Final Results

RNS Number : 5243H
Bloomsbury Publishing PLC
20 May 2014
 



BLOOMSBURY PUBLISHING PLC

 

("Bloomsbury", the "Company" or the "Group")

 

Unaudited Preliminary Results for the year ended 28 February 2014

 

Bloomsbury Publishing Plc today announces unaudited results for the year ended 28 February 2014.

 

Bloomsbury's strategy to develop a wholly integrated consumer and academic publisher in the major global markets has generated strong revenue growth across key book publishing divisions.

 

 

Financial highlights

 

The highlights for the year ended 28 February 2014 include:

 

·      Revenue up 11% to £109.5 million (2012/13: £98.5 million)

·      Profit before tax and highlighted items* up 4% to £13.0 million (2012/13: £12.5 million)

·      Profit before tax £9.5 million (2012/13: £9.8 million)

·      Total dividend increased by 5.8% to 5.82 pence per share (2012/13: 5.50 pence per share)

·      Net cash balance of £10.0 million (2012/13: £14.6 million) following acquisition investment including Hart Publishing in September 2013

 

 

Operating highlights

 

·      Adult Division - a spectacular year

·      Revenue was £49.9 million (2012/13: £44.3 million), with operating profit before highlighted items £5.4 million (2012/13: £3.7 million)

·      Robust growth in e-book sales with potential for further expansion in high-growth economies

·      Major best sellers including Khaled Hosseini's And the Mountains Echoed and Samantha Shannon's The Bone Season

·      Consistently strong performance from portfolio of high quality cookery books, including Tom Kerridge's Proper Pub Food and significant sales from established authors including Raymond Blanc, Heston Blumenthal, Hugh Fearnley-Whittingstall and MasterChef

 

·      Academic & Professional business delivers robust sales performance

·      Revenue was up 11% to £32.1 million (2012/13: £29.0 million)

·      Revenues from e-books and other digital products now account for 10% of divisional revenue (2012/13: 8%)

·      Launched award-winning new digital services including Drama Online, Actors and Performers and in May 2014 Bloomsbury Collections

·      A new platform, Bloomsbury Fashion Central, to be launched in 2015

·      Voted Academic, Professional and Educational Publisher of the Year in May 2013 and 2014 at the annual industry trade awards

 

·      Strategic investment pays off in Children's & Educational

·      Revenue of £23.6 million (2012/13: £21.3 million)

·      Majority of UK sales growth came from illustrated books in line with our strategy

·      Highlights included Fortunately, the Milk... by Neil Gaiman being shortlisted for the Specsavers Children's Book of the Year and the bestseller Shh! Don't Wake the Royal Baby! by Martha Mumford and Ada Gray

 

·      Digital sales sees significant growth

·      Significant growth in digital sales increasing 21% to £12.2 million, contributing 12.1% of title sales (2012/13: 11.5%)

·      Strong performance in UK and other markets with potential for further growth as digital reading devices become more widespread in the high-growth economies of Asia, Africa, the Middle East and Latin America

 

·      Potential bestsellers for 2014/15

·      Paperbacks including Khaled Hosseini's And the Mountains Echoed, Elizabeth Gilbert's The Signature of All Things and The Bone Season by Samantha Shannon

·      New titles from Tom Kerridge, Paul Hollywood and Hugh Fearnley-Whittingstall

·      The Mime Order by Samantha Shannon

·      We are Pirates by Daniel Handler (published under pen-name Lemony Snicket)

·      Close Call by Stella Rimington

·      Miss Carter's War by Sheila Hancock

·      Can't We Talk About Something More Pleasant? by Roz Chast

·      Social Suppers by Jason Atherton

 

 

Commenting on the results, Nigel Newton, Chief Executive, said:

 

"This has been a very strong year for Bloomsbury.

 

Our Adult division had a spectacular year driven by an excellent list of new books including Khaled Hosseini's And the Mountains Echoed, Samantha Shannon's debut novel The Bone Season, and the continued strength of our cookery list which includes the phenomenal success of Tom Kerridge's Proper Pub Food.

 

We have continued to grasp the opportunities offered by the digital revolution to build a growing profitable, sustainable and balanced twenty-first century publishing business. Underpinning this is our success in developing into a wholly integrated trade and academic publisher in the major markets around the world. During the year we made good progress towards our longer-term strategic targets.

 

We enter 2014/15 with a strong publishing programme including new titles from Tom Kerridge and Paul Hollywood as well as a year-long Harry Potter marketing campaign to promote the newly illustrated series. In May we launched Bloomsbury Collections, an academic e-book platform that will have 3,500 titles by the end of the year."

 

* Highlighted items mainly comprise amortisation of intangible assets, acquisition related legal and other professional fees and restructuring costs.

 

For further information, please contact:

 

Daniel de Belder/Guy Scarborough, Bell Pottinger

+44 (0) 20 7861 3232

Nigel Newton, Chief Executive, Bloomsbury Publishing Plc

+44 (0) 20 7631 5630

 

 

Chief Executive's Review 2013/14

 

Bloomsbury is continuing to grasp the opportunities offered by the digital revolution to build a growing, sustainable and balanced twenty-first century publishing business. We have succeeded in developing into a wholly integrated consumer and academic publisher in the major markets around the world. We are now recognised as one of the finest publishers of both general and academic books and we believe there are valuable synergies between the two.

