Bloomsbury Publishing Annual Report 2020

Plain-text annual report

27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2Bloomsbury Publishing Plc Annual Report and Accounts for the year ended 29 February 2020Stock code: BMY27040-Bloomsbury-AR2020 - strategic.indd 311-Jun-20 9:49:40 PM27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2Be entrepreneurialindependentindependentBe independentBe collaborativeBe author-focusedBe ethicalBe optimisticBe determinedBe sustainableBe inclusivecollaborativeethicaldeterminedinclusiveentrepreneurialAuthor focussedoptimisticsustainableBloomsbury Publishing Plc is an entrepreneurial, independent, worldwide publisher listed on the London Stock Exchange with offices in London, Oxford, New York, Sydney and New Delhi, and a joint venture presence in China. Our missionOur mission is to be an entrepreneurial, independent publisher of works of excellence and originality to a worldwide audience.Our purposeOur purpose is to inform, educate, entertain and inspire readers of all ages. We champion a life-long love of reading and learning to help build a reading culture with all the benefits which that brings society.Our values 27040-Bloomsbury-AR2020 - strategic.indd 311-Jun-20 9:49:46 PM27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2ContentsOverviewYear highlights 02Bloomsbury at a glance 04Global Bestsellers 2019/2020 05Chairman’s Statement 06Strategic ReportChief Executive’s Review 10Marketplace 18Business Model 20Strategy 22Key Performance Indicators 25Divisional Overview 26– The Non-Consumer Division 26– The Consumer Division 30– Group Functions supporting our Publishing Divisions 35Financial Review 36Risk Factors and Risk Management 40Corporate Responsibility 46– Stakeholder Engagement 58GovernanceChairman's Introduction to Corporate Governance 66Corporate Governance Framework 67Board of Directors 68Directors’ Report 70Corporate Governance Report 75Nomination Committee Report 81Audit Committee Report 84Directors’ Remuneration Report 88Section 172 Directors’ Duties Statement 108Financial StatementsIndependent Auditor’s Report 112Consolidated Income Statement 120Consolidated Statement of Comprehensive Income 121Consolidated Statement of Financial Position 122Consolidated Statement of Changes in Equity 123Consolidated Statement of Cash Flows 124Notes to the Financial Statements 125Company Statement of Financial Position 164Company Statement of Changes in Equity 165Company Statement of Cash Flows 166Notes to the Company Financial Statements 167Additional InformationFive Year Financial Summary 182Company Information 183Legal Notice 184Notice of the Annual General Meeting 18527040-Bloomsbury-AR2020 - strategic.indd 111-Jun-20 9:49:47 PMYear Highlights Financial highlights Revenue £m £162.8m +0% Dividend1 pence per share 1.28p -84% 2020 2019 2018 2017 2016 £162.8m 2020 £162.7m £161.5m £142.6m £123.7m 2019 2018 2017 2016 Adjusted profit2 £m £15.7m +9% 1.28p 7.96p 7.51p 6.70p 6.40p 2020 2019 2018 2017 2016 Profit before tax Adjusted diluted EPS3 £m £13.2m +10% pence per share 16.77p +12% Diluted EPS pence per share 13.84p +13% 2020 2019 2018 2017 2016 £13.2m 2020 16.77p 2020 £12.0m £11.6m £9.4m £10.4m 2019 2018 2017 2016 14.97p 13.92p 12.63p 15.24p 2019 2018 2017 2016 £15.7m £14.4m £13.2m £12.0m £13.0m 13.84p 12.25p 12.06p 9.81p 12.93p 1 Bloomsbury had intended to declare a final dividend for the year of 6.89 pence per share. This would have resulted in a total dividend for the year of 8.17 pence per share, up 3% on the previous year. As previously announced, Bloomsbury has decided in light of coronavirus to conserve cash and therefore will not be paying a cash dividend. It is now proposed, subject to Shareholder approval, that the dividend is instead settled through the issuance of new ordinary shares by way of bonus issue to Shareholders, with a value equivalent to the proposed final dividend. Further information is set out in the Notice of Annual General Meeting on pages 188 to 196. 2 Adjusted profit is profit before taxation, amortisation of acquired intangible assets and other highlighted items. 3 Adjusted diluted EPS is calculated from adjusted profit with taxation on adjusted profit deducted. • Profit before taxation and highlighted items* grew by 9% to • Net cash of £31.3 million at 29 February 2020, up 14% (2019: £15.7 million, up from £14.4 million in 2018/2019 £27.6 million) • Revenues increased to £162.8 million (2018/2019: £162.7 million) despite the impact of coronavirus on our Chinese sales in January and February • Profit before taxation grew by 10% to £13.2 million (2018/2019: £12.0 million) • Diluted earnings per share, excluding highlighted items*, grew by 12% to 16.77p (2018/2019: 14.97p) • Diluted earnings per share grew by 13% to 13.84p (2018/2019: 12.25p) • Cash conversion of 96% (2018/2019: 128%), excluding the acquisition of the rights of Oberon Books Limited • Subject to Shareholder approval, proposed bonus issue, in lieu of, and with a value equivalent to, proposed final dividend of 6.89p per share * Highlighted items comprise amortisation of acquired intangible assets and legal, other professional costs and restructuring costs relating to ongoing and completed acquisitions and one-off costs relating to the coronavirus. 02 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 2 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:49:49 PM 27040 11 June 2020 9:44 pm Proof 2 OVERVIEW Operational highlights Non-Consumer Consumer • Excellent Academic & Professional performance, with profit before taxation and highlighted items* up by 58% to £4.8 million (2018/2019: £3.0 million) and revenue up 4% • Non-Consumer profit before taxation and highlighted items* up by 85% to £6.7 million and revenues grew by 4% to £66.0 million (2018/2019: £63.4 million) • Non-Consumer profit before taxation grew by 159% to £5.0 million (2018/2019: £1.9 million) • Bloomsbury Digital Resources (“BDR”) revenues up 32% to £8.3 million and moves into profit • Profit before taxation and highlighted items* of £8.9 million (2018/2019: £10.7 million) • Consumer revenue of £96.8 million (2018/2019: £99.3 million) • Strong Adult Trade performance, with revenue up 12% to £37.4 million (2018/2019: £33.5 million) and profit before taxation and highlighted items* of £1.6 million (2018/2019: £0.9 million) • Children’s Trade delivered profit before taxation and highlighted items* of £7.3 million (2018/2019: £9.8 million) and revenue of £59.4 million (2018/2019: £65.8 million) • Digital format sales now comprise 22% of Non-Consumer • Resilient sales of Harry Potter titles, in line with last year revenues, a CAGR of 18% over four years • Acquisition of Oberon’s rights in December 2019 completed for £1.2 million, strengthening our digital resources with its high quality drama IP • BDR partnerships with Human Kinetics launched and Taylor & Francis in development as well as the new National Theatre collection included in Drama Online Read more about our markets on pages 18 to 20 • Children’s revenue affected by the timing of and fewer frontlist titles from Sarah J. Maas • Excellent audio performance from our new Audio division, with an expert team delivering 190% revenue growth by focusing on production of key titles and delivering bestsellers • Appointment of Paul Baggaley as Editor-In-Chief of Bloomsbury Adult Trade, one of the most highly-regarded figures in the industry who joined us from Macmillan in March 2020 * Highlighted items comprise amortisation of acquired intangible assets and legal, other professional costs and restructuring costs relating to ongoing and completed acquisitions and one-off costs relating to the coronavirus. No Visible Bruises by Rachel Louise Snyder was a New York Times bestseller Crescent City: House of Earth and Blood by Sarah J. Maas was number one on the New York Times bestseller list Women Rowing North by Mary Pipher was one of Bloomsbury’s top selling titles in ebook format Lose Weight & Get Fit by Tom Kerridge was in the Nielsen Bookscan Non- Fiction Top 10 for four weeks, with its highest position at number 4, and the Sunday Times Manual chart at number 3 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 3 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:49:54 PM Stock code: BMY Annual Report and Accounts 2020 03 Bloomsbury at a glance Bloomsbury is a global publisher of books and other media for general readers, children, students, teachers, researchers and professionals. Bloomsbury offers authors and illustrators access to these markets in multiple formats and via multiple channels throughout the world. Our entrepreneurial teams in London, Oxford, New York, Sydney, New Delhi and China (through our joint venture partnership with China Youth Publishing Group and its subsidiary Roaring Lion Media) serve all territories. Our mission and purpose are set out on the front inside cover of this Annual Report; our strategy for achieving our mission and purpose is summarised on pages 22 to 23 of the Strategic Report. Strong financial position and liquidity Diversified portfolio of content and services Global brand recognition Access to global markets and partners Strong financial position and liquidity Access to global markets and partners Global markets and partners Bloomsbury has grown strongly over the past five years, both through organic digital growth, and by acquisition. The bulk of Bloomsbury’s turnover each year comes from its backlist: repeat sales on older titles and services. Over 63% of revenues comes from outside the United Kingdom. An increasing percentage of revenue derives from digital formats, much of which is annuity-based income. Bloomsbury had cash reserves of £31 million at 29 February 2020: the result of better working capital performance over the past five years, as well as a more profitable product mix. Bloomsbury has relationships with over 1,200 customers in over 90 countries worldwide. Bloomsbury’s customer base ranges from small independent bookshops to large online retailers. In addition, we have relationships with wholesalers for print and ebooks, which supply retail customers and libraries, both public and academic. Bloomsbury also sells direct to academic and educational institutions, and corporate and professional bodies via our Academic and Professional digital resource platforms, and direct to consumers via our consumer-facing websites. Brand reputation Diversified portfolio of content and services Diversified portfolio Bloomsbury’s brand reputation is for excellence and originality, and our brand is recognised worldwide due to Bloomsbury’s high-calibre authors and illustrators. Our publishing is known for its high production values and award-winning design, and our Academic list for its scholarly excellence and focus on digital delivery to the modern student. Read more about our business model on page 20 Bloomsbury has a back catalogue of over 50,000 active titles and digital services. These appeal to a wide range of audiences, with an increasing percentage classified as "must have" for professionals, academics and students. Our Consumer lists are increasingly diverse, with sizeable lists in specific areas of non-fiction, such as sport, crime and natural history, as well as bestselling award-winning fiction lists for both adults and children. Our two operating divisions The Group is organised as two worldwide publishing Divisions supported by global back office functions. These Divisions reflect the core customers for our different operations. Non-Consumer Division Consumer Division The Non-Consumer Division comprises the Academic & Professional, Special Interest and Education publishing subdivisions within Bloomsbury. The Division provides content for the following end-users: • Academic institutions • Students and academics • Libraries • Corporates • Professional bodies £6.7m • Primary and secondary schools • Teachers and trainee teachers £66.0m The Consumer Division publishes trade books for both adults and children in print, ebook and audio book formats in both the UK and the USA, and sells these books globally. The categories of titles that are published in each of these Consumer subdivisions are as follows: • Adult Trade – fiction, non-fiction and cookery • Children’s Trade – fiction, non-fiction, picture books, pre-school titles and activity books £8.9m £96.8m profit* *Profit before taxation and amortisation, and excluding highlighted items revenue profit* *Profit before taxation and amortisation, and excluding highlighted items revenue Read more about our publishing Divisions in the Divisional Overview on pages 26 to 35 Full details on each Division’s performance are in the Chief Executive’s Review on pages 12 to 13 04 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 4 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:49:55 PM 27040 11 June 2020 9:44 pm Proof 2 27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2Global Bestsellers 2019/2020Note: Rank is based on revenue.PrintEbookAudio1 Harry Potter Box Set: The Complete Collection (Children’s Paperback)J.K. Rowling2 Harry Potter and the Goblet of Fire – Illustrated EditionJ.K. Rowling3 Harry Potter and the Philosopher’s Stone J.K. Rowling4 Dishoom: From Bombay with LoveShamil Thakrar, Naved Nasir and Kavi Thakrar 5 Crescent City: House of Earth and BloodSarah J. Maas6 Lose Weight & Get FitTom Kerridge7 Harry Potter and the Chamber of SecretsJ.K. Rowling8Harry Potter and the Philosopher’s Stone - Illustrated Edition J.K. Rowling9 Harry Potter and the Prisoner of AzkabanJ.K. Rowling10 Harry Potter and the Goblet of FireJ.K. Rowling1 Three WomenLisa Taddeo2 Priory of the Orange TreeSamantha Shannon3 Dutch HouseAnn Patchett4 Women Rowing NorthMary Pipher5 City of GirlsElizabeth Gilbert6 Kingdom of AshSarah J. Maas7 CirceMadeline Miller8 Court of Thorns and RosesSarah J. Maas9 Throne of GlassSarah J. Maas10 Court of Mist and FurySarah J. Maas1 Silk RoadsPeter Frankopan2 Throne of GlassSarah J. Maas3 Priory of the Orange TreeSamantha Shannon4 Heir of FireSarah J. Maas5 Lost ConnectionsJohann Hari6 Crown of MidnightSarah J. Maas7 Norse MythologyNeil Gaiman8 Chasing the ScreamJohann Hari9 Jonathan Strange & Mr NorrellSusanna Clarke10 Seven Deaths of Evelyn HardcastleStuart TurtonStock code: BMYAnnual Report and Accounts 202005OVERVIEW27040-Bloomsbury-AR2020 - strategic.indd 511-Jun-20 9:50:48 PM27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 206Bloomsbury Publishing PlcBloomsbury Publishing’s financial year ended on 29 February 2020 – three weeks before coronavirus locked down the UK economy – and it went well. The results underlined three key features of the Company: the continuing success of its diversification strategy, the growth of its Non-Consumer business, and its strong balance sheet and liquidity.Profits before tax and highlighted items grew by 9% to £15.7 million, which was in line with market expectations, and adjusted diluted earnings per share rose by 12% to 16.77 pence. Over the past five years, the successful delivery of Bloomsbury’s growth strategy has lifted revenues by 32% and profits before tax and highlighted items by 21%.The feature of these latest results has been the growth of the Non-Consumer Division, where profits before tax and highlighted items rose 85% to £6.7 million. We are now seeing the results from our long-term investment in Bloomsbury Digital Resources, which moved into profits this year after a sales increase of 32% to £8.3 million. Digital format sales now make up 22% of divisional revenues, and have delivered a compound annual growth rate of 18% since 2016. The Adult Trade side had a strong year, driven by the success of such titles as The Anarchy by William Dalrymple, Such a Fun Age by Kiley Reid, and The Dutch House by Ann Patchett. Profits were down on Children’s Trade – for so long the engine of Bloomsbury’s growth – despite the continuing resilience of Harry Potter titles, where sales were in line with the previous year. The numbers here were affected by the timing of frontlist titles from Sarah J. Maas, whose latest book – Crescent City: House of Earth and Blood – has been topping the bestseller lists in the past few months. Overall profits from the Consumer Division came in at £8.9 million before tax and highlighted items, compared with £10.7 million a year earlier.High rates of cash conversion and a strong balance sheet have always been features of the Company’s business, and this year is no exception. Net cash at the year end was up from £27.6 million to £31.3 million, after the acquisition of Oberon Books Limited, which will further strengthen our digital resources with its quality drama products.In normal circumstances, this performance would have more than justified the continuation of Bloomsbury’s extraordinary dividend record – 24 years of uninterrupted growth in the annual cash payment. But these are exceptional times. As the business uncertainties multiplied after the year end with the coronavirus pandemic impacting all aspects of the economy, the Board decided that it was in the best long-term interests of all the stakeholders in the Company – Shareholders, employees, customers, authors and suppliers – to conserve our resources while the storm raged. So, instead of the normal cash dividend, we are proposing that the dividend is settled through the issuance of new ordinary shares by way of a bonus issue to Shareholders, with a value equivalent to a final dividend for the year of 6.89 pence per share.Since the year end, the Company has taken further steps to strengthen its balance sheet and increase its liquidity. In his Chief Executive’s Review, Nigel Newton will spell out these and other measures Bloomsbury has taken to counter the current uncertainties.The Company’s reaction to the crisis has been impressive. It was quicker off the mark than most to protect the wellbeing of its staff as the virus spread. And everyone has adapted with extraordinary pace and commitment to the new conditions of working from home. With a team like this, a very strong balance sheet, a great list of forthcoming titles and continued growth in the digital business, we can be confident that Bloomsbury will pull through these difficult times in good shape.At the end of February, Nigel Newton was awarded the London Book Fair’s Lifetime Achievement Award, for his “huge contribution to the book industry”. That seemed a good note on which to end the financial year.Sir Richard LambertNon-Executive Chairman“High rates of cash conversion and a strong balance sheet have always been features of the Company’s business, and this year is no exception.” Sir Richard LambertNon-Executive ChairmanChairman’s Statementwww.bloomsbury.com27040-Bloomsbury-AR2020 - strategic.indd 611-Jun-20 9:50:53 PM27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 7 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:50:53 PM 27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2Sunday Times bestsellers Sunday Times bestsellers included The Anarchy by William Dalrymple, City of Girls by Elizabeth Gilbert, The Priory of the Orange Tree by Samantha Shannon, Mudlarking by Laura Maiklem, Three Women by Lisa Taddeo, The Dutch House by Ann Patchett and Such a Fun Age by Kiley Reid←27040-Bloomsbury-AR2020 - strategic.indd 811-Jun-20 9:50:54 PM27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 210Chief Executive’s Review18Marketplace20Business Model22Strategy25Key Performance Indicators26Divisional Overview, Non-Consumer30Divisional Overview, Consumer35Divisional Overview, Group Functions supporting our Publishing Divisions36Financial Review40Risk Factors and Risk Management46Corporate ResponsibilityStrategic Report27040-Bloomsbury-AR2020 - strategic.indd 911-Jun-20 9:50:55 PM27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2Chief Executive’s Review10Bloomsbury Publishing PlcOverviewThe year ended 29 February 2020 saw a robust performance by Bloomsbury, particularly given the impact of coronavirus in China in the last two months of the financial year. Group profit before tax and highlighted items increased by 9% to £15.7 million (2018/2019: £14.4 million). Group profit before tax increased by 10% to £13.2 million (2018/2019: £12.0 million).Our Bloomsbury Digital Resources digital growth strategy continues to perform very well, delivering 32% revenue growth year-on-year and generating profit. This strong growth demonstrated the demand for, and quality of, our digital content, platforms and infrastructure. There was healthy revenue growth both from increased sales of existing products, as well as new partnerships and new products.In December 2019, we acquired the drama publisher Oberon Books Limited for £1.2 million, further strengthening our presence as the leading publisher in drama and the performing arts. Also in December 2019, we entered the domestic Chinese market with Bloomsbury China, a new joint venture with China Youth Publishing Group and Roaring Lion Media. Continuing our international growth is a key part of our strategy, and this partnership enables the business to further accelerate that goal. Performance was in line with the Board’s expectations and so there was no management bonus for the year (2018/2019: £2.3 million). The highlighted items of £2.5 million consist of the amortisation of acquired intangible assets of £1.7 million (2018/2019: £1.7 million), one-off restructuring costs and legal and other professional fees relating to the acquisitions of £0.6 million (2018/2019: £0.6 million), and one-off costs relating to the coronavirus of £0.2 million. The effective rate of tax for the year was 21% (2018/2019: 23%). The adjusted effective rate of tax, excluding highlighted items, was 19% (2018/2019: 21%). Diluted earnings per share, excluding highlighted items, grew 12% to 16.77 pence (2018/2019: 14.97 pence). Including highlighted items, profit before tax was £13.2 million (2018/2019: £12.0 million) and diluted earnings per share grew 13% to 13.84 pence (2018/2019: 12.25 pence).Cash and financingBloomsbury’s cash generation continued to be robust with cash at the year end of £31.3 million, up £3.8 million. During the year, we invested £1.8 million of capital expenditure in BDR, and the £1.2 million cash consideration for the acquisition of Oberon Books Limited was paid on completion in December 2019. The Group has an unsecured revolving credit facility with Lloyds Bank Plc. The facility comprises a committed revolving loan facility of £8 million in the first half and an additional £4 million in the second half, totalling £12 million, to match Bloomsbury’s cashflow cycle, and an uncommitted incremental term loan facility of up to £6 million. The facilities are subject to two covenants, being a maximum net debt to EBITDA ratio of 2.5x and a minimum interest cover covenant of 4x. Subsequent to the year end, the maturity of the facility was extended to May 2022 and the covenants were amended to exclude IFRS 16. StrategyDelivering the Bigger Bloomsbury Initiatives We delivered good results on the eight initiatives announced in May 2019, with highlights including: −Growing the profits of the Academic & Professional division: Delivered £1.8 million (58%) growth in profit before taxation and highlighted items. −Maximising the success of Bloomsbury Digital Resources: Moved into profit for the first time and delivered 32% growth in BDR revenue. −Growing the profits of the Adult division: Delivered £1.6 million profit before taxation and highlighted items, up £0.7 million. −Reducing our finished goods stock further: Further 1% reduction in inventories on a like-for-like basis. −Growing the revenues of acquisitions: 49% growth in I.B. Tauris revenues, acquired in May 2018, contributing to the Non-Consumer growth. −Increasing the focus on Bloomsbury’s nine biggest assets, starting with Harry Potter, Sarah J. Maas and Tom Kerridge: Delivered 23 bestsellers globally. “Our Bloomsbury Digital Resources digital growth strategy continues to perform very well, delivering 32% revenue growth year-on-year and generating profit.” Nigel NewtonFounder and Chief Executive www.bloomsbury.com27040-Bloomsbury-AR2020 - strategic.indd 1011-Jun-20 9:50:56 PMSTRATEGIC REPORT 13.84p diluted earnings per share +32% growth in BDR revenue £13.2m group profit before tax − As the originating publisher of J.K. Rowling’s Harry Potter, to ensure that new children discover and read it for pleasure every year. Progress 2019/2020: Harry Potter and the Philosopher’s Stone was the 10th bestselling Children’s title on Nielsen BookScan in the UK, 22 years after first publication. • International expansion − Expand international revenues and reduce reliance on UK market. Progress 2019/2020: delivered overseas revenues of 63% of Group revenue; achieved BDR international sales growth of 31% this year. • Employee experience and engagement Our colleagues are among our most important assets, and our success is driven by their expertise, passion and commitment. We understand the importance of attracting, supporting and engaging colleagues wherever they work. − To be an attractive employer for all individuals seeking a career in publishing regardless of background or identity, so adding cultural value to our business operations and performance. − Accelerating the growth of Bloomsbury’s sales in the USA, Australia and India: International sales are 63% of revenue. − Increasing employee engagement through strategic initiatives: Good progress in engagement and delivery of key initiatives. Following the success of the Bigger Bloomsbury Initiatives, we are now renewing our focus on Bloomsbury’s long-term growth strategy, which is aimed at diversifying into digital channels and building quality revenues, increasing earnings and building on the strategic success of the last five years. To achieve this, we are focused on a number of long-term strategic objectives, which include: • Non-Consumer − Grow Bloomsbury’s portfolio in Non-Consumer publishing. These are characterised by higher, more predictable margins and greater digital and global opportunities. Progress 2019/2020: delivered 85% growth in profit before tax and highlighted items and revenue growth of 4%. − Achieve BDR revenue of £15 million and profit of £5 million for 2021/2022. Progress 2019/2020: delivered £8.3 million revenue, up 32%. • Consumer − Discover, nurture, champion and retain high-quality authors and illustrators in our Consumer Division, while looking at new ways to leverage existing title rights. Progress 2019/2020: Sunday Times bestsellers included Such a Fun Age by Kiley Reid, The Anarchy by William Dalrymple, City of Girls by Elizabeth Gilbert, Three Women by Lisa Taddeo and The Dutch House by Ann Patchett. − Grow our key authors through effective publishing across all formats alongside strategic sales and marketing. Progress 2019/2020: Crescent City: House of Earth and Blood by Sarah J. Maas was Number One on the New York Times bestseller list, and we established our Specialist Audio division. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 11 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:50:57 PM Stock code: BMY Annual Report and Accounts 2020 11 Chief Executive’s Review continued − Focus on targeted initiatives to create an environment that nurtures talent, stimulates creativity and collaboration, is respectful of difference and supports wellbeing. Progress 2019/2020: continuing focus on employee engagement and development initiatives, including Employee Voice Meetings, Management Development Programme, mentoring scheme, formation of Diversity and Inclusion (“D&I”) Networks, which complement and inform the activities of our D&I Focus Group, and introduction of Core Hours to support flexible working. • Sustainability − Maximise our use of sustainable resources whilst seeking to reduce carbon emissions. Progress 2019/2020: increased use of print-on demand technology to over 20,000 titles, implementation of Sustainability Working Group to promote positive environmental actions and reduced greenhouse gas emissions from fuel and electricity use. Underpinning our strategy, our strengthened balance sheet will help to ensure we have sufficient working capital to weather the impact of coronavirus and to ensure we are able to fulfil our long-term growth plans. We have already implemented cost savings while balancing the need to retain our staff and acquire future titles, as Bloomsbury’s proven business model is to commission titles one to two years ahead of publication. Acquisitions As previously announced, in December 2019, we acquired the rights of drama publisher Oberon Books Limited for £1.2 million, all of which was satisfied in cash on completion. This acquisition further strengthens our presence as the leading publisher in drama and the performing arts. Also in December 2019, we entered the domestic Chinese market with Bloomsbury China, a new joint venture with China Youth Publishing Group and Roaring Lion Media. The investment is de minimis. Post year end in March 2020, as previously announced, we acquired certain assets of Zed Books Limited, the London-based academic and non-fiction publisher. The consideration was £1.75 million, of which £0.875 million was satisfied in cash on completion and the remainder to be paid within 12 months. Zed will operate within Bloomsbury’s Academic & Professional division. In the second half, the Special Interest division took over the publishing part of our Content Services division, to generate further synergies following the successful restructure of the Special Interest division. Digital projects, including IZA World of Labor, moved to the Academic & Professional division. Comparatives have been restated to reflect this. Dividend Bloomsbury had intended to declare a final dividend for the year of 6.89 pence per share. This would have resulted in a total dividend for the year of 8.17 pence per share, up 3% on the previous year. As previously announced, Bloomsbury has decided, in light of coronavirus, to conserve cash and therefore will not be paying a cash dividend. It is now proposed, subject to Shareholder approval, that the dividend is instead settled through the issuance of new ordinary shares by way of bonus issue to Shareholders, with a value equivalent to the proposed final dividend. Subject to Shareholder approval at our AGM on 21 July 2020, the bonus issue will be made on 28 August 2020 to Shareholders on the register on the record date of 31 July 2020. Bloomsbury is proud of its strong track record of 24 years of consecutive dividend growth. Our intention would be to reintroduce cash dividend payments as soon as market conditions allow us to do so. Non-Consumer Division The Non-Consumer Division consists of Academic & Professional and Special Interest. Revenues in the Division increased by 4% to £66.0 million (2018/2019: £63.4 million). Within this, Academic & Professional revenues grew by 4% to £43.1 million (2018/2019: £41.5 million). Profit before taxation and highlighted items for the Non- Consumer Division increased by 85% to £6.7 million (2018/2019: £3.6 million). Profit before taxation grew by 159% to £5.0 million (2018/2019: £1.9 million). The profit growth reflects improved Academic & Professional and Special Interest profitability and the £0.7 million increase in BDR profit. The strategic growth initiative BDR has made Bloomsbury into a leading B2B publisher in the academic and professional information market and significantly accelerated the growth of its digital revenues. Key achievements during the year, which demonstrate the opportunities to further leverage content and market other services on our digital platforms and through the sales infrastructure we have developed, were: − Launch of five new digital resources during the year as planned; − Growth of Bloomsbury Collections to over 9,000 front and backlist Bloomsbury Academic titles; over 20% higher than last year. These include titles from I.B. Tauris, the British Film Institute and our newly expanded frontlist collections; − Launch of the new content partnership with Human Kinetics, the world’s leading sports science publisher; − Development of our content partnership with Taylor & Francis; − Launch of our content partnership with the National Theatre in September 2019, further endorsing and significantly expanding the video offering of our award-winning Drama Online platform; and − Continuing our customer retention rate above 90%. Within Special Interest, profit before taxation and highlighted items has increased by 227% to £1.9 million (2018/2019: £0.6 million) and revenue was 4% higher at £22.9 million (2018/2019: £21.9 million). These results demonstrate the impact of the restructuring under the new Head of Special Interest Publishing, with a clear focus on publishing for key communities and reduced overheads. 12 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 12 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:50:58 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Consumer Division The Consumer Division consists of Adult and Children’s Trade publishing. The Consumer Division generated revenue of £96.8 million (2018/2019: £99.3 million). Profit before taxation and highlighted items was £8.9 million (2018/2019: £10.7 million). Profit before taxation was £8.8 million (2018/2019: £10.7 million). The strong performance from the Adult division and resilient Harry Potter sales were tempered by the impact of timing and fewer frontlist titles from Sarah J. Maas. Adult Trade The Adult division achieved very strong growth with a 12% increase in revenue to £37.4 million (2018/2019: £33.5 million) and profit before taxation and highlighted items increasing by 77% to £1.6 million (2018/2019: £0.9 million), from success in front and backlist titles, and the continued impact of strategic changes in the division. Bestsellers in the year included Dishoom: From Bombay with Love by Shamil Thakrar, Kavi Thakrar and Naved Nasir, Tom Kerridge’s Lose Weight & Get Fit, the global bestseller, The Anarchy by William Dalrymple, the number one Sunday Times bestseller Three Women by Lisa Taddeo, the Sunday Times bestsellers The Dutch House by Ann Patchett and City of Girls by Elizabeth Gilbert, and the New York Times bestsellers Elderhood by Louise Aronson and No Visible Bruises by Rachel Louise Snyder. Children’s Trade Children’s sales were £59.4 million (2018/2019: £65.8 million). Sales of the Harry Potter titles were in line with last year, with the Harry Potter and the Goblet of Fire Illustrated Edition by J.K. Rowling and Jim Kay published in October. The standard edition of Harry Potter and the Philosopher’s Stone was the tenth bestselling children’s book of the year on UK Nielsen Bookscan, 22 years after it was first published – every year these classics reach a new generation of readers. Sarah J. Maas’ new bestselling title, Crescent City: House of Earth and Blood, was published at the end of the financial year, compared to two new frontlist £59.4m Children’s revenues £43.1m Academic & Professional revenues hardback titles in the previous year, and total sales for this author were 32% lower than last year. Other highlights on the Children’s list included the second in Brigid Kemmerer’s Cursebreaker series, A Heart So Fierce and Broken, the latest title in the Fantastically Great Women series by Kate Pankhurst, and backlist titles We’re Going on an Egg Hunt by Laura Hughes, Norse Mythology by Neil Gaiman, Holes by Louis Sachar and The Explorer by Katharine Rundell, alongside her new novel The Good Thieves. Audio Bloomsbury’s new Audio division has delivered 190% revenue growth by focusing on production of key titles, distributed through an exclusive deal with Audible. This expert team has enabled us to produce 131 titles to date, launching with the Audible bestseller, The Madness of Crowds by Douglas Murray, as well as The Dutch House by Ann Patchett and Three Women by Lisa Taddeo. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 13 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:01 PM Stock code: BMY Annual Report and Accounts 2020 13 Chief Executive’s Review continued • Book Aid International and The Soho Center US: Book donations to these charities; • EmpathyLab: Working closely with this charity and many of our authors, we ensure that children and the books they read support the teaching of empathy; • In addition, for every copy of Dishoom: From Bombay with Love sold, we donate towards the price of a meal for a hungry child to both of Dishoom’s chosen charities, Magic Breakfast and The Akshaya Patra Foundation. IFRS 16 During the year IFRS 16, Leases (“IFRS 16”), was introduced. Adoption of this standard has reduced the amount of rent and lease charges, increased depreciation charges and finance costs and increased the value of assets and liabilities. The net reduction to profit before taxation for the year ended 29 February 2020 was £0.2 million. The impact on EBITDA was an increase of £2.1 million and the impact on operating profit was an increase of £0.3 million. Throughout this Review, we have used profit before tax and amortisation as this provides the fairest profit comparison between the results to 29 February 2020, which include IFRS 16, and the previous year’s results, which have not been restated. Board changes As previously announced, Jonathan Glasspool, Executive Director and Managing Director for the Non- Consumer Division, is retiring and will leave Bloomsbury at the end of July 2020, after 20 years’ service. I would like to thank Jonathan for his exceptional contribution to Bloomsbury, building the major Academic & Professional publisher that Bloomsbury sought to add to its trade portfolio. The Academic & Professional division is now an impressive, award-winning business in its own right. We are delighted that Jenny Ridout, Bloomsbury’s Global Head of Academic Publishing, has been promoted to be the new Managing Director of the Non- Consumer Division. Jenny’s knowledge of digital and academic publishing, and her proven commercial abilities, are Charitable initiatives As part of Bloomsbury’s ongoing commitment to the wider communities in which we operate, we are proud to support a wide range of charitable initiatives. Highlights include: • National Literacy Trust: Our three- year partnership with the National Literacy Trust with a particular focus on Hastings, one of the UK’s most deprived local authority areas; • Publishing Children’s books in partnership with three leading UK charities: the RSPB, Royal Botanic Gardens, Kew and The Woodland Trust; • World Book Day: We are extremely proud to support World Book Day, the most important, inclusive reading initiative in the UK; • Pathways Project: Aiming to increase the representation of underrepresented groups in children’s illustration; Bloomsbury led workshops and mentoring; 14 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 14 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:02 PM 27040 11 June 2020 9:44 pm Proof 2 27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2a very strong basis for achieving the growth expectations we have for this part of the business. Jenny has been with Bloomsbury for over 15 years, since the inception of the Division in 2008, and will continue her role as Global Head of Academic Publishing. Jenny also joins Bloomsbury’s Executive Committee.Bloomsbury’s purpose, values and cultureOur purpose at Bloomsbury is to inform, educate, entertain and inspire readers of all ages by publishing works of excellence and originality to a global audience. We champion a life-long love of reading and learning to help build a reading culture with all the benefits which that brings society. Embedded in our purpose is the social good that comes from our publishing. Many of our books are in themselves a social good which have made a positive impact on readers and, in a few cases, helped make the world a better place. The Harry Potter series, aside from its commercial success, encouraged more reluctant readers – especially boys – to pick up a book and read for pleasure around the world than any other book published at the time. Books about structural racism like Why I’m No Longer Talking to White People About Race by Reni Eddo-Lodge and White Rage by Carol Anderson have the power to educate and contribute to a change of attitudes in society. Personal narratives like Wendy Mitchell’s memoir Somebody I Used to Know, about suffering with Alzheimer’s, encourage people to come forward to talk about their own personal experience and open up the conversation around important subjects like dementia. And titles such as The Sustainable(ish) Living Guide by Jen Gale and Clearing the Air by Tim Smedley have informed readers about the climate change crisis and offered practical ways they can be part of the solution in living more sustainably.Our clear sense of purpose, and our shared values, as set out on the front insider cover of this Annual Report, are the foundation of Bloomsbury’s strategy for building a sustainable business and guide our priorities and decision-making throughout the Company. They shape our culture and define Bloomsbury’s character. They unite and connect colleagues around the world and are the cornerstone of our approach to publishing. We are committed to helping authors, both new and established, bring original and powerful works across an array of genres and subjects to readers and learners worldwide, sharing ideas, knowledge and experience, and challenging the status quo. Our independence allows us the freedom to publish in a manner that reflects the value we place on being inclusive by publishing works from a wide spectrum of international – and often contrarian – voices. We are entrepreneurial in the way we seek out new opportunities to reach more readers and learners, whether by entering into new markets, as we have done with Bloomsbury China, or leveraging our digital rights and our resources in response to the increasing demand for digital products. Determination, optimism and high standards underline the actions we take in pursuit of our purpose, and inform our dealings with all our business partners – from authors to suppliers to customers. During the year, we re-articulated our guiding principles to our colleagues, through Company-wide Employee Voice meetings, an internal management training programme, a fortnightly newsletter from the Chief Executive and, more recently since working from home during the pandemic, with live online video Town Halls attended by over 500 employees worldwide, with questions from staff and answers from Nigel Newton speaking to Bloomsbury employees about Bloomsbury's values at the Company Highlights eventSTRATEGIC REPORTStock code: BMYAnnual Report and Accounts 20201527040-Bloomsbury-AR2020 - strategic.indd 1511-Jun-20 9:51:02 PMChief Executive’s review continued management and in other forums. We continue to monitor and assess Bloomsbury’s culture and its alignment with our strategic objectives through direct engagement with our workforce, including, most importantly, by way of the Employee Voice Meetings Programme, more detail about which can be found in the Corporate Responsibility section on pages 50 to 53. Management action in response to the coronavirus pandemic People In response to the coronavirus pandemic, management acted quickly to implement proactive measures to protect our staff and continue working effectively with our authors, illustrators, customers and suppliers. Staff globally are working safely and effectively from home. Financing We have extended the maturity of our facilities with Lloyds Bank Plc from May 2021 to May 2022, and amended covenants to exclude IFRS 16. Cost savings Management has also taken the following proactive measures to conserve cash and reduce costs: • Board taking salary or Board fee reductions of 30%, saving £0.03 million per month; • Salary reductions across the majority of staff, weighted to more senior staff, saving £0.2 million per month; • Participating in Government schemes in the UK and USA to support staff and businesses, saving £0.7 million per month for the first two months and £0.1 million thereafter; • Recruitment freeze and furloughing 14 staff, with top-up salaries for the majority of those affected, saving £0.03 million per month; and • Reducing discretionary spend to a minimum, including marketing and non-essential capital expenditure, saving an average of £0.9 million per month. Equity Placing On 17 April 2020, Bloomsbury announced the successful completion of the non-pre-emptive placing of 5.0% of ordinary shares, raising gross proceeds of £8.4 million. Acting in the long-term interests of all stakeholders, this placing strengthened our balance sheet to ensure we have sufficient working capital to weather the impact of coronavirus without damaging Bloomsbury’s business; being able to retain our staff and acquire future titles is a crucial part of this. Future publishing Our publishing list for 2020/2021 includes Quidditch Through the Ages Illustrated Edition by J.K. Rowling and Emily Gravett, Fantastic Beasts and the Wonder of Nature in association with the Natural History Museum exhibition, Sarah J. Maas’ number one New York Times bestseller Crescent City: House of Earth and Blood, Humankind by Rutger Bregman, Susanna Clarke’s Piranesi, Brigid Kemmerer’s A Vow so Bold and 16 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 16 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:04 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Deadly, and the authorised History of GCHQ, Behind the Enigma, by Professor John Ferris. Outlook There is no immediate certainty around the severity and duration of the impact of the coronavirus pandemic on our business and therefore the Board is unable to provide guidance for the year ending 28 February 2021 at this time. The coronavirus crisis and imposition of Government lockdowns and restrictions and retail closures continue to impact all our key markets of the UK, USA, Australia and India, as well as many other important markets. Orders for print books, which comprised 79% of the Group's revenue for the year ended 29 February 2020, are being affected in all our markets. Our UK, USA and Australia warehouses remain open and continue supply to customers. We have positive sales prospects through Amazon, even as they prioritise essential crisis services, with strong growth in demand for ebooks. April 2020 year-to-date revenue is 3% below last year, with print revenues at 87% of last year’s sales and academic digital revenues up over 52% year-on- year. Our strategy of expanding and leveraging our digital rights and products means that we are well placed to benefit from increased demand for our digital resources, audio and ebooks as we are with direct supply from Amazon, Bloomsbury.com, Waterstones.com and most internet retailers selling print books. Strong digital growth continues from academic institutional customers as libraries pivot swiftly to digital resources and reduce print purchases to support remote learning for students. However, academic institutions face major uncertainties over student recruitment, particularly international students, and when students will be allowed to return. This could bring financial uncertainty for many of our digital resource customers. Should a prolonged downside scenario not materialise, the equity placing proceeds will be used for future growth opportunities. Bloomsbury has a successful track record of acquisitive growth via 26 strategic acquisitions and we continue to see opportunities in the Academic markets. Nigel Newton Chief Executive The Board has modelled a severe but plausible downside scenario, including the impact of coronavirus. This assumes: • Print revenues are reduced by 60%–65% for the three months of expected global restrictions to July 2020 and gradual recovery through to March 2021; • Downside assumptions about extended debtor days to the end of 2021; and • In this scenario, we extend the cost reduction measures already implemented, as set out above. Under this pessimistic downside scenario, we expect our business model to be able to manage these downside assumptions and stay within the headroom of our current banking facilities. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 17 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:05 PM Stock code: BMY Annual Report and Accounts 2020 17 Marketplace Bloomsbury Publishing Plc is an entrepreneurial, independent, global publisher listed on the London Stock Exchange with offices in London, Oxford, New York, Sydney and New Delhi. Bloomsbury publishes in English across trade and academic markets around the world, and recently entered the Chinese domestic market through a Beijing- based joint venture. Bloomsbury’s publishing cuts across a broad range of sectors, genres and countries, spanning trade fiction to children’s books to academic humanities and social sciences monograph publishing. As such, it is interested in a large variety of global trends, many behaving and developing differently depending on the type of publishing and the region it applies to. The most common and longest running global trend is the continued growth of online retail sales across all markets. Other key trends are more driven by the sector of publishing. In Bloomsbury’s Children’s and Adult Trade markets, consumers remain loyal to print books but audio books have increased in popularity globally with consumers choosing to also listen to books, particularly when on the go. Children’s books remain the growth area of the consumer market, particularly in print formats. Independent and high street retail shops remain challenged as more consumers buy online. The coronavirus pandemic is exacerbating this trend as many high streets across the world have been closed for extended periods of time; it is not known if these retailers will have a v-shaped recovery post the global lockdown ending. The coronavirus crisis is also impacting the academic publishing market. It is believed that the coronavirus outbreak may have a negative effect on university budgets internationally, and also possibly impact student enrolment, particularly in those universities that are dependent on foreign students’ attendance to boost their budgets. However, the global academic library market has remained stable over several years and the demand for digitally delivered academic content has continued to increase. The onset of the coronavirus pandemic has dramatically accelerated this shift. Another long-term trend that continues to make news is that the research and academic bodies in many of Bloomsbury’s markets are demanding an increase to the amount of scholarly content published as free-to-view “open access”. So far this demand is focused on scientific, technical and medical content and associated journals, and not in the humanities book publishing areas where Bloomsbury publishes. Each of Bloomsbury’s publishing Divisions has identified and tracked these and other ongoing trends, implementing mitigation strategies that place Bloomsbury in a solid position to respond successfully to them, and to future trends. US £42.4m UK £104.4m Non-Consumer Division The Non-Consumer Division consists of the following Bloomsbury publishing sub-divisions: Academic & Professional; Bloomsbury Digital Resources; Special Interest; and Education. The Non-Consumer Division delivered revenue of £66.0m million (2018/2019: £63.4 million). Profit before taxation and highlighted items was £6.7 million (2018/2019: £3.6 million). The Non-Consumer Division has identified the following key global trends and is responding to them: • Shift to digitally delivered academic content: Bloomsbury has continued to significantly broaden its digital portfolio across all its divisions and experienced academic digital revenue growth of more 32% during the year, compared to overall academic market growth of 1–2%. • Open access: There continues to be increased demand for open access humanities publications, but little funding to enable it to happen. Bloomsbury is well-positioned should this change, as it has long published open access content and offers all its academic authors the option to publish their research work with Bloomsbury on a Gold open access basis. • Coronavirus impact on university budgets: Bloomsbury is significantly broadening its customer base by selling direct to institutions globally, reducing individual country exposure and broadening its customer base. 18 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 18 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:05 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Australia £11.1m Bloomsbury enters domestic Chinese market In December 2019, Bloomsbury announced its entry to the domestic Chinese market through a joint venture with China Youth Publishing Group and Roaring Lion Media. China is an increasingly important and fast-growing publishing market for trade and academic publishing. China is expected to continue its growth rate and is projected to surpass the USA as the world’s largest economy by 2030. India £4.8m UK £104.4m Consumer Division The Consumer Division consists of Adult and Children’s Trade publishing. The Consumer Division delivered revenue of £96.8m million (2018/2019: £99.3 million). Profit before taxation and highlighted items was £8.9 million (2018/2019: £10.7 million). The Consumer Division has identified the following key global trends and is responding to them. • Increase in digital audio book popularity: Bloomsbury has established a specialist Audio publishing division to maximise the opportunity presented by the increasing popularity of audio books, and during the year delivered significant frontlist success with Lisa Taddeo’s Three Women and Ann Patchett’s The Dutch House. • Children’s books remain growth area: Bloomsbury’s strategic focus on its picture book list delivered 14% growth in UK sales value, and its ongoing implementation of its Harry Potter publishing and sales and marketing strategy keeps this leading brand front and centre across global markets. • Continued growth of online retail: There continues to be growth of online retail sales. In the UK, Bloomsbury launched a new initiative offering to support independent retailers during the coronavirus crisis by using Bloomsbury.com to sell and deliver books to their customers. • Continued decline in ebook sales: Though digital audio is thriving, sales of ebooks continues to decline in most markets. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 19 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:06 PM Stock code: BMY Annual Report and Accounts 2020 19 Business Model Valuable intellectual property Talent Talent Valuable intellectual property Talent Strong financial position and liquidity Diversified portfolio of content and services Diversified portfolio of content and services Key resources Strong financial position and liquidity Diversified portfolio of content and services Key activities Global brand recognition Global brand recognition Access to global markets and partners Access to global markets and partners Access to global markets and partners • Focus on digital publishing • Growing Bloomsbury’s portfolio in Non-Consumer publishing • Acquisition of rights from authors, illustrators and other copyright owners • Leveraging existing intellectual property rights • International expansion • Strategic acquisitions in key areas of publishing • Traditional wholesalers • Online retailers – print and and retailers digital (ebooks and audio books) • Digital content aggregators • Direct to academic and educational institutions, libraries and corporates Channels Market segments Non-Consumer • Academic institutions • Students and academics • Libraries • Corporates • Professional bodies • Primary and secondary schools • Teachers and trainee teachers • Adult Trade: fiction, • Children’s Trade: fiction, Consumer non-fiction and cookery non-fiction, picture books, pre-school titles and activity books Creating value for stakeholders Consumers and society Publishing works of excellence and originality to inform, educate, entertain and inspire, supporting literacy and culture and fostering a passion for reading and learning. Authors and illustrators Helping our authors and illustrators to create stories and communicate ideas to a global audience, connecting them with readers worldwide through multiple formats and channels. Economic and social contribution to our communities through tax contributions, charitable donations and partnerships, and employee time. Shareholders The opportunity to invest in a resilient, global publishing company with a diversified portfolio operating in global markets. Employees Creating rewarding work, enabling ongoing professional development. Providing the opportunity to align with a business with a strong socially responsible purpose, entrepreneurial spirit and compelling global opportunity in a dynamic marketplace. Partners Generating business activity that creates commercial opportunity for our suppliers, business partners and commercial customers. 20 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 20 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:07 PM 27040 11 June 2020 9:44 pm Proof 2 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 21 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:07 PM Strategy Our overall growth strategy and long-term focus remains unchanged; to invest in high value intellectual property, to publish works of excellence and originality, to build our diversified portfolio of content and services across our Consumer and Non-Consumer Divisions, and to diversify into digital channels to build quality revenues and increase earnings. Our strategic priorities International expansion • Expand international revenues and reduce reliance on the UK market. Continuing our international growth in order to reduce reliance on the UK market as well as take advantage of the biggest academic market in the USA and significant growth potential in India and China is a key part of our strategy. 