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BloomsburyPublishing (BMY)

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Tuesday 24 October, 2017

BloomsburyPublishing

Half-year Report

RNS Number : 3822U
Bloomsbury Publishing PLC
24 October 2017
 

24 October 2017

 

BLOOMSBURY PUBLISHING Plc

("Bloomsbury" or the "Group")

Unaudited Interim Results for the six months ended 31 August 2017

 

The Group saw strong growth in the first half and is trading in line with the Board's expectations for the full year. Traditionally, sales of trade titles peak for Christmas and sales of academic titles at the beginning of the academic year in the autumn. We therefore expect our sales to be second-half weighted, as in past years.

 

Group financial highlights

 

·     Total revenues up 15% to £72.1 million (2016: £62.7 million)

·     Digital revenues up 15% to £8.9 million (2016: £7.7 million)

·     Print revenues up 16% to £60.1 million (2016: £51.7 million)

·     Adjusted* profit before tax up 74% to £2.5 million (2016: £1.5 million)

·     Profit before tax £1.7 million (2016: £0.1 million)

·     Net cash up 85% to £16.9 million (2016: £9.1 million)

·     Interim dividend up 5% to 1.15 pence per share (2016: 1.10 pence per share)

·     Adjusted* diluted earnings per share up 70% to 2.81 pence (2016: 1.65 pence)

·     Diluted earnings per share 1.87 pence (2016: 0.15 pence)

 

Consumer division 

 

·    Revenues increased 20% to £44.7 million (2016: £37.3 million), driven by Children's Trade where revenues increased 33% to £31.7 million

·    J.K. Rowling's Harry Potter titles continue to sell strongly, including the Harry Potter Box Set and the new House Editions of Harry Potter and the Philosopher's Stone, which celebrate the 20th anniversary of the title first being published

·    Sarah J. Maas title revenues grew 47% including the publication of A Court of Wings and Ruin

·    Lincoln in the Bardo by George Saunders won the Man Booker prize last Tuesday. Tom Kerridge's Dopamine Diet reached number one on the Sunday Times Original Non-Fiction list simultaneously with Neil Gaiman's Norse Mythology being number one on the Sunday Times Original Fiction list. Kid Normal by Greg James and Chris Smith, published in the UK in July, went to number one in the total consumer market chart for children's books in the UK (source: Nielsen BookScan)

 

Non-Consumer division

 

·    Revenues up 8% to £27.4 million (2016: £25.4 million)

·    Academic & Professional digital resources revenues grew 10% to £2.2 million (2016: £2 million) including 17% growth in Bloomsbury Professional Online

·    Bloomsbury 2020 digital resources growth strategy on track with launch of Bloomsbury Design Library and Bloomsbury Cultural History

·    Bestselling titles from the Non-Consumer division include Wisden Cricketers' Almanack 2017 and Douglas Murray's The Strange Death of Europe

·    Creation of new imprint, Bloomsbury China, to publish, in English, works about China and for China, by Chinese, Western and other writers

 

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

Commenting on the results, Nigel Newton, Chief Executive of Bloomsbury Publishing, said:

'It has been a very strong six months for Bloomsbury. Revenues are up 15%, with good growth in each of our territories. The Children's Trade division delivered another outstanding performance, increasing revenues by 33%.

The Group is trading in line with the Board's expectations for the full year. We have a strong second half list including the Illustrated Edition of Harry Potter and the Prisoner of Azkaban, the Illustrated Edition of Fantastic Beasts and Where to Find Them and two major books to accompany the British Library's Harry Potter exhibition, which was launched last Thursday to huge public acclaim. Our cookery list for the second half includes A Baker's Life by Paul Hollywood, Lose Weight for Good by Tom Kerridge and River Cottage Much More Veg by Hugh Fearnley-Whittingstall. October is the peak period for academic book sales and Christmas for the sales of consumer books. We therefore expect our results to continue to be second-half weighted, as in past years.

We have successfully launched two new major digital resources this period and are on track to launch a further two new resources this year, one more than originally planned in the Bloomsbury 2020 growth plan.'

 

For further information, please contact:

Bloomsbury Publishing Plc

+44 (0) 20 7631 5630

Nigel Newton, Chief Executive

 

Wendy Pallot, Group Finance Director

 

FTI Consulting

+44 (0) 203 727 1000

Charles Palmer / Dwight Burden / Emma Hall / Leah Dudley

[email protected]

 

 

Overview

It has been a very strong six months for Bloomsbury. Revenues for the period to 31 August 2017 were up 15% to £72.1 million, with good growth in each of our territories. Adjusted profit before taxation was up 74% to £2.5 million (2016: £1.5 million). Reported profit before tax was £1.7 million (2016: £0.1 million).

The Children's Trade division was a major contributor to this growth, with revenues up 33% on the previous period driven by several key titles including the Harry Potter Box Set, the new House Editions of Harry Potter and the Philosopher's Stone, which celebrate the 20th anniversary of the title first being published, and A Court of Wings and Ruin by Sarah J. Maas.

