REG - BloomsburyPublishing - Audited Preliminary Results
31/05/2023 07:00
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RNS Number : 0790B Bloomsbury Publishing PLC 31 May 2023
BLOOMSBURY PUBLISHING PLC
("Bloomsbury" or "the Company")
Audited Preliminary Results for the year ended 28 February 2023
Record sales and profit ahead of recently upgraded expectations
Final dividend up 10%
Bloomsbury Publishing Plc (LSE: BMY), the leading independent publisher, today
announces audited results for the year ended 28 February 2023.
Commenting on the results, Nigel Newton, Chief Executive, said:
"We are delighted to have achieved these record results with sales up 15% to
£264.1 million and profit up 16% to £31.1 million. Compared to two years
ago, sales are up 43% and profits up 62%. Our growth outperformed the industry
which was up 4%(1). These results demonstrate the strength of our strategy to
publish for both the consumer and the academic markets, unusual in our
industry, and to grow digital revenues while expanding globally.
In challenging economic times, readers are turning to books as affordable as
they cut back on more expensive forms of diversion.
Our long-term strategy to invest in digital content, which has delivered
strong growth and cash, which enables future strategic investment in both our
academic and consumer markets and potential acquisitions - the flywheel of
Bloomsbury.
Bloomsbury Digital Resources ("BDR") continues to deliver high margin,
quality, repeatable revenues, with sales growth of 41% driven by organic and
acquired assets. This drove the Non-Consumer division's revenue growth of 19%
and a 43% increase in profit before tax and highlighted items(2) to £13.1
million. Resilient demand for our books saw the Consumer division revenue grow
by 12%, achieving a 2% increase in profit before tax and highlighted items(2)
to £18.1 million.
We have signed a further four book contract with Sarah J. Maas on top of the
three books already under contract, as announced in March. Also, in April, HBO
Max announced a new Harry Potter television series, over a decade, with each
season dedicated to one of the seven books. A Bollywood streaming version of
William Dalrymple's The Anarchy is being planned and The Three-Body Problem,
the bestselling trilogy by Cixin Liu, is in production at Netflix.
In recognition of our strong performance and in line with our progressive
dividend policy, the Board proposes a 10% increase in our final dividend to
10.34 pence per share.
Trading for 2023/24 has started in line with the Board's expectations and the
Board is confident in its ability to achieve continued long-term success.
Bloomsbury plans to invest in further acquisitions and organic growth."
Note
The Board considers current consensus market expectation for the year ending
29 February 2024 to be revenue of £272.1 million and profit before taxation
and highlighted items of £32.2 million.
Financial Highlights
2022/23 2021/22 2020/21 Growth 2022/23 vs 2021/22 Growth 2022/23 vs 2020/21
Revenue £264.1m £230.1m £185.1m 15% 43%
Organic revenue(3) £231.6m £212.7m £185.1m 9% 25%
Profit before taxation and highlighted items(2) £31.1m £26.7m £19.2m 16% 62%
Profit before taxation £25.4m £22.2m £17.3m 15% 46%
Adjusted diluted earnings per share 30.56p 25.94p 18.68p 18% 64%
Diluted earnings per share 24.54p 20.33p 16.71p 21% 47%
Net cash £51.5m £41.2m £54.5m 25% (5)%
Final dividend per share 10.34p 9.40p 7.58p 10% 36%
Operational Highlights
Non-Consumer Division
· Non-Consumer revenue growth of 19% to £97.4 million (2021/22: £81.9
million). Organic revenue growth was 3%
· Non-Consumer profit before taxation and highlighted items(2)
increased by 43% to £13.1 million (2021/22: £9.1 million)
· Academic & Professional revenue growth of 28% to £75.7 million
(2021/22: £59.3 million) and profit before taxation and highlighted items(2)
up 37% to £12.4 million (2021/22: £9.1 million), with prior year
acquisitions contributing £21.5 million revenue (2021/22: £8.4 million)
· Bloomsbury Digital Resources ("BDR") revenue growth of 41% to £26.2
million (2021/22: £18.6 million) driven by strong demand for existing BDR
products and growth from the acquisition of ABC-CLIO. Organic revenue growth
was 18%
· New BDR target is to achieve further 40% organic revenue growth over
the five years to 2027/28, to reach turnover of approximately £37 million
Consumer Division
· Consumer revenue growth of 12% to £166.7 million (2021/22: £148.2
million). Organic revenue growth was 12%, with the prior year acquisition
contributing £11.0 million revenue (2021/22: £9.0 million) to Adult Trade
· Consumer profit before taxation and highlighted items(2) up 2% to
£18.1 million (2020/21: £17.8 million)
· Adult Trade revenue up 5% to £57.8 million (2021/22: £55.2 million)
and profit before taxation and highlighted items(2) of £1.0 million (2021/22:
£2.0 million)
· Children's Trade revenue growth of 17% to £108.9 million (2021/22:
£93.0 million) and profit before taxation and highlighted items(2) up 9% to
£17.2 million (2021/22: £15.8 million)
· Sales growth of Sarah J. Maas' titles of 51%; Harry Potter sales were
strong 26 years after it was first published
Notes
( )
(1) Publishers Association: 2022 UK market up 4% year-on-year.
( )
(2) Highlighted items comprise amortisation of acquired intangible assets and
legal and other professional costs relating to ongoing and completed
acquisitions and restructuring costs.
(3) Organic revenue for the year is defined as total revenue less revenue
attributable to the acquisitions of Head of Zeus ("HoZ"), Red Globe Press
("RGP") and ABC-CLIO LLC ("ABC-CLIO"), completed during 2021/22.
