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RNS
Bloomsbury Publishing PLC  -  BMY   

Final Results

Released 07:00 18-May-2017

RNS Number : 4811F
Bloomsbury Publishing PLC
18 May 2017
 

BLOOMSBURY PUBLISHING PLC

("Bloomsbury" or the "Group")

Audited Preliminary Results for the year ended 28 February 2017

 

Bloomsbury today announces audited results for the year ended 28 February 2017.

 

Financial Highlights

·    

Revenues grew by 15% to £142.6 million (2016: £123.7 million) 

·    

Profit before taxation and highlighted items* of £12.0 million (2016: £13.0 million), above market expectations

·    

Final dividend of 5.6p per share making a total dividend of 6.7p per share for the year (2016: 6.4p per share)

·    

Diluted earnings per share, excluding highlighted items, were 12.63p (2016: 15.24p)

·    

Strong cash generation with net cash of £15.5m at 28 February 2017 (2016: £5.2m)

 

Operational Highlights

 

Consumer division

 

·    

The Consumer division, consisting of Adult and Children's trade publishing, had an exceptional year, due primarily to an excellent Children's performance.  Revenue increased 28% to £85.4m (2016: £66.4m) and operating profit before highlighted items increased by 33% to £7.9m (2016: £6.0m)

 

·    

Children's

Revenue for the year increased by 48% to £55.9m (2016: £37.7m)

Sales of the Harry Potter series in the year grew by 88%, including Harry Potter and the Chamber of Secrets Illustrated Edition.

Sales of Sarah J. Maas grew by 87% globally, including A Court of Mist and Fury,  which was number one on the New York Times Young Adult bestseller list

Neil Gaiman reached number one in The Sunday Times fiction bestseller list with Norse Mythology

 

·    

Adult division

Revenue increased by 3% year on year to £29.5m (2016: £28.7m)

Highlights include William Boyd's Sweet Caress, Celia Imrie's Nice Work if You Can Get It, Hannah Rothschild's Improbability of Love and Natasha Pulley's The Watchmaker of Filigree Street

The cookery list continues to perform well, notably Tom Kerridge's Dopamine Diet which reached number one on The Sunday Times non-fiction bestseller list, and Le Manoir Aux Quat' Saisons by Raymond Blanc

 

Non-Consumer division

·    

The Non-Consumer division, consisting of Academic & Professional, Special Interest and Content Services, generated revenues of £57.2m (2016: £57.3m) and operating profit before highlighted items of £4.1m (2016: £7.1m).  Profits were affected by the end of the term of the Qatar contract and investment in the Bloomsbury 2020 digital resources growth strategy

 

·    

Progress on Bloomsbury 2020 digital resources growth strategy

As planned, four new digital resources were launched: Fairchild Books Library, The Fashion Photography Archive, Arcadian Library and Bloomsbury Popular Music

Digital resources revenues grew by 50% to £3.9 million (2016: £2.6 million)

Strong pipeline with three new resources to be launched over the next year: The Bloomsbury Design Library, The Bloomsbury Food Library and Bloomsbury Cultural History

 

·    

Strong list for the year ahead

Illustrated Edition of Harry Potter and the Prisoner of Azkaban and the Illustrated Edition of Fantastic Beasts and Where to Find Them

A Court of Wings and Ruin by Sarah J Mass

The Strange Death of Europe by Douglas Murray

Breaking Mad by Anna Williamson

 

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

"This has been a very strong year for Bloomsbury with excellent revenue growth in all our territories.  Our children's publishing, in particular, had an exceptional year, delivering double digit revenue growth for the fourth year in a row. 

We are very pleased also at the impact of our trade publishing, having had two simultaneous number one bestsellers in February- Tom Kerridge's Dopamine Diet topping The Sunday Times non-fiction bestseller list and Neil Gaiman's Norse Mythology the fiction list. This was followed by George Saunders' extraordinary and brilliant novel, Lincoln in the Bardo, going to Number 1 on the Evening Standard bestseller list in March. The way we publish all three books reflects the significant success of our trade publishing

We have also made substantial progress in delivery of our Bloomsbury 2020 digital resource strategy.  We completed a new platform to host our digital resources and launched four new major resources during the year.  It was particularly encouraging to see digital resource revenues exceeding expectations, increasing 50% year-on-year.

We are well-placed for the coming year.  We are launching three further major digital resources, as planned, and have an exciting publishing list from new and existing authors."

 

* Highlighted items comprise amortisation of acquired intangible assets and other one-off significant non-cash charges and major one-off initiatives including legal and other professional costs relating to acquisitions and restructuring costs.

 

For further information, please contact:

Daniel de Belder, Bell Pottinger

+44 (0) 20 3772 2500

Nigel Newton, Chief Executive, Bloomsbury Publishing Plc

+44 (0) 20 7494 6015

Forward-looking statements: Statements contained in this Annual Results Announcement are based on the knowledge and information available to the Company's directors at the date it was prepared and therefore the facts stated and views expressed may change after that date. By their nature, the statements concerning the risks and uncertainties facing the Company in this Annual Results Announcement involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. To the extent that this Annual Results Announcement contains any statement dealing with any time after the date of its preparation such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur. The Company undertakes no obligation to update these forward-looking statements.

