Annual Report • Feb 29, 2016
Annual Report
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Bloomsbury Publishing is an independent global publisher listed on the London Stock Exchange with offices in London, Oxford, New York, New Delhi and Sydney. Over its 30-year history, Bloomsbury's mission has been to publish works of excellence and originality. Bloomsbury has built up a valuable portfolio of content and rights-based intellectual property assets.
Research for Telegraph Money by SharePad, a portfolio analysis tool, filtered the UK stock market for companies that have grown dividends every year for at least two decades.
It looked at every share in the FTSE All Share, excluding investment trusts. In applying the screen some shares, such as Royal Dutch Shell which has not cut its dividends since 1945, do not feature. This is because there has been at least one year when the dividend was maintained rather than increased.
A total of ten shares qualified as dividend kings:
| Share Name | Industry | Dividend Cover | Dividend Yield |
|---|---|---|---|
| Vodafone | Telecoms | 5.2% | 0.5 |
| Cranswick | Food | 1.8% | 2.8 |
| SSE | Energy | 6.2% | 1.2 |
| RPC | Plastics specialist | 2.2% | 2.6 |
| Fuller Smith & Turner | Brewer and pubs | 1.6% | 3.2 |
| Halma | Health and safety devices | 1.4% | 2.7 |
| Bloomsbury | Publishing | 4.3% | 2.2 |
| PZ Cussons | Household goods | 2.7% | 2.1 |
| Capita | Outsourcing | 3.3% | 2.2 |
| Mitie Group | Outsourcing | 4.6% | 2.0 |
Source: SharePad. Please note data used is the forecast dividend yield, based on analysts' expectations in one year's time.
Phil Oakley, analyst at SharePad, said:
"A long track record of dividend growth can be seen as a hallmark of a high quality and resilient business. It shows a company has been able to prosper in good times and bad and might be able to keep on doing so.
But investors also need to be wary. Sometimes management can become slaves to a dividend policy and pay dividends which aren't sustainable. Investors need to keep an eye on the levels of dividend cover and whether a company might be borrowing to pay its dividend due to a lack of cash flow."
This "cover" is calculated by comparing profits and dividends. As a rule of thumb, a low dividend cover score, around one or lower, suggests dividends are vulnerable, as the company is using most, if not all, of its profits to fund the dividend. A figure of two or more is comfortable.
An extract of an article in Telegraph Money by Kyle Caldwell, 27 March 2016.
The full article is found at http://www.telegraph.co.uk/investing/shares/why-these-are-britains-best-dividend-shares/
12.0
Total dividend
6.10
2014 2015 2016
12.1
2014 2015 2016
Adjusted profit1 £m
6.40
13.0
pence
5.82
| STRATEGIC REPORT | |
|---|---|
| Performance Overview | |
| Highlights | 2 |
| Chairman's Statement | 3 |
| Chief Executive's Review | 4 |
| Group Overview | |
| – Group Strategic Summary | 14 |
| – Academic & Professional | 16 |
| – Children's & Educational | 18 |
| – Adult | 20 |
| – Bloomsbury Information | 23 |
| – Group Functions | 24 |
| Financial Review | 25 |
| Risk Factors | 32 |
| Corporate Responsibility | 36 |
| GOVERNANCE | |
| Board of Directors | 42 |
| Board of Directors | 42 |
|---|---|
| Directors' Report | 44 |
| Corporate Governance | 49 |
| Directors' Remuneration Report | 58 |
| Independent Auditor's Report | 75 |
|---|---|
| Consolidated Income Statement | 79 |
| Consolidated Statement of Comprehensive Income | 80 |
| Consolidated Statement of Financial Position | 81 |
| Consolidated Statement of Changes in Equity | 82 |
| Consolidated Statement of Cash Flows | 83 |
| Notes to the Consolidated Financial Statements | 84 |
| Company Statement of Financial Position | 118 |
| Company Statement of Changes in Equity | 119 |
| Company Statement of Cash Flows | 120 |
| Notes to the Company Financial Statements | 121 |
| Five Year Financial Summary | 130 |
|---|---|
| Company Information | 131 |
| Explanation of the Annual General Meeting | 132 |
| Notice of the Annual General Meeting | 135 |
✷ Digital revenues grew by 24% year on year to £5.3 million, more than treble the industry growth rate (Source: Publishing Association: Digital Sales Monitor)
✷ Digital now represents 16% of total revenues in the division (2015: 12%)
As it approaches its 30th birthday in September, I am pleased to report that Bloomsbury has had a good year in terms of the quality of both its publishing and its financial results. Total revenue is up 11% and operating profit before highlighted items is up 8%. The overall results of the business are in line with market expectations. Based on this the Board proposes a final dividend of 5.34 pence per share to Shareholders on the register on 26 August 2016, which gives an increase in full year dividend of 5% and continues Bloomsbury's long-term stable dividend growth.
The Group continues to pursue its strategy of increasing the proportion of its business in non-consumer areas. In order to leverage our entrepreneurial workforce and valuable portfolio of intellectual property, I am delighted to report on a new major strategic growth initiative, Bloomsbury 2020. This initiative will accelerate the expansion of the Group's range of digital content products and will invest in the B2B sales processes to grow sales and revenues. This will build on the success of our platforms such as Drama Online, Bloomsbury Collections and Berg Fashion Library. From the time of Bloomsbury's foundation in 1986, our overarching mission – to publish works of excellence and originality – has guided the business and will continue to do so with this new initiative.
We are also simplifying our organisational structure by combining our Adult and Children's consumer books divisions and combining Business Information with Academic & Professional along with Special Interest and Educational into a Non-Consumer division. These changes will help to streamline our internal processes.
More details on Bloomsbury 2020 and the restructuring are given in the Chief Executive's Review that follows this Chairman's Statement. We are delighted that Richard Charkin has agreed to stay on the Board when, at the end of this financial year, he reduces his formal time commitment to two days a week.
I am pleased to confirm that the two most recent appointments to the Board made following the 2015 AGM in July 2015, namely Jonathan Glasspool as an Executive Director and John Warren as the Senior Independent Director and Chair of the Audit Committee, have both settled in well. The Corporate Governance section of the Annual Report explains the Board's evaluation process and provides a summary of the findings and conclusions of this year's Board evaluation. The Board has concluded that it can best support the business as it evolves through a programme of regular new board appointments. This will ensure that, at a time of considerable change, there is a steady inflow to the Board of new insights from other businesses. We plan that the size of the Board will remain at 8 and, generally speaking, we anticipate appointing one new non-executive director each year and for the average duration of non-executive appointments to be around 4 years.
We recently welcomed two new institutional Shareholders to our portfolio, namely Fidelity UK and Majedie Asset Management Limited. The Board continues to be keen to receive any feedback from Shareholders.
We are proud of the high social value of our core business of promoting literature and literacy. Bloomsbury's authors enrich the lives of millions of people across the world. I would like, on behalf of the Board, to thank all our staff for their hard work and commitment to publishing the Bloomsbury way.
Bloomsbury is a highly innovative publishing group with a Board and management team who demonstrate their capacity to adapt in order to stay ahead of the challenges of a rapidly changing market. The depth of talent across Bloomsbury gives me confidence that we are very able to continue to face and to exploit future challenges over the years to come.
Non-Executive Chairman
Berg Fashion Central online service is Bloomsbury's recently released upgrade to the highly popular Berg Fashion Library and provides additional content and functionality.
"We announced in May a major new strategic growth initiative called Bloomsbury 2020, and the creation of Bloomsbury Digital Resource Publishing. We plan to accelerate significantly the growth of digital revenues by implementing a new digital publishing plan in our move to become primarily a nonconsumer publisher in the B2B academic and professional information market."
Nigel Newton Chief Executive
I t has been a very good year for Bloomsbury, with revenues growing by 11% year on year to £123.7 million and profit before tax and highlighted items increasing by 8% to £13.0 million.
Book sales grew by 17% year on year to £113.1 million, with digital sales, within this total, increasing by 28% to £15.0 million. Digital sales make up 13% of book sales (2015: 12%). Rights and services revenues were £10.6 million (2015: £14.1 million), being 9% of total Group revenues compared to 13% in the previous year. The operating profit margin before highlighted items for the Group was maintained year on year at 11%. Operating profit before highlighted items grew year on year in all territories except India, where we saw significant sales growth but where we continue to invest for that growth.
The Children's & Educational division delivered an excellent performance, with its third consecutive year of strong double digit revenue growth. The Illustrated Edition of Harry Potter and the Philosopher's Stone by J. K. Rowling and Jim Kay, which was published in October, was a major international seller.
The Academic & Professional division had strong digital revenues contributing to a growth in book sales but, as expected, did not match last year with its exceptional rights sales. In the Adult division revenues were higher and included a full year of Osprey Publishing, which was acquired in December 2014, but profits reflected a change in revenue mix and a tough comparator that included the paperback release of Khaled Hosseini's exceptionally successful And the Mountains Echoed. Bloomsbury Information division profits grew year on year. The strength of our overall result, despite the variations in individual divisional performance, again demonstrates the virtues of our portfolio approach encompassing four different publishing genres.
Planned synergies following the acquisition of Osprey Publishing in December 2014 have been achieved. Osprey contributed £7.2 million of revenue and £1.1 million of operating profit before highlighted items to Bloomsbury in 2016. Excluding the results of Osprey in both years, Group like for like revenues grew by 6% and profit before tax and highlighted items was flat year on year.
We continue to keep costs closely under review and this year renegotiated our US mono print contracts with little or no movement on cost in a highly competitive marketplace (previous contracts having expired in 2015). Planned savings on freight from Far East printers were achieved through consolidation with other publishers using the same UK warehouse and distribution service provider.
Highlighted items of £2.7 million (2015: £2.5 million) include £1.8 million (2015: £1.8 million) of amortisation of acquired intangible assets. Other highlighted items in this period of £0.9 million are primarily as a result of the Group's acquisition activities and the restructuring of the Bloomsbury Information division.
Global consumer e-book Global consumer (print and e-book)
COMPANY INFORMATION
FINANCIAL STATEMENTS
STRATEGIC REPORT
GOVERNANCE
Rank is based on revenue
The effective rate of tax for the year was 6.3% compared to 8.9% for the year ended 28 February 2015. The rates in both years are low, but are expected to increase to a more normal level of approximately 25% in 2016/17. In 2016 the rate includes £0.5 million benefit from the utilisation of previously unrecognised tax losses arising as a result of the resolution of an HMRC tribunal over the use of Bloomsbury Verlag losses dating back to 2003 and 2004. In addition there is a £0.6 million double tax relief benefit arising in 2016 following the filing of prior year US tax computations. The 2015 rate includes the recognition of additional deferred tax assets.
Diluted earnings per share, excluding highlighted items, were 15.24 pence, up 3% from 14.73 pence in 2015. Total diluted earnings per share for the year were 12.93 pence compared to 11.90 pence in 2015.
The Group's net cash balance was £5.2 million at 29 February 2016 (2015: £7.5 million). Cash from higher profits was offset by a higher working capital outflow due to the timing of receipts from rights and services revenues.
Total revenues for the division were £32.7 million (2015: £36.0 million). As expected, rights and services revenues reduced year on year following the inclusion last year of several key contracts. Book revenues, which make up 92% of total revenues, grew by 2% year on year to £30.1 million. Within this, digital revenues grew by 24% year on year to £5.3 million, more than treble the overall industry growth rate in calendar year 2015. In particular we had very good revenues from home-grown digital institutional products such as Bloomsbury Collections and Drama Online. Digital now represents 16% of total revenues in the division (2015: 12%), with digital growth offsetting continuing print revenue weakness. We were successful in our two key targets for growth in the year, which were digital revenues and revenues in the US – where there was 5% growth in total revenues. Operating profit before highlighted items was £3.2 million (2015: £5.1 million) in total and £0.8 million (2015: £0.4 million) excluding the effect of the higher margin rights and services contracts.
In December 2015 we announced the acquisition from RELX Group of the publishing rights to six must-have family law titles including Duckworth's Matrimonial Property & Finance and Hershman and McFarlane: Children Law and Practice. The consideration was £0.5 million in cash (after adjusting for deferred income). These are some of the most authoritative family law products in the UK and they provide Bloomsbury Professional with a high quality foundation for a new digital family law service. Bloomsbury Publishing is now the largest independent legal publisher in the UK. During the year its UK tax business delivered some strong titles including Tax Advisers Guide to Trusts, Principles of International Taxation, Revenue Law and Tax Planning for Family and Owner-Managed Companies. It also expanded its Tax Online service and, in its second full year of ownership, the Hart list delivered very significant revenues from its digital collections.
Bloomsbury Professional has a range of online services.
Drama Online is a subscription service providing a resource for plays, critical analysis and performance featuring pre-eminent drama lists.
Bloomsbury Collections is the online academic platform for delivering scholarly texts.
J.K. Rowling: A Bibliography 1997-2013 Phillip W. Errington
Rank is based on revenue
The Academic division had particular success in its performing arts lists. We had notable successes with student edition play text publishing following the launch of the new GCSE English Literature exam resulting in increased sales of bestselling set texts, Simon Stephen's adaptation of The Curious Incident of the Dog in the Night-Time and Willy Russell's Blood Brothers.
The 400th anniversary of Shakespeare's death in 1616 was marked with a range of publications in print and online, notably with a volume featuring leading contemporary poets and their responses to the Sonnets. The Arden Shakespeare's On Shakespeare's Sonnets is published in collaboration with the Royal Society of Literature and the British Council and has been nominated as one of the Telegraph's Top Ten New Books on Shakespeare. New editions of the major set texts Hamlet and Othello will also be published this year.
The success of our institutional products to date, such as Drama Online, Berg Fashion Library, Bloomsbury Collections, and Bloomsbury Professional Online, led to 24% growth in the last financial year, and we are projecting higher growth in this financial year. In 2016 we will be launching a new collection of drama films from the BBC which will significantly increase the video presence of Drama Online in schools and universities worldwide. The collection includes the film adaptation of the Royal Shakespeare Company's critically acclaimed Hamlet starring Patrick Stewart alongside David Tennant in the title role; an award-winning National Theatre production of King Lear; core curriculum plays by Henrik Ibsen, Anton Chekhov and Sophocles as well as the recent film adaptation of major GCSE set text An Inspector Calls by J. B. Priestley. In addition, Bloomsbury, together with Faber & Faber, are pleased to announce a new digital content platform for libraries, educators, students and researchers to be sold via subscription and perpetual access to academic institutions. Building on the success of the award-winning Drama Online initiative, Screen Studies, launching in January 2018, will combine iconic and contemporary screenplays, works by leading directors, critical and contextual works covering theory and history, as well as practical instruction on screenwriting, film and TV production, documentary film-making and animation techniques.
The division was shortlisted for the IPG Independent Publishers Awards – Academic & Professional Publisher of the Year and for the Bookseller Academic & Professional Publisher of the Year, in both cases for the fourth year in a row.
Children's & Educational division revenue for the year increased by 57% to £41.8 million (2015: £26.6 million). Operating profit before highlighted items increased by 111% to £6.0 million (2015: £2.9 million). There was revenue growth across all territories in local currency, 42% in Australia, 31% in the US, 62% in India and a standout growth of 70% in the UK. This excellent result in the division reflects the success of our five-year strategy focusing on commercial title acquisitions, targeted and strategic marketing and brand management of our major authors. Continued success with the picture book list and activity list has led to growth in our illustrated publishing, in which we hold world rights. This financial year saw the creation of a children's non-fiction publishing team, which will lead to further trade growth in the future. Our UK Nielsen BookScan value increased by 60% in a market up by 7%, and our market share increased from 2.3% to 3.4%.
Our sales of Harry Potter in the year grew by 133%. Harry Potter and the Philosopher's Stone Illustrated Edition by J. K. Rowling and Jim Kay was published to great acclaim. Reviews were consistently good, with the Telegraph saying the book was "a triumph – a book so alive it seems to jump, explode and slither out of your hands as you read." We sold rights to Jim Kay's illustrations in 28 languages. Our re-jacketed Jonny Duddle editions of the seven Harry Potter novels continued to perform strongly in all territories.
Sales of Sarah J. Maas titles grew by 184%. The launch of her new trilogy, A Court of Thorns and Roses, sold in 13 languages and hit the New York Times Young Adult bestseller list for eight weeks. A Court of Mist and Fury, the second book in this trilogy, has just hit number one on the New York Times Young Adult bestseller list. Her new Throne of Glass novel – Queen of Shadows – has sold in 24 languages and was on the New York Times Series bestseller list for four weeks and hit number five on the Bookseller UK children's chart. It was also voted Goodreads' Winner: Best YA Fantasy and Science Fiction of 2015.
We capitalised on a film adaption of John Green's Paper Towns starring Cara Delevingne with two new editions of this evergreen Young Adult novel. The film tie-in edition was a Bookseller children's number one, remaining there for five weeks, and we have sold more than one million copies.
Our two best performers on the Bloomsbury Picture Book list were You Can't Take an Elephant on the Bus by Patricia Cleveland-Peck, illustrated by David Tazzyman, selling 33,000 copies through the UK BookScan (Nielsen TCM), and Never Tickle a Tiger by Pamela Butchart, illustrated by Marc Boutavant, selling 20,000 copies through UK BookScan and translation rights in nine territories. I Love You Night and Day by Smriti Prasadam Halls and Alison Brown continued to sell strongly in the US following a month in the Barnes & Noble Valentine's Day promotion.
The Academic division had particular success in its performing arts list with sales helped by the launch of the new GCSE English Literature exam
The Philosopher's Stone is first in the Harry Potter series to be illustrated. Sales in the year of the illustrated edition have been strong.
The award winning new trilogy by Sarah J. Maas is reaching an international audience of readers and hit number one in the New York Time Young Adult bestseller list.
Bloomsbury Picture Books are selling strongly.
Bloomsbury Children's authors continue to win literary prizes. The division was short-listed for the IPG Independent Publishers Award and for the Bookseller Children's Publisher of the Year.
The Wolf Wilder by Katherine Rundell was the most reviewed children's book in the UK in the run-up to Christmas and sales have been strong for the beautiful illustrated hardback package.
We achieved the Overall Winner and Children's Trade Category Winner at the British Printing Industries Federation's Book Design and Production Awards for The Imaginary by A. F. Harrold and Emily Gravett. The judges said "It is a delight to see publishers willingly upping their game in terms of print and production." It was also awarded Kirkus Reviews' Best Middle Grade Books of 2015 in the US.
Andy Seed's Silly Book of Side-Splitting Stuff was named the winner of the Blue Peter Award for a Book with Facts.
In the Education division we had two Education Resource Award winners: Early Years Non ICT for Time to Communicate by Trudi Fitzhenry and Karen Murphy; and Secondary Non ICT for 100 Ideas – Outstanding Science Lessons by Ian McDaid. The A&C Black Music list moved to Collins Learning in the year. This leaves our list focused on generalist primary teachers and secondary school teachers. Our strategy is to publish titles that support today's teachers and today's curriculum and to exploit our content through digital innovation.
E-book sales in the US rose to 18% of book sales, from 15% last year – due to strong sales of Sarah J. Maas titles. In the UK sales of Paper Towns and Sarah J. Maas titles contributed to e-book sales rising to 11% of book sales for the trade list, up from 9% last year (excluding Harry Potter sales where we don't hold digital rights). Bloomsbury Spark, our e-first list, continued to publish titles for the young adult and new adult market.
We were shortlisted for the IPG Independent Publishers Awards – Children's Publisher of the Year and are shortlisted for the Bookseller Children's Publisher of the Year.
Revenue increased by 3% year on year to £46.0 million (2015: £44.7 million). Osprey Publishing, which was acquired in December 2014, generated revenue of £7.2 million in the year (2015: £1.5 million). On a like for like basis, excluding the results of this acquisition, Adult revenues were down by 10% year on year. Operating profit before highlighted items was £2.7 million (2015: £3.0 million). Results last year included the success of two major cookery titles as well as the release of the paperback of And the Mountains Echoed by Khaled Hosseini.
Our global publishing strategy continues for both our general and special interest markets and was strengthened by the acquisition of global publishing rights and by investment in the US market for our niche publishing activities, in particular in Osprey military history and popular science through our Bloomsbury Sigma imprint.
The market for print books throughout the English-speaking world was robust with many bookshop chains showing improved performance in spite of intense competition from internet retailers and e-books. Some of this improvement has been driven by the extraordinary performance of a number of adult colouring books but there is an underlying confidence in the future of traditional bookselling and traditional books for pleasure, leisure, enlightenment and giving.
Our focus on special interest niches is paying off, with that part of the business representing 14% of total Bloomsbury sales (2015: 10%). The value of this strategy is the ability to pinpoint market sectors and promote and sell direct to a community of shared interest. Our chosen niches are military history (through Osprey), natural history (through Helm and Poyser), sport (through Nautical, Reed's, and Wisden), popular science (through Sigma) and reference (through Who's Who, Whitaker's, and www.writersandartists.co.uk). In each of these areas we have strengthened our editorial positioning, and invested in digital marketing, new products and portfolio widening. The results have been impressive and there is much opportunity still to be uncovered.
On the general trade side our key authors continue to grow. Celia Imrie's Not Quite Nice hit the bestseller lists as did William Boyd's Sweet Caress, while both James Runcie's Grantchester series (with six million viewers for each TV episode) and Hannah Rothschild's debut novel, The Improbability of Love (which has been shortlisted for the Bailey's Prize), have garnered extraordinary attention and sales. In addition we had new books from our established authors such as Margaret Atwood, TC Boyle, Esther Freud and Colum McCann. In non-fiction we had great success with Adam Sisman's superb biography of John le Carré, Elizabeth Gilbert's Big Magic, Peter Frankopan's Silk Roads, Patti Smith's M Train, and our Christmas special, A Guinea Pig Pride & Prejudice, which introduced a whole new generation to Jane Austen. Other highlights included the film tie-in edition of Carol by Patricia Highsmith and Kamila Shamsie's A God in Every Stone being shortlisted for last year's Bailey's Prize; Sheila Hancock's Miss Carter's War being selected for the Richard and Judy book club;
Osprey Publishing has settled in well following its acquisition by Bloomsbury in the previous financial year.
Writers and Artists provides information, training and advice for authors who seek to develop their skills.
Bloomsbury Adult has had a strong publishing list during the year,
a wide range of literary prizes for outstanding works. .
Sales have exceeded £1 million for the Bloomsbury Reader digital first list
Roz Chast's Can't we Talk about Something More Pleasant? remaining on the New York Times bestseller list for the entire year; and publishing Nobel Prize winner Patrick Modiano's Occupation Trilogy.
Among the many literary prizes our authors and books were awarded are: The Sheridan Morley Prize for Tennessee Williams by John Lahr, the Pulitzer Prize for The Sixth Extinction by Elizabeth Kolbert; the James Tait Black Prize for The Valley by Richard Benson; the National Book Critics Circle Award for Dreamland by Sam Quinones; Victoria's Premier's Award for The World Without Us by Mireille Juchau; the Ramnath Goenka Award for Excellence in Journalism for Mecca: The Sacred City by Ziauddin Sardar; and for Bloomsbury itself the Gourmand Award for Best Big Cookery Publisher in the World for the last twenty years.
Our digital-first list, Bloomsbury Reader, has now generated over £1.0 million of revenue since launching in September 2011 with the aim of bringing literary backlists into circulation alongside new titles as e-books and, based on consumer demand, print editions. Bestsellers include The White Cottage Mystery by Margery Allingham, first serialised in 1927 and Bloomsbury's Outsider, first published in 2015 and shortlisted for the James Tait Black Award for Best Biography.
Bloomsbury Information provides innovative content marketing and publishing services to external partners. This includes the development of IP-rich knowledge hubs; large-scale, multi-year digital content and community platforms provided as a full service for other organisations; publishing, management and consultancy services; and content creation and licensing, customised for other organisations. Bloomsbury Information also publishes the Bloomsbury Business list.
Revenue in the year was £3.2 million (2015: £3.9 million), with much of this change due to the end of the seven-year term of contracts with Qatar Foundation ("QF"). Operating profit before highlighted items was £1.2 million (2015: £1.1 million).
The contracts for Bloomsbury to provide QF with publishing services reached the end of their term in December 2015. The original objective of the QF relationship was to achieve knowledge transfer to QF to enable it to run its own self-sufficient publishing company. We have handed over to the strong local team we developed having completed this mission. QF now has the tools, knowledge and experience to take the reins and run its own publishing house. Bloomsbury Qatar Foundation Publishing published more than 200 titles in Arabic and English, winning awards and having bestselling titles over its first seven years. In April we reached an agreement with Kalimat, a publisher in Sharjah, to translate Arabic books into English for the global market and to translate English-language books into Arabic.
The IZA World of Labor knowledge hub had a strong year of global engagement with policymakers and the media. It now contains more than 230 peer-reviewed articles written by leading labour economists, and achieved more than 250 global media mentions in 2015, including articles in the Washington Post, The Times, the Economist and
the Financial Times. The knowledge hub covers important and timely topics such as asylum policy in Europe and the impact of robots on employment, and its content helped inform the B20 Employment Taskforce Report. We continue to grow key partnerships with leading organisations like the World Bank, OECD and UCL.
From 2016, Bloomsbury is pleased to be providing publishing services to the Arcadian Library to digitise it and sell access to a new digital platform containing images of its unique collection of rare books and manuscripts. The Arcadian Library is one of the best collections of books about relations between the West and the Arab and Islamic worlds, including travel, medicine and science. The Library was assembled over decades and always held as a private collection. Bloomsbury will be digitising these books for the first time and making them available to universities, libraries and individuals around the world as a subscription product.
Bloomsbury provided Lloyds Bank with business content aimed at their SME business customers during the year, including a new business glossary that went live on the Lloyds Business Resource Centre. Lloyds will continue to launch more Bloomsbury content in the coming year, which will provide business thought leadership, insight and best practice to its business customers.
The Bloomsbury Business list continued to grow this year, as did our partnership with Ashridge/Hult Business School. Titles published from this partnership included Capitalism's Toxic Assumptions by Eve Poole and Creating Financial Value by Malcolm Allitt. Other titles in the list were well received, including Rewire: A Radical Approach to Tackling Diversity and Difference by Chris Yates and Pooja Sachdev and Managing for Success: Spotting Danger Signals – and Fixing Problems Before They Happen by Morgen Witzel, both of which were covered by the Financial Times.
We announced in May major new strategic growth initiative called Bloomsbury 2020, and the creation of Bloomsbury Digital Resource Publishing. We plan to accelerate significantly the growth of digital revenues by implementing a new digital publishing plan in our move to become primarily a non-consumer publisher in the B2B academic and professional information market. The increased range of digital products will include reversioning and updating content from Bloomsbury's extensive and deep backlists, as well as licensing in high quality third party intellectual property, and primary resource material from a wide range of international content providers. Bloomsbury aims to become the go-to scholarly partner for copyright holders looking to reach HE institutions around the world, but who lack the expertise and infrastructure to do so effectively.
The budget for academic libraries worldwide is estimated to be worth \$5 billion. Academic & Professional digital output to date has been highly successful in terms of profit margins (mature digital resources often yield an operating profit margin of 25% to 40%) and in terms of growth (24% total revenue growth in the last financial year). Bloomsbury 2020 will build rapidly on this success, by increasing the output and speed to market of a range of new products, providing a robust scalable set of platforms and
IZA World of Labour knowledge hub (http://wol.iza.org)
In addition to its focus on rights and services based projects, Bloomsbury Information division publishes the Bloomsbury Business list.
STRATEGIC REPORT
institutional digital sales team. Existing services like the awardwinning Berg Fashion Library, Drama Online and Bloomsbury Professional Online are proof that Bloomsbury can deliver high value, repeat-income digital resources; it is this capability that Bloomsbury 2020 seeks to grow dramatically. We are targeting revenues rising to £15 million and profits of £5 million from Bloomsbury Digital Resource Publishing by financial year 2021/22. The peak effect on our Income Statement is expected to be an extra £2 million of net cost in 2017/18 and on our cash flow an extra £1.7 million of outflow is expected in 2017/18. Cash payback on the investment is expected to be in the fourth full year, 2020/21. We announced in May 2016 a reorganisation of the business into two divisions: Consumer and Non-Consumer, reflecting the core customers for our different operations. The Consumer division will be created by merging the Children's trade and Adult trade businesses and from 1 June will be managed by Emma Hopkin, who is currently the Managing Director of our Children's & Educational division. All other operations will be in the Non-Consumer division which will be managed by Jonathan Glasspool, who is currently Managing Director of our Academic & Professional division, reporting to Richard Charkin. Richard will remain on the Board; in addition to the Non-Consumer division he will focus on strategic growth areas including special interest and the Bloomsbury India business. He will continue full time until 28 February 2017, after which he will change to two days a week. This reorganisation will
improving the strength, depth and geographical spread of our
expansion. Since the year end, Group revenues have been in line with our expectations, with the Children's & Educational division very strong. In the current year our publishing programme includes Harry Potter and the Chamber of Secrets Illustrated Edition by J. K. Rowling and Jim Kay, two front list Sarah J. Maas titles, new cookery titles from Tom Kerridge with Tom's Table and Hugh Fearnley-Whittingstall with River Cottage A to Z, and the new edition of Fantastic Beasts & Where to Find Them with new content from J. K. Rowling.
simplify our business, and lead to system and structural efficiencies as well as increase our customer focus and facilitate our digital
Bloomsbury continues its strategy of growing academic, professional, special interest and educational revenues. Bloomsbury has shown that its Academic & Professional intellectual property in particular is capable of creating significant value when sold in a digital format. Our exclusive content can be monetised as an individual title, in collections, as a subscription or through perpetual access. We will be accelerating growth in this area, leveraging content across both Bloomsbury and third parties, providing significant opportunities to create more value from these assets. The Bloomsbury 2020 strategy to grow revenues from academic and professional digital resources for academic libraries worldwide will lead our repositioning in the market from a primarily consumer publisher to a digital B2B publisher, whilst continuing our long track record of huge bestsellers in the adult and children's markets, which remain a very important part of Bloomsbury's mission.
Bloomsbury is a global fully integrated publisher of books and other media for general readers, children, students, researchers and professionals. Bloomsbury offers authors access to these multiple markets in multiple formats throughout the world: in print, through e-books, through digital downloads and apps; in schools, in libraries, in universities, and in terrestrial and internet bookshops; with entrepreneurial teams in New York, London, New Delhi and Sydney serving all territories.
Our overall strategy is unchanged and is to grow a high quality global publishing business delivering high value to its authors and other contributors, readers and Shareholders.
We achieve this by:
| Area of focus | Reason for the focus | Progress in the year |
|---|---|---|
| Growing non-consumer* revenues so that they match or exceed our consumer revenues |
Non-consumer revenues have higher margins, are generally a more predictable revenue stream, are less reliant on the retail bookshop environment and have more digital opportunities. They are typically derived from our Academic & Professional and Information divisions and Educational and Special Interest books. |
In January 2016 we acquired several family law publishing assets from Lexis Nexis and Jordan Publishing. Non-Consumer products made up 47% of revenues in 2015/16, up from 39% in 2014/15. |
| Continuing acquisition of rights to publish outstanding works by undiscovered and established authors |
Bloomsbury differentiates its brand by the quality of its publishing. |
Bloomsbury titles won a significant number of prizes in the year– these are listed on pages 17 to 22 of these accounts. |
| Expanding internationally in English language markets |
This reduces the Group's reliance on the UK market and, in particular, takes advantage of the biggest academic market worldwide in the US and the significant growth potential in India. |
A full year of Osprey revenue has helped expand the Group's presence internationally. Over 50% of Osprey's revenue is generated outside the UK, principally in the US. |
| Revenues sourced from outside the UK grew by 19% in the year and now account for over 35% of Group revenue (2014/15: 33%) |
||
| Creating and exploiting copyright and IP, including by licensing information databases to support major institutions and corporations |
This reduces the Group's reliance on consumer revenues and increases higher value B2B transactions. |
IZA World of Labor website had a strong year of global engagement with policy makers and the media. A new publishing services contract was signed to digitalise and sell the Arcadian Library. |
| Benefiting from the digital opportunity |
It expands the markets we are in and our revenue opportunities. |
Bloomsbury titles available as e-books up 39% year on year to 22,000. Academic & Professional digital revenues increased by 24% on the prior year. |
| Delivering excellent service to our authors |
Excellent service is core to attracting and keeping our authors. |
We continue to monitor the service we provide authors via a monthly author survey. As a result we now offer all authors the ability to receive their royalty statements electronically by pdf. |
* Non-consumer: This includes Academic & Professional, Bloomsbury Information, Education and Specialist titles (excluding Cookery)
During the year the Group was organised as four worldwide publishing divisions supported by global functions. A review of these follows.
| Date | Publishing division most affected |
Description | |
|---|---|---|---|
| Bloomsbury 2020 announced |
May 2016 | All | Creation of Bloomsbury Digital Resource Publishing division to address £5 billion academic library market |
| Acquisition of Osprey Publishing Ltd |
December 2014 | Adult Special Interest | Acquisition of a special interest publisher of military, heritage and natural history titles. |
| Acquisition of Hart Publishing Ltd |
September 2013 | Academic & Professional | Acquisition of publisher of books and journals for the academic and professional markets in law. |
| US office move | April 2013 | All | Relocated employees from various offices in the US into one single New York office. |
| Acquisition of Applied Visual Arts Publishing |
June 2012 | Academic & Professional | Acquisition of a publisher for students and professionals in the applied visual arts. |
| Acquisition of Fairchild Books |
March 2012 | Academic & Professional | Acquisition of a list of visual arts titles which augments Bloomsbury's visual arts offering. |
| Sale of Bloomsbury Verlag GmbH |
February 2012 | Adult, Children's & Educational |
Sale of a loss making German subsidiary. |
| Set-up of Bloomsbury India |
February 2012 | All | Setting up Bloomsbury's India publishing business. The business was launched in August 2012. |
| Acquisition of Absolute Press |
September 2011 | Adult | Acquisition of a specialist cookery list. |
| UK office move | August 2011 | All | Relocated employees from various offices in London and Oxford into a single London office. This enables teams to work efficiently together under the One Global Bloomsbury structure. |
| Acquisition of Continuum International Publishing Group |
July 2011 | Academic & Professional | Acquisition of substantial UK and US academic publisher which extends Bloomsbury's UK academic publishing activities and provides a critical mass in the US from which to grow US sales. |
| One Global Bloomsbury March 2011 | All | Implementation of Group structure consisting of four worldwide publishing divisions supported by global functions. |
Academic & Professional
The division has a growing portfolio of digital subscription products and will publish over 1,500 new titles this year. Significant investment has flowed into Bloomsbury Academic & Professional since 2008 and significant growth has come through acquisitions of imprints and high quality lists in humanities and social sciences (Methuen Drama, Arden Shakespeare, Bristol Classical Press, Continuum International), applied visual arts (Fairchild Books, Berg Publishers and AVA Books) and law and tax (Tottel Publishing, Hart Publishing and a range of LexisNexis and Jordan family law publishing assets). Organic investment has been in digital publishing in services such as Bloomsbury Fashion Central, Berg Fashion Library, Bloomsbury Professional Tax and Law Online, the Churchill Archive and Drama Online.
Jonathan Glasspool Manager and Director: Academic & Professional division
Jonathan joined Bloomsbury in 1999, was appointed to the Board as Executive Director in 2015 and now oversees the development of Bloomsbury's Academic & Professional publishing business and our office in the USA. Previous roles include being a publisher at Reed Elsevier in Singapore, Melbourne and Oxford. He started his career at Cambridge University Press. He has an MBA with Distinction from Warwick Business School.
| Value generating activities | Description |
|---|---|
| Academic book publishing in print and e-book | Required study material for students of humanities, social sciences and applied |
| formats | visual arts. Mainly backlist, print and e-books, with a significant US weighting. |
| Digital academic services | Online Institutional services e.g. Berg Fashion Library, the Churchill Archive, Drama Online, Bloomsbury Collections and Bloomsbury Fashion Central. |
| Professional book and online information | Online and print resources for qualified and trainee solicitors, barristers, |
| publishing | accountants and tax practitioners. |
| Divisional facts | ||
|---|---|---|
| Revenue | £32.7m | |
| Revenue – UK | £21.1m | |
| Revenue – US | £10.3 m | |
| Revenue – Other territories | £1.3m | |
| Adjusted operating profit £3.2m |
||
| Adjusted operating margin | 10% |
| Medium-term targets | Progress report | |
|---|---|---|
| 1 | Number 1 independent humanities and social science publisher in Europe |
Number 2 independent humanities and social sciences publisher in Europe. |
| 2 | Number 1 applied visual arts publisher in the world |
Number 1 applied visual arts publisher in the world. With the acquisition of Berg Publishers, Fairchild Books and AVA Books, the division is the largest textbook publisher in fashion studies in the world. |
| 3 | Contribute to Non-Consumer businesses being 50% of Group revenue and 70% of Group profits before highlighted items |
Non-Consumer products made up 47% of Group revenues in 2015/16 (2014/15: 39%) and 56% of Group profits before highlighted items in 2015/16 (2014/15: 56%). |
| 4 | Contribute to increase in digital revenues to 40% of Non-Consumer division revenue |
Digital revenues were 11% of Non-Consumer revenues (2014/15: 9%) |
Bloomsbury Academic & Professional publishes thousands of titles and millions of books each year that significantly contribute to improving learning outcomes of students, academics and professionals across the world. Its online resources are accessed by thousands of users every day.
