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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Quarto Group Incorporated | LSE:QRT | London | Ordinary Share | COM STK USD0.10 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 140.00 | 120.00 | 150.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMQRT
RNS Number : 5829G
Quarto Group Inc
09 August 2016
THE QUARTO GROUP, INC.
("Quarto" or the "Company" or the "Group")
Half-Year Results for the Six Months Ended 30 June 2016
The Quarto Group, Inc. (LSE: QRT), the leading global illustrated book publisher and distribution group announces its unaudited half year results for the six months ended 30 June 2016.
Financial Highlights
Hot Features
Premium
-- Revenue of $73.3m up 8% in the period (H1 2015:
$67.7m(1) )
-- Publishing revenue of $57.8m up 16% (H1 2015:
$49.9m)
-- Adjusted(2) group operating profit of $0.4m
(H1 2015: $0.7m(1) )
-- Core publishing adjusted operating profit up
by $1.2m
-- Adjusted loss before tax of $1.1m (H1 2015:
$0.8m(1) )
-- Loss before tax of $1.4m (H1 2015: $1.6m(1)
)
-- Continued focus on reducing net debt: $8.5m
reduction to $72.5m (H1 2015: $81.0m)
-- Interim dividend maintained at 5.13c/3.93p(3)
(H1 2015: 5.13c/3.35p) (3)
Operational Highlights
-- Continued strength in the US market with
revenue up by 17% and adjusted operating
profit up by 39%. Harvard Common Press, acquired
in February, has been successfully integrated.
-- Acquisition of becker&mayer, announced on
8 August 2016, adds another creative hub
in the US with a sizeable children's publishing
element to it.
-- Disappointing result from Books & Gifts Direct,
with adjusted operating profit down $1.1m
but with recovery expected in the second
half, based on order book visibility.
-- Children's and foreign rights revenues also
growing, with Children's revenues up 36%.
[1] Restated as set out in Note 1.
(2) Throughout this document, adjusted measures are
stated before amortisation of acquired intangible
assets and exceptional items.
(3) Dividend per share is declared in cents per share
and paid in sterling translated at the spot rate
at the time of payment. For the purpose of illustration
above, we have used the closing spot rate on Friday
5 August of $1 : GBP1.306.
Commenting on the results, Chief Executive, Marcus Leaver said:
"It has been another six months of progress for the Group. Importantly, the acquisition of becker&mayer adds another creative hub in the US and continues to build long-term shareholder value.
As we have highlighted before, we are increasingly second-half weighted. Trading remains on track, with healthy order book visibility, and we remain confident of both reducing debt and delivering growth for a fourth successive year."
-S -
For further information please contact:
The Quarto Group
Michael Connole, CFO Dorothée de Montgolfier, Group Director of Communications 020 7700 9002 Bell Pottinger Elly Williamson Lucy Stewart 020 3772 2491
About The Quarto Group
The Quarto Group (LSE: QRT) is the leading global illustrated non-fiction book publisher and distribution group, whose mission is to make and sell great books that entertain, educate and enrich the lives of adults and children around the world.
Quarto creates and owns proprietary content, publishing books from a diverse portfolio of imprints that are creatively independent and expert in developing long-lasting content across specific niches of interest.
Quarto sells books across 45 countries and in 35 languages through a variety of traditional and non-traditional channels, while constantly looking for new ways to create and deliver content that people need.
Quarto employs over 400 talented people in the US, UK, Hong Kong, Australia and New Zealand. The group was founded in London in 1976. It is domiciled in the US and listed on the London Stock Exchange.
For more information, visit quartoknows.com or follow us on Twitter at @TheQuartoGroup.
This statement will be available at the registered office of the Company. A copy will also be displayed on the Company's website: quartoknows.com.
CHIEF EXECUTIVE'S STATEMENT
SUMMARY
It has been another six months of progress for the Group. Importantly, the acquisition of becker&mayer adds another creative hub in the US and continues to build long-term shareholder value.
