Regulatory announcements

Bloomsbury Publishing Plc

Maya Abu-Deeb, Group General Counsel & Company Secretary

[email protected]

Hudson Sandler

+44 (0) 20 7796 4133

Dan de Belder / Hattie Dreyfus / Emily Brooker

[email protected]

Key area

Description

Mitigation

Market

Changes during the year

      ↑

Market volatility: impact of economic instability

Economic instability, inflationary pressures and, in the case of academic institutions, funding/budgetary pressures may lead to changes in demand for products, impacting revenues and margins.

• Bloomsbury combines academic and general publishing in different formats and distributes its products through different channels. In addition, we operate in multiple countries and sell our products worldwide. This diversified portfolio and customer base, together with our international presence creates a level of resilience in respect of market or country-specific downturns
• Close monitoring of revenue streams, lists and channels; range and diversity of our content; resilience of demand for strong content
• Close monitoring of developments in the academic market including library spending and demand for HSS course material, adjusting publishing and marketing programmes accordingly
• Continue focus on promoting Academic BDR products, developing BDR product pipeline and adopting flexible buying solutions to enable customers to purchase according to their individual content requirements and budgetary constraints
• Focus on expanding international sales in territories where student numbers and investment in Higher Education are increasing
• Increase marketing and sales activities focused on retaining reader engagement
• Continue focused promotion of reading for pleasure including at key travel points

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 and professional digital products, rights and services

Open access

Policy changes in the UK, Europe and US are accelerating the requirement for publicly funded scholarly content to be published on an Open Access basis. From 1 January 2024, UK Research and Innovation (UKRI) UKRI will require monographs, book chapters and edited collections that acknowledge UKRI funding to be made Open Access within 12 months of publication. If there is not sufficient public funding in place, then income from UK-originated monographs that are submitted to the REF - the UK's system for assessing the quality of research in UK higher education institutions - may be impacted.

In March 2024, the UK's Research Excellence Framework (REF) launched a consultation on requiring all scholarly books and chapters submitted to it to be made Open Access within two years of publication. If implemented, this will effectively be a mandate for all UK-authored scholarly books to be made Open Access. This is at the consultation stage and the final policy is expected to be announced in late 2024.

In the US, federal agencies, including the National Endowment for the Humanities (NEH) and National Endowment for the Arts (NEA) are consulting on introducing Open Access requirements by 2026, while, in Europe, the PALOMERA project aims to align European research funders over the next two years to accelerate Open Access for books and chapters.

• Develop digital services that deliver mixed Open Access and proprietary content in the form that customers demand and will continue to pay for.
• Director of Research and Open Access manages responses to developments in Open Access publishing and related mandates to ensure the successful transition to sustainable Open Access business models. Business workflow and systems are in the process of being adapted to ensure capacity to operate at scale
• Open Access publishing initiatives are underway to ensure Bloomsbury is well placed to continue to serve its UK academic authors, and in preparation for the adoption of UKRI's proposed policy in respect of monographs from 2024.
• Continue to engage with industry representative bodies to influence Open Access policy developments, including in respect of the response to the UK's Research Excellence Framework (REF) consultation

Sales of used books

Sales of used books for academic purposes erode backlist sales.

• Digital subscriptions and multiple ebook purchasing models are offered direct to institutions and students

Rental of textbooks

US 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 resources and ebook platforms to deliver, direct to institutions and students, the content and flexible pricing models to suit readers' requirements

Importance
of digital
publishing

Changes during the year

      ↑

BDR revenues and profit

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

See also Market Risk

• 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 more quickly and create economies of scale.
• Continue to invest in internal resource and infrastructure to support product pipeline

Acquisitions

Changes during the year

    ↔

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 according to strategic and cultural fit. 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)

Changes during the year

   ↔

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
• Editorial guidelines and policies in place to guide acquisition decisions

Information
and technology
systems

Changes during the year

      ↑

Cybersecurity/malware attack

Unauthorised access to the Company's systems may result in fraud, a 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.