Through our business, we seek to publish works of excellence and originality and to provide talented authors who are often unknown with access to the market.
| Title of book/author | Prize |
|---|---|
| Bertrand Russell's Bundle Theory of Particulars/ Gülberk | Bertrand Russell Society Book Award: 2015 |
| Koç Maclean | |
| Computable Bodies: Instrumented Life and the Human Somatic | Association of American Publishers: PROSE Awards 2016 for language |
| Niche/ Josh Berson | and linguistics |
| Divine Self, Human Self: The Philosophy of Being in Two Gita | Society for Hindu-Christian Studies: Hindu-Christian Studies |
| Commentaries/ Chakravarthi Ram-Prasad | Book Award |
| Ezra Pound's Eriugena/ Mark Byron | Ezra Pound Society Book Prize 2015 |
| Magical Musical Tour: Rock and Pop in Film Soundtracks/ | Southwest Popular and American Culture Association: |
| Kevin J. Donnelly | Peter C. Rollins Book Award 2016 |
| Marlowe's Literary Scepticism/ Chloe Preedy | Marlowe Society of America: Roma Gill Prize 2015 |
| Medical Negligence and Childbirth/ Doireann O'Mahony | AIB Private Banking Irish Law Awards: Legal Book of the Year |
| Serbia and the Balkan Front, 1914/ James Lyon | World War One Historical Association: Norman B. Tomlinson, |
| Jr. Prize 2015 | |
| Sustainable Building Systems and Construction for Designers/ | American Society of Interior Designers: Joel Polsky Prize 2015 |
| Lisa M. Tucker | |
| The Curious Incident of the Dog in the Night-Time (Stage | Drama Desk Awards: winner for multiple categories 2015 |
| Adaptation)/ Simon Stephens | |
| The Tragedy of Fatherhood: King Laius and the Politics of | Modern Language Association: 23rd Annual Aldo/ Jeanne |
| Paternity in the West/ Silke-Maria Weineck | Scaglione Prize |
| Visual Journeys Through Wordless Narratives/ Evelyn Arizpe, | Literacy Research Association: Edward B. Fry Book Award |
| Teresa Colomer, Carmen Martínez-Roldán |
GOVERNANCE
STRATEGIC REPORT
Children's & Educational
The division sells and markets titles to the global trade, education and mass market sectors in both print and digital. The trade list acquires books from both the UK and US markets and publishes titles for all ages from 0 to 16. Imprints include Bloomsbury Activity Books, Bloomsbury Children's Books and Bloomsbury Spark, an e-first list for Young Adult readers. In the UK education market we publish under the Andrew Brodie, Bloomsbury Education and Featherstone imprints.
Known for the quality and prize-winning calibre of our books, we publish authors such as Neil Gaiman, John Green, Sarah J. Maas, Louis Sachar, and the Harry Potter novels by J.K. Rowling.
Emma Hopkin Managing Director: Children's & Educational division
Emma is responsible for all children's and educational books globally. She joined Bloomsbury in March 2011 as Managing Director of the Children's & Educational publishing division. Previously she was Managing Director of Macmillan Children's Books. She has also held marketing roles at Pan Macmillan, Routledge and Houghton Mifflin.
| Value generating activities | Description |
|---|---|
| Children's activity books | Books focused towards play e.g. puzzles, colouring, games and illustrated stories. Also published as a range of apps. |
| Children's trade publishing | Both picture books, non-fiction and fiction in print and e-formats. |
| Educational publishing | Print and digital learning materials for teachers. |
| Divisional facts | ||
|---|---|---|
| Revenue | £41.8m | |
| Revenue – UK | £26.7m | |
| Revenue – US | £11.2m | |
| Revenue – Other territories | £3.9m | |
| Adjusted operating profit | £6.0m | |
| Adjusted operating margin | 14% |
Our objectives are to grow the lists by focused and global acquisition; to better exploit our backlist; to grow and build brands; to ensure strategic sales and marketing planning along with consumer community building; and to attract talent to the list whilst providing excellent author care for our published authors.
Our ambition is to publish all mono and colour titles simultaneously in print and digital formats. We publish certain targeted apps.
| Medium-term targets | Progress report | |
|---|---|---|
| 1 | Bloomsbury Activity Books will be a leading, profit generating list |
Sales steady with last year. Strategy ongoing. |
| 2 | Bloomsbury Children's Books will be known for author care, independent spirit and innovation |
Continuing to attract and retain the best authors. |
| 3 | 25% of sales are digital on trade lists | 18% digital in US and 5% UK (2014/15: 15% US, 5% UK). |
| 4 | 50% of sales trade front list illustrated | 48% illustrated (2014/15: 42%). |
Bloomsbury Children's & Educational publishes many books each year that contribute significantly to improving the literacy of children across the world. We believe books can open the minds of children to a world of possibility.
We are happy in the year to 29 February 2016 to have supported the White House led Open eBooks initiative that gives underprivileged students access to e-books.
We worked with the National Literacy Trust on two major projects to help raise funds for the charity. The New Fiction Prize offered the opportunity of having a novel published by Bloomsbury and the winner was announced early in 2015. The winning book, Malkin Moonlight by Emma Cox, is set to be published this year. The second project focused on poetry – and finding future children's poets – and asked entrants to create a funny poem about reading. The winning poem will be designed up as a poster sent out to all primary schools in the UK.
Bloomsbury also hosted a Reading for Pleasure roadshow at their offices where book/reading charities were given the opportunity to talk about their work and how Bloomsbury staff could get involved. Over 70 members of staff attended the roadshow and made pledges to support the promotion of reading for pleasure.
Staff continue to volunteer to read with pupils at schools worldwide.
| Title of book/author | Prize |
|---|---|
| Because You'll Never Meet Me/ Leah Thomas | 2016 William C. Morris Award finalist |
| Epic Book of Epicness/ Adam Frost | Blue Peter Book with Facts award 2015 |
| The Imaginary/ A.F.Harrold and Emily Gravett | Book Design and Production award 2015: Overall and Children's Category Winner |
| The Imaginary/A. F. Harrold. Illustrated by Emily Gravett | Kirkus Reviews: Best Middle Grade Books of 2015 |
| Queen of Shadows (Throne of Glass #4)/ Sarah J. Maas | Goodreads winner: Best YA Fantasy and Science Fiction of 2015 |
| The Valley/ Richard Benson | James Tait Black Prize: Biography category |
| The Valley/ Richard Benson | Portico Prize: Non-fiction |
Adult
The division publishes globally in English fiction, biography, general reference and special interests such as sport, cookery, natural history and military history. The main publishing operations are based in New York and London and coordinated by experienced editorial and publishing managers so that authors and their works are supported throughout the world.
Apart from household names such as Khaled Hosseini, Elizabeth Gilbert, William Boyd and Margaret Atwood, we are also proud to be the publishers of the Reed's Nautical, Wisden Cricketers' and Whitaker's Almanacks as well as the great institution that is Who's Who.
Richard Charkin Managing Director: Adult division
Richard is an Executive Director on the Board responsible for the Adult general/specialist publishing, which includes a number of significant innovative digital and publishing, services projects, and for Bloomsbury India. He joined the Bloomsbury Board as an Executive Director in October 2007 following ten years as Chief Executive of Macmillan Publishers.
| Value generating activities | Description |
|---|---|
| Best-selling fiction | High volume titles sold as e-books and in print. |
| Sport, cookery, natural history | Subject specific titles typically where communities of interest allow more precise marketing. |
| Divisional facts | |
|---|---|
| Revenue | £46.0m |
| Revenue – UK | £29.0m |
| Revenue – US | £13.2m |
| Revenue – Other territories | £3.8m |
| Adjusted operating profit | £2.7m |
| Adjusted operating margin | 6% |
Our objectives are to be the publisher of choice for the very best authors and the very best books in both digital and print formats. We pay particular attention to editorial support for authors both during the publication process and thereafter, the highest standards of production and presentation, and creative and innovative marketing.
Our editorial and marketing teams work together so that we can genuinely offer global publishing reflecting the changing nature of our markets and the media that alert readers to books.
| Medium-term targets | Progress report | |
|---|---|---|
| 1 | Number 1 UK publisher of choice in cookery, sport and natural history |
Number 1 in sport, Number 3 in cookery, Number 2 in natural history (Nielsen Bookscan). |
| 2 | Top ten in quality fiction worldwide | Number 6, 48% revenue growth over the year. |
| 3 | Destination for quality authors | Continuing to attract and retain the best authors. |
| 4 | 25% of sales are digital | 14% digital (2014/15: 13%). |
| 5 | 50% of sales are backlist | 45% backlist (2014/15: 36%). |
The Bloomsbury Adult team is passionate about helping authors to reach readers and helping readers to find the books they need or want. The level of sales of our books is a measure of our contribution to achieving our social responsibility aims.
| Title of book/author | Prize |
|---|---|
| A Place on Earth: Scenes from a War/ Anjan Sundaram | Frontline Club Award |
| The Sack/ Namwali Serpell | Caine Prize for African Writing |
| A Spy Among Friends/ Ben Macintyre | Elizabeth Longford Prize for Historical Biography |
| A Year at Otter Farm/ Mark Diacono | Andre Simon Food Book of the Year |
| Alone: The Triumph and Tragedy of John Curry/ Bill Jones | Cross British Sports Books Awards: Outstanding Sports Writing |
| Based on a True Story/ Delphine de Vigan | Prix Goncourt Des Lyceens |
| Benares/Atul Kochhar | Gourmand Awards: Best Indian Cookbook |
| Bloomsbury | Gourmand Awards: Best Big Cookbook Publisher in the World for 20 Years |
| Can't We Talk About Something More Pleasant?/ Roz Chast | Heinz Award: Arts and Humanities |
| Can't We Talk About Something More Pleasant?/ Roz Chast | National Book Critics Circle Award 2014: Autobiography |
| Can't We Talk About Something More Pleasant?/ Roz Chast | Reuben Award 2015: Outstanding Cartoonist of the Year |
| Can't We Talk About Something More Pleasant?/ Roz Chast | Books for a Better Life Award 2014: Inspirational Memoir |
| Cuckoo/ Nick Davies | British Birds/British Trust for Ornithology |
| Dabbous/ Ollie Dabbous | British Book Design and Production Awards |
| Dreamland/ Sam Quinones | National Book Critics Circle Award |
| Elizabeth's Bedfellows/ Anna Whitelock | Pen/Jacqueline Bograd Weld Award for Biography |
| Fives and Twenty Fives/ Michael Pitre | New Orleans Public Library Choice Award 2014 |
| Frostgrave: Fantasy Wargames in the Frozen City | Beasts of War Awards: Best Miniatures Game |
| Joint winner: Alison MacLeod | Eccles British Library Writer in Residence Award |
| Lifted – The Great Nothing/ Karim Dimechkie | Honourable Mention for the Pen/Hemingway Award for Debut Fiction |
Adult
| Title of book/author | Prize |
|---|---|
| Mecca/ Ziauddin Sardar | Ramnath Goenka Award for Excellence in Journalism 2015: Non fiction books |
| Mr Mac and Me/ Esther Freud | East Anglian Book Award: Fiction Category |
| Return of a King/ William Dalrymple | Kapuscinski Prize |
| Rivers/ Nigel Holmes and Paul Raven | British Ecological Society Marsh Book of the Year Award |
| Scribe/ Bob Ryan | New England Book Festival Grand Prize |
| Tennessee Williams/ John Lahr | Sheridan Morley Prize |
| The Confessions of Frances Godwin/ Robert Hellenga | Society of Midland Authors Awards: Adult Fiction |
| The Crusades of Cesar Chavez/ Miriam Pawel | 2015 Robert F. Kennedy Book Award |
| The Crusades of Cesar Chavez/ Miriam Pawel | Gold Medal for California Book Awards: Non-fiction |
| The Crusades of Cesar Chavez/ Miriam Pawel | Robert F. Kennedy Book Award 2015 |
| The Lagoon/ Armand Marie Leroi | London Hellenic Prize |
| The Lagoon/ Armand Marie Leroi | Runciman Award |
| The Man Who Walked Away/ Maud Casey | St. Francis College Literary Prize 2015 |
| The Seahorse/ Mitch Tonks and Mat Prowse | Gourmand Awards: Best Barbecue Cookbook |
| The Sixth Extinction/ Elizabeth Kolbert | LA Times Book Award for Science and Technology |
| The Sixth Extinction/ Elizabeth Kolbert | Pulitzer Prize: General Non-Fiction |
| The Sunlit Night/ Rebecca Dinerstein | 2015 Edward Lewis Wallant Award (University of Hartford) |
| The Two Hotel Francforts/ David Leavitt | Stonewall Honor Book: Literature Category 2015 |
| The Valley/ Richard Benson | James Tait Black Prize: Biography Category |
| Thirty-One Nil: On the Road with Football's Outsiders/ James Montague |
Cross British Sports Books Awards: Football Book of the Year |
| Whirlwind/ John Ferling | Fraunces Tavern Museum Book Award |
| World Without Us/ Mireille Juchau | Victorian Premier's Literary Awards |
The division helps external partners inspire, inform and engage their audiences by providing them with innovative content, marketing and publishing services. Its offerings and activities cover the development of IP-rich digital knowledge hubs; large-scale, multi-year digital content and community platforms provided as a full service; publishing, management and consultancy services; digital archive platforms and services; and content creation and licensing, customised for other organisations. The division acts as an incubator for trialling new business models and product and service ideas; it also publishes the Bloomsbury Business list.
Vafa Payman Director: Information division
Vafa joined Bloomsbury in 2011 and was appointed Director of Bloomsbury Information in 2015. He was previously Director of New Media and Video Publishing at Oxford University Press and has 20+ years' experience of business, development and digital leadership for global companies.
| Value generating activities | Description |
|---|---|
| Content services | New and existing Bloomsbury content curated and customised for use by clients and partners in their marketing and communications activities. |
| Publishing services | Range of end-to-end publishing services, digital and print, provided to corporations and organisations. |
| Consultancy and management services | Provided to non-publishers to advise on, implement and manage publishing strategy and projects. |
| Business publishing | Growing list of business and management thought leadership and best practice, published in digital and print. |
| Divisional facts | |
|---|---|
| Revenue | £3.2m |
| Revenue – UK | £3.1m |
| Revenue – US and other | £0.1m |
| Adjusted operating profit | £1.2m |
| Adjusted operating margin | 38% |
Our objective is to explore and secure business in areas beyond traditional book publishing, leveraging Bloomsbury's expertise and its IP, which provides significant operating profit growth. The division's recent successes are in providing content marketing and publishing services. We will continue to focus on providing these content and publishing services to other organisations; to explore and secure effective routes to new markets; to innovate and incubate new digital offerings; and to continue to expand Bloomsbury's reach into untapped profitable areas.
The Bloomsbury Information division develops innovative products and services utilising Bloomsbury's publishing skills and literary content. This broadens the channels through which Bloomsbury publishes content of excellence and originality.
Group functions
Under the One Global Bloomsbury structure, the process driven Group functions are service providers to the global publishing divisions and are key to the internal control framework of the business. The following provides an outline of the main Group functions and the interplay with the business model.
| Group function | Description of service to the Group | Contribution to strategic aims |
|---|---|---|
| Sales and Marketing Kathleen Farrar is Group Sales and Marketing Director and joined |
Provide sales and marketing services to the Group across, print, e-books and digital platforms |
Manage "One Global Bloomsbury" sales and marketing campaigns and deliver global sales and marketing KPIs |
| Bloomsbury in 1998. She began her publishing career in Sydney, Australia |
Manage marketing budgets to maximise ROI across the Group |
Provide professional and excellent author care across all divisions |
| and has held various senior sales and marketing roles |
Deliver profitable sales across retail and wholesale channels |
Maximise profits from all sales channels and regularly review pricing in print and digital to increase net revenue |
| Production Louise Cameron is Group Production Director and joined Bloomsbury through the acquisition of Continuum International Publishing in 2011. She began her career in publishing in 1988 and has held various senior production and editorial roles |
Cost-efficient on-time delivery of high quality print and digital product for sale globally Production-editorial operations design, documentation and management |
Margin optimisation through Group based tender processes for prepress, manufacturing and freight, and through efficient operations Support of digital publishing strategy through design and management of XML first workflows, with allied future proofing of content and IP storage |
| Finance Wendy Pallot is Group Finance Director and a Bloomsbury Executive Director (see page 42 for biographical details) |
Providing finance and royalty services to the Group |
Accurate transaction processing, quality financial reporting and business planning to enable good decision making across the business. Improving author care through excellent royalty services. |
Kathleen Farrar Group Sales and Marketing Director
Louise Cameron Group Production Director
I n 2015/16 Bloomsbury increased sales by £12.6 million to £123.7 million generating £13.0 million of profit before tax and highlighted items (2014/15: £12.1 million).
The results for this year largely reflect:
There have been no changes in accounting policies in the year, with the exception of the adoption of a number of new accounting standards which have not had a material impact on the Group's results.
Revenue £m Adjusted Operating Profit* £m
Year ended
* Revenue and operating profit are for 12 months ended 28/29 February for the years stated. Operating profit is stated before highlighted items. On 28 February 2012 the Company sold Bloomsbury Verlag, its subsidiary in Germany, following a strategic decision to concentrate on English language publishing. Results for 2011/12 exclude this subsidiary.
Year ended
| 29 February 2016 |
28 February 2015 |
on year change |
|
|---|---|---|---|
| £'m | £'m | % | |
| Revenue | 123.7 | 111.1 | 11% |
| Operating profit margin before highlighted items | 11% | 11% | -3% |
| Net operating cash flow | 5.0 | 10.2 | -51% |
| Effective tax rate | 6.3% | 8.9% | -29% |
| Profit before tax and highlighted items | 13.0 | 12.1 | 8% |
| Profit before tax | 10.4 | 9.6 | 8% |
| Diluted EPS before highlighted items | 15.24p | 14.73p | 3% |
| Diluted EPS | 12.93p | 11.90p | 9% |
| Net cash | 5.2 | 10.0 | -35% |
GOVERNANCE
Year
STRATEGIC REPORT
The Group's revenues arise from publishing services and related revenue. Publishing services principally comprise editing, marketing, selling and distribution of titles either in print or digital formats. Related revenue is disclosed in the rights and services table below.
Group revenue for the year was £123.7 million, up £12.6 million or 11% on the year ended 28 February 2015 of £111.1 million: £5.7 million derived from acquisitions, £1.7 million from foreign exchange movements, and £5.2 million from organic growth.
| £'m | 2015/16 Total revenue |
Proportion of total revenue % |
Revenue growth year on year % |
2014/15 Total revenue |
Proportion of total revenue % |
|---|---|---|---|---|---|
| 98.1 | 79% | 15% | 85.3 | 77% | |
| Digital | 15.0 | 12% | 28% | 11.7 | 10% |
| Total title sales | 113.1 | 91% | 17% | 97.0 | 87% |
| Rights and services | 10.6 | 9% | -25% | 14.1 | 13% |
| Total | 123.7 | 100% | 11% | 111.1 | 100% |
There was growth year on year of 57% in the Children's & Educational division, and growth in the Adult division of 3%, offset by a decline in the Academic & Professional division of 9% and decline in the Information division of 17%. Within the Adult division Osprey contributed £7.2 million to revenue and £1.1 million to operating profit before highlighted items. Excluding the impact of the Osprey acquisition, the Group's underlying revenue in the year ended 29 February 2016 of £116.6 million grew on a like for like basis by £6.9 million or 6%. Total title sales grew by 17% year on year. Print sales grew by 15% year on year, driven by an excellent year from the
Children's & Educational division, with print sales outperforming the prior year by £12.4 million or 54%. The Digital sales growth of 28% or £3.3 million was driven by Academic & Professional growth split evenly across e-book and digital resources sales, Adult's growth from Osprey's full year impact and Children's growth due to the Sarah J. Maas series. Digital sales are 13% of Group book sales (2014/15: 12%). There are now 22,000 Bloomsbury titles available as e-books (28 February 2015: 16,000; 28 February 2014: 13,000).
Rights and services revenues are analysed below:
| £m | 2015/16 | 2014/15 | Change | 2013/14 | 2012/13 |
|---|---|---|---|---|---|
| Copyright licences | 7.9 | 10.2 | -2.3 | 3.8 | 6.3 |
| Trademark licences | 0.0 | 0.4 | -0.4 | 0.7 | 0.7 |
| Management contracts | 2.0 | 2.9 | -0.9 | 3.2 | 4.0 |
| Other | 0.7 | 0.6 | +0.1 | 0.8 | 0.5 |
| Total | 10.6 | 14.1 | -3.5 | 8.5 | 11.5 |
| % Total sales | 9% | 13% | 8% | 12% |
The two key areas that drive this revenue are copyright licence sales and management contract income.
Copyright licences include the sale of foreign language, online and other rights to our titles. Although this year's revenues were strong, they are compared to an exceptional prior year result which included two large license deals worth in excess of £1.5 million each.
Management contracts revenues include monies from the IZA World of Labor contract worth £0.5 million and £1.5 million from our management contract in Qatar which expired in December 2015.
The top three copyright licence revenue sources in 2015/16 delivered profit of £2.3 million (29% of total rights and services profit) (2014/15: £6.3 million or 58%).
The following chart shows where Group revenues were generated for the year ended 29 February 2016. Revenue growth has been achieved year on year in all Bloomsbury's territories: India 20%; US 11%; Australia 31%; UK 8% (growth quoted is in local currencies). The revenue mix sees an increased share of Group revenues achieved in all of the US, Australia and India.
The gross margin declined year on year to 55% from 57% due to the reduction in high margin rights & services revenues. Excluding these revenues in both years, the gross margin was constant year on year at 54%.
Group marketing and distribution costs remained constant at 14% of revenues.
Overheads grew £2.4 million to £37.0 million, reflecting the full year impact of Osprey (£1.5 million) and a core overhead increase of 3% year on year. Group operating profit before highlighted items for the year was £13.1 million, up 8% on last year. The operating profit margin for the Group was 11% (2014/15: 11%).
Highlighted items:
| Charge |
|---|
| 0.9 |
| 1.8 |
| 2.7 |
Restructuring costs arise following the acquisition of Osprey and the strategic reorganisation of the Information division.
STRATEGIC REPORT
The table below shows performance by division.
| Operating profit before | |||||
|---|---|---|---|---|---|
| Revenue | highlighted items | ||||
| 2015/16 | 2014/15 | 2015/16 | 2014/15 | ||
| £'m | £'m | £'m | £'m | ||
| Academic & Professional | 32.7 | 36.0 | 3.2 | 5.1 | |
| Adult | 46.0 | 44.6 | 2.7 | 3.0 | |
| Children's & Educational | 41.8 | 26.6 | 6.0 | 2.9 | |
| Information | 3.2 | 3.9 | 1.2 | 1.1 | |
| Total | 123.7 | 111.1 | 13.1 | 12.1 |
Divisional financial highlights are noted below and further information by division is given in the Divisional Review section of the Chief Executive's Review.
Academic & Professional revenue for the year was £32.7 million (2014/15: £36.0 million), reflecting an exceptional prior year result which included two large license deals worth in excess of £1.5 million each. Academic digital title sales grew by 24% year on year, more than treble the overall industry growth rate, to £5.3 million, boosted by robust online subscription revenue growth and now representing 16% of total revenues in the division (2014/15: 12%). Within the year the Group invested in an expanded institutional sales team to support the long-term growth of our digital resources, the cost of which was offset by savings in third party commissions compared to the prior year. On 21 December 2015 the Group signed a sale and purchase agreement to acquire from RELX (UK) Limited publishing rights to six must-have family law titles including Duckworth's Matrimonial Property & Finance and Hershman and McFarlane: Children Law and Practice; the consideration was £0.5 million in cash (after adjusting for deferred income). These are some of the most authoritative family law products in the UK and they provide Bloomsbury Professional with a high quality foundation for a new digital family law service. Operating profit before highlighted items was £3.2 million (2014/15: £5.1 million).
In the Adult division total net sales grew by £1.3 million or 3% year on year to £46.0 million (2014/15: £44.6 million). However, this includes the full year impact of Osprey Publishing, which was acquired in December 2014, which generated revenue of £7.2 million (2014/15: £1.5 million); revenue performance on a like for like basis declined by £4.4 million or 10%. Results in the year ended 28 February 2015 included: the success of major cookery titles (notably Tom's Table, the largest Adult title in 2015/16), as well as the release of the paperback of And the Mountains Echoed by Khaled Hosseini. Operating profit before highlighted items was £2.7 million (2014/15: £3.0 million). However, this includes the full year impact of Osprey Publishing; year on year operating profit performance on a like for like basis declined by £1.4 million.
The Children's & Educational division sales were up 57% year on year, £41.8 million (2014/15: £26.6 million). There was revenue growth across all territories: 42% in Australia, 31% in the US, 62% in India and standout growth of 70% in the UK. Sales of Harry Potter titles in the year grew by 133%, including Harry Potter and the Philosopher's Stone Illustrated Edition by J.K. Rowling and Jim Kay. E-book and other digital revenue grew by £1.2 million to £3.0 million, driven by the success of Sarah J. Maas. Sarah J Maas title sales grew by 184% globally, including her new trilogy A Court of Thorns and Roses. The Children's & Educational division's operating profit before highlighted items was £6.0 million (2014/15: £2.9 million).
The Information division's revenue for the year was £3.2 million (2014/15: £3.9 million). The Information division's net title sales (from the Bloomsbury Business list) continued to grow with revenue up by £0.2 million to £0.6 million (2014/15: £0.4 million). The Information division's rights and services revenue declined by £0.8 million largely due to the expiration of the management services agreement with the Qatar Foundation, worth £1.5 million in the year ended 29 February 2016. The IZA World of Labor knowledge hub had a strong year of global engagement and now contains more than 230 peer-reviewed articles, achieving more than 250 global media mentions in 2015. From 2016, Bloomsbury is pleased to be providing publishing services to the Arcadian Library, one of the finest collections of books about relations between the West and the Arab and Islamic worlds. The Information division operating profits before highlighted items grew to £1.2 million (2014/15: £1.1 million).
The charts show the proportion of Group revenue that each division generates.
On 21 December 2015 the Group signed a sale and purchase agreement to acquire from RELX (UK) Limited certain LexisNexis and Jordan family law publishing assets as a pre-condition of the Competition and Markets Authority ("CMA") approval of the purchase of Jordan Publishing Limited by RELX (UK) Limited. The clearance from the CMA was obtained on 22 January 2016, at which point the completion of the acquisition took place for a total consideration of £1.4 million or £0.5 million after adjusting for deferred income.
Bloomsbury has acquired the publishing rights to six highly regarded family law titles including Duckworth's Matrimonial Property & Finance and Hershman and McFarlane: Children Law and Practice. The titles are sold in a practical loose-leaf format and are available in an online digital form.
The net interest expense for the Group for the year was £0.09 million compared with a net interest expense of £0.05 million for 2014/15 due to lower net cash levels, which reduced following the acquisition of Osprey Publishing Limited in December 2014.
Taxation was £0.7 million for the year, compared to £0.9 million for the year ended 28 February 2015. The effective tax rate was 6.3% (2014/15: 8.9%). Excluding the effect of highlighted items, the effective tax rate for the Group was 8.5% (2014/15: 8.4%). The effective rate of tax is low this year due to the following factors:
Diluted earnings per share, excluding highlighted items, were up by 3% year on year to 15.24 pence (2014/15: 14.73 pence) reflecting the growth in profit before tax and highlighted items. Diluted earnings per share were up by 9% year on year to 12.93 pence (2014/15: 11.90 pence).
The Group has a progressive dividend policy and aims to keep dividend cover in excess of two. In line with this policy the Directors are recommending a final dividend of 5.34 pence per share, which subject to Shareholder approval at our Annual General Meeting on19 July 2016 will be paid on 21 September 2016 to Shareholders on the register at the close of business on 26 August 2016.
Together with the interim dividend, this makes a total dividend for the year ended 29 February 2016 of 6.40 pence per share, a 5% increase on the 6.10 pence dividend for the year ended 28 February 2015. Over the past 11 years the dividend has increased at a compound annual growth rate of 7%.
Our balance sheet at 29 February 2016 can be summarised as set out in the table below:
| Assets £'m |
Liabilities £'m |
Net assets £'m |
|
|---|---|---|---|
| Property, plant and equipment | 2.5 | – | 2.5 |
| Goodwill and intangible assets | 64.5 | – | 64.5 |
| Current assets and liabilities | 99.1 | 38.5 | 60.6 |
| Other non-current assets and liabilities | 1.0 | 0.9 | 0.1 |
| Post-retirement obligations | – | 0.2 | (0.2) |
| Deferred tax | 3.0 | 2.7 | 0.3 |
| Total before net cash | 170.1 | 42.3 | 127.8 |
| Net cash | 6.6 | 1.4 | 5.2 |
| Total as at 29 February 2016 | 176.7 | 43.7 | 133.0 |
| Total as at 28 February 2015 | 171.5 | 47.3 | 124.2 |
| Increase/(decrease) | 5.2 | (3.6) | 8.8 |
The Group's key assets were goodwill and intangible assets, net trade receivables and inventories.
Net assets increased by 7% to £133.0 million (2015: £124.2 million) and net assets per share by 7% to 177 pence (2015: 166 pence). The main movements in the balance sheet are explained below.
Goodwill and intangible assets increased by £0.4 million to £64.5 million (2015: £64.1 million) principally due to:
Inventories decreased 6% to £27.6 million (2015: £29.2 million). Stock levels have decreased across the Group following a Groupwide plan to reduce the level of stock. This is despite the US dollar strengthening in the year having the impact of increasing year end stock by £1.4 million.
Trade and other receivables were £72.5 million (2015: £61.7 million). There was an increase of £7.4 million in trade receivables from increased trading and an increase to accrued income of £1.6 million from other income deals. Corporation tax also moved into a net receivable position of £0.9 million due to the prior year adjustments noted in the taxation section above. Since books sold are generally returnable by customers, the Group makes a provision against books sold in the accounting year. The unused provision at the year end is then carried forward and offset against trade receivables in the balance sheet, in anticipation of further book returns subsequent to the year end. A provision for the Group of £5.8 million (2015: £6.1 million) for future returns relating to 2015/16 and prior year sales has been carried forward in trade receivables at the balance sheet date. This provision was 13% of gross trade receivables (2015: 16%), reflecting the higher level of returns within our Academic & Professional division and the Adult division's year with fewer major bestsellers.
At 29 February 2016 total equity was £133.0 million (2015: £124.2 million). The increase of £8.8 million was due to an increase of £3.2 million from cumulative currency translations (driven by the US dollar strengthening against the GB pound), the retained profit for the year of £9.7 million (2015: £8.7 million) after highlighted items of £2.7 million (2015: £2.5 million), offset by share-based payment transactions of £0.4 million (2015: £0.4 million) and dividends of £4.6 million (2015: £4.3 million).
Current liabilities decreased 10% to £38.5 million (2015: £42.6 million). Trade payables increased to £20.4 million (2015: £18.7 million) due to the timing of printing of key titles and the reclassification of royalties payable to authors for the six months to December from accruals. Accruals and deferred income, which is included in trade and other payables, decreased to £14.6 million (2015: £16.5 million). This includes deferred income on database contracts, subscription revenues and royalty payments due to authors, which vary year on year depending on revenue and authors' royalty rates. Deferred income is up £0.6 million due to the purchase of the RELX and Jordan family law publishing assets. Royalty accruals due to authors are down due to reclassifying royalties payable to authors for the six months to December to trade payables. Other payables of £2.6 million (2015: £1.5 million) increased by £1.1 million which included £0.7 million of deferred and contingent acquisition consideration.
Non-current liabilities decreased by 19% to £3.8 million (2015: £4.7 million). The deferred tax liability of £2.7 million primarily relates to intangible assets arising on acquisitions. This is reducing as the relevant intangibles are amortised.
Cash and cash equivalents were £5.2 million at the year end (2015: £10.0 million). The net cash inflow from operating activities, including the effect of highlighted items, was £5.0 million, £5.2 million down on 2014/15. This difference is principally due to the increase in Group trade and other receivables in the year. Investing activities for the year ended 29 February 2016 resulted in an outflow of £3.1 million (2014/15: £9.1 million), the difference largely due to the acquisition of Osprey last year and lower product and systems development investment this year. The net cash of £7.1 million used in financing activities was predominantly made up of dividend payments of £4.6 million (2014/15: £4.3 million) plus a £2.5 million repayment of the revolving credit facility during the year (2014/15: £2.5 million drawdown).
The Group has an unsecured revolving credit facility with Lloyds Bank plc. At 29 February 2016 the Group had at its disposal £14.1 million of undrawn borrowing facilities (2015: £13 million) comprising a £13.5 million committed revolving loan facility and £0.6 million undrawn on the overdraft.
In May 2016 Bloomsbury extended the revolving credit facility with Lloyds Bank plc under new terms. The existing facility expires in July 2016 and the new facility will take over from then for a further five years. The new facility comprises a £14 million committed revolving loan facility, an uncommitted incremental term loan facility of up to £6 million and a £2 million overdraft facility. The overdraft facility is available until December 2016. All facilities are subject to two covenants, being a maximum net debt to EBITDA ratio and a minimum interest cover covenant.
The Group's net cash position changes over the course of the year as a result of the seasonality of the business with the most significant expenses being the payment of royalties in March and September and the most significant sale receipts being in February from the Christmas sales.
Group Finance Director
Outlined in the table on pages 34 and 35 is a description of risk factors that management considers are relevant to the Group's business. Not all the factors are within management's control and other factors besides those listed below could also affect the Group. Actions being taken by management to mitigate risk factors should be considered in conjunction with the cautioning note to Shareholders in the Directors' Report on page 47 with regards to forward looking statements. Details on financial risk management are given in note 24.
Provision C.2.2 of the UK Corporate Governance Code requires the Directors to assess the viability of the Group over a period significantly longer than 12 months from the date the financial statements are approved.
The Group prepares five-year projections developed from the longterm plans for each of the global publishing divisions. As well as the existing backlist titles, the projections for the first three years of the plan are based on the future title, online platform and other income pipelines. There is inherently less certainty in years four and five. The Board therefore concludes that three years is an appropriate period for the viability statement.
The Group's principal risks (see pages 34 to 35) and its approach to managing them have formed the basis for the assessment of longer-term viability. The Board believes the principal risks to viability are primarily:
We have developed plausible downside scenarios for each of these risk areas and quantified the impact on the Group's revenue, profit and cash for each scenario. We evaluated all the principal risks below and focused our sensitivity analysis on the key risks.
Individual and multiple scenarios were overlaid on our three-year projections. Through this analysis, the Board concludes that the Group does not face a risk to longer-term viability except in the event of remote combinations of material events. The analysis took account of the Group's current funding, forecast requirements and existing committed borrowing facilities.
Based on this assessment, the Board has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to 28 February 2019.
The Group's mission is to grow a high quality global publishing business delivering high value to its contributors, readers and Shareholders.
Overview on page 14.
Information on how we take account of social and environmental matters when implementing our strategy is included in Corporate Responsibility on pages 36 to 41.
Bloomsbury is an independent publisher and has been listed on the Main Market of the London Stock Exchange since 1994. Over a period of almost 30 years the business has built up a substantial body of publishing rights.
The Group is structured as fully integrated worldwide publishing divisions under a global brand supported by centralised sales, marketing, production and head office functions (this structure is named "One Global Bloomsbury"). Each publishing division reports to the Chief Executive. The Group encourages each publishing division to develop and grow diversified income streams. Each division has the capability to publish books in all formats but may also produce other products such as online content accessible through subscription. Each division may also use its expertise to provide publishing-related services to clients.
Book publishing (e-books, printed books etc.) is the main activity of Bloomsbury. This generates two core income streams: book sales and rights sales.
In competition with other publishers, Bloomsbury's publishing teams acquire the intellectual property rights to publish the works of authors. Ultimately, the authors and their literary agents control which rights each publisher acquires. Bloomsbury focuses on publishing worldwide in English but getting the specific rights desired can entail acquiring an assortment of other rights. Bloomsbury re-sells on to other publishers any rights it does not need, which generates an income stream. When it makes financial sense, Bloomsbury also sells the publishing rights to titles in its extensive backlist e.g. for a book in a series published by another publisher which is valuable to them to complete the series.
Bloomsbury sells its own books typically through online retailers such as Amazon, through bookshops, through supermarkets and direct to customers.
Bloomsbury's global production function produces books in all formats. Bloomsbury has produced e-books since 2005 and as an early adopter benefited from the worldwide growth in e-book sales. Printed books that are sold through retail outlets are normally sold on a sale-or-return basis. The Group does not print its own books but subcontracts the printing, warehouse storage and distribution of printed books to a number of long-term global partners.
Bloomsbury is a cash generative business and has enjoyed the benefit of publishing many bestselling titles over a prolonged period. Bloomsbury has balanced its core consumer book publishing business with academic and professional publishing. This addresses a number of risks:
India has one of the world's largest English-speaking populations and an increasing number of highly educated readers of English. Bloomsbury has a growing publishing business in India that publishes the works of local talented authors in addition to the works of Bloomsbury authors with works originally published in the UK and US.