 

Strong revenue growth, up 11% to £109.5 million, was driven by an excellent list of new books contributing significantly to another successful year for the Group. Profit before tax and highlighted items* of £13.0 million was up 4% on the year ended 28 February 2013 of £12.5 million. Profit before tax was £9.5 million (2012/13: £9.8 million).

 

The majority of our revenue is generated by title sales, which were up by 16% year on year to £101.0 million following the success of our new books. Within this, digital sales rose by 21% to £12.2 million and now make up 12.1% of title sales (2012/13: 11.5%). The strong sales from new books mitigated a fall in higher-margin rights and services revenues, which delivered 8% of total revenue compared to 12% last year.  Rights and services revenues were down 26% to £8.5 million. Within that, copyright licence revenue fell by £2.5 million as fewer deals were completed and at lower amounts. 

 

A robust sales performance in our Academic & Professional division was enhanced by the acquisition of the legal publisher, Hart Publishing ("Hart"), in September 2013, which contributed revenue of £1.8 million and profit before tax of £0.5 million in the six months since its acquisition. Underlying revenue, which excludes the result of Hart and the two businesses we acquired in 2012, Fairchild Books and Applied Visual Arts Publishing, was up by 10% to £101.5 million.

Operating profit margin before highlighted items reduced from 12.6% to 11.9% mainly because of the lower proportion of higher margin rights and services revenue compared to the very strong prior year. During the year we have tendered our colour print purchasing and delivered savings in the second half of the year equivalent to £0.4 million per annum. This was part of a significant reorganisation of our Group Production, which included adopting an XML-based, content-led workflow across the entire Group. This consolidation project will deliver a single, documented and controlled mark-up language suited to over 95% of Bloomsbury's output. This is vital to the success of our publishing strategy for both print and digital.

We have also invested in new staff in IT, Digital Development and Production to facilitate further the strategic move to digital workflows. Combined with additional investment in Operations in the second half of the year, total additional investment in these areas is £0.6 million per annum, as previously announced.

 

We have been investing successfully in the development of online platforms. These include Drama Online, Churchill Archive and Berg Fashion Library, with Bloomsbury Collections launching in May this year. As sales and the number of platforms increase, we are creating our own institutional digital sales force. During 2014/15 there will be overlap costs of £0.3 million as we make this transition.

 

In its first full year of operation, our Indian publishing business in New Delhi generated revenues of £1.5 million and broke even, before the allocation of Group costs. This is a year ahead of our original plan and was due to the excellent sales of Khaled Hosseini's And the Mountains Echoed and some strong local publishing.

The acquisition of Hart Publishing, related restructuring and other strategic initiatives have resulted in £0.8 million of costs which, together with intangible amortisation, are highlighted separately in the financial statements.

 

The effective rate of tax for the year was 18.7% compared to 20.6% for the year ended 28 February 2013. The reduction mainly reflects the lower rate of UK corporation tax which affected current and deferred tax. 

 

Diluted earnings per share, excluding highlighted items, were 14.23 pence, up 9% from 13.11 pence in 2012/13. Total diluted earnings per share for the year were 10.43 pence compared to 9.99 pence in 2012/13.

 

The Group's net cash balance was £10.0 million at 28 February 2014 down from £14.6 million at 28 February 2013. The Group generated £3.9 million of cash in the year before an £8.5 million outflow for acquisition investment. This reflected in our strong operating cash conversion rate of 86% (2012/13: 62%).

 

 

Divisional Review

 

Academic & Professional - Another year of robust sales growth

The year saw a robust sales performance driven by substantial growth in organic digital revenues, the acquisition of Hart Publishing and a strong US performance, reflecting the investments made last year in sales and marketing infrastructure. Profits were also impacted by a reduction in rights and services income and a one-off £0.8 million additional US stock provision.  

The division's results are summarised below:

 

Year ended

28.2.14

£m

 

Year ended

28.2.13

£m

 

Change

Year on year

£m

 

% change

Year on year

Revenue

32.1

29.0

3.1

11%

Underlying** revenue

24.1

23.1

1.0

5%

Operating profit before highlighted items

4.5

5.2

-0.7

-13%

Underlying** operating profit before highlighted items

2.1

3.2

-1.1

-35%

 

** Underlying revenue and profit exclude the results from businesses acquired during the 2013/14 and 2012/13 financial years i.e. Hart Publishing, Fairchild Books and Applied Visual Arts Publishing.

 

Underling revenue growth of 5% compares to 0.7% growth for global revenues at UK academic and professional publishers generally (source: The Publishers Association Sales Monitor). Revenues from e-books and other digital product now account for 10% of divisional revenue (2012/13: 8%). Subscription revenues make up 9% of sales (2012/13: 6%). Rights and services revenues reduced by £1.0 million year on year following a very strong year in 2012/13. The Academic & Professional division generated 29% of Group sales this year (2012/13: 29%).

In May 2014, the division was voted Academic, Educational and Professional Publisher of the Year at The Bookseller Industry Awards for the second year running. This prize goes to the company which best exhibits all-round excellence in its publishing including: the commercial success and innovation of the publishing programme; a sustainable and durable business; particularly with digital (including e-book and journal platforms, Virtual Learning Environments and internal digital workflow) and new ways to engage with learners; excellent relations and engagement with institutions, staff, faculty, teachers, professional organisations, learned societies and/or students; environmental awareness and responsibility; the retention and motivation of staff. The other companies on the shortlist were Oxford University Press, Sage and Palgrave Macmillan.

