Shapero Rare Books' to End Listing on London Stock Exchange

Scholium Group, the parent of Shapero Rare Books (and little other business besides Shapero Modern Prints), will be delisting its stock from the London Stock Exchange on January 6. Ten years ago, Scholium went public, presumably expecting this to increase the market value of the company. According to their statement, the public listing is now having the opposite effect, hence the decision to once again become a private company.

In a letter from Chairman David Harland, Scholium Group said that the cost of maintaining their exchange listing was seriously reducing their profits. He explained, “...the Group has been bearing the cost of maintaining its public company status. The Board estimates that the Group could, by cancelling the admission of its Ordinary Shares to trading on AIM [the Alternative Investment Market of the London Stock Exchange], reduce its overhead by at least £75,000 [US $95,500] per annum, in respect, primarily, of professional adviser fees, stock exchange related expenses and other costs associated with the running of a quoted company. This reduction would have increased profit before taxation in the year ended 31 March 2024 by at least 25 per cent.”

Scholium continued that the recent share price of 36 pence represents a 50% discount on its net asset value. This, they said, has hampered their ability to make acquisitions. “The Board is confident that the cost savings so secured will contribute to greater profits, thereby enabling greater investment in the business and an opportunity to pay dividends to Shareholders.” When the company first went public in 2014, it paid dividends, but tough conditions for the business led them to discontinue issuing dividends a relatively short time later. For several years, it operated at a loss. After going public at a price of 1£ or 100 pence per share, it dropped soon thereafter, and has spent the great majority of the past ten years in the 30s or 40s pence per share.

That said, they are coming off a strong first half of their accounting year 2024, which runs from April 1 – September 30. It was the seventh consecutive half year of being profitable. Sales were £4,970,000 for the six months, up from £3,835 for the same period in the previous year. Pre-tax profits were £167,000 compared to £43,000 the prior year, almost a 300% increase. Nonetheless, the large increase had little effect on the stock price, and perhaps that frustration led to the decision to go private. Even with the improved profits, it's easy to see how £75,000 spent to maintain the public listing substantially reduced those profits. Nevertheless, the stock price was still only 36 pence after earnings were announced.

Six major shareholders, representing about two-thirds of the stock ownership, agreed to support delisting before it was brought to the shareholders for approval. They were Bernard Shapero, Philip Blackwell, Charles Sebag-Montelfiore, Thomas Jennings, Peter Gyllenhammar, and FIJ PTC Ltd., a corporation. The company will be delisted on January 6, 2025, while the last day of trading on the London Exchange will be January 3. That could be an issue for smaller shareholders not involved in the operations of the company. There is a procedure for another year where they will be able to have their broker sell their shares through an agent who will match them with a buyer, but that does not guarantee a buyer will be found, or what the price will be. Once that year as up, shareholders will still get financial reports from the company, but they will be on their own if they want to sell their shares. The most likely potential buyer will be the company itself or one of the major shareholders, but again, there is not a certainty of a buyer and the price offered may be disappointing. It could be complicated. Small shareholders may want to consider selling their shares by January 3 and hope for the best price possible.