Bloomsbury, the leading independent publisher, today announces unaudited results for the year ended 29 February 2020, in line with expectations.
Commenting on the results, Nigel Newton, Chief Executive, said:
“I am pleased to report a year of further progress at Bloomsbury resulting in 9% growth in profit before tax and highlighted items. Our Non-Consumer division delivered an excellent result with profit before tax and highlighted items up by 85% to £6.7 million, including outstanding revenue growth of 32% from Bloomsbury Digital Resources, which moved into profit this year, and the Adult Consumer division achieved 77% growth in profit before tax and highlighted items. These performances demonstrate the underlying strength and resilience of our diversified, international strategy.
Over the past five years, the successful execution of this strategy has delivered Company revenue growth of 32% and profit before tax and highlighted items growth of 21%, with digital revenue as a proportion of total revenue increasing from 10% to 15%.
Since the year end, the coronavirus pandemic has led to significant disruption across all our key markets. The impact may be substantial. Orders for print books, which comprised 79% of the Company’s revenue for the year ended 29 February 2020, are being affected in all our markets. Our UK, US and Australia warehouses remain open and continue supply to customers. Our strategy of expanding and leveraging our digital rights and products means that we are well placed to benefit from increased demand for our digital resources, audio and e-books.
There is no immediate certainty around the severity and duration of the impact on our business and therefore the Board is unable to provide guidance for the year ending 28 February 2021 at this time.
In response to the pandemic, the Board has taken swift measures to strengthen Bloomsbury’s balance sheet and increase liquidity to ensure we have sufficient working capital to weather the impact of coronavirus and avoid damaging our business in the long-term.I would like to thank our staff, authors, illustrators and suppliers for their resilience and determination over a challenging period. Their ability to adapt to the rapidly changing conditions, together with the strength of our strategy supported by our solid financial position, gives me confidence that Bloomsbury will emerge stronger from this crisis.”
* Highlighted items comprise amortisation of acquired intangible assets and legal, other professional costs and restructuring costs relating to ongoing and completed acquisitions and one-off costs relating to the coronavirus.
The information in this announcement has not been audited or otherwise independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss whatsoever arising from any use of this announcement, or its contents, or otherwise arising in connection with this announcement.
This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares in the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares of the Company.
Certain statements, statistics and projections in this announcement are or may be forward looking. By their nature, forward‑looking statements involve a number of risks, uncertainties or assumptions that may or may not occur and actual results or events may differ materially from those expressed or implied by the forward-looking statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Accordingly, forward-looking statements contained in this announcement regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which are based on the knowledge and information available only at the date of this announcement’s preparation.
The Company does not undertake any obligation to update or keep current the information contained in this announcement, including any forward‑looking statements, or to correct any inaccuracies which may become apparent and any opinions expressed in it are subject to change without notice.References in this announcement to other reports or materials, such as a website address, have been provided to direct the reader to other sources of information on Bloomsbury Publishing Plc which may be of interest. Neither the content of Bloomsbury’s website nor any website accessible by hyperlinks from Bloomsbury’s website nor any additional materials contained or accessible thereon, are incorporated in, or form part of, this announcement.
The year ended 29 February 2020 saw a robust performance by Bloomsbury, particularly given the impact of coronavirus in China in the last two months of the financial year. Group profit before tax and highlighted items increased by 9% to £15.7 million
(2018/19: £14.4 million). Group profit before tax increased by 10% to £13.2 million (2018/19: £12.0 million).
Our BDR digital growth strategy continues to perform very well, delivering 32% revenue growth year -on-year and generating profit. This strong growth demonstrated the demand for and quality of our digital content, platforms and infrastructure. There was
healthy revenue growth both from increased sales of existing products, as well as new partnerships and new products.
In December 2019 we acquired the drama publisher Oberon for £1.2 million, further strengthening our presence as the leading publisher in drama and the performing arts. Also in December 2019, we entered the domestic Chinese market with Bloomsbury China, a new joint venture with China Youth Publishing Group and Roaring Lion Media. Continuing our international growth is a key part of our strategy, and this partnership enables the business to further accelerate that goal.
