4th Apr 2006 07:02
Bloomsbury Publishing PLC04 April 2006 4 APRIL 2006 BLOOMSBURY PUBLISHING PLC Preliminary Results for the Year Ended 31 December 2005 • Turnover increased 29.2% to £109.11m (2004, £84.45m). • Pre-tax profit before exceptional gain improved 23.6% to £20.13m (2004, £16.28m). • Basic earnings per share before exceptional gain rose 18.6% to 20.30p (2004, 17.12p). • Final dividend increased 21.1% to 3.0p (2004, 2.478p). Total dividend for the year increased by 20.0% to 3.60p (2004, 3.00p). • Investment in future titles at the year end up 7.5% at £22.41m (2004, £20.85m). • Significant investment in new business initiatives to drive future organic growth. New commissioning editors appointed. Up to £15m allocated for advances for new publishing area in music, TV, film and sport. • International presence now clearly established and operations in US and Germany performing well. • Good start to current year, in line with the Board's expectations with strong pipeline of new titles. Commenting on the results and prospects for Bloomsbury, Nigel Newton, Chairman,said: "We achieved much in 2005, building our book list, expanding the number of ourauthors and improving the performance of our international operations. We havemade particularly good progress in positioning the Group for growth in thefuture. 2006 has got off to a good start, in line with the Board's expectations and witha number of bestsellers on both sides of the Atlantic. Our position as aninternational publisher is now firmly established and we expect to see furtherbenefits from this and the new areas of publishing that we are entering in thecurrent year and beyond." For further information, please contact: Tim Spratt, Charles Palmer, Financial Dynamics 020 7831 3113Sandy Karon, PA to the Chairman, Bloomsbury Publishing Plc 020 7494 6015 Overview The significant publishing achievements of last year allowed us to meet ourforecast made to the market this time last year of profit before tax of not lessthan £20.0 million. In recognition of this performance and our good start to thecurrent year, we are raising the total dividend for 2005 by 20% to 3.60p (2004,3.00p). The launch of Harry Potter and the Half-Blood Prince on July 16th broke allprevious sales records both in the UK and in our other territories around theworld. As we look to the future, we continue to see new launches for the HarryPotter series. The paperback edition of Harry Potter and the Half-Blood Princewill be launched in 2006, followed by the launch of the seventh book in theseries, which is as yet unscheduled, and then the paperback edition of that bookapproximately twelve months later. In addition, there will be launches ofboxed-set editions of seven books in the series when it is complete plus thelaunch of celebratory editions to coincide with film releases, of which thefifth is scheduled for July 2007. The cloth-bound gift edition of the sevenbooks is also likely to become a major collector's item. In addition, under ourjoint venture with HNP, we will be releasing further audio editions of HarryPotter in 2006 as the audio backlist moves over to us from the BBC. Wetherefore envisage at least five more years of a variety of Harry Potterlaunches before it changes gear into the significant backlist life that awaitsit. It will probably constitute one of the most significant backlists in modernpublishing history. 2005 was also a successful year for Bloomsbury Paperbacks with bestsellingpaperback releases of The Two of Us by Sheila Hancock in June and JonathanStrange & Mr Norrell by Susanna Clarke in September. One of our best paperbacksfor the year was a backlist title, The Kite Runner by Khaled Hosseini, whichsold more in 2005 than in previous years, and the acceleration of thisremarkable book in the marketplace has continued in 2006. The Schott's Miscellany series has been one of the most successful in theGroup's history and the challenge was how to transform the three one-offsuccesses into a series. We have succeeded in doing this with the successfullaunch of Schott's Almanac in November 2005 - a title which will now be anannuity for many years to come with new editions currently scheduled for both2006 and 2007. In addition we will publish completely localised editions inAmerica and Germany as well as the UK. Finally, 2005 was the year of Berlin. In the two years since we acquired BerlinVerlag, we have turned the company around from losses to an operating profit in2005 of £0.64m (2004, loss of £0.50m before re-organisation costs). This hasbeen an important achievement, based on hard work by our colleagues in Berlin,the introduction of some outstanding titles for translation into German from ourUK list, publication of novels by Ingo Schulze and Zeruya Shalev, improved costcontrols and the benefits of selling Bloomsbury UK's English language titles inGermany. Above all, it is a testament to the benefits of our strategy of havingan international publishing operation and cross-selling books across three majormarkets. We enter 2006 anticipating the paperback edition of Harry Potter and theHalf-Blood Prince, being launched to coincide with the Celebration of BritishChildren's Literature at Buckingham Palace on June 25th at the time of HerMajesty the Queen's 80th birthday celebrations. We begin 2006 with the strongest list we have ever assembled, with outstandingnew books from a wide variety of authors - both established and new - includingJoanna Trollope, A. C. Grayling, William