Group print revenues grew 16% to £60.1 million (2016: £51.7 million) and made up 87% of the Group's total book revenues in the period, demonstrating an on-going demand for books in print format. Group e-book revenues grew 16% to £6.6 million. We are making good progress with our strategic growth initiative to significantly accelerate the growth of digital revenues with an accelerated digital publishing plan to strengthen our position as a non-consumer publisher in the B2B academic and professional information market. Digital resources revenues in the period grew 14% to £2.3 million. Rights and services revenues were £3.1 million (2016: £3.3 million). Revenues from digital services within Bloomsbury 2020 grew by 16%. Foreign exchange movements in the period have increased revenues by 3% or £2.2 million, and reduced profits by £0.1 million. Using constant exchange rates, total revenues increased by 12% to £69.9 million, with print revenues increasing by 12% and total digital revenues up by 13%.

The highlighted item in the period of £0.8 million is the amortisation of acquired intangible assets. The effective rate of tax reduced to 19% (2016: 25%), it includes the benefit of a £0.4m tax refund following the resolution of a tax loss claim from 2006. The adjusted effective rate of tax was 16% (2016:15%). Adjusted diluted earnings per share were up 70% to 2.81 pence (2016: 1.65 pence). Diluted earnings per share for the period were 1.87 pence (2016: 0.15 pence). The business continues to have a strong balance sheet with £16.9 million of net cash at 31 August 2017 (31 August 2016: £9.1 million), following excellent results and good working capital inflows.

The Directors have declared an interim dividend of 1.15 pence per share which is a 5% increase on the dividend paid for the six months ended 31 August 2016 of 1.10 pence per share. The dividend will be paid on 30 November 2017 to shareholders on the register at close of business on 3 November 2017.

Consumer division 

Revenues in Consumer publishing increased 20% to £44.7 million in the six months ended 31 August 2017 (2016: £37.3 million). This excellent performance meant that the Consumer division's adjusted operating profit increased to £2.9 million from £1.8 million. Prior year divisional results have been restated to reflect a change in how Group shared service costs are allocated. This restatement has no effect on overall Group results, but provides a better understanding of divisional performance. This change saw a reallocation of £0.5 million of costs out of the Consumer division into the Non-Consumer division.

Children's

The growth in profit in the division came from Children's Trade, where revenues were up by 33% to £31.7 million. J.K. Rowling's Harry Potter titles continue to sell strongly, with revenues growing 40% in the period. Harry Potter and the Philosopher's Stone celebrated its 20th anniversary in June 2017 with the publication of four House Editions of the title - Gryffindor, Slytherin, Hufflepuff and Ravenclaw - the hardback of which had sprayed striped edges.

Other top selling titles in the period included two by Sarah J. Maas; A Court of Wings and Ruin, the third book in the A Court of Thorns and Roses series which went to number one on the New York Times Children's Series Best Sellers list and stayed on the list for five weeks, and Tower of Dawn, a companion novel to the Throne of Glass series which went to number two in that list. Sarah J. Maas revenues grew 47% in this period. We currently have seven more titles contracted with Sarah J. Maas.

Kid Normal by Greg James and Chris Smith published in the UK in July and went to number one in the total consumer market chart for children's books in the UK (source: Nielsen BookScan). This strong debut in the UK has seen sales of over 45,000 books since July. The book launches in the US early next year. Fantastically Great Women Who Changed the World by Kate Pankhurst is the strongest selling UK non-fiction children's title this year so far (source: Nielsen BookScan), with over 50,000 copies sold year to date. Neil Gaiman's Norse Mythology reached number one on the Sunday Times Original Fiction list.

During the period the children's division was shortlisted for the Independent Publisher's Guild Children's Publisher of the Year and the British Book Award Children's Publisher of the Year.

Adult

Adult revenues were £13 million (2016: £13.4 million), with flat print book sales and a 10% reduction in higher margin e-book sales. According to statistics from the Publishers Association's Annual Yearbook, UK sales of trade e-books fell by 17% in 2016. Although our Children's division e-book sales continue to outperform due to the strength of Young Adult authors like Sarah J. Mass, our Adult division is showing the effects of the general industry-wide weakness. This change in sales mix, together with a £0.1 million incremental overhead investment following the strategic changes made recently in the division, have adversely impacted the result in the period.

The US list performed well. Successes in the US include Dreamland: The True Tale of America's Opiate Epidemic by Sam Quinones and White Rage: The Unspoken Truth of Our Racial Divide by Carol Anderson, which was the winner of the National Book Critics Award for Criticism and reached number seven on the New York Times Non-fiction paperback bestseller list.

In the UK Tom Kerridge's Dopamine Diet reached number one on the Sunday Times Original Non-Fiction list. Lincoln in the Bardo by George Saunders won the Man Booker Prize last Tuesday. Home Fire by Kamila Shamsie was longlisted for the Man Booker Prize. Why I'm No Longer Talking to White People about Race by Reni Eddo Lodge was longlisted for the Baillie Gifford Prize. It has also been shortlisted in the Best Cover/Jacket Design category of the British Book Design and Production Awards 2017.

Non-Consumer division

Total revenues in the division were up 8% to £27.4 million (2016: £25.4 million) and the adjusted operating loss was £0.4 million (2016: Loss of £0.4 million), where the prior year has been restated for a change in allocation of Group shared service costs as noted above. The result in the non-consumer division is weighted to the second half of the year, given the autumn sales of academic titles at the beginning of the academic year.

