Press Release: Miscellaneous Announcements
Bloomsbury Acquires Continuum
Posted at 7:39AM Monday 11 Jul 2011
Bloomsbury Publishing Plc ("Bloomsbury") announces that it has today completed the acquisition of the entire issued share capital of Continuum for a total cash consideration of £20.1 million from Nova/Paul Investments Capital and management shareholders. The Board of Bloomsbury has been looking for a transformational acquisition to act as the cornerstone of its Academic & Professional division. We have successfully acquired and consolidated six acquisitions in our Academic & Professional division over the last five years. Continuum now provides the cornerstone of an enlarged division with critical mass and a solid base for organic growth going forward. Continuum, which is based in New York and London, is an international academic and professional publisher with a small trade list. It has world class academic lists, some of which date back over 170 years and include a number of the most distinguished international authors in the humanities and social sciences, including Karl Barth, Martin Heidegger, Pope Benedict XVI, Archbishop of Canterbury Rowan Williams, Chief Rabbi Jonathan Sacks and Alain Badiou. Continuum is the UK market leader in publishing Continental Philosophy, Education and Theology and Biblical Studies lists. It also publishes sizeable lists in History, Literary Studies, Linguistics and Politics. The Continuum lists are highly complementary to Bloomsbury's existing academic lists, offering us both the ability to improve revenue momentum within our Academic & Professional division, especially in the key US market, as well as opportunities for material cost synergies. Earlier this year, Continuum was awarded Independent Publishers' Group Publisher of the Year 2011 and Academic & Professional Publisher of the Year. Continuum is forecasting EBITA of £0.6 million* for the year ended 30 June 2011 on turnover of £10.7 million*. Bloomsbury have identified potential cost synergies in excess of £1 million in the first full year of combined operation. In the year ended 30 June 2010 Continuum reported a loss before taxation of £1.2 million (after charging an interest charge of £1.0 million payable to its private equity majority shareholders, Nova/Paul Investments Capital, which will not be ongoing). Turnover in the year ended 30 June 2010 was £10.6 million of which 42% was sourced from the US. Gross assets at 30 June 2010 were £14.4 million (including £5.7 million of intangible assets). Continuum had cash of £0.9 million* at the time of acquisition. Bloomsbury's strategy has been to increase its proportion of academic and professional revenues compared to trade revenues through retail channels. The current strength of the Group's academic sales compared to consumer sales vindicates this strategy. Academic revenues are more predictable and have lower related costs of sale with resulting higher margins, and are much less reliant on retail bookshop sales. Around 60% of Continuum's sales are outside the UK, thereby increasing Bloomsbury's exposure to the global book market. Through this acquisition, for the first time, Bloomsbury will have an academic editorial and marketing team in the US. Bloomsbury has an excellent track record in exploiting digital opportunities; this acquisition will enable us to develop Continuum's 7,000 strong backlist through conversion to e-book formats and the creation of new subscription based academic services. Continuum will become part of Bloomsbury's Academic & Professional Division, led by Jonathan Glasspool. Bloomsbury intends to move the Continuum business in due course from its current offices in Waterloo to its new home in Bedford Square. Oliver Gadsby, Chief Executive of Continuum, will be staying with the business for a few months to assist with the integration process. Frances Pinter will continue as publisher of the Winston Churchill Archive Online, though having successfully founded the Bloomsbury Academic list, she is relinquishing this role to pursue her other open access projects. The consideration was paid in cash on completion from Bloomsbury's own cash reserves; Bloomsbury had £29.3 million* of cash as at 30 June 2011. The acquisition is expected to be earnings enhancing in the year ending 28 February 2012, with a forecast contribution to Bloomsbury's EBITA in excess of £0.5 million*, replacing interest receivable of approximately £0.1 million* over that period. Nigel Newton, Chief Executive of Bloomsbury commented: "The acquisition of Continuum is a transformational step in the delivery of a long held strategic objective to grow our academic publishing. It is complementary to, and will substantially enhance, our Academic business, in particular giving it significantly more power in the US, helping to expand our increasing global market. Our growing proportion of academic and professional revenues will increase profit