Boyd, William Dalrymple, DavidBlunkett, Ben Schott, Richard Ford, Patrick McCabe, Margaret Atwood, JayMcInerney, Alexander McCall Smith, Louis Sachar, Patricia Duncker, James Runcie,Bruce Robinson, Philip Reeve, Angie Sage, Louis Baum, Jeanette Winterson,Douglas Coupland, Kamran Nazeer, Edward Said, Kurt Vonnegut, Ronan Bennett,Aminatta Forna, T.C. Boyle, Jon McGregor, Susanna Clarke, Heston Blumenthal, andHugh Fearnley-Whittingstall. For 2007 and beyond, we have signed new books byDavid Dimbleby, Rosie Boycott, Germaine Greer, Charlotte Rampling, JustinePicardie, Sarah Raven, Anchee Min, Justin Cartwright, Katie Hickman, EstherFreud, Sophie Dahl and Khaled Hosseini. It was announced today that Gordon Brown, Chancellor of the Exchequer, is tojoin Bloomsbury with the publication in September of Moving Britain Forward:Selected Speeches, 1997-2006, his political vision for Britain in an age ofglobalisation. 2006 has started well. We have two of the ten titles selected by the Richardand Judy Book Club - Moondust by Andrew Smith and Empress Orchid by Anchee Min -which has propelled both books into the paperback bestseller lists. Recognising the growing success of books about music, film, TV and sport, andthe manner in which these are now promoted through major retail chains,supermarkets and the internet and their extensive media coverage, Bloomsburywill expand in this publishing area in addition to its well-established ones.Following the huge success in 2004 of Sheila Hancock's The Two of Us, about herlife with John Thaw, this is a natural development for us. In the schedule noware books by Gary Barlow of Take That, Amir Khan, David Thomson on Nicole Kidmanand Dave Marsh on Bruce Springsteen. We believe this development, whilesometimes involving higher advances, will have a significant impact, making gooduse of Bloomsbury's proven ability to grow organically. In 2006 the company hasallocated up to £15.0m of additional funds for the acquisition of titles forthis market. This publishing model offers good organic growth opportunities,and a more attractive risk profile than most of the potential companyacquisitions Bloomsbury has considered in the last year. Today sees the unveiling of Bloomsbury's first 24 titles available forelectronic download. We firmly believe that the way forward is for publishersto host their own titles for electronic download and are backing this view bymaking titles available as from today for download from Bloomsbury.com at thepaperback prices of those books. Whilst sales are expected to be smallinitially with the e-book reading devices of the future still in development, wewish to establish our position now in a market that could become very importantin the future. Possibly up to 50% of fiction sales may be downloads within tenyears, following the development of a popular e-book reader. Two of our firste-books are the current bestsellers Moondust by Andrew Smith and Empress Orchidby Anchee Min plus the novels of Will Self to coincide with their paperbackre-launch, all of which are downloadable from Bloomsbury.com/ebooks from today. Financial performance Turnover increased by 29.2% to £109.11m (2004, £84.45m), reflecting strongperformances from our international operations and sales of Harry Potter and theHalf-Blood Prince, Jonathan Strange & Mr Norrell, The Two of Us and The KiteRunner. Revenues from the US operations rose 22.7% to £11.03m (2004, £8.99m),including the first-time contribution of revenues from Walker PublishingCompany, Inc. Revenues from Continental Europe, which were generated by BerlinVerlag, increased 40.3% to £5.47m (2004, £3.90m). Profit before tax and exceptional gain increased 23.6% to £20.13m (2004,£16.28m). Basic earnings per share before exceptional gain rose by 18.6% to20.30 pence (2004, 17.12 pence). Diluted earnings per share before exceptionalgain increased by 18.6% to 19.93 pence (2004, 16.81 pence). At the end of the year the Group had increased its net cash balances to £53.51m(2004, £28.74m). We continue to invest in future growth through acquiring newauthors and titles. Our strong balance sheet supports this strategy. AtDecember 31st 2005 the Group had under contract 1,062 titles (2004, 978) forfuture publication, with a gross investment of £22.41m (2004, £20.85m). Afterpayment of the initial tranches of advances to authors, our liability for futurecash payments on these contracted titles at that date was £12.05m (2004,£11.88m). We continue to pursue strategic acquisitions that fit our strict criteria andcomplement our core activities. UK Children's The publication of Harry Potter and the Half-Blood Prince was a triumph oflogistical planning, ensuring that the book was available at the same timearound the world at one minute past midnight BST on July 16th when the book waslaunched from Edinburgh Castle. First-day sales in the UK broke all records.For the first time, we published in our joint publishing arrangement with HNPthe audio editions of Harry Potter and the Half-Blood Prince on CD and cassette.We will also be releasing the audio editions of Harry Potter and the Chamber ofSecrets and Harry Potter and the Prisoner of Azkaban in mid-2006. The film ofHarry Potter and the Goblet of Fire was released in November and was the highestrevenue-grossing film of 2005. The success of both the book and the filmconfirms that Harry Potter is still a growing worldwide phenomenon. We had a bestseller with Magyk by Angie Sage, the first of a five-book