Annual Financial Report

RNS Number : 5903C

Bloomsbury Publishing PLC

18 June 2019

 

18 June 2019

Annual Financial Report

Bloomsbury Publishing Plc (the "Company")

The Company released its Preliminary Announcement of annual results for the year ended 28 February 2019 on 21 May 2019. Further to the Preliminary Announcement, the Company can confirm that the Annual Report for the year ended 28 February 2019 ("2019 Annual Report") and the Notice of Annual General Meeting ("Notice of AGM") is now being mailed to Shareholders. The 2019 Annual Report and the Notice of AGM are also available on the Company's website at www.bloomsbury-ir.co.uk.

AGM

The Company's Annual General Meeting will be held on Wednesday 17 July 2019 at 12.00 noon at 50 Bedford Square, London WC1B 3DP. Shareholders are recommended to vote online at www.signalshares.com.

National Storage Mechanism

Pursuant to Listing Rule 9.6.1, the 2019 Annual Report and the Notice of AGM have been submitted to the National Storage Mechanism and will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM.

Additional Information

In accordance with Disclosure Guidance and Transparency Rule 6.3.5(2)(b), additional information is set out in the appendices to this announcement.  The directors' responsibility statement, a description of the principal risks and uncertainties and details of related party transactions are set out below in full unedited text extracted from the 2019 Annual Report.  The text below should be read in conjunction with the Company's final results for the period ended 28 February 2019 which were announced in unedited full text on 21 May 2019. This information is not a substitute for reading the 2019 Annual Report.

Enquiries:

Maya Abu-Deeb
Group General Counsel & Company Secretary
Bloomsbury Publishing Plc
Telephone [phone]

APPENDIX 1: Directors' Responsibilities Statement

The following directors' responsibility statement is extracted from the 2019 Annual Report (page 46)

 

Statement of Directors' responsibilities

The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRSs as adopted by the EU") and applicable law and have elected to prepare the parent Company financial statements on the same basis.

Under Company Law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial statements, the Directors are required to:

·    select suitable accounting policies and then apply them consistently;

·    make judgements and estimates that are reasonable, relevant and reliable;

·    state whether they have been prepared in accordance with IFRSs as adopted by the EU;

·    assess the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

·    use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, www.bloomsbury-ir.co.uk. Legislation in the United Kingdom ("UK") governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Safe harbour

Under the Companies Act 2006, a safe harbour limits the liability of Directors in respect of statements in and omissions from the Strategic Report and the Directors' Report. Pages 1 to 145 of the Annual Report, and the front and back covers to the Annual Report, are included within the Directors' Report by reference and so are included within the safe harbour.

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to the best of our knowledge:

·    the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

·    the Strategic Report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Group's position and performance, business model and strategy.

Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Strategic Report and Directors' Report were approved by the Board on 21 May 2019.

APPENDIX 2: Principal Risks and Uncertainties

The following description of the principal risks and uncertainties that the Company faces is extracted from the 2019 Annual Report (pages 26 to 29)

Principal Risks

The table below provides a description of risk factors that management considers relevant to the Group's business. Other factors besides those listed could also affect the Group.

During the financial year ended 28 February 2019, the Principal Risks have not changed substantially, save that the volatility of paper material costs and Brexit have been added as Principal Risks.

