25 October 2012 | Education | Bloomsbury Publishing plc

Bloomsbury Reports Lower Interim Profits on Falling Harry Potter Sales

Bloomsbury's shares fall on disappointing interims as the magic of Harry Potter fades but digital sales grow strongly and Academic & Professional now represent 28% of sales.

​Financial highlights

Turnover £43.5 million (2011: £42.4 million) +2.5%  increase

Profit before taxation and highlighted items* £2.1 million (2011: £3.3 million) a -37% decline

Profit before taxation £0.9 million (2011: £1.5 million)

Basic earnings per share before highlighted items* 2.20 pence (2011: 3.27 pence)

Basic earnings per share of 0.87 pence (2011: 1.45 pence) 

* Highlighted items comprise amortisation of intangible assets, acquisition costs, restructuring, relocation costs and Bloomsbury India set up costs.

Operating highlights

• ebook sales in the six months to 31 August 2012 increased by 89% to £4.5 million (2011: £2.4m)

• New e-reader devices expected to have a positive impact on Q4 ebook sales

• Academic division now represents 28% of Group continuing sales (2011: 20%)

• Acquisition of Fairchild Books for $6.1 million (£3.8 million)

• Acquisition of Applied Visual Arts Publishing for CHF 2.6 million (£1.7 million)

Commenting on the results, Nigel Newton, Chief Executive, said: "The Group continues to make good progress. We have acquired two new businesses further boosting its presence in the academic market, particularly in the USA, and have launched sales and publishing operation in India, a market which has the potential to become one of the largest English language book markets in the world. Higher ebook sales and academic turnover continue to increase the weighting of its sales to the second half. In addition we have a strong second half list, including potential best sellers, and are targeting a significant number of rights and services contracts. We remain well positioned for the future and results continue to show a positive trend over the longer term."

Continuing turnover increased by 2.5% to £43.5 million. Within this digital sales increased 95% to £4.8 million, rights & services sales increased by 12% to £3.8 million and print sales were £34.9 million (2011: £36.5 million).

In line with its strategy, over the last 16 months the Company has acquired three academic publishers, with the most significant addition being The Continuum International Publishing Group Limited in July 2011. These acquisitions contributed £6.9 million of mainly print sales in the six months ended 31 August 2012 (2011: £1.7 million). The Company says its print sales this period have also been affected by the Olympics, during which many people stayed away from the high street, and a market dominated by the best-selling Fifty Shades of Grey and more specifically by a reduction in sales of Harry Potter titles year on year, following the release of the last film in that series in the summer of 2011.

Digital sales mainly comprise ebook sales, which are up by 89% year on year to £4.5 million (2011: £2.4 million).

Ebook sales now represent 10% of total Group continuing turnover (2011: 6%) and 15% of the Adult division continuing turnover (2011: 9%).Ebook sales peak in January and February following the sale of e-reader devices at Christmas and academic sales peak at the beginning of the academic year, in September and October. As these two revenue streams form a higher proportion of total turnover, the proportion of its results accruing in the second half of the financial year increases.

The Academic & Professional division generated 28% of Group continuing sales. This increase is in line with its strategy of securing more predictable, global revenue streams. Continuing revenue was up 41% year on year by £3.6 million to £12.3 million. Underlying revenue, excluding the contribution from the acquisitions made in 2011 and 2012, was down 8% year on year reflecting the trend in the academic book market generally and a few of its contracts being delayed into the second half of the year. Operating profit before highlighted items reduced by £0.3 million to £0.6 million as a result of the reduction in underlying turnover and the second half weighting of the sales of recent acquisitions.

Bloomsbury Professional had a strong first half with a number of important titles published in the UK and Ireland, including: Lewis and Buchan: Clinical Negligence, 7th edition; its increasingly popular Bloomsbury's Tax Rates and Tables; and, on its Scottish list, Studying Scots Law, 4th edition. Bloombury also launched its new Financial Reporting Online service in April for the accounting profession, which has received a very favourable response.

Bloomsbury Professional now has five key online services for the legal, tax and accountancy markets in the UK and Ireland, with plans to launch a further two in the second half of 2012. Digital revenues are growing quickly and renewal rates to-date have been 100%.

The Children's & Educational division generated 22% of Group continuing revenue in the six months ended 31 August 2012 (2011: 29%). Continuing revenue for the period was down £2.8 million year on year at £9.3 million and continuing operating profit before highlighted items reduced by £0.9 million to nil reflecting the reduction in Harry Potter sales compared to last year, which was boosted by the final movie in 2011.

The Group's continuing gross margin has improved to 57% for the six months ended 31 August 2012 from 53% in the prior period, reflecting the increasing proportion of higher margin ebook and rights and services sales. The significant weighting of sales from its recent acquisitions into the second half of the year and the decrease in sales excluding those acquisitions have meant that the operating profit margin before highlighted items has reduced from 8% to 5% in the period.

Continuing highlighted items of £1.3 million (2011: £1.9 million) include £1.1 million (2011: £0.7 million) of recurring amortisation of intangible assets.

The business had £10.6 million of cash as at 31 August 2012 (31 August 2011: £9.4 million).


Bloomsbury has a strong second half list which includes Hugh's Three Good Things by Hugh Fearnley-Whittingstall, How to Bake by Paul Hollywood and  Hogwarts Library Boxed Set by J.K. Rowling. The Company’s outcome for the second half of the financial year depends on the success of these and other releases.

Over the next few months there are many new and improved e-reading devices being competitively marketed, which Bloomsbury expect to drive ebook sales during the second half.

Management believes the Company’s Academic acquisitions over the last 16 months, the global restructuring in 2011, the on-going innovation in digital and its strong balance sheet, means the Group is well positioned for the future.


​The market responded negatively to these results. Investors appear to be concerned the Company's focus on the Academic and Professional business may not deliver the predictable global revenue streams promised by Management. Like for like sales fell 8% due to weaker demand for academic books in the key US market.

The Company faces a challenging task in re-inventing itself. Hogwarts, wizards and witches will play a much reduced role going forward but the growing Academic and Professional book division is under attack from forces as potent as Voldemort. Academic book sales are falling as education budgets in the US tighten. Dealing effectively with the dramatic growth in low cost digital learning will be a challenge for the Company, as complicated as the puzzles Harry, Hermonine and Ron had to deal with.    

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