Audited Preliminary Results for the year ended 28 February 2019
Strong strategic delivery and earnings growth
Bloomsbury, the leading independent publisher, today announces audited results for the year ended 28 February 2019, ahead of expectations.
Commenting on the results, Nigel Newton, Chief Executive, said:
"Bloomsbury had a very strong year. Our results, with profits before tax and highlighted items up 9%, demonstrate the underlying strength, resilience and further potential of our global publishing strategy. Our Academic and Professional division delivered an outstanding performance with 13% revenue growth and profit before tax and highlighted items up £3.5 million. We had an exceptional result in our Adult division, where profit before tax and highlighted items grew by £1.1 million, in a year in which we had many novels, works of narrative non-fiction and cookery titles including Fresh Start by Tom Kerridge, hit the bestseller lists in our core publishing area.
A year ago, I announced the Bigger Bloomsbury strategy; we have delivered all seven initiatives, including improving our working capital by reducing inventories by £2 million and growing Academic and Professional digital resource revenue by 42%. These initiatives focus on our key growth drivers with targeted strategies across the Group to help grow our revenues and increase our margins over the next four years.
Our strong financial position and excellent cash generation, with cash of £27.6 million and cash conversion of 128%, give us great opportunities for further acquisitions and investment in organic growth. Our proposed dividend increase of 6% delivers our 24th year of consecutive dividend growth."
- Financial highlights
- Chief Executive's statement
- Income Statement
- Statement of Comprehensive Income
- Statement of Financial Position
- Statement Of Changes In Equity
- Statement of Cash Flows
- Profit before taxation and highlighted items* grew by 9% to £14.4 million, up from £13.2 million in 2017/18, ahead of market expectations
- Total revenues rose to £162.7 million (2017/18: £161.5 million)
- Profit before taxation grew by 3% to £12.0 million (2017/18: £11.6 million)
- Diluted earnings per share, excluding highlighted items*, grew by 8% to 14.97p (2017/18: 13.92p)
- Diluted earnings per share grew by 16% to 12.25p (2017/18: 12.06p)
- Cash conversion of 128% (2017/18: 161%), excluding the acquisition, with net cash of £27.6 million at 28 February 2019 (2018: £25.4 million)
- Proposed final dividend up 6% to 6.75p per share, making a total dividend of 7.96p per share for the year (2017/18: 7.51p per share)
- 24th consecutive year of dividend growth
- Excellent Academic & Professional performance, with profit before highlighted items of £3.1 million (2017/18: loss of £0.4 million) and revenue up 13%
- Non-Consumer revenues grow 7% to £63.4 million (2017/18: £59.3 million)
- Bloomsbury Digital Resources 2020 ("BDR 2020") Academic & Professional revenues up 42% on a like-for-like basis, excluding the impact of IFRS 15
- Five new digital resources launched during the year, as planned
- Acquisition of I.B. Tauris ("IBT") in May 2018 completed for £5.6 million, strengthening our digital resources with its quality academic IP
- IBT delivered £2.5 million of revenue and £0.4 million of profit before highlighted items for the first ten months of ownership
- Substantial new B2B five-year digital subscription contract with the Institute of Chartered Accountants of England and Wales ("ICAEW"), announced in October 2018
- Resilient full year results, with profit before highlighted items of £10.7 million (2017/18: £11.4 million)
- Exceptional Adult Trade performance, with operating profit before highlighted items of £0.9 million (2017/18: loss of £0.2 million) and revenue up 1%
- Children's Trade delivered profit before highlighted items of £9.8 million (2017/18: £11.6 million), with enduring sales of the Harry Potter series against last year's very strong comparative with the twentieth anniversary. Sarah J. Maas titles continued their bestselling performance, including the new bestseller, Kingdom of Ash, and revenue and profit growth delivered in the rest of the Children's division
Bigger Bloomsbury represents our seven key growth initiatives, announced in May 2018. During the year, we delivered all seven of these initiatives, with notable highlights including delivering excellent growth in Adult and Academic & Professional profitability, international growth and continued working capital improvement.
