DELEGATES OF THE UNIVERSITY PRESS
Annual Report 1st April 1978 - 31st March 1979

The Delegacy

The Proctors for the year were Dr. R. Martin and Mr. P. J. Clarke. The Assessor was Mrs. M. T. Griffin.
No delegates listed - A. M.

General

The quincentenary anniversary of printing in Oxford was celebrated, during 1978, in all the countries in which the Press is established. Ample evidence was provided of the respect in which the Press is held and those now responsible for its affairs were led to reflect on the inheritance with which they have been entrusted.

There was a significant expansion during the financial year in the book sales of the Press as a whole; trading surplus, however, declined, as did liquidity.

Several changes make it difficult to identify these trends from the Accounts. Consolidated turnover at £40.6 m. was lower than the figure shown for the prior year; but that reflects the exclusion of the revenues of the Nigerian Branch and the Wolvercote Mill, previously included. Revenues of the remaining parts of the Press rose in terms of sterling, despite the strengthening of the Pound against most other currencies. Even after allowing for the diminution of purchasing power, real increases in sales were achieved by U.K. Publishing, O.U.P. New York, and the Branches.

Two structural changes further complicate comparisons. The Wolvercote Paper Mill was sold to Brittains Ltd. in exchange for shares and loans; as this company fared very badly during the year provision has been made in the accounts against a fall in the value of these holdings. The Press was obliged by Nigerian law to dispose of its Branch in that country; it now owns 40 per cent of a new Nigerian company, University Press Limited. The Accounts also reflect the confirmation of exemption from United Kingdom tax. [page 6]

Together, these events caused a significant reshaping of the Group Balance Sheet at 31 March 1979. They gave rise moreover to large 'Extraordinary Items' which appear in the Profit and Loss Statement for the year. Their inclusion may obscure the underlying trend of earnings. Profit before Extraordinary Items was markedly lower than in the previous year, and this is a cause for concern.

The decline was concentrated in the United Kingdom, the United States, and Nigeria. In U.K. Publishing, expenditure rose more than sales revenue. More staff were employed, and although this will increase the flow of books in the longer term, the short-term effect is to raise overhead costs. Staff were also paid more; a new salary structure was negotiated with the recognized trade union and levels of payment are now fully competitive with those of other large publishing houses. Costs were also increased and sales lost by continuing distribution difficulties; the Neasden warehouse is too small and labour relations have not been good. If the Press is to prosper in the years ahead, its distribution arrangements must be improved.

Likewise in New York, expenditure has risen more than revenue and here also development expenditures are being incurred the benefits from which are necessarily deferred. Trading conditions are difficult and the high price of British books, together with the reduction in educational spending, have made it harder to expand the sales of our learned books.

In Nigeria massive educational development, sustained by economic prosperity, had led to a great upsurge in the demand for books. The Press helped to meet this demand. More recently, however, educational spending has been cut; this adversely affected the sales and earnings of the Nigerian business as well as U.K. Publishing and Printing. It has also become more difficult to secure payment from Nigeria of the large sums of money due to Oxford; the liquidity of the Press as a whole took the strain. Other difficulties were compounded by our being obliged to transfer the assets of our Branch to a new company in which the Press's interest would not exceed 40 per cent. Having formerly obtained exemption because of its special status from the requirement to indigenize, the Press was faced with the need to endeavour to sell shares on the local market at a time when the demand for them had fallen off. [page 7]

Nigeria apart, the overseas offices of the Press as a whole had a successful year. In East Asia, in particular, sales markedly increased; our publishing there makes a significant contribution to educational development at both school and university level.

The Printing Division in Oxford suffered a small reduction in the real value of its sales, chiefly because of the loss of work for Nigeria. But the high level of British costs compared to those of printers abroad make the future uncertain.

Events during the year indicated the risks to which the Press is exposed internationally and the need to strengthen its position in countries where market conditions may be expected to be more stable. But despite vicissitudes, the Press has sold more books than ever before; it published more learned monographs than it did during the previous year and the investments it has been making will further strengthen its ability to fulfil its central purpose. Trading conditions are hardly favourable and the need to improve the financial performance of our major publishing operations, those in Britain and the United States, is therefore all the more pressing.