Performance was in line with the Board’s expectations and so there was no management bonus for the year (2018/19: £2.3 million). The highlighted items of £2.5 million consist of the amortisation of acquired intangible assets of £1.7 million (2018/19: £1.7 million), one-off restructuring costs and legal and other professional fees relating to the acquisitions of £0.6 million (2018/19: £0.6 million) and one-off costs relating to the coronavirus of £0.2 million. The effective rate of tax for the year was 21% (2018/19: 23%). The adjusted effective rate of tax, excluding highlighted items, was 19% (2018/19: 21%). Diluted earnings per share, excluding highlighted items, grew 12% to 16.77 pence (2018/19: 14.97 pence). Including highlighted items, profit before tax was £13.2 million (2018/19: £12.0 million) and diluted earnings per share grew 13% to 13.84 pence (2018/19: 12.25 pence).
Cash and financing
Bloomsbury’s cash generation continued to be robust with cash at the year end of £31.3 million, up £3.8 million. During the year we invested £1.8 million of capital expenditure in BDR and the £1.2 million cash consideration for the acquisition of Oberon was paid on completion in December 2019.
The Group has an unsecured revolving credit facility with Lloyds Bank Plc. The facility comprises a committed revolving loan facility of £8 million in the first half and an additional £4 million in the second half, totalling £12 million, to match Bloomsbury’s cashflow cycle, and an uncommitted incremental term loan facility of up to £6 million. The facilities are subject to two covenants, being a maximum net debt to EBITDA ratio of 2.5x and a minimum interest cover covenant of 4x. Subsequent to the year end, the maturity of the facility was extended to May 2022 and the covenants were amended to exclude IFRS 16.
Delivering the Bigger Bloomsbury Initiatives
We delivered good results on the eight initiatives announced in May 2019, with highlights including:
Following the success of the Bigger Bloomsbury initiatives, we are now renewing our focus on Bloomsbury’s long-term growth strategy which is aimed at diversifying into digital channels and building quality revenues, increasing earnings and building on the strategic success of the last five years. To achieve this, we are focused on a number of long-term strategic objectives, which include:
Employee Experience and Engagement
Our colleagues are amongst our most important assets, and our success is driven by their expertise, passion and commitment. We understand the importance of attracting, supporting and engaging colleagues wherever they work.
Underpinning our strategy, our strengthened balance sheet will help to ensure we have sufficient working capital to weather the impact of coronavirus and to ensure we are able to fulfil our long-term growth plans. We have already implemented cost savings while balancing the need to retain our staff and acquire future titles, as Bloomsbury’s proven business model is to commission titles one to two years ahead of publication
As previously announced, in December 2019, we acquired the rights of drama publisher Oberon Books Limited for £1.2 million, all of which was satisfied in cash on completion. This acquisition further strengthens our presence as the leading
publisher in drama and the performing arts.
Also in December 2019, we entered the domestic Chinese market with Bloomsbury China, a new joint venture with China Youth Publishing Group and Roaring Lion Media. The investment is de minimis.
Post year end in March 2020, as previously announced, we acquired certain assets of Zed Books Limited, the London-based academic and non-fiction publisher. The consideration was £1.75 million, of which £0.875 million was satisfied in cash on completion and the remainder to be paid within 12 months. Zed will operate within Bloomsbury's Academic & Professional division.
Bloomsbury had intended to declare a final dividend for year of 6.89 pence per share. This would have resulted in a total dividend for the year of 8.17 pence per share, up 3% on the previous year. As previously announced, Bloomsbury has decided in light of coronavirus to conserve cash and therefore will not be paying a cash dividend. It is now proposed, subject to shareholder proposal, that the dividend is instead settled through the issuance of new ordinary shares by way of bonus issue to shareholders, with a value equivalent to the proposed final dividend.
Subject to Shareholder approval at our AGM on 21 July 2020, the bonus issue will be made on 28 August 2020 to Shareholders on the register on the record date of 31 July 2020.