* Highlighted items comprise amortisation of acquired intangible assets and restructuring costs and legal and other professional fees relating to the acquisition of IBT.
Certain information in this announcement has not been audited or otherwise independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss whatsoever arising from any use of this announcement, or its contents, or otherwise arising in connection with this announcement.
This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares in the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares of the Company.
Certain statements, statistics and projections in this announcement are or may be forward looking. By their nature, forward‑looking statements involve a number of risks, uncertainties or assumptions that may or may not occur and actual results or events may differ materially from those expressed or implied by the forward-looking statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Accordingly, forward-looking statements contained in this announcement regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which are based on the knowledge and information available only at the date of this announcement's preparation.
The Company does not undertake any obligation to update or keep current the information contained in this announcement, including any forward‑looking statements, or to correct any inaccuracies which may become apparent and any opinions expressed in it are subject to change without notice.
References in this announcement to other reports or materials, such as a website address, have been provided to direct the reader to other sources of information on Bloomsbury Publishing Plc which may be of interest. Neither the content of Bloomsbury's website nor any website accessible by hyperlinks from Bloomsbury's website nor any additional materials contained or accessible thereon, are incorporated in, or form part of, this announcement.
The year ended 28 February 2019 was a very strong year for Bloomsbury. Group profit before tax and highlighted items increased by 9% to £14.4 million (2017/18: £13.2 million). Group profit before tax increased by 3% to £12.0 million (2017/18: £11.6 million).
Our BDR 2020 digital growth strategy is delivering well, with a 42% increase year-on-year in Academic & Professional digital resource revenues on a like-for-like basis. The range of new contracts announced during the year, including the five year contract with the ICAEW, demonstrates the potential of high quality platforms and infrastructure.
In May 2018 we acquired the academic publisher I. B. Tauris & Co. Ltd ("IBT") for £5.6 million. Of this, £4.4 million was consideration to former shareholders for equity, and the remainder payment for pre-existing loans. This acquisition further consolidates our significant presence in humanities and social science academic publishing. IBT's complementary lists have good growth potential, especially with their inclusion within the BDR 2020 growth strategy.
Due to strong trading in the year, the management bonus was £2.3 million (2017/18: £2.3 million). The highlighted item of £2.3 million was the amortisation of acquired intangible assets (£1.7 million) and one-off restructuring costs and legal and other professional fees relating to the acquisition of IBT (£0.6 million). The effective rate of tax for the year was 23% (2017/18: 22%). The adjusted effective rate of tax, excluding highlighted items, was 21% (2017/18: 21%). Diluted earnings per share, excluding highlighted items, grew 8% to 14.97 pence (2017/18: 13.92 pence). Including highlighted items, profit before tax was £12.0 million (2017/18: £11.6 million) and diluted earnings per share was 12.25 pence (2017/18: 12.06 pence).
Key Strategy Objectives
- Grow Non-Consumer revenues
- Diversify into Non-Consumer markets with higher margins, more predictability and more digital and global opportunities. Delivered 111% increase in Non-Consumer profit this year;
- Achieve BDR 2020 revenue of £15 million and profit of £5 million for 2021/22. Delivered £6.4 million revenue, up 42% on a like-for-like basis.
- Expand international revenues
- Reduce reliance on UK market. Delivered overseas revenues of 64% of Group revenue, 2% higher than last year.
- Grow Consumer revenues
- Discover, nurture, champion and retain high quality talent in our Consumer division, remaining the home of some of the world's best loved and most exciting authors;
- Focus on finding excellent works and looking at new ways to leverage existing title rights; this will always be a key part of our strategy.