Revenue was up by 8% at $73.3m (H1 2015: $67.7m(1) ). The adjusted(2) group operating profit for the first six months was $0.4m (H1 2015: $0.7m(1) ) continuing to reflect the strong second half seasonality of the business. The adjusted loss before tax was $1.1m (H1 2015: loss of $0.8m(1) ). The loss before tax was $1.4m (2015: loss of $1.6m(1) ), after charging amortisation of acquired intangibles of $0.3m (2015: $0.3m). There were no operating exceptional charges in the period (2015: $0.5m). Net debt at 30 June 2016 was $72.5m (H1 2015: $81.0m), a reduction of $8.5m over the twelve month period or $4.6m on a currency adjusted basis.
Dividend
The Board is pleased to recommend an interim dividend of 5.13c per share, (2015: 5.13c). Dividends are declared in cents per share and paid in sterling at the rate prevailing at the time of payment. Using the exchange rate on Friday 5 August of $1 : GBP1.306, the dividend would be 3.93p per share when paid in October
[1] Restated as set out in Note 1.
(2) Throughout this document, adjusted measures are
stated before amortisation of acquired intangible
assets and exceptional items.
OPERATING REVIEW
6 months ended 30 June
Adjusted
Revenue Operating
$m Profit/(Loss)
2016 2015 2016 2015
Quarto International Co-Editions
Group 18.5 15.1 (0.2) (1.1)
Quarto Publishing Group
USA 31.7 27.2 2.5 1.8
Quarto Publishing Group
UK 7.6 7.6 (0.1) 0.3
-------------------------------------------- ---------------- ---------------- ----------------- -----------------
Publishing Operations 57.8 49.9 2.2 1.0
Books & Gifts Direct,
ANZ 7.8 10.4 (0.4) 0.7
Quarto HK 7.7 7.4 0.9 0.8
-------------------------------------------- ---------------- ---------------- ----------------- -----------------
Segment result 73.3 67.7 2.7 2.5
============================================ ================ ================
Group Overhead (2.3) (1.8)
----------------- -----------------
Adjusted operating profit 0.4 0.7
================= =================
[1] Restated as set out in Note 1.
Publishing Operations
Quarto International Co-Editions Group has performed well in the first half of 2016, with revenue of $18.5m (2015: $15.1m) up by 23%. This excellent result reflects good trading by our children's imprints and by Ivy Press, which we acquired in March 2015 and which benefitted from some very good reprint orders in the period. Like any portfolio, some of our imprints are performing better than others but the medium term characteristics of this business' order book continue to give us good visibility. We remain confident that the business will show overall growth in revenue and profit for the full year.
Quarto Publishing Group USA has had an excellent six months. Revenue was up by 17% on the same period in 2015 and adjusted operating profit, improved by 39% from $1.8m to $2.5m. We saw continued momentum from the fourth quarter of 2015 into the first quarter of 2016, particularly with our adult art instruction/colouring book titles. As anticipated, we are now starting to see signs of retail oversaturation with this category and believe that sales of these titles will now settle to a lower, more consistent level, but one in which we expect our titles to continue to participate. In addition, we are satisfied with the integration and progress of Harvard Common Press, which we acquired in February.
Quarto Publishing Group UK generated revenue of $7.6m for the first six months of 2016, which is in line with 2015. This was against a background of sterling weakening by 7% over the comparable period in 2015. The business is performing to expectations and we expect it to show growth in revenue and profit for the full year.
Strategic Initiatives
Our children's publishing revenues for the first six months of 2016 were $12.5m, 36% higher than last year's figure for the same period of $9.2m. We believe that this upward momentum will be sustained for the full year and will be further boosted by the acquisition of the publishing assets of becker&mayer LLC, which comprises approximately 50% children's titles.
We also expect our foreign language business to show pleasing growth for 2016 despite the uncertainties in some of the markets in which we conduct business.
Trading businesses
Books & Gift Direct had a disappointing first half year, with adjusted operating profit down $1.1m, but with recovery expected in the second half, based on order book visibility.
The Executive Directors, along with local management, are looking at various options for improving the business's underlying performance and its future ownership structure. Further comment will be made at the Final Results in March 2017.
