Investors cheered these financial results from illustrated book publisher Quarto (QRT), sending the shares up 7 per cent to a five-year high. The heavily indebted company reduced net debt to $71m (£43m) from $81m a year earlier by selling some property and clearing out inventory.
Activist investors at Harwood Capital took control of the company in late 2012. Since then they have been busy re-organising the business and hiving off non-core assets with a “resolute focus on debt reduction”. This has resulted in a few non-cash exceptional charges but the strategy appears to be working, albeit slowly.
Although revenues fell by a few per cent, underlying pre-tax profits held steady at $11.5m. And the company continues to invest in its publishing pipeline, spending $19.5m during the year on pre-publication costs for new titles. This, says chief executive Marcus Leaver, will be “a key driver of Quarto’s growth”.
After adjusting for exceptional items and amortisation of intangible assets, the company recorded flat underlying EPS of 44¢ in 2013. Broker Peel Hunt expects EPS to rise to 49¢ in the current year, with year-end net debt falling further to $64m.
QUARTO (QRT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 175p | MARKET VALUE: | £34m | |
| TOUCH: | 170-180p | 12-MONTH HIGH: | 175p | LOW: 133p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 229¢* | NET DEBT: | 142% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
| 2010 | 176 | 7.8 | 29.2 | 7.5 |
| 2011 | 186 | 9.4 | 38.9 | 7.9 |
| 2012 | 181 | 7.1 | 25.9 | 7.9 |
| 2013 | 176 | 5.8 | 20.0 | 7.9 |
| % change | -3 | -18 | -23 | - |
Ex-div: 04 Jun Payment: 07 Jul *Includes intangible assets of £42m, or 215¢ a share £1=$1.67 | ||||
