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Friday 27 May, 2011

BloomsburyPublishing

Final Results

RNS Number : 4010H
Bloomsbury Publishing PLC
27 May 2011
 



Bloomsbury Publishing Plc

27 May 2011

 

BLOOMSBURY PUBLISHING Plc

("Bloomsbury" or "the Group")

 

Unaudited Preliminary Results for the fourteen months ended 28 February 2011

 

Bloomsbury Publishing Plc has changed its year end to 28 February 2011, as previously reported. The Group today announces fourteen month results for the period ended 28 February 2011. Interim results for the twelve months ended 31 December 2010 were announced on 28 February 2011.

 

Financial highlights

 

The highlights for the fourteen months ended 28 February 2011 include:

 

·          Revenue of £103.4 million for the 14 months ended 28 February 2011 (12 months ended 31 December 2009: £87.2 million)

·          Pre-tax profit of £4.2 million (2009: £7.1 million)

·          Pre-tax profit adjusted for  highlighted items* £7.7 million (2009: £7.7 million)

·          Basic earnings per share of 3.02 pence (2009: 6.77 pence)

·          Earnings per share adjusted for  highlighted items* 7.70 pence (2009: 7.56 pence)

·          Net cash of £36.9 million (2009: £35.0 million)

·          Board  recommended final dividend of 0.28p per share for the two month period from 1 January 2011 to 28 February 2011 - subject to shareholder approval at the AGM

 

 

*Highlighted items comprise goodwill impairment, amortisation of intangible assets, acquisition costs, aborted acquisition costs, restructuring and relocation costs

 

Operating highlights

 

·          Bloomsbury's e-book sales increased to £1.5 million in 2010 (2009: £0.08 million). Sales in January to March 2011 were £1.1 million

·          Launch of Bloomsbury Australia in January 2011, immediately earnings enhancing

·          Acquisition of Bristol Classical Press and Duckworth Academic in November 2010

·          Appointment of two new Non Executive Directors in 2010 and a new Group Finance Director in 2011

·          Appointment of a Group Sales and Marketing Managing Director, a Managing Director of the new Children's and Educational division and a new Managing Director of Berlin Verlag

·          Bestsellers across the Group included:

-     Eat, Pray, Love - Elizabeth Gilbert

-     The Finkler Question - Howard Jacobson - winner of the 2010 Man Booker Prize

-     Operation Mincemeat - Ben Macintyre

-     Suspicions of Mr Whicher - Kate Summerscale

·          Major online initiatives included:

-     Berg Fashion Library Online

-     Public Library Online in new territories

-     Winston Churchill Archives digitisation

·          Implemented on 1 March 2011 One Global Bloomsbury - four worldwide publishing divisions: Adult; Children's & Educational; Academic & Professional; and Information, now form the basis of the Group's structure

 

 

Commenting on the results and prospects for Bloomsbury, Nigel Newton, Chief Executive, said:

 

"This is an exciting time for Bloomsbury: demand for digital delivery, including e-books, is increasing significantly; it will change the publishing business model creating one worldwide market. The recent organisation change is already bringing benefits to the Group, enabling us to better exploit that worldwide market as a global publisher in print and digital. We have a strong balance sheet and an excellent management team, so are well placed to exploit future opportunities as we enter our 25th anniversary year."

 

For further information, please contact:

 

Daniel de Belder/Rosanne Perry, Pelham Bell Pottinger

+44 (0) 20 7861 3232

Nigel Newton, Chief Executive, Bloomsbury Publishing Plc

+44 (0) 20 7494 6015

 



 

 

CHAIRMAN'S STATEMENT

 

The world, particularly in the West, is inching its way back to recovery, weighed down by public debt and fiscal imbalances in the aftermath of a financial crisis which has done lasting damage to business confidence.  In the aftermath of the economic earthquake, a new world is emerging.

 

At the same time, the publishing world is handling its own revolution.  Digital competence is undermining old business models, spawning new ones and allowing major new forces to transform - or render irrelevant - traditional relationships.

 

Charles Darwin observed that "It is not the strongest of the species, nor the most intelligent that survives.  It is the one that is the most adaptable to change".  Bloomsbury is undergoing one of the most significant periods of adaptation in its 25 year history. 

 

The Chief Executive's Report covers the re-organisation of the Group to exploit the global horizons opened in the publishing industry by digital technology;  the continued pace of acquisitions;  the move into new premises later this year; the overhaul of key internal systems;  and Bloomsbury's adaptation to meet the needs of the growing population of e-readers who are provoking one of the most profound re-assessments of the conventional publishing industry since the development of the printing press.

 

The Board of Bloomsbury Publishing Plc has also been re-positioned. 

 

Ian Cormack and Sarah Jane Thomson have joined the Board as non-Executive Directors following the retirement of Charles Black and Mike Mayer, and Wendy Pallot has joined the Board as Group Finance Director replacing Colin Adams. 

 

Ian Cormack has had a successful City career in leading international and UK roles at AIG, Citigroup and Citibank, where he spent over thirty years. A former member of the Chancellor's City Advisory Panel, he has served on committees for the London Stock Exchange, CHAPS, APACS, the European Securities Forum, Cedel and the Bank of England.  Ian Cormack is Senior Independent Director of Bloomsbury and Chair of the Audit Committee.  He brings to Bloomsbury the experience and discipline of a career with some of the finest corporate institutions in the world. 

 

Sarah Jane Thomson founded Thomson Intermedia Plc in 1997 (now Ebiquity Plc), a media information business using internet and technology to capture and deliver real-time advertising creatives and expenditure data for businesses. The company was floated on AIM in 2000 and she remains on the Board. In 2006, she founded First News, the weekly newspaper for children which has become the most widely read children's publication in the UK and she continues to be actively involved in driving the business forward. Her other roles include: founder of Priority One, an IT outsourcing business, serving medium size businesses in Central London and joint CEO of Addictive Interactive a newly launching Social Network for brands.  Sarah Jane Thomson is Chair of the Remuneration Committee.  She brings to Bloomsbury the experience, forward-looking vision, and sure intuition of a successful entrepreneur in the digital world. 

 

Wendy Pallot has joined the Board as Group Finance Director.  Wendy Pallot is a graduate Chartered Accountant who qualified with Coopers & Lybrand with whom she spent 8 years.  She was Group Finance Director for GCap Media plc, the UK's leading commercial radio operator and formerly listed on the UK Main Market, from 2005 until its takeover by Global Radio in 2008.  She was Group Finance Director of GWR Group plc, a leading UK radio operator formerly listed on the UK Main Market, from 2001 until its merger with Capital Radio plc in 2005 to form GCap Media plc.  She brings to Bloomsbury a fresh perspective and a capacity for change.

 

This mix of new talent and experience on the Board - three new members on a Board of six - should not be under-estimated.  It will be invaluable. 

 

The departure of Colin Adams as Group Finance Director deserves special comment.  His firm, steady and comprehensive grasp of the financial reins, and his understanding of the business, saw the Group through a momentous period of 17 years in its history.  The Board and the entire complement of Bloomsbury wish him well in his new job.

 

Charles Black and Mike Mayer stepped down from the Board during 2010 after a long service, during which they both contributed immensely to the success of the Group.

 

With the injection of new blood to our senior and middle management through acquisitions and recruitment, and the depth of the Group in a well-established and long-serving work-force, Bloomsbury and its stakeholders are well equipped for the continued transformation in the next stage of the revolution in this industry and the geo-political upheaval in the world in which it operates.

 

The people who work for Bloomsbury are amongst the best in the business.  The success of the Group in meeting the formidable challenges of the past, and in ensuring a profitable future, is down to them. The whole team are focused on the   challenge and opportunities the group now faces. They have the thanks and gratitude of the Board, its shareholders and all its stakeholders for their untiring and enthusiastic commitment.

 

 

Jeremy Wilson

Chairman

 

 

 

CHIEF EXECUTIVE'S STATEMENT

 

Overview

 

Bloomsbury has changed its year end to 28 February 2011 as previously reported, so these results are in respect of the fourteen months ended on that date. We reported interim results for the twelve months ended 31 December 2010 on 28 February 2011. Figures given below in relation to the twelve months ended 31 December 2010 are unaudited.

 

Bloomsbury's results for the fourteen month period ended 28 February 2011 demonstrate not only the strength of our revenue streams but also the adaptability of Bloomsbury which allows the Group to continue to grow in a difficult, but dynamic and opportunistic, external environment. This ability is largely centred on our small but strong, proactive and entrepreneurial management team, who not only continue to excel in traditional publishing but are also establishing a highly successful digital strategy.

 

A good performance during the fourteen month period was particularly strengthened by an excellent final quarter of 2010. The two months ended 28 February 2011 were, as forecast, seasonally quiet months delivering a small trading loss in line with expectations and our experience in previous years.

 

In 2010 and into 2011 we have, in particular, seen significant growth in e-book sales. The US market continues to lead this trend, although since the last quarter of 2010, the UK has also begun to experience a surge in demand. Bloomsbury's e-book sales rose from £79,000 in 2009 to £1.5 million in 2010 and sales in January to March 2011 were £1.1 million. UK and US e-book sales are both growing apace, and with the Kindle now firmly established in the UK market and recently launched in Germany, there is now a focused effort to sell e-books throughout the world.

