Quercus (QUPP), a UK publisher, is banking on a broader portfolio and a digital push to offset dwindling revenues from its Stieg Larsson franchise. The process is not without some pain. Half-year operating profit slumped from £3.47m to only £557,000, although management maintains that the company is in the early stages of an investment cycle and that there's room for post-Larsson optimism. "We are very bullish about 2013 and 2014," said Colin Adams, newly-appointed chief financer officer and operating officer.
To broaden its range of adult and children's titles, Quercus is dipping into the cash pile built up in the Larsson boom years following sales of the hugely successful Millenium Trilogy. New publishers have been hired to bid aggressively for publishing rights, which increased administrative expenses by over £1m in the first half. Mr Adams reckons this investment will translate into higher sales in 12-18 months' time, although at the expense of margins in the short term.
Digital revenue is also on the increase, jumping 88 per cent to £2.4m, and now accounts for around a quarter of turnover. Quercus has plans to launch its own direct-to-consumer (DTC) system by the end of the year. With e-commerce capability packed into it, DTC will allow Quercus to sell print and ebooks across its suite of websites, as well as capture and utilise customer details.
Prior to these results, broker Edison expected full-year adjusted pre-tax profits of £7m and adjusted EPS of 25p (from £5.9m and 22p).
QUERCUS PUBLISHING (QUPP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 80p | MARKET VALUE: | £16.4m | |
| TOUCH: | 75-85p | 12-MONTH HIGH: | 123p | LOW: 80p |
| DIVIDEND YIELD: | 6.6% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 66p | NET CASH: | £2.27m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 12.0 | 3.44 | 12.0 | nil |
| 2012 | 9.2 | 0.57 | 2.0 | nil |
| % change | -23 | -83 | -83 | - |
