k) which could have been significantly higher but for the last four months of the year.
The return to a full calendar year of fairs clearly benefitted sales but not in all cases, and not without a major increase in distribution costs that were severely impacted by inflationary pressures in associated costs of carriage, insurance and others.
Taking all this into account, the Group recorded an increased profit before tax of £231k (2022: £177k).
Looking forward
It is encouraging to report that the performance of the business in the first three months of the new financial year has been in line with our expectations and remains profitable. Global economic headwinds that really came to the fore in the latter part of the financial year ended March 2023 still present major challenges but a more forensic focus on costs, particularly around fairs and marketing, and the promotion of our multi-channel sales routes of retail premises, an extensive online presence and exhibitions at international trade fairs will, I believe, maintain the positive momentum going forward, in the current year.
Staff
I have a fabulous team around me without whom the positive results for the year could not have been achieved and I thank them for their dedication and hard work throughout the year.
Shareholders
I am delighted with the support and guidance received from my fellow Board members and our major shareholders and look forward to taking the Group to future success.
BERNARD SHAPERO
Group Chief Executive
27 July 2023
Strategic Report
This report provides an overview of the Group's strategy and business model; gives a review of the performance of the operating entities and of the financial position at 31 March 2023 and it sets out the principal risks to which the Group is exposed. In addition, it comments briefly on the future prospects of the business.
Principal Activities & Review of the Business
The Group comprises four legal entities; Scholium Group PLC (the "Company") which is the publicly traded holding company which incurs the central costs of the group and its three wholly owned subsidiaries, Shapero Rare Books Limited which is the only trading entity as detailed below and two dormant companies, Scholium Trading Limited and Mayfair Philatelic Limited. The four together are referred to as the "Group".
The Group is engaged in the business of dealing in rare books and fine art. The majority of the business transacted is as a dealer - buying, owning and selling items, either on its own or together with third parties who also deal as principals. The Group also conducts auctions where both its own stock and third-party consignments are available for sale. The Group generates value through its expertise, astute buying and the profitable sale of stock.
Shapero Rare Books is the main business of the Group. It is a leading international dealer in rare and collectible books and works on paper with special expertise in Natural History, Illustrated, Travel and Exploration and Literature trading under the name of Shapero Rare Books. The business also trades as Shapero Modern in modern and contemporary prints and limited editions by established artists.
Strategy & Key Objectives
The Group's strategy is to:
• build, organically or by acquisition, a portfolio of rare books and art focused businesses to enable further growth of its revenue and profit streams;
• attract individuals or teams of specialists in markets complementary to the Group's existing businesses;
• optimise working capital in existing businesses to provide funds for new business development; and,
• trade alongside other dealers in high value rare books and art and participate in the acquisition for onward sale of large consignments.
Review of the year from continuing operations
The Group's revenues increased to £9.1m from £8.1m in the prior year due to increased sales in each of the constituent businesses. The Group's core business was profit making during the both the first and second half of the financial year. Gross profit increased by 12% compared with the prior year ended 31 March 2022, and the margin made on sales rose from 37.8% last year to 38.1% in the year ended 31 March 2023 as a result of increased activity in the market and the active drive by management to improve such margins.
Total expenses rose 22% to £3,175k (2022: £2,602k) driven by direct costs with the return of art fairs and accompanying marketing costs increasing over the year. Central costs, including the costs of the Company's membership of AIM, were reduced on account of the prior year incurring a one-off director payment.
The Group's profit before tax for the year to 31 March 2023 was £231k (2022: £177k).
An analysis of the Group's profit before tax for the year to 31 March 2023 between the two halves of the financial year is set out in the table below:
| (£'000) | H1* | H2 | Full year total |
| Revenue | 4,454 | 4,606 | 9,060 |
| Gross Profit | 1,731 | 1,716 | 3,447 |
| Profit before tax | 179 | 52 | 231 |
*H1 Unaudited figures published November 2022
The value of the Group's stock at 31 March 2023 was £9,812k compared with the prior year's total of £9,584k and Group cash at 31 March 2023 was in net overdraft at £(54)k. Furthermore, the original £250k Covid bank loan, that was taken in 2020, was reduced by repayment over the year from £235k to £187k. The Group's overdraft facility of £500k remains in place and from time-to-time, depending on timing differences in significant purchases and onward sales, was drawn during the year.
Key Performance Indicators
The Group is managed by and reports on a few key performance indicators (KPIs).
The current principal KPIs are:
• sales, gross profit, gross margin and profit before tax;
• the breadth and distribution of the stock of rare books held by the Group;
• stock turnover; and
• cash position.
