Quercus Publishing plc

June 05, 2009 02:00 ET

Final Results


                                      Quercus Publishing Plc
                                   ("Quercus" or the "Company")

                         Final results for the year ended 31 December 2008

Quercus Publishing Plc, the PLUS-quoted publishing company (symbol: QUPP on PLUS), today announces
its final results for the year ended 31 December 2008.

Key Performance Indicators 2008:
*       Turnover                                         £10,943,557       (2007: £8,626,192)
*       Quercus Editions Operating Profit                   £180,278       (2007:   £415,104)
*       Quercus Publishing Plc admin costs                  £151,363       (2007:   £140,368)
*       Consolidated Operating Profit                        £28,914       (2007:   £274,736)
*       Consolidated (Loss)/Profit Before Tax              (£280,683)      (2007:   £154,100)
*       Operating Earnings per Share                      1.48 pence       (2007: 3.73 pence)
*       Basic Earnings per share                        (1.95) pence       (2007: 1.01 pence)
*       New titles                                               121       (2007: 89)


Financial Review

2008,  of course, was challenging on many fronts given the deteriorating economic environment  and
the steep fall in consumer confidence in the last three months of the year.

However, there were still noteworthy positives with the business achieving total revenue growth of
27% over 2007 (2008: £10.94m v 2007: £8.63m) with both the Contract and Trade Divisions increasing
the size of their businesses.

While  the  overall level of growth was pleasing, the disruption in the UK marketplace contributed
to  a  shortfall in our anticipated Trade revenues and, as a result, total revenue fell  short  of
Directors' original expectations.

The  shortfall  in  sales was exacerbated by foreign exchange losses of £0.21m  arising  from  the
volatility  of  the  US  dollar; this resulted in a loss for the year  of  £0.24m.  (2007:  £0.11m

The  Directors are by no means satisfied with these results and have implemented both  cost-saving
and  revenue-generating measures for 2009 to ensure the business is managed in the most  effective
manner during what could be another challenging year.


The  fiction list continued to evolve and develop during the year with Stieg Larsson's  Girl  with
the  Dragon Tattoo a standout success. The second book in the trilogy was published in early  2009
and  reached  Number  1  on the UK Hardback Fiction Chart - the Company's first  number  one.  The
paperback  of  The Girl who Played with Fire publishes in July 2009 and the final instalment  hits
the  stores in October. We look forward to having all three titles in the marketplace and hope  to
replicate the success that the Millennium Trilogy has experienced throughout Europe.

Heather  O'Neil's novel, Lullabies for Little Criminals was short listed for the Orange Prize  and
ended the year as our third best selling title after Stef Penney's Costa winning The Tenderness of
Wolves.  Michelle Moran, Elena Forbes, Philip Kerr and Colin Cotterill all made significant  steps
forward during the year.


The best selling philosophy title in the UK last year was Quercus' 50 Philosophical Ideas that You
Really  Need to Know - a fine achievement for the non-fiction team. Over the course of  the  year,
the  depth  and breadth of the non-fiction offering was extended and other notable successes  were
our giant Dinosaurs book, 101 Monsters, The Secret History of the World and Fighting Ships 1750  -

There  is  a wealth of talent and creativity amongst the authors we publish and we thank them  all
for their contributions to the Company's success.


The  management  team  was strengthened during the year with the appointment  of  David  North  as
Managing  Director  of the Trade Division. David has spent his entire career in trade  publishing,
most recently as Managing Director of Pan Macmillan, the UK's 5th largest consumer publisher.

In  November  2008,  Anthony Cheetham stepped back from an executive role to become  Non-Executive
Chairman and in early 2009 decided to leave the business.

In February 2009, David Potter previously an independent Non-Executive Director, was appointed Non-
Executive Chairman.  The Board welcomes David to his new role.

The Board is confident that we now have the management team in place to execute our business plan,
return  to  profitability and continue to expand the business at an appropriate  rate,  given  the
current economic climate.


The  economic environment remains volatile, presenting an element of risk and uncertainty for  the
business in 2009 that the Directors are closely managing.

That  said,  we are pleased to report that trading for the first five months of 2009 has  met  the
Directors' expectations, with sales and margins holding up, costs under control and year  to  date
profit on target.

We  are  confident  of achieving better results in 2009, but remain watchful and  prudent  in  the
current climate.

To  support the Company's trading, a short term working capital facility has been provided to  the
Company by Pentland Group.  £460k has been utilised under this facility. The facility is due to be
repaid during 2009.


The Directors do not recommend the payment of a dividend.

Mark Smith
Chief Executive
5 June 2009

The Directors of Quercus accept responsibility for this announcement.

