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BLOOMSBURY PUBLISHING PLC
Earnings Release • Jun 15, 2022
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Earnings Release
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Bloomsbury Publishing PLC
15 June 2022
BLOOMSBURY PUBLISHING PLC
("Bloomsbury" or "the Company")
Audited Preliminary Results for the year ended 28 February 2022
Highest ever sales and profit
Bloomsbury, the leading independent publisher, today announces audited results for the year ended 28 February 2022.
Commenting on the results, Nigel Newton, Chief Executive, said:
"Bloomsbury achieved its highest ever results with sales up 24% to £230.1 million and profits up 40% to £26.7 million. Sales were up 41% and profits up 70% from two years ago. Both the Consumer and Non-Consumer divisions gave outstanding and resilient performances, highlighting Bloomsbury's unique strength in combining general and academic publishing.
The question on all of our minds was: would the pandemic surge in reading continue? We now know the answer: reading has become a reacquired habit and continues to thrive. The pandemic made us all re-evaluate how we spend our time and this has resulted in an increase in sales of books that enable us to explore our hobbies and personal interests such as cooking, fitness, history and reading novels for enlightenment and escape. Our Academic sales have benefitted from the structural shift to online learning. Our success continues to this date with good sales for Bloomsbury's first quarter. The surge in reading, which seemed to be one of the only rays of light in the darkest days of the pandemic is perhaps now being revealed as permanent, with the simple act of reading shedding light and giving joy to millions of people.
The Consumer division revenue grew by 25%, continuing the momentum of last year, and achieved a 25% increase in profit before tax and highlighted items1 to £17.8 million. The Non-Consumer division saw 23% revenue growth and a 68% increase in profit before tax and highlighted items1 to £9.1 million. Consumer revenue was 53% higher and Non-Consumer revenue 24% higher than two years ago. Bloomsbury Digital Resources ("BDR") outperformed the target set six years ago of £15 million of sales and £5 million of profit, with sales of £18.6 million, up 50% on last year, and profit of £6.8 million, up £3.9 million on last year. Following this success, we have set ambitious new growth targets for BDR.
Supporting our strong organic growth, we made three acquisitions during the year of ABC-CLIO LLC, the Red Globe Press list and Head of Zeus Limited.
In recognition of our strong performance and in line with our progressive dividend policy, the Board proposes a 24% increase in our final dividend to 9.40 pence per share.
Trading for 2022/23 has started in line with the Board's expectations. Bloomsbury plans to invest robustly in continued organic growth and further acquisitions based on our strong financial position and proven strategy."
Financial Highlights
| 2021/22 | 2020/21 | 2019/20 | Growth 2021/22 vs 2020/21 | Growth 2021/22 vs 2019/20 | |
| Revenue | £230.1 million | £185.1 million | £162.8 million | 24% | 41% |
| Organic revenue2 | £212.7 million | £185.1 million | £162.8 million | 15% | 31% |
| Profit before taxation and highlighted items1 | £26.7 million | £19.2 million | £15.7 million | 40% | 70% |
| Profit before taxation | £22.2 million | £17.3 million | £13.2 million | 28% | 68% |
| Adjusted diluted earnings per share | 25.94 pence | 18.68 pence | 16.23 pence | 39% | 60% |
| Diluted earnings per share | 20.33 pence | 16.71 pence | 13.40 pence | 22% | 52% |
| Net cash | £41.2 million | £54.5 million | £31.3 million | (24)% | 32% |
| Final dividend | 9.40 pence per share | 7.58 pence per share | Bonus issue, value equivalent to 6.89 pence per share | 24% | 36% |
Operational Highlights
Consumer Division
| ● | Consumer revenue growth of 25% to £148.2 million (2020/21: £118.3 million) |
| ● | Consumer profit before taxation and highlighted items1 increased by 25% to £17.8 million (2020/21: £14.2 million) |
| ● | Organic revenue growth was 18% and organic profit growth was 24% |
| ● | Adult Trade revenue up 26% to £55.2 million (2020/21: £43.7 million) and profit before taxation and highlighted items1 of £2.0 million (2020/21: £3.9 million) |
| ● | Children's Trade revenue growth of 25% to £93.0 million (2020/21: £74.6 million) and profit before taxation and highlighted items1 up 52% to £15.8 million (2020/21: £10.4 million) |
| ● | Sales growth of Sarah J. Maas' titles of 86%; Harry Potter sales still growing by 5% as the 25th anniversary approaches |
| ● | Acquisition of Head of Zeus Ltd ("HoZ") in June 2021, providing a strong addition to the Consumer division. HoZ contributed £9.0 million revenue and £0.1 million profit before taxation and highlighted items1 to Adult Trade in the nine months since acquisition |
Non-Consumer Division
| ● | Non-Consumer revenue growth of 23% to £81.9 million (2020/21: £66.8 million) |
| ● | Non-Consumer profit before taxation and highlighted items1 increased by 68% to £9.1 million (2020/21: £5.4 million) |
| ● | Organic revenue growth was 10% and organic profit growth was 40% |
| ● | Academic & Professional revenue growth of 34% to £59.3 million (2020/21: £44.3 million) and profit before taxation and highlighted items1 up 111% to £9.1 million (2020/21: £4.3 million) |
| ● | Bloomsbury Digital Resources ("BDR") revenue growth of 50% to £18.6 million (2020/21: £12.4 million) and profit of £6.8 million (2020/21: £2.9 million) |
| ● | BDR performance beat the target, set six years ago, of £15 million of revenue and £5 million of profit by the end of 2021/22 |
| ● | Acquisition of ABC-CLIO, LLC ("ABC-CLIO") in December 2021 for £16.7 million, further strengthening BDR and significantly accelerating Bloomsbury's academic publishing in North America, growing international revenues |
| ● | Acquisition of the assets of Red Globe Press ("RGP") completed in June 2021 for £3.2 million, accelerating our digital growth and our significant presence in humanities and social sciences academic publishing |
| ● | RGP contributed £6.2 million revenue and £1.0 million profit before taxation and highlighted items1 and ABC-CLIO, contributed £2.2 million revenue and £0.6 million profit before taxation and highlighted items1 to Academic & Professional |
Notes
1 Highlighted items comprise amortisation of acquired intangible assets and legal and other professional costs relating to ongoing and completed acquisitions and restructuring costs. (2020/21 also included a grant under the US Government Paycheck Protection Program.)