margins and give our results more stability. Our strategic direction towards academic and professional publishing is vindicated by the market place of 2011." Oliver Gadsby, Chief Executive of Continuum commented: "Continuum has a leading position in academic publishing, with a thriving backlist, a huge number of authors who are leading authorities in their field, a vibrant digital story, and – above all – an excellent team in London and New York. I am delighted that Continuum is finding a new home with Bloomsbury, a company we all admire. I am confident that the lists and teams of the two companies will make a powerful combination, capable of playing a major role in the academic publishing landscape in the years ahead." Interim Management Statement for the period from 1 March 2011 to date In the UK the consumer economy is the toughest it has been for decades. Additionally a change in ownership of Waterstones means challenging times for consumer books on the High Street - Waterstones have strictly rationed orders during recent months. In the US, the Borders bankruptcy and subsequent sale looms over the industry and in Australia it is a similar story with the RED group, which owns Angus & Robertson. These factors mean that trade revenues, although boosted by growing e-book sales in the UK and US, remain soft. In the Adult division, sales reflect current retail weakness – in particular in Germany, which had a strong comparator year with Eat, Pray, Love hitting the best seller list there last year. However, A.C. Grayling's The Good Book: A Secular Bible was published to huge acclaim on both sides of the Atlantic in April, reaching number five on Amazon.com in the U.S., following major national publicity and a U.S. publicity tour by A.C. Grayling. Chelsea Handler's My Horizontal Life continued its amazing run on the New York Times bestseller list, where it has remained for 138 straight weeks, approaching three consecutive years. Last week it was announced that Mao's Great Famine by Frank Dikötter has won the Samuel Johnson Prize for Non-fiction. The Bookseller commented that "the win means Bloomsbury has taken the prize three times—all in the last five years—and accordingly becomes the most successful publisher in the event's history." In the US, Amazon has reported that e-book sales have now surpassed print sales. In the Children's & Educational division, the launch by JK Rowling of Pottermore.com has led to a resurgence of excitement in the Harry Potter books just prior to the release of the film of Harry Potter and The Deathly Hallows Part 2, this month. This has resulted in good stock orders coming from all retailers giving a boost to our children's backlist sales. Bloomsbury will receive a share of the revenues from the sale of e -books from Pottermore.com, which will commence later this year. Bloomsbury Information operates a diversified high margin portfolio of management services and content creation and exploitation. Since the year end we have recruited an experienced Business Development Director to further crystallize opportunities in this area. As in past years, a number of prospective deals are in negotiation with third parties in this area and the outcome for the year is therefore dependent on completing these and the level of business to business demand generally for the rest of the year. The provision of management services to the Qatar Foundation has progressed well in this period. Particular successes of Bloomsbury Qatar Foundation Publishing ("BQFP") included How To Avoid Being Killed in a Warzone by Rosie Garthwaite, commissioned by BQFP and licensed throughout the Bloomsbury Group for worldwide publication in English and German. Over 60 titles will be published in Arabic and English by BQFP during the year. Bloomsbury Professional was awarded 2011 Supplier of the Year by the British and Irish Librarians' Association. This is the first time a publisher has won the award. Bloomsbury continues to exploit the opportunities available due to the digital revolution in publishing; the new Irish Law and Tax Online service launched in June, our first digital service aimed at the legal and tax profession. In the autumn, the division will launch its UK Tax Online service. Bloomsbury Professional and PricewaterhouseCoopers announces today a new and dynamic international relationship under which Bloomsbury will publish PricewaterhouseCoopers' flagship financial reporting guidance, including the PwC Manual of Accounting. This marks a major step towards Bloomsbury Professional's aim of becoming the publisher of choice for professionals in accountancy and tax. Difficult prevailing retail conditions mean we remain cautious about current trading. The Bloomsbury team continue to be active and innovative, and with eight months still to come in our financial year, a number of digital and strategic initiatives are in progress.
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