2019/2020 progress: − Delivered overseas revenues of 63% of Group revenue; − Achieved Bloomsbury Digital Resources international sales growth of 31% in international markets; and − Entry into the domestic Chinese market with Bloomsbury China: a new joint venture with China Youth Publishing Group and Roaring Lion Media. Non-Consumer publishing • Grow Bloomsbury’s portfolio in Non-Consumer publishing. Non-Consumer publishing is characterised by higher, more predictable margins, is less reliant on retailers and presents greater digital and global opportunities. Non-Consumer revenues are derived from our Academic & Professional, Educational and Special Interest publishing. 2019/2020 progress: − Delivered 85% growth in profit before tax and highlighted items and revenue growth of 4%; − Acquisition of drama publisher Oberon Books Limited, strengthening our presence as the leading publisher in drama and the performing arts. • Achieve Bloomsbury Digital Resources revenue of £15 million and profit of £5 million for 2021/2022. Our Bloomsbury Digital Resources digital growth strategy, combining digital products of excellence with the strength and range of our partnerships enables us to deliver growth from the high-quality platforms and infrastructure we have built and are continuing to build. 2019/2020 progress: − Delivered £8.3 million revenue, up 32%; − Delivered five new products and five new modules; and − Established new partnerships with the National Theatre, Taylor & Francis, Human Kinetics and the Donmar Warehouse. Consumer publishing • Discover, nurture and retain high-quality authors and illustrators, while looking at new ways to leverage existing title rights. 2019/2020 progress: − Sunday Times bestsellers included Such a Fun Age by Kiley Reid, The Anarchy by William Dalrymple, City of Girls by Elizabeth Gilbert, Three Women by Lisa Taddeo and The Dutch House by Ann Patchett. New York Times bestsellers included Elderhood by Louise Aronson and No Visible Bruises by Rachel Louise Snyder. • Grow our key authors through effective publishing across all formats alongside strategic sales and marketing. 2019/2020 progress: − Crescent City: House of Earth and Blood by Sarah J. Maas was Number One on the New York Times bestseller list; and − Specialist Audio division established. • As the originating publisher of J.K. Rowling’s Harry Potter series, ensure that new children discover and read it for pleasure every year. 2019/2020 progress: − Harry Potter and the Philosopher’s Stone was the tenth bestselling Children’s title on Nielsen Bookscan in the UK, 22 years after first publication. Link to KPIs Link to KPIs Link to KPIs 1 2 3 4 1 2 4 1 3 22 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 22 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:08 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Key to KPIs: 1 Revenue growth 2 Adjusted PBTA 3 Digital resources revenue growth 4 Adjusted operating profit margin 5 Employee engagement 6 Gender diversity 7 Environmental performance Sustainability • Maximise our use of sustainable resources while seeking to reduce carbon emissions. We recognise our responsibilities to conserve resources and we are committed to monitoring and improving the environmental impact of our operations. 2019/2020 progress: − Decrease in greenhouse gas emissions from location based and vehicle fuel use*; − Decrease in greenhouse gas emissions from electricity use*; − Decrease in water consumption*; − Increased use of print-on- demand technology: over 20,000 titles; and − Implementation of Sustainability Working Group to promote positive environmental actions within the Group. *An analysis of our environmental performance during the year is set out on in the Strategic Report on pages 55 to 57. Employee experience and engagement • Be an attractive employer for all individuals seeking a career in publishing regardless of background or identity, adding cultural value to our business operations and performance. • Focus on targeted initiatives to create an environment that nurtures talent, stimulates creativity and collaboration, is respectful of difference and supports wellbeing. Our colleagues are amongst our most important assets, and our success is driven by their expertise, passion and commitment. We understand the importance of attracting, supporting and engaging colleagues wherever they work. 2019/2020 progress: Continuing focus on employee engagement and development initiatives, including: − Ongoing Employee Voice Meetings, listening to each of our employees’ views; − Continued provision of Management Development Programme for line managers; − Introduction of mentoring scheme for early and mid-career employees; − Formation of Diversity and Inclusion Networks that complement and inform the activities of our Diversity and Inclusion Working Group; and − Introduction of Core Hours to support flexible working. Link to KPIs Link to KPIs 5 6 7 Stock code: BMY Annual Report and Accounts 2020 23 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 23 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:08 PM 27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2Delivering the 2019 Bigger Bloomsbury InitiativesIn May 2018 we announced our Bigger Bloomsbury Initiative to focus on key growth drivers with targeted strategies across the Group. We delivered good results on the eight initiatives announced in May 2019. Following the success of the Bigger Bloomsbury Initiatives, we are now renewing our focus on Bloomsbury’s long-term growth strategy, which is aimed at diversifying into digital channels and building quality revenues, increasing earnings and building on the strategic success of the last five years. To achieve this, we are focused on a number of long-term strategic initiatives as set out on the immediately preceding pages.1Growing the profits of the Academic & Professional division: • Delivered £1.8 million (58%) growth in Academic & Professional profit before taxation and highlighted items.2Maximising the success of Bloomsbury Digital Resources: • Moved into profit for the first time and delivered 32% growth in BDR revenue.3Growing the profits of the Adult division:• Delivered £1.6 million profit before taxation and highlighted items, up £0.7 million.4Reducing our finished goods stock further: • Further 1% reduction in inventories on a like-for-like basis.5Growing the revenues of acquisitions: • 49% growth in I.B. Tauris revenues, acquired in May 2018, contributing to the Non-Consumer growth. 6Increasing the focus on Bloomsbury’s nine biggest assets, starting with Harry Potter, Sarah J. Maas and Tom Kerridge:• Delivered 23 bestsellers globally. 7Accelerating the growth of Bloomsbury’s sales in the USA, Australia and India: • International sales 63% of revenue.8Increasing employee engagement through strategic initiatives: • Good progress in engagement and delivery of key initiatives.www.bloomsbury.com24Bloomsbury Publishing PlcStrategycontinued27040-Bloomsbury-AR2020 - strategic.indd 2411-Jun-20 9:51:11 PMSTRATEGIC REPORT Key Performance Indicators Financial measures Revenue growth £162.8m +0% Adjusted PBTA £15.7m +9% 2020 2019 2018 0% 1% 13% Link to risks A 2020 2019 2018 £15.7m £14.4m £13.2m Link to risks A B C D F Digital resources revenue growth Adjusted operating profit margin £8.3m +32% 2020 2019 2018 9.8% +12% 2020 2019 2018 32% 34% 20% Link to risks B Non-Financial measures Employee engagement I Gender diversity I 9.8% 8.8% 8.1% Link to risks A B C D F Environmental performance – greenhouse gas emissions (absolute tonnes CO2e) J K 51 Employee Voice Meetings connecting employees with the Board and senior management 6 Active employee Diversity and Inclusion networks Key to risks: 28.5% Female Board members (2019: 28.5%) 19.7% UK median gender pay gap (2019: 21.9%) 22 Vehicle fuel use (2019: 35) 71.4% Female Executive Committee members (2019: 62.5%) 69% Female employees (2019: 71%) 18.3% UK mean gender pay gap (2019: 22.9%) 291 Electricity use: location- based emissions (2019: 314) 43 Stationary fuel use (2019: 46) A Market B Importance of digital publishing C Acquisitions D Title acquisition E Information and technology systems F Financial valuations G Intellectual property H Reliance on key counterparties J Legal and compliance K Reputation Talent management I 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 25 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:12 PM Stock code: BMY Annual Report and Accounts 2020 25 27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2The Non-Consumer DivisionThe Non-Consumer Division consolidates a number of Bloomsbury publishing divisions: Academic & Professional; Special Interest; Content Services; and Education. A new publishing division, Bloomsbury Digital Resources, was created in May 2016 within the Academic business to focus on institutional digital resources. During the financial year, Bloomsbury purchased Oberon Books Limited, a performing arts publishing company specialising in play-text publishing. This has been integrated into the Methuen Drama imprint. In March 2020, Bloomsbury purchased certain assets of Zed Books Limited, an academic publisher specialising in Africa studies, economics, development, politics and books about the Global South. The Non-Consumer Division produces a large portfolio of scholarly and B2B digital resources sold direct to institutions, schools and companies worldwide, Over 1,100 international academic institutions and 2,600 corporate customers now purchase digital resources direct from Bloomsbury. The Division publishes a print and ebook programme of over 2,000 new titles per year across the arts, humanities and social sciences, law and tax, as well as specialist content for communities of shared interest in military history (Osprey), natural history (Helm and Poyser), Sport (through Nautical, Reeds, and Wisden), Popular Science (through Sigma); and reference (through Who’s Who, Whitaker’s, and www.writersandartists.co.uk). In addition to its publishing programme, the Division provides consultancy services to corporations and institutions round the world. The markets we serveThe Non-Consumer Division serves the following end users: • The international research community and higher education students, who use our books and digital resources, which are purchased by academic libraries and institutions worldwide;• UK and Eire professionals, who use our online law, accounting and tax services;• Corporations and institutions worldwide looking for consultancy and publishing services;• Niche communities of interest in sports and sports science, nautical, military history, natural history, and popular science; and• Teachers and trainee teachers looking for content to support Continuing Professional Development and their teaching.Jonathan GlasspoolExecutive Director and Managing Director, Non-Consumer DivisionJonathan Glasspool joined Bloomsbury in 1999, was appointed to the Board as Executive Director in 2015 and now oversees the development of Bloomsbury’s Academic & Professional publishing business and the other Non-Consumer publishing divisions. Previous roles include being a publisher at Reed Elsevier in Singapore, Melbourne and Oxford. He started his career at Cambridge University Press. He has an MBA with Distinction from Warwick Business School. Jonathan is also a Governor of Bath Spa University; Chair, Industry Advisory Board, Oxford Brookes Publishing Centre; Chair, Federation of British Artists, and Trustee, Publishing Training Centre.Divisional facts£66.0m Revenue – total£3.3m Revenues – other territories£48.9m Revenue – UK£6.7m PBTA*£13.8m Revenue – US10.42% PBTA margin** PBTA is profit before taxation, amortisation of acquired intangible assets, restructuring costs and legal and other professional fees relating to acquisitions. www.bloomsbury.com26Bloomsbury Publishing PlcDivisional Overview27040-Bloomsbury-AR2020 - strategic.indd 2611-Jun-20 9:51:14 PMSTRATEGIC REPORT Value generating activities Description Academic book publishing in print and ebook formats Digital academic and B2B services Professional book and online information publishing Publishing services Required study material for students of humanities, social sciences and applied visual arts. Mainly backlist, print and ebooks, with a significant USA weighting. Sold direct and through industry intermediaries. Online services sold direct to institutions worldwide, e.g. Bloomsbury Professional Online, Drama Online, Bloomsbury Collections and Bloomsbury Fashion Central. Sold direct through subscription or perpetual access. Online and print resources for business practitioners, qualified and trainee solicitors, barristers, accountants and tax practitioners, sold direct through subscription and perpetual access. Range of end-to-end publishing and content services, digital and print, provided direct to corporations and organisations. Consultancy and management services Provided to non-publishers to advise on, implement and manage publishing strategy and projects. Books, games and special interest digital resources Specialist content and services for a range of niche communities of interest. Content is sold direct through websites and through retail intermediaries. Books and online resources for teachers Content for teachers and trainee teachers. strategic goals strategy for growth Strategy for growth • Growing the Division via direct sales to institutions such as law firms, accountancy practices, tax practitioners, and higher education libraries worldwide rather than via traditional third party retailers and content aggregators. • Increasing investment in repeat purchase, digital services for professional, student and educational use rather than print products. • Bolt-on acquisitions that strengthen already strong lists. • Expanding Divisional sales in international markets. Strategic goals • Grow institutional revenues internationally, especially in North America. • Grow revenues from digital-only products and services to £15 million revenue and £5 million profit by 2022. • Expand number of revenue streams from non-book sources. • Create rich content and compelling services for niche communities of special interest. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 27 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:18 PM Stock code: BMY Annual Report and Accounts 2020 27 Divisional Overview continued Our books were recognised by Choice* with a number of Outstanding Academic Title awards, including: 1 2 3 4 5 6 7 8 9 Food studies: a Hands-On Guide Future sounds: the temporality of noise History and film: a tale of two disciplines Life itself is an art: the life and work of Erich Fromm Literature's children: the critical child and the art of idealization Modernism and the law Rereading Childhood Books: A Poetics The meaning of the circus: the communicative experience of Cult, Art, and Music as an Art History of Illustration Contemporary Peruvian cinema: history, identity and violence on screen 10 The Shari’a: History, Ethics and Law 11 Bloomsbury Popular Music (Bloomsbury Digital Resources) *Choice is a publishing unit of the Association of College and Research Libraries. Examples of recent Non-Consumer prizes and awards • History of Illustration won the Best Edited Collection (Ray and Pat Browne Award) from the Popular Culture Association/American Culture Association. • An Introduction to Popular Culture in the US: People, Politics, and Power was awarded the John G. Cawelti Award for the Best Textbook/Primer in Popular and American Culture from the Popular Culture Association/American Culture Association. • When Genres Collide: Down Beat, Rolling Stone, and the Struggle Between Jazz and Rock won the IASPM Canada Book prize from the International Association for the Study of Popular Music – Canada Branch. • The Politics of 1930s British Literature won the ISCHE First Book Award. • Fellini’s Eternal Rome won the Flaiano Prize from Premi Flaiano. • Shakespeare on the Record was awarded the Harley Prize from the British Records Association. • Empire of the Winds was given the Penang Book Prize for 2019 from the Penang Institute. • Nomads and Soviet Rule won the Alexander Nove Prize from BASEES. • Feminist Judgments in International Law edited by Loveday Hodson and Troy Lavers was awarded the 2020 ASIL Certificate of Merit for a Preeminent Contribution to Creative Scholarship. • Secured Credit in Europe by Teemu Juutilainen won the 2016–2018 KG Idman Prize. • Unity in Adversity by Charlotte O’Brien was awarded the 2019 SLSA Book Prize. • Among many Bloomsbury finalists, A Cultural History of Work Volumes 1–6 was awarded the PROSE Award for Multivolume Reference. • Feminist Judgements in International Law was recognised by the 2019–2020 ASIL Book Awards with the Certificate of Merit for a Preeminent Contribution to Creative Scholarship, from the American Society of International Law. Shortlistings of note • 2020 British Book Awards (administered by the Bookseller): Academic, Educational and Professional Publisher of the Year. 28 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 28 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:23 PM 27040 11 June 2020 9:44 pm Proof 2 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 29 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:30 PM 27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2The Consumer DivisionThe Consumer Division publishes books for both adult and child readers. It publishes around 600 new titles per year and these books are published in print, ebook and audio book formats under the following imprints: Bloomsbury Absolute, Bloomsbury Activity Books, Bloomsbury Children’s Books, Bloomsbury Circus, Bloomsbury Publishing and Raven Books.The Division publishes cookery, fiction and non-fiction titles on our Adult Trade list – and activity books, fiction, non-fiction, picture books and preschool titles on our Children’s Trade list. Our main publishing operations are based in London and New York, and are coordinated by experienced editorial and publishing staff so that authors and their works are supported throughout the world. Known for the quality and the prize-winning calibre of the list, we publish authors such as George Saunders, Madeleine Miller, Lisa Taddeo, Kamila Shamsie, Peter Frankopan and Khaled Hosseini on our Adult Trade list, Stuart Turton on our Raven Books imprint, and Neil Gaiman, Sarah J. Maas, J.K. Rowling and Brigid Kemmerer on our Children’s Trade list.The markets we serveOur publishing serves the global bookshop and online retail market, in print, audio and ebooks; and rights sales to foreign publishing houses. The UK market is the largest market based on Divisional sales.Emma HopkinManaging Director, Consumer DivisionEmma is responsible for all Consumer publishing. She joined Bloomsbury in 2011 to run the Children’s publishing business and was promoted to manage the Adult Trade Division as well in 2016 following a Company restructure. Previously, she was Managing Director of Macmillan Children’s Books. She has also held sales and marketing roles at Houghton Mifflin, Pan Macmillan and Routledge.Divisional facts£96.8m Revenue – total£12.7m Revenues – other territories9.2% PBTA margin£55.5m Revenue – UK£9.8m Revenue – ebooks only worldwide£28.6m Revenue – US£8.9m PBTA**PBTA is profit before taxation, amortisation of acquired intangible assets, restructuring costs and legal and other professional fees relating to acquisitions.www.bloomsbury.com30Bloomsbury Publishing PlcDivisional Overviewcontinued27040-Bloomsbury-AR2020 - strategic.indd 3011-Jun-20 9:51:38 PMSTRATEGIC REPORT Value generating activities Description Children’s Trade publishing Harry Potter publishing Publishing and promoting activity books, fiction, non- fiction, picture books, preschool books in print, audio book and ebook formats. Reimaging and promoting J.K. Rowling’s children’s novels with illustrated editions by Jim Kay, Chris Riddell and Olivia Lomenech Gill. Our ambition is to introduce new children to reading these books for pleasure every year. Adult Trade fiction To publish bestselling, award-winning fiction in print, audio and ebook formats. Adult Trade non-fiction To publish bestselling and award-winning non- fiction in the following areas: biography, food and drink, history, memoir, popular science and popular psychology, including some illustrated books. strategy for growth strategic goals Strategy for growth • Growing the lists by focused and global acquisition of titles. • Increased exploitation of the backlist. • Growing and building brands by winning major literary prizes, winning slots in retail promotions and gaining exceptional media coverage and TV/film tie-ins. • Ensuring strategic sales and marketing planning is in place for established and new brands. • Attracting and retaining talent to the list by providing excellent author care. Strategic goals • Grow Adult Trade market share in UK and USA. • Grow Children’s Trade market share in UK and USA. • Ensure our titles are regularly listed on The New York Times bestseller and Sunday Times bestseller charts. • Focus on audio publishing and integrating it into our publishing strategy. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 31 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:47 PM Stock code: BMY Annual Report and Accounts 2020 31 Divisional Overview continued Examples of recent prizes and awards: Adult Trade division USA winners 1 2019 National Book Award Distinguished Contribution to American Letters Lifetime Achievement Award Edmund White UK winners 1 2 3 The ALA Carnegie Medal for Excellence in Non-fiction Heavy by Kiese Laymon The Charleston John Maynard Keynes Prize Mary Robinson (author of Climate Justice) The EU Prize for Literature All Among the Barley by Melissa Harrison 2 4 5 6 7 2019 Center for Fiction Awards First Novel Prize In West Mills by De’Shawn Charles Winslow The Kitschies Red Tentacle Circe by Madeline Miller The Kerry Group Irish Novel of the Year Award Travelling in a Strange Land by David Park Whiting Award in Non-fiction Heart Berries by Terese Marie Mailhot Last Laugh Award A Shot in the Dark by Lynn Truss 8 9 National Geographic Traveller Reader Awards Around the World in 80 Trains by Monisha Rajesh Guild of Food Writers Award, Food Book Award Lateral Cooking by Niki Segnit 32 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 32 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:52 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Design Awards UK Winners ABCD (Academy of Book Cover Design) award in SciFi/Fantasy category Folk by Zoe Gilbert British Book Design and Production Awards, Brand/Series Identity Eat Like a Local Shortlistings of note: UK ABCD (Academy of Book Cover Design) in SciFi/Fantasy category Circe by Madeline Miller ABCD (Academy of Book Cover Design) in SciFi/Fantasy category Red Birds by Mohammed Hanif Waterstones Beautiful Book of the Year Circe by Madeline Miller British Book Design and Production Awards Everest: The Remarkable Story of Edmund Hillary and Tenzing Norgay by Alexandra Stewart and Joe Todd Stanton The Silk Roads: A New History of the World, Illustrated Edition by Peter Frankopan and Neil Packer The Tales of Beedle the Bard, Deluxe Illustrated Edition by J.K. Rowling and Chris Riddell Shortlistings of note: US The 2019 Original Art Show Migration by Jenni Desmond Moth by Daniel Egneu Examples of recent prizes and awards: Children’s Trade division USA winners UK winners 1 2 3 4 2019 National Book Award Young People’s Literature 1919: The Year that Changed America by Martin Sandler 2019 The Boston Globe Horn Book Awards This Promise of Change by Jo Allen Boyce and Debbie Levy 2020 ALAN Award for lifetime contribution to adolescent literature Nikki Grimes 2020 AAAS/Subaru SB&F Prize for Excellence in Science Books Hands On Science Book: Can you Crack the Code? by Ella Schwartz 1 2 3 4 5 Blue Peter Book Award Winner of Winners Harry Potter and the Philosopher’s Stone by J.K. Rowling Laugh Out Loud Book Awards I Bet I Can Make You Laugh by Joshua Siegal Foyles Book of the Year The Good Thieves by Katherine Rundell Sainsbury’s Book Award The Awesome Book of Space by Adam Frost Books are my Bag Readers Award (young adult) Toffee by Sarah Crossan 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 33 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:55 PM Stock code: BMY Annual Report and Accounts 2020 33 Divisional Overview continued Adult Trade division Shortlistings of note: UK • The International Dylan Thomas Prize: Folk by Zoe Gilbert • The International Dublin Literary Award: Lincoln in the Bardo by George Saunders Home Fire by Kamila Shamsie • Orwell Prize for Political Writing: The Growth Delusion by David Pilling • RSL Ondaatje Prize: Small Days and Nights by Tishani Doshi • CWA Awards: To The Lions by Holly Watt (CWA Ian Fleming Steel Dagger for best thriller) The House on Half Moon Street by Alex Reeve (CWA Sapere Historical Dagger for best historical crime novel) • The Rathbones Folio Prize: Can You Tolerate This? by Ashleigh Young • Irish Book Awards: This is Happiness by Niall Williams (Novel of the Year) Nicole Flattery (Newcomer of the Year, and Short Story of the Year, for her story ‘Parrot’) Louise Kennedy (Short Story of the Year) • Wilbur Smith Adventure Writing Prize: To the Lions by Holly Watt • Books Are My Bag Readers Awards Fiction: Circe by Madeline Miller • Books Are My Bag Readers Awards Beautiful Book: Circe by Madeline Miller • Jhalak Prize: Suncatcher by Romesh Gunesekera • Palestinian Book Awards: Zaitoun by Yasmin Khan • Guild of Food Writers Award, First Book Award: The New Art of Cooking by Frankie Unsworth • Jhalak Prize: Built by Roma Agrawal Shortlistings of note: US • 2019 The Booker Prize: 10 Minutes, 38 Seconds in this Strange World by Elif Shafak (finalist) The Man Who Knew Everything by Deborah Levy (longlisted) • 2019 PEN America Literary Awards John Kenneth Galbraith Award for Nonfiction: One Person, No Vote by Carol Anderson • 2019 National Book Critics Circle Awards: Nonfiction: No Visible Bruises by Rachel Louise Snyder • 2019 LA Times Book Prize Art Seidenbaum Award for First Fiction: In West Mills by De’Shawn Charles Winslow • 2019 LA Times Book Prize Current Interest: No Visible Bruises by Rachel Louise Snyder • 2019 NAACP Image Awards Outstanding Literary Work Poetry: A Bound Woman Is a Dangerous Thing by DaMaris B. Hill Children’s Trade division Shortlistings of note: UK • An Post Irish Book Awards: Dept 51 @ Eason Teen & Young Adult Book of the Year: Toffee by Sarah Crossan • Books Are My Bag Readers Awards: Children’s Fiction: The Good Thieves by Katherine Rundell • An Post Irish Book Awards: Specsavers Children’s Book of the Year (Senior): The Lost Tide Warriors by Catherine Doyle • An Post Irish Book Awards: Dept 51 @ Eason Teen & Young Adult Book of the Year: The M Word by Brian Conaghan • An Post Irish Book Awards: Dept 51 @ Eason Teen & Young Adult Book of the Year: All The Invisible Things by Orlagh Collins • Goodreads Choice Award 2019: A Curse So Dark and Lonely by Brigid Kemmerer • Laugh Out Loud Book Awards 2020: Picture Book Baby’s First Bank Heist by Jim Whalley, illustrated by Stephen Collins • Laugh Out Loud Book Awards 2020: (9–13) I Swapped My Brother on the Internet by Jo Simmons, illustrated by Nathan Reed • Laugh Out Loud Book Awards 2020: (9–13) Kid Normal and the Rogue Heroes by Greg James and Chris Smith illustrated by Erica Salcedo Shortlistings for British Book Awards • Children’s Book of the Year: The Good Thieves by Katherine Rundell • Narrative Non Fiction Book of the Year: Three Women by Lisa Taddeo • Lifestyle Non Fiction Book of the Year: Dishoom: From Bombay with Love by Shamil Thakrar, Kavi Shakrar and Naved Nasir • Editor of the Year: Alexis Kirschbaum Shortlistings of note: USA • 2019 NAACP Image Awards Outstanding Literary Work Children: Ruby Finds a Worry by Tom Percival • 2020 Edgar Awards Young Adult: Wild and Crooked by Leah Thomas 34 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 34 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:51:55 PM 27040 11 June 2020 9:44 pm Proof 2 27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2STRATEGIC REPORTStock code: BMYAnnual Report and Accounts 202035Group functions supporting our publishing divisions Sales, Marketing and Sales OperationsKathleen Farrar is Managing Director – Group Sales and Marketing and joined Bloomsbury in 1998. She began her publishing career in Sydney, Australia, and has held various senior sales and marketing roles. Production Louise Cameron is Group Production Director. She joined Bloomsbury through the acquisition of Continuum International Publishing in 2011, having begun her career in publishing in 1988, and has held various senior production and editorial roles. Finance and TechnologyPenny Scott-Bayfield is Group Finance Director and is also responsible for technology and internal controls and risk management (see Board biographical details).Description of service to the Group• Provide sales and marketing services to the Group across print, ebooks, digital audio books and digital platforms.• Manage marketing budgets to maximise marketing spend return on investment across the Group. Deliver profitable sales across retail and wholesale channels.• Manage retail relationships including Group terms negotiations.• Manage Sales Operations function.Description of service to the Group• Cost-efficient on-time delivery of high-quality print and digital product for sale globally.• Devise, document and manage Production-editorial operations. Description of service to the Group• Provide finance and royalty administration services to the Group.• Provide information, communication and technology services to the Group, across back office and customer-facing systems.• Evaluate, implement and test internal controls in connection with effective risk management.Contribution to strategic aims• Manage Group sales and marketing campaigns and deliver global sales and marketing KPIs.• Provide professional and excellent author care across all divisions.• Maximise profits from all sales channels and regularly review pricing in print and digital to increase net revenue.• Manage print numbers with the Operations team to control stock expenditure.Contribution to strategic aims• Optimise margins through Group-based tender processes for pre-press, manufacturing and freight, and through efficient operations.• Provide framework for digital publishing strategy by drafting and managing XML-first workflows, with allied future proofing of content and IP storage.• Support global stock control initiatives with agile and flexible print models.Contribution to strategic aims• Financial reporting, forecasting and business partnering to drive delivery of results, efficiencies and support decision-making across Bloomsbury.• Provide exemplary author care through excellent royalty services.• Deliver digital platforms to grow digital revenues in line with Bloomsbury Digital Resource growth strategy.• Provide technology services across the Group to support business strategy and effective and efficient working.Read more about our strategy on pages 22 to 2427040-Bloomsbury-AR2020 - strategic.indd 3511-Jun-20 9:51:59 PM“Profit before tax increased by 10% to £13.2 million (2019: £12.0 million)” Penny Scott-Bayfield Group Finance Director Financial Review Revenue In 2020, Group revenues increased to £162.8 million (2018/2019: £162.7 million). Non-Consumer Division revenues grew by 4%, generated by 4% growth in both Academic & Professional, and Special Interest division sales. Academic & Professional revenue included the 32% growth in Bloomsbury Digital Resources (“BDR”). Total revenues in the Consumer Division were 3% below last year, with strong Adult division growth of 12% while Children’s was impacted by fewer key frontlist titles. In the second half, the Special Interest division took over the publishing part of our Content Services division, to generate further synergies following the successful restructure of the Special Interest division. Digital projects moved to the Academic & Professional division. Comparatives have been restated to reflect this. Revenues by territory Revenues sold overseas totalled £102.0 million, being 63% of total revenues. The chart on the right shows where Group revenues were generated for the year ended 29 February 2020. Revenues by type Digital sales grew by 16%, driven by growth in BDR revenues, up 32%, and in audio sales, up 190%, with ebook sales growth of 1%. Print sales reduced by 3% in the year, with increased Adult sales and resilient Non-Consumer sales offset by lower Children’s print revenues. Rights and services revenues increased by 12%, generated by strong sales of Consumer title rights. The chart on the right shows the proportion of Group revenue that each product type generates. Profit Profit before tax and highlighted items increased by 9% to £15.7 million (2018/2019: £14.4 million). Profit before tax increased by 10% to £13.2 million (2018/2019: £12.0 million). The increased profit was driven by the excellent performance of the Non-Consumer Division, with profit before taxation and highlighted items up 85% to £6.7 million. Within this, Academic & Professional profitability increased by 58%, including profit generated by BDR for the first year, an increase of £0.7 million, and Special Interest profitability increased by 227%. The operating profit margin increased year-on-year to 8.3% from 7.4%, with improved profitability and 0.2% from the impact of IFRS 16. The operating profit margin before highlighted items increased year-on-year to 9.8% from 8.8%, with 0.2% from the impact of IFRS 16. This was driven by the Academic & Professional performance. Administrative expenses, excluding highlighted items, were down by 2%. Highlighted items in the year were: the amortisation of acquired intangible assets of £1.7 million (2018/2019: £1.7 million), legal, other professional and restructuring costs relating to ongoing and completed acquisitions of £0.6 million (2018/2019: £0.6 million) and one-off costs relating to the coronavirus of £0.2 million (2018/2019: nil). Interest The net finance cost was £0.2 million (2018/2019: £0.1 million net finance income). The finance income of £0.3 million relates to bank interest and the unwinding of interest on long-term revenue contracts. The finance cost of £0.5 million predominantly relates to interest on lease liabilities. Taxation The tax charge of £2.7 million (2018/2019: £2.8 million) is a reported effective rate of tax of 20.6%, lower than the reported rate of 23.3% for the prior year. Excluding the effect of highlighted items, the effective tax rate for the Group was 19.0% (2018/2019: 21.4%). The lower tax rate this year is primarily due to the profit mix in overseas territories. 36 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 36 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:00 PM 27040 11 June 2020 9:44 pm Proof 2 Earnings per share Diluted earnings per share before highlighted items were up by 12% to 16.77 pence (2018/2019: 14.97 pence), as a result of the growth in profit. Diluted earnings per share after deducting highlighted items were up by 13% to 13.84 pence (2018/2019: 12.25 pence). Information on distributable reserves can be found on page 175. Information on the dividend can be found in the Chief Executive’s Review on page 12. New standards IFRS 16, Leases, was adopted during the year. At the transition date of 1 March 2019, the adoption of IFRS 16 resulted in the Group recognising right-of-use assets of £13.6 million and lease liabilities of £14.5 million. There is a reduction of £0.3 million for prepaid rental amounts now netted against the right-of-use assets and a reduction of £1.2 million to liabilities for deferred rent-free amounts netted against the right-of-use asset. Prior to the adoption of IFRS 16, rental payments were charged to the income statement on a straight-line basis. Under IFRS 16 rental costs in the income statement are replaced with depreciation on the right-to-use asset and interest charges on the lease liability. The adoption of IFRS 16 gives rise to a net £0.2 million charge in profit before tax for the year ended 29 February 2020. See note 2w of the financial statements for the impact assessment of the adoption of IFRS 16. STRATEGIC REPORT Cash Cash and cash equivalents were £31.3 million (2019: £27.6 million). Cash flow conversion in the year was 96% (2019: 128%). The net cash generated from operating activities, including the effect of highlighted items, was £16.6 million (2019: £15.0 million). This movement is due to a combination of increased profit and the impact of IFRS 16 classification changes (£2.0 million), offset by increased working capital. Cash used in investing activities was principally the cost of internally generated intangible assets such as product and system development as well as the acquisition of Oberon Book’s publishing rights (“Oberon”) and the investment in the joint venture; Beijing CYP & Gakken Education Development Co., Ltd. Cash used in financing activities mainly comprised dividend payments of £6.0 million (2019: £5.7 million). Revenues by territory n UK 64% n USA 26% n Australia 7% n India 3% Revenues by type n Print 79% n Digital 15% n Rights and Services 6% Capital structure Our balance sheet at 29 February 2020 is summarised in the table below: Goodwill and acquired intangible assets Internally generated intangible assets Investments Property, plant and equipment Net right-of-use assets and lease liability Net deferred tax assets Working capital Other non-current assets and liabilities Total net assets before net cash Net cash Total net assets 2020 £m 2019 £m 58.8 59.5 7.9 0.5 7.3 0.3 1.9 2.1 (1.2) 0.4 49.9 – – 45.9 0.2 1.0 118.4 116.1 27.6 149.7 143.7 31.3 Net assets per share were 199 pence (2019: 190 pence). The main movements on the balance sheet are in right-of-use assets, lease liabilities, working capital and cash. Right-of-use assets and lease liabilities have been recognised during the year on the adoption of IFRS 16. Working capital has increased due to strong sales at the end of the year, increasing trade debtors, and higher royalty advances. The increased profit, partly offset by increased working capital, has driven the £3.7 million improvement in net cash. Inventories increased by 4% to £27.2 million (2019: £26.1 million). On a like- for-like basis, excluding the effect of acquisitions (reduced by £0.2 million) and on a constant currency basis (reduced by £0.3 million), this increase was 2% or £0.6 million. Included in inventories, finished goods, on a like-for-like basis, excluding the effect of acquisitions (reduced by £0.1 million) and on a constant currency basis (reduced by £0.3 million), reduced by 1%. Trade and other liabilities increased by 2% to £61.8 million (2019: £60.6 million). Trade payables are up £3.0 million to £25.4 million (2019: £22.4 million) due to timing of title releases and printing. Accruals are £3.4 million lower than last year at £19.7 million (2019: £23.1 million) primarily as there is no management bonus payable for the year (2019: £2.3 million). 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 37 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:00 PM Stock code: BMY Annual Report and Accounts 2020 37 Financial Review generation. The Income Statement items that are excluded from adjusted profit measures are referred to as highlighted items. Alternative performance measures are used by the Board and management for planning and reporting, and have remained consistent with prior year. The Group’s definition of adjusted performance measures may not be comparable to other similarly titled measures that are used by other companies. A reconciliation of the adjusted profit measures to their corresponding statutory reported figures can be found on the face of the Income Statement in conjunction with note 4 and note 9 on Earnings Per Share. Both adjusted profit measures and highlighted items are presented together with statutory measures on the face of the Income Statement. Details of the charges and credits presented as highlighted items are set out in note 4 to the financial statements. The basis for treating these items as highlighted is as follows: Highlights £162.8m Revenue £15.7m Adjusted PBTA 16.77p Adjusted diluted EPS (pence per share) 12.2% ROCE Amortisation of acquired intangible assets Charges for amortisation of acquired intangible assets arise from the purchase consideration of a number of separate acquisitions. These acquisitions are strategic investment decisions that took place at different times over a number of years, and so the associated amortisation does not reflect current operational performance. Other highlighted items Other highlighted items are recorded in accordance with the Group’s policy set out in note 4 of the financial statements. They arise from one-off major initiatives such that in the opinion of the Directors; separate disclosure is helpful in understanding the underlying performance of the business that underpins long-term value generation. Examples include major restructuring initiatives or legal and professional fees arising from an acquisition. In the opinion of the Directors, separate disclosure is helpful in understanding the underlying performance and future profitability of the business. Tax related to highlighted items The elements of the overall Group tax charge relating to the above highlighted items are also treated as adjusting. These elements of the tax charge are calculated with reference to the specific tax treatment of each individual highlighted item. Return on capital employed Return on capital employed is calculated as profit before tax with other highlighted items and net finance costs added back, divided by average capital employed for the last two years. Capital employed is gross assets excluding cash and cash equivalents, deferred tax assets and current tax receivables less trade and other payables and lease liabilities. continued Liquidity The Group has an unsecured committed revolving credit facility with Lloyds Bank Plc. The facility comprises £8.0 million in the first half and an additional £4.0 million in the second half, totalling £12.0 million, to match Bloomsbury’s cashflow cycle. The facilities are subject to two covenants, being a maximum net debt to EBITDA ratio of 2.5x and a minimum interest cover of 4x. Post year end, the maturity of the loan facilities was extended from May 2021 to May 2022. The Group’s net cash position changes over the course of the year as a result of the seasonality of the business with the most significant expenses being the payment of royalties in March and September, and the most significant sale receipts being in February from Christmas sales. Acquisitions In December 2019, the Company acquired Oberon for £1.2 million, all of which was paid in cash at completion. For the year ended 29 February 2020, Oberon contributed £0.2 million of revenue to the Academic & Professional division. Also in December 2019, we entered the domestic Chinese market with Bloomsbury China, a new joint venture with China Youth Publishing Group (“CYPG”) and Roaring Lion Media (“RLM”). The investment is de minimis. Alternative performance measures The Board considers it helpful to provide performance measures that it uses to assess the operating performance of the Group. The Annual Report presents non-GAAP measures alongside the standard accounting terms prescribed by IFRS and the Companies Act, as the Board considers they would be beneficial to users. These measures exclude Income Statement items arising from significant non-cash charges and major one-off initiatives, which are highlighted in the Income Statement because, in the opinion of the Directors, separate disclosure is helpful in understanding the underlying performance of the business that underpins long-term value 38 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 38 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:01 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Cash conversion Cash conversion shows how well the Company is converting profit into cash. It is taken from the following GAAP measures: Cash generated from operating activities Settlement of pre-existing acquisition liabilities IFRS 16 presentation changes Adjusted cash generated from operating activities Less: Purchase of property, plant and equipment Less: Purchase of intangible assets Net cash generated Operating profit Cash conversion 2020 £m 18.3 0.1 (2.0) 16.4 (0.3) (3.1) 13.0 13.5 96% 2019 £m 17.5 1.2 – 18.7 (0.5) (2.9) 15.3 12.0 128% Constant currency measures Constant currency measures are disclosed in order to eliminate the effect of the movement in foreign exchange rates. Changes in exchange rates used to record non-sterling businesses result in a lack of comparability between periods since equivalent local currency amounts are recorded at different sterling amounts in different periods. Results using constant currencies are disclosed where they have a material impact on those numbers, enabling a better understanding of the underlying performance. We have therefore restated the current year revenue at the prior year exchange rates below. The currency adjustment is calculated by applying the monthly foreign exchange rates used in 2019 to convert the overseas revenue into sterling. This has been applied on a month-by-month basis to the 2020 revenue. This method allows better comparability given the seasonality of the business. Group revenue 2020 – reported Currency adjustment 2020 – currency adjusted 2019 – reported Group revenue 2020 – reported Currency adjustment 2020 – currency adjusted 2019 – reported Group operating profit before highlighted items 2020 – reported Currency adjustment 2020 – currency adjusted 2019 – reported Children's Trade £’000 59,354 (319) 59,035 65,800 Adult Trade £’000 37,416 (301) 37,115 33,454 Consumer £’000 Academic & Professional £’000 Special Interest £’000 Non- Consumer £’000 96,770 (620) 96,150 99,254 43,123 (283) 42,840 41,514 22,879 (83) 22,796 21,911 United Kingdom £0’000 North America £’000 104,440 – 104,440 100,959 42,415 (1,293) 41,122 45,846 Australia £’000 11,107 379 11,486 11,586 66,002 (366) 65,636 63,425 India £’000 4,810 (72) 4,738 4,288 Children's Trade £’000 Adult Trade £’000 Consumer £’000 Academic & Professional £’000 Special Interest £’000 Non- Consumer £’000 7,400 46 7,446 9,784 1,667 (40) 1,627 891 9,067 6 9,073 10,675 4,906 (54) 4,852 3,043 1,974 (25) 1,949 576 6,880 (79) 6,801 3,619 Total £’000 162,772 (986) 161,786 162,679 Total £’000 162,772 (986) 161,786 162,679 Total £’000 15,947 (73) 15,874 14,294 Where no reconciliation is provided above for alternative performance measures, sufficient information is included in the narrative to be able to perform a reconciliation. Penny Scott-Bayfield Group Finance Director Stock code: BMY Annual Report and Accounts 2020 39 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 39 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:01 PM Risk Factors and Risk Management The focus of Bloomsbury’s risk management process is on identifying, evaluating and managing risk, with the goal of supporting the Group in meeting its strategic and operational objectives. Further explanation of the Group’s risk management and internal control framework is provided in the Corporate Governance section on page 86, and is summarised below. Risk management: Risks facing the business are identified and assessed on a regular basis ← Internal control: Internal controls are designed and deployed to mitigate these risks to an accepted level ← Assurance: Assurance activities assess whether the controls are effective and risks are mitigated to an acceptable level in practice The Board ← Audit Committee ← Operational level Bloomsbury’s risk management framework is designed to provide the Board with oversight of the most significant risks faced by the Group. During the year, the Company implemented a new process to review, identify and monitor emerging and existing risks, assess the level of risk in each case and identify those risks that are considered to be significant to the Group. The rating of risks takes into account the likelihood of the risks happening and the potential financial and non-financial impacts they could have. Risks are rated twice: • The first rating is based on the potential exposure if nothing is done to manage or mitigate the risk, in order to assess the significance of the risk to the Group’s business and provide a baseline (“gross risk rating”); and • The second rating takes into account the mitigations and controls currently in place to manage the risk and/or the impact of the risk, and indicates the current status of the risk (“net risk rating”). This informs decisions about what additional action may be required to further mitigate the risk, according to the Company’s risk appetite. The most material risks are those which have a higher probability and which, if they were to occur, would have a material impact on the Company’s financial results, strategy, reputation or operations. These risks are classed as the Group’s principal risks. Outlined in the table starting on page 41 of this section of the Annual Report, and shown on the risk heat map on this page, are the principal risks that management have identified to the Group. These risks are included in the table on the basis of the gross risk rating described above; the actions taken in mitigation and the controls applied to manage these risks are described alongside each risk. The risk heat map illustrates the net risk ratings of these risk areas after mitigation and controls. The risk register is monitored and reviewed internally throughout the year. Not all the risks listed in the table starting on page 41 of this section of the Annual Report, are within management’s control and other factors besides those listed could also affect the Group. Actions being taken by management to mitigate risk factors should be considered in conjunction with the cautionary statement to Shareholders on page 73 of the Directors’ Report with regards to forward-looking statements. Details on financial risk management are given in note 25. The coronavirus pandemic, which has resulted in the imposition of Government lockdowns, restrictions and retail closures in all our key markets of the UK, USA, Australia and India, as well as many other important markets, is an ongoing risk which management and the Board actively continue to monitor. This is discussed further under the section headed “Market” in the table starting on page 41 of this section of the Annual Report. Principal risks The table starting on the next page provides a description of the risks that management considers significant for the Group’s business. Other risks besides those listed could also affect the Group and are monitored throughout the year. The relative net risk ratings of the principal risks (after mitigation and controls) are illustrated schematically in the following chart: d o o h i l e k L i Impact 1. Market 2. Importance of digital publishing 3. Acquisitions 4. Title acquisition (Consumer publishing) Information and technology systems 5. 6. Financial valuations Intellectual property 7. 8. Reliance on key counterparties 9. Talent management 10. Legal and compliance 11. Reputation During the year, the Company implemented a new process to identify and monitor emerging and existing risks, and to assess the level of risk in each case and the likely impact on the Group’s business should the risk occur, in order to identify those risks that are considered to be significant to the Group. The table on pages 41 to 44 summaries those risks which are considered significant, being risks which have a higher probability and which, if they were to occur, would have a material impact on our financial results, strategy, reputation or operations, together with the action taken, and controls implemented, by management to mitigate these risks. 40 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 40 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:01 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Key area Market Risk Description Mitigation A Market volatility: Impact of the coronavirus pandemic Sales of print books in the Group’s key markets are being impacted by the imposition of Government lockdowns, restrictions and retail closures. • Close monitoring of revenue streams and affected supply chains, with increased marketing and sales activities focused on unaffected retail channels such as online retailers, supermarkets and the Company’s own website Bloomsbury.com. • Increased focus on promoting digital book sales (ebooks and audio books) and BDR products (as academic institutional customers pivot to digital resources to support remote learning for students). Increased dependence on internet retailing • Grow expert marketing teams skilled in internet sales. • Engage with multiple internet retailers and support Growth of online retailers may impact on the discoverability of Bloomsbury titles and lead to a reduction in sales channels available to the Group. Sales of used books Sales of used books for academic purposes erode backlist sales. independent retailers. • Focus on promoting sales from the Company’s own website and on direct sales to customers. • Increase focus on developing other marketing opportunities and other revenue streams, e.g. Academic & Professional digital products, rights and services. • Digital subscriptions are offered to support B2B model by selling direct to institutions rather than to students. Rental of textbooks • Develop digital platforms to deliver, on a subscription Importance of digital publishing B basis, the content that readers demand. USA readers may license books from retailers for a limited period at a lower cost to buying books, with no revenues or royalty paid to the publisher. BDR revenues and profit • Develop a portfolio of high-quality online content Revenue and profit from BDR products and services may not grow in line with our stretching targets. Higher project and development costs may be required or incurred than were budgeted for, impacting profit. services in markets we understand well. • Use third party content and content partnerships to scale up projects quicker and create economies of scale. • Annual and monthly BDR budgets and reforecasts are monitored against BDR targets on a weekly basis. • The business case for each BDR product requires approval by the Group Finance Director and Managing Director of the Non-Consumer Division. Costs and profitability by project are tracked and reviewed against budget on a monthly and quarterly basis by senior management to identify any corrective action required. Any budget overspend requires approval of the Group Finance Director and Managing Director of the Non- Consumer Division. Unforeseen circumstances may delay development of new online content services. • Standardise the digital delivery platform to simplify and speed up the development and implementation of new digital content services. Reduced budgets for academic libraries and institutions may impact on revenue. • Adoption of flexible sales models where budgets for annual subscriptions are restricted. • Broaden the international institutional customer base so that the Company is not reliant on sales in specific territories. section headed “Market” in the table starting on page 41 of this section of the Annual Report. Principal risks The table starting on the next page provides a description of the risks that management considers significant for the Group’s business. Other risks besides those listed could also affect the Group and are monitored throughout the year. The relative net risk ratings of the principal risks (after mitigation and controls) are illustrated schematically in the following chart: d o o h i l e k i L Impact 1. Market 3. Acquisitions 2. Importance of digital publishing 4. Title acquisition (Consumer publishing) 5. Information and technology systems 6. Financial valuations 7. Intellectual property 8. Reliance on key counterparties 9. Talent management 10. Legal and compliance 11. Reputation During the year, the Company implemented a new process to identify and monitor emerging and existing risks, and to assess the level of risk in each case and the likely impact on the Group’s business should the risk occur, in order to identify those risks that are considered to be significant to the Group. The table on pages 41 to 44 summaries those risks which are considered significant, being risks which have a higher probability and which, if they were to occur, would have a material impact on our financial results, strategy, reputation or operations, together with the action taken, and controls implemented, by management to mitigate these risks. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 41 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:01 PM Stock code: BMY Annual Report and Accounts 2020 41 Risk Factors and Risk Management continued Key area Risk Description Mitigation Acquisitions M&A activity C Acquisitions could deliver lower than expected return on investment. Poor acquisitions may result in potential impairment charges. • Potential acquisition targets are assessed by the members of the Executive Committee. Thorough pre-acquisition due diligence is conducted by relevant functions, including finance, legal, publishing and sales. Capital allocation for acquisitions is determined at Group level and approved by the Board. Integration plans are developed at Divisional level and are implemented by a cross-functional team of experts, with Divisional oversight. • Regular reports are presented to the Board throughout the year on post-acquisition performance, including an assessment of any variation to the expected return on investment. Title acquisition (Consumer publishing) D Information and technology systems E Commercial viability • Advances over a certain limit are required to be Titles may be acquired that are not commercially or critically successful. Cybersecurity/malware attack Unauthorised access to the Company’s systems may result in fraud, data privacy breach, theft of intellectual property, inability to access, or damage to, vital systems and assets, thus causing financial and reputational damage to the Group. Inadequate internal access controls or security measures Inadequate controls over certain processes could lead to sensitive data being inadvertently revealed internally or externally. authorised by the Chief Executive and Group Finance Director. • Financial forecasts are prepared prior to acquisition to predict commercial success. • Focus on acquiring world rights where possible in order to increase sales opportunities and mitigate the risk posed by competing editions in open markets. • Clear responsibility for systems, restrictions on software installation, increasing use of the cloud, information back-up, monitoring security risks, internal control reviews of the systems and up-to-date anti-virus software are amongst the measures in place. • Training provided to all staff on cybersecurity risk. • Sensitive personal data is stored securely and protected with password controls or encryption. User access controls are embedded in the Company’s finance systems. Financial valuations F Judgemental valuation of assets and provisions • Consistent and evidence-based approach to assumptions. • Board approval of key assumptions. Significant assets and provisions in the balance sheet depend on judgemental assumptions, e.g. goodwill, advances, intangible rights, inventory and returns provisions. 