 

Financial Performance

 

On 1 March 2011, Bloomsbury reorganised its structure into four worldwide publishing divisions: Adult; Children's & Educational; Academic & Professional; and Information. We have also created two global service divisions for Sales & Marketing and Production. These changes were made in order to align the Group's structure with the increasing globalisation of the publishing business and the growing demand for digital content. For the fourteen months to 28 February 2011, the Group was managed on the previous geographic lines, so this report reflects that configuration, reviewing performance within Trade and Specialist divisions across the UK, North America and Continental Europe.

Revenue for the Group for the fourteen month period to 28 February 2011 was £103.4 million (12 months ended 31 December 2009: £87.2 million). Revenue for the year to 31 December 2010 was up 4% to £90.7 million (2009: £87.2 million). Revenues from the UK for the fourteen month period were £70.6 million (2009: £58.9 million). Revenues from the US were £21.7 million (2009: £18.8 million). Revenues from Continental Europe generated by Berlin Verlag were £10.1 million (2009: £9.6 million). Revenues from Bloomsbury Australia, which was launched on 1 January 2011, were £1.0m.

 

Profit before tax for the Group was £4.2 million (2009: £7.1 million). Profit before tax and highlighted items was £7.7 million (2009: £7.7 million). Highlighted items include the amortisation of intangible assets of £1.1 million (2009: £0.6 million), impairment of goodwill for Berlin Verlag of £1.5 million (2009: £nil), costs of £0.3 million (2009: £nil) relating to an aborted class one acquisition, restructuring costs of £0.2 million (2009: £nil) and costs of £0.2 million (2009: £nil) in relation to the relocation of the London offices as part of the Group's reorganisation. We are due to move to a new London headquarters building in August 2011. This will enable the majority of Bloomsbury staff in the UK to operate from one building and bring the benefits of better integration of the publishing teams. The impairment of the goodwill in Berlin was made following a review of economic factors affecting the business. A new management team and structure is in place there now and a subsequent rationalisation of the publishing programme and reduction of the cost base has put the business on a firmer footing for the future.

 

Basic earnings per share were 3.02 pence (2009: 6.77 pence). Basic earnings per share before highlighted items were 7.70 pence (2009: 7.56 pence). Diluted earnings per share were 3.02 pence (2009: 6.74 pence). Diluted earnings per share before highlighted items were 7.70 pence (2009: 7.53 pence).

 

At the period end the Group had net cash balances of £36.9 million (2009: £35.0 million). We continue to invest in future growth through acquiring new authors and titles as well as specialist publishing companies. Our strong balance sheet puts us in an excellent position to take advantage of these opportunities as they arise. As at 28 February 2011, the Group had 1,329 titles (31 December 2009: 1,073) under contract for future publication, with a gross investment of £23.2 million (2009: £23.7 million).  After payment of the initial tranches of advances to authors, our commitment for future cash payments on these contracted titles was £13.2 million (2009: £13.4 million).

 

UK Specialist

 

In July 2010, Bloomsbury Academic won the contract to digitise and publish online on a subscription model the archive of Sir Winston Churchill. This nearly one million-page archive will be launched in the second half of 2012.  In April 2011 we purchased the National Archive Book publishing programme from the National Archive, that includes an academic as well as a trade history list. 

 

The acquisition of Bristol Classical Press and Duckworth Academic in November 2010 has made Bloomsbury Academic a major player in the field of classical scholarship by publishing important new research in Archaeology, Classics, Ancient History and Ancient Philosophy.

 

Bloomsbury Professional published a number of major reference works in the period.  Foremost of these were The Law and Practice Relating to Charities 4th ed., by Hubert Picarda QC which is the first major book to cover the sweeping new reforms in charities law, and Personal Injury Schedules - Calculating Damages 3rd ed.  Our loose-leaf, Norfolk and Montagu on the Taxation of Interest and Debt Finance, was re-launched to great acclaim and this has led to a 24% increase in these loose-leaf subscribers and a more than 100% increase in revenue owing to the delivery of higher value content.  Important to our success in 2011/12 is the launch of our new online service, and loose-leaf titles such as Norfolk and Montagu, with their established subscriber base, regular income stream and fast-changing content, which are ideally placed to capitalise on online delivery.

 

Our Core Tax Annual series continued to grow in 2010, with revenue up by 20% on the previous year.  It will form the backbone of our new tax online service, which will be launched later in the year.  The change of government in 2010, combined with an extra Finance Act, created significant tax publishing opportunities.   As complex tax reforms are set to continue over the next few years, we can expect a continuing uplift for our tax publishing programme.

 

In 2011/12, we launch a new online professional service in the Republic of Ireland.  The first modules will provide a comprehensive reference service for professionals specialising in tax and company law, with further modules in other core subject areas to follow.

 

Under Bloomsbury's ownership, Berg Publishersproduced the best performance in its trading history in the period. Sales were strongly boosted by the US co-publication of the Berg Encyclopedia of World Dress and Fashion with Oxford University Press. Along with the on-line Berg Fashion Library, it won three major awards.  The first was the 2011 Dartmouth Medal, awarded by the American Library Association who deemed it a "landmark of scholarship." The second was the 2011 Frankfurt Book Fair Digital Award from the Independent Publishers Guild and the third the 2011 Bookseller FutureBook Award for Best Website.

 

In September 2011 Berg will relocate from Oxford to the new London head office, with clear advantages from reduced overheads and synergies from the closer integration of the Berg business with Bloomsbury's visual arts list.

 

Methuen Drama and Faber & Faber Limited have just announced a new partnership to develop a drama digital content platform for libraries, teachers, students and researchers. Launching in late 2012, Drama Online is the ultimate online resource for plays, critical analysis and performance. Drawing on the pre-eminent titles from Methuen Drama, Arden Shakespeare and Faber, Drama Online will offer a complete digital library of the most studied, performed and critically acclaimed plays from the last two and a half thousand years. In addition, it will provide expert student guidance in the form of scholarly notes, annotated texts, critical analysis and contextual information. Performance and practitioner texts from theory to backstage and acting guides, coupled with video and audio material, will make this an essential study tool meeting the full range of drama teaching needs.

 

Bloomsbury Information had an excellent financial period which saw the delivery of our key management services contracts with the Qatar Foundation through the successful launch of two new divisions of the Foundation: Bloomsbury Qatar Foundation Publishing (BQFP) and Bloomsbury Qatar Foundation Journals (BQFJ). BQFP publishes books in English and Arabic and was launched in April 2010 at a reception at Windsor Castle hosted by Her Majesty Queen Elizabeth II and attended by Her Highness Sheikha Mozah bint Nasser Al Missned, Consort of the Emir of Qatar and Chairperson of the Qatar Foundation. Since its launch, BQFP has published over 40 titles including the Arabic translation of the worldwide bestseller The Gruffalo. It has acquired English language and translation rights to a number of novels from Arab writers including the two most recent winners of the International Prize for Arab Fiction, known as the 'Arab Booker' prize.

 

In December the astronaut Buzz Aldrin's inspiring talk to scientists meeting in Qatar marked the lift-off of BQFJ, the open-access, online, peer-reviewed, research journals publishing portal (www.qscience.com). The launch journals include Sir Magdi Yacoub's Aswan Heart Centre: Science and Practice, and journals about healthcare, librarianship, education and Islamic Studies.

 

The online financial best practice and information resource (www.qfinance.com) also saw sustained growth through the period achieving over 186,000 unique visitors per month by the end of February 2011.

 

Prospects for 2011/12 are positive as the new businesses develop. From 1 July, BQFP will take over the sales of Bloomsbury Group titles in the Arab World from Penguin Group. Other international business development opportunities are under active pursuit with additional internal resource being devoted to this aspect of the Division's activities since the Group restructure in March 2011.

 

UK Trade

 

The Trade division continues to perform well. The strategy for the division has been to focus strongly on the titles with maximum commercial potential whilst keeping tight controls on the level of advance investment, continuing to identify new talented writers and promoting the "long tail" by acquiring established authors' backlists in print and e-book format and moving titles to print on demand.

 

In Adult, the growth of our food list has been considerable with books published by high profile authors such as Hugh Fearnley-Whittingstall and Heston Blumenthal but also innovative new authors such as Niki Segnit with The Flavour Thesaurus. We continue to look for markets that are showing good growth and we have embarked on building a crime list of high quality writers who will deliver a book a year.  Our ten-year strategy of building a serious non-fiction list has matured. Concentration on the growth of our paperback list has paid off with a wide variety of bestselling books from the novels of Khaled Hosseini to The Guernsey Literary and Potato Peel Pie Society to Eat, Pray, Love and the books of Ben McIntyre.

 

The retail landscape is changing with more titles being sold online or through supermarkets, in e-book or print format. The impact of digitisation is becoming considerable and acquiring world English rights is of premier importance in the digital future. In the month of October 2010, e-books made up 42% of the US sales of our Man Booker Prize winner, The Finkler Question.