2 Organic revenue for 2021/22 is defined as total revenue of £230.1m less revenue attributable to the acquisitions of HoZ, RGP and ABC-CLIO in the year. Organic profit for 2021/22 is defined as total profit before taxation and highlighted items of £26.7 million less profit attributable to the acquisitions of HoZ, RGP and ABC-CLIO in the year.
For further information, please contact:
| Bloomsbury Publishing Plc | |
| Nigel Newton, Chief Executive Penny Scott-Bayfield, Group Finance Director |
[email protected] [email protected] |
| Hudson Sandler | +44 (0) 20 7796 4133 |
| Dan de Belder / Hattie Dreyfus | [email protected] |
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 highest ever performance in the year ended 28 February 2022, with revenue growth of 24% £230.1 million (2020/21: £185.1 million) and a 40% increase in profit before taxation and highlighted items to £26.7 million (2020/21: £19.2 million). Profit before taxation increased by 28% to £22.2 million (2020/21: £17.3 million).
Growth in organic revenue was 15%, with the three strategic acquisitions, ABC-CLIO, RGP and HoZ, contributing revenue of £17.4 million. Growth in organic profit before taxation and highlighted items was 28%, with ABC-CLIO, RGP and HoZ contributing £1.7 million.
The strength of demand for Bloomsbury titles and the excellent sales of our digital products, demonstrate the strength of our long-term growth strategy, the publishing judgement of our editors and the strength of our sales and marketing. During the year, Bloomsbury authors have won three of the most important prizes in the literary world - The Nobel Prize in Literature, the Pulitzer Prize in Biography and The Women's Prize - which were won by Abdulrazak Gurnah, Winfred Rembert and Erin I. Kelly and Susanna Clarke respectively. We are immensely proud to publish them.
We achieved the major milestone for Bloomsbury Digital Resources ("BDR") of significantly exceeding the target announced six years ago of £15 million of sales and £5 million of profit by the year ending 28 February 2022. We beat this target with sales of £18.6 million and profit of £6.8 million (2020/21: £2.9 million). Achieving this goal of building high margin, quality revenues, demonstrates the strength and successful execution of our digital strategy. We saw growth due to the shift to digital learning, excellent digital products, platforms and infrastructure, with an 18% increase in the number of customers year-on-year. We have strengthened BDR with the acquisitions of RGP and ABC-CLIO.
The highlighted items of £4.6 million (2020/21: £1.8 million) consist of the amortisation of acquired intangible assets of £2.8 million (2020/21: £1.8 million), one-off legal and other professional fees relating to the three acquisitions and restructuring costs of £1.8 million (2020/21: £1.3 million) and, in 2020/21 only, a one-off US Government grant under the Paycheck Protection Program of £1.3 million. The effective rate of tax for the year was 24% (2020/21: 21%). The adjusted effective rate of tax, excluding highlighted items, was 19% (2020/21: 20%). Diluted earnings per share, excluding highlighted items, grew 39% to 25.94 pence (2020/21: 18.68 pence). Including highlighted items, profit before tax was £22.2 million (2020/21: £17.3 million) and diluted earnings per share grew 22% to 20.33 pence (2020/21: 16.71 pence).
Strategy
Bloomsbury's long-term growth strategy is aimed at continuing our success in building digital channels, increasing quality revenues and earnings. To achieve this, we are focused the following long-term strategic objectives:
· Non-Consumer Publishing and BDR
o 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.
2021/22: delivered 23% growth in Non-Consumer revenue.
o Achieve BDR target of £15 million of sales revenue and £5 million of profit by 2021/22.
2021/22: delivered £18.6 million revenue, up 50%, and profit of £6.8 million, up £3.9 million.
o New BDR target is to achieve further 50% organic growth and 30% margin over the five years from 2022/23.
· Consumer
o Discover, nurture, champion and retain high-quality authors and illustrators, while looking at new ways to leverage existing title rights.
2021/22: Bestsellers included Piranesi by Susanna Clarke, The Priory of the Orange Tree by Samantha Shannon, Tom Kerridge's Outdoor Cooking, and The Song of Achilles and Circe, both by Madeline Miller.
o Grow our key authors through effective publishing across all formats alongside strategic sales and marketing.
2021/22: 86% growth in sales of Sarah J. Maas title sales, with her new title: Crescent City: House of Sky and Breath reaching Number 1 on the New York Times bestseller list. Winner of the 2022 IPG Bookseller Marketing Award.
o As the originating publisher of J.K. Rowling's Harry Potter, to ensure that new children discover and read it for pleasure every year.
2021/22: 5% growth in Harry Potter title sales, 24 years after first publication. Harry Potter and the Philosopher's Stone was the 6th bestselling children's book of the year on UK Nielsen Bookscan.
· International Expansion
o Expand international revenues and reduce reliance on the UK market. Continuing our international growth in order to take advantage of the biggest academic market in the USA and reduce reliance on the UK market.
2021/22: increased overseas revenues to 66% of Group revenue; 78% of Academic BDR sales are international. US revenues increased to 30% of Group revenue. Acquisition of ABC-CLIO significantly accelerates Bloomsbury's academic publishing in North America, further growing international revenues.
· Employee Experience and Engagement; Diversity, Equity and Inclusion
o 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 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 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 Implement Bloomsbury's Diversity, Equity and Inclusion Action Plan (DEIAP).
2021/22:
o Developed our employee bonus scheme, ensuring the rewards of our financial success are fairly shared across all of our employees.
o Increased focused resource with the appointment of our Diversity and Inclusion and Training Administration Manager, with training pilots across the Company and a Leadership and Management Diploma for UK staff.
o Launched and begun implementation of our DEIAP, focusing on recruitment, retention, training and development, education, engagement and inclusion, publishing and communication.
o Became an official partner of the 'Lit in Colour' initiative with The Runnymede Trust and Penguin Random House.
o Winner of two major industry diversity awards, the Inclusivity in Publishing Award at the 2022 London Book Fair International Excellence Awards and Winner of the Diversity Award at the 2022 IPG Awards.
· Sustainability
o 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.
2021/22:
o Set science-based targets, validated by the Science Based Targets Initiative (SBTi), to reduce carbon emissions in line with the goals of the Paris Agreement.
o Committed to a 46% reduction in our Scope 1 and 2 emissions by 2030; this reduction is aligned with pursuing efforts to limit global warming to 1.5o C. We have achieved a 40% reduction since 2019/20.
o Our Scope 3 target is a 20% reduction in emissions by 2035. This reduction is in line keeping global temperature increase below 2o C.
o Completed qualitative analysis of climate-related risks and opportunities for our business and operations and progressed adoption of the Task Force on Climate-Related Financial Disclosures (TCFD).
