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Unaudited Interim Results for the six months ended 31 August 2016

Bloomsbury Publishing Plc announces results for the six months ended 31 August 2016.

 

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The Group is trading in line with management’s expectations. Traditionally, sales of trade titles peak for Christmas and sales of academic titles in the autumn at the beginning of the academic year. We therefore expect our sales to be significantly second-half weighted, as in past years.

Group Financial Highlights

  • Total revenues up 19% to £62.7 million (2015: £52.7 million)
  • Digital revenues up 8% to £7.7 million (2015: £7.1 million)
  • Print revenues up 25% to £51.7 million (2015: £41.4 million)
  • Adjusted* profit before tax £1.5 million (2015: £1.9 million)
  • Profit before tax £0.1 million (2015: £0.3 million)
  • Net cash up to £9.1 million (2015: £0.9 million)
  • Interim dividend up 4% to 1.10 pence per share (2015: 1.06 pence per share)
  • Adjusted* diluted earnings per share 1.65 pence (2015: 2.06 pence)
  • Diluted earnings per share 0.15 pence (2015: 0.36 pence)

Consumer division

  • Revenues increased 36% to £37.3 million (2015: £27.5 million), driven by Children’s Trade where revenues increased 63% to £23.9 million
  • J.K. Rowling’s Harry Potter continued its growth – with the children’s editions selling well and strong sales of the Illustrated Editionof Harry Potter and the Philosopher's Stone
  • Sarah J. Maas revenues grew 101% year on year with the publication of the second book in the A Court of Thorns and Roses series, A Court of Mist and Fury
  • Adult Trade division revenues increased by 5% to £13.4 million in the period, including Peter Frankopan’s The Silk Roads and Hannah Rothschild’s The Improbability of Love
  • Paul Beatty’s The Sellout, published by Oneworld and distributed by Bloomsbury in Australia, won the Man Booker Prize on Tuesday

Non-Consumer division

  • Total revenues of £25.4 million (2015: £25.2 million), including the effect of the end of the Qatar Foundation contract and the acquisition of certain family law publishing titles as announced in December 2015
  • Academic and professional digital resources revenues doubled year on year to £2.0 million (2015: £1.0 million)
  • Bloomsbury was shortlisted for Academic, Educational and Professional Publisher of the Year at the Bookseller Industry Awards for the fourth year in a row
  • Some key bestselling titles from the Non-Consumer division include The 100-Year Life and Age of Discovery, selected respectively for the shortlist and longlist for the 2016 Financial Times and McKinsey Business Book of the Year Award

 

Note: Pro forma historic financial results

In May 2016, Bloomsbury announced a reorganisation from four to two divisions, Consumer and Non-Consumer, to simplify our business and increase our customer focus. Historic results for the years ending 29 February 2016 and 28 February 2015 have been restated in line with this new structure and are available at www.Bloomsbury-ir.co.uk.

 

Note: *Adjusted results are calculated before deducting highlighted items. Highlighted items mainly comprise amortisation of acquired intangible assets and costs relating to acquisitions and major restructuring.

 

Commenting on the results, Nigel Newton, Chief Executive of Bloomsbury Publishing, said:
“This has been a strong period for Bloomsbury. We are making good progress towards our strategic objectives with an increase in revenues of 19% and growth in each of our territories. The Children’s Trade division delivered another outstanding performance, increasing revenues by 63%.

The Group is trading in line with management’s expectations. We have a strong second half list including the Illustrated Editionof Harry Potter and the Chamber of Secrets, Fantastic Beasts and Where to Find Them - Newt Scamander: A Movie Scrapbook, Empire of Storms by Sarah J. Maas, the Throne of Glass Colouring Book, Mad Enchantment by Ross King, Tom Kerridge’s Dopamine Diet, Commonwealth by Ann Patchett, Bloomsbury Professional’s Tax Looseleafs and Last Testament: In His Own Words by Pope Benedict XVI. October is the peak period for academic book sales and Christmas for the sales of consumer books. We therefore expect our results to continue to be significantly second-half weighted, as in past years.