 

During the period we have had seven hardback bestsellers in the UK including Alex's Adventures in Numberland by Alex Bellos, The Flavour Thesaurus by Niki Segnit, which was the winner of a design award, MI6: The History of the Secret Intelligence Service 1909-1949 by Keith Jeffery, Operation Mincemeat by Ben McIntyre, Just Kids by Patti Smith, River Cottage Everyday by Hugh Fearnley-Whittingstall and The Finkler Question by Howard Jacobson.  We also had three paperback bestsellers, Eat, Pray, Love and Committed by Elizabeth Gilbert, and Operation Mincemeat, in the Sunday Times list. Operation Mincemeat was number one in both hardback and paperback and Eat, Pray, Love was the number one bestselling non-fiction book in the year of 2010, occupying first place for 23 consecutive weeks.

 

Howard Jacobson won the Man Booker Prize, and Patti Smith won the National Book Award. We continue to identify and acquire books that are adopted for the Richard & Judy and TV Bookclub promotions.  No and Me, Operation Mincemeat, and Major Pettigrew's Last Stand were adopted as Richard & Judy picks and The Bed I Made and Even the Dogs as TV Bookclub choices.

 

The 2011/12 year started well with the paperback edition of Alex's Adventures in Numberland and The Good Book: A Secular Bible by AC Grayling.  Highlights of the year ahead include the paperback of The Finkler Question, a new book in the summer from Ben Schott, Schott's Quintessential Miscellany, and Rip Tide, a thriller by the ex chief of MI5, Stella Rimington.  Non-fiction highlights for the autumn include the new title in the River Cottage series, River Cottage Everyday Veg by Hugh Fearnley-Whittingstall, Heston Blumenthal's Heston at Home and How to Bake by Paul Hollywood.

 

In Children's & Educational The Graveyard Book by Neil Gaiman won the Carnegie Medal in June 2010 and was the first book to win both the Newbury and the Carnegie Medals. Chains by Laurie Halse Anderson was also shortlisted for the Carnegie medal - giving Bloomsbury Children's two out of the eight shortlisted titles. Grass by Cathy McPhail won the 12-16 year category for the Royal Mail Scottish Book Award in February 2011. Mortlock by Jon Mayhew and A Beautiful Lie by Irfan Master were shortlisted for The Waterstone's Children's Book Prize in January 2011. Terry Deary's Put Out the Light, published in September 2010, has been shortlisted for the Sheffield Children's Book Award 2011. The Wombles made a successful return to print, 40 years after the first book by Elizabeth Beresford was published in November 2010.  

 

A children's publishing agreement was signed with London Zoo to create a bespoke book programme for them; the first books will be published in September 2011.

 

J.K. Rowling won the Hans Christian Andersen Literature Prize in October. The Harry Potter series was reissued in paperback with a stunning new livery for a new generation of readers. It was published alongside the release of the film of Harry Potter and the Deathly Hallows Part 1 in November 2010. Sales of the boxed set continued to be particularly strong. Part 2 of this film will be released in July 2011.

 

We have just announced the establishment of Bloomsbury Reader, a new digital global publisher, in partnership with the Rights House, one of Britain's leading literary agencies. The aim of this business is to make available books that are in copyright but currently unavailable in print, as e-books and print-on-demand throughout the world.  The first list to be published in September 2011 has 500 titles by authors including Alan Clark, Ivy Compton-Burnett, Monica Dickens, Angela Huth, Roy Jenkins, Edith Sitwell and Alec Waugh, most of whom have not been published by Bloomsbury before. 

 

Bloomsbury's Public Library Online project continues to help libraries offer to their communities cost effective online access to books from a wide range of publishers thereby helping them retain their valued place at the core of a literate society.  The service has maintained a 100% renewal rate and is currently available through 18 UK library authorities reaching 7.3 million of the UK population.  Based on the success of the service in the UK and its scalability, Public Library Online has now been launched in the US, Canada, Australia, New Zealand, Germany and Scandinavia.

 

US

 

The US turned in a record performance for the period and all divisions had marked success. With the addition of new e-book agreements, most notably with Barnes & Noble, e-book sales increased significantly throughout the year, and Bloomsbury had its first two e-book bestsellers on the newly established New York Times e-book bestseller list.

 

In Adult, My Horizontal Life, by Chelsea Handler, remained in the top 20 on the New York Times trade paperback non-fiction bestseller list every week during 2010, while the e-book of My Horizontal Life was in the top 10 of the New York Times non-fiction e-book bestseller list that was established in the last quarter of 2010.  The U.S. adult division published The Finkler Question, and it became an immediate print and e-book bestseller when published in October, appearing each week thereafter in 2010 on the New York Times trade paperback fiction bestseller list, and several weeks on the e-book bestseller list. 

 

Professional and Academic sales grew solidly throughout the year in the US, and the Methuen and Arden Shakespeare lists are now well-established there as leading publishers of drama.  A&C Black's book on Alexander McQueen, the first book published following his death, was a big success.

 

The Children's list had numerous successes including Captivate, Carrie Jones's sequel to her paranormal blockbuster Need.  It reached number seven on the New York Times bestseller list.  Rules of Attraction, the follow up to Simone Elkeles's 2009 bestseller Perfect Chemistry, also appeared on the Times list - reaching the number three spot - and placed on the USA Today and Publishers Weekly bestseller lists as well. Hearts at Stake, by Alyxandra Harvey, the first in a paranormal romance series published in January, has shipped more than 50,000 copies, and with the subsequent 2010 releases of Blood Feud in July and Out for Blood in December, the series now has over 100,000 copies in print. 

 

Germany

 

The overall German retail book market showed no growth in 2010, and Berlin Verlag's sales reflected that.  A film tie-in paperback edition of Elizabeth Gilbert's Eat, Pray, Love hit the top of the bestseller list, as did a biography of Berthold Beitz, one of Germany's most important industrialists during the post-war era. Strong sales of Khaled Hosseini's The Kite Runner and A Thousand Splendid Suns ensured that backlist sales remained significant.

 

Profitability improved considerably as a result of having moved the print contract for the paperback list to the UK, where costs are lower.

 

Berlin Verlag e-books were launched in the autumn, and following Amazon's entry into the market in Germany in the spring of 2011 we expect significant growth in this area.

 

Berlin Academic was launched in the spring of 2010 with the aim of providing a digital platform for academic publishers, and has made good progress in negotiations with potential clients.

 

At the end of February 2011, Berlin Verlag was renamed as Bloomsbury Verlag as part of the corporate restructuring.

 

 

Management

 

On 28 May 2010, Sarah Jane Thomson was appointed as an Independent non-executive Director and Chair of the Remuneration Committee. Sarah replaced Charles Black who stepped down from the Board on 28 May 2010. Ian Cormack was appointed as Independent non-executive Director on 1 January 2011 and also became the Senior Independent Director and Chair of the Audit Committee on that date. Ian Cormack replaces Mike Mayer who stepped down from the Board on 31 December 2010. I would like to thank Charles and Mike for their long and distinguished service to the Board of Bloomsbury and their immeasurable contribution to the Company over many years. Wendy Pallot joined the Group as Group Finance Director on 8 April 2011. We thank Colin Adams for his support and contribution over 17 years as Group Finance Director.

 

Current trading, developments and prospects

 

Since the period end, trading within the UK has remained strong, although overseas markets are currently weaker, in part reflecting the weakness in their respective retail book markets. The strength in the UK list at the moment is evidenced by titles such as Anthony Grayling's The Good Book, the paperback editions of Howard Jacobson's The Finkler Question and Kate Summerscale's The Suspicions of Mr Whicher, Raymond Blanc's Kitchen Secrets, The River Cottage Baby and Toddler Cookbook, and the Orange Prize shortlisted The Memory of Love by Aminatta Forna.

 

This is an exciting time for Bloomsbury: e-book demand is increasing significantly; it will change the publishing business model creating one worldwide market. The recent organisational change is already bringing benefits to the Group, enabling us to better exploit that worldwide market as a global publisher in print and digital. During 2011/12 these benefits will be enhanced by the move into our new headquarters building in Bedford Square, London. We have a strong balance sheet and an excellent management team, so are well placed to exploit future opportunities as we enter our 25th anniversary year.

 

Nigel Newton

Founder and Chief Executive

 

 

FINANCIAL REVIEW

 

Results for the fourteen months ended 28 February 2011

 

The figures given below are for the fourteen month period ended 28 February 2011 unless otherwise indicated. Figures given below in relation to the twelve months ended 31 December 2010 are unaudited.

 

Profit before tax for the fourteen month period was £4.2 million (2009: £7.1 million).  Profit before tax and highlighted items was £7.7 million (2009: £7.7 million). For the twelve month period to 31 December 2010 profit before tax and highlighted items was £8.4 million (2009: £7.7 million).  Due to the cyclicality of the business the operation typically makes a loss in January and February.

 

Revenue for the Group for the fourteen month period was £103.4 million (2009: £87.2 million). Revenue for the twelve month period ended 31 December 2010 was £90.7 million (2009: £87.2 million).