Academic & Professional

Academic & Professional revenues make up 61% of total division revenues. Core Academic & Professional revenues were up by 2% in the period, reflecting the growth in its digital portfolio.  Including the Children's Educational sub-division, divisional sales were flat at £16.6 million on the back of strong education rights sales in the previous period.

Academic & Professional digital resources revenues grew 10% to £2.2 million (2016: £2 million). Digital revenues, including e-books, now represent 24% of total book revenues in the division (2016: 21%). The net investment in the income statement for digital resources in the period to 31 August 2017 was £0.6 million (2016: £0.3 million profit). We are on track to deliver four major new digital resources this year, one more than originally planned. Bloomsbury Design Library launched in July 2017 with our highest number of new product trials to date. Three new Drama Online modules have also gone live in this period: Aurora Metro, Playwrights Canada Press, and Bloomsbury Scholarly Collection: Critical Studies and Performance Practice. The Bloomsbury Food Library launched in September, and Bloomsbury Cultural History and Bloomsbury Encyclopaedia of Philosophers launch later this year. Following on from the FutureBook win for Platform of the Year last year, Bloomsbury Fashion Central won the IPG Ingram Content Group Digital Publishing Award. There is now a full global team in place to support Bloomsbury Digital Resources, with customer numbers and trials both seeing significant growth. We have a strong programme of products in development, our guidance on future investment levels is unchanged and we continue to target revenues rising to £15 million and profits of £5m from our digital resource publishing by financial year 2021/22.

Hart, Bloomsbury's academic law business, continues to show steady growth reflecting its increased publishing output and growing digital sales.  Bloomsbury Professional's online subscription revenue increased by 17% following the launch of a number of new services this year. In the period Methuen Drama playwright David Ireland won the prestigious James Tait Black Prize for Drama for his play Cyprus Avenue and Rotterdam by Jon Brittain won the Olivier Award for Outstanding Achievement in an Affiliate Theatre. Carolyn Cocca's Superwomen: Gender, Power, and Representation won the Will Eisner Award for Best Academic/Scholarly Work. Animated Landscapes, edited by Chris Pallant, won the prestigious McLaren-Lambart award for Best Book on the Subject of Animation.

Special Interest

There was particular strength in the period from the special interest list where revenues grew 25% to £10.1 million (2016: £8.1 million). Key titles included Douglas Murray's The Strange Death of Europe which sold over 78,000 copies in five months and Wisden Cricketers' Almanack 2017. Green Tree, our new Health and Wellbeing list got off to a great start, its successes include Sod Sitting, Get Moving! by Diana Moran and Muir Gray and Jeannette Hyde's The Gut Makeover.

This month we announced the creation of a new imprint, Bloomsbury China, to publish, in English, works about China and for China, by Chinese, Western and other writers. In partnership with Chinese publishers and with Western and Chinese universities, Bloomsbury aims to develop sophisticated digital products to supplement and enhance print editions and will use the latest digital marketing and sales tools to maximise discovery, readership and sales. Bloomsbury China will launch in February 2018 with the publication of The Complete Dramatic Works of Tang Xianzu, who is known as the 'Shakespeare of the East' and China's greatest playwright. This is the first time his complete collected works have been translated into English and made available outside of China. They will subsequently be made available on Bloomsbury's award-winning Drama Online digital platform.

Content Services

Having secured new clients at the end of the last fiscal year, including Freshfields Bruckhaus Deringer, Royal Bank of Canada and ICAEW, Bloomsbury Content Services successfully delivered associated content services projects this first half. The largest managed service project, the IZA World of Labor, continues to grow with hundreds of peer-reviewed papers focused on labour economics reaching an expanding audience of policy makers, advisors and the media. Bloomsbury's Business list continues on its growth trajectory, with strong sales of titles such as Leading Organisations and The 100 Year Life, and the launch of new titles Fully Connected and Dear CEO.

Outlook

A very strong autumn Harry Potter list features the Illustrated Edition of Harry Potter and the Prisoner of Azkaban, the Illustrated Edition of Fantastic Beasts and Where to Find Them and two colour titles to accompany the British Library's Harry Potter exhibition; Harry Potter - A History of Magic: The Book of The Exhibition and Harry Potter - A Journey Through A History of Magic. Other key titles being published in the second half of the year include A Baker's Life by Paul Hollywood, Lose Weight for Good by Tom Kerridge and River Cottage Much More Veg by Hugh Fearnley-Whittingstall.  Our new crime imprint, Raven Books, launches its second title The Silent Companions by Laura Purcell in October.

A new Illustrated Edition of The Tales of Beedle the Bard by J.K. Rowling will be published in October 2018. Chris Riddell, who has won the Kate Greenaway Medal three times, most recently for his illustrations in Neil Gaiman's The Sleeper and the Spindle, has been chosen as the illustrator.

Following the successful launch of two new major digital resources so far this year, we are on track to exceed the original plan of three major launches, with two further launches scheduled for the second half of the year; Bloomsbury Cultural History and Bloomsbury Encyclopaedia of Philosophers.