The table below provides a description of risk factors that management considers relevant to the Group's business. Other factors besides those listed could also affect the Group.
During the financial year ended 29 February 2016 the principal risks have not changed substantially.
| Key area | Risk | Description | Mitigation |
|---|---|---|---|
| Market | Volatility of consumer book sales |
Sales of books to the consumer market can be seasonal and volatile |
Develop special interest, academic and professional publishing where revenues are less volatile |
| Develop other revenue streams, including from rights and services, increasing the scope to enter annually renewing agreements |
|||
| Increased dependence on internet retailing |
Readers might not discover, and so buy, Bloomsbury's print and |
Grow expert marketing teams skilled in internet sales |
|
| e-books sold through internet retailers |
Engage with multiple internet retailers | ||
| Increase focus on developing other marketing opportunities and other revenue streams, e.g. A&P digital products, rights and services |
|||
| Grow e-book sales | |||
| Rights and services |
Volatility of timing of closing rights and services deals |
The timing for completing high margin rights and services deals can depend on the performance by multiple parties including the main customer |
Increase the number of rights and services deals to reduce the dependency on individual deals |
| Generating new/non renewal of subscription |
The pipeline of new products and agreements might be uneven |
Senior managers are responsible for ensuring strong performance by Bloomsbury of its |
|
| and services agreements |
A customer or partner might not renew larger agreements that generate significant ongoing income |
obligations and strong customer care Increase the portfolio of products and agreements to grow income and reduce the dependency on individual agreements |
|
| Entrepreneurial risk | A deal may require upfront staff time and costs but fail to close resulting in lost investment |
Similar to ordinary publishing risks: increase the portfolio of deals to leverage economies of scale and absorb volatility |
|
| Move to digital | Development of the digital book market |
Consumer e-book prices may not hold up in the longer term |
Continue to supply books in all formats through multiple digital delivery systems aligned with the |
| Possible emergence of not yet known reading technology, e.g. involving subscription services for consumer books |
demands of readers Ensure the Group is positioned to take advantage of e-book (or any new format) growth in international markets |
||
| Use social media and other digital marketing to encourage direct sales to consumers |
|||
| Develop non-consumer offering where revenues are less volatile and there is a direct relationship with the customers |
| Key area | Risk | Description | Mitigation |
|---|---|---|---|
| Information and technology systems |
Productivity of IT systems and data |
Continuing to improve staff efficiency depends on the IT systems and data keeping pace with the needs of the business |
Board level representation on steering IT strategy, implementation and IT operations |
| Financial reporting |
Valuation of assets and provisions |
Significant assets and provisions in the balance sheet depend on assumptions over the value, e.g. goodwill, advances, intangible rights and inventory, returns provisions |
Prudent approach to assumptions. Board approval of key assumptions. Rigorous audit of valuations |
| Title acquisition | High advances sought by agents. World rights |
Agents seek high advances for some authors |
Publish more special interest trade books, e.g. Academic & Professional |
| not acquired | Agents prefer to split territorial rights for English language |
Focus acquisition on titles where world English rights are available |
|
| publishing between US and UK | Concentrate on academic publishing where world rights are the norm |
||
| IP and copyright | Erosion of copyright | Erosion of copyright through government or other action |
Continue policy of support for copyright and intellectual property rights as a fundamental facet of publishing |
| Piracy | Piracy of titles in print or digital form | Adopt robust anti-piracy policies | |
| Ensure good digital rights management protection of e-books and digital formats |
|||
| Participate in key industry anti-piracy initiatives | |||
| Overseas operations |
Overseas offices | Growing offices in the US, Australia and India |
One Global Bloomsbury structure of global publishing divisions supported by Group functions provides an effective internal control framework and oversight of the overseas offices |
The following section provides an outline of Bloomsbury's work as a good corporate citizen. More examples of the contribution to this made by our global publishing divisions is provided in the Group Overview on pages 16 to 23.
Bloomsbury's core business is the worldwide promulgation and promotion of literature, literacy and information for readers of all ages, which has a high social value. The Group has a significant beneficial social impact globally through sales of e-books and print books and access to online resources that are embraced by many adults and children in all walks of life.
We aim for integrity in all our activities, consider our impact on society and the environment and maintain high ethical standards. This is key to our commercial success and ability to deliver good returns to our Shareholders, which depends on attracting and retaining talented authors who want us to publish them and on products for which there is a significant demand.
The Board recognises that the achievements of the Group have depended upon the high standards of social responsibility demonstrated by the Directors and employees for more than 25 years. The Board takes account of the relevant social, environmental and ethical issues and associated risks and opportunities to the Group's short-term and long-term value. The Company continues to be included in the FTSE4Good index.
Bloomsbury has a significant direct beneficial impact on the community through its commercial activities. Our publishing teams share a common passion for promoting the enjoyment of reading and high quality literature that is often cutting edge and provides new authors with opportunities to establish themselves. We have a substantial Children's & Educational division focused on promoting literacy for young readers of all abilities and ages, including specialist ranges for 'Hi-Low' pupils (high age, low attainment) which provide parents and teachers with the tools needed to engage their children in reading.
In addition to our direct commercial activities and with a focus mainly on promoting literature, literacy and education, we actively support numerous organisations worldwide including schools, universities, libraries and other good causes and charities. The following examples illustrate the range of our support worldwide:
We make a small number of targeted minor cash donations each year predominantly to not-for-profit organisations that support literature, literacy and education, which in recent years has included to Book Aid International, the Independent Publishers Guild, The Charleston Trust and Woodland Trust.
We encourage the spare time involvement of staff worldwide in supporting good causes and in the promotion of literature, literacy and education. These voluntary activities by employees are often directly or indirectly assisted by the business and by Bloomsbury colleagues. Examples of the many such activities recently undertaken are as follows.
Many employees worldwide are involved in their local communities promoting literacy, literature and education, such as by sitting on committees or as governors of schools and by supporting special interest groups: e.g. a Bloomsbury employee has established a scholarship scheme for a US University.
Bloomsbury employees worldwide often call on their colleagues for fundraising sponsorship such as with marathons, cake sales and many other employee-inspired activities. Our offices will put up teams to participate in events: e.g. an Australia office employee participated in Diabetes Walk for Cure.
We have a diverse workforce and management team led by a gender diverse Board. The majority of senior managers and employees worldwide in the Group are women. As at 29 February 2016 the numbers of employees by each sex is:
| Female | Male | |
|---|---|---|
| All employees of the Group1 | 432 (69%) | 190 (31%) |
| Senior managers of the Group2 | 5 | 2 |
| Directors of the Group parent | ||
| Company | 2 | 6 |
Excludes Non-Executive Directors and workers who are freelance consultants and temps.
Includes the heads of publishing divisions, Group functions and country heads who are not Executive Directors on the parent Company Board.
The senior management team monitors joiners, leavers, head count, pay rates and other KPIs but the Group does not disclose all of these for commercial reasons that are in the interests of the Shareholders.
We recognise that people are a key asset and employment policies are directed at creating a workplace that attracts, motivates, develops and retains high calibre employees.
Supported by territory heads of human resources, the managing directors of the four publishing divisions, the heads of each Group function and managing directors of regional offices have responsibility for the employment matters (including human rights) of their teams. The Chief Executive has overall Board level responsibility for employment matters. For example, where employment matters have a Group-wide impact or cannot be resolved at a lower level in the business then they may be referred to the Chief Executive.
Key features of the Group's employment policies and practices are:
Ethical behaviour Group policies such as for anti-bribery and corruption, dealing in Bloomsbury shares and anti-slavery and human trafficking. Compliance with these policies is an employment term with Bloomsbury.
✷ Employee development: Bloomsbury is acquisitive and has benefited from an intake of high calibre entrepreneurs who support the Group's capacity to innovate. The Group develops its management structure to serve the changing needs of the business. This creates opportunities for suitably high calibre individuals to progress to increasing levels of seniority as they gain capabilities and expertise. External recruitment is supported by territorial Human Resources functions enabling vacancies across sites worldwide to be filled internally where employees of an appropriately high calibre seek new opportunities.
✷ Equality of opportunity: Bloomsbury has a diverse workforce and follows a policy that no employee or other person receives more or less favourable treatment on the grounds of gender, sexual orientation, colour, race and ethnic origin, nationality, religion, disability or age. This extends to any person known to be HIV positive. The Human Resources function monitors compliance with the policy and with applicable legislative requirements to ensure the equality of opportunity in the recruitment, selection and promotion of employees. Grievance and disciplinary procedures protect employees from discriminatory behaviours and attitudes.
✷ Disabled persons: Group policy is to offer equal treatment in respect of the recruitment, training, career development and promotion of disabled persons. Should people become disabled during the course of their employment, the Group will seek to retain their services and to provide retraining where necessary.
The Company Secretary reporting to the Chief Executive in respect of Health and Safety ("H&S") heads an H&S team that ensures Group-wide compliance with H&S policy. At least annually, the main Board and senior team review H&S including risks assessments, developments and incident reports. The H&S team works closely with management and employees to ensure that the H&S policy is effectively communicated, implemented and maintained across the business. Managers of the worldwide sites are accountable for ensuring their areas of the business are in compliance with H&S policy.
The Group maintains H&S risk assessments and accident books for all its locations worldwide (including where there is no local legal requirement to do so) and staff are encouraged to report all accidents or near misses.
During the year there were no serious injuries, fatalities or reportable incidents. Accidents have typically included infrequent bumps and scalds from hot drinks associated with the office environment.
The Board recognises that a responsible approach to the environment is attractive to the Group's existing and prospective stakeholders. Customers can require Bloomsbury to demonstrate that the Group is a good corporate citizen during the tender process for new and existing contracts.
The Executive Committee (which consists of the Executive Directors and the managing directors of the publishing divisions and Group functions) have responsibility for environmental matters of their teams. These people report to the Chief Executive who has overall Board level responsibility for environmental matters and issues.
The impact on the environment of our business predominantly arises from the activities the Group subcontracts to its suppliers including the printing, production, distribution, recycling and disposal of printed books. Bloomsbury also has office-based editorial, product development, sales and administrative activities, which operate through an employee workforce based at offices in the UK, US (New York), India (New Delhi) and Australia (Sydney).
Our policy is to reduce both the financial cost to the business and the impact of the business on the environment. We employ specialist independent external advisors, Trucost, to monitor our impact on the environment. Key areas where we are active in reducing the direct and indirect environmental impact of the business include:
We have previously taken advice from the Carbon Trust and continue to apply their recommendations to reduce our carbon footprint. For example, we use point of use instead of bottled water coolers, fit energy efficient lamps, ensure heating systems are regularly maintained and programmed efficiently and turn off unnecessary electrical equipment out of hours amongst other measures.
We aim to beat the greenhouse gas and waste production normalised tonnes per £m revenue averaged for the previous two years. By setting such a target we are focused on continuously increasing our efficiency at using natural resources.
Our direct operations are predominantly office-based and have been independently assessed as having a low impact on the environment. The Group's consumption of natural resources, although relatively minor, is significantly impacted by ambient weather conditions beyond our control and by the buildings we lease.
Our independent external advisor, Trucost, has calculated the tables below based on data we have provided. We report on our waste production and greenhouse gas emissions aligning with the 2006 Government Guidelines, Environmental Key Performance Indicators, Reporting Guidelines for UK Businesses. In respect of greenhouse gases, we report consumption of natural gas, vehicle
fuel and electricity in kWh, converted to CO2 -e following the protocols provided by the Department for Environment, Food and Rural affairs (DEFRA). Emissions have been categorised against the Greenhouse Gas Protocol scopes of reporting. This information is unaudited.
The Board reviews the emissions and environmental impact of the Group as a formal agenda item at least annually. During the year CO2 emissions for the Group rose primarily due to the addition of the Oxford premises that came with Osprey Publishing acquisition. The Group's two Oxford premises have been consolidated during 2016 into a single building which we expect will improve the Group's emissions.
Target
| Greenhouse gases |
Definition | Data source and calculation methods |
Normalised tonnes per Absolute tonnes CO2 -e £m revenue 12 months to 12 months to 29/28 February 29/28 February 2016 2015 2016 |
2015 | tonnes per £m revenue 12 months to 29 February 2016 |
||
|---|---|---|---|---|---|---|---|
| Building operations |
Emissions from natural gas and diesel consumption in utility boilers |
Annual consumption in kWh collected from fuel bills, converted according to Defra Guidelines for the London office (Headquarters). Data scaled up by number of employees to estimate emissions for Dublin and Edinburgh serviced offices. Natural gas was not used in India and Australia offices. |
26.6 | 23.6 | 0.25 | 0.21 | 0.19 |
| Refrigerants | Emissions from refrigerant leakage |
Refrigerant use provided only for London office and not estimated for other sites as not considered applicable. |
7.2 | 6.8 | 0.06 | 0.06 | 0.05 |
| Company cars |
Emissions from petrol and diesel consumption |
Annual consumption in litres calculated from fuel bills for UK/ converted according to Defra Guidelines. There are no company cars in India and the US offices. Previous year data was used for Australia. |
40.4 | 30.6 | 0.36 | 0.28 | 0.36 |
| Total Scope 1 | 74.2 | 61.0 | 0.673 | 0.55 | 0.60 |
| Greenhouse gases |
Definition | Data source and calculation methods |
Absolute tonnes CO2 12 months to 29/28 February 2016 |
-e 2015 |
Normalised tonnes per £m revenue 12 months to 29/28 February 2016 |
2015 | Target tonnes per £m revenue 12 months to 29 February 2016 |
|---|---|---|---|---|---|---|---|
| Electricity use |
Directly purchased electricity, which generates greenhouse gases |
Annual consumption of directly purchased electricity in kWh collected for the London, Oxford, Alton and Haywards Heath offices, US and India offices. Data has been scaled up by number of employees to estimate emissions for operations in the rest of the US and Australia. KWhs data converted according to Defra, EPA and IEA. |
587.62 | 506.4 | 5.293 | 4.56 | 3.99 |
Figures in the table are location based (Emissions associated with purchased electricity based on the site location only – i.e grid emission factor. This does not reflect any sustainable sourcing or supplier specific activity, but allows for recognition of efficiency improvements).
In adherence to the GHG Protocol guidance, 657.6 tonnes CO2 -e is the equivalent market-based figure (based on the contractual instruments used to procure electricity. This may include renewable tariffs, RECs, guarantees of origin or other such instruments. It does not only relate to renewables and can simply be a supplier disclosed emission factor).
The combined Scope 1 and Scope 2 normalised tonnes per £million revenue for the 12 months to 29 February 2016 is 5.96.
Below we report our waste disposal by method of disposal in metric tonnes per annum and normalised to revenue.
| Greenhouse gases |
Definition | Data source and calculation methods |
Absolute tonnes CO2 12 months to 29/28 February 2016 |
-e 2015 |
Normalised tonnes per £m revenue 12 months to 29/28 February 2016 |
2015 | tonnes per £m revenue 12 months to 29 February 2016 |
|---|---|---|---|---|---|---|---|
| Landfill | General office waste (which includes a mixture of paper, card, wood, plastics and metals) sent to landfill sites |
Annual quantity of waste generated in London offices, Oxford sites, US and India offices. UK disclosed data scaled up to estimate quantity for operations in the rest of the UK and the US. Previous year data was used for Australia. |
75 | 78 | 0.68 | 0.71 | 0.66 |
| Recycled | General office waste sent to recycling facilities |
Annual quantity of waste generated in London offices, Oxford sites, US office and India. UK disclosed data scaled up to estimate quantity for operations in the rest of the UK and the US. Previous year data was used for Australia. |
52 | 51 | 0.47 | 0.46 | 0.45 |
Target
The Directors and Officers serving during the year were as follows:
Nigel Newton was born and raised in San Francisco. He read English at Cambridge. After working at Macmillan Publishers, he joined Sidgwick & Jackson. He left Sidgwick in 1986 to start Bloomsbury. Bloomsbury floated on The London Stock Exchange in 1994 and has grown organically and through acquisitions and partnerships. Bloomsbury publishes 2,500 books a year from its offices in the UK, US, India and Australia.
Nigel Newton serves as Chairman of the British Library Trust, President of Book Aid International, Chairman of the Charleston Trust, member of the Man Booker Prize Advisory Committee, Trustee of the International Institute for Strategic Studies, past Chair of World Book Day (2006), past member of the Publishers Association Council and member of the Advisory Committee of Cambridge University Library.
Wendy Pallot is a Chartered Accountant who qualified with Coopers & Lybrand. She was Group Finance Director for GCap Media Plc, the UK's leading commercial radio operator which was listed on the UK main market, from 2005 until its sale in 2008. She was Group Finance Director of GWR Group plc, a leading UK listed radio operator, from 2001 until its merger with Capital Radio plc in 2005 to form GCap Media Plc. Wendy Pallot is the chair and one of the co-founding directors of a company operating a number of local radio stations. She is also a Governor of the Central School of Ballet.
Richard Charkin joined the Bloomsbury Board as an Executive Director in October 2007. He began his career in 1972 as Science Editor of Harrap & Co. He has since held senior roles at Pergamon Press, Oxford University Press, Reed International/Reed Elsevier, Current Science Group and has been Chief Executive of Macmillan Publishers Limited and Executive Director of Verlagsgruppe Georg von Holtzbrinck. His other publishing interests include being Chairman of the International Advisory Board of Bloomsbury Qatar Foundation Journals in Doha, Non-Executive Director of the Institute of Physics Publishing, visiting Professor at the University of the Arts London, President of the International Publishers Association, a Trustee of Common Purpose Charitable Trust, and a member of The Advisory Board of the Frankfurt Book Fair.
He was President of the UK Publishers Association, Director of the Federation of European Publishers, and a Non-Executive Director of Melbourne University Publishing. He received an MA from Cambridge University for the Natural Science Tripos; was a Supernumerary Fellow of Green College, Oxford; and attended the Advanced Management Program at Harvard Business School.
Jonathan Glasspool was appointed to the Bloomsbury Board in July 2015. He joined Bloomsbury in 1999 and is Managing Director of Bloomsbury's Academic & Professional publishing division. Jonathan is Chair of the Industry Advisory Board at Oxford Brookes University, a Trustee of Publishing Training Centre, and is a member of the Commercial Board of the ICAEW and the Academic & Professional Board of the Publisher's Association. He has held roles in publishing with Reed Elsevier in the UK and Asia, the Chartered Management Institute and Cambridge University Press. Jonathan has a first class degree in English from Trinity College, Oxford, an MA in English from Bristol University and an MBA with Distinction from Warwick.
Sir Anthony Salz joined the Bloomsbury Board as an Independent Non-Executive Director in August 2013 and was appointed Chairman on joining. He is an Executive Vice Chairman of Rothschild and a director of NM Rothschild & Sons Limited. He joined Rothschild in 2006 after 30 years as a corporate lawyer with Freshfields, the last ten years as the Senior Partner. He is Trustee of the Tate Foundation, the Royal Opera House, the Paul Hamlyn Foundation, the Scott Trust and Reprieve.
Sir Anthony is a former Vice Chairman of the BBC Board of Governors and between 2010 and 2012 was lead Non-Executive member of the Board of the Department for Education. He headed the Salz Review, an independent external review of the business practices of Barclays Plc, which reported in 2013. He chaired the Independent Commission on Youth Crime and Antisocial Behaviour in England and Wales, which reported in 2010 and was a member of Business in the Community's committees on Homelessness and on Education.
John Warren joined the Bloomsbury Board in July 2015 and is the Senior Independent Director, the Chair of the Audit Committee and the member with recent and relevant financial experience. He is a Chartered Accountant (FCA) and has a wealth of NED experience including as audit committee chair of a number of companies
including Rexam Plc, Spectris plc, Welsh Water, Greencore Group plc, 4imprint Group plc and Bovis Homes Group PLC. As an executive director he was Group Finance Director of WH Smith PLC and before that United Biscuits Plc.
Jill Jones joined the Bloomsbury Board in July 2013. She was Managing Director for McGraw-Hill Education, Europe, Middle East and Africa, a global provider of educational materials and digital learning solutions until January 2016, and from 2008–2012, President and CEO (EMEA) of Cengage Learning EMEA. Prior to this Jill held positions within Pearson Education, Thomson Learning, Longman and Prentice Hall International. Jill has worked in Higher Education and Schools textbook and revision publishing, English Language Teaching and reference publishing – including the development of large electronic and primary source material databases, and scaling digital solutions. She is a former member of the Publishers Association Council, and ex-Chair of the Academic Publishers group at the Publishers Association.
Stephen Page joined the Bloomsbury Board in August 2013. He is the Chief Executive of Faber and Faber, a digitally innovative independent trade publisher of poetry, drama, children's books and other fiction and non-fiction literature. Stephen joined Faber and Faber in 2001 from Harper Collins Publishers, where he was Sales and Marketing Director. He is a Council member and former president of The Publishers Association and he is a Board member of Creative Skillset, the licensed Sector Skills Council supporting skills development and training in the UK for the entertainment media, publishing, advertising and other creative industries. Stephen Page was named in 2012 as the most inspiring digital publishing person at the FutureBook Innovation Awards.
Michael Daykin is a graduate Chartered Company Secretary (FCIS) and Chartered Accountant (FCA) and joined Bloomsbury in February 2011. He has held Group Company Secretary and senior roles in a number of UK Main Market listed companies.
| Committee | Members | Date appointed | Date resigned | |
|---|---|---|---|---|
| Board | Sir Anthony Salz | Chairman of the Board | 29 August 2013 | – |
| Nigel Newton | Chief Executive | During 1986 | – | |
| Richard Charkin | Executive Director | 1 October 2007 | – | |
| Wendy Pallot | Finance Director | 8 April 2011 | – | |
| Jonathan Glasspool | Executive Director | 23 July 2015 | – | |
| Jill Jones | Independent Non-Executive Director | 23 July 2013 | – | |
| Stephen Page | Independent Non-Executive Director | 20 August 2013 | – | |
| John Warren | Senior Independent Director | 23 July 2015 | – | |
| Ian Cormack | Senior Independent Director | 1 January 2011 | 23 July 2015 | |
| Audit Committee | John Warren | Chair of the Committee | 23 July 2015 | |
| Ian Cormack | Chair of the Committee | 1 January 2011 | 23 July 2015 | |
| Jill Jones | 23 July 2013 | – | ||
| Stephen Page | 20 August 2013 | – | ||
| Remuneration | Jill Jones | Chair of the Committee | 23 July 2013 | – |
| Committee | Sir Anthony Salz | 29 August 2013 | – | |
| John Warren | 23 July 2015 | – | ||
| Ian Cormack | 1 January 2011 | 23 July 2015 | ||
| Nomination | Sir Anthony Salz | Chair of the Committee | 29 August 2013* | – |
| Committee | Nigel Newton | 20 September 2014 | – | |
| Jill Jones | 23 July 2013 | – | ||
| Stephen Page | 20 August 2013 | – | ||
| John Warren | 23 July 2015 | – | ||
| Ian Cormack | 1 January 2011 | 23 July 2015 |
Membership of Board Committees
* Sir Anthony Salz was appointed as Chair of the Nomination Committee from 9 July 2014.
The Directors present their report and the audited financial statements for Bloomsbury Publishing Plc and its subsidiary companies (the "Group") for the year ended 29 February 2016. Bloomsbury Publishing Plc is a company incorporated in England and Wales, company number 01984336, with its principal place of business and registered office at 50 Bedford Square, London WC1B 3DP. Bloomsbury Publishing Plc is a company listed on the Main Market of the London Stock Exchange subject to the Listing Rules and Disclosure and Transparency Rules of the Financial Conduct Authority.
In accordance with the Companies Act, the Strategic Report on pages 1 to 41 provides a fair review of the Group's business and a description of the principal risks and uncertainties facing the Group. It contains information on the Group's performance, business model and strategy. A summary of the Group's corporate responsibility activities is contained in the Corporate Responsibility section on pages 36 to 41.
The Group's report relating to the UK Corporate Governance Code disclosures is contained on pages 49 to 57.
The Group has overseas subsidiaries that are based and operate in North America, Australia and India. These subsidiaries allow locally employed teams to deliver services locally to authors and customers. Employees from all Bloomsbury offices can be involved in business development and travel to various countries worldwide.
The Key Performance Indicators for the Group include profit before tax and highlighted items, revenue, and profit before tax, which are set out in the Financial Review on pages 25 to 31. Profit after tax for the Group's operations for the year was £9.7m (2014/15: £8.7m).
The Directors recommend a final dividend of 5.34p (2014/15: 5.08p) per share payable on 21 September 2016 to Shareholders on the register at the close of business on 26 August 2016. The dividends paid and proposed by the Company for the year ended 29 February 2016 and year ended 28 February 2015 are as follows:
| Dividend | Dividend per share | Total dividend | Record date | Paid/payable date |
|---|---|---|---|---|
| 2016 Final (proposed) | 5.34p | £4.0m | 26 August 2016 | 21 September 2016 |
| 2016 Interim | 1.06p | £0.8m | 6 November 2015 | 30 November 2015 |
| Total | 6.40p | £4.8m | ||
| 2015 Final | 5.08p | £3.8m | 28 August 2015 | 23 September 2015 |
| 2015 Interim | 1.02p | £0.7m | 7 November 2014 | 4 December 2014 |
| Total | 6.10p | £4.5m |
The names of the Directors as at the date of this report, together with biographical details, are set out on pages 42 and 43, which form part of the Directors' Report. The Directors serving on the Board of the Company during the year were as follows:
| Date appointed in the year (if applicable) |
Date resigned in the year (if applicable) |
|
|---|---|---|
| Non-Executive Chairman | ||
| Sir Anthony Salz | – | – |
| Independent Non-Executive Directors | ||
| Jill Jones | – | – |
| Stephen Page | – | – |
| John Warren | 23 July 2015 | – |
| Ian Cormack | – | 23 July 2015 |
| Executive Director | ||
| Nigel Newton | – | – |
| Richard Charkin | – | – |
| Wendy Pallot | – | – |
| Jonathan Glasspool | 23 July 2015 | – |
Details of Directors' service contracts and Directors' interests in shares, awards and options are shown in the Directors' Remuneration Report on pages 58 to 74. Other than as disclosed in the Directors' Remuneration Report, none of the Directors held any interest, either during or at the end of the financial year in any material contract or arrangement with the Company or any subsidiary undertaking. The terms of termination of the Directors' contracts are described in the Directors' Remuneration Report set out in pages 58 to 74, which includes details of any agreements by which the Company would pay compensation to its Directors for loss of office, for loss of employment or would make payments in respect of a change of control of the Company.
Company policy is to appoint Directors to the Board on the recommendation of the Nomination Committee. This may be as part of the progressive refreshing of the Board, to reappoint a Director retiring by rotation, to fill a vacancy arising as a result of a retiring Director or as part of measures taken to enhance the skills, experience, capability and balance of the Board.
Directors retiring by rotation at an Annual General Meeting ("AGM") may offer themselves for re-election at the AGM. The Company's Articles of Association (the "Articles") require as a minimum:
The Board applies the FTSE350 best practice and requires all directors to stand for re-election.
The Chairman on behalf of the Board confirms that each Director proposed for re-election at the AGM continues to contribute effectively and to demonstrate commitment to the role (including commitment of time for Board and committee meetings and any other duties).
In accordance with the Articles, Directors are granted an indemnity from the Company to the extent permitted by law in respect of liabilities incurred as a result of their office. The Group maintained insurance throughout the year for its Directors and Officer (the Company Secretary) against the consequences of actions brought against them in relation to their duties for the Group.
Procedures are in place to ensure compliance with the Directors' conflict of interest duties set out in the Companies Act 2006. These procedures have been complied with during the year and the Board considers that these procedures operate effectively.
During the year, details of any new potential conflict matters were submitted to the Board for consideration and, where appropriate, these were approved. Authorised conflicts or potential conflict matters will be reviewed by the Board on an ongoing basis.
The Group made charitable donations of £4,009 in respect of the year (2015: £4,621). Details of the non-cash support given by the charitable and voluntary activities of the Company are as set out in the Corporate Responsibility section on pages 36 to 41.
No political donations were made by the Group during the current or previous year.
Details of financial risk management are given in note 24.
The share capital of the Company comprises a single class of ordinary 1.25p shares ("Ordinary shares"). During the year the Company allotted new shares as follows:
| Fully paid Ordinary shares in issue |
Reason for allotment | |
|---|---|---|
| As at 1 March 2015 | 75,003,734 | |
| Allotted 15 January 2016 | 77,443 | 2012 LTIP exercise |
| As at 29 February 2016 | 75,081,177 |
As at the date of this Directors' Report, there were 75,081,177 fully paid issued shares, all listed on the London Stock Exchange, with a further 24,921,301 Ordinary shares that the Directors are authorised to issue.
Details of the issued share capital of the Company can be found in note 21 together with details of the shares issued and cancelled during the year.
No Ordinary shares carry special rights with regard to control of the Company. At a general meeting of the Company every member has one vote on a show of hands and on a poll one vote for each share held. The notice of general meeting specifies deadlines for exercising voting rights either by proxy or present in person in relation to resolutions to be passed at a general meeting.
Under the Articles, any share in the Company may be issued with such rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise as the Company may from time to time by ordinary resolution determine (or, in the absence of any such determination, as the Directors may determine).
No Shareholder is, unless the Board decides otherwise, entitled to attend or vote either personally or by proxy at a general meeting or to exercise any other rights conferred by being a Shareholder if he or she or any person with an interest in shares has been sent a notice under section 793 of the Companies Act 2006 (which confers upon public companies the power to require information with respect to interests in their voting shares) and he or she or
any interested person failed to supply the Company with the information requested within 14 days after delivery of that notice. The Board may also decide to apply to the court for an order under section 794 of the Companies Act 2006 so that no dividend is payable in respect of those default shares and that no transfer of any default shares shall be registered. These restrictions end seven days after receipt by the Company of a notice of an approved transfer of the shares or all the information required by the relevant section 793 notice, whichever is earlier.
The Directors may refuse to register any transfer which is not a fully paid share, although such discretion may not be exercised in a way which the Financial Conduct Authority regards as preventing dealing in the shares of that class from taking place on an open proper basis. The Directors may likewise refuse any transfer of a share in favour of more than four persons jointly.
The Company is not aware of any other restrictions in the transfer of Ordinary shares in the Company other than certain restrictions that may from time to time be imposed by laws and regulations (for example, insider trading laws); and pursuant to the Listing Rules of the Financial Conduct Authority whereby certain employees of the Group require approval of the Company to deal in the Company's shares.
The Company is not aware of any agreements between Shareholders that may result in restrictions on the transfer of the securities or voting rights.
In respect of dilution limits, the Company adheres to "Investment Association principles of remuneration" issued 11 November 2015. In particular:
As set out below in this report, the Bloomsbury Employee Benefit Trust purchases shares in the market to be used for satisfying LTIP awards and other employee share options that vest.
Notice of the 2016 Annual General Meeting and explanatory foreword to the meeting on pages 132 to 138 form part of the Directors' Report and set out:
Throughout the financial year, Elian Employee Benefit Trustee Limited ("Trustee") acted as the trustee of the Bloomsbury Employee Benefit Trust ("EBT").
During the year the EBT held Ordinary shares of 1.25 pence in the Company as follows:
| Fully paid Ordinary shares held by EBT |
Comment | |
|---|---|---|
| As at 1 March 2015 | 268,293 | |
| (84,739) | Sharesave exercise | |
| (177,762) | 2012 LTIP excercise | |
| As at 29 February 2016 | 5,792 |
As at 29 February 2016 the EBT held 5,792 Ordinary shares of 1.25 pence in the Company being less than 0.1% of the issued Ordinary share capital. Between 29 February 2016 and signing of this report the EBT acquired 500,000 Ordinary shares in the market bringing the total holding after the exercise of Sharesave options to 500,269 (0.67%) shares. The Trustee may vote on shares held by the EBT at its discretion, but waives its right to a dividend.
During the year, the Company made no purchases of its own shares.
As at the date of signing of this report, substantial shareholdings of 3% or more of the shares in the Company notified to the Company prior to signing of this report or per the share register analysed as at 31 May 2016 (being the latest practical date) are set out below:
| Ordinary shares number Million |
% issued shares1 |
|
|---|---|---|
| Managed funds | ||
| Liontrust Asset Management | 12.1 | 16.1 |
| Fidelity Worldwide Investment (FIL) | 6.5 | 8.6 |
| Majedie Asset Management | 5.6 | 7.5 |
| Charles Stanley | 5.5 | 7.3 |
| Majedie Investments | 4.8 | 6.4 |
| Chelverton Asset Management | 3.1 | 4.2 |
| BlackRock Inc | 2.6 | 3.5 |
The Group has established close relationships over a long period within the publishing markets in which it operates. It relies heavily on its goodwill and reputation and in particular on its reputation as an autonomous independent publisher with authors, customers and key employees that could be affected by a change of control.
The Company's share incentive schemes contain provisions relating to a change of control of the Company following a takeover bid (see note 22 for further details of the share incentive schemes). Under these provisions, a change of control of the Company would normally be a vesting event, facilitating the exercise of awards, typically subject to the discretion of the Remuneration Committee.
The Group has a diverse base of authors, customers and general suppliers so that its dependency on any one individual author, customer or supplier is reduced. Primarily for printed books, the Group develops longer-term relationships with a reduced number of business partners, printers and distributors to maximise process efficiencies and economies of scale. Failure of a main supplier could temporarily disrupt the supply of books to market or result in increased cost of working whilst alternative arrangements are made.
The Group depends on its reputation which strongly influences authors and customers in their selection of publisher.
The Group intends to continue to develop its range of publishing businesses and services. Although the primary focus of the Group is on organic growth, acquisitions in these areas of business will be considered.
Under s417 of the Companies Act 2006, a company's Directors' Report is required, among other matters, to contain a fair review by the Directors of the Group's business through a balanced and comprehensive analysis of the development and performance of the business of the Group and the position of the Group at the period end, consistent with the size and complexity of the business. The Directors' Report together with all sections incorporated into it by reference has been prepared only for the Shareholders of the Company. Its sole purpose and use is to assist Shareholders to exercise their governance rights. In particular, the Directors' Report has not been audited or otherwise independently verified. The Company and its Directors and employees are not responsible for any other purpose or use or to any other person in relation to the Directors' Report.
The Directors' Report contains indications of likely future developments and other forward looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the sectors, countries and business divisions in which the Group operates. These factors include, but are not limited to, those discussed under Risk Factors on pages 32 to 35. These and other factors could adversely affect the Group's results, strategy and prospects. Forward looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ materially from those currently anticipated. No obligation is assumed to update any forward looking statements, whether as a result of new information, future events or otherwise.
A resolution to reappoint KPMG LLP as Auditor will be proposed at the forthcoming Annual General Meeting.
The Directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the Auditor is unaware. The Directors have each confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the Auditor.
The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with IFRSs as adopted by the EU and applicable law and
have elected to prepare the parent Company financial statements on the same basis.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial statements, the Directors are required to:
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, www.bloomsbury-ir.co.uk. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
We consider the Annual Report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Group's position and performance, business model and strategy.
The notice of the 2016 Annual General Meeting of Bloomsbury Publishing Plc is set out on pages 135 to 138 and an explanation of the resolutions to be put to Shareholders at the Annual General Meeting on 19 July 2016 is set out on pages 132 to 134 which forms part of this Directors' Report.
Under the Companies Act 2006, a safe harbour limits the liability of Directors in respect of statements in and omissions from the Strategic Report and the Directors' Report. Pages 1 to 138 of the Annual Report are included within the Directors' Report by reference and so are included within the safe harbour.
We confirm that to the best of our knowledge:
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Strategic Report and Directors' Report were approved by the Board on 13 June 2016.
By order of the Board
Group Company Secretary 13 June 2016
The Board takes its responsibility to achieve sound governance of the Bloomsbury Group seriously and continuously maintains high standards of corporate governance that focus on serving the interests of the shareholders.
The UK Corporate Governance Code edition issued September 2014 (the "Code") is published on the Financial Reporting Council's website (www.frc.org.uk).
The Company has complied fully throughout the year with the provisions of the Code in addition to the Listing Rules of the Financial Conduct Authority.
The following sections provide information on how the Company has applied the Code principles and adhered to Code provisions.
The Board is responsible to the Shareholders for ensuring that the Company is appropriately managed and that it achieves its objectives. The Board determines the strategy for the Group and sets and monitors targets for the management team to achieve the strategy.
The Board comprises the Independent Non-Executive Chairman, Senior Independent Director, a further two Independent Non-Executive Directors, the Chief Executive, the Finance Director and two further Executive Directors. The biographies of the Directors appear on pages 42 and 43.
The agendas for all main Board meetings provide standing items for each Director to provide updates on areas of their responsibility and items for the Chairs of each Board committee to update the Board.