For further information, please contact:
Bloomsbury Publishing Plc
Nigel Newton, Chief Executive nigel.newton@bloomsbury.com (mailto:nigel.newton@bloomsbury.com)
Penny Scott-Bayfield, Group Finance Director penny.scott-bayfield@bloomsbury.com
(mailto:penny.scott-bayfield@bloomsbury.com)
Hudson Sandler +44 (0) 20 7796 4133
Dan de Belder / Amelia Craddock / Emily Brooker bloomsbury@hudsonsandler.com (mailto:bloomsbury@hudsonsandler.com)
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.
Chief Executive's statement
Overview
Bloomsbury achieved its best ever performance in the year ended 28 February
2023, with revenue growth of 15% to £264.1 million (2021/22: £230.1 million)
and a 16% increase in profit before taxation and highlighted items to £31.1
million (2021/22: £26.7 million). Profit before taxation increased by 15% to
£25.4 million (2021/22: £22.2 million).
Growth in organic revenue was 9%, with the three strategic acquisitions
completed during 2021/22, ABC-CLIO, RGP and HoZ, contributing revenue of
£32.5 million (2021/22: £17.4 million).
The strength of demand for Bloomsbury titles and the excellent sales of our
digital products, reflects our long-term growth strategy, the publishing
judgement of our editors and the quality of our sales and marketing teams and
infrastructure.
Our strategy of diversification, across channels and markets, continues
successfully. Our international revenues have increased to 73% of total
revenue - our highest ever. Our digital strategy ensures increasing publishing
through digital channels, and we continue to expand our academic as well as
consumer markets, most recently to the lucrative US schools market.
We continue to deliver success with the Bloomsbury Digital Resources ("BDR")
growth strategy of building high margin, high quality, repeatable revenues
from our market leading Academic and Professional IP. BDR achieved 41%
year-on-year revenue growth, and an 18% increase in organic revenue. This
highly scalable business has grown its sales from £4.7 million in 2017/18 to
£26.2 million this year, through organic growth and strategic acquisitions.
Our academic customer renewal rate remained above 90%.
Our strategy enables us to continue to deliver growth from the ongoing shift
to digital learning, accelerating the breadth and depth of our excellent
digital products and the quality of our platforms and infrastructure. In
addition, we accelerated our growth by leveraging last year's acquisitions of
ABC-CLIO and RGP, through global sales as well as cross-selling existing
digital products to ABC-CLIO's US schools market. Given the momentum behind
the BDR strategy, Bloomsbury is setting a new growth target of further 40%
organic revenue growth over the five years to 2027/28, to reach approximately
£37 million turnover. Further acquisitions would augment this growth. This
new, ambitious, target reflects the opportunities, synergies and integration
of our acquisitions, particularly ABC-CLIO.
Bloomsbury won the 2022 Master Investor Company of the Year award.
The highlighted items of £5.7 million (2021/22: £4.6 million) consist of the
amortisation of acquired intangible assets of £5.2 million (2021/22: £2.8
million), one-off legal and other professional fees relating to acquisitions
and restructuring costs of £0.5 million (2021/22: £1.8 million). The
effective rate of tax for the year was 20% (2021/22: 24%). The adjusted
effective rate of tax, excluding highlighted items, was 19% (2021/22: 19%).
Diluted earnings per share, excluding highlighted items, grew 18% to 30.56
pence (2021/22: 25.94 pence). Including highlighted items, profit before tax
was £25.4 million (2021/22: £22.2 million) and diluted earnings per share
grew 21% to 24.54 pence (2021/22: 20.33 pence).
We have increased our international revenues, in particular from the US,
during the year. In 2022/23, changes in exchange rates, mainly the relative
strength of the US dollar, increased revenues by £12.2 million and profit
before taxation and highlighted items by £2.2 million.
Strategy
Bloomsbury's long-term growth strategy is aimed at continuing our success in
investing in high-value intellectual property and building digital channels,
increasing quality revenues and earnings. To achieve this, we are focused the
following long-term strategic objectives:
· Non-Consumer
o Goal: Grow Bloomsbury's portfolio in Non-Consumer publishing.
Non-Consumer publishing is characterised by higher, more predictable margins,
is less reliant on retailers and presents greater digital and global
opportunities.
Achieved 2022/23: delivered 19% growth in Non-Consumer revenue.
o Goal: New BDR target is to achieve further 40% organic revenue growth over
the five years to 2027/28, to reach approximately £37 million turnover.
Achieved 2022/23: Achieved 41% revenue growth, of which 18% was organic.
· Consumer
o Goal: Discover, nurture, champion and retain high-quality authors and
illustrators, while looking at new ways to leverage existing title rights.
Achieved 2022/23: Delivered 12% growth in Consumer revenue. Bestsellers
included A Day of Fallen Night by Samantha Shannon, Stolen Focus by Johann
Hari, Bake by Paul Hollywood, Tom Kerridge's Real Life Recipes and Trespasses
by Louise Kennedy.
o Goal: Grow our key authors through effective publishing across all formats
alongside strategic sales and marketing.
Achieved 2022/23: 51% growth in sales of Sarah J. Maas title sales and seven
new titles contracted.
o Goal: As the originating publisher of J.K. Rowling's Harry Potter series,
ensure that new children discover and read it for pleasure every year.
Achieved 2022/23: Harry Potter title sales remain strong, 26 years after first
publication. Harry Potter and the Philosopher's Stone was the 3(rd)
bestselling children's book of the year on UK Nielsen Bookscan.
· International Expansion
o Goal: Expand international revenues. Continue our international growth and
take advantage of the biggest academic market in the US.
Achieved 2022/23: Increased overseas revenues to 73% of Group revenue. US
revenues increased to 48% of Group revenue.
