After being shunned by many a publisher, in 1997 JK Rowling turned to Bloomsbury (BMY) to publish the first instalment of her Harry Potter series. Nineteen years later and the company is still reaping the rewards for taking that risk. The launch of the first fully illustrated version of The Philosopher's Stone has kept Harry Potter book sales ticking up and helped lift children's book revenue 63 per cent in the six months to August 2016. The publisher is expecting another sales surge in the second half of its financial year having recently launched the illustrated version of The Chamber of Secrets.
This strong sales performance helped lift adjusted operating profit in the children's division by 93 per cent, in spite of an increase in cost of sales. The adult books division saw revenue rise - albeit far more modestly - but a reduction in higher-margin e-book sales and stock write-downs widened adjusted operating losses here from £0.6m to £1.2m, which dragged on profits at group level.
Adjusted operating profit in the non-consumer division also took a hit, largely due to the ending of a major publishing services contract with the Qatar Foundation. However, it was good to see revenue from academic and professional digital resources double to £2m, in line with the Bloomsbury 2020 strategy set out in July.
Broker Investec Securities expects adjusted pre-tax profit of £11.8m, giving EPS of 11.7p for the year to February 2017 (from £13m and 14.6p in FY2016).
BLOOMSBURY PUBLISHING (BMY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 154p | MARKET VALUE: | £116m | |
| TOUCH: | 149-154p | 12-MONTH HIGH: | 179p | LOW: 140p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 179p* | NET CASH: | £9.1m | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 52.7 | 0.34 | 0.37 | 1.06 |
| 2016 | 62.7 | 0.15 | 0.15 | 1.10 |
| % change | +19 | -56 | -59 | +4 |
Ex-div: 3 Nov Payment: 30 Nov *Includes intangible assets of £64.3m, or 85.3p a share | ||||
