Scholium Group plc                                                                               

Interim Report & Financial Statements

Six Months ended 30 September 2023

 

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

The directors of Scholium Group plc ("Scholium", the "Company" or, together with its subsidiaries, the "Group") present their report and financial statements for the Group for the six months ended 30 September 2023.

Operating highlights

·    Revenues of £3,835k for the period compared with £4,454k for the prior corresponding period

·    Gross profit of £1,511k compared to £1,731k of the prior corresponding period

·    Profit margin strength continues at 39% (2022: 39%)

·    Fifth successive half-year of profitability, £43k (2022: profit of £179k)

·    Earnings per share on a diluted basis of 0.31p (2022: 1.32p per share)

·    NAV per issued share of 71.1p (2022: 70.4p)

·    Cash position £(436)k (2022: £515k) including Covid loan of £162k (2022: £213k)

Financial Summary

Six months ended September	2023	2022	Change
(£000 unless otherwise stated)
Revenue	3,835	4,454	(14)%
Gross Profit	1,511	1,731	(13)%
Gross Margin	39.4%	38.9%
Pre-Tax Profit	43	179	(76)%
Inventories	10,258	9,482	8%
Net Cash	(436)	(515)
Net Assets	9,673	9,578	1%
NAV/Share (pence per issued share)	71.1	70.4

 

David Harland, Chair of Scholium, noted:

"We are pleased with the performance of the Group in recording its fourth consecutive profitable half-year period, given the deteriorating economic environment. Action was taken on costs from December 2022 and whilst the profit was reduced for the period this was expected as was noted in the annual report for the period ended March 2023. The on-going difficult geo-political situation naturally presents a difficult environment in which to plan but we remain cautiously positive about the coming six-month period."

The person responsible for arranging the release of this announcement on behalf of the Company is Philip Tansey, Chief Financial Officer of the Company.

 

For further information, please contact:

Scholium Group plc David Harland, Chairman Bernard Shapero, Chief Executive Officer Philip Tansey, Chief Financial Officer	+44 (0)20 7493 0876
WH Ireland Ltd - Nominated Adviser Chris Fielding Isaac Hooper	+44 (020) 7220 1666

Business Review

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

Revenue streams

The Group earned revenue in the six months to 30 September 2023 from the sale of rare books, prints and works on paper through Shapero Rare Books.

 

Strategy and key performance indicators (KPIs)

The Group's strategy is to:

•       provide stable asset-backed growth driven by the markets in which the Group operates;

•       build, either organically or by acquisition, a portfolio of art and collectibles focused businesses to enable further diversification of its revenue and profit streams; and,

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

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;

•               cash position;

•               net assets per share; and,

•               earnings per share.

Performance Review

Overall Performance

The Group made a profit before tax of £43k during the six months to 30 September 2023, a reduction from the profit of £179k for the corresponding period last year though through intensive sales efforts margins were improved.

Overall turnover was lower by 14% compared to the same period in the prior year.  This was due to the expected more difficult environment for sales and this was reflected in books sales of £2,900k (2022: £3,420k) whilst Gallery sales of art through several initiatives and exhibitions improved to £858k (2022: £808k). As a result, gross profit of £1,511k compared to the prior period total of £1,731k.

Group costs, including Distribution and Administrative expenses, decreased by 4% to £1,456k (2022: £1,518k).  This decrease resulted from the active decision to target a reduction given the challenging markets, particularly in trade fairs and exhibitions.

The Group result for the six months was a profit before tax of £43k (2022: profit of £179k).

Inventories increased by £776k to £10,258k (2022: £9,482k) in active preparation for major sales initiatives in the months following the end of this period. Group cash balances continue to fluctuate monthly in line with stock purchases and trade debtors with net overdrafts and loan balances of £(436)k at 30 September 2023 (2022: £(515k). 

Six months ended September (all figures £'000)	2023	2022	Change
Revenue	3,835	4,454*	(14)%
Gross Profit	1,511	1,731	(13)%
Gross Margin	39.4%	38.9%
Distribution Expenses	(245)	(368)	(33)%
Administrative Expenses	(1,211)	(1,150)	5%
Pre-Tax Profit	43	179	(76)%
Inventories	10,258	9,482	8%
Net Cash	(436)	(515)
Net Assets	9,673	9,578	1%
NAV/Issued Share (pence)	71.1	70.4	1%

* Total includes £25k of revenue generated by Scholium Trading

 

Alternative accounting presentation 

The Board is focused on demonstrating shareholder return and part of that desire is the analysis of the core performance of the Group's trading business without costs that are related to the non-trading elements such as public company status and other non-directly related or one-off costs not typically expected to be incurred in a 'normal' year.