Delivering the Bigger Bloomsbury Strategy
Bloomsbury continues to focus on quality revenues, increasing earnings and building on the strong momentum achieved over the last two years. Our Bigger Bloomsbury initiative, announced in May 2018, focusing on our key growth drivers with targeted strategies across the Group to help grow our revenues and improve our margins over the next four years. We delivered all seven of these initiatives during the year:
- Growing the profits of the Adult division:
- Delivered £1.1 million growth in Adult operating profit
- Delivered £3.5 million growth in Academic & Professional operating profit
- Delivered a reduction in inventories of £2.0 million (8%) on a like-for-like basis, ahead of our target
- Delivered 24 bestsellers globally
- Delivered 42% growth in Academic & Professional BDR 2020 revenue on a like-for-like basis
- Delivered 28% growth in India, 3% growth in the US and 1% growth in Australia (in local currency)
- Delivered significant progress with two deals in negotiation
Cash generation continued to be robust with cash at the year end of £27.6 million, up £2.2 million, and cash conversion of 128% (2017/18: 161%), excluding the IBT acquisition. Our focus on working capital continues: inventories have reduced by 8% or £2.0 million year on year, on a like-for-like basis (2018: 5% or £1.3 million). This achieves our target to reduce inventory by 5%, using constant currencies in 2018/19, excluding additions from acquisitions. Our strategic priority for cash is organic investment to grow and enhance our existing business. During the year we invested a total of £1.9 million of capital expenditure in the BDR 2020 strategy.
Of the £5.6 million paid for the acquisition of IBT, £5.2 million was paid in cash in the year and the balance was paid in April 2019, post year end.
Bloomsbury has a strong and successful track record in strategic acquisitions, with 14 acquisitions completed since 2008. We continue to target and assess opportunities and are increasing our dedicated M&A resource to enable us to achieve further strategic acquisitions.
The Group has a progressive dividend policy aiming to keep dividend earnings cover in excess of two times, supported by strong cash cover. The Board has committed to maintain its progressive dividend policy on the basis that earnings cover will improve as the return on our BDR 2020 investment accrues. The Board is recommending a final dividend of 6.75 pence per share. Together with the interim dividend, this makes a total dividend for the year ended 28 February 2019 of 7.96 pence per share, a 6% increase on the 7.51 pence dividend for the year ended 28 February 2018. Subject to Shareholder approval at our AGM on 17 July 2019, the final dividend will be paid on 23 August 2019 to Shareholders on the register on the record date of 26 July 2019. Including the proposed 2018/19 dividend, over the past fourteen years the dividend has increased at a compound annual growth rate of 7.0%, and this will be the 24th consecutive year of dividend growth.
The Non-Consumer division consists of Academic & Professional, Special Interest and Content Services. Revenues in the division increased by 7% to £63.4 million (2017/18: £59.3 million). Within this, Academic & Professional revenues grew by 13% to £41.2 million (2017/18: £36.5 million), with 7% organic growth and £2.5 million from the acquisition of IBT. Our performance in humanities and social sciences lists was particularly strong. Operating profit before highlighted items for the Non-Consumer division increased by 111% to £3.6 million (2017/18: £1.7 million). The profit growth reflects improved Academic & Professional profitability, the £0.8 million improvement in the BDR 2020 result and the £0.4 million contribution from the acquisition of IBT, partly offset by lower Special Interest profit. The Special Interest division published the New York Times bestseller In the Closet of the Vatican, following the strong comparative with The Strange Death of Europe by Douglas Murray last year.
The strategic growth initiative BDR 2020 has made Bloomsbury into a leading B2B publisher in the academic and professional information market and significantly accelerated the growth of its digital revenues. Our BDR 2020 strategy from inception has been to acquire and license content to develop excellent digital products, and future acquisitions will continue this successful strategy.
We launched five new digital resources during the year as planned: Bloomsbury Architecture Library, Screen Studies, Bloomsbury Early Years, Bloomsbury Fashion Business Cases and Bloomsbury Applied Visual Arts Library. We have also launched new, more flexible ways for our customers to buy from us in the form of "Title by Title" acquisition and Evidence Based Acquisition models. Bloomsbury Collections contains some 6,500 backlist Bloomsbury Academic titles; we expect to grow this number by over 20% in the current year as we add titles from IBT and the British Film Institute, along with our newly expanded frontlist collections.