Key Performance Indicators (on continuing business)
| Years ended 31 March (£'000) | 2023 | 2022 | Variance | ||||||
| Revenue | 9,060 | 8,129 | 12% | ||||||
| Gross Profit | 3,447 | 3,071 | 12% | ||||||
| Gross Margin | 38.1% | 37.8% | 1% | ||||||
| Stock Turnover (months) | 21.0 | 22.8 | -8% | ||||||
| Net (borrowings) / Net cash | (241) | 466 | n/a | ||||||
| Net Profit before tax | 231 | 177 | 64% | ||||||
Group Performance
Shapero Rare Books
Shapero Rare Books Limited (SRB) traded profitably through the year ended 31 March 2023 off the back of increased activity in physical as well as on-line sales and an increasingly busy and full calendar of trade fairs. The year's sales were £9,060k, 12% above the prior year's sales of £8,129k, and gross profit at £3,447k for the year ended 31 March 2023 was, again, 12% above the prior year of £3,071k.
Direct costs, including the attendance at fairs, exhibitions, and catalogues, increased from £340k in the prior year to £815k in the year to 31 March 2023. This reflected the increasing return of exhibiting at fairs in the first full calendar year of events since exiting Covid. Administrative costs increased 4% from £1,853k in the prior year to £2,026k in the year to 31 March 2023. Financial expenses for the year were £41k (2022: £33k).
SRB therefore recorded a profit before tax of £565k compared with the £904k in the prior year.
Mayfair Philatelics - closed
The Board took the decision in the prior financial year to close the business. The results of that business have been presented and treated as discontinued business within these report and accounts and the impact of this treatment is fully explained in note 14 to these accounts. The full provision against future costs of closure taken in the prior year was sufficient to offset any incurred actual costs and consequently, with the exception of some immaterial items, there is no discontinued business impact in the results for this financial year.
Central Costs
Central costs, which are incurred by the holding company, Scholium Group PLC, include the Board members as well as those costs associated with the Group's AIM public status. The central costs were £334k in the year to 31 March 2023, a decrease of £75k from the prior year's total of £409k on account of a one-off payment in the prior year, including associated social security costs, to a former director of £90k. These costs include the cost of managing the Group, its audit, tax and professional fees, as well as the costs of maintaining the AIM membership for the Company's shares.
Year ended 31 March 2023 (£'000)
| Shapero Rare Books Books Gallery |
Scholium Trading* | Central | Continuing business | ||
| Revenue | 7,283 | 1,777 | - | - | 9,060 |
| Gross Profit | 2,841 | 606 | - | - | 3,447 |
| Gross Margin | 39% | 34% | - | - | 38% |
| Profit/(Loss) before tax | 565 | - | (334) | 231 |
*Following the closure of the legal entity in 2020 the trading name of Scholium Trading was discontinued with any residual sales and costs being taken through the results of Shapero Rare Books.
Year ended 31 March 2022 (£'000)
| Shapero Rare Books Books Gallery |
Scholium Trading | Central | Continuing business | ||
| Revenue | 6,088 | 1,823 | 218 | - | 8,129 |
| Gross Profit | 2,418 | 648 | 63 | - | 3,071 |
| Gross Margin | 39% | 35% | 29% | - | 38% |
| Profit/(Loss) before tax | 850 | 54 | (409) | 494 |
Dividend
The Board does not propose to declare a dividend for the financial year ended 31 March 2023. (2022: £Nil)
Alternative accounting presentation
The Board is focused on enhancing shareholder return. It is important therefore for an analysis of the core performance of the Group's trading business to be prepared excluding those costs that are more concerned with the non-trading elements such as the costs of maintaining its public company status and other non-directly related or one-off costs not typically expected to be incurred in a 'normal' year.
| Year ended 31 March (£'000) | 2023 | 2022 | 2021 |
| Pre-tax Profit / (Loss) for the year | 231 | 177 | (434) |
| Add back: | |||
| Central costs | 334 | 409 | 314 |
| Discontinued business losses | - | 317 | 3 |
| Depreciation & amortisation (Note 6) | 347 | 231 | 322 |
| Finance expenses (Note 11) | 41 | 33 | 30 |
| Re-stated EBITDA for the year | 953 | 1,167 | 235 |
Principal Risks & Uncertainties
Continuing supply of rare books, works on paper and prints.
By definition, rare books and other works on paper and prints are not commonly available. The availability of fresh stock of such items onto the market is often driven by major life events, such as inheritance, unrecovered debt, divorce or downsizing due to economic malaise. The business of Shapero Rare Books is reliant upon individual works and collections of works coming onto the market and upon the Group being able to access those business opportunities. There is no guarantee that fresh stock will come onto the market in sufficient quantities to meet the Group's plans for continued growth.
When works become available for sale or purchase, they are often dealt with privately and discretely and, accordingly, there is no guarantee that the Group's employees will be able to access such business opportunities or to negotiate successfully the purchase of fresh stock coming onto the market.
Reliance on key international trade fairs
A significant proportion of the Group's sales are made at international trade fairs. If these fairs were to be discontinued it would have a material effect on the ability of the Group to sell its stock. There are a limited number of stands at international trade fairs and as a result places are highly sought after. Whilst the Group have been exhibiting at these fairs for many years, there can be no certainty that it will continue to secure places in the future.