• Audit Committee monitoring of scope, development and performance of cyber security controls
• Follow industry best practice for information and cyber security, with active management of information and cyber security risks.
• Controls include Advanced Endpoint protection, including Next Generation Antivirus, with events fed to a CentralisedEndpoint Protection Platform. This is supported by a 24x7 Managed Detection and Response service, which performs proactive threat hunting of our environment every 24 hours. Automation is in place to disable processes and/or isolate endpoints for high and critical threats
• Manage access to Company assets and services on a least-privilege basis, with Multi-Factor Authentication required for remote access and when accessing business-critical cloud services
• Perform frequent vulnerability scans of the Company's internal and external network to identify and remediate emerging threats
• Encrypted backups taken daily with copies stored off site and segmented from the Company's network
• Information security policies are in place and staff training includes data protection, cyber security and regular phishing simulations

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

Systems Changes

Ineffective change management may create operational challenges, affecting the Group's ability to deliver strategic, commercial and operational objectives

• Establish specific governance structures to manage significant projects
• Ensure adequate resources are in place to address the requirements of systems changes alongside day-to-day business
• Ensure clear and detailed planning of each and any system changes, including the impact of other projects

Financial
Valuations

Changes during the year

    ↔

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

Changes during the year

     ↑

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

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 procedures.
• Undertake targeted enforcement action against third party infringers
• Ensure appropriate digital rights management protection of ebooks and digital formats

Reliance on key
Counterparties; supply chain resilience

Changes during the year

       ↑

Failure of key counterparties or breakdown in key counterparty relationships

The failure of key counterparties could result in a significant disruption to the Group's business activities, resulting in lower levels of trading and revenues.

The Group's ability to meet customer demand for print products depends on timely supply from our printing partners. This may be impacted by the availability of raw materials (e.g. paper pulp) and ongoing global supply chain disruption.

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
• Regular review of global supply chain resilience by the cross-function Supply Chain Working Group to ensure proactive steps are implemented to mitigate supply chain risks and prioritise supply of print titles
• Ongoing diversification of supplier base
• Increased local printing to mitigate shipping delays and disruptions
• Apply additional due diligence in respect of key partners to assess their financial stability, cyber and information security practices and business continuity plans
• Continually assess key partner capabilities and performance to ensure they are well- positioned to support the Group's long-term strategic objectives
• Ensure effective leadership and change management governance structures and resources are in place to oversee the transition of services provision from one supplier to another

Talent

Management and retention

Changes during the year

↓

Failure to attract and retain key talent and create an inclusive and supportive environment in which the Group's employees can thrive

Inability to recruit individuals with the necessary skills and experience could impact on Bloomsbury's ability to innovate and grow.

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.

• Ongoing focus at Board and senior leadership level on creating an engaging, inclusive and rewarding working environment
• Ongoing employee engagement measures to monitor and improve employee experience and organisational culture; more information on these measures is set out on pages 48 to 52 of this Annual Report
• Continue focus on employee development through training and mentoring programmes for early and mid-career employees
• Extensive learning and development initiatives exist, ranging from individual skills training through to Leadership Development of our senior managers
• 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
• Continued focus on Diversity and Inclusion initiatives
• Implement pay and reward structures that incentivise and ensure that colleagues share in the Group's success. Introduction of Bloomsbury Career Framework has involved rigorous evaluation of all roles, with external benchmarking of salaries in order to create a transparent and clear framework of job families and career levels

Legal and
Compliance

Changes during the year     

    ↔

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 Head of Investor Relations and the Group Company Secretary advise 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

Failure to comply with regulations relating to product safety certification, accessibility and sustainability may affect access to our market

• Relevant business units are advised by the Group's in-house legal department, with specialist external advice taken where required, on forthcoming legislative and regulatory changes and appropriate measures taken to respond to such changes, including adapting operational processes and workflows where necessary.

Reputation

Changes during the year

   ↔

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

Cost inflation

Changes during the year

  ↓

Print Supply Costs

Increased print supply costs resulting from increases to energy prices and raw materials could impact on margin and achievement of the Group's financial targets.

Increased staff costs as a result of inflation.

• Long-term contracts with key suppliers to manage and mitigate cost increases; active price management of Bloomsbury products to recover incremental costs; diversification of supplier base
• Staff costs are managed as part of the Group's budgeting process and annual salary reviews

Year ended
29 February
2024
£'000

Year ended
28 February
2023
£'000

Short-term employee benefits

6,311

4,387

Post-employment benefits

177

170

Share-based payment charge

1,342

1,020

Total

7,830

5,577

29 February
2024
£'000

28 February
2023
£'000

Sale of goods to subsidiaries

11,824

13,864

Management recharges

16,029

12,913

Commission receivable from subsidiaries

6

2

Commission payable to subsidiaries

325

273

Finance income from subsidiaries

95

84

Finance costs to subsidiaries

640

427

Amounts owed by subsidiaries at year end

10,707

13,445

Amounts owed to subsidiaries at year end

81,689

73,131