 

Bloomsbury has had a year of strong progress - with excellent revenue growth and good strategic development through investment in the Bloomsbury 2020 digital resources growth strategy. Book sales, and print in particular, continue to be resilient in spite of political and economic uncertainty.

 

Bloomsbury achieved excellent revenue growth of 15% for the year ending 28 February 2017 (9% at constant currencies) resulting in total revenues of £142.6 million (2016: £123.7 million). Profit before tax and highlighted items was £12.0 million (2016: £13.0 million), £1.0 million below the prior year in line with the guidance we gave in May 2016 to reflect our £0.6 million investment in the Bloomsbury 2020 digital resources growth strategy and also the end of the seven year term of the Qatar Foundation contract in December 2015.

 

During the year revenues generated by each of Bloomsbury's four territorial offices grew. The Group's ambitious plans to grow in Australia, announced in July 2016, saw Bloomsbury Australia grow revenues by 50% (26% at constant currencies) from £7.0 million to £10.5 million. Revenues in Bloomsbury India grew 46% (30% at constant currencies) and the business made an operating profit for the first time. 61% of Bloomsbury's sales now originate from customers outside the UK (2016: 54%).

 

Book sales grew by 18% year on year to £133.3 million, with digital sales, included in this total, increasing by 7% to £16.0 million. Digital growth was driven by strong sales of digital resources.  Rights and services revenues were £9.3 million (2016: £10.6 million), being 7% of total Group revenues compared to 9% in the previous year.

 

The Consumer division and Children's publishing in particular delivered an excellent performance, with its fourth year in a row of double digit revenue growth. The Illustrated Edition of Harry Potter and the Chamber of Secrets by J. K. Rowling and illustrated by Jim Kay was a major international seller. Book sales in the Non-Consumer division grew by 5% but, as expected, the division saw a reduction in rights and services revenues following the end of the term of the Qatar contract and last year's strong rights performance.

 

A key strategic focus in 2016/17 was the Bloomsbury 2020 digital resources growth strategy. During the year we built a new platform to host our digital resources. Our programme is on schedule, with two resources launched onto the new platform. We are encouraged that digital resources revenues exceeded our expectation, growing by 50% year on year to £3.9 million. Our guidance on future investment and returns for this growth strategy is unchanged.

 

Due to the strong trading in the year, the Group was able to make a bonus provision of £1.0 million (2016: Nil).

 

Highlighted items of £2.6 million (2016: £2.7 million) include £1.7 million (2016: £1.8 million) of amortisation of acquired intangible assets. Other highlighted items in this period of £0.9 million are primarily as a result of the strategic restructuring of the US operation.

 

The effective rate of tax for the year was 22% compared to 6% for the year ended 29 February 2016. The rate last year was low as it included the utilisation of previously unrecognised tax losses and a double tax relief benefit.

 

Diluted earnings per share, excluding highlighted items, were 12.63 pence (2016: 15.24 pence). Total diluted earnings per share for the year were 9.81 pence compared to 12.93 pence in 2016.

 

Cash generation was strong with cash and cash equivalents net of bank overdraft of £15.5 million at 28 February 2017 (2016: £5.2 million). Our focus on working capital continues - stock has reduced by 5% or £1.3 million year on year, using constant currencies. We are working to achieve a similar stock reduction in the new financial year. Our strategic priority for cash is organic investment to grow and enhance our existing business. Including capital expenditure, during the year we invested an additional £1.5 million of cash in Bloomsbury 2020.

 

Another strategic priority for cash is the growth of our dividend. The Group has a progressive dividend policy while aiming to keep dividend earnings cover in excess of two. Investment in Bloomsbury 2020 is leading to earnings cover falling below that level in the short-term, but the dividend is underpinned by strong cash cover. The Board has committed during this period of investment to maintain its progressive dividend policy on the basis that earnings cover will improve as the return on Bloomsbury 2020 accrues. The Directors are therefore recommending a final dividend of 5.6 pence per share, which subject to shareholder approval at our AGM on 18 July 2017, will be paid on 20 September 2017 to shareholders on the register at the close of business on 25 August 2017. Together with the interim dividend, this makes a total dividend for the year ended 28 February 2017 of 6.7 pence per share, a 5% increase on the 6.4 pence dividend for the year ended 29 February 2016. Including the full year dividend increase, over the past twelve years the dividend has increased steadily at a compound annual growth rate of 7%.

 

Consumer division

 

The Consumer division, which consists of Adult and Children's trade publishing, has had an exceptional year, significantly due to an excellent Children's performance. Revenue for the division increased by 28% to £85.4 million (2016: £66.4 million). Operating profit before highlighted items increased by 33% to £7.9 million (2016: £6.0 million). There was good revenue growth in all territories; 23% in Australia, 17% in the US, 55% in India and 21% in the UK (all at constant currencies).