series.The second book in the series, Flyte, has just been published. New business initiatives We continue to build a very strong international children's publicationprogramme with Bloomsbury in New York and Berlin, with books published in allthree territories now accounting for approximately 75% of our joint children'slists. The pre-school list in particular shows good potential in this respectwith 21 titles in the 2006 publishing programme. One of the strong underlyingthemes for the list is that the majority of our pre-school books areinteractive, with 3D collage art, pull-out tabs and sounds, making them verypopular as an aid to a child's learning at an early age. Berlin is publishingthe German language editions and Walker Publishing will be publishing the listin the US. We have also sold foreign-language rights in these books tothird-party publishers. We are developing heavily branded, young-reader fiction series such as RubyRogers by Sue Limb and Araminta Spook by Angie Sage. And we also have JeanetteWinterson's children's novel, Tanglewreck, for which 12 foreign language dealshave been completed prior to publication. The book will be co-published in theUK, US and Germany. Adult There have been a number of changes in the book industry that have had an impacton the type of books we acquire and how they are sold in the market. These arecharacterised by the rise of lead titles and the ability to sell them in biggernumbers than before. The rise of the supermarkets and the dramatic effect ofbookshop promotions, particularly those linked to media promotions, are allcontributory factors. 2005 was a very strong year for Bloomsbury's paperback list. We launched thepaperback of Sheila Hancock's The Two of Us, which made the non-fictionpaperback bestseller list, and Susanna Clarke's international bestsellerJonathan Strange & Mr Norrell, which also spent many weeks on the bestsellerlist. Other paperback bestsellers included Khaled Hosseini's The Kite Runner,which was our top-selling backlist paperback in 2005, The Promise of Happinessby Justin Cartwright, Frederick Taylor's Dresden and Anchee Min's EmpressOrchid. In hardback, notable successes include The Icarus Girl by Helen Oyeyemi, whichhas rights deals in 18 countries, Joanna Briscoe's Sleep With Me and John Irving's latest novel, Until I Find You. It was a strong year for Bloomsbury non-fiction with notable successes,including The Hungry Years by William Leith, Olivier by Terry Coleman, the TheNaming of Names by Anna Pavord, author of The Tulip, and the launch of BenSchott's major new annual, Schott's Almanac, which went straight into thebestseller list. The non-fiction list has been significantly strengthened by the addition ofPublishing Director Michael Fishwick, who joined us from HarperCollins in August2005. He has already signed William Dalrymple, whose White Mughals is anenduring bestseller and whose next book, The Last Mughal, will launch a seriesof four books by him from Bloomsbury starting this autumn. In illustrated books, we have appointed the editor Richard Atkinson from Hodderand Stoughton as we expand into the illustrated, television tie-in and cookerymarket. This is marked by Hugh Fearnley-Whittingstall joining us with amulti-book contract. In addition to the success of Empress Orchid and Moondust, we have also begunthe year with a No. 1 bestseller, the new Joanna Trollope novel, SecondHoneymoon. This year has perhaps the most distinguished fiction list yet, withthe addition of William Boyd with his new novel, Restless, the twiceBooker-shortlisted author Patrick McCabe and the Pulitzer prize-winning novelistRichard Ford. On top of these titles, we have new books by bestsellingBloomsbury authors Jay McInerney, Margaret Atwood, Jon McGregor, Ronan Bennettand Susanna Clarke. New business initiatives Bloomsbury will continue to expand its editorial team through hiring topcommissioning editors in particular fields and buying aggressively andcompetitively in those areas that have proven particularly successful in thecurrent marketplace. In addition to hiring new commissioning editors, Bloomsbury has been acquiringbooks that reflect the current trend in non-fiction, including theautobiographies of the boxer Amir Khan and the singer and songwriter Gary Barlowfrom Take That. Reference 2005 saw steady growth of A&C Black sales, both from new reference andeducational publications and from new editions of backlist titles such asBlack's Medical Dictionary, published in its 42nd edition, the BloomsburyConcise Dictionary 2nd edition and Reeds Nautical Almanac, acquired in 2004 andnow in its second edition with A&C Black. We continued to develop the Whitaker's brand with the launch of Whitaker's Worldof Facts in September, which was extremely successful. A new edition of thispopular family reference book will be published in 2006, bringing the brand to abroader and younger audience. Other significant new developments on thereference list included the launch of a new annual, The Sunday Times Rich List,and the publication of Who's Who as an online and mixed-media product availableto individual subscribers. The educational list had a strong year, with sales to schools significantlyincreased. We have also expanded our bestselling Music Express series into thesecondary-schools market, and we are already seeing a notable uplift in sales. Other publishing highlights included two collaborative publications with Wisden:Wisden Collection Volume 2 and Wisden, The