During the year we completed the following deals, which demonstrate the opportunities to further leverage content and market other services on our digital platforms and through the sales infrastructure we have developed:
- Announced today, new content partnerships with Taylor and Francis and Human Kinetics, the world's leading sports science publisher, further leveraging our BDR 2020 development and infrastructure;
- Substantial new five year digital subscription contract with the ICAEW, announced in October 2018;
- Strategic sales partnerships with Rowman & Littlefield and Manchester University Press, announced in January 2019; and
- Content partnership with Yoox Net-A-Porter, announced in July 2018.
The Consumer division consists of Adult and Children's trade publishing. The Consumer division delivered revenue of £99.3 million (2017/18: £102.2 million). Operating profit before highlighted items was £10.7 million (2017/18: £11.4 million), driven by a strong performance from the Adult division.
The Adult team achieved an exceptional operating profit of £0.9 million (2017/18: loss of £0.2 million), and 1% growth in revenues to £33.5 million, from success in front and backlist titles, and our successful delivery of strategic changes including our new Raven crime and thriller imprint.
Bestsellers in the year included Tom Kerridge's Fresh Start, number one on UK Nielsen Bookscan, the New York Times bestseller, Women Rowing North by Mary Pipher, The New Silk Roads by Peter Frankopan, Circe by Madeline Miller, the paperback edition of Why I'm No Longer Talking to White People About Race by Reni Eddo-Lodge, Kitchen Confidential by Anthony Bourdain, Sea Prayer by Khaled Hosseini and from our crime and thriller imprint, Raven Books, the Sunday Times bestseller The Seven Deaths of Evelyn Hardcastle by Stuart Turton.
Our authors won the most important literary awards, notably the Golden Man Booker Prize with The English Patient by Michael Ondaatje, the Women's Prize for Fiction with Home Fire by Kamila Shamsie and the Costa First Novel Award with The Seven Deaths of Evelyn Hardcastle by Stuart Turton.
Children's sales were £65.8 million (2017/18: £69.2 million). Harry Potter's twentieth anniversary, in 2017/18, generated one of the highest levels of revenue since the initial publications, growing by 31% compared to the previous year, so we've been pleased to continue the momentum this year, with the Illustrated Tales of Beedle the Bard and house editions of Harry Potter and the Chamber of Secrets. Sales of the Harry Potter titles were 15% below last year. The standard edition of Harry Potter and the Philosopher's Stone was the fourth bestselling children's book of the year on UK Nielsen Bookscan, twenty one years after it was first published - every year these classics reach a new generation of readers.
Excluding Harry Potter, Children's sales were 10% higher year on year. Sarah J. Maas sales continue to grow with the global number one bestseller Kingdom of Ash, the epic conclusion to Sarah J. Maas' #1 New York Times bestselling Throne of Glass series, which reached number one on the New York Times bestseller list and the UK Nielsen Bookscan TCM Children's Bestseller list. Other highlights on the Children's list included Norse Mythology by Neil Gaiman, A Curse So Dark and Lonely by Brigid Kemmerer and The Darkdeep by Ally Condie and Brendan Reichs.
As a testament to our strength in this area, Bloomsbury won Children's Publisher of the Year at the British Book Awards in May 2018 and at the IPG Awards in May 2019.
Employee Engagement Initiatives
We are also pleased with the strides we have taken in the last year in our strategic HR initiatives to listen to our employees more and to look after them even better. This includes our new Employee Voice meetings where each of our 700 employees worldwide is meeting in small groups with a member of the Board or Executive Committee to say how they think Bloomsbury could be a better place to work. Many changes have been introduced as a result of discussions at these Voice meetings and this is a key focus for 2019/20.
During the year IFRS 15, Revenue from Contracts with Customers ("IFRS 15"), was introduced. Adoption of this standard has not had a material impact on the Group's results, with nil net impact on revenue and a net credit to profit before tax of £0.1 million.
