What the company does
Most people who know of Bloomsbury, probably know it as the Harry Potter publisher. It doesn’t shy from the soar-away success of JK Rowling’s boy wizard and in the latest results refers to the “enduring sales” of the novels. But to see Bloomsbury as a one franchise wonder is to miss the point. To see it purely as a fiction publisher compounds the error.
It has two arms:
- Its consumer division consists of Adult and Children's trade publishing
- The non-consumer operation is made up of Academic & Professional, Special interest and content services
Of the near £163mln of sales Bloomsbury posted in the last full year, £63mln came from the growing non-consumer side of the operation.
Bloomsbury posted full-year results ahead of market expectations and hailed its strong financial position and excellent cash generation. Profit before taxation and various one-off charges in the year to the end of February grew by 9% to £14.4mln, up from £13.2mln the year before. The consensus forecast among brokers covering the stock was for a headline profit before tax of £13.96mln. The publisher ended its financial year with net cash of £27.6mln, up from £25.4mln the year before. The dividend was 7.96p a share, which equates to a 3.4% yield (based on a 233p share price).
In May last year it outlined seven initiatives aimed at growing revenues and improving margins.
The latest results statement revealed the company made significant headway towards those goals.
- The Adult division delivered £1.1mln of extra operating profit
- Academic & Professional: £3.5mln of additional operating profit
- Inventories reduced by 8%, or £2mln
- Delivered 24 best sellers
- 42% increase digital revenues from Academic & Professional
- Saw 28% growth in India, 3% growth in the US and 1% growth in Australia
- Two significant deals in negotiation in China
What the brokers say
Numis – Bloomsbury looks good value/cheap given increasing growth momentum, better long-term profitability, good cash generation and balance sheet net cash. Price target 275p.
Peel Hunt – an enterprise (EV/EBITDA) multiple of only 7.5-times [is] very modest for such a robust commercial story with a great defendable IP asset. Price target 270p.