Ashes in Focus, a photographiccelebration of England's victory against Australia in the summer Test Series of2005. New books for 2006 include The Ultimate Teen Book Guide, which was published inFebruary, attracting excellent review coverage and selling its entire firstprint-run in the month of publication. In addition, there is the forthcomingre-launch of the long established Know the Game series, which includes popularsports, such as athletics, soccer, tennis and boxing. We will publish newtitles in collaboration with the RSPB, including The Secret Lives of BritishBirds and a range of new business books, led by the 2nd edition of Business: TheUltimate Resource - a management library in one book - which sold over 100,000copies in its first edition. New business initiatives In April A&C Black begins a new collaboration with the book publishing arm ofthe Guardian newspaper. A&C Black will be selling and distributing theGuardian's reference list, including the bestselling Media Directory. Goingforward, the two companies will be developing joint publishing projects underthe Guardian imprint. International publishing Bloomsbury USA and Walker Publishing Company, Inc. In Bloomsbury USA Jonathan Strange & Mr Norrell was released in paperback andwas our top US selling title of the year, Walker Publishing had a major successwith Kakuro Challenge, which is building to be the successor to Soduku. The integration of Walker has been completed. We combined sales and marketingdepartments, publicity, production and design, while keeping the editorialdepartments for all four divisions distinct. A CFO has been appointed to head upthe US finance function as the operation prepares for increased organic growth. Paperback rights are now being retained on all Walker titles for publication byus. Prior to its acquisition by us, these were sold off to third-partylicencees to fund the working capital of what was a relatively small business.The paperbacks are due to be published in 2006. We will be using our US distributor's large sales force for new mass-marketeditions of a selection of our titles including Jonathan Strange & Mr Norrelland Faerie Wars, beginning in the autumn of 2006. Exporting titles from the UShas in previous years not been exploited. We are now using a third-party salesforce and we plan to build this into a significant revenue stream over time. 2006 is expected to be a strong year for the operation. Already in theChildren's division we have had two New York Times bestsellers with PrincessAcademy and Nanny McPhee, and we have to come books by Alexander McCall Smith,E.D. Baker and Herbie Brennan. Berlin Verlag 2005 was an excellent year for Berlin Verlag as the company made a good profitafter two years of post-acquisition investment and integration. All four ofBerlin's imprints showed improved performances. The new Bloomsbury Berlin imprint continued to thrive as Schotts Sammelsuriumremained in the Der Spiegel bestseller list for 56 weeks, joined by the secondSchott miscellany, Schotts Sammelsurium Essen & Trinken (Food and DrinkMiscellany), on its publication in September. Other successes included AlinaReyes's novel, Die Siebte Nacht (The Seventh Night), which hit the bestsellerlist in spring after it was serialised in the BILD-Zeitung. Berlin Verlag published long-awaited new novels by two of its most importantauthors. Zeruya Shalev's Spate Familie (Late Family) was published inSeptember and Ingo Schulze's third book Neue Leben (New Lives) appeared inOctober. Both titles dominated the literary press throughout the autumn. The paperback division, Berlin Verlag Taschenbuch, delivered an improvedperformance over 2004. Several backlist titles exceeded expectations, especiallyKhaled Hosseini's Der Drachenlaufer (The Kite Runner) and Zeruya Shalev's Mannund Frau (Husband and Wife). The paperback edition of our 2004 hardback success,Jonathan Strange & Mr. Norrell, was published in the autumn and sold strongly,continuing to backlist in 2006. The arrival of a new editor for the paperbackimprint in the autumn will lead to the future development of this list. 2005 was also the first full year in which Berlin was responsible for sellingBloomsbury UK's English-language titles in Germany, Austria and Switzerland.Bloomsbury's English language edition of Harry Potter and the Half-Blood Princewas number one in the Der Spiegel bestseller list for several weeks, producingsignificant revenues. Our strategy of enabling German booksellers to orderBloomsbury UK's English books from our German warehouse is bearing fruit, asthey can more readily order small quantities and settle in Euros. In addition to growing revenues, the focus on the business in 2005 was tocontinue reducing the cost base. In January 2005 Berlin's distribution moved toa more cost effective and efficient distributor, and we also renegotiated termswith our main printers and other suppliers, which played a significant role inimproving the company's performance. Publications scheduled for 2006 include new titles by key authors, includingPeter Esterhazy, Elke Schmitter, Ben Schott, Joanna Trollope, and the launch ofa new children's non-fiction list. Following our successes in 2005, Berlin anticipates further significant growthin the German book market. Since 2003, the company's revenue growth hasconsistently grown, and we are confident that it will continue to do so. Dividend The directors are recommending a final dividend of 3.0 pence per share (2004,2.478 pence