Six months ended September (£'000)	2023	2022
Profit	43	179
Add back:
Central costs of the public group	197	162
Mayfair Philatelic losses	-	15
Depreciation & amortisation	182	171
Finance expenses	32	19
Operating EBITDA	455	546

 

Financial Position

The Group retains a strong balance sheet. Net assets of £9,673k (2022: £9,578k) include £10,258k of stock (2022: £9,482k) and an overdrawn cash balance of £(436)k (2022: £(515)k). The Covid loan, drawn down in October 2020 of £250k, has been further reduced by repayment to the current £162k (2022: £213k). As a result, there is an increase to 71.1p of net assets per ordinary share currently in issue (2022: 70.4p).

Shapero Rare Books & Shapero Modern

Shapero Rare Books operates from its first-floor bookshop at 106 New Bond Street, its retail premises on the ground floor of 105 New Bond Street and a separate gallery for modern prints nearby at 43 Maddox Street. The lease for both premises in New Bond Street were extended during the period though for a period of less than 12 months and consequently the Board is focused on securing suitable alternative premises in the near future.

Six months ended September (all figures £'000)	2023	2022	Change
Revenue	3,835	4,429	(13)%
Gross Profit	1,511	1,731	(14)%
Gross Margin	39%	39%
Pre-Tax Profit before Central costs	240	341

 

Group resources are balanced between its stock of rare books and prints in order to maximise sales and profit opportunities.

Sales in the period have, as presented in Note 3, been challenging for rare books though the Gallery has increased its sales above the corresponding prior period.

Distribution costs have decreased significantly as the decision, taken in December 2022, was to rationalise trade fairs and exhibitions given the expectation of more challenging times ahead. The central costs of the business include all board directors and other Group level costs including those associated with membership of the AIM market.  The central costs were £197k (2022: £162k). 

Outlook

The Group continues to focus on its two profitable businesses, rare books and modern prints, having discontinued the distraction of stamps and Scholium Trading and is looking to continue the profitable performance of the recent twenty-four months into the second half of the current financial year.  

Looking forward, the Group is viewing its trading for the second half of the year with cautious optimism.  

 

Key Risks

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

The principal risks and uncertainties affecting the continuing business activities of the Group were outlined in detail in the Strategic Report section of the annual report covering the full year ended 31 March 2023.

In preparing this interim report for the six months ended 30 September 2023, the Board has reviewed these risks and uncertainties and considers that there have been no changes since the publication of the 2023 Annual Report.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independent Review Report to Scholium Group plc

Conclusion

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2023 which comprises the condensed consolidated statement of comprehensive income, the consolidated statement of changes in equity, the condensed consolidated statement of financial position, the consolidated statement of cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2023 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the AIM Rules.

Basis for Conclusion

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

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with UK adopted IFRSs. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting".

Conclusions Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as

described in the Basis of Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern.

Responsibilities of Directors

The directors are responsible for preparing the half-yearly financial report in accordance with the AIM rules.

In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the Review of Financial Information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

 

Use of Our Report

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

 

 

 

 

Ajay Bahl BA BFP FCA

For and on behalf of

Wenn Townsend Chartered Accountants

Oxford, United Kingdom

 

29 November 2023

 

 

 

 

 

 

 

Consolidated statement of total comprehensive income (unaudited)

 

					Six-month Period Ended (Unaudited)	Six-month Period Ended (Unaudited)	Year Ended (Audited)
					30 Sept	30 Sept	31 Mar
					2023	2022	2023
				Note	£000	£000	£000
Revenue				3	3,835	4,454	9,060
Cost of Sales					(2,324)	(2,723)	(5,613)
Gross profit					1,511	1,731	3,447
Distribution costs					(245)	(368)	(815)
Administrative expenses					(1,211)	(1,150)	(2,360)
Total costs and expenses					(1,456)	(1,518)	(3,175)
Profit from operations					55	213	272
Financial income					-	-	-
Financial expense				4	(32)	(19)	(41)
Other income							-
Profit before taxation					43	194	231
Income tax (expense)				5	-	-	-
Profit for the period from continuing operations					43	194	231
Loss from discontinued operations				6	-	(15)	-
Profit for the period and total comprehensive income attributable to equity holders of the parent company					43	179	231
Earnings per share in share:
From continued operations - pence				7
Basic					0.32	1.43	1.70
Diluted					0.31	1.43	1.70
From discontinued operations - pence
Basic					-	(0.11)	-
Total earnings per share - Basic					0.32	1.32	1.70
Total earnings per share - Diluted					0.31	1.32	1.70