 

The consolidated income statement for the year ended 28 February 2011 is also provided for information purposes. It does not form part of the preliminary results. In addition the related segmental analysis is provided, both under the old divisional structure and under the new structure, assuming that the business reorganisation had taken place on 1 March 2010.

 

Segmental analysis

 

Until March 2011 the Group was managed on a geographic basis and the segmental analysis presented in these financial statements reflects that structure. Revenue in the UK was £70.6 million (2009: £58.9 million). The revenue increase was primarily due to the success of the Adult list and the full period's trading of Bloomsbury Professional which was acquired in July 2009. During the fourteen month period we enjoyed seven hardback bestsellers in the UK. Unadjusted profit before investment income, finance costs, tax and central cost recharge income in the UK was £4.9 million (2009: £6.3 million).  Profit before highlighted items, investment income, finance costs, tax and central cost recharge income in the UK was £6.7 million (2009: £6.9 million).  US revenue was £21.7 million (2009: £18.8 million). E-book sales continued to gather momentum into the new year along with re-orders of core backlist titles.  Profit in the US before investment income, finance costs, tax and central costs recharged from the UK was £1.2 million (2009: £0.5 million). For Continental Europe, revenue, which was generated by Berlin Verlag, was £10.1 million (2009: £9.6 million). Berlin was operating in a difficult market during 2010 but generated a profit before highlighted items, investment income, finance costs, tax and central costs recharged from the UK in the six months to 31 December 2010. The loss in Berlin for the fourteen month period before highlighted items, investment income, finance costs, tax and central costs recharged from the UK was £0.5 million (2009: loss £0.6 million).

 

Within the geographical locations, the Group's divisional structure is split into three main operating areas: Children's, Adult and Reference publishing. Under this structure Children's and Adult form the Trade publishing division, and Reference the Specialist publishing division. All three divisions operated in the UK, US and Germany. For the fourteen month period the breakdown of revenue between the three areas was: Children's 22% (2009: 26%), Adult 46% (2009: 44%) and Reference 32% (2009: 30%).

 

Revenue in Children's was £22.8 million (2009: £23.0 million). Although there were fewer bestselling titles during the period, the backlist performed well on the back of the film Harry Potter and the Deathly Hallows part 1 and the release of the Harry Potter series with a new jacket design. The demand for the paperback box set over the Christmas period also continued into the New Year. Contribution before administrative expenses was £7.9 million (2009: £8.4 million).

 

Adult revenue was £47.8 million (2009: £37.9 million). As previously mentioned, the Adult division performed well during the period from a broad selection of new titles and existing backlist. The division was also the main beneficiary of e-book revenues during the period.  The increase in gross profit margin was mainly due to lower provisions against unearned advances, decreased stock provisions and lower return levels. Contribution before administrative expenses was £17.3 million (2009: £11.0 million). This increase was mainly due to higher revenues and margin.

 

Reference revenue increased to £32.8 million (2009: £26.4 million). The revenue growth was primarily due to the full fourteen month impact of the 2009 acquisitions of Tottel Publishing, renamed Bloomsbury Professional, and Hodder Education's Higher Education Humanities list. Bristol Classical Press and Duckworth Academic, which were acquired in November 2010, have now been integrated into the Academic operation. Contribution before administrative expenses was £10.4 million (2009: £8.6 million).

 

Rights revenue, which includes subsidiary rights, electronic database income, management contracts and income derived from third-party agencies, was £8.1 million (2009: £9.2 million). The contribution attributable to this revenue was £6.5 million (2009: £6.6 million). The decrease in contribution on a like for like basis was due to higher revenue recognised in 2009 on the delivery of content under the QFCA contract which was not repeated in 2010. £5.0 million (2009: £4.9 million) of the profit was generated in the Specialist Publishing Division and £1.5 million (2009: £1.7 million) was generated in the Trade Publishing Division.

 

Gross profit

Gross profit for the Group for the period was £53.1 million (2009: £43.4 million). Gross profit margin increased to 51.3% (2009: 49.7%). The increase in the gross profit margin was due to a number of factors including the fourteen months' trading of the higher margin Bloomsbury Professional, acquired in July 2009, lower book returns rates in the UK and moving the paperback printing of Berlin's business to the UK where the costs are lower.

 

Royalty rates vary according to the type of books published in the year. Provisions against unearned advances charged to the Income Statement were £3.7 million (2009: £3.4 million) and represented 3.6% of revenues (2009: 3.9% of revenues). Books returned by customers are credited to the returns provision. There was no overall change in the returns provision during the period. There was a write-back to the Income Statement in 2009 of £0.58 million. The stock provision charged to the Income Statement in respect of obsolescence (excluding write downs for items such as wastage) increased to £2.6 million (2009: £2.2 million) and represented 2.5% of revenues (2009: 2.5% of revenues).

 

Costs

Marketing and distribution costs for the period were £17.5 million. For the twelve month period to 31 December 2010 they were £15.2 million (2009: £15.4 million). Administrative expenses before highlighted items for the period were £28.2 million.  For the twelve month period to 31 December 2010 they were £24.7 million (2009: £21.2 million). On a like for like basis with 2009, £1.2 million of increased overhead costs before central cost recharges relate to the additional six months' overhead of Bloomsbury Professional, which was acquired in July 2009. In addition, share option charges for the twelve month period to 31 December 2010 increased to £0.8 million (2009: £0.1 million) and there were higher premises costs and professional fees as a result of credits in the year ended 31 December 2009. 

 

Highlighted items

Highlighted items for the fourteen month period include the amortisation of intangible assets of £1.1 million (2009: £0.6 million), impairment of goodwill of Berlin Verlag of £1.5 million (2009: £nil), costs of £0.3 million (2009: £nil) relating to an aborted class one acquisition, restructuring costs of £0.2 million (2009: £nil) and costs of £0.2 million (2009: £nil) in relation to the relocation of the London offices as part of the Group's reorganisation.  The move to the new offices in London is due to take place in August 2011. The increase in the amortisation is due to the full fourteen months' charge on the prior year's acquisitions and acquisitions and other additions in the period.  The impairment of the goodwill in Berlin was made following a review of economic factors affecting Germany, in particular the weakness of the retail book market there.  With a new management team and structure, there has been a rationalisation of the publishing programme and reduction of Berlin's cost base as part of the plan to increase profitability in the business.

 

Investment Income

Investment income for the fourteen month period was £0.4 million (2009: £1.1 million) as a result of lower interest rates and, to a lesser extent, lower average cash balances held during the fourteen month period. 2009 benefitted from the overhang of longer-term deposits made in prior years at significantly higher interest rates.

 

Taxation

The Group's effective tax rate for the fourteen months ending 28th February 2011 was 47.2% (2009: 30.1%). The increase in the rate is primarily due to certain significant one-off items which reduce the group's pre-tax profits but which are not considered allowable expenses for corporation tax purposes. These one-off highlighted items principally relate to an impairment of goodwill in respect of the Group's Berlin operations of £1.5 million (2009: £nil), fees incurred on an aborted class 1 transaction of £0.3 million (2009: £nil) and costs associated with relocating the Group's London head office of £0.2 million (2009: £nil).

 

The corporation tax charge for the period also includes the impact of the Group recognising a deferred tax asset of £0.4 million, relating to previously unrecognised losses arising from the Group's US operation, which partially offsets the de-recognition of the deferred tax asset (of £0.7 million) on the Group's Berlin operation's tax losses in prior periods. The adjusted underlying corporation tax rate for 2011 excluding the impact of these one-off items is 31.3%.

 

Earnings per share

Basic earnings per share were 3.02 pence (2009: 6.77 pence).  Diluted earnings per share were 3.02 pence (2009: 6.74 pence). Basic earnings per share before highlighted items were 7.70 pence (2009: 7.56 pence). Diluted earnings per share before highlighted items were 7.70 pence (2009: 7.53 pence).

 

Dividend

 

The Directors are recommending a final dividend of 0.28 pence per share, which, subject to shareholder approval at our Annual General Meeting, will be paid on 27 September 2011 to shareholders on the register at the close of business on 26 August 2011. This dividend is a 5% increase, pro rata for two months, on the dividend paid for the six months ending 30 June 2010. Together with the interim and second interim dividend, this makes a total dividend for the 14 month period ended 28 February 2011 of 5.00 pence per share, a 13.0% increase on the total dividend for the year ended 31 December 2009 of 4.43 pence per share.

 

Balance sheet

 

Intangible assets

Intangible assets were £37.2 million (2009: £37.6 million). The change was primarily due to the acquisition of Bristol Classical Press and Duckworth Academic in November 2010 and other additions (mainly software and publishing rights) less amortisation and the impairment of the goodwill relating to Berlin Verlag.

 

The businesses and net assets of Bristol Classical Press and Duckworth Academic were acquired for a cash consideration of £1,100,000. The acquisition has been accounted for using the acquisition method of accounting. The goodwill of £28,000 and intangibles of £930,000 arising on the acquisition have been capitalised in the Group balance sheet.