Consumer Division
The Consumer division consists of Adult and Children's trade publishing. The Consumer division generated revenue growth of 25% to £148.2 million (2020/21: £118.3 million). Organic revenue growth was 18%. Profit before taxation and highlighted items increased by 25% to £17.8 million (2020/21: £14.2 million). Profit before taxation increased to £17.5 million (2020/21: £14.2 million). The excellent performance was from both the Adult and Children's divisions, across front and backlist titles, and includes £9.0 million revenue and £0.1 million profit before taxation and highlighted items from HoZ, for the nine months since June 2021.
Adult Trade
The Adult division achieved a 26% increase in revenue to £55.2 million (2020/21: £43.7 million) and profit before taxation and highlighted items of £2.0 million (2020/21: £3.9 million). Profit before taxation was £1.7 million (2020/21: £3.8 million). This was driven by bestsellers from our front and backlist, and includes the revenue and profit generated by the acquisition of HoZ.
UK bestsellers in the year included Piranesi by Susanna Clarke, Tom Kerridge's Outdoor Cooking, Animal by Lisa Taddeo, The Song of Achilles and Circe, by Madeline Miller, Gino's Italian Family Adventure by Gino D'Acampo, Humankind by Rutger Bregman and The Wolf Den by Elodie Harper. US bestsellers in the year included The Priory of the Orange Tree by Samantha Shannon. This Is How They Tell Me The World Ends by Nicole Perlroth won the FT & McKinsey Business Book of the Year.
We are proud that Bloomsbury authors have won three of the most important prizes in the literary world - The Nobel Prize for Literature, the Pulitzer Prize in Biography and The Women's Prize - which were won by Abdulrazak Gurnah, Winfred Rembert and Erin I. Kelly and Susanna Clarke respectively. We congratulate them all.
Children's Trade
Children's sales saw growth of 25% to £93.0 million (2020/21: £74.6 million). Profit before taxation and highlighted items increased by 52% to £15.8 million (2020/21: £10.4 million). Profit before taxation was £15.8 million (2020/21: £10.4 million). High demand continued the momentum from last year, with excellent sales of Sarah J. Maas' new and backlist titles.
Sales of the Harry Potter titles increased by 5%. Harry Potter and the Philosopher's Stone was the 6th bestselling children's book of the year on UK Nielsen Bookscan, twenty-four years after it first began, showing the enduring appeal of this classic series.
Sarah J. Maas' sales grew by 86% compared to last year, with Crescent City: House of Sky and Breath, published in February 2022, reaching number one on the New York Times and Sunday Times bestseller lists, and strong backlist sales.
Sarah J. Maas is the bestselling author of the Crescent City, Court of Thorns and Roses and Throne of Glass series, with all of her 15 titles published by Bloomsbury, since her first novel, Throne of Glass, in 2012. Hulu is developing a television adaptation of the Court of Thorns and Roses series for its streaming service.
Non-Consumer Division
The Non-Consumer division consists of Academic & Professional, including Bloomsbury Digital Resources, and Special Interest. Revenues in the division increased by 23% to £81.9 million (2020/21: £66.8 million). Profit before taxation and highlighted items for the Non-Consumer division increased by 68% to £9.1 million (2020/21: £5.4 million). Profit before taxation increased by 81% to £6.6 million (2020/21: £3.6 million). Organic revenue growth was 10% and organic profit growth was 55%, with RGP and ABC-CLIO contributing £8.4 million revenue and £1.6 million profit before taxation and highlighted items.
Academic & Professional revenues increased by 34% to £59.3 million (2020/21: £44.3 million) and profit before taxation and highlighted items increased by 111% to £9.1 million (2020/21: £4.3 million). Profit before taxation was £6.7 million (2020/21: £2.7 million). Strong demand for our digital products delivered 50% growth in BDR revenue and print sales recovered well from last year, up 29%.
We are focused on achieving BDR growth by accelerating our most successful products, including Drama Online, leveraging platforms and content from acquisitions, building partnerships and launching new products. We achieved an 18% increase in the number of customers in the year, and maintained our existing customer retention rate at over 90%. We have further strengthened our portfolio of products with the acquisition of ABC-CLIO's 32 digital databases and RGP's three digital platforms.
In recognition of these achievements, we were voted Academic Publisher of the Year at the 2021 British Book Awards and Education Publisher of the Year at the 2022 IPG Awards.
Special Interest revenue grew by 1% to £22.6 million (2020/21: £22.5 million), and broke even before taxation and highlighted items (2020/21: £1.1 million profit), with resilient demand for wildlife titles, Wisden and Osprey Games during the year.
Acquisitions
In June 2021, we achieved another key step in the delivery of our growth strategy for our Non-Consumer business, with the completion of the acquisition of certain assets of RGP, the academic imprint, from Springer Nature Group as previously announced. These RGP titles are a good strategic fit, strengthen Bloomsbury's existing academic publishing, and establish new areas of academic publishing in Business and Management, Study Skills and Psychology. RGP's digital product Cite them Right has been migrated to BDR's own platform with further digital product migrations to follow. RGP's relevant content will also be added to Bloomsbury Collections. The consideration was £3.2 million, of which £1.8 million was satisfied in cash on completion in June 2021 and £1.3 million was satisfied in cash post completion during the year, with an expected further £0.1 million to be satisfied post completion and post year end subject to assignment of certain contracts. The integration of RGP is going well and contributing as projected.
In June 2021, we completed the acquisition of the issued share capital of HoZ, the independent trade publisher, as previously announced. This acquisition provides a strong addition to Bloomsbury's Consumer division and support our long-term Consumer growth strategy, with new high-quality authors and effective publishing across all formats, including ebook and audio. The consideration, net of pre-existing loans, was £7.0 million, of which £5.5 million was satisfied in cash at completion, with £1.1 million paid in cash post completion, and £0.4 million of deferred consideration payable in cash subject to achievement of Netflix release targets. HoZ won Publisher of the Year at the CWA Daggers Awards and The Wolf Den by Elodie Harper was a number one Times bestseller. Popular writers from HoZ include Dan Jones, Cixin Liu, Nadine Dorries, Victoria Hislop and Lesley Thomson. Cixin Liu's bestselling science trilogy, The Three-Body Problem, is currently being filmed for Netflix by David Benioff and D.B. Weiss, creators of HBO's Game of Thrones. HoZ is contributing as planned.
