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Scholium Group hit by sales slowdown

Last updated: 08:22 09 Feb 2015 GMT, First published: 09:22 09 Feb 2015 GMT

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Scholium Group (LON:SCHO) shares lost about a third amid profit warnings, an asset sale and the news that the chief executive is stepping down.

The company is to sell the South Kensington Books business to chief executive Philip Blackwell, who will subsequently leave his executive position.

Scholium, which floated on AIM in March last year, warned investors over expectations for core business units Shapero Rare Books and Scholium Trading.

Shapero - a specialist in antique Russian books and maps - suffered a slowdown in larger value, higher margin sales due to the impact of political instability and sanctions for its customers. As a result, the unit is unlikely to see full year revenues materially ahead of the preceding year.

The Scholium Trading business, meanwhile, is set for a shortfall in anticipated revenue and profit after a significant transaction was not able to take place as the proposed export licences were denied.

The assets due to be sold had been deemed to be of national importance, the company revealed.

Scholium said South Kensington Books and the hotel-based Ultimate Library business (which is also being sold) both generated increased returns but they are small in context of the wider group.

South Kensington Books retail business specialises in illustrated contemporary art, architecture and photography books, and according to Scholium it has become less related to the group's core collectibles businesses, Shapero Rare Books and Scholium Trading.

Blackwell, who will remain a non-executive director of Scholium, is to pay £140,000 in cash for the business which last year had turnover of £650,088 and made a £24,351 profit. The transaction terms represent a 15% premium to asset value, as at December 31 2014.

Executive chairman Jasper Allen, in a statement, said: "Despite the disappointing performance in the current year, the group remains strong with healthy levels of cash and excellent stock.

“With a clear focus on Shapero Rare Books and Scholium Trading, we are working hard to secure larger transactions, which have a significant impact on profitability, and continue to have a positive outlook for the future of the group."

On AIM, Scholium shares fell 21.5p or 31% in early deals to trade at 46.5p.

Scholium floated on London’s junior market in March 2014, raising £8mln with an IPO priced at 100p per share. At that time the IPO valued the whole business at £13.2mln, and at today’s market price the company is now worth £6.3mln.

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