Quarto Hong Kong had a steady start to 2016 with revenue of $7.7m up 4% on last year. At this point of the year, based on its order book, we expect the business to show modest profit growth for 2016.
Group overheads
Group overheads have increased over 2015 due to the phasing of certain costs, share-based payment charges and the impact of changes in personnel.
Acquisition of becker&mayer
On the 8(th) August, we announced the acquisition of the publishing assets of becker&mayer LLC for a consideration of $9.8m together with a working capital adjustment payment capped at $1m and further deferred contingent consideration of up to $1.25m. The consideration is being paid in stages over the next three years and has been structured to minimize the impact on our debt facilities. Full details of the acquisition are set out in the separate announcement.
Capital Markets Day
There will be a Capital Markets Day on Thursday 13 October when Quarto's Leadership Team will outline the vision for the business over the next few years.
Outlook
The strength and breadth of our product offering means that we are continuing to see good organic growth. Our stated intention to develop the business by making judicious acquisitions is reflected in our acquisition of the publishing assets of becker&mayer LLC, an imprint which creates a fifth creative hub for us in the US market and a sizeable US-originated children's books business.
By the end of this year there will have been elections or constitutional upheaval in all of our main markets - the US, Australia, UK and Europe. We are increasingly second-half weighted and with good visibility over the majority of our second half revenues, we remain confident of both reducing debt and delivering growth for a fourth successive year.
On behalf of the Board, I would once again like to thank all of our people in all of our businesses for their continued hard work and commitment, as well as our entire ecosystem of partners and network of suppliers.
Marcus E. Leaver
Chief Executive
8 August 2016
THE QUARTO GROUP, INC.
Condensed Consolidated Income Statement
For the six months ended 30 June 2016
Six months Six months
to to Year ended
30 June 30 June 31 December
2016 2015 2015
(Restated)*
Unaudited Unaudited Audited
Note $'000 $'000 $'000
Continuing operations
Revenue 3 73,343 67,766 182,165
Cost of sales (53,476) (48,694) (122,803)
---------- ------------ ------------
Gross profit 19,867 19,072 59,362
Distribution costs (3,295) (3,298) (7,196)
Administrative expenses (16,132) (15,076) (34,960)
Operating profit before
amortisation of acquired
intangibles and exceptional
items 440 698 17,206
Amortisation of acquired
intangibles (330) (340) (724)
Exceptional items 4 - (474) (445)
---------- ------------ ------------
Operating profit/(loss) 3 110 (116) 16,037
Finance income 55 68 142
Finance costs (1,566) (1,585) (3,240)
---------- ------------ ------------
(Loss)/profit before
tax (1,401) (1,633) 12,939
Tax 5 921 441 (3,685)
---------- ------------ ------------
(Loss)/profit for the
period (480) (1,192) 9,254
========== ============ ============
Attributable to:
Owners of the parent (699) (1,400) 8,866
Non-controlling interests 219 208 388
---------- ------------ ------------
(480) (1,192) 9,254
========== ============ ============
(Loss)/earnings per share
(cents)
Basic 6 (3.5) (7.1) 45.0
Diluted 6 (3.4) (7.1) 44.9
* Restated as set out in Note 1
THE QUARTO GROUP, INC.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2016
Six months Six months
to to Year ended
30 June 30 June 31 December
2016 2015 2015
(Restated)*
Unaudited Unaudited Audited
$'000 $'000 $'000
(Loss)/profit for the period (480) (1,192) 9,254
---------- ------------ ------------
Other comprehensive income
which may be reclassified
to profit or loss
Foreign exchange translation
differences (1,950) (2,332) (2,467)
Cash flow hedge: losses arising
during the period (170) - (64)
Cash flow hedge: reclassification
adjustment for gain included
in profit - - 68
Tax relating to items that
may be reclassified to profit
or loss 34 - (14)
---------- ------------ ------------
Total comprehensive (expense)/income
for the period (2,566) (3,524) 6,777
========== ============ ============
Attributable to:
Owners of the parent (2,803) (3,722) 6,403
Non-controlling interests 237 198 374
---------- ------------ ------------
(2,566) (3,524) 6,777
========== ============ ============
* Restated as set out in Note 1
THE QUARTO GROUP, INC.
