expected to pay for all this; unfortunately it turns out they were too aggressive with their forecast for the company’s revenue and profits. Although
Angels Falling
exceeded its initial budget in terms of sales, they were left with too much stock (in hindsight their last reprint should have been 15,000 copies instead of the 85,000 copies they had ended up printing), the illustrated editions of the first three books flopped, and the mass market edition of
Angels Falling
sold less than expected. Aspart of their effort to restore Litmus to good health, they sold a majority stake in their US company to Globish Inc., but that hadn’t generated enough revenue to make up the shortfall in Seppi sales.
They have missed their 2009 budget targets for two quarters in a row, and what they have on their autumn list is not enough to make their year-end number. As Gabrijela lays out the measures she intends to take to deal with the existing state of affairs the gloom in the room grows – there will be no bonus for employees this year, salaries will be frozen, and there will be more job cuts in line with the lowered 2009 numbers. She proposes that the board abstain from declaring a dividend. Also, if they do not have enough confidence in the list over 2010 and beyond, she intends to cut the publishing program, overhead, and other operating costs by half.
There is more. She recommends to the board that they sell the rest of their holdings in the US company to Globish and then she drops a bomb – Globish has made an offer to her and to the chairman for the UK company. God, Zach thinks, so that’s who is after them. When she first told him about the trouble the company was in, she had casually spoken about the threat of being taken over, but hadn’t given him a clue as to who had made the offer! They have no intention of selling, she says calmly; at this point Sir William Boyce, the majority shareholder in the company, and chairman of the board, takes over. He reminds them about the shareholding pattern of the company (he holds 39 per cent, and two of the investors he brought in, and who vote with him, hold a further 20 per cent; Gabrijela owns 18 per cent;and the remaining 23 per cent is divided among three others) and says that he and some of the other directors who, between them, own a majority stake in the company are seriously concerned about Litmus’s future as an independent publishing company. They have agreed with Gabrijela that they will not sell to Globish but if Litmus does not grow over the next three years it could well mean the end; they cannot afford to have another year like this one. There are further investments to be made in digital; there are pressures on pricing; and in a market that isn’t growing, if they don’t find another Seppi, it might not be possible to hold out. As Olive, the finance director takes them through a PowerPoint presentation on the financial state of the company, and hands out spreadsheets on their current three-year plan, the tension grows within Zach. It is going to be his turn next and he has nothing that will lighten the mood in the boardroom.
In just a moment all eyes will turn to him. This is the part he hates the most about board meetings, trying to present to hardcore businessmen, in language that they will comprehend, why what they are asking of him is impossible. One part of him would like to say, “Look, I’m just an editor,” that it is too much to expect him to worry about profit and loss, spreadsheets, operating costs, cash, capital expenditure, depreciation, returns on investment, net present value and all the other eye-glazing stuff he had to learn about in the Finance for Non-financial Managers course he had had to take when was elevated to the position of publisher and to the board of directors. But he cannot duck his responsibility, he is just as much a part of this as the others present in the room – he could have alwaysturned down the promotion when it was offered
Angels Falling
exceeded its initial budget in terms of sales, they were left with too much stock (in hindsight their last reprint should have been 15,000 copies instead of the 85,000 copies they had ended up printing), the illustrated editions of the first three books flopped, and the mass market edition of
Angels Falling
sold less than expected. Aspart of their effort to restore Litmus to good health, they sold a majority stake in their US company to Globish Inc., but that hadn’t generated enough revenue to make up the shortfall in Seppi sales.
They have missed their 2009 budget targets for two quarters in a row, and what they have on their autumn list is not enough to make their year-end number. As Gabrijela lays out the measures she intends to take to deal with the existing state of affairs the gloom in the room grows – there will be no bonus for employees this year, salaries will be frozen, and there will be more job cuts in line with the lowered 2009 numbers. She proposes that the board abstain from declaring a dividend. Also, if they do not have enough confidence in the list over 2010 and beyond, she intends to cut the publishing program, overhead, and other operating costs by half.
There is more. She recommends to the board that they sell the rest of their holdings in the US company to Globish and then she drops a bomb – Globish has made an offer to her and to the chairman for the UK company. God, Zach thinks, so that’s who is after them. When she first told him about the trouble the company was in, she had casually spoken about the threat of being taken over, but hadn’t given him a clue as to who had made the offer! They have no intention of selling, she says calmly; at this point Sir William Boyce, the majority shareholder in the company, and chairman of the board, takes over. He reminds them about the shareholding pattern of the company (he holds 39 per cent, and two of the investors he brought in, and who vote with him, hold a further 20 per cent; Gabrijela owns 18 per cent;and the remaining 23 per cent is divided among three others) and says that he and some of the other directors who, between them, own a majority stake in the company are seriously concerned about Litmus’s future as an independent publishing company. They have agreed with Gabrijela that they will not sell to Globish but if Litmus does not grow over the next three years it could well mean the end; they cannot afford to have another year like this one. There are further investments to be made in digital; there are pressures on pricing; and in a market that isn’t growing, if they don’t find another Seppi, it might not be possible to hold out. As Olive, the finance director takes them through a PowerPoint presentation on the financial state of the company, and hands out spreadsheets on their current three-year plan, the tension grows within Zach. It is going to be his turn next and he has nothing that will lighten the mood in the boardroom.
In just a moment all eyes will turn to him. This is the part he hates the most about board meetings, trying to present to hardcore businessmen, in language that they will comprehend, why what they are asking of him is impossible. One part of him would like to say, “Look, I’m just an editor,” that it is too much to expect him to worry about profit and loss, spreadsheets, operating costs, cash, capital expenditure, depreciation, returns on investment, net present value and all the other eye-glazing stuff he had to learn about in the Finance for Non-financial Managers course he had had to take when was elevated to the position of publisher and to the board of directors. But he cannot duck his responsibility, he is just as much a part of this as the others present in the room – he could have alwaysturned down the promotion when it was offered
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