In December 2021, we completed the purchase of the members' interests of ABC-CLIO, as previously announced. ABC-CLIO is an established academic publisher of reference, non-fiction, online curriculum and professional development materials in both print and digital formats for schools, academic libraries and public libraries, primarily in the USA. Founded in 1955, ABC-CLIO is based in Santa Barbara, California. ABC-CLIO has four imprints and 32 databases that provide curriculum-aligned content and lesson plans, professional development support and student activities to US schools and academic institutions. It has more than 23,000 titles in its portfolio. The consideration was £16.7 million, of which £16.6 million was satisfied in cash on completion and up to £0.1 million will be satisfied in cash post completion.
Bloomsbury has a successful track record in strategic acquisitions, with 18 completed since 2008. We are actively targeting further acquisition opportunities in line with our long-term growth strategy.
Cash and Financing
Bloomsbury's cash generation was strong with cash at the year end of £41.2 million (2021: £54.5 million) and cash conversion of 194% (2020/21: 142%). During the year we invested £26.6 million in cash consideration net of cash acquired for the acquisitions of ABC-CLIO (£16.3 million), HoZ (£6.6 million) and RGP (£3.1 million) and £1.0 million of capital expenditure in BDR. We also paid £7.9 million for the 2020/21 special dividend.
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 2022, the Group had no draw down (2021: £nil) of this facility.
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 9.40 pence per share, totalling £7.7 million. Together with the interim dividend, this makes a total dividend for the year ended 28 February 2022 of 10.74 pence per share, a 21% increase on the 8.86 pence value of the dividend for the year ended 28 February 2021.
Subject to Shareholder approval at our AGM on 20 July 2022, the final dividend will be paid on 26 August 2022 to Shareholders on the register on the record date of 29 July 2022.
Including the proposed 2021/22 final dividend, over the past ten years, the dividend has increased at a compound annual growth rate of 8%.
Board Changes
As announced in March 2022, John Bason joined the Board as a Non-Executive Director on 1 April 2022. John also became a member of the Remuneration, Nomination and Audit Committees. We welcome John to the Board.
Steven Hall will step down from the Board at the conclusion of Bloomsbury's 2022 AGM taking place on 20 July 2022. Steven joined the Board in 2017 and is the Chair of the Remuneration Committee. It is intended that Steven will be succeeded by John Bason as Chair of the Remuneration Committee.
Sir Richard Lambert, Chairman of Bloomsbury, said: "Steve Hall joined the Bloomsbury Board five years ago, and his deep knowledge of the world of academic and professional publishing has been an invaluable support to the Company as it has built its presence in this sector. He has been a rigorous Chair of the Remuneration Committee, and a lively contributor to Board discussion. We owe him a big vote of thanks."
Future Publishing
Our strong Consumer publishing list for 2022/23 includes the Illustrated edition of the fifth Harry Potter title, Harry Potter and the Order of the Phoenix, Paul Hollywood's Bake, A Visible Man by Edward Enninful, This Wicked Fate by Kalynn Bayron, The House of Fortune by Jessie Burton, A Life in Light by Mary Pipher and Essex Dogs by Dan Jones. The next new Sarah J. Maas novel, the third in the Crescent City series, will be published in 2023/24.
2022 is the 25th anniversary of the original publication of the first Harry Potter, with a special anniversary edition publishing in June 2022 and a series of exciting marketing activities to celebrate this milestone.
Our BDR strategic initiatives include bringing ABC-CLIO's 32 databases into Bloomsbury Digital Resources, enabling Bloomsbury to scale ABC-CLIO's digital offering globally. In addition, we will expand Bloomsbury Collections to include the RGP titles and migrate RGP's digital products to BDR's own platform.
Outlook
Trading for 2022/23 has started in line with the Board's expectations.
Bloomsbury aims to deliver continued success, given the strength and resilience of our proven strategy, combined with our strong financial position, which enables us to invest in continued organic growth and further acquisition opportunities. Digital sales continue to materially increase and are a growing proportion of both revenue and profits.
Audited Consolidated Income Statement
FOR THE YEAR ENDED 28 FEBRUARY 2022
| Year ended | Year ended | ||
| 28 February | 28 February | ||
| 2022 | 2021 | ||
| Notes | £'000 | £'000 | |
| Revenue | 2 | 230,110 | 185,136 |
| Cost of sales | (107,948) | (85,533) | |
| Gross profit | 122,162 | 99,603 | |
| Marketing and distribution costs | (29,808) | (23,393) | |
| Administrative expenses | (69,675) | (58,267) | |
| Share of result of joint venture | (117) | (110) | |
| Operating profit before highlighted items | 27,112 | 19,637 | |
| Highlighted items | 3 | (4,550) | (1,804) |
| Operating profit | 22,562 | 17,833 | |
| Finance income | 105 | 120 | |
| Finance costs | (486) | (604) | |
| Profit before taxation and highlighted items | 26,731 | 19,153 | |
| Highlighted items | 3 | (4,550) | (1,804) |
| Profit before taxation | 22,181 | 17,349 | |
| Taxation | 4 | (5,291) | (3,652) |
| Profit for the year attributable to owners of the Company | 16,890 | 13,697 | |
| Earnings per share attributable to owners of the Company | |||
| Basic earnings per share | 6 | 20.72p | 16.94p |
| Diluted earnings per share | 6 | 20.33p | 16.71p |
Audited Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 28 FEBRUARY 2022
| Year ended | Year ended | |
| 28 February | 28 February | |
| 2022 | 2021 | |
| £'000 | £'000 | |
| Profit for the year | 16,890 | 13,697 |
| Other comprehensive income | ||
| Items that may be reclassified to the income statement: | ||
| Exchange differences on translating foreign operations | 1,497 | (2,877) |
| Items that may not be reclassified to the income statement: | ||
| Remeasurements on the defined benefit pension scheme | (10) | 89 |
| Other comprehensive income for the year net of tax | 1,487 | (2,788) |
| Total comprehensive income for the year attributable to the owners of the Company | 18,377 | 10,909 |
Items in the statement above are disclosed net of tax.
