The Bookseller.com

1st December 2008

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Quercus sets £20m target

29.04.08 Philip Jones

Quercus Publishing has set out to reach annual sales of £20m in three years, as it aims to grow from a small publisher to a medium-sized one. Results put out today showed that the company saw sales rise a massive 140% in 2007, with trade sales up by 194%, thanks to its two prize winning authors, Stef Penney and Peter Temple. However, operating profits remained static at £0.4m, with group profits actually halved at £0.15m.

Sales rose to £8.6m, compared with £3.6m a year earlier. Both Publishing divisions contributed equally to the result: Contract Publishing recorded growth of 82% to £3.1m (2006: £1.7m), and Trade Publishing advanced by 194% to £5.5m (2006: £1.8m).

Despite the startling increase in turnover, the trading company's operating profits were static at £0.4m, with group profits down to £0.15m compared to £0.32m in 2006. The £0.4m figure represents a ratio of operating profit to sales of 4.8%, compared with 11.5% a year earlier. The group said that the relatively modest level of profit recorded in 2007 reflected the management's decision to invest heavily in personnel, infrastructure and marketing to prepare for the next stage in the life of the company. Marketing costs in 2007, at £527,200, (2006, £202,923) represented 10% of trade sales turnover, while the business created 21 new jobs between October 2006 and December 2007. The total number of employees at the year's end was 34.

Mark Smith, chief executive, said: "This has been a transformational year for Quercus, with both our Contract and Trade Divsions contributing handsomely to revenue growth of 140% over the prior year. The board believes that Quercus is now well placed for further growth and over the next three years the group will continue to evolve, build the publishing programmes and further develop an enhanced source of revenues from international licensing."

Smith said the defining achievement of 2007 was to prepare the company for a new level of activity as a medium sized publisher with annual sales exceeding £10m. "Management believe that we now have in place the strategy, the organisational structure and the publishing programmes to take the business to £20m over the next three years."

He added: "Prospects for the year as a whole are inevitably clouded by the threat of reduced consumer spending in the wake of the credit crisis. But with the benefit of the major investments in staff and marketing made last year, we nevertheless expect to see a recovery in the ratio of operating profits to sales."

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