Publishing Technology’s profitable new chapter

BUY

13/08/2010 Robert Tyerman

George Lossius, chief executive of Oxford-based publishing software and systems concern Publishing Technology (PT), is looking forward to exploiting the new era in digital publishing for the company. PT has become profitable for the first time since it assumed its present form in 2007 and followers are now looking for solid growth.

The versatility of the AIM-quoted company is a quality Lossius likes to emphasise. Whether the objective is to provide digital systems direct to academic libraries in the USA or help publishers keep control of raw material and content in a digital environment, he insists that Publishing Technology can make it happen.

The same applies to creating attractive virtual ‘communities’ for scientists or doctors with ‘PDF warehouses’ or building systems enabling authors efficiently to receive proportionate royalties when only a chapter of a book is disseminated digitally. Chaired by serial chairman and entrepreneur Martyn Rose, the company, which last year turned a £1.2 million loss into £287,000 pre-tax profits on flat turnover of £15.3 million, is stepping up its international drive, with an office in Brazil and first South American software sales into Rio, a push into Australia and the launch of PT’s first online site in Japan at the end of August.

Lossius claims 500 publishing customers, including Random House, McGraw-Hill, Barnes & Noble and Hachette. He says 50 per cent of volume in the UK has used a Publishing Technology product and suggests that the

US proportion is ‘15 to 20 per cent and rising’.

According to Lossius, the US market is now where the company is having its biggest success. ‘US publishers did not cancel their capital expenditure programmes during the credit crunch, but UK publishers did,’ he contends.

Publishing Technology, which has spent more than £6 million in three years on new products and services and ended last year with £1.2 million cash, is looking for ‘complementary’ acquisitions to bolster organic growth, says Lossius. He stresses that the company, which is generating cash, has ‘no need’ to tap investors.

Today’s Publishing Technology is essentially the product of a reverse takeover three years ago, which brought academic online publishing specialist Ingenta together with Vista, provider of management systems for some major publishing groups and at the time newly headed by Lossius. PT is a versatile enterprise, whose skills range from processing rights and royalties for ‘Harry Potter’ author JK Rowling to helping publishers understand and distribute electronically archived ‘metadata’.

‘The two companies needed each other,’ reflects Lossius. ‘Ingenta was moving into higher-value, low-volume products and needed stronger management.’

Both parts of the business have since then invested ‘heavily’ in new products, including online publishing platforms. Lossius maintains that the old Vista, now rebranded as ‘advance’, is thriving.

He argues, ‘Publishing Technology scores because it shows publishers that they need to be flexible as regards print and digital.’ The company claims that its post-2007 investment has provided it with what Lossius describes as four ‘world-beating suites’.

ICS (Information Commerce Software) aims to maximise the value of a client’s digital assets, for example enabling a publisher to hold a law book broken down into chapters, paragraphs, quotations or even the table of contents. This would help the publisher sell or ‘re-purpose’ each of these singly or as part of a different package, thus increasing potential revenue from a given set of assets.

PT calls its advance range of products a ‘state-of-the-art modular business solution’. Its integrated modules include ‘Product Manager’, ‘Contract’, ‘Rights and Royalties’, ‘Order to Cash’, ‘Relationship Manager’ and ‘Information Commerce’.

The group’s pub2web product is an online, multi-content platform that can host journals, books, manuals, conference proceedings, podcasts and other features, which users can search or browse. PT calls this a hosting platform supporting all the information that publishers publish and says it provides them with such online publishing essentials as content conversion, discovery, authentication and customer support.

IngentaConnect, an existing product now upgraded, hosts the content of more than 270 publishers in the digital arena. The aim is for IngentaConnect to enable large publishers to have multiple platforms for their content and to provide a starting point for smaller publishers.

Publishing Technology did well to hold its own in 2009’s tough climate and house broker Arbuthnot reckons 2010 could show a near 250 per cent pre-tax profits leap to £1 million. Lossius says a dividend is not on the cards just yet, but stresses ‘we are not averse’ to paying one in due course.

The shares, which fell from 217.5p in 2006, before the company’s transformation, to 37.5p early last year, remain unloved, having more recently fallen from 97.5p to 74p. But, given the change in fundamental performance and prospects, bolder spirits could find this a punt that pays off well in time.

Tags: AIM, Growth Stocks, Turnaround

Sector: Software & Computer Services

Companies: Publishing Technology

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