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Quarto shifts to intellectual property business

The company is set to focus on its intellectual property business as part of a post-profit warning restructure
April 3, 2018

Quarto (QRT) may be described as an "illustrated book publisher" in the introduction to its full-year figures, but management would rather investors perceive the enterprise as a “pure-play” intellectual property business. The company is overhauling its image after a profit warning sent its shares tumbling in 2017.

IC TIP: Sell at 163p

Increased cost pressures sent gross profit down 16 per cent, while Quarto reversed from a profit at the operating level in 2016 to a loss of $17.9m (£12.7m), reflecting hefty impairments on goodwill/intangibles, together with other reorganisation costs. The year-on-year decline is starkly illustrated in the adjusted operating margin, which contracted from 11 per cent to 4.7 per cent.  

Focus for the year ahead will centre on restructuring the parts of the business aimed at adults. Management is also hoping that the stronger performance apparent in the second half will continue through 2018 to support sales growth and margin recovery. 

QUARTO GROUP (QRT)  
ORD PRICE:163pMARKET VALUE:£33.2m
TOUCH:160-165p12-MONTH HIGH:274pLOW: 119p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:118ȼ*NET DEBT:267%
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (ȼ)Dividend per share (ȼ)
20131765.818.67.9
201417112.044.58.3
201518212.945.09.5
201615513.046.415.0
2017153-21.2-96.4nil
% change-1---
Ex-div:na   
Payment:na   
*Includes intangible assets of $22.8m, or 112ȼ a share  £1=$1.41