Bloomsbury is proud of its strong track record of 24 years of consecutive dividend growth. Our intention would be to reintroduce cash dividend payments as soon as market conditions allow us to do so.
The Non-Consumer division consists of Academic & Professional and Special Interest. Revenues in the division increased by 4% to £66.0 million (2018/19: £63.4 million). Within this, Academic & Professional revenues grew by 4% to £43.1 million (2018/19: £41.5 million). Profit before taxation and highlighted items for the Non-Consumer division increased by 85% to £6.7 million (2018/19: £3.6 million). Profit before taxation grew by 159% to £5.0 million (2018/19: £1.9 million). The profit growth reflects improved Academic & Professional and Special Interest profitability and the £0.7 million increase in BDR profit.
In the second half, the Special Interest division took over publishing part of our Content Services division, to generate further synergies following the successful restructure of the Special Interest division. Digital projects, including IZA World of Labor, moved to the Academic & Professional division. Comparatives have been restated to reflect this.
The strategic growth initiative BDR has made Bloomsbury into a leading B2B publisher in the academic and professional information market and significantly accelerated the growth of its digital revenues. Key achievements during the year, which demonstrate the opportunities to further leverage content and market other services on our digital platforms and through the sales infrastructure we have developed, were:
Within Special Interest, profit before taxation and highlighted items has increased by 227% to £1.9 million (2018/19: £0.6 million) and revenue was 4% higher at £22.9 million (2018/19: £21.9 million).
These results demonstrate the impact of the restructuring under the new Head of Special Interest Publishing, with a clear focus on publishing for key communities and reduced overheads.
The Consumer division consists of Adult and Children’s trade publishing. The Consumer division generated revenue of £96.8 million (2018/19: £99.3 million). Profit before taxation and highlighted items was £8.9 million (2018/19: £10.7 million). Profit before taxation was £8.8 million (2018/19: £10.7 million). The strong performance from the Adult division and resilient Harry Potter sales were tempered by the impact of timing and fewer frontlist titles from Sarah J Maas.
The Adult division achieved very strong growth with a 12% increase in revenue to £37.4 million (2018/19: £33.5 million) and profit before taxation and highlighted items increasing by 77% to £1.6 million (2018/19: £0.9 million), from success in front and backlist titles, and the continued impact of strategic changes in the division.
Bestsellers in the year included Dishoom: From Bombay with Love Love by Shamil Thakrar, Kavi Thakrar and Naved Nasir, Tom Kerridge’s Lose Weight & Get Fit, the global bestseller, The Anarchy by William Dalrymple, the number one Sunday Times bestseller Three Women by Lisa Taddeo, the Sunday Times bestsellers The Dutch House by Ann Patchett and City of Girls by Elizabeth Gilbert, and the New York Times bestsellers Elderhood by Louise Aronson and No Visible Bruises by Rachel Louise Snyder.
Children’s sales were £59.4 million (2018/19: £65.8 million). Sales of the Harry Potter titles were in line with last year, with the Harry Potter and the Goblet of Fire Illustrated Edition by J.K. Rowling and Jim Kay published in October. The standard edition of Harry Potter and the Philosopher’s Stone was the tenth bestselling children’s book of the year on UK Nielsen Bookscan, twenty two years after it was first published – every year these classics reach a new generation of readers.
Sarah J. Maas’ new bestselling title, Crescent City: House of Earth and Blood, was published at the end of the financial year, compared to two new frontlist hardback titles in the previous year, and total sales for this author were 32% lower than last year. Other highlights on the Children’s list included the second in Brigid Kemmerer’s Cursebreaker series, A Heart So Fierce and Broken, the latest title in the Fantastically Great Women series by Kate Pankhurst, and backlist titles We’re Going on an Egg Hunt by Laura Hughes, Norse Mythology by Neil Gaiman, Holes by Louis Sachar and The Explorer by Katharine Rundell, alongside her new novel The Good Thieves.
Bloomsbury’s new Audio division has delivered 190% revenue growth by focusing on production of key titles, distributed through an exclusive deal with Audible. This expert team has enabled us to produce 131 titles to date, launching with the Audible bestseller, The Madness of Crowds by Douglas Murray, as well as The Dutch House by Ann Patchett and Three Women by Lisa Taddeo.