per share) making a total of 3.6 pence per share (2004, 3.0 penceper share) for the year. This represents a 20.0% increase in the total dividendfor the year which is in line with our progressive dividend policy to movetowards a lower level of dividend cover over the medium term, and is underpinnedby the company's rise in earnings. The final dividend will be payable on July6th 2006 to Ordinary Shareholders on the register at the close of business onMay 26th 2006. Management and Staff In April 2005 Richard Cordeschi was appointed Company Secretary for the Group.He was previously Company Secretary to Mansell Plc. In November 2005 Jeremy Wilson was appointed as Non-Executive Director. Jeremyis the Vice Chairman, Business Banking at Barclays Bank PLC. Today, Paul Scherer retires as a Non-Executive Director, having made asignificant contribution to Bloomsbury. I am profoundly grateful to him for allthat he has done for the company. Current Trading and Prospects 2006 has got off to a good start, in line with the Board's expectations and witha number of bestsellers on both sides of the Atlantic. Our position as aninternational publisher is now firmly established, and we expect to see furtherbenefits from this and the new areas of publishing that we are entering in thecurrent year and beyond, as well as from our exceptionally strong list for 2006. Nigel NewtonChairman3rd April 2006 Financial Review Results Turnover for the Group increased 29.2% to £109.11m (2004, £84.45m). Bloomsbury'sprimary segmental analysis is by geographic breakdown, which follows ourinternational publishing strategy. Turnover in the UK increased 29.4% to £92.62m(2004, £71.56m). In the US, turnover increased 22.7% to £11.03m (2004, £8.99m),which included the first-time contribution of revenues from Walker PublishingCompany, Inc. of £3.9m. Bloomsbury USA's turnover was down by £1.86m due to thefact that 2004 benefited from the strong success of Jonathan Strange & MrNorrell published in hardback last year. For Continental Europe, revenues,which were generated by Berlin Verlag, increased 40.3% to £5.47m (2004, £3.90m). The Group's secondary segmental disclosure is by division, which is split intothree main operating areas: Children's, Adult and Reference publishing. For2005 the breakdown of turnover between the three areas was: Children's 63%(2004, 48%), Adult 25% (2004, 36%) and Reference 12% (2004, 16%). Revenues inthe Children's division increased 69.9% to £69.01m (2004, £40.62m) primarily onthe back of the publication of Harry Potter and the Half-Blood Prince. In theAdult division, revenues decreased 8.8% to £27.47m (2004, £30.13m). In 2004 wehad the release in hardback of two major bestsellers, The Two of Us and JonathanStrange & Mr Norrell. Both were released as lower price point paperbacks in2005. Revenues in the Reference division decreased 7.8% to £12.63m (2004,£13.70m) due to the phasing of titles in the publishing programme. Gross profit increased 31.8% to £55.59m (2004, £42.18m). Gross profit marginincreased to 51.0% (2004, 50.0%) due to the economies of scale achieved from theprinting of Harry Potter and the Half-Blood Prince. Marketing and distribution costs increased by 59.1% to £18.11m (2004, £11.38m).The increase included the first-time marketing costs from Walker PublishingCompany, Inc. and the costs associated with the publication of Harry Potter andthe Half-Blood Prince. Administrative expenses increased 17.9% to £18.68m (2004,£15.85m) which was primarily as a result of the inclusion for the first time ofthe overheads attributable to the Walker acquisition. Profit before exceptionalitems and investment income increased 25.8% to £18.81m (2004, £14.95m). Investment income reduced by 16.8% to £1.39m (2004, £1.67m) as a result of loweraverage cash balances during the year. Finance costs were reduced to £0.07m(2004, £0.34m) due to the redemption of the A&C Black loan notes. The loan noteshave now been fully redeemed. In 2004 we had a one-off interest charge of £0.3mrelating to prior years' corporation tax. The effective corporation tax rate for the year is 27.2% (2004, 23.7%) and takesaccount of share options exercised during the year and the recognition of priorperiod Berlin Verlag tax losses as a deferred tax asset. This represents BerlinVerlag's tax losses, which we expect will be utilised in the foreseeable future.The 2004 tax rate benefited from inclusion of the gain on disposal of thefreehold distribution centre in A&C Black, which had no capital gains taxliability due to indexation and other allowances, and share options exercisedduring the year. In addition, the tax charge for 2004 was net of a deferred taxcredit of £0.75m, which included £0.60m in respect of tax losses carried forwardin Berlin Verlag. Basic earnings per share before exceptional gain increased by 18.6% to 20.30pence (2004, 17.12 pence). Diluted earnings per share before exceptional gainincreased by 18.6% to 19.93 pence (2004, 16.81 pence). Balance sheet Non current assets Property, plant and equipment increased to £1.62m (2004, £0.78m) reflecting thecost of refurbishment of the Group's offices in Soho Square. These costs arebeing amortised over the remaining life of the property leases. Goodwill hasincreased to £15.16m (2004, £13.87m) due to the deferred consideration on theacquisition of Berlin Verlag and fair value adjustments relating to theacquisition of Walker Publishing Company, Inc. Current assets Inventories increased 30.3% to £15.13m (2004, £11.61m), of which work inprogress increased 14.3% to £3.84m (2004, £3.36m) due to the increase in numberand timing of titles at the work in progress stage. Stocks of finished goodsincreased 38.1% to £11.11m (2004, £8.04m), due to a combination of the stockholding of an increased number of titles published by the Group during the yearwhich contributed to the increase in turnover, and the timing of the release oftitles at the end of the financial year. Trade and other receivables increased 14.7% to £49.87m (2004, £43.47m), of whichtrade debtors increased marginally to £21.27m (2004, £21.25m). Within trade andother receivables, prepayments and accrued income increased 28.7% to £26.59m(2004, £20.66m) reflecting the increase in investment in titles across all threedivisions. Equity and liabilities At 31 December 2005 total equity stood at £88.78m (2004, £73.10m). The increasewas principally due to retained earnings of £12.43m (2004, £11.18m) and shareoptions exercised during the year. Current liabilities increased 79.7% to £46.72m (2004, £26.00m). Trade creditorsdecreased by 6.0% to £5.44m (2004, £5.79m), which was attributable to the timingof supplier payments at the year end. Accruals and deferred income, which isincluded in trade and other payables, increased to £36.36m (2004, £15.33m).Accruals and deferred income include royalty payments to authors, which varyfrom year to year depending on turnover and the authors' royalty rates whichtypically escalate at thresholds triggered as volume sales increase. The Grouppublished the highest selling book in its history in the year under review. Theroyalties due to authors, accrued at 31st December were paid on 31st March 2006. The remaining £0.38m of the Guaranteed Loan Notes 2005,relating to the A&C Black acquisition in 2000, were redeemed during the year.Corporation tax payable decreased to £2.58m (2004, £2.76m) primarily due toallowances for share options exercised during the year. Berlin Verlag Berlin made its first operating profit in 2005. Turnover for the companyincreased 40.3% to £5.47m (2004, £3.90m). All four lists within the operation,including Bloomsbury Berlin and the Bloomsbury Kinder list, showed considerableimprovement over 2004. The company, and indeed the Group, has benefited from theGerman translation rights retained by Bloomsbury and published through Berlin.The operation has continued to manage its cost base well with trading agreementsreviewed with key suppliers including its distribution arrangements. Operatingprofit for the year was £0.64m (2004, loss of £0.50m before re-organisationcosts). Bloomsbury USA The integration of Walker Publishing Company, Inc. was completed during theyear. All back office service functions have now been consolidated whilstleaving the four editorial divisions to operate separately. Turnover for thecombined operation was £11.03m (2004, £8.99m). The acquisition of Walker hasprovided the infrastructure to grow the US business, and the additional salesvolume from the Walker business has given us the critical mass to start agreeingnew trading agreements with key suppliers. This will be ongoing in 2006.Operating profit for the year for the combined operation was £0.48m (2004, lossof £0.54m). Cash Flow £31.07m of cash was generated from operating activities during the year (2004,£4.37m). Cash generation was particularly strong for the UK with the publicationof Harry Potter and the Half-Blood Prince. Corporation tax paid during the yearwas £5.90m (2004, £3.71m). Included in the purchase of property, plant andequipment cost of £1.268m (2004, £0.21m) is the refurbishment cost of theGroup's offices in Soho Square. The bulk of the costs have been incurred in 2005but there will be some ongoing costs to be recognised in 2006. During the year£1.80m (2004, £1.61m) was received from the exercise of share options, and£2.22m of dividends were paid (2004, £1.56m). Future investment and strategy Investment in authors and acquiring world rights to new titles is still at theforefront of our strategy for growth. Berlin Verlag's success is a goodillustration of the benefits that can be derived from acquiring world rights andexploiting them across the Group. Bloomsbury continues to generate good cashflowfrom its publishing operations that is being re-invested in new titles acrossour markets. In particular, we have allocated up to £15m of funds to invest ingrowing our non-fiction lists across the Group. We are reviewing other genresof publishing to evaluate their potential for growth. Corporate acquisitions remain an important part of our growth strategy. We havereviewed many potential acquisitions to date, applying strict criteria to ensureany targets complement the existing business and provide future growthopportunities for Bloomsbury. We are in a good position with a strong balancesheet and are well placed to fund any acquisitions that meet these criteria. Colin Adams ACAGroup Finance Director3rd April 2006 CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2005 Notes Year Year ended ended 31 December 31 December 2005 2004 £'000 £'000 Revenue 2 109,108 84,449 Cost of sales (53,514) (42,270) Gross profit 55,594 42,179Marketing and distribution costs (18,107) (11,377)Administrative expenses (18,681) (15,854) Profit before exceptional items and investmentincome 18,806 14,948Profit on sale of fixed assets in continuing - 1,076operationsLoss on sale of publishing assets - (77)Reorganisation costs in continuing operations - (582) Profit