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

 

Condensed Consolidated Interim Income Statement

For the six months ended 31 August 2017

               

 

 

 

 

 

Notes

6 months ended

31 August

2017

£'000

 

6 months ended

31 August

2016

£'000

Year

ended

28 February

2017

£'000

 

 

 

 

 

Revenue

3

72,113

62,672

142,564

Cost of sales

 

(35,417)

(31,259)

(67,686)

Gross profit

 

36,696

31,413

74,878

Marketing and distribution costs

 

(11,029)

(9,798)

(20,977)

Administrative expenses

 

(23,987)

(21,562)

(44,499)

Operating profit before highlighted items

 

2,474

1,362

11,997

Highlighted items

4

(794)

(1,309)

(2,595)

Operating profit

 

1,680

53

9,402

Finance income

 

55

111

138

Finance costs

 

-

(17)

(96)

Profit before taxation and highlighted items

 

2,529

1,456

12,039

Highlighted items

4

(794)

(1,309)

(2,595)

Profit before taxation

3

1,735

147

9,444

Taxation

 

(332)

(37)

(2,091)

Profit for the period attributable to owners of the Company

 

1,403

110

7,353

 

 

 

 

 

Earnings per share attributable to owners of the Company  

 

 

 

 

Basic earnings per share

6

1.88p

0.15p

9.83p

Diluted earnings per share

6

1.87p

0.15p

9.81p

 

 

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

 

Condensed Consolidated Interim Statement of Comprehensive Income

For the six months ended 31 August 2017

 

 

6 months ended

31 August

2017

£'000

6 months

ended

31 August

2016

£'000

Year

ended

28 February

2017

£'000

Profit for the period

1,403

110

7,353

 

Other comprehensive income

Items that may be reclassified to the income statement:

 

 

 

Exchange differences on translating foreign operations

(1,387)

2,288

4,587

 

 

 

 

Items that may not be reclassified to the income statement:

 

 

 

Remeasurements on the defined benefit pension scheme

3

(174)

(58)

Other comprehensive income for the period net of tax

(1,384)

2,114

4,529

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

 

19

 

2,224

11,882

 

 

 

 

 

Items in the statement above are disclosed net of tax.

 

 

Condensed Consolidated Interim Statement of Financial Position

At 31 August 2017

                                                                                                                                                               

 

Notes

31 August

2017

£'000

31 August

2016

£'000

28 February

2017

£'000

Assets

 

 

 

 

Goodwill

 

42,385

42,321

42,548

Other intangible assets

 

20,402

21,934

21,214

Investments

 

300

-

-

Property, plant and equipment

 

2,134

2,254

2,248

Deferred tax assets

 

4,707

3,151

4,808

Trade and other receivables

7

1,692

1,119

1,951

Total non-current assets               

 

71,620

70,779

72,769

 

 

 

 

 

Inventories

 

28,034

28,929

28,611

Trade and other receivables

7

75,865

73,010

75,808

Cash and cash equivalents

 

16,853

9,092

15,478

Total current assets

 

120,752

111,031

119,897

Total assets

 

192,372

181,810

192,666

 

 

 

 

 

Liabilities

 

 

 

 

Retirement benefit obligations

 

251

442

255

Deferred tax liabilities

 

2,197

2,674

2,225

Other payables

 

947

942

2,191

Provisions           

 

43

43

43

Total non-current liabilities

 

3,438

4,101

4,714

 

 

 

 

 

Trade and other payables

 

48,945

42,635

47,365

Current tax liabilities

 

631

-

1,265

Provisions

 

22

22

23

Total current liabilities

 

49,598

42,657

48,653

Total liabilities

 

53,036

46,758

53,367

Net assets

 

139,336

135,052

139,299

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

942

942

942

Share premium

 

39,388

39,388

39,388

Translation reserve

 

10,243

9,331

11,630

Other reserves

 

6,323

6,698

6,274

Retained earnings

 

82,440

78,693

81,065

Total equity attributable to owners of the Company

 

139,336

135,052

139,299

 

 

Condensed Consolidated Interim Statement of Changes in Equity

At 31 August 2017

 

 

Share capital

Share premium

Translation

reserve

 

 

Merger reserve

Capital redemption reserve

Share-based payment reserve

Own shares held by the EBT

Retained

earnings

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 March 2017

942

39,388

11,630

1,803

22

5,492

(1,043)

81,065

139,299

Profit for the period

-

-

-

-

-

-

-

1,403

1,403

Other comprehensive income

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

-

-

(1,387)

-

-

-

-

-

(1,387)

Remeasurements on the defined benefit pension scheme

-

-

-

-

-

-

-

3

3

Total comprehensive income for the period

-

-

(1,387)

-

-

-

-

1,406

19

Transactions with owners

 

 

 

 

 

 

 

 

 

Deferred tax on share-based payment transactions

-

-

-

-

-

-

-

(31)

(31)

Share-based payment transactions

-

-

-

-

-

49

-

-

49

Total transactions with owners of the Company

-

-

-

-

-

49

-

(31)

18

At 31 August 2017

942

39,388

10,243

1,803

22

5,541

(1,043)

82,440

139,336

 

At 1 March 2016

939

39,388

7,043

1,386

22

5,428

(7)

78,768

132,967

Profit for the period

-

-

-

-

-

-

-

110

110

Other comprehensive income

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

-

-

2,288

-

-

-

-

-

2,288

Remeasurements on the defined benefit pension scheme

-

-

-

-

-

-

-

(174)

(174)

Total comprehensive income for the period

-

-

2,288

-

-

-

-

(64)

2,224

Transactions with owners

 

 

 

 

 

 

 

 

 