As part of Bloomsbury’s ongoing commitment to the wider communities in which we operate, we are proud to support a wide range of charitable initiatives. Highlights include:
During the year IFRS 16, Leases (“IFRS 16”), was introduced. Adoption of this standard has reduced the amount of rent and lease charges, increased depreciation charges and finance costs and increased the value of assets and liabilities. The net reduction to profit before taxation for the year ended 29 February 2020 was £0.2 million. The impact on EBITDA was an increase of £2.1 million and the impact on operating profit was an increase of £0.3 million.
Throughout this announcement we have used profit before tax and amortisation as this provides the fairest profit comparison between the results to 29 February 2020, which include IFRS 16, and the previous year’s results, which have not been restated.
I would like to thank Jonathan for his exceptional contribution to Bloomsbury, building the major Academic & Professional publisher that Bloomsbury sought to add to its trade portfolio. The Academic & Professional division is now an impressive, award-winning business in its own right.
There is no immediate certainty around the severity and duration of the impact of the coronavirus pandemic on our business and therefore the Board is unable to provide guidance for the year ending 28 February 2021 at this time.
The coronavirus crisis and imposition of government lockdowns and restrictions and retail closures continue to impact all our key markets of the UK, US, Australia and India as well as many other important markets. Orders for print books, which comprised 79% of the Company’s revenue for the year ended 29 February 2020, are being affected in all our markets. Our UK, US and Australia warehouses remain open and continue supply to customers. We have positive sales prospects through Amazon, even as they prioritise essential crisis services, with strong growth in demand for e-books.
April 2020 year-to-date revenue is 3% below last year, with print revenues at 87% of last year’s sales and academic digital revenues up over 52% year-on-year.
Our strategy of expanding and leveraging our digital rights and products means that we are well placed to benefit from increased demand for our digital resources, audio and e-books as we are with direct supply from Amazon, Bloomsbury.com, Waterstones.com and most internet retailers selling print books. Strong digital growth continues from academic institutional customers as libraries pivot swiftly to digital resources and reduce print purchases to support remote learning for students. However, academic institutions face major uncertainties over student recruitment, particularly international students, and when students will be allowed to return. This could bring financial uncertainty for many of our digital resource customers.
The Board has modelled a severe but plausible downside scenario, including the impact of coronavirus. This assumes:
Under this pessimistic downside scenario, we expect our business model to be able to manage these downside assumptions and stay within the headroom of our current banking facilities.Should a prolonged downside scenario not materialise the equity placing proceeds will be used for future growth opportunities. Bloomsbury has a successful track record of acquisitive growth via 26 strategic acquisitions and we continue to see opportunities in the Academic markets
|Cost of sales||(74,978)||(74,922)|
|Marketing and distribution costs||(21,373)||(22,053)|
|Operating profit before highlighted items||15,947||14,294|
|Profit before taxation and highlighted items||15,704||14,374|
|Profit before taxation||13,229||12,049|
|Profit for the year attributable to owners of the Company||10,501||9,247|
|Earnings per share attributable to owners of the Company|
|Basic earnings per share||6||14.03p||12.37p|
|Diluted earnings per share||6||13.84p||12.25p|
|Profit for the year||10,501||9,247|
|Other comprehensive income|
|Items that may be reclassified to the income statement:|
|Exchange differences on translating foreign operations||856||964|
|Items that may not be reclassified to the income statement:|
|Remeasurements on the defined benefit pension scheme||(115)||(5)|
|Other comprehensive income for the year net of tax||741||959|
|Total comprehensive income for the year attributable to the owners of the Company||11,242||10,206|
Items in the statement above are disclosed net of tax.