 

The division won many important awards, notably the Financial Times and McKinsey Business Book of the Year Award for The Man Who Knew, a biography of Alan Greenspan by Sebastian Mallaby; and Bloomsbury Children's Books became the first publisher in 50 years to win both the Carnegie and Greenaway Medals for One by Sarah Crossan and Chris Riddell for illustrating The Sleeper and the Spindle by Neil Gaiman. The Children's team were shortlisted for the Independent Publishers Guild Children's Publisher of the Year and the British Book Awards Children's Publisher of the Year. These awards recognise the high standard and quality of our authors and illustrators and support our strategy to focus on acquiring global commercial rights, targeted and strategic marketing and brand management of our major authors.

 

Children's revenues increased by 48% to £55.9 million (2016: £37.7 million). Operating profit before highlighted items increased by 44% to £7.6 million (2016: £5.3 million). Sales of Harry Potter titles grew by 88% in the year. Harry Potter and the Chamber of Secrets Illustrated Edition was published to great acclaim in October 2016. We sold rights to Jim Kay's Harry Potter illustrations, in which we control world rights, in 30 languages. The film tie-in Fantastic Beasts and Where to Find Them - Newt Scamander: A Movie Scrapbook sold well following the release of the film, the first of five, in November 2016.  Sales of Sarah J. Maas titles grew by 87% year on year. A Court of Mist and Fury, the second book in the A Court of Thorns and Roses series, was number one on the New York Times Young Adult bestseller list. Her new Throne of Glass novel - Empire of Storms - was on the New York Times Series bestseller list for nine weeks reaching number two and was also number two on the Bookseller UK children's chart. The success of Sarah J. Maas and other Young Adult publishing contributed significantly to Children's e-book sales increasing by 19% to £3.4 million. Neil Gaiman reached number one in the Nielsen BookScan original fiction chart with Norse Mythology. Bloomsbury Children's UK market share value grew by 21% year on year to 4% (source: Nielsen BookScan). During the year we created a Children's Non-Fiction team to enhance focus and growth in that part of the division.

 

Adult revenues increased by 3% to £29.5 million (2016: £28.7 million). Operating profit before highlighted items of £0.3 million (2016: £0.7 million) was affected by a reduction in higher margin e-book revenues and increased advance provisions. William Boyd's Sweet Caress, Ann Patchett's Commonwealth, Hannah Rothschild's Improbability of Love and Natasha Pulley's The Watchmaker of Filigree Street all sold strongly. In cookery, Tom Kerridge's Dopamine Diet sold over 140,000 copies and went to number one in the overall Nielsen BookScan chart in the UK on publication. Le Manoir Aux Quat' Saisons by Raymond Blanc also sold well. Peter Frankopan's The Silk Roads was in the Sunday Times paperback non-fiction chart for eleven weeks and in the US, Dreamland by Sam Quinones won the National Book Critics Circle non-fiction award. Bloomsbury Adult in the UK grew market share by value by 2% year on year (source: Nielsen BookScan).

 

During the year a new Publishing Director joined the Adult team in London and we launched a new crime imprint, Raven Books, run by a new Editorial Director. Crime is a constantly growing segment of the market. Bloomsbury's first book in this imprint, The River at Night by Erica Ferencik was published in January 2017. It is nominated as The Bookseller's Book of the Month for June. The US Consumer division has been restructured and a new Editorial Director for Fiction was appointed in January 2017.

 

Non-Consumer division

 

The Non-Consumer division consists of Academic & Professional, Special Interest and Content Services. Both revenues in the division of £57.2 million (2016: £57.3 million) and adjusted operating profits of £4.1 million (2016: £7.1 million) were affected by the end of the term of the Qatar Foundation contract in December 2015, our £0.6 million net incremental investment in Bloomsbury 2020 and the benefit of a full year of results from certain Family Law titles, which were acquired in January 2016. Academic & Professional revenues make up 65% of total division revenues and were up 1%. Within this, Education has revenue of £2.5 million (2016: £3.9 million) and operating profit before highlighted items of £0.3 million (2016: £0.7 million) in the year ended 28 February 2017. The £1.4 million reduction in revenues year on year is due to a strong year for rights sales last year. Excluding Education, Academic & Professional revenues grew by 5%.