There is no evidence that competition is lessening in the academic market.  Library budgets worldwide remain constrained.  However, we expect digital sales to continue to grow much faster than the market overall as educational establishments at all levels adopt new ways of supporting students and faculty.

We have seen sizeable revenue growth albeit from a low base from Bloomsbury India and Bloomsbury Australia.  Sales to market of the division's academic products and services are 50% outside the UK, and we expect this percentage to increase.

The acquisition of Hart Publishing is consistent with Bloomsbury's strategy to increase its proportion of academic and professional revenues to balance revenues generated from consumer sales. Academic and professional revenues are more predictable and have lower related costs of sale with higher margins and are much less reliant on retail bookshop sales. Around 50% of Hart's revenue is generated outside the UK, thereby reducing Bloomsbury's overall exposure to the UK book market. The acquisition will also enable the further development of Hart's e-book catalogue and expand the Bloomsbury Professional digital range of services to or for lawyers and accountants.

Hart's leading list of authors is complementary to Bloomsbury's existing academic and professional lists, offering Bloomsbury the ability to improve revenue momentum within its Academic & Professional division in both the UK and a range of overseas markets. Hart published over 150 new books in the last twelve months and launched a new journal, Restorative Justice, and has a larger programme this year.

Bloomsbury Professional's Irish operation had a very good year of growth. Key to this success were new editions of Wylie, Irish Land Law and McMahon and Binchy, Law of Torts, both of which have been shortlisted for the Dublin Solicitors Bar Association's Irish Law Book of the Year award.   The sixth online service from the Irish team, Irish Criminal Law, was launched in December 2013. This has been a strong addition to our highly regarded range of services and significant contracts have been won with the Attorney General's Office, the Law Library of Ireland and the Garda Síochána Ombudsman Commission. In September 2013, in association with PricewaterhouseCoopers, we published the Manual of Accounting New UK GAAP which has quickly established a reputation as one of the leading products dealing with the new financial reporting landscape for unlisted companies. 

During the year Bloomsbury Professional also launched the online service, National Infrastructure Planning Service.

We continue to invest in new digital services for academic customers.  Responding to increasing demand for a high quality online research tool for drama and literature students, professors and teachers, Drama Online was launched in March 2013 featuring content from Bloomsbury Methuen Drama, Arden Shakespeare and Faber & Faber. It currently contains over 1,000 plays in a fully cross-searchable format which allows students to interact with Character Grids and Part Books, as well as search for plays via cast size and monologues via gender. From January 2015 the collection will grow significantly to accommodate new content partners, Nick Hern Books and L.A. Theatre Works. Drama Online is used in leading higher education institutions around the world. 

2013 also saw the launch of Actors and Performers, www.actorsandperformers.com, a professional community website for actors with blogs and advice from professionals and industry contact information from Actors' Yearbook available on subscription.

In May 2014, we launched Bloomsbury Collections, an e-book platform which will make available the division's entire research-led publishing programme.  We expect around 3,500 titles to be made available on the platform by the end of the calendar year.  In addition, Bloomsbury has recruited an institutional sales team, which will be responsible for selling the increasingly wide range of new services to libraries and institutions around the world.  They will also be responsible for selling Bloomsbury's growing list of academic journals - currently over 50 - with new journal launches well advanced for this financial year.  This will further reduce the Group's reliance on UK sales.

A new online platform, Bloomsbury Fashion Central, will be launched in 2015. It will feature Fairchild Books, Berg Fashion Library and Fashion Photography Archive. The investment in this platform aligns with the ongoing industry migration from print to digital and will cement Bloomsbury's dominant position in this niche. Beyond offering textbook rentals to students, the platform will provide a robust e-learning environment that will enable institutional and B2B subscription sales, raise profile and expand our market share in international markets.

 

Adult - a spectacular year in both print and digital, fiction and non-fiction

 

Revenue was £49.9 million (2012/13: £44.3 million). Operating profit before highlighted items was £5.4 million (2012/13: £3.7 million). The operating profit margin before highlighted items for the division was 11% (2012/13: 8%). Print sales increased by 17.3%, while digital sales increased by 26% to £7.1 million, representing 14% of sales (2012/13: 13%).

 

Whilst US e-book sales growth has moderated, the UK and other markets still see robust growth with potential for even more as digital reading devices become ever more widespread in the high-growth economies of Asia, Africa, the Middle East and Latin America.

 

Samantha Shannon's The Bone Season was simultaneously published worldwide and appeared on the New York Times and the Sunday Times bestseller lists in addition to enjoying success throughout the English-speaking world in print, digital and digital audio. We had a very successful global marketing campaign driving it to bestseller lists across UK, US and India. The film rights have been acquired by 20th Century Fox/Chernin Entertainment. The next volume of this seven-book series, The Mime Order, will be published in October 2014. Khaled Hosseini's brilliant and moving And the Mountains Echoed repeated the successes of The Kite Runner and A Thousand Splendid Suns and notably had sales of more than 100,000 copies through the recently established Bloomsbury India office and well over 100,000 copies in e-book formats.

Elizabeth Gilbert's new novel, The Signature of All Things, a finalist for the Wellcome Book Prize, is a very different book from her bestselling memoir Eat, Pray, Love.  It has received outstanding reviews globally and had great sales, particularly in Australia.