In the Non Consumer division, adopting IFRS 15 has impacted the timing of recognition of certain non subscription Perpetual Access ("PA") digital resource sales. Previously, revenue from sales of these products were recognised when the customer was granted access; under IFRS 15 a proportion of these revenues are recognised over five years. The impact of this is to defer revenue and profit from certain PA sales compared to the previous treatment. For 2018/19, the net impact on BDR 2020 revenue and profit before tax has been a reduction of £0.1 million.
As separately announced, we welcome to the Board Leslie-Ann Reed, who will be joining Bloomsbury as Non-Executive Director on 17 July 2019, succeeding Jill Jones who retires from the Board on the same date. We would like to thank Jill enormously for her significant part in the governance of Bloomsbury. There are no further details to disclose in respect of the appointment of Leslie-Ann in accordance with Listing Rule LR9.6.13R.
We expect to launch five further major digital resources in 2019/20 as well as creating new content modules for existing platforms. The full year of our ICAEW contract will also add value in the forthcoming year. Announced today, new content partnerships with Taylor and Francis and Human Kinetics, the world's leading sports science publisher, further leveraging our BDR 2020 development and infrastructure.
Our trade book list this year includes the illustrated version of Harry Potter and the Goblet of Fire by J.K. Rowling, the first in Sarah J. Maas' new Crescent City adult series, House of Earth and Blood, The Good Thieves by Katherine Rundell, The Lost Tide Warriors by Catherine Doyle, Elizabeth Gilbert's City of Girls and the authorised History of GCHQ, Behind the Enigma, by Professor John Ferris.In addition, Bloomsbury is publishing a major new cookery book with Tom Kerridge.
During 2019/20, the Group will introduce IFRS 16, Leases ("IFRS 16"). Adoption of this standard is expected to reduce the amount of rent and lease charges, increase depreciation charges and finance costs and increase the value of assets and liabilities. The net impact on profit before tax for 2019/20 is expected to be an additional £0.2 million charge.
Excluding the impact of IFRS 16, performance is line with management expectations for 2019/20.
Bigger Bloomsbury Strategy for 2019/20
- Growing the profits of the Adult division;
- Growing the profits of the Academic & Professional division;
- Reducing our finished goods inventory further;
- Increasing the focus on Bloomsbury's nine biggest Consumer assets;
- Maximising the success of Bloomsbury Digital Resources;
- Accelerating the growth of Bloomsbury's sales in the USA, Australia and India;
- Growing the revenues of acquisitions; and
- Increase employee engagement through strategic HR initiatives.
|Cost of sales||(74,922)||(77,155)|
|Marketing and distribution costs||(22,053)||(22,814)|
|Operating profit before highlighted items||14,294||13,114|
|Profit before taxation and highlighted items||14,374||13,217|
|Profit before taxation||12,049||11,644|
|Profit for the year attributable to owners of the Company||9,247||9,070|
|Earnings per share attributable to owners of the Company|
|Basic earnings per share||6||12.37p||12.15p|
|Diluted earnings per share||6||12.25p||12.06p|
|Profit for the year||9,247||9,070|
|Other comprehensive income|
|Items that may be reclassified to the income statement:|
|Exchange differences on translating foreign operations||964||(3,943)|
|Items that may not be reclassified to the income statement:|
|Remeasurements on the defined benefit pension scheme||(5)||27|
|Other comprehensive income for the year net of tax||959||(3,916)|
|Total comprehensive income for the year attributable to the owners of the Company||10,206||5,154|
|Other intangible assets||21,890||19,885|
|Property, plant and equipment||2,110||2,083|
|Deferred tax assets||2,376||2,092|
