Final Results - Pre-tax Profit Up 66.4%

Bloomsbury Publishing PLC 27 April 2000 Bloomsbury Publishing Plc Preliminary results for the year ended 31 December 1999 Bloomsbury Publishing Plc is pleased to announce preliminary results for the year ended 31 December 1999. Highlights: - Pre-tax profits increased by 66.4% to £2.616m (1998: £1.572m) - Turnover increased by 36.9% to £20.863m (1998: £15.231m) - Gross margins improved to 51.7% (1998, 50.1%) - Bloomsbury voted Publisher of the Year at The British Book Awards - Worldwide success of launch of Encarta World English Dictionary database in print and electronic form - Bloomsbury USA achieves bestseller in first year - Harry Potter series dominates the book world Nigel Newton commenting on the company's two operating divisions: Reference and Electronic Media Division 'The English language is probably now the most important communications tool in the world, representing as significant a commercial opportunity as the internet itself or new developments in telephony. Bloomsbury's strategic goal for the Reference and Electronic Media Division is to be one of the world's leading providers of reference content for print and electronic publication for this global market. The demand for content on the internet is insatiable, and with the advent of new channels for the dissemination of information, such as WAP technology, the demand for content generated from our databases is set to continue.' Book Division 'The future trading prospects for Bloomsbury are excellent. The increased profile of the company on the back of its successes in the Book Division is attracting more talented new and established authors than ever before. New initiatives to expand the base from which we exploit intellectual property rights have been put in place.' 'In summary, our divisions are firing on all cylinders with the successes of the past encouraging us to drive forward with even greater enthusiasm. We have much to look forward to and remain confident that Bloomsbury will continue to build on its current value in the months and years ahead.' CHAIRMAN'S STATEMENT Overview 1999 was a vintage year for Bloomsbury Publishing with pre-tax profits up 66.4% to £2.616m (1998: £1.572m) on a turnover that increased by 36.9% to £20.863m (1998: £15.231m). The drivers of this growth were a combination of a very strong list of books led by the extraordinary success of Harry Potter, increasing repeat revenue from our backlist catalogue, the first full year's turnover from Bloomsbury's new American operation, and the ground-breaking publication of the Encarta World English Dictionary, which positions Bloomsbury as a leader in electronic reference publishing. The publishing industry recognised the achievements of the company by awarding Bloomsbury Publisher of the Year at the British Book Awards. Side by side with these achievements, has been the continued championing of exciting new novelists and the nurturing of our established authors. Review of Operations Reference & Electronic Media Division For the Reference and Electronic Media Division, 1999 was a year both of fruition and of broadening the scope of the business. The Encarta World English Dictionary, an ambitious three-year project worked on by a global team of more than 350 experts was published to tremendous acclaim in August 1999. It was the first dictionary to be published worldwide on the same day and the first to be published simultaneously in print and electronic formats. The Observer called the work ' a milestone in the history of our language'. The Times Educational Supplement wrote, 'Bill Gates' and Bloomsbury's nimble Encarta dictionary beats an Oxford classic'. To date, it has sold over 100,000 copies in the UK alone in its print edition, rapidly establishing itself as a leading dictionary and guaranteeing itself a place on book shelves and computer screens for decades to come. Following its success, we are now expanding the dictionary by a further 10,000 words. The launch of The Encarta World English Dictionary generated much interest in Bloomsbury's electronic reference expertise. We have formed a partnership with Macmillan, a global publishing company, to create a second major dictionary database. This is aimed at over 750 million learners of English worldwide, an enormous and rapidly growing market. We estimate that by the year 2050, over 50% of the world's population will have some competence in English, compared to 29% today. The English language is probably now the most important communications tool in the world, representing as significant a commercial opportunity as the internet itself or new developments in telephony. Bloomsbury's