                               CONSOLIDATED PROFIT AND LOSS ACCOUNT
                                FOR THE YEAR ENDED 31 DECEMBER 2008

                                                   Notes              2008            2007
                                                                         £               £
TURNOVER                                             1          10,943,557       8,626,192
Cost of sales                                                   (6,071,601)     (4,687,471)
GROSS PROFIT                                                     4,871,956       3,938,721
Selling and distribution                                        (1,405,329)     (1,377,682)
Administration expenses                                         (3,437,713)     (2,286,303)
OPERATING PROFIT                                                    28,914         274,736
Interest receivable and similar income                               4,887           5,962
Interest payable and similar charges                              (314,484)       (126,598)
(LOSS)/PROFIT ON ORDINARY ACTIVITIES                              (280,683)        154,100
BEFORE TAXATION                                                                  
Taxation                                                            41,810         (41,920)
(LOSS)/PROFIT ON ORDINARY ACTIVITIES                                             
AFTER TAXATION AND RETAINED (LOSS)/PROFIT FOR                     (238,873)        112,180
EARNINGS PER SHARE                                                               
Basic earnings per share                             3          (1.95) pence      1.01 pence
Diluted earnings per share                           3          (1.95) pence      0.89 pence

All amounts relate to continuing operations.
                                    CONSOLIDATED BALANCE SHEET
                                      AS AT 31 DECEMBER 2008

                                                   Notes             2008             2007
                                                                        £                £
FIXED ASSETS                                                                     
Tangible assets                                                    159,237         181,005
CURRENT ASSETS                                                                   
Stocks                                                           3,776,355       2,007,386
Debtors                                                          8,227,632       6,395,456
Cash at bank and in hand                                           429,230         112,605
                                                                12,433,217       8,515,447
CREDITORS: amounts falling due                                                   
within one year                                                 (8,746,245)     (5,127,789)
NET CURRENT ASSETS                                               3,686,972       3,387,658
TOTAL ASSETS LESS CURRENT LIABILITIES                            3,846,209       3,568,663
CREDITORS: amounts falling due                                                   
after more than one year                                        -               (1,351,751)
PROVISIONS FOR LIABILITIES                                                       
Deferred taxation                                                  (14,097)         (5,393)
NET ASSETS                                                       3,832,112       2,211,519
CAPITAL AND RESERVES                                                             
Called up share capital                                            140,493          89,494
Equity shares to be issued                                          20,500          34,507
Share premium account                                            3,477,851       1,703,047
Profit and loss account                                            193,268         384,471
SHAREHOLDERS' FUNDS - All Equity                                 3,832,112       2,211,519

      A geographical analysis of turnover is given below:
                                                                     2008              2007
                                                                        £                 £
United Kingdom                                                   6,111,369        5,168,428
USA                                                              2,393,012        1,889,914
Canada                                                             198,731          180,199
Other                                                            2,240,445        1,387,651
                                                                10,943,557        8,626,192

                                                                     2008              2007
                                                                        £                 £
Operating Profit                                                    28,914          274,736
Depreciation of tangible fixed assets                               81,977           60,672
Amortisation of debt issue expenses                                 53,165           57,030
Share option cost                                                   47,670           25,635
Increase in stocks                                               (1,768,969)     (1,390,848)
Increase in debtors                                              (1,843,531)     (3,299,518)
Increase in creditors                                             1,858,472       2,801,363
NET CASH OUTFLOW FROM OPERATIONS                                 (1,542,302)     (1,470,930)

      Earnings  per  share  is  calculated on the basis of a loss of  £238,873  (2007:  profit  of
      £112,180)  divided  by  the weighted average number of shares in issue  for  the  period  of
      12,220,192  (2007:  11,131,615).  The  diluted earnings  per  share  is  calculated  on  the
      assumption  none  of the options are exercised this year as they are anti-dilutive.  In  the
      prior  year the diluted earnings per share was calculated on the assumption that all of  the
      options  were exercised. This would give rise to a total weighted average number of ordinary
      shares in issue at the end of the period of 12,220,192 (2007: 12,624,491). The conversion of
      the loan notes are also excluded from this calculation as they are anti-dilutive.

                                                             Year ended           Period ended
                                                          31 December 2008      31 December 2007
                                                                 £                     £
        (Loss)/profit for the financial year                 (238,873)              112,180
                                                         Earnings per share    Earnings per share
        (Loss)/profit per share                                (1.95) pence            1.01 pence
        Diluted (loss)/profit per share                        (1.95) pence            0.89 Pence
                                                           Number of shares      Number of shares
        Weighted average number of shares:                                    
        For basic earnings per share                         12,220,192             11,131,615
        Dilutive share options                                   -                   1,492,876
        Diluted weighted average number of shares            12,220,192             12,624,491


      During  the year, unsecured loans that were made to the company in year ending 31st December
      2007 were repaid to the following directors:

        Director             Date Loan granted       Amount loaned      Repayment date of the loan
        Mark Smith                  30/11/2007            £100,000                   19/12/2008
        Anthony Cheetham            30/11/2007            £250,000                   19/12/2008
        Pentland Group              30/11/2007            £400,000                   12/12/2008
        David Potter                30/11/2007             £25,000                   19/12/2008
      Barry Mosheim is a director of the company and also of Pentland Group.


      During the year, Quercus Editions Limited, the wholly owned subsidiary of Quercus Publishing
      PLC,  spent £473,866 (2007: £388,737) with Capel and Land, a literary agency.  This supplier
      is  a  related party as Georgina Capel, one of the co-owners of the agency is  the  wife  of
      Anthony  Cheetham.   To date payments made under the contracts by the  Group  have  totalled
      £1,011,986.   This  represents payment of royalty advances and royalty earnings  to  authors
      represented by the Capel & Land agency.

The above information has been extracted from the audited financial statements of the Company.

Enquiries to:

Quercus Publishing Plc

Mark Smith, Chief Executive                                      Tel: 020 7291 7200

Redleaf Communications

Emma Kane/Sanna Sumner                                           Tel: 020 7566 6700

St Helen's Capital Plc

Mark Anwyl/Duncan Vasey                                          Tel: 020 7628 5582

Contact Information

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