Condensed Consolidated Balance Sheet
At 30 June 2016
30 June 30 June 31 December
2016 2015 2015
(Restated)*
Unaudited Unaudited Audited
$'000 $'000 $'000
Non-current assets
Goodwill 39,685 40,539 40,112
Other intangible assets 1,936 1,967 1,510
Property, plant and equipment 3,560 3,292 3,368
Intangible assets: Pre-publication
costs 58,139 62,729 59,443
---------- ------------ -----------
Total non-current assets 103,320 108,527 104,433
---------- ------------ -----------
Current assets
Inventories 23,353 23,939 26,147
Trade and other receivables 42,079 43,722 57,145
Derivative financial instruments 18 - 18
Cash and cash equivalents 7,710 11,762 25,059
---------- ------------ -----------
Total current assets 73,160 79,423 108,369
---------- ------------ -----------
Total assets 176,480 187,950 212,802
========== ============ ===========
Current liabilities
Short term borrowings (5,000) (8,876) (5,000)
Derivative financial instruments (180) (23) (10)
Trade and other payables (38,229) (41,434) (63,076)
Tax payable (1,258) (944) (2,549)
---------- ------------ -----------
Total current liabilities (44,667) (51,277) (70,635)
---------- ------------ -----------
Non-current liabilities
Medium and long term borrowings (75,247) (83,906) (79,562)
Deferred tax liabilities (6,277) (6,498) (7,466)
Other payables (44) (540) (99)
---------- ------------ -----------
Total non-current liabilities (81,568) (90,944) (87,127)
---------- ------------ -----------
Total liabilities (126,235) (142,221) (157,762)
---------- ------------ -----------
Net assets 50,245 45,729 55,040
========== ============ ===========
Equity
Share capital 2,045 2,045 2,045
Paid in surplus 33,764 33,764 33,764
Retained profit and other
reserves 9,538 4,781 14,072
---------- ------------ -----------
Equity attributable to
owners of the parent 45,347 40,590 49,881
Non-controlling interests 4,898 5,139 5,159
Total equity 50,245 45,729 55,040
========== ============ ===========
* Restated as set out in Note 1.
THE QUARTO GROUP, INC.
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2016
Equity
attributable
Paid to owners
Share in Hedging Translation Treasury Retained of the Non-controlling
capital surplus reserve reserve shares earnings parent interests Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
Balance at 1
January
2016 2,045 33,764 (10) (8,064) (634) 22,780 49,881 5,159 55,040
(Loss)/profit for
the period - - - - - (699) (699) 219 (480)
Foreign exchange
translation -
differences - - - (1,968) - - (1,968) 18 (1,950)
Cash flow hedge:
losses arising
during
the year - - (170) - - - (170) - (170)
Tax relating to
items that may
be
reclassified to
profit or loss - - 34 - - - 34 - 34
------- ------- ------- ----------------------- --------- --------- ------------ --------------- -------
Total
comprehensive
(expense)/income
for the period - - (136) (1,968) - (699) (2,803) 237 (2,566)
------- ------- ------- ----------------------- --------- --------- ------------ --------------- -------
Dividends to
shareholders - - - - (1,826) (1,826) - (1,862)
Dividend paid to
non-controlling
interests - - - - - - - (498) (498)
Share based
payment
charge - - - - - 95 95 - 95
Balance at 30
June
30 2016 2,045 33,764 (146) (10,032) (634) 20,350 45,347 4,898 50,245
======= ======= ======= ======================= ========= ========= ============ =============== =======
Equity
attributable
Paid to owners
Share in Hedging Translation Treasury Retained of the Non-controlling
capital surplus reserve reserve shares earnings parent interests Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
Balance at 1
January
2015 2,045 33,764 - (5,624) (634) 17,203 46,754 4,941 51,695
Prior year
adjustment - - - 13 - (973) (960) - (960)
------- ------- ------- ----------------------- --------- --------- ------------ --------------- -------
Balance at 1
January
2015 (Restated)* 2,045 33,764 - (5,611) (634) 16,230 45,794 4,941 50,735
(Loss)/profit for
the period - - - - - (1,400) (1,400) 208 (1,192)
Foreign exchange
translation
differences - - - (2,322) - - (2,322) (10) (2,332)
------- ------- ------- ----------------------- --------- --------- ------------ --------------- -------
Total
comprehensive
(expense)/income
for the period - - - (2,322) - (1,400) (3,722) 198 (3,524)
------- ------- ------- ----------------------- --------- --------- ------------ --------------- -------
Dividends to
shareholders - - - - - (1,482) (1,482) - (1,482)
------- ------- ------- ----------------------- --------- --------- ------------ --------------- -------
Balance at 30
June
2015 2,045 33,764 - (7,933) (634) 13,348 40,590 5,139 45,729
======= ======= ======= ======================= ========= ========= ============ =============== =======
* Restated as set out in Note 1.
