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Quercus beats expectations, reduces losses
15.09.09 | Catherine Neilan
Quercus saw its revenue increase by 54% over the six months to 30 June 2009, up to £5.55m from £3.6m for the same period in 2008. The publisher's operating loss was reduced from £490,000 to £105,000.
Mark Smith, chief executive of Quercus, said the results had "exceeded our expectations". He added: "In the current economic climate and what is traditionally the quieter part of the year, these first half results are particularly pleasing and demonstrate the further development of the company’s publishing strategy.'
Cost of sales increased from £1.7m to £3.3m, which the company put down to a "prudent" re-evaluation of the value of its intellectual property. Pretax losses more than halved to £260,000 from £590,000 however.
The company's market share also grew, from 0.21% to 0.33%, with sales as measured by BookScan up 52% at a time when the total market decreased by 1.3%. This was partly thanks to its first-ever number one in the UK's hardback adult fiction charts with the second in Stieg Larsson’s Millennium Trilogy, The Girl Who Played With Fire.
Smith added: "The revenue increase in both our contract and trade businesses, coupled with the cost cutting programme that was implemented at the end of 2008 has reduced the half year loss substantially. These results have exceeded directors’ expectations and praise is in order for all our staff who have pulled together in a difficult and challenging environment." At the end of 2008, Quercus confirmed staff earning £30,000 or more had taken a voluntary pay cut, believed to be 10%.
David Potter, chairman, said: "These stronger results position us well for the continued challenge in the 'credit crunch' environment, and the board believes that trading conditions will continue to be difficult for some while to come . . . We are still running on a 'belt tightened' basis and I would like to thank the management and staff for their dedication during a very busy period."
In its last full-year results, announced in June, Quercus revealed that its turnover had risen from £8.6m to £10.9m, while operating profit fell to £28,914. However, after interest payments of £314,484 the company made a pretax loss of £280,683. Over 2007, the company made a pretax profit of £154,100, which itself was half what it made in 2006.
Earlier this year the company set up a short term working capital facility with its investor the Pentland Group, in addition to the £1.75m it raised from a share issue at the end of 2008. This followed claims from agents that payments were failing to emerge satisfactorily. Smith said Quercus was "on schedule" with paying back the loan, but declined to give specifics. He added: "We’re pretty much there with catching up with [the agents]. We have made great headway in dealing with that issue."