42 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 42 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:02 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Key area Risk Description Mitigation Intellectual property G Erosion of copyright Erosion of traditional copyrights. • Continue policy of support for copyright and intellectual property rights as a fundamental facet of publishing. Erosion of territorial copyrights as a result of global internet retailing. • Continue to police infringements of the Group’s territorial copyrights and take appropriate action to enforce such rights. Open access. • Develop digital services that deliver mixed open access Infringement of Group IP by third parties Failure to adequately manage and protect the Group’s intellectual property rights (including trademarks and copyright) may damage the value of our core assets and impact on profits. Reliance on key counterparties H Failure of key counterparties or breakdown in key counterparty relationships Talent management I The failure of key counterparties could result in a significant disruption to the Company’s business activities, resulting in lower levels of trading and revenues. A breakdown in key commercial relationships could impact on future publishing opportunities. Failure to retain key talent and create the conditions in which the Group’s employees can thrive Loss of key talent could lead to loss of skill and knowledge from the business, result in decreased efficiency, impact on staff motivation and undermine external relationships. and proprietary content in the form that customers demand and will continue to pay for. • Adopt robust anti-piracy and procedures. • Undertake targeted enforcement action against third party infringers. • Ensure appropriate digital rights management protection of ebooks and digital formats. • Relationships with key counterparties are closely monitored and actively managed by senior managers. This includes frequent and regular engagement with key counterparties in order to ensure open communication and cooperation and to identify potential issues that may impact on the Company’s business at the earliest opportunity. Other mitigations include having appropriate contracts and service level agreements in place, and interrogating the business continuity plans of key counterparties. • Continued focus on employee development through training and mentoring programmes for early and mid- career employees. • Provision of executive coaching for senior staff. • Ongoing Employee Voice Programme, allowing every employee to have their voice heard directly by senior management and the Board. HR initiatives are implemented in response to matters raised during Employee Voice Meetings. • Formal appraisal system provides the opportunity to identify learning and development opportunities to support career progression and succession planning. • Formation of a Diversity and Inclusion Working Group and related Diversity and Inclusion networks. • Global staff turnover by Division and functional area is reported to the Executive Committee and monitored against agreed thresholds. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 43 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:02 PM Stock code: BMY Annual Report and Accounts 2020 43 Risk Factors and Risk Management continued Key area Risk Description Mitigation Legal and compliance J Breach of key contracts by the Company Breach of a key contract by the Company could result in a claim for damages and/or termination of the contract by the relevant counterparty, resulting in financial loss to the Group. Failure to comply with applicable regulations Failure to comply with regulations relating to the reporting of annual financial reports may lead to a range of sanctions including fines, imprisonment, reputational damage and delisting. Failure to comply with privacy regulations may result in significant fines and reputational damage. • Relevant individuals within the business who are engaged in activities which relate to or are governed by key contracts are made aware of the terms of such contracts. Legal advice is sought from the Group’s legal function where appropriate to ensure performance by the Company in accordance with contractual terms. • Annual Report and Accounts is reviewed internally by the Head of Group Finance and the Group Finance Director, and externally by the Group’s appointed Auditor. Material balances are tested in accordance with relevant standards. The Group Company Secretary advises on content requirements under relevant regulation/legislation. • Mitigation in respect of the risk of a data breach is noted above in connection with Information Technology and Systems. • Since the introduction of the General Data Protection Regulation ("GDPR"), which came into force in May 2018, the Company has implemented a range of measures to ensure compliance with the requirements of GDPR. These include the implementation of policies and guidance in key areas, the provision of training to employees, reviewing and updating the Company’s data collection methods and marketing communications, updating supplier terms and conditions, and updating privacy policies on the Company’s websites. The Company has appointed a Data Protection Officer to oversee GDPR compliance. Reputation K Investor confidence • Diversify the portfolio of products and services to City confidence undermined by events outside of the Company’s control, e.g. collapse of a retailer. reduce dependencies on individual customers, sales channels and markets. 44 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 44 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:02 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Changes during the year Acquisitions have been added as a principal risk as growth through acquisitions represents a key element of the Group’s strategy. Reliance on key counterparties has been added as a principal risk. The outbreak of the coronavirus pandemic has highlighted the potential risks to the Group associated with the failure of key counterparties and/or the disruption to services provided by such counterparties. Talent management has been added as a principal risk. The Group recognises that the success of its business is dependent on attracting and retaining appropriately skilled talent to deliver high quality and original products and services. Legal and compliance has been added as a principal risk in recognition of the potential impact of failing to perform in respect of key contractual arrangements, the failure to comply with regulatory requirements applicable to listed companies, and the failure to comply with increased regulation around data privacy. Brexit was added as a risk during 2018/2019 due to the uncertainty arising from the prolonged negotiation process for the UK’s departure from the EU. The Company has implemented measures and undertaken logistical planning to mitigate potential interruptions to its supply chain and operations that may arise as a result of the UK’s departure. As a result of such measures, Brexit is no longer considered a principal risk to the Group. Volatility of paper costs has been removed from the risk register as this is no longer considered a principal risk. Provision for production variances are factored into the Group’s budget at the beginning of each fiscal year. The Group’s contracts with its printers typically fix prices for printing work for a period of time, and include provisions to control the extent to which increases in the costs of paper may be passed on to the Group. As a result of these mitigating measures, this is considered to pose a moderate risk to the Group. Viability statement and going concern assessment Provision 31 of the 2018 UK Corporate Governance Code requires the Board to assess the viability of the Group over a period significantly longer than 12 months from the date the financial statements are approved. The Directors confirm that they have carried out a robust assessment of the principal and emerging risks facing the entity, including those that would threaten its business model, future performance, solvency or liquidity. The Group prepares five-year plans for each of the global publishing divisions and for the Group. As well as the existing backlist titles, the projections for the first three years of the plan are based on the future title, online platform and other income pipelines. There is inherently less certainty in years four and five. The Board therefore concludes that three years is an appropriate period for the viability statement. The Group’s principal risks (see pages 41 to 44) and its approach to managing them have been taken into account for the purposes of assessing viability, both in connection with the period covered by the viability statement and longer term. We have evaluated all the principal risks above and focused our sensitivity analysis on what the Board believes to be the key risks to viability: • Market volatility: including the impact of the coronavirus pandemic; • Increased dependence on internet retailing; and • Failure of key counterparties or breakdown in key counterparty relationships. We have developed plausible downside scenarios for each of these risk areas and quantified the impact on the Group’s revenue, profit and cashflows. All scenarios modelled significant impact on print revenues and delayed customer payments due to the coronavirus. The analysis took account of the Group’s current funding, forecast requirements and existing banking facilities. The severe but plausible downside scenario, including the impact of coronavirus, assumes: • Print revenues are reduced by 60%–65% for the three months of expected global coronavirus restrictions to July 2020 and gradual recovery through to March 2021; • Downside assumptions about extended debtor days to the end of 2021; and • Cost reduction measures already implemented. Under this severe but plausible downside scenario, the Group has sufficient liquidity to be able to manage these downside assumptions. Through this analysis, the Board concludes that the Group does not face a risk to longer-term viability except in the event of remote combinations of material events. The Board has a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements, being the period of the detailed going concern assessment reviewed by the Board, and therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements. The Board has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to 28 February 2023. Stock code: BMY Annual Report and Accounts 2020 45 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 45 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:02 PM 27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2Our literary heart and social purposeAt the heart of our business is a strong social purpose – to inform, educate and entertain, to inspire a love for reading and learning, to promote literacy and to help build a reading culture.Bloomsbury’s activities have a significant beneficial social impact globally through the publication of a diverse and inclusive range of titles from an international author base, and by providing access to a wide range of resources to support learning and research at different levels of the educational system.Through our publishing, we celebrate diversity and creativity, encourage dialogue and debate, champion free speech and human rights, and challenge the status quo; all fundamental aspects of a democratic and culturally rich society. Many of our books are in themselves a social good, driving change.In addition to the social purpose that guides Bloomsbury’s activities generally, the Board aims to take account of other social, environmental and ethical issues which may be relevant to Bloomsbury’s operations. Our communityOur publishing teams share a common passion for promoting the enjoyment of reading and high-quality literature that is often cutting edge and provides new authors with opportunities to establish themselves. Our Children’s Trade division is focused on promoting literacy for young readers of all abilities and ages, including specialist ranges for “Hi-Low” pupils (high age, low attainment), which provide parents and teachers with the tools needed to engage their children in reading.In addition to our direct commercial activities and with a focus mainly on promoting literature, literacy and education, we actively support numerous organisations worldwide including schools, universities, libraries and other good causes and charities. We also encourage the spare time involvement of staff worldwide in supporting good causes and in the promotion of literature, literacy and education. These voluntary activities by employees are often directly or indirectly assisted by the business and by Bloomsbury colleagues. The following examples illustrate the range of Bloomsbury’s support and support by its employees for good causes worldwide:Corporate donating• Bloomsbury has adopted the National Literacy Trust (“NLT”), a charity dedicated to giving disadvantaged children the literacy skills they need to succeed and to improving reading, writing, speaking and listening skills in the UK’s poorest communities, as its house charity. During the year, we made a donation of £10,000 to the NLT and we have been working with the NLT to support activities aimed at developing literacy in Hastings, one of the ten worst cities in the UK for adult and child working class literacy (more information about Bloomsbury’s support of the NLT is set out in the Charitable Partnerships section below). • In 2019, Bloomsbury published Dishoom: From Bombay with Love, written by the head chef and co-founders of the successful Dishoom restaurant chain, Shamil Thakrar, Naved Nasir and Kavi Thakrar. Inspired by Dishoom’s Meal for a Meal Initiative, Bloomsbury has donated a portion of its proceeds from book sales to Dishoom’s charity partners, Magic Breakfast (UK) and the Akshaya Patra Foundation (Mumbai), to help children in need by providing healthy breakfasts to the most vulnerable. To date, in New Delhi and London, our donations have enabled the provision of 31,689 breakfasts for homeless people, something we are extremely proud of. • In August 2018, Bloomsbury published Sea Prayer, a powerful book by Khaled Hosseini in response to the Syrian refugee crisis. By donating £1 per every copy sold to UNHCR – the UN refugee agency – Bloomsbury has, to date, raised over £100,000 in support of UNHCR’s activities caring for refugees around the world. • In June 2020, Bloomsbury made a donation of $10,000 to Black Lives Matter.• We support good causes that promote literacy and literature. We are a proud sponsor of, and partner with, World Book Day, the most important, inclusive reading initiative in the UK, established by UNESCO to promote reading amongst children and adults, Their mission is to give every child and young person a book of their own. In 2019, we published Bad Mermaids meet the Witches by Sibeal Pounder in support of World Book Day and in 2020, Kid Normal and the Loudest Library by Greg James and Chris Smith. During the year, we made a donation to the Waterstones Children’s Laureate in support of the 2019–2022 award. • Our US office has also provided sponsorship to a number of non-profit groups involved in the promotion of literacy, human rights and the freedom of expression, including PEN America, The Center for Fiction, the National Coalition Against Censorship, and Literacy Partners.• Our Australia office supports the Indigenous Literacy Foundation (the national charity of the Australian Book Industry, which aims to address the literacy gap arising in remote indigenous communities across Australia and reduce the disadvantage experienced by children in such communities across Australia) (“ILF”), with fundraising and time given for administrative support. During the year, Bloomsbury’s Australia office made a modest donation to ILF, to match funds donated by Bloomsbury employees.Nigel Newton speaking to Bloomsbury employees about Bloomsbury's social purpose at the Company Highlights eventwww.bloomsbury.com46Bloomsbury Publishing PlcCorporate Responsibility27040-Bloomsbury-AR2020 - strategic.indd 4611-Jun-20 9:52:03 PM27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2• Our US, UK and Australia offices donate, or provide at a reduced cost, a substantial quantity of books and games each year, which includes donations of mainstream titles to schools, libraries and organisations supporting education, e.g. our US office donated over 248,000 children’s books to the Soho Center that promotes quality childcare nationally with a special focus on children’s literacy, school readiness, and school success, and our UK office donated over 17,000 books to Book Aid International. Our Australia office has donated books to the Children’s Book Council of Australia and, in response to the Australian bushfires, donated books to go in care packs for children impacted by the bushfires, and for use in auctions and fundraising sales in aid of bushfire appeals. Other donations of books and Osprey games worldwide have been to good causes not related to literature and education such as Barnardo’s, Oxfam, the Red Cross, the Salvation Army and smaller organisations local to our offices worldwide.Charitable partnerships• Bloomsbury has entered into a three-year partnership with the NLT with the mission of supporting the NLT in its efforts to overcome literacy challenges facing the residents of Hastings – identified by Ofsted as one of the country’s worst performing boroughs, and by the NLT as one of the towns in the UK with the worst literacy rates. Bloomsbury’s annual financial support will help the NLT to deliver outreach activities via schools, community centres and food banks to help children and adults of Hastings who are most in need. In addition to financial support, Bloomsbury will provide access to the skills and expertise of its staff and authors to the NLT along with significant book gifting, competitions and promotional support. To date, our partnership with the NLT has involved an array of reading events based in the NLT’s Hub in Hastings, including town-wide reading moments, competitions and meet-and-greet sessions with Radio One celebrities and Kid Normal authors, Greg James and Chris Smith.Through our publishing we celebrate diversity and creativity, encourage dialogue and debate, champion free speech and human rights, and challenge the status quo; all fundamental aspects of a democratic and culturally rich society. • Our Children’s publishing division publishes books in partnership with three leading UK charities whose key focus is nature conservation and wildlife. They are the RSPB, Royal Botanic Gardens, Kew, and The Woodland Trust. These partnerships involve the publication of titles by Bloomsbury that support the activities of these charities, and embed their public mission statements into the commercial world of bookselling, reaching far beyond their membership pool with titles across all age groups from 3 years and above. We are experts at commissioning high profile authors with excellent credentials and, in many cases, who have empathy and links with these charities. Our longevity in sustaining these collaborations is evident in our relationship with the RSPB. It now spans nearly ten years, with sales of over 750,000 units and includes nearly 30 successful books that remain perennial favourites, reprinting year-on-year. A royalty is paid to the relevant charity for each book sold.• Bloomsbury also works closely with EmpathyLab, which is the first organisation to build children's empathy, literacy and social activism through a systematic use of high-quality literature. The strategy builds on new scientific evidence showing the power of reading to build real life empathy skills. Working closely with this charity and many of our authors, we ensure that children and the books they read support the teaching of empathy.• We sponsor achievement prizes for students within USA and UK universities, invite students to visit us for presentations on working in publishing and support careers fairs for students to promote publishing as a career.• Bloomsbury’s Chief Executive is President of Book Aid International that gifts approximately 500,000 books a year to libraries in Africa.• Jonathan Glasspool, one of Bloomsbury’s Executive Directors, is Senior Independent Governor at Bath Spa University, as well as Chair of Federation of British Artists. Both organisations have a substantial education remit in the creative arts. STRATEGIC REPORTStock code: BMYAnnual Report and Accounts 20204727040-Bloomsbury-AR2020 - strategic.indd 4711-Jun-20 9:52:14 PMCorporate Responsibility continued Patronus on a Postcard To celebrate the 20th anniversary of Harry Potter and the Prisoner of Azkaban by J. K. Rowling, Bloomsbury worked with BookTrust, the UK’s largest children’s reading charity, to challenge 26 artists to create original, postcard- sized masterpieces of Patronus animals, with all proceeds going to BookTrust. The auction proved a huge success with the original artworks receiving combined bids of over £12,000. Jim Kay's postcard-sized illustration of the stag Patronus Elizabeth Gilbert speaking about her book City of Girls at an event at the How to Academy Staff volunteering • A significant number of our employees worldwide, both through a Bloomsbury coordinator and privately, are involved in formal volunteer reading schemes and regularly attend schools in the UK and the USA. These provide supervised reading support to young readers, often from disadvantaged backgrounds where their opportunities to develop reading skills may be hindered. • Bloomsbury employees attend schools and colleges to give talks that have included on careers, such as in digital publishing and IT, and on reading skills required in the workplace. They have also assisted young people with interview practice, career mentoring and school magazines. They are unpaid public speakers at presentations, have published articles and hosted discussions on publishing topics and are volunteers for literary festivals and societies for young publishers. Bloomsbury employees also support primary schools, e.g. giving classroom talks on writing. • Many employees worldwide are involved in their local communities typically promoting literacy, literature and education, such as by sitting on committees, as governors of schools, by supporting special interest groups and as trustees and supporters of publishing industry and arts voluntary organisations. For example, one UK employee volunteers for a local charity and attends the local primary school to help young children with their reading. USA employees also support various organisations; one employee is a board member of the Children’s Book Council, and another is a mentor at a not-for-profit organisation connecting self-identified people of colour who are interested in publishing and literature to publishing professionals. An employee in our Australia office has, for many years, been a volunteer at ILF, mentioned in the Corporate Donating section, donating an hour each week at ILF’s head office to support ILF outreach initiatives and fundraising activities. • The main Board Directors commit significant spare time outside of work to book-related charities, not-for-profit organisations and higher education. Staff donating Bloomsbury employees worldwide often call on their colleagues for fundraising sponsorship such as with marathons, cake sales and many other employee- inspired activities. For example, an employee in the UK office ran the Brighton Marathon for Breast Cancer Care with a large proportion of the funds raised donated by Bloomsbury employees. A team also collected over 5,000 stamps for Macmillan Cancer Support as part of their stamp appeal. Bloomsbury also held a Christmas Crafternoon for Mind, the mental health charity. Our US office participates in food, coat and feminine hygiene product drives, and donates these to the homeless and vulnerable communities in New York City; and groups of employees arrange visits to charity centres at Christmas to sing carols. Promoting diversity amongst writers and illustrators In addition to promoting diversity within its own workforce, Bloomsbury is also active in promoting diversity amongst writers and illustrators. • Pathways Project: The Pathways Project specifically aims to increase the representation of underrepresented groups in Children’s illustration and Bloomsbury led the first week of workshops and mentoring for their first intake of 30 mentees in December 2019. • Spread the Word: Spread the Word kickstarts the careers of London’s best new writers, and energetically campaigns to ensure that publishing truly reflects the diversity of the city. They support the creative and professional development of writing talent by engaging those already interested in literature and those who will be, and by advocating on behalf of both. Four Bloomsbury editors spoke at a workshop on their London writes award programme. • Writing Squad: Writing Squad is a development programme for writers aged 16 to 21 living, working or studying in the north of England. Bloomsbury hosted a workshop and party for five new writers introducing them to publishing and to literary agents. 48 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 48 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:16 PM 27040 11 June 2020 9:44 pm Proof 2 Literary events for the community Bloomsbury’s public events series, The Bloomsbury Institute, produced 19 literary events during the year and welcomed over 1,000 writers, editors and publishers into Bloomsbury’s London offices for its talks, workshops and panel events with Bloomsbury authors. In 2019, it hosted collaborative events in partnership with London Horror Festival, BookMachine, the Publishing Training Centre and the London Library. The Bloomsbury Institute events are open to the public on a ticketed basis, and are free for Bloomsbury staff to attend. Our response to the coronavirus pandemic Bloomsbury has undertaken a number of initiatives to help support and inspire the community during the crisis: • Recognising that many people will be combining working from home and looking after children, we made our Bloomsbury Education online product Bloomsbury Early Years free to all. Whilst the activities are aimed at children aged up to five years old and tied into the curriculum in England for that age group (the “EYFS”), there is plenty of inspiration for children who are a bit older too. • We have given free online access to textbooks to support school and university students and instructors with remote learning, both through partnerships with Kortext, Vitalsource, BibliU, Redshelf and Classoos, and direct to customer. This also includes additional online resources and activities for home learning, including videos, lesson plans and teaching tools. • The National Theatre Collection on Bloomsbury’s online resource Drama Online was made available for free to pupils and teachers at UK state schools and state-funded further education colleges via remote access from home. Over 2,600 state schools and colleges signed up to the National Theatre Collection in the first two weeks of this offer going live to access these resources at home. Bloomsbury also extended the free trial period for academic institutions including universities, libraries and independent schools until the end of May 2020 to continue to support the educational community across the globe. • In response to the nearly immediate migration to online classes, Bloomsbury Digital Resources created an expanded access initiative to present Bloomsbury as part of a solution to the educational issues created by this unprecedented crisis. This initiative allows libraries to gain free access to all of our online resources so their faculty, staff, and students can take advantage of our rich trove of scholarly databases, ebooks, and historical archives during this time of rapid transition to digital learning, research, and teaching. In addition to extending gratis access, we have conducted outreach via email, social media, and other channels to our author base, library contacts, faculty, and many more to ensure that those with new access have the information they need about the features and tools to make best use of our resources. The response has been significant. Since 1 March 2020, Bloomsbury Digital Resources has set up 4,317 trials for 947 unique institutions. We will continue to build out our digital learning strategy as we focus on providing more solutions for a rapidly shifting academic landscape. • In April 2020, Katherine Rundell launched The Book of Hopes: Words and Pictures to Comfort, Inspire and Encourage Children in Lockdown with the support of Bloomsbury’s editorial and publicity teams. Curated by Katherine, this extraordinary collection has contributions from over 110 children’s writers and illustrators – “professional hunters of hope” – including Lauren Child, Frank Cottrell Boyce, Sophie Dahl, Emily Gravett, Anthony Horowitz, Greg James and Chris Smith, Catherine Johnson, Michael Morpurgo, Patrick Ness, Axel Scheffler, Danny Wallace, Jacqueline Wilson and of course, Katherine Rundell herself. Dedicated to “the doctors, nurses, carers, porters, cleaners and everyone currently working in hospitals“, The Book of Hopes is available to read for free in full on the NLT website. We intend to publish The Book of Hopes, a gift book based on the project, this autumn in support of NHS Charities Together. STRATEGIC REPORT Partnership with the NLT Since Bloomsbury’s partnership with the NLT began in July 2019, Bloomsbury has worked with the NLT to host events for the authors of the Kid Normal series, Greg James and Chris Smith, and an exclusive storytelling night in Hastings Library for Harry Potter Book Night. In 2020, we will support the NLT’s emergency appeal to help the people of Hastings avoid the worst impact of the global coronavirus pandemic. We are doing this by funding the Hastings Hub Facebook page and donating 25,000 books to children and adults in need. In April 2020, The Book of Hopes was launched by Katherine Rundell with the support of Bloomsbury's editorial and publicity teams, and is available to read for free in full on the NLT website. Bloomsbury will publish a gift book in autumn 2020 in support of NHS Charities Together. Members of the Publishing Training Centre attend an event hosted by the Bloomsbury Institute 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 49 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:17 PM Stock code: BMY Annual Report and Accounts 2020 49 27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 251 Employee Voice Meetings6 Active employee Diversity and Inclusion networksOur peopleBloomsbury is a people business, and the success of our business is in large part driven by the expertise, passion and commitment of our workforce. Our colleagues are a key asset of the business and our employment policies and practices are directed at creating a workplace that attracts, motivates, develops and retains high-calibre employees. Effective engagement with employees is an essential aspect of achieving this.Bloomsbury has in place a wide range of effective mechanisms to engage with employees. A key element of our engagement strategy is our Employee Voice Meeting (“EVM”) programme. This programme allows employees to have their voices heard directly by senior management and by the Board. EVMs are held routinely throughout the year, with a selection of employees from different levels across the Group being invited to attend scheduled meetings by rotation. These meetings provide every employee of Bloomsbury with the opportunity to share their views on Bloomsbury’s strategy, communications, training, compensation and benefits, and other matters of concern or interest to them with Bloomsbury’s senior management and the Board. Meetings are chaired by members of the Executive Committee on rotation, and Non-Executive Directors are also invited to attend these meetings. Employees are encouraged to share their honest views on the understanding that the matters discussed will not be attributed to particular individuals in the reports, which are provided to the other members of the Executive Committee or the Board on the outcomes of the meetings. The Executive Committee and the Board are provided at each of their respective meetings with the minutes of EVMs on an anonymous basis together with a list of the key themes arising out of EVMs. This form of engagement with employees across the Group enables senior management and the Directors of Bloomsbury to keep a finger on the pulse of the organisation and to gain Corporate ResponsibilityThe Bloomsbury London Book Fair team celebrate Nigel Newton's London Book Fair Lifetime Achievement AwardBloomsbury employees at the Company Highlights eventwww.bloomsbury.com50Bloomsbury Publishing Plccontinued27040-Bloomsbury-AR2020 - strategic.indd 5011-Jun-20 9:52:19 PMSTRATEGIC REPORT Employment policies and HR initiatives We promote a supportive and inclusive culture that fosters diversity and encourages professional development, active participation and the exchange of ideas. During the year, the Group continued to implement and develop a wide range of strategic HR initiatives directed at further promoting this culture and creating a rewarding and inclusive work environment and ongoing professional opportunities for colleagues, while also responding appropriately to matters raised during EVMs. These initiatives are reflected in the Group’s employment policies and practices set out on pages 52 to 53, which include: • The ongoing provision of a Management Development programme for all UK line managers across all departments within the business to support personal development, career progression and the ability to grow their leadership and management capabilities so that they are equipped to progress in their careers; • The operation of a Mentoring Scheme to enable employees in the business to succeed and develop in their roles with the help of a mentor; • The provision of executive coaching for employees in senior leadership positions; • Following the completion of a Diversity and Inclusion survey, the setting up of Diversity and Inclusion networks to address the priorities identified pursuant to that survey and support the activities of our Diversity and Inclusion Working Group; • The implementation of Core Hours (9.30 am to 4.00 pm) working in order to allow employees to choose a working pattern which suits them; • The implementation of Summer Hours to support more flexible working by enabling employees to finish work early on Fridays over the summer months; • The refinement of Bloomsbury’s formal appraisal programme to provide greater focus on identifying opportunities for career development; • The revision of the annual leave policy, to grant staff additional holiday in the period between Christmas and New Year, so that employees are no longer required to take this period from their personal annual holiday allowance; • The reduction of notice periods for entry level and early career roles, and the reduction of probationary periods for the same level of roles; • The provision of a global Employee Assistance Programme to support employee wellbeing and mental health. This service is provided by an independent company and provides all employees with free, confidential access to counselling and support for work issues and personal issues. Prospective apprentices from the London Apprenticeship Scheme attending a Career Kickstarter Day at Bloomsbury unfiltered feedback from employees on Bloomsbury’s strategy, communications, employee compensation and benefits, and approach to employee development, as well as employees’ views on the senior leadership team overall. The Board and the Executive Committee discuss and approve new policies based on the outcome of these meetings. EVMs also provide an effective means for the Board and senior management to monitor the Company’s culture in order to ensure that it aligns with the Company’s values and purpose, and continues to support the delivery of the Company’s strategy. Other mechanisms, in addition to EVMs, through which Bloomsbury engages with employees including: • Town Halls; • Employee networks and focus groups; • Weekly newsletters to all employees globally; • The Company’s bi-annual Highlights meeting; and • Monthly divisional meetings. Bloomsbury’s formal appraisal programme also provides the opportunity for colleagues to give and receive feedback on performance and discuss opportunities for career development. In response to the coronavirus pandemic and the transition to working from home by Bloomsbury’s workforce globally, we have significantly increased the frequency of communications with employees with the objective of providing clear guidance on measures being taken by Bloomsbury in response to the pandemic, and to provide assistance, support and reassurance to employees in the face of the challenges posed by the crisis. This has included regular communications from the Chief Executive to all staff, including by way of online Town Halls, daily updates from Bloomsbury’s Health & Safety Committee, the establishment of numerous online social networks to enable colleagues to connect with one another during the period of lockdown and social distancing, and the provision of access to private medical consultations over the telephone. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 51 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:20 PM Stock code: BMY Annual Report and Accounts 2020 51 Corporate Responsibility continued Key employment policies and practices Supported by territory heads of HR, the managing directors of the publishing divisions, the heads of each Group function and managing directors of regional offices have responsibility for the employment matters (including human rights) of their teams. The Chief Executive has overall Board-level responsibility for employment matters. For example, where employment matters have a Group-wide impact or cannot be resolved at a lower level in the business then they may be referred to the Chief Executive. Key features of the Group’s employment policies and practices are: Employment policy Description Employee engagement Employee development Performance and merit Through the EVM programme, Bloomsbury encourages employees to share their views with management and with each other on matters relating to employee interests and the conduct of Bloomsbury’s business overall. In turn, Bloomsbury provides a good degree of openness and transparency on its activities and performance through information provided to employees. Employees are kept updated by way of the engagement mechanisms outlined above on matters affecting them individually and relating to the performance of the Group as a whole, including information about ongoing HR initiatives, daily sales figures, book releases and related publicity, project achievements, corporate news and commentary from external media and other sources. Weekly and other regular team meetings and internal bi-annual conferences bring employees together from across the Group’s worldwide sites allowing colleagues to formally and informally share information about the business and develop strong working relationships. Bloomsbury is acquisitive and has benefited from an intake of high calibre entrepreneurs who support the Group’s capacity to innovate. The Group develops its management structure to serve the changing needs of the business. This creates opportunities for individuals to progress to increasing levels of seniority as they gain capabilities and expertise. Recruitment is supported by territorial Human Resources functions, enabling vacancies across our offices worldwide to be filled internally where employees of an appropriately high calibre seek new opportunities. Bloomsbury supports personal and professional development through a range of training programmes, one being the Management Development Programme. This programme is designed to promote personal growth and enhance leadership and relationship skills, and is specifically targeted at line managers. Our objective is to provide these individuals with the tools and training they need to achieve more in their existing roles and to advance through the organisation if their achievements merit it. Our Mentoring Scheme provides support and development to employees who choose to participate by sharing the wealth of knowledge and experience that the Bloomsbury workforce has to offer, along with opportunities to connect with colleagues across departments and divisions. The Scheme enables the mentee to tap into the existing knowledge, skills and experience of their mentors, and enhance these areas for themselves to aid their own career development. Senior employees agree personal objectives and are rewarded based on performance determined by the Group’s results and the achievement of such objectives. Senior managers are accountable for the performance of their teams and determine the most appropriate approach to performance management for each team. All employees participate in Bloomsbury’s formal annual appraisal process which serves as mechanism for managing performance and identifying opportunities for career development. Promotions and external recruitment are based on merit and ensure that the most suitable person is selected for each position. Employee participation in share schemes The Group offers UK employees the opportunity to participate in an all-employee HM Revenue & Customs approved Sharesave scheme to encourage employee participation in the performance and growth of the Group. High performing senior managers may also be eligible to participate in the Company’s Long Term Incentive Plan. Flexible working We encourage family-friendly working practices such as flexible working hours and recognise that experienced employees returning to work following maternity, paternity or other career breaks are an asset. Our Core Hours Working policy encourages and supports flexible working by allowing employees to choose a working pattern which suits them. The Summer Hours policy also enables employees to finish work early on Fridays over the summer months. 52 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 52 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:21 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Employment policy Description Health and wellbeing The global Employee Assistance Programme is available to support employee wellbeing and mental health. This service is provided by an independent company and provides all employees with free, confidential access to counselling and support for work issues and personal issues. In addition, employees have access to an on-site massage therapist and to free consultations with a private GP. Social and literary events Human rights Ethical behaviour Equality of opportunity Bloomsbury’s public events series, The Bloomsbury Institute, is open to all staff and provides the opportunity for Bloomsbury employees to meet the authors we publish. In addition, Bloomsbury runs an internal “Lunches Live” catered events series for employees, which feature the authors of Bloomsbury’s forthcoming publications in conversation with their editor. Bloomsbury’s Social Committee organises informal social events to connect staff from across the Company. Bloomsbury is committed to meeting its responsibility to respect human rights. The regional Human Resources managers monitor for human rights issues and ensure any remedial action that is needed is taken promptly. Bloomsbury is committed to complying with employment and other legislation applicable to the locations in which it employs people, ensuring the human rights of individuals are protected. Bloomsbury’s Modern Slavery and Human Trafficking Statement can be found on our investor relations website www.bloomsbury-ir.co.uk. We expect employees, Directors, and subcontractors to behave ethically in their work relationships and dealings with third parties on behalf of Bloomsbury. Compliance with ethical behaviour Group policies such as for anti-bribery and corruption, dealing in Bloomsbury shares and modern slavery and human trafficking is an employment term of Group employment contracts. Bloomsbury’s Whistleblower policy enables employees, other categories of workers and third parties to have any concerns relating to the Group confidentially addressed. Details of these policies can be found at www.bloomsbury-ir.co.uk. Bloomsbury has a diverse workforce and follows a policy that no employee or other person receives more or less favourable treatment on the grounds of gender, sexual orientation, colour, race and ethnic origin, nationality, religion, disability or age. The Human Resources function monitors compliance with the policy and with applicable legislative requirements to ensure the equality of opportunity in the recruitment, selection and promotion of employees. Grievance and disciplinary procedures protect employees from discriminatory behaviours and attitudes. Further information on our approach to diversity and inclusion is set out below under the heading Diversity. Disabled persons Group policy is to offer equal treatment in respect of the recruitment, training, career development and promotion of disabled persons. Should people become disabled during the course of their employment, the Group will seek to retain their services and to provide retraining where necessary. Employment KPIs The senior management team monitors staff-related KPIs (e.g. joiners and leavers) on an ongoing basis in order to assess the effectiveness of the Group’s policies and practices in attracting and retaining talent. Health and safety Bloomsbury’s Facilities Manager reports to the Chief Executive in respect of Health and Safety (“H&S”) and heads an H&S team that ensures compliance with the Company’s H&S policy. At least annually, the Board and the senior management team review H&S including risks assessments, developments and incident reports. The H&S team works closely with management and employees to ensure that the H&S policy is effectively communicated, implemented and maintained across the business. Managers of the worldwide sites are accountable for ensuring their areas of the business are in compliance with H&S policy. The Group maintains H&S risk assessments and accident books for all its locations worldwide (including where there is no local legal requirement to do so) and staff are encouraged to report all accidents or near misses. During the year, there were no serious injuries, fatalities or reportable incidents. Accidents have typically included infrequent bumps and scalds from hot drinks associated with the office environment. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 53 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:21 PM Stock code: BMY Annual Report and Accounts 2020 53 Corporate Responsibility continued Diversity We have a diverse workforce and management team led by a gender diverse Board. The majority of senior managers and employees worldwide in the Group are women. As at 29 February 2020 the number of employees by each gender is: In line with UK regulations, Bloomsbury has provided information on its gender pay gap in the UK (see www.bloomsbury-ir.co.uk). We have benchmarked our Gender Pay Gap against the publishing industry and will continue to identify best practices that can reduce the pay gap. All employees of the Group1 n Female 499 (69%) n Male 223 (31%) Senior managers of the Group2 n Female 5 n Male 2 Directors of the Group Parent Company n Female 2 n Male 5 1 Excludes workers who are freelance consultants and temps. 2 Includes the heads of publishing divisions, Group functions and country heads who are not Executive Directors on the parent Company Board. We recognise that attracting talented people from all walks of life enriches our business and performance and the lives of our employees. Diversity and inclusion is essential to our productivity, creativity and innovation, and to creating an environment in which our employees feel able to do their best work. A Diversity and Inclusion Working Group was established during 2019 with the aim of fostering a working environment that is welcoming and supportive of differences and individual wellbeing, while at the same time promoting an inclusive culture in which our workforce feels connected by a common purpose and shared values. During the year, the Company asked all UK staff to participate in a Diversity and Inclusion survey in order to gain a better understanding of the demographics of our workforce and identify areas of priority for the Diversity and Inclusion Working Group to address. Some of the actions we have taken in response to the survey and to promote diversity within Bloomsbury (as well as to support increased diversity within the wider publishing ecosystem) are as follows: • Six support networks have been established (BAME, Carers, Disabled, LGBTQ+, Parents/Guardians and Mental Health) to promote an inclusive and supportive culture within Bloomsbury. These networks also complement the activities of the Diversity and Inclusion Working Group by providing valuable feedback and helping to set priorities for future action; • A Diversity and Inclusion Policy to formalise the Company’s approach towards diversity and inclusion has been approved by the Board and adopted; • Employees will be provided with ongoing training in unconscious bias, equality and diversity to reinforce Bloomsbury’s culture of equal treatment of all employees; • Working with the Publishers’ Association and LDN Apprenticeships, Bloomsbury helped to establish the country’s first Publishing Assistant Apprenticeship programme. This scheme places young candidates from lower socio-economic backgrounds into publishing houses for a year of continuous learning through work experience and individual study modules, and leads to the award of a Level 3 Publishing Assistant Apprenticeship Standard accredited by AIM Awards. It launched in October 2019, when Bloomsbury welcomed two apprentices to the Academic Production department. Bloomsbury continues to sit on the programme’s Advisory Board; and • On an ongoing basis, Bloomsbury partners with Creative Access – an organisation dedicated to recruiting under-represented talent into the creative industries – not only to attract and hire promising candidates into entry-level and early-career roles, but to build their careers through training and awareness programmes for the employee and employer. The Board, supported by the Nomination Committee, oversees the diversity and inclusion initiatives across the Group and is committed to developing a strong and diverse talent pipeline in connection with effective succession planning. The Board receives regular updates on strategic HR initiatives across the Group with a view to ensuring that the strategies in place are effective in promoting a culture that upholds Bloomsbury’s principles of inclusion, diversity and equality. 54 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 54 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:21 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT The environment Bloomsbury is mindful of its relationship with the environment and takes its environmental responsibilities seriously. We aim to reduce the environmental impact of our business wherever possible. The Executive Committee of Bloomsbury, led by the Chief Executive, have overall responsibility for the development of Bloomsbury’s environmental policy and the Company’s approach to sustainability. During 2019/2020, we established a Sustainability Working Group to expand the Group’s activities in respect of environmental performance. The Working Group’s focus is to consider ways in which we can improve our environmental footprint by becoming more energy efficient and developing sustainable working practices. The Working Group has created three sub-groups in order to action change where appropriate both within Bloomsbury and in collaboration with our business partners (The Individual, The Corporate and The Collaborative). The Sustainability Working Group reports to the Executive Committee, which considers and, where appropriate, approves action aimed at reducing our impact on the environment. Our direct operations are predominantly office-based and are considered to have a relatively low impact on the environment. The impact on the environment of our business predominantly arises from the activities the Group subcontracts to its suppliers including the printing, production, distribution, recycling and disposal of printed books. The Group’s consumption of natural resources, although relatively minor, is significantly impacted by ambient weather conditions beyond our control and by the buildings we lease. Lights are generally fitted with motion detectors and our office policy is to turn off lights and non-essential electrical equipment out of hours when not in use. We only use energy-efficient light bulbs and we are rolling out a programme to upgrade these to LED lamps where possible. We use 100% recyclable cardboard packaging for our shipments from our offices and do not purchase any plastic packaging. We supply point of use drinking water and do not supply plastic or paper cups. We are ESOS compliant and have recently taken advice from Energy Team (UK), who carried out phase two of our ESOS compliance. We continue to consider and apply their recommendations to reduce our carbon footprint. We have previously taken advice from the Carbon Trust and continue to apply their recommendations to reduce our carbon footprint. For example, the roll-out of LED lamps to replace energy-efficient lamps, ensuring heating systems are regularly maintained and programmed efficiently, and turning off unnecessary electrical equipment out of hours, amongst other measures. The key areas where we are active in reducing the direct and indirect environmental impact of the business include: Print-on-demand Changes in technology and the print supplier base are increasingly making it economic to print books at the time and in the quantity needed for sale and/or in direct response to market demand. This reduces the CO2 generated by pulping, recycling and transporting unsold books. Online publishing and e-formats Our strategy embraces digital publishing and the potential benefits this may bring to the environment. Our focus on digital formats and products allows millions of students to access essential resources without using paper, and enables consumers to purchase Bloomsbury titles in ebook and audio book formats should they wish to avoid the consumption of paper products. Book manufacture We are committed to reducing the environmental impact of our products and to controlling the materials used to produce them. To that end, we work only with Forestry Stewardship Council (“FSC”) and the Programme for the Endorsement of Forest Certification (“PEFC”) accredited suppliers, and we use FSC materials for over 90% of the Group’s output. Where FSC-accredited materials are not available we specify alternatives from known and reputable sources. We make regular trips to suppliers’ factories to monitor their recycling and other locally relevant environmental initiatives. Building and office facilities Most of our employees travel to work by public transport and we support part-time and homeworking. We provide bicycle storage for staff who ride to work. For most employees we have implemented separate recycling bins for different waste materials so that a significant proportion of our office waste is recycled. Paper and cardboard collection points are provided in every room and next to every photocopier. All general waste is disposed of in clear sacks for sorting at the relevant recycling centre. Stock code: BMY Annual Report and Accounts 2020 55 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 55 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:22 PM Corporate Responsibility continued Greenhouse gases, waste generation and water consumption We report on our greenhouse gas emissions as required by the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013. We also report on our greenhouse gas emissions, waste production and water consumption in alignment with the 2006 Government Guidelines; Environmental Key Performance Indicators: Reporting Guidelines for UK Businesses. In respect of greenhouse gases, we report in respect of stationary fuel use (onsite consumption of natural gas and diesel), vehicle fuel use, refrigerant use and electricity use in kWh, converted to CO2e following the protocols provided by the Department for Environment, Food and Rural affairs (“DEFRA”). Emissions have been categorised against the Greenhouse Gas Protocol scopes of reporting. The analysis of the Group’s Scope 1 and Scope 2 emissions, together with waste production and water consumption, is performed by an independent external adviser, Trucost, based on data we have provided, including utility bills, vehicle fuel data, and expenditure on business travel. This information is unaudited and is shown in the tables below and on page 57 of this section of the Annual Report. Environmental performance During the year, there was a decrease (in absolute tonnes CO2e) in emissions from stationary fuel use (-6%), a decrease in emissions from vehicle fuel use (-39%), a decrease in location-based emissions from electricity use (-7%), and a decrease in water consumption (-41%) as compared to the previous reporting period. However, during the year there was an increase in total Scope 1 Greenhouse gas emissions and waste production in comparison with the preceding year. Analysis of the reasons for this increase indicates that it arose from the following factors: • The inclusion for the first time of refrigerants in reporting for Bloomsbury’s US office. This data was not previously available; and • A significant office move involving the relocation of a large number of employees from Bloomsbury’s main London office to newly occupied premises, and the vacating of a second London office upon termination of the lease, generating an increased volume of waste in the form of furniture, office materials, packaging and other waste. Greenhouse Gas Emissions: Scope 1 Quantity Absolute tonnes CO2e Normalised tonnes CO2e per £m revenue 2019/2020 2018/2019 2019/2020 2018/2019 43 46 0.3 0.3 Greenhouse gases Definition Data source and calculation methods Scope 1 direct impacts Stationary fuel use Emissions from natural gas and diesel consumption in utility boilers. Annual consumption in kWh collected from fuel bills, converted according to DEFRA guidelines for the London office (Headquarters). Data scaled up by number of employees to estimate emissions for Alton, Haywards Heath, Dublin and Edinburgh serviced offices. Natural gas was not used in US, India and Australia offices. This year, India office has diesel consumption in utility boilers and US office has fuel oil consumption. A new office at Bath is added this year for analysis whereas office at Salem Road was closed by middle of last year. Refrigerants Company cars Emissions from refrigerant leakage. Emissions from petrol and diesel consumption. Refrigerant R410A used in US office in 2019/2020 financial year. 49 01 0.3 0.0 Annual consumption in litres calculated from fuel bills for the UK and India. Converted according to DEFRA guidelines. There are no company cars in Australia and the US offices. 