There was also new fiction from Margaret Atwood with her novel MaddAddam, George Saunders, who won the inaugural Folio Prize for new fiction for Tenth of December, Jhumpa Lahiri, who was shortlisted for the Man Booker Prize for The Lowland, Colum McCann, the winner of the National Book Award for Transatlantic, Aminatta Forna, Carlos Acosta and many others.

In non-fiction we had a stellar year with William Dalrymple's Return of A King being shortlisted for the Samuel Johnson Prize, Glenn Frankel's The Searchers on the New York Times bestseller list, Larry Sabato's The Kennedy Half-Century on the New York Times bestseller list, David Kynaston's Modernity Britain, Damian Barr's Maggie & Me, Amy Chua's and Jed Rubenfeld's controversial The Triple Package, Shiv Khera's You Can Win and You Can Sell (from Bloomsbury India), Jesmyn Ward's memoir Men We Reaped, and the bestsellers, Tim Cope's On the Trail of Genghis Khan and Simon Singh's The Simpsons and Their Mathematical Secrets.

Our cookery list continues to thrive with the phenomenal success of Tom Kerridge's Proper Pub Food and the continuing sales of Raymond Blanc, Heston Blumenthal, Hugh Fearnley-Whittingstall, Chris and Jeff Galvin, Fergus Henderson, Paul Hollywood,  Atul Kochar, Leith's, Masterchef, Russell Norman, Sarah Raven, Niki Segnit, Vivek Singh, Marcus Veherne and many others.

John Wisden's range of cricket books had its best year ever, celebrating the 150th edition of The Cricketers' Almanack, which was reviewed for the first time in The Wall Street Journal and is enjoying unprecedented press and Internet coverage, including a Google "Doodle" on 5th September 2013. Our sports list overall grew strongly, particularly in cycling.

New titles in 2014 include Kwasi Kwarteng's War and Gold, Kamila Shamsie's A God in Every Stone, Mumsnet's cookbook Top Bananas, Alex Bellos's Alex Through the Looking-glass, Ben Macintyre's A Spy Among Friends, which went to Number One on the Sunday Times bestseller List, Jason Atherton's Social Suppers and Roz Chast's Can't We Talk About Something More Pleasant? which reached Number One on the New York Times Graphic Books bestseller list in the first month of publication.

We continued to innovate with Bloomsbury Reader, Public Library Online, Reed's Nautical Almanac for the iPad (sponsored by Aberdeen Global Asset Management), and most recently the launch of www.writersandartists.co.uk/self-publishing, the essential comparison guide for authors to identify the best self-publishing companies.

 

Children's & Educational - Strategic investment pays off

Revenue was £23.6 million (2012/13: £21.3 million). Operating profit before highlighted items was £2.0 million (2012/13: £1.1 million). The operating profit margin before highlighted items for the division was 8% (2012/13: 5%).

Much of the growth this year came from sales of new books within the UK, with a significant proportion of that coming from illustrated books in line with our strategy. The division's UK trade print sales increased by 21.5% in a market which declined by 3.6% (source: Nielsen Bookscan).  In the US, revenues were down by 1%, mainly due to soft e-book sales.

Our strategic priorities remain focused on commercial global acquisitions for the consumer lists and targeted strategic marketing of our strong brands. Our new imprint Bloomsbury Activity Books and the Bloomsbury Picture Book list remain growth focuses - the breadth of publishing achieved by the launch of these two lists shifts our world rights ownership from 43% of the list in 2011 to 63% of the list in 2013. 13% of sales from our consumer new releases in the year were illustrated titles compared to 7% in 2012/13.

The education business remains stable and profitable. Focus for the year has been on the development of a new print edition and online subscription service for Music Express, the UK's best-selling and award-winning primary classroom music resource.  The online service will launch in August 2014.  The division produced The RSC Shakespeare Toolkit for Primary Teachers, an active approach to bringing Shakespeare's plays to life in the classroom.

Digital sales in the division fell in value in the year to 8% of total net sales from 10%. In the US digital sales fell from 20% of total net sales to 16%, whereas in the UK they were broadly as last year. The digital market for children's titles is still predominantly led by Young Adult fiction.  Bloomsbury Spark, our e-first imprint, launched with seven titles in December and sales have been good, particularly in the US.

Publishing highlights included Fortunately, the Milk... by Neil Gaiman. It was shortlisted for the Specsavers Children's Book of the Year and chosen by the independent sector as the only children's book in the independent bookshops Best Books of the Year. The author spoke to an audience of over 2,500 at a London event held in conjunction with Time Out and Foyles. We have successfully acquired a graphic novel of The Graveyard Book in two parts, a new middle grade novel for publication in 2016 and world rights excluding North America in a new illustrated book called The Sleeper and the Spindle, to be illustrated by Chris Riddell.

Jessica Day George was in the New York Times bestseller list with Wednesdays in the Tower and  sales grew strongly. Sarah J. Maas also hit the list with her sequel to Throne of Glass, Crown of Midnight. This publication was supported by our biggest global marketing campaign of the year. Throne of Glass is now available in 16 languages.

Bloomsbury Picture Books had a strong year with Shh! Don't Wake the Royal Baby! by Martha Mumford and Ada Gray hitting the bestseller lists in July and being the biggest selling debut picture book of the year in the UK.

