Despite a turbulent year in the publishing industry, Laurence Orbach, chief executive of specialist publishing business
The niche nature of Quarto's titles means that the company's books are also displayed in specialist shops - like DIY and hobby stores - which helped drive sales from its core publishing business up 6 per cent to $123.6m (£78.2m) in 2011. More than 60 per cent of the unit's sales were generated from backlist titles and Mr Orbach says that two of the company's top five bestsellers last year were also in the top five bestsellers' list in 2010. In fact, with each book generating sales for about five years, the backlist should continue to drive growth. This has certainly helped propel co-edition sales, which have inched up 4 per cent to $62.5m, with over two-thirds of revenues coming from re-prints.
Quarto is trading comfortably within current credit lines, including a revolving credit facility of $95m running until April 2015 and a $50m private placement, part of which is due for repayment in December. Year-end net debt of $81.4m represents 2.09 times underlying cash profits.
Collins Stewart expects 2012 EPS of 37.1¢ (38.9¢ in 2011), reflecting a higher tax charge.
|ORD PRICE:||152p||MARKET VALUE:||£31.1m|
|DIVIDEND YIELD:||5.2%||PE RATIO:||6|
|NET ASSET VALUE:||195¢||NET DEBT:||175%|
Quarto's specialist focus has allowed the business to remain relatively robust. On a modest six times earnings and offering a yield of 3.3 per cent, the shares rate a buy.
Last IC view: Good value, 122p, 16 August 2011