· Employee Experience and Engagement; Diversity, Equity and Inclusion
Our success is driven by the expertise, passion and commitment of our
employees, highlighting the importance of attracting, supporting and engaging
our colleagues. We value diversity of thought, perspectives and experience in
shaping our culture and strategy, driving our long-term success and informing
the ways in which we fulfil our social purpose.
o Goal: Be an attractive employer for individuals seeking a career in
publishing, regardless of background or identity, adding cultural value to our
business operations and performance.
o Goal: Focus on initiatives to create an environment that promotes
diversity, nurtures talent, stimulates creativity and collaboration, supports
well-being and is inclusive and respectful of difference.
o Goal: Implement Bloomsbury's Diversity, Equity and Inclusion Action Plan
("DEIAP").
Achieved 2022/23:
o All employees received a one-off £1,250 payment in February 2023, in
addition to a permanent salary increase of £1,000 per annum from 1 October
2022, to help with the cost of living.
o Shortlisted for the IPG Diversity and Inclusivity Award and the LBF
Inclusivity in Publishing Award for the second year running.
o Shortlisted for the Small Cap Diversity, Inclusion & Engagement award.
o Our DEIAP set targets for Black and minority ethnic groups to represent
20% of new UK recruits and 35% of new US recruits by 2024. In 2022/23, Black
and minority ethnic groups represented 31% of UK applications and 20% of UK
offers made. 15% of UK employees are from ethnic minority groups (2021/22:
13%). In the US, Black and minority ethnic groups represented 40% of
applications and 59% of offers made. 26% of our US employees are from ethnic
minority groups (2021/22: 20%).
o Official partner of The Runnymede Trust's Lit in Colour initiative,
supporting student access to books by writers of colour and from minority
ethnic backgrounds, drawing on our world-leading drama list from Methuen
Drama.
o Ran a series of 'In Conversation' author interviews for over 700 schools,
with live interviews with our authors Tanika Gupta, Benjamin Zephaniah and
Khaled Hosseini.
o Founding signatory of the Publishers Association's Inclusivity Action
Plan, to promote equality, diversity and inclusion within the industry's
workforce.
· Sustainability
o Goal: Maximise our use of sustainable resources while seeking to reduce
carbon emissions in line with our science-based targets. We recognise our
responsibility to conserve the Earth's resources and we are committed to
monitoring and improving the environmental impact of our operations.
Achieved 2022/23:
o Awarded the IPG Sustainability Award and winner of the inaugural London
Book Fair Sustainability Initiative Award.
o Reduction of 80% in Scope 1 and 2 emissions from base year of 2019/20.
o Removed plastic shrink wrap from all Harry Potter paperback boxsets,
piloted removing dust jackets and plastic finishes and introduced changes to
backlist printing to reduce carbon emissions.
o Completed the CDP Climate Change questionnaire, receiving the second
highest score of B, demonstrating our coordinated response to climate change.
o Completed our quantitative analysis of select climate-related risks and
progressed our Task Force on Climate-Related Financial Disclosures ("TCFD")
reporting.
Non-Consumer Division
The Non-Consumer division consists of Academic & Professional, including
BDR, and Special Interest. Revenues in the division grew by 19% to £97.4
million (2021/22: £81.9 million). Profit before taxation and highlighted
items for the Non-Consumer division increased by 43% to £13.1 million
(2021/22: £9.1 million). Profit before taxation increased by 25% to £8.2
million (2021/22: £6.6 million). Organic revenue growth was 3% with ABC-CLIO
and RGP, acquired in December 2021 and June 2021 respectively, contributing
£21.5 million revenue (2021/22: £8.4 million).
Academic & Professional
Academic & Professional revenues increased by 28% to £75.7 million
(2021/22: £59.3 million) and profit before taxation and highlighted items
increased by 37% to £12.4 million (2021/22: £9.1 million). Profit before
taxation increased by 15% to £7.8 million (2021/22: £6.7 million). This was
driven by the strength of our BDR strategy, with a 41% increase in revenue
from both excellent organic growth in our existing digital products and
leveraging recent acquisitions. BDR organic growth was 18%.
Our BDR growth strategy is to build high margin, high quality, repeatable
digital revenue from our market leading Academic and Professional IP. The
acquisition of ABC-CLIO increased the depth and breadth of our portfolio of
digital products. Through this, we accelerated growth through global sales as
well as cross-selling existing digital products to both schools and academic
institutions. We increased the number of academic institution customers by 20%
and maintained our existing customer retention rate at over 90%. We continue
to see significant opportunities for further growth in both the global
academic institution and US school markets.
The Academic & Professional profit margin increased to 16% (2021/22: 15%),
predominantly driven by BDR growth and improved sales mix. Our BDR success
delivers high margin incremental revenue, with gross margin of over 70%,
created from our IP which is also sold through print and ebooks.
Special Interest
Special Interest revenue was £21.7 million (2021/22: £22.6 million), and
profit before taxation and highlighted items increased to £0.6 million
(2021/22: break even). Bestsellers during the year included Wisden Cricketers
Almanack, Reeds Nautical Almanac, Putin's Wars by Mark Galeotti and Osprey
Games' Undaunted: Stalingrad and Stargrave.
Consumer Division
The Consumer division consists of Adult and Children's trade publishing. The
Consumer division generated revenue growth of 12% to £166.7 million (2021/22:
£148.2 million). Organic revenue growth was 12%. Profit before taxation and
highlighted items increased by 2% to £18.1 million (2021/22: £17.8 million).
Profit before taxation increased by 2% to £17.8 million (2021/22: £17.5
million). The strong performance was driven by the Children's divisions,
across front and backlist titles, and includes £11.0 million revenue
(2021/22: £9.0 million) from HoZ, completed in June 2021.
Bloomsbury's Consumer growth outperformed the rest of the UK market, in both
print and digital formats; the Publishers Association reported Consumer growth
of 2% for 2022.
Adult Trade
The Adult division achieved a 5% increase in revenue to £57.8 million
(2021/22: £55.2 million) and profit before taxation and highlighted items of
£1.0 million (2021/22: £2.0 million). Profit before taxation was £0.6
million (2021/22: £1.7 million). Revenue growth was driven by the strength of
the backlist and includes £11.0 million (2021/22: £9.0 million) revenue from
HoZ, completed in June 2021.