The Board has approved the matters specifically reserved for consideration by the Board. The Board determines the responsibilities and authority of its committees, individual Directors and the level of authorities delegated to management. The Audit Committee, Nomination Committee and Remuneration Committee have terms of reference approved by the Board that can be found on the Company's website, www.bloomsbury-ir.co.uk. Matters considered at Board meetings during the year have typically included:
✷ regular reports by the Chief Executive, proposals and updates on developing business operations, significant investments, major initiatives, other organisational changes, environmental impact of the business and health and safety;
✷ reports of the chairs of Board committees and minutes following committee and subcommittee meetings;
There is a clear division of responsibilities at the head of the Company, with the Chairman responsible for the effective operation of the Board, encouraging the active participation of all Directors, and the Chief Executive responsible for the strategic running of the Company's businesses. The Board has approved formal statements describing the role and remit of both the Chairman and Chief Executive, which further emphasise this division of responsibilities and can be found at www.bloomsbury-ir.co.uk .
The Executive Directors regularly hold formal meetings with senior managers as a management team to assist the Chief Executive in fulfilling his operational and strategic objectives. This management team makes recommendations to the Board and seeks approval from the Board where required. The Non-Executive Directors constructively challenge and help develop proposals on strategy and proposed corporate initiatives such as acquisitions at meetings specifically set up for the purpose attended by all Board members.
All Directors and Board committees have access to the advice and services of the Group Company Secretary, who is responsible for ensuring that Board procedures are followed and advising the Board, through the Chairman, on governance matters and best practices. Directors also have access to independent professional advice, if required, at the Company's expense.
The Chairman has held meetings during the year with the Non-Executive Directors without the Executive Directors present to discuss relevant matters.
A standing item on Board agendas at the start of meetings is for Directors to disclose their significant interests. The Board has reviewed the interests of the Directors and maintains a register of areas of conflict of interest for Directors. In accordance with the Board's formal policy, should a matter arise where there is a risk of a conflict in the Board discussing matters or making decisions then the Director affected by the conflict will absent themselves from the room whilst the matter is considered.
The Board considers each of the Non-Executive Directors who served during the year to be independent in character and judgement and does not consider that there are any relationships or circumstances which affect, or could appear to affect, their independent judgement.
The table below shows the attendance at main Board and committee meetings during the year ended 29 February 2016. Further meetings in addition to the figures included in the table below were convened during the year for subcommittees of Directors delegated by the Board to consider specific matters.
| Date appointed during the year |
Date resigned during the year |
Board | Remuneration | Audit | Nomination | |
|---|---|---|---|---|---|---|
| Total number of meetings during the year | 8 | 5 | 3 | 1 | ||
| Executive Directors | ||||||
| Nigel Newton (Chief Executive) | – | – | 8 | 4† | 3* | 1 |
| Richard Charkin | – | – | 8 | – | 3* | – |
| Wendy Pallot | – | – | 8 | 3† | 3* | – |
| Jonathan Glasspool** | 23 July 2015 | – | 4 | – | 1* | – |
| Non-Executive Directors | ||||||
| Sir Anthony Salz (Chairman of the Board) | – | – | 8 | 5 | 3* | 1 |
| Jill Jones | – | – | 8 | 5 | 3 | 1 |
| Stephen Page | – | – | 7 | – | 3 | 1 |
| Ian Cormack | – | 23 July 2015 | 3 | 3 | 2 | – |
| John Warren** | 23 July 2015 | – | 4 | 2 | 1 | – |
* Not a member of the Board committee. Attended committee meetings as a guest of the Chair of the Committee.
† The Executive Directors attend by invitation only for relevant parts of Remuneration Committee meetings to provide updates.
** Attended all meetings they were required to do so from the date of their appointment.
The Board conducts a formal evaluation annually that considers the balance of skills, experience, independence and knowledge of the Board, its diversity including gender, how the Board works together as a unit and other factors relevant to its effectiveness. The evaluation reviews the progress made by the Board with developing strategy and with the underlying processes supporting the effective operation of the Board including the quality of information it receives.
The evaluation of the Board and of each individual Director is through:
✷ the Chief Executive conducts additional management appraisals of the Executive Directors and the senior management team;
✷ the Board discusses the findings and recommendations for improvement actions in respect of all the evaluations of the Board, each Director, the Board committees and the processes supporting the Board; and
Upon completing the interviews, the Chairman and Senior Independent Director make formal reports to the Board on the findings with recommendations for actions to be implemented by the Board, by individual Directors, by the Group Company Secretary and by senior management in the business. Where needed the Chairman holds confidential follow-up meetings with individual Directors to address concerns they have raised or to address concerns raised about them. The Board monitors progress relating to implementing the actions arising from the Board evaluation.
Board committees are evaluated annually against the terms of reference for the committee and against adherence to relevant regulation such as the Code. The committees approve the evaluations and make recommendations to the Board on any changes needed to the Board processes and terms of reference.
The conclusions of the Board evaluations are considered by the Nomination Committee when reviewing the structure and composition of the Board and succession planning. As a result of the review of performance, the Chairman on behalf of the Board confirms that each of the Directors proposed for re-election at the AGM continues to contribute effectively and to demonstrate commitment to the role (including commitment of time for Board and committee meetings and any other duties).
Examples of the matters arising from the 2015/16 Board and committee evaluations include:
The Board led by the Chairman is responsible for ensuring an open dialogue with Shareholders based on the mutual understanding of objectives.
The Annual Report, interim reports, AGM, market updates and post-results announcement presentations are the principal means through which the Company communicates its strategy and performance to Shareholders. All Shareholders are welcome to attend the AGM, at which senior managers give presentations on the business and investors are encouraged to take advantage of the opportunity given to ask questions. The chairs of the Audit, Remuneration and Nomination Committees attend the AGM and are available to answer questions.
The Company maintains an active dialogue with its institutional Shareholders and City analysts through a planned programme of investor relations. The programme includes formal presentations of results and post-results meetings with the major Shareholders and other investors who request meetings. The presentations are made available at www.bloomsbury-ir.co.uk. The meetings and presentations provide an opportunity for Shareholders to ask questions and to meet Directors. The outcome of regular meetings with the main Shareholders, presentations and post-results meetings is reported to the Board. This includes both feedback from individual Directors and feedback collated from discussions by the Company's corporate broker or public relations representative with the main Shareholders and City analysts. The Company's corporate broker provides regular analysis of Shareholder holdings. Feedback from Shareholders and other members of the Shareholder corporate governance community is used to help review and develop Bloomsbury's procedures.
The Chairman writes to the major Shareholders each year to provide Shareholders with the opportunity to discuss corporate governance matters, including remuneration, and to raise any concerns. Following the meetings the Chairman reports to the Board on the discussions held including any feedback from the Shareholders.
The Board evaluation including Director appraisals by the Chairman considers whether each Director has refreshed their skills and knowledge sufficiently and provides an opportunity for Directors to identify where training and development can assist them in the performance of their duties. Development may include, for example, meetings with senior managers to gain an improved understanding of the business.
Directors are provided with extensive director knowledge checklists to help them self-assess their personal learning needs and they have access to numerous relevant publications by Bloomsbury. Formal training is provided to the Board by the External Auditor and external remuneration consultants, who assign time in meetings to provide updates on and to explain topical areas of corporate governance, remuneration, auditing and financial reporting.
The Board is progressively refreshed, bringing in new skills and experience to the pool of knowledge on the Board from which each Director on the Board can learn.
The Committee comprises the Non-Executive Chairman of the Board, who chairs the Committee, and the three Independent Non-Executive Directors and the Chief Executive.
The Committee operates under terms of reference agreed by the whole Board, which are available on the Company's website www.bloomsbury-ir.co.uk. Its role is to review the composition of the Board, consider succession planning and nominate to the Board, for approval, candidates to fill Board vacancies. The Committee determines the Directors who should stand for re-election at the AGM in accordance with the Articles of Association of the Company. Starting from the 2016 AGM on 19 July 2016, all Directors will stand for re-election annually. The Board formally approves the appointment of all new Directors on the recommendation of the Committee.
The Board adopts a formal and rigorous approach to the appointment of Directors. The following outlines the Board appointment process typical to that followed:
The Group Company Secretary ensures that new Directors receive a full, formal and tailored induction on joining the Board. Newly appointed Directors are provided with induction packs and one-toone meetings are arranged for them with the senior management team. Directors are provided with a detailed knowledge selfassessment questionnaire to help them consider any further training needs they may have.
The significant Shareholders are invited to contact or meet with a new Chairman. Any request by a Shareholder to meet with a new Director would be considered by the Board. Investors will typically get the opportunity to meet with Directors at AGMs, at presentations and meetings following the announcements of the results.
The Board may require all Directors to retire for rotation at an AGM and stand for re-election.
As a minimum all Directors are subject to reappointment by the Shareholders at the first Annual General Meeting after their appointment and thereafter at intervals of no more than three years.
Non-Executive Directors are appointed for periods of three years upon the end of which their appointment terminates subject to their reappointment by the Board. A policy is followed of progressive refreshing of the Board and the Independent Non-Executive Director team aligned with the changing needs of the business.
The notice periods by the Company of the Directors are set out in the Directors' Remuneration Report on pages 58 to 74.
The Board aims for at least one third, or the nearest number to a third, of Directors on the Board to be women. The Board presently comprises two women out of eight Directors. The Board is progressively refreshed and new appointments are selected by the Nomination Committee using independent search consultants based on merit as the best candidate for the role.
The Remuneration Committee comprises two Independent Non-Executive Directors and the Non-Executive Chairman of the Board and is chaired by Jill Jones. The role of the Committee is set out in the Directors' Remuneration Report on pages 58 to 74.
The following table provides the statements required and information in respect of the Code provisions relating to financial reporting, internal control and risk management.
| Code provision | Compliance |
|---|---|
| C.1.1, C.3.4 | Fair, balanced and understandable view |
| The Board confirms that, in the opinion of the Board and the Committee, the Annual Report and Accounts on pages 1 to 138, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy. |
|
| C.1.2 | Business model |
| The Strategic Report on pages 1 to 41 provides an explanation of the basis on which the Company generates and preserves value over the longer term (the business model) and the strategy for delivering the objectives of the Company. |
|
| C.1.3 | Going concern |
| The Risk Factors section on pages 32 to 35 sets out how the Board has evaluated the material uncertainties to the Group's ability to continue as a going concern over a period of at least 12 months from the date of approval of the financial statements. |
|
| Accordingly, the Board continues to adopt the going concern basis in preparing the consolidated and Company financial statements in accordance with Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009, published by the Financial Reporting Council in October 2009. Further going concern disclosure is given in the financial statements as noted in note 2c) of the significant accounting policies on page 84. |
|
| C.2.1 and C.2.3 | Systems of risk management and internal control |
| The principal risks are described in the Risk Factors section on pages 32 to 35, which explains how the risks are being managed and mitigated. The Directors confirm they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. |
|
| The Board has monitored the Company's risk management and internal control systems and carried out a review of their effectiveness covering all material controls, including financial, operational and compliance controls. Further details of this review are below. |
|
| C.2.2 | Viability statement |
| The Risk Factors section on pages 32 to 35 sets out how the Board has taken account of the Group's current position and principal risks and how it has assessed the prospects of the Group over a period of three years. The Board has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the assessment period. |
|
| C.3.8 | Significant issues in relation to the financial statements |
| The issues that the Committee considers significant in relation to the financial statements and how these issues are addressed are set out overleaf. |
The Committee comprises three Independent Non-Executive Directors. The Chair of the Committee is John Warren, a Fellow of the Institute of Chartered Accountants in England and Wales. The Board is satisfied that the experience and qualifications of John Warren are sufficient for him to meet the experience and qualification requirements to be a member of the Audit Committee, with recent and relevant financial experience under the Code and the UK listing authority Listing Rules appropriate to the Company.
The Committee typically invites the External Auditor, Internal Auditor, Chairman of the Board, Chief Executive, Finance Director and the other Executive Directors to attend meetings. It meets at least once in respect of each reporting period. There is a standing item on the agenda for each meeting is for the External Auditor to meet the Committee alone without management present, which provides an opportunity for Committee members and the External Auditor to share any concerns that they may have.
The terms of reference of the Committee can be found on the Company's website, www.bloomsbury-ir.co.uk, and set out the role and authority of the Committee. Responsibilities and matters reserved for the Committee include:
✷ to develop and implement policy on the engagement of the External Auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm;
✷ to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken; and
The Committee formally reviews the whistleblowing arrangements of the Company by which staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The Committee's objective is to ensure that arrangements are in place for the proportionate and independent investigation of such matters and for appropriate follow-up action. The Group's whistleblower policy and procedures are found at www.bloomsbury-ir.co.uk and are available to all staff.
The Committee reviews the plans, findings and recommendations of the Internal Auditor, and management's responses to internal audit recommendations. It ensures that the internal audit function is adequately resourced in light of the system of risk management and has appropriate standing within the Company. The Committee approves the appointment and removal of the Head of Internal Audit, who for the financial year up to the time of signing this report was the Group Company Secretary.
The Audit Committee has primary responsibility for making a recommendation on the appointment, reappointment and removal of the External Auditor.
The appointment of the External Auditor was tendered following the 2013 AGM and the Board appointed KPMG LLP as External Auditor for the Group and for the Company for audits for the year ended 28 February 2014 and onwards. The detailed tender process followed is set out in the Annual Report for the year ended 28 February 2014.
The Committee assesses the effectiveness of the audit process as an item on the agenda for Committee meetings. In forming its view on the effectiveness of the audit process the Committee considered:
The annual evaluation of the Board considered the effectiveness of how the external audit process integrated with the business processes for the Group.
The Committee is satisfied that KPMG has performed an effective audit that provided the Committee with adequate assurance.
The Committee has approved a formal policy on the provision of non-audit services to safeguard the independence and objectivity of the External Auditor and reviews the level of non-audit fees relative to audit fees. The full policy is found on the website www.bloomsbury-ir.co.uk. A list has been approved by the Committee of services that the External Auditor is prohibited from undertaking which includes:
Other policy terms include:
The Code requires the Directors to assess at least annually the effectiveness of the Group's systems of internal control, which include financial, operational and compliance controls, and the system of risk management. This review has been carried out by the Audit Committee on behalf of the Board.
The Board has overall responsibility for the Group's system of internal control and for reviewing its effectiveness, for setting policy on internal control, and for reviewing the effectiveness of internal control. The role of management is to implement Board policies on risk and control. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable, and not absolute, assurance against material financial misstatement or loss.
The Board operates both formally, through Board and committee meetings, and informally, through regular contact amongst Directors. High level decisions on such matters as strategy, financial performance and reporting, dividends, risk management, major capital expenditure, major acquisitions and disposals are reserved for the Board or Board committees. For its regular formal meetings, the Board receives appropriate information in advance from management. Other decisions outside of these areas are delegated to the Company's management, who report to the Chief Executive.
The Board has put in place an ongoing process for identifying, evaluating and managing the significant risks faced by the Company in accordance with "Financial Reporting Council, Internal Control Revised Guidance For Directors On The Combined Code October 2005" (formerly Turnbull guidance on internal control). This process has been in place for the year under review and up to the date of approval of this Annual Report. The process is regularly reviewed by the Audit Committee on behalf of the Board to ensure that the procedures implemented continue to be effective and, where appropriate, recommendations are made to management to improve the procedures. The Company's system of internal financial control aims to safeguard the Company's assets, and ensure that proper accounting records are maintained, that the financial information used within the business and for publication is reliable, that business risks are identified and managed and that compliance with appropriate legislation and regulation is maintained.
The preparation of the consolidated financial statements of the Company is the responsibility of the Finance Director and is overseen by the Audit Committee and the Board. This includes responsibility for ensuring appropriate internal controls are in place over financial reporting processes and related IT systems. The Audit Committee monitors the risks and associated controls over financial reporting processes, including the consolidation process.
Relevant features of the Company's system of internal controls and risk management in relation to the financial reporting process and preparation of the Group financial statements include:
✷ Organisational culture: The Company has a highly skilled, professional and committed workforce. The Board is committed to developing a culture of openness, integrity, competence and responsibility. The Board concentrates mainly on strategic and significant organisational issues, approving objectives and monitoring, at a high level, the financial and operational performance against objectives.
✷ Book title acquisition procedures: Established procedures, such as the review and approval by an Executive Director of acquisition proposals of rights to new books, are operated within set authority limits and used for transactions in the ordinary course of business. Acquisitions exceeding delegated authority limits require approval by the Board. Significant acquisitions of companies and businesses are approved by the Board. The Board has set authorised limits for the total author advances held on the Statement of Financial Position as a percentage of net assets and for the total value of committed but unpaid advances.
✷ Accountability: The Company has clearly defined lines of responsibility headed by the Chief Executive and Executive Committee to control the publishing divisions and business functions. Detailed operational and financial performance data are monitored by supervisory management to ensure the performance of operations is in line with targets. The reasons for variances and underperformance are established by supervisory line management and followed up with managers and staff.
Significant failings or weaknesses in the internal controls Pursuant to provision C.2.3 of the Code, the Committee concludes from its review of the systems of risk management and internal control that the internal controls are adequate for the business of Bloomsbury, including all the Group companies. From this review, the Committee has not identified any significant internal control weaknesses that challenge the Group in achieving its objectives.
The One Global Bloomsbury structure of four worldwide publishing divisions supported by Group functions ensures an effective internal control framework and provides a platform for integrating acquisitions as the Group grows and evolves.
Management assigns and monitors control effectiveness ratings to the internal controls across all the business processes worldwide based on the benefits expected from making improvements given the investment of resources that would be required. Based on this, management has identified that the Group's information systems is the process area where most improvement can be made to help increase productivity and effectiveness of the business. In particular, work is ongoing to simplify the legacy systems and introduce new reporting systems to help manage the risks from expansion across new markets, new product types and acquisitions.
In accordance with Code Provision C.3.8, the following are the issues that the Committee considers significant in relation to the financial statements and how these issues are addressed.
For each item below, the Committee has reviewed the assumptions and judgements made and has considered the risks to the integrity of information reported in the financial statements. In accordance with the Code the Committee has taken account of the disclosure of the issues when forming an opinion on the fair, balanced and understandable view of the Annual Report.
The level of inventories and the inventory provision are set out in note 15 to the financial statements.
For each line of inventory, a provision is made against the cost of the inventory, where the Net Realisable Value is less than cost. Net Realisable Value is the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
The estimated selling price for each inventory line is a judgement based mainly on recent selling patterns for a title. A formulaic provision is applied to each inventory line where titles have been published for more than one year. The Committee considered the judgements applied to estimating the selling prices of inventory. This was to ensure that the total level of provision for all inventory was adequate.
The level of sales return provision is set out in note 16 to the financial statements.
Printed books are normally sold on a sale-or-return basis. The timing of returns of unsold books is uncertain. A provision is made against sales for the expected future returns of books that have not occurred by the end of an accounting period. This provision is a judgement based on the assumption of the time lag following a sale before a return is made and the calculation of the historic returns rate.
The Committee considered the judgements made in estimating the key assumptions. This was to ensure that the sales return provision was adequate.
Included within rights and services revenues are licenses over Bloomsbury's IP to third parties, as stated in note 3 to the financial statements. The revenue recognised from these licences in any one period mainly reflects the value of contracted performance obligations satisfied in that period. The revenue recognition treatment for more complex deals is reviewed by the External Auditors as soon as contracted.
The Committee considered the judgements applied to the most significant licenses. This was to ensure that the revenue recognition treatment was adequate.
The carrying value of goodwill arising on the acquisition of companies (or groups of companies) by the Group is set out in note 11 to the financial statements.
Goodwill is carried at cost less accumulated impairment losses. For the purposes of impairment testing, goodwill is allocated to each of the Group's cash generating units ("CGUs") that is expected to benefit from the synergies of the combination. If the recoverable amount of a CGU is less than its carrying value, an impairment charge reduces goodwill and is recognised in the Income Statement. There is more detail on this process in note 2j to these financial statements. The recoverable amount is based on future cash flow projections based on a Board approved budget and the five-year plan.
The Committee considered the judgements and assumptions made in selecting CGUs and performing the impairment tests for each CGU, to ensure that the carrying value for goodwill was adequately supported. In particular, the Committee reviewed the annual budget and five-year plan for the Group, as approved by the Board, which is used as the basis for forecasting future cash flows from the CGUs.
Trade and other receivables in the Group Statement of Financial Position, in note 16 to the financial statements, include net unearned author advances of £22.2 million (2015: £21.4 million).
A provision is made against gross advances (paid and payable) to the extent that they are not expected to be fully earned from anticipated future sales of a title. This provision is a judgement that depends on recent royalty earnings and known future new format releases.
The Committee considered the assumptions made for the titles with the largest net advances across the Group to ensure that the net carrying value of advances was adequately supported. By order of the Board
Group Company Secretary
Annual Statement
I am delighted to present the Directors' Remuneration Report for Bloomsbury Publishing Plc for the year ended 29 February 2016 (the "Report"). The Report has been prepared on behalf of the Bloomsbury Board by the Remuneration Committee (the "Committee") and has been approved by the Board.
The Report is split into the following two sections:
The Annual Report on Remuneration will be subject to an advisory Shareholder vote at the forthcoming AGM on 19 July 2016. The Directors' Remuneration Policy Report will be subject to a binding vote every three years (sooner if changes are made to the policy), next due at the 2017 AGM.
Bloomsbury delivered another good performance for the year ended 29 February 2016 against the background of a publishing marketplace that continues to evolve. The Committee set a stretching annual bonus threshold target for Group performance (see below) for the year based on the City analysts' consensus forecast for PBTA. Although the business came close to meeting the threshold target, given the target was not exceeded the Committee has determined that no bonus should be paid for the year.
The PSP awards granted on 29 November 2013 were determined to have vested at 16.5% of the maximum (100% of awards) in 2015/16 based on earnings per share (50% of awards) over the three years ended 29 February 2016. Relative total shareholder return (50% of awards) over the three years from the date of grant was below the threshold target so did not trigger vesting.
The Committee continually reviews the Executive Director Remuneration Policy to ensure it promotes the attraction, motivation and retention of the high quality executives who have been key to delivering the Company's strategy in the past and who will be key to delivering sustainable earnings growth and Shareholder return in the future. For 2016/17, the Committee has concluded that:
In line with best practice, the LTIP awards in respect of 2016/17 and onwards will be granted subject to a two-year post-vesting holding period in addition to the existing shareholding guidelines so that, during the holding period, vested shares may not be sold by the Executive Director and remain subject to a clawback provision. The holding period will continue to apply should an Executive Director leave Bloomsbury.
The current Remuneration Policy was approved by the Shareholders at the 2014 AGM held on 22 July 2014. In line with the regulations requiring the renewal of the Remuneration Policy at least every three years, the Committee will review the policy in light of best practice and will seek Shareholder approval to renew the policy at the 2017 AGM.
In applying the Remuneration Policy, the Committee's priority is to ensure that the interests of the Shareholders and, where beneficial to the Shareholders, other stakeholders are served whilst the Executive Directors and senior management team are treated fairly. In reaching its decisions the Committee considers the views and feedback it receives from Shareholders and other members of the Shareholder corporate governance community together with the views of management.
In conclusion, the Committee considers that the Remuneration Policy will incentivise the sustainable delivery of the Board's strategy, strong financial performance and the creation of long-term Shareholder value.
Chair of the Remuneration Committee 13 June 2016
The Committee has adopted the principles of good governance relating to Directors' remuneration as set out in the UK Corporate Governance Code issued September 2014 (the "Code"). This Report, together with the Annual Report on Remuneration, complies with the Companies Act 2006 (the "Act"), the UKLA Listing Rules of the Financial Services Authority and Directors' Remuneration: the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. The Company has complied with the provisions of the Code relating to Directors' remuneration throughout the year.
In determining the Remuneration Policy the Committee applies the key principles that remuneration should:
The Committee considers Shareholder feedback received in relation to the AGM each year. This feedback, plus any additional feedback received during any meetings from time to time, is then considered as part of the Group's annual review of the Remuneration Policy. In addition, the Remuneration Committee will seek to engage directly with major Shareholders and their representative bodies should any material changes be made to the Remuneration Policy. Major Shareholders and representative bodies were consulted in early 2014 in respect of the proposed changes to the long-term incentive policy.
Details of votes cast for and against the resolution to approve last year's Directors' Remuneration Report and any matters discussed with Shareholders during the year are set out in the Annual Report on Remuneration.
The Committee considers the general basic salary increase for the broader employee population when determining the annual salary increases for the Executive Directors. Employees have not been consulted in respect of the design of the Group's Executive Director Remuneration Policy, although the Committee will keep this under review.
The relative increase in CEO pay for the year under review, as compared with that of the general workforce, is set out in the Annual Report on Remuneration. The Committee also considers environmental, social and governance issues, and risk when reviewing executive pay quantum and structure.
| Element | Purpose and link to strategy |
Operation | Maximum | Performance targets |
|---|---|---|---|---|
| Salary | ✷ Reflects the value of the individual and their role ✷ Reflects skills and experience over time ✷ Provides an appropriate level of basic fixed income avoiding excessive risk taking arising from over reliance on variable income |
✷ Reviewed annually and normally effective 1 March ✷ Takes periodic comparisons against companies with similar characteristics and sector comparators |
✷ No maximum base salary or maximum salary increase operated ✷ Annual increases are typically linked to those of the wider workforce ✷ Where salaries are below market levels (e.g. upon promotion or a change of role) higher increases may be awarded where appropriate |
✷ N/A |
| Annual bonus |
✷ Incentivises annual delivery of financial and strategic goals ✷ Maximum bonus only payable for achieving demanding targets |
✷ Paid in cash ✷ Not pensionable |
✷ 100% of salary | ✷ Group profit (majority) ✷ Strategic objectives (minority) ✷ Personal objectives (minority) ✷ Clawback provisions operate for Executive Directors |
| Pension | ✷ Provides modest retirement benefits ✷ Opportunity for Executive Directors to contribute to their own retirement plan |
✷ Defined contribution/salary supplement or cash payment in lieu of pension contribution |
✷ Up to 15% of salary | ✷ N/A |
| Other benefits |
✷ To aid retention and recruitment |
✷ Company car or car allowance and the provision of private medical/permanent health insurance and life assurance |
✷ N/A | ✷ N/A |
| Long-term incentives |
✷ Aligned to main strategic objectives of delivering sustainable profit growth and shareholder return |
✷ Annual grant of nil cost options or conditional awards which normally vest after three years subject to continued service and performance targets |
✷ Normal annual grant policy is 100% of basic salary ✷ Enhanced award levels may be granted up to 150% of salary (e.g. upon an Executive Director's appointment) ✷ Dividend equivalents may be payable to the extent that shares under award vest |
✷ PSP performance normally measured over three years based on EPS growth targets and/or relative TSR ✷ 25% of awards will vest at threshold performance increasing pro rata to full vesting at maximum performance levels ✷ Clawback provisions operate for Executive Directors |
| Element | Purpose and link to strategy |
Operation | Maximum | Performance targets |
|---|---|---|---|---|
| Sharesave | ✷ To encourage employee share ownership by employees and |
✷ HMRC approved savings plan to fund the exercise of share options ✷ The exercise price may be discounted by up to 20% |
✷ Prevailing HMRC limits apply | ✷ N/A |
| therefore alignment with Shareholders |
✷ Provides tax advantages to UK employees |
|||
| Share ownership guidelines |
✷ To provide alignment between Executive Directors and Shareholders |
✷ Executive Directors are required to build and maintain a shareholding equivalent to one year's base salary through the retention of vested share awards or through open market purchases |
✷ 100% of salary holding for Executive Directors |
✷ N/A |
| Non | ✷ Reflects time | ✷ Cash fee paid monthly | ✷ No maximum fee or | ✷ N/A |
| Executive Director |
commitments of each role |
✷ Three-month notice periods | maximum fee increase operated |
|
| fees | ✷ Reflects fees paid by similarly sized companies |
✷ Annual increases are typically linked to those of the wider workforce, time commitment and responsibility levels |
Pension/Benefits Salary
Richard Charkin
97%
49%
33%
Maximum
Target
Minimum
£000
Long-Term Share Awards Annual Bonus
Pension/Benefits Salary
3%
1%
1%
✷ all non-routine payments to the Executive Directors including but not limited to leavers, to new appointees and in respect of a change of
The Committee will operate the annual bonus and PSP schemes according to the respective scheme rules (or relevant documents) and in accordance with the applicable regulations. Executive Director incentive schemes and remuneration plans are designed to align the interests of management with those of the Shareholders and are kept as simple as possible. Where the outcome of incentives is not as the Committee intended it may use its independent discretion to intervene and modify the outcomes to align the interests of management with those of the Shareholders.
The Committee has adopted terms of reference based on best practice and may apply its independent discretion in a number of ways through its conditional approval including for:
✷ all changes to Executive Director basic salaries, pensions and eligibility to benefits; and
control.
The following charts show the projected earnings in 2016/17 for each Executive Director under different performance scenarios:
Under the guidelines the Executive Directors are expected to build and maintain a shareholding valued at 100% of basic salary with no upper limit on the number of shares they may hold. A time limit is not set to accumulate the shareholding; however, Executive Directors are required to retain all shares arising from vested PSP awards (net of tax) or purchase shares until the shareholding guideline is met. The number of shares needed to satisfy the shareholding is recalculated annually at the close of the next business day following the announcement of the full year results taking account of changes to basic salary.
Significant external appointments of the Directors are given in the bibliographic details on pages 42 and 43. The Committee considers that the external appointments of the Executive Directors have no detrimental impact on the performance of their duties. The Committee has approved that each Executive Director may retain his or her remuneration earned from external appointments up to £15,000 per year.
The remuneration package for a new Executive Director would be set in accordance with the terms of the Company's prevailing approved Remuneration Policy at the time of appointment and take into account the skills and experience of the individual, the market rate for a candidate of that experience and the importance of securing the relevant individual.
Salary would be provided at such a level as required to attract the most appropriate candidate and may be set initially at a below midmarket level on the basis that it may progress towards the mid-market level once expertise and performance has been proven and sustained. The annual bonus potential would be limited to 100% of salary and grants under the PSP would be limited to 100% of salary (150% of salary in exceptional circumstances). In addition, the Committee may offer additional cash and/or share-based elements to replace deferred or incentive pay forfeited by an Executive leaving a previous employer. It would seek to ensure, where possible, that these awards would be consistent with awards forfeited in terms of vesting periods, expected value and performance conditions.
For an internal Executive Director appointment, any variable pay element awarded in respect of the prior role may be allowed to pay out according to its terms. In addition, any other ongoing remuneration obligations existing prior to appointment may continue.
For external and internal appointments, the Committee may agree that the Company will meet certain relocation and/or incidental expenses as appropriate.
If appropriate the Committee may agree, on the recruitment of a new Executive Director, a notice period in excess of 12 months but to reduce this to 12 months over a specified period.
Details of the service contracts of the Executive Directors, which are not of a fixed term and are terminable by either the Company or the Director, are set out below:
| Executive Directors | Date of agreement | Date of expiry | Notice period |
|---|---|---|---|
| Nigel Newton | 24 June 2003 | – | 12 months |
| Richard Charkin | 1 October 2007 | – | 12 months |
| Wendy Pallot | 10 March 2011 | – | 12 months |
| Jonathan Glasspool | 23 July 2015 | – | 12 months |
At the Board's discretion, early termination of an Executive Director's service contract may be undertaken by way of payment of salary and benefits in lieu of the required notice period (or shorter period where permitted by the contract of service or where agreed with the Executive Director) and the Committee would take such steps as necessary to mitigate the loss to the Company and to ensure that the Executive Director observed his or her duty to mitigate loss.
Annual bonus may be payable with respect to the period of the financial year served although it will be prorated for time and paid at the normal payout date. Any share-based entitlements granted to an Executive Director under the Company's share plans will be determined based on the relevant plan rules. However, in certain prescribed circumstances, such as death, ill-health, injury, disability, redundancy, retirement, sale of employing business or other circumstances at the discretion of the Committee, "good leaver" status may be applied. For good leavers, awards will normally vest at the normal vesting date, subject to the satisfaction of the relevant performance conditions at that time and reduced prorata to reflect the proportion of the performance period actually served. However, the Remuneration Committee has the discretion to determine that awards vest at cessation of employment and/or not to prorate awards.
The service contracts for Executive Directors are available for inspection at the Company's registered office.
Each of the Non-Executive Directors ("NEDs") has similar general terms for their agreement, which can be found on Bloomsbury's investor relations website at www.bloomsbury-ir.co.uk. The agreements provide for three months' notice by the Director or by the Company with the option for the Company to terminate an appointment at any time on payment of three months' fees in lieu of notice. Termination of the agreements is without compensation. Details of the NED agreements are as follows:
| Non-Executive Director | Date of appointment | Date of agreement | Date of expiry1 | Notice period |
|---|---|---|---|---|
| Jill Jones | 23 July 2013 | 22 July 2013 | July 2016 | 3 months |
| Stephen Page | 20 August 2013 | 20 August 2013 | July 2016 | 3 months |
| Sir Anthony Salz | 29 August 2013 | 29 August 2013 | July 2016 | 3 months |
| John Warren | 23 July 2015 | 26 May 2015 | July 2018 | 3 months |
The annual fees of NEDs, excluding the Chairman, are determined by the Chairman and the Executive Directors. The annual fee of the Chairman is determined by the other NEDs and the Executive Directors. NEDs receive a basic annual fee plus an extra annual amount for additional responsibilities such as chairing Board committees. The fees of the NEDs and Chairman are periodically reviewed against benchmark data provided by external remuneration consultants. Where NEDs and the Chairman receive an increase in annual fee this is normally limited to the budgeted annual increase in salaries for Bloomsbury employees. The NEDs and Chairman do not participate in the Company's annual bonus or share incentive schemes including Sharesave.
The following provides details of the Remuneration Policy which will be in operation for 2016/17 and that operated for the year ended 29 February 2016. Certain elements of this Report, as indicated, have been audited.
Following the close of the AGM on 23 July 2015, the Board made the internal appointment of Jonathan Glasspool as an Executive Director. Jonathan Glasspool joined Bloomsbury in 1999 and has a held a number of senior positions in the Company including leading the Academic and Professional publishing division from its start. Further biographical details can be found in the Directors Report.
Jonathan Glasspool was appointed to the Board at an entry-level salary of £200,000 set by the Committee, with the intention of salary enhancement to our targeted market pay positioning over time to reflect his development during his early period in role. The Committee is satisfied that he has proven himself and, after considering mid-quartile basic salaries of executive directors for companies with a similar
market capitalisation as the Company, has awarded a one-time enhanced increase of £25,000 (12.5%) to his basic salary from 1 March 2016 to align his salary with market. The Committee has no plans to award a further enhanced increase to his basic salary, outside of the normal cycle and considerations for the broader executive director group. Pension and minor benefits for Jonathan Glasspool are in line with the other the Executive Directors of the Company and are in accordance with the Remuneration Policy.
Prior to his appointment to the Board, Jonathan Glasspool received LTIP awards including grants under the Company's CSOP market price share option scheme (see below). Under the Remuneration Policy, CSOP options may not be granted to Executive Directors. The Committee has approved that Jonathan Glasspool may retain his CSOP options on his appointment as permitted by the Remuneration Policy. Future LTIP awards for Jonathan Glasspool will be grants made under the Company's PSP conditional share scheme at a level of 100% of basic salary in line with the other Executive Directors.
From 1 March 2016, the Group's employees generally, including Nigel Newton, Richard Charkin and Wendy Pallot, received a pay increase of 2% reflecting the underlying performance of the publishing business and in line with the market generally.
Jonathan Glasspool was appointed to the Board on 23 July 2015 at a lower initial salary. In view of his strong performance following his recent appointment, the Committee awarded Jonathan Glasspool a 12.5% increase taking his basic salary to £225,000 from 1 March 2016.
The basic salaries for the Executive Directors from 1 March are as follows:
| From | From | From | |
|---|---|---|---|
| 1 March | 1 March | 1 March | |
| 2016 | 2015 | 2014 | |
| Executive Director | £'000 | £'000 | £'000 |
| Nigel Newton | 424 | 415 | 407 |
| Richard Charkin1 | 346 | 339 | 333 |
| Wendy Pallot | 255 | 250 | 245 |
| Jonathan Glasspool2 | 225 | 200 | n/a |
As negotiated at the time of appointment, Richard Charkin's base salary includes a modest uplift in lieu of pension and car allowance.
Jonathan Glasspool was appointed to the Board from 23 July 2015 at a salary of £200,000 per annum.
In accordance with the policy, pension contributions will be set at 15% of basic salary for Nigel Newton, Wendy Pallot and Jonathan Glasspool. Directors may elect to receive a cash alternative in lieu of payments by the Company into their private pension arrangements. No pension contributions will be made by the Company for Richard Charkin.
Benefits will continue to comprise a car or car allowance (excluding Richard Charkin), medical cover, permanent health cover, life assurance and Company schemes offered to staff generally, such as buying books for private use at the staff discount rate.
For 2016/17, the maximum bonus potential will continue to be set at 100% of salary based on profit with 30% of the bonus paid subject to achieving further objectives comprising 10% on personal objectives and 20% on strategic objectives.
The Group Management Bonus scheme used in previous years for the Executive Directors will continue to be adopted for 2016/17. Under this scheme bonuses for the Executive Directors and approximately 40 managers are paid from a bonus pool determined by the Committee. The bonuses for the participants of the scheme are scaled back where the pool is not sufficient to pay maximum bonuses. The maximum bonus for each participant is capped and depends on them achieving their individual bonus objectives.