Issue of shares

3

-

-

417

-

-

-

-

420

Purchase of Shares by the Employee Benefit Trust

-

-

-

-

-

-

(570)

-

(570)

Deferred tax on share-based payment transactions

-

-

-

-

-

-

-

(11)

(11)

Share-based payment transactions

-

-

-

-

-

22

-

-

22

Total transactions with owners of the Company

3

-

-

417

-

22

(570)

(11)

(139)

At 31 August 2016

942

39,388

9,331

1,803

22

5,450

(577)

78,693

135,052

 

 

 

 

Share capital

Share premium

Translation

reserve

 

 

Merger reserve

Capital redemption reserve

Share-based payment reserve

Own shares held by the EBT

Retained

earnings

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 March 2016

939

39,388

7,043

1,386

22

5,428

(7)

78,768

132,967

Profit for the year

-

-

-

-

-

-

-

7,353

7,353

Other comprehensive income

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

-

-

4,587

-

-

-

-

-

4,587

Remeasurements on the defined benefit pension scheme

-

-

-

-

-

-

-

(58)

(58)

Total comprehensive income for the year

-

-

4,587

-

-

-

-

7,295

11,882

Transactions with owners

 

 

 

 

 

 

 

 

 

Issue of shares

3

-

-

417

-

-

-

-

420

Purchase of Shares by the Employee Benefit Trust

-

-

-

-

-

-

(1,196)

-

(1,196)

Dividend to equity holders of the Company

-

-

-

-

-

-

-

(4,819)

(4,819)

Share options exercised

-

-

-

-

-

-

160

(160)

-

Deferred tax on share-based payment transactions

-

-

-

-

-

-

-

(19)

(19)

Share-based payment transactions

-

-

-

-

-

64

-

-

64

Total transactions with owners of the Company

3

-

-

417

-

64

(1,036)

(4,998)

(5,550)

At 28 February 2017

942

39,388

11,630

1,803

22

5,492

(1,043)

81,065

139,299

 

 

Condensed Consolidated Interim Statement of Cash Flows

For the six months ended 31 August 2017

 

 

6 months ended

6 months ended

Year ended

 

31 August

31 August

28 February

 

2017

2016

2017

 

£'000

£'000

£'000

Cash flows from operating activities

 

 

 

 

 

 

 

Profit before taxation

1,735

147

9,444

Finance income

(55)

(111)

(138)

Finance costs

-

17

96

Operating profit

1,680

53

9,402

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

220

314

541

Amortisation of intangible assets

1,995

1,978

3,988

Share-based payment charges

49

29

73

 

3,944

2,374

14,004

(Increase)/decrease in inventories

(43)

(292)

1,334

(Increase)/decrease in trade and other receivables

(180)

958

(2,873)

Increase in trade and other payables

1,256

2,563

7,318

Cash generated from operating activities

4,977

5,603

19,783

Income taxes (paid)/received

(1,776)

10

(1,009)

Net cash generated from operating activities

3,201

5,613

18,774

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

(122)

(98)

(267)

Purchases of intangible assets

(1,239)

(1,666)

(2,628)

Purchase of other investments

(300)

-

-

Interest received

55

111

120

Net cash used in investing activities

(1,606)

(1,653)

(2,775)

Cash flows from financing activities

 

 

 

Purchase of shares by the Employee Benefit Trust

-

(570)

(1,196)

Equity dividends paid

-

-

(4,819)

Interest paid

-

(17)

(72)

Net cash used in financing activities

-

(587)

(6,087)

Net increase in cash and cash equivalents

1,595

3,373

9,912

Cash and cash equivalents at beginning of period

15,478

5,166

5,166

Exchange (loss)/gain on cash and cash equivalents

(220)

553

400

Cash and cash equivalents at end of period

16,853

9,092

15,478

    

 

Notes to the Condensed Consolidated Interim Financial Statements

 

1.    Reporting entity

Bloomsbury Publishing Plc (the "Company") is a Company domiciled in the United Kingdom.  The condensed consolidated interim financial statements of the Company as at and for the six months ended 31 August 2017 comprise the Company and its subsidiaries (together referred to as the "Group").  The Group is primarily involved in the publication of books and other related services.

2.    Significant accounting policies

a)     Basis of preparation

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 'Interim Financial Reporting' as adopted by the European Union ("EU"). They are unaudited and do not constitute statutory accounts. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended 28 February 2017.  

Except as described below, the condensed set of financial statements have been prepared on a consistent basis with the financial statements for the year ended 28 February 2017 and should be read in conjunction with the Annual Report 2017. The annual consolidated financial statements of the Group are prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") pronouncements as adopted by the EU. The 2017 Annual Report refers to other new standards effective from 1 March 2017. None of these standards have had a material impact in these financial statements.

The comparative financial information for the year ended 28 February 2017 does not constitute statutory accounts for that financial year. This information was extracted from the statutory accounts for the year ended 28 February 2017, a copy of which has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not include a reference to any matters to which the auditor drew attention by way of emphasis of matter and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. 

