Acquisitions are playing a big role in the next chapter at Quarto (QRT). The illustrated book publisher's turnaround was orchestrated by chairman Tim Chadwick, who left earlier this year, but the strategy to grow through acquisitions is continuing and, so far, proving fruitful.
Ivy Press, bought in March 2015, made a good contribution to the international co-editions business, where revenue was up just over a fifth to $18.5m (£14.3m). In February this year, the group also added Harvard Common Press to the US publishing division. And this month, management announced the acquisition of becker&mayer, a publishing company for which children's titles make up around half of its business. Quarto’s children’s division has been performing well with revenue up 36 per cent.
The gift business is lagging, however, reporting a $1.1m fall in adjusted operating profits. However, good order book visibility bodes well for the second half. This is actually true of the sales growth weighting across the whole business.
A lack of major one-off costs this time around kept statutory operating profits in the black but higher administrative expenses - the result of high levels of M&A acitivty - meant adjusted operating profits still fell 37 per cent.
Broker Peel Hunt expects adjusted pre-tax profits of $15.2m for the year ending December 2016, giving adjusted EPS of 52.3ȼ, up from $14.1m and 49.8ȼ in 2015.
QUARTO (QRT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 262p | MARKET VALUE: | £ 52m | |
| TOUCH: | 258-265p | 12-MONTH HIGH: | 272p | LOW: 195p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 230ȼ* | NET DEBT: | 144% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 67.8 | -1.6 | -7.1 | 3.35 |
| 2016 | 73.3 | -1.4 | -3.5 | 3.93 |
| % change | +8 | - | - | +17 |
Ex-div: 22 Sep Payment: 26 Oct *Includes intangible assets of $41.6m, or 211ȼ a share. £1=$1.3 | ||||