In the coming months we expect to deliver the platform and associated infrastructure to accelerate digital revenues in line with Bloomsbury’s 2020 plan, and specifically to see the launch of the Arcadian Library Online and Bloomsbury Popular Music, the latest two resources in our growing range of digital products.”

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Overview

We are pleased with progress for the six months ended 31 August 2016. Revenues were up 19%, £10.0 million year on year to £62.7 million, with growth in each of our territories. The Children’s Trade division revenues were up 63% on the previous period driven by several key titles including the Harry Potter Box Set, the Illustrated Edition of Harry Potter and the Philosopher's Stone and A Court of Mist and Fury by Sarah J. Maas. As expected, adjusted profit before taxation was down by £0.4 million to £1.5 million following the end of the term of the contract for publishing services with the Qatar Foundation, as announced in December 2015. Reported profit before tax was £0.1 million (2015: £0.3 million). The Group is trading in line with management’s expectations. As with prior years, the Group’s results continue to be substantially weighted towards the second half of the year, with October being the peak period for academic book sales and Christmas the peak season for sales of consumer books.

Print revenues grew 25% to £51.7 million (2015: £41.4 million) and made up 87% of the Group’s total title revenues in the period, demonstrating a continued demand for books in print format. Digital revenues grew 8% to £7.7 million (2015: £7.1 million), including an excellent performance by digital resources in our Non-Consumer division and despite a 4% fall in total e-book sales reflecting industry trends. Rights and services revenues were £3.3 million (2015: £4.1 million) reflecting the end of the term of the Qatar Foundation contract. Foreign exchange movements in the period have increased revenues by £2.4 million (4%) and profits by £0.2 million. Using constant exchange rates, total revenues increased by 14% to £60.3 million, with print revenues increasing by 20% and digital revenues by 4%.

Highlighted items of £1.3 million (2015: £1.5 million) include £0.9 million (2015: £0.9 million) of amortisation of acquired intangible assets. Other highlighted items of £0.4 million include costs for the integration of the Osprey acquisition and the major restructuring of the global sales and US finance teams. The effective rate of tax for the period was 25% (2015: 20%) in line with guidance given in May 2016. Adjusted diluted earnings per share were 1.65 pence (2015: 2.06 pence). Diluted earnings per share for the period were 0.15 pence (2015: 0.36 pence). The business continues to retain its strong balance sheet with £9.1 million of net cash at 31 August 2016 (31 August 2015: £0.9 million), following excellent cash flow generation in the period, including a receipt of £1.1 million of tax repayments following the resolution of an HMRC tribunal.

The Directors have declared an interim dividend of 1.10 pence per share which is a 4% increase on the dividend paid for the six months ended 31 August 2015 of 1.06 pence per share. The dividend will be paid on 30 November 2016 to shareholders on the register at close of business on 4 November 2016.

Consumer division

The Consumer division is Adult and Children’s trade publishing. Revenues in Consumer publishing increased 36% to £37.3 million in the six months ended 31 August 2016 (2015: £27.5 million). This excellent performance meant that the Consumer division’s adjusted operating profit increased to £1.3 million from £0.7 million last period. The growth in profit in the division came from Children’s Trade, where revenues were up by 63% to £23.9 million. In the period J.K. Rowling’s Harry Potter continued its growth – with the children’s editions selling well (Nielsen BookScan Total Consumer Market revenues up 107% year on year). Strong sales of the Illustrated Editionof Harry Potter and the Philosopher's Stone continued in this period with sales to date exceeding 1.3 million copies. On 4 October 2016 we launched the next title in the series, the Illustrated Edition of Harry Potter and the Chamber of Secrets. There is continuing strong interest from the market for this series.

