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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.

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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 Setand 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.'

 

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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.

 

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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.

 

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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.

 

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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

 

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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

 

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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

 

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Notes

Notes to the Financial Statements are available in the printable PDF version