 

The Bloomsbury 2020 digital resources growth strategy, announced in May 2016, will make Bloomsbury a leading non-consumer publisher in the B2B academic and professional information market and significantly accelerate the growth of digital revenues. The plan is to increase the output and speed to market of a range of new digital products, provide a robust scalable set of platforms, and improve the strength, depth and geographical spread of our institutional digital sales team. Bloomsbury Digital Resources, a separate team within Non-Consumer, has been set up under its own Managing Director and Sales Director to bring this to fruition more quickly. During the year ended 28 February 2017, the focus of this plan was to deliver the digital platform upon which to host the new services and hire the new content acquisition, sales and marketing teams as well as launch two new resources on the new platform. All this was achieved as planned during the year. Academic & Professional digital resources revenues grew by 58% to £3.7 million (2016: £2.4 million), well above our expectations. Over 40% of digital resources revenues originated from outside the UK, with the largest single territory being North America at 33% (2016: 18%) which had 194% revenue growth year on year. Bloomsbury now has over 1,700 active institutional customers worldwide for its digital resources (2016: 1,009), a growth of 68%. All our existing major digital resources saw revenue growth. In the year, as planned, we launched four new major digital resources: Fairchild Books Library, The Fashion Photography Archive, Arcadian Library and Bloomsbury Popular Music - the latter two hosted on our new platform. In addition there were a number of modules added to existing products including BBC Drama and Hollow Crown added to Drama Online, which now reaches over one million students worldwide. The pipeline of new resources is strong - over the next year we will be launching three new resources: The Bloomsbury Design Library, The Bloomsbury Food Library and Bloomsbury Cultural History, as well as three new modules to Drama Online.

 

Including e-book revenues, Academic & Professional digital revenues in total grew by 25% year on year to £6.9 million, more than four times the industry growth rate of 6% for academic and professional digital revenues (Source: Publishing Association Yearbook 2016).

 

The Academic division generally had a good year, with a sizeable increase in output of titles, a third Dartmouth prize in seven years and a new strategic partnership for the Classics list with leading exam board Oxford Cambridge and RSA, making Bloomsbury the largest publisher in UK secondary schools classics. Bloomsbury's expanding digital resources sales mitigated the ongoing flat US print library budgets. The effect of retailer text book rental and used book programmes on higher education text book sales in North America, while structurally significant for the market, is restricted within Bloomsbury to the Fairchild Books list. Fairchild comprises 7% of Non-Consumer revenues and less than 3% of Group turnover. Through Bloomsbury 2020, we are able to exploit the Fairchild content digitally on Bloomsbury Fashion Central, with direct institutional sales.

 

The integration of the Family Law titles, acquired in January 2016, into Bloomsbury's Professional division was completed during the year. Family Law contributed £0.9 million of revenue (2016: £0.3 million) and £0.5 million of profit (2016: £0.3 million), in excess of our expectations. Excluding these results in both years, Group revenues grew by 15% (9% at constant currencies).

 

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

 

Our focus on special interest niches is succeeding, with revenues up by 5% to £18.4 million (2016: £17.5 million). The value of our strategy is the ability to pinpoint market sectors and promote and sell direct to a community of shared interest. Our chosen niches are military history (through Osprey), natural history (through Helm and Poyser), sport (through Nautical, Reed's, and Wisden), popular science (through Sigma) and reference (through Who's Who, Whitaker's, and www.writersandartists.co.uk). In each of these areas we have strengthened our editorial positioning, and invested in digital marketing, new products and widening our portfolio. In particular Wisden has seen one of its highest sales for many years. The division launched the Green Tree imprint in February 2017 with the goal of publishing the best in health and wellness books - a natural extension from our expertise in sport and fitness publishing.

 

Bloomsbury Content Services had revenue growth of 9% to £1.9 million (excluding the loss of £1.5 million revenue year on year from the end of the term of the Qatar contract). This organic growth was in content marketing and publishing services, with new customers including the Royal Bank of Canada and the Institute of Chartered Accountants in England and Wales. The agreement with the Institute of Labor Economics for the provision of publishing, marketing and digital services for the IZA World of Labor knowledge hub was extended for a further 18 months from January 2017. A new and enhanced version of the website was launched in February 2017.

 

Outlook

 

In 2017/18 we will continue to expand Bloomsbury 2020 digital growth resources by launching three further digital services.

 

June 2017 is the 20th anniversary since Harry Potter and the Philosopher's Stone was first published. To celebrate, there will be new editions of this title and a series of events. There is a new edition of Fantastic Beasts and Where to Find Them with a foreword by J.K.Rowling and six new beasts. There are also two new illustrated Harry Potter editions, the Illustrated Edition of Harry Potter and the Prisoner of Azkaban, and the Illustrated Edition of Fantastic Beasts and Where to Find Them. In addition our strong publishing list for the new year includes Utopia for Realists by Rutger Bregman, Lincoln in the Bardo by George Saunders, A Court of Wings and Ruin by Sarah J. Maas, The Strange Death of Europe by Douglas Murray and Breaking Mad by Anna Williamson.

 

Trading in the new financial year is in line with our expectations.