Sarah J. Maas revenues grew 101% year on year in this period with the publication of the second book in the A Court of Thorns and Roses series, A Court of Mist and Fury. This stayed at number one on the Young Adult New York Times bestseller list for four weeks and in the top ten for 21 weeks. It reached number four in the UK Nielsen Children’s BookScan chart in its paperback format. We have sold rights in 18 territories. In July we secured world rights in eight new titles from Sarah J. Maas; three new novels to extend the A Court of Thorns and Roses series, a further colouring book, a World of Throne of Glass and three novellas. The combined series have sold 3.4 million copies to date.

In June, Bloomsbury became the first publisher in history to win both the Carnegie Medal and the Greenaway Medal with two books: Sarah Crossan’s One winning the Carnegie Medal and Chris Riddell winning the Greenaway Medal for his illustrations of Neil Gaiman’s The Sleeper and the Spindle.

The Children’s team was shortlisted for the Independent Publishers Guild Children’s Publisher of the Year and the British Book Award’s Children’s Publisher of the Year.

There was a 5% increase in revenues to £13.4 million in the Adult Trade division in the period, although profits were impacted by a reduction in higher margin e-book revenues and higher advance and stock write downs. The division had two Waterstone’s book of the month slots – in non-fiction for Peter Frankopan’s The Silk Roads, which was also a Sunday Times non-fiction number one and in fiction for Hannah Rothschild’s The Improbability of Love. Paul Beatty’s The Sellout, published by Oneworld and distributed by Bloomsbury in Australia, won the Man Booker prize 2016. Hot Milk by Deborah Levy, which we publish in the US, was shortlisted for the prize. The Man Who Knew: The Life and Times of Alan Greenspan by Sebastian Mallaby is shortlisted for the 2016 Financial Times and McKinsey Business Book of the Year Award. The Guilty Thing: A Life of Thomas De Quincey by Frances Wilson has been longlisted for the 2016 Baillie Gifford Prize for Non-fiction (previously called the Samuel Johnson prize).

Non-Consumer division

The Non-Consumer division consists of Academic, Professional, Special Interest and Content Services. Total revenues in the division of £25.4 million (2015: £25.2 million) and adjusted operating profits of £0.1 million (2015: £1.2 million) were adversely affected by the end of the term of the Qatar Foundation contract in December 2015. There was good revenue growth in all other areas of the Non-Consumer division, driven in particular by a range of key titles from the special interest list and an excellent performance from academic and professional digital resources, which doubled year on year to £2.0 million (2015: £1.0 million). Digital revenues now represent 18% of total title revenues in the division (2015: 15%). Revenue growth by all the existing major digital resources exceeded our expectations. 

During the period Bloomsbury was shortlisted for Academic, Educational and Professional Publisher of the Year at the Bookseller Industry Awards, for the fourth year in a row.

US academic print revenues continue to be affected by tightening academic library budgets and digital demand-driven acquisition models.  Whilst textbook revenues in the Academic lists are a small part of the divisional output, the Fairchild list, which is 12% of total Academic & Professional sales, has suffered appreciably from students’ increasing preference for rental purchase, used book purchase and digital formats.  The timely launch this year of Bloomsbury Fashion Central, and specifically, Fairchild Books Library, both online resources, is designed to address these changes in consumption, offering students and lecturers access to purchase via a range of different business models and price points, including rental.

Bloomsbury Professional’s digital revenues have been boosted by the successful integration of the family law titles purchased from Lexis Nexis in January 2016. These titles generated £0.6 million of revenue and £0.4 million of profit in the six months ended 31 August 2016.

Bloomsbury Content Services has renewed its publishing services agreement with the Institute for the Study of Labor for an additional 18 month term, starting January 2017. Bloomsbury will continue to provide fully managed publishing, marketing and digital services for the IZA World of Labor knowledge hub (wol.iza.org).

Some key bestselling titles from the Non-Consumer division include The 100-Year Life by Lynda Gratton and Andrew Scott and Age of Discovery by Ian Goldin and Chris Kutarna, which were selected respectively for the shortlist and longlist for the 2016 Financial Times and McKinsey Business Book of the Year Award and Spitfire: The Legend Lives On by John Dibbs and Tony Holmes.