|Other intangible assets|
|Property, plant and equipment||1,914||2,110|
|Deferred tax assets||2,756||2,376|
|Trade and other receivables||7||1,237||1,360|
|Total non-current assets||86,426||72,931|
|Trade and other receivables||7||84,805||80,506|
|Cash and cash equivalents||31,345||27,580|
|Total current assets||143,314||134,162|
|Retirement benefit obligations||185||121|
|Deferred tax liabilities||2,347||2,360|
|Total non-current liabilities||15,659||2,628|
|Trade and other liabilities||61,844||60,644|
|Current tax liabilities||328||–|
|Total current liabilities||64,408||60,727|
|Total equity attributable to owners of the Company||149,673||143,738|
|Share capital £’000||Share premium £’000||Translation reserve|
|Merger reserve £’000||Capital redemption reserve |
|Share-based payment reserve £’000||Own shares held by EBT £’000||Retained|
|Total equity £’000|
|At 28 February 2018 (restated*)||942||39,388||7,687||1,803||22||5,673||(1,043)||84,034||138,506|
|Profit for the year||–||–||–||–||–||–||–||9,247||9,247|
|Other comprehensive income|
|Exchange differences on translating foreign operations||–||–||964||–||–||–||–||–||964|
|Remeasurements on the defined benefit pension scheme||–||–||–||–||–||–||–||(5)||(5)|
|Total comprehensive income for the year||–||–||964||–||–||–||–||9,242||10,206|
|Transactions with owners|
|Dividends to equity holders of the Company|
Share options exercised
|Deferred tax on share-based payment transactions||–||–||–||–||–||–||–||33||33|
|Share-based payment transactions||–||–||–||–||–||422||–||–||422|
|Total transactions with owners of the Company||–||–||–||–||–||422||241||(5,637)||(4,974)|
|At 28 February 2019||942||39,388||8,651||1,803||22||6,095||(802)||87,639||143,738|
|Profit for the year||–||–||–||–||–||–||–||10,501||10,501|
|Other comprehensive income|
|Exchange differences on translating foreign operations||–||–||856||–||–||–||–||–||856|
|Remeasurements on the defined benefit pension scheme||–||–||–||–||–||–||–||(115)||(115)|
|Total comprehensive income for the year||–||–||856||–||–||–||–||10,386||11,242|
|Transactions with owners|
|Dividends to equity holders of the Company|
Share options exercised
|Deferred tax on share-based payment transactions||–||–||–||–||–||–||–||46||46|
|Share-based payment transactions||–||–||–||–||–||629||–||–||629|
|Total transactions with owners of the Company||–||–||–||–||–||629||31||(5,967)||(5,307)|
|At 28 February 2020||942||39,388||9,507||1,803||22||6,724||(771)||92,058||149,673|
|Cash flows from operating activities|
|Profit for the year||10,501||9,247|
|Depreciation of property, plant and equipment||502||470|
|Depreciation of right-of-use assets||1,775||–|
|Amortisation of intangible assets||4,301||4,139|
|Share of loss of Joint Venture||7||–|
|Share-based payment charges||761||498|
|(Increase)/decrease in inventories||(620)||2,315|
|(Increase)/decrease in trade and other receivables||(4,385)||5,834|
|Increase/(decrease) in trade and other liabilities||2,489||(7,702)|
|Cash generated from operating activities||18,302||17,523|
|Income taxes paid||(1,706)||(2,529)|
|Net cash generated from operating activities||16,596||14,994|
|Cash flows from investing activities|
|Purchase of property, plant and equipment||(294)||(456)|
|Purchase of intangible assets|
Purchase of business, net of cash acquired
|Purchase of rights to assets||(1,213)||–|
|Purchase of joint ventures||(223)||-|
|Net cash used in investing activities||(4,923)||(7,242)|
|Cash flows from financing activities|
|Equity dividends paid|
Proceeds from exercise of share options
Repayment of overdraft
|Repayment of lease liabilities||(1,531)||–|
|Lease liability interest paid||(492)||–|
|Net cash used in financing activities||(8,008)||(5,676)|
|Net increase in cash and cash equivalents||3,665||2,076|
|Cash and cash equivalents at beginning of year||27,580||25,428|
|Exchange gain on cash and cash equivalents||100||76|
|Cash and cash equivalents at end of year||31,345||27,580|
Notes to the Financial Statements are available in the printable PDF version