Sunday Times bestsellers in the year included Stolen Focus by Johann Hari,
Bake by Paul Hollywood, Tom Kerridge's Outdoor Cooking and Real Life Recipes,
Trespasses by Louise Kennedy, Illuminations by Alan Moore and A Visible Man by
Edward Enninful. New York Times bestsellers in the year included Bake by Paul
Hollywood and Dirtbag, Massachusetts by Isaac Fitzgerald.
Recognition for our authors continued with Louise Kennedy's Trespasses
shortlisted for the Women's Prize 2023 and winning the British Book Awards
2023 Book of the Year - Debut Fiction, both Olivia Sadjic and Saba Sams being
named as Granta's best young novelists, Tom Benn winning The Sunday Times
Charlotte Aitken Young Writer of the Year for Oxblood, and Isaac Blood winning
the National Book Critics Circle 2022 Award for Nonfiction for The Method.
Children's Trade
Children's revenue increased by 17% to £108.9 million (2021/22: £93.0
million). Profit before taxation and highlighted items increased by 9% to
£17.2 million (2021/22: £15.8 million). Profit before taxation was £17.2
million (2021/22: £15.8 million). High demand for our strong titles continued
the momentum from last year, with excellent sales of Sarah J. Maas' titles.
Sales of the Harry Potter titles were strong. Harry Potter and the
Philosopher's Stone was the 3(rd) bestselling children's book of the year on
UK Nielsen Bookscan, 26 years after it first began, showing the enduring
appeal of this classic series.
Sarah J. Maas' sales grew by 51%, reflecting her latest bestselling frontlist
title, Crescent City: House of Sky and Breath, published in February 2022, and
strong backlist sales. House of Sky and Breath, House of Earth and Blood, A
Court of Silver Flames and the Throne of Glass series were all New York Times
bestsellers during the year. All 15 of Sarah J. Maas' titles have been
published by Bloomsbury since her first novel, Throne of Glass, in 2012.
Revenues for the rest of the Children's division were also good. Other
highlights in the Children's list included October, October, which won the
Yoto Carnegie medal, Sunday Times bestsellers We're Going on a Sleigh Ride,
We're Going on an Egg Hunt and Five Little Easter Bunnies, New York Times
bestsellers This Wicked Fate by Kalynn Bayron, Ways to Make Sunshine by Renee
Watson and Forging Silver into Stars and Defy the Dawn by Brigid Kemmerer.
Three Bloomsbury children's books were included in the BBC's global poll of
the best 100 books of all time: two of the Harry Potter series and Neil
Gaiman's The Graveyard Book.
Cash and Financing
Bloomsbury's cash generation was strong with cash at the year end of £51.5
million (2022: £41.2 million) and cash conversion of 107% (2021/22: 194%).
The Group has an unsecured revolving credit facility with Lloyds Bank Plc. The
facility comprises a committed revolving loan facility of £10.0 million and
an uncommitted incremental term loan facility of up to £6.0 million. At 28
February 2023, the Group had no draw down (2022: £nil) of this facility.
Acquisitions
Bloomsbury has a successful track record in strategic acquisitions, with 19
completed since 2008. We are actively targeting and assessing further
acquisition opportunities in line with our long-term growth strategy,
particularly in Academic and Professional.
Dividend
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 is
recommending a final dividend of 10.34 pence per share, totalling £8.4
million. Together with the interim dividend, this makes a total dividend for
the year ended 28 February 2023 of 11.75 pence per share, a 9% increase on the
10.74 pence value of the dividend for the year ended 28 February 2022.
Subject to Shareholder approval at our AGM on 18 July 2023, the final dividend
will be paid on 25 August 2023 to Shareholders on the register on the record
date of 28 July 2023.
Including the proposed 2022/23 final dividend, over the past ten years, the
dividend has increased at a compound annual growth rate of 8%.
Future Publishing
In Non-Consumer, we are focused on our BDR growth by continuing the global
sales and marketing of ABC-CLIO's 34 databases. We have successfully expanded
the customer base for these in the global academic market, as well as
extending our reach in the US school market, and we will increase our cross
selling of existing school and university level digital resources. We will
expand Bloomsbury Collections to include ABC-CLIO titles, as well as investing
in new ABC-CLIO high school products and expanding BDR products with ABC-CLIO
content.
Our strong Consumer publishing list for 2023/24 includes the next new Sarah J. Maas novel, House of Flame and Shadow, the third in the Crescent City series, which will be published in January 2024. The Harry Potter Wizarding Almanac, the official magical companion to J.K. Rowling's Harry Potter books, will be published in October 2023. We are also publishing The Earth Transformed by Peter Frankopan, Pub Kitchen by Tom Kerridge, Impossible Creatures by Katherine Rundell, Tom Lake by Ann Patchett, and the next titles in our bestselling children's series, We're Going on a Ghost Hunt and We're Going to a Birthday Party, by Martha Mumford and Cherie Zamazing.
As previously announced, we have signed a further four book contract with
Sarah J. Maas, on top of the three books already under contract.
Moreover, on 12 April 2023, HBO Max's streaming service announced an original
Harry Potter scripted television series with Warner Bros. Discovery and J.K.
Rowling as Executive Producer. The series will be a faithful and authentic
adaptation of the books and will be available globally. The stories from J.K.
Rowling's books will become a decade-long series with each season dedicated to
one of the seven books, full of the much-loved characters that fans have
adored for over 25 years. A new cast will lead a new generation of fandom, and
the series will stand alongside the original classic and beloved films. As
with other high-profile Harry Potter productions, we believe that the series
will stimulate further interest in Harry Potter titles.