 

Current assets

Inventories increased 12.1% to £18.3 million (2009: £16.4 million). The increase mainly reflects the higher revenues particularly in the second half of the year, business seasonality and stock at the new Australian subsidiary. The underlying stock holding has remained relatively stable over the last twelve months. On a like for like basis with 2009 there was no significant exchange movement on overseas stocks (2009: positive exchange movement of £0.6 million).

 

Trade and other receivables increased 2.5% to £48.7 million (2009: £47.5 million). Trade receivables were £21.4 million (2009: £21.6 million). Since books sold are generally returnable by customers, the Group makes a provision against books sold in the accounting period. The unused provision at the period-end is then carried forward as an offset to trade receivables in the balance sheet, in anticipation of further book returns subsequent to the year end.  A provision for the Group of £6.5 million for future returns relating to 2010/11 and prior year sales (2009: £6.5 million relating to 2009 and prior year sales) has been carried forward in trade receivables at the balance sheet date. This provision at margin represents 6.3% (2009: 7.5%) of revenues. Within trade and other receivables, prepayments and accrued income increased 7.1% to £27.2 million (2009: £25.4 million) mainly as a result of higher paid advances. Net provisions of £3.7 million (2009: £3.4 million) against advances to authors on titles published were made during the period.

 

Equity and liabilities

As at 28 February 2011 total equity stood at £111.9 million (2009: £112.7 million). The reduction was due to retained earnings reduction of £1.3 million (2009: £1.9 million increase) as a result of the profit for the period of £5.6 million before highlighted items (2009: £5.6 million), the highlighted items of £3.4 million (2009: £0.6 million), dividends of £3.3 million (2009: £3.1 million) and share buy-back of £0.2 million (2009: £nil), a decrease in the translation reserve due to the translation loss on consolidation of the assets and liabilities of overseas subsidiaries in other comprehensive income of £0.4 million (2009: £3.0 million loss), and an increase in the share-based payment reserve due to the share-based payment charge for the fourteen months of £0.8 million (2009: £0.1 million).

 

Current liabilities increased 20.6% to £29.1 million (2009: £24.2 million). Trade payables increased to £9.2 million (2009: £5.9 million) due to increased payables for work in progress and trade payable for the stock acquired by the new Australian subsidiary. Accruals and deferred income, which is included in trade and other payables, increased 20.8% to £18.6 million (2009: £15.4 million).  Accruals and deferred income includes increased deferred income on database contracts, higher deferred subscription revenues and increased royalty payments to authors, which vary from year to year depending on revenue and the authors' royalty rates, which typically escalate on triggered thresholds as sales increase.

 

Cash flow

The Group had a net cash inflow from operating activities before tax of £11.0 million for the fourteen months (2009: £2.6 million cash outflow). This was mainly attributable to increased payables more than offsetting increased receivables. Corporation tax paid during the fourteen months was £2.8 million (2009: £1.7 million). During the fourteen months £0.4 million (2009: £1.4 million) of interest was received from deposits, and £3.3 million (2009: £3.1 million) of dividends were paid.  £1.1 million, net of cash acquired, was spent on the business acquired during the period (2009: £10.3 million). The Group's cash on the balance sheet as at 28 February 2011 was £36.9 million (2009: £35.0 million).

 

 

 

Wendy Pallot ACA

Group Finance Director

 

 

UNAUDITED CONSOLIDATED INCOME STATEMENT

for the fourteen month period ended 28 February 2011

 

Continuing operations

Notes

 

 

14 months ended

28 February

2011

 

£'000

Year

ended

31 December

2009

 

£'000

 

 

 

 

 

 

Revenue

2

 

 

103,398

87,217

 

 

 

 

 

 

Cost of sales

 

 

 

(50,316)

______

(43,839)

______

Gross profit

 

 

 

53,082

43,378

Marketing and distribution costs

 

 

 

(17,539)

(15,441)

Administrative expenses - highlighted items

7

 

 

(3,449)

(584)

Administrative expenses - other

 

 

 

(28,228)

______

(21,186)

______

Administrative expenses - total


 


(31,677)

 

(21,770)

 

Profit before investment income, finance costs, tax and highlighted items




7,315

6,751

Highlighted items

7



(3,449)

 

(584)

 

Profit before investment income, finance costs and tax

 

 

3,866

6,167

Investment income

 

 

 

403

1,105

Finance costs

 

 

 

(49)

 

(145)

 

Profit before taxation and highlighted items

 

 

7,669

7,711

Highlighted items

7

 

 

(3,449)

 

(584)

 

Profit before taxation

2

 

4,220

7,127

Income tax expense


 


(1,991)

______

(2,146)

______

 

Profit for the period, attributable to owners of the parent

 

 

 

 

2,229

______

 

4,981

______

Basic earnings per share

5

 

 

3.02p

______

6.77p

______

Diluted earnings per share

5

 

 

3.02p

______

6.74p

______

 

 

 

 

 

 

 

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the fourteen month period ended 28 February 2011

 





14 months ended

28 February

2011

 

£'000

Year

ended

31 December

2009

 

£'000







Profit for the period




2,229

______

4,981

______

Other comprehensive income:






Exchange differences on translating

foreign operations




(368)

(2,950)

Deferred tax on share based payments




(26)

21





______

______

Other comprehensive income for the

period net of tax




(394)

______

(2,929)

______

Total comprehensive income for the

period attributable to owners of the parent

company

 

 




1,835

______

2,052

______

 

 

 

UNAUDITED CONSOLIDATED BALANCE SHEET

                                                            at 28 February 2011                                                           

 

 

Notes

 

28 February

2011

£'000

31 December

2009

£'000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

     Property, plant and equipment

 

 

965

1,061

     Intangible assets

 

 

37,241

37,598

     Deferred tax assets

 

 

1,583

1,965

    

Total non-current assets       

 

 

______

39,789

______

______

40,624

______






Current assets

 

 

 

 

     Inventories

     Trade and other receivables

    Cash and cash equivalents

 

Total current assets

 

8

 

18,334

48,719

36,876

______

103,929

______

16,350

47,509

35,036

______

98,895

______






TOTAL ASSETS

 

 

143,718

______

139,519

______

EQUITY AND LIABILITIES

 

 

 

 

Equity attributable to owners of the parent

     Ordinary shares

     Share premium

     Capital redemption reserve

     Share-based payment reserve

     Translation reserve

     Retained earnings

 

Total equity

 

 

 

 

 

924

39,388

22

3,197

4,236

64,077

______

111,844

______

 

 

922

39,388

20

2,393

4,604

65,357

______

112,684

______






Liabilities

 

 

 

 

Non-current liabilities

     Deferred tax liabilities

     Retirement benefit obligations

     Other payables

 

Total non-current liabilities

 

 

 

 

2,176

95

467

______

2,738

______

 

2,234

91

353

______

2,678

______






Current liabilities

     Trade and other payables

     Current tax liabilities

 

Total current liabilities

 

 

 

 

29,120

16

______

29,136

______

 

23,069

1,088

______

24,157

______

Total liabilities

 

 

31,874

______

26,835

______






TOTAL EQUITY AND LIABILITIES

 

 

143,718

______

139,519

______

 

 

 

 

 

 

 

 

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT

 

 

Ordinary

shares

 

 

£'000

Share premium

 

 

£'000

Capital redemption reserve

 

£'000

Share-based payment reserve

£'000

Translation

reserve

 

 

 £'000

Retained

earnings

 

 

£'000

Total

 

 

 

£'000

Attributable to owners of the parent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at 1 January 2009

922

 

39,388

 

20

 

2,305

 

7,554

 

63,483

 

113,672

 

Profit for the year

-

-

-

-

-

4,981

4,981

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

-

-

-

-

(2,950)

-

(2,950)

 

 

 

 

 

 

 

 

Deferred tax on share-based payments

-

-

-

-

-

21

21

 

______

______

______

______

______

______

______

Total comprehensive

income for the year

ended 31 December 2009

-

______

-

______

-

______

-

______

(2,950)

______

5,002

______

 

2,052

______

 

 

 

 

 

 

 

 

Transactions with owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends

-

-

-

-

-

(3,128)

(3,128)

 

______

______

______

______

______

______

______

Total transactions with owners for the year ended 31 December 2009

-

-

-

-

-

(3,128)

(3,128)

Share-based payments

-

-

-

88

-

-

88

 

______

______

______

______

______

______

______

Balances at 31 December 2009

922

 

39,388

 

20

 

2,393

 

4,604

 

65,357

 

112,684

 

 

 

 

 

 

 

 

 

Profit for the period ended 28 February 2011

-

-

-

-

-

2,229

2,229

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

-

-

-

-

(368)

-

(368)

 

 

 

 

 

 

 

 

Deferred tax on share-based payments

-

-

-

-

-

(26)

(26)

 

______

______

______

______

______

______

______

Total comprehensive

income for the period ended 28 February 2011

-

______

-

______

-

______

-

______

(368)

______

2,203

______

 

1,835

______

 

 

 

 

 

 

 

 

Transactions with owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends

-

-

-

-

-

(3,296)

(3,296)

 

 

 

 

 

 

 

 

Share options exercised

4

-

-

-

-

-

4

 

 