The condensed consolidated interim financial statements were approved and authorised for issue by the Board of Directors on 24 October 2017.

b)     Going concern

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis of accounting in preparing the condensed consolidated interim financial statements. The factors taken into account in developing this expectation include the level of cash within the business, the Group's bank facilities, continuing sources of revenue and principal risks including the impact of Brexit.  The Group's bank facilities consist of a £10 million to £14 million committed revolving loan facility (amount dependent on time during the year to match Bloomsbury's cash flow cycle) which expires in May 2021, an uncommitted incremental term loan facility of up to £6 million and a £2 million overdraft facility renewable annually.

c)      Uses of estimates and judgments

The preparation of condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets liabilities, income and expenses. Actual results may differ from these estimates. Critical judgments and areas where the use of estimates is significant are set out in the 2017 Annual Report.

3.    Segmental analysis

 

The Group is comprised of two worldwide publishing divisions: Consumer and Non-Consumer, reflecting the core customers for our different operations.    The Consumer division is further split out into two operating segments; Children's Trade and Adult Trade, and Non-Consumer is split between four operating segments; Academic & Professional, Educational, Special Interest and Content Services.  Educational has been aggregated with Academic & Professional to create one reportable segment.  Both operating segments share very similar products, customers and sales behaviours.

Each reportable segment represents a cash-generating unit for the purpose of impairment testing.  We have reallocated goodwill between reportable segments.

These divisions are the basis on which the Group primarily reports its segment information. Segments derive their revenue from book publishing, sale of publishing and distribution rights, management and other publishing services. The analysis by segment is shown below:

* The results for the six months ended 31 August 2016 and year ended 28 February 2017 have been restated to reflect a change in the allocation of central administration costs, in order to provide a better understanding of underlying divisional results. This change has not affected the consolidated Group result.

 

 

 

 

 

 

 

 

 

 

Children's Trade

Adult Trade

Consumer

 

Academic & Professional

Special Interest

Content Services

Non-Consumer

Unallocated

Total

Six months ended 31 August 2017

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

External revenue

31,687

13,008

44,695

16,608

10,093

717

27,418

-

72,113

Cost of sales

(15,666)

(7,699)

(23,365)

(6,774)

(5,047)

(231)

(12,052)

-

(35,417)

Gross profit

16,021

5,309

21,330

9,834

5,046

486

15,366

-

36,696

Marketing and distribution costs

(5,070)

(2,389)

(7,459)

(2,008)

(1,505)

(57)

(3,570)

-

(11,029)

Contribution before administrative expenses

10,951

2,920

13,871

7,826

3,541

429

11,796

-

25,667

Administrative expenses excluding highlighted items

(6,243)

(4,712)

(10,955)

(8,572)

(3,177)

(489)

(12,238)

-

(23,193)

Operating profit/(loss) before highlighted items/ segment results

4,708

(1,792)

2,916

(746)

364

(60)

(442)

-

2,474

Amortisation of acquired intangible assets

-

(9)

(9)

(691)

(91)

(3)

(785)

-

(794)

Other highlighted items

-

-

-

-

-

-

-

-

-

Operating profit /(loss)

4,708

(1,801)

2,907

(1,437)

273

(63)

(1,227)

-

1,680

Finance income

-

-

-

-

-

-

-

55

55

Finance costs

-

-

-

-

-

-

-

-

-

Profit/(loss) before taxation

4,708

(1,801)

2,907

(1,437)

273

(63)

(1,227)

55

1,735

Taxation

-

-

-

-

-

-

-

(332)

(332)

Profit/(loss) for the period

4,708

(1,801)

2,907

(1,437)

273

(63)

(1,227)

(277)

1,403

Operating profit / (loss) before highlighted items/ segment results

4,708

(1,792)

2,916

(746)

364

(60)

(442)

-

2,474

Depreciation

76

45

121

61

34

4

99

-

220

Amortisation of internally generated intangibles

135

97

232

836

121

12

969

-

1,201

EBITDA before highlighted items

4,919

(1,650)

3,269

151

519

(44)

626

-

3,895

 

 

 

 

* Restated

 

 

 

 

 

 

 

Children's Trade

Adult Trade

Consumer

Academic & Professional

Special Interest

Content Services

Non-Consumer

Unallocated

Total

Six months ended 31 August 2016

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

External revenue

23,897

13,381

37,278

16,651

8,069

674

25,394

-

62,672

Cost of sales

(12,025)

(7,594)

(19,619)

(6,858)

(4,427)

(355)

(11,640)

-

(31,259)

Gross profit

11,872

5,787

17,659

9,793

3,642

319

13,754

-

31,413

Marketing and distribution costs

(3,882)

(2,652)

(6,534)

(2,085)

(1,106)

(73)

(3,264)

-

(9,798)

Contribution before administrative expenses

7,990

3,135

11,125

7,708

2,536

246

10,490

-

21,615

Administrative expenses excluding highlighted items

(4,772)

(4,593)

(9,365)

(7,418)

(3,017)

(453)

(10,888)

-

(20,253)

Operating profit/(loss) before highlighted items/ segment results

3,218

(1,458)

1,760

290

(481)

(207)

(398)

-

1,362

Amortisation of acquired intangible assets

-

(9)

(9)

(778)

(91)

(3)

(872)

-

(881)

Other highlighted items

-

-

-

-

-

-

-

(428)

(428)

Operating profit /(loss)

3,218

(1,467)

1,751

(488)

(572)

(210)

(1,270)

(428)

53

Finance income

-

-

-

-

-

-

-

111

111

Finance costs

-

-

-

-

-

-

-

(17)

(17)