Outlook
Our digital strategy continues apace and despite the economic uncertainty,
readers continue to turn to books. Bloomsbury is on solid foundations, with
significant financial resources available to augment organic growth and invest
in future acquisitions. We have continued to expand globally, with almost 75%
of our revenues now generated internationally. Diversification in channels and
markets continues to serve us well. It is all these factors combined - our
customers, our consistent performance, and the scale and resilience of our
business - that underpin the confidence we have in the future.
Trading for 2023/24 has started in line with the Board's expectations.
Audited Consolidated Income Statement
FOR THE YEAR ENDED 28 FEBRUARY 2023
Year ended Year ended
28 February 28 February
2023 2022
Notes £'000 £'000
Revenue 2 264,102 230,110
Cost of sales (119,191) (107,948)
Gross profit 144,911 122,162
Marketing and distribution costs (32,529) (29,808)
Administrative expenses (86,551) (69,675)
Share of result of joint venture (228) (117)
Operating profit before highlighted items 31,286 27,112
Highlighted items 3 (5,683) (4,550)
Operating profit 25,603 22,562
Finance income 270 105
Finance costs (458) (486)
Profit before taxation and highlighted items 31,098 26,731
Highlighted items 3 (5,683) (4,550)
Profit before taxation 25,415 22,181
Taxation 4 (5,171) (5,291)
Profit for the year attributable to owners of the Company 20,244 16,890
Earnings per share attributable to owners of the Company
Basic earnings per share 6 24.94p 20.72p
Diluted earnings per share 6 24.54p 20.33p
Audited Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 28 FEBRUARY 2023
Year ended Year ended
28 February 28 February
2023 2022
£'000 £'000
Profit for the year 20,244 16,890
Other comprehensive income
Items that may be reclassified to the income statement:
Exchange differences on translating foreign operations 7,464 1,497
Items that may not be reclassified to the income statement:
Remeasurements on the defined benefit pension scheme - (10)
Other comprehensive income for the year net of tax 7,464 1,487
Total comprehensive income for the year attributable to the owners of the 27,708 18,377
Company
Items in the statement above are disclosed net of tax.
Audited Consolidated Statement of Financial Position
AS AT 28 FEBRUARY
2023
28 February 28 February
2023 2022
Notes £'000 £'000
Assets
Goodwill 48,656 47,910
Other intangible assets 38,243 40,323
Investments - 45
Property, plant and equipment 2,503 2,319
Right-of-use assets 9,126 10,628
Deferred tax assets 7,928 7,168
Trade and other receivables 7 934 923
Total non-current assets 107,390 109,316
Inventories 43,364 33,816
Trade and other receivables 7 112,819 104,879
Cash and cash equivalents 51,540 41,226
Total current assets 207,723 179,921
Total assets 315,113 289,237
Liabilities
Deferred tax liabilities 3,115 3,696
Lease liabilities 8,570 9,961
Provisions 334 297
Total non-current liabilities 12,019 13,954
Trade and other liabilities 111,620 103,028
Lease liabilities 2,082 2,265
Current tax liabilities 790 433
Provisions 764 588
Total current liabilities 115,256 106,314
Total liabilities 127,275 120,268
Net assets 187,838 168,969
Equity
Share capital 1,020 1,020
Share premium 47,319 47,319
Translation reserve 15,591 8,127
Other reserves 10,870 8,765
Retained earnings 113,038 103,738
Total equity attributable to owners of the Company 187,838 168,969
Audited Consolidated Statement of Changes in Equity
AS AT 28 FEBRUARY 2023
Share capital £'000 Share premium £'000 Translation reserve Merger reserve £'000 Capital redemption reserve Share-based payment reserve £'000 Own shares held by EBT £'000 Retained Total equity £'000
£'000 £'000 earnings £'000
At 28 February 2021 1,020 47,319 6,630 1,803 22 7,945 (147) 103,657 168,249
Profit for the year - - - - - - - 16,890 16,890
Other comprehensive income
Exchange differences on translating foreign operations - - 1,497 - - - - - 1,497
Remeasurements on the defined benefit pension scheme - - - - - - - (10) (10)
Total comprehensive income for the year - - 1,497 - - - - 16,880 18,377
Transactions with owners
Dividends to equity holders of the Company - - - - - - - (15,157) (15,157)
Purchase of shares by the Employee Benefit Trust
- - - - - - (4,489) - (4,489)
Share options exercised - - - - - - 2,084 (2,050) 34
Deferred tax on share-based payment transactions - - - - - - - 408 408
Share-based payment transactions - - - - - 1,547 - - 1,547
Total transactions with owners of the Company - - - - - 1,547 (2,405) (16,799) (17,657)
At 28 February 2022 1,020 47,319 8,127 1,803 22 9,492 (2,552) 103,738 168,969
Profit for the year - - - - - - - 20,244 20,244
Other comprehensive income
Exchange differences on translating foreign operations - - 7,464 - - - - - 7,464
Remeasurements on the defined benefit pension scheme - - - - - - - - -
Total comprehensive income for the year - - 7,464 - - - - 20,244 27,708
Transactions with owners
Dividends to equity holders of the Company - - - - - - - (8,752) (8,752)
Purchase of shares by the Employee Benefit Trust
- - - - - - (1,669) - (1,669)
Share options exercised - - - - - - 2,539 (2,273) 266
Deferred tax on share-based payment transactions - - - - - - - 81 81
Share-based payment transactions - - - - - 1,235 - - 1,235
Total transactions with owners of the Company - - - - - 1,235 870 (10,944) (8,839)