THE QUARTO GROUP, INC.
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2016
Year ended 31 December 2015 (Audited)
Equity
attributable
Paid to owners
Share in Hedging Translation Treasury Retained of the Non-controlling
capital surplus reserve reserve shares earnings parent interests Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
Balance at 1
January
2015 2,045 33,764 - (5,611) (634) 16,230 45,794 4,941 50,735
Profit for the
year - - - - - 8,866 8,866 388 9,254
Other
comprehensive
income
Foreign exchange
translation
differences - - - (2,453) - - (2,453) (14) (2,467)
Cash flow hedge:
losses arising
during
the year - - (64) - - - (64) - (64)
Cash flow hedge:
reclassification
adjustment for
gain
included in
profit - - 68 - - - 68 - 68
Tax relating to
items that may
be
reclassified to
profit or loss - - (14) - - - (14) - (14)
------- ------- -------- ----------- -------- -------- ------------ --------------- -------
Total
comprehensive
income for the
year - - (10) (2,453) - 8,866 6,403 374 6,777
Transactions with
owners
Dividends to
shareholders
(Note 7) - - - - - (2,502) (2,502) - (2,502)
Dividends paid to
non-controlling
interests - - - - - - - (156) (156)
Share based
payments - - - - - 186 186 - 186
------- ------- -------- ----------- -------- -------- ------------ --------------- -------
Balance at
December
31, 2015 2,045 33,764 (10) (8,064) (634) 22,780 49,881 5,159 55,040
======= ======= ======== =========== ======== ======== ============ =============== =======
THE QUARTO GROUP, INC.
Condensed Consolidated Cash Flow Statement
For the six months ended June 30, 2016
Six months Six months
to to Year ended
30 June 30 June 31 December
2016 2015 2015
(Restated)*
Unaudited Unaudited Audited
$'000 $'000 $'000
(Loss)/profit for the
period (480) (1,192) 9,254
Adjustments for:
Net finance costs 1,511 1,517 3,098
Depreciation of property,
plant and equipment 397 480 1,189
Tax (credit)/expense (921) (526) 3,685
Share based payment charge 95 - 186
Amortisation of acquired
intangibles 330 340 724
Amortisation and amounts
written off pre-publication
costs 14,186 14,688 33,258
Movement in fair value
of derivatives 47 44 (85)
Operating cash flows
before movements in working
capital 15,165 15,351 51,309
Decrease/(increase) in
inventories 2,728 (582) (1,929)
Decrease/(increase) in
receivables 13,362 10,105 (6,156)
(Decrease)/increase in
payables (24,305) (15,814) 8,724
---------- ------------ ------------
Cash generated by operations 6,950 9,060 51,948
Income taxes paid (470) (777) (1,981)
---------- ------------ ------------
Net cash from operating
activities 6,480 8,283 49,967
Investing activities
Interest received 55 68 142
Investment in pre-publication
costs (17,250) (17,612) (34,872)
Purchases of property,
plant and equipment (709) (1,096) (2,010)
Acquisition of publishing
assets/subsidiaries (130) (847) (1,614)
---------- ------------ ------------
Net cash used in investing
activities (18,034) (19,487) (38,354)
Financing activities
Dividends paid (1,826) (1,482) (2,502)
Interest payments (1,552) (1,306) (2,891)
External loans (repaid)/drawn (2,013) 3,055 (3,283)
Dividends paid to non-controlling
interests (498) - (156)
---------- ------------ ------------
Net cash (used)/from
in financing activities (5,889) 267 (8,832)
Net (decrease)/increase
in cash and cash equivalents (17,443) (10,937) 2,781
Cash and cash equivalents
at beginning of period 25,059 23,110 23,110
Foreign currency exchange
differences on cash and
cash equivalents 94 (411) (832)
---------- ------------ ------------
Cash and cash equivalents
at end of period 7,710 11,762 25,059
========== ============ ============
* Restated as set out in Note 1.