Whitaker’s Online - whitakersalmanack.com - was launched in March giving up-to-date information on Britain and its governance, which would appear to be very timely given the Brexit vote resulting in changes to almost every element of British politics, governance, economics and culture. Taking advantage of the referendum Europe: An Obituary? by Douglas Murray was reissued to acclaim.

Bloomsbury 2020

As outlined in our Capital Markets Day in July, the Bloomsbury 2020 investment will significantly accelerate the growth of digital revenues by implementing a new digital publishing plan in our move to become a leading non-consumer publisher in the B2B academic and professional information market. The plan is to increase the output and speed to market of a range of new digital products, provide a robust scalable set of platforms, and improve the strength, depth and geographical spread of our institutional digital sales team. We are targeting revenues rising to £15 million and profits of £5m from our digital resource publishing by financial year 2021/22. The 2020 initiative will be delivered within the Non-Consumer division and is now headed by Kathryn Earle, reporting to Jonathan Glasspool. Kathryn has been responsible for generating some of the Academic division’s most successful products, not least the award-winning Berg Fashion Library and the division’s biggest and most ambitious new launch this year, Bloomsbury Fashion Central. Kathryn has been at Bloomsbury for eight years; she was previously Managing Director of Berg Publishing, which Bloomsbury acquired in 2008.   

The principal focus for Bloomsbury 2020 this financial year is to deliver the digital platform upon which many of the new services will be based, and to hire the new content acquisition team and sales and marketing teams. We are on track to achieve these, with the first services on the new platform, the Arcadian Library Online and Bloomsbury Popular Music, launching this financial year as scheduled. Having digitised and developed Arcadian Library Online, Bloomsbury will be providing sales, marketing and distribution services to make it available to universities, libraries and individuals around the world as a perpetual access product. Popular Music will be a Bloomsbury subscription service for institutions. The income statement this period includes £0.2m investment for Bloomsbury 2020.

Outlook

As well as the Illustrated Editionof Harry Potter and the Chamber of Secrets, Bloomsbury’s strong second-half list includes Fantastic Beasts and Where to Find Them - Newt Scamander: A Movie Scrapbook, Empire of Storms by Sarah J. Maas, the Throne of Glass Colouring Book, Mad Enchantment by Ross King, Tom Kerridge’s Dopamine Diet, Commonwealth by Ann Patchett, Bloomsbury Professional’s Tax Looseleafs and Last Testament: In His Own Words by Pope Benedict XVI, the only modern Pope to retire whilst in office and who now breaks his silence.

The Group is trading in line with management’s expectations. As in previous years, the Group is targeting a number of new contracts from which we expect to deliver rights and services income in the second half of our financial year. October is the peak period for academic book sales and Christmas for sales of consumer books. We therefore expect our results to continue to be significantly second-half weighted, as in the past.

In the coming months we expect to deliver the platform and associated infrastructure to enable digital publishing growth in line with Bloomsbury’s 2020 plan, and specifically to see the launch of the Arcadian Library Online and Bloomsbury Popular Music, the latest two resources in our growing range of digital products.

 

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Condensed Consolidated Interim Income Statement
For the six months ended 31 August 2016

  Notes 6 months ended
31 August
2016
£’000
6 months ended
31 August
2015
£’000
Year
ended
29 February
2016
£’000
         

Revenue

3 62,672 52,678 123,725
Cost of sales   (31,259) (24,000) (55,198)
Gross profit   31,413 28,678 68,527
Marketing and distribution costs   (9,798) (7,808) (17,065)
Administrative expenses   (21,562) (20,521) (41,016)
Operating profit before highlighted items   1,362 1,868 13,115
Highlighted items 4 (1,309) (1,519) (2,669)
Operating profit   53 349 10,446
Finance income   111 5 27
Finance costs   (17) (12) (114)
Profit before taxation and highlighted items   1,456 1,861 13,028
Highlighted items 4 (1,309) (1,519) (2,669)
Profit before taxation 3 147 342 10,359
Taxation   (37) (69) (652)
Profit for the period attributable to owners of the Company   110 273 9,707
         
Earnings per share attributable to owners of the Company          
Basic earnings per share 6 0.15p 0.37p 12.98p
Diluted earnings per share 6 0.15p 0.36p 12.93p

The accompanying notes form an integral part of this condensed consolidated interim financial report.