Key area	Risk	Description	Mitigation
1. Market	Volatility of consumer book sales	Sales of books to the consumer market can be seasonal and volatile.	Develop special interest, academic and professional publishing where revenues are less volatile. Develop other revenue streams, including from rights and services, increasing the scope to enter annually renewing agreements.
	Increased dependence on internet retailing	Readers might not discover, and so buy, Bloomsbury's print and e-books sold through internet retailers who may control discoverability.	Grow expert marketing teams skilled in internet sales. Engage with multiple internet retailers. Increase focus on developing other marketing opportunities and other revenue streams, e.g. Academic & Professional digital products, rights and services.
2. Rights and services	Dependence on timing of closing rights and services deals	The timing for completing high margin rights and services deals can depend on the performance by multiple parties including the main customer.	Increase the number of rights and services deals to reduce the dependency on individual deals.
	Generating new/ non-renewal of subscription and services agreements	The pipeline of new products and agreements might be uneven. A customer or partner might not renew larger agreements that generate significant ongoing income.	Increase the portfolio of products and agreements to grow income and reduce the dependency on individual agreements. Senior managers are responsible for ensuring strong performance by Bloomsbury of its obligations and strong customer care.
	Entrepreneurial risk	A deal may require upfront staff time and costs but fail to close, resulting in lost investment.	Similar to ordinary publishing risks: increase the portfolio of deals to leverage economies of scale and reduce volatility.
3. Financial valuations	Judgemental valuation of assets and provisions	Significant assets and provisions in the balance sheet depend on judgemental assumptions, e.g. goodwill, advances, intangible rights, inventory and returns provisions.	Consistent and evidence-based approach to assumptions. Board approval of key assumptions. Rigorous audit of valuations.
4. Information and technology systems	Productivity of IT systems and data	Continuing to improve staff efficiency depends on the IT systems and data keeping pace with the needs of the business.	Board level representation on steering IT strategy, implementation and IT operations.
	Cybersecurity	Unauthorised access could be made to Bloomsbury's systems to perpetrate a fraud or cause damage.	Clear responsibility for systems, increasing use of the cloud, monitoring security risks, internal control reviews of the systems and up-to-date anti-virus software are amongst the measures in place.
5. Growth of digital	Digital development	Unforeseen hold-ups may delay development of new online content services and revenue for the services may not grow in line with our stretching targets.	Develop high-quality online content services in markets we understand well. Standardise the digital delivery platform to simplify and speed up the development and implementation of new online content services.
	Development of the digital book market	Consumer e-book prices may not hold up in the longer term. Possible emergence of not yet known reading technology.	Continue to supply books in all formats through multiple digital delivery systems aligned with the demands of readers. Ensure the Group is positioned to take advantage of e-book and audio book (or any new format) growth in international markets. Use social media and other digital marketing to encourage direct sales to consumers. Develop Non-Consumer offering where revenues are less volatile and there is a direct relationship with the customers.
	Rise of alternative book supply arrangements	US readers may license books from retailers for a limited period at a lower cost to buying books, with no revenues or royalty paid to the publisher.	Develop digital platforms to deliver, on a subscription basis, the content that readers demand.
6. Title acquisition	High advances sought by agents	Agents seek high advances for some authors.	Publish more special interest trade books.
	World rights not acquired	Agents prefer to split territorial rights for English language publishing between US and UK.	Focus acquisition on titles where world English rights are available. Concentrate on academic publishing where world rights are the norm.
7. Reputation	Product and service quality	Errors in books and digital content.	Careful selection and rigorous review of titles by broad teams of experienced publishers, and planning of the title pipeline to focus on publishing strengths. Rigorous production procedures and planning of titles and digital resource content.
	Information security	Being hacked and theft of intellectual property, e.g. key illustrations before publication.	Security awareness in teams and additional security measures to protect high value assets and data.
	Investor confidence	City confidence undermined by events outside of Bloomsbury's control, e.g. collapse of a retailer.	Diversify the portfolio of products and services to reduce dependencies on individual customers, sales channels and markets.
8. IP and copyright	Erosion of copyright	Erosion of traditional copyrights. Erosion of territorial copyrights as a result of global internet retailing. Open access.	Continue policy of support for copyright and intellectual property rights as a fundamental facet of publishing. Continue to police infringements of the Group's territorial copyrights and take appropriate action to enforce such rights. Develop digital services that deliver mixed open access and proprietary content in the form that customers demand and will continue to pay for.
	Piracy	Piracy of titles in print or digital form.	Adopt robust anti-piracy policies. Ensure good digital rights management protection of e-books and digital formats. Participate in key industry anti-piracy initiatives.
9. Overseas operations	Overseas offices	Growing offices in the US, India and Australia may increase the operational risks and demands on management.	One Global Bloomsbury structure of global publishing divisions supported by Group functions provides an effective internal control framework and oversight of the overseas offices. Keep under review the management resources deployed within this structure as the business evolves.
10. Volatility of paper material costs	Increased production costs	A contracting print market and increases to the costs of paper around the world due to various factors including increased regulation may result in higher production costs for the Group. See also below for the potential impact of Brexit on the costs of paper materials.	Provision for production variances are factored into the Group's budget at the beginning of each fiscal year. The Group's contracts with its printers typically fix prices for printing work for a period of time, and include provisions to control the extent to which increases in the costs of paper may be passed on to the Group.
11. Brexit	Impact on the cost of paper materials	Falls in the value of sterling may result in increased production costs due to increases in the costs of paper sourced by the Group's printers.	The Group's contracts with its printers typically fix prices for printing work for a period of time, and include provisions to control the extent to which increases in the costs of paper may be passed on to the Group. Production costs are paid by the Group in a mix of local and foreign currencies and falls in sterling will not impact on all production costs
	Impact on supply chains and ensuring delays in delivering product to market	Disruptions to the supply chain may impact on sales if the delivery of product is delayed. Logistics costs may increase as a result of measures taken to counter delays and as a result of increased complexities surrounding the movement of goods across the UK/EU border.	Measures to mitigate the risk of disruption to supply chains include building in additional time to production schedules and placing orders for additional paper supplies with Bloomsbury's printers.

APPENDIX 3: Related Party Transactions

The following details of 'Related party transactions' are shown in note 27 to the consolidated financial statements on page 127 of the 2019 Annual Report.

27. Related party transactions

The Group has no related party transactions other than key management remuneration as disclosed in note 5.

The following detail on staff costs is extracted from note 5 (pages 105 to 106).

5. Staff costs

The Group considers key management personnel as defined under IAS 24 "Related Party Disclosures" to be the Directors of the Company, this includes Non-Executive Directors, and those Directors of the global divisions, major geographic regions and departments who are actively involved in strategic decision-making.

Total emoluments for Executive Directors and other key management personnel were:

	Year ended 28 February 2019 £'000	Year ended 29 February 2018 £'000
Short-term employee benefits	4,022	3,567
Post-employment benefits	209	219
Share-based payment charge	410	128
Total	4,641	3,914

The following detail on related parties is extracted from note 47 (page 143)

 

47. Related parties

Trading transactions

During the year the Company entered into the following transactions and had the following balances with its subsidiaries:

	28 February 2019 £'000	28 February 2018 £'000
Sale of goods to subsidiaries	8,553	10,759
Management recharges	9,667	9,843
Commission payable to subsidiaries	(5)	-
Finance income from subsidiaries	77	232
Amounts owed by subsidiaries at year end	12,209	10,045
Amounts owed to subsidiaries at year end	46,890	45,583

All amounts outstanding are unsecured and will be settled in cash. No provisions have been made for doubtful debts in respect of the amounts owed by subsidiaries.

Key management remuneration is disclosed in note 5.

 

END

 

 

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