strategic goal for the Reference and Electronic Media Division is to be one of the world's leading providers of reference content for print and electronic publication for this global market. The demand for content on the internet is insatiable, and with the advent of new channels for the dissemination of information, such as WAP technology, the demand for content generated from our databases is set to continue. During the year, we have been developing a further strategy for successfully exploiting online and other electronic opportunities, which will be implemented over the next five years. We plan to unveil some of these plans in the months ahead. Book Division 1999 was another highly successful year for the Book Division, with Bloomsbury once again demonstrating its ability to develop both bestselling and first time authors. The year began spectacularly with the publication of Anna Pavord's magnificent work, The Tulip, which became an international bestseller and won the British Book Award for Design and Production. Other highlights during the year included Lesley Glaister's Sheer Blue Bliss, a new work from one of Britain's finest young novelists. In the spring we published Shadow Box, a first novel by the Irish writer Antonia Logue, the rights to which we had secured in a hotly contested auction; Holy Smoke by Jane and Anna Campion (the former is the author and director of The Piano), the film of which was released in March this year starring Kate Winslett. East of the Mountains, by David Guterson, author of the international bestseller, Snow Falling on Cedars was also an immediate success. Summer highlights included Ahdaf Soueif's The Map of Love which was shortlisted for the Booker Prize. Three major biographies were published: Gore Vidal by Fred Kaplan, Secrets of the Flesh, a biography of Collette, by Judith Thurman, and Vaclav Havel by John Keane. During the year we celebrated the fifth anniversary of our paperback list, five years in which the list has carved itself a niche as one of the most innovative and imaginative in the UK. Highlights of the year included the bestselling Easy Riders, Raging Bulls, an account of Hollywood in the Sixties and Seventies, one of the most talked about non-fiction books of the year. Two established authors, whom we had only previously published in hardback, have now joined our paperback list both having seen significant increases in sales: Nadine Gordimer with The House Gun and Jay McInerney with Model Behaviour.This underlines the increasing strength of our paperback list with backlist income growing substantially, based on the huge success of lead titles and our specialist categories of film, music and American fiction. 2000 looks like being an excellent paperback year with a marvellous array of bestsellers coming through, including East of the Mountains and The Tulip in paperback. Harry Potter led the success of the children's list. While these books reached new heights of popularity, our other children's fiction and picture books also increased in strength. 1999 opened with the launch of the paperback edition of Harry Potter and the Chamber of Secrets. UK paperback sales of the books now total over 1.3 million. Later in the year the hard cover of the third in the series of seven books, Harry Potter and the Prisoner of Azkaban, was launched, selling 1.25 million to date. The books topped the bestseller list for the whole year. Our early prophecy that Harry Potter would become a classic of children's literature is rapidly being realised. In a recent poll, JK Rowling's books were voted second after Roald Dahl's output of 40 years, as the greatest children's books of all time. Equally pleasing has been the strong performance of our other children's titles. No Matter What by Debi Gliori, lived up to its promise with publication in 13 countries and sales figures topping 275,000. Other highlights included Face by Benjamin Zephania selling 25,000 copies in the UK and The Selfish Crocodile which has been a paperback success with over 40,000 UK sales. Looking forward we can say with confidence that the children's list is building up a catalogue of high quality long term properties. Bloomsbury USA continued to develop its American list with the additions of young American authors such as Alyson Richman, author of The Mask Carver's Son, and James Gunn, author of The Toy Collector. UK originated titles such as The Tulip also greatly benefited from having a dedicated marketing team in the US to drive sales. In 2000, highlights include Kitchen Confidential by Anthony Bourdain. A serialisation is appearing in the New Yorker, with the book selected as a 'hot tip' on Amazon.com. Management