Interim Management Statement

24 Apr 2008 07:00

Quarto Group Inc24 April 2008 THE QUARTO GROUP, INC. Interim Management Statement Quarto (QRT.L), the fully-listed international specialist book publisher basedin London, announces its Interim Management Statement for the period sinceJanuary 1, 2008. "Revenues, for the normally quiet first quarter, ended March 31, 2008, rose by22% to £21.0 million (2007: £17.2 million), helped by a first time contributionof £3.2 million from MBI, and improved sales in the co-edition segment, whichincreased by 15% over 2007's first quarter. Gross margin overall increased to 34% (2007: 33%), and operating profit almostdoubled to £268,000 (2007: £142,000). The interest charge increased to £0.9million (2007: £0.6 million), reflecting the debt taken on for the acquisitionof MBI. The normal, seasonal loss (before amortization of non-currentintangibles, and non-recurring items) was £0.7 million (2007: £0.5 million). "These results are very encouraging," commented Laurence F Orbach, Chairman andCEO of The Quarto Group. "Looked at together with the trailing 12 months'results, they suggest that our areas of book publishing (at least) are risingabove wider economic uncertainties. Our co-edition forward order book is 27%ahead of the same time last year. The first quarter accounts, typically, for no more than 18-20% of Quarto'sannual revenues. For the trailing 12 months, ended March 31, 2008, grouprevenues increased to £103.8 million (2007: £92.9 million), operating profit, at10.4% of sales, rose by 12% to £10.7 million (2007: £9.6 million) and pre-taxprofit, on the same basis, to £7.5 million (2007: £7.3 million). EBITDA(earnings before interest, tax, depreciation, and amortization) rose to £20.5million (2007: £18.0 million). "We are not in the fiction publishing business, nor do we produce very manyhigh-profile non-fiction books. Our focus is on catering to special interestaudiences. We can only comment on our direct experience, of course, which isthat in both the US and the UK - the two major markets in which we publish andhold book inventories - the reported sales of our titles through the cashregisters actually increased during the quarter, with the notable, andanticipated, exception of the home improvement line. Generally, too, ouranecdotal information is that other publishers have had similar experiences.Where there is weakness, it is visible only in the buying patterns of someretail chains that, for their own reasons, appear to be hunkering down inresponse to a more generally subdued retailing environment. As our art printbusiness continues to languish, along with most of that industry, we have takensteps to dispose of our operation in Melbourne, Australia, and to eliminate itslosses. "Virtually across the board, co-edition revenues were robust," he continued."Taking this, together with the responses we received at two of the four mostimportant international book fairs - the Bologna Children's Book Fair, and theLondon Book Fair - and, barring the appearance of unanticipated storm clouds,these results point to the likelihood of another successful year for the group. "Our strong sales of backlist titles continue to drive Quarto's goodperformance. It's exciting to note that, in addition to the revenue that we arebeginning to derive from digital channels, our backlist looks likely to addfurther licensing income from TV production, and other media, that wish to takeadvantage of our deep well of solid content." A summarised trading statement to March 31, 2008 (before amortization ofnon-current intangibles and non-recurring items) is set out below: Three months Trailing 12 months 2008 2007 2008 2007 £000 £000 £000 £000Revenue 20,956 17,244 103,819 92,906 ======== ======== ========= ========Gross profit 7,141 5,745 37,046 32,708Overheads (6,873) (5,603) (26,360) (23,141) --------- --------- ---------- ----------Operating profit 268 142 10,686 9,567Interest (919) (600) (3,228) (2,287) ------- ------- --------- ---------Pre-tax result (651) (458) 7,458 7,280 ======= ======= ======= =======EBITDA 2,797 2,335 20,476 18,047 ======= ======= ======== ======== There has been no material change in the financial position of the Group sinceDecember 31, 2007" Notes for Editors: Quarto is an international book producer and publisher with two principalstrands of activity: it publishes, under imprints owned by the Group, books andart prints in the US, the UK, and Australia; and it creates books that arelicensed to other publishers for publication under their own imprints in manylanguages around the world. In 2007, Quarto increased revenue by 7% to £100.1 million, adjusted EBITDA by11% to £20.0 million, adjusted pre-tax profit by 5% to £7.7 million and adjusteddiluted earnings per share by 8% to 24.4p, proposing total dividends per shareup 6% at 7.15p. Enquiries: The Quarto Group, Inc.Laurence Orbach (Chairman & CEO) 020-7700 9003Mick Mousley (Finance Director) 020-7700 9004 Bankside Consultants LimitedCharles Ponsonby 020-7367 8851 This information is provided by RNS The company news service from the London Stock Exchange