Profit/(loss) before taxation

3,218

(1,467)

1,751

(488)

(572)

(210)

(1,270)

(334)

147

Taxation

-

-

-

-

-

-

-

(37)

(37)

Profit/(loss) for the period

3,218

(1,467)

1,751

(488)

(572)

(210)

(1,270)

(371)

110

Operating profit / (loss) before highlighted items/ segment results

3,218

(1,458)

1,760

290

(481)

(207)

(398)

-

1,362

Depreciation

94

61

155

97

56

6

159

-

314

Amortisation of internally generated intangibles

132

95

227

637

222

11

870

-

1,097

EBITDA before highlighted items

3,444

(1,302)

2,142

1,024

(203)

(190)

631

-

2,773

 

 

 

 

*Restated

 

 

 

 

 

 

 

Children's Trade

Adult Trade

Consumer

Academic & Professional

Special Interest

Content Services

Non-Consumer

Unallocated

Total

Year ended 28 February 2017

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

External revenue

55,915

29,459

85,374

36,915

18,404

1,871

57,190

-

142,564

Cost of sales

(26,838)

(15,688)

(42,526)

(15,474)

(9,076)

(610)

(25,160)

-

(67,686)

Gross profit

29,077

13,771

42,848

21,441

9,328

1,261

32,030

-

74,878

Marketing and distribution costs

(8,751)

(5,034)

(13,785)

(4,600)

(2,455)

(137)

(7,192)

-

(20,977)

Contribution before administrative expenses

20,326

8,737

29,063

16,841

6,873

1,124

24,838

-

53,901

Administrative expenses excluding highlighted items

(10,447)

(9,201)

(19,648)

(15,142)

(6,195)

(919)

(22,256)

-

(41,904)

Operating profit/(loss) before highlighted items/ segment results

9,879

(464)

9,415

1,699

678

205

2,582

-

11,997

Amortisation of acquired intangible assets

-

(18)

(18)

(1,478)

(182)

(5)

(1,665)

-

(1,683)

Other highlighted items

-

-

-

-

-

-

-

(912)

(912)

Operating profit /(loss)

9,879

(482)

9,397

221

496

200

917

(912)

9,402

Finance income

-

-

-

-

-

-

-

138

138

Finance costs

-

-

-

-

-

-

-

(96)

(96)

Profit/(loss) before taxation

9,879

(482)

9,397

221

496

200

917

(870)

9,444

Taxation

-

-

-

-

-

-

-

(2,091)

(2,091)

Profit/(loss) for the year

9,879

(482)

9,397

221

496

200

917

(2,961)

7,353

Operating profit before highlighted items/ segment results

9,879

(464)

9,415

1,699

678

205

2,582

-

11,997

Depreciation

162

109

271

162

98

10

270

-

541

Amortisation of internally generated intangibles

268

194

462

1,454

365

24

1,843

-

2,305

EBITDA before highlighted items

10,309

(161)

10,148

3,315

1,141

239

4,695

-

14,843

 

 

Due to the seasonality of the business, the Group's sales and divisional results are weighted towards the second half of the year.

 

External revenue by product type

 

Six months ended

31 August

 2017

£'000

Six months

ended

31 August

 2016

£'000

Year

ended

28 February 2017

£'000

Print

60,122

51,719

117,261

Digital

8,876

7,695

16,036

Rights and services

3,115

3,258

9,267

Total

62,672

142,564

 

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

 

 

Total assets

31 August 2017

£'000

31 August

2016

£'000

28 February 2017

£'000

Children's Trade

9,890

8,724

9,057

Adult Trade

7,893

8,052

8,282

Academic & Professional

56,559

59,739

58,709

Special Interest

13,481

13,813

13,416

Content Services

196

190

198

Unallocated

104,353

91,292

103,004

Total assets

192,372

181,810

192,666

 

Unallocated primarily represents centrally held assets including system development, property, plant and equipment, receivables and cash.

 

4.            Highlighted items

 

Six months ended

31 August

2017

£'000

Six months ended

31 August

2016

£'000

Year ended

28 February

2017

£'000

 

 

 

 

Legal and other professional fees

-

-

-

Restructuring costs

-

428

881

Other

-

-

31

Other highlighted items

-

428

912

Amortisation of acquired intangible assets

794

881

1,683

Total highlighted items

794

1,309

2,595

 

Highlighted items charged to operating profit comprise significant non-cash charges and the cost of major one-off initiatives 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 and future profitability of the business.

For the six months ended 31 August 2016 and year ended 28 February 2017 restructuring costs of £428,000 and £881,000 were primarily incurred as a result of strategic restructuring of the Bloomsbury US business.

 

5.         Dividends

 

Six months ended

Six months ended

Year ended

 

31 August

31 August

28 February

 

2017

2016

2017

 

£'000

£'000

£'000

Amounts arising in respect of the period

 

 

 

Interim dividend for the period

859

823

823

Final dividend for the year

-

-

4,182

Total dividend for the period

859

823

5,005

 

The proposed interim dividend of 1.15 pence per ordinary share will be paid to the equity shareholders on 30 November 2017 to shareholders registered at close of business on 3 November 2017.  The final dividend for 28 February 2017 was paid on 20 September 2017.