 

 

Audited Consolidated Income Statement

FOR THE YEAR ENDED 28 FEBRUARY 2017

 

 

 

Year ended

Year ended

 

 

28 February

29 February

 

 

2017

2016

 

Notes

£'000

£'000

Revenue

2

142,564

123,725

Cost of sales

 

(67,686)

(55,198)

Gross profit

 

74,878

68,527

Marketing and distribution costs

 

(20,977)

(17,065)

Administrative expenses

 

(44,499)

(41,016)

Operating profit before highlighted items

 

11,997

13,115

Highlighted items

3

(2,595)

(2,669)

Operating profit

 

9,402

10,446

Finance income

 

138

27

Finance costs

 

(96)

(114)

Profit before taxation and highlighted items

 

12,039

13,028

Highlighted items

3

(2,595)

(2,669)

Profit before taxation

 

9,444

10,359

Taxation

4

(2,091)

(652)

Profit for the year attributable to owners of the Company

 

7,353

9,707

 

 

 

 

 

 

 

 

Earnings per share attributable to owners of the Company

 

 

 

Basic earnings per share

6

9.83p

12.98p

Diluted earnings per share

6

9.81p

12.93p

 

 

Audited Consolidated Statement of Comprehensive Income

FOR THE YEAR ENDED 28 FEBRUARY 2017

 

 

Year ended

Year ended

 

28 February

29 February

 

2017

2016

 

£'000

£'000

Profit for the year

 

7,353

9,707

Other comprehensive income

 

 

Items that may be reclassified to the income statement:

 

 

Currency translation differences on foreign operations

4,587

3,214

Items that may not be reclassified to the income statement:

 

 

Remeasurements on the defined benefit pension scheme

(58)

(24)

Other comprehensive income for the year net of tax

4,529

3,190

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

11,882

12,897

 

 

Audited Consolidated Statement of Financial Position

AS AT 28 FEBRUARY 2017

 

 

 

28 February

29 February

 

 

2017

2016

 

Notes

£'000

£'000

Assets

 

 

 

Goodwill

 

42,548

42,092

Other intangible assets

 

21,214

22,465

Property, plant and equipment

 

2,248

2,463

Deferred tax assets

 

4,808

2,988

Trade and other receivables

7

1,951

1,011

Total non-current assets

 

72,769

71,019

 

 

 

 

Inventories

 

28,611

27,598

Trade and other receivables

7

75,808

71,461

Cash and cash equivalents

 

15,478

6,556

Total current assets

 

119,897

105,615

Total assets

 

192,666

176,634

 

 

 

 

Liabilities

 

 

 

Retirement benefit obligations

 

255

230

Deferred tax liabilities

 

2,225

2,675

Other payables

 

2,191

871

Provisions

 

43

43

Total non-current liabilities

 

4,714

3,819

 

 

 

 

Trade and other payables

 

47,365

38,435

Bank overdraft

 

-

1,390

Current tax liabilities

 

1,265

-

Provisions

 

23

23

Total current liabilities

 

48,653

39,848

Total liabilities

 

53,367

43,667

Net assets

 

139,299

132,967

 

 

 

 

Equity  

 

 

 

Share capital

 

942

939

Share premium

 

39,388

39,388

Translation reserve

 

11,630

7,043

Other reserves

 

6,274

6,829

Retained earnings

 

81,065

78,768

Total equity attributable to owners of the Company

 

139,299

132,967

 

 

Audited Consolidated Statement of Changes in Equity

AS AT 28 FEBRUARY 2017

 

 

Share capital

£'000

Share premium

£'000

Translation reserve

 £'000

 Merger reserve £'000

Capital redemption reserve

£'000

Share-based payment reserve £'000

Own shares held by EBT £'000

Total equity £'000

At 28 February 2015

938

39,388

3,829

1,386

22

4,986

(338)

124,154

Profit for the year

-

-

-

-

-

-

-

9,707

9,707

Other comprehensive income

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

-

-

3,214

-

-

-

-

-

3,214

Remeasurements on the defined benefit pension scheme

-

-

-

-

-

-

-

(24)

Total comprehensive income for the year

-

-

3,214

-

-

-

-

9,683

12,897

Transactions with owners

 

 

 

 

 

 

 

 

 

Issue of shares

1

-

-

-

-

-

-

(1)

-

Dividends to equity holders of the Company

-

-

-

-

-

-

-

(4,590)

(4,590)

Share options exercised

-

-

-

-

-

-

331

(243)

88

Deferred tax on share-based payment transactions

-

-

-

-

-

-

-

(24)

(24)

Share-based payment transactions

-

-

-

-

-

442

-

442

Total transactions with owners of the Company

1

-

-

-

-

442

331

(4,084)

At 29 February 2016

939

39,388

7,043

1,386

22

5,428

(7)

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)

Dividends 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)

(5,550)

At 28 February 2017

942

39,388

11,630

1,803

22

5,492

(1,043)

139,299

 

 

Audited Consolidated Statement of Cash Flows

FOR THE YEAR ENDED 28 FEBRUARY 2017

 

 

Year ended

Year ended

 

28 February

29 February

 

2017

2016

 

£'000

£'000

Cash flows from operating activities

 

 

 

 

 

Profit before taxation

9,444

10,359

Finance income

(138)

(27)

Finance costs

96

114

Operating profit

9,402

10,446

Adjustments for:

 