Competition
The market in the books and works on paper and prints in which the Group trades is competitive and the Group faces various competitive pressures from auctioneers as well as a wide range of dealers and smaller operators.
The Group is likely to face continued and/or increased competition in the future both from established competitors and/or from new entrants to the market. The Group's competitors include businesses with greater financial and other resources than the Group. Such competitors may be in a better position than the Group to compete for future business opportunities. If the Group is unable to compete effectively in the markets in which it operates, it could lead to a material adverse effect on the Group's business, financial condition, and operations.
Co-owned goods
In the case of high value items or collections, the Group will often acquire the items jointly with another third-party bookseller or dealer and if not expressly provided for there is a risk that the Group will not be able to sell the entire asset without the agreement of all joint owners. In this and other respects the Group relies on the honesty and integrity of other dealers. Whilst the Group takes care to deal only with established counterparties and experienced dealers who are well known to senior management and/or the Directors, there can be no guarantee that co-owners will comply with the agreed terms (including, for example not changing the items) or that such co-owners will not enter into administration or other insolvency procedure, and in the event there is a loss of the co-owned goods it is uncertain the Group could claim on its insurance policy in relation thereto.
Stock valuation and liquidity
The Group trades in rare items, which may be highly illiquid. The value of goods acquired is difficult to assess and it may not be possible for the Group to sell the assets at or above the price for which they were acquired. The value of assets may not always represent the actual resale value achievable.
Theft, loss or damage
Rare and collectible items are highly mobile goods. Furthermore, such goods are frequently transported internationally for trade shows or other marketing opportunities. Whilst precautions are taken to ensure safe passage, the Group's assets may be lost, damaged or stolen. While the Group carries specialist insurance, there is no guarantee that the Group's insurance cover will be adequate in all circumstances. Assets of the Group will be placed with third parties for sale on commission. While the Group intends to take appropriate precautions when placing assets with third parties, there is a risk that these assets outside of the Group's direct control may be stolen or replaced by unscrupulous third parties with fakes or forgeries.
Authenticity and export authority
The Directors of the Group will ensure that due diligence is undertaken on the authenticity of the assets acquired for sale. Nonetheless fakes and forgeries do exist in the market and despite due diligence the Group may acquire these believing them to be authentic. Further, the attribution of works to a writer or artist is not always an exact science, and there can be no guarantee that assets of the Group will not have been mistakenly attributed in this way. Lack of authenticity is not covered by the Group's insurance. Whilst the Group takes appropriate care when acquiring works which may be of material importance in the state of origin, there can be no guarantee that works acquired by the Group are not subject to restrictions on export or sale.
Insurance
The Group carries a specialist insurance policy under the Antiquarian Booksellers Association Insurance Scheme which covers each of the businesses. The Directors believe that the Group carries appropriate insurance for a business of its size and nature but there can be no guarantee that the extent or value of the cover will be sufficient, in relation to stock in transit or on consignment. The Directors review the Group's insurance arrangements on an annual basis and endeavour to insure its stock adequately, but there is no certainty that future claims will not fall within the exclusions under the policy or that the insurer will pay out any claim if made. Further, there can be no guarantee that the necessary insurance will be available to the Group in the future at an acceptable cost or at all.
Premises
Like many of the established dealers in the market, the Group has publicly accessible galleries in Mayfair, London from where it operates and sells both books and works of art. Although there is a risk that the increasing demand for online retail will render 'high street' premises uneconomic, the Directors believe that a central London location is an important factor in the success of the business as a whole.
Terms of sale
In the past, the contractual arrangements which the Group has entered into with clients, customers and other dealers have not always included (amongst other things) terms dealing specifically with:
1. transfer of ownership and risk,
2. contract formation,
3. price and payment,
4. limitations and exclusions of liability, and
5. governing law and jurisdiction.
There is no guarantee that the Group's arrangements with its customers will not be terminated on short notice or that the Group will not at some future time face challenges or disputes regarding the contractual or other arrangements with its clients.
If the Group became involved in a contractual dispute and/or a third party was successful in any contractual dispute with the Group, any resultant loss of revenues or exposure to litigation costs or other claims could have a material adverse effect on the Group's reputation, business, financial condition and/or operations or financial results. The Group has revised its standard terms of sale to seek to ensure that, henceforth, the arrangements with clients, customers, dealers and others will include terms dealing with each of the aforementioned areas.
Employees
The Group is reliant on a small number of key employees, and in particular the Chief Executive Officer, for their knowledge and the reliance customers place on their integrity and service. If a key employee was to leave, the business may suffer a short term decrease in performance whilst it adjusts to the level of resources available to it.
Currency risk
The Group conducts certain transactions other than in Pounds Sterling, its functional currency. Movements in foreign exchange rates may impact the Group's performance. The Group does not enter into any hedging contracts in respect of currency positions.
Pandemics and government-imposed trading restrictions
The recent Covid-19 pandemics led to the closure of the Group's retail premises for several months and the cancellation of all fairs and exhibitions. The Group has other ways to market, including the internet, telephone and post, but it may be difficult for the Group to trade profitably while such a pandemic is present.