Jim Kay has been announced as the illustrator of the colour illustrated editions of Harry Potter. We also launched our new jacket look for the children's editions in March, by Jonny Duddle, and announced our year-long Harry Potter marketing campaign. The new editions are being published in September 2014.

We remain dedicated and passionate about the future of children's publishing, in all formats, and continue to encourage a love of reading.

 

Information - expanding knowledge hubs

The core activities of Information are the development of IP-rich knowledge hubs in cooperation with external partners, the provision of management, publishing and consultancy services and the publication of business, management, finance and reference titles in print and digital formats.

Revenue was £3.9 million, up 2% on £3.8 million for 2012/13. Operating profit before highlighted items was £1.1 million, down from £2.3 million in 2012/13 mainly due to higher project costs and a strategic investment in new staff to move the division from purely a UK base to a more global reach. Rights and services revenue of £3.4 million made up 89% of total revenue (2012/13: 90%).

Key achievements in the year for the division were a new content licence agreement with Lloyds Bank, a new publishing services arrangement with Ernst & Young and a publishing consultancy for University of London.

Our flagship knowledge hub, www.QFinance.com, is the website of best practice for finance professionals created by Bloomsbury in partnership with the Qatar Financial Centre Authority.  It has several hundred thousand unique visitors per month, the impact of which is enhanced by the use of social media. 

In May 2014 we launched IZA World of Labor (wol.iza.org), a knowledge hub targeted at policy makers in the field of labour economics which covers topics such as migration and minimum wage. It was previewed in Washington D.C. in November 2013 to an audience including the World Bank and International Monetary Fund. 

Bloomsbury continues its provision of management services to the Qatar Foundation to manage Bloomsbury Qatar Foundation. The Open Access journals portal, www.qscience.com showed good growth and its first journals are being tracked for impact factors, a testimony to the quality of the content.

This expansion of activity and customer base is helping to deliver the division's strategy to increase revenues from digital knowledge hubs as part of the Group's overall digital strategy and to broaden the base for the services, partnerships and consultancy in a complex economic environment. We are working on the renewal of two contracts with our long-term partners.

The investment already made, together with further investment in the new financial year is intended to help increase the pipeline of project and long-term contracts. The market for the services which Information specialises in remains complex, but more positive economic conditions will also be beneficial.  The division remains well placed to exploit digital, management services and other innovative business opportunities for the Group.

Dividend

The Group has a progressive dividend policy and aims to keep dividend cover in excess of two. In line with this policy the Directors are recommending a final dividend of 4.84 pence per share, which subject to shareholder approval at our Annual General Meeting on 22 July 2014, will be paid on 24 September 2014 to shareholders on the register at the close of business on 29 August 2014. Together with the interim dividend, this makes a total dividend for the year ended 28 February 2014 of 5.82 pence per share, a 5.8% increase on the 5.50 pence dividend for the year ended 28 February 2013. Over the past six years the dividend has increased at a compound annual growth rate of 6%.

 

Bloomsbury's Strategy

Bloomsbury is a global, fully integrated publisher of books and other media for general readers, children, students, researchers and professionals throughout the world. Bloomsbury uniquely offers authors access to these multiple markets in multiple formats throughout the world: in print, through e-books, through digital downloads and apps; in schools, in libraries, in universities, and in terrestrial and internet bookshops, with entrepreneurial teams in New York, London, New Delhi and Sydney serving all territories.

The Academic & Professional division's aim is to be the number one applied visual arts publisher in the world and the number one independent humanities and social science publisher in Europe, with half of its revenue derived from digital and subscription-based products.

The Adult division aims to be the number one publisher of choice in cookery, sport and natural history and in the top ten for quality fiction worldwide.

Our overall strategy for Children's & Educational books is to be recognised for great author care, independent spirit and innovation. Over the next five years we will develop Bloomsbury Activity books to be a leading, profit generating list for the division, with half of the consumer frontlist being illustrated books and 25% of all publishing being in a digital format.

The Information division strategy is to increase revenues from digital knowledge hubs and broaden the base for services and partnerships. Over the next few years we intend to expand from the division's UK base and develop a global capability.

The Group is making progress towards these longer-term targets.

Bloomsbury's overall long-term strategy for growth is centred on building its non-consumer publishing, specifically its Academic & Professional division, to balance the consumer revenues in the business. The business has a growing portfolio of valuable intellectual property, an innovative staff team and the respected Bloomsbury brand to help achieve its aims.

 

Outlook

Bloomsbury's publishing programme for 2014/15 includes new titles from Tom Kerridge, Paul Hollywood and Hugh Fearnley-Whittingstall, as well as a range of paperbacks from this year's successful hardback list including And the Mountains Echoed by Khaled Hosseini, The Signature of All Things by Elizabeth Gilbert, The Bone Season by Samantha Shannon and Can't we talk about something more pleasant? by Roz Chast.

In 2014/15 we will continue to invest in the business in a number of areas; the launch of new digital services for academic and general customers, a new internal institutional digital sales force, a year-long Harry Potter marketing campaign, which will accompany the new jackets, and new staff for global business development at Bloomsbury Information. 