 

 

 

 

 

 

Share buy back and cancellation

(2)

-

2

-

-

(187)

(187)

 

______

______

______

______

______

______

______

Total transactions with owners for the period ended 28 February 2011

2

-

2

-

-

(3,483)

(3,479)

 

 

 

 

 

 

 

 

Share-based payments

-

-

-

804

-

-

804

 

______

______

______

______

______

______

______

Balances at 28 February 2011

924

______

39,388

______

22

______

3,197

______

4,236

______

64,077

______

111,844

______

 

 

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
for the fourteen month period ended 28 February 2011

 

 

14 months ended

28 February

2011

 

£'000

Year

ended

31 December

2009

 

£'000

Cash flows from operating activities

 

 

 

Profit before tax

 

4,220

7,127

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

 

655

669

Amortisation of intangible assets

 

1,136

584

Impairment of goodwill

 

1,532

-

Profit on sale of property, plant and equipment

 

-

(9)

Share-based payment charges

 

804

88

Investment income

 

(403)

(1,105)

Finance costs

 

49

145

 

 

______

______

 

 

7,993

7,499

Increase in inventories

 

(1,942)

(76)

Increase in trade and other receivables

 

(1,379)

(98)

Increase / (decrease) in trade and other payables

 

6,326

______

(9,888)

______

Cash generated from / (used in) operations

 

10,998

(2,563)

Income taxes paid

 

(2,792)

______

(1,734)

______

Net cash generated from / (used in) operating activities

 

8,206

______

(4,297)

______

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

 

(563)

(304)

Proceeds from sale of property, plant and equipment

 

-

23

Purchase of businesses, net of cash acquired

 

(1,100)

(10,307)

Purchases of intangible assets

 

(1,437)

-

Interest received

 

385

1,409

 

 

______

______

Net cash used in investing activities

 

 

(2,715)

______

(9,179)

______

Cash flows from financing activities

 

 

 

Share options exercised

 

4

-

Share buy back

 

(187)

-

Equity dividends paid

 

(3,296)

(3,128)

Interest paid

 

(33)

(34)

 

 

______

______

Net cash used in financing activities

 

 

(3,512)

______

(3,162)

______

 

 

 

 

Net increase / (decrease)  in cash and cash equivalents

 

1,979

(16,638)

Cash and cash equivalents at beginning of period

 

35,036

51,908

Exchange loss on cash and cash equivalents

 

(139)

(234)

 

 

______

______

Cash and cash equivalents at end of period

 

36,876

______

35,036

______

 

NOTES

 

1.    The above unaudited financial information does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The above figures for the period ended 28 February 2011 are an abridged version of the Company's accounts which will be reported on by the Company's auditors before dispatch to the shareholders and filing with the Registrar of Companies. The preliminary announcement was approved by the Board and authorised for issue on 27 May 2011.

 

The consolidated financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU). The accounting policies applied in the period ended 28 February 2011 are consistent with those applied in the Financial Statements for 2009 other than the changes resulting from the implementation IFRS 3 (revised), which was implemented during the financial year. The impact on the Group's accounting policies is explained in the condensed consolidated interim financial statements for the six months ended 31 December 2010.

 

The statutory accounts for the year ended 31 December 2009 have been lodged with the Registrar of Companies.  These accounts 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.

 

 

 

NOTES

 

2.   Segmental analysis

 

In the period ended 28 February 2011, the main thrust of the Group's growth was to develop its international publishing strategy. The internal reporting to the chief operating decision maker was therefore by geographical segments. Management has determined the operating segments based on these reports. All segments derive their revenue from book publishing, sale of publishing and distribution rights, sponsorship and database contracts.  The analysis by geographical segment is shown below.

 

Fourteen months ended

28 February 2011

 

 

United

Kingdom

 

 

£'000

 

North

America

 

 

£'000

 

Continental

Europe

 

 

£'000

 

Australia

 

 

 

£'000

 

 Eliminations and unallocated costs

£'000

 

Total

 

 

 

£'000

Revenue

 

 

 

 

 

 

External sales

70,647

21,734

10,052

965

-

103,398

Inter-segment sales *

1,813

_______

-

_______

202

_______

-

_______

(2,015)

_______

-

______

Total revenue

72,460

_______

21,734

_______

10,254

_______

965

_______

(2,015)

_______

103,398

______

Result

 

 

 

 

 

 

Segment result before central costs and highlighted items

6,666

1,191

(451)

(91)

-

7,315

Highlighted items

(1,791)

-

(1,658)

-

-

(3,449)

Central cost recharges

329

_______

(183)

_______

(146)

_______

-

_______

-

_______

-

______

Segment result

5,204

1,008

(2,255)

(91)

-

3,866

Investment income

398

5

-

-

-

403

Finance costs

(49)

_______

-

_______

-

_______

-

_______

-

_______

(49)

______

Profit / (loss) before taxation

5,553

1,013

(2,255)

(91)

-

4,220

Income tax expense

-

_______

-

_______

-

_______

-

_______

(1,991)

_______

(1,991)

_______

Profit / (loss) for the period

5,553

_______

1,013

_______

(2,255)

_______

(91)

_______

(1,991)

_______

2,229

______

Other Information

 

 

 

 

 

 

Amortisation of intangible assets

1,095

41

-

-

-

1,136

Depreciation

586

29

40

-

-

655

Actuarial losses

16

-

-

-

-

16

Share-based payment charges

727

_______

38

_______

39

_______

-

_______

-

_______

804

______

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Inter-segment sales are charged at prevailing market rates.

 

 

NOTES

 

2.   Segmental analysis (continued)

 

Year ended 31 December 2009

 

 

United

Kingdom

 

 £'000

 

North

America

 

 £'000

 

Continental

Europe

 

 £'000

 

Australia

 

 

 £'000

 

Eliminations and unallocated costs

£'000

 

Total

 

 

 £'000

Revenue

 

 

 

 

 

 

External sales

58,888

18,777

9,552

-

-

87,217

Inter-segment sales *

480

_______

-

_______

134

_______

-

_______

(614)

_______

-

______

Total revenue

59,368

_______

18,777

_______

9,686

_______

-

_______

87,217

______

Result

 

 

 

 

 

 

Segment result before central costs and highlighted items

6,868

450

(567)

-

6,751

Highlighted items

(584)

-

-

-

-

(584)

Central cost recharges

284

_______

(152)

_______

(132)

_______

-

_______

-

_______

-

______

Segment result

6,568

298

(699)

-

-

6,167

Investment income

1,101

4

-

-

-

1,105

Finance costs

(145)

_______

-

_______

-

_______

-

_______

(145)

______

Profit / (loss) before taxation

7,524

302

(699)

-

-

7,127

Income tax expense

-

_______

-

_______

-

_______

-

_______

(2,146)

______

Profit / (loss) for the year

7,524

_______

302

_______

(699)

_______

-

_______

4,981

______

Other Information

 

 

 

 

 

 

Amortisation of intangible assets

548

36

-

-

-

584

Depreciation

620

17

32

-

-

669

Actuarial losses

111

-

-

-

-

111

Share-based payment charges

88

_______

-

_______

-

_______

-

_______

88

______

 

 

 

 

 

 

 

 

* Inter-segment sales are charged at prevailing market rates.

 

 

NOTES

 

2.   Segmental analysis (continued)

 

External sales by destination

 

 

 

Source

United

Kingdom

£'000

 

North

America

£'000

 

Continental

Europe

£'000

 

Australia

 

£'000

 

Total

 

£'000

Destination

Fourteen months ended

28 February 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

United Kingdom (country of domicile)

 

49,114

_______

-

_______

-

_______

-

_______

49,114

_______

 

 

 

 

 

 

 

North America

 

1,179

21,734

-

-

22,913

Continental Europe

 

7,724

-

10,052

-

17,776

Australasia

 

4,332

-

-

965

5,297

Far and Middle East

 

5,066

-

-

-

5,066

Rest of the world

 

3,232

_______

-

_______

-

_______

-

_______

3,232

_______

Overseas countries

 

21,533

21,734

10,052

965

54,284

 

 

_______

_______

_______

_______

_______

Total external sales

 

70,647

_______

21,734

_______

10,052

_______

965

_______

103,398

_______

 

 

 

 

 

 

 

Year ended

31 December 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

United Kingdom (country of domicile)

 

38,517

_______

-

_______

-

_______

-

_______

38,517

_______

 

 

 

 

 

 

 

North America

 

3,568

18,404

-

-

21,972

Continental Europe

 

5,550

-

9,552

-

15,102

Australasia

 

3,809

-

-

-

3,809

Far and Middle East

 

5,427

373

-

-

5,800

Rest of the world

 

2,017

_______

-

_______

-

_______

-

_______

2,017

_______

Overseas countries

 

20,371

18,777

9,552

-

48,700

 

 

_______

_______

_______

_______

_______

Total external sales

 

58,888

_______

18,777

_______

9,552

_______

-

_______

87,217

_______

 

 

Non-current assets

 

 

 

28 February

2011

 

£'000

31 December

2009

 

£'000

 

 

 

 

United Kingdom (country of domicile)

 

34,528

_______

33,283

_______

North America

 

3,575

3,679

Continental Europe

 

101

1,697

Australia

 

2

_______

-

_______

Overseas countries

 

3,678

5,376

 

 

_______

_______

Total non-current assets (excluding deferred tax assets)

 

38,206

_______

 

38,659

_______

 

 

 

NOTES

 

2.   Segmental analysis (continued)

 

Business Divisions

 

In the period ended 28 February 2011, the Group's business was organised in three operating areas: Trade Adult, Trade Children's and Specialist.  The following table provides the breakdown of revenue and divisional result for these areas.