Future prospects
The Group has traded profitably in the first three months of the current year. The core business of Shapero Rare Books is one of the leading UK rare book dealers, with a solid international customer base. Further attention will be required in order to continue to improve its return on capital employed, particularly stock turnover. The Board has implemented several initiatives to target this.
The Board continues to review the opportunity for further cost savings to improve the Group's profitability and create improved shareholder value. During the year ending 31 March 2024 the Board will assess opportunities for future property, enhanced selling channels and improving the sales of slower-moving and aged stock.
Consolidated Statement of Comprehensive Income
| Year ended | Year ended | |||||
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Note | £000 | £000 | ||||
| Revenue | 5 | 9,060 | 8,129 | |||
| Cost of Sales | (5,613) | (5,058) | ||||
| Gross profit | 3,447 | 3,071 | ||||
| Distribution expenses | (815) | (340) | ||||
| Administrative expenses | (2,360) | (2,262) | ||||
| Total expenses | (3,175) | (2,602) | ||||
| Profit from operations | 272 | 469 | ||||
| Financial (expense) | 11 | (41) | (33) | |||
| Other income | 12 | - | 58 | |||
| Profit before taxation | 231 | 494 | ||||
| Income tax (expense) | 13 | - | - | |||
| Profit for the year from continuing operations and total comprehensive income attributable to equity holders of the parent company | 231 | 494 | ||||
| Loss from discontinued operations | 14 | - | (317) | |||
| Profit for the year and total comprehensive income attributable to equity holders of the parent company | 231 | 177 | ||||
| Earnings per share (in pence): | 15 | |||||
| From continuing operations | 1.70 | 3.63 | ||||
| From discontinued operations | - | (2.33) | ||||
| Total Earnings per share | 1.70 | 1.30 |
Scholium Group Plc Company number 08833975
Consolidated Statement of Financial Position
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Note | £000 | £000 | ||||
| Assets | ||||||
| Non-current assets | ||||||
| Property, plant and equipment | 16 | 877 | 970 | |||
| Intangible assets | 17 | - | 4 | |||
| Deferred corporation tax asset | 19 | - | - | |||
| 877 | 974 | |||||
| Current assets | ||||||
| Inventories | 20 | 9,812 | 9,584 | |||
| Trade and other receivables | 21 | 2,058 | 2,219 | |||
| Cash and cash equivalents | 23 | 110 | 705 | |||
| 11,980 | 12,508 | |||||
| Total assets | 12,857 | 13,482 | ||||
| Current liabilities | ||||||
| Bank overdrafts | 23 | 164 | - | |||
| Trade and other payables | 24 | 1,973 | 2,868 | |||
| Loans and borrowings | 25 | 47 | 47 | |||
| Right-of-use asset lease liabilities | 28 | 227 | 193 | |||
| Total current liabilities | 2,411 | 3,108 | ||||
| Non-current liabilities | ||||||
| Loans and borrowings | 25 | 140 | 188 | |||
| Right-of-use asset lease liabilities | 28 | 676 | 787 | |||
| Total non-current liabilities | 816 | 975 | ||||
| Total liabilities | 3,217 | 4,083 | ||||
| Net assets/liabilities | 9,630 | 9,399 | ||||
| Equity and liabilities | ||||||
| Equity attributable to owners of the parent | ||||||
| Ordinary shares | 26 | 136 | 136 | |||
| Share Premium | 9,516 | 9,516 | ||||
| Merger reserve | 27 | 82 | 82 | |||
| Retained (loss) | (104) | (335) | ||||
| Total equity | 9,630 | 9,399 |
Consolidated Statement of Changes in Equity
| Share | Share | Merger | Retained | Total | ||
| Capital | Premium | reserve | earnings | equity | ||
| £000 | £000 | £000 | £000 | £000 | ||
| Balance at 31 March 2020 | 136 | 9,516 | 82 | (75) | 9,659 | |
| (Loss) for the year from continued and discontinued operations | - | - | - | (437) | (437) | |
| Total comprehensive income for the period | - | - | - | (437) | (437) | |
| Balance at 31 March 2021 | 136 | 9,516 | 82 | (512) | 9,222 | |
| Profit for the year from continued and discontinued operations | - | - | - | 177 | 177 | |
| Total comprehensive income for the period | - | - | - | 177 | 177 | |
| Balance at 31 March 2022 | 136 | 9,516 | 82 | (335) | 9,399 | |
| Profit for the year from continued and discontinued operations | - | - | - | 231 | 231 | |
| Total comprehensive income for the period | - | - | - | 231 | 231 | |
| Balance at 31 March 2023 | 136 | 9,516 | 82 | (45) | 9,630 |
There were no transactions with owners in the year.