 

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Condensed Consolidated Interim Statement of
Comprehensive Income
For the six months ended 31 August 2016

  6 months ended
31 August
2016
£’000
6 months
ended
31 August
2015
£’000
Year
ended
29 February
2016
£’000
Profit for the period 110 273 9,707
Other comprehensive income
Items that may be reclassified to the income statement:
     
Currency translation differences on foreign operations 2,288 41 3,214
       
Items that may not be reclassified to the income statement:      
Remeasurements on the defined benefit pension scheme (174) 57 (24)
Other comprehensive income for the
period net of tax
2,114 98 3,190
Total comprehensive income for the period attributable to owners of the Company 2,224 371 12,897
       

 

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Condensed Consolidated Interim Statement of Financial Position
At 31 August 2016

  Notes 31 August
2016
£’000
31 August
2015
£’000
29 February
2016
£’000
Assets    

 

 

Goodwill   42,321 41,717 42,092
Other intangible assets   21,934 22,016 22,465
Property, plant and equipment   2,254 2,654 2,463
Deferred tax assets   3,151 3,547 2,988
Trade and other receivables 7 1,119 - 1,011
Total non-current assets                  70,779 69,934 71,019
         
Inventories   28,929 30,575 27,598
Trade and other receivables 7 73,010 60,888 71,461
Cash and cash equivalents   9,092 3,516 6,556
Total current assets   111,031 94,979 105,615
Total assets   181,810 164,913 176,634
         
Liabilities        
Retirement benefit obligations   442 159 230
Deferred tax liabilities   2,674 3,108 2,675
Other payables   942 1,135 871
Provisions              43 43 43
Total non-current liabilities   4,101 4,445 3,819
         
Trade and other payables   42,635 32,078 38,435
Bank overdraft   - - 1,390
Loans and borrowing   - 2,600 -
Current tax liabilities   - 613 -
Provisions   22 434 23
Total current liabilities   42,657 35,725 39,848
Total liabilities   46,758 40,170 43,667
Net assets   135,052 124,743 132,967
         
Equity        
Share capital   942 938 939
Share premium   39,388 39,388 39,388
Translation reserve   9,331 3,870 7,043
Other reserves   6,698 6,298 6,829
Retained earnings   78,693 74,249 78,768
Total equity attributable to owners of the Company   135,052 124,743 132,967

 

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Condensed Consolidated Interim Statement of Changes in Equity
For the six months ended 31 August 2016

  Share capital Share premium Translation
reserve
Merger reserve Capital redemption reserve Share-based payment reserve Own shares held by the EBT Retained
earnings
Total equity
  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 March 2016 939 39,388 7,043 1,386 22 5,428 (7) 78,768 132,967
Profit for the period - - - - - - - 110 110
Other comprehensive income                  
Exchange differences on translating foreign operations - - 2,288 - - - - - 2,288
Remeasurements on the defined benefit pension scheme - - - - - - - (174) (174)
Total comprehensive income for the period - - 2,288 - - - - (64) 2,224
Transactions with owners                  
Issue of shares 3 - - 417 - - - - 420
Share buy back - - - - - - (570) - (570)
Deferred tax on share-based payment transactions - - - - - - - (11) (11)
Share-based payment transactions - - - - - 22 - - 22
Total transactions with owners of the Company 3 - - 417 - 22 (570) (11) (139)
At 31 August 2016 942 39,388 9,331 1,803 22 5,450 (577) 78,693 135,052
                   