 

 

UNAUDITED CONSOLIDATED INCOME STATEMENT

 

FOR THE YEAR ENDED 28 FEBRUARY 2014

 

 

 






Continuing operations

Notes

£'000

Revenue

Cost of sales

Gross profit

Marketing and distribution costs

Administrative expenses

Operating profit before highlighted items

Highlighted items

Operating profit

Finance income


Finance costs

Profit before taxation and highlighted items

Highlighted items

Profit before taxation

Taxation

Profit for the year from continuing operations



Discontinued operation


Loss for the year from discontinued operation

Profit for the year attributable to owners of the Company


Earnings per share attributable to owners of the Company - continuing operations

Basic earnings per share

Diluted earnings per share

 

 

 

 

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

FOR THE YEAR ENDED 28 FEBRUARY 2014

 

 

 




Profit for the year

Other comprehensive income

Items that may be reclassified to the income statement:

Currency translation differences on foreign operations

Deferred tax on share-based payments


Items that may not be reclassified to the income statement:

Remeasurements on the defined benefit pension scheme

Other comprehensive income for the year net of tax

Total comprehensive income for the year attributable to the owners of the Company

 

 

Arises from:



Continuing operations

9,226

Discontinued operation

Total comprehensive income for the year attributable to the owners of the Company



 

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

           

AS AT 28 FEBRUARY 2014

 





Notes

Assets




Goodwill

Other intangible assets

Property, plant and equipment

Deferred tax assets

Total non-current assets


Inventories

Trade and other receivables

Cash and cash equivalents

Total current assets

Total assets


Liabilities

Retirement benefit obligations

Deferred tax liabilities

Other payables

Provisions

Total non-current liabilities


Trade and other payables

Current tax liabilities

Provisions

Total current liabilities

Total liabilities

Net assets


Equity  

Share capital

Share premium

Translation reserve

Other reserves

Retained earnings

Total equity attributable to owners of the Company

 

 


UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



At 29 February 2012

Profit for the year

Other comprehensive income

Exchange differences on translating foreign operations

Deferred tax on share-based payment transactions

Total comprehensive income for the year

Transactions with owners

Dividends to equity holders of the Company

Share options exercised

Share-based payment transactions

Total transactions with owners of the Company

At 28 February 2013

Profit for the year

Other comprehensive income

Exchange differences on translating foreign operations

Remeasurements on the defined benefit pension scheme

Total comprehensive income for the year

Transactions with owners

Dividends to equity holders of the Company

Share options exercised

Deferred tax on share-based payment transactions

Share-based payment transactions

Total transactions with owners of the Company

At 28 February 2014

 

 


UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

FOR THE YEAR ENDED 28 FEBRUARY 2014

 




Cash flows from operating activities

Continuing operations

Profit before taxation

Finance income

Finance costs

Operating profit

Adjustments for:

Depreciation of property, plant and equipment

Amortisation of intangible assets

Gain on bargain purchase

Loss on sale of property, plant and equipment

Share-based payment charges


Increase in inventories

(Increase)/decrease in trade and other receivables

Increase/(decrease) in trade and other payables

Cash generated from operating activities

Income taxes paid

Net cash generated from operating activities

Cash flows from investing activities

Purchase of property, plant and equipment

Purchase of businesses, net of cash acquired

Purchases of intangible assets

Sale of discontinued operations

Interest received

Net cash used in investing activities

Cash flows from financing activities

Equity dividends paid

Interest paid

Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Exchange (loss)/gain on cash and cash equivalents

Cash and cash equivalents at end of year




NOTES

1.  Accounting policies

 

The above unaudited financial information does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The above figures for the year ended 28 February 2014 are an abridged version of the Group's financial statements which will be reported on by the Group's auditors before dispatch to the shareholders and filing with the Registrar of Companies and as such do not contain full disclosures under International Financial Reporting Standards ("IFRS"). The preliminary announcement was approved by the Board and authorised for issue on 19 May 2014.

 

The Group's financial statements have been prepared in accordance with IFRS and International Financial Reporting Interpretations Committee ("IFRIC") interpretations adopted by the European Union ("EU") at the time of preparing the Group's financial statements and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies applied in the year ended 28 February 2014 are consistent with those applied in the financial statements for year ended 28 February 2013 with the exception of a number of new accounting standards which have not had a material impact on the Group's results.

 

The Group's statutory financial statements for the year ended 28 February 2013 have been lodged with the Registrar of Companies.  These financial statements received an audit report which was unqualified and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying their report or a statement under section 498(2) or section 498(3) of the Companies Act 2006.

 

2.  Segmental analysis

 

The Group is comprised of four worldwide publishing divisions: Adult, Children's & Educational, Academic & Professional and Information. These divisions are the basis on which the Group reports its primary segment information. Segments derive their revenue from book publishing, sale of publishing and distribution rights, management and other publishing services.

 

The analysis by segment for continuing operations is shown below:

 

Year ended 28 February 2014


External revenue

        3,876

Cost of sales

Gross profit

Marketing and distribution costs

Contribution before administrative expenses

Administrative expenses excluding highlighted items

Operating profit before highlighted items / segment result

Intangible asset amortisation

Other highlighted items

Operating profit/(loss)

Finance income

Finance costs

Profit/(loss) before taxation

Taxation

Profit/(loss) for the year from continuing operations








Depreciation

27

Capital expenditure

 

 

2.         Segmental analysis (continued)

 

Year ended 28 February 2013

Adult

Children's & Educational

Unallocated

Total


£'000

£'000

£'000

£'000

£'000

£'000

External revenue

44,340

21,290

29,038

3,811

-

98,479

Cost of sales

(22,010)

(10,090)

(9,041)

(101)

-

(41,242)

