Quarto looks to cut debt after 2012 revenue fall

Quarto has revealed plans to cut debt by divesting of businesses "detracting from shareholder value", as it reported 2012 results showing falls in revenue and profit.

The illustrated book publisher's revenue for the year ending 31st December 2012 stood at $180.9m (£121.5m), down from $186.1m (£124.9m) the previous year, a fall of 2.8%. Pretax profit for the year was $7.1m (£4.8m), down from $9.4m (£6.3m) a decline of 24.5%.

Marcus Leaver [pictured], who took over the role of c.e.o. from founder and major shareholder Laurence Orbach in November 2012, said in a statement that the results showed "fundamental resilience".

He said: "These 2012 results display the fundamental resilience of the Quarto businesses even in challenging times. I believe that good foundations are in place here for a business capable of rewarding shareholders and employees alike. In order to do so, it is my intention to build an agile, product-led marketing and sales organisation for a dynamic and fragmented marketplace."

Tim Chadwick, who became chairman in November, outlined some of the changes which were being introduced at Quarto following what he described as a "regrettable and bruising" process last year.

These involved appointing new board members, including Max Lesser from investment advisory business Worsley Associates LLP, and taking on new lawyers, brokers and financial advisors. Chadwick also said the company would look into being restructured as a conventional UK plc and cease being governed by Delaware law, and divest of businesses detracting from shareholder value in an attempt to reduce debt, which stood at the end of 2012 at $81m (£54.4m).

Leaver said the company would now be structured in four distinct businesses: Quarto International Co-editions UK; Quayside Publishing Group USA; Aurum Publishing Group UK; and Lifetime/Premier Display Marketing, Australia and New Zealand.

He said: "The crucial issue for Quarto is not one of platform or of format but of channel. How the consumer wants to read our content is up to them. Our job is to make this content available to them in an economically viable format with the quality that we have historically been known for on whichever platform they desire. Such an approach is not something new, this is fundamentally our job at Quarto as publishers: the sales, marketing and distribution of content."

Digital revenues at the company rose 29% to $2.7m (£1.8m), up from $2.1m (£1.4m) in 2011, accounting for 3.3% of applicable revenues.

Leaver added: "This year, 2013, will be a year of resolute focus on the operational underpinnings of Quarto that will allow us to grow the business in 2014 and beyond. Cash generation and debt reduction will be key. We will continue Quarto's relentless quest to make quality products that entertain, educate and enrich the lives of our readers but now with a renewed focus on marketing and selling both via existing channels and by  discovering new ones. This year will see fine-tuning to already solid foundations, allowing focus on revenue and profit growth in years to come."