The pool is calculated as the excess of Adjusted Profits (before bonus) above a stretching target set by the Committee. No bonuses are paid if Adjusted Profits fall below the target.
Reflecting market practice for a FTSE SmallCap company, the PSP individual annual award limits under the current PSP is 100% of salary. The Committee has discretion to apply the exceptional limit of 150% of salary but envisages doing this only rarely when in the interests of the Shareholders.
The annual PSP awards granted in 2016 will be subject to the following targets:
to be the most appropriate measures of long-term performance for the Group, in that they ensure Executives are incentivised and rewarded for the earnings performance of the Group as well as returning value to Shareholders.
The awards for Executive Directors will be subject to clawback provisions and to a two-year post-vesting holding period in addition to the existing shareholding guidelines. During the holding period, an Executive Director (including if they stand down from the Board) may not sell their vested shares, which will remain subject to a clawback provision.
The Remuneration Committee has approved that the Executive Directors may participate in the Company's Sharesave scheme if operated during 2016/17.
Current annualised fees are as follows:
| From | From | ||
|---|---|---|---|
| 1 March | 1 March | ||
| 2016 | 2015 | ||
| Non-Executive Director | Position | £'000 | £'000 |
| Sir Anthony Salz | Chairman of the Board, Chair of the Nomination Committee | 103 | 103 |
| John Warren1 | Chair of the Audit Committee and Senior Independent Director | 39 | 39 |
| Jill Jones | Chair of the Remuneration Committee | 39 | 39 |
| Stephen Page | Independent NED | 38 | 38 |
Details of payments to Directors in respect of 2015/16 are as follows:
| Year ended 28/29 February |
Basic salary or fees £'000 |
Other benefits2 £'000 |
Pension contributions3 £'000 |
Performance related bonus4 £'000 |
Gain on share awards5 £'000 |
Total 7 £'000 |
|
|---|---|---|---|---|---|---|---|
| Executive Directors | |||||||
| Nigel Newton | 2016 | 415 | 22 | 62 | – | 48 | 547 |
| 2015 | 407 | 20 | 57 | 65 | 250 | 799 | |
| Richard Charkin | 2016 | 339 | 10 | – | – | 35 | 384 |
| 2015 | 333 | 8 | – | 50 | 179 | 570 | |
| Wendy Pallot | 2016 | 250 | 14 | 38 | – | 26 | 328 |
| 2015 | 245 | 14 | 37 | 38 | 160 | 494 | |
| Jonathan Glasspool1 | 2016 | 117 | 3 | 18 | – | 11 | 149 |
| 2015 | – | – | – | – | – | – | |
| Non-Executive Directors | |||||||
| Sir Anthony Salz | 2016 | 103 | – | – | – | – | 103 |
| 2015 | 101 | – | – | – | – | 101 | |
| Jill Jones | 2016 | 39 | – | – | – | – | 39 |
| 2015 | 38 | – | – | – | – | 38 | |
| Stephen Page | 2016 | 38 | – | – | – | – | 38 |
| 2015 | 37 | – | – | – | – | 37 | |
| John Warren1 | 2016 | 24 | – | – | – | – | 24 |
| 2015 | - | – | – | – | – | – | |
| Ian Cormack6 | 2016 | 16 | – | – | – | – | 16 |
| 2015 | 39 | – | – | – | – | 39 | |
| Total | 2016 | 1,341 | 49 | 118 | – | 120 | 1,628 |
| 2015 | 1,200 | 42 | 94 | 153 | 589 | 2,078 |
Salaries from date of appointment to the Board: John Warren and Jonathan Glasspool on 23 July 2015.
A description of other benefits received by the Directors is given in Part B on page 66.
Nigel Newton, Wendy Pallot and Jonathan Glasspool accrued pension contributions or a cash alternative amount during the year at a rate of 15% of basic salary.
Details of the annual bonus targets are given overleaf.
Details of the gains on PSP award share incentives are given overleaf.
Ian Cormack stood down from the Board on 23 July 2015.
Richard Charkin receives a fee of £10,575 per annum in respect of his external appointment as an Non-Executive Director of the Institute Of Physics Publishing that the Committee has approved he may retain. The Executive Directors received no other remuneration from external appointments as Non-Executive Directors.
As set out in the Strategic Report, Bloomsbury delivered another good performance for the year ended 29 February 2016 achieving profit before taxation and highlighted items of £13.0 million. The Committee set a stretching annual bonus threshold target for profit before taxation and highlighted items of £13.0 million based on the City analysts' consensus forecast. Although the business came close to meeting the threshold target, given the target was not exceeded, the Committee has determined that no bonus should be paid for the year. In making its determination, the Committee decided not to use its discretion to allow a bonus to be accrued.
The maximum bonus for each Executive Director is subject to 70% financial, 20% strategic and 10% personal objectives. The table below summarises the personal and strategic bonus objectives set for each Executive Director by the Committee. These would have been used to determine individual bonuses had a bonus been paid.
| Strategic area of focus | Nigel Newton | Richard Charkin | Wendy Pallot | Jonathan Glasspool | ||||
|---|---|---|---|---|---|---|---|---|
| Grow Non-Consumer | Integrate Osprey as per acquisition planb) |
5S | Grow A&P books sales |
5P | ||||
| Expand internationally | Improve distribution and sales arrangements |
10S | Develop/implement plans to grow Bloomsbury USA |
10S | ||||
| Create/exploit IP | Acquire rights/ initiate projects for Children'sa) |
5P | Acquire rights/ initiate projects for Adult |
5P | Acquire rights/ initiate projects for A&Pd) |
5P | ||
| Develop new Children's & Educational strategy |
5S | Renew key long-term contracts |
10S | |||||
| Benefit from digital | Lead development of Group technology strategy/plans |
10S | Expand digital products and services to institutional customers |
10S | ||||
| Establish solid profit streams |
Overhaul the Rights systems |
5P | Develop and deliver new Trade strategy |
5S | Complete next rollout phase of sales systemc) |
10S | ||
| Develop/implement processes for stock reduction |
5S | Continue to improve the author care process |
5P | Complete internal control improvements |
10P |
During the year, the Committee set the criteria for each objective for "high" (stretching target for full bonus), "medium" (threshold target for partial bonus) and "low" (no bonus accrues) achievement.
a) The acquisition of picture rights, publishing work, production and marketing for the Harry Potter and the Philosopher's Stone: Illustrated Edition regular and deluxe editions has been executed effectively resulting in significant sales worldwide of books.
b) Staff, stock and the publishing processes of the acquired Osprey Publishing group of companies have been effectively integrated into the Group with minimal disruption to the businesses.
The PSP awards granted on 29 November 2013 are set to vest in 2016 based on EPS performance over the three years ended 29 February 2016 for 50% of awards and relative TSR over the three years from grant for the other 50%. As disclosed in previous annual reports, the performance condition for this award was as follows:
| Metric | Performance condition | Threshold target | Stretch target | Actual | % Vesting |
|---|---|---|---|---|---|
| Earnings per Share | EPS of 15.1 pence (30% vesting of this part of | 15.1p EPS | 18.4p EPS | 15.24p EPS | 16.5% |
| (50% of awards) | an award) to EPS of 18.4 pence (100% vesting) | (out of a | |||
| for the year ended 29 February 2016. | maximum | ||||
| of 50%) | |||||
| Total Shareholder Return | TSR against the constituents of the FTSE Mid | 18% increase | 54% increase | 1% increase | 0%1 |
| (50% of awards) | 250 (excluding investment trusts). Median | in TSR | in TSR | in TSR | (out of a |
| (30% vesting of this part of an award) to top | (median TSR) | (top quartile | maximum | ||
| quartile (100% vesting) over three years | TSR) | of 50%) | |||
| from grant date. | |||||
Total estimated vesting of 2013 PSP awards 16.5%
For calculating Single Figure values, based on the above, estimated values for the 2013 PSP awards with EPS performance conditions for the Executive Directors are as follows:
| Executive | Type of award | Number of shares at grant with EPS |
Number of shares to lapse |
Number of shares to vest |
Number of Dividend Shares 2 |
Total | Estimated value 3 (£'000) |
|---|---|---|---|---|---|---|---|
| Nigel Newton | Conditional | 86,760 | 58,155 | 28,605 | 3,163 | 31,768 | 48 |
| Richard Charkin | award with EPS | 62,364 | 41,803 | 20,561 | 2,274 | 22,835 | 35 |
| Wendy Pallot | performance | 45,994 | 30,830 | 15,164 | 1,677 | 16,841 | 26 |
| Jonathan Glasspool | condition | 19,898 | 13,338 | 6,560 | 725 | 7,285 | 11 |
Dividend Shares are in lieu of dividends that would have accrued on the "Number of shares to vest" if held by the participants from the date of grant up to the date of vesting of awards.
Estimated value is based on the average share price in the last three months of the financial year being 152.45 pence (2015: 155.38 pence).
The values of 2012 PSP awards granted 5 December 2012 for the Executive Directors that vested with a performance period ending during the year ended 29 February 2016 are as follows:
| Total | Value of shares received3 |
||
|---|---|---|---|
| Executive | Type of award | shares received | (£'000) |
| Nigel Newton | 0 | 0 | |
| Richard Charkin | Conditional award with | 0 | 0 |
| Wendy Pallot | TSR performance condition granted 5 December 2012 |
0 | 0 |
| Jonathan Glasspool | 0 | 0 |
Details of PSP awards granted in 2015/16 are as follows:
| Date of | Face value | Vesting at | Vesting at | ||||
|---|---|---|---|---|---|---|---|
| Individual | Scheme | grant | Basis of award | £'000 | Threshold | Maximum | Performance period |
| Nigel Newton1 | 28 July 2015 | 100% of salary | 415 | 25% | 100% | TSR: 3 years to | |
| Richard Charkin1 | PSP | 28 July 2015 | 100% of salary | 339 | 25% | 100% | 28 February 2018 |
| Wendy Pallot1 | (Conditional | 28 July 2015 | 100% of salary | 250 | 25% | 100% | EPS: 3 years to |
| Jonathan Glasspool2 | awards) | 28 July 2015 | 55% of salary | 110 | 25% | 100% | 28 February 2018 |
✷ For 50% of awards (TSR awards): 25% of this part of an award will vest for a median TSR (nil vesting for below), increasing to 100% vesting of this part of an award for a top quartile TSR, measured against the FTSE SmallCap Index (excluding investment trusts); and
✷ For 50% of awards (EPS awards): 25% of this part of an award will vest for a compound annual growth rate in normalised EPS over the performance period in excess of annualised RPI ("Relative EPS growth") of 3% increasing prorata to 100% vesting of this part of an award for a Relative EPS growth of 8%.
| Type of award | Performance conditions | Date of grant |
Basis of award | Face value £'000 |
|---|---|---|---|---|
| TSR award | 28 July 2015 | 15% of salary | 30 | |
| EPS award | Same performance conditions as for the awards to the other Directors. | 28 July 2015 | 40% of salary | 80 |
| Total | 55% of salary | 110 |
In determining the level of the PSP awards to Jonathan Glasspool the Committee took account of:
✷ the normal annual grant policy of 100% of basic salary in total for EPS and TSR awards;
✷ the length of service as a Director during the year ended 29 February 2016 (approximately 61% of the full year); and
✷ the awards granted before appointment to the Board during the year ended 29 February 2016, namely market-priced share options with a concurrent EPS performance condition granted under the Bloomsbury 2014 Company Share Option Plan with a face value of £50,000. In accordance with the Remuneration Policy, the Committee approved that Jonathan Glasspool may retain these options upon his promotion to a Director.
The Committee anticipates the normal grant policy of 100% of salary will be applied to Jonathan Glasspool for future awards.
There were no payments made during the year to past Directors.
Ian Cormack stepped down as Non-Executive Director at the close of the 2015 AGM on 23 July 2015. No payment for loss of office was made to Ian Cormack.
PSP conditional share awards have been granted for nil consideration over Ordinary shares of 1.25 pence in the Company under the Bloomsbury 2005 Performance Share Plan ("2005 PSP") and the Bloomsbury 2014 Performance Share Plan ("2014 PSP"). The number of PSP conditional shares awarded is calculated based on the closing mid-market share price prevailing on the day before the date of grant. The following PSP conditional shares awarded to the Executive Directors were outstanding during the year:
| Date of PSP award |
Due date of exercise/expiry |
Price at grant date (pence) |
At 1 March 2015 |
Awarded during the year |
Exercised during the year |
Lapsed during the year |
Share price on date of exercise (pence) |
At 29 February 2016 |
|
|---|---|---|---|---|---|---|---|---|---|
| Nigel Newton | 5 Dec 2012 | 5 Dec 2015 | 115.50p | 256,711 | – | 74,446 | 182,265 | – | – |
| 29 Nov 2013 | 29 Nov 2016 | 170.88p | 173,519 | – | – | – | – | 173,519 | |
| 23 Dec 2014 | 23 Dec 2017 | 160.00p | 254,500 | – | – | – | – | 254,500 | |
| 28 Jul 2015 | 28 Jul 2018 | 162.75p | – | 255,238 | – | – | – | 255,238 | |
| Richard Charkin | 5 Dec 2012 | 5 Dec 2015 | 115.50p | 184,527 | – | 53,513 | 131,014 | – | – |
| 29 Nov 2013 | 29 Nov 2016 | 170.88p | 124,728 | – | – | – | – | 124,728 | |
| 23 Dec 2014 | 23 Dec 2017 | 160.00p | 201,626 | – | – | – | 201,626 | ||
| 28 Jul 2015 | 28 Jul 2018 | 162.75p | – | 208,480 | – | – | – | 208,480 | |
| Wendy Pallot | 5 Dec 2012 | 5 Dec 2015 | 115.50p | 129,234 | – | 37,478 | 91,756 | – | – |
| 29 Nov 2013 | 29 Nov 2016 | 170.88p | 91,988 | – | – | – | – | 91,988 | |
| 23 Dec 2014 | 23 Dec 2017 | 160.00p | 153,312 | – | – | – | – | 153,312 | |
| 28 Jul 2015 | 28 Jul 2018 | 162.75p | – | 153,732 | – | – | – | 153,732 | |
| Jonathan Glasspool | 5 Dec 2012 | 5 Dec 2015 | 115.50p | 58,874 | – | 17,073 | 41,801 | – | – |
| 29 Nov 2013 | 29 Nov 2016 | 170.88p | 39,795 | – | – | – | – | 39,795 | |
| 23 Dec 2014 | 23 Dec 2017 | 160.00p | 27,359 | – | – | – | – | 27,359 | |
| 28 Jul 2015 | 28 Jul 2018 | 162.75p | – | 67,588 | – | – | – | 67,588 |
For 50% of the 2013 awards: 30% of this part of an award will vest for a median TSR, increasing to 100% vesting of this part of an award for a top quartile TSR, measured against the FTSE 250 (excluding investment trusts).
For 50% of the awards from 2014 and onwards1 : 25% of this part of an award will vest for a median TSR, increasing to 100% vesting of this part of an award for a top quartile TSR, measured against the FTSE SmallCap (excluding investment trusts). Awards have a concurrent performance condition that no vesting occurs for Relative EPS growth below 0%.
Bloomsbury operates the 2014 Company Share Option Plan ("2014 CSOP") under which the Committee may grant options over Ordinary shares of 1.25 pence in the Company with performance conditions determined by the Committee to participants below the Board. The outstanding 2014 CSOP options granted to Executive Directors prior to their appointment as a Director that the Remuneration Policy permits the Director to retain are:
| At | Granted | At | Exercise | ||||
|---|---|---|---|---|---|---|---|
| 1 March | during | 29 February | price 1 | ||||
| 2015 | the year | 2016 | (pence) | Date of grant | Vesting date 2 | Expiry date | |
| Jonathan Glasspool | 18,750 | – | 18,750 | 160.00p | 24 Dec 2014 | Dec 2017 | Dec 2024 |
| – | 31,447 | 31,447 | 159.00p | 10 Jul 2015 | Jul 2018 | Jul 2025 |
The exercise price is the closing share price on the day before the grant date.
CSOP options vest on the third anniversary of the grant date for a compound annual growth rate in normalised EPS over the three-year performance period in excess of annualised RPI ("Relative EPS growth") of 0%.
Bloomsbury operates an HMRC approved Sharesave scheme for which all UK employees are eligible to participate. The following Sharesave options granted to the Executive Directors were outstanding at the year ended:
| At 1 March 2015 |
Granted during the year |
Exercised during the year |
At 29 February 2016 |
Exercise price 1 (pence) |
Date of grant | Date from which exercisable |
Expiry date | |
|---|---|---|---|---|---|---|---|---|
| Richard Charkin | 3,682 | – | (3,682) | – | 97.75p | 14 Jun 2012 | Aug 2015 | Feb 2016 |
| – | 6,346 | – | 6,346 | 141.8p | 16 Jun 2015 | Sep 2018 | Mar 2018 | |
| Wendy Pallot | 3,682 | – | (3,682) | – | 97.75p | 14 Jun 2012 | Aug 2015 | Feb 2016 |
| – | 6,346 | – | 6,346 | 141.8p | 16 Jun 2015 | Sep 2018 | Mar 2018 | |
| Jonathan Glasspool | 3,682 | – | (3,682) | – | 97.75p | 14 Jun 2012 | Aug 2015 | Feb 2016 |
| – | 3,808 | – | 3,808 | 141.8p | 16 Jun 2015 | Sep 2018 | Mar 2018 |
The interests of the Directors who served on the Board during the year are set out in the table below:
| Jonathan Glasspool3 Sir Anthony Salz |
23,559 5,000 |
n/a – |
134,742 – |
– – |
50,197 – |
3,808 – |
212,306 5,000 |
16% n/a |
|---|---|---|---|---|---|---|---|---|
| Jill Jones | – | – | – | – | – | – | – | n/a |
| Stephen Page | – | – | – | – | – | – | – | n/a |
| John Warren3 | 10,000 | n/a | – | – | – | – | 10,000 | n/a |
| Ian Cormack3 | n/a | 11,975 | – | – | – | – | 11,975 | n/a |
| Total | 1,698,224 | 1,671,223 | 1,751,865 | – | 50,197 | 16,500 | 3,528,761 |
The Shareholding Guideline (100% of salary) was introduced during the year ended 28 February 2013 and can be found on the Company's website www.bloomsbury-ir.co.uk. The guideline requires that the Executive Director must retain shares vesting from the PSP awards net of tax until the shareholding guideline has been met. The number of shares needed to satisfy a shareholding is recalculated at the close of the next business day following the announcement of the full year results (the "Review Date"). The recalculation is based on the Executive Director's prevailing base salary and the closing mid-market share price 153.25 pence) on the Review Date.
Owned includes shares held directly by the Director and indirectly by a nominee on behalf of the Director where the Director has the beneficial interest. It includes the shares of the Director and of connected persons defined under the Model Code annexed to the UKLA Listing Rules.
At the time of retiring from the Board on 23 July 2015, Ian Cormack held 11,975 Bloomsbury shares. John Warren and Jonathan Glasspool were appointed to the Board on 23 July 2015.
No Director has or has had any interest, direct or indirect, in any transaction, contract or arrangement (excluding service agreements), which is or was unusual in its nature or conditions or significant to the business of the Group during the current or immediately preceding financial year.
The closing market price of an Ordinary share at 29 February 2016 was 156.5p (2015: 149.25p) and the range of intra-day market prices from 1 March 2015 to 29 February 2016 was 141.1p to 185.0p (2015: 140.5p to 190.0p).
The chart below shows the Company's Total Shareholder Return for the year ended 29 February 2016 and for the seven prior years together with the FTSE SmallCap Media sector index. The index has been selected as it represents a broad equity market index of which the Company is a constituent member.
The chart aligns to the Company's accounting period, which was extended during the 14 months to 28 February 2011.
The total remuneration figures for the Chief Executive during each of the financial years of the relevant period are shown in the table below. The total remuneration figure includes the annual bonus based on that year's performance and PSP awards based on three-year performance periods ending in the relevant year (EPS) or just after the relevant year (TSR). The annual bonus payout and PSP vesting level as a percentage of the maximum opportunity are also shown for each of these years.
| Period ended | ||||||
|---|---|---|---|---|---|---|
| 28 February | ||||||
| 2011 | 29 February | 28 February | 28 February | 28 February | 29 February | |
| (14 months) | 2012 | 2013 | 2014 | 2015 | 2016 | |
| Total remuneration (£'000) | 900 | 785 | 617 | 749 | 799 | 547 |
| Annual bonus (%) | 84% | 54% | 0% | 17% | 16% | 0% |
| PSP vesting (%) | 0% | 50% | 50% | 50% | 56% | 16%[1] |
The table below shows the percentage change in the Chief Executive's salary, benefits and annual bonus between the financial year ending 28 February 2015 and 29 February 2016, compared to that of the total remuneration for all employees of the Company for each of these elements of pay.
| Total remuneration | |||
|---|---|---|---|
| Year ended | Year ended | ||
| 28 February | 29 February | ||
| 2015 | 2016 | % change | |
| Salary | |||
| Chief Executive (£'000) | 407 | 415 | 2% |
| All employees (£'m) | 21.2 | 22.8 | 8% |
| Benefits including pension | |||
| Chief Executive (£'000) | 77 | 84 | 9% |
| All employees (£'m) | 0.8 | 0.9 | 13% |
| Annual bonus | |||
| Chief Executive (£'000) | 63 | – | – |
| All employees (£'m) | 0.3 | – | – |
| Average number of employees | 550 | 585 | 6% |
The following table shows the Company's actual spend on pay (for all employees) relative to dividends.
| Year ended 28 February 2015 |
Year ended 29 February 2016 |
% change | |
|---|---|---|---|
| Staff costs (£'m) | 24.1 | 25.8 | 7% |
| Dividends declared (£'m) | 4.5 | 4.8 | 7% |
| Retained profits (£'m) | 3.5 | 4.8 | 37% |
The Annual Statement by the Chairman of the Remuneration Committee and Annual Report on Directors' Remuneration for the financial year ended 28 February 2015 was put to Shareholders at the Annual General Meeting held on 23 July 2015 on an advisory basis. The voting outcomes were as follows:
| Number | Percentage of the | |
|---|---|---|
| of shares | vote | |
| Votes cast in favour | 56,665,627 | 99.8% |
| Votes cast against | 127,001 | 0.2% |
| Total votes cast | 56,792,628 | 100% |
| Abstentions on voting cards | 9,700 |
The Remuneration Policy was last put to shareholders at the Annual General Meeting held on 22 July 2014 as an ordinary resolution. The voting outcomes were as follows:
| Number | Percentage | |
|---|---|---|
| of shares | of the vote | |
| Votes cast in favour | 52,547,667 | 99.4% |
| Votes cast against | 296,076 | 0.6% |
| Total votes cast | 52,843,743 | 100% |
| Abstentions on voting cards | 25,566 | |
The Committee determines the Remuneration Policy and annual remuneration plans for the Executive Directors for approval by the Board. In particular, the Committee approves for each Executive Director the basic salaries, pensions, other benefits, bonus awards and the awards made under Bloomsbury's Long Term Incentive Plan (see above). The Committee approves all payments of bonus and the vesting and exercise of share-based awards before payments are made for each Executive Director.
The Committee considers it is appropriate for the Executive Directors to determine the remuneration plans of senior management. In respect of employees below the level of the Board, the Committee approves the bonus pool from which bonuses are paid and approves the grant and vesting of all share incentives before payments are made.
For the year ended 29 February 2016 up until signing the Report, the Committee has comprised three Independent Non-Executive Directors as follows:
| Director | Appointed in the year (if applicable) |
Resigned in the year (if applicable) |
|---|---|---|
| Jill Jones (Chair of the Committee) | – | – |
| Sir Anthony Salz | – | – |
| John Warren | 23 July 2015 | – |
| Ian Cormack | – | 23 July 2015 |
The Group Company Secretary, Michael Daykin FCIS FCA, acts as secretary to the Committee. All meetings or business of the Committee have been conducted during the year with two Independent Non-Executive Directors and the Non-Executive Chairman present.
The Committee met formally on five occasions during the year, including one occasion without the Executive Directors present and four occasions with Executive Directors attending part of a meeting at the request of the Committee for specific items on the agenda. New Bridge Street attends Committee meetings where needed to provide technical support. The Committee Chair has a standing item on the agenda at each main Board meeting, which provides the opportunity for them to update on and raise remuneration matters for discussion by the Board. Minutes of the Committee are circulated to the Board once they have been approved by the Committee.
During the year the Committee took advice from external remuneration consultants, New Bridge Street, which does not perform other services for and has no other connection with the Company (a statement to this effect is included on the Company's website, www.bloomsbury-ir.co.uk). The Committee is free to choose its advisors and is satisfied that New Bridge Street continues to provide advice that is objective and independent. Fees paid to New Bridge Street for 2015/16 totalled £7,900.
The Committee received assistance from the Group Company Secretary and, where specifically requested by the Committee, the Chief Executive and Finance Director. The Committee has considered any feedback received from the major Shareholders during the year as part of Bloomsbury's ongoing investor relations programme and considers the reports and recommendations of Shareholder representative bodies and corporate governance analysts.
Approved by the Board of Directors and signed on its behalf
Chair of the Remuneration Committee 13 June 2016
We have audited the financial statements of Bloomsbury Publishing Plc for the year ended 29 February 2016, set out on pages 79 to 129. In our opinion:
In arriving at our audit opinion on the financial statements the risks of material misstatements that had the greatest effect on our audit were as follows:
| The risk | Our response |
|---|---|
| Revenue – £123.7m; Returns provision – £5.8m | |
| Refer to page 54 (Audit Committee Report), page 86 (accounting policy) and pages 91 to 93 (financial disclosures) There are contracts entered into by the Group for Rights and Services revenue (including sales of copyright and trademarks) that are complex. These arrangements may include: the licensing or outright sale of the Group's intellectual property; the provision of ongoing consultancy services; or a bundled combination of these. The complexity of the contractual terms requires the Group to make judgements in assessing when the triggers for revenue recognition have been met, particularly as to when the Group has sufficiently fulfilled its obligations under the contract (licensing, consultancy or outright sale) to allow revenue to be recognised. The Group is also required to make judgement in allocating fair value of the consideration to each deliverable included in a bundled arrangement, especially in instances where fair value of the individual deliverables is not observable on the open market. The Group typically sells its books on a sale or return basis. Estimating the level of returns from customers is subjective in nature due to the longer period of returns allowed in the industry and may have a material impact on the reported result at any given year end. As such this is a significant focus area for our audit. |
For all individually significant Rights and Services contracts signed during the year, our audit procedures included: |
| ✷ Reviewing the Group's determination of fair value for each deliverable in a bundled arrangement by reference to other available sources of information on fair value |
|
| ✷ Identifying from review of the contracts and discussions with the directors, the triggers for revenue recognition and assessing the risk of revenues being recorded in the incorrect period in respect of bundled contracts straddling the year end ✷ Obtaining evidence that the Group had fulfilled its obligations |
|
| under the contract so as to recognise revenues, which included, where appropriate, evidence of customer acceptance |
|
| ✷ For revenue on licensing arrangements that was recognised by the Group on delivery of the intellectual property, we considered whether there were any remaining contractual obligations or separate deliverables in the agreement which may preclude the recognition of revenue. |
|
| ✷ For the returns provision, our procedures included an assessment of historical returns from customers and comparing this against the returns rate used in the underlying provision calculation. |
|
| We obtained evidence of actual returns received in the year to prior year's provision to assess historical accuracy of the Group's provisions. |
To the members of Bloomsbury Publishing Plc only
| The risk Our response Goodwill – £42.1m Refer to page 54 (Audit Committee Report), page 87 (accounting policy) and pages 99 to 100 (financial disclosures) ✷ Our audit procedures included testing of the budgeting The Group has completed a number of significant acquisitions in the past four years. The recoverability of the goodwill is dependent on individual businesses acquired sustaining sufficient integrity of the discounted cash flow model. profitability in the future and the Group realising synergy savings ✷ We have used our knowledge of comparable companies and associated with the acquisitions. Due to the inherent uncertainty involved in forecasting and discounting future cash flows, which and methodology in determining the discount rate used to are the basis of the assessment of recoverability, this is a significant calculate the present value of projected future cash flows. risk area that our audit is focused on. ✷ We considered the historical accuracy of key assumptions by comparing the accuracy of the previous estimates of revenue of goodwill. Inventory – £27.6m Refer to page 54 (Audit Committee Report), page 88 (accounting policy) and page 104 (financial disclosures) ✷ We assessed the recoverability of inventory items based on The Group has significant inventory balances which could be at risk of obsolescence if stock levels exceed future sales volumes. sales made in the year and the Group's historic stock turns. We compared the estimates used in the stock provision calculation There is an inherent uncertainty in estimates of future sales |
||
|---|---|---|
| procedures upon which the forecasts are based and assessing the market data to challenge the assumptions, in particular the inputs |
||
| and cost growth to the actual amounts realised. We sensitised key assumptions, including the revenue growth rate and the discount rate and considered whether the disclosures about the sensitivity of the outcome of the impairment assessment to changes in key assumptions properly reflected the risks inherent in the valuation |
||
| volume and the related estimates of stock obsolescence, which may have a material impact on the reported result. As such this is a |
to the actual stock turnover rates in the year and assessed if the actual trend is followed while making predictions for future years. |
|
| significant focus area for our audit ✷ In addition we assessed whether inventory was recorded at the basis, the recorded unit cost of stock against the market sales price at the time of testing. |
lower of cost and recoverable value by comparing, on a sample | |
| consistently applied. | ✷ We also evaluated whether the Group's provisioning policy was | |
| Advances – £22.2m Refer to page 54 (Audit Committee Report), page 88 (accounting policy) and pages 104 to 105 (financial disclosures) |
||
| ✷ For individually significant advance balances, we challenged The Group pays royalty advances to its authors prior to the delivery of a manuscript. The Group recovers these advances forecasts for future sales by analysing the accuracy of historical from future sales by deducting royalties due to the author under estimates of recoverability, both by genre and by title. the terms of the relevant royalty agreement. |
✷ We considered any specific adjustments made by management to | |
| The advances balance is made up of a significant number of individual advances to authors and requires the Group to forecast sales to monitor recoverability of advances |
the historical trends in arriving at the final provision and provided challenge on whether such a position was justified. This involved |
|
| In determining whether advances are recoverable, the Group future which could have a material impact on the title's future must make judgements over the likely future sales of individual recoverability. titles. Where insufficient sales are forecast by the Group, a provision is recorded against each advance. |
discussing specific promotions or market events planned for the | |
| This is a significant risk area as there is inherent uncertainty regarding the future sales of individual titles arising from the changes in the economic environment, actions of competitors and forecasting risk. |
The materiality for the Group financial statements as a whole was set at £500,000, determined with reference to a benchmark of Group profit before taxation, of which it represents 5%.
We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding £25,000 in addition to other identified misstatements that warranted reporting on qualitative grounds.
Of the group's five reporting components, audits for Group reporting purposes were performed at the two reporting components in the UK and the USA, covering 93% of total Group revenue; 98% of Group profit before taxation and 95% of total Group assets. We have performed specific procedures over the year-end balance sheet of Osprey Group, which include obtaining inventory and cash confirmations. For the remaining components in Australia and India, we performed analysis at an aggregated group level to re-examine our assessment that there were no significant risks of material misstatement within these.
The Group audit team performed the audit of the UK component and instructed the USA component auditor as to the significant areas to be covered, including the relevant risks detailed above and the information to be reported back. The Group audit team approved the component materialities, which ranged from £400,000 to £450,000, having regard to the mix of size and risk profile of the Group across the components.
The Group audit team also visited the USA component, to assess the audit risk and strategy and to review the audit files. Telephone conference meetings were also held with the US component auditors. At the visit and meetings, the findings reported to the Group audit team were discussed in more detail, and any further work required by the Group audit team was then performed by the component auditor.
In our opinion:
To the members of Bloomsbury Publishing Plc only
Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified other information in the annual report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
Under the Listing Rules we are required to review:
We have nothing to report in respect of the above responsibilities.
As explained more fully in the Directors' Responsibilities Statement set out on pages 47 to 48, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate. This report is made solely to the company's members as a body and is subject to important explanations and disclaimers regarding our responsibilities, published on our website at www.kpmg.com/uk/auditscopeukco2014a, which are incorporated into this report as if set out in full and should be read to provide an understanding of the purpose of this report, the work we have undertaken and the basis of our opinions.
(Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square, London 13 June 2016
For the year ended 29 February 2016
| Year ended 29 February |
Year ended 28 February |
||
|---|---|---|---|
| Notes | 2016 £'000 |
2015 £'000 |
|
| Revenue | 3 | 123,725 | 111,125 |
| Cost of sales | (55,198) | (47,800) | |
| Gross profit | 68,527 | 63,325 | |
| Marketing and distribution costs | (17,065) | (15,519) | |
| Administrative expenses | (41,016) | (38,154) | |
| Operating profit before highlighted items | 13,115 | 12,127 | |
| Highlighted items | 4 | (2,669) | (2,475) |
| Operating profit | 4 | 10,446 | 9,652 |
| Finance income | 6 | 27 | 46 |
| Finance costs | 6 | (114) | (94) |
| Profit before taxation and highlighted items | 13,028 | 12,079 | |
| Highlighted items | 4 | (2,669) | (2,475) |
| Profit before taxation | 10,359 | 9,604 | |
| Taxation | 7 | (652) | (856) |
| Profit for the year attributable to owners of the Company | 9,707 | 8,748 | |
| Earnings per share attributable to owners of the Company | |||
| Basic earnings per share | 10 | 12.98p | 11.94p |
| Diluted earnings per share | 10 | 12.93p | 11.90p |
The notes on pages 84 to 117 form part of these consolidated financial statements.
For the year ended 29 February 2016
| Year ended 29 February 2016 £'000 |
Year ended 28 February 2015 £'000 |
|
|---|---|---|
| Profit for the year | 9,707 | 8,748 |
| Other comprehensive income | ||
| Items that may be reclassified to the income statement: | ||
| Currency translation differences on foreign operations | 3,214 | 1,954 |
| Items that may not be reclassified to the income statement: | ||
| Remeasurements on the defined benefit pension scheme | (24) | (106) |
| Other comprehensive income for the year net of tax | 3,190 | 1,848 |
| Total comprehensive income for the year attributable to the owners of the Company | 12,897 | 10,596 |
Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income is disclosed in note 7.
| Notes | 29 February 2016 £'000 |
28 February 2015 £'000 |
|
|---|---|---|---|
| Assets | |||
| Goodwill | 11 | 42,092 | 41,508 |
| Other intangible assets | 12 | 22,465 | 22,578 |
| Property, plant and equipment | 13 | 2,463 | 2,833 |
| Deferred tax assets | 14 | 2,988 | 3,607 |
| Trade and other receivables | 16 | 1,011 | – |
| Total non-current assets | 71,019 | 70,526 | |
| Inventories | 15 | 27,598 | 29,235 |
| Trade and other receivables | 16 | 71,461 | 61,700 |
| Cash and cash equivalents | 17 | 6,556 | 10,021 |
| Total current assets | 105,615 | 100,956 | |
| Total assets | 176,634 | 171,482 | |
| Liabilities | |||
| Retirement benefit obligations | 23 | 230 | 227 |
| Deferred tax liabilities | 14 | 2,675 | 3,119 |
| Other payables | 18 | 871 | 886 |
| Provisions | 20 | 43 | 482 |
| Total non-current liabilities | 3,819 | 4,714 | |
| Trade and other payables | 18 | 38,435 | 37,250 |
| Bank overdraft | 17 | 1,390 | – |
| Loans and borrowing | 19 | – | 2,500 |
| Current tax liabilities | – | 2,841 | |
| Provisions | 20 | 23 | 23 |
| Total current liabilities | 39,848 | 42,614 | |
| Total liabilities | 43,667 | 47,328 | |
| Net assets | 132,967 | 124,154 | |
| Equity | |||
| Share capital | 21 | 939 | 938 |
| Share premium | 39,388 | 39,388 | |
| Translation reserve | 21 | 7,043 | 3,829 |
| Other reserves | 21 | 6,829 | 6,056 |
| Retained earnings | 21 | 78,768 | 73,943 |
| Total equity attributable to owners of the Company | 132,967 | 124,154 |
The financial statements were approved by the Board of Directors and authorised for issue on 13 June 2016.