Audited Consolidated Statement of Financial Position
AS AT 28 FEBRUARY 2022
| 28 February | 28 February | ||
| 2022 | 2021 | ||
| Notes | £'000 | £'000 | |
| Assets | |||
| Goodwill | 47,910 | 44,688 | |
| Other intangible assets Investments |
40,323 45 |
21,337 162 |
|
| Property, plant and equipment | 2,319 | 1,846 | |
| Right-of-use assets | 10,628 | 11,433 | |
| Deferred tax assets | 7,168 | 3,904 | |
| Trade and other receivables | 9 | 923 | 1,005 |
| Total non-current assets | 109,316 | 84,375 | |
| Inventories | 33,816 | 26,774 | |
| Trade and other receivables | 9 | 104,879 | 93,542 |
| Cash and cash equivalents | 41,226 | 54,466 | |
| Total current assets | 179,921 | 174,782 | |
| Total assets | 289,237 | 259,157 | |
| Liabilities | |||
| Retirement benefit obligations | - | 14 | |
| Deferred tax liabilities | 3,696 | 2,386 | |
| Lease liabilities | 9,961 | 11,135 | |
| Provisions | 297 | 232 | |
| Total non-current liabilities | 13,954 | 13,767 | |
| Trade and other liabilities | 103,028 | 74,341 | |
| Lease liabilities | 2,265 | 1,808 | |
| Current tax liabilities | 433 | 456 | |
| Provisions | 588 | 536 | |
| Total current liabilities | 106,314 | 77,141 | |
| Total liabilities | 120,268 | 90,908 | |
| Net assets | 168,969 | 168,249 | |
| Equity | |||
| Share capital | 1,020 | 1,020 | |
| Share premium | 47,319 | 47,319 | |
| Translation reserve | 8,127 | 6,630 | |
| Other reserves | 8,765 | 9,623 | |
| Retained earnings | 103,738 | 103,657 | |
| Total equity attributable to owners of the Company | 168,969 | 168,249 |
Audited Consolidated Statement of Changes in Equity
AS AT 28 FEBRUARY 2022
| Share capital £'000 | Share premium £'000 | Translation reserve £'000 |
Merger reserve £'000 | Capital redemption reserve £'000 |
Share-based payment reserve £'000 | Own shares held by EBT £'000 | Retained earnings £'000 |
Total equity £'000 | |
| At 29 February 2020 | 942 | 39,388 | 9,507 | 1,803 | 22 | 6,724 | (771) | 92,058 | 149,673 |
| Profit for the year | - | - | - | - | - | - | - | 13,697 | 13,697 |
| Other comprehensive income | |||||||||
| Exchange differences on translating foreign operations | - | - | (2,877) | - | - | - | - | - | (2,877) |
| Remeasurements on the defined benefit pension scheme | - | - | - | - | - | - | - | 89 | 89 |
| Total comprehensive income for the year | - | - | (2,877) | - | - | - | - | 13,786 | 10,909 |
| Transactions with owners | |||||||||
| Issue of share capital | 47 | 7,931 | - | - | - | - | - | - | 7,978 |
| Bonus issue of share capital | 31 | - | - | - | - | - | - | (31) | - |
| Dividends to equity holders of the Company Purchase of shares by the Employee Benefit Trust |
- - |
- - |
- - |
- - |
- - |
- - |
- (674) |
(1,045) - |
(1,045) (674) |
| Share options exercised | - | - | - | - | - | - | 1,298 | (1,114) | 184 |
| Deferred tax on share-based payment transactions | - | - | - | - | - | - | - | 3 | 3 |
| Share-based payment transactions | - | - | - | - | - | 1,221 | - | - | 1,221 |
| Total transactions with owners of the Company | 78 | 7,931 | - | - | - | 1,221 | 624 | (2,187) | 7,667 |
| 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 Purchase of shares by the Employee Benefit Trust |
- - |
- - |
- - |
- - |
- - |
- - |
- (4,489) |
(15,157) - |
(15,157) (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 |
Audited Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 28 FEBRUARY 2022
| Year ended 28 February 2022 £'000 |
Year ended 28 February 2021 £'000 |
|
| Cash flows from operating activities | ||
| Profit for the year | 16,890 | 13,697 |
| Adjustments for: | ||
| Depreciation of property, plant and equipment | 512 | 473 |
| Depreciation of right-of-use assets | 1,889 | 1,806 |
| Amortisation of intangible assets | 7,505 | 5,485 |
| Impairment of investments | - | 300 |
| Loss on disposal on intangible assets | 65 | - |
| Finance income | (105) | (120) |
| Finance costs | 486 | 604 |
| Share of loss of joint venture | 117 | 110 |
| Share-based payment charges | 2,054 | 1,416 |
| Tax expense | 5,291 | 3,652 |
| 34,704 | 27,423 | |
| Increase in inventories | (2,745) | (357) |
| Decrease/(increase) in trade and other receivables | 1,205 | (11,281) |
| Increase in trade and other liabilities | 14,572 | 13,789 |
| Cash generated from operating activities | 47,736 | 29,574 |
| Income taxes paid | (7,927) | (4,406) |
| Net cash generated from operating activities | 39,809 | 25,168 |
| Cash flows from investing activities | ||
| Purchase of property, plant and equipment | (644) | (422) |
| Purchase of intangible assets Purchase of business, net of cash acquired |
(3,693) (22,913) |
(3,804) - |
| Purchase of rights to assets | (3,650) | (1,547) |
| Purchase of share in a joint venture Interest received |
- | (56) |
| 92 | 110 | |
| Net cash used in investing activities | (30,808) | (5,719) |
| Cash flows from financing activities | ||
| Equity dividends paid Purchase of shares by the Employee Benefit Trust Proceeds from exercise of share options |
(15,157) (4,489) 34 |
(1,045) (674) 184 |
| Proceeds from share issue | - | 7,978 |
| Repayment of borrowing | (1,097) | - |
| Repayment of lease liabilities | (1,862) | (1,451) |
| Lease liabilities interest paid | (419) | (442) |
| Other interest paid | (55) | (149) |
| Net cash (used in)/generated from financing activities | (23,045) | 4,401 |
| Net (decrease)/increase in cash and cash equivalents | (14,044) | 23,850 |
| Cash and cash equivalents at beginning of year | 54,466 | 31,345 |
| Exchange gain/(loss) on cash and cash equivalents | 804 | (729) |
| Cash and cash equivalents at end of year | 41,226 | 54,466 |
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 2022 or 28 February 2021 but is derived from those accounts. Statutory accounts for 2021 have been delivered to the registrar of companies, and those for 2022 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 2022 are consistent with those applied in the financial statements for year ended 28 February 2021 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 2022/2023, with recovery during 2023/2024;
· Digital revenues are reduced by 20% during 2022/2023, with recovery during 2023/2024;
· Print costs are increased by 15% from 2022/2023 and staff costs are increased by 5% from 2023/2024;
· Downside assumptions about extended debtor days during 2022/2023, with recovery during 2023/2024;
· Cash preservation measures implemented and variable costs reduced.