 

Depreciation of property, plant and equipment

541

666

Amortisation of intangible assets

3,988

3,857

Loss on sale of property, plant and equipment

-

1

Share-based payment charges

73

487

 

14,004

15,457

Decrease in inventories

1,334

3,133

Increase in trade and other receivables

(2,873)

(8,212)

Increase/(decrease) in trade and other payables

7,318

(1,476)

Cash generated from operating activities

19,783

8,902

Income taxes paid

(1,009)

(3,870)

Net cash generated from operating activities

18,774

5,032

Cash flows from investing activities

 

 

Purchase of property, plant and equipment

(267)

(249)

Purchase of businesses, net of cash acquired

-

(60)

Purchases of intangible assets

(2,628)

(2,846)

Interest received

120

9

Net cash used in investing activities

(2,775)

(3,146)

Cash flows from financing activities

 

 

Equity dividends paid

(4,819)

(4,590)

Purchase of shares by the Employee Benefit Trust

(1,196)

-

Proceeds from exercise of share options

-

88

Repayment of borrowings

-

(2,500)

Interest paid

(72)

(90)

Net cash used in financing activities

(6,087)

(7,092)

Net increase/(decrease) in cash and cash equivalents

9,912

(5,206)

Cash and cash equivalents at beginning of year

5,166

10,021

Exchange gain on cash and cash equivalents

400

351

Cash and cash equivalents at end of year

15,478

5,166

 

 

 

NOTES

 

1.  Accounting policies

 

The above Audited financial information does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The above figures for the year ended 28 February 2017 are an abridged version of the Group's financial statements which will be reported on by the Group's auditors before dispatch to the shareholders and filing with the Registrar of Companies and as such do not contain full disclosures under International Financial Reporting Standards ("IFRS"). The preliminary announcement was approved by the Board and authorised for issue on 18 May 2017.

 

The Group's financial statements have been prepared in accordance with IFRS and International Financial Reporting Interpretations Committee ("IFRIC") interpretations adopted by the European Union ("EU") at the time of preparing the Group's financial statements and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies applied in the year ended 28 February 2017 are consistent with those applied in the financial statements for year ended 29 February 2016 with the exception of a number of new accounting standards which have not had a material impact on the Group's results.

 

The Group's statutory financial statements for the year ended 29 February 2016 have been lodged with the Registrar of Companies.  These financial statements received an audit report which was unqualified and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying their report or a statement under section 498(2) or section 498(3) of the Companies Act 2006.

 

 

2.  Segmental analysis

We announced in May 2016 a reorganisation of the business into two 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 split between four operating segments; Academic & Professional, Education, Special Interest and Content Services.  Education has been aggregated with Academic & Professional to create one reportable segment.  Both operating segments share very similar products, customers and sales behaviours.

 

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 analysis by segment is shown below:

 

 

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

(12,716)

(8,407)

(21,123)

(14,084)

(5,648)

(1,049)

(20,781)

-

(41,904)

Operating profit before highlighted items/ segment results

7,610

330

7,940

2,757

1,225

75

4,057

-

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)

7,610

312

7,922

1,279

1,043

70

2,392

(912)

9,402

Finance income

-

-

-

-

-

-

-

138

138

Finance costs

-

-

-

-

-

-

-

(96)

(96)

Profit/(loss) before taxation

7,610

312

7,922

1,279

1,043

70

2,392

(870)

9,444

Taxation

-

-

-

-

-

-

-

(2,091)

(2,091)

Profit/(loss) for the year

7,610

312

7,922

1,279

1,043

70

2,392

(2,961)

7,353

Operating profit before highlighted items/ segment results

7,610

330

7,940

2,757

1,225

75

4,057

-

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

8,040

633

8,673

4,373

1,688

109

6,170

-

14,843

 

 

 

 

 

 

 

 

 

 

Children's Trade

Adult Trade

Consumer

Academic & Professional

Special Interest

Content Services

Non-Consumer

Unallocated

Total

Year ended 29 February 2016*

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

External revenue

37,722

28,726

66,448

36,601

17,454

3,222

57,277

-

123,725

Cost of sales

(17,010)

(14,452)

(31,462)

(15,422)

(7,728)

(586)

(23,736)

-

(55,198)

Gross profit

20,712

14,274

34,986

21,179

9,726

2,636

33,541

-

68,527

Marketing and distribution costs

(5,469)

(4,989)

(10,458)

(4,369)

(2,155)

(83)

(6,607)

-

(17,065)

Contribution before administrative expenses

15,243

9,285

24,528

16,810

7,571

2,553

26,934

-

51,462

Administrative expenses excluding highlighted items

(9,954)

(8,594)

(18,548)

(12,903)

(5,571)

(1,325)

(19,799)

-

(38,347)

Operating profit before highlighted items/ segment results

5,289

691

5,980

3,907

2,000

1,228

7,135

-

13,115

Amortisation of acquired intangible assets

(88)

(17)

(105)

(1,487)