 

Fourteen months ended

28 February 2011

 

 

Trade

(Adult)

 

 

Trade

(Children's)

 

Total

Trade

 

Specialist

 

 

Unallocated

 

 

Total

 

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Revenue

47,823

22,812

70,635

32,763

-

103,398

Cost of sales

(22,893)

_______

(11,546)

_______

(34,439)

_______

(15,877)

_______

-

_______

(50,316)

_______

Gross profit

 

24,930

11,266

36,196

16,886

-

53,082

Marketing and distribution costs

(7,672)

_______

(3,379)

_______

(11,051)

_______

(6,488)

_______

-

_______

(17,539)

_______

Contribution before administrative expenses

17,258

_______

7,887

_______

25,145

10,398

-

35,543

Administrative expenses

 

 

(20,678)

(7,937)

(3,062)

(31,677)

 

 

 

_______

_______

_______

_______

Divisional result

 

 

4,467

2,461

(3,062)

 

3,866

 

Investment income

 

 

-

-

403

403

Finance costs

 

 

-

-

(49)

(49)

 

 

 

_______

_______

_______

_______

Profit before taxation

 

 

4,467

2,461

(2,708)

4,220

Income tax expense

 

 

-

-

(1,991)

(1,991)

 

 

 

_______

_______

_______

_______

Profit for the period

 

 

4,467

2,461

(4,699)

2,229

 

 

 

_______

_______

_______

_______

 

 

NOTES

 

2.   Segmental analysis (continued)

 

Year ended

31 December 2009

 

 

Trade

(Adult)

 

 

Trade

(Children's)

 

Total

Trade

 

Specialist

 

 

Unallocated

 

 

Total

 

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Revenue

37,892

22,977

60,869

26,348

-

87,217

Cost of sales

(20,056)

_______

(11,427)

_______

(31,483)

_______

(12,356)

_______

-

_______

(43,839)

_______

Gross profit

 

17,836

11,550

29,386

13,992

-

43,378

Marketing and distribution costs

(6,814)

_______

(3,203)

_______

(10,017)

_______

(5,424)

_______

-

_______

(15,441)

_______

Contribution before administrative expenses

11,022

_______

8,347

_______

19,369

8,568

-

27,937

Administrative expenses

 

 

(16,470)

(5,013)

(287)

(21,770)

 

 

 

_______

_______

_______

_______

Divisional result

 

 

2,899

3,555

(287)

 

6,167

 

Investment income

 

 

-

-

1,105

1,105

Finance costs

 

 

-

-

(145)

(145)

 

 

 

_______

_______

_______

_______

Profit before taxation

 

 

2,899

3,555

673

7,127

Income tax expense

 

 

-

-

(2,146)

(2,146)

 

 

 

_______

_______

_______

_______

Profit for the year

 

 

2,899

3,555

(1,473)

4,981

 

 

 

_______

_______

_______

_______

 

 

NOTES

 

3.   Taxation

 

(a) Tax charge for the period

 

14 months ended 28 February

2011

£'000

Year ended 31 December

2009

£'000

 

UK corporation tax

 

1,720

 

 

2,159

 

 

 

Overprovision in respect of prior year

(55)

(246)

Overseas taxation - current period

70

61

 

_______

_______

 

1,735

1,974

Deferred tax

- UK

 

4

 

172

- Overseas                                                

252

-

 

_______

_______

 

1,991

_______

2,146

_______

 

 

 

 

 

 

 

 

NOTES

 

3.   Taxation (continued)

 

(b) Factors affecting tax charge for the period

 

The tax assessed for the period is different from the standard rate of corporation tax in the UK (28%).  The differences are explained below:

 

 

14 months ended

 28 February

 2011

£'000

 

 

 

 

 %

Year

ended

 31 December

 2009

£'000

 

 

 

 

 %

 

 

 

 

 

Profit before taxation

4,220

______

100.00

______

7,127

______

100.00

______

 

 

 

 

 

Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 28% (2009, 28%)

 

1,182

 

28.00

 

1,996

 

28.00

Effects of:

 

 

 

 

 

 

 

 

 

Non-deductible revenue expenditure

111

2.63

73

1.06

 

 

 

 

 

Non-qualifying depreciation

34

0.81

52

0.73

 

 

 

 

 

Share-based payments

150

3.55

-

-

 

 

 

 

 

Different rates of tax on overseas results

(48)

(1.14)

6

0.09

 

 

 

 

 

Tax losses (utilised) / not utilised

50

1.18

116

1.65

 

 

 

 

 

Movement in deferred tax rate

(95)

(2.25)

-

-

 

 

 

 

 

Adjustment to tax charge in respect of previous periods

- current tax

- deferred tax

 

(55)

(5)

______

 

(1.32)

(0.12)

______

 

(246)

149

______

 

(3.50)

2.12

______

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

1,324

 

31.34

 

2,146

 

30.15

 

 

 

 

 

Highlighted and other non-recurring items:

 

 

 

 

 

 

 

 

 

Disallowable costs incurred on the abortive acquisition / moving head office

 

143

 

3.39

 

-

 

-

 

 

 

 

 

Impairment of goodwill

271

6.42

-

-

 

 

 

 

 

Write off deferred tax asset on German tax losses previously recognised

 

680

 

16.11

 

-

 

-

 

 

 

 

 

Recognition of deferred tax asset on US tax losses not previously recognised

 

(427)

______

 

(10.12)

______

 

-

______

 

-

______

Tax charge for the period

1,991

______

47.15

______

2,146

______

30.15

______

 

 

 

 

 

 

 

 

NOTES

 

4.   Dividends

 

For the prior year

 

A final dividend for 2009 of 3.65 pence per share (£2,698,000) was paid to the equity shareholders on 1 July 2010, being the amount proposed by the Directors, and subsequently approved by the shareholders at the 2010 Annual General Meeting (2009: final dividend for 2008 paid in 2009 of 3.47 pence per share, £2,554,000).

 

For the current period

 

On 16 November 2010 an interim dividend of 0.81 pence per share (£597,423) was paid to the equity shareholders (2009: 0.78 pence per share, £574,000).

 

The Directors have declared a second interim dividend of 3.91 pence per share, which will be paid on 1 June 2011 to shareholders on the register at close of business on 3 May 2011.  Based on the number of shares currently in issue, excluding shares held by the Employee Benefit Trust, the second interim dividend will be £2,825,000.

 

The Directors are recommending a final dividend of 0.28 pence per share, which, subject to shareholder approval at our Annual General Meeting, will be paid on 27 September 2011 to shareholders on the register at close of business on 26 August 2011. Together with the interim and second interim dividend, this makes a total dividend for the 14 month period ended 28 February 2011 of 5.00 pence per share, a 13.0% increase on the total dividend for the year ended 31 December 2009 of 4.43 pence per share. Based on the number of shares currently in issue, excluding shares held by the Employee Benefit Trust, the final dividend will be £202,000. This dividend is subject to approval by the shareholders at the Annual General Meeting and has therefore not been included as a liability in these financial statements.

 

5.   Earnings per share

 

The basic earnings per share has been calculated by reference to earnings of £2,229,000 (2009, £4,981,000) and a weighted average number of Ordinary Shares in issue after deducting 88,760 (2009, 88,760) shares held by the Employee Benefit Trust of 73,735,046 (2009, 73,594,863). The diluted earnings per share has been calculated by reference to earnings of £2,229,000 (2009, £4,981,000) and a weighted average number of Ordinary Shares of 73,735,046 (2009, 73,920,795) which takes account of share options and awards.

 

The reconciliation between the weighted average number of shares for the basic earnings per share and the diluted earnings per share is as follows:

 

 

28 February

2011

Number

31 December

2009

Number

Weighted average number of shares for basic earnings per share

 

73,735,046

 

73,594,863

Dilutive effect of share options and awards

-

325,932

 

_________

_________

Weighted average number of shares for diluted earnings per share

 

73,735,046

_________

 

 73,920,795

_________

 

 

 

 

 

The earnings per share are shown below:

 

 

14 months ended 28 February

2011

 

Year ended 31 December

2009

 

Basic earnings per share

3.02p

______

6.77p

______

Diluted earnings per share

3.02p

______

6.74p

______

 

 

 

 

The adjusted earnings per share before amortisation of intangible assets of £1,136,000 (2009, £584,000), impairment of goodwill of £1,532,000 (2009, £nil) and other highlighted items of £781,000 (2009 £nil) are shown below:

 

 

14 months ended 28 February

2011

 

Year ended 31 December

2009

 

Adjusted basic earnings per share

7.70p

______

7.56p

______

Adjusted diluted earnings per share

7.70p

______

7.53p

______

 

NOTES

 

6.  Acquisitions

 

On 1 November 2010 A&C Black acquired the business and net assets of Duckworth Academic for a cash consideration of £1,100,000.  It was renamed Bristol Classical Press and is being managed under the Bloomsbury Academic imprint. Bloomsbury has identified academic and professional publishing as a growth area for the Group. Bringing Bristol Classical Press into Bloomsbury Academic is an important stepping stone in the development of our publishing in this area. The acquisition has been accounted for by the acquisition method of accounting. The goodwill of £28,000 and intangibles of £930,000 arising on the acquisition have been capitalised in the Group balance sheet.