 

 

6.         Earnings per share

 

The basic earnings per share for the six months ended 31 August 2017 is calculated using a weighted average number of Ordinary Shares in issue of 74,677,559 (31 August 2016: 74,834,869 and 28 February 2017: 74,820,311) after deducting shares held by the Employee Benefit Trust. 

 

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

 

 

6 months ended

6 months ended

Year ended

 

31 August

31 August

28 February

 

2017

2016

2017

 

Number

Number

Number

Weighted average shares in issue

74,677,559

74,834,869

74,820,311

Dilution

410,787

112,842

111,762

Diluted weighted average shares in issue

75,088,346

74,947,711

74,932,073

 

 

 

 

 

£'000

£'000

£'000

Profit after tax attributable to owners of the Company

1,403

110

7,353

Basic earnings per share

1.88p

0.15p

9.83p

Diluted earnings per share

1.87p

0.15p

9.81p

 

 

 

 

Adjusted profit attributable to owners of the Company

2,112

1,236

9,465

Adjusted basic earnings per share

2.83p

1.65p

12.65p

Adjusted diluted earnings per share

2.81p

1.65p

12.63p

 

Adjusted profit is derived as follows:

Profit before tax

1,735

147

9,444

Amortisation of acquired intangible assets

794

881

1,683

Other highlighted items

-

428

912

Adjusted profit before tax

2,529

1,456

12,039

 

Tax expense

332

37

2,091

Deferred tax movements on goodwill and acquired intangible assets

85

97

321

Tax expense on other highlighted items

-

86

162

Adjusted tax

417

220

2,574

 

Adjusted profit

2,112

1,236

9,465

 

The Group includes the benefit of tax amortisation of intangible assets in the calculation of adjusted tax as this more accurately aligns the adjusted tax charge with the expected cash tax payments.

 

 

7.         Trade and other receivables

 

 

31 August

31 August

28 February

 

2017

2016

2017

 Non-current

£'000

£'000

£'000

Prepayments and accrued income

1,692

1,119

1,951

Non-current trade and other receivables

1,692

1,119

1,951

 

 

 

 

Current

 

 

 

Gross trade receivables

51,682

46,780

50,326

Less: provision for impairment of receivables

(683)

(534)

(621)

Less: provision for returns

(6,143)

(5,629)

(6,536)

Net trade receivables

44,856

40,617

43,169

Income tax recoverable

811

840

401

Other receivables

2,547

1,852

1,961

Prepayments and accrued income

4,172

6,927

5,472

Royalty advances

23,479

22,774

24,805

Current trade and other receivables

75,865

73,010

75,808

Total trade and other receivables

77,557

74,129

77,759

 

Trade receivables principally comprise amounts receivable from the sale of books due from distributors. The majority of trade debtors are secured by credit insurance and in certain territories by third party distributors.

 

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

 

Royalty advances have been separated out from prepayments and accrued income to enable a user to get a better understanding of the business. A provision is held against gross advances payable in respect of published titles advances which may not be fully earned down by anticipated future sales. As at 31 August 2017 £5,781,000 (31 August 2016 £5,651,000 and 28 February 2017 £6,371,000) of royalty advances relate to titles expected to publish after more than 12 months.

 

 

8.         Related parties

 

The Group has no related party transactions in the period other than key management remuneration.

 

Responsibility Statement of the Directors in Respect of the Interim Financial Statements

 

Directors

 

Sir Richard Lambert

Independent Non-Executive Chairman

Nigel Newton

Chief Executive

John Warren

Independent Non-Executive Director

Senior Independent Director

Chair of the Audit Committee

Jill Jones

Independent Non-Executive Director

Chair of the Remuneration Committee

Steven Hall

Independent Non-Executive Director

Richard Charkin

Executive Director

Jonathan Glasspool

Executive Director

Wendy Pallot

Group Finance Director

 

 

We confirm that to the best of our knowledge:

 

·    The condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

 

·    The interim management report includes a fair review of the information required by:

 

(a)   DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

 

(b)   DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

       

       

By order of the Board

 

 

 

 

Nigel Newton                                   Wendy Pallot             

 

24 October 2017

 

 

Principal risks and uncertainties

Bloomsbury has a systematic and embedded risk management process for identifying and addressing the short to long-term risks and uncertainties for its operations worldwide.  The strategy implemented by the Board aims to mitigate the main risks and exploit opportunities to create sustainable returns for shareholders.  A summary of the principal risks and uncertainties to the business for the remaining six months of the financial year are as follows:

·     The profit from trade publishing depends significantly on the unpredictable sales of a small number of front-list titles especially around the Christmas period.

·     The timing for completing rights and services deals depends on third parties.

·     Group results are affected by changing exchange rates, although print costs are largely under fixed long term contracts.

A full list of risks and uncertainties is included in the 2017 Annual Report and Accounts.

 

INDEPENDENT REVIEW REPORT TO BLOOMSBURY PUBLISHING PLC 

Conclusion 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 August 2017 which comprises condensed consolidated interim income statement, condensed consolidated interim statement of comprehensive income, condensed consolidated interim statement of financial position, condensed consolidated interim statement of changes in equity and condensed interim statement of cash flows and the related explanatory notes. 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 August 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").   

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion. 

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

The annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU.  The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA.  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

John Bennett

for and on behalf of KPMG LLP 

Chartered Accountants 

15 Canada Square

London

E14 5GL

 

24 October 2017                                              


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