At 28 February 2022, the Group had available liquidity of £51.2m, 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 2022, the Group had £nil draw down (2021: £nil) of this facility with £10.0 million of undrawn borrowing facilities (2021: £8.0 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 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 |
| Children's Trade | Adult Trade | Consumer | Academic & Professional | Special Interest | Non-Consumer | Unallocated | Total | |
| Year ended 28 February 2021 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| External revenue | 74,599 | 43,761 | 118,360 | 44,307 | 22,469 | 66,776 | - | 185,136 |
| Cost of sales | (37,128) | (20,812) | (57,940) | (16,767) | (10,826) | (27,593) | - | (85,533) |
| Gross profit | 37,471 | 22,949 | 60,420 | 27,540 | 11,643 | 39,183 | - | 99,603 |
| Marketing and distribution costs | (9,386) | (6,278) | (15,664) | (4,678) | (3,051) | (7,729) | - | (23,393) |
| Contribution before administrative expenses | 28,085 | 16,671 | 44,756 | 22,862 | 8,592 | 31,454 | - | 76,210 |
| Administrative expenses excluding highlighted items | (17,543) | (12,706) | (30,249) | (18,494) | (7,420) | (25,914) | (300) | (56,463) |
| Share of result of joint venture | - | - | - | - | - | - | (110) | (110) |
| Operating profit/(loss) before highlighted items/ segment results | 10,542 | 3,965 | 14,507 | 4,368 | 1,172 | 5,540 | (410) | 19,637 |
| Amortisation of acquired intangible assets | - | (17) | (17) | (1,578) | (214) | (1,792) | - | (1,809) |
| Other highlighted items | - | - | - | - | - | - | 5 | 5 |
| Operating profit/(loss) | 10,542 | 3,948 | 14,490 | 2,790 | 958 | 3,748 | (405) | 17,833 |
| Finance income | - | - | - | 51 | - | 51 | 69 | 120 |
| Finance costs | (161) | (105) | (266) | (117) | (59) | (176) | (162) | (604) |
| Profit/(loss) before taxation and highlighted items | 10,381 | 3,860 | 14,241 | 4,302 | 1,113 | 5,415 | (503) | 19,153 |
| Amortisation of acquired intangible assets | - | (17) | (17) | (1,578) | (214) | (1,792) | - | (1,809) |
| Other highlighted items | - | - | - | - | - | - | 5 | 5 |
| Profit/(loss) before taxation | 10,381 | 3,843 | 14,224 | 2,724 | 899 | 3,623 | (498) | 17,349 |
| Taxation | - | - | - | - | - | - | (3,652) | (3,652) |
| Profit/(loss) for the year | 10,381 | 3,843 | 14,224 | 2,724 | 899 | 3,623 | (4,150) | 13,697 |
| Operating profit/(loss) before highlighted items/ segment results | 10,542 | 3,965 | 14,507 | 4,368 | 1,172 | 5,540 | (410) | 19,637 |
| Depreciation | 912 | 528 | 1,440 | 556 | 283 | 839 | - | 2,279 |
| Amortisation of internally generated intangibles | 446 | 383 | 829 | 2,586 | 261 | 2,847 | - | 3,676 |
| EBITDA before highlighted items | 11,900 | 4,876 | 16,776 | 7,510 | 1,716 | 9,226 | (410) | 25,592 |
External revenue by source
| United Kingdom £'000 |
North America £'000 |
Australia £'000 |
India £'000 |
Total £'000 |
|
| Year ended 28 February 2022 | 143,192 | 69,651 | 13,133 | 4,134 | 230,110 |
| Year ended 28 February 2021 | 117,429 | 53,872 | 11,084 | 2,751 | 185,136 |
During the year sales to one customer exceeded 10% of Group revenue (2021: one customer). The value of these sales was £67,811,000 (2021: £68,597,000).
External revenue by product type
| Year ended 28 February 2022 | Children's Trade £'000 |
Adult Trade £'000 | Consumer £'000 | Academic & Professional £'000 |
Special Interest £'000 | Non-Consumer £'000 | Total £'000 |
| 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 Services1 | 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 |
| Year ended 28 February 2021 | Children's Trade £'000 |
Adult Trade £'000 | Consumer £'000 | Academic & Professional £'000 |
Special Interest £'000 | Non-Consumer £'000 | Total £'000 |
| 63,708 | 34,644 | 98,352 | 23,267 | 18,200 | 41,467 | 139,819 | |
| Digital | 7,636 | 8,298 | 15,934 | 19,015 | 2,730 | 21,745 | 37,679 |
| Rights and Services1 | 3,255 | 819 | 4,074 | 2,025 | 1,539 | 3,564 | 7,638 |
| Total | 74,599 | 43,761 | 118,360 | 44,307 | 22,469 | 66,776 | 185,136 |
1 Rights and Services revenue includes revenue from copyright and trademark licences, management contracts, advertising and publishing services.
Total assets
| 28 February | 28 February | |
| 2022 | 2021 | |
| £'000 | £'000 | |
| Children's Trade | 13,633 | 10,361 |
| Adult Trade | 13,513 | 7,495 |
| Academic & Professional | 78,096 | 58,527 |
| Special Interest | 13,170 | 12,773 |
| Unallocated | 170,825 | 170,001 |
| Total assets | 289,237 | 259,157 |
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) by geographic location
| 28 February | 28 February | |
| 2022 | 2021 | |
| £'000 | £'000 | |
| United Kingdom (country of domicile) | 79,708 | 73,711 |
| North America | 22,196 | 6,633 |
| Other | 244 | 127 |
| Total | 102,148 | 80,471 |
3. Highlighted items
| Year ended | Year ended | ||
| 28 February | 28 February | ||
| 2022 | 2021 | ||
| £'000 | £'000 | ||
| Legal and other professional fees | 1,317 | 203 | |
| Integration and restructuring costs | 398 | 1,076 | |
| Paycheck Protection Program grant | - | (1,284) | |
| Other highlighted items | 1,715 | (5) | |
| Amortisation of acquired intangible assets | 2,835 | 1,809 | |
| Total highlighted items | 4,550 | 1,804 |
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 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.