At 28 February 2023 1,020 47,319 15,591 1,803 22 10,727 (1,682) 113,038 187,838
Audited Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 28 FEBRUARY 2023
Year ended Year ended
28 February 28 February
2023 2022
£'000 £'000
Cash flows from operating activities
Profit for the year 20,244 16,890
Adjustments for:
Depreciation of property, plant and equipment 659 512
Depreciation of right-of-use assets 2,114 1,889
Amortisation of intangible assets 9,687 7,505
Loss on disposal of property, plant and equipment 13 -
Loss on disposal on intangible assets 107 65
Finance income (270) (105)
Finance costs 458 486
Share of loss of joint venture 228 117
Share-based payment charges 1,601 2,054
Tax expense 5,171 5,291
40,012 34,704
(Increase) in inventories (7,557) (2,745)
(Increase)/decrease in trade and other receivables (3,226) 1,205
Increase in trade and other liabilities 4,033 14,572
Cash generated from operating activities 33,262 47,736
Income taxes paid (6,640) (7,927)
Net cash generated from operating activities 26,622 39,809
Cash flows from investing activities
Purchase of property, plant and equipment (818) (644)
Purchase of intangible assets (5,165) (3,693)
Purchase of business, net of cash acquired (72) (22,913)
Purchase of rights to assets (633) (3,650)
Purchase of share in a joint venture (183) -
Interest received
253 92
Net cash used in investing activities (6,618) (30,808)
Cash flows from financing activities
Equity dividends paid (8,752) (15,157)
Purchase of shares by the Employee Benefit Trust (1,669) (4,489)
Proceeds from exercise of share options 266 34
Repayment of borrowing - (1,097)
Repayment of lease liabilities (2,226) (1,862)
Lease liabilities interest paid (390) (419)
Other interest paid - (55)
Net cash used in financing activities (12,771) (23,045)
Net increase/ (decrease) in cash and cash equivalents 7,233 (14,044)
Cash and cash equivalents at beginning of year 41,226 54,466
Exchange gain on cash and cash equivalents 3,081 804
Cash and cash equivalents at end of year 51,540 41,226
NOTES
1. Accounting policies
a) Basis of Preparation
The financial information set out above does not constitute the company's
statutory accounts for the years ended 28 February 2023 or 28 February 2022
but is derived from those accounts. Statutory accounts for 2022 have been
delivered to the registrar of companies, and those for 2023 will be delivered
in due course. The auditor has reported on those accounts; their reports were
(i) unqualified, (ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The Group financial statements were prepared in accordance with UK-adopted
international accounting standards ("UK-adopted IFRS") and the requirements of
the Companies Act 2006. Except as described below, the accounting policies
applied in the year ended 28 February 2023 are consistent with those applied
in the financial statements for year ended 28 February 2022 with the exception
of a number of new accounting standards and amendments which have not had a
material impact on the Group's results.
b) Going concern
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence at least 12 months from the
date of this preliminary announcement, being the period of the detailed going
concern assessment reviewed by the Board, and therefore continue to adopt the
going concern basis of accounting in preparing the condensed consolidated
financial statements.
The Board has modelled a severe but plausible downside scenario. This assumes:
· Print revenues are reduced by 20% during 2023/2024, with recovery
during 2024/2025;
· Digital revenues are reduced by 20% during 2023/2024, with recovery
during 2024/2025;
· Print costs are increased by 3% from 2023/2024 and staff costs are
increased by 3% from 2023/2024;
· Downside assumptions about extended debtor days during 2023/2024,
with recovery during 2024/2025;
· Cash preservation measures implemented and variable costs reduced.
At 28 February 2023, the Group had available liquidity of £61.5m, comprising
central cash balances and its undrawn £10.0m Revolving Credit Facility (RCF).
The RCF agreement is to October 2024. Under the severe but plausible downside
scenario, the Group would maintain sufficient liquidity headroom even before
modelling the mitigating effect of actions that management would take in the
event that these downside risks were to crystallise.
The Group has an unsecured revolving credit facility with Lloyds Bank Plc. At
28 February 2023, the Group had £nil draw down (2022: £nil) of this facility
with £10.0 million of undrawn borrowing facilities (2022: £10.0 million)
available.
The facility comprises a committed revolving credit facility of £10 million,
and an uncommitted incremental term loan facility of up to £6 million. The
facilities are subject to two covenants, being a maximum net debt to EBITDA
ratio of 2.5x and a minimum interest cover covenant of 4x.
2. Revenue and segmental analysis
The Group is comprised of two worldwide publishing divisions: Consumer and
Non-Consumer, reflecting the core customers for our different operations. The
Consumer division is split into two operating segments: Children's Trade and
Adult Trade, and Non-Consumer is split into two operating segments: Academic
& Professional and Special Interest.
Each reportable segment represents a cash-generating unit for the purpose of
impairment testing. We have allocated goodwill between reportable segments.