22 35 0.1 0.2 Total Scope 1 114 81 0.7 0.5 1 Refrigerant used in the USA was not tracked previously 56 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 56 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:22 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Greenhouse Gas Emissions: Scope 2 Greenhouse gases Scope 2 Impacts Definition Data source and calculation methods Electricity use – location-based emissions Greenhouse gas emissions resulting from electricity purchased. Annual consumption of directly purchased electricity in kWh collected for the London, Alton, Haywards Heath, Oxford, Salem Road, US, Australia and India offices. Data scaled up by the number of employees to estimate emissions for the operations in the rest of UK offices. kWh data converted to emissions according to DEFRA, EPA and IEA guidelines. Electricity use – market-based emissions Market-based emission for purchased electricity. Calculated by using purchased electricity data in kWh and residual mixes for UK and US. For India and Australia, average grid emission factors are used from IEA as no residual emissions are yet determined by Governments in these countries. Quantity Absolute tonnes CO2e Normalised tonnes CO2e per £m revenue 2019/2020 2018/2019 2019/2020 2018/2019 291 314 1.8 1.9 366 382 2.2 2.4 Total Scope 2 291 314 1.8 1.9 Other environmental indicators Water Definition Data source and calculation methods Water consumption Directly purchased water Annual volume of water purchased provided for London, Oxford and India offices. Disclosed UK data was scaled up using number of employees to estimate water consumption in the rest of UK, US and Australia offices. 1 This decrease may be due in part to a change in calculation methods from the preceding year Quantity Normalised cubic Absolute cubic metres metres per £m turnover 2019/2020 2018/2019 2019/2020 2018/2019 4,2551 7,196 26 44 Waste Definition Data source and calculation methods 2019/2020 2018/2019 2019/2020 2018/2019 Quantity Absolute tonnes Normalised tonnes per £m turnover Landfill General office waste (which includes a mixture of paper, card, wood, plastics and metals) sent to landfill sites Annual quantity of waste generated in London offices, Oxford, India and Australia are provided. UK disclosed data scaled up to estimate quantity for operations in the rest of UK and US offices. 76.58 74.99 0.47 0.46 Recycled General office waste sent to recycling facilities Annual quantity of waste generated in London offices, Oxford, India and Australia are provided. UK disclosed data scaled up to estimate quantity for operations in the rest of UK and US offices. 98.71 57.96 0.61 0.36 Stock code: BMY Annual Report and Accounts 2020 57 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 57 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:22 PM Corporate Responsibility continued Engagement with stakeholders We believe that effective engagement with out key stakeholders, and consideration of their interests, is an essential aspect of our ability to achieve our mission and purpose, and ensuring Bloomsbury's continued success. A summary of the ways in which we engage with key stakeholders and consider their interests in conducting our business is set out below. Shareholders Why they matter Our Shareholders provide capital, including for growth, while providing challenge and feedback on our business model and strategic plans. We rely on their confidence, support and investment to deliver our strategy and Bloomsbury’s long-term sustainable success. What matters to them • Long-term value creation through a mix of capital appreciation and dividends; • Timely and relevant information on performance against expectations; • Dividend Policy; • Remuneration Policy; • Strategy for future growth; and • Opportunities for engagement with management. Shareholders Customers – Wholesale and Retail Ways we engage Our Executive Directors maintain an investor relations annual plan, which includes: • Presentations given to Shareholders upon the release of annual or interim results; • Meetings with current and prospective Shareholders following annual and interim results; • Feedback from institutional and private client brokers following investor engagement; and • Reporting to the Board on investor matters and investor feedback. The Chairman offers meetings with our top ten Shareholders twice a year. The Company’s Annual Report and Accounts provides information about the Company’s performance and governance. Key information and investor presentations are published on the Company’s investor relations website (www.bloomsbury-ir.com). The Company’s Annual General Meeting (“AGM”) provides a forum for all Shareholders to address questions to the Board and vote on key resolutions. In 2019, Shareholders with a holding over 1% were consulted in respect of proposed revisions to the Company’s Remuneration Policy, which will be put to Shareholders for approval at the 2020 AGM. How we consider the interests of our stakeholders The Board is kept informed of all feedback received as part of Shareholder meetings and consultations. Shareholder feedback on Bloomsbury’s strategy and performance has been positive; this has affirmed Bloomsbury’s commitment to its current strategy and areas of focus. See the Strategic Report on pages 10 to 17, which explains the Company’s performance and investment decisions during 2019/2020. The Board recognises that Bloomsbury has a broad range of investors and aims to deliver long-term sustainable value while recognising their diverse interests (e.g. capital appreciation vs divided earnings). The Board considers these diverse interests in approving annual budgets and longer-term strategic planning. Shareholder feedback on the proposed revisions to the Company’s Remuneration Policy have been taken into account and reflected in the Policy, which will be put to Shareholders for approval at the 2020 AGM. Feedback received from Shareholders in response to the Annual Report and Accounts, and at the Company’s AGM in respect of matters relating to governance, are taken into consideration by the Board in deciding whether any revisions to its corporate framework are required. 58 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 58 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:22 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT How we consider the interests of our stakeholders Topics raised during the engagement process vary from author to author. A key topic of engagement in respect of new acquisitions will be terms, including the scope of rights granted and royalties payable. Other topics of engagement include the quality of editorial work, jacket design, marketing and publicity campaigns and sales activities. These are considered and responded to on a case by case basis. Author surveys have yielded a consistently high level of scores. The Board is provided with survey results for consideration and to identify ways in which author satisfaction can be improved or enhanced. Authors Corporate Customers Authors and illustrators Why they matter Authors are the lifeblood of our Company. What matters to them • Publication of the author’s works to a high and consistent standard, in line with the author’s vision for the work; • Effective sales and marketing representation in relevant markets; • Appropriate compensation; • Timely and relevant information on the publication process and sales and marketing strategy for their works; and • For academic authors, to maximise their impact on the scholarly community, secure tenure and promotion at academic institutions, secure research funding and enhance their professional reputation. Ways we engage Supporting authors in realising their best works and ensuring that their works are brought to market successfully requires close collaboration throughout the entire publishing process, from editorial and design, to sales and marketing, to production and distribution. Frequent and ongoing engagement with authors and/or their literary agents enables us to help authors achieve their vision and to address any concerns they may have during the publishing process. In respect of academic publications, monthly production surveys and post-publication editorial surveys are conducted with authors in order to monitor author satisfaction and address any issues identified. Authors are also provided with a review and marketing update three months following publication of their works, so that they are kept informed of relevant marketing activities. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 59 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:22 PM Stock code: BMY Annual Report and Accounts 2020 59 Corporate Responsibility continued Engagement with stakeholders Shareholders Employees Suppliers Customers – Academic and Educational Institutions Society (including community and the environment) How we consider the interests of our stakeholders Significant issues arising out of engagement with key suppliers were reported to the Board for consideration, including engagement over commercial terms. Various supplier reporting processes have been strengthened, including in respect of credit risk, bad debt and retail customer charges and returns. Factors impacting on the provision of services (such as internal restructuring by print supplier or restrictions on storage space) were taken into account by Bloomsbury in placing work with relevant suppliers. The Board is committed to high standards of ethical business conduct. The policies and procedures relevant to business conduct are available to all employees and are incorporated by reference into our contracts with suppliers. Employees Why they matter Our employees are key to delivering Bloomsbury’s purpose and strategy, and are the driving force behind Bloomsbury’s sustainable success. What matters to them • Recognition and fair remuneration; • Career development and progression; • To work in a stimulating, positive, ethical and inclusive environment for a business with a strong social purpose; • To have a voice in Bloomsbury’s business; Suppliers Why they matter Building strong relationships with our suppliers enables us to obtain the best value and quality of service. We rely on our suppliers to provide specialist services, which enable us to bring our publications and products to market. We wish to work with suppliers who understand our priorities and will adhere to our way of working and to our values. What matters to them • Shared success; • Appropriate compensation for services provided; • Prompt payment; • Predictable workloads; • Engagement with management; • Provision of timely information and • The long-term health of the business. Ways we engage Information about the ways we engage with our employees is set out on pages 50 to 53 of the Strategic Report. How we consider the interests of our stakeholders Information about how we consider the interests of our employees and the outcome of our engagement is set out on pages 50 to 53 of the Strategic Report. required to manage service provision; • Clear processes; and • Impact of legislative or regulatory changes which may impact on service provision. Ways we engage Engagement with key suppliers is ongoing and frequent, and is managed by the Heads of the relevant functional divisions. Regular formal meetings as well as day- to-day engagement ensure close collaboration and the effective flow of information required for the successful and timely provision of services. In the case of printers, this includes the successful delivery of finished stock according to Bloomsbury’s publication schedules. In the case of Bloomsbury’s distributors, this includes the ability to meet customer demand and expectations, exercise effective credit control, and appropriately manage stock levels. 60 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 60 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:23 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Customers – Wholesale and Retail Customers – wholesale and retail Ways we engage Why they matter Senior management meets with key Wholesalers and retailers are customers at relevant book fairs. Bloomsbury’s primary route to market. Bloomsbury’s sales team meets regularly with customers, to discuss forthcoming titles and publishing programmes. Sell-ins to customers occur on a monthly, quarterly or annual basis, depending on the customer. Our sales and marketing teams liaise with key retailers on an ongoing basis on a range of matters with a view to maximising sales. Collaboration with such parties is an important aspect of ensuring a work is published successfully. Regular engagement with key customers builds trust and nurtures long-term relationships, which in turn encourages support for Bloomsbury titles. Wholesale and retail customers provide valuable insight into consumer trends and advice on optimum release dates in order to maximise sales. What matters to them • Maximising sales; • Maximising revenue and margins; • Ensuring a level playing field across wholesalers and retailers; • Reliability of publishing schedules; • Timely delivery of stock; and • Promotional support. How we consider the interests of our stakeholders Key topics of engagement included: • Commercial terms; • Sales activity and sales trends; • Matters relevant to maximising the success of particular titles, including cover designs, publication dates, marketing plans and retailer promotions; • Promotional support for individual titles; and • Logistical issues. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 61 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:23 PM Stock code: BMY Annual Report and Accounts 2020 61 Corporate Responsibility continued Engagement with stakeholders Customers – Academic and Educational Institutions Customers – academic and educational institutions, corporate customers Why they matter Academic and educational institutions and professional organisations are becoming increasingly important customers in respect of Bloomsbury’s digital products, and consequently for the delivery of our long-term strategy of focusing on digital opportunities to grow our business. Ways we engage Bloomsbury has in place a range of engagement mechanisms to ensure we understand the priorities of these customers. These include: • Regular site visits by our sales team to academic libraries; What matters to them • Access to high quality, relevant and comprehensive content to support academic courses and research, and in the case of professional organisations, the activities of their employees or members; • Applying funding to deliver the best value to their own stakeholders; and • To ensure a swift, accurate and cost- effective way to purchase and access relevant products. • Direct meetings with a wide range of senior academics and university staff to understand their requirements; • Attendance of publishing directors and sales team at principal library conferences and professional organisation annual membership events; and • Regular surveys of student, faculty and library users in respect of all aspects of Bloomsbury’s publishing and, in particular, in respect of new products. How we consider the interests of our stakeholders Feedback from our customers and their stakeholders informs: • How Bloomsbury develops new and existing products; and • Product pricing the various sales models Bloomsbury offers (subscription vs perpetual access sales, short-term loans, evidence or usage-based sales). In response to feedback from librarians, we are developing user case studies to support librarians’ internal- facing activities. 62 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - strategic.indd 62 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:23 PM 27040 11 June 2020 9:44 pm Proof 2 STRATEGIC REPORT Society (including community and the environment) Society (including community and the environment) Society (including community and the environment) Why it matters At the heart of Bloomsbury is a strong social purpose – to inform, educate, and entertain, to inspire a love for reading and to promote literacy. Making a positive contribution to the wider communities in which we operate is therefore integral to our activities. In addition, the environmental impact of Bloomsbury’s business activities is a growing consideration for us and we are committed to effecting improvements where practicable. Ways we engage The very essence of our business is engagement with wider society, through the dissemination of stories and ideas, the stimulation of debate and dialogue, the support of learning and research and the enrichment of culture. Information about our charitable donations, charitable initiatives and direct community engagement is set out on pages 46 to 49 of the Strategic Report. What matters • That Bloomsbury behaves as a responsible and ethical corporate citizen; • That we support relevant charities; • That we contribute to community success; and • That we manage our environmental footprint. Bloomsbury also works in partnership with theatres and other organisations to publish their cultural output in the form of play texts and programme texts to accompany performances. The inclusion of live performance collections in Bloomsbury’s educational databases, made available for free to schools, provides a means of extending audience reach and ensuring cultural heritage is embedded within the curriculum. Expanding the Group’s activities on sustainability is a key priority for us. Information on our activities in this area is set out in the Corporate Responsibility section on page 55. How we consider the interests of our stakeholders The Board supports Bloomsbury’s wider social purpose and charitable initiatives, including as part of the approval of the Company’s budget and strategic plan, where applicable. The Board considers the long- term impact on the environment of Bloomsbury’s operations in its decision-making and receives annual reporting on the Group’s greenhouse gas emissions, generation of waste, and consumption of water, with comparisons to prior years. Details of the Group’s environmental performance can be found in the Corporate Responsibility section on pages 56 to 57. The Executive Committee and the Board receive presentations on the activities of Bloomsbury’s Sustainability Working Group, considers recommendations from the Working Group for proposed sustainability initiatives and approves action where appropriate to improve Bloomsbury’s environmental footprint. 27040 11 June 2020 9:44 pm Proof 2 27040-Bloomsbury-AR2020 - strategic.indd 63 27040 11 June 2020 9:44 pm Proof 2 11-Jun-20 9:52:23 PM Stock code: BMY Annual Report and Accounts 2020 63 27040 11 June 2020 8:07 pm Proof 227040 11 June 2020 8:07 pm Proof 2Bloomsbury Professional A selection of books published by Bloomsbury Professional: Chambers’ Corporate Governance Handbook: Eighth Edition by Andrew D. Chambers, Privacy and Libel Law: The Clash with Press Freedom by Paul Tweed, Cyber Security: Law and Guidance by Helen Wong MBE, Cornerstone on Information Law by Damien Welfare, Conduct and Accountability in Financial Services by Stacey English and Sussanah Hammond and Human Trafficking and Modern Slavery Law and Practice by Philippa Southwell, Michelle Brewer and Ben Douglas-Jones QC. Bloomsbury Professional publishes high quality books and digital products for lawyers, tax practitioners, accountants and business professionals.←27040-Bloomsbury-AR2020 - governance.indd 6411-Jun-20 9:50:03 PM27040 11 June 2020 8:07 pm Proof 227040 11 June 2020 8:07 pm Proof 2Annual Report and Accounts 202066Chairman’s Introduction to Corporate Governance67Corporate Governance Framework68Board of Directors70Director’s Report75Corporate Governance Report81Nomination Committee Report84Audit Committee Report88Directors’ Remuneration Report108Section 172 Directors’ duties statementGovernance27040-Bloomsbury-AR2020 - governance.indd 6511-Jun-20 9:50:05 PM27040 11 June 2020 8:07 pm Proof 227040 11 June 2020 8:07 pm Proof 2On behalf of the Board, I am pleased to introduce Bloomsbury’s Corporate Governance Report for the financial year ending 29 February 2020. Compliance with the 2018 UK Corporate Governance CodeThis year, the Company is reporting against the UK Corporate Governance Code published in July 2018 (the “Code”), which applies to accounting periods beginning on or after 1 January 2019. The Code is published on the Financial Reporting Council’s (“FRC”) website at www.frc.org.uk. During the year, the Board has focused on reviewing and strengthening the measures implemented by the Company to ensure compliance with the 2018 Code. This Corporate Governance Report and the Strategic Report set out how the Company has applied the Code principles and adhered to Code provisions throughout the year.The Board believes that for the financial year ended 29 February 2020, the Company has complied with all applicable principles and provisions of the Code, save in respect of the provisions that relate to pension contributions for Executive Directors (as explained in the Directors’ Remuneration Report on page 102), and to the determination of senior manager remuneration by the Remuneration Committee (as explained in the Directors’ Remuneration Report on page 107).Stakeholder engagementThe Board believes that the manner in which it conducts its business is important and it is committed to maintaining the highest standards of corporate governance, which underpin Bloomsbury’s ability to deliver long-term value and success for the benefit of all of its stakeholders. The Board is mindful of its duties to stakeholders under section 172 of the Companies Act 2006. More detail on how the Board has discharged its duties under section 172 to promote the success of the Company, having regard to the Company’s key stakeholders as part of its decision-making, can be found in the Strategic Report on pages 58 to 63.Purpose, values and cultureThe Board is closely involved in setting the tone for Bloomsbury’s culture and embedding it throughout the Group. During the year, we re-articulated the values which inform Bloomsbury’s culture and guide the Company in achieving its purpose, and confirmed these to all employees across the Group. Our values are a key aspect of Bloomsbury’s ethos and guide the workforce as they pursue the delivery of Bloomsbury’s strategy. The Board believes that an engaged and committed workforce is integral to the achievement of Bloomsbury’s strategic objectives, and organisational culture is central to this. To this end, the Board is informed on key matters and actions arising out of Employee Voice Meetings, which are held regularly as part of the Company’s employee engagement programme. More details on the output of employee engagement can be found in the Strategic Report on pages 50 to 53.Diversity and inclusionThe Board recognises the benefits that diversity and inclusion can bring to the effectiveness of Board decision-making where different skillsets and perspectives are present. The Nomination Committee supports the Board in overseeing the Company’s diversity and inclusion policy, and further information can be found in the Nomination Committee Report on pages 82 to 83.Board evaluationI led an internal process to evaluate the effectiveness of the Board, its Committees and each individual Director. The outcome of the evaluation confirmed that the Board and its Committees continue to operate effectively and that all of our Directors continue to demonstrate commitment to their role. Further information relating to the Board evaluation can be found on pages 79 to 80 of this section of the Annual Report.Board changesBloomsbury announced in October 2019 that Jonathan Glasspool, an Executive Director since 2015, will be stepping down from the Board at the forthcoming Annual General Meeting and retiring from Bloomsbury at the end of July 2020 after 20 years’ service. We thank Jonathan for his exceptional hard work and contribution to Bloomsbury. Sir Richard Lambert Chairman of the BoardSir Richard LambertChairman of the Boardwww.bloomsbury.comChairman’s Introduction to Corporate Governance66Bloomsbury Publishing Plc27040-Bloomsbury-AR2020 - governance.indd 6611-Jun-20 9:50:09 PMCorporate Governance Framework GOVERNANCE Board The Board provides leadership and governance for the Company, while having regard to the interests of Shareholders as well as other stakeholders. It determines, and oversees the execution of, the Group’s strategy, and is responsible for the overall management, control and performance of the Group’s business. The Board is involved in determining the Company’s purpose and values, and monitoring organisational culture. The Board establishes appropriate risk management and internal control procedures, and determines the risk appetite for the Company. Certain matters are reserved for the Board’s approval, with others being delegated to Board Committees or to the Company’s Executive Committee as appropriate. Full details are available on the Company’s website (www.bloomsbury-ir.co.uk). Audit Committee • Monitors the integrity of financial statements and narrative reporting; Nomination Committee • Reviews the structure, size and composition of the Board; Remuneration Committee • Determines the remuneration and benefits of Executive Directors; • Considers Board experience • Monitors the remuneration of • Monitors and reviews the and diversity; senior managers; effectiveness of the internal audit function; • Monitors internal financial and operational controls; • Oversees risk management; • Reviews the External Auditor’s independence and leads the audit tender process; and • Reviews the effectiveness of the external audit process. • Considers the appointment of new Directors and oversees succession planning; • Oversees policy and strategy regarding workforce diversity and inclusion; and • Oversees Director induction, monitoring conflicts, time commitments, training and evaluation of Board members. • Oversees workforce pay practices and policies; and • Approves the targets for performance-related remuneration schemes and share incentive plans. Chief Executive • Responsible for the day-to-day management of the Group; and • Responsible for the execution of the approved Group strategy. Financial matters are managed by the Group Finance Director. Executive Committee • Led by the Chief Executive. • Responsible for managing all operational aspects of the Group, the implementation of the Company’s strategic initiatives in all areas and for identifying and managing Group risks. • Membership comprises of the Executive Directors, the Group General Counsel and Company Secretary, the heads of the Group’s two operational Divisions and the heads of Group functions. 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 67 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:09 PM Stock code: BMY Annual Report and Accounts 2020 67 27040 11 June 2020 8:07 pm Proof 227040 11 June 2020 8:07 pm Proof 2NRNAppointed: 18 July 2017Sir Richard Lambert joined the Bloomsbury Board as an Independent Non-Executive Director in July 2017. He was appointed as Chairman of the Board, Chair of the Nomination Committee and a member of the Remuneration Committee on joining. Sir Richard is Chairman of the British Museum. He is also a member of the Board of the Institute for Government and Trustee of the Kimmeridge Trust. Sir Richard joined the Financial Times after reading History at Balliol College, Oxford. He was editor of the Lex column, became New York bureau chief, and thereafter deputy editor. He was editor of the Financial Times from 1991 to 2001. He served as a member of the Bank of England Monetary Policy Committee from 2003 to 2006, Director General of the CBI from 2006 to 2011, Chancellor of the University of Warwick from 2008 to 2016 and as the senior independent member of the Foreign and Commonwealth Office’s Supervisory Board from 2012 to 2017.Appointed: 11 May 1986Nigel Newton was born and raised in San Francisco. He read English at Cambridge. After working at Macmillan Publishers, he joined Sidgwick & Jackson. He left Sidgwick in 1986 to start Bloomsbury. Bloomsbury floated on The London Stock Exchange in 1994 and has grown organically and through acquisitions. Nigel Newton serves as a member of the Advisory Committee of Cambridge University Library, Board member of the US-UK Fulbright Commission and President of Book Aid International. He has served as a member of the Booker Prize Advisory Committee, Chairman of the Charleston Trust, Chair of World Book Day, member of the Publishers Association Council, Trustee of the International Institute for Strategic Studies, Chairman of the British Library Trust, head of the Selwyn Association and member of Cuckmere Haven SOS.Appointed: 23 July 2015Jonathan Glasspool joined Bloomsbury in 1999 and was appointed to the Bloomsbury Board in July 2015. He is Managing Director of Bloomsbury’s Non-Consumer Division and has executive responsibility for Bloomsbury India. Jonathan is Chair of the Industry Advisory Board at Oxford Brookes University, a Trustee of Publishing Training Centre (until July 2019), a member of the Academic & Professional Board of the Publishers Association, Chair of Federation of British Artists and Senior Independent Governor of Bath Spa University. He has held roles in publishing with Reed Elsevier in the UK and Asia, the Chartered Management Institute, and Cambridge University Press. Jonathan has a first class degree in English from Trinity College, Oxford, an MA in English from Bristol University, and an MBA with Distinction from Warwick Business School. Jonathan will retire from the Company in July 2020.Appointed: 16 July 2018Penny Scott-Bayfield was appointed to the Bloomsbury Board in July 2018, when she joined Bloomsbury as Group Finance Director. Prior to this, she was Finance Director of Conde Nast Britain, and held senior finance roles at Sky Plc and lastminute.com plc. She started her career and qualified as Chartered Accountant (FCA) with Deloitte. Penny Scott-Bayfield has a first class degree in Maths from University College, Durham, and has been a judge on the “Women of the Future” programme since 2011.Sir Richard LambertNon-Executive Chairman Nigel NewtonFounder and Chief Executive Jonathan Glasspool Executive Director Penny Scott-Bayfield Group Finance Director www.bloomsbury.comBloomsbury Publishing Plc68Board of Directors27040-Bloomsbury-AR2020 - governance.indd 6811-Jun-20 9:50:15 PM27040 11 June 2020 8:07 pm Proof 227040 11 June 2020 8:07 pm Proof 2RCommittee member:A Audit CommitteeR Remuneration Committee N Nomination Committee Chair of Committee Executive Director Non-Executive DirectorNRANANRAAppointed: 23 July 2015John Warren joined the Bloomsbury Board in July 2015 and is the Senior Independent Director, Chair of the Audit Committee, and the member with recent and relevant financial experience. He is a Chartered Accountant (FCA) and has a wealth of Non-Executive and Audit Committee chairmanship experience with companies including Rexam Plc, Spectris plc, Welsh Water, Greencore Group plc, 4imprint Group plc and Bovis Homes Group Plc. As an Executive Director, he was Group Finance Director of WH Smith Plc and prior to that, United Biscuits (Holdings) Plc.Appointed: 1 March 2017Steven Hall joined the Bloomsbury Board in March 2017. He is managing director of IOP Publishing, a leading publisher of scientific books, journals and websites, and has worked in academic publishing for more than 40 years. He has extensive experience of digital publishing and has led the development of pioneering online content databases. He is a member of the Academic Publishers Council of the UK Publishers Association and regularly represents the publishing industry to Government and policymakers in the UK and overseas. He served for six years on the board of the International Association of STM Publishers, in his final year as chair, and was one of three publisher members of the UK’s “Finch” group.Appointed: 17 July 2019Leslie-Ann Reed joined the Bloomsbury Board in July 2019. She is currently an Independent Non-Executive Director and Chair of the Audit Committee of Learning Technologies Group plc, Induction Healthcare Group Limited and Centaur Media plc. She was formerly a Non-Executive Director and Chair of the Audit Committee of the London listed publisher Quarto Group Inc and Vice Chair of the Supervisory Board and Chair of the Audit Committee of the German-listed company ZEAL Networks SE. Leslie-Ann is a Chartered Accountant by profession, and has held senior finance roles in various media and professional services companies, namely Universal Pictures, Polygram Music, EMI Music and Warner Communications Inc, acted as an advisor to Marwyn Investment Management, and was Chief Financial Officer of the B2B media group Metal Bulletin plc and the online auctioneer Go Industry plc.John Warren Senior Independent Director Steven Hall Independent Non-Executive Director Leslie-Ann Reed Independent Non-Executive Director Maya Abu-Deeb Group General Counsel and Company Secretary Maya Abu-Deeb is a qualified solicitor and joined Bloomsbury in 2008. Maya is responsible for all legal advice to the Company, and manages the legal and contracts teams at Bloomsbury. She is also Company Secretary and Group Data Protection Officer. Prior to joining Bloomsbury, Maya was in private practice for ten years, specialising in commercial, media and intellectual property law, and advising in respect of both contentious and non-contentious matters.Maya read Oriental Studies at St John’s College, Oxford, before completing the Common Professional Exam and Legal Practice Course at the College of Law in London.Stock code: BMYAnnual Report and Accounts 2020GOVERNANCE6927040-Bloomsbury-AR2020 - governance.indd 6911-Jun-20 9:50:24 PMDirectors’ Report The Directors present their report and the audited financial statements for Bloomsbury Publishing Plc and its subsidiary companies (the “Group”) for the year ended 29 February 2020. Bloomsbury Publishing Plc is a company incorporated in England and Wales, company number 01984336, with its principal place of business and registered office at 50 Bedford Square, London WC1B 3DP. Bloomsbury Publishing Plc is a premium listed company on the Main Market of the London Stock Exchange subject to the Listing Rules (“LR”) and Disclosure Guidance and Transparency Rules (“DTR”) of the Financial Conduct Authority. Information Future developments of the Company Risk factors and risk management Use of financial instruments, financial risk management objectives and policies Sustainability Greenhouse gas emissions Viability statement Governance arrangements Directors Employment policies and employee engagement Diversity Stakeholder engagement S172 statement This Directors’ Report forms part of the Company’s Strategic Report, as required under the Companies Act 2006 (Strategic and Directors’ Report) Regulations 2013. The Strategic Report also serves as the Management Report for the purposes of DTR 4.1.8R, and includes the reporting requirements of the EU Non-Financial Reporting Directive, as incorporated into the Companies Act (see pages 20, 25 and 46 to 63 of the Strategic Report). Information that is relevant to this Report and information required under the Companies Act 2006 and LR 9.8.4R is incorporated by reference and can be found in the following sections: Section in the Annual Report Strategic Report Strategic Report Financial Statements Page 10 to 11, and 16 to 17 40 to 45 157 to 160 Strategic Report Strategic Report Strategic Report Corporate Governance Report Corporate Governance Report Strategic Report Strategic Report Strategic Report Corporate Governance Report 55 56 to 57 45 75 to 80 68 to 69 50 to 53 54 58 to 63 108 Overseas activities The Group has overseas subsidiaries that are based and operate in North America, Australia and India, and a joint venture company that operates in China. These subsidiaries allow locally employed teams to deliver services locally to authors and customers. Employees from all Bloomsbury offices can be involved in business development and travel to various countries worldwide. The impact may be substantial; the extent will depend on the changing positions of the Group’s major wholesale print and digital customers, academic institutions and Government restrictions, and in particular on their impact on retailers. The Company’s strategy of expanding and leveraging its digital rights and products means that it is well placed to benefit from increased demand for our digital resources, audio books and ebooks as it is with direct supply. Overseas branches The Company has no branches outside of the UK. Results The Financial Review on pages 36 to 39 sets out the Group’s profit before tax and highlighted items, revenue and profit before tax along with other key performance indicators. Profit after tax for the Group’s operations for the year was £10.5 million (2019: £9.2 million). Material post-balance sheet events Details of material post-balance sheet events are set out at note 29. In addition to the matters referenced there, since the year end, Government restrictions and retail closures have been imposed in all of the Group’s key markets of the UK, USA, Australia and India, as well as many other important markets. It is not possible to estimate the extent of the impact on the Group’s earnings for the year ended 28 February 2021 as there are mostly unknowns for the Group, as for the world as a whole. Since the year end, the Company has taken measures to strengthen its balance sheet and increase liquidity to ensure it has sufficient working capital to weather the impact of coronavirus and avoid damaging the Group’s business in the long-term. The key actions have been cost savings, extending our financing facility and raising £8.4 million through the non- pre-emptive placing of Ordinary shares. Dividend Bloomsbury had intended to declare a final dividend for the year of 6.89 pence per share. This would have resulted in a total dividend for the year of 8.17 pence per share, up 3% on the previous year. As previously announced, Bloomsbury has decided, in light of the coronavirus crisis, to conserve cash and therefore will not be paying a cash dividend. It is now proposed, subject to Shareholder approval, that the dividend is instead settled through the issuance of new Ordinary shares by way of bonus issue to Shareholders, with a value equivalent to the proposed final dividend. 70 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 70 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:24 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE of a retiring Director or as part of measures taken to enhance the skills, experience, capability and balance of the Board. In 2016, the Board agreed that all Directors would stand for annual re-election and this is now required under the 2018 revision of the UK Corporate Governance Code. Accordingly, the Chairman on behalf of the Board, confirms that each Director proposed for re-election at the 2020 Annual General Meeting (“AGM”) continues to contribute effectively and demonstrate commitment to the role (including commitment of time for Board and Committee meetings and any other duties). In addition, the Board believes that each such Director is important to the long-term success of the Company. At the 2020 AGM, Jonathan Glasspool, an Executive Director, will not stand for re-election as he will be retiring from Bloomsbury in July 2020. The Company may remove a Director from office by passing an ordinary resolution. Powers of Directors The powers of Directors are described in the Articles, the Companies Act 2006 and in the schedule of matters reserved for the Board, a copy of which is available on the Company’s website at www.bloomsbury-ir.co.uk. Directors’ indemnities and insurance In accordance with the Articles, the Company may indemnify the Directors to the extent permitted by law in respect of liabilities incurred as a result of their office. The Articles permit the Company to purchase insurance for its Directors and it has maintained insurance throughout the year for its Directors and Officer (the Company Secretary) against the consequences of any actions brought against them in relation to their duties. Director conflicts of interest Procedures are in place to ensure compliance with the Directors’ conflict of interest duties set out in the Companies Act 2006. These procedures have been complied with during the year and the Board considers that these procedures operate effectively. Details of any new potential or actual conflicts must be submitted to the Board for consideration at the start of each meeting. These may be approved or the Director may be asked, where appropriate, to withdraw from any consideration of a matter where a potential or actual conflict exists. Authorised conflicts or potential conflict matters are reviewed by the Board on a regular basis. Charitable and political donations No political donations were made by the Group during the current or previous year. Information about charitable donations made by the Company during the year is set out in the Corporate Responsibility section on pages 46 to 48. Articles of Association The Company’s Articles may only be amended by special resolution of the Shareholders. The Articles are available on the Company’s website at www.bloomsbury-ir.co.uk. Subject to Shareholder approval at our AGM on 21 July 2020, the bonus issue will be made on 28 August 2020 to Shareholders on the register on the record date of 31 July 2020. The dividends paid and proposed by the Company for the year ended 29 February 2020 and year ended 28 February 2019 are as follows: Dividend 2020 Final (proposed) 2020 Interim Total 2019 Final 2019 Interim Total Dividend per share Total dividend Record date Paid/payable date – 1.28p 1.28p 6.75p 1.21p 7.96p – – – 6 Dec 2019 £1.0m 8 Nov 2019 £1.0m £5.1m 26 July 2019 23 Aug 2019 £0.9m 2 Nov 2018 29 Nov 2018 £6.0m Directors The names of the Directors as at the date of this Report, together with biographical details, are set out in the Board of Directors section on pages 68 to 69. The Directors serving on the Board of the Company during the year were as follows: Date appointed in the year (if applicable) Date resigned in the year (if applicable) Non-Executive Chairman Sir Richard Lambert Independent Non-Executive Directors Jill Jones John Warren Steven Hall Leslie-Ann Reed Executive Directors Nigel Newton Penny Scott-Bayfield Jonathan Glasspool – – – 17 July 2019 – – – – – 17 July 2019 – – – – – – Details of Directors’ service contracts and Directors’ interests in shares, awards and options are shown in the Directors’ Remuneration Report. Other than as disclosed in that Report, none of the Directors held any interest, either during or at the end of the financial year in any material contract or arrangement with the Company or any subsidiary undertaking. The terms under which Directors’ contracts may terminate are described in the Directors’ Remuneration Report on pages 95 to 96. This includes details of any arrangement by which the Company would pay compensation to its Directors for loss of office, for loss of employment or would make payments in respect of a change of control of the Company. Appointment and replacement of Directors The Company is governed by its Articles of Association (“Articles”), the Companies Act 2006 and related legislation with regard to the appointment and replacement of Directors. Company policy is to appoint Directors to the Board on the recommendation of the Nomination Committee. This may be as part of the progressive refreshing of the Board, to reappoint a Director retiring by rotation, to fill a vacancy arising as a result 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 71 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:25 PM Stock code: BMY Annual Report and Accounts 2020 71 Directors’ Report continued Share capital and rights attaching to the Company’s shares The share capital of the Company comprises a single class of ordinary 1.25 pence shares (“Ordinary shares”). During the year the Company made no new allotment of shares, nor were any cancelled. Share movements during the year are therefore as follows: As at 1 March 2019 Movement during the year As at 29 February 2020 Fully paid Ordinary shares in issue 75,328,570 – 75,328,570 On 17 April 2020, the Company announced the completion of the non-pre-emptive placing (“Placing”) of 3,766,428 Ordinary shares in the capital of the Company (“Placing Shares”), representing 5% of the issued share capital of the Company prior to the Placing, all of which were admitted to the Official List of the Financial Conduct Authority (“FCA”) and to trading on the main market for listed securities of the London Stock Exchange (“LSE”) on 21 April 2020. Pursuant to the Placing, and as at the date of this Directors’ Report, there were 79,094,998 fully paid up issued shares, all listed on the LSE. The Directors are authorised to issue up to a further 21,343,095 Ordinary shares until the earlier of the date of next AGM of the Company, currently 21 July 2020, or 21 October 2020 should the date of the 2020 AGM be delayed for any reason. Details of the issued share capital can be found in note 22. No Ordinary shares carry special rights with regard to control of the Company. At a general meeting of the Company every member has one vote on a show of hands and, on a poll, one vote for each share held. The Notice of General Meeting specifies deadlines for exercising voting rights either by proxy or by being present in person in relation to resolutions to be passed at a general meeting. Under the Articles, any share in the Company may be issued with such rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise as the Company may from time to time by ordinary resolution determine (or, in the absence of any such determination, as the Directors may determine). No Shareholder is, unless the Board decides otherwise, entitled to attend or vote either personally or by proxy at a general meeting or to exercise any other rights conferred by being a Shareholder if they, or any person with an interest in shares, have been sent a notice under section 793 of the Companies Act 2006 (which confers upon public companies the power to require information with respect to interests in their voting shares) and they, or any interested person, failed to supply the Company with the information requested within 14 days after delivery of that notice. The Board may also decide to apply to the court for an order under section 794 of the Companies Act 2006 so that no dividend is payable in respect of those default shares and that no transfer of any default shares shall be registered. These restrictions end seven days after receipt by the Company of a notice of an approved transfer of the shares or all the information required by the relevant section 793 notice, whichever is earlier. The Directors may refuse to register any transfer that is not a fully paid share, although such discretion may not be exercised in a way which the FCA regards as preventing dealing in the shares of that class from taking place on an open and proper basis. The Directors may likewise refuse any transfer of a share in favour of more than four persons jointly. The Company is not aware of any other restrictions in the transfer of Ordinary shares in the Company other than certain restrictions that may, from time to time, be imposed by laws and regulations. The Company is not aware of any agreements between Shareholders that may result in restrictions on the transfer of the securities or voting rights. Share dilution In respect of dilution limits, the Company adheres to the updated “Investment Association Principles of Remuneration” issued in November 2019. In particular: • The rules of the Company’s Long Term Incentive Plan (“LTIP”) scheme ensure that: − Commitments to issue new shares or reissue treasury shares under executive (discretionary) schemes do not exceed 5% of the issued Ordinary share capital of the Company (adjusted for share issuance and cancellation) in any rolling ten-year period; and − Commitments to issue new shares or reissue treasury shares, when aggregated with awards under all of the Company’s other schemes, do not exceed 10% of the issued Ordinary share capital (adjusted for share issuance and cancellation) in any rolling ten-year period. • The Remuneration Committee ensures that appropriate policies regarding flow-rates exist in order to spread the potential issue of new shares over the life of relevant schemes so that the limit is not breached. The Bloomsbury Employee Benefit Trust may purchase shares in the market to be used for satisfying vested LTIP awards and other employee share options. Further details are given below. Authorities to purchase shares, to allot shares and pre-emption rights The Notice of the 2020 Annual General Meeting and explanatory foreword set out: • An ordinary resolution renewing the authority for the Directors to allot shares under section 551 of the Companies Act 2006; • Special resolutions renewing the authority given to the Directors to disapply statutory pre-emption rights under section 571 of that Act to allow shares to be issued for cash or treasury shares to be sold for cash on a non-pre-emptive basis; and • A special resolution renewing the authority given to the Directors to purchase the Company’s own shares on the stock market. 72 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 72 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:25 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE There are no significant agreements to which the Company is a party that alter or terminate upon a change of control following a takeover bid except in respect of the Group’s revolving credit facility described at note 25c. The Company’s share incentive schemes (see note 23 for further details of the share incentive schemes) contain provisions relating to a change of control of the Company following a takeover bid. Under these provisions, a change of control of the Company would normally be a vesting event, facilitating the exercise of awards, typically subject to the discretion of the Remuneration Committee. Contracts and arrangements essential to the business The Group has a diverse base of authors, customers and general suppliers so that its dependency on any one individual author, customer or supplier is reduced. Primarily for printed books, the Group develops longer-term relationships with a reduced number of business partners, printers and distributors to maximise process efficiencies and economies of scale. Failure of a main supplier could temporarily disrupt the supply of books to market or result in increased cost of working whilst alternative arrangements are made. The Group depends on its reputation which strongly influences authors and customers in their selection of publisher. Cautionary statement The Directors’ Report together with all sections incorporated into it by reference has been prepared only for the Shareholders of the Company. Its sole purpose and use is to assist Shareholders to exercise their governance rights. In particular, the Directors’ Report has not been audited or otherwise independently verified. The Company, its Directors and employees are not responsible for any other purpose or use or to any other person in relation to the Directors’ Report. The Directors’ Report contains indications of likely future developments and other forward-looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the sectors, countries and business divisions in which the Group operates. These factors include, but are not limited to, those discussed in the Risk Factors and Risk Management section. These and other factors could adversely affect the Group’s results, strategy and prospects. Forward-looking statements involve risks, uncertainties and assumptions. They relate to events and or depend on circumstances in the future that could cause actual results and outcomes to differ materially from those currently anticipated. No obligation is assumed to update any forward-looking statements, whether as a result of new information, future events or otherwise. Employee Benefit Trust The Bloomsbury Employee Benefit Trust (“EBT”) may purchase shares in the market to be used for satisfying LTIP awards and other employee share options that vest. During the year the EBT held Ordinary shares of 1.25 pence in the Company as follows: Fully paid Ordinary shares held by EBT As at 1 March 2019 Released to satisfy vesting of awards As at 29 February 2020 500,708 19,615 481,093 As at 29 February 2020 and up to the signing of this Report, the EBT held 481,093 Ordinary shares of 1.25 pence in the Company, being less than 0.61% of the issued Ordinary share capital. The Trustee may vote on shares held by the EBT at its discretion, but waives its right to a dividend. Share purchases of own shares During the year, the Company made no purchases of its own shares and the authority granted by Shareholders at the 2019 AGM for the Company to purchase its own shares was, at the end of the reporting period, still valid. This authority allows the Company to make market purchases of up to 10% of the issued Ordinary share capital as at 21 May 2019 (excluding treasury shares). Substantial shareholdings As at 29 February 2020, the Company had been notified under DTR 5 of the following interests of 3% or more in the issued share capital of the Company. Institution Montanaro Asset Management Limited Majedie Asset Management Limited BlackRock Inc 1 Based on 75,328,570 issued shares. Ordinary shares number million % issued shares1 3.3 3.5 4.1 4.31% 4.64% 5.46% All notifications made to the Company under DTR 5 are published on the Regulatory Information Service and on the Company’s website (www.bloomsbury-ir.co.uk). Between 29 February 2020 and 8 June 2020 (being the latest practicable date before the publication of this Report), the Company received further notifications under DTR 5, with the most recent position being as follows (based on 79,094,998 issued shares as these notifications were released following the Placing): • Chelverton UK disclosed a holding of 4.86%; and • Canaccord Genuity Group disclosed a holding of 11.48%. Change of control The Group has established close relationships over a long period within the publishing markets in which it operates. It relies heavily on its goodwill and reputation and in particular on its reputation as an autonomous independent publisher with authors, customers and key employees that could be affected by a change of control. 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 73 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:25 PM Stock code: BMY Annual Report and Accounts 2020 73 Directors’ Report continued Auditor a) Reappointment of the Auditor A resolution to reappoint KPMG LLP as Auditor will be proposed at the forthcoming AGM. b) Statement as to disclosure of information to the Auditor The Directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the Auditor is unaware. The Directors have each confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the Auditor. Statement of Directors’ responsibilities The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRSs as adopted by the EU”) and applicable law and have elected to prepare the parent Company financial statements on the same basis. Under Company Law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial statements, the Directors are required to: • Select suitable accounting policies and then apply them consistently; • Make judgements and estimates that are reasonable, relevant and reliable; • State whether they have been prepared in accordance with IFRSs as adopted by the EU; • Assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and • Use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so. The Directors’ statement regarding the adoption of the going concern basis of accounting is set out in the Strategic Report on page 45 and at note 2c. