Key area

Description

Mitigation

Market

Market volatility: Impact of the coronavirus pandemic

Sales of print books in the Group's key markets are being impacted by the imposition of Government lockdowns, restrictions and retail closures.

• Close monitoring of revenue streams and affected supply chains, with increased marketing and sales activities focused on unaffected retail channels such as online retailers, supermarkets and the Company's own website Bloomsbury.com.

• Increased focus on promoting digital book sales (ebooks and audio books) and BDR products (as academic institutional customers pivot to digital resources to support remote learning for students).

Increased dependence on internet retailing

Growth of online retailers may impact on the discoverability of Bloomsbury titles and lead to a reduction in sales channels available to the Group.

• Grow expert marketing teams skilled in internet sales.

• Engage with multiple internet retailers and support independent retailers.

• Focus on promoting sales from the Company's own website and on direct sales to customers.

• Increase focus on developing other marketing opportunities and other revenue streams, e.g. Academic & Professional digital products, rights and services.

Sales of used books

Sales of used books for academic purposes erode backlist sales.

• Digital subscriptions are offered to support B2B model by selling direct to institutions rather than to students.

Rental of textbooks

USA readers may license books from retailers for a limited period at a lower cost to buying books, with no revenues or royalty paid to the publisher.

• Develop digital platforms to deliver, on a subscription basis, the content that readers demand.

Importance

of digital

publishing

BDR revenues and profit

Revenue and profit from BDR products and services may not grow in line with our stretching targets.

• Develop a portfolio of high-quality online content services in markets we understand well.

• Use third party content and content partnerships to scale up projects quicker and create economies of scale.

Higher project and development costs may be required or incurred than were budgeted for, impacting profit.

• Annual and monthly BDR budgets and reforecasts are monitored against BDR targets on a weekly basis.

• The business case for each BDR product requires approval by the Group Finance Director and Managing Director of the Non-Consumer Division. Costs and profitability by project are tracked and reviewed against budget on a monthly and quarterly basis by senior management to identify any corrective action required. Any budget overspend requires approval of the Group Finance Director and Managing Director of the Non-Consumer Division.

Unforeseen circumstances may delay development of new online content services.

• Standardise the digital delivery platform to simplify and speed up the development and implementation of new digital content services.

Reduced budgets for academic libraries and institutions may impact on revenue.

• Adoption of flexible sales models where budgets for annual subscriptions are restricted.

• Broaden the international institutional customer base so that the Company is not reliant on sales in specific territories.

Acquisitions

M&A activity

Acquisitions could deliver lower than expected return on investment. Poor acquisitions may result in potential impairment charges.

• Potential acquisition targets are assessed by the members of the Executive Committee. Thorough pre-acquisition due diligence is conducted by relevant functions, including finance, legal, publishing and sales. Capital allocation for acquisitions is determined at Group level and approved by the Board. Integration plans are developed at Divisional level and are implemented by a cross-functional team of experts, with Divisional oversight.

• Regular reports are presented to the Board throughout the year on post-acquisition performance, including an assessment of any variation to the expected return on investment.

Title acquisition

(Consumer

publishing)

Commercial viability

Titles may be acquired that are not commercially or critically successful.

• Advances over a certain limit are required to be authorised by the Chief Executive and Group Finance Director.

• Financial forecasts are prepared prior to acquisition to predict commercial success.

• Focus on acquiring world rights where possible in order to increase sales opportunities and mitigate the risk posed by competing editions in open markets.

Information

and technology

systems

Cybersecurity/malware attack

Unauthorised access to the Company's systems may result in fraud, data privacy breach, theft of intellectual property, inability to access, or damage to, vital systems and assets, thus causing financial and reputational damage to the Group.

• Clear responsibility for systems, restrictions on software installation, increasing use of the cloud, information back-up, monitoring security risks, internal control reviews of the systems and up-to-date anti-virus software are amongst the measures in place.

• Training provided to all staff on cybersecurity risk.

Inadequate internal access controls or security measures

Inadequate controls over certain processes could lead to sensitive data being inadvertently revealed internally or externally.

• Sensitive personal data is stored securely and protected with password controls or encryption. User access controls are embedded in the Company's finance systems.

Financial

valuations

Judgemental valuation of assets and provisions

Significant assets and provisions in the balance sheet depend on judgemental assumptions, e.g. goodwill, advances, intangible rights, inventory and returns provisions.

• Consistent and evidence-based approach to assumptions.