| The following describes the nature and purpose of each reserve within owners' equity: | |
| Share capital | Amount subscribed for shares at nominal value. |
| Share premium | Amount subscribed for share capital in excess of nominal value less attributable share issue expenses. |
| Merger reserve | Amounts attributable to equity in respect of merged subsidiary undertakings. |
| Retained earnings | Cumulative profit/(loss) of the Group attributable to equity shareholders. |
Consolidated Statement of Cash Flows
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| £000 | £000 | |||||
| Cash flows from operating activities | ||||||
| profit before tax | 231 | 177 | ||||
| Depreciation of property, plant and equipment | 353 | 231 | ||||
| Amortisation of intangible assets | 4 | 4 | ||||
| Interest paid | 41 | 33 | ||||
| 629 | 445 | |||||
| (Increase)/decrease in inventories | (228) | (559) | ||||
| Decrease/(increase) in trade and other receivables | 161 | (530) | ||||
| Increase/(decrease) in trade and other payables | (895) | 1,560 | ||||
| Net cash generated from operating activities | (333) | 916 | ||||
| Cash flows from investing activities | ||||||
| Purchase of property, plant and equipment | (21) | (26) | ||||
| Purchase of right-to -use assets | (239) | - | ||||
| Net cash (used) in investing activities | (260) | (26) | ||||
| Cash flows from financing activities | ||||||
| Lease repayments for right-of-use assets | (77) | (165) | ||||
| Bank loan | (48) | (15) | ||||
| Interest paid | (41) | (7) | ||||
| Net cash (used) from financing activities | (166) | (187) | ||||
| Net increase/(decrease) in cash and cash equivalents | (759) | 703 | ||||
| Cash and cash equivalents at the beginning of the year | 705 | 2 | ||||
| Cash and cash equivalents at the end of the year | (54) | 705 |
Scholium Group Plc Company number 08833975
Company Statement of Financial Position
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Note | £000 | £000 | ||||
| Assets | ||||||
| Non-current assets | ||||||
| Group Investments | 18 | 2,391 | 2,391 | |||
| Deferred tax asset | - | - | ||||
| 2,391 | 2,391 | |||||
| Current assets | ||||||
| Trade and other receivables | 21 | 7,559 | 7,115 | |||
| Cash and cash equivalents | 22 | (164) | (160) | |||
| 7,395 | 6,955 | |||||
| Total assets | 9,786 | 9,346 | ||||
| Current liabilities | ||||||
| Trade and other payables | 24 | 143 | 59 | |||
| Loans and borrowings | 25 | 47 | 47 | |||
| Total current liabilities | 190 | 106 | ||||
| Non-current liabilities | ||||||
| Loans and borrowings | 25 | 140 | 188 | |||
| Total liabilities | 330 | 294 | ||||
| Net assets/liabilities | 9,456 | 9,052 | ||||
| Equity and liabilities | ||||||
| Equity attributable to owners of the parent | ||||||
| Ordinary shares | 26 | 136 | 136 | |||
| Share Premium | 9,516 | 9,516 | ||||
| Merger reserve | 27 | - | - | |||
| Retained earnings/(deficit) | (196) | (600) | ||||
| Total equity | 9,456 | 9,052 |
Statement of Changes in Company Equity
| Share | Share | Merger | Retained | Total | ||
| Capital | Premium | reserve | earnings | equity | ||
| £000 | £000 | £000 | £000 | £000 | ||
| Balance at 1 Apr 2020 | 136 | 9,516 | - | 40 | 9,962 | |
| Loss for the year | - | - | - | (231) | (231) | |
| Total comprehensive income for the period | - | - | - | (231) | (231) | |
| Write-off of merger reserve Write-off of merger reserve |
- | - | (2,809) | - | (2,809) | |
| Balance at 31 March 2021 | 136 | 9,516 | - | (191) | 9,461 | |
| (Loss) for the year | - | - | - | (409) | (409) | |
| Total comprehensive income for the period | - | - | - | (231) | (231) | |
| Balance at 31 March 2022 | 136 | 9,516 | - | (600) | 9,052 | |
| Profit for the year | - | - | - | 404 | 404 | |
| Total comprehensive income for the period | - | - | - | 404 | 404 | |
| Balance at 31 March 2023 | 136 | 9,516 | - | (196) | 9,456 |
| The following describes the nature and purpose of each reserve within owners' equity: | |
| Share capital | Amount subscribed for shares at nominal value. |
| Share premium | Amount subscribed for share capital in excess of nominal value less attributable share-issue expenses. |
| issue expenses. | |
| Merger reserve | Amounts attributable to equity in respect of merged subsidiary undertakings. |
| Retained earnings | Cumulative profit/(loss) of the Group attributable to equity shareholders. |
Company Cashflow
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| £000 | £000 | |||||
| Cash flows from operating activities | ||||||
| Profit/(Loss) before tax | 404 | (409) | ||||
| Interest paid | - | 7 | ||||
| 404 | (402) | |||||
| Decrease/(increase) in trade and other receivables | (444) | 349 | ||||
| (Decrease)/increase in trade and other payables | 84 | (26) | ||||
| Net cash generated from operating activities | 44 | (79) | ||||
| Cash flows from investing activities | ||||||
| Dividends receivable from subsidiary undertakings | - | - | ||||
| Net cash generated from investing activities | - | - | ||||
| Cash flows from financing activities | ||||||
| Bank loan | (48) | (22) | ||||
| Net cash (used)/generated from financing activities | (48) | (22) | ||||
| Net (decrease) in cash and cash equivalents | (4) | (101) | ||||
| Cash and cash equivalents at the beginning of the year | (160) | (59) | ||||
| (Overdraft)/cash and cash equivalents at the end of the year | (164) | (160) |
Notes to the Consolidated Financial Statements
1 General information
Scholium Group plc and its subsidiaries (together 'the Group') are engaged in the trading and retailing of rare books, works on paper and stamps primarily in the United Kingdom. The Company is a public company limited by shares domiciled and incorporated in England and Wales (registered number 08833975). The address of its registered office is 106 New Bond Street, London W1S 1DN.