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website, www.bloomsbury-ir.co.uk. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Safe harbour Under the Companies Act 2006, a safe harbour limits the liability of Directors in respect of statements in and omissions from the Strategic Report and the Directors’ Report. Pages 1 to 184 of the Annual Report, and the front and back covers to the Annual Report, are included within the Directors’ Report by reference and so are included within the safe harbour. Responsibility statement of the Directors in respect of the annual financial report In accordance with DTR 4.1.12R, each of the Directors, whose names and roles are set out in the Corporate Governance section on pages 68 to 69, confirm that to the best of their knowledge: • The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the parent Company and the undertakings included in the Group taken as a whole; and • The Management Report (which includes the Strategic Report and the Directors’ Report) includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces. We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Group’s position and performance, business model and strategy. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Strategic Report and Directors’ Report were approved by the Board on 20 May 2020. By order of the Board Maya Abu-Deeb General Counsel and Company Secretary 74 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 74 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:25 PM 27040 11 June 2020 8:07 pm Proof 2 Corporate Governance Report GOVERNANCE The Board takes its responsibility to achieve sound governance of the Bloomsbury Group seriously, and continuously maintains high standards of corporate governance that focus on serving the interests of Shareholders and other key stakeholders. Governance structure and Board effectiveness Role of the Board The Board is responsible for the overall leadership of the Group. The Board determines, and oversees the execution of, the Group’s strategy, and is responsible for the overall management, control and performance of the Group’s business. The Board reviews and monitors internal controls, risk management, principal risks, governance and viability of the Company, and is closely involved in developing and monitoring the Group’s values and culture. The Board is ultimately responsible to the Shareholders for the direction, management, performance and long-term sustainable success of the Company. Board oversight of culture and values The Company’s core values as set out on the inside front cover of this Annual Report are central to its purpose: to inform, educate, entertain and inspire readers of all ages all over the world. These values fundamentally inform the strategy adopted by the Company in pursuing that purpose, and the behaviours and activities of the Company’s workforce in achieving the Company’s strategic objectives. The Board is closely involved in shaping the Company’s values and monitors the culture of the Company with the assistance of its Committees. The Board receives regular updates from the Company’s Director of Human Resources on key themes and issues arising out of the Company’s programme of Employee Voice Meetings and is provided with detailed minutes of each of these meetings. The Non-Executive Directors have a standing invitation to attend Employee Voice Meetings and in this way are able to assess organisational health through direct engagement with a wide range of employees during such meetings. Further information on the Company’s Employee Voice Programme is set out in the Strategic Report on page 50. The Board also receives updates from the Head of the Company’s Diversity and Inclusion Working Group on the Company’s activities in this area. Other ways in which the Board monitors culture include reviewing the results of employee surveys, monitoring staff turnover levels and receiving regular whistleblowing reports. The Board has not identified any significant issues pursuant to its monitoring activities which require corrective action. The Board recognises the importance of these matters and we continue to focus on developing relevant policies. Engagement with stakeholders Details of the Company’s engagement with key stakeholders are set out in the Strategic Report on pages 58 to 63. In respect of engagement with the workforce, the Board considers the method of engagement through the forum of Employee Voice Meetings as described above to be effective as it provides a means for the Board to hear directly from employees on matters of concern to them, and provides insight on how to enhance employee satisfaction and work effectiveness within the Company. The Board is actively involved in considering and developing the Company’s response to matters raised during Employee Voice Meetings. Powers and responsibilities of the Board The Company’s Articles of Association set out the Board’s powers. The Board has a formal schedule of matters specifically reserved for its own decision. A copy of this schedule can be found on the Company’s website at www.bloomsbury-ir.co.uk. The schedule was reviewed and updated during the financial year to ensure that it complies with the Code and other legal and regulatory requirements, and reflects best corporate practice. The key responsibilities of the Board include: • Reviewing and setting long-term objectives and commercial strategy; • Developing and monitoring the Company’s values and culture; • Considering stakeholder interests in decision-making; • Reviewing and approving the annual operating and capital expenditure budget; • Reviewing the Company’s performance in light of the Group’s strategy, objectives, business plans and budgets; • Approving an extension of the Group’s activities into new business or geographic areas; • Approving any decision to cease to operate all or any material part of the Group’s business; • Approving major changes to the Group’s corporate, senior management and control structure or share capital structure; • Approving the Annual Report and Accounts, the half-year statements and associated announcements; • Approving the dividend policy and declaration of dividends; • Approving significant changes to accounting policies; • Approving the treasury policy; • Monitoring the Group’s risk management policy and procedures, oversight of the internal risk control framework and carrying out an annual review of their effectiveness; • Approving all material contracts, acquisition of titles, net advances and major investments above a specified level; • Approving resolutions to be put to the AGM and circulars to Shareholders; • Approving changes to the structure, size and composition of the Board, following recommendations of the Nomination Committee; • Approving appointments to the Board; • Approving the Remuneration Policy upon recommendation of the Remuneration Committee; • Approving the remuneration of Non-Executive Directors; and • Approving various Company policies. Stock code: BMY Annual Report and Accounts 2020 75 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 75 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:25 PM Corporate Governance Report continued Board Committees The Board has three Committees to assist in the discharge of its duties: the Audit Committee, Nomination Committee and Remuneration Committee. The Chairs and members of these Committees are appointed by the Board on the recommendation of the Nomination Committee in consultation with the respective Committee Chair. Each of the Committees have formally delegated duties and responsibilities under their written terms of reference, which are approved by the Board and can be found on the Company’s website, www. bloomsbury-ir.co.uk. Each Committee’s terms of reference was reviewed and updated during the financial year to ensure that it complies with the Code and other legal and regulatory requirements, and reflects best corporate practice. All main Board meetings provide standing items for each Committee Chair to update the Board after each Committee meeting. Committees also submit reports and recommendations to the Board on any matter which they consider significant to the Group. The main roles and responsibilities of the Board Committees are summarised in the Corporate Governance Framework set out page 67 of this section. The Board may also appoint a sub-committee of the Board as and when required. Further information on the activities of each Committee is detailed within the separate Committee reports. Composition of the Board As at the date of this report, the Board comprises the Non- Executive Chairman, three Executive Directors: the Chief Executive, the Group Finance Director and the Managing Director of the Academic and Professional publishing division, and three independent Non-Executive Directors, one of whom is appointed as the Senior Independent Director. The biographies of the Directors appear on pages 68 to 69 of this section. 76 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 76 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:25 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE Division of responsibilities Chairman • Ensuring the effective operation of the Board and its Committees in conformity with the highest standards of governance; • Leading, chairing and managing the Board; • Promoting a culture of openness and debate at Board level and ensuring constructive relations between Non-Executive and Executive Directors; • Setting the Board agenda and ensuring adequate time is available for discussion on all agenda items; • Ensuring the Board receives accurate, clear and timely information; • Leading the performance evaluation of the Board and Committees; • Ensuring that there is effective communication with Shareholders and other stakeholders; • Considering the composition and succession planning of the Board and its Committees; • Ensuring the Board’s Committees are properly structured with appropriate of terms of reference; and • Ensuring that Directors receive a tailored induction programme when joining the Board. Chief Executive • Managing the Group’s business and implementing Board decisions, policies and strategies; • Developing the Group’s corporate strategy and objectives for recommendation to the Board; • Providing leadership to the Executive Committee to achieve strategic objectives; • Promoting the desired culture to the Company’s workforce and ensuring that operational policies and practices drive appropriate behaviours; • Leading effective engagement with Shareholders and other stakeholders; and • Monitoring, reviewing and managing the risk framework and strategies with the Board. Group Finance Director • Providing day-to-day management of the Group’s financial affairs; • Managing the Group’s financial planning, reporting and analysis; Senior Independent Director Non-Executive Directors • Supporting the Chief Executive in developing and implementing strategy; and • Leading other functional areas such as tax, treasury, internal controls and risk management, and corporate finance. • Acting as a sounding board for the Chairman; • Serving as an intermediary for the other Directors and Shareholders as necessary; • Meeting with Shareholders on matters where usual channels are deemed inappropriate; and • Leading the annual evaluation of the Chairman of the Board. • Scrutinising and holding to account the performance of management and individual Executive Directors against agreed performance objectives; • Providing constructive challenge to the Executive Directors; • Contributing to the development of proposals on strategy and proposed corporate initiatives; and • Monitoring the integrity of financial information, financial and non-financial controls and systems of risk management. Company Secretary • Advising the Board, through the Chairman, on all governance-related matters and best practice; • Providing advice and services to the Directors and Board Committees where requested; and • Ensuring clear and timely information flow to the Board and its Committees. There is a clear separation of the roles of the Chairman and Chief Executive to prevent any individual from having unfettered powers of decision. A formal statement describing the division of responsibilities between the Chief Executive and the Chairman together with details of the roles and responsibilities for each of the Chairman, Chief Executive and Senior Independent Director, can be found at www.bloomsbury-ir.co.uk. 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 77 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:26 PM Stock code: BMY Annual Report and Accounts 2020 77 Corporate Governance Report continued Activities of the Board during the year A key area of focus for the Board throughout the year was an ongoing assessment of the measures implemented by the Company in respect of revisions to its governance framework to ensure compliance with the newly effective Code’s principles and provisions. Consideration of such matters has been a standing agenda item at Board meetings throughout the year. Notable items which the Board discussed as part of this assessment included: • The effectiveness and appropriateness of Employee Voice Meetings as the method of engagement with the Company’s workforce; • The Board’s monitoring and understanding of organisational culture and values; • The identification of key stakeholders and their interests, and the Company’s engagement with the relevant stakeholders; The following key matters are standing agenda items at every Board meeting: • Updates from the Audit, Nomination and Remuneration Committee Chairs; • Report from the Chief Executive; • Report from the HR Director on HR initiatives and outcomes of Employee Voice Meetings; • Report from the Group Finance Director; • Discussion of strategy and key strategic objectives; • In-depth focus on a principal risk; and • Corporate Governance update. During the year, among other matters, the Board considered the following: • Review and setting of long-term objectives and commercial strategy for the Company’s operations supported by an in- depth review of the publishing market; • Review and approval of the annual budget; • Review of the management accounts, short and long-term forecasts, key performance indicators and full year forecasts; • Review of progress against agreed financial and strategic objectives and internal and external forecasts; • Review and approval of the Annual Report and Accounts, the half-year statements and associated announcements; • Approval of the interim and final dividends; • Regular reports by Executive Directors on operational matters; • The acquisition of Oberon Books Limited and certain assets from Zed Books Limited; • The Company’s entry to the domestic Chinese market through a joint venture with China Youth Publishing Group and Roaring Lion Media; • The management and review of the risks of the Company; • Review of the Group Treasury policy; • Review of the Group’s tax strategy; • Review and approval of revised terms of reference for all the Committees; • Review and approval of the Company’s mission, purpose and values statement; • Consideration of the Company’s key stakeholders and their interests, and review of stakeholder engagement; • Review of other routine corporate governance matters, in particular, ensuring compliance with the Code; • Review of the Group’s whistleblowing procedures; and • Evaluation of the Board’s own effectiveness. In addition to its regular meetings throughout the year, the Board convenes annually with members of the Company’s Executive Committee and other key operational employees of the Company for the Board Strategy Day, during which the Board undertakes an in-depth review of key areas of the Company’s business, sets the strategic direction of the Company and reviews performance against previously agreed strategic objectives. Whistleblowing Under the Code, the Board is responsible for approving and overseeing the Group’s whistleblowing policy and ensuring that adequate procedures are in place for staff to raise concerns in confidence. The Company has an approved whistleblowing policy which can be viewed at www.bloomsbury-ir.co.uk. The Board is provided with an update of all significant matters that are reported under the policy. Conflicts of interest procedures The Board has reviewed the interests of the Directors and the Company maintains a register of areas of potential conflict of interest for Directors. Additionally, Directors are required to declare any new interests at the start of all Board and Committee meetings. In accordance with the Board’s formal policy, should a matter arise where there is a risk of a conflict in the Board discussing matters or making decisions, the Director affected by the conflict will absent themselves from the meeting while the matter is considered. During the year, there were no actual or potential conflicts of interest arising that required a Director to take this step. Directors may also notify the Company, via the Company Secretary, at any time, of any potential or future direct or indirect conflicts that may arise, or that may possible conflict with the interests of the Company. Any such notifications are required to be considered and, if thought appropriate, authorised by the Board. Director independence The Board has reviewed the independence of each Non- Executive Director and considers all the Non-Executive Directors who serve during the year to be independent in character and judgement, and does not consider that there are any relationships or circumstances which affect, or could appear to affect, their independent judgement. The Board meets the requirement under the Code that at least half the Board (excluding the Chairman) should be independent Non- Executive Directors. 78 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 78 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:26 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE Time commitments The time commitments of Directors are considered on appointment and annually. The Board is satisfied that there are no Directors whose time commitments are considered to be a matter of concern and that each of the Directors have sufficient time to meet their Board responsibilities. None of the Executive Directors have taken up more than one Non- Executive Director role at a FTSE 100 company or any other significant appointment. Additional appointments are not to be undertaken without prior approval of the Board. Board information and support All Directors have access to the advice of the Company Secretary where required. Directors also have access to independent professional advice, if required, at the Company’s expense. Attendance at Board and Committee meetings The table below shows the attendance of Directors at Board and Committee meetings during the year ended 29 February 2020. During the year, there were seven scheduled Board meetings. Executive Directors may also have been present at Committee meetings, either in full or part to update members. Nigel Newton attends the Nomination Committee as a full member. Committee appointments Chairman Sir Richard Lambert R N Executive Directors Nigel Newton Penny Scott-Bayfield Jonathan Glasspool Non-Executive Directors Jill Jones1 John Warren2 Steven Hall3 Leslie-Ann Reed4 N A A A A R R R R N N N N Board Remuneration Audit Nomination 7/7 7/7 7/7 7/7 4/4 6/7 7/7 3/3 8/8 – – – 4/4 7/8 8/8 4/4 – – – – 2/2 4/4 4/4 2/2 2/2 2/2 – – 1/1 2/2 2/2 1/1 1 Jill Jones resigned as a Director of the Company on 17 July 2019. 2 John Warren was unable to attend one Board meeting and one Remuneration Committee meeting due to an external commitment. Prior to the meetings, Mr Warren communicated his comments on the business of the Board and the Committee to their respective Chairs. 3 Steven Hall became Chair of the Remuneration Committee on 17 July 2019. 4 Leslie-Ann Reed was appointed as a Director of the Company on 17 July 2019. In addition to the meetings above, Leslie-Ann Reed attended a Board meeting as an observer prior to joining the Board. Committee member: A Audit Committee R Remuneration Committee N Nomination Committee Board and Committee evaluation for 2019/2020 The Board The Board conducts an annual formal evaluation of its performance. For 2019/2020 this was conducted internally. The 2019/2020 evaluation of the Board took place towards the end of the financial year. It was led by the Chairman, supported by the Company Secretary, who used questionnaires completed by all the Directors to appraise the performance of the Board and to discuss any improvements needed to the Board processes. The Chairman also conducted one-to-one interviews with each of the Directors. He then reported to the Board and to the Nomination Committee where his findings were considered. Overall, the results of the evaluation were positive and showed that the Board continued to work well together, with strong commitment from the Executive and Non-Executive Directors. The evaluation concluded that the performance of the Board, its Committees, the Chairman and each of the Directors continued to be effective. The composition and size of the Board was considered to be appropriate, with an appropriate balance of experience, skills and capabilities. All Directors demonstrated commitment to their roles and contributed effectively. The main areas identified by the evaluation for continued focus were: • The further development and articulation of long-term strategy; and, • The further improvement in the effectiveness of the Company’s internal operational systems and processes, including IT systems. Stock code: BMY Annual Report and Accounts 2020 79 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 79 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:26 PM 27040 11 June 2020 8:07 pm Proof 227040 11 June 2020 8:07 pm Proof 2Progress against the 2018/2019 evaluationA summary of the Board’s progress against the actions arising from the 2018/2019 evaluation are set out below:ActionProgressIt would be appropriate to further the engagement of members of senior management in Board meetings.Presentations have been delivered by members of the senior management at Board meetings during the course of the year, including from members of the Sales and Marketing, IT and Finance teams.The Board should engage more on strategy and longer-term trends.A routine “Strategy” item is included on each Board agenda and remains an area of focus.The Company should review the methods by which the Company measures the satisfaction of authors with the service provided by the Company. Author engagement and satisfaction was considered as part of the Board’s overall consideration of stakeholder engagement. Further information on the Company’s engagement with key stakeholders is set out in the Strategic Report on pages 58 to 63.Succession planning and appraisals.Increased focus on career development and training as a means of supporting effective succession planning will be integrated into the formal appraisal process for 2019/2020.Board CommitteesBoard Committees are evaluated annually against their terms of reference and against adherence to relevant requirements of the Code and applicable regulations, as well as how they operate as an effective committee. They consider the evaluations and make recommendations to the Board on any changes needed to related Board processes and their terms of reference. During 2019 and 2020, the Board Committees also considered their roles in the light of the changes emerging out of the 2018 Code and how this impacted on their roles, responsibilities and the skills and experience of Committee members. The ChairmanThe present Chairman, Sir Richard Lambert, joined the Board in July 2017 and was considered independent upon his appointment. For 2019/2020, the Senior Independent Director led the evaluation of his performance through confidential discussions with the other Non-Executive Directors and a one-to-one interview with the Chairman. The outcome was reported to the Board who agreed with the assessment that the Chairman continued to lead the Board in an effective and positive manner. Directors The Board considers that each of the Directors proposed for re-election at the 2020 AGM continues to contribute effectively, and to demonstrate commitment, to their roles. The Board evaluation process is designed to identify whether each Director has refreshed their skills and knowledge sufficiently for their roles and whether there is anything that the Company can assist them with in the performance of their duties. Induction, training and developmentUpon appointment to the Board, all Directors undertake a comprehensive induction process, which includes dedicated time with the Executive team and senior management. Directors are also provided with induction materials, which comprise an overview of the Group and its organisational structure, the responsibilities of being a Director of a UK-listed Company, Board policies and procedures, minutes of previous Board and Committee meetings and details of the Board’s external advisers, amongst other information. In July 2019, Leslie-Ann Reed joined the Board and was supported by an induction programme of introductory meetings with Executive and Non-Executive Directors, senior management and advisers, and which included joining the Board for a routine Board meeting prior to her formal appointment. The Board and Committees receive regular updates on key governance and compliance issues during meetings. During the year, the External Auditor KPMG provided updates on developments in corporate governance, and auditing and financial reporting standards. External remuneration consultants New Bridge Street led a day’s training on long term incentive plans for the Non-Executive Directors, and Deloitte LLP provided an update on new requirements under the 2018 Code.Relations with Shareholders The Board, led by the Chairman, is responsible for ensuring an open dialogue with Shareholders based on the mutual understanding of objectives. The Annual Report, interim reports, AGM, market updates and post-results announcement presentations are the principal means through which the Company communicates its strategy and performance to Shareholders. All Shareholders are welcome at the AGM, which includes presentations on the business and an opportunity to ask questions. The Chairs of the Audit, Remuneration and Nomination Committees attend and are available to answer questions.The Company maintains an active dialogue with its institutional Shareholders and City analysts through a planned programme of investor relations. Twice a year, there are formal presentations of results, followed by a series of post-results meetings with Shareholders. The presentations are made available at www.bloomsbury-ir.co.uk. The outcome of these meetings is reported to the Board. This includes feedback from individual Directors and from discussions by the Company’s corporate broker or public relations representative with Shareholders and City analysts. This is used to help review and develop Bloomsbury’s procedures. In addition, the Chairman invites significant Shareholders to meet with him to discuss any matter of interest or concern. The Senior Independent Director is also available to Shareholders as required.www.bloomsbury.comBloomsbury Publishing Plccontinued80Corporate Governance Report27040-Bloomsbury-AR2020 - governance.indd 8011-Jun-20 9:50:28 PM27040 11 June 2020 8:07 pm Proof 227040 11 June 2020 8:07 pm Proof 2Dear Shareholder,I am pleased to present my report to you as Chair of the Nomination Committee which describes how the Committee has carried out its responsibilities during the year.Composition of the CommitteeThe Committee is comprised of the Chairman of the Board, who chairs the Committee, three Independent Non-Executive Directors and the Chief Executive. The members of the Committee during the year were:DirectorAppointed in the year (if applicable)Resigned in the year (if applicable)Sir Richard Lambert (Chair of the Committee)––Nigel Newton––Jill Jones–17 July 2019John Warren––Steven Hall––Leslie-Ann Reed17 July 2019–The Committee met twice during 2019/2020. The Committee members’ attendance can be seen on page 79 of this section of the Annual Report.Role of the CommitteeThe terms of reference of the Committee set out its role and authority. These are reviewed annually and can be found on the Company’s website, www.bloomsbury-ir.co.uk. In summary, the Committee’s responsibilities include:• Reviewing the size, structure and composition of the Board and making recommendations for changes to the Board where necessary;• Regularly monitoring and assessing the skills, knowledge, experience and diversity of the Board and senior management;• Reviewing the results of the Board performance evaluation process to include reviewing the composition and diversity of the Board and its Committees (taking into consideration the balance of skills, experience and knowledge required) and how effectively Board members work together to achieve objectives;• Reviewing annually the time required from Non-Executive Directors and the number of external appointments held and, in respect of any additional external appointments notified to the Board, considering the type of role, the expected time commitment and any impact which this might have on the Director’s duties to the Company; • Overseeing plans for the orderly succession to Board and senior management positions, taking into account the leadership requirements of the Company in the context of the challenges and opportunities facing the Company;• Leading the process for new appointments to the Board;• Identifying and making recommendations to the Board on potential candidates for appointment to the Board and senior management positions;• Overseeing the induction of new Directors and monitoring ongoing conflicts, time commitments, training and evaluation of the Board; and• Overseeing the Company’s approach to diversity and related initiatives in the context of developing a diverse pipeline for succession. Board appointment processThe Board appointment process is as follows: • The annual evaluation of Board effectiveness enables the Committee to identify any gaps in the skills, knowledge and experience needed or forecast in anticipation of Director resignations;Sir Richard LambertChair of the Nomination CommitteeAnnual Report and Accounts 2020GOVERNANCE81Stock code: BMYNomination Committee Report27040-Bloomsbury-AR2020 - governance.indd 8111-Jun-20 9:50:30 PMNomination Committee Report continued • The Committee then carries out a more detailed consideration of the Board’s structure, balance, diversity and succession planning needs; • An independent external recruitment consultant is appointed who performs a search to identify candidates meeting criteria agreed with the Nomination Committee. The external consultant carries out initial interviews with candidates and carries out background research on them to formulate a shortlist; • One or more Directors interview each candidate and feed back to the external consultant on the interview evaluation of the candidate; • References are taken and other background checks are made on candidates; • The Nomination Committee sitting together selects the final candidate and makes a recommendation to the Board; and • The Board has the final decision on appointing a candidate. Activities of the Committee during the year In 2019, the Nomination Committee completed the process of recruiting a Non-Executive Director to replace Jill Jones, who was not standing for re-election at the 2019 AGM. The Willis Partnership was appointed to handle the search for her replacement following an evaluation of the Board’s needs and the particular skills required. The selection process outlined above was followed. In May 2019 the Nomination Committee recommended, and the Board approved, the appointment of Leslie-Ann Reed to the Board. Her appointment was subsequently approved by Shareholders at the 2019 AGM. Other matters considered by the Committee during the year included: • The gender balance for direct reports to senior management; • Succession plans for the Board and senior management; • Conflicts of interest, time commitments, independence of directors, training and evaluation of the Board; • Diversity and inclusion in the Bloomsbury workforce; • The format of the Board evaluation and once completed, the consideration of the results and feedback; and • Review of revised terms of reference for the Committee. Oversight of the Company’s diversity and inclusion policy and practices Central to the Company’s mission and purpose is the promotion and dissemination of a multiplicity of voices on a vast range of topics from an international author base. Diversity and inclusion therefore inform the strategy which the Company adopts to realise its purpose. The Board recognises that diversity within the Company’s workforce and at senior levels of management may further serve this purpose and support the delivery of Bloomsbury’s strategic objectives. The Committee supports the Board in overseeing the Company’s diversity and inclusion policy and related HR strategies for the purposes of developing a strong and diverse talent pipeline for the future through recruitment, retention and development strategies designed to promote all aspects of diversity. The Committee receives periodic updates from the Director of Human Resources and the Head of the Diversity and Inclusion Working Group in respect of diversity and inclusion initiatives across the business. Further information in respect of diversity and inclusion can be found in the Corporate Responsibility section on page 54. The Committee has approved the Company’s Diversity and Inclusion Policy. Board diversity The Board recognises the benefits of greater diversity on the Board and in senior management positions throughout the Group. The Board aims for at least one-third, or the nearest number to a third, of Directors on the Board to be women. At present it has two women among its seven Directors. With the retirement of Jonathan Glasspool in July 2020, one-third of the Directors will be women. New appointments to the Board are selected by the Nomination Committee using independent search consultants based on merit as the best candidate for the role. The Board appreciates how diversity can enhance the Board’s effectiveness in decision-making where different skillsets and perspectives are present in the boardroom and may consider different aspects of diversity such as ethnicity, education and social background in connection with new appointments. The Board considers there to be a diverse pipeline of senior management with respect to gender balance. A majority of the Executive Committee and their direct reports are women. Board diversity Gender Balance of the Board Tenure n Male 5 n Female 2 n Chairman 1 n Non-Executive 3 n Executive 3 n 0–2 years n 2–4 years n 4–6 years n 6+ years 2 2 2 1 82 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 82 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:32 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE intends to take a more structured approach towards below Board succession planning by identifying high potential individuals within the business and providing a structured opportunity for such individuals to develop the skills and experience that would enable them to move into higher tier and/or senior management positions. Earlier in the year, the Company commenced running a bespoke Management Development programme targeted at UK line managers across all departments within the business to support personal development and career progression. The purpose of the programme is to enable individuals to develop the critical knowledge, skills, and behaviours needed in senior business positions. The intention is to run the programme twice per annum and eventually to roll the programme out globally. Re-election of Directors In 2016, the Board decided to follow best practice by requiring all Directors to retire at each AGM and stand for re-election. Annual re-election is now a requirement under the Code for a FTSE SmallCap company such as Bloomsbury Publishing Plc. The Articles of the Company would otherwise require all Directors to be subject to reappointment by the Shareholders at the first Annual General Meeting after their appointment and thereafter at intervals of no more than three years. Recent Non-Executive Director appointments by the Board have been for periods of up to four years. In 2016, the Board concluded that it would be best served by a policy of progressive refreshing of the Non-Executive Directors, anticipating annual appointments of new Non-Executive Directors and an average duration of such appointments of four years. During 2019 the Board reviewed this policy and decided it remained appropriate given that it retained flexibility to extend an appointment beyond four years where the circumstances made it appropriate to do so. The notice periods by the Company of the Directors are set out in the Directors’ Remuneration Report on pages 95 to 96. Sir Richard Lambert Chair of the Nomination Committee 20 May 2020 Further information on the gender balance at different levels of the Company can be found in the Company’s Gender Pay Gap Report on its website (www.bloomsbury-ir.co.uk). The Board is also committed to ensuring development of a more diverse executive pipeline and will be considering action to broaden the diversity of the global workforce. Board balance by experience and skills Bloomsbury Board members bring a wide range of experience and skills which support the Company's strategy. All Board members have strong leadership experience at global business and institutions. The Board believes it has an appropriate balance of skills, experience and knowledge, but the composition of the Board is kept under review to ensure any skill gaps are taken into consideration as part of ongoing succession planning. Details of the Board’s skills are set out at the bottom of this page. Succession planning The Committee considers succession planning at each meeting. Ensuring that suitable plans are in place for orderly succession to both the Board and senior management positions to ensure business continuity is even more significant in light of the coronavirus pandemic, due to the risk of Board members and members of senior management becoming incapacitated. The Committee focuses on succession planning at Board level in particular and during the year discussed succession plans for the Chief Executive. The size, structure and composition of the Board together with the knowledge, skills and experience of Directors is kept under review as part of assessing the overall effectiveness of the Board. In the event that a Director were to announce their resignation from the Board, the Committee would identify any resulting gaps in the skills mix and would make recommendations to the Board where appropriate on the skills, knowledge and experience that the replacement candidate should have. On the whole, the Board is satisfied that plans are in place for orderly succession to the Board. The Board is committed to recognising and nurturing a talent pipeline within the various management levels across the Group to ensure that opportunities are created to develop key individuals within the business. In 2020/2021, the Company Composition of the Executive Committee Executive Committee direct reports Board skills Plc experience Publishing and media Digital and technology CEO experience Finance experience Executive compensation Audit and Risk Governance Global markets M&A Business to business operations ESG n Male 2 n Female 5 n Male 17 n Female 30 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 83 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:33 PM Stock code: BMY Annual Report and Accounts 2020 83 27040 11 June 2020 8:07 pm Proof 227040 11 June 2020 8:07 pm Proof 2Dear Shareholder,I am pleased to present my report to you as Chair of the Audit Committee which describes the Committee’s operations during the financial year ended 29 February 2020.Composition of the CommitteeThe Committee is comprised of three Independent Non-Executive Directors. The Chair of the Committee is John Warren, a Fellow of the Institute of Chartered Accountants in England and Wales. The Board is satisfied that his experience and qualifications are sufficient for him to meet the experience and qualification requirements for at least one member of the Audit Committee to hold recent and relevant financial experience as required by the Code and Listing Rules. Leslie-Ann Reed also has extensive financial and Audit Committee experience. In addition, another Committee member, Steven Hall, is experienced in the field of publishing, enabling the Committee to have competence relevant to the sector in which the Company operates. The members of the Committee during the year were:DirectorAppointed in the year (if applicable)Resigned in the year (if applicable)John Warren (Chair of the Committee)––Jill Jones–17 July 2019Steven Hall––Leslie-Ann Reed17 July 2019–The Committee met four times during 2019/2020. The Committee members’ attendance can be seen on page 79 of this section of the Annual Report. The Committee typically invites the External Auditor, the Head of Internal Audit, the Chairman of the Board, the Group Finance Director and the other Executive Directors to attend meetings. There is a standing item on the agenda for the External and Internal Auditors to meet the Committee alone without management present, enabling Committee members or Auditors to share any concerns that they may have.Role of the CommitteeThe terms of reference of the Committee set out its role and authority. These are reviewed annually and can be found on the Company’s website, www.bloomsbury-ir.co.uk. In summary, the Committee’s responsibilities include:• Monitoring the integrity of the financial and narrative statements of the Company and any formal announcements relating to the Company’s financial performance; reviewing significant financial reporting judgements contained therein;• Overseeing the review of the Annual Report and Accounts and advising the Board on whether taken as a whole it is fair, balanced and understandable and provides the necessary information for Shareholders to assess the Company’s performance, business model and strategy;• Reviewing and advising the Board on the going concern assessment and viability statement;• Evaluating the Company’s internal controls (including financial controls and controls relating to legal and regulatory compliance) and risk management systems;• Reviewing and approving the statements made in the annual report and accounts in respect of the Company’s internal control policies and risk management procedures;• Monitoring and reviewing the effectiveness and independence of the Company’s internal audit function;• Making recommendations to the Board, for it to put to the Shareholders for their approval in a general meeting, in relation to the appointment, reappointment and removal of the External Auditor and to approve the remuneration and terms of engagement of the External Auditor; John WarrenChair of the Audit Committeewww.bloomsbury.comAudit Committee Report84Bloomsbury Publishing Plc27040-Bloomsbury-AR2020 - governance.indd 8411-Jun-20 9:50:37 PMGOVERNANCE • Reviewing and monitoring the External Auditor’s • The adequacy of sensitivity disclosures in relation to independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements; Academic & Professional goodwill, particularly in the context of the coronavirus pandemic (note 11); • The impact of the coronavirus pandemic on the going • Developing and implementing policy on the engagement of the External Auditor to supply non-audit services, taking into account relevant guidance regarding the provision of non- audit services by the external audit firm; • Reporting to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken; and • Reporting to the Board on how it has discharged its responsibilities. Activities of the Committee during the year During the year, amongst other matters, the Committee considered: • The impact of adopting accounting standards – these are covered in more detail under the heading of Significant financial reporting matters below; • The annual and interim results and associated announcements, recommending them to the Board for approval; • The Annual Report and Accounts, recommending them to the Board for approval; • The analysis supporting the viability statement and the going concern assessment; • The appointment and remuneration of the External Auditor; • The External Auditor’s audit strategy for the year, agreeing the risks identified therein; • The effectiveness of the Internal Audit function. For 2019/2020, the Committee considered that it would be appropriate to adopt a revised approach to the internal audit function, which is further described below under the heading of Internal Audit; • At each meeting, the Group’s internal controls policies and associated risk management framework to assess the scope and effectiveness of these matters. The approach to these matters is further elaborated on below while the principal risks facing the Company are described in the Risk Factors and Risk Management section on pages 40 to 45, which also explains how each risk is managed and mitigated; and • Revised terms of reference for the Committee. Significant financial reporting matters The Committee considered: • The impact of adopting IFRS 16 and the resulting changes including disclosure requirements. Further details are supplied in note 2w to the financial statements; • Assessment of whether the acquisition of Oberon Books Limited should be treated as an asset purchase or a business combination under IFRS 3; • The adequacy of provisions made in relation to key balance sheet estimates, specifically including the sales return provision and provision against unearned author advances; concern assessment; • The treatment of rights and services revenues from licences over Bloomsbury’s IP to third parties, as stated in note 2g to the financial statements. The revenue recognised from these licences in any one period reflects the value of contracted performance obligations satisfied in that period. The revenue recognition treatment for more complex deals is reviewed and agreed with the Group Finance team before the contract is signed; and • That the Group’s annual and interim financial statements, after review and taken as a whole, are fair, balanced and understandable, and provide the necessary information to assess the Group’s position and performance, business model and strategy. In addition, it considered that they met the necessary legal and regulatory requirements. External Auditor The Audit Committee has primary responsibility for making a recommendation on the appointment, reappointment and removal of the External Auditor and approving their remuneration and terms of engagement. The role of External Auditor was tendered following the 2013 AGM and the Board appointed KPMG LLP as External Auditor for the Group and for the Company for audits for the year ended 28 February 2014 and onwards. The detailed tender process followed is set out in the Annual Report for that year. The Group will continue to comply with the relevant tendering and auditor rotation requirements applicable under UK and EU regulations, which require the next external audit tender to occur for the year ending 28 February 2024. The External Auditor is required to rotate the audit partner responsibility for the Group audit every five years. Sarah Styant has been KPMG’s audit partner for the Company since the 2018/2019 audit and attends all meetings of the Committee. During the year, the Committee assessed the effectiveness of the external audit process and were satisfied with the scope, direction and outcome of work. In forming its view the Committee considered: • The quality of audit work undertaken and resulting findings; • The scope of the External Auditor’s work and whether the External Auditor deployed sufficient resources to complete their agreed programme; and • The independence and objectivity of the External Auditor, confirmed in a letter addressed to the Committee. The Committee was satisfied that KPMG was an effective External Auditor and recommended to the Board that the reappointment of KPMG as External Auditor be put to the Shareholders at the 2019 AGM. The External Auditor’s terms of engagement and remuneration were approved. Details of the amounts paid to KPMG are provided in note 4 to the Accounts. Stock code: BMY Annual Report and Accounts 2020 85 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 85 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:37 PM Audit Committee Report continued External Auditor non-audit services The Committee has approved a formal policy on the provision of non-audit services to safeguard the independence and objectivity of the External Auditor and reviews the level of non-audit fees relative to audit fees. The full policy can be found on the website www.bloomsbury-ir.co.uk. A list has been approved by the Committee of services that the External Auditor is prohibited from undertaking. Other than the half year review, during 2019/2020, KPMG did not supply any non- audit services to the Group. Internal controls and risk management The Code requires the Directors to assess at least annually the effectiveness of the Group’s systems of internal control, which include financial, operational and compliance controls, and the system of risk management. The Board has put in place an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. This procedure has been in place for the year under review and up to the date of approval of this Annual Report. The procedure will regularly be reviewed by the Board and the Audit Committee to ensure that the procedures implemented continue to be effective and that, where appropriate, recommendations are made to management to improve the procedures. The Audit Committee reviews the internal control and risk management systems and internal financial controls while the Board considers the principal risks to the business, the countermeasures in place and the Group’s appetite for risk. The Board retains overall responsibility for the Group’s internal controls and for reviewing their effectiveness and for approving all related policy. These internal controls are designed to manage rather than eliminate risk, and can only provide reasonable, and not absolute, assurance against material loss. Until 2018/2019, internal control questionnaires (“ICQ”) were used to assess the internal controls across the Group worldwide at least twice annually. Outcomes of assessments were reported regularly to senior management and at each Audit Committee meeting. The Audit Committee considered reports from External and Internal Audit to ensure that adequate measures were being taken by management to address risk and control issues. Following consideration by the Committee, it was determined that a risk-based approach to internal controls should be adopted from 2019/2020 onwards, to ensure that internal controls policies and procedures directly and adequately address the specific risk factors relevant to the Company. Further explanation is provided below under the heading Internal Audit. Internal controls are reviewed regularly throughout the year with relevant business areas and consideration is given to identifying any actions required to improve the effectiveness of the key controls. The Audit Committee receives reports on the internal controls and progress in respect of any actions identified as necessary to improve the system of controls three times a year. records are maintained, that the financial information used within the business and for publication is reliable, that business risks are identified and managed and that compliance with appropriate legislation and regulation is maintained. Overall, the Board confirms it has monitored the Group’s risk management and internal control systems and carried out a review of their effectiveness covering all material controls, including financial, operational and compliance controls. Internal audit The internal audit function is responsible for providing independent assurance to management and the Audit Committee on the design and effectiveness of internal controls to mitigate strategic, financial, operational, and compliance risks. During 2019/20, the Committee determined that it would be appropriate to co-source the function using both internal and external resources, while retaining its oversight, and the Committee approved the engagement of Grant Thornton for this purpose. Martin Gardner, partner at Grant Thornton, was appointed as the Head of Internal Audit, reporting to the Chair of the Audit Committee. During the year, the Company worked with Grant Thornton to deliver a risk-based audit approach to internal controls and internal audit. Key controls covering the Group’s key risk areas were developed and reviewed in consultation with the heads of relevant business areas and with Grant Thornton. These are reviewed and reported to the Audit Committee three times a year. The internal audit mandate and plan for the relevant year is approved by the Committee, and is aligned to the Company’s greatest areas of risk. In preparing Bloomsbury’s internal audit plan for 2020/2021, Grant Thornton identified those areas from the Group risk register that could have a significant impact on the business, should the risk crystallise. Out of the auditable areas identified, the Committee approved the internal audit plan proposed by Grant Thornton to conduct two risk-based audits in the following areas: • Key financial controls: to review the internal control framework covering period-end close, including areas such as accounts payable, accounts receivable and accruals; and • Cybersecurity: to review cyber and information security arrangements, focused on ensuring that key controls are in place. Internal control and risk management framework The preparation of the consolidated financial statements of the Company is the responsibility of the Group Finance Director and is overseen by the Audit Committee with overall responsibility resting with the Board. This includes responsibility for ensuring appropriate internal controls are in place over financial reporting processes and related IT systems. The Audit Committee monitors the risks and associated controls over financial reporting processes, including the consolidation process. The Company’s system of internal financial control aims to safeguard the Group’s assets, ensures that proper accounting The Risk Factors and Risk Management section on pages 40 to 45 sets out how the Board has taken account of the Group’s 86 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 86 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:37 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE current position and principal risks and how it has assessed the prospects of the Group over a period of three years. The Board has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the assessment period. Relevant features of the Company’s system of internal controls and risk management in relation to the financial reporting process and preparation of the Group financial statements include: • Organisational culture: The Company has a highly skilled, professional and committed workforce. The Board is committed to developing a culture of openness, integrity, competence and responsibility. The Company has in place a Group Whistleblower Policy and an Anti-Bribery and Corruption Policy. • Organisational structure: The One Global Bloomsbury structure comprises the worldwide publishing divisions supported by Group functions (finance, IT, production, sales and marketing) which provide an internal control service to the business as internal control pillars within the Group’s internal control framework. • Risk and control review: The framework for oversight of the Group’s internal controls and risk management process by the Board and the Audit Committee is described above. In addition, the Executive Committee (which comprises the divisional and Group function heads and Executive Directors) are asked to review the Group risk register and accompanying controls and actions for each risk. This ensures that risks and control issues from around the Group worldwide are reported openly to the senior management team and addressed. The Board regularly reviews the significant Group risks to ensure appropriate action is taken to address the risks. The Audit Committee reviews the risks, in particular the financial risks and issues that could impact on reporting, when considering the financial statements. • Financial internal control and risk review: The Group Finance Director formally reviews the internal financial controls, taking account of the risks within the financial information systems, and reports the findings of this review to the Audit Committee. Analytical review of operating results and detailed control questionnaires completed for the publishing divisions and overseas offices supplement management’s knowledge of the business for the evaluation of the risks and assessment of the internal financial controls. The Audit Committee also receives reports on the internal controls and risks provided by the Internal Auditor. The Audit Committee receives other reports from management relevant to the internal financial controls such as reports on the progress of key projects. • Authority levels: The Board maintains a detailed register of delegated authorities and sets the level of authority