Director Director
| 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 28 February 2014 | 924 | 39,388 | 1,875 | – | 22 | 4,582 | (1,202) | 70,447 | 116,036 |
| Profit for the year | – | – | – | – | – | – | – | 8,748 | 8,748 |
| Other comprehensive | |||||||||
| income | |||||||||
| Exchange differences | |||||||||
| on translating foreign | |||||||||
| operations | – | – | 1,954 | – | – | – | – | – | 1,954 |
| Remeasurements on the defined benefit pension |
|||||||||
| scheme | – | – | – | – | – | – | – | (106) | (106) |
| Total comprehensive income for the year |
– | – | 1,954 | – | – | – | – | 8,642 | 10,596 |
| Transactions with owners | |||||||||
| Issue of shares | 14 | – | – | 1,386 | – | – | – | (3) | 1,397 |
| Dividends to equity holders of the Company |
– | – | – | – | – | – | – | (4,276) | (4,276) |
| Share options exercised | – | – | – | – | – | – | 864 | (749) | 115 |
| Deferred tax on share-based | |||||||||
| payment transactions | – | – | – | – | – | – | – | (118) | (118) |
| Share-based payment | |||||||||
| transactions | – | – | – | – | – | 404 | – | – | 404 |
| Total transactions with | |||||||||
| owners of the Company | 14 | – | – | 1,386 | – | 404 | 864 | (5,146) | (2,478) |
| At 28 February 2015 | 938 | 39,388 | 3,829 | 1,386 | 22 | 4,986 | (338) | 73,943 | 124,154 |
| Profit for the year | – | – | – | – | – | – | – | 9,707 | 9,707 |
| Other comprehensive | |||||||||
| income | |||||||||
| Exchange differences | |||||||||
| on translating foreign | |||||||||
| operations | – | – | 3,214 | – | – | – | – | – | 3,214 |
| Remeasurements on the defined benefit pension |
|||||||||
| scheme | – | – | – | – | – | – | – | (24) | (24) |
| Total comprehensive | |||||||||
| income for the year | – | – | 3,214 | – | – | – | – | 9,683 | 12,897 |
| Transactions with owners | |||||||||
| Issue of shares | 1 | – | – | – | – | – | – | (1) | – |
| Dividends to equity holders | |||||||||
| of the Company | – | – | – | – | – | – | – | (4,590) | (4,590) |
| Share options exercised | – | – | – | – | – | – | 331 | (243) | 88 |
| Deferred tax on share-based | |||||||||
| payment transactions | – | – | – | – | – | – | – | (24) | (24) |
| Share-based payment | |||||||||
| transactions | – | – | – | – | – | 442 | – | – | 442 |
| Total transactions with | |||||||||
| owners of the Company | 1 | – | – | – | – | 442 | 331 | (4,858) | (4,084) |
| At 29 February 2016 | 939 | 39,388 | 7,043 | 1,386 | 22 | 5,428 | (7) | 78,768 | 132,967 |
| Year ended 29 February 2016 |
Year ended 28 February 2015 |
|
|---|---|---|
| Notes | £'000 | £'000 |
| Cash flows from operating activities | ||
| Profit before taxation | 10,359 | 9,604 |
| Finance income | (27) | (46) |
| Finance costs | 114 | 94 |
| Operating profit | 10,446 | 9,652 |
| Adjustments for: | ||
| Depreciation of property, plant and equipment | 666 | 660 |
| Amortisation of intangible assets | 3,857 | 3,259 |
| Loss on sale of property, plant and equipment | 1 | 8 |
| Share-based payment charges | 487 | 496 |
| 15,457 | 14,075 | |
| Decrease/(increase) in inventories | 3,133 | (2,443) |
| (Increase)/decrease in trade and other receivables | (8,212) | 272 |
| Decrease in trade and other payables | (1,476) | (246) |
| Cash generated from operating activities | 8,902 | 11,658 |
| Income taxes paid | (3,870) | (1,410) |
| Net cash generated from operating activities | 5,032 | 10,248 |
| Cash flows from investing activities | ||
| Purchase of property, plant and equipment | (249) | (274) |
| Purchase of businesses, net of cash acquired | (60) | (5,325) |
| Purchases of intangible assets | (2,846) | (3,562) |
| Proceeds from sales of property, plant and equipment | – | 6 |
| Interest received | 9 | 26 |
| Net cash used in investing activities | (3,146) | (9,129) |
| Cash flows from financing activities | ||
| Equity dividends paid | (4,590) | (4,276) |
| Proceeds from exercise of share options | 88 | 115 |
| (Repayment)/drawdown of borrowings | (2,500) | 2,500 |
| Interest paid | (90) | (68) |
| Net cash used in financing activities | (7,092) | (1,729) |
| Net decrease in cash and cash equivalents | (5,206) | (610) |
| Cash and cash equivalents at beginning of year | 10,021 | 10,037 |
| Exchange gain on cash and cash equivalents | 351 | 594 |
| Cash and cash equivalents at end of year | 17 5,166 |
10,021 |
Accounting Policies
Bloomsbury Publishing Plc (the "Company") is a company domiciled in the United Kingdom. The address of the Company's registered office can be found on page 131. The consolidated financial statements of the Company as at and for the year ended 29 February 2016 comprise the Company and its subsidiaries (together referred to as the "Group"). The Group is primarily involved in the publication of books and other related services.
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented unless otherwise stated.
These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations adopted by the European Union ("EU") at the time of preparing these financial statements and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared under the historical cost convention and on a going concern basis.
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Review on pages 1 to 41. The financial position of the Group, its cash flows and liquidity position are described in the Financial Review on pages 25 to 31. In addition, note 24 to the financial statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments, and its exposures to credit risk and liquidity risk.
The Directors believe that the Group's diversification of product and geographical spread together with its monitoring and forecasting processes place the Group well in managing its business risks. The Group's forecasts and projections, taking into account reasonable possible changes in trading performance, indicate that the Group is able to operate within the level of its current available facilities including compliance with the bank facility covenants. Details of the bank facility and its covenants are shown in note 24c).
After making enquiries of senior management and reviewing cash flow forecasts, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence at least until June 2017, being the period of the detailed going concern assessment reviewed by the Board. They therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements.
The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Critical judgements and areas where the use of estimates is significant are disclosed in note 2v).
The following amendments and interpretations were introduced to accounting standards relevant to the Group during the year ended 29 February 2016. The table below summarises the impact of these changes to the Group:
| Accounting standard | Description of change | Impact on financial statements |
|---|---|---|
| IAS 19 Employee Benefits The amendment simplifies how to account for contributions that are made independently of the number of years of employee service. |
The amendment has not had any impact on the Group. |
|
| Annual Improvements to IFRS 2010–2012 cycle |
Amendments have been made to update and clarify various standards including IFRS 2 'Share-based Payment', IFRS 3 'Business Combinations', IFRS 8 'Operating Segments', IFRS 13 'Fair Value Measurement', IAS 16 'Property, Plant and Equipment', IAS 38 'Intangible Assets' and IAS 24 'Related Party Disclosures'. |
The amendments do not have an impact on the financial position or performance of the Group. |
| Annual Improvements to IFRS 2011–2013 cycle |
Amendments have been made to update and clarify various standards including IFRS 1 'First-time Adoption of International Financial Reporting Standards', IFRS 3 'Business Combinations', IFRS 13 'Fair Value Measurement' and IAS 40 'Investment Property'. |
The amendments made do not have an impact on the financial position or performance of the Group. |
Stock Code: BMY
The Directors are currently assessing the potential impact of other new and revised accounting standards, interpretations or amendments issued by the International Accounting Standards Board that are currently endorsed but not yet effective. They have not been adopted early by the Group and are not expected to have a material impact on the Group's financial statements.
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The Group measures goodwill at the acquisition date as:
Where the excess is negative, a bargain purchase gain is recognised immediately in the income statement.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in the income statement.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with the business combination are expensed as incurred.
Any contingent consideration payable is measured and recognised at fair value at the acquisition date. Subsequent changes to the fair value of contingent consideration are recognised in the income statement.
For acquisitions before 1 January 2010, the Group applies IFRS 3 'Business Combinations' (2004) in accounting for business combinations. All changes to contingent consideration in respect of these acquisitions are recognised as an adjustment to goodwill.
The consolidated financial statements comprise the financial information of the Company and its subsidiaries.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
Accounting policies of subsidiaries are aligned with accounting policies adopted by the Group to ensure consistency. All subsidiaries except Bloomsbury Publishing India Private Limited have a reporting period end of 29 February. Bloomsbury Publishing India Private Limited has a reporting period end of 31 March, which aligns with the Indian government's financial year.
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any non-controlling interests and the other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
Intra-Group balances and transactions, and any unrealised income and expenses arising from intra-Group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.
Accounting Policies
Revenue represents the fair value of consideration received from the provision of goods, services and rights falling within the Group's ordinary activities, after deduction of trade discounts, value added tax and anticipated returns.
Where contractual arrangements consist of two or more separate elements, such as access to multiple titles, revenue is recognised for each element as if it were an individual contractual arrangement.
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). These consolidated financial statements are presented in sterling (£) as this is the most representative currency of the Group's operations. All financial information presented in sterling has been rounded to the nearest thousand except where otherwise stated.
Transactions in currencies other than the functional currency are recorded in the functional currency at the rates of exchange prevailing on the dates of the transactions. Assets and liabilities in foreign currencies are translated into sterling at closing rates of exchange at the date of the statement of financial position.
Exchange differences are charged or credited to the income statement within administrative expenses.
The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in equity.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be generated to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the end of the reporting period.
Current and deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to other comprehensive income or equity, in which case the deferred tax is also recognised in other comprehensive income or equity respectively.
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see note 2f) i) less accumulated impairment losses, if any.
For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cashgenerating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently where there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss in the consolidated income statement. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.
Except for goodwill, intangible assets are amortised on a straight-line basis in the income statement over their expected useful lives by equal annual instalments at the following rates:
| Publishing relationships | — 7% to 20% per annum |
|---|---|
| Imprints | — 3% to 10% per annum |
| Subscriber and customer relationships | — 7% to 17% per annum |
| Product and systems development | — 14% to 20% per annum |
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively if appropriate.
Costs that are directly associated with the purchase and implementation of systems, such as software products, are recognised as intangible assets. Likewise costs incurred in developing a product, typically an online platform, are recognised as intangible assets.
Expenditure is only capitalised if costs can be measured reliably, the product is technically and commercially feasible, future economic benefits are probable and the Group has sufficient resources to complete development and use the asset.
Accounting Policies
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment loss.
Property, plant and equipment are depreciated in order to write down their cost less residual value using the straight-line method over their expected useful lives at the following rates:
| Short leasehold improvements | — over the remaining life of the lease |
|---|---|
| Furniture and fittings | — 10% per annum |
| Computer and other office equipment | — 20% per annum |
| Motor vehicles | — 25% per annum |
Depreciation is prorated in the years of acquisition and disposal of an asset. The estimated useful lives, residual value and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement.
At the end of each reporting period the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement.
Inventories include bound stock. The cost of work in progress and finished goods represents the amounts invoiced to the Group for origination, paper, printing and binding. Inventories are valued at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Provisions are made for slow-moving and obsolete stock.
Advances of royalties to authors are included within current receivables when the advance is paid less any provision required to adjust the advance to its net realisable value. The royalty advance is expensed at the contracted or effective royalty rate as the related revenues are earned.
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Financial assets and financial liabilities are recognised when the Group has become a party to the contractual provisions of the instrument. The Group's financial assets and liabilities are as below:
Trade receivables are initially stated at fair value after provision for bad and doubtful debts and anticipated future sales returns and thereafter they are held at amortised cost.
Stock Code: BMY
Cash and cash equivalents in the statement of cash flows comprise cash in hand and at bank, other short-term deposits held by the Group, repayable on demand and overdrafts. Bank overdrafts are included in current liabilities in the statement of financial position.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Trade payables are not interest bearing and are initially recognised at fair value and subsequently at amortised cost using the effective interest method.
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating lease by the lessee. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.
Pension costs relating to defined contribution pension schemes are recognised in the income statement in the period for which related services are rendered by the employee.
Until 1997 a subsidiary company operated a defined benefit pension scheme. The retirement obligation recognised in the statement of financial position represents the net of the present value of the defined benefit obligation and the fair value of plan assets at the statement of financial position date. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. The service cost, representing benefits accruing over the year, is included in the income statement as an operating cost. Net interest is calculated by applying the discount rate to the net defined benefit obligation and is presented as finance costs or finance income.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan either to terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
The Group issues equity-settled share-based payment instruments to certain employees. Equity-settled share-based payment transactions are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled sharebased payments is charged to the income statement on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest.
Options granted under the Group's share option schemes and sharesave scheme are equity settled. The fair values of such options have been calculated using the Black–Scholes model or a modified version of the same, based on publicly available market data.
Awards granted under the Group's Performance Share Plan are equity settled. Part of any award granted under the plan is subject to a Total Shareholder Return performance condition. The fair value of this element of the awards is calculated using the Stochastic model. The other part of any award granted under the plan is subject to an Earnings Per Share performance condition. The fair value of this element of the awards is calculated using the Black–Scholes model.
Accounting Policies
The Company operates an employee benefit trust and has de facto control of shares held by the trust and bears their benefits and risks. The Group considers the trust to be substantially under its control and so consolidates the financial information of the trust as stated in note 2f). The Group records the assets and liabilities of the trust as its own and shares held by the trust are recorded at cost as a deduction from Shareholders' equity. Finance costs and administrative expenses are charged as they accrue.
Operating segments, which have not been aggregated, are reported in a manner that is consistent with the internal reporting provided to the Chief Executive Officer ("CEO"), regarded as the Chief Operating Decision Maker.
The CEO views the Group primarily from a nature of business basis, reflecting the divisional performance of Adult, Children's & Educational, Academic & Professional and Information. Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Performance is evaluated based on operating profit contributions using the same accounting policies as adopted for the Group's financial statements.
Dividends are recognised as liabilities once they are appropriately authorised.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. The resultant estimates will, by definition, not necessarily equal the related actual results and may require adjustment in subsequent accounting periods. The estimates and assumptions that may cause a material adjustment to the carrying amount of assets and liabilities in the next financial year are:
Certain contracts entered into by the Group may include: the licensing or outright sale of the Group's intellectual property; the provision of ongoing consultancy services; or a bundled combination of both.
The Group considers contractual terms and makes judgements in assessing when the triggers for revenue recognition have been met, particularly that the Group has sufficiently fulfilled its obligations under the contract to allow revenue to be recognised and the allocation of revenue between multiple deliverables.
As books are returnable by customers, the Group makes a provision against books sold in the accounting period which is then carried forward and offset against trade receivables in the statement of financial position in anticipation of book returns received subsequent to the reporting period end. The provision is calculated by reference to historical returns rates and expected future returns.
A provision is made by the Group against advances on published titles which may not be covered by royalties on anticipated future title sales or subsidiary rights receivable. At the end of each financial year a review is carried out on all published titles advances. If it is unlikely that royalties from future title sales or subsidiary rights will fully earn down the advance, a provision is made in the income statement for the difference between the carrying value and the anticipated recoverable amount from future earnings.
At the end of each reporting period a review is carried out on all published titles where inventory is held. A provision is made by the Group against unsold inventory on a title by title basis, with regard to historical net sales and expected future net sales, to value the inventories at the lower of cost and net realisable value.
IFRS require management to undertake an annual test for impairment of indefinite life assets and, for finite life assets, to test for impairment if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Group currently undertakes an annual impairment test covering goodwill and other indefinite life assets and also reviews finite life assets to consider whether a full impairment review is required.
Intangible assets recoverability is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made. Note [11] details the assumptions used.
The Group is comprised of four worldwide publishing divisions: Adult, Children's & Educational, Academic & Professional and Information. These divisions are the basis on which the Group reports its primary 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:
| Adult | Children's & Educational |
Academic & Professional |
Information | Unallocated | Total | |
|---|---|---|---|---|---|---|
| Year ended 29 February 2016 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| External revenue | 45,994 | 41,840 | 32,669 | 3,222 | – | 123,725 |
| Cost of sales | (22,101) | (18,667) | (13,844) | (586) | – | (55,198) |
| Gross profit | 23,893 | 23,173 | 18,825 | 2,636 | – | 68,527 |
| Marketing and distribution costs | (7,118) | (5,942) | (3,922) | (83) | – | (17,065) |
| Contribution before administrative | ||||||
| expenses | 16,775 | 17,231 | 14,903 | 2,553 | – | 51,462 |
| Administrative expenses excluding | ||||||
| highlighted items | (14,108) | (11,194) | (11,720) | (1,325) | – | (38,347) |
| Operating profit before highlighted | ||||||
| items/segment result | 2,667 | 6,037 | 3,183 | 1,228 | – | 13,115 |
| Amortisation of acquired intangible | ||||||
| assets | (206) | (138) | (1,437) | (5) | – | (1,786) |
| Other highlighted items | – | – | – | – | (883) | (883) |
| Operating profit/(loss) | 2,461 | 5,899 | 1,746 | 1,223 | (883) | 10,446 |
| Finance income | – | – | – | – | 27 | 27 |
| Finance costs | – | – | – | – | (114) | (114) |
| Profit/(loss) before taxation | 2,461 | 5,899 | 1,746 | 1,223 | (970) | 10,359 |
| Taxation | – | – | – | – | (652) | (652) |
| Profit/(loss) for the year | 2,461 | 5,899 | 1,746 | 1,223 | (1,622) | 9,707 |
| Operating profit before highlighted | ||||||
| items/segment results | 2,667 | 6,037 | 3,183 | 1,228 | – | 13,115 |
| Depreciation | 260 | 169 | 207 | 30 | – | 666 |
| Amortisation of internally generated | ||||||
| intangibles | 538 | 273 | 1,214 | 46 | – | 2,071 |
| EBITDA before highlighted items | 3,465 | 6,479 | 4,604 | 1,304 | – | 15,852 |
| Adult | Children's & Educational |
Academic & Professional |
Information | Unallocated | Total | |
|---|---|---|---|---|---|---|
| Year ended 28 February 2015 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| External revenue | 44,669 | 26,635 | 35,959 | 3,862 | – | 111,125 |
| Cost of sales | (21,556) | (11,844) | (13,489) | (911) | – | (47,800) |
| Gross profit | 23,113 | 14,791 | 22,470 | 2,951 | – | 63,325 |
| Marketing and distribution costs | (6,393) | (4,422) | (4,605) | (99) | – | (15,519) |
| Contribution before administrative | ||||||
| expenses | 16,720 | 10,369 | 17,865 | 2,852 | – | 47,806 |
| Administrative expenses excluding | ||||||
| highlighted items | (13,672) | (7,510) | (12,774) | (1,723) | – | (35,679) |
| Operating profit before highlighted | ||||||
| items/segment result | 3,048 | 2,859 | 5,091 | 1,129 | – | 12,127 |
| Amortisation of acquired intangible | ||||||
| assets | (109) | (214) | (1,497) | (5) | – | (1,825) |
| Other highlighted items | – | – | – | – | (650) | (650) |
| Operating profit/(loss) | 2,939 | 2,645 | 3,594 | 1,124 | (650) | 9,652 |
| Finance income | – | – | – | – | 46 | 46 |
| Finance costs | – | – | – | – | (94) | (94) |
| Profit/(loss) before taxation | 2,939 | 2,645 | 3,594 | 1,124 | (698) | 9,604 |
| Taxation | – | – | – | – | (856) | (856) |
| Profit/(loss) for the year | 2,939 | 2,645 | 3,594 | 1,124 | (1,554) | 8,748 |
| Operating profit before highlighted | ||||||
| items/segment results | 3,048 | 2,859 | 5,091 | 1,129 | – | 12,127 |
| Depreciation | 266 | 156 | 212 | 26 | – | 660 |
| Amortisation of internally generated | ||||||
| intangibles | 419 | 172 | 822 | 21 | – | 1,434 |
| EBITDA before highlighted items | 3,733 | 3,187 | 6,125 | 1,176 | – | 14,221 |
| Total assets |
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Adult | 21,250 | 22,402 |
| Children's & Educational | 12,280 | 11,473 |
| Academic & Professional | 55,939 | 56,756 |
| Information | 203 | 384 |
| Unallocated | 86,962 | 80,467 |
| Total assets | 176,634 | 171,482 |
Unallocated primarily represents centrally held assets including system development; property, plant and equipment; receivables; and cash.
| Source | |||||
|---|---|---|---|---|---|
| United Kingdom | North America | Australia | India | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Destination | |||||
| Year ended 29 February 2016 | |||||
| United Kingdom (country of domicile) | 56,943 | 3 | – | – | 56,946 |
| North America | 3,373 | 32,762 | – | – | 36,135 |
| Continental Europe | 9,254 | 332 | – | – | 9,586 |
| Australasia | 741 | 1,302 | 7,038 | – | 9,081 |
| Middle East and Asia | 4,935 | 188 | – | 1,917 | 7,040 |
| Rest of the world | 4,737 | 200 | – | – | 4,937 |
| Overseas countries | 23,040 | 34,784 | 7,038 | 1,917 | 66,779 |
| Total | 79,983 | 34,787 | 7,038 | 1,917 | 123,725 |
| Year ended 28 February 2015 United Kingdom (country of domicile) |
53,815 | – | – | – | 53,815 |
| North America | 4,438 | 29,038 | – | – | 33,476 |
| Continental Europe | 8,897 | 1 | – | – | 8,898 |
| Australasia | 444 | – | 6,025 | – | 6,469 |
| Middle East and Asia | 3,555 | – | – | 1,589 | 5,144 |
| Rest of the world | 3,206 | 117 | – | – | 3,323 |
| Overseas countries | 20,540 | 29,156 | 6,025 | 1,589 | 57,310 |
| Total | 74,355 | 29,156 | 6,025 | 1,589 | 111,125 |
| During the year sales to one customer exceeded 10% of Group revenue (2015: one customer). The value of these sales was £23,426,000 | |||||
| (2015: £21,111,000). | |||||
| External revenue by product type | |||||
| Year ended | Year ended | |
|---|---|---|
| 29 February | 28 February | |
| 2016 | 2015 | |
| £'000 | £'000 | |
| 98,111 | 85,301 | |
| Digital | 15,022 | 11,748 |
| Rights and services1 | 10,592 | 14,076 |
| Total | 123,725 | 111,125 |
| Year ended 29 February |
Year ended 28 February |
|
|---|---|---|
| 2016 £'000 |
2015 £'000 |
|
| United Kingdom (country of domicile) | 62,877 | 61,837 |
| North America | 5,094 | 5,027 |
| Other | 60 | 55 |
| Total | 68,031 | 66,919 |
Operating profit is stated after charging/(crediting) the following amounts:
| Year ended | Year ended | ||
|---|---|---|---|
| 29 February | 28 February | ||
| 2016 | 2015 | ||
| Note | £'000 | £'000 | |
| Purchase of goods and changes in inventories | 15 | 37,404 | 30,705 |
| Auditor's remuneration (see below) | 195 | 245 | |
| Depreciation of property, plant and equipment | 13 | 666 | 660 |
| Operating leases | 1,324 | 1,276 | |
| Loss on disposal of property, plant and equipment | 1 | 8 | |
| Highlighted items (see below) | 2,669 | 2,475 | |
| Advance provisions | 2,565 | 3,567 | |
| Exchange gain | (37) | (134) | |
| Staff costs (excluding redundancy costs) | 5 | 25,844 | 24,134 |
| Year ended 29 February 2016 |
Year ended 28 February 2015 |
||
|---|---|---|---|
| Note | £'000 | £'000 | |
| Legal and other professional fees | 16 | 215 | |
| Restructuring costs | 915 | 435 | |
| Other | (48) | – | |
| Other highlighted items | 883 | 650 | |
| Amortisation of acquired intangible assets | 12 | 1,786 | 1,825 |
| Total highlighted items | 2,669 | 2,475 |
Highlighted items charged to operating profit comprise significant non-cash charges and non-recurring items which are highlighted in the income statement because, in the opinion of the Directors, separate disclosure is helpful in understanding the underlying performance of the business.
All highlighted items are included in administrative expenses in the income statement.
In 2015 legal and other professional costs of £215,000 were incurred primarily in relation to the acquisition of the Osprey Publishing group – see note 9.
Restructuring costs of £915,000 have been incurred as a result of the Group's acquisition activities and the restructuring of the Bloomsbury Information division (2015: £435,000 have been incurred as a result of the Group's acquisition activities and the One Global Bloomsbury strategic reorganisation).
The other credit of £48,000 is primarily the release of penalties and interest relating to a historic tax enquiry with HMRC.
Amounts payable to KPMG LLP and its associates in respect of both audit and non-audit services are as follows:
| Year ended 29 February 2016 | Year ended 28 February 2015 | |||||
|---|---|---|---|---|---|---|
| UK | Overseas | Total | UK | Overseas | Total | |
| Fees payable to the Company's Auditor for the audit of parent Company and consolidated financial statements |
£'000 105 |
£'000 60 |
£'000 165 |
£'000 125 |
£'000 60 |
£'000 185 |
| Fees payable to the Company's Auditor and its associates for other services: |
||||||
| Audit of the Company's subsidiaries pursuant to legislation |
5 | – | 5 | 35 | – | 35 |
| Other services pursuant to legislation: | ||||||
| Interim review | 25 | – | 25 | 25 | – | 25 |
| Total | 135 | 60 | 195 | 185 | 60 | 245 |
| Year ended | Year ended | |
|---|---|---|
| 29 February | 28 February | |
| 2016 | 2015 | |
| £'000 | £'000 | |
| Salaries | 22,805 | 21,163 |
| Social security costs | 1,744 | 1,683 |
| Pension costs (see note 23) | 808 | 792 |
| Share-based payment charge (see note 22) | 487 | 496 |
| Staff costs (excluding redundancy costs) | 25,844 | 24,134 |
| Redundancy costs | 563 | 353 |
| Total | 26,407 | 24,487 |
Redundancy costs are included as part of restructuring costs in highlighted items.
The average monthly number of employees during the year was:
| Number | Number | |
|---|---|---|
| Editorial, production and selling | 471 | 457 |
| Finance and administration | 114 | 93 |
| Total | 585 | 550 |
Staff costs are charged to administrative expenses.
The Group considers key management personnel as defined under IAS 24 'Related Party Disclosures' to be the Executive Directors of the Company and those directors of the global divisions, major geographic regions and departments who are actively involved in strategic decision-making.
Full details concerning individual Directors' remuneration are set out in the audited part of the Directors' Remuneration Report on pages 58 to 74. The total remuneration of the Directors was £1,508,000 (2015: £1,489,000).
Total emoluments for Executive Directors and other key management personnel were:
| Year ended 29 February |
Year ended 28 February |
|
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Short-term employee benefits | 2,887 | 2,859 |
| Post-employment benefits | 266 | 183 |
| Share-based payment charge | 472 | 490 |
| Total | 3,625 | 3,532 |
| Year ended 29 February |
Year ended 28 February |
|
|---|---|---|
| 2016 £'000 |
2015 £'000 |
|
| Finance income | ||
| Interest on bank deposits | 9 | 13 |
| Other interest receivable | 1 | 13 |
| Return on pension plan assets (see note 23) | 17 | 20 |
| Total | 27 | 46 |
| Finance costs | ||
| Interest cost on pension obligations (see note 23) | 24 | 26 |
| Interest on bank overdraft and loans | 86 | 61 |
| Other interest payable | 4 | 7 |
| Total | 114 | 94 |
| Year ended 29 February |
Year ended 28 February |
|
|---|---|---|
| Notes | 2016 £'000 |
2015 £'000 |
| Current taxation | ||
| UK corporation tax | ||
| Current year | 2,009 | 2,038 |
| Adjustment in respect of prior years | (1,460) | 279 |
| Overseas taxation | ||
| Current year | 100 | 695 |
| Adjustment in respect of prior years | (366) | (274) |
| 283 | 2,738 | |
| Deferred tax 14 |
||
| UK | ||
| Origination and reversal of temporary differences | 250 | (671) |
| Adjustment in respect of prior years | 73 | – |
| Tax rate adjustment | (209) | – |
| Overseas | ||
| Origination and reversal of temporary differences | 398 | (413) |
| Adjustment in respect of prior years | (143) | (798) |
| 369 | (1,882) | |
| Total taxation expense | 652 | 856 |
The tax on the Group's profit before tax differs from the standard rate of corporation tax in the United Kingdom of 20.08% (2015: 21.17%). The reasons for this are explained below:
| Year ended 29 February 2016 | Year ended 28 February 2015 | |||
|---|---|---|---|---|
| £'000 | % | £'000 | % | |
| Profit before taxation | 10,359 | 100.00 | 9,604 | 100.00 |
| Profit on ordinary activities multiplied by the standard rate of corporation | ||||
| tax in the UK of 20.08% (2015: 21.17%) | 2,080 | 20.08 | 2,033 | 21.17 |
| Effects of: | ||||
| Non-deductible revenue expenditure | 279 | 2.69 | 23 | 0.24 |
| Non-qualifying depreciation | 15 | 0.14 | 18 | 0.19 |
| Movement in unrecognised temporary differences | 99 | 0.96 | 38 | 0.40 |
| Different rates of tax in foreign jurisdictions | 519 | 5.01 | 71 | 0.74 |
| Tax losses utilised | (216) | (2.09) | (583) | (6.08) |
| Movement in deferred tax rate | (209) | (2.02) | – | – |
| Adjustment to tax charge in respect of prior years | ||||
| Current tax – utilisation of previously unrecognised Bloomsbury Verlag | ||||
| losses in the UK | (543) | (5.24) | – | – |
| Current tax – other | (1,070) | (10.32) | 5 | 0.05 |
| Deferred tax | (70) | (0.68) | (795) | (8.27) |
| Tax charge for the year before disallowable costs on highlighted items | 884 | 8.53 | 810 | 8.44 |
| Highlighted items: | ||||
| Disallowable costs incurred on acquisitions | 5 | 0.05 | 46 | 0.48 |
| Disallowable credits | (24) | (0.23) | – | – |
| Release of Bloomsbury Verlag tax provision | (213) | (2.06) | – | – |
| Tax charge for the year | 652 | 6.29 | 856 | 8.92 |
In 2016 the £1,070,000 current tax adjustment in respect of prior years relates to the carry back of double taxation relief to prior years and an adjustment to align the prior year Group tax charge with recently submitted tax returns, particularly for the US entities.
Subsequent to the successful First-Tier Tribunal decision on Bloomsbury Verlag, a prior year adjustment of £543,000 has been recognised for the utilisation of previously unrecognised losses. Linked to this successful decision there was a release of a £213,000 tax provision in respect of prior years. This went through highlighted items in prior years and thus has been released in the same place.
In 2015 the £795,000 deferred tax adjustment in respect of prior years relates to increased certainty over the recoverability of provision temporary differences in the US.
There are no significant unprovided exposures remaining.
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015, and an additional reduction to 17% (effective from 1 April 2020) was announced in the budget on 16 March 2016. This will reduce the Company's future current tax charge accordingly. The deferred tax asset at 29 February 2016 has been calculated based on the substantively enacted rates.
| Before tax 2016 £'000 |
Tax charge 2016 £'000 |
After tax 2016 £'000 |
Before tax 2015 £'000 |
Tax charge 2015 £'000 |
After tax 2015 £'000 |
|
|---|---|---|---|---|---|---|
| Exchange difference on translating foreign operations |
3,214 | – | 3,214 | 1,954 | – | 1,954 |
| Remeasurements on the defined benefit pension scheme |
(29) | 5 | (24) | (106) | – | (106) |
| Other comprehensive income | 3,185 | 5 | 3,190 | 1,848 | – | 1,848 |
| Year ended | Year ended | |
|---|---|---|
| 29 February | 28 February | |
| 2016 | 2015 | |
| £'000 | £'000 | |
| Amounts paid in the year | ||
| Prior period final 5.08p dividend per share (2015: 4.84p) | 3,797 | 3,531 |
| Interim 1.06p dividend per share (2015: 1.02p) | 793 | 745 |
| Total dividend payments in the year | 4,590 | 4,276 |
| Amounts arising in respect of the year | ||
| Interim 1.06p dividend per share for the year (2015: 1.02p) | 793 | 745 |
| Proposed 5.34p final dividend per share for the year (2015: 5.08p) | 4,009 | 3,797 |
| Total dividend 6.40p per share for the year (2015: 6.10p) | 4,802 | 4,542 |
The Directors are recommending a final dividend of 5.34 pence per share, which, subject to Shareholder approval at the Annual General Meeting, will be paid on 21 September 2016 to Shareholders on the register at close of business on 26 August 2016.
On 22 December 2014 the Group acquired the issued share capital of Osprey Publishing Limited ("Osprey"), the Oxford-based military and natural history publisher, from private equity ownership, principally The Third Alcuin Fund LP, a fund managed by Alcuin Capital Partners LLP. The consideration of £4.6 million was satisfied by the payment of £3.2 million in cash on completion and the issue of 869,054 new Bloomsbury Ordinary shares to the value of £1.4 million.
The acquisition of Osprey increases our presence in niche special interest markets. It is complementary to, and will substantially enhance, our existing lists; in particular increasing the Audit division's expertise in natural history and military history publishing, as well as international sales. Over 50% of Osprey's revenue is generated outside the UK, thereby increasing Bloomsbury's benefit from the global book market.
The table below summarises the fair values to the Group included in the consolidated financial statements of the major categories of assets and liabilities of Osprey at the date of acquisition. As a result of a final review of the acquired balance sheet, goodwill has increased by £235,000 and net assets decreased by the corresponding amount.
| Net assets acquired | Total fair value to the Group £'000 |
|---|---|
| Identifiable intangible assets | 1,583 |
| Property, plant and equipment | 43 |
| Inventories | 1,757 |
| Trade and other receivables | 1,438 |
| Cash and cash equivalents | 287 |
| Deferred tax liability | (234) |
| Payables and provisions | (2,044) |
| Total net assets acquired | 2,830 |
| Goodwill | 1,816 |
| Total | 4,646 |
| Total consideration | 4,646 |
|---|---|
| Share consideration | 1,396 |
| Cash consideration | 3,250 |
| Satisfied by: |
Identifiable intangible assets of £1,583,000 consist of publishing rights of £719,000, imprint of £782,000, customer relationships of £74,000 and software of £8,000. The publishing rights and customer relationships have a useful life of 12 years and imprint 20 years. The goodwill arising of £1,816,000 is attributable to the expected profitability of the acquired business and the synergies expected to arise after the acquisition.
The gross contractual trade receivable at acquisition is £1,644,000, of which £46,000 is the best estimate of the contractual cash flows that are not expected to be collected.
Transaction costs of £210,000 have been expensed in the prior year within administrative expenses (highlighted items).
From 23 December 2014 to 28 February 2015 revenue of £1,195,000 and profit before tax attributable to owners of the Company of £26,000 has been included in the consolidated income statement in relation to Osprey.
If the acquisition had occurred on 1 March 2014 the revenue and profit attributable to Shareholders of the combined entity for the prior year would have been £117.0 million and £8.3 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.
The basic earnings per share for the year ended 29 February 2016 is calculated using a weighted average number of Ordinary shares in issue of 74,807,436 (2015: 73,250,139) 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 29 February |
Year ended 28 February |
|
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Weighted average shares in issue | 74,807,436 | 73,250,139 |
| Dilution | 245,115 | 262,644 |
| Diluted weighted average shares in issue | 75,052,551 | 73,512,783 |
| £'000 | £'000 | |
|---|---|---|
| Profit after tax attributable to owners of the Company | 9,707 | 8,748 |
| Basic earnings per share | 12.98p | 11.94p |
| Diluted earnings per share | 12.93p | 11.90p |
| £'000 | £'000 | |
| Adjusted profit attributable to owners of the Company | 11,440 | 10,826 |
| Adjusted basic earnings per share | 15.29p | 14.78p |
| Adjusted diluted earnings per share | 15.24p | 14.73p |
| Adjusted profit is derived as follows: |
| Year ended 29 February 2016 £'000 |
Year ended 28 February 2015 £'000 |
|
|---|---|---|
| Profit before taxation | 10,359 | 9,604 |
| Amortisation of acquired intangible assets | 1,786 | 1,825 |
| Other highlighted items | 883 | 650 |
| Adjusted profit before tax | 13,028 | 12,079 |
| Tax expense | 652 | 856 |
| Deferred tax movements on goodwill and acquired intangible assets | 527 | 305 |
| Tax expense on other highlighted items | 409 | 92 |
| Adjusted tax | 1,588 | 1,253 |
| Adjusted profit | 11,440 | 10,826 |
The Group includes the benefit of tax amortisation of intangibles assets as this benefit more accurately aligns the adjusted tax charge with the expected cash tax payments.
| 29 February | 28 February | |
|---|---|---|
| 2016 £'000 |
2015 £'000 |
|
| Cost | ||
| At start of year | 45,764 | 43,764 |
| Acquisitions | 235 | 1,670 |
| Revision of cost | (23) | 62 |
| Exchange differences | 376 | 268 |
| At end of year | 46,352 | 45,764 |
| Impairment | ||
| At start of year | 4,256 | 4,253 |
| Exchange differences | 4 | 3 |
| At end of year | 4,260 | 4,256 |
| Net book value | ||
| At end of year | 42,092 | 41,508 |
| At start of year | 41,508 | 39,511 |
Goodwill is not amortised, but instead is subject to annual impairment reviews. Any impairment losses are recognised immediately in the income statement.
Acquisitions relate to finalisation of fair values on the Osprey Publishing acquisition; see note 9 for further information. The revision of cost relates to the deferred consideration on the Oxford International Publishers Limited acquisition.
Management have aligned the monitoring of goodwill to how it reviews the performance of the business. Goodwill is monitored by management at the publishing division level. The following is a summary of goodwill allocation for each publishing division:
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Adult | 7,114 | 6,676 |
| Children's & Educational | 5,275 | 4,693 |
| Academic & Professional | 29,703 | 30,139 |
| Total | 42,092 | 41,508 |
The recoverable amount of the Group's goodwill has been considered with regard to value in use calculations. These calculations use the pre-tax future cash flow projections of each cash-generating unit ("CGU") based on the Board's approved budgets for the year ended 29 February 2016 and the Board approved five-year plan. The calculations include a terminal value based on the projections for the final year of the five-year plan with a long-term growth rate assumption applied.