Gross profit

22,330

11,200

19,997

3,710

-

57,237

Marketing and distribution costs

(5,962)

(3,304)

(3,397)

(70)

-

(12,733)

Contribution before administrative expenses

16,368

7,896

16,600

3,640

-

44,504

Administrative expenses excluding highlighted items

(12,658)

(6,756)

(11,361)

(1,315)

-

(32,090)

Operating profit before highlighted items / segment result

3,710

1,140

5,239

2,325

-

12,414

Intangible asset amortisation

(150)

(181)

(1,562)

(5)

(423)

(2,321)

Other highlighted items

-

-

-

-

(337)

(337)

Operating profit/(loss)

3,560

959

3,677

2,320

(760)

9,756

Finance income

-

-

-

-

117

117

Finance costs

-

-

-

-

(26)

(26)

Profit/(loss) before taxation

3,560

959

3,677

2,320

(669)

9,847

Taxation

-

-

-

-

(2,029)

(2,029)

Profit/(loss) for the year from continuing operations

3,560

959

3,677

2,320

(2,698)

7,818








Depreciation

246

118

161

21

-

546

Capital expenditure

-

-

-

-

2,892

2,892

 

 

Total assets




Adult

Children's & Educational

Academic & Professional

Information

Unallocated

Total assets

 

 

 

2.         Segmental analysis (continued)

 

External revenue by destination




Destination






Year ended 28 February 2014






United Kingdom (country of domicile)

North America

Continental Europe

Australasia

Middle East and Asia

Rest of the world

Overseas countries

 Total






Year ended 28 February 2013






United Kingdom (country of domicile)

North America

Continental Europe

Australasia

Middle East and Asia

Rest of the world

Overseas countries

 Total

 

During the year sales to one customer exceeded 10% of Group revenue (2013: one customer). The value of these sales was £21,507,000 (2013: £14,059,000).

 

 

External continuing revenue by product type

 

Year ended


28 February


2014


£'000

Print

88,860

Digital

12,175

Rights and services1

8,461

Total

109,496

 

1 Rights and services revenue includes income from copyright and trademark licences, management contracts, advertising and publishing services income.



 

 

2.         Segmental analysis (continued)

 

Analysis of non-current assets (excluding deferred tax assets) by geographic location

 

28 February


2014


£'000

United Kingdom (country of domicile)

58,934

North America

4,962

Other

70

Total

63,966

 

 

3.         Highlighted items







 Notes

Legal and other professional fees


Restructuring costs


Business set up costs


Gain on bargain purchase

Other highlighted items

Amortisation of intangible assets

Highlighted items attributable to continuing operations

Highlighted items attributable to discontinued operation 

Total highlighted items


 

 

Highlighted items charged to operating profit comprise significant non-cash charges and non-recurring items which are highlighted in the income statement because, in the opinion of the Directors, separate disclosure is helpful in understanding the underlying performance of the business.

 

All continuing highlighted items are included in administrative expenses in the income statement.

 

Legal and other professional costs of £218,000 were incurred primarily in relation to the acquisition of Hart Publishing Limited and the trade and assets of New Holland, see note 7 (2013: £76,000 incurred primarily in relation to the acquisition of Fairchild Books and Applied Visual Arts).

 

Restructuring costs of £547,000 have been incurred as a result of the Group's acquisition activities and the One Global Bloomsbury strategic reorganisation (2013: £342,000 incurred as a result of the Group's acquisition activities).

 

In the prior period £129,000 was incurred in relation to the set-up of Bloomsbury India and a gain on a bargain purchase of £210,000 was recognised in relation to the acquisition of Fairchild Books.

 

 

 

4.         Taxation

Factors affecting tax charge for the year

The tax on the Group's profit before tax differs from the standard rate of corporation tax in the United Kingdom of 23.08% (2013: 24.17%).  The reasons for this are explained below:

 



Profit before taxation

Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 23.08% (2013: 24.17%)

Effects of: 

Non-deductible revenue expenditure

Non-qualifying depreciation

Share-based payment transactions

Movement in unrecognised temporary differences

Different rates of tax in foreign jurisdictions

Tax losses utilised

Movement in deferred tax rate

Adjustment to tax charge in respect of prior years

Current tax

Deferred tax

Tax charge for the year before highlighted and other non-recurring items

Highlighted and other non-recurring items:

Disallowable costs incurred on acquisitions, abortive acquisitions and moving head office

Disallowable gain on bargain purchase

Utilisation of Bloomsbury Verlag losses in the UK

Tax charge for the year

 

 

5.         Dividends




Amounts paid in the year



Prior period final 4.56p dividend per share (2013: 4.31p)

Interim 0.98p dividend per share (2013: 0.94p)

Total dividend payments in the year

Amounts arising in respect of the year

Interim 0.98p dividend per share for the year (2013: 0.94p)

Proposed 4.84p final dividend per share for the year (2013: 4.56p)

Total dividend

 

The Directors are recommending a final dividend of 4.84 pence per share, which, subject to shareholder approval at the Annual General Meeting, will be paid on 24 September 2014 to shareholders on the register at close of business on 29 August 2014.  The ex-dividend date is 27 August 2014.

6.         Earnings per share

The basic earnings per share for the year ended 28 February 2014 is calculated using a weighted average number of Ordinary shares in issue of 72,852,467 (2013: 72,331,464) after deducting 898,244 (2013: 1,265,313) shares held by the Employee Benefit Trust. 

