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PUBLISHING TECHNOLOGY PLC INTERIM RESULTS

CEO Strategic Review fundamentally re-positions the Group on a stronger growth path

Publishing Technology plc (AIM: PTO), (“Publishing Technology”, the “Company” or the “Group”) the AIM quoted leading provider of world-class software and services to the global publishing industry, announces its unaudited interim results for the six months to 30 June 2014.

The Group, which is a leading provider of software and services to the global publishing industry, acts for seven of the world’s top ten publishing groups and its clients include HarperCollins, McGraw-Hill, Macmillan, Elsevier, Springer, Sage, Oxford University Press and Bloomsbury Publishing.

As indicated in the Company’s trading update on 19 June 2014, the interim results show a loss due to the recent actions taken by management to improve implementation on certain current contracts, resulting in both additional product development expenses being incurred and the deferral of revenue that was expected to be recognised in the period.

Financial Key Points

  •  Group revenues down 10.3% to £7.61m (2013: £8.49m)
  •  Gross profit down 25.1% to £2.18m (2013: £2.91m)
  •  Loss before tax £0.69m (2013: profit before tax £0.42m)
  •  Loss per share 8.55p (2013: profit per share 4.58p)
  •  Cash inflow from operations £0.2m (2013: cash outflow £0.84m)

Operational Key Points`

  •  All advance modules being implemented
  •  Large contract wins for pub2web last year helping to drive recurring revenue
  •  Renewal of BioOne contract a significant result for PCG
  •  Vista performing well, with good margins and high renewal rates
  •  Relaunch for ingentaconnect helping to secure new customers
  •  China JV remains strong with new contract and project wins
  •  Strategic review completed and actions taken to address the issues
  •  Talks underway with third-party integrators to improve implementation and scalability
  •  Strong sales pipeline across the Group’s products and services

Michael Cairns, Chief Executive of Publishing Technology plc, commented:

“The first half of 2014 has latterly been a period of review and assessment to ensure the Group has as strong a platform as possible from which it can reap the full benefits of its significant research and development investment and capitalise on the considerable embedded value in its products and services.

The strategic review I have undertaken over the past few months focused on two areas: some of the short-term issues the Group faced, which have now largely been addressed, but which as a result will hold back this year’s results; and, building a new vision and approach, designed to improve the Group’s performance and ensure the business is scalable and positioned for growth.

As a result of the review, the Group will focus on its core skills as a software developer and services provider and work with integration partners to optimise advance and pub2web implementations for global publishing clients. Working with integrators will enhance our project management skill set, increase our sales opportunities geographically and by market segment, and is expected to improve our achievable day rates and utilisation rates while reducing risk on project implementations. Overall this is expected to lead to greater scalability for the advance and pub2web divisions.

This essential re-positioning of the Group will allow it to take advantage of positive and supportive market trends. The global publishing industry is undergoing considerable change and publishers are keen to find partners that can help them capitalise on the growth in e-books and commercialise their content digitally.

The Group’s fundamentals remain strong. Some 65% of revenue is recurring, the Group acts for 7 of the world’s top 10 publishing groups, has a global blue-chip list of 400 publishing and academic customers while the new business pipeline across all products and services is robust.”

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