The key assumptions for calculating value in use are:
| Discount rates Revenue growth |
Long-term growth | |||||
|---|---|---|---|---|---|---|
| Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | |
| 29 February | 28 February | 29 February | 28 February | 29 February | 28 February | |
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Adult | 7.8 | 7.0 | (0.4)–0.5 | (0.6)–0.5 | 2.4 | 2.5 |
| Children's & Educational | 9.0 | 8.2 | 7.2–8.5 | 5.3–7.0 | 2.4 | 2.5 |
| Academic & Professional | 8.0 | 7.0 | 1.6–5.3 | 4.7–5.8 | 2.4 | 2.5 |
The discount rates applied to the cash flows are calculated using a pre-tax rate based on the weighted average cost of capital for the Group. This is adjusted for risks specific to the market in which the CGU operates. The Group has considered the impact of the current economic climate in determining appropriate discount rates.
Growth rates have been calculated based on those applied to the Board approved budget for the year ended 29 February 2016 and fiveyear plan. They incorporate future expectations of growth in backlist revenues and identified new revenue streams.
The five-year forecasts are extrapolated to perpetuity on the basis that the relevant CGUs are long established business units. The long-term growth rates is a blended rate formed from the territory-specific long-term growth rates.
Gross margins have been based on historic performance and expected changes to the sales mix in future periods.
The Group has not identified any reasonably possible changes to key assumptions that would cause the carrying value of goodwill of any CGU to exceed its recoverable amount.
| Subscriber | ||||||||
|---|---|---|---|---|---|---|---|---|
| Publishing | and customer | Systems | Product | Assets under | ||||
| rights £'000 |
Trademarks £'000 |
Imprints £'000 |
relationships £'000 |
development £'000 |
development £'000 |
construction £'000 |
Total £'000 |
|
| Cost | ||||||||
| At 28 February 2014 | 14,749 | 108 | 4,296 | 4,329 | 2,901 | 2,804 | 620 | 29,807 |
| Acquisitions | 719 | – | 782 | 74 | 8 | – | – | 1,583 |
| Additions | 145 | 25 | 86 | – | 855 | 1,034 | 1,215 | 3,360 |
| Transfers | – | – | – | – | – | 949 | (949) | – |
| Disposals | – | – | – | (652) | – | – | – | (652) |
| Exchange differences | 110 | 9 | – | 20 | 18 | 2 | – | 159 |
| At 28 February 2015 | 15,723 | 142 | 5,164 | 3,771 | 3,782 | 4,789 | 886 | 34,257 |
| Additions | – | 11 | 626 | 668 | 781 | 935 | 850 | 3,871 |
| Transfers | – | – | – | – | – | 289 | (289) | – |
| Disposals | – | – | – | (74) | (3) | (276) | – | (353) |
| Exchange differences | 154 | 13 | – | 28 | 27 | 12 | – | 234 |
| At 29 February 2016 | 15,877 | 166 | 5,790 | 4,393 | 4,587 | 5,749 | 1,447 | 38,009 |
| Amortisation | ||||||||
| At 28 February 2014 | 4,416 | – | 635 | 1,431 | 1,075 | 940 | – | 8,497 |
| Charge for the year | 1,266 | – | 192 | 367 | 630 | 804 | – | 3,259 |
| Disposals | – | – | – | (130) | – | – | – | (130) |
| Exchange differences | 47 | – | – | 3 | 3 | – | – | 53 |
| At 28 February 2015 | 5,729 | – | 827 | 1,671 | 1,708 | 1,744 | – | 11,679 |
| Charge for the year | 1,252 | – | 234 | 300 | 767 | 1,304 | – | 3,857 |
| Disposals | – | – | – | (7) | (2) | (75) | – | (84) |
| Exchange differences | 75 | – | – | 7 | 7 | 3 | – | 92 |
| At 29 February 2016 | 7,056 | – | 1,061 | 1,971 | 2,480 | 2,976 | – | 15,544 |
| Net book value | ||||||||
|---|---|---|---|---|---|---|---|---|
| At 29 February 2016 | 8,821 | 166 | 4,729 | 2,422 | 2,107 | 2,773 | 1,447 | 22,465 |
| At 28 February 2015 | 9,994 | 142 | 4,337 | 2,100 | 2,074 | 3,045 | 886 | 22,578 |
On 21 December 2015 the Group signed a sale and purchase agreement to acquire from RELX (UK) Limited certain LexisNexis and Jordan family law publishing assets as a pre-condition of the Competition and Markets Authority ("CMA") approval of the purchase of Jordan Publishing Limited by RELX (UK) Limited. The clearance from the CMA was obtained on 22 January 2016, at which point the completion of the acquisition took place for a total consideration of £1,400,000. Intangible assets of £1,294,000 were recognised on acquisition. The intangible assets consist of customer relationships of £668,000 and imprint of £626,000. The customer relationships have a useful life of ten years, and the imprint a useful life of 20 years.
On 1 September 2014 the Group acquired the Conway nautical list from Pavilions Books for a total consideration of £442,000. Goodwill of £89,000 and intangible assets of £231,000 were recognised on acquisition. The intangible assets consist of publishing rights of £145,000 and imprint of £86,000. The publishing rights have a useful life of 13 years, and the imprint a useful life of 20 years.
| Short leasehold | Furniture | Computers and other office |
Motor | ||
|---|---|---|---|---|---|
| improvements | and fittings | equipment | vehicles | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Cost | |||||
| At 28 February 2014 | 2,723 | 743 | 1,830 | 155 | 5,451 |
| Acquisitions | – | 7 | 36 | – | 43 |
| Additions | 39 | 25 | 210 | – | 274 |
| Disposals | – | (1) | (54) | (30) | (85) |
| Exchange differences | 9 | 28 | 21 | 3 | 61 |
| At 28 February 2015 | 2,771 | 802 | 2,043 | 128 | 5,744 |
| Additions | 13 | 13 | 228 | – | 254 |
| Disposals | (8) | (15) | (45) | – | (68) |
| Exchange differences | 13 | 40 | 31 | – | 84 |
| At 29 February 2016 | 2,789 | 840 | 2,257 | 128 | 6,014 |
| Depreciation | |||||
| At 28 February 2014 | 667 | 299 | 1,216 | 124 | 2,306 |
| Disposals | – | (1) | (50) | (21) | (72) |
| Charge for the year | 294 | 81 | 278 | 7 | 660 |
| Exchange differences | 2 | 6 | 8 | 1 | 17 |
| At 28 February 2015 | 963 | 385 | 1,452 | 111 | 2,911 |
| Disposals | (7) | (15) | (44) | – | (66) |
| Charge for the year | 285 | 88 | 287 | 6 | 666 |
| Exchange differences | 4 | 14 | 22 | – | 40 |
| At 29 February 2016 | 1,245 | 472 | 1,717 | 117 | 3,551 |
| Net book value | |||||
| At 29 February 2016 | 1,544 | 368 | 540 | 11 | 2,463 |
| At 28 February 2015 | 1,808 | 417 | 591 | 17 | 2,833 |
The depreciation charge is included in administrative expenses.
Deferred tax is calculated in full on temporary differences using the tax rate appropriate to the jurisdiction in which the asset or liability arises and the tax rates that are expected to apply in the periods in which the asset or liability is settled.
Movement in temporary differences during the year:
| Property, plant and |
Retirement benefit |
Share-based | Intangible | ||||
|---|---|---|---|---|---|---|---|
| Tax losses | equipment | obligation | payments | assets | Other | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 28 February 2014 | 925 | (119) | 41 | 347 | (2,997) | 721 | (1,082) |
| Recognised on acquisition | 31 | 50 | – | – | (315) | – | (234) |
| Credit/(charge) to the income statement | 100 | 74 | 25 | (77) | 305 | 1,455 | 1,882 |
| Charge to equity | – | – | – | (118) | – | – | (118) |
| Exchange differences | 22 | – | – | – | – | 18 | 40 |
| At 28 February 2015 | 1,078 | 5 | 66 | 152 | (3,007) | 2,194 | 488 |
| (Charge)/credit to the income statement | (569) | (51) | (13) | (6) | 527 | (257) | (369) |
| Credit/(charge) to equity | – | – | 5 | (24) | – | – | (19) |
| Exchange differences | – | – | – | – | – | 213 | 213 |
| At 29 February 2016 | 509 | (46) | 58 | 122 | (2,480) | 2,150 | 313 |
Deferred tax assets in respect of losses are only recognised to the extent that it is anticipated they will be utilised in the foreseeable future. The significant credit to the income statement in 2015 primarily relates to increased certainty over the recoverability of provision temporary differences in the US and recoverability of trading losses in the UK.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Deferred tax assets | 2,988 | 3,607 |
| Deferred tax liabilities | (2,675) | (3,119) |
| Total | 313 | 488 |
The Group had deferred tax assets not recognised in the financial statements as follows:
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Non-trading losses | 271 | 465 |
At 29 February 2016 the Group had non-trading losses of approximately £1.5 million (2015: 2.3 million). A deferred tax asset has not been recognised in respect of non-trading losses carried forward as it is not clear whether sufficient non-trading income against which the losses may be offset will arise in the Group in the foreseeable future.
Deferred tax is not provided on unremitted earnings of subsidiaries where the Group controls the timing of remittance and it is probable that the temporary difference will not reverse in the foreseeable future.
| 29 February 2016 |
28 February 2015 |
|
|---|---|---|
| £'000 | £'000 | |
| Work in progress | 6,390 | 8,446 |
| Finished goods for resale | 21,208 | 20,789 |
| Total | 27,598 | 29,235 |
The cost of inventories recognised as cost of sales amounted to £29,707,000 (2015: £24,111,000). The provision and write down of inventories to net realisable value recognised in cost of sales amounted to £7,697,000 (2015: £6,594,000).
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Non-current | ||
| Prepayments and accrued income | 1,011 | – |
| Current | ||
| Gross trade receivables | 45,476 | 38,489 |
| Less: provision for impairment of receivables | (432) | (627) |
| Less: provision for returns | (5,800) | (6,057) |
| Net trade receivables | 39,244 | 31,805 |
| Income tax recoverable | 850 | 4 |
| Other receivables | 1,354 | 2,637 |
| Prepayments and accrued income | 7,784 | 5,905 |
| Royalty advances | 22,229 | 21,349 |
| Total current receivables | 71,461 | 61,700 |
| Total trade and other receivables | 72,472 | 61,700 |
Royalty advances have been separated out from prepayments and accrued income to enable a user to get a better understanding of the business. A provision is held against gross advances payable in respect of published titles advances which may not be fully earned down by anticipated future sales. As at 29 February 2016 £5,530,000 (2015: £5,154,000) of royalty advances are expected to be recovered after more than 12 months.
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 for the return of books by customers is made with reference to the historic rate of returns.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair values. The Group's exposure to credit and currency risks is disclosed in note 24. Trade receivables principally comprise amounts receivable from the sale of books due from distributors. The average number of days' credit taken for sales of books by the Group was 116 days (2015: 104 days).
A provision for impairment of trade receivables is made with reference to specific debts, past default experience, trading history and the current economic environment. Movements on the Group provision for impairment of trade receivables are as follows:
| 29 February 2016 £'000 |
28 February 2015 £'000 |
|
|---|---|---|
| At start of year | 627 | 498 |
| Amounts created | 353 | 305 |
| Amounts utilised | (438) | (222) |
| Amounts released | (110) | – |
| Assumed in a business combination | – | 46 |
| Exchange adjustments | – | – |
| At end of year | 432 | 627 |
A provision for the return of books by customers is made with reference to the historical rate of returns. Movements on the Group provision for returns are as follows:
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| At start of year | 6,057 | 4,749 |
| Amounts created | 13,339 | 15,507 |
| Amounts utilised | (13,889) | (14,722) |
| Amounts released | (101) | (124) |
| Assumed in a business combination | – | 386 |
| Exchange adjustments | 394 | 261 |
| At end of year | 5,800 | 6,057 |
If actual returns were 10% higher/lower in the year the revenue would have been £1.4 million lower/higher.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Cash at bank and in hand | 6,556 | 10,021 |
| Cash and cash equivalents as presented in the statement of financial position | 6,556 | 10,021 |
| Bank overdraft | (1,390) | – |
| Cash and cash equivalents as presented in the statement of cash flows | 5,166 | 10,021 |
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Non-current | ||
| Other payables | 871 | 886 |
| Current | ||
| Trade payables | 20,374 | 18,684 |
| Taxation and social security | 862 | 582 |
| Other payables | 2,590 | 1,504 |
| Accruals | 12,935 | 15,476 |
| Deferred income | 1,674 | 1,004 |
| Total current trade and other payables | 38,435 | 37,250 |
| Total trade and other payables | 39,306 | 38,136 |
Trade payables are non-interest bearing and are normally settled on terms of between 30 and 90 days. Non-current other payables include the authors' share of rights receivable.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Current | ||
| Unsecured bank loans | – | 2,500 |
Information about the Group's exposure to interest rate, foreign currency and liquidity risk is included in note 24.
| Contingent | |||
|---|---|---|---|
| Property | consideration | Total | |
| £'000 | £'000 | £'000 | |
| At 1 March 2015 | 66 | 439 | 505 |
| Transfers | – | (439) | (439) |
| At 29 February 2016 | 66 | – | 66 |
| Non-current | 43 | – | 43 |
| Current | 23 | – | 23 |
The property provision includes amounts provided for onerous lease commitments and dilapidations. The timing of cash flows for onerous lease commitments is dependent on the terms of the leases.
The Oxford International Publishers Limited (t/a Berg Publishers) acquisition contingent consideration of £439,000 has been transferred to other payables in the year as payment of the consideration is now certain.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Authorised: | ||
| 98,459,604 Ordinary shares of 1.25p each (2015: 98,459,604 Ordinary shares of 1.25p each) | 1,231 | 1,231 |
| Allotted, called up and fully paid: | ||
| 75,081,177 Ordinary shares of 1.25p each (2015: 75,003,734 Ordinary shares of 1.25p each) | 939 | 938 |
The Company has one class of Ordinary share which carries equal voting rights and no contractual right to receive payment. No shares are held by the Company as Treasury shares. Directors and other employees of the Group have been granted options to purchase 2,452,805 (2015: 2,371,666) Ordinary shares with an aggregate nominal value of £30,660 (2015: £29,646) (note 22).
The increase in share capital in the year relates to Ordinary shares issued to satisfy share options exercised in the year.
The translation reserve comprises all foreign currency differences arising from the translation of the financial information of foreign operations.
The merger reserve comprises the amount that would otherwise arise in share premium relating to specific share issue, wherein more than 90% of the shares in a subsidiary are acquired and the consideration includes the issue of new shares by the Company, thereby attracting merger relief under the Companies Act 2006.
The movement on the merger reserve in the prior year relates to the acquisition of Osprey Publishing – see note 9.
The capital redemption reserve arose on the purchase by the Company of its own shares and comprises the amount by which the distributable profits were reduced on these transactions.
The share-based payment reserve comprises cumulative amounts charged in respect of employee share-based payment arrangements.
The Employee Benefit Trust ("EBT") is an independent discretionary trust established to acquire issued shares of the Company to satisfy any of the share-based incentive schemes (see note 22) and plans of the Company. All employees of the Group are potential beneficiaries of the EBT. The results and net assets of the EBT are included in the consolidated financial statements of the Group.
During the year ended 29 February 2016 159,338 shares held by the EBT were used to satisfy share option exercises under the Bloomsbury Performance Share Plan (see note 22). 18,424 EBT shares were used to satisfy the dividends due on the vested shares exercised. 84,739 EBT shares were used to satisfy share option exercises under the Bloomsbury Sharesave Plan (see note 22).
The market value of the 5,792 shares of the Company held at 29 February 2016 (2015: 268,293) in the EBT was £9,000 (2015: £397,000). Whilst the trustee has power to subscribe for Ordinary shares and to acquire Ordinary shares in the market or from Treasury, it is not permitted to hold more than 5% of the issued share capital without prior approval of the Shareholders.
As at the date of signing this Annual Report, the Trust held 500,269 Ordinary shares of 1.25 pence being approximately 0.7% of the issued Ordinary share capital.
The retained earnings reserve comprises profit for the year attributable to owners of the Company and other items recognised directly through equity as presented on the consolidated statement of changes in equity.
Options over shares of the ultimate parent undertaking, Bloomsbury Publishing Plc, have been granted to employees of the Group under various schemes.
The total share-based payment charge to the income statement for the year was as follows:
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Equity-settled share-based transactions | 442 | 404 |
| Cash-settled share-based transactions | 45 | 92 |
| Total | 487 | 496 |
National Insurance contributions are payable by the Company in respect of some of the share-based payment transactions. These contributions are payable on the date of exercise based on the intrinsic value of the share-based payments and are therefore treated as cash-settled awards. The Group had an accrual for National Insurance at 29 February 2016 of £15,000 (2015: £58,000), of which none related to vested options.
The Group operates the PSP for Directors and senior employees. Awards under the scheme are granted as conditional share awards. The number of Ordinary shares comprised in an award is calculated using a share value equal to either the average middle-market price of the Ordinary share for the five dealing days immediately preceding the award date or the middle-market price on the dealing day before the award date.
The vesting period is three years and the level of vesting is subject to the achievement of Earnings Per Share ("EPS") and Total Shareholder Return ("TSR") performance conditions. For details of the performance conditions see the Directors' Remuneration Report on pages 58 to 74. Awards are not exercisable after the vesting date and awards that vest on the vesting date are automatically exercised. Except in certain circumstances awards lapse if the employee leaves the Group.
| 2016 Number |
2015 Number |
|
|---|---|---|
| Outstanding at start of year | 2,168,102 | 2,362,717 |
| Granted during the year | 779,934 | 739,611 |
| Exercised during the year | (228,755) | (723,086) |
| Lapsed during the year | (684,185) | (211,140) |
| Outstanding at end of year | 2,035,096 | 2,168,102 |
| Exercisable at end of year | – | – |
| 2016 | 2015 | |
| Range of exercise price of outstanding awards (pence) | – | – |
| Weighted average remaining contracted life (months) | 21 | 21 |
| Expense recognised for the year (£'000) | 456 | 483 |
The share awards granted in the year to 29 February 2016 have been measured by New Bridge Street Consultants. The TSR element has been measured using the Stochastic model and the EPS element has been measured using the Black–Scholes model. The inputs were:
| Performance condition | Earnings Per Share | Total Shareholder Return |
|---|---|---|
| Share price | 162.0 pence | 162.0 pence |
| Exercise price | – | – |
| Expected term | 3 years | 3 years |
| Expected volatility | n/a | 22.1% |
| Risk-free interest rate | n/a | 0.8% |
| Fair value charge per award | 162.0 pence | 91.27 pence |
The expected volatility was based on Bloomsbury's share price volatility over the period prior to grant equal in length to the expected three-year performance period. Half of each award is subject to an EPS performance condition (which is not factored into the valuation). Half of each award is subject to a Total Shareholder Return condition whereby performance is compared to the FTSE SmallCap Index (excluding Investment Trusts) over a three-year period from the date of grant. A median ranking results in 25% of shares subject to this performance condition vesting, rising to 100% for an upper-quartile ranking. The TSR condition is calculated at the date of grant using the Stochastic model and discounted back to the present value using the risk-free rate of return.
The Group operates an HM Revenue and Customs approved savings-related share option scheme under which employees are granted options to purchase Ordinary shares in the Company in three years' time, dependent upon their entering into a contract to make monthly contributions to a savings account over the period of the savings term. The Sharesave Plan is open to all UK employees.
| Sharesave options 2016 Number |
Weighted average exercise price 2016 Pence |
Sharesave options 2015 Number |
Weighted average exercise price 2015 Pence |
|
|---|---|---|---|---|
| Outstanding at start of year | 103,858 | 98 | 259,360 | 98 |
| Granted during the year | 210,518 | 142 | – | – |
| Exercised during the year | (84,739) | 98 | (137,771) | 98 |
| Lapsed during the year | (21,465) | 98 | (17,731) | 98 |
| Outstanding at end of year | 208,172 | 141 | 103,858 | 98 |
| Exercisable at end of year | 5,523 | 98 | 5,146 | 98 |
| 2016 | 2015 | |||
| Range of exercise price of outstanding options (pence) | 97.75–141.8 | 97.75–98.18 | ||
| Weighted average remaining contracted life (months) | 35 | 12 |
Expense recognised for the year (£'000) 9 12
excess of RPI element has been measured using the Black–Scholes model. The inputs were:
The Group operates the CSOP for senior employees. During the year awards under the scheme were granted at an option price per share of 159 pence. The option price is based on the closing mid-market price of a share on 12 July 2015.
The vesting period is three years and the level of vesting is subject to the achievement of "Annualised EPS in excess of RPI" performance conditions. Options are exercisable by the participant after the vesting date whilst the participant continues in employment with the Group up to a period ending ten years after the date of grant.
| Weighted average |
Weighted average |
|||
|---|---|---|---|---|
| 2016 | exercise price 2016 |
2015 | exercise price 2015 |
|
| Number | Pence | Number | Pence | |
| Outstanding at the start of year | 99,706 | 160 | – | – |
| Granted during the year | 128,581 | 159 | 99,706 | 160 |
| Lapsed during the year | (18,750) | 160 | – | – |
| Outstanding at end of year | 209,537 | 159 | 99,706 | 160 |
| Exercisable at end of year | – | – | – | – |
| 2016 | 2015 | |||
| Range of exercise price of outstanding awards (pence) | 159–160 | 160 | ||
| Weighted average remaining contracted life (months) | 110 | 120 |
Expense recognised for the year (£'000) 22 1 The share awards granted in the year to 29 February 2016 have been measured by New Bridge Street Consultants. The Annualised EPS in
| Performance condition | Annualised EPS |
|---|---|
| Share price | 161.0 pence |
| Exercise price | 159.0 pence |
| Expected term | 6.5 years |
| Expected volatility | 25.6% |
| Risk-free interest rate | 1.7% |
| Fair value charge per award | 26.60 pence |
For the CSOP awards, volatility was calculated with reference to share price movements over the period prior to the grant date which is commensurate with the expected term.
The pension costs charged to the income statement of £827,000 (2015: £798,000) relate to the Group's defined contribution and defined benefit pension arrangements.
The Group operates defined contribution retirement benefit plans for all qualifying employees.
The total cost charged to the income statement of £808,000 (2015: £792,000) represents contributions payable to these schemes by the Group at rates specified in the rules of the schemes. At 29 February 2016 there were no prepaid contributions (28 February 2015: nil).
A subsidiary company operates a defined benefit scheme for some staff which is accounted for in accordance with IAS 19. Accrual of benefits ceased in 1997, with the scheme now operated as a closed fund. There is no obligation in respect of medical costs. The scheme is actuarially valued every three years. The last full actuarial valuation was carried out as at 28 February 2015 and updated to 29 February 2016 by a qualified independent actuary.
Contributions are paid by the employer at the rate of £1,830 per month, plus expenses as and when required. Contributions paid to the scheme during the year were £45,000 (2015: £21,000). The Directors' best estimate of the contributions including administration expenses to be paid for in the year ending 28 February 2017 is £63,000. In addition, PPF levies and other administration expenses are payable by the Group as and when due.
The Group's policy is to fund the deficit in the scheme by additional contributions to meet the scheme's commitment to members.
The financial assumptions used by the actuary for the update were as follows:
| 29 February | 28 February | 28 February | |
|---|---|---|---|
| 2016 | 2015 | 2014 | |
| Discount rate | 3.80% | 3.40% | 4.40% |
| Inflation assumption | 2.10–3.10% | 2.10–3.10% | 2.50–3.40% |
The scheme is closed and there are no active paying members, therefore no increases in payments have been applied. The assumptions used are estimates chosen from a range of possible actuarial assumptions which, due to the timescale covered, may not necessarily occur in practice.
The mortality assumptions adopted at 29 February 2016 are 110% of the standard tables PNxA00, year of birth, no age rating for males and females, projected using Long Cohort underpinned by 1.00% p.a. These imply the following life expectancies:
| 29 February 2016 |
28 February 2015 |
|
|---|---|---|
| Years | Years | |
| Male retiring in 2035 | 25.7 | 25.6 |
| Female retiring in 2035 | 28.0 | 28.0 |
| Male retiring in 2015 | 23.7 | 23.6 |
| Female retiring in 2015 | 26.2 | 26.1 |
The amounts recognised in the income statement in respect of the defined benefit scheme are as follows:
| Year ended | Year ended | |
|---|---|---|
| 29 February | 28 February | |
| 2016 | 2015 | |
| £'000 | £'000 | |
| Interest cost | (24) | (26) |
| Return on pension plan assets | 17 | 20 |
| Expenses | (12) | (12) |
| Total | (19) | (18) |
A charge of £24,000 (2015: £26,000) has been included in finance costs and a credit of £17,000 (2015: £20,000) has been included in finance income.
The amounts recognised in other comprehensive income in respect of the defined benefit scheme are as follows:
| Year ended | Year ended | |
|---|---|---|
| 29 February | 28 February | |
| 2016 | 2015 | |
| £'000 | £'000 | |
| Return on pension plan assets | 4 | 1 |
| Experience gains and losses arising on the defined benefit obligation – (loss)/gain | (88) | 5 |
| Effects of changes in the financial assumptions underlying the present value of the defined benefit | ||
| obligation – gain/(loss) | 55 | (112) |
| Total | (29) | (106) |
The amount included in the statement of financial position arising from the Group's obligation in respect of the defined benefit pension scheme is as follows:
| 29 February 2016 |
28 February 2015 |
|
|---|---|---|
| £'000 | £'000 | |
| Fair value of assets (with profit policy) | 540 | 486 |
| Present value of defined benefit obligations | (770) | (713) |
| Deficit in scheme | (230) | (227) |
| Deferred tax assets | 41 | 45 |
| Net liability to be recognised | (189) | (182) |
| Analysis for reporting purposes: | ||
| Non-current liabilities | (230) | (227) |
| Deferred tax assets | 41 | 45 |
Movements in the present value of defined benefit obligations in the year were as follows:
| Year ended | Year ended | |
|---|---|---|
| 29 February | 28 February | |
| 2016 | 2015 | |
| £'000 | £'000 | |
| At start of year | (713) | (588) |
| Expenses | (12) | (12) |
| Interest cost | (24) | (26) |
| Benefits paid and expenses | 12 | 20 |
| Remeasurement losses | (33) | (107) |
| At end of year | (770) | (713) |
Movements in the fair value of scheme assets in the year were as follows:
| Year ended | Year ended | |
|---|---|---|
| 29 February | 28 February | |
| 2016 | 2015 | |
| £'000 | £'000 | |
| At start of year | 486 | 464 |
| Return on plan assets | 17 | 20 |
| Remeasurement gains | 4 | 1 |
| Employer contributions | 45 | 21 |
| Benefits paid and expenses | (12) | (20) |
| At end of year | 540 | 486 |
The actual return on scheme assets was £21,000 (2015: gain of £21,000).
| Year ended 29 February |
Year ended 28 February |
Year ended 28 February |
|
|---|---|---|---|
| 2016 | 2015 | 2014 | |
| £'000 | £'000 | £'000 | |
| With profits | 540 | 486 | 464 |
| Total assets | 540 | 486 | 464 |
None of the fair values of the assets shown above include any direct investments in the Company's own financial instruments or any property occupied by, or other assets used by, the Company. All of the scheme assets have a quoted market price in an active market.
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to Shareholders as well as sustaining the future development of the business. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to Shareholders and issue new shares. The Group's overall strategy remains unchanged from 2015.
The capital structure of the Group comprises equity attributable to owners of the Company, comprising issued capital, reserves and retained earnings as disclosed in the consolidated statement of changes in equity and note 21.
| 29 February | 28 February | |
|---|---|---|
| Notes | 2016 £'000 |
2015 £'000 |
| Loans and receivables | ||
| Cash and cash equivalents 17 |
6,556 | 10,021 |
| Trade receivables 16 |
39,244 | 31,805 |
| Accrued income | 4,731 | 3,128 |
| Rights income receivable | 2,847 | 1,688 |
| Total loans and receivables | 53,378 | 46,642 |
| Financial liabilities measured at amortised cost | ||
| Trade payables 18 |
20,374 | 18,684 |
| Overdrafts and current loans 17/19 |
1,390 | 2,500 |
| Other payables due in less than one year | 3,452 | 2,086 |
| Other payables due in more than one year 18 |
871 | 886 |
| Accruals 18 |
12,935 | 15,476 |
| Total financial liabilities measured at amortised cost | 39,022 | 39,632 |
| Financial liabilities measured at fair value | ||
| Contingent consideration 20 |
– | 439 |
| Total financial liabilities measured at fair value | – | 439 |
| Net financial instruments | 14,356 | 6,571 |
There is no material difference between the fair value and book value of financial assets and liabilities.
The contingent consideration is measured in accordance with Level 3 valuation techniques (which use inputs which have a significant effect on the recorded fair value that are not based on observable market data).
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance from the key risks of market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
The Board has approved the Group Treasury policies and procedures by which the Group Treasury function is to be managed. The Group Treasury function is headed by the Group Finance Director and is part of Bloomsbury's Finance Department. It operates under a delegated authority from the Board.
The Treasury management policies and procedures focus on the investment of surplus operating cash likely to be needed in order to support Bloomsbury's ongoing operations, foreign currency requirements and interest rate risk management. The Group does not use derivative contracts for speculative purposes. The policies are reviewed at least on an annual basis by the Group Finance Director and any amendments are approved by the Board. The Board is assisted in its oversight role by Internal Audit, who undertakes regular reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
The Group's activities expose it mainly to the financial risks of changes in foreign currency exchange rates and changes in interest rates. The Group incurs costs in the same currencies as it earns revenue creating some degree of natural hedging.
The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. Risk management is carried out by Group Treasury under policies approved by the Board of Directors. Group Treasury monitors the distribution of its cash assets so as to control exposure to the relative performance of any particular territory, currency or institution.
The Board provides written principles for overall risk management, as well as policies covering specific areas, such as funding, foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.
The Group has significant interest-bearing assets in the form of cash and cash equivalents and as such cash flows are dependent on changes in market interest rates.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| Fixed rate instruments | £'000 | £'000 |
| Financial assets | 1,023 | 654 |
| Financial liabilities | – | – |
| Total | 1,023 | 654 |
| Variable rate instruments | ||
| Financial assets | 5,533 | 9,367 |
| Financial liabilities | (1,390) | (2,500) |
| Total | 4,143 | 6,867 |
Fixed rate financial assets are short-term bank deposits with a maturity date range of one day to one month. Variable rate financial assets are cash at bank.
The Group does not account for any fixed rate financial assets at fair value through profit or loss. Therefore a change in interest rates at 29 February 2016 would not affect the income statement.
The Group derived the following sensitivities to assess the impact of changes in interest rates, based on the effect of the market volatility in the current climate and the previous 12 months. The analysis assumes all other variables remain constant.
| 29 February 2016 | 28 February 2015 | |||
|---|---|---|---|---|
| Profit or loss £'000 |
Equity £'000 |
Profit or loss £'000 |
Equity £'000 |
|
| Impact on profit or loss and equity | ||||
| 1% increase in base rate of interest (2015: 1%) | 24 | – | 100 | – |
| 0.5% decrease in base rate of interest (2015: 0.5%) | (12) | – | (50) | – |
The Directors believe that in its current circumstances the Group's risk from foreign currency exposure is limited and no active currency risk management by hedging is considered necessary, as a significant proportion of revenues are matched by expenditure in the same local currency creating some degree of natural hedging.
The Group's exposure to foreign currency risk was as follows based on notional amounts:
| Loans and receivables | Financial liabilities | |||
|---|---|---|---|---|
| 29 February | 28 February | 29 February | 28 February | |
| 2016 | 2015 | 2016 | 2015 | |
| £'000 | £'000 | £'000 | £'000 | |
| GBP | 32,942 | 30,304 | 28,167 | 25,975 |
| USD | 14,413 | 11,672 | 5,677 | 9,857 |
| EURO | 785 | 1,071 | 494 | 562 |
| AUD | 3,926 | 2,433 | 4,439 | 3,433 |
| INR | 1,312 | 1,162 | 245 | 244 |
| Total | 53,378 | 46,642 | 39,022 | 40,071 |
No significant amounts of loans and receivables or financial liabilities are denominated in currencies other than sterling, US dollars, euros, Australian dollars and Indian rupees.
The Group derived the following sensitivities based on the outstanding foreign currency denominated financial assets and liabilities at the year end. The sensitivity analysis includes loans to foreign operations within the Group where the denomination of the loan is in a currency other than the functional currency of the lender or the borrower.
The use of a 10% sensitivity rate has been determined based on the effect of the market volatility in exchange rates between the current and previous year end, and represents management's assessment of the reasonably possible change in foreign exchange rates. A positive number below indicates an increase in profit or equity.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Impact on equity | ||
| 10% weakening in US dollar against pound sterling (2015: 10%) | (581) | (164) |
| 10% strengthening in US dollar against pound sterling (2015: 10%) | 710 | 200 |
| 10% weakening in euro against pound sterling (2015: 10%) | – | (46) |
| 10% strengthening in euro against pound sterling (2015: 10%) | – | 57 |
| 10% weakening in AUS dollar against pound sterling (2015: 10%) | (51) | 91 |
| 10% strengthening in AUS dollar against pound sterling (2015: 10%) | 51 | (111) |
| 10% weakening in INR against pound sterling (2015: 10%) | (97) | (88) |
| 10% strengthening in INR against pound sterling (2015: 10%) | 119 | 102 |
| Impact on income statement | ||
| 10% weakening in US dollar against pound sterling (2015: 10%) | (214) | (29) |
| 10% strengthening in US dollar against pound sterling (2015: 10%) | 261 | 36 |
| 10% weakening in euro against pound sterling (2015: 10%) | (27) | (46) |
| 10% strengthening in euro against pound sterling (2015: 10%) | 32 | 57 |
| 10% weakening in AUS dollar against pound sterling (2015: 10%) | – | – |
| 10% strengthening in AUS dollar against pound sterling (2015: 10%) | – | – |
| 10% weakening in INR against pound sterling (2015: 10%) | – | – |
| 10% strengthening in INR against pound sterling (2015: 10%) | – | – |
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's trade and rights income receivables.
The carrying amount of financial assets represents the maximum credit exposure. The amounts presented in the statement of financial position are net of allowances for doubtful receivables, estimated by the Group's management based on trading experience and the current economic environment. An analysis of the relevant provisions is set out in note 16.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings as assigned by international creditrating agencies.
The Group determines its concentration of credit risk based on the individual characteristics of its customers and publicly available knowledge of specific circumstances affecting those customers. The Group defines counterparties as having similar characteristics if they are related entities.
The Group has a significant concentration of credit risk due to its use of third party distributors. Credit limits for the final customers are set by the distributors based on a combination of payment history and third party credit references. Credit limits are reviewed on a regular basis in conjunction with debt ageing and collection history. The distributors belong to established international groups whose business includes a number of publishing interests and clients. The Group's risk is limited as significant amounts outstanding through the UK distributors are secured by credit insurance, and in the US credit risk for significant amounts outstanding through distributors rests with the distributor.
The Directors do not consider that the Group currently has a significant exposure to liquidity risk, as the Group has limited borrowing and has sufficient cash deposits to meet its debts as they fall due for the foreseeable future.
Cash flow budgets and forecasts are prepared by the operating entities of the Group, aggregated for the Group and regularly reviewed by the Board, and the actual cash position of the Group and each entity is compared monthly against budget. This allows management to ensure that each operating entity and the Group have sufficient cash to meet operational needs. Surplus cash held by the operating entities over and above the balance required for working capital management is invested in interest-bearing accounts and money market deposits.
The Group has an unsecured revolving credit facility with Lloyds Bank plc. At 29 February 2016 the Group had drawn down £1.4 million (2015: £2.5 million) of this facility with £14.1 million of undrawn borrowing facilities (2015: £13 million) available. The facilities comprised a £13.5 million committed revolving loan facility and £2.0 million overdraft.
In May 2016 Bloomsbury extended the revolving credit facility with Lloyds Bank plc under new terms. The existing facility expires in July 2016 and the new facility will take over from then for a further five years. The new facility comprises of a £10 million – £14 million committed revolving loan facility (amount dependent on time during the year to match Bloomsbury's cash flow cycle), an uncommitted incremental term loan facility of up to £6 million and a £2 million overdraft facility. The overdraft facility is available until December 2016. All facilities are subject to two covenants being a maximum net debt to EBITDA ratio and a minimum interest cover covenant.
The Group's financial liabilities are trade payables, accruals and other payables as shown above. Apart from the identified other payables due after one year, all other financial liabilities are due within one year.
At 29 February 2016 the Group had the following outstanding commitments under non-cancellable operating leases:
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Within one year | 1,357 | 1,322 |
| Later than one year and less than five years | 5,926 | 5,529 |
| After more than five years | 2,409 | 3,394 |
| Total | 9,692 | 10,245 |
The operating leases represent rentals payable by the Group for certain office properties, vehicles and equipment. The lease at the headquarters in Bedford Square is for a period of 20 years from January 2010 with an option to break the lease at the tenth year. The operating leases over vehicles are in respect of company cars driven by certain employees. The operating leases over equipment are in respect of office equipment.