|Trade and other receivables||8||1,360||1,530|
|Total non-current assets||72,931||68,029|
|Trade and other receivables||8||80,506||76,857|
|Cash and cash equivalents||27,580||25,428|
|Total current assets||134,162||128,962|
|Retirement benefit obligations||121||170|
|Deferred tax liabilities||2,360||1,993|
|Total non-current liabilities||2,628||2,220|
|Trade and other liabilities||60,644||55,185|
|Total current liabilities||60,727||55,208|
|Total equity attributable to owners of the Company||143,738||139,563|
held by EBT
|At 28 February 2017||942||39,388||11,630||1,803||22||5,492||(1,043)||81,065||139,299|
|Profit for the year||-||-||-||-||-||-||-||9,070||9,070|
|Other comprehensive income|
|Exchange differences on translating foreign operations||-||-||(3,943)||-||-||-||-||-||(3,943)|
|Remeasurements on the defined benefit pension scheme||-||-||-||-||-||-||-||27||27|
|Total comprehensive income for the year||-||-||(3,943)||-||-||-||-||9,097||5,154|
|Transactions with owners|
|Dividends to equity holders of the Company||-||-||-||-||-||-||-||(5,041)||(5,041)|
|Deferred tax on share-based payment transactions||-||-||-||-||-||-||-||(30)||(30)|
|Share-based payment transactions||-||-||-||-||-||181||-||-||181|
|Total transactions with owners of the Company||-||-||-||-||-||181||-||(5,071)||(4,890)|
|At 28 February 2018||942||39,388||7,687||1,803||22||5,673||(1,043)||85,091||139,563|
|Adjustment on initial application of IFRS 15 net of tax (see note 1b)||-||-||-||-||-||-||-||(857)||(857)|
|Adjustment on initial application of IFRS 9 net of tax (see note 1c)||-||-||-||-||-||-||-||(200)||(200)|
|At 28 February 2018 (restated)||942||39,388||7,687||1,803||22||5,673||(1,043)||84,034||138,506|
|Profit for the year||-||-||-||-||-||-||-||9,247||9,247|
|Other comprehensive income|
|Exchange differences on translating foreign operations||-||-||964||-||-||-||-||-||964|
|Remeasurements on the defined benefit pension scheme||-||-||-||-||-||-||-||(5)||(5)|
|Total comprehensive income for the year||-||-||964||-||-||-||-||9,242||10,206|
|Transactions with owners|
|Dividends to equity holders of the Company||-||-||-||-||-||-||-||(5,655)||(5,655)|
|Purchase of Shares||-||-||-||-||-||-||241||(27)||214|
|Deferred tax on share-based payment transactions||-||-||-||-||-||-||-||33||33|
|Share-based payment transactions||-||-||-||-||-||422||-||-||422|
|Total transactions with owners of the Company||-||-||-||-||-||422||241||(5,637)||(4,974)|
|At 28 February 2019||942||39,388||8,651||1,803||22||6,095||(802)||87,639||143,738|
|Cash flows from operating activities|
|Profit for the year||9,247||9,070|
|Depreciation of property, plant and equipment||470||434|
|Amortisation of intangible assets||4,139||4,002|
|Share-based payment charges||498||202|
|Decrease in inventories||2,315||1,399|
|Decrease/(increase) in trade and other receivables||5,834||(2,529)|
|(Decrease)/increase in trade and other liabilities||(7,702)||6,969|
|Cash generated from operating activities||17,523||22,018|
|Income taxes paid||(2,529)||(3,049)|
|Net cash generated from operating activities||14,994||18,969|
|Cash flows from investing activities|
|Purchase of property, plant and equipment||(456)||(314)|
|Purchases of intangible assets||(2,898)||(2,808)|
|Purchase of business, net of cash acquired||(4,004)||-|
|Purchases of investments||-||(300)|
|Net cash used in investing activities||(7,242)||(3,283)|
|Cash flows from financing activities|
|Equity dividends paid||(5,655)||(5,041)|
|Proceeds from exercise of share options||214||-|
|Repayment of overdraft||(201)||-|
|Net cash used in financing activities||(5,676)||(5,072)|
|Net increase in cash and cash equivalents||2,076||10,614|
|Cash and cash equivalents at beginning of year||25,428||15,478|
|Exchange gain/(loss) on cash and cash equivalents||76||(664)|
|Cash and cash equivalents at end of year||27,580||25,428|
Notes to the Financial Statements are available in the printable PDF version