Academic Division

Changes in the Division during the year included the appointment of three existing members of staff as chief editors: R. D. P. Charkin, responsible for Science and Medical books, J. K. Cordy, for some Arts subjects and for Reference works, and A. L. Schuller, for Social Sciences.

During the year the Division achieved a considerable increase in sales volume, thanks largely to the publication of the Pocket Oxford Dictionary, sixth edition. Sales of medical books showed a particularly large increase, having risen by 40 per cent in units in the last two years and by nearly 100 per cent in value.

Good progress has been made in overcoming the internal causes of delay in the processing of books referred to in last year's report. But a shortage of skilled compositors throughout the printing industry is a serious constraint on the production of learned books, and fewer were published during the year than had been budgeted. Nevertheless, there was an increase of about 40 over the previous year. The Division published 267 new titles, of which 33 were on commission and 16 were [page 8 - further publication detail omitted]

[page 20, re. labour relations in the printing division] ...there were no major upsets or stoppages. A new grading system and pay structure for administrative and supervisory staff, established by job evaluation, was generally well received. Changes in plant and processes made it possible to release more space for use by the publishing departments. At the end of March 1979 the total number of people employed was 665, which includes 211 craftsmen (compared with 227 last year).

[page 21]

With regard to the Consolidated Balance Sheet as at 31 March 1979, the Delegates wish to observe that:

(a) As recorded in the Supplementary Note to last year's Annual Report (Supplement* No. 1 to Gazette, vol. cix (November 1978), p. 21), the Press's claim to exemption from U.K. Corporation Tax was accepted in September 1978. Provision for U.K. Corporation Tax and Deferred Tax have therefore been released. The Press remains liable to pay taxes in certain other countries;

(b) The short-term investment and cash position is substantially stronger at 31 March than at other times of the year.

With regard to the Profit and Loss Account for the year ended ended (sic) 31 March 1979, the Delegates further wish to observe that:

(c) as recorded in Notes E and 4, a proportion of earnings arising in certain overseas countries is not available for use elsewhere;

(d) the Accounts have been prepared on the historical cost convention, and thus make no allowance for the declining value of money. Informal estimates of the effect of restating the Accounts on a Current Cost Accounting basis indicate that reported earnings would be substantially lower.

As stated in Note 3 to these Accounts, the Officers consider that a provision of £750,000 should be made against the investment in the Brittains Group. It is not possible to assess with reasonable certainty the level of provision required. However, in our opinion, reasonable steps have been taken to assess the amount of provision on a prudent basis.

Subject to the outcome of this matter, in our opinion the Accounts give a true and fair view of the state of affairs at the Press at 31 March 1979 and of the profit for the year ended on that date, according to the historical cost convention.

(Signed) COOPERS & LYBRAND
Chartered Accountants

[page 22]

Note A. As a result of the Nigerian Enterprise Promotion Decree of 1977, the Press's business in Nigeria has been reconstructed as a corporation, University Press Ltd. The Press's interest in U.P.L. is 40 per cent, and in consequence the company is treated as an associate in the Accounts for 1979.

Note B. Including investments in and loans to Associated Companies, and in Brittains Ltd. and a subsidiary (less provision).

Note C. Including amounts due from Associated Companies.

Note D. Including portions of loans repayable within one year.

Note E. Including non-remittable reserves: see Note 4.

[page 23]

Note 1. As recorded in Note A, 1979 excludes the sales to third parties of the Nigerian Business, now deconsolidated.

Note 2. The contribution of the manufacturing departments to the consolidated profit before tax was:

Note 3. In 1979: refunds and release of provision for tax and deferred tax, attendant upon exemption from United Kingdom tax, totalling £6,138; gain on disposal of a Branch, £24; provision against permanent diminution in value of the investment in Brittains Ltd. and a subsidiary company £(750). In 1978: loss on disposal of Wolvercote Paper Mill, £(358).

Note 4. A proportion of the earnings arising in certain overseas countries is not available for use elsewhere, and represents an addition to non-remittable reserves.