Quercus Publishing plc

September 27, 2010 02:00 ET


                                                                                          27 September 2010

                                          Quercus Publishing Plc

                            INTERIM RESULTS FOR THE PERIOD ENDED 30th JUNE 2010
                                Continued strong revenue and profit growth

Quercus  Publishing Plc ("Quercus", the "Group" or the "Company"), the award-winning independent  publisher
in the trade, contract, paperback and children's sectors, is pleased to present its interim results for the
six months ended 30th June 2010.


    *   Revenue nearly tripled to £15.01m (2009:£5.55m)
    *   Profit Before Tax of £3.3m, (2009: pre-tax loss of £0.26m)
    *   Gross profit margin 47.0% (2009:40.7%)
    *   UK book publishing market share increased to 1.53% (2009:0.39%).
    *   Strong half yearly cash balance of £1.52m (2009:£0.005m)
    *   Continued success of Stieg Larsson's Millennium Trilogy
    *   Non-Larsson trade division revenue growth of 24% over the period
    *   Directors expect to exceed market expectations for the full year

Six Month Review

The  past  six months have seen notable developments and achievements in both trade and contract publishing

    i.      Trade Division

The  Trade  Division  has performed significantly above expectations, predominantly due  to  the  continued
success  of  Stieg  Larsson's  Millennium Trilogy, in which Quercus holds the  worldwide  English  language
rights.  The  three books have reached and stayed in the top ten bestselling lists in the  United  Kingdom,
Ireland, South Africa, Australia, New Zealand,  Canada  and the United States for the majority of H1  2010,
delivering substantial operating and royalty income.

Importantly,  the trade list (excluding Larsson) has delivered growth over the past year  of  24%,  due  to
increased  distribution of the list across all markets, as well as authors the Company has been  developing
attracting  larger  audiences for their work. Notable successes have been If the Dead Rise  Not  by  Philip
Kerr,  Cleopatra's  Daughter by Michelle Moran, The Digital Photography Handbook by Doug  Harmon,  Let  the
Right One In by John Ajvide Linqvist, Lennox by Craig Russell and Choral Society by Prue Leith.

    ii.     Contract Division

The  Contract Publishing Division is trading on a par with the results achieved in H1 2009. The challenging
market conditions in the United States have been offset by increased activity with a wider customer base in
both  North  America  and internationally. The top five titles in the first half of  2010  were  The  Tudor
Chronicles,  History's Monsters, Speeches that Changed the World, Dream Destinations and The  Philosopher's


In  August,  a  fiction publishing joint venture, Silver Oak, was agreed with Sterling Publishing  Inc.,  a
subsidiary  of Barnes & Noble Inc, the world's largest bookseller. The first title in the programme,  Three
Seconds  by authors Roslund and Hellström, will be published in North America in January 2011. The  Company
expects Silver Oak to be a significant contributor to profits in the future.

Following  an  extensive  tender process, Pan Macmillan Australia has been  appointed  as  Quercus'  sales,
marketing  and  distribution  partner  in Australia and New Zealand ("ANZ")  from  1st  January  2011.  The
Company's  ANZ business has grown substantially with their former distributor, Murdoch Books  Pty  Ltd,  in
recent years and Pan Macmillan is well placed to drive the next stage of this market's development.

Trading  in  the  first  few  months  of  the second half of 2010  has  continued  to  exceed  Management's
expectations and the Directors are confident of achieving a strong performance for the full year.

Mark Smith, Chief Executive of Quercus Publishing Plc, commented:

"The  results for the first half of the year bode extremely well for the full year performance as  we  head
into  the  pre-Christmas selling season.  With substantial positive cash flows, the Company  can  now  take
advantage  of all the opportunities that are being offered, as well as planning long term initiatives  such
as Silver Oak, which will contribute positively to the Company's results in the future.

"The  Company  views  the developments in electronic readers and digital editions  positively  and  we  are
positioning ourselves to take advantage of the opportunities these new markets offer.

"Once  again,  I  offer my thanks and praise to Quercus' authors and staff, for their hard  work,  creative
endeavours and unswerving dedication to the Company and its future."

David Potter, Chairman, commented:

"I  am delighted to be able to report such a sparkling set of results, which have been achieved against the
trend  of  the UK book industry. Even more importantly, these results have been achieved not only from  the
continuing growth of our Stieg Larsson franchise but also from our growing stable of successful authors.