2 Basis of preparation and accounting policies
The financial statements have been prepared in accordance with International Financial Reporting Standards including standards and interpretations issued by the International Accounting Standards Board and in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006.
The consolidated and Company financial statements have been prepared on an historical cost basis.
The preparation of financial statements in conformity with IFRSs requires the use of certain accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3 below.
The functional and presentational currency of the Group and the Company is pounds sterling. The financial information is shown to the nearest £1,000.
The principal accounting policies applied by the Group in the preparation of these consolidated financial statements for the years ended 31 March 2023 and 31 March 2022 are set out below. These policies have been consistently applied to all periods presented.
Going concern
The Directors have reviewed the activities of the Group since 1 April 2022 with a view to determining whether there are any material uncertainties which may impact whether the Group can be considered to be a going concern. The Group's primary activities can be classified as retail, and therefore the Directors have considered the Group's position in the light of the retail industry as a whole as well as the Group's own circumstances. The Group's leases on its retail premises are at relatively low rents, and in the case of the New Bond Street lease, has a relatively short term date of August 2023 which is currently subject to a negotiated 12 month short-term lease extension. The Group therefore does not have any exposure to any onerous leases. The Group has an international customer base and is not dependent on footfall generating sales from its London premises, or its presence at international fairs.
The Group in 2020 made use of a government £250,000 Covid loan, which at the year-end date, following repayments made during the year, has £187,500k outstanding. This is repayable over five years and therefore is not exposed to any liabilities where the terms of repayment may change. The Group has no creditors over one year, and no liabilities to a defined benefit pension scheme.
The Group has enjoyed a second consecutive successful year and continues to expand sales channels with its own online auctions. The Directors have prepared revised "stressed" forecasts taking account of the results to date, current expected demand, and cost savings identified. This has been conducted together with an assessment of the liquidity headroom against the cash and bank facilities including the new Covid loan.
The Directors recognise that the current difficult geo-political and resulting economic environment could impact business but have concluded that there are no material uncertainties over the Group and Company's ability to continue as a going concern. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the next 12 months, therefore it is appropriate to adopt a going concern basis for the preparation of the Financial Statements. Accordingly, these financial statements do not include any adjustments to the carrying amount or classification of assets and liabilities that would result if the Group and Company were unable to continue as a going concern.
3 Revenue
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Group | Group | |||||
| £000 | £000 | |||||
| Sales of Stock - Books | 7,042 | 6,016 | ||||
| Sales of Stock - Gallery | 1,777 | 1,823 | ||||
| Commissions | 177 | 279 | ||||
| Other income | 64 | 11 | ||||
| 9,060 | 8,129 |
4 Profit Before Taxation
| Profit before taxation is after charging/(crediting): | 31 Mar | 31 Mar | ||||
| 2023 | 2022 | |||||
| Group | Group | |||||
| £000 | £000 | |||||
| Depreciation of property, plant and equipment (note 16) | 347 | 231 | ||||
| Amortisation of intangible assets | 4 | 4 | ||||
| Foreign currency losses | - | 2 | ||||
| Employee costs (note 7) | 736 | 936 | ||||
| Fees payable to the Company's auditors (note 9) | 38 | 38 |
5 Employee costs including Directors
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Group | Group | |||||
| £000 | £000 | |||||
| Wages | 663 | 819 | ||||
| Social security costs | 50 | 70 | ||||
| Pension costs | 15 | 32 | ||||
| Other employee benefits | 8 | 15 | ||||
| 736 | 936 |
All employee costs are included in administrative expenses.
Defined contribution pension schemes.
The Group operates a defined contribution retirement benefit scheme for qualifying employees. The total cost charged of £38k (2022: £32k) represents contributions payable to the scheme by the Group at rates specified in the plan rules. As at 31 March 2023, contributions due in respect of the current reporting period of £3k (2022: £3k) not paid over to the schemes are included within payables.