At 1 March 2015 938 39,388 3,829 1,386 22 4,986 (338) 73,943 124,154
Profit for the period - - - - - - - 273 273
Other comprehensive income                  
Exchange differences on translating foreign operations - - 41 - - - - - 41
Remeasurements on the defined benefit pension scheme - - - - - - - 57 57
Total comprehensive income for the period - - 41 - - - - 330 371
Transactions with owners                  
Deferred tax on share-based payment transactions - - - - - - - (24) (24)
Share-based payment transactions - - - - - 242 - - 242
Total transactions with owners of the Company - - - - - 242 - (24) 218
At 31 August 2015 938 39,388 3,870 1,386 22 5,228 (338) 74,249 124,743
                   
  Share capital Share premium Translation
reserve
 

Merger reserve
Capital redemption reserve Share-based payment reserve Own shares held by the EBT Retained
earnings
Total equity
  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 March 2015 938 39,388 3,829 1,386 22 4,986 (338) 73,943 124,154
Profit for the year - - - - - - - 9,707 9,707
Other comprehensive income                  
Exchange differences on translating foreign operations - - 3,214 - - - - - 3,214
Remeasurements on the defined benefit pension scheme - - - - - - - (24) (24)
Total comprehensive income for the year - - 3,214 - - - - 9,683 12,897
Transactions with owners                  
Issue of shares 1 - - - - - - (1) -
Dividend to equity holders of the Company - - - - - - - (4,590) (4,590)
Share options exercised - - - - - - 331 (243) 88
Deferred tax on share-based payment transactions - - - - - - - (24) (24)
Share-based payment transactions - - - - - 442 - - 442
Total transactions with owners of the Company 1 - - - - 442 331 (4,858) (4,084)
At 29 February 2016 939 39,388 7,043 1,386 22 5,428 (7) 78,768 132,967

 

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Condensed Consolidated Interim Statement of Cash Flows
For the six months ended 31 August 2016

  6 months ended 6 months ended Year ended
  31 August 31 August 29 February
  2016 2015 2016
  £’000 £’000 £’000
Cash flows from operating activities      
     
Profit before taxation 147 342 10,359
Finance income (111) (5) (27)
Finance costs 17 12 114
Operating profit 53 349 10,446
Adjustments for:    
Depreciation of property, plant and equipment 314 333 666
Amortisation of intangible assets 1,978 1,931 3,857
Loss on sale of property, plant and equipment - - 1
Share-based payment charges 29 281 487
  2,374 2,894 15,457
(Increase)/decrease in inventories (292) (1,620) 3,133
Decrease/(increase) in trade and other receivables 958 1,207 (8,212)
Increase/(decrease) in trade and other payables 2,563 (5,124) (1,476)
Cash generated from/(used in) operating activities 5,603 (2,643) 8,902
Income taxes received/ (paid) 10 (2,261) (3,870)
Net cash generated from/(used in) operating activities 5,613 (4,904) 5,032
Cash flows from investing activities    
Purchase of property, plant and equipment (98) (159) (249)
Purchase of businesses, net of cash acquired - (30) (60)
Purchases of intangible assets (1,666) (1,389) (2,846)
Interest received 111 5 9
Net cash used in investing activities (1,653) (1,573) (3,146)
Cash flows from financing activities    
Purchase of shares by the Employee Benefit Trust (570) - -
Equity dividends paid - - (4,590)
Proceeds from exercise of share options - - 88
Drawdown of borrowing - 100 (2,500)
Interest paid (17) (12) (90)
Net cash (used in)/generated from financing activities (587) 88 (7,092)
Net increase/(decrease) in cash and cash equivalents 3,373 (6,389) (5,206)
Cash and cash equivalents at beginning of period 5,166 10,021 10,021
Exchange gain/(loss) on cash and cash equivalents 553 (116) 351
Cash and cash equivalents at end of period 9,092 3,516 5,166

 

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Notes

Notes to the Financial Statements are available in the printable PDF version