 

The diluted earnings per share is calculated by adjusting the weighted average number of Ordinary shares to take account of all dilutive potential Ordinary shares, which are in respect of unexercised share options and the performance share plan.

 




Weighted average shares in issue

Dilution

Diluted weighted average shares in issue



Profit after tax from continuing operations

Loss after tax from discontinued operation

Profit after tax attributable to owners of the Company


Basic earnings per share

From continuing operations

From discontinued operation

Diluted earnings per share

From continuing operations

From discontinued operation


6.         Earnings per share (continued)




Adjusted profit from continuing operations (below)

Adjusted profit attributable to owners of the Company


Adjusted basic earnings per share

From continuing operations

Adjusted diluted earnings per share

From continuing operations

 

Adjusted profit is derived as follows:

 

Profit before tax from continuing operations

 9,479

 9,847

 

Amortisation of intangible assets

 2,764

 2,321

 

Other highlighted items

 765

 337

 

Adjusted profit before tax from continuing operations

 13,008

 12,505

 

 

Tax expense from continuing operations

 1,776

 2,029

Deferred tax movements on goodwill and acquired intangible assets

 582

 518

Tax expense on other highlighted items

 140

 116

Utilisation of Bloomsbury Verlag losses in the UK

 -

 43

Adjusted tax from continuing operations

 2,498

 2,706

 

Adjusted profit from continuing operations

                10,510

                     9,799

 

 

The Group includes the benefit of tax amortisation of goodwill and other intangibles as this benefit more accurately aligns the adjusted tax charge with the expected cash tax payments.

 

7.  Acquisitions

 

Hart Publishing

On 2 September 2013 the Group acquired the issued share capital of Hart Publishing Limited ('Hart'), the Oxford-based legal publisher, from the management shareholders. An initial consideration of £6.5 million was paid in cash on completion from Bloomsbury's own cash reserves. A further cash consideration of up to a maximum of £0.5 million is payable on the achievement of certain revenue and title number targets for the period ending 31 March 2014.  The Group expects these targets to be met.  This is net of a working capital adjustment of £288,000 as the closing working capital was less than the target closing working capital anticipated at the point of acquisition.  The acquisition is consistent with Bloomsbury's strategy to increase its proportion of academic and professional revenues to 50% of total sales in five years' time. Around 50% of Hart's revenue is generated outside the UK, thereby increasing Bloomsbury's benefit from the global book market. The acquisition will also enable the Company to further develop its e-book publishing and expand the Bloomsbury Professional digital suite of services.

           

The table below summarises the fair values to the Group included in the consolidated financial statements of the major categories of assets and liabilities of Hart at the date of acquisition. 

 

Net assets acquired

Identifiable intangible assets

Property, plant and equipment

Inventories

Trade and other receivables

Deferred tax liability

Payables and provisions

Total net assets acquired

Goodwill




Cash consideration



Working capital adjustment



Contingent consideration



Total consideration



 

Identifiable intangible assets of £2,196,000 consist of publishing rights of £621,000, imprint of £1,110,000 and customer relationships of £465,000. The publishing rights have a useful life of between 10 and 13 years, imprint 20 years and customer relationships 14 years.

 

The gross contractual trade receivable at acquisition is £556,000 of which £16,000 is the best estimate of the contractual cash flows that are not expected to be collected.

 

Transaction costs of £159,000 were expensed in the year within administrative expenses.

 

From 2 September 2013 revenue of £1,753,000 and profit before tax attributable to owners of the Company of £538,000 have been included in the consolidated income statement in relation to Hart.

 

If the acquisition had occurred on 1 March 2013 the revenue and profit attributable to shareholders of the combined entity from continuing operations for the current year would have been £110,648,000 and £7,738,000 respectively. These pro forma amounts do not include any possible synergies from the acquisition. The pro forma information is provided for comparative purposes only and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of operations of the combined companies.

 

New Holland

On 4 September 2013 the Group acquired the natural history list from New Holland Publishers for an initial consideration of £389,000.  A further cash consideration of £50,000 will be payable a year after the acquisition date subject to New Holland providing a complete set of novation agreements in respect of the authors. 

 

Goodwill of £116,000 and intangible assets of £209,000 were recognised on acquisition.  The intangible assets consist entirely of publishing rights. The publishing rights have a useful life of 13 years.

 

8.  Trade and other receivables



Gross trade receivables

Less: provision for impairment of receivables

Less: provision for returns

Net trade receivables

Income tax recoverable

Other receivables

Prepayments and accrued income

Total trade and other receivables

 

As at 28 February 2014 £5,120,000 (2013: £4,403,000) of prepayments and accrued income are expected to be recovered after more than 12 months.

 

Trade receivables principally comprise amounts receivable from the sale of books due from distributors. The majority of trade debtors are secured by credit invoices, third party distributors and letters of credit on the main UK third party distributor.

 

A provision for the return of books by customers is made with reference to the historic rate of returns.

 

Prepayments and accrued income include net advances. A provision is held against gross advances payable in respect of published titles advances which may not be fully earned down by anticipated future sales.

 

 

9. Annual General Meeting

 

The Annual General Meeting will be held at on 22 July 2014.

 

 

10. Report and Accounts

 

Copies of the Annual Report and Financial Statements will be circulated to shareholders in July and can be viewed after the posting date on the Bloomsbury website.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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