 

The Directors consider the assets acquired and the impact on results is not material.

 

 

7.  Highlighted items

 

 

 

14 months ended

 28 February

2011

£'000

Year

 ended

31 December

2009

£'000

Amortisation of intangible assets

1,136

584

Impairment of goodwill

1,532

-

Professional fees on acquisitions

25

-

Relocation of headquarters

196

-

Aborted acquisition costs

313

-

Restructuring costs

247

______

-

______

 

3,449

______

584

______

 

 

 

 

Highlighted items charged to profit before tax comprise significant non-cash charges and/or 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.

 

The goodwill impairment charge relates to goodwill attributable to Berlin Verlag.  This was a result of an impairment review assessing the carrying value of the investments, which took account of economic factors in Germany, in particular the weakness of the retail market there, and forecasts not supporting the carrying value.  With the new management team and structure, there will be a rationalisation of the publishing programme and continuing reduction of Berlin's cost base as part of the plan to increase profitability in the business.

 

Legal costs of £25,000 were incurred in relation to the acquisition of Duckworth Academic.

 

The Group has incurred costs of £196,000 relating to its planned relocation of its Head Office to Bedford Square in July 2011, including professional fees and additional rental expense while the new premises are refurbished.

Aborted acquisition costs of £313,000 related to professional fees in connection with an acquisition of a business which did not go ahead following the due diligence process.

 

Restructuring costs of £247,000 were incurred as a result of the strategic global reorganisation of the Bloomsbury Group.

 

8.  Trade and other receivables

 

Included within trade and other receivables are the following provisions:

 

As books are returnable by customers, the Group makes a provision against books sold in the accounting period which is then carried forward in trade receivables in the balance sheet in anticipation of book returns received subsequent to the period end.  A provision for the Group of £6.51m (2009: £6.51m), at margin, for future returns relating to the current period and prior year sales has been included in trade receivables in the balance sheet at 28 February 2011.  This included a provision for the Company of £2.21m (2009: £2.14m). A 1% change in the closing returns provision rates would have an impact of £0.31m for the Group (2009: £0.26m). In addition to books returned by customers during 2009, there was a write-back in the returns provision relating to changes in assumptions made in respect of the provision brought forward from the prior year which, as a result of the level of returns actually received during the period, is no longer required.  The value of the write-back to the income statement is £nil (year to 31 December 2009: £0.58m).

 

The reconciliation of the Group's returns provision balance is shown below:

 

 

 

 28 February

2011

 

£'000

31 December

2009

 

£'000

 

At 1 January 2010

 

6,505

 

7,783

Exchange difference

(19)

(431)

Change in basis of calculation

-

(581)

Subsidiaries acquired

-

186

Provision made in the period

11,079

8,340

Provision utilised in the period

(11,053)

(8,792)

 

______

______

At 28 February 2011

6,512

______

6,505

______

 

 

 

The change in the basis of the calculation takes account of the reassessment of likely returns rates based on the level of actual returns in the period.

 

The Group makes a provision against published titles advances which may not be covered by anticipated future sales, paperback editions or contracts for subsidiary rights receivable.  At the end of each financial year a review is carried out on all published titles advances.  If it is unlikely that royalties from future sales, paperback sales or subsidiary rights will fully earn down the advance, a provision is charged to the income statement for the difference between the carrying value and the anticipated recoverable amount from future earnings ("advance provision").  The advance provision charged to the income statement for the Group was £3.67m for the fourteen months to 28 February 2011 (year to 31 December 2009, £3.44m).  The provision for the Company has been increased by £0.88m (year to 31 December 2009, £1.03m).  The net advance is included within prepayments and accrued income.

 

The movement on the advances provision for the Group during the period is shown below:

 

 

14 months ended

28 February

2011

£'000

Year ended

31 December

2009

£'000

 

 

 

 

 

 

Reversal of provision no longer required

-

(1,624)

Provisions made in the period

3,668

5,062

 

______

______

Total charge to income statement

3,668

3,438

 

 

 

Provisions used to write off advances

(1,682)

(1,960)

Exchange difference

(273)

(474)

 

______

______

Net movement in provision

1,713

______

1,004

______

 

 

 

 

 

9. Annual General Meeting

 

The Annual General Meeting will be held at 12 noon on Thursday 11 August 2011 at 36 Soho Square, London W1D 3QY.

 

10. Report and Accounts

 

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

 

 

This information is provided for information purposes only, does not form part of our preliminary results and is unaudited

 

 

CONSOLIDATED PROFORMA INCOME STATEMENT

for the year ended 28 February 2011

 

 

 

 

Year ended

28 February

2011

 

£'000

 

 

 

 

Revenue

 

 

92,555

 

 

 

 

Cost of sales

 

 

(44,651)

______

Gross profit

 

 

47,904

Marketing and distribution costs

 

 

(15,622)

Administrative expenses - highlighted items

 

 

(3,299)

Administrative expenses - other

 

 

(25,068)

______

Administrative expenses - total


 

(28,367)

 

Profit before investment income, finance costs, tax and highlighted items



7,214

Highlighted items



(3,299)

 

Profit before investment income, finance costs and tax

 

 

3,915

Investment income

 

 

349

Finance costs

 

 

(44)

 

Profit before taxation and highlighted items

 

 

7,519

Highlighted items

 

 

(3,299)

 

Profit before taxation

 

 

4,220

Income tax expense


 

(1,843)

______

 

Profit for the year, attributable to owners of the parent

 

 

 

2,377

______

 

Segmental analysis

 

Business Divisions - new structure

 

 

Year ended

28 February 2011

 

 

Adult

 

 

Children's & Educational

 

Academic & Professional

 

Bloomsbury Information

 

 

Unallocated

 

 

Total

 

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Revenue

54,790

24,439

10,722

2,604

-

92,555

Cost of sales

(26,940)

_______

(12,447)

_______

(4,874)

_______

(390)

_______

-

_______

(44,651)

_______

Gross profit

 

27,850

11,992

5,848

2,214

-

47,904

Marketing and distribution costs

(9,649)

_______

(3,870)

_______

(2,015)

_______

(88)

_______

-

_______

(15,622)

_______

Contribution before administrative expenses

18,201

8,122

3,833

2,126

-

32,282

Administrative expenses

(14,163)

(7,258)

(3,023)

(959)

(2,964)

(28,367)

 

_______

_______

_______

_______

_______

_______

Divisional result

4,038

864

810

1,167

(2,964)

 

3,915

 

Investment income

-

-

-

-

349

349

Finance costs

-

-

-

-

(44)

(44)

 

_______

_______

_______

_______

_______

_______

Profit before taxation

4,038

864

810

1,167

(2,659)

4,220

Income tax expense

-

-

-

-

(1,843)

(1,843)

 

_______

_______

_______

_______

_______

_______

Profit for the year

4,038

864

810

1,167

(4,502)

2,377

 

_______

_______

_______

_______

_______

_______

 

 

Segmental analysis

 

Business Divisions - old structure

 

 

Year ended

28 February 2011

 

 

Trade

(Adult)

 

 

Trade

(Children's)

 

Total

Trade

 

Specialist

 

 

Unallocated

 

 

Total

 

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Revenue

42,941

20,551

63,492

29,063

-

92,555

Cost of sales

(20,461)

_______

(10,401)

_______

(30,862)

_______

(13,789)

_______

-

_______

(44,651)

_______

Gross profit

 

22,480

10,150

32,630

15,274

-

47,904

Marketing and distribution costs

(6,956)

_______

(3,081)

_______

(10,037)

_______

(5,585)

_______

-

_______

(15,622)

_______

Contribution before administrative expenses

15,524

_______

7,069

_______

22,593

9,689

-

32,282

Administrative expenses

 

 

(18,243)

(7,160)

(2,964)

(28,367)

 

 

 

_______

_______

_______

_______

Divisional result

 

 

4,350

2,529

(2,964)

 

3,915

 

Investment income

 

 

-

-

349

349

Finance costs

 

 

-

-

(44)

(44)

 

 

 

_______

_______

_______

_______

Profit before taxation

 

 

4,350

2,529

(2,659)

4,220

Income tax expense

 

 

-

-

(1,843)

(1,843)

 

 

 

_______

_______

_______

_______

Profit for the year

 

 

4,350

2,529

(4,502)

2,377

 

 

 

_______

_______

_______

_______

 

 

 

 


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