THE QUARTO GROUP, INC.
Notes to the condensed financial statements
1. Introduction
These interim consolidated financial statements are for the half year to 30 June 2016. They were approved by the board on 8 August 2016. These results are unaudited and have not been reviewed by the auditor. The comparative figures for the six months to 30 June 2015 are also unaudited and derived from the half-yearly financial report for that period, subject to certain restatement changes noted below.
The information for the year ended 31 December 2015 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.
The information for the six months to 30 June 2015 was restated as follows:
a. Classification of the amortisation of debt issuance costs
The amortisation of debt issuance costs was previously included with administrative expenses. The policy on these costs has changed to better reflect the underlying nature as a financing cost. There is no net impact to the income statement. The reclassified amount for the six months ended 30 June 2015 was $195,000.
b. Insurance arrangements and related revenue recognition
A review of certain insurance arrangements across the Group identified that in limited circumstances the Group remains the principal insurer of product shipments in transit. In these circumstances it was determined that it was inappropriate to recognise the related revenue until the shipment was receipted by the customer. This correction is limited to the Books & Gifts Direct business only. The impact of the results of the business for the six months ended 30 June 2015 was an increase in profit after tax of $195,000.
c. Allocation of overheads to inventories
A review of the inventory costing model identified that some inconsistency in the allocation of overheads to inventories. The inconsistency was limited to the Books & Gifts Direct business only and has been corrected. There was no impact on the results for the six months ended 30 June 2015.
Details of these have all been set out in the 2015 Annual Report and Accounts.
As a result of the above restatements, comparative figures for 30 June 2015 have been restated, as follows:
Consolidated Statement of Comprehensive income for the six months ended 30 June 2015
Restatements
----------------------
Reported a b c Restated
$000 $'000 $'000 $'000 $000
Operating profit before
amortisation of acquired
intangibles and exceptional
items 223 195 280 - 698
Amortisation of acquired
intangibles (340) - - (340)
Exceptional items (474) - - (474)
-------- ------ ------ ------ --------
Operating loss (591) 195 280 - (116)
Net finance costs (1,322) (195) - - (1,517)
-------- ------ ------ ------ --------
Loss before tax (1,913) - 280 - (1,633)
Tax credit 526 - (85) - 441
-------- ------ ------ ------ --------
Loss after tax (1,387) - 195 - (1,192)
======== ====== ====== ====== ========
THE QUARTO GROUP, INC.
Notes to the condensed financial statements
1. Introduction (continued)
Consolidated Balance Sheet at 30 June 2015
Restatements
-----------------------
Reported a b c Restated
$000 $'000 $'000 $'000 $000
Inventories 23,627 - 1,061 (749) 23,939
Trade and other receivables 45,103 (1,381) - 43,722
Deferred tax liability (6,802) - 79 225 (6,498)
-------- ------ ------- ------ --------
Impact on net assets 61,928 - (241) (524) 61,163
======== ====== ======= ====== ========
Impact on total equity 46,494 - (241) (524) 45,729
======== ====== ======= ====== ========
2. Basis of preparation
These interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34," Interim Financial Reporting", as adopted by the European Union.
The Directors have formed a judgement that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements. The Group has significant banking facilities. In particular, the Group has committed facilities of $90.0m through to 30 April 2019. The Group has continued to comply with its bank covenants.
