The Bookseller.com

13th October 2008

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Anova profit soars despite returns

14.07.08 Catherine Neilan

Anova's profit climbed by more than 340% to £825,591 in the year to end-February 2008, despite a fall in turnover of 11% to £12.6m. Profit the previous year was £186,367 on sales of £14.1m.

Robin Wood, c.e.o of Anova, said: "The top line was lower than we had expected, and there were three main reasons for that." The firm pinned the drop in sales on a higher than anticipated level of returns in the UK, the completion of the planned wind-down of Chrysalis Educational in North America, Australia and Asia, and the bankruptcy of "key customer" AMS, "which disrupted expected reprint orders" alongside a weaker US market.

Wood said it was the level of UK trade returns that had been most unexpected. "That really surprised us," he said. "We weren't alone in suffering, but it did hit our top line." He said the poor economic environment, with chain bookstores de-stocking to improve cash flows, as well as Waterstone's takeover of Ottakar's, had been responsible forreturns, which he estimated were "double what we would have expected".

The chief executive added: "We noticed early on last year that the UK was having high levels of returns, so we took costs out of the business to make sure we protected the cash flow and the bottom line."

Although he would not specify what measures had been taken, Anova cited "careful overhead costs control and an increase in publishing gross margin", which was up two percentage points to 45%, for the increase in profits.

Wood said he was confident the publisher would see a higher turnover for the current financial year. "We are looking to increase our top line, expecting higher revenues," he said. "And we will look to protect profitability—we are very pleased our gross margin is up and we will look to maintain or improve on that."

Anova recorded current net assets of £3.66m as at February 2008, compared with net liabilities of £172,627 the previous year.

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