before investment income 18,806 15,365Investment income 1,392 1,669Finance costs (71) (337) Profit before taxation 20,127 16,697Income tax expense 3 (5,481) (3,956) Profit for the year 14,646 12,741 Basic earnings per share 5 20.30p 17.98p Diluted earnings per share 5 19.93p 17.66p CONSOLIDATED BALANCE SHEET at 31 December 2005 2005 2004 £'000 £'000ASSETSNon-current assets Property, plant and equipment 1,615 776 Intangible assets 15,511 14,226 Total non-current assets 17,126 15,002 Current assets Inventories 15,129 11,614 Trade and other receivables 49,868 43,468 Cash and cash equivalents 53,511 29,120 Total current assets 118,508 84,202 TOTAL ASSETS 135,634 99,204 EQUITY AND LIABILITIESEquity attributable to equity holders of theparent Share capital 911 894 Share premium 38,123 35,763 Capital redemption reserve 20 20 Share-based payment reserve 453 217 Translation reserve 642 2 Retained earnings 48,634 36,206 Total equity 88,783 73,102 Non-current liabilities Employee benefits 130 102 Total non-current liabilities 130 102 Current liabilities Trade and other payables 44,137 22,792 Short-term borrowings - 445 Current tax payable 2,584 2,763 Total current liabilities 46,721 26,000 Total liabilities 46,851 26,102 TOTAL EQUITY AND LIABILITIES 135,634 99,204 STATEMENT OF CHANGES IN EQUITY The group Share Share Capital Share-based premium redemption payment Translation Retained Total capital reserve reserve reserve earnings £'000 £'000 £'000 £'000 £'000 £'000 £'000Balances at 1 January 2004 876 33,967 20 65 - 25,023 59,951 Exchange differences on - - - - 2 - 2translating foreignoperations Profit for the year - - - 152 - 12,741 12,893 Dividends - - - - - (1,558) (1,558) Share issues 18 1,796 - - - - 1,814 Balances at 31 December 894 35,763 20 217 2 36,206 73,1022004 Exchange differences on - - - - 640 - 640translating foreignoperations Profit for the year - - - 236 - 14,646 14,882 Dividends - - - - - (2,218) (2,218) Share issues 17 2,360 - - - - 2,377 Balances at 31 December 911 38,123 20 453 642 48,634 88,7832005 CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December 2005 Year Year ended ended 31 December 31 December 2004 2005 £'000 £'000Cash flows from operating activitiesNet profit before tax 20,127 16,697Adjustments for:Depreciation of tangible fixed assets 400 323Amortisation of publishing relationships 35 -Profit on sale of property, plant and equipment (3) (1,076)Share-based payment charges 236 152Investment income (1,392) (1,669)Finance costs 71 337 19,474 14,764(Increase) / decrease in inventories (3,442) 1,162Increase in trade and other receivables (6,353) (10,955)Increase / (decrease) in trade and other payables 21,394 (605) Cash generated from operations 31,073 4,366Income taxes paid (5,898) (3,707) Net cash inflow from operating activities 25,175 659 Cash flows from investing activitiesPurchase of property, plant and equipment (1,268) (210)Proceeds from sale of property, plant and equipment 33 1,412Purchase of subsidiaries (33) (3,296)Sale of publishing assets - 111Interest received 1,392 1,669Cash acquired with subsidiaries - 50 Net cash generated from / (used in) investing activities 124 (264) Cash flows from financing activitiesShare options exercised 1,796 1,607Equity dividends paid (2,218) (1,558)Interest paid (118) (32)Repayment of loans (379) (764) Net cash used in financing activities (919) (747) Net increase / (decrease) in cash and cash equivalents 24,380 (352)Cash and cash equivalents at beginning of period 29,120 29,472Unrealised exchange gain on cash and cash equivalents 11 - Cash and cash equivalents at end of period 53,511 29,120 NOTES 1. The above financial information does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The above figures for the year ended 31 December 2005 are an abridged version of the Company's audited accounts which will be reported on by the Company's auditors before dispatch to the shareholders and filing with the Registrar of Companies. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU). The accounting policies applied in 2005 are consistent with those applied in the Financial Statements for 2004 restated in accordance with IFRS by the company on 19th August 2005. The statutory accounts for the year ended 31st December 2004 have been lodged with the Registrar of Companies. These accounts received an audit report which was unqualified and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying their report. 2. Segmental analysis Geographical segments The Group considers that, as the main thrust of its growth is to develop its international publishing strategy, the primary segmental reporting should be based on geographical segments. The analysis by geographical segment is shown below. Year ended 31 December 2005 United North Continental Eliminations Total Kingdom America Europe £'000 £'000 £'000 £'000 £'000RevenueExternal sales 92,616 11,027 5,465 - 109,108Inter-segment sales * 199 - 594 (793) - Total revenue 92,815 11,027 6,059 (793) 109,108 ResultSegment result 17,856 478 642 - 18,976Unallocated central costs - - - (170) (170) Operating profit 17,856 478 642 (170) 18,806 Investment income 1,877 - - (485) 1,392Finance costs (135) (211) (210) 485 (71) Profit before taxation 19,598 267 432 (170) 20,127Income tax expense (5,567) (197) 283 - (5,481) Profit for the year 14,031 70 715 (170) 14,646 Other InformationCapital additions 1,250 13 5 - 1,268Depreciation and 383 42 10 - 435amortisationProfit / (loss) on disposalof fixed assets 