Quercus Publishing

Interim figures from Quercus Publishing (QUPP) reflect an ebbing of income from best-selling Stieg Larsson's Millennium Trilogy, but fast growth elsewhere. The PLUS-quoted company increased pre-tax profit by £100,000 to £3.4m in the six months to June on turnover down 20% to £12m, but cites a 69% rise in non-Larsson UK trade revenue over the same period.

London-based Quercus, steered by entrepreneurial Australian chief executive officer Mark Smith, has reacted to the predicted falling-off of income from the Larsson thrillers by diversifying. The company launched two new imprints, Heron Books and Fletcher Books, set in train its Silver Oak joint venture with top US book retailer Barnes & Noble's Sterling Publishing arm, and scored some best sellers, including book-of-the-film 'The King's Speech' by Mark Logue, Toby Harnden's 'Dead Men Risen' about the Welsh Guards in Afghanistan and 'An Epic swindle' about Liverpool Football Club by Brian Reade. 

Smith points out that children's book sales have been doing well and stresses a sevenfold jump in first-half digital sales to £1.26 million. He says nearly all Quercus's fiction and many of its non-fiction titles are now available digitally and adds the company is making a big push to make its illustrated 'coffee table' titles ready for digital use, with the help of an inexpensive Far Eastern developer.

The company, which paid a combined maiden dividend and special Larsson dividend of 12p a share, ended June with nearly £6.4m cash. Smith says Quercus is now attracting better authors and senior executives, which he sees as a better use of funds than going for acquisitions, though he has reviewed several such possibilities. 

Broker Northland Capital sees the company, which is now debt-free, making £6.5m pre-tax profit for the full year, with £7m pre-tax on the cards for 2012. Recommended by Growth Company Investor as a long-term buy at 143p in May, the shares have eased to 125p (with a 10p spread), but are worth holding for future gains.