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Books division hits DC Thomson profits

PUBLISHER DC Thomson has suffered a fall in pre-tax profit after being hit by weak performance at its Parragon books business.

TOUGH YEAR: DC Thomson chief executive Ellis Watson said conditions were difficult in all markets. Picture: Steve Cox
TOUGH YEAR: DC Thomson chief executive Ellis Watson said conditions were difficult in all markets. Picture: Steve Cox

The Dundee-based owner of The Sunday Post and Courier newspapers, saw earnings before tax drop 23.8% to £23.7 million for the year to March 31.

A £39.4m gain from disposal of financial assets was insufficient to offset weakened underlying earnings as the family-owned business took a £25m impairment on its books arm.

Group revenue fell to £252m in its most recent financial year from £272m in the year to March 2012.

As turnover at the books business fell to £84.6m for the year, down from £97.7m, it made a £1m operating loss after a profit of £3.4m in the 2012 financial year.

Operating profit was up 29.4% at its newspaper and magazine division after it centralised printing in Dundee and outsourced distribution.

There was a 33.9% fall in operating profit at DC Thomson's online business, which specialises in genealogy research, to £3.7m from £5.6m in 2012.

DC Thomson's directors, led by chief executive Ellis Watson, said of its books business: "Conditions were difficult in all markets, but especially Europe and Australia.

"The book division was affected by sales decline. There was also significant discounting as competitors sought to reduce stock levels and this reduced gross margins."

The company said it was only partially able to offset the pressure on sales and profit margins at the operation, which specialises in children's, cookery and adult reference titles, by cutting costs. It also reported "significant bad debt levels" in its European business.

During the year Parragon, which publishes in 18 languages, reorganised its operations in Australia and Europe and closed the Peter Haddock operation in Bridlington, Yorkshire.

DC Thomson said the performance of its newspaper interests had been "solid overall". "We are firm believers in the future of our newspapers and magazines both in print and online," the company said.

It reported almost unchanged circulation revenues as falls in sales were offset by increased prices. Total advertising revenues from its newspapers were down 4.9% while at its magazine arm, which owns The People's Friend, The Beano and Scots Magazine, they were 4.7% behind last year.

DC Thomson said profits at the division had been boosted by the closure of print facilities in Glasgow and Aberdeen during the year and the refurbishment and rebuilding of its Dundee printing plant. It was also aided by the transfer of newspaper distribution to an external provider.

Separate accounts for the Aberdeen Journals, the part of DC Thomson that publishes the Press and Journal and Evening Express newspapers, revealed its pre-tax profit soared to £4.3m from £1.6m despite a 1.5% drop in revenue to £31.8m.

The rise in profit was due in part to a fall in newsprint charges and staff costs as employee numbers fell from an average of 470 in the 2012 financial year to 387 in 2013.

Staff numbers for DC Thomson as a whole dropped from 2027 to 1896.

"Staff costs remain the major cost faced by the group and these are kept under tight review," it said.

The online business, which rebranded from brightsolid to DC Thomson Family History, is seeking to develop its US presence with the launch of findmypast.com.

It has a deal to scan another eight million pages for the British Newspaper Archive.

"Our principal online genealogy business had lower revenues in line with dataset availability and reduced revenues from the Friends Reunited website," DC Thomson said.

"Change is underway in this business which will increase the amount and quality of data available."

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