4 - (1) - 3 Balance SheetASSETSSegment assets 124,564 17,866 8,541 - 150,971Unallocated corporate assets - - - (15,337) (15,337) Total assets 124,564 17,866 8,541 (15,337) 135,634 LIABILITIESSegment liabilities 43,984 11,927 6,277 - 62,188Unallocated corporate - - - (15,337) (15,337)liabilities Total liabilities 43,984 11,927 6,277 (15,337) 46,851 * Inter-segment sales are charged at prevailing market rates. NOTES TO THE ACCOUNTS 2. Segmental analysis (continued) Year ended 31 December 2004 United North Continental Eliminations Total Kingdom America Europe £'000 £'000 £'000 £'000 £'000RevenueExternal sales 71,564 8,985 3,900 - 84,449Inter-segment sales - - - - - Total revenue 71,564 8,985 3,900 - 84,449 ResultSegment result 16,899 (543) (1,405) - 14,951Unallocated central costs - - - (3) (3) Operating profit 16,899 (543) (1,405) (3) 14,948 Profit on sale of fixed 1,076 - - - 1,076assets in continuingoperationsLoss on sale of publishing (77) - - - (77)assetsReorganisation costs in (582) - - - (582)continuing operationsInvestment income 1,838 - - (169) 1,669Finance costs (420) - (86) 169 (337) Profit before taxation 18,734 (543) (1,491) (3) 16,697Income tax expense (4,556) - 600 - (3,956) Profit for the year 14,178 (543) (891) (3) 12,741 Other InformationCapital additions 203 - 7 - 210Depreciation and 314 - 9 - 323amortisation Balance SheetASSETSSegment assets 86,212 12,587 5,840 - 104,639Unallocated corporate - - - (5,435) (5,435)assets Total assets 86,212 12,587 5,840 (5,435) 99,204 LIABILITIESSegment liabilities 24,717 1,889 4,931 - 31,537Unallocated corporate - - - (5,435) (5,435)liabilities Total liabilities 24,717 1,889 4,931 (5,435) 26,102 3. Taxation (a) Tax charge for the year 2005 2004 £'000 £'000Based on the profit for the year: Corporation tax at 30% 5,579 4,807 Over provision in respect of prior years (8) (54)Overseas taxation - current year 386 - 5,957 4,753Deferred tax -UK (45) (197) -Overseas (431) (600) 5,481 3,956 (b) Factors affecting tax charge for the year The tax assessed for the year is different from the standard rate of corporationtax in the UK (30%). The differences are explained below: 2005 2004 £'000 £'000Profit on ordinary activities before tax 20,127 16,697 Profit on ordinary activities multiplied by the standardrate of corporation tax in the UK of 30% 6,038 5,009Effects of:Expenses not deductible for tax purposes 412 165Difference between depreciation and capital allowances 76 87Expenses deductible for tax purposes in different periods 61 -Utilisation of tax losses (234) -Losses for the year in subsidiary company not utilised 79 564Corporation tax relief on share options exercised (604) (575)Difference between profit on disposal of freehold propertyand taxable gain - (324)Different rate of tax on overseas results 137 (119)Adjustment to tax charge in respect of previous periods (8) (54) Current tax charge for the year 5,957 4,753 4. Dividends A dividend of 2.478p per share (£1,773,000) was paid to the equity shareholderson 7 July 2005, being the amount proposed by the directors, and subsequentlyapproved by the shareholders at the Annual General Meeting for the year ended 31December 2004. For the current year On 18 November 2005 an interim dividend of 0.600p per share (£445,000) was paidto the equity holders (2004: 0.522p per share, £383,000). The directors propose that a dividend of 3.0p per share will be paid to theequity holders on 6 July 2006. Based on the number of shares currently inissue, the final dividend will be £2,186,000 (2004, £1,773,000). This dividendis subject to approval by the shareholders at the Annual General Meeting and hasnot been included as a liability in these financial statements. 5. Earnings per share The basic earnings per share has been calculated by reference to earnings of£14,646,000 (2004, £12,741,000) and a weighted average number of Ordinary Sharesin issue of 72,134,014 (2004, 70,841,627). The diluted earnings per share hasbeen calculated by reference to a weighted average number of Ordinary Shares inissue of 73,493,581 (2004, 72,135,053), which takes account of share options andawards under the Group's Performance Share Plan. The reconciliation between the weighted average number of shares for the basicearnings per share and the diluted earnings per share is as follows: 2005 2004 Number NumberWeighted average number of shares for basicearnings per share 72,134,014 70,841,627Dilutive effect of share options and awardsunder the Group's performance share plan 1,359,567 1,293,426 Weighted average number of shares for dilutedearnings per share 73,493,581 72,135,053 The earnings per share before exceptional gain are shown below. 2005 2004 Basic earnings per share before exceptional gain 20.30p 17.12p Diluted earnings per share before exceptional 19.93p 16.81pgain The reconciliation between earnings before and after exceptional gain is asfollows: 2005 2004 £'000 £'000Earnings after exceptional gain 14,646 12,741Exceptional gain (net) - (417)Tax relief on exceptional costs - (198) Earnings before exceptional gain 14,646 12,126 6. Annual General Meeting The Annual General Meeting will be held at 12 noon on Thursday 29 June 2006 at36 Soho Square, London W1D 3QY. 7. Report and Accounts Copies of the Report and Accounts will be circulated to shareholders shortly andmay be obtained after the posting date from the Company Secretary, BloomsburyPublishing Plc, 36 Soho Square, London W1D 3QY. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Bloomsbury