6 Directors' remuneration
| ## 31 Mar | ## 31 Mar | ||
| 2023 ## Group |
2022 ## Group |
||
| ## £000 | ## £000 | ||
| ## Salaries and fees | ## 375 | ## 192 | |
| ## Social security costs | ## 43 | ## 26 | |
| ## Pension costs | ## 23 | ## 6 | |
| ## Other employee benefits | ## 15 | ## 8 | |
| ## One-off payments to an ex-Director | ## - | ## 79 | |
| ## Total | ## 456 | ## 311 | |
| ## Information regarding the highest paid Director, Bernard Shapero (2022: Jasper Allen): | |||
| ## Salary | ## 204 | ## 120 | |
| ## Benefits | ## 28 | ## 5 | |
| ## Total | ## 232 | ## 125 |
There are two (2022 - two) directors accruing a defined contribution pension liability.
The Directors are considered to be the Company's key management personnel.
7 Income tax
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| £000 | £000 | |||||
| Current tax (credit)/expense | ||||||
| Current tax | - | - | ||||
| Deferred tax | - | - | ||||
| Total tax expense | - | - | ||||
| The charge for the year can be reconciled to the profit per the income statement as follows: | ||||||
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| £000 | £000 | |||||
| Profit before tax | 291 | 177 | ||||
| Applied corporation tax rates: | 19% | 19% | ||||
| Tax at the UK corporation tax rate of 19% (2022: 19%): | 44 | 34 | ||||
| Tax payable covered by available tax losses | (44) | (34) | ||||
| Tax losses not recognised as deferred tax assets | ||||||
| Origination and reversal of temporary differences | - | - | ||||
| Taxation charge | - | - |
8 Discontinued Operations
In the year ended 31 March 2022 the Board determined that the Mayfair Philatelic business was not key to the future of the Group and in accordance with IFRS5 - Non-current assets held for sale and discontinued business, the results for Mayfair Philatelic were shown as Discontinued operations in the income statement of the 2022 year-end and the prior period; its assets and liabilities were recorded at the lower of the carrying value and fair value less costs to sell in the financial statements for that financial year. The provisions taken in the accounts for the year-ended 31 March 2022 were sufficient to absorb losses incurred in closing the business in financial year ended 2022. An analysis of the individual line items are shown below,
Financial performance and cash flow information
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Group | Group | |||||
| £000 | £000 | |||||
| Revenue | - | 680 | ||||
| Cost of sales | - | 374 | ||||
| Gross profit | - | 306 | ||||
| Distribution expenses | - | (74) | ||||
| Administration expenses | - | (409) | ||||
| Impairment charge - debtors | - | (40) | ||||
| Impairment charge - stock | - | (100) | ||||
| Profit / (loss) before tax | - | (317) | ||||
| Tax | - | - | ||||
| Loss from discontinued operations | - | (317) |
Net cash generated / (used) by the discontinued business was £nil (2022: (£77))
Assets and liabilities of discontinued business
No assets or liabilities relating to Mayfair Philatelic are included within the relevant line of the Group Consolidated statement of financial position as at 31 March 2023.
9 earnings per share
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Group | Group | |||||
| £000 | £000 | |||||
| Profit used in calculating basic and diluted earnings per share attributable to the owners of the parent | ||||||
| Continuing operations | 231 | 494 | ||||
| Discontinued operations | - | (317) | ||||
| Total | 231 | 177 | ||||
| Number of shares | ||||||
| Weighted average number of shares for the purpose of basic and diluted earnings per share | 13.6m | 13.6m | ||||
| Basic earnings per share from continuing operations (pence per share) | 1.70 | 3.63 | ||||
| Basic (loss) per share from discontinued operations (pence per share) | - | (2.33) | ||||
| Total basic and diluted earnings pence per share | 1.70 | 1.30 |
All shares shown above are authorised, issued and fully paid up. Ordinary shares carry the right to one vote per share at general meetings of the Company and the rights to share in any distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up.
10 Investment in subsidiaries
| 31 Mar | ||||||||||||
| 2023 | ||||||||||||
| Company | ||||||||||||
| £000 | ||||||||||||
| At 7 January 2014: nominal value of shares issued | 28 | |||||||||||
| Fair-value adjustment taken to merger reserve | 2,809 | |||||||||||
| Write-off of merger reserve on 31 March 2020 | (2,809) | |||||||||||
| Deferred consideration | 2,363 | |||||||||||
| Balance at 31 March 2023 | 2,391 | |||||||||||
| Balance at 31 March 2022 | 2,391 | |||||||||||
| The investments in Group undertakings are originally recorded at cost which is the fair-value of the consideration paid. At 31 March 2019 the amount was £5,200,000. The Company's merger reserve was written off as at 31 March 2020 due to the assessment of the subsidiary company's value following the adverse impact of Covid-19. As such, the investment is now valued at £2,391,000. | ||||||||||||
| The principal subsidiaries of the Company, all of which are incorporated in the UK and wholly owned have been included in the consolidated financial information, are: Shapero Rare Books Ltd (a dealer in rare books and art), Scholium Trading Ltd and Mayfair Philatelics Ltd. Scholium Trading Ltd and Mayfair Philatelics Ltd. are dormant companies, their activities having been transferred in to Shapero Rare Books Limited in 2020. | ||||||||||||
11 Deferred Corporation Tax
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Group | Group | |||||
| £000 | £000 | |||||
| Balance at the beginning of the year | - | - | ||||
| Income statement | - | - | ||||
| Balance at the end of the year | - | - | ||||
Deferred tax has historically been calculated in full on temporary differences under the liability method using the tax rates expected for future periods of 19%. The deferred tax had arisen in past periods due to the availability of trading losses. The Group, on account of recent profits, has £238,000 unutilised tax allowances available at expected tax rates for use in future periods at the year-end date (2022: £282,000).