required, before Board approval is needed, to commit the Company or to undertake transactions. It also approves budgets and other performance targets. The publishing divisions and Group functions operate within these authority levels and budgets. The Executive Directors determine the authority to be delegated to individual managers. • Financial management reporting: The Board approves the annual Group budget. Sales are reported daily, weekly and monthly. Financial results of the business operations are reported monthly and compared to budget and forecasts. Detailed forecasts for the Company are updated regularly and reviewed by the Board. • Book title acquisition procedures: Established procedures, such as the review and approval by an Executive Director of acquisition proposals of rights to new books (and approval by the Chief Executive of acquisitions over a specific threshhold), are operated within set authority limits and used for transactions in the ordinary course of business. Acquisitions exceeding delegated authority limits require approval by the Board. Significant acquisitions of companies and businesses are approved by the Board. The Board has set authorised limits for the total author advances held on the Statement of Financial Position as a percentage of net assets and for the total value of committed but unpaid advances. • Accountability: The Company has clearly defined lines of responsibility headed by the Chief Executive and Executive Committee to control the publishing divisions and business functions. Detailed operational and financial performance data are monitored by supervisory management to ensure the performance of operations is in line with targets. The reasons for variances and underperformance are established by supervisory line management and followed up with managers and staff. • Overseas offices: Each overseas office has a local manager or managing director who is responsible for operational effectiveness and local internal controls. Accounting for the Group is centralised and overseas subsidiaries hold limited cash balances. Senior managers and Executive Directors regularly visit the overseas offices and the finance function conducts operational review visits to review the procedures. • Internal audit: For 2019/2020, a risk-based audit approach was used to identify and assess the key internal controls across the Group worldwide. The Audit Committee considers reports from External and Internal Audit to ensure that adequate measures are being taken by management to address risk and control issues. Significant failings or weaknesses in the internal controls Following its review, the Committee concluded that the systems of risk management and internal controls are adequate for Bloomsbury, including all the Group companies. There were no significant internal control weaknesses identified that challenged the Group in achieving its objectives. Committee effectiveness The Committee’s annual evaluation review, which was conducted as part of the 2019/2020 Board evaluation, confirmed that the Committee was continuing to function effectively. John Warren Chair of the Audit Committee 20 May 2020 Stock code: BMY Annual Report and Accounts 2020 87 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 87 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:37 PM 27040 11 June 2020 8:07 pm Proof 227040 11 June 2020 8:07 pm Proof 288Bloomsbury Publishing PlcDear Shareholder,I am pleased to present my first Directors’ Remuneration Report (the “Report”) as Chair of the Remuneration Committee for Bloomsbury Publishing Plc for the year ended 29 February 2020. I would like to take this opportunity to thank Jill Jones for her commitment and contribution during her time as Chair of the Committee. The Report has been prepared on behalf of the Bloomsbury Board by the Remuneration Committee and has been approved by the Board. Outline of the Remuneration Report The Report is split into the following two sections:• Part A, the Remuneration Policy Report, which sets out the proposed new Remuneration Policy for the Executive and Non-Executive Directors to be put to Shareholders for approval at the 2020 AGM and which, subject to Shareholders’ approval, will operate from 1 March 2020 and become formally effective from the 2020 AGM; and • Part B, the Annual Report on Remuneration, which discloses how the current Remuneration Policy (approved by Shareholders at the 2017 AGM) was implemented for the year ended 29 February 2020 and how the proposed Remuneration Policy referred to above will be implemented for the year ending 28 February 2021 (subject to Shareholders’ approval). The Annual Report on Remuneration will also be subject to an advisory Shareholder vote at the forthcoming AGM on 21 July 2020. Performance and reward for 2019/2020The Group delivered a strong performance over the year to 29 February 2020 which was reflected in the financial results. Group profits before taxation and highlighted items increased by 9% to £15.7 million. Profits before taxation increased by 10% to £13.2 million. The Company had intended to declare a final dividend for the year of 6.89 pence per share. This would have resulted in a total dividend for the year of 8.17 pence per share, up 3% on the previous year. As previously announced, and as explained in the Chief Executive’s Review on page 12, the Company has decided, in light of the coronavirus pandemic, to conserve cash and will not therefore be paying a cash dividend. It is now proposed, subject to Shareholder approval, that the dividend is instead settled through the issuance of new Ordinary shares by way of bonus issue to Shareholders, with a value equivalent to the proposed final dividend.Annual bonusAnnual bonus payments to the Executive Directors are based on a combination of financial and strategic measures. The majority (70%) of the bonus is based on financial measures, (the “Profit Target bonus”), the remainder (30%) is based on strategic measures (the “Strategic Objectives bonus”). For 2019/2020, the Committee set a stretching threshold target for profit, taking into account the Group’s budget, analyst consensus forecasts and other factors. Profit above the threshold target set by the Committee accrues into a bonus pool (until the pool becomes fully funded), with distributions from the pool linked to achievement of financial and strategic objectives. Despite positive achievement during the year, there was a nil payout for Executive Directors under the bonus scheme in respect of 2019/2020, due to the bonus pool being insufficiently funded.Long Term Incentive Plan (“LTIP”) vesting The LTIP awards granted on 27 July 2017 (“2017 PSP Award”) and due to vest in July 2020 were subject to EPS and ROCE performance conditions. Up to half of the award could vest under each of these two performance conditions, with the ROCE element subject to an additional underpin whereby the Committee would consider the underlying performance of the business and apply discretion should it consider it appropriate to do so.Steven HallChair of the Remuneration Committee www.bloomsbury.comDirectors’ Remuneration Report27040-Bloomsbury-AR2020 - governance.indd 8811-Jun-20 9:50:41 PMGOVERNANCE Bloomsbury delivered EPS growth of 7.4% in excess of RPI over the three-year performance period, resulting in 91% of this element vesting, and ROCE of 12.2%, which exceeded the maximum target of 11%. Accordingly, the 2017 PSP Award will vest in July 2020 at 96% of maximum. The Committee considers that this result appropriately reflects the progress Bloomsbury has made over the last three years. All vested shares for Executive Directors will be subject to an additional two-year holding period, which will ensure that awards to Executive Directors will remain aligned with our Shareholders for an extended period. The outcome of the 2017 PSP Award is also shown in tabular form in Part B of the Remuneration Report on page 99. Review of the Remuneration Policy and remuneration arrangements for 2020/2021 The current Directors’ Remuneration Policy was approved by Shareholders at the 2017 Annual General Meeting, with strong support from our Shareholders with 99.5% of votes cast in favour. In line with UK reporting regulations, the Company is required to submit a new Policy to Shareholders for approval at the 2020 AGM. During the year, the Committee undertook a comprehensive review of the current Policy to ensure that it continues to incentivise the sustainable delivery of the Board’s strategy, strong financial performance and the creation of long-term Shareholder value, with input from Committee members, Executive Directors, Shareholders and the Company’s independent advisers. Whilst it was determined that the overall structure of the current Policy continues to operate effectively and should remain unchanged, the new Policy has been updated to reflect the 2018 Code, Shareholders’ feedback and recent developments in market and best practice. The maximum incentive opportunities will remain unchanged. A summary of the key changes are: • The maximum pension contribution rate for new Executive Directors joining the Board will be aligned with the employer contribution rate available to the wider workforce; • Executive Directors will be expected to build and maintain a shareholding equivalent to 200% of basic salary (increased from 100% of basic salary). Executive Directors will be expected to retain all shares from vested PSP Awards or purchase shares until the guideline is met; • When an individual steps down as an Executive Director, they will be expected to retain the full shareholding guideline of 200% of basic salary (or actual shareholding if lower) tapering down to nil over two years; and • The circumstances in which malus and clawback can be enforced have been widened to ensure that the Committee has the ability to prevent payments for failure. The Committee is also proposing a change to the PSP performance measures for the 2020 PSP Award. The Committee is keen to ensure that performance measures for PSP awards are simple, reward the successful execution of the Company’s strategy, support long-term sustainable performance and align with the Shareholders’ interests. The performance measures attached to the 2020 PSP Award will be based on EPS (60%), Non-Consumer operating profit (15%), Consumer operating profit (15%) and BDR revenue (10%). While ROCE will not be used as a metric for the 2020 PSP Award, the Committee considers that strong performance under each of the selected metrics will in turn positively contribute to stronger return on capital. The Committee will keep the measures and weightings under review to ensure that they continue to support the long-term success of the Company. Given the impact of the coronavirus crisis on the sector, the Committee is still in the process of finalising the detail of the target ranges, and is currently in the process of consulting with our major Shareholders. Once finalised, our current intention is to disclose the detail of the targets on our website ahead of the AGM. The annual bonus for 2020/2021 will continue to be based on a combination of financial and operational metrics. Inevitably, the detail of the targets will need to be adapted to reflect the very specific challenges that the business will face in the coming months. When determining outcomes for the year, the Committee will need to be particularly mindful of overall affordability and the approach taken for the wider employee population and exercise discretion as appropriate. In line with the Group’s general workforce, for 2020/2021, an annual increase of 2% was applied to the Executive Directors’ base salaries and to the fees of the Chairman of the Board with effect from 1 March 2020. The Chairman of the Board and the Executive Directors approved a similar increase of 2% to Non-Executive Directors fees for 2020/2021. Since the coming into effect of these increases, all the Directors (Executive and Non-Executive) have voluntarily agreed to a temporary reduction of 30% to base salary and fee payments for a period of at least three months from 1 April 2020, as one of a number of measures taken by the Company to mitigate the impact of the coronavirus crisis by conserving cash and reducing costs. Similar arrangements have also been implemented across the employee base. The Company intends to review this approach in July 2020, and consider whether any further extension of the arrangement is required. At the end of the financial year, consideration will be given to whether it is appropriate to reimburse (either in part or in full) the discounted element of salary/fees in respect of the year. This assessment will take into account various factors, including evolving market conditions, the underlying financial health of the business and the approach taken for wider employees. On appointment to the role of Group Finance Director, Penny-Scott Bayfield was recruited on a salary below that of her predecessor, and below market, on the basis that once her expertise and performance were proven and she was fully operating in the role of Group Finance Director, her salary would be increased, in line with the Group’s recruitment approach. Penny’s salary will be reviewed further during the course of the year. Stock code: BMY Annual Report and Accounts 2020 89 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 89 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:41 PM Directors’ Remuneration Report continued Executive Director changes On 29 October 2019, the Company announced that Jonathan Glasspool will step down from the Board on 21 July 2020, being the date of the AGM, and will retire from Bloomsbury on 31 July 2020. He will not receive any payment in lieu of notice or any ex-gratia payment, and he will not be granted an award under the 2020 PSP Award. The Committee has determined that Jonathan shall be eligible for any bonus that may be awarded in respect of 2020/2021 on a time pro-rated basis. In light of his long service, the Committee decided to confirm Jonathan’s status as a “good leaver” for the purposes of outstanding incentive awards. All awards will be subject to time pro-rating, with performance assessed at the end of the relevant performance period. Implementation of the new Policy in 2020/2021 The Committee consulted with Shareholders regarding the changes to the Policy and the final proposals reflect the feedback received from Shareholders. The Committee is grateful to Shareholders for the time they have given to participating in the consultation process. Your contributions resulted in changes to our proposal and helped to frame the Committee’s discussions and facilitate a more robust decision-making process. We hope that you will find this 2020 Remuneration Report clear and helpful, and of course welcome Shareholder feedback. Steven Hall Chair of the Remuneration Committee 20 May 2020 Part A – Remuneration Policy Report Introduction The Directors’ Remuneration Policy is set out in this section. This Policy will be put to a binding Shareholder vote at the AGM on 21 July 2020 and, if approved, will immediately come into effect from this date. In determining the Remuneration Policy, the Committee applies the key principles that remuneration should: • Attract and retain suitably high calibre Executive Directors and ensure that they are motivated to achieve the highest levels of performance including delivering strategic initiatives and objectives and driving sustainable long-term value for Shareholders; • Align the interests of the Executive Directors with those of the Shareholders and wider stakeholders; and • Not pay more than is necessary. The current Policy was approved by Shareholders at the 2017 AGM with strong support from 99.4% of Shareholders. In determining the new Policy, the Committee followed a robust decision-making process. The Committee discussed the detail of the Policy over a series of meetings in 2019 and early 2020 taking into account the strategic priorities of the business, evolving market practice and investor guidance. In line with the 2018 UK Corporate Governance Code (the “Code”), the Committee also assessed the Policy against the principles of clarity, simplicity, risk management, predictability, proportionality and alignment to culture. Throughout this Policy review process, input was sought from both the management team, while ensuring that conflicts of interests were suitably mitigated, and the Committee’s independent advisers. The Committee also consulted with major Shareholders, their representatives and institutional proxy agencies, as outlined below. While the key features of the current Policy remain unchanged, the new Policy has been updated to reflect feedback from Shareholders, the 2018 Code and recent developments in market and best practice. Key changes to the new Policy include: • Pensions – pension contributions for any new Executive Director appointments will be set in line with the applicable wider workforce rate; • Shareholding guidelines – the in-employment shareholding guideline for Executive Directors has been increased from 100% of salary to 200% of salary. A post-employment shareholding guideline has also been introduced; and • Malus and clawback – the circumstances under which malus and clawback can be applied have been expanded. Other minor changes have been made to the Policy to increase flexibility and transparency as well as aid its operation and to reflect evolving market practice. Consideration of Shareholder views As part of this year’s Policy review, the Remuneration Committee engaged directly with major Shareholders and their representative bodies. All feedback received during this process was carefully considered by the Committee, and resulted in changes to our proposals prior to the finalisation of the new Policy. 90 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 90 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:41 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE In general, the Committee considers any Shareholder feedback received in relation to the remuneration resolutions tabled at the AGM each year. This feedback, plus any additional feedback received during any Shareholder meetings from time to time, is considered as part of the Group’s annual review of the Remuneration Policy and its implementation. In addition, the Remuneration Committee will seek to engage directly with major Shareholders and their representative bodies should any material changes be proposed to the Remuneration Policy at any time. Remuneration Policy for Executive Directors – Policy Table The following table summarises each element of the remuneration policy for the Executive Directors, explaining how each element operates and links to the corporate strategy. Performance targets • N/A Element Salary Purpose and link to strategy Operation • Reflects the value of the individual and their role • Reflects skills and experience over time • Provides an appropriate level of basic fixed income avoiding excessive risk taking arising from over-reliance on variable income • Normally reviewed annually and effective 1 March, although salaries may be reviewed more frequently or at different times of the year if the Committee determines that this is appropriate • Takes into account the role, personal experience and performance, business performance, wider workforce policies, and comparisons against companies with similar characteristics and sector comparators Maximum opportunity • No maximum base salary or maximum salary increase operated • Annual increases are typically linked to those of the wider workforce, but with scope for higher increases in circumstances including (but not limited to): • Change in role • Where salaries are below market levels • Enhanced performance and experience of the individual Pension • Provides role- appropriate retirement benefits • Opportunity for Executive Directors to contribute to their own retirement plan • Defined contribution/ • For new Executive • N/A salary supplement or cash payment in lieu of pension contribution Directors, the maximum contribution rate will be in line with the employer contribution rate available to the majority of the workforce • For incumbent directors, up to 15% of salary Other benefits • To aid retention and recruitment • Benefits include but are • There is no • N/A not limited to: company car or car allowance, and the provision of private medical/ permanent health insurance and life assurance maximum but benefits will be appropriate in the context of the role 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 91 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:42 PM Stock code: BMY Annual Report and Accounts 2020 91 Directors’ Remuneration Report continued Element Purpose and link to strategy Operation Maximum opportunity Performance targets Annual bonus • Incentivises annual delivery of financial and strategic goals • Maximum bonus only payable for achieving demanding targets Long term incentives: Performance Share Plan (PSP) • Aligned to main strategic objectives of delivering sustainable profit growth and Shareholder return • Normally paid in cash, but may be delivered in shares at the discretion of the Committee • Not pensionable • Performance assessed over a one year period • Measures and targets are set each year, normally based on the Group’s business plan as at the start of the financial year • Annual bonus outcomes are typically determined by the Committee following the year end based on performance against pre- determined objectives • Where awards are deferred into shares, dividends (or equivalents) may be payable on any shares that vest • Annual grant of nil cost options or conditional awards (or economic equivalent) which normally vest subject to continued service and performance targets assessed over three years • Any vested shares must normally be held by the Executive for a further two years • Dividend (or equivalents) may be payable to the extent that shares under award vest • 100% of salary • Group financial objectives (majority) • Strategic objectives, including personal objectives (minority) • Performance measures may be varied year-on-year based on the Company’s strategic priorities • The level of payout for threshold performance will vary depending on the nature of the measure and the stretch of the targets. For performance between threshold and maximum hurdles, award levels are appropriately scaled • The Committee may adjust the formulaic outcome where it believes the outcome does not reflect the Committee’s assessment of the underlying financial or non-financial performance of the Company/ individual or is not appropriate in the context of circumstances that were unexpected or unforeseen at the start of the bonus year • Malus and clawback provisions apply. Further details set out below • Normal grant policy is 100% of basic salary in respect of any financial year • Under the • Vesting of PSP awards will be based on performance against relevant financial and strategic non-financial metrics as determined by the Committee Shareholder approved plan rules, enhanced award levels may be granted up to 150% of salary (e.g. upon an Executive Director’s appointment) • Up to 25% of awards will vest at threshold performance increasing to full vesting at maximum performance levels • For awards granted in 2020, vesting will be based on EPS (60%), Non-Consumer operating profit (15%), Consumer operating profit (15%) and BDR revenue (10%) • The Committee may adjust the formulaic outcome where it believes the outcome does not reflect the Committee’s assessment of the underlying financial or non-financial performance of the Company/ individual or is not appropriate in the context of circumstances that were unexpected or unforeseen at the time of grant • Malus and clawback provisions apply. Further details set out below 92 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 92 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:42 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE Maximum opportunity Performance targets • Prevailing HMRC • N/A limits apply Element All-employee share plans Purpose and link to strategy • To encourage employee share ownership by employees and therefore alignment with Shareholders Operation • Eligible to participate in any HMRC-approved all- employee plan on the same basis as other employees • The Company currently operates an HMRC tax- advantaged savings plan to fund the exercise of share options over three or five- year savings arrangements (Sharesave) • The exercise price may be discounted by up to 20% • Provides tax advantages to UK employees Notes to the Policy table: 1 A description of how the Company intends to implement this Policy in 2020/2021 is set out in the Annual Report on Remuneration. As noted on page 89, a temporary reduction has been made to salaries and fees for Board Directors in respect of the current year. Where such temporary reductions are made, the Company reserves the ability to reimburse (either in part or in full) the discounted element of salary/fees in respect of the year having taken into account all factors deemed relevant (e.g. underlying financial health). 2 The choice of the performance metrics applicable to the annual bonus or long term incentive scheme will reflect the Company strategy at the time of grant. Targets are set by the Committee taking into account internal and external reference points, including the Company’s business plan, to ensure that they are appropriately stretching. Annual bonus – The annual bonus metrics are designed to provide an appropriate balance between incentivising Executive Directors to meet financial targets for the year and to deliver on specific strategic objectives to ensure the business is well positioned to deliver sustainable financial growth and Shareholder value in the future. The annual bonus performance targets are therefore based on a combination of financial, operational and strategic objectives, which provide clear alignment to the Company’s KPIs and strategic priorities. PSP – For the 2020 PSP Award, the Committee has taken the opportunity to review performance metrics to ensure that they continue to support the strategic ambitions of the Company as well as the creation of sustainable value for Shareholders. The Committee continues to consider EPS an appropriate measure that encourages management to grow earnings for Shareholders over the longer term. Consumer and Non-Consumer profit targets as well as BDR revenue targets have been included this year to align with the Company’s strategy of growing our product portfolio and our digital presence in a sustainable and balanced way. The Committee will keep the measures and weightings under review to ensure that they support the long-term success of the Company. Malus and clawback provisions The annual bonus and PSP incorporate malus and clawback provisions. These enable the Company to reduce the size of unvested awards and to claw back awards for up to three years following the date when the performance outcome is determined, and in respect of the PSP, three years from the date of vesting. The circumstances under which malus and clawback may be applied include: • Material misstatement in the Company’s financial results; • Assessment of performance conditions based on an error, or on inaccurate or misleading information; • Serious misconduct on the part of the participant; • Serious reputational damage; or • Material corporate failure. The above circumstances apply for all annual bonus and PSP awards made from 2020 onwards. Previous incentive awards are subject to malus and clawback provisions in the first three circumstances only. The Committee is satisfied that the above provisions provide robust safeguards against inappropriate payment of incentive awards. Further details The Committee reserves the right to make remuneration payments and payments for loss of office (which includes exercising related discretions) that are not in line with this 2020 Policy if the terms of the payment were agreed: 1) Before the Policy came into effect, if the payment was made in line with the policy in force at the time or was otherwise approved by Shareholders; 2) At a time when the recipient was not subject to the Policy, provided the Committee does not consider the payment to have been made in consideration of the recipient becoming subject to the Policy. For these purposes “payment” means any payment that would otherwise be subject to the Policy and, in relation to a share award, will not be considered to have been “agreed” any later than the date of grant. The Committee may make minor amendments to the Policy (e.g. for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation) without obtaining Shareholder approval for that amendment. Stock code: BMY Annual Report and Accounts 2020 93 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 93 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:42 PM Directors’ Remuneration Report continued Awards granted under the Company’s share plans will be operated in accordance with the relevant plan rules and applicable regulations. Under the plan rules, the Committee retains a number of discretions concerning the operation of the Company’s share plans. This includes: 3 Maximum assumes full bonus payout (100% of salary) and the full face value of the PSP (100% of salary), in addition to fixed components of remuneration. 4 In addition, a further performance scenario, comprising fixed pay and the maximum value of incentive arrangements with 50% share price growth applied to the PSP, has been included. • Determining the participants (including for Executive Directors and below the Board), timing of grants, size of awards and performance conditions; 5 Basic salaries, pension and car allowance used are effective as at 1 March 2020. During 2020/2021, in light of the coronavirus pandemic and its impact on the Company, the Executive Directors voluntarily agreed to a 30% reduction in their salaries. These reductions have not been reflected in the above scenarios. • Determining the vesting of awards, including both the timing 6 For simplicity, no share price growth (other than in the scenario stated above) and level of vesting; • Where possible under the plan rules, determining that awards may be settled in cash rather than shares, where the Committee considers this appropriate (e.g. due to local securities law); and • Making adjustments in accordance with the relevant provisions of the relevant plan rules, including adjustments to awards to reflect one off corporate events, such as a change in the Group’s capital structure. Reward scenarios The remuneration package comprises both fixed elements (base salary, pension and benefits) and performance-based variable elements (cash bonus and PSP). The structure of the remuneration packages for on-target and stretch performance for each of the Executive Directors for 2020/2021, in line with the Remuneration Policy, is illustrated in the bar charts below. Nigel Newton - Chief Executive (£’000) Maximum + share price appreciation 33% Maximum 33% 27% 31% 27% 13% £1,719k 31% £1,487k Target 55% 23% 23% £1,023k Minimum 100% £559k 0 500 1000 1500 2000 Penny Scott-Bayﬁeld - Group Finance Director (£’000) Maximum + share price appreciation Maximum 32% 37% 27% 32% 27% 14% £879k 32% £759k Target 54% 23% 23% £519k Minimum 100% £279k 0 200 400 600 800 1000 Fixed elements Bonus PSP Share price appreciation Notes: 1 The minimum performance scenario comprises the fixed elements of remuneration only, based on salary, pension and car allowance as per policy for 2020/2021. 2 The target level of bonus is assumed to be 50% of the maximum bonus opportunity (100% of salary), and the target level of PSP vesting is assumed to be 50% of the face value assuming a normal grant level (100% of salary). These values are included in addition to the components/values of minimum remuneration. has been factored into the calculations. The value of any Sharesave awards and notional dividends accruing on vested PSP shares has been excluded. Executive Director share ownership guidelines Under the guidelines, the Executive Directors are expected to build and maintain a shareholding equivalent to 200% of basic salary (increased from 100% of salary) with no upper limit on the number of shares they may hold. Executive Directors are expected to retain all shares arising from vested PSP awards (net of tax) or purchase shares until the shareholding guideline is met. Executive Directors will be subject to a post-employment shareholding guideline. Further detail on the operation of shareholding guidelines are set out in the Annual Remuneration Report. Approach to recruitment and promotions The remuneration package for any new Executive Director would be set in accordance with the terms of the Company’s approved Remuneration Policy at the time of appointment and take into account the skills and experience of the individual, the market rate for a candidate of that experience and the importance of securing the relevant individual. All remuneration components, as set out in the Policy Table above, would typically apply to a new Executive Director appointment. Salary would be provided at such a level as required to attract the most appropriate candidate and may be set initially at a below market level on the basis that it may progress once expertise and performance has been proven and sustained. Pensions and related benefits would normally be set in line with the wider workforce. New appointments would be eligible to participate in the incentive plans up to the maximum limits set out in the Policy Table. In addition, the Committee may offer additional cash and/or share-based elements to replace remuneration forfeited on joining the Company. It would seek to ensure, where possible, that these awards would be consistent with awards forfeited in terms of vesting periods, expected value and performance conditions. For an internal Executive Director appointment, any variable pay element awarded in respect of the prior role may be allowed to pay out according to its terms. In addition, any other ongoing remuneration obligations existing prior to appointment may continue. For external and internal appointments, the Committee may agree that the Company will meet certain relocation and/or incidental expenses as appropriate. 94 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 94 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:43 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE If appropriate the Committee may agree, on the recruitment of a new Executive Director, a notice period in excess of 12 months but to reduce this to 12 months over a specified period. The remuneration package for a newly appointed independent Non-Executive Director would be set in accordance with the approved remuneration policy in force at that time. Newly appointed independent Non-Executive Directors would not receive pension benefits or variable remuneration. Service contracts for Executive Directors and payments for loss of office Service contracts of the Executive Directors are not of a fixed term and are terminable by either the Company or the Director under a notice period of up to 12 months by either party. At the Board’s discretion, early termination of an Executive Director’s service contract may be undertaken by way of payment of salary and benefits in lieu of the required notice period (or shorter period where permitted by the contract of service or where agreed with the Executive Director) and the Committee would take such steps as necessary to mitigate the loss to the Company and to ensure that the Executive Director observed their duty to mitigate loss. Annual bonus may be payable, at the discretion of the Committee, with respect to the period of the financial year served, although it will normally be prorated for time and paid at the normal payout date. Any share-based entitlements granted to an Executive Director under the Company’s share plans will be determined based on the relevant plan rules. However, in certain prescribed circumstances, such as death, ill health, injury, disability, redundancy, retirement, sale of employing business or other circumstances at the discretion of the Committee, “good leaver” status may be applied. For good leavers, awards will normally vest at the normal vesting date, subject to the satisfaction of the relevant performance conditions at that time and reduced pro rata to reflect the proportion of the performance period actually served. However, the Committee has the discretion to determine that awards vest at cessation of employment and/or not to prorate awards. The service contracts for Executive Directors are available for inspection at the Company’s registered office. Remuneration Policy for Non-Executive Directors The Policy on Non-Executive Director fees is set out below. Element Purpose and link to strategy Non- Executive Director fees • Reflects responsibilities and time commitments of each role • Reflects fees paid by similarly sized companies Performance targets N/A Operation Maximum opportunity • No maximum fee or maximum fee increase operated • Annual increases are typically linked to those of the wider workforce, time commitment and responsibility levels • Details of current fee levels are set out in the Annual Report on Remuneration • The Chairman and Non- Executive Directors receive an annual fee for carrying out their duties • Additional fees may be payable for chairing Board Committees and/ or to reflect additional time commitments and responsibilities if appropriate • Fees are normally paid monthly in cash • Where appropriate certain benefits (including travel, expenses and associated taxes) may be provided • Fee levels are reviewed on a periodic basis, with reference to the time commitment and responsibilities of the role and market levels in companies of comparable size and complexity 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 95 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:43 PM Stock code: BMY Annual Report and Accounts 2020 95 Directors’ Remuneration Report PART B – ANNUAL REPORT ON REMUNERATION Factors considered when determining Executive Director remuneration When determining Executive Director remuneration, the Committee has due regard for the factors set out in the Code. Our Executive remuneration arrangements, which comprise fixed pay, an annual bonus and LTIP Award, are simple and aligned with market practice for UK listed companies. They also incorporate a number of features so as not to encourage excessive risk taking. These include the LTIP holding period and in-employment and post-employment shareholding guidelines, both of which support long-term stewardship of the Company. Incentives are also subject to malus and clawback provisions, which have been enhanced this year. The Remuneration Policy Report sets out the maximum opportunity for each component of pay, but actual outcomes vary depending on performance against financial and strategic objectives. The Committee reviews these objectives, as well as the targets set, on an annual basis to ensure they continue to reward the successful execution of the Company’s strategy, support long-term sustainable performance and align with the Shareholders’ interests. The Committee hopes that this Directors’ Remuneration Report clearly and transparently discloses the remuneration paid to, or earned, by the Directors in respect of the financial year ended 29 February 2020, and how we are proposing to pay them for 2020/2021. continued The annual fees of Non-Executive Directors, excluding the Chairman, are determined by the Chairman and the Executive Directors. The annual fee of the Chairman is determined by the Committee (excluding the Chairman) and the Executive Directors. The Non-Executive Directors and Chairman do not participate in the Company’s incentive schemes. Each of the Non-Executive Directors has similar general terms for their agreement, which can be found on Bloomsbury’s website at www.bloomsbury-ir.co.uk. The agreements provide for three months’ notice by the Director or by the Company with the option for the Company to terminate an appointment at any time on payment of three months’ fees in lieu of notice. All Directors’ appointments are subject to annual reappointment at each AGM. Termination of the agreements is without compensation. Consideration of employment conditions elsewhere in the Group The Committee is updated during the year on workforce remuneration policies, including variable pay schemes and benefits for employees across the Company as a whole, and takes these into account when setting the Policy for Executive Directors. The Committee does not formally consult with employees on the Executive Remuneration Policy. Remuneration arrangements below Board tend to be skewed more towards fixed pay with less of a focus on share-based long-term incentive pay. These differences have arisen from the development of remuneration arrangements that are market competitive for the various categories of individuals. For example, participation in the PSP is limited to our most senior employees. Under its terms of reference, the Committee is responsible for annual approval of the Group bonus pool as well as the level of bonus outturns for all those who participate in the Group bonus scheme, including Executive Directors and managers below Board. The Committee also considers the general basic salary increase for the broader employee population when determining the annual salary increases for the Executive Directors. The Company’s CEO pay ratio as well as the relative increase in the Chief Executive’s pay for the year under review as compared with that of the general workforce is set out in the Annual Report on Remuneration. The Committee also considers environmental, social and governance issues and risk when reviewing executive pay quantum and structure. 96 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 96 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:43 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE PART B–1 (AUDITED INFORMATION) Single total figure table of remuneration for 2019/2020 Directors’ remuneration for 2019/2020 Details of the remuneration of each of the Directors are as follows: Year ended 28/29 February Basic salary or fees £’000 Benefits £’000 Annual bonus3 £’000 Long term incentives4 £’000 Pension benefits £’000 Executive Directors Nigel Newton Jonathan Glasspool Penny Scott-Bayfield Non-Executive Directors Sir Richard Lambert Steven Hall John Warren Jill Jones1 Leslie-Ann Reed2 Total 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 455 444 242 236 236 142 111 108 41 39 42 41 16 41 25 – 1,168 1,051 25 29 17 15 7 2 – – – – – – – – – – 49 46 – 411 – 218 – 128 – – – – – – – – – – – 757 702 – 373 – – – – – – – – – – – – – 1,075 – 68 67 36 36 35 14 – – – – – – – – – – 139 117 Total fixed remuneration £’000 Total variable remuneration £’000 548 540 295 287 278 158 111 108 41 39 42 41 16 41 25 – 1,356 1,214 702 411 373 218 – 128 – – – – – – – – – – 1,075 757 Total £’000 1,250 951 668 505 278 286 111 108 41 39 42 41 16 41 25 – 2,431 1,971 1 Jill Jones resigned as a Director of the Company on 17 July 2019. Her 2020 fees are up until the date of her resignation. 2 Leslie-Ann Reed was appointed as a Director of the Company on 17 July 2019. Her 2020 fees are from the date of her appointment. 3 Figures shown for bonus payments relating to 2019 are those received during the year based on performance and basic salary received during the previous year. 4 Figures shown for 2020 relate to PSP Awards granted in 2017, which will vest following completion of the three-year performance on 27 July 2020. Vested shares will be subject to an additional two-year holding period. These awards have been valued using a three-month average share price to the 29 February 2020 of £2.815. Of these values, £230,484 and £122,393 relate to share price growth over the performance period for Nigel Newton and Jonathan Glasspool, respectively. Based on the share price on 19 May 2020 (£2.11), the value of the 2017 PSP Awards for Nigel Newton and Jonathan Glasspool would be £487,540 and £258,896 respectively. More details on the content of the headings in the above table, including a description of the other benefits received by the Directors, their pension contributions and the targets for the 2019/2020 bonus, are set out below under the relevant headings below. Basic salary The Executive Directors all received an increase in basic salary of 2.5% with effect from 1 March 2019 in accordance with normal policy. Such increase was in line with the average salary increases for all employees across the Group. The basic salaries for the Executive Directors from 1 March 2019 were as follows: From 1 March 2019 £’000 455 242 236 From 1 March 2018 £’000 444 236 230 Executive Director Nigel Newton Jonathan Glasspool Penny Scott-Bayfield Stock code: BMY Other benefits Benefits comprised a car or car allowance (excluding Penny Scott-Bayfield), medical cover, permanent health cover, life assurance, the value of options held in the Sharesave scheme (except for Nigel Newton as he does not hold any such options), and Company schemes offered to staff generally, such as buying books for private use at the staff discount rate. Pensions In accordance with the policy, pension contributions in 2019/2020 were 15% of basic salary for Nigel Newton, Jonathan Glasspool and Penny Scott-Bayfield. Directors may elect to receive a cash alternative in lieu of payments by the Company into their private pension arrangements. Annual Report and Accounts 2020 97 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 97 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:44 PM Directors’ Remuneration Report continued Bonus for 2019/2020 The purpose of the Bloomsbury Annual Management Bonus Scheme (“the Bonus Scheme”) is to incentivise annual delivery of financial and strategic goals. There are 51 staff in the Bonus Scheme globally, including the Executive Directors. 70% of the bonus relates to Group profits and 30% relates to other strategic objectives. The Committee sets stretching annual targets for the profit element of the Bonus Scheme, taking into account a wide set of reference points including, for example: Bloomsbury’s historical performance to date; internal future projections in line with our business and growth plans; City analysts’ consensus forecast; the full year budget; and external performance of any key relevant industry peers (both historic and analyst forecast). Any payment under either element can only be made out of the bonus pool that accrues above the stretching target that the Committee sets. This incentivises management to achieve profits over and above expectations. Although the profit target set by the Committee for 2019/2020 was achieved in full and there was good achievement against the strategic objectives, due to the bonus pool not funding above the profit target threshold, there was a nil payout under the Bonus Scheme for Executive Directors and senior management in respect of 2019/2020. Profit target element of bonus for 2019/2020 The Group profit bonus objective accounts for 70% of the total bonus opportunity for Executive Directors. At the start of the year, the Committee set a stretching threshold target for profit before taxation and highlighted items (“Adjusted profit”) of £15.7 million after assessing the Group’s budget, analyst consensus forecasts and other factors. As set out in the Strategic Report, Bloomsbury performed in line with expectations for the year ended 29 February 2020, achieving Adjusted profit of £15.7 million. However, due to the bonus pool not funding above the profit target threshold, no bonus was payable in respect of the profit element of the target. Strategic objectives element of bonus for 2020 At the start of the year, the Committee reviewed the 2018/2019 strategic objectives and decided to amend these for 2019/2020 by the addition of two objectives, one relating to sales development of acquisitions and the second relating to employee engagement. Within these seven objectives, stretching targets were set for each. While strong progress was made in a number of strategic areas, no bonus was payable in respect of the strategic element of the bonus, due to the bonus pool not funding above the profit target threshold. An overview of the strategic objectives is set out below: Strategic objective Aim Earlier profit realisation Reduce the dependency on the final two months of the year Metric – Measured profit Cost saving Improve the efficiency of the Group Metric – Measured cost Sales development of six major properties Improve revenue and earnings Metric – Net revenue Inventory reduction Reduce working capital and improve ROCE Metric – Net finished goods stock value Digital revenue Achieve the milestones within the Bloomsbury 2020 strategy Metric – BDR 2020 revenue Sales development of acquisitions Focus on the performance of recent acquisitions Metric – Revenue arising from recent acquisitions Improved employee engagement Total Measure the progress and effectiveness of employee engagement initiatives Metric – Employee turnover Respective weightings Nigel Newton Jonathan Glasspool Penny Scott-Bayfield 5% 5% 2% 3% 10% 2% 3% 30% 5% 5% – 3% 10% 4% 3% 30% 5% 10% – 3% 7% 2% 3% 30% 98 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 98 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:44 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE Vesting of PSP Awards The PSP Awards granted on 27 July 2017 (“2017 PSP Award”) are set to vest on 27 July 2020 based on performance over a three- year period ending 29 February 2020. The performance conditions for this award are as disclosed in previous Annual Reports. The level of vesting for the 2017 PSP awards is as follows: Metric Relative EPS growth (50% of awards) ROCE1 (50% of awards) Total estimated vesting of 2017 PSP Awards Performance condition Compound annual growth in normalised EPS over the performance period in excess of annualised RPI (“Relative EPS growth”) ROCE measured in the last financial year of the three-year performance period Threshold target2 3% Stretch target2 8% Actual 7.4% 9.2% 11.6% 12.2% % Vesting 46% (out of a maximum of 50%) 50% (out of a maximum of 50%) 96% 1 Vesting is subject to an underpin whereby the Committee will consider the underlying performance of the business and may apply discretion should it conclude it is appropriate to do so. On review, the Committee was satisfied that the outcome was consistent with Company performance over the last three years. 2 The level of vesting for achievement between threshold and stretch targets is calculated on a straight-line basis from 25% at threshold to 100% at stretch. No vesting for achievement below threshold, and 100% vesting for achievement above the stretch target. Based on the above, values for the 2017 PSP Awards are as follows: Executive Type of award Nigel Newton Jonathan Glasspool Conditional award with EPS and ROCE performance conditions Number of shares at grant Number of shares to lapse Number of shares to vest Number of Dividend Shares 1 Estimated value £’0002 Total 240,689 9,628 231,061 18,345 249,406 127,812 5,112 122,700 9,742 132,442 702 373 1 Dividend Shares are in lieu of dividends that would have accrued on the “Number of shares to vest” if held by the participants from the date of grant up to the date of vesting of awards. 2 Estimated value is calculated using a three-month average share price to the 29 February 2020 of £2.815. The actual value of shares received will vary depending on the share price at the end of the holding period. PSP Awards granted during 2019/2020 Details of PSP Awards granted in 2019/2020 (“2019 PSP Award”) are as follows: Individual Nigel Newton Penny Scott-Bayfield Jonathan Glasspool Scheme Date of grant Date of vest 21 Aug 2019 21 Aug 2022 PSP (Conditional awards) 21 Aug 2019 21 Aug 2022 Basis of award (% of base salary) 100% 100% 21 Aug 2019 21 Aug 2022 100% Face value1 £’000 455 Vesting at threshold 25% Vesting at maximum 100% 236 242 25% 100% 25% 100% Performance period ROCE: 3 years to 28 February 2022 EPS: 3 years to 28 February 2022 1 Face value was determined using a share price of 230p (closing mid-market price of a share on the dealing day before the grant was made). For awards presented above: • For 50% of awards (EPS awards): 25% of this part of an award will vest for a compound annual growth rate in normalised EPS over the performance period in excess of annualised RPI (“Relative EPS growth”) of 3% increasing pro rata to 100% vesting of this part of an award for a Relative EPS growth of 8%; and • For 50% of awards (ROCE awards): 25% of this part of an award will vest for absolute ROCE of 12.2% or higher (nil vesting for below), increasing straight-line to 100% vesting of this part of an award for ROCE of 15.3% (100% for above), ROCE measured in the last financial year of the three-year performance period. The awards will be subject to malus and clawback provisions. Any vested shares must be held by the Executive Directors for a further two years. Stock code: BMY Annual Report and Accounts 2020 99 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 99 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:44 PM Directors’ Remuneration Report continued Payments to past Directors There were no payments to past Directors during the year. Payments for loss of office There were no payments for loss of office during the year. On 29 October 2019, the Company announced that Jonathan Glasspool will retire from the Company in July 2020. Jonathan will step down from the Board on 21 July 2020, being the date of the AGM, and will retire from the Company on 31 July 2020. He will not receive any payment in lieu of notice or any ex-gratia payment, and he will not be granted an award under the 2020 PSP Award. The Committee has determined that Jonathan shall be eligible for any bonus that may be awarded in respect of 2020/2021 on a time pro-rated basis. The Committee has further confirmed Jonathan’s status as a “good leaver” for the purposes of outstanding incentive awards. All awards will be subject to time pro-rating and performance (as assessed at the end of the relevant performance period). Outstanding share awards PSP Awards PSP conditional share awards have been granted for nil consideration over Ordinary shares of 1.25 pence in the Company under the Bloomsbury 2014 Performance Share Plan (“2014 PSP”). The number of PSP conditional shares awarded is calculated based on the closing mid-market share price prevailing on the day before the date of grant. The following PSP conditional shares awarded to the Executive Directors were outstanding during the year: Nigel Newton Penny Scott-Bayfield1 Jonathan Glasspool Date of PSP award 8 June 2016 27 July 2017 30 July 2018 21 August 2019 30 July 2018 21 August 2019 8 June 2016 27 July 2017 30 July 2018 21 August 2019 Due date of exercise/ expiry Price at grant date (pence) At 1 March 2019 Awarded during the year Exercised during the year Lapsed during the year Share price on date of exercise (pence) At 29 February 2020 162.00p 261,544 8 June 2019 180.00p 240,689 27 July 2020 220.00p 201,851 30 July 2021 230.00p 21 August 2022 220.00p 104,545 30 July 2021 230.00p 21 August 2022 162.00p 138,888 8 June 2019 180.00p 127,812 27 July 2020 30 July 2021 220.00p 107,188 21 August 2022 230.00p – – – – 197,901 – 102,500 – – – – 105,090 – 261,544 – – – – – – 40,115 – – – – 138,888 – – – – – – – – – 240,689 – 201,851 – 197,901 – 64,430 – 102,500 – – – 127,812 – 107,188 – 105,090 1 Penny Scott-Bayfield became a Director on 16 July 2018. Her 2018 PSP award over 104,545 shares reflected her annual salary on appointment, rather than her actual salary from the date of her appointment to 28 February 2019. Accordingly, the award was reduced by 40,115 to 64,430 shares to correct the position. EPS For 50% of all awards: 25% of this part of an award will vest for a compound annual growth rate in normalised EPS over the performance period in excess of annualised RPI (“Relative EPS growth”) of 3%, increasing pro rata to 100% vesting of this part of an award for a Relative EPS growth of 8%. TSR For 50% of awards made in 2016: 25% of this part of an award will vest for a median TSR, increasing to 100% vesting of this part of an award for a top quartile TSR, measured against the FTSE SmallCap (excluding investment trusts). Awards have a concurrent performance condition that no vesting occurs for Relative EPS growth below 0%. ROCE For 50% of the awards made in 2017, 2018 and 2019: 25% of this part of the award will vest for absolute Return On Capital Employed (“ROCE”) of 9.2% (2017) or 13.1% (2018) or 12.2% (2019) (nil vesting for below), increasing straight-line to 100% vesting of this part of an award for ROCE of 11.6% (2017) or 15.1% (2018) or 15.3% (2019) (100% for above), ROCE being measured in the last financial year of the three-year performance period. Vesting is subject to an underpin whereby the Committee will consider the underlying performance of the business and may apply discretion should it conclude it is appropriate to do so. 100 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 100 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:44 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE Sharesave options Bloomsbury operates an HMRC-approved Sharesave scheme in respect of which all UK employees are eligible to participate. The following Sharesave options granted to the Executive Directors were outstanding at the year end: Jonathan Glasspool Penny Scott-Bayfield At 1 March 2019 6,550 – – Granted during the year – 4,870 9,740 Exercised during the year – – – Lapsed during the year – – – At 29 February 2020 6,550 4,870 9,740 Exercise price (pence) Date of grant 137.4p 12 June 2017 12 July 2019 184.8p 12 July 2019 184.8p Date from which exercisable Expiry date Sept 2020 Mar 2021 Sept 2022 Mar 2023 Sept 2022 Mar 2023 Directors’ interests in shares Under the current Remuneration Policy, Executive Directors are required to build up a shareholding in the Company equal to 100% of their salary ("Shareholding Guideline") to align their interests with that of Shareholders. For 2020/2021, the Shareholding Guideline for Executive Directors is increasing to 200% of salary. Executive Directors will normally be expected to retain any vested shares (net of tax) until the Shareholding Guideline has been achieved. Following the AGM, Executive Directors will also be subject to a post-employment shareholding guideline. After ceasing to be an Executive Director, individuals will be expected to maintain a shareholding equivalent to 200% of salary (or actual shareholding if lower), tapering down to nil over two years. This guideline may be disapplied in certain cases (e.g. due to compassionate circumstances). The new guideline will apply to shares vesting after the adoption of the new Policy. Shareholding Guidelines do not apply to the Chairman or Non-Executive Directors. The interests of the Directors who served on the Board during the year are set out in the table below: Owned2 PSP Awards Nigel Newton Penny Scott-Bayfield3 Jonathan Glasspool Sir Richard Lambert Jill Jones4 John Warren Steven Hall Leslie-Ann Reed5 Total 29 February 2020 1,017,263 – 30,975 10,000 – 10,000 3,171 – 1,071,409 28 February 2019 1,017,263 – 30,975 10,000 2,800 10,000 3,171 – 1,074,209 Unvested 640,441 166,930 340,090 – – – – – 1,147,461 CSOP options unvested – – – – – – – – – Vested – – – – – – – – – Sharesave options unvested Total 29 February 2020 – 1,657,704 176,670 382,485 10,000 – 10,000 3,171 – 21,160 2,240,030 9,740 11,420 – – – – – Shareholding Guideline achieved1 % 100% 0% 27.9% N/A N/A N/A N/A N/A 1 The Shareholding Guideline was introduced during the year ended 28 February 2013 and can be found on the Company’s website www.bloomsbury-ir.co.uk. The Guideline requires that the Executive Director must retain shares vesting from the PSP awards net of tax until the Shareholding Guideline has been met. The number of shares needed to satisfy a shareholding is normally recalculated at the close of the next business day following the announcement of the full year results (the “Review Date”). The share price used above is 218 pence (determined by closing price of shares the day after annual results are announced). 