For the year ended 28 February 2021, legal and other professional fees of £203,000 were incurred as a result of the Group's ongoing and completed acquisitions, including certain assets of Red Globe Press and Zed Books Limited. Restructuring costs primarily relate to restructuring in both divisions. The Paycheck Protection Program grant was received from the US Government's Small Business Administration.
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 19.00% (2021: 19.00%). The reasons for this are explained below:
| Year ended | Year ended | |||||
| 28 February 2022 | 28 February 2021 | |||||
| £'000 | % | £'000 | % | |||
| Profit before taxation | 22,181 | 100.0 | 17,349 | 100.0 | ||
| Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%) | 4,214 | 19.0 | 3,296 | 19.0 | ||
| Effects of: | ||||||
| Non-deductible revenue expenditure | 16 | 0.1 | 80 | 0.5 | ||
| Non-taxable income | (383) | (1.7) | (131) | (0.8) | ||
| Movement in unrecognised temporary differences | - | - | (52) | (0.3) | ||
| Different rates of tax in foreign jurisdictions | 946 | 4.3 | 444 | 2.6 | ||
| Tax losses | (212) | (1.0) | 217 | 1.2 | ||
| Movement in deferred tax rate | 144 | 0.7 | 132 | 0.8 | ||
| Adjustment to tax charge in respect of prior years | ||||||
| Current tax | (173) | (0.8) | 289 | 1.7 | ||
| Deferred tax | 512 | 2.3 | (391) | (2.3) | ||
| Tax charge for the year before disallowable costs on highlighted items | 5,064 | 22.9 | 3,884 | 22.4 | ||
| Highlighted items: | ||||||
| Disallowable costs | 227 | 1.0 | 38 | 0.2 | ||
| Disallowable credits | - | - | (270) | (1.6) | ||
| Tax charge for the year | 5,291 | 23.9 | 3,652 | 21.0 | ||
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.
For the year ended 28 February 2021 the disallowable credits relate to the US Government Paycheck Protection Program grant.
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 | |
| 2022 | 2021 | |
| £'000 | £'000 | |
| Amounts paid in the year | ||
| Prior period 7.58p final dividend per share (2021: -p) | 6,141 | - |
| Prior period 9.78p special dividend per share for the year (2021: -p) | 7,923 | - |
| Interim 1.34p dividend per share (2021: 1.28p) | 1,093 | 1,045 |
| Total dividend payments in the year | 15,157 | 1,045 |
| Amounts arising in respect of the year | ||
| Interim 1.34p dividend per share for the year (2021: 1.28p) | 1,093 | 1,045 |
| Proposed 9.40p final dividend per share for the year (2021: 7.58p) | 7,671 | 6,182 |
| Proposed -p special dividend per share for the year (2021: 9.78p) | - | 7,976 |
| Total dividend 10.74p per share for the year (2021: 18.64p) | 8,764 | 15,203 |
The Directors are recommending a final dividend of 9.40 pence per share, which, subject to Shareholder approval at the Annual General Meeting, will be paid on 26 August 2022 to Shareholders on the register at close of business on 29 July 2022.
For the year ended 29 February 2020, Bloomsbury made a bonus issue to Shareholders in lieu of, and with a value equivalent to, it's proposed final cash dividend of 6.89 pence per ordinary share.
6. Earnings per share
The basic earnings per share for the year ended 28 February 2022 is calculated using a weighted average number of Ordinary shares in issue of 81,532,620 (2021: 80,867,938) 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 | |
| 2022 | 2021 | |
| Number | Number | |
| Weighted average shares in issue | 81,532,620 | 80,867,938 |
| Dilution | 1,530,573 | 1,082,577 |
| Diluted weighted average shares in issue | 83,063,193 | 81,950,515 |
| £'000 | £'000 | |
| Profit after tax attributable to owners of the Company | 16,890 | 13,697 |
| Basic earnings per share | 20.72p | 16.94p |
| Diluted earnings per share | 20.33p | 16.71p |
| £'000 | £'000 | |
| Adjusted profit attributable to owners of the Company | 21,548 | 15,310 |
| Adjusted basic earnings per share | 26.43p | 18.93p |
| Adjusted diluted earnings per share | 25.94p | 18.68p |
Adjusted profit is derived as follows:
| Year ended | Year ended | |
| 28 February | 28 February | |
| 2022 | 2021 | |
| £'000 | £'000 | |
| Profit before taxation | 22,181 | 17,349 |
| Amortisation of acquired intangible assets | 2,835 | 1,809 |
| Other highlighted items | 1,715 | (5) |
| Adjusted profit before tax | 26,731 | 19,153 |
| Tax expense | 5,291 | 3,652 |
| Deferred tax movements on goodwill and acquired intangible assets | (207) | (41) |
| Tax expense on other highlighted items | 99 | 232 |
| Adjusted tax | 5,183 | 3,843 |
| Adjusted earnings | 21,548 | 15,310 |
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. Business combinations
Head of Zeus Limited
On 2 June 2021 the Group acquired the issued share capital of Head of Zeus Limited ("HoZ"). The consideration, net of pre-existing third party loans is £7.0 million, of which £5.5 million was satisfied in cash at completion, with £1.1 million paid in cash post completion, and £0.4 million of deferred consideration payable in cash subject to achievement of Netflix release targets. The latter element is discounted.
HoZ is an independent publisher of genre fiction and narrative non-fiction and children's books, based in London. It has published many bestsellers, won literary prizes and industry awards. The business will operate within Bloomsbury's Consumer division.
The table below summarises the provisional fair values to the Group included in the consolidated financial statements of the major categories of assets and liabilities of HoZ at the date of acquisition.
| Net assets acquired | Fair value to the Group £'000 |
||
| Assets | |||
| Other intangible assets | 2,800 | ||
| Property, plant and equipment | 52 | ||
| Right-of-use assets | 275 | ||
| Deferred tax assets | 130 | ||
| Total non-current assets | 3,257 | ||
| Inventories | 2,202 | ||
| Trade and other receivables | 6,654 | ||
| Cash and cash equivalents | 37 | ||
| Total current assets | 8,893 | ||
| Total assets | 12,150 | ||
| Liabilities | |||
| Deferred tax liabilities | 700 | ||
| Lease liabilities | 137 | ||
| Total non-current liabilities | 837 | ||
| Trade and other liabilities | 3,578 | ||
| Borrowings | 1,097 | ||
| Lease liabilities | 165 | ||
| Current tax liabilities | 51 | ||
| Total current liabilities | 4,891 | ||
| Total liabilities | 5,728 | ||
| Identifiable net assets | 6,422 | ||
| Goodwill | 579 | ||
| Total | 7,001 | ||
Identifiable intangible assets of £2,800,000 consist of publishing rights and imprints. The publishing rights have a useful life of 8 years and imprints have a useful life of 8 years. The goodwill arising of £579,000 is attributable to the expected profitability of the acquired business and the synergies expected to arise after the acquisition.
