Specialist book publisher Quarto is in rough seas. During the half year, US-based Borders bookstores and Australian-based RED bookstores both went into bankruptcy. But chief executive Laurence Orbach points out that "it is simply wrong to portray the book publishing industry as being in decline".
Revenues in the group's core book publishing business nudged up 3 per cent to $51.6m (£31.5m) in the half year, helped by a maiden contribution from gardening book publisher Cool Springs Press - acquired last February. Mr Orbach is forging ahead with plans to bolster growth through further acquisitions. The £4.5m purchase of Frances Lincoln, announced alongside these results, brings in a backlist of over 1,500 titles and an operation which published 150 books last year. It's also very profitable, having turned in profits of £619,000 in the year to March 2011, and will more than double the size of Quarto's UK-based book publishing business.
This should supplement the still flourishing co-edition arm, which licenses content and supplies printed copies across the world. Sales here increased 12 per cent to $21m despite the first half being the traditionally quieter period. Income from digital offerings still remains a small part of the business as e-books have yet to offer high-quality graphics capabilities which will be needed for the majority of Quarto's books.
Analysts at Collins Stewart expect 2011 EPS of 41.1¢ (29.2¢ in 2010).
QUARTO (QRT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 122p | MARKET VALUE: | £24.8m | |
| TOUCH: | 118-125p | 12-MONTH HIGH: | 167p | LOW: 120p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 166¢* | NET DEBT: | 223% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($000) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 68.9 | 100 | -0.9 | 3.35 |
| 2011 | 72.5 | 374 | 0.6 | 3.35 |
| % change | +5 | +274 | - | - |
Ex-div: 28 Sep Payment: 27 Oct *Includes intangible assets of $41.1m, or 201¢ a share £1=$1.64 | ||||