12 Inventories
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Group | Group | |||||
| £000 | £000 | |||||
| Finished goods | 9,812 | 9,584 | ||||
| Finished goods expensed in the year | 5,613 | 5,058 |
Note that the cost of sales incurred in the year ended 31 March 2023 was £5.6million (2021: £5.1million) and there were no impairment charges taken in either year.
13 Trade & other receivables
| 31 Mar | 31 Mar | 31 Mar | 31 Mar | |||
| 2023 | 2022 | 2023 | 2022 | |||
| Group | Group | Company | Company | |||
| £000 | £000 | £000 | £000 | |||
| Trade debtors | 1,713 | 1,700 | - | - | ||
| Other debtors | 25 | 24 | - | 2 | ||
| Amounts due from Group undertaking | - | - | 7,460 | 7,102 | ||
| Prepayments and accrued income | 320 | 495 | 99 | 11 | ||
| 2,058 | 2,219 | 7,559 | 7,115 |
| The age profile of trade debtors comprises: | £000 | |||||
| Current | 700 | |||||
| One month past due | 152 | |||||
| Two months past due | 355 | |||||
| Over three months past due | 506 | |||||
| Provision for doubtful debts | - | |||||
| 1,713 | ||||||
| At 31 March 2023, trade receivables of £nil (31 March 2022 £158k, 31 March 2021 £nil) were considered past due and impaired. The other debtor balances are categorised as loans and receivables. All amounts shown under trade and receivables are due for payment within one year. Some receivables will be settled against trade payables in due course. |
Amounts due from Group undertakings are unsecured, interest-free, have no fixed date of repayment and are repayable on demand.
14 Loans and Borrowings
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Group and Company £000 |
Group and Company £000 |
|||||
| Bank loan | ||||||
| At the beginning of the year | 235 | 250 | ||||
| (Repaid) in the year | (48) | (15) | ||||
| At the end of the year | 187 | 235 |
| Bank loan liabilities maturity analysis | ||||||
| Due within one year | 47 | 47 | ||||
| Due after more than one year | 140 | 188 | ||||
| Total loans and borrowings | 187 | 235 |
15 Share Capital
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Group and Company £000 |
Group and Company £000 |
|||||
| Ordinary shares of £0.01 each | ||||||
| At the beginning of the year | 136 | 136 | ||||
| At the end of the year | 136 | 136 | ||||
| Number of shares | 31 Mar | 31 Mar | ||||
| 2023 | 2022 | |||||
| Group and Company | Group and Company | |||||
| Ordinary shares of £0.01 each | Number | Number | ||||
| At the beginning of the year | 13,600,000 | 13,600,000 | ||||
| At the end of the year | 13,600,000 | 13,600,000 | ||||
All shares shown above are authorised, issued and fully paid up. Ordinary shares carry the right to one vote per share at general meetings of the Company and the rights to share in any distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up.
16 Right of use Asset lease Liabilities
| 31 Mar | 31 Mar | |||||
| 2023 | 2022 | |||||
| Group | Group | |||||
| £000 | £000 | |||||
| Land and buildings and motor vehicle | 903 | 980 |
| Lease liability maturity analysis | ||||||
| Due within one year | 227 | 193 | ||||
| Due after more than one year | 676 | 787 | ||||
| Total right-of-use lease liabilities | 903 | 980 |
See also note 16 for the corresponding asset. All right-of-use liabilities were classified as current in the previous period. The charge for the year for depreciation of right of use assets was £317k (2021: £198k).
17 Post balance sheet date events
Property Leases
Following the year-end, the lease for the Group's property at 105 and 106 New Bond Street, which were due to come to an end in August 2023, were renegotiated with a revised term date of 31 August 2024.
Employee Option Scheme
In June 2023 the Company granted options under the Company's Enterprise Management Incentive Share Option Scheme ("EMI Option Scheme") over a total of 1,000,000 ordinary shares of 1 penny in the Company ("Option Shares") to certain employees of which 700,000 were granted to Directors as detailed within the Remuneration report. The Option Shares have an exercise price of 37.5p per share (being the closing mid-market share price on 16 June 2023), vest over the three years from the date of grant (ensuring the employees remain in continuous employment within the Group) and once vested, are exercisable at any time up to ten years after the date of grant.
There have been no other material events directly affecting the Group since the end of the financial year date.
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