The gross contractual trade and other receivables at acquisition is £6,691,000 of which, as at the acquisition date, £37,000 is the best estimate of the contractual cash flows that are not expected to be collected.
Transaction costs of £242,000 have been expensed in the year within administrative expenses.
From 2 June 2021, revenue of £9.0 million and profit attributable to owners of the Company of £0.1 million have been included in the consolidated income statement for the period ended 28 February 2022 in relation to HoZ.
If the acquisition had occurred on 1 March 2021 the revenue and profit attributable to shareholders of the combined entity for the current period would have been £11.5 million and £0.2 million respectively. These pro forma amounts do not include any possible synergies from the acquisition. The pro forma information is provided for comparative purposes only and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of operations of the combined companies.
ABC - CLIO, LLC
On 15 December 2021 the Group acquired the members' interest of ABC - CLIO, LLC ("ABC-CLIO"). The consideration, is £16.7 million, of which £16.6 million was satisfied in cash at completion, with £0.1 million payable in cash post completion, subject to working capital and other considerations.
ABC-CLIO is an established academic publisher of reference, nonfiction, online curriculum and professional development materials in both print and digital formats for schools, academic libraries and public libraries, primarily in the USA. This acquisition further strengthens Bloomsbury Digital Resources and significantly accelerates Bloomsbury's academic publishing in North America, growing international revenues. ABC-CLIO will operate within Bloomsbury's Academic & Professional division.
The table below summarises the provisional fair values to the Group included in the consolidated financial statements of the major categories of assets and liabilities of ABC-CLIO at the date of acquisition.
| Net assets acquired | Provisional fair value to the Group £'000 |
||
| Assets | |||
| Other intangible assets | 16,572 | ||
| Property, plant and equipment | 284 | ||
| Right-of-use assets | 357 | ||
| Deferred tax assets | 962 | ||
| Total non-current assets | 18,175 | ||
| Inventories | 552 | ||
| Trade and other receivables | 3,354 | ||
| Cash and cash equivalents | 342 | ||
| Total current assets | 4,248 | ||
| Total assets | 22,423 | ||
| Liabilities | |||
| Lease liabilities | 184 | ||
| Total non-current liabilities | 184 | ||
| Trade and other liabilities | 7,564 | ||
| Lease liabilities | 173 | ||
| Current tax liabilities | 254 | ||
| Total current liabilities | 7,991 | ||
| Total liabilities | 8,175 | ||
| Identifiable net assets | 14,248 | ||
| Goodwill | 2,497 | ||
| Total | 16,745 | ||
Identifiable intangible assets of £16,572,000 consist of publishing rights, imprints and product development. The publishing rights have a useful life of 6-7 years, imprints have a useful life of 7 years and product development have a useful life of 10 years. The goodwill arising of £2,497,000 is attributable to the expected profitability of the acquired business and the synergies expected to arise after the acquisition.
The gross contractual trade and other receivables at acquisition is £3,445,000 of which, as at the acquisition date, £91,000 is the best estimate of the contractual cash flows that are not expected to be collected.
Transaction costs of £630,000 have been expensed in the year within administrative expenses.
From 16 December 2021, revenue of £2.2 million and profit attributable to owners of the Company of £0.4 million have been included in the consolidated income statement for the period ended 28 February 2022 in relation to ABC-CLIO.
If the acquisition had occurred on 1 March 2021 the revenue and profit attributable to shareholders of the combined entity for the current period would have been £10.9 million and £1.3 million respectively. These pro forma amounts do not include any possible synergies from the acquisition. The pro forma information is provided for comparative purposes only and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of operations of the combined companies.
8. Rights to Assets
Red Globe Press
On 23 April 2021, the Group announced the acquisition of certain assets of Red Globe Press ("RGP"), the academic imprint, from Macmillan Education Limited, a part of Springer Nature Group. The transaction completed on 1 June 2021. The consideration was £3.2 million, of which £1.8 million was satisfied in cash at completion and £1.3 million was satisfied in cash post completion during the year, with an expected further £0.1 million to be satisfied post-year end subject to assignment of certain contracts.
RGP specialises in high-quality publishing for Higher Education students globally in Humanities and Social Sciences, Business and Management, and Study Skills. RGP has a backlist of more than 7,000 titles and publishes more than 100 new titles per year, with content including digital platforms, textbooks, research-driven materials and general academic publishing. The acquired RGP titles are a good strategic fit, strengthen Bloomsbury's existing academic publishing, and establish new areas of academic publishing in Business and Management, Study Skills and Psychology. RGP's three digital products will be migrated to Bloomsbury Digital Resources' own platform and its content added to Bloomsbury Collections. The assets will operate within Bloomsbury's Academic & Professional division. There are opportunities for profit enhancements following the integration of the assets into Bloomsbury.
The Group has taken on Inventories, Advances and intangible assets associated with taking on the titles and digital products. No cash or trade receivables transferred as part of the acquisition.
9. Trade and other receivables
| 28 February | 28 February | |
| 2022 | 2021 | |
| £'000 | £'000 | |
| Non-current | ||
| Accrued income | 923 | 1,005 |
| Current | ||
| Gross trade receivables | 68,764 | 61,897 |
| Less: loss allowance | (3,551) | (3,230) |
| Net trade receivables | 65,213 | 58,667 |
| Income tax recoverable | 1,392 | 171 |
| Other receivables | 2,431 | 3,623 |
| Prepayments | 2,672 | 1,072 |
| Accrued income | 4,494 | 5,219 |
| Royalty advances | 28,677 | 24,790 |
| Total current trade and other receivables | 104,879 | 93,542 |
| Total trade and other receivables | 105,802 | 94,547 |
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 2022, £7,145,000 (2021: £7,260,000) of royalty advances are expected to be recovered after more than 12 months.
10. Annual General Meeting
The Annual General Meeting will be held on 20 July 2022.
11. Report and Accounts
Copies of the Annual Report and Financial Statements will be circulated to shareholders in July and can be viewed after the posting date on the Bloomsbury website.
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