(189)

(5)

(1,681)

-

(1,786)

Other highlighted items

-

-

-

-

-

-

-

(883)

(883)

Operating profit /(loss)

5,201

674

5,875

2,420

1,811

1,223

5,454

(883)

10,446

Finance income

-

-

-

-

-

-

-

27

27

Finance costs

-

-

-

-

-

-

-

(114)

(114)

Profit/(loss) before taxation

5,201

674

5,875

2,420

1,811

1,223

5,454

(970)

10,359

Taxation

-

-

-

-

-

-

-

(652)

(652)

Profit/(loss) for the year

5,201

674

5,875

2,420

1,811

1,223

5,454

(1,622)

9,707

Operating profit before highlighted items/ segment results

5,289

691

5,980

3,907

2,000

1,228

7,135

-

13,115

Depreciation

138

160

298

239

30

368

-

666

Amortisation of internally generated intangibles

162

203

365

1,329

331

46

1,706

-

2,071

EBITDA before highlighted items

5,589

1,054

6,643

5,475

2,430

1,304

9,209

-

15,852

 

 

* The year ended 29 February 2016 has been restated to reflect the new divisional structure.  The total result has not changed.

Total assets

 

28 February

29 February

 

2017

2016

 

£'000

£'000

Children's Trade

9,057

9,068

Adult Trade

8,282

5,932

Academic & Professional

58,709

61,569

Special Interest

13,416

12,900

Content Services

198

203

Unallocated

103,004

86,962

Total assets

192,666

176,634

 

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

 

External revenue by destination

 

Source

 

United Kingdom

£'000

North America

£'000

Australia

£'000

India

£'000

Total

£'000

Destination

 

 

 

 

 

Year ended 28 February 2017

 

 

 

 

 

United Kingdom (country of domicile)

55,249

30

-

-

55,279

North America

7,999

38,314

-

-

46,313

Continental Europe

11,397

52

-

-

11,449

Australasia

521

431

10,530

-

11,482

Middle East and Asia

5,700

1,625

-

2,802

10,127

Rest of the world

7,819

95

-

-

7,914

Overseas countries

33,436

40,517

10,530

2,802

87,285

 Total

88,685

40,547

10,530

2,802

142,564

 

 

 

 

 

 

Year ended 29 February 2016

 

 

 

 

 

United Kingdom (country of domicile)

56,943

3

-

-

56,946

North America

3,373

32,762

-

-

36,135

Continental Europe

9,254

332

-

-

9,586

Australasia

741

1,302

7,038

-

9,081

Middle East and Asia

4,935

188

-

1,917

7,040

Rest of the world

4,737

200

-

-

4,937

Overseas countries

23,040

34,784

7,038

1,917

66,779

 Total

79,983

34,787

7,038

1,917

123,725

 

During the year sales to one customer exceeded 10% of Group revenue (2016: one customer). The value of these sales was £24,757,000 (2016: £23,426,000).

 

External revenue by product type

 

 

Year ended

Year ended

 

28 February

29 February

 

2017

2016*

 

£'000

£'000

Print

117,261

98,111

Digital

16,036

15,022

Rights and services1

9,267

10,592

Total

142,564

123,725

 

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

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

 

 

28 February

29 February

 

2017

2016

 

£'000

£'000

United Kingdom (country of domicile)

62,652

62,877

North America

5,168

5,094

Other

141

60

Total

67,961

68,031

 

 

3.  Highlighted items

 

 

Year ended

Year ended

 

 

28 February

29 February

 

 

2017

2016

 

 

£'000

£'000

Legal and other professional fees

 

-

16

Restructuring costs

 

881

915

Other

 

31

(48)

Other highlighted items

912

883

Amortisation of acquired intangible assets                                      

1,683

1,786

Total highlighted items

 

2,595

2,669

 

Highlighted items charged to operating profit comprise significant non-cash charges and 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.

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

Restructuring costs of £881,000 have been incurred primarily as a result of strategic restructuring of the Bloomsbury US business (2016: £915,000 incurred as a result of the Group's acquisition activities and the restructuring of the Bloomsbury Content Services division).

 

The other cost of £31,000 relate to final costs on the historic tax enquiry with HMRC (2016: credit of £48,000 is primarily the release of penalties and interest relating to a historic tax enquiry with HMRC).