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:
Children's Trade Adult Trade Consumer Academic & Professional Special Interest Non-Consumer Unallocated Total
Year ended 28 February 2023 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
External revenue 108,897 57,796 166,693 75,749 21,660 97,409 - 264,102
Cost of sales (56,205) (30,473) (86,678) (22,578) (9,935) (32,513) - (119,191)
Gross profit 52,692 27,323 80,015 53,171 11,725 64,896 - 144,911
Marketing and distribution costs (14,882) (9,455) (24,337) (5,364) (2,828) (8,192) - (32,529)
Contribution before administrative expenses 37,810 17,868 55,678 47,807 8,897 56,704 - 112,382
Administrative expenses excluding highlighted items (20,497) (16,835) (37,332) (35,296) (8,240) (43,536) - (80,868)
Share of result of joint venture - - - - - - (228) (228)
Operating profit/(loss) before highlighted items/segment results 17,313 1,033 18,346 12,511 657 13,168 (228) 31,286
Amortisation of acquired intangible assets - (352) (352) (4,660) (214) (4,874) - (5,226)
Other highlighted items - - - - - - (457) (457)
Operating profit/(loss) 17,313 681 17,994 7,851 443 8,294 (685) 25,603
Finance income - - - 50 - 50 220 270
Finance costs (144) (81) (225) (125) (40) (165) (68) (458)
Profit/(loss) before taxation and highlighted items 17,169 952 18,121 12,436 617 13,053 (76) 31,098
Amortisation of acquired intangible assets - (352) (352) (4,660) (214) (4,874) - (5,226)
Other highlighted items - - - - - - (457) (457)
Profit/(loss) before taxation 17,169 600 17,769 7,776 403 8,179 (533) 25,415
Taxation - - - - - - (5,171) (5,171)
Profit/(loss) for the year 17,169 600 17,769 7,776 403 8,179 (5,704) 20,244
Operating profit/(loss) before highlighted items/segment results 17,313 1,033 18,346 12,511 657 13,168 (228) 31,286
Depreciation 930 659 1,589 950 234 1,184 - 2,773
Amortisation of internally generated intangibles 487 629 1,116 3,023 322 3,345 - 4,461
EBITDA before highlighted items 18,730 2,321 21,051 16,484 1,213 17,697 (228) 38,520
Children's Trade Adult Trade Consumer Academic & Professional Special Interest Non-Consumer Unallocated Total
Year ended 28 February 2022 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
External revenue 93,039 55,157 148,196 59,328 22,586 81,914 - 230,110
Cost of sales (46,759) (29,106) (75,865) (20,945) (11,138) (32,083) - (107,948)
Gross profit 46,280 26,051 72,331 38,383 11,448 49,831 - 122,162
Marketing and distribution costs (12,812) (8,271) (21,083) (5,335) (3,390) (8,725) - (29,808)
Contribution before administrative expenses 33,468 17,780 51,248 33,048 8,058 41,106 - 92,354
Administrative expenses excluding highlighted items (17,506) (15,732) (33,238) (23,907) (7,980) (31,887) - (65,125)
Share of result of joint venture - - - - - - (117) (117)
Operating profit/(loss) before highlighted items/ segment results 15,962 2,048 18,010 9,141 78 9,219 (117) 27,112
Amortisation of acquired intangible assets - (272) (272) (2,349) (214) (2,563) - (2,835)
Other highlighted items - - - - - - (1,715) (1,715)
Operating profit/(loss) 15,962 1,776 17,738 6,792 (136) 6,656 (1,832) 22,562
Finance income - - - 62 - 62 43 105
Finance costs (162) (94) (256) (115) (48) (163) (67) (486)
Profit/(loss) before taxation and highlighted items 15,800 1,954 17,754 9,088 30 9,118 (141) 26,731
Amortisation of acquired intangible assets - (272) (272) (2,349) (214) (2,563) - (2,835)
Other highlighted items - - - - - - (1,715) (1,715)
Profit/(loss) before taxation 15,800 1,682 17,482 6,739 (184) 6,555 (1,856) 22,181
Taxation - - - - - - (5,291) (5,291)
Profit/(loss) for the year 15,800 1,682 17,482 6,739 (184) 6,555 (7,147) 16,890
Operating profit/(loss) before highlighted items/ segment results 15,962 2,048 18,010 9,141 78 9,219 (117) 27,112
Depreciation 914 632 1,546 604 251 855 - 2,401
Amortisation of internally generated intangibles 455 508 963 3,405 302 3,707 - 4,670
EBITDA before highlighted items 17,331 3,188 20,519 13,150 631 13,781 (117) 34,183
External revenue by source
United Kingdom North America Australia India Total
£'000 £'000 £'000 £'000 £'000
Year ended 28 February 2023 144,632 98,294 16,145 5,031 264,102
Year ended 28 February 2022 143,192 69,651 13,133 4,134 230,110
During the year sales to one customer exceeded 10% of Group revenue (2022: one
customer). The value of these sales was £68,856,000 (2022: £67,811,000).
External revenue by product type
Year ended 28 February 2023 Children's Trade Adult Trade £'000 Consumer £'000 Academic & Professional Special Interest £'000 Non-Consumer £'000 Total
£'000 £'000 £'000
Print 90,481 44,702 135,183 32,942 17,841 50,783 185,966
Digital 13,599 11,374 24,973 39,051 2,293 41,344 66,317
Rights and Services(1) 4,817 1,720 6,537 3,756 1,526 5,282 11,819
Total 108,897 57,796 166,693 75,749 21,660 97,409 264,102
Year ended 28 February 2022 Children's Trade Adult Trade £'000 Consumer £'000 Academic & Professional Special Interest £'000 Non-Consumer £'000 Total
£'000 £'000 £'000
Print 79,053 42,702 121,755 29,996 18,632 48,628 170,383
Digital 10,511 10,511 21,022 27,150 2,354 29,504 50,526
Rights and Services(1) 3,475 1,944 5,419 2,182 1,600 3,782 9,201
Total 93,039 55,157 148,196 59,328 22,586 81,914 230,110
(1) Rights and Services revenue includes revenue from copyright and trademark
licences, management contracts, advertising and publishing services.
Total assets
28 February 28 February
2023 2022
£'000 £'000
Children's Trade 19,569 13,633
Adult Trade 14,493 13,513
Academic & Professional 77,918 78,096
Special Interest 14,381 13,170
Unallocated 188,752 170,825
Total assets 315,113 289,237
Unallocated primarily represents centrally held assets including system
development, property plant and equipment, right-of-use assets, receivables
and cash.
Analysis of non-current assets (excluding deferred tax assets and financial
instruments) by geographic location
28 February 28 February
2023 2022
£'000 £'000
United Kingdom (country of domicile) 71,311 79,708
North America 26,796 22,196
Other 421 244
Total 98,528 102,148
3. Highlighted items
Year ended Year ended
28 February 28 February
2023 2022
£'000 £'000
Legal and other professional fees 93 1,317
Integration and restructuring costs 364 398
Other highlighted items 457 1,715
Amortisation of acquired intangible 5,226 2,835
assets
Total highlighted items 5,683 4,550
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 and future profitability
of the business.
All highlighted items are included in administrative expenses in the income
statement.
