Trouble at its Corby distribution plant in the first two months of this year forced Oxford University Press' pretax profit down to just above its 1993 level, the newly-published report and accounts for the year to end-April 1996 show.
The press installed new computerised equipment built by Siemens which failed to meet expectations when it came on stream in January this year. A series of systems errors led to "serious delays in deliveries, with a consequent effect on sales", the report said. A rescue programme was agreed with the systems suppliers, and twilight and weekend deliveries were instituted to clear the backlog of orders." The operating surplus fell from £23.4 million to £20.9 million as a result of these extra costs and lost sales, as well as the press' heavy investment programme, chief executive James Arnold-Baker said. OUP's contribution to the university was reduced from £9.106 million to £4.114 million.
The top-line sales figure was much more encouraging: up 16.6 per cent to £251 million. Mr Arnold-Baker believes that OUP's geographic spread is part of the reason why it has maintained such a strong growth rate. "We are quite a small player in the largest market of all, the US. Therefore, although the market is not growing much, there is room to expand in it. In the less mature markets such as eastern Europe, the Far East and Latin America, there is a lot of room for growth."
OUP was reorganised earlier this year into three publishing groups: academic, educational and English language teaching. "It was a way of getting some sort of focus on a global basis," Mr Arnold-Baker explained. "We cannot afford to have a global layer as well as a publishing layer." The academic group, which includes dictionaries and the trade division, saw a 12 per cent increase in sales, but mainly thanks to the US, where OUP is doing particularly well as a result of the expansion of the superstores.
This growth may not hold up in the current year, but Mr Arnold-Baker believes that there is still reason to be optimistic. "We are getting a lot of returns at the moment. I think that since the beginning of this year there has been a great tidal wave of returns across the US. Everyone seems to think that this will come right in the second half of this year. I think there are several years' more growth."
The ELT group had a good year in Spain (which is the press' largest ELT market). Mexico and Korea also saw growth, although sales in the US and Japan declined. The educational division, which includes children's publishing, had a difficult year in the UK. Its market-leading series such as the Oxford Reading Tree fared well, and there was a small overall increase in UK schools sales, but government funding remains the main problem. "We are just going to keep plugging on in the hope that things start looking up."
Elsewhere in the educational group, OUP Southern Africa won an appeal against the South African tax authorities over its tax-exempt status. This allowed the press to enjoy the full fruits of the 45 percent rise in educational sales in the country. OUP Pakistan and the east African companies enjoyed strong growth, although the press had difficulties in Malaysia, where school adoptions were elusive, and in Singapore, where it lost out in the government tendering system.
Overall Mr Arnold-Baker is optimistic that OUP will maintain its sales growth in the current year. "This year started very well but there is a big element of catching up on the Corby situation. I have no doubt we will see growth, but it will not be in the UK." He is less confident about the surplus. "I am being vague because of the university's primary objective, which is dissemination of scholarship. The surplus the press makes is secondary."
There is also the question of the press's ongoing investment in IT. OUP is committed to a German system known as SAP, which will eventually provide integrated systems across the whole group. The delegates - the academics who oversee the operations of the Press - are sanguine about the considerable amounts of money involved. "I think they see it as an investment in the long term."
Click for Bookseller OUP accounts digest, 1997 or OUP's Annual Report and Accounts abstracts 1995 (includes 1994 figures) and 1997 (includes 1996 figures).
Click for related files:
The Waldock Report, OU's own investigation into its P (1970)
CUP's tax-exemption Chapter 15 of M. H. Black's Cambridge University Press 1584-1984.
Mammon's Imprint by Valentine Cunningham (+ leader comment and campaign), OUP fights corner in poetry row including CUP's donations to CU, US presses enjoy tax freedom, Times Higher Education Supplement, 12/2/99.
OUP to invest £87 million in university The Times Business section, 17/7/99
OUP denies breach of charity rules Oxford Times, 5/11/99
Cooking the books? Cherwell, 12/11/99
OUP profit row Cherwell, 25/2/00
A Message from India Oxford Times, 30/3/01, including admission that OUP's 1999 'donations' were bogus.
Click for OUP Accounts Index - OUP's 'Charitable status' - Oxford College Accounts - Oxford Cuttings Library - Literary Law Library - Student Law Library - Malcolm v. Oxford I - Malcolm v. Oxford II - website history - SITE INDEX.