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2015 as described in those financial statements.
3. Segmental analysis
Six months Six months
to to
30 June 30 June Year ended
2016 2015 31 December
(Restated)* 2015
Unaudited Unaudited Audited
Revenue $'000 $'000 $'000
Quarto International Co-Editions
Group 18,535 15,106 50,147
Quarto Publishing
Group USA 31,719 27,234 72,441
Quarto Publishing
Group UK 7,624 7,582 22,765
Books & Gifts Direct 7,747 10,427 22,060
Quarto HK 7,718 7,417 14,752
---------- ------------ ------------
73,343 67,766 182,165
========== ============ ============
* Restated as set out in Note 1.
THE QUARTO GROUP, INC.
Notes to the condensed financial statements
3. Segmental analysis (continued)
Six months Six months
to to
30 June 30 June Year ended
2016 2015 31 December
(Restated)* 2015
Unaudited Unaudited Audited
Operating profit $'000 $'000 $'000
Quarto International Co-Editions
Group (196) (1,110) 6,351
Quarto Publishing Group USA 2,498 1,812 8,884
Quarto Publishing Group UK (99) 293 3,302
Books & Gifts Direct (355) 693 1,613
Quarto HK 846 799 1,487
---------- ------------ ------------
Operating profit before amortisation
of acquired intangibles and
exceptional items 2,694 2,487 21,637
Amortisation of acquired intangibles (330) (340) (724)
---------- ------------ ------------
Segment result 2,364 2,147 20,913
Exceptional items - (474) (445)
Unallocated corporate expenses (2,254) (1,789) (4,431)
---------- ------------ ------------
Operating profit/(loss) 110 (116) 16,037
Finance income 55 68 142
Finance costs (1,566) (1,585) (3,240)
---------- ------------ ------------
(Loss)/profit before tax (1,401) (1,633) 12,939
Tax 921 441 (3,685)
---------- ------------ ------------
(Loss)/profit after tax (480) (1,192) 9,254
========== ============ ============
* Restated as set out in Note 1.
Due to the seasonality of the business, the Group's sales and segmental results are weighted towards the second half of the year.
4. Exceptional items
There were no exceptional items included in loss before tax for the period. Exceptional items for the six months ended 30 June 2015 and the year ended 31 December 2015 was comprised of corporate development costs, due diligence expenses and restructuring costs.
5. Taxation
Taxation for the six months to 30 June 2016 is based on the Group estimated underlying tax rate for the year. The tax credit for the six months also includes a deferred tax credit in respect of prior periods. We expect the full year effective rate to be substantially consistent with the prior year.
THE QUARTO GROUP, INC.
Notes to the condensed financial statements
6. Earnings per share
Six months Six months
to to
30 June 30 June Year ended
2016 2015 31 December
(Restated)* 2015
Unaudited Unaudited Audited
$'000 $'000 $'000
(Loss)/profit attributable to
owners of the parent (699) (1,400) 8,866
Amortisation of acquired intangibles
(net of tax) 244 245 526
Exceptional items - 378 441
Adjusted earnings attributable
to owners of the parent (455) (777) 9,833
========== ============ ============
Weighted average number of shares 19,696,729 19,696,729 19,696,729
Dilutive outstanding options
awards 971,614 - 38,591
---------- ------------ ------------
Diluted weighted average number
of 20,668,343 19,696,729 19,735,320
========== ============ ============
Earnings per share (cents)
Basic (3.5) (7.1) 45.0
Diluted (3.4) (7.1) 44.9
Adjusted earnings per share
(cents)
Basic (2.3) (3.9) 49.9
Diluted (2.2) (3.9) 49.8
* Restated as set out in Note 1.
7. Dividends
Six months Six months Year ended
to to 31 December
30 June 30 June 2015
2016 2015 Audited
Unaudited Unaudited $'000
$'000 $'000
Amounts arising in respect of
the period
Final dividend for the prior
period paid 1,826 1,482 1,492
Interim dividend for the year
paid - - 1,010
Total dividend paid for the
period 1,826 1,482 2,502
The proposed interim dividend of 5.13c per share is payable on 26 October 2016, to shareholders on the register on 23 September 2016 with an ex-dividend date of 22 September 2015.