The Group has no capital commitments relating to property, plant and equipment at the year end (2015: no commitments).
The Group is committed to paying royalty advances to authors in subsequent financial years. At 29 February 2016 this commitment amounted to £15,210,000 (2015: £14,315,000).
The Company and certain of its subsidiaries have guarantees to Lloyds Bank plc in place relating to the Group's borrowing facilities – see note 24c.
The Group has no related party transactions other than key management remuneration as disclosed in note 5.
In May 2016 Bloomsbury extended the revolving credit facility with Lloyds Bank plc under new terms. The existing facility expires in July 2016 and the new facility will take over from then for a further five years. The new facility comprises a £10 million – £14 million committed revolving loan facility (amount dependent on time during the year to match Bloomsbury's cash flow cycle), an uncommitted incremental term loan facility of up to £6 million and a £2 million overdraft facility. The overdraft facility is available until December 2016.
The principle subsidiary companies at 29 February 2016 are:
| Proportion of | |||||||
|---|---|---|---|---|---|---|---|
| Country of incorporation | equity capital held | Nature of business during the year | |||||
| Subsidiary undertakings held directly by Bloomsbury Publishing Plc: | |||||||
| A & C Black Limited | England and Wales | 100% | Intermediate | ||||
| holding company | |||||||
| Bloomsbury Publishing Inc | USA | 100% | Publishing | ||||
| Bloomsbury Information Limited | England and Wales | 100% | Publishing | ||||
| Bloomsbury Professional Limited | England and Wales | 100% | Publishing | ||||
| Bloomsbury Australia PTY Limited | Australia | 100% | Publishing | ||||
| The Continuum International Publishing Group Limited | England and Wales | 100% | Publishing | ||||
| Hart Publishing Limited | England and Wales | 100% | Publishing | ||||
| Osprey Publishing Limited | England and Wales | 100% | Publishing | ||||
| Subsidiary undertakings held through a subsidiary company: | |||||||
| A & C Black Publishers Limited | England and Wales | 100% | Publishing | ||||
| Christopher Helm (Publishers) Limited | England and Wales | 100% | Publishing | ||||
| Oxford International Publishers Limited t/a Berg Publishers | England and Wales | 100% | Publishing | ||||
| Berg Fashion Library Limited | England and Wales | 100% | Publishing | ||||
| John Wisden and Company Limited | England and Wales | 100% | Publishing | ||||
| Shire Publications Limited | England and Wales | 100% | Publishing | ||||
| British Wildlife Publishing Limited | England and Wales | 100% | Publishing | ||||
| The Continuum International Publishing Group Inc | USA | 100% | Publishing | ||||
| Osprey Publishing Inc | USA | 100% | Publishing | ||||
| Bloomsbury Publishing India Private Limited | India | 100% | Publishing | ||||
All subsidiary undertakings are included in the consolidation.
For the year ended 29 February 2016 the following subsidiary companies were entitled to exemption from audit under section 479A of the Companies Act 2006:
| Subsidiary name | Company number |
|---|---|
| Bloomsbury Information Limited | 06409758 |
| Bloomsbury Professional Limited | 05233465 |
| The Continuum International Publishing Group Limited | 03833148 |
| A & C Black Publishers Limited | 00189153 |
| Christopher Helm (Publishers) Limited | 01953639 |
| Oxford International Publishers Limited t/a Berg Publishers | 03143617 |
| Berg Fashion Library Limited | 05728582 |
| John Wisden and Company Limited | 00135590 |
| Hart Publishing Limited | 03307205 |
| Osprey Publishing Limited | 03471853 |
| Shire Publications Limited | 00868867 |
| British Wildlife Publishing Limited | 06810049 |
As at 29 February 2016 Company Number 1984336
| 29 February | 28 February | ||
|---|---|---|---|
| Notes | 2016 £'000 |
2015 £'000 |
|
| Assets | |||
| Intangible assets | 32 | 2,028 | 1,956 |
| Property, plant and equipment | 33 | 1,957 | 2,245 |
| Investments in subsidiary companies | 34 | 65,595 | 65,595 |
| Deferred tax assets | 35 | 46 | 73 |
| Trade and other receivables | 37 | – | 11,806 |
| Total non-current assets | 69,626 | 81,675 | |
| Inventories | 36 | 4,555 | 3,908 |
| Trade and other receivables | 37 | 59,652 | 48,450 |
| Cash and cash equivalents | 38 | 1,152 | 6,139 |
| Total current assets | 65,359 | 58,497 | |
| Total assets | 134,985 | 140,172 | |
| Liabilities | |||
| Provisions | 41 | 20 | 20 |
| Other payables | 39 | 871 | 886 |
| Total non-current liabilities | 891 | 906 | |
| Trade and other payables | 39 | 46,637 | 50,656 |
| Bank overdraft | 38 | 1,390 | – |
| Loans and borrowings | 40 | – | 2,500 |
| Current tax liabilities | 292 | 698 | |
| Total current liabilities | 48,319 | 53,854 | |
| Total liabilities | 49,210 | 54,760 | |
| Net assets | 85,775 | 85,412 | |
| Equity | |||
| Share capital | 42 | 939 | 938 |
| Share premium | 39,388 | 39,388 | |
| Other reserves | 42 | 6,836 | 6,394 |
| Retained earnings | 42 | 38,612 | 38,692 |
| Total equity attributable to owners of the Company | 85,775 | 85,412 |
The Company financial statements were approved by the Board of Directors and authorised for issue on 13 June 2016.
Director Director
| Share capital |
Share premium |
Merger reserve |
Capital redemption reserve |
Share-based payment reserve |
Retained earnings |
Total | |
|---|---|---|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 28 February 2014 | 924 | 39,388 | – | 22 | 4,582 | 40,844 | 85,760 |
| Profit for the year and total | |||||||
| comprehensive income for the year | – | – | – | – | – | 2,130 | 2,130 |
| Transactions with owners | |||||||
| Shares issued in the year | 14 | – | 1,386 | – | – | (3) | 1,397 |
| Dividends to equity holders of the | |||||||
| Company | – | – | – | – | – | (4,276) | (4,276) |
| Share options exercised | – | – | – | – | – | 115 | 115 |
| Deferred tax on share-based | |||||||
| payment transactions | – | – | – | – | – | (118) | (118) |
| Share-based payment | |||||||
| transactions | – | – | – | – | 404 | – | 404 |
| Total transactions with owners of | |||||||
| the Company | 14 | – | 1,386 | – | 404 | (4,282) | (2,478) |
| At 28 February 2015 | 938 | 39,388 | 1,386 | 22 | 4,986 | 38,692 | 85,412 |
| Profit for the year and total | |||||||
| comprehensive income for the year | – | – | – | – | – | 4,447 | 4,447 |
| Transactions with owners | |||||||
| Shares issued in the year | 1 | – | – | – | – | (1) | – |
| Dividends to equity holders of the | |||||||
| Company | – | – | – | – | – | (4,590) | (4,590) |
| Share options exercised | – | – | – | – | – | 88 | 88 |
| Deferred tax on share-based | |||||||
| payment transactions | – | – | – | – | – | (24) | (24) |
| Share-based payment | |||||||
| transactions | – | – | – | – | 442 | – | 442 |
| Total transactions with owners of | |||||||
| the Company | 1 | – | – | – | 442 | (4,527) | (4,084) |
| At 29 February 2016 | 939 | 39,388 | 1,386 | 22 | 5,428 | 38,612 | 85,775 |
For the year ended 29 February 2016
| Notes | Year ended 29 February 2016 £'000 |
Year ended 28 February 2015 £'000 |
|---|---|---|
| Cash flows from operating activities | ||
| Profit before tax | 4,653 | 3,012 |
| Finance income | (70) | (55) |
| Finance costs | 86 | 68 |
| Operating profit | 4,669 | 3,025 |
| Adjustments for: | ||
| Depreciation of property, plant and equipment | 464 | 458 |
| Amortisation of intangible assets | 823 | 732 |
| Share-based payment charges | 158 | 174 |
| 6,114 | 4,389 | |
| (Increase)/decrease in inventories | (647) | 600 |
| Decrease/(increase) in trade and other receivables | 903 | (4,161) |
| (Decrease)/increase in trade and other payables | (4,050) | 8,903 |
| Cash generated from operations | 2,320 | 9,731 |
| Income taxes paid | (608) | (1,197) |
| Net cash generated from operating activities | 1,712 | 8,534 |
| Cash flows from investing activities | ||
| Purchase of property, plant and equipment | (176) | (209) |
| Purchase of businesses | – | (4,345) |
| Purchases of intangible assets | (895) | (1,252) |
| Interest received | 70 | 55 |
| Net cash used in investing activities | (1,001) | (5,751) |
| Cash flows from financing activities | ||
| Equity dividends paid | (4,590) | (4,276) |
| Proceeds from exercise of share options | 88 | 115 |
| (Repayment)/drawdown of borrowings | (2,500) | 2,500 |
| Interest paid | (86) | (68) |
| Net cash used in financing activities | (7,088) | (1,729) |
| Net (decrease)/increase in cash and cash equivalents | (6,377) | 1,054 |
| Cash and cash equivalents at beginning of year | 6,139 | 5,085 |
| Cash and cash equivalents at end of year 38 |
(238) | 6,139 |
Bloomsbury Publishing Plc (the "Company") is a company domiciled in the United Kingdom. The address of the Company's registered office can be found on page 131. The Company is primarily involved in the publication of books and other related services.
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations adopted by the European Union ("EU") at the time of preparing these financial statements and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.
The financial statements have been prepared on the going concern basis as the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence at least until June 2017, being the period of the detailed going concern assessment reviewed by the Board.
The Company accounting policies are consistent with the Group policies set out in note 2 to the consolidated financial statements. Key additional policies are stated below.
The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006 not to present the Company income statement or statement of comprehensive income. The Company's profit for the year was £4,447,000 (2015: £2,130,000).
The preparation of the Company financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised and in any future years affected. Critical judgements and areas where the use of estimates is significant are disclosed in note 2v) for the Group and are applicable for the Company.
The following amendments and interpretations were introduced to accounting standards relevant to the Company during the year ended 29 February 2016. The table below summarises the impact of these changes to the Company:
| Accounting standard | Description of change | Impact on financial statements |
|---|---|---|
| IAS 19 Employee Benefits The amendment simplifies how to account for contributions that are made independently of the number of years of employee service. |
The amendment has not had any impact on the Company. |
|
| Annual Improvements to IFRS 2010–2012 cycle |
Amendments have been made to update and clarify various standards including IFRS 2 'Share-based Payment', IFRS 3 'Business Combinations', IFRS 8 'Operating Segments', IFRS 13 'Fair Value Measurement', IAS 16 'Property, Plant and Equipment', IAS 38 'Intangible Assets' and IAS 24 'Related Party Disclosures'. |
The amendments made do not have an impact on the financial position or performance of the Company. |
| Annual Improvements to IFRS 2011–2013 cycle |
Amendments have been made to update and clarify various standards including IFRS 1 'First-time Adoption of International Financial Reporting Standards', IFRS 3 'Business Combinations', IFRS 13 'Fair Value Measurement' and IAS 40 'Investment Property'. |
The amendments made do not have an impact on the financial position or performance of the Company. |
The Directors are currently assessing the potential impact of other new and revised accounting standards, interpretations or amendments issued by the International Accounting Standards Board that are currently endorsed but not yet effective. They have not been adopted early by the Company and are not expected to have a material impact on the Company's financial statements.
Investments in subsidiaries are recorded at cost less accumulated impairment in the statement of financial position. Investments are reviewed at each reporting date to assess whether there are any indicators of impairment. Any impairment losses are recognised in the income statement in the year they occur.
The Company issues equity-settled share-based payment instruments to certain employees of the Group. Equity-settled share-based payment transactions are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled sharebased payments is charged to the income statement on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest.
Options granted under the Company's share option schemes and Sharesave scheme are equity settled. The fair values of such options have been calculated using the Black–Scholes model or a modified version of the same, based on publicly available market data.
Awards granted under the Company's Performance Share Plan are equity settled. Part of any award granted under the plan is subject to a Total Shareholder Return performance condition. The fair value of this element of the awards is calculated using the Stochastic model. The other part of any award granted under the plan is subject to an Earnings Per Share performance condition. The fair value of this element of the awards is calculated using the Black–Scholes model.
Awards granted under the Company's Share Option Plan are equity settled. The award is subject to an Adjusted Earnings Per Share growth performance condition. The fair value of this award is calculated using the Black–Scholes model.
The Company recharges a share of the share-based payment charge to subsidiaries. This recharge is made via intercompany transactions.
| Publishing | Systems | ||
|---|---|---|---|
| rights | development | Total | |
| £'000 | £'000 | £'000 | |
| Cost | |||
| At 28 February 2014 | 660 | 2,715 | 3,375 |
| Additions | – | 819 | 819 |
| At 28 February 2015 | 660 | 3,534 | 4,194 |
| Additions | – | 895 | 895 |
| At 29 February 2016 | 660 | 4,429 | 5,089 |
| Amortisation | |||
| At 28 February 2014 | 440 | 1,066 | 1,506 |
| Charge for the year | 132 | 600 | 732 |
| At 28 February 2015 | 572 | 1,666 | 2,238 |
| Charge for the year | 88 | 735 | 823 |
| At 29 February 2016 | 660 | 2,401 | 3,061 |
| Net book value |
| At 29 February 2016 | – | 2,028 | 2,028 |
|---|---|---|---|
| At 28 February 2015 | 88 | 1,868 | 1,956 |
The amortisation charge of £823,000 (2015: £732,000) was included in administrative expenses in the year.
| Short leasehold improvements £'000 |
Furniture and fittings £'000 |
Computers and other office equipment £'000 |
Total £'000 |
|
|---|---|---|---|---|
| Cost | ||||
| At 28 February 2014 | 2,640 | 389 | 886 | 3,915 |
| Additions | 4 | 13 | 193 | 210 |
| At 28 February 2015 | 2,644 | 402 | 1,079 | 4,125 |
| Additions | 4 | 8 | 164 | 176 |
| At 29 February 2016 | 2,648 | 410 | 1,243 | 4,301 |
| Depreciation | ||||
| At 28 February 2014 | 659 | 245 | 517 | 1,421 |
| Charge for the year | 272 | 31 | 156 | 459 |
| At 28 February 2015 | 931 | 276 | 673 | 1,880 |
| Charge for the year | 272 | 28 | 164 | 464 |
| At 29 February 2016 | 1,203 | 304 | 837 | 2,344 |
| Net book value | ||||
| At 29 February 2016 | 1,445 | 106 | 406 | 1,957 |
| At 28 February 2015 | 1,713 | 126 | 406 | 2,245 |
| The depreciation charge of £464,000 (2015: £459,000) was included in administrative expenses. | ||||
| 34. Investment in subsidiary companies | ||||
| £'000 | ||||
| Cost | ||||
| At 28 February 2015 and 29 February 2016 | 75,037 | |||
| Impairment | ||||
| At 28 February 2015 and 29 February 2016 | 9,442 | |||
| Net book value | ||||
| At 29 February 2016 | 65,595 |
At 28 February 2015 65,595
Deferred tax is calculated in full on temporary differences using the tax rate appropriate to the jurisdiction in which the asset or liability arises and the tax rates that are expected to apply in the periods in which the asset or liability is settled.
Movement in temporary differences during the year:
| Property, plant and equipment £'000 |
Retirement benefit obligation £'000 |
Share-based payments £'000 |
Total £'000 |
|
|---|---|---|---|---|
| At 28 February 2014 | (152) | 15 | 347 | 210 |
| Credit/(charge) to the income statement | 53 | 5 | (77) | (19) |
| Charge to equity | – | – | (118) | (118) |
| At 28 February 2015 | (99) | 20 | 152 | 73 |
| Credit/(charge) to the income statement | 6 | (3) | (6) | (3) |
| Charge to equity | – | – | (24) | (24) |
| At 29 February 2016 | (93) | 17 | 122 | 46 |
The analysis for financial reporting purposes is as follows:
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Deferred tax assets | 46 | 73 |
| Deferred tax liabilities | – | – |
| Total | 46 | 73 |
Deferred tax is not provided on unremitted earnings of subsidiaries where the Group controls the timing of remittance and it is probable that the temporary difference will not reverse in the foreseeable future.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Work in progress | 1,362 | 710 |
| Finished goods for resale | 3,193 | 3,198 |
| Total | 4,555 | 3,908 |
The cost of inventories recognised as cost of sales amounted to £9,929,000 (2015: £7,667,000).
The provision and write down of inventories to net realisable value recognised in cost of sales amounted to £1,599,000 (2015: £1,201,000).
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Non-current | ||
| Amounts owed by Group undertakings | – | 11,806 |
| Current | ||
| Gross trade receivables | 26,693 | 23,710 |
| Less provision for impairment of receivables | (401) | (592) |
| Less provision for returns | (1,493) | (2,219) |
| Net trade receivables | 24,799 | 20,899 |
| Amounts owed by Group undertakings | 17,952 | 10,911 |
| Other receivables | 462 | 2,051 |
| Prepayments and accrued income | 4,266 | 3,000 |
| Royalty advances | 12,173 | 11,589 |
| Total current receivables | 59,652 | 48,450 |
| Total trade and other receivables | 59,652 | 60,256 |
The non-current amount owed by Group undertakings has been moved to current receivables as this loan is technically repayable on demand; however, there is no intention to demand repayment of the loan within the next twelve months.
Royalty advances have been separated out from prepayments and accrued income to enable a user to get a better understanding of the business. A provision is held against gross advances payable in respect of published titles advances which may not be fully earned down by anticipated future sales. As at 29 February 2016 £2,576,000 (2015: £2,594,000) of royalty advances are expected to be recovered after more than 12 months.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair values. The Company's exposure to credit and currency risks is disclosed in note 44. Trade receivables principally comprise amounts receivable from the sale of books due from distributors. The average number of days' credit taken for sales of books by the Company was 227 days (2015: 232 days).
Movements on the Company's provision for impairment of trade receivables are as follows:
| 2016 2015 £'000 £'000 |
28 February |
|---|---|
| At start of year 592 |
479 |
| Amounts created 353 |
323 |
| Amounts released (110) |
– |
| Amounts utilised (434) |
(210) |
| At end of year 401 |
592 |
Movements on the Company provision for book returns are as follows:
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| At start of year | 2,219 | 1,503 |
| Amounts created | 8,371 | 6,206 |
| Amounts utilised | (9,097) | (5,490) |
| At end of year | 1,493 | 2,219 |
If actual returns were 10% higher/lower in the year then revenue would have been £0.9 million lower/higher.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Cash at bank and in hand | 1,152 | 6,139 |
| Cash and cash equivalents as presented in the statement of financial position | 1,152 | 6,139 |
| Bank overdraft | (1,390) | – |
| Cash and cash equivalents as presented in the statement of cash flows | (238) | 6,139 |
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Non-current | ||
| Other payables | 871 | 886 |
| Current | ||
| Trade payables | 5,624 | 6,562 |
| Amounts owed to Group undertakings | 30,547 | 34,488 |
| Taxation and social security | 535 | 499 |
| Other payables | 1,295 | 1,040 |
| Accruals and deferred income | 8,636 | 8,067 |
| Total current trade and other payables | 46,637 | 50,656 |
| Total trade and other payables | 47,508 | 51,542 |
Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. Non-current other payables include the authors' share of rights receivable falling due after more than one year.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Current | ||
| Unsecured bank loans | – | 2,500 |
| Information about the Company's exposure to interest rate, foreign currency and liquidity risk is included in note 44. |
| Property | |
|---|---|
| £'000 | |
| At 1 March 2015 | 20 |
| Utilised in the year | – |
| At 29 February 2016 | 20 |
| Non-current | 20 |
| Current | – |
The property provision is in respect of dilapidations for the Bedford Square head office.
For details of share capital, merger reserve, capital redemption reserve, share-based payment reserve and retained earnings see note 21 and the Company statement of changes in equity attributable to the owners of the Company. For details of the Company profit for the year see note 31b).
For details of dividends see note 8.
Options over shares of the Company have been granted to employees of the Company and Group under various schemes. The full sharebased payment disclosures can be found in note 22.
The total share-based payment charge to the income statement for the year was:
| Year ended | Year ended | |
|---|---|---|
| 29 February | 28 February | |
| 2016 | 2015 | |
| £'000 | £'000 | |
| Equity-settled share-based transactions | 442 | 404 |
| Cash-settled share-based transactions | 45 | 92 |
| Total | 487 | 496 |
£329,000 (2015: £322,000) of this amount was recharged to subsidiaries of the Company.
Full disclosures relating to the Group's financial risk management strategies and other financial assets and liabilities are given in note 24 to the consolidated financial statements.
| Year ended 29 February |
Year ended 28 February |
||
|---|---|---|---|
| Notes | 2016 £'000 |
2015 £'000 |
|
| Loans and receivables | |||
| Cash and cash equivalents | 38 | 1,152 | 6,139 |
| Amounts owed by Group undertakings | 37 | 17,952 | 22,717 |
| Trade receivables | 37 | 24,799 | 20,899 |
| Accrued income | 902 | 690 | |
| Rights income receivable | 2,689 | 1,690 | |
| Total loans and receivables | 47,494 | 52,135 | |
| Financial liabilities measured at amortised cost | |||
| Trade payables | 39 | 5,624 | 6,562 |
| Accruals | 8,473 | 7,823 | |
| Other payables | 1,830 | 1,539 | |
| Amounts owed to Group undertakings | 39 | 30,547 | 34,488 |
| Other payables due in more than one year | 39 | 871 | 886 |
| Overdrafts and current loans | 38/40 | 1,390 | 2,500 |
| Total financial liabilities measured at amortised cost | 48,735 | 53,798 | |
| Net financial instruments | (1,241) | (1,663) | |
| a) Market risk | |||
| i) Interest rate risk |
Interest rate profile of financial assets
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Variable rate financial assets | 1,152 | 6,139 |
The Company derived the following sensitivities to assess the impact of changes in interest rates, based on the effect of the market volatility in the current climate and the previous 12 months. The analysis assumes all other variables remain constant.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Impact on profit and equity | ||
| 1% increase in base rate of interest (2015: 1%) | (6) | 61 |
| 0.5% decrease in base rate of interest (2015: 0.5%) | 3 | (31) |
The Company's exposure to foreign currency risk was as follows based on notional amounts:
| Loan and receivables | Financial liabilities | |||
|---|---|---|---|---|
| 29 February | 28 February | 29 February | 28 February | |
| 2016 | 2015 | 2016 | 2015 | |
| £'000 | £'000 | £'000 | £'000 | |
| GBP | 44,591 | 49,289 | 46,510 | 51,744 |
| USD | 2,113 | 1,770 | 1,710 | 1,488 |
| EURO | 785 | 1,071 | 511 | 562 |
| AUD | 5 | 5 | 4 | 4 |
| Total | 47,494 | 52,135 | 48,735 | 53,798 |
The Company derived the following sensitivities based on the outstanding foreign currency denominated financial assets and liabilities at the year end.
The use of a 10% sensitivity rate has been determined based on the effect of the market volatility in exchange rates between the current and previous year end, and represents management's assessment of the reasonably possible change in foreign exchange rates. A positive number below indicates an increase in profit or loss and equity.
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Impact on profit or loss | ||
| 10% weakening in US dollar against pound sterling (2015: 10%) | (37) | (26) |
| 10% strengthening in US dollar against pound sterling (2015: 10%) | 45 | 32 |
| 10% weakening in euro against pound sterling (2015: 10%) | (25) | (46) |
| 10% strengthening in euro against pound sterling (2015: 10%) | 30 | 57 |
| 10% weakening in AUS dollar against pound sterling (2015: 10%) | – | – |
| 10% strengthening in AUS dollar against pound sterling (2015: 10%) | – | 1 |
The Company has a significant concentration of credit risk due to its use of third party distributors. Credit limits for the final customers are set by the distributors based on a combination of payment history and third party credit references. Credit limits are reviewed on a regular basis in conjunction with debt ageing and collection history. The distributors belong to established international groups whose business includes a number of publishing interests and clients. The Company's risk is limited as significant amounts outstanding through the UK distributors are secured by credit insurance.
The Group has an unsecured revolving credit facility with Lloyds Bank plc. At 29 February 2016 the Group had drawn down £1.4 million (2015: £2.5 million) of this facility with £14.1 million of undrawn borrowing facilities (2015: £13 million) available. The facilities are comprised of a £13.5 million committed revolving loan facility and a £2 million overdraft.
In May 2016 Bloomsbury extended the revolving credit facility with Lloyds Bank plc under new terms. The existing facility expires in July 2016 and the new facility will take over from then for a further five years. The new facility comprises a £10 million–£14 million committed revolving loan facility (amount dependent on time during the year to match Bloomsbury's cash flow cycle), an uncommitted incremental term loan facility of up to £6 million and a £2 million overdraft facility. The overdraft facility is available until December 2016. All facilities are subject to two covenants being a maximum debt to EBITDA ratio and a minimum interest cover covenant.
At 29 February 2016 the Company had the following outstanding commitments under non-cancellable operating leases:
| 29 February | 28 February | |
|---|---|---|
| 2016 | 2015 | |
| £'000 | £'000 | |
| Within one year | 594 | 617 |
| Later than one year and fewer than five years | 2,274 | 2,373 |
| After more than five years | – | 494 |
| Total | 2,868 | 3,484 |
The operating leases represent rentals payable by the Company for certain office properties, vehicles and equipment; see note 25 for further details.
The Group has no capital commitments relating to property, plant and equipment at the year end (2015: no commitments).
The Company is committed to paying royalty advances in subsequent financial years. At 29 February 2016 this commitment amounted to £9,017,000 (2015: £9,175,000).
The Company and certain of its subsidiaries have guarantees to Lloyds Bank plc in place relating to the Group's borrowing facilities; see note 44c).
The Company has guaranteed the liabilities of certain of its UK subsidiaries, being those listed in note 29, to enable them to take the audit exemption under section 479A of the Companies Act 2006.
During the year the Company entered into the following transactions and had the following balances with its subsidiaries:
| 29 February 2016 £'000 |
28 February 2015 £'000 |
|
|---|---|---|
| Sale of goods to subsidiaries | 4,200 | 3,907 |
| Management recharges | 7,642 | 8,974 |
| Commission payable to subsidiaries | 1 | – |
| Finance income from subsidiaries | 68 | 51 |
| Amounts owed by subsidiaries at year end | 17,952 | 22,717 |
| Amounts owed to subsidiaries at year end | 30,547 | 34,488 |
All amounts outstanding are unsecured and will be settled in cash. No provisions have been made for doubtful debts in respect of the amounts owed by subsidiaries.
Key management remuneration is disclosed in note 5.
See note 28 for post balance sheet events impacting the Company.
| 2012 £'000 |
2013 £'000 |
2014 £'000 |
2015 £'000 |
2016 £'000 |
|
|---|---|---|---|---|---|
| Revenue | |||||
| Continuing | 97,399 | 98,479 | 109,496 | 111,125 | 123,725 |
| Discontinued | 5,818 | – | – | – | – |
| Total | 103,217 | 98,479 | 109,496 | 111,125 | 123,725 |
| Adjusted profit† | |||||
| Continuing | 11,876 | 11,806 | 11,954 | 12,079 | 13,028 |
| Discontinued | (2,692) | – | – | – | – |
| Total | 9,184 | 11,806 | 11,954 | 12,079 | 13,028 |
| Continuing adjusted diluted EPS‡ | 12.95p | 12.17p | 12.80p | 14.73p | 15.24p |
| Dividend per share | 5.20p | 5.50p | 5.82p | 6.10p | 6.40p |
| Net assets | 109,180 | 114,808 | 116,036 | 124,154 | 132,967 |
| Net cash | 12,639 | 14,625 | 10,037 | 10,021 | 5,166 |
† Adjusted profit is profit before taxation, amortisation of acquired intangible assets, impairment of goodwill and other highlighted items. 2014 and earlier has been restated to add back internally generated intangible asset amortisation to continuing adjusted profit.
‡ Continuing adjusted diluted EPS is calculated from continuing adjusted profit with tax on continuing adjusted profit deducted. Again 2014 and earlier has been restated to reflect the change in treatment of internally generated intangible asset amortisation.
| Chairman | Sir Anthony Salz – Non-Executive Chairman |
|---|---|
| Executive Directors | Nigel Newton – Founder and Chief Executive Richard Charkin – Executive Director Wendy Pallot – Finance Director Jonathan Glasspool – Executive Director |
| Independent Non-Executive Directors | John Warren – Senior Independent Director Jill Jones Stephen Page |
| Company Secretary | Michael Daykin FCIS, FCA |
| Registered Office | 50 Bedford Square London WC1B 3DP +44 (0) 20 7631 5600 |
| Registered number | 01984336 (England & Wales) |
| Auditor | KPMG LLP 15 Canada Square London E14 5GL |
| Bankers | Lloyds Bank 25 Gresham Street London EC2V 7HN |
| Stockbrokers and Financial Advisers | Investec Investment Banking 2 Gresham Street London EC2V 7QP |
| Registrars | Capita Asset Services 40 Dukes Place London EC3A 7NH |
To Bloomsbury Shareholders and, for information only, to the holders of share options and awards under the Company's share incentive schemes.
The 2016 Annual General Meeting ("AGM") of Bloomsbury Publishing Plc (the "Company") is to be held at 50 Bedford Square, London WC1B 3DP on Tuesday 19 July 2016 at 12 noon. The formal notice convening the AGM is set out on pages 135 to 138 below.
Information regarding the AGM, including the information required by section 311A of the Companies Act 2006 (the "Act"), is available from www.bloomsbury-ir.co.uk.
The AGM is an important opportunity for the Directors to listen to the Shareholders and respond to their questions. It is also when Shareholders are asked to vote in favour of various resolutions related to the running and management of the Company. Therefore below are explanatory notes relating to the resolutions that you will be asked to consider and vote on at the AGM. Resolutions 1 to 14 will be proposed as ordinary resolutions and resolutions 15 and 16 will be proposed as special resolutions.
As at 12 noon on the date of this notice, the Company's issued share capital comprised 75,081,177 Ordinary shares of 1.25 pence each (subject to any changes that will be notified to you at the beginning of the AGM). Each Ordinary share carries the right to one vote at a General Meeting of the Company and, therefore, the total number of voting rights in the Company as at 12 noon on the date of this notice is 75,081,177.
As a Shareholder, you are entitled to attend and vote but, if you are not able to attend, then you may appoint one or more proxies to attend, speak and vote on your behalf.
As your vote is important to us, whether or not you intend to come to the AGM, you are asked to return the Form of Proxy provided to you. Completing the Form of Proxy will not prohibit Shareholders from attending, and voting at, the AGM in person.
To receive the report of the Directors and the financial statements for the year ended 29 February 2016, together with the report of the Auditor.
To approve the Annual Statement by the Chairman of the Remuneration Committee and Annual Report on Directors' Remuneration as set out on pages 58 to 59 and 65 to 74 respectively of the 2016 Annual Report and Accounts for the year ended 29 February 2016.
The Directors' Remuneration Policy Report, as set out in the first part of the Directors' Remuneration Report on pages 60 to 65 of the 2014 Annual Report and Accounts, was last approved by the Shareholders at the AGM on 22 July 2014 and remains effective for up to three years.
The Board proposes a final dividend of 5.34p per share for the year ended 29 February 2016. If approved, the recommended final dividend will be paid on 21 September 2016 to all Shareholders who are on the register of members on 26 August 2016. Payments will be made by cheque or BACS (where there is an existing dividend mandate). The final dividend equates to an aggregate distribution to Shareholders of approximately £4.0 million, making approximately £4.8 million for the interim and final dividend together.
In accordance with best practice for issuers listed on the Main Market of the London Stock Exchange and the Articles of Association of the Company ("Articles"), all the Directors will retire at the AGM and, being eligible, offers themselves for reappointment. The Board has considered the appraisal of the performance of each Director and recommends that each Director is reappointed.
The Board recommends that the incumbent External Auditor, KPMG LLP, be reappointed for a further year so that they are able to audit the Company's report and accounts for the year ending 28 February 2017.
The Board proposes that it be authorised to determine the level of the Auditor's remuneration.
This is a resolution to replace the general authority, last given at the 2015 AGM, for the Directors to be authorised to allot Ordinary shares pursuant to section 551 of the Act. This resolution, if passed, would give the Directors the authority to allot up to 25,024,556 Ordinary shares of 1.25 pence with a nominal value of £312,806, representing approximately 33.33% of the issued Ordinary share capital of the Company at the date of this notice.
This authority, if granted, will expire on the earlier of the conclusion of the Company's next AGM and 15 months from the date of passing this resolution. The Board has no present intention of exercising the authority granted by this resolution. The Board intends to seek its renewal at subsequent AGMs of the Company.
As at the date of signing the Directors' Report for the 2016 Annual Report, the Directors had beneficial holdings of Ordinary shares in the Company which, in aggregate, amounted to approximately 2.3% of the Ordinary shares in issue. The Directors have been granted awards under the Company's share schemes* that, if they were to fully vest, would entitle the Directors to further Ordinary shares which in aggregate would amount to approximately a further 2.4% of the Ordinary shares in issue.
* Includes conditional share awards under the Bloomsbury Publishing Plc Performance Share Plan 2005 and Bloomsbury Publishing Plc 2014 Performance Share Plan and options granted under the Bloomsbury Publishing Plc 2014 Sharesave Plan and, in the case of Jonathan Glasspool for options granted prior to his appointment as a Director, under the Bloomsbury Publishing Plc 2014 Company Share Option Plan.
This resolution gives limited power to the Directors to allot new Ordinary shares for cash without first offering them, pro rata, to existing Shareholders pursuant to section 571 of the Act.
The maximum nominal value of new Ordinary shares which may be so allotted under this authority is £46,926 or 3,754,058 shares of 1.25 pence, being equivalent to approximately 5% of the entire issued Ordinary share capital of the Company at date of this notice. This authority will expire on the earlier of the conclusion of the Company's next AGM and 15 months from the date of passing this resolution.
With the authority of Shareholders in general meeting, the Company is empowered by the Articles to purchase Ordinary shares subject to the provisions of the Act. The Directors believe it is prudent to seek general authority from Shareholders to be able to act if circumstances arise in which they consider such purchases to be desirable. The Directors have no current intention to exercise the authority granted by this resolution and it will only be exercised if and when, in the light of market conditions prevailing at that time, the Directors believe that such purchases would increase earnings per share and would be for the benefit of Shareholders generally.
This resolution authorises the Company to purchase its own Ordinary shares and either, depending on the circumstances at the time and subject to the provisions of the Act, to hold these as Treasury shares or to cancel them. This authority would, if granted, expire on the earlier of the conclusion of the Company's next AGM and 15 months from the date of passing this resolution.
The Company would be authorised to make market purchases of up to 7,508,117 Ordinary shares of 1.25 pence with a nominal value of £93,851, being equivalent to approximately 10% of the issued Ordinary share capital (excluding treasury shares) of the Company at the date of this notice. The maximum price (exclusive of expenses) shall be not more than 5% above the average market value of the Company's equity shares for the five business days prior to the day the purchase is made. The minimum price (exclusive of expenses) that may be paid shall be the nominal value of an Ordinary share (1.25 pence).
As outlined above, information regarding the AGM is available from www.bloomsbury-ir.co.uk.
Enclosed with this Notice of Meeting, you will find a reply-paid Form of Proxy for use at the AGM. Whether or not you are able to attend the AGM, you are advised to complete and return the Form of Proxy in accordance with the instructions printed on it.
If you wish to attend the AGM in person then the proxy appointment will not preclude you from doing so.
The Form of Proxy should be completed and returned as soon as possible to Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU and, in any event, so as to reach such address no later than 48 hours before the appointed commencement time of the AGM (for which a prepaid business reply service has been provided). You may also deliver it by hand to Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU during usual business hours, by such time.
The Board considers that the passing of Resolutions 1 to 16 is in the best interests of the Company and of the Shareholders as a whole and is most likely to promote the success of the Company. The Board unanimously recommends that you vote in favour of all the resolutions, as each of the Directors intends to do in respect of his or her own beneficial holdings of shares in the Company.
Yours faithfully
Group Company Secretary Bloomsbury Publishing Plc 13 June 2016
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at 50 Bedford Square, London, WC1B 3DP on 19 July 2016 at 12.00 noon for the following purposes:
To consider and, if thought fit, to pass the following resolutions as ordinary resolutions:
To consider and, if thought fit, to pass the following resolutions of which resolution 14 will be proposed as an ordinary resolution and resolutions 15 and 16 will be proposed as special resolutions.
and shall expire at the conclusion of the next Annual General Meeting of the Company after passing this resolution or, if earlier, 15 months from the date of passing of this resolution, unless previously varied, revoked or renewed by the Company in general meeting, and provided that the Company may, before such expiry, make any offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities pursuant to any such offer or agreement as if the power hereby conferred had not expired; and
By order of the Board
Group Company Secretary Bloomsbury Publishing Plc 13 June 2016
Registered office: 50 Bedford Square London WC1B 3DP
Stock code: BMY
Building tools?
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