Alexandra Pringle, who joined us in May 1999, was appointed Editor-in-Chief of the Book Division on February 11th 2000. She has many years experience in publishing, as well as having been a literary agent. Liz Calder is Publishing Director at Bloomsbury, building on the successes of her many established and bestselling authors. David Reynolds left the Company during the year to pursue a career as an author. He played a vital role as a co-founder of the Company, and in building Bloomsbury into what it is today. We thank him for everything and wish him well. Dividend The Directors recommend a final dividend of 3.0 pence per ordinary share (1998: 2.9 pence), making a total of 3.8 pence per ordinary share (1998: 3.7 pence) for the year. The final dividend, to be approved at the AGM, will be paid on 4 July 2000 to shareholders on the register on 19 May 2000. Prospects The future trading prospects for Bloomsbury are excellent. The increased profile of the company on the back of its successes in the Book Division is attracting more talented new and established authors than ever before. New initiatives to expand the base from which we exploit intellectual property rights have been put in place. We recently announced a partnership with Creative Artists Agency, the leading Hollywood agency, to sell film rights in selected Bloomsbury books to Hollywood studios and television producers. Such deals could generate significant new royalty revenue streams for us in years to come. The success of the Encarta World English Dictionary has led to the establishment of a new partnership with an international company to develop a third major reference database, the details of which will be announced in the coming weeks. Bloomsbury.com, our book sales and marketing site, has been in operation since September 1997, and has provided us with a sound basis of knowledge from which to move into our next phase of internet operation. We believe that there is considerable scope for Bloomsbury to generate a significant part of its future operations from online sales. The dotcom market is currently being flooded with new start-ups, but we feel that the successful online operations of the future will come from companies such as ours, with a considerable amount of content stored in our archives, and a proven, profitable track record. Further developments on our internet operation will be announced in the coming months. In summary, our divisions are firing on all cylinders with the successes of the past encouraging us to drive forward with even greater enthusiasm. We have much to look forward to and remain confident that Bloomsbury will continue to build on its current value in the months and years ahead. Nigel Newton Chairman FINANCIAL REVIEW Turnover for 1999 increased by 36.9% to £20.863m (1998, £15.231m) on the back of a very strong publishing list, a full year's publishing programme from our Bloomsbury USA operation, and continued growth in the strength of our backlist. The increase in backlist revenues and the economies of scale derived from the large print runs on the Harry Potter series increased gross profit margins by 1.6% to 51.7% (1998, 50.1%). Gross profit increased by 41.2% to £10.783m (1998, £7.637m). Marketing and distribution costs increased by 87.9% to £3.197m (1998, £1.701m). Key contributors to the increase in marketing costs include the first full year's operation of Bloomsbury USA, the launch and ongoing marketing of the Encarta Dictionary, and promotion of the Harry Potter series. Distribution costs increased as a result of the growth of trade and export turnover and the first full year's sales from Bloomsbury USA. Administrative costs increased by 27.4% to £4.660m (1998, £3.659m). New personnel have been appointed for our next phase of organic growth. These include a full time commissioning editor for Bloomsbury USA, and a new Publishing Director. There is also a variable element to our administrative expenses, which have increased as a result of the increase in turnover. Operating profits increased by 28.5% to £2.926m (1998, £2.277m). The interest charge for the year decreased by 56% to £0.310m (1998, £0.705m) as a result of the funds received from the rights issue in 1998 and the 5% placing which took place in November 1999. Bloomsbury has had a low actual tax charge because of timing differences arising from the different treatment for tax and accounts purposes of amounts which are deductible for tax purposes when paid. The directors have taken the view that some of the timing differences could reverse in the foreseeable future and therefore, a provision has been made for deferred tax. The effective tax rate