For the year ended 28 February 2023, legal and other professional fees of
£93,000 were incurred as a result of the Group's acquisitions, including
ABC-CLIO, LLC and certain assets of UIT Cambridge. Integration and
restructuring costs primarily relate to the integration of the ABC-CLIO, LLC,
Head of Zeus Limited acquisitions and certain assets of Red Globe Press.
For the year ended 28 February 2022, legal and other professional fees of
£1,317,000 were incurred as a result of the Group's acquisitions, including
ABC-CLIO, LLC, Head of Zeus Limited and certain assets of Red Globe Press.
Integration and restructuring costs primarily relate to the integration of the
above acquisitions including restructuring and other restructuring in both
divisions.
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 19.0% (2022: 19.0%). The reasons
for this are explained below:
Year ended Year ended
28 February 2023 28 February 2022
£'000 % £'000 %
Profit before taxation 25,415 100.0 22,181 100.0
Profit on ordinary activities multiplied by the standard rate of corporation 4,829 19.0 4,214 19.0
tax in the UK of 19.0% (2022: 19.0%)
Effects of:
Non-deductible revenue expenditure 67 0.3 16 0.1
Non-taxable income (323) (1.3) (383) (1.7)
Different rates of tax in foreign jurisdictions 865 3.4 946 4.3
Tax losses 189 0.7 (212) (1.0)
Movement in deferred tax rate (65) (0.3) 144 0.7
Adjustment to tax charge in respect of prior years
Current tax (1,123) (4.4) (173) (0.8)
Deferred tax 724 2.9 512 2.3
Tax charge for the year before disallowable costs on highlighted items 5,163 20.3 5,064 22.9
Highlighted items:
Disallowable costs 8 - 227 1.0
Tax charge for the year 5,171 20.3 5,291 23.9
Different rates of tax in foreign jurisdictions is where we are paying tax at
higher rates in the US and Australia as well as paying state taxes in the US.
Tax losses relate to the recognition of previously unrecognised tax losses or
losses in the year that have not been recognised as deferred tax assets.
Adjustments to prior periods primarily arise where an outcome is obtained on
certain tax matters which differs from expectations held when the related
provision was made. Where the outcome is more favourable than the provision
made, the difference is released, lowering the current year tax charge. Where
the outcome is less favourable than our provision, an additional charge to
current year tax will occur.
We are not aware of any significant unprovided exposures that are considered
likely to materialise.
5. Dividends
Year ended Year ended
28 February 28 February
2023 2022
£'000 £'000
Amounts paid in the year
Prior period 9.40p final dividend per share (2022: 7.58p) 7,604 6,141
Prior period special dividend per share for the year (2022: 9.78p) - 7,923
Interim 1.41p dividend per share (2022: 1.34p) 1,148 1,093
Total dividend payments in the year 8,752 15,157
Amounts arising in respect of the year
Interim 1.41p dividend per share for the year (2022: 1.34p) 1,148 1,093
Proposed 10.34p final dividend per share for the year (2022: 9.40p) 8,397 7,671
Total dividend 11.75p per share for the year (2022: 10.74p) 9,545 8,764
The Directors are recommending a final dividend of 10.34 pence per share,
which, subject to Shareholder approval at the Annual General Meeting, will be
paid on 25 August 2023 to Shareholders on the register at close of business on
28 July 2023.
6. Earnings per share
The basic earnings per share for the year ended 28 February 2023 is calculated
using a weighted average number of Ordinary shares in issue of 81,172,636
(2022: 81,532,620) 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 28 February
2023 2022
Number Number
Weighted average shares in issue 81,172,636 81,532,620
Dilution 1,336,878 1,530,573
Diluted weighted average shares in issue 82,509,514 83,063,193
£'000 £'000
Profit after tax attributable to owners of the Company 20,244 16,890
Basic earnings per share 24.94p 20.72p
Diluted earnings per share 24.54p 20.33p
£'000 £'000
Adjusted profit attributable to owners of the Company 25,217 21,548
Adjusted basic earnings per share 31.07p 26.43p
Adjusted diluted earnings per share 30.56p 25.94p
Adjusted profit is derived as follows:
Year ended Year ended
28 February 28 February
2023 2022
£'000 £'000
Profit before taxation 25,415 22,181
Amortisation of acquired intangible assets 5,226 2,835
Other highlighted items 457 1,715
Adjusted profit before tax 31,098 26,731
Tax expense 5,171 5,291
Deferred tax movements on goodwill and acquired intangible assets 631 (207)
Tax expense on other highlighted items 79 99
Adjusted tax 5,881 5,183
Adjusted earnings 25,217 21,548
( )
( )
The Group includes the benefit of tax amortisation of intangible assets in the
calculation of adjusted
tax as this more accurately aligns the adjusted tax charge with the expected
cash tax payments.
7. Trade and other receivables
28 February 28 February
2023 2022
£'000 £'000
Non-current
Accrued income 934 923
Current
Gross trade receivables 72,549 68,764
Less: loss allowance (3,334) (3,551)
Net trade receivables 69,215 65,213
Income tax recoverable 2,332 1,392
Other receivables 2,497 2,431
Prepayments 2,653 2,672
Accrued income 6,579 4,494
Royalty advances 29,543 28,677
Total current trade and other receivables 112,819 104,879
Total trade and other receivables 113,753 105,802
Non-current receivables relate to accrued income on long-term rights deals.
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 is held against gross advances payable in respect of published
title advances which may not be fully earned down by anticipated future sales.
As at 28 February 2023, £7,745,000 (2022: £7,145,000) of royalty advances
relate to titles expected to be published in more than 12 months' time.
8. Annual General Meeting
The Annual General Meeting will be held on 18 July 2023.
9. Report and Accounts
Copies of the Annual Report and Financial Statements will be circulated to
shareholders in June and can be viewed after the posting date on the
Bloomsbury website.
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