The Quarto Group, Inc., as a US incorporated company, is required to collect US dividend withholding taxes on dividend distributions made to its non-US shareholders. The US dividend withholding tax is generally 30% of any dividends paid to Quarto's non-US shareholders, but this amount can potentially be reduced pursuant to an applicable income tax treaty between the US and the country of residence of the non-US shareholder. For example, under the US/UK income tax treaty, the US dividend withholding tax rate can range from nil (applicable to certain UK resident pension trusts and tax exempt entities) to 15% (applicable to UK resident individual shareholders and certain UK corporate shareholders). For US shareholders, no US dividend withholding tax is generally applicable. It should be noted that certain documentation requirements must be met by all shareholders prior to the payment of any dividends to certify their status as a US or non-US shareholder, and, if a non-US shareholder to claim any applicable benefits under the US/UK or other applicable income tax treaty. Each shareholder should consult their own tax adviser to determine whether and to what extent they may be entitled to claim a reduced amount of US dividend withholding taxes under a US income tax treaty
THE QUARTO GROUP, INC.
Notes to the condensed financial statements
8. Net debt and financing
At 30 June 2016 the Group had a US$90.0m syndicated bank facility, comprising a term loan and revolving credit facility, of which $9.8m was undrawn. During the period $5.0m was repaid against the term loan. These facilities expire on 30 April 2019 and are subject to financial covenants which were all met at 30 June 2016. The Group has adequate resources to continue in operational existence for the foreseeable future.
Net debt is reconciled as follows:
Six months Six months
to to
30 June 30 June Year ended
2016 2015 31 December
2015
Unaudited Unaudited Audited
$'000 $'000 $'000
Cash and cash equivalents 7,710 11,762 25,059
Short term borrowings (5,000) (8,876) (5,000)
Medium and long term borrowings (75,247) (83,906) (79,562)
---------- ---------- ------------
Net debt (72,537) (81,020) (59,503)
========== ========== ============
9. Principal risks and uncertainties facing the Group
There have been no changes to the principal risks and uncertainties facing the Group since the year-end. These are disclosed on page 33 of the 2015 Annual Report.
10. Financial Instruments
There are no material differences between the fair value of financial instruments and their carrying value.
11. Acquisitions and post balance sheet event
On 3 February 2016, the Group acquired the publishing assets from The Harvard Common Press Inc. for a total consideration of $1.0m. The consideration is payable in three stages, on completion, in July 2016 and July 2017.
On 8 August, the Group acquired the publishing business of becker&mayer LLC for a consideration of $9.8m, together with a working capital adjustment payment capped at $1.0m and further deferred contingent consideration of up to $1.25m. The consideration is being paid in stages over the next three years. Due to the proximity of the acquisition to the date of this report, it is not practicable to present the provisional fair value of the assets acquired, the allocation of the consideration and final transactions costs. Full details of the acquisition will be disclosed in the Annual Report for the year ended 31 December 2016.
THE QUARTO GROUP, INC.
Notes to the condensed financial statements
12. Management Statement
This Interim Management Report (IMR) has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.
The IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
Responsibility statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements, which
has been prepared in accordance with IAS 34 "Interim
Financial Reporting", gives a true and fair view
of the assets, liabilities, financial position
and profit or loss of the issuer, or the undertakings
included in the consolidation as a whole as required
by DTR 4.2.4R;
(b) the interim management report includes a fair
review of the information required by DTR 4.27R
(indication of important events during the first
six months and description of principal risks
and uncertainties for the remaining six months
of the year); and
(c) the interim management report includes a fair
review of the information required by DTR 4.28R
(disclosure of related party transactions and
changes therein)
By the order of the board
Marcus E. Leaver Michael Connole Chief Executive Officer Chief Financial Officer
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AKFDPQBKDFFK
(END) Dow Jones Newswires
August 09, 2016 02:00 ET (06:00 GMT)
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