"We have continued to benefit from the increasing use of new technology to reach our readers. Stieg Larsson
is  the  first  author  ever  to  achieve  over a million e-book downloads.  Our  knowledge  of  these  new
technologies  and  our  lack of restraints from legacy business models means we are well  placed  to  fully
embrace these new channels to market.

"We  are  husbanding  carefully the resources we have gained from this strong  performance  and  the  Board
believes the Company is well positioned for further growth."

Enquiries to:

QUERCUS PUBLISHING PLC                    Tel: +44 (0)20 7291 7200
Mark Smith, Chief Executive

ST HELENS CAPITAL PARTNERS LLP            Tel: +44 (0)20 7368 6959
Mark Anwyl
Duncan Vasey

MERLIN (PR Advisers to Quercus)           Tel: +44 (0)20 7726 8400
Charles Cook
Rachel Thomas
Fiona Crosswell

This financial information has not been reviewed or audited by the Company's auditor.



As at 30th June 2010

                                                       As at               As at           As at 31st
                                                   30th June      30th June 2009        December 2009
                                                         GBP                 GBP                  GBP
FIXED ASSETS                                                                                         
Tangible assets                                      147,105             117,614              149,589
CURRENT ASSETS                                                                                       
Stocks                                             2,221,795           3,697,284            2,859,295
Debtors                                           10,927,386           6,930,553            9,231,631
Cash at bank and in hand                           1,523,322             126,122                5,406
                                                  14,672,503          10,753,959           12,096,332
CREDITORS: amounts                                                                                   
falling due within one year                      (8,013,064)         (7,287,612)          (7,742,437)
NET CURRENT ASSETS                                 6,659,439           3,466,347            4,353,895
TOTAL ASSETS LESS                                                                                    
CURRENT LIABILITIES                                6,806,544           3,583,961            4,503,484
CREDITORS: amounts falling                                                                           
due after more than one year                        (13,920)            (14,097)             (13,920)
NET ASSETS                                         6,792,624           3,569,864            4,489,564
CAPITAL AND RESERVES                                                                                 
Called up share capital                              140,493             140,493              140,493
Equity shares to be issued                            20,500              20,500               20,500
Share Premium account                              3,477,851           3,477,851            3,477,851
Profit and loss account                            3,153,780            (68,980)              850,720
SHAREHOLDERS' FUNDS -                                                                                
All Equity                                         6,792,624           3,569,864            4,489,564



6 months to 30th June 2010

                                                 6 months to        6 months to          Year to 31st
                                              30th June 2010          30th June         December 2009
                                                         GBP                GBP                   GBP
TURNOVER                                          15,005,898          5,553,153            19,132,835
Cost of sales                                    (7,953,296)        (3,292,721)          (12,225,000)
GROSS PROFIT                                       7,052,602          2,260,432             6,907,835
Selling and distribution                         (1,764,727)          (930,816)           (2,045,375)
Administration expenses                          (1,891,659)        (1,434,538)           (3,669,136)
OPERATING PROFIT/(LOSS)                            3,396,216          (104,922)             1,193,324
Interest receivable and similar income                 2,345              2,440                 3,669
Interest payable and similar charges                (98,881)          (159,767)             (330,395)
PROFIT/(LOSS) ON ORDINARY ACTIVITIES               3,299,680          (262,249)               866,598
BEFORE TAXATION                                                                                      
Taxation                                           (996,620)                  -             (251,496)
PROFIT/(LOSS) ON ORDINARY ACTIVITIES                                                                 
AFTER TAXATION AND RETAINED                        2,303,060          (262,249)               615,102
PROFIT/(LOSS) FOR THE YEAR                                                                           
BASIC EARNINGS PER SHARE                               13.11             (1.49)                  3.50
NB  no tax asset has been provided for the half-years

The Directors of Quercus Publishing Plc accept responsibility for this announcement.

Notes to Editors:

    *   Quercus Publishing Plc is an award-winning independent publisher based in London.
    *   The Company was founded by Mark Smith and Wayne Davies in May 2004 and listed on the PLUS market in
        October  2006.   Mark  Smith  is  Chief Executive and Wayne Davies is Managing  Director  (Contract
    *   Quercus was the fastest-growing trade publisher in the UK in 2009 with sales rising 133%.

Contact Information

  • Quercus Publishing plc