 

 

4.  Taxation

 

Factors affecting tax charge for the year

The tax on the Group's profit before tax differs from the standard rate of corporation tax in the United Kingdom of 20.00% (2016: 20.08%).  The reasons for this are explained below:

 

 

 

 

 

 

 

Year ended

Year ended

 

28 February    2017

29 February    2016

 

£'000

%

£'000

%

Profit before taxation

9,444

100.00

10,359

100.00

Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 20.00% (2016: 20.08%)

1,889

20.00

2,080

20.08

Effects of: 

 

 

 

 

Non-deductible revenue expenditure

432

4.57

279

2.69

Non-qualifying depreciation

(32)

(0.34)

15

0.14

Movement in unrecognised temporary differences

(71)

(0.75)

99

0.96

Different rates of tax in foreign jurisdictions

693

7.34

519

5.01

Tax losses utilised

(104)

(1.10)

(216)

(2.09)

Movement in deferred tax rate

(149)

(1.57)

(209)

(2.02)

Adjustment to tax charge in respect of prior years

 

 

 

 

Current tax - utilisation of previously unrecognised Bloomsbury Verlag losses in the UK

-

-

(543)

(5.24)

Current tax - other

(238)

(2.52)

(1,070)

(10.32)

Deferred tax

(349)

(3.70)

(70)

(0.68)

Tax charge for the year before disallowable costs on highlighted items

2,071

21.93

884

8.53

Highlighted items:

 

 

 

 

Disallowable costs

20

0.21

5

0.05

Disallowable credits

-

-

(24)

(0.23)

Release of Bloomsbury Verlag tax provision

-

-

(213)

(2.06)

 

 

 

 

 

Tax charge for the year

2,091

22.14

652

6.29

             

 

In 2017 the £349,000 deferred tax prior year adjustment relates to improvements in timing differences on Intangible assets.  In 2016 the £1,070,000 current tax adjustment in respect of prior years' relates to the carry back of double taxation relief to prior years and an adjustment to align the prior year Group tax charge with recently submitted tax returns, particularly for the US entities.

 

In 2016 subsequent to the successful First-Tier Tribunal decision on Bloomsbury Verlag, a prior year adjustment of £543,000 was recognised for the utilisation of previously unrecognised losses. Linked to this successful decision there was a release of a £213,000 tax provision in respect of prior years. This went through highlighted items in prior years and thus has been released in the same place.

 

 

5.  Dividends

 

Year ended

Year ended

 

28 February

29 February

 

2017

2016

 

£'000

£'000

Amounts paid in the year

 

 

Prior period final 5.34p dividend per share (2016: 5.08p)

3,996

3,797

Interim 1.10p dividend per share (2016: 1.06p)

823

793

Total dividend payments in the year

4,819

4,590

Amounts arising in respect of the year

 

 

Interim 1.10p dividend per share for the year (2016: 1.06p)

823

793

Proposed 5.60p final dividend per share for the year (2016: 5.34p)

4,182

4,009

Total dividend 6.70p per share for the year (2016: 6.40p)

5,005

4,802

 

The Directors are recommending a final dividend of 5.60 pence per share, which, subject to Shareholder approval at the Annual General Meeting, will be paid on 20 September 2017 to Shareholders on the register at close of business on 25 August 2017.

 

 

6.  Earnings per share

 

The basic earnings per share for the year ended 28 February 2017 is calculated using a weighted average number of Ordinary shares in issue of 74,820,311 (2016: 74,807,436) 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.

 

 

Year ended

Year ended

 

28 February

29 February

 

2017

2016

 

Number

Number

Weighted average shares in issue

74,820,311

74,807,436

Dilution

111,762

245,115

Diluted weighted average shares in issue

74,932,073

75,052,551

 

 

 

 

£'000

£'000

Profit after tax attributable to owners of the Company

7,353

9,707

Basic earnings per share

9.83p

12.98p

Diluted earnings per share

9.81p

12.93p

 

 

 

 

£'000

£'000

Adjusted profit attributable to owners of the Company

9,465

11,440

Adjusted basic earnings per share

12.65p

15.29p

Adjusted diluted earnings per share

12.63p

15.24p

 

 

Adjusted profit is derived as follows:

 

Year  ended

Year ended

 

28 February

29 February

 

2017

2016

 

£'000

£'000

Profit before taxation

9,444

10,359

Amortisation of acquired intangible assets

1,683

1,786

Other highlighted items

912

883

Adjusted profit before tax

12,039

13,028

                                  

Tax expense

2,091

652

Deferred tax movements on goodwill and acquired intangible assets

321

527

Tax expense on other highlighted items

162

409

Adjusted tax

2,574

1,588

 

Adjusted profit

9,465

 11,440

 

 

7.  Trade and other receivables

 

28 February

29 February

 

2017

2016

 

£'000

£'000

Non-current

 

 

Prepayments and accrued income

1,951

1,011

 

 

 

Current

 

 

Gross trade receivables

50,326

45,476

Less: provision for impairment of receivables

(621)

(432)

Less: provision for returns

(6,536)

(5,800)

Net trade receivables

43,169

39,244

Income tax recoverable

401

850

Other receivables

1,961

1,354

Prepayments and accrued income

5,472

7,784

Royalty advances

24,805

22,229

Total current trade and other receivables

75,808

71,461

Total trade and other receivables

77,759

72,472

 

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 28 February 2017 £6,371,000 (2016: £5,530,000) of royalty advances are expected to be recovered after more than 12 months.

 

 

8.  Annual General Meeting

 

The Annual General Meeting will be held on 18 July 2017.

 

 

9.  Report and Accounts

 

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


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