• Board approval of key assumptions.

Intellectual

property

Erosion of copyright

Erosion of traditional copyrights.

• Continue policy of support for copyright and intellectual property rights as a fundamental facet of publishing.

Erosion of territorial copyrights as a result of global internet retailing.

• Continue to police infringements of the Group's territorial copyrights and take appropriate action to enforce such rights.

Open access.

• Develop digital services that deliver mixed open access and proprietary content in the form that customers demand and will continue to pay for.

Infringement of Group IP by third parties

Failure to adequately manage and protect the Group's intellectual property rights (including trademarks and copyright) may damage the value of our core assets and impact on profits.

• Adopt robust anti-piracy and procedures.

• Undertake targeted enforcement action against third party infringers.

• Ensure appropriate digital rights management protection of ebooks and digital formats.

Reliance on key

counterparties

Failure of key counterparties or breakdown in key counterparty relationships

The failure of key counterparties could result in a significant disruption to the Company's business activities, resulting in lower levels of trading and revenues. A breakdown in key commercial relationships could impact on future publishing opportunities.

• Relationships with key counterparties are closely monitored and actively managed by senior managers. This includes frequent and regular engagement with key counterparties in order to ensure open communication and cooperation and to identify potential issues that may impact on the Company's business at the earliest opportunity. Other mitigations include having appropriate contracts and service level agreements in place, and interrogating the business continuity plans of key counterparties.

Talent

management

Failure to retain key talent and create the conditions in which the Group's employees can thrive

Loss of key talent could lead to loss of skill and knowledge from the business, result in decreased efficiency, impact on staff motivation and undermine external relationships.

• Continued focus on employee development through training and mentoring programmes for early and midcareer employees.

• Provision of executive coaching for senior staff.

• Ongoing Employee Voice Programme, allowing every employee to have their voice heard directly by senior management and the Board. HR initiatives are implemented in response to matters raised during Employee Voice Meetings.

• Formal appraisal system provides the opportunity to identify learning and development opportunities to support career progression and succession planning.

• Formation of a Diversity and Inclusion Working Group and related Diversity and Inclusion networks.

• Global staff turnover by Division and functional area is reported to the Executive Committee and monitored against agreed thresholds.

Legal and

compliance

Breach of key contracts by the Company

Breach of a key contract by the Company could result in a claim for damages and/or termination of the contract by the relevant counterparty, resulting in financial loss to the Group.

• Relevant individuals within the business who are engaged in activities which relate to or are governed by key contracts are made aware of the terms of such contracts. Legal advice is sought from the Group's legal function where appropriate to ensure performance by the Company in accordance with contractual terms.

Failure to comply with applicable regulations

Failure to comply with regulations relating to the reporting of annual financial reports may lead to a range of sanctions including fines, imprisonment, reputational damage, and delisting.

• Annual Report and Accounts is reviewed internally by the Head of Group Finance and the Group Finance Director, and externally by the Group's appointed Auditor. Material balances are tested in accordance with relevant standards. The Group Company Secretary advises on content requirements under relevant regulation/legislation.

Failure to comply with privacy regulations may result in significant fines and reputational damage.

• Mitigation in respect of the risk of a data breach is noted above in connection with Information Technology and Systems.

• Since the introduction of the General Data Protection Regulation ("GDPR"), which came into force in May 2018, the Company has implemented a range of measures to ensure compliance with the requirements of GDPR. These include the implementation of policies and guidance in key areas, the provision of training to employees, reviewing and updating the Company's data collection methods and marketing communications, updating supplier terms and conditions, and updating privacy policies on the Company's websites. The Company has appointed a Data Protection Officer to oversee GDPR compliance.

Reputation

Investor confidence

City confidence undermined by events outside of the Company's control, e.g. collapse of a retailer.

• Diversify the portfolio of products and services to reduce dependencies on individual customers, sales channels and markets.

Year ended

29 February

2020

£'000

Year ended

28 February

2019

£'000

Short-term employee benefits

3,841

4,022

Post-employment benefits

224

209

Share-based payment charge

597

410

Total

4,662

4,641

29 February

2020

£'000

28 February

2019

£'000

Sale of goods to subsidiaries

9,525

8,553

Management recharges

9,422

9,667

Commission payable to subsidiaries

(8)

(5)

Finance income from subsidiaries

91

77

Amounts owed by subsidiaries at year end

12,824

12,209

Amounts owed to subsidiaries at year end

47,901

46,890