for the year is 31% per cent which takes account of the adjustment to the deferred tax provision and the reduction in the corporation tax rate from 31 per cent to 30 per cent. Profit after tax increased by 60.7% to £1.805m (1998, £1.123m). Basic earnings per share increased by 13.0% to 13.56 pence (1998, 12.00 pence). Fully diluted earnings per share increased by 10.5% to 13.19 pence (1998, 11.94 pence). Bloomsbury has three major databases; the first, the Encarta World English Dictionary, was completed and launched in 1999. The other two, including the English Language Teaching database, are currently under development. All development costs of the databases are capitalised in work in progress which accounts for the bulk of the increase to £5.710m (1998, £3.770m). The capitalised costs of the Encarta Dictionary database are being amortised over ten years. Finished stocks increased by 32.5% to £3.750m (1998, £2.830m), which reflects the increased stockholding on high stock turn books, the stock holding for a full year's trading of Bloomsbury USA and the stockholding of the dictionary. The stock turn of Harry Potter has been high, and to ensure that the series doesn't go out of stock, large print runs are commissioned. The year end stock holding reflects a high proportion of the last print run before the year end, all of which were rapidly sold early in the New Year. Trade debtors increased by 100.5% to £7.580m (1998, £3.781m) due to very strong second half trading. Export sales increased 159.1% to £8.306m (1998, £3.321m), and as they are on longer credit terms than UK customers, a greater proportion of those sales is reflected in trade debtors. The full year's trading of Bloomsbury USA is also included in the trade debtors at the year-end. Increasing backlist revenues and sub-licence income reduced prepayments and accrued income by 16.1% to £11.980m (1998, £14.280m). The cash generated by sub-licence rights sales and the sale of books continues to grow, and is reducing the requirement to fund our working capital requirements from borrowings. We believe, however, that acquiring intellectual property rights through our book division for publication and developing intellectual property rights in the form of reference databases, for electronic as well as hard copy publication in the Media and Electronic Reference Division, is the key to our future growth. The investment in these two areas, particularly the development of electronic reference databases, contributed to a net cash outflow from operating activities of £0.825m (1998, cash inflow £0.203m). Through a combination of the proceeds from the placing, which took place on 26th November 1999 and the retained profits for the year, gearing has been reduced to 2.5% (1998, 14.1%). Placing On 23rd November 1999, approximately 5% of the company's share capital was placed with institutions, raising £3.267m net of expenses. The proceeds will be used to fund the development of reference databases and internet activity. Shareholders' funds At 31 December 1999, shareholders' funds stood at £18.424m (1998, £13.765m), the increase due to the retained earnings of £1.276m (1998, £0.667m) and net receipts from the 5% placing of £3.267m. Strategy Acquiring and developing rights in house for exploitation in electronic or print form has been a primary profit driver of the company. We are always seeking to identify new rights to exploit, and the agreement with the Creative Artists Agency in Hollywood to sell film rights, highlights our strength in identifying opportunities for future long term growth. Growing organically requires long term investment, but our track record does show that previous year's investments are now generating significant returns. We are continuing to acquire rights for worldwide publication through Bloomsbury USA as well as in the UK. Our balance sheet is strong, with gearing at an all time low. The list of authors we have built up has already produced a very strong list for 2000. I am confident that with the funds received from the placing in November 1999, and cash being generated from operations, Bloomsbury will continue to establish itself as a market leader in both the reference and electronic media division and the book division. Going concern Having made enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts. Colin Adams ACA Finance Director PROFIT AND LOSS ACCOUNT for the year ended 31 December 1999 Notes 1999 1998 £'000 £'000 Turnover 2 20,863 15,231 Cost of sales (10,080) (7,594) ______ ______ Gross profit 10,783 7,637 Marketing and distribution (3,197) (1,701) costs Administrative expenses (4,660) (3,659) ______ ______ Operating profit 2,926 2,277 Net interest payable (310) (705) ______ ______ Profit on ordinary activities 2,616 1,572 before taxation Taxation on profit on ordinary (811) ( 449) activities ______ ______ Profit on ordinary activities 1,805 1,123 after taxation Dividends 3 ( 529) (456) ______ ______ Profit for the financial year transferred to reserves 1,276 667 _____ _____ Basic earnings per share 4 13.56p 12.00p ______ ______ Diluted earnings per share 4 13.18p 11.94p _______ _______ Notes All turnover and results arose from continuing operations. There were no recognised gains or losses in either year other than the profit for the year and on this basis a statement of recognised gains and losses has not been prepared. BALANCE SHEET at 31 December 1999 1999 1998 £'000 £'000 Fixed assets: Tangible assets 371 284 Current assets: Stocks 9,507 6,694 Debtors due within one 15,750 12,173 year 3,882 5,907 Debtors due after more 554 - than one year ______ ______ Cash at bank and in 29,693 24,774 hand Creditors: amounts falling due within one year 9,052 7,853 ______ ______ Net current assets 20,641 16,921 ______ ______ Total assets less current 21,012 17,205 liabilities Creditors: amounts falling due after more than one year 1,926 2,370 Provisions for liabilities and charges 662 1,070 ______ ______ 18,424 13,765 Equity capital and reserves: 700 661 Called up share capital 13,520 10,176 Share premium account 9 9 Capital redemption reserve 4,195 2,919 Profit and loss account ______ ______ 18,424 13,765 Total shareholders' funds ______ ______ The financial statements were approved by the Board of Directors on 27 April 2000. J N Newton Director C R Adams Director RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the year ended 31 December 1999 1999 1998 £'000 £'000 Profit on ordinary 1,805 1,123 activities after taxation Dividends (529) (456) Share options exercised 120 - New shares placed net of 3,263 5,437 expenses ______ _____ Net addition to 4,659 6,104 shareholders' funds Opening shareholders' funds 13,765 7,661 ______ _____ Closing shareholders' funds 18,424 13,765 ______ _____ CASH FLOW STATEMENT for the year ended 31 December 1999 1999 1998 £'000 £'000 Net cash (outflow) / inflow from (807) 203 operating activities Returns on investments and servicing of finance (323) (737) Interest paid Interest received 4 7 _____ _____ Net cash outflow from returns on investments and servicing of finance (319) (730) Taxation Tax paid (116) (83) Capital expenditure Purchase of fixed assets (178) (79) Equity dividends paid (491) (333) Financing Repayment of loans (413) (2,383) Share options exercised 120 - Shares placed (net of expenses) 3,263 5,437 _____ _____ Net cash inflow 2,970 3,054 _____ _____ Increase in cash 1,059 2,032 _____ _____ NOTES TO THE ACCOUNTS 1. The above financial information does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The above figures for the year ended 31 December 1999 are an abridged version of the Company's audited accounts which will be reported on by the Company's auditors before despatch to the shareholders and filing to the Registrar of Companies. 2.Geographical analysis of turnover The directors regard the Company's business as a single segment. Its profit and turnover arises principally in the United Kingdom where its assets are located. The table below analyses turnover by destination: 1999 1998 £'000 £'000 United Kingdom 12,557 11,910 North America 4,975 1,952 Continental Europe 1,338 610 Australasia 1,286 523 Others 707 236 _______ _______ 20,863 15,231 _______ _______ In the directors' opinion, disclosure of the analysis of the profit before tax by geographical segment would be seriously prejudicial to the Company. 3. Dividends 1999 1998 £'000 £'000 Interim, paid 15 107 72 December 1999 Final proposed 3.0p per 422 384 share ______ ______ 529 456 ______ ______ 4. Earnings per share Basic earnings per share has been calculated by reference to earnings of £1,805,000 (1998, £1,123,000) and a weighted average number of Ordinary Shares in issue of 13,314,273 (1998, 9,358,242). The diluted earnings per share has been calculated by reference to a weighted average number of Ordinary Shares in issue of 13,699,566 (1998, 9,404,376). 5. Annual General Meeting The Annual General Meeting will be held at 12 noon on Thursday 22nd June 2000 at 38 Soho Square, London, W1V 5DF. 6. Report and Accounts Copies of the Report and Accounts will be circulated to shareholders shortly and may be obtained after the posting date from the Company Secretary, Bloomsbury Publishing Plc, 38 Soho Square, London, W1V 5DF.

Companies

Bloomsbury Publishing (BMY)
Investor Meets Company
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today