2 Owned includes shares held directly by the Director and indirectly by a nominee on behalf of the Director where the Director has the beneficial interest. It includes the shares of the Director and of connected persons. 3 Penny Scott-Bayfield became a Director on 16 July 2018. Her 2018 PSP Award over 104,545 shares reflected her annual salary on appointment, rather than her actual salary from the date of her appointment to 28 February 2019. Accordingly, the award was reduced by 40,115 to 64,430 shares to correct the position. 4 Jill Jones resigned as a Director of the Company on 17 July 2019. 5 Leslie-Ann Reed was appointed as a Director of the Company on 17 July 2019. 6 There have been no changes in the interests of each of the Directors during 2019/2020. No Director has or has had any interest, direct or indirect, in any transaction, contract or arrangement (excluding service agreements) which is or was unusual in its nature or conditions or significant to the business of the Group during the current or immediately preceding financial year. Overall, the Committee considers that the Remuneration Policy has operated as it intended during 2019/2020 and that the pay outcomes are aligned with the experience of Shareholders and other stakeholders over the relevant performance period. Stock code: BMY Annual Report and Accounts 2020 101 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 101 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:45 PM Directors’ Remuneration Report continued Implementation of Remuneration Policy in 2020/2021 From 1 March 2020, the Executive Directors received a pay increase of 2% in line with the increase for the general workforce. Basic salaries for the Executive Directors are as follows: Executive Director Nigel Newton Penny Scott-Bayfield Jonathan Glasspool From 1 March 2020 £’000 464 240 247 From 1 March 2019 £’000 455 236 242 As noted in the Chair’s Annual Statement on page 89, the Executive Directors have voluntarily agreed to a temporary reduction of 30% to their base salary payments for a period of at least three months from 1 April 2020, as one of a number of measures taken by the Company to mitigate the impact of the coronavirus crisis by conserving cash and reducing costs. The Company intends to review this approach in July 2020, and consider whether any further extension of the arrangement is required. At the end of the financial year, the Board will give consideration to whether it is appropriate to reimburse (either in part or in full) the discounted element of salary/fees in respect of the year. This assessment will take into account various factors, including evolving market conditions, the underlying financial health of the business and the approach taken for wider employees. Pension and benefits In 2020/2021, pension contributions (as a percentage of base salary) for Executive Directors will remain unchanged at 15%. Pension contributions for any new Executive Director appointments will be set in line with the applicable wider workforce rate, which is determined by the age of the employee and ranges from 4% for those under 40 to 7% for those over 50. We appreciate that market practice in this area continues to evolve, and we will keep this under review in future years. There will be no changes to other benefits. Annual bonus Annual bonuses for 2020/2021, will be consistent with the Remuneration Policy. The maximum bonus potential will continue to be set at 100% of salary. When determining annual bonuses, the Committee will consider both financial and strategic performance of the Group over the year, taking into account overall affordability. Specific measures and targets will be disclosed retrospectively in the Annual Report on Remuneration. To the extent any annual bonus is payable to the Executive Directors, the Committee will be mindful of the experience of all our stakeholders groups over the year, in particular the wider employee population. Any bonus payable will be subject to malus and clawback provisions. Long-term incentives Annual PSP awards will be granted to Executive Directors in 2020/2021 (“2020 PSP Award”) at 100% of salary in line with awards in prior years. When granting awards for 2020, the Committee will be cognisant of the current volatility across the market. When granting awards, the Committee will consider the share price on the grant date as well as the average price used to grant awards over multiple years. The 2020 PSP Award will be subject to the following performance measures: • EPS (60%) • Non-Consumer operating profit (15%) • Consumer operating profit (15%) • BDR revenue (10%) Given the impact of the global coronavirus crisis on the sector, the Committee is still in the process of finalising targets and consulting with Shareholders. Once finalised, our intention is to disclose the detail of the targets on the Company's website. The awards for Executive Directors will be subject to malus and clawback provisions and to a two-year post-vesting holding period. During the holding period, an Executive Director may not sell their vested shares, which will remain subject to a clawback provision. The Remuneration Committee has approved that the Executive Directors may participate in the Company’s Sharesave scheme if operated. 102 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 102 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:45 PM 27040 11 June 2020 8:07 pm Proof 2 27040 11 June 2020 8:07 pm Proof 227040 11 June 2020 8:07 pm Proof 2Non-Executive DirectorsFrom 1 March 2020, the Non-Executive Directors received an increase to their fees of 2% in line with the increase for the general workforce. Current annualised fees are as follows:Non-Executive DirectorPositionFrom 1 March 2020 £’000 From 1 March 2019 £’000Sir Richard LambertChairman of the Board, Chair of the Nomination Committee113 111John WarrenChair of the Audit Committee and Senior Independent Director4342Steven HallChair of the Remuneration Committee and Independent Non-Executive Director4341Leslie-Ann Reed1Independent Non-Executive Director40251 Leslie-Ann Reed was appointed as a Director of the Company on 17 July 2019. Her 2019 fees are from the date of her appointment.As noted in the Chair’s Annual Statement on page 89, the Non-Executive Directors have voluntarily agreed to a temporary reduction of 30% to their fee payments for a period of at least three months from 1 April 2020, as one of a number of measures taken by the Company to mitigate the impact of the coronavirus crisis by conserving cash and reducing costs. The Company intends to review this approach in July 2020, and consider whether any further extension of the arrangement is required. At the end of the financial year, the Board will give consideration to whether it is appropriate to reimburse (either in part or in full) the discounted element of salary/fees in respect of the year. This assessment will take into account various factors, including evolving market conditions, the underlying financial health of the business and the approach taken for wider employees.PART B–2 (UNAUDITED INFORMATION)Performance graph and tableThe chart below shows the Company’s Total Shareholder Return for the period from 31 December 2009 to 29 February 2020 compared to that of the FTSE SmallCap Media sector index over the same period. The index has been selected as it represents a broad equity market index, of which the Company is a constituent member.250300200150100500Feb–11Dec–09Feb–12Feb–13Feb–14Feb–15Feb–16 FTSE SmallCap MediaBloomsburyTotal Shareholer Return (rebased)Feb–19Feb–20Feb–18Feb–17The chart aligns to the Company’s accounting period, which was extended during the 14 months to 28 February 2011.Stock code: BMYAnnual Report and Accounts 2020GOVERNANCE10327040-Bloomsbury-AR2020 - governance.indd 10311-Jun-20 9:50:45 PMDirectors’ Remuneration Report continued The total remuneration figures for the Chief Executive during each of the financial years of the relevant period are shown in the table below. The total remuneration figure includes the annual bonus based on that year’s performance and PSP awards based on three-year performance periods ending in the relevant year (EPS and ROCE) or just after the relevant year (TSR). The annual bonus payout and PSP vesting level as a percentage of the maximum opportunity are also shown for each of these years. Year ending: Total remuneration (£’000) Annual bonus (%) PSP vesting (%) 28 Feb 2011 974¹ 100% 0% 29 Feb 2012 785 54% 50% 28 Feb 2013 617 0% 50% 28 Feb 2014 749 17% 50% 28 Feb 2015 799 16% 56% 29 Feb 2016 547 0% 17% 28 Feb 2017 689 42% 0% 28 Feb 2018 909 88% 0% 28 Feb 2019 951 92.5% 0% 29 Feb 2020 1,250 0% 96% 1 Covers a period of 14 months due to the change of Accounting Reference Date. Percentage change in Chief Executive’s remuneration The table below shows the percentage change in the Chief Executive’s salary, benefits and annual bonus between the financial years ended 28 February 2019 and 29 February 2020, compared to that of the total remuneration for all employees of the Company for each of these elements of pay. Salary Chief Executive (£’000) All employees (£m) Benefits including pension Chief Executive (£’000) All employees (£m) Annual bonus Chief Executive (£’000) All employees (£m) Average number of employees Total remuneration Year ended 29 February 2020 Year ended 28 February 2019 455 29.3 93 1.6 0 0.3 702 444 27.8 96 1.5 411 2.3 683 % change 2.5% 5.5% -3.1% 9.9% -100% -86.4% 2.8% Chief Executive’s pay ratio The table below discloses the ratio of the Chief Executive’s pay for 2019/2020, using the single total figure remuneration as disclosed on page 97 of this section of the Annual Report to the comparable, full-time equivalent total remuneration of all UK employees whose pay is ranked at the 25th percentile, median and 75th percentile. Year 2020 Method1 A 25th percentile pay ratio2 44.8 : 1 Median pay ratio3 34.9 : 1 75th percentile pay ratio4 24.5 : 1 1 Method A, as set out in the Companies (Miscellaneous Reporting) Regulations 2018, was selected as this is considered the most statistically accurate and robust methodology. The 25th percentile, median and 75th percentile UK employees were determined based on total remuneration for the year ended 29 February 2020 using the single total figure valuation methodology. The elements used to calculate total remuneration comprised of salary, pensions, bonus and benefits. The value of Sharesave options granted in the year have been excluded when calculating total remuneration for UK employees. 2 The relevant 25th percentile values are £26,000 salary and £27,892.57 total pay and benefits. 3 The relevant median values are £31,519 salary and £35,832.66 total pay and benefits. 4 The relevant 75th percentile values are £48,000 salary and £51,024.99 total pay and benefits. The Company believes the median pay ratio for the year ended 29 February 2020 is consistent with the pay, reward and progression policies for the Company’s UK employees taken as a whole. During 2019/2020, there was a nil payout for the bonus scheme and the 2017 PSP awards vested at 96%. A greater proportion of the Chief Executive’s and senior managements’ overall remuneration is linked to performance (via the annual bonus and PSP Awards) when compared to the wider workforce due to the nature of their roles. The Committee therefore noted that pay ratios are likely to fluctuate in future years depending on the performance of the business and associated outcomes of incentive plans in each year. In practice, the pay ratio for 2019/20 would be lower if the Chief Executive’s pay was determined based on the current share price. 104 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 104 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:45 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE Consideration of wider workforce During the year, the Committee was updated on workforce remuneration policies, including variable pay schemes and benefits for employees across the Company as a whole, and took these into account when determining remuneration arrangement for Executive Directors. The Committee continues to develop and evolve its approach to engagement with the workforce on Executive pay. Currently information on the Executive Remuneration Policy is provided on the Company’s intranet, which is accessible by all employees. Relative importance of spend on pay The following table shows the Company’s actual spend on pay (for all employees) relative to dividends. Staff costs (£m) Dividends declared (£m) Retained profits (£m)1 2 1 Retained profits for 2019/2020 reflect the impact of adopting IFRS 16. 2 Retained profits for 2018/2019 reflect the impact of adopting IFRS 9 and 15. Year ended 29 February 2020 34.9 1.0 4.4 Year ended 28 February 2019 34.8 6.0 3.6 Voting at the Annual General Meeting At the Annual General Meeting of 17 July 2019, the Annual Statement by the Chair of the Remuneration Committee and the Annual Report on Directors’ Remuneration for the financial year ended 28 February 2019 was put to an advisory vote. The voting outcomes were as follows: Votes cast in favour Votes cast against Total votes cast Abstentions on voting cards Number of shares 46,417,877 366,082 46,783,959 1,500 Percentage of the vote 99.2% 0.8% 100% The Remuneration Policy was last put to Shareholders at the Annual General Meeting held on 18 July 2017 as an ordinary resolution. The voting outcomes were as follows: Votes cast in favour Votes cast against Total votes cast Abstentions on voting cards Number of shares 57,376,766 309,752 57,686,518 14,432 Percentage of the vote 99.5% 0.5% 100% 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 105 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:45 PM Stock code: BMY Annual Report and Accounts 2020 105 Directors’ Remuneration Report continued Remuneration Committee Composition of the Committee The Committee is comprised of three Independent Non-Executive Directors and the Chairman of the Board. The members of the Committee during the year were: Director Jill Jones (Chair of the Committee)1 Steven Hall (Chair of the Committee)2 Sir Richard Lambert John Warren Leslie-Ann Reed 1 Jill Jones resigned as a Director of the Company on 17 July 2019. 2 Steven Hall became Chair of the Remuneration Committee on 17 July 2019. Appointed in the year (if applicable) – – – – 17 July 2019 Resigned in the year (if applicable) 17 July 2019 – – – – The Committee met eight times during 2019/2020. The Committee members’ attendance can be seen on page 79 of this section of the Annual Report. Only members of the Remuneration Committee have the right to attend Committee meetings, however the Chief Executive and Group Finance Director may attend Committee meetings at the request of the Chair of the Committee for specific items on the agenda. The remuneration consultants may attend where needed to provide technical support. Role of the Committee The terms of reference of the Committee set out its role and authority. These are reviewed annually and can be found on the Company’s website, www.bloomsbury-ir.co.uk. In summary, the Committee’s responsibilities include: • Determining the remuneration policy for the Chairman and Executive Directors; • Determining the remuneration packages for the Executive Directors and Chairman within the terms of the policy; • Monitoring the level and structure of remuneration for other members of senior management; • Approving the design of, and determining targets for, the performance-related pay schemes operated by the Company; • Reviewing the design of all share incentive plans for Board approval. For any such plans, the Committee shall determine whether the awards will be made, and if so, approve the overall amount of such awards, the individual awards to Executive Directors, Company Secretary and designated senior managers and the performance targets to be used; and • Developing a formal policy for shareholding guidelines in employment and post-employment shareholding requirements. 106 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 106 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:46 PM 27040 11 June 2020 8:07 pm Proof 2 Activities of the Committee during the year During the year, the Committee undertook a review of the Directors’ Remuneration Policy in line with the standard three-year renewal cycle to ensure that it continues to support the execution of the Company’s strategy and the interest of Shareholders. A significant proportion of the Remuneration Committee’s time at meetings was spent on discussing the content of the new Policy. Matters that were considered in respect of the new Policy included: • The consideration and approval of revised performance metrics for the 2014 Performance Share Plan; • In-employment and post-employment shareholding requirements; • Pension contributions for new Executive Director appointments; • Malus and clawback provisions applying to both the 2014 Performance Share Plan and the bonus scheme; and • Shareholder communications and feedback following the Shareholder consultation. Other matters the Committee considered include the following: • The approval of increases to the Executive Directors’ salaries and the Chairman’s fees; • Review and approval of the Executive Directors’ remuneration packages; • Review of the bonus plan achievement for 2018/2019; • Review and approval of the bonus plan proposal and objectives for 2019/2020; • Review of workforce engagement around Executive remuneration policies; • Review and approval of performance targets for the 2019 PSP Award; • Review of the Committee evaluation; • Approval of the correction to Penny Scott-Bayfield’s 2018 PSP Award; • Review and recommendation for approval of the Directors’ Remuneration Report for the Annual Report and Accounts for the financial year ended 28 February 2019; • Review of the performance outcome of the 2016 PSP Award; and • Review and approval of the Committee’s terms of reference. GOVERNANCE The Committee Chair has a standing item on the agenda at each main Board meeting, enabling remuneration matters to be raised for discussion by the Board if required. During 2019, the Committee considered its role in respect of determining the remuneration of senior management with reference to the 2018 Code. After due consideration and discussion at both the Committee and the Board level it was decided that the Executive Directors would remain responsible for remuneration for senior management. The Committee believes that the Executive Directors are best placed to assess the appropriate level of remuneration of senior managers based on their performance and contribution to the Company’s success and on the Executive Directors’ knowledge of market rates of pay. The Committee will nonetheless monitor the remuneration of senior managers closely and will continue to be responsible for approving the granting and vesting of share incentives. Advisers to the Committee In carrying out its responsibilities, the Committee was independently advised by external advisers. During the first half of the year, the Committee was advised by New Bridge Street. In respect of their services to the Committee, fees charged by New Bridge Street amounted to £43,758 (excluding VAT). In the second half of the year, Deloitte LLP was appointed as the Committee’s external remuneration consultants through a competitive tender process, which took place in September 2019. Deloitte LLP is a founding member of the Remuneration Consultants’ Group and adheres to its Code of Conduct. In respect of their services to the Committee, fees charged by Deloitte LLP amounted to £25,900 (excluding VAT). During the year, separate teams within Deloitte also provided Bloomsbury with tax advisory services. The Committee is satisfied that the advice provided by Deloitte LLP was objective and independent, that the provision of other services in no way compromised their independence and that there was no potential conflict of interest. The individual consultants who work with the Committee do not provide advice to the Executive Directors or act on their behalf. The Committee received assistance from the Company Secretary and, where specifically requested by the Committee, the Chief Executive and Group Finance Director. The Committee has considered any feedback received from the major Shareholders during the year as part of Bloomsbury’s ongoing investor relations programme and considers the reports and recommendations of Shareholder representative bodies and corporate governance analysts. Approved by the Board of Directors and signed on its behalf. Steven Hall Chair of the Remuneration Committee 20 May 2020 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 107 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:46 PM Stock code: BMY Annual Report and Accounts 2020 107 Section 172 Directors’ Duties Statement The Directors of Bloomsbury – and those of all UK companies – must act in a manner which complies with a set of general duties. These duties are detailed in the Companies Act 2006 and include, in s172, a duty to promote the success of the company, as set out below. Section 172 of the Companies Act 2006 A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to: • The likely consequences of any decisions in the long term; • The interests of the company’s employees; • The need to foster the company’s business relationships with suppliers, customers and others; the impact of the company’s operations on the community and the environment; • The desirability of the company maintaining a reputation for high standards of business conduct; and • The need to act fairly as between members of the company. As part of their induction, the Directors are briefed on their duties, including their duties under s172, and are able to access professional advice on these, either through the Company, or from an independent provider should they consider it necessary. The Board believes that, individually and together, they have acted in the way they consider, in good faith, would promote the success of the Company for the benefit of its members as a whole, having regard to the matters set out in s172(1)(a–f) of the Companies Act 2006 in the decisions taken during the year ended 29 February 2020. The Board has always had regard for the potential impact of the Group’s activities on its various stakeholders. The key stakeholders of the Group are set out in more detail in the Strategic Report on pages 58 to 63. The Board believes that the Company can only be successful when the interests of its stakeholders are considered and appropriately reflected in how the Company’s business and strategy develops. The Directors fulfil their duties partly through a governance framework that delegates day-to-day decision-making to employees of the Company; details of this governance framework are set out in the Corporate Governance section on pages 67. In delegating such decision-making the Board is mindful of the importance of an organisational culture which has appropriate regard for the needs and views of its stakeholders and high ethical standards. The Board believes that balancing the interests of the Company’s stakeholders with the Company’s commercial objectives and the desire to behave as an ethical and responsible business is embedded in the way the Company operates, is informed by the strong social purpose which underlies the Group’s activities and is reinforced by a robust system of controls and assurances. As set out in the Chairman’s statement on page 66 of the Corporate Governance Report and further on page 75 of the Corporate Governance Report, the Board continues to focus on setting a corporate culture that is aligned with the Company’s purpose, values and strategy; effective engagement with, and regard for the concerns of, key stakeholders is an important aspect of promoting the Company’s desired culture and reinforcing its values. The Board gathers relevant information and feedback on key stakeholder interests and concerns from information provided by the Company’s Executive Directors, senior and functional management and through direct engagement where appropriate. As is typical of an organisation the size of the Company, engagement with key stakeholders in respect of day-to-day business and operational matters is ordinarily conducted by senior managers and other employees of the Company. During the course of the year, the Board maintains its oversight of the Company’s engagement with key stakeholders by receiving reports on the Company’s engagement mechanisms, the matters considered during engagement, and the outcomes of such engagement. The insights which the Board gains through the Company’s engagement mechanisms form an important part of the context for the Board’s discussions and decision-making process. Information about how the Company engages with its key stakeholders, and how the Directors, with the support of the wider business, consider the matters set out under s172 of the Companies Act in carrying out their duties, is set out in the Strategic Report on pages 58 to 63. 108 Bloomsbury Publishing Plc www.bloomsbury.com 27040-Bloomsbury-AR2020 - governance.indd 108 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:46 PM 27040 11 June 2020 8:07 pm Proof 2 GOVERNANCE 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - governance.indd 109 27040 11 June 2020 8:07 pm Proof 2 11-Jun-20 9:50:46 PM Stock code: BMY Annual Report and Accounts 2020 109 Notes to the Financial StatementsFinancial Statements 112 Independent Auditor’s Report 120 Consolidated Income Statement 121 Consolidated Statement of Comprehensive Income 122 Consolidated Statement of Financial Position 123 Consolidated Statement of Changes in Equity 124 Consolidated Statement of Cash Flows 125 Notes to the Financial Statements 164 Company Statement of Financial Position 165 Company Statement of Changes in Equity 166 Company Statement of Cash Flows 167 Notes to the Company Financial Statements Annual Report and Accounts 2020Independent Auditor’s Report to the members of Bloomsbury Publishing Plc 1. Our opinion is unmodified We have audited the financial statements of Bloomsbury Publishing Plc (“the Company”) for the year ended 29 February 2020 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, Consolidated and Company Statements of Changes in Equity, Consolidated and Company Statements of Cash Flows and the related notes, including the accounting policies in notes 2 and 32. In our opinion: • the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 29 February 2020 and of the Group’s profit for the year then ended; • the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU); • the parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the Audit Committee. We were first appointed as Auditor by the Directors on 4 September 2013. The period of total uninterrupted engagement is for the seven financial years ended 29 February 2020. We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided. 2. Key audit matters: our assessment of risks of material misstatement Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters, in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters. 112 www.bloomsbury.comBloomsbury Publishing PlcThe risk Our response Going concern basis of preparation Refer to page 85 (Audit Committee Report), notes 2 and 32 on pages 125 and 167 (accounting policies) New risk for 2020 Disclosure quality The financial statements explain how the Directors have formed a judgement that the use of the going concern basis is appropriate in preparing the financial statements of the Group and the parent Company. That judgement is based on an evaluation of the inherent risks to the Group’s and the parent Company’s business model and how those risks might affect the Group’s and the parent Company’s financial resources or ability to continue operations over a period of at least a year from the date of approval of the financial statements. The risks most likely to adversely affect the Group’s and the parent Company’s available financial resources over this period were: • COVID-19: The pandemic affecting the global economy leading to significant economic uncertainty and a significant reduction in physical retailers open for business. There is inherent estimation uncertainty in the assumptions used in the Group’s and the parent Company’s business model as a result of COVID-19, including the length of the period that the reduction in the number of retailers open for business and the likelihood of consumers switching to alternative methods of purchasing books; and • Uncertainty due to the UK exiting the European Union. The risk for our audit was whether or not those risks were such that they amounted to a material uncertainty that may have cast significant doubt about the ability to continue as a going concern. Had they been such, then that fact would have been required to have been disclosed. Our procedures included: Benchmarking assumptions: We challenged the appropriateness of key assumptions in the cash flow projections, applying our sector knowledge and experience based on our historical knowledge of the Group and the markets in which the subsidiaries operate, together with market and other externally available information. Sensitivity analysis: We considered sensitivities over the level of available financial resources indicated by the Group’s financial forecasts, taking account of reasonably possible (but not unrealistic) adverse effects that could arise from these risks individually and collectively. Funding assessment: We examined correspondence and supporting documentation with third party funding providers, assessing the Group’s lending RCF arrangements and covenant terms. Assessing transparency: We considered the appropriateness of relevant disclosures, including both the going concern disclosure in the financial statements and also the commentary elsewhere in the Annual Report on the impact of COVID-19. Our results We found the going concern disclosure without any material uncertainty to be acceptable. 113 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSIndependent Auditor’s Report to the members of Bloomsbury Publishing Plc continued The risk Our response Carrying value of Goodwill (Academic and Professional) – £35.9m (2019: £35.9m) Refer to page 85 (Audit Committee Report), note 2 on page 129 (accounting policy) and note 11 on pages 144 to 145 (financial disclosures) Risk vs 2019 ↓ Forecast-based valuation The Group has historically acquired a number of businesses with a majority being integrated into the Academic and Professional division. The recoverability of goodwill associated with the Academic and Professional division is dependent on achieving forecast trading and realising acquisition synergies. The estimated recoverable amount is subjective due to the inherent uncertainty involved in forecasting future cash flows. The effect of these matters is that, as part of our risk assessment, we determined that the value in use of goodwill has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. The financial statements (note 11) disclose the sensitivity estimated by the Group. Our procedures included: • Benchmarking assumptions: We challenged the Group’s assumptions by comparing to externally derived data in relation to key inputs such as projected economic growth. • Our sector experience: We used our sector experience to assess the appropriateness of the discount rate for the Academic and Professional cash generating unit, with reference to external sources of data. We challenged the judgements and assumptions used by the Group in its calculation based on our knowledge of the business. • Sensitivity analysis: We performed breakeven analysis on the cash flows and discount rate and considered the likelihood that the drivers of breakeven would arise. • Historical comparisons: We considered the historical accuracy of key assumptions by comparing the accuracy of the previous estimates of revenue and cost growth to the actual amounts realised. • Assessing transparency: We assessed whether the Group’s disclosures about the sensitivity of the outcome of the impairment assessment to changes in key assumptions reflected the risks inherent in the valuation of goodwill. Our results We found the resulting estimate of the recoverable amount of goodwill for the Academic and Professional cash generating unit to be acceptable (2019 result: acceptable). 114 www.bloomsbury.comBloomsbury Publishing PlcThe risk Our response Sales returns liability – Group £9.2m (2019: £8.5m), parent Company £1.6m (2019: £3.4m) Refer to page 85 (Audit Committee Report), notes 2 and 32 on pages 127 and 167 (accounting policies) and notes 19 and 41 on pages 150 and 173 (financial disclosures) Risk vs 2019 ←→ Subjective estimate The Group typically sells its books on a sale or return basis, and presents revenue net of estimated returns in the financial statements. The Group provides for returns based on past experience using a one-year average method. Estimating the level of returns from customers is subjective in nature due to the inherent uncertainty involved in forecasting returns, particularly due to the longer period of returns allowed in the industry. The effect of these matters is that, as part of our risk assessment, we determined that the liability for returns has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole. The financial statements (notes 19 and 41) disclose the sensitivity estimated for the Group and parent Company financial statements. Our procedures included: • Assessing application: We evaluated whether the Group’s sales returns policy was consistently applied and remained appropriate, reflecting the underlying trends in the data and with regard to relevant accounting standards. • Historical comparisons: We obtained evidence of actual returns received in the current year and compared to prior year’s liability to assess historical accuracy of the Group’s liabilities. • Tests of details: We tested the inputs used in the returns liability calculations at 29 February 2020 by agreeing inputs such as historical sales and returns experienced to underlying records of the Group. Our results From the evidence obtained, we considered the level of the sales returns liability to be acceptable (2019: acceptable). The risk Our response Recoverability of advances – Group £24.8m (2019: £22.7m), parent Company £12.5m (2019: £10.8m) Refer to page 85 (Audit Committee Report), notes 2 and 32 on pages 130 and 167 (accounting policies) and notes 18 and 40 on pages 149 and 173 (financial disclosures) Risk vs 2019 ←→ Subjective estimate The Group pays royalty advances to its authors prior to the delivery of a manuscript. The Group recovers these advances from future sales by deductions of royalties due to the author under the terms of the relevant royalty agreements. The advances balance is made up of a significant number of individual advances to authors and requires the Group to forecast future sales to assess recoverability of advances. Where insufficient sales are forecast by the Group for the advance to be recovered in full, a provision is recorded against that advance. There is inherent uncertainty regarding the estimation of future sales of individual titles arising from the changes in the economic environment and the popularity of titles. The effect of these matters is that, as part of our risk assessment, we determined that the carrying value of advances has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. Our procedures included: • Historical comparisons: We challenged the Group’s forecasts for future royalty payments, which offset against the unearned advance, by assessing historical accuracy of future sales forecasts across a sample of unearned advance balances. • Assessing application: We evaluated whether the Group’s policy was consistently applied and remained appropriate, with regard to the relevant accounting standards. • Our sector experience: We challenged any specific adjustments made by the Group to the historical trends in arriving at the final provision and provided challenge on how such a position was derived. This involved considering specific promotions, film tie-ins, future book releases or planned market events which could have a material impact on the recoverability of the advances. • Assessing transparency: We assessed the adequacy of the Group’s disclosures concerning the degree of estimation involved in arriving at the final unearned advance position. Our results We found the resulting estimate of the carrying value of advances to be acceptable (2019: acceptable). 115 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSIndependent Auditor’s Report to the members of Bloomsbury Publishing Plc continued The risk Our response Parent: Recoverability of parent Company’s investment in subsidiaries - £81.2m (2019: £83.3m) Refer to page 85 (Audit Committee Report), note 32 on page 167 (accounting policy) and note 36 on page 171 (financial disclosures) Risk vs 2019 ←→ Forecast-based valuation The carrying amount of the parent Company’s investments in subsidiaries represents 43.7% (2019: 49.4%) of the parent Company’s total assets. Their recoverability is at risk of misstatement and subject to significant judgement. Due to their materiality in the context of the parent Company financial statements, this is considered to be the area that had the greatest effect on our overall parent Company audit. The effect of these matters is that, as part of our risk assessment, we determined that the carrying amount of the parent Company’s investments in subsidiaries has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. Our procedures included: • Tests of detail: Compared the carrying amount of 100% of the investment balance with the relevant subsidiaries’ value in use were in excess of their carrying amount and assessing whether those subsidiaries have historically been profit- making. • Benchmarking assumptions: We challenged the Group’s assumptions by comparing to externally derived data in relation to key inputs such as projected economic growth. • Our sector experience: We used our sector experience to assess the appropriateness of the discount rate for each cash generating unit, with reference to external sources of data. We challenged the judgements and assumptions used by the Group in its calculation based on our knowledge of the business. • Sensitivity analysis: We performed breakeven analysis on the assumptions noted above and considered the likelihood that the drivers of breakeven would arise. Our results We found the Group’s assessment of the recoverability of the parent Company’s investment in subsidiaries to be acceptable (2019: acceptable). We continue to perform procedures over revenue recognised from contracts and recoverability of inventory. However, following the implementation of IFRS 15 in 2019 we consider the ongoing risk of revenue recognition in relation to revenue recognised from contracts to have reduced, as such we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified as a key audit matter in our report this year. In addition, following management’s continued focus on inventory control, we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified as a key audit matter in our report this year. Finally, last year we reported a key audit matter in our report in respect of the impact of uncertainties due to the UK exiting the European Union. As a result of developments since the prior year report, including the Group’s own preparation, the relative significance of this matter on our audit work has reduced. Accordingly, we no longer consider this a key audit matter. 3. Our application of materiality and an overview of the scope of our audit Materiality for the Group financial statements as a whole was set at £606,000 (2019: £595,000), determined with reference to a benchmark of Group profit before tax of £13,229,000 (2019: £12,049,000), of which it represents 4.6% (2019: 4.9%). Materiality for the parent Company financial statements as a whole was set at £515,000 (2019: £505,000), determined with reference to a benchmark of the parent Company’s profit before tax of £12,217,000 (2019: £8,030,000), of which it represents 4.2% (2019: 5.1%). We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £30,000 (2019: £29,000), in addition to other identified misstatements that warranted reporting on qualitative grounds. Of the Group's four (2019: four) reporting components, we subjected two (2019: two) to full scope audits for group purposes. Audits for Group purposes were performed at the reporting components in the UK and the USA, covering 90% of total Group revenue (2019: 90%), 94% of Group profit before tax (2019: 98%) and 94% of Group total assets (2019: 91%). The Group audit team has performed the audit of both the UK (parent Company) and USA components, and has addressed the significant risk areas detailed above. The Group team used the following component materialities, having regard to the mix of size and risk profile of the Group across the components: • UK £515,000 (2019: £505,000) • USA £327,000 (2019: £267,000) 116 www.bloomsbury.comBloomsbury Publishing PlcThe remaining 10% (2019: 10%), of total Group revenue, 6% (2019: 2%), of Group profit before tax and 6% (2019: 9%), of total Group assets is represented by two reporting components, neither of which individually represented more than 7% of any of total Group revenue, Group profit before tax or total Group assets. For these residual components, we performed analysis at an aggregated group level to re-examine our assessment that there were no significant risks of material misstatement within these. 4. We have nothing to report on going concern The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the parent Company or the Group or to cease their operations, and as they have concluded that the parent Company’s and the Group’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”). Our responsibility is to conclude on the appropriateness of the Directors’ conclusions and, had there been a material uncertainty related to going concern, to make reference to that in this audit report. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this Auditor's report is not a guarantee that the Group and the parent Company will continue in operation. We identified going concern as a key audit matter (see section 2 of this report). Based on the work described in our response to that key audit matter, we are required to report to you if: • we have anything material to add or draw attention to in relation to the Directors’ statement in note 2 to the financial statements on the use of the going concern basis of accounting with no material uncertainties that may cast significant doubt over the Group and the parent Company’s use of that basis for a period of at least 12 months from the date of approval of the financial statements; or • the related statement under the Listing Rules set out on page 74 is materially inconsistent with our audit knowledge. We have nothing to report in these respects. 5. We have nothing to report on the other information in the Annual Report The Directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information. Strategic Report and Directors’ Report Based solely on our work on the other information: • we have not identified material misstatements in the Strategic Report and the Directors’ Report; • in our opinion the information given in those reports for the financial year is consistent with the financial statements; and • in our opinion those reports have been prepared in accordance with the Companies Act 2006. Directors’ Remuneration Report In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw attention to in relation to: • the Directors’ confirmation within the viability statement (page 45) that they have carried out a robust assessment of the emerging and principal risks facing the Group, including those that would threaten its business model, future performance, solvency and liquidity; • the Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated; and • the Directors’ explanation in the viability statement of how they have assessed the prospects of the Group, over what period they have done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. 117 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSIndependent Auditor’s Report to the members of Bloomsbury Publishing Plc continued Under the Listing Rules we are required to review the viability statement. We have nothing to report in this respect. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and the parent Company’s longer-term viability. Corporate governance disclosures We are required to report to you if: • we have identified material inconsistencies between the knowledge we acquired during our financial statements audit and the Cirectors’ statement that they consider that the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Group’s position and performance, business model and strategy; or • the section of the Annual Report describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee; or • a corporate governance statement has not been prepared by the Company. We are required to report to you if the Corporate Governance Statement does not properly disclose a departure from the provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. Based solely on our work on the other information described above: • with respect to the Corporate Governance Statement disclosures about internal control and risk management systems in relation to financial reporting processes and about share capital structures: − we have not identified material misstatements therein; and − the information therein is consistent with the financial statements; and • in our opinion, the Corporate Governance Statement has been prepared in accordance with relevant rules of the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority. 6. We have nothing to report on the other matters on which we are required to report by exception Under the Companies Act 2006, we are required to report to you if, in our opinion: • adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or • the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. We have nothing to report in these respects. 7. Respective responsibilities Directors’ responsibilities As explained more fully in their statement set out on page 74, the Directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or other irregularities (see below), or error, and to issue our opinion in an Auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. 118 www.bloomsbury.comBloomsbury Publishing PlcA fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities. Irregularities – ability to detect We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience and through discussion with the Directors and other management (as required by auditing standards) and discussed with the Directors and other management the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably. Firstly, the Group is subject to laws and regulations that directly affect the financial statements, including financial reporting legislation (including related companies legislation), distributable profits legislation and taxation legislation, and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: health and safety and employment law. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and other management and inspection of regulatory and legal correspondence, if any. Through these procedures, we became aware of actual or suspected non-compliance and considered the effect as part of our procedures on the related financial statement items. The identified actual or suspected non-compliance was not sufficiently significant to our audit to result in our response being identified as a key audit matter. Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations. 8. The purpose of our audit work and to whom we owe our responsibilities This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an Auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed. Sarah Styant (Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square, London E14 5GL 26 May 2020 119 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSConsolidated Income Statement For the year ended 29 February 2020 Revenue Cost of sales Gross profit Marketing and distribution costs Administrative expenses Operating profit before highlighted items Highlighted items Operating profit Finance income Finance costs Profit before taxation and highlighted items Highlighted items Profit before taxation Taxation Profit for the year attributable to owners of the Company Earnings per share attributable to owners of the Company Basic earnings per share Diluted earnings per share The notes on pages 125 to 163 form part of these consolidated financial statements. Year ended 29 February 2020 £’000 162,772 (74,978) 87,794 (21,373) (52,949) 15,947 (2,475) 13,472 270 (513) 15,704 (2,475) 13,229 (2,728) 10,501 Year ended 28 February 2019 £’000 162,679 (74,922) 87,757 (22,053) (53,735) 14,294 (2,325) 11,969 130 (50) 14,374 (2,325) 12,049 (2,802) 9,247 14.03p 13.84p 12.37p 12.25p Notes 3 4 4 6 6 4 7 9 9 120 www.bloomsbury.comBloomsbury Publishing PlcConsolidated Statement of Comprehensive Income For the year ended 29 February 2020 Profit for the year Other comprehensive income Items that may be reclassified to the income statement: Exchange differences on translating foreign operations Items that may not be reclassified to the income statement: Remeasurements on the defined benefit pension scheme Other comprehensive income for the year net of tax Total comprehensive income for the year attributable to the owners of the Company Year ended 29 February 2020 £’000 10,501 Year ended 28 February 2019 £’000 9,247 856 964 (115) 741 11,242 (5) 959 10,206 Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income is disclosed in note 7. 121 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSConsolidated Statement of Financial Position As at 29 February 2020 Assets Goodwill Other intangible assets Investments Property, plant and equipment Right-of-use assets Deferred tax assets Trade and other receivables Total non-current assets Inventories Trade and other receivables Cash and cash equivalents Total current assets Total assets Liabilities Retirement benefit obligations Deferred tax liabilities Lease liabilities Provisions Total non-current liabilities Trade and other liabilities Lease liabilities Current tax liabilities Provisions Total current liabilities Total liabilities Net assets Equity Share capital Share premium Translation reserve Other reserves Retained earnings Total equity attributable to owners of the Company 29 February 2020 £’000 28 February 2019 £’000 Notes 11 12 13 14 15 16 18 17 18 24 16 26 21 19 26 21 22 22 22 22 22 45,030 21,630 516 1,914 13,343 2,756 1,237 86,426 27,164 84,805 31,345 143,314 229,740 185 2,347 12,945 182 15,659 61,844 1,585 328 651 64,408 80,067 149,673 942 39,388 9,507 7,778 92,058 149,673 44,895 21,890 300 2,110 – 2,376 1,360 72,931 26,076 80,506 27,580 134,162 207,093 121 2,360 – 147 2,628 60,644 – – 83 60,727 63,355 143,738 942 39,388 8,651 7,118 87,639 143,738 The financial statements were approved by the Board of Directors and authorised for issue on 26 May 2020. J N Newton Director P Scott-Bayfield Director 122 www.bloomsbury.comBloomsbury Publishing Plc Consolidated Statement of Changes in Equity For the year ended 29 February 2020 At 28 February 2018 (restated*) Profit for the year Other comprehensive income Exchange differences on translating foreign operations Remeasurements on the defined benefit pension scheme Total comprehensive income for the year Transactions with owners Dividends to equity holders of the Company Unclaimed dividends Share options exercised Deferred tax on share-based payment transactions Share-based payment transactions Total transactions with owners of the Company At 28 February 2019 Profit for the year Other comprehensive income Exchange differences on translating foreign operations Remeasurements on the defined benefit pension scheme Total comprehensive income for the year Transactions with owners Dividends to equity holders of the Company Share options exercised Deferred tax on share-based payment transactions Share-based payment transactions Total transactions with owners of the Company At 29 February 2020 Share Share capital premium £’000 £’000 942 39,388 – – Translation reserve £’000 7,687 – Merger reserve £’000 1,803 – Capital redemption reserve £’000 22 – Share- based payment reserve £’000 5,673 – Own shares held by EBT £’000 Retained earnings Total equity £’000 £’000 (1,043) 84,034 138,506 9,247 9,247 – – – – – – – – – – – – – – – – – 964 – 964 – – – – – – – – – – – – – – – 942 39,388 – – – 8,651 – – 1,803 – – – – – – – – – – – – – – – 856 – 856 – – – – – – – – – – – – – – – – – – – – 22 – – – – – – – – – – – – – – – 422 422 6,095 – – – – – – – 629 – – – – – 241 – – – (5) 964 (5) 9,242 10,206 (5,655) 12 (27) (5,655) 12 214 33 – 33 422 241 (4,974) (5,637) (802) 87,639 143,738 10,501 10,501 – – – – 856 (115) (115) – 10,386 11,242 – 31 – – (6,009) (4) (6,009) 27 46 – 46 629 – – 942 39,388 – 9,507 – 1,803 – 22 629 6,724 31 (5,307) (5,967) (771) 92,058 149,673 * The Group has applied IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial Instruments" at 1 March 2018. The cumulative impact of adoption has been recognised as a decrease to opening retained earnings as at 28 February 2018. 123 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSConsolidated Statement of Cash Flows For the year ended 29 February 2020 Year ended 29 February 2020 £’000 Year ended 28 February 2019 £’000 Notes 10,501 9,247 14 15 12 6 6 13 23 7 20 20 20 20 20 20 20 502 1,775 4,301 (270) 513 7 761 2,728 20,818 (620) (4,385) 2,489 18,302 (1,706) 16,596 (294) (3,137) (310) (1,213) (223) 254 (4,923) (6,009) 27 – (1,531) (492) (3) (8,008) 3,665 27,580 100 31,345 470 – 4,139 (130) 50 – 498 2,802 17,076 2,315 5,834 (7,702) 17,523 (2,529) 14,994 (456) (2,898) (4,004) – – 116 (7,242) (5,655) 214 (201) – – (34) (5,676) 2,076 25,428 76 27,580 Cash flows from operating activities Profit for the year Adjustments for: Depreciation of property, plant and equipment Depreciation of right-of-use assets Amortisation of intangible assets Finance income Finance costs Share of loss of joint venture Share-based payment charges Tax expense (Increase)/decrease in inventories (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other liabilities Cash generated from operating activities Income taxes paid Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Purchase of intangible assets Purchase of business, net of cash acquired Purchase of rights to assets Purchase of share in a joint venture Interest received Net cash used in investing activities Cash flows from financing activities Equity dividends paid Proceeds from exercise of share options Repayment of overdraft Repayment of lease liabilities Lease liabilities interest paid Other interest paid Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Exchange gain on cash and cash equivalents Cash and cash equivalents at end of year 124 www.bloomsbury.comBloomsbury Publishing Plc Notes to the Financial Statements Accounting Policies 1. Reporting entity Bloomsbury Publishing Plc (the “Company”) is a company domiciled in the United Kingdom. The address of the Company’s registered office can be found on page 183. The consolidated financial statements of the Company as at and for the year ended 29 February 2020 comprise the Company and its subsidiaries (together referred to as the “Group”). The Group is primarily involved in the publication of books and other related services. 2. Significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented unless otherwise stated. a) Statement of compliance These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations adopted by the European Union (“EU”) at the time of preparing these financial statements and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. b) Basis of preparation The consolidated financial statements have been prepared under the historical cost convention and on a going concern basis. c) Going concern The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report on pages 10 to 63. The financial position of the Group, its cash flows and liquidity position are described in the Financial Review on pages 36 to 39. In addition, note 25 to the financial statements includes the Group’s objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments, and its exposures to credit risk and liquidity risk. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements, being the period of the detailed going concern assessment reviewed by the Board, and therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements. The Board has modelled a severe but plausible pessimistic downside scenario, including the impact of coronavirus. This assumes: • Print revenues are reduced by 60%–65% for the three months of expected global coronavirus restrictions to July 2020 and gradual recovery through to March 2021; • Downside assumptions about extended debtor days to the end of 2021; and • In this scenario, we extend the cost reduction measures already implemented, including salary reductions and reducing discretionary spend including marketing and non-essential capital expenditure. Under this severe but plausible downside scenario, the Group has sufficient liquidity to be able to manage these downside assumptions. Details of the bank facility and its covenants are shown in note 25c. d) Use of estimates and judgements The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Critical judgements and areas where the use of estimates is significant are disclosed in note 2v. 125 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSAccounting Policies e) Application of new and amended standards and interpretations The following amendments and interpretations were introduced to accounting standards relevant to the Group during the year ended 29 February 2020. The table below summarises the impact of these changes to the Group: Accounting standard IFRS 16 Leases Other standards Description of change Impact on financial statements A description and the impact of the adoption of IFRS 16 Leases is set out in note 2w. A number of other new standard and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2019. The standards and amendments have not had a material impact on the Group. Additional disclosure has been provided where relevant. The Group has not early adopted the following new and revised accounting standards, interpretations or amendments issued by the International Accounting Standards Board that are currently endorsed but not yet effective: Accounting standard Description of change Impact on financial statements Other standards A number of other new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2020 and have not been applied in preparing these financial statements. The Directors do not anticipate the application of these standards and amendments will have a material impact on the Group’s consolidated financial statements. f) Basis of consolidation i. Business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The Group measures goodwill at the acquisition date as: • The fair value of consideration transferred; plus • The recognised amount of any non-controlling interest in the acquiree; less • The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. Where the excess is negative, a bargain purchase gain is recognised immediately in the income statement. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in the income statement. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with the business combination are expensed as incurred. Any contingent consideration payable is measured and recognised at fair value at the acquisition date. Subsequent changes to the fair value of contingent consideration are recognised in the income statement. ii. Subsidiaries The consolidated financial statements comprise the financial information of the Company and its subsidiaries. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Accounting policies of subsidiaries are aligned with accounting policies adopted by the Group to ensure consistency. All subsidiaries except Bloomsbury Publishing India Private Limited have a reporting period end of 29 February. Bloomsbury Publishing India Private Limited has a reporting period end of 31 March, which aligns with the Indian Government’s financial year. iii. Loss of control When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any non-controlling interests and the other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. iv. Transactions eliminated on consolidation Intra-Group balances and transactions, and any unrealised income and expenses arising from intra-Group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment. 126 www.bloomsbury.comBloomsbury Publishing PlcNotes to the Financial Statementsv. Joint ventures Joint ventures are entities in which the Group holds an interest on a long-term basis and has rights to the net assets through contractually agreed sharing of control. Investments in joint ventures are accounted for by the equity method and are initially recognised at the fair value of consideration transferred. The Group’s share of its joint venture’s post acquisition profit or losses is recognised in the income statement. The Group’s share of its joint venture’s results is recognised as a component of operating profit as these operations form part of the core publishing business of the Group and are an integral part of existing wholly-owned business. The cumulative post- acquisition profit or loss is adjusted against the carrying amount of the investment. When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture, the Group does not recognise further losses unless the Group has incurred obligations or made payments on behalf of the joint venture. g) Revenue Revenue represents the fair value of consideration received from the provision of goods, services and rights falling within the Group’s ordinary activities, after deduction of trade discounts, value added tax and anticipated returns. Where the goods or services promised within a contract are distinct, they are identified as separate performance obligations and are accounted for separately. Where contractual arrangements consist of two or more performance obligations, such as access to multiple titles, the transaction price is allocated between the distinct performance obligations on the basis of their relative stand- alone selling prices. i. Print: • Print sales: Revenue from the sale of printed books is recognised at the point in time when control passes. This is generally at the point of shipment when title passes to the customer, when the Group has a present right to payment and has satisfied the relevant performance obligations under the contract. A provision for anticipated returns is made based primarily on historical return rates in each territory. If these do not reflect actual returns in future periods, then revenues could be understated or overstated for a particular period. The provision for anticipated future sales returns is recognised in trade and other liabilities in the statement of financial position. ii. Digital: • Ebook sales: Revenue from ebook sales is recognised when content is delivered i.e. access has been given to the customer. • Subscription income: Revenue is generated from customers through the sale of digital materials to educational establishments, libraries and professionals. Revenue for digital subscriptions is derived from the periodic subscription or update of the product. Revenue is recognised on a straight-line basis over the period of subscription or if less the expected useful economic life of the product, unless the product is downloadable or the goods or services are not delivered in a consistent manner over time, in which case revenue is recognised based on the value received by the customer. iii. Rights and services • Revenue from the licence of publishing and distribution rights, including film, paperback, electronic, overseas publishing rights, and sponsorship, is recognised when the Group has provided the associated material and collectability is probable. • Management services contracts: Revenue is primarily generated from multi-year contractual arrangements related to the delivery of online platform build, editorial and management services. Revenue is recognised over time based on contractual milestones as the customer gains benefit from the assets created or services provided. 127 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSAccounting Policies h) Foreign currencies i. Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). These consolidated financial statements are presented in sterling as this is the most representative currency of the Group’s operations. All financial information presented in sterling has been rounded to the nearest thousand except where otherwise stated. ii. Transactions and balances Transactions in currencies other than the functional currency are recorded in the functional currency at the rates of exchange prevailing on the dates of the transactions. Assets and liabilities in foreign currencies are translated into sterling at closing rates of exchange at the date of the statement of financial position. Exchange differences are charged or credited to the income statement within administrative expenses. iii. Group companies The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; • Income and expenses are translated at the average exchange rates over the period; and • All resulting exchange differences are recognised in other comprehensive income and presented in the translation reserve in equity. On disposal of a foreign entity these exchange differences are recycled to the income statement. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in equity. i) Taxation The tax expense represents the sum of the tax currently payable and deferred tax. i. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date. The Group recognises liabilities for anticipated tax issues based on estimates of the additional taxes that are likely to become due, which require judgement. Amounts are accrued based on the Director’s interpretation of specific tax law in the relevant country and the likelihood of settlement. The Directors use in-house tax experts, professional firms and previous experience when assessing tax risks. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current tax and deferred tax provisions in the period in which such determination is made. ii. Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be generated to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the end of the reporting period. iii. Current and deferred tax for the year Current and deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to other comprehensive income or equity, in which case the deferred tax is also recognised in other comprehensive income or equity respectively. 128 www.bloomsbury.comBloomsbury Publishing PlcNotes to the Financial Statementsj) Goodwill and other intangible assets i. Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see note 2f)i) less accumulated impairment losses, if any. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash- generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently where there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss in the consolidated income statement. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. ii. Other intangible assets Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses. Except for goodwill and assets under construction, intangible assets are amortised on a straight-line basis in the income statement over their expected useful lives by equal annual instalments at the following rates: Publishing relationships Imprints Subscriber and customer relationships — 7% to 9% per annum Trademarks Product and systems development — 5% to 21% per annum — 3% to 10% per annum — over the life of the trademark — 14% to 20% per annum Assets under construction relate to the costs of developing a product, typically an online platform, which is yet to go live. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively if appropriate. iii. Product and systems development Costs that are directly associated with the purchase and implementation of systems, such as software products, are recognised as intangible assets. Likewise, costs incurred in developing a product, typically an online platform, are recognised as intangible assets. Expenditure is only capitalised if costs can be measured reliably, the product is technically and commercially feasible, future economic benefits are probable and the Group has sufficient resources to complete development and use the asset. k) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment loss. Property, plant and equipment are depreciated in order to write down their cost less residual value using the straight-line method over their expected useful lives at the following rates: — over the remaining life of the lease Short leasehold improvements — 10% per annum Furniture and fittings Computers and other office equipment — 20% per annum — 25% per annum Motor vehicles Depreciation is prorated in the years of acquisition and disposal of an asset. The estimated useful lives, residual value and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. An item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement. 129 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSAccounting Policies l) Leases Policy applicable from 1 March 2019 The Group assessed whether a contract contains a lease at the inception of the contract. A contract is, or contains a lease, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group recognises a right-of-use asset and a lease liability at the lease commencement date with respect to all lease arrangements except for short-term leases (leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the lease payments are recognised as an operating expense on a straight-line basis over the term of the lease. The right-of-use asset is initially measured at cost, comprising the initial amount of the lease liability plus any initial direct costs incurred and an estimate of costs to restore the underlying asset, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or the end of the lease term. The Group applies IAS 36 to determine whether a right-of-use asset is impaired. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or a rate or a change in the Group’s assessment of whether it will exercise an extension or termination option. When the lease liability is remeasured, a corresponding adjustment is made to the right-of-use asset. Management uses judgement to determine the lease term where extension and termination options are available within the lease. Policy applicable before 1 March 2019 Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases by the lessee. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. m) Impairment of tangible and intangible assets excluding goodwill At the end of each reporting period the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement. n) Inventories The cost of work in progress and finished goods represents the amounts invoiced to the Group for origination, paper, printing and binding. Inventories are valued at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Provisions are made for slow-moving and obsolete stock. o) Royalty advances to authors Advances of royalties to authors are included within current receivables when the advance is paid less any provision required to adjust the advance to its net realisable value. The royalty advance is expensed at the contracted royalty rate as the related revenues are earned. p) Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). 130 www.bloomsbury.comBloomsbury Publishing PlcNotes to the Financial Statementsq) Financial instruments Financial assets and financial liabilities are recognised when the Group has become a party to the contractual provisions of the instrument. The Group’s financial assets and liabilities are as below: Trade receivables Trade receivables and other receivables are measured on initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method, less any impairment. Following the adoption of IFRS 9, provisions for bad and doubtful debts are based on the expected credit loss model. The "simplified approach" is used with the expected loss allowance measured at an amount equal to the lifetime expected credit losses. Cash and cash equivalents Cash and cash equivalents in the statement of cash flows comprise cash in hand and at bank, other short-term deposits held by the Group and overdrafts. Bank overdrafts are included in current liabilities in the statement of financial position. Financial liabilities and equity Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Trade payables Trade payables are not interest bearing and are initially recognised at fair value and subsequently at amortised cost using the effective interest method. r) Employee benefits i. Defined contribution plans Pension costs relating to defined contribution pension schemes are recognised in the income statement in the period for which related services are rendered by the employee. ii. Defined benefit plans Until 1997, a subsidiary company operated a defined benefit pension scheme. The retirement obligation recognised in the statement of financial position represents the net of the present value of the defined benefit obligation and the fair value of plan assets at the statement of financial position date. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Net interest is calculated by applying the discount rate to the net defined benefit obligation and is presented as finance costs or finance income. iii. Termination benefits Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan either to terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. iv. Share-based payment transactions The Group issues equity-settled share-based payment instruments to certain employees. Equity-settled share-based payment transactions are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share- based payments is charged to the income statement on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest. Options granted under the Company Share Option Plan and Sharesave Plan are equity-settled. The fair values of such options have been calculated using the Black-Scholes model based on publicly available market data. Awards granted under the Group’s Performance Share Plan are equity-settled. For the awards granted in 2016, part of any award granted under the Plan is subject to a Total Shareholder Return performance condition. The fair value of this element of the awards is calculated using the Stochastic model. For awards granted in 2017 or 2018, part of any award under the Plan is subject to a Return on Capital Employed performance condition. These have been measured based on the share price at the date of grant as they are only subject to non-market conditions. The other part of any award granted under the Plan is subject to an Earnings Per Share performance condition. The fair value of this element of the awards is calculated using the Black-Scholes model. Where the awards are subject to a holding period, we have used the Chaffe model to determine a discount for lack of marketability. 131 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSAccounting Policies s) Employee benefit trust The Company operates an employee benefit trust and has de facto control of shares held by the trust and bears their benefits and risks. The Group considers the trust to be substantially under its control and so consolidates the financial information of the trust as stated in note 2f. The Group records the assets and liabilities of the trust as its own and shares held by the trust are recorded at cost as a deduction from Shareholders’ equity. Finance costs and administrative expenses are charged as they accrue. t) Segmental reporting Operating segments, which have not been aggregated, are reported in a manner that is consistent with the internal reporting provided to the Chief Executive Officer (“CEO”), regarded as the Chief Operating Decision Maker. The CEO views the Group primarily from a nature of business basis, reflecting the divisional performance of Consumer, made up of Children’s Trade and Adult Trade, and Non-Consumer, made up of Academic & Professional and Special Interest. Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Performance is evaluated based on operating profit contributions using the same accounting policies as adopted for the Group’s financial statements. u) Dividends Dividends are recognised as liabilities once they are appropriately authorised. v) Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. The resultant estimates will, by definition, not necessarily equal the related actual results and may require adjustment in subsequent accounting periods. The estimates and assumptions that may cause a material adjustment to the carrying amount of assets and liabilities in the next financial year are: i. Revenue recognition Note 3 shows a breakdown of revenue by type. This is a judgement because management is required to decide whether the revenue recognition criteria has been met for a contract. Certain contracts entered into by the Group may include the licensing or outright sale of the Group’s intellectual property; the provision of ongoing consultancy services; or a bundled combination of both. The Group considers contractual terms and makes judgements in assessing when the triggers for revenue recognition have been met, particularly that the Group has sufficiently fulfilled its performance obligations under the contract to allow revenue to be recognised and the allocation of revenue between multiple deliverables. ii. Book returns The level of sales returns liability is set out in note 19. Printed books are normally sold on a sale-or-return basis. The timing of returns of unsold books is uncertain. A provision is made against sales for the expected future returns of books that have not occurred by the end of an accounting period. This is an estimate as it requires management to estimate the level of expected future returns. As books are returnable by customers, the Group makes a provision against books sold in the accounting period which is then carried forward in anticipation of book returns received subsequent to the period end. The provision is recorded by sub-division, and is based on the estimated time lag following a sale before a return is made, based on the historic returns data. The provision is calculated by reference to historical returns rates and expected future returns. iii. Author advances Trade and other receivables in the Group Statement of Financial Position, in note 18, include royalty advances (i.e. net unearned advances to authors). A provision is made against gross advances (paid and payable) to the extent that they are not expected to be fully earned from anticipated future sales of a title or subsidiary rights receivable. This is an estimate as it requires management to estimate the future sales of a title. At the end of each financial year a review is carried out on all published title advances. If it is unlikely that royalties from future title sales or subsidiary rights will fully earn down the advance, a provision is made in the income statement on a title-by-title basis, with regard to historical net sales, expected future net sales and taking account of the lifecycle of a book, for the difference between the carrying value and the anticipated recoverable amount from future earnings. 132 www.bloomsbury.comBloomsbury Publishing PlcNotes to the Financial Statementsiv. Inventory The level of inventories and the inventory provision are set out in note 17 to the financial statements. For each line of inventory, a provision is made against the cost of the inventory, where the Net Realisable Value is less than cost. Net Realisable Value is the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. This is an estimate as it requires management to estimate the net realisable value for inventory. At the end of each reporting period a review is carried out on all published titles where inventory is held. A provision is made by the Group against unsold inventory on a title-by-title basis, with regard to historical net sales and expected future net sales, to value the inventories at the lower of cost and net realisable value. v. Impairment reviews The carrying value of goodwill arising on the acquisition of companies (or groups of companies) by the Group is set out in note 11. This is an estimate as it requires an estimation of future cash flows relating to each CGU. IFRS require management to undertake an annual test for impairment of indefinite life assets and, for finite life assets, to test for impairment if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Group currently undertakes an annual impairment test covering goodwill and other indefinite life assets and also reviews finite life assets to consider whether a full impairment review is required. Intangible assets recoverability is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made. Note 11 details the assumptions used and sensitivities analysis performed on the value in use calculations. w) Change of accounting policy: IFRS 16 The Group has adopted IFRS 16 Leases from 1 March 2019 and applied the modified retrospective approach. Comparatives for 2019 have not been restated and there is no adjustment to equity at the date of application. On transition the Group elected not to reassess whether a contract is, or contains, a lease, instead relying on the assessment already made applying IAS 17 "Leases" and IFRIC 4 "Determining whether and Arrangement contains a Lease". In addition, the Group applied the available practical expedients as follows: • Reliance on assessment as to whether leases are onerous on 1 March 2019 with no impact identified; • Exclude leases of low value assets and short-term leases of less than 12 months from the application of IFRS 16, with payment for these leases continuing to be expensed directly to the income statement as operating leases; • The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease; and • Exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application. The major class of lease impacted by the new standard is property leases. The lease liability has been measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate at transition. The right-of-use assets are set to equal the lease liability adjusted for any prepaid or accrued lease payments. The weighted average incremental borrowing rate (“IBR”) applied to the lease liabilities on 1 March 2019 was 3.3%. A single IBR has been applied to a portfolio of leases when these have shared similar characteristics including location, duration and nature of the leases. The approach to use an IBR to discount leases has been followed since the transition date as the interest rate implicit in individual leases cannot be readily determined. At 1 March 2019 transition date adoption of IFRS 16 resulted in the Group recognising right-of-use assets of £13.6 million and lease liabilities of £14.5 million. There is a reduction of £0.3 million for prepaid rental amounts now netted against the right-of-use assets and a reduction of £1.2 million to liabilities for deferred rent-free amounts netted against the right-of-use asset. 133 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSAccounting Policies The impact on the income statement for the year ended 29 February 2020 is as follows: Decrease in administrative expenses EBITDA benefit Increase in depreciation Operating profit benefit Increase in finance costs Profit before tax reduction Year ended 29 February 2020 £’000 2,055 2,055 (1,775) 280 (492) (212) Prior to the adoption of IFRS 16 rental payments were charged to the income statement on a straight-line basis. Under IFRS 16 rental costs in the income statement are replaced with depreciation on the right-of-use asset and interest charges on the lease liability. The adoption of IFRS 16 gives rise to a net £212,000 charge in the profit before tax for the year ended 29 February 2020. At operating profit, the adoption of IFRS 16 gives a benefit of £280,000. The impact is the same for both the statutory profit before tax and adjusted profit before tax. There is no overall impact on the Group’s cash and cash equivalents although there is a change to the classification of cash flows in the cash flow statement with lease payments previously categorised as net cash used in operations now being split between the principal element (categorised in financing activities) and the interest element (categorised as interest paid in financing activities). The impact on the cash flow statement for the year ended 29 February 2020 is as follows: Net cash used in operating activities Net cash used in financing activities Pre IFRS 16 £’000 14,573 (5,985) Repayment of lease liabilities £’000 1,531 (1,531) Interest paid £’000 492 (492) Post IFRS 16 £’000 16,596 (8,008) The lease liabilities as at 1 March 2019 can be reconciled to the operating lease commitments at 28 February 2019 as follows: Operating lease commitments disclosed at 28 February 2019 Less commitments relating to short-term leases Less commitments relating to low value assets Discounted using the lease’s incremental borrowing rate Other liabilities now recognised within lease liabilities Lease liability recognised as at 1 March 2019 Analysed at: Current lease liabilities Non-current lease liabilities 1 March 2019 £’000 16,134 (23) (7) (2,372) 787 14,519 1,580 12,839 134 www.bloomsbury.comBloomsbury Publishing PlcNotes to the Financial Statements3. Revenue and segmental analysis The Group is comprised of two worldwide publishing divisions: Consumer and Non-Consumer, reflecting the core customers for our different operations. The Consumer Division is further split out into two operating segments: Children’s Trade and Adult Trade. Non-Consumer is split between two operating segments: Academic & Professional, and Special Interest. Each reportable segment represents a cash-generating unit for the purpose of impairment testing. We have allocated goodwill between reportable segments. These divisions are the basis on which the Group primarily reports its segment information. Segments derive their revenue from book publishing, sale of publishing and distribution rights, management and other publishing services. The analysis by segment is shown below: Year ended 29 February 2020 External revenue Cost of sales Gross profit Marketing and distribution costs Contribution before administrative expenses Administrative expenses excluding highlighted items Operating profit before highlighted items/segment results Amortisation of acquired intangible assets Other highlighted items Operating profit/(loss) Finance income Finance costs Profit before taxation and highlighted items Amortisation of acquired intangible assets Other highlighted items Profit/(loss) before taxation Taxation Profit/(loss) for the year Operating profit before highlighted items/segment results Depreciation Amortisation of internally generated intangibles EBITDA before highlighted items Children’s Trade £’000 59,354 (30,840) 28,514 (8,269) Adult Trade £’000 37,416 (19,627) 17,789 (5,619) Consumer £’000 96,770 (50,467) 46,303 (13,888) Academic & Professional1 £’000 43,123 (13,606) 29,517 (4,636) Special Interest1 £’000 22,879 (10,905) 11,974 (2,849) Non- Consumer £’000 66,002 (24,511) 41,491 (7,485) Unallocated £’000 – – – – Total £’000 162,772 (74,978) 87,794 (21,373) 20,245 12,170 32,415 24,881 9,125 34,006 (12,845) (10,503) (23,348) (19,975) (7,151) (27,126) 7,400 1,667 9,067 4,906 1,974 6,880 – – 7,400 – (110) (18) – 1,649 – (94) (18) – 9,049 – (204) (1,504) – 3,402 116 (201) (214) – 1,760 – (88) (1,718) – 5,162 116 (289) – – – – (739) (739) 154 (20) 66,421 (50,474) 15,947 (1,736) (739) 13,472 270 (513) 7,290 1,573 8,863 4,821 1,886 6,707 134 15,704 – – 7,290 – 7,290 7,400 821 360 8,581 (18) – 1,555 – 1,555 1,667 515 (18) – 8,845 – 8,845 9,067 1,336 210 2,392 570 10,973 (1,504) – 3,317 – 3,317 4,906 626 1,817 7,349 (214) – 1,672 – 1,672 1,974 315 178 2,467 (1,718) – 4,989 – 4,989 6,880 941 1,995 9,816 – (739) (605) (2,728) (3,333) – – – – (1,736) (739) 13,229 (2,728) 10,501 15,947 2,277 2,565 20,789 1 The Content Services division has been moved into the Special Interest Division; digital projects moved to the Academic & Professional division. 135 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTScontinued Year ended 28 February 2019 External revenue Cost of sales Gross profit Marketing and distribution costs Contribution before administrative expenses Administrative expenses excluding highlighted items Operating profit before highlighted items/segment results Amortisation of acquired intangible assets Other highlighted items Operating profit/(loss) Finance income Finance costs Profit before taxation and highlighted items Amortisation of acquired intangible assets Other highlighted items Profit/(loss) before taxation Taxation Profit/(loss) for the year Operating profit before highlighted items/segment results Depreciation Amortisation of internally generated intangibles EBITDA before highlighted items Children’s Trade £’000 65,800 (32,671) 33,129 (9,039) Adult Trade £’000 33,454 (16,937) 16,517 (5,231) Consumer £’000 99,254 (49,608) 49,646 (14,270) Academic & Professional1 £’000 41,514 (14,813) 26,701 (4,878) Special Interest1 £’000 21,911 (10,501) 11,410 (2,905) Non- Consumer £’000 63,425 (25,314) 38,111 (7,783) Unallocated £’000 – – – – Total £’000 162,679 (74,922) 87,757 (22,053) 24,090 11,286 35,376 21,823 8,505 30,328 (14,306) (10,395) (24,701) (18,780) (7,929) (26,709) 9,784 891 10,675 3,043 576 3,619 – – 9,784 – – (18) – 873 – – (18) – 10,657 – – (1,482) – 1,561 – – (214) – 362 – – (1,696) – 1,923 – – – – – – (611) (611) 130 (50) 65,704 (51,410) 14,294 (1,714) (611) 11,969 130 (50) 9,784 891 10,675 3,043 576 3,619 80 14,374 – – 9,784 – 9,784 9,784 185 (18) – 873 – 873 891 83 (18) – 10,657 – 10,657 10,675 268 373 10,342 177 1,151 550 11,493 (1,482) – 1,561 – 1,561 3,043 131 1,638 4,812 (214) – 362 – 362 576 71 237 884 (1,696) – 1,923 – 1,923 3,619 202 1,875 5,696 – (611) (531) (2,802) (3,333) – – – – (1,714) (611) 12,049 (2,802) 9,247 14,294 470 2,425 17,189 1 The Content Services division has been moved into the Special Interest Division; digital projects moved to the Academic & Professional division. The reconciliation of operating profit to EBITDA, both before highlighted items, for the year ended 29 February 2020 includes the impact of IFRS 16. The comparative year reconciliation has not been restated for IFRS 16. Note 2w explains the impact of IFRS 16 on EBITDA for the year ended 29 February 2020. Total assets Children’s Trade Adult Trade Academic & Professional Special Interest Unallocated Total assets 29 February 2020 £’000 11,016 6,747 59,128 13,492 139,357 229,740 28 February 2019 £’000 9,939 7,218 58,466 14,328 117,142 207,093 Unallocated primarily represents centrally held assets including system development; property, plant and equipment; right-of-use assets; receivables; and cash. 136 www.bloomsbury.comBloomsbury Publishing PlcNotes to the Financial StatementsExternal revenue by destination Destination Year ended 29 February 2020 United Kingdom (country of domicile) North America Continental Europe Australasia Middle East and Asia Rest of the world Overseas countries Total Year ended 28 February 2019 United Kingdom (country of domicile) North America Continental Europe Australasia Middle East and Asia Rest of the world Overseas countries Total Source United Kingdom £’000 North America £’000 Australia £’000 India £’000 Total £’000 60,724 15,352 16,782 1,320 7,435 2,827 43,716 104,440 58,407 13,248 17,802 1,463 7,317 2,722 42,552 100,959 74 40,064 1,683 – 190 404 42,341 42,415 54 43,478 1,594 – 289 431 45,792 45,846 – – – 11,107 – – 11,107 11,107 – – – 11,586 – – 11,586 11,586 – – – – 4,799 11 4,810 4,810 – – – – 4,244 44 4,288 4,288 60,798 55,416 18,465 12,427 12,424 3,242 101,974 162,772 58,461 56,726 19,396 13,049 11,850 3,197 104,218 162,679 During the year, sales to one customer exceeded 10% of Group revenue (2019: one customer). The value of these sales was £43,405,000 (2019: £37,483,000). This customer purchases from all operating segments. Analysis of non-current assets (excluding deferred tax assets) by geographic location United Kingdom (country of domicile) North America Other Total The Group’s revenues by product type were as follows: Year ended 29 February 2020 £’000 75,839 7,638 193 83,670 Year ended 28 February 2019 £’000 65,802 4,669 84 70,555 Year ended 29 February 2020 Print Digital Rights and services1 Total Year ended 28 February 2019 Print Digital Rights and services1 Total Children’s Trade £’000 52,646 3,029 3,679 59,354 Children’s Trade £’000 58,288 4,157 3,355 65,800 Adult Trade £’000 29,460 6,772 1,184 37,416 Adult Trade £’000 27,568 4,887 999 33,454 Consumer £’000 82,106 9,801 4,863 96,770 Consumer £’000 85,856 9,044 4,354 99,254 Academic & Professional2 £’000 28,438 12,099 2,586 43,123 Academic & Professional2 £’000 29,087 10,083 2,344 41,514 Special Interest2 £’000 18,571 2,235 2,073 22,879 Special Interest2 £’000 18,367 1,746 1,798 21,911 Non- Consumer £’000 47,009 14,334 4,659 66,002 Non- Consumer £’000 47,454 11,829 4,142 63,425 1 Rights and services revenue includes revenue from copyright and trademark licences, management contracts, advertising and publishing services. 2 The Content Services division has been moved into the Special Interest Division; digital projects moved to the Academic & Professional division. Total £’000 129,115 24,135 9,522 162,772 Total £’000 133,310 20,873 8,496 162,679 137 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS The below table depicts the remaining transaction price on unsatisfied or partially unsatisfied performance obligations from contracts with customers as follows: Year ended 29 February 2020 Print Digital Rights and services Total Year ended 28 February 2019 Print Digital Rights and services Total Deferred income £’000 550 2,697 16 3,263 Deferred income £’000 275 2,285 585 3,145 Committed sales £’000 4,784 1,991 1,872 8,647 Committed sales £’000 4,880 2,499 2,445 9,824 Total remaining transaction price £’000 5,334 4,688 1,888 11,910 Total remaining transaction price £’000 5,155 4,784 3,030 12,969 Sales £’000 129,115 24,135 9,522 162,772 Sales £’000 133,310 20,873 8,496 162,679 4. Operating profit Operating profit is stated after charging the following amounts: Purchase of goods and changes in inventories Auditor’s remuneration (see overleaf) Depreciation of property, plant and equipment Highlighted items (see below) Provision made against advances Exchange (gain)/loss Staff costs (excluding termination benefits) Highlighted items Legal and other professional fees Coronavirus onerous costs Restructuring costs Other highlighted items Amortisation of acquired intangible assets Total highlighted items 2021 £’000 5,245 2,991 611 8,847 2020 £’000 5,155 2,650 1,089 8,894 Notes 17 14 5 Notes 12 2022 £’000 89 646 570 1,305 2021 £’000 – 587 715 1,302 Year ended 29 February 2020 £’000 43,722 331 502 2,475 5,464 (151) 34,868 Year ended 29 February 2020 £’000 461 180 98 739 1,736 2,475 2023 and later £’000 – 1,051 707 1,758 2022 and later £’000 – 1,547 1,226 2,773 Year ended 28 February 2019 £’000 44,293 266 470 2,325 4,997 38 34,848 Year ended 28 February 2019 £’000 223 – 388 611 1,714 2,325 Highlighted items charged to operating profit comprise significant non-cash charges and major one-off initiatives, which are highlighted in the income statement because, in the opinion of the Directors, separate disclosure is helpful in understanding the underlying performance and future profitability of the business. All highlighted items are included in administrative expenses in the income statement. For the year ended 29 February 2020 legal and other professional fees of £461,000 were incurred as a result of the Group’s acquisition of rights, primarily that of Oberon Books Limited and the joint venture; Beijing CYP & Gakken Education Development Co., Ltd. Coronavirus onerous costs of £180,000 are irrecoverable costs crystallised in the year associated with book fairs and conferences that have been cancelled due to the coronavirus. Restructuring costs relate to the acquisition of Oberon Books Limited and I.B. Tauris & Co. Limited. 138 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements For the year ended 28 February 2019 legal and other professional fees of £223,000 and restructuring costs of £388,000 were incurred as a result of the Group’s acquisition of I.B. Tauris & Co. Limited; see note 10. Auditor’s remuneration Amounts payable to KPMG LLP and its associates in respect of both audit and non-audit services are as follows: Fees payable to the Company’s Auditor for the audit of the parent Company and consolidated financial statements Fees payable to the Company’s Auditor and its associates for other services: Audit of the Company’s subsidiaries pursuant to legislation Other services pursuant to legislation: Interim review Total 5. Staff costs Staff costs, including Directors, during the year were: Salaries (including bonuses) Social security costs Pension costs Share-based payment charge Staff costs (excluding termination benefits) Termination benefits Total Year ended 29 February 2020 Year ended 28 February 2019 UK £’000 Overseas £’000 Total £’000 UK £’000 Overseas £’000 190 90 280 140 5 35 230 11 – 101 16 35 331 Total £’000 215 16 35 266 75 11 – 86 Year ended 29 February 2020 £’000 29,653 2,952 1,502 761 34,868 220 35,088 Year ended 28 February 2019 £’000 30,116 2,912 1,322 498 34,848 613 35,461 5 35 180 Notes 24 23 4 For the year ended 29 February 2020 £16,000 (year ended 28 February 2019: £189,000) of termination benefits are included within highlighted items. The average monthly number of employees during the year were: Editorial, production and selling Finance and administration Total Staff costs are charged to administrative expenses. Year ended 29 February 2020 £’000 593 109 702 Year ended 28 February 2019 £’000 583 100 683 Three (2019: four) Directors were accruing benefits during the year under defined contribution pension arrangements. Total emoluments for Directors was: Short-term employee benefits Post-employment benefits Total Year ended 29 February 2020 £’000 1,967 140 2,107 Year ended 28 February 2019 £’000 2,612 132 2,744 139 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSThe Group considers key management personnel as defined under IAS 24 “Related Party Disclosures” to be the Directors of the Company, this includes Non-Executive Directors, and those Directors of the global divisions, major geographic regions and departments who are actively involved in strategic decision making. Total emoluments for Executive Directors and other key management personnel were: Short-term employee benefits Post-employment benefits Share-based payment charge Total 6. Finance income and finance costs Finance income Interest on bank deposits Other interest receivable Return on pension plan assets Total Finance costs Interest on lease liabilities Interest cost on pension obligations Interest on bank overdraft and loans Other interest payable Total 7. Taxation a) Tax charge for the year Current taxation UK corporation tax Current year Adjustment in respect of prior years Overseas taxation Current year Adjustment in respect of prior years Deferred tax UK Origination and reversal of temporary differences Adjustment in respect of prior years Overseas Origination and reversal of temporary differences Adjustment in respect of prior years Total taxation expense 140 Year ended 29 February 2020 £’000 3,841 224 597 4,662 Year ended 28 February 2019 £’000 4,022 209 410 4,641 Year ended 29 February 2020 £’000 Year ended 28 February 2019 £’000 Notes 24 26 24 136 118 16 270 492 18 2 1 513 55 62 13 130 – 17 1 32 50 Year ended 29 February 2020 £’000 Year ended 28 February 2019 £’000 Notes 16 2,513 (73) 462 40 2,942 14 – (171) (57) (214) 2,728 1,961 (3) 301 (18) 2,241 97 – 488 (24) 561 2,802 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements b) Factors affecting tax charge for the year The tax on the Group’s profit before tax differs from the standard rate of corporation tax in the United Kingdom of 19.00% (2019: 19.00%). The reasons for this are explained below: Profit before taxation Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%) Effects of: Non-deductible revenue expenditure Movement in unrecognised temporary differences Different rates of tax in foreign jurisdictions Previously unprovided tax losses utilised Adjustment to tax charge in respect of prior years Current tax Deferred tax Tax charge for the year before disallowable costs on highlighted items Highlighted items Disallowable costs Tax charge for the year Year ended 29 February 2020 Year ended 28 February 2019 £’000 13,229 % 100.0 £’000 12,049 2,514 19.0 2,289 153 47 142 (124) (33) (57) 2,642 86 2,728 1.1 0.4 1.1 (0.9) (0.3) (0.4) 20.0 0.6 20.6 117 132 308 (36) (21) (24) 2,765 37 2,802 % 100.0 19.0 1.0 1.1 2.6 (0.3) (0.2) (0.2) 23.0 0.3 23.3 Non-deductible revenue expenditure mainly relates to disallowable foreign exchange and entertainment expenses. Different rates of tax in foreign jurisdictions is where we are paying tax at higher rates in the US and Australia as well as paying state taxes in the US. Previously unprovided tax losses utilised relate to differences from the finalisation of losses on tax returns. Adjustments to prior periods primarily arise where an outcome is obtained on certain tax matters which differs from expectations held when the related provision was made. Where the outcome is more favourable than the provision made, the difference is released, lowering the current year tax charge. Where the outcome is less favourable than our provision, an additional charge to current year tax will occur. We are not aware of any significant unprovided exposures that are considered likely to materialise. c) Factors affecting tax charge for future years Factors which may affect the future tax charges includes changes in tax legislation, transfer pricing regulations and the level and mix of profitability in different countries. A reduction in the UK corporation tax rate from 19% to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016, and the net UK deferred tax liability as at 29 February 2020 has been calculated based on this rate. The March 2020 Budget announced that a rate of 19% would continue to apply with effect from 1 April 2020, and this change was substantively enacted on 17 March 2020. This will increase the Group’s future current tax charge accordingly and decrease the net deferred tax asset by £138,000. d) Tax effects of components of other comprehensive income Before tax 2020 £’000 Tax charge 2020 £’000 After tax 2020 £’000 Before tax 2019 £’000 Tax charge 2019 £’000 After tax 2019 £’000 Exchange difference on translating foreign operations Remeasurements on the defined benefit pension scheme Other comprehensive income 856 (138) 718 – 23 23 856 (115) 741 964 (6) 958 – 1 1 964 (5) 959 141 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS8. Dividends Amounts paid in the year Prior period final 6.75p dividend per share (2019: 6.36p) Interim 1.28p dividend per share (2019: 1.21p) Total dividend payments in the year Amounts arising in respect of the year Interim 1.28p dividend per share for the year (2019: 1.21p) Proposed final dividend per share for the year (2019: 6.75p) Total dividend 1.28p per share for the year (2019: 7.96p) Year ended 29 February 2020 £’000 Year ended 28 February 2019 £’000 5,051 958 6,009 958 – 958 4,749 906 5,655 906 5,051 5,957 Absent of coronavirus, Bloomsbury would have declared a final cash dividend for the year to 29 February 2020 of 6.89 pence per share, which would have resulted in a total dividend for the year of 8.17 pence per share, up 3% on the previous year. As previously announced, Bloomsbury has decided in view of coronavirus to prioritise cash conservation at the current time and therefore will not be paying a cash dividend. Bloomsbury will instead, subject to Shareholder approval at the Annual General Meeting, be making a bonus issue to Shareholders in lieu of, and with a value equivalent to, its proposed final dividend. This bonus issue will be provided on 28 August 2020 to Shareholders on the register on the record date of 31 July 2020. 9. Earnings per share The basic earnings per share for the year ended 29 February 2020 is calculated using a weighted average number of Ordinary shares in issue of 74,830,714 (2019: 74,741,083) after deducting shares held by the Employee Benefit Trust. The diluted earnings per share is calculated by adjusting the weighted average number of Ordinary shares to take account of all dilutive potential Ordinary shares, which are in respect of unexercised share options and the Performance Share Plan. Weighted average shares in issue Dilution Diluted weighted average shares in issue Profit after tax attributable to owners of the Company Basic earnings per share Diluted earnings per share Adjusted profit attributable to owners of the Company Adjusted basic earnings per share Adjusted diluted earnings per share Year ended 29 February 2020 Number 74,830,714 1,026,939 75,857,653 Year ended 28 February 2019 Number 74,741,083 756,547 75,497,630 £’000 10,501 14.03p 13.84p £’000 12,720 17.00p 16.77p £’000 9,247 12.37p 12.25p £’000 11,299 15.12p 14.97p 142 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements Adjusted profit is derived as follows: Profit before taxation Amortisation of acquired intangible assets Other highlighted items Adjusted profit before tax Tax expense Deferred tax movements on goodwill and acquired intangible assets Tax expense on other highlighted items Adjusted tax Adjusted profit Year ended 29 February 2020 £’000 13,229 1,736 739 15,704 2,728 202 54 2,984 12,720 Year ended 28 February 2019 £’000 12,049 1,714 611 14,374 2,802 194 79 3,075 11,299 The Group includes the benefit of tax amortisation of intangible assets within adjusted tax as this benefit more accurately aligns the adjusted tax charge with the expected cash tax payments. 10. Acquisitions On 1 May 2018 the Group acquired the issued share capital of I. B. Tauris & Co. Limited (“IBT”), the academic publisher. The consideration of £4.4 million was satisfied by the payment of £4.0 million in cash on completion and £0.4 million paid out post completion subject to working capital and other adjustments. £0.3 million of this post completion consideration was paid in the year ended 29 February 2020. The previously disclosed £5.8 million consideration includes the payment of pre-existing IBT obligation including loans to Shareholders and the current loans and the best estimate at that time of the payment due for working capital and other adjustments. The pre-existing IBT obligation including loans to Shareholders and the current loans is included in overdrafts and current loans and payables and provisions in the IBT net assets acquired below at the date of acquisition. IBT has a world-leading list in Middle East studies, history, politics and international relations. Other subject areas in which it has a sizeable presence are visual culture, classics, ancient history and religion. Around 90% of sales are in print, so there is significant potential to grow digital revenues. IBT titles will be included within Bloomsbury’s digital resources. The business will operate within Bloomsbury’s Academic & Professional division. The table below summarises the fair values to the Group included in the consolidated financial statements of the major categories of assets and liabilities of IBT at the date of acquisition. Net assets acquired Identifiable intangible assets Property, plant and equipment Deferred tax assets Inventories Trade and other receivables Cash and cash equivalents Deferred tax liabilities Overdraft and current loans Payables and provisions Total net assets acquired Goodwill Total Satisfied by: Cash consideration Fair value to the Group £’000 3,200 37 662 1,054 1,557 93 (544) (201) (4,064) 1,794 2,613 4,407 4,407 143 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSIdentifiable intangible assets of £3,200,000 consist of publishing rights and imprints. The publishing rights have a useful life of 12 years and imprints have a useful life of 20 years. The goodwill arising of £2,613,000 is attributable to the expected profitability of the acquired business and the synergies expected to arise after the acquisition. The gross contractual trade receivable at acquisition is £1,539,000 of which £217,000 is the best estimate of the contractual cash flows that are not expected to be collected. Transaction costs of £223,000 were expensed in the year ended 28 February 2019 within administrative expenses. 11. Goodwill Cost At start of year Acquired through business combinations Exchange differences At end of year Impairment At start of year Exchange differences At end of year Net book value At end of year At start of year 29 February 2020 £’000 28 February 2019 £’000 49,156 – 137 49,293 4,261 2 4,263 46,399 2,613 144 49,156 4,260 1 4,261 45,030 44,895 44,895 42,139 Goodwill is not amortised, but instead is subject to annual impairment reviews. Any impairment losses are recognised immediately in the income statement. Management has aligned the monitoring of goodwill to how it reviews the performance of the business. Goodwill is monitored by management at the publishing division level. The following is a summary of goodwill allocation for each publishing division: 29 February 2020 £’000 1,849 2,339 35,889 4,953 45,030 28 February 2019 £’000 1,788 2,265 35,889 4,953 44,895 Children’s Trade Adult Trade Academic & Professional Special Interest Total 144 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements Impairment testing The recoverable amount of the Group’s goodwill has been considered with regard to value-in-use calculations. These calculations use the pre-tax future cash flow projections of each cash-generating unit (“CGU”) based on the Board’s approved budgets for the year ended 28 February 2021 and the Board-approved five-year plan. The calculations include a terminal value based on the projections for the final year of the five-year plan with a long-term growth rate assumption applied. The key assumptions for calculating value in use are: Children’s Trade Adult Trade Academic & Professional Special Interest Discount rates CAGR - Revenue Long-term growth 2020 % 11.5 11.3 10.7 11.6 2019 % 10.8 11.4 10.2 11.6 2020 % 0.8 2.6 3.0 2.0 2019 % 2.4 1.8 5.7 3.7 2020 % 2.0 2.0 2.0 2.0 2019 % 2.0 2.0 2.0 2.0 Discount rates The discount rates applied to the cash flows are calculated using a pre-tax rate based on the weighted average cost of capital for the Group. This is adjusted for risks specific to the market in which the CGU operates. Revenue growth rates Growth rates have been calculated based on those applied to the Board-approved budget for the year ended 28 February 2021 and five-year plan. They incorporate future expectations of growth in backlist revenues and identified new revenue streams. The compound annual growth rates (“CAGR”) noted above covers the period of the 4 years after the year ended 28 February 2021, and is representative of the growth used in each year of the forecast, with the exception of Children’s Trade which has a range of annual growth rates used between (7.0)% and 10.0% Long-term growth rates The five-year forecasts are extrapolated to perpetuity on the basis that the relevant CGUs are long-established business units. The long-term growth rates are blended rates formed from the territory-specific long-term growth rates. Gross margins Gross margins have been based on historic performance and expected changes to the sales mix in future periods. Sensitivity The Group has not identified any reasonably possible changes to key assumptions that would cause the carrying value of goodwill of the Children’s Trade, Adult Trade and Special Interest CGUs to exceed its recoverable amount. Academic & Professional has by far the largest goodwill and non-current assets. This division is in the middle of an investment phase with the Bloomsbury 2020 Digital Resources strategy to leverage our academic and professional IP assets into the academic library market, growing more high-quality digital subscription income. There is therefore a risk in the medium term if this strategy does not succeed. However, current progress on this strategy is very good. A 2% increase in the discount rate would not give rise to an impairment (2019: no impairment). A 8% reduction in the first year revenue growth rates would lead to an impairment of £0.2 million (2019: impairment of £2.2 million). Reducing the long-term growth rate to 0% would not give rise to an impairment (2019: no impairment). Management have also prepared a severe but plausible pessimistic downside scenario, including the impact of coronavirus. It assumes a significant downside to print revenues in 2020/21 but revenues are broadly back to normal expected levels for 2021/22 and thereafter. The assumptions used are detailed further in note 2c) on going concern. Under this scenario no impairment would arise for any of the publishing divisions. 145 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS12. Other intangible assets Cost At 28 February 2018 Acquired through business combinations Additions Transfers Disposals Exchange differences At 28 February 2019 Additions1 Transfers Exchange differences At 29 February 2020 Amortisation At 28 February 2018 Disposals Charge for the year Exchange differences At 28 February 2019 Charge for the year Exchange differences At 29 February 2020 Net book value At 29 February 2020 At 28 February 2019 Publishing rights1 £’000 Subscriber and customer relationships £’000 Imprints £’000 15,941 5,790 4,396 900 70 – – 59 16,970 866 – 56 17,892 9,092 – 1,007 36 10,135 1,010 33 11,178 2,300 – – – – 8,090 – – – 8,090 1,585 – 358 – 1,943 377 – 2,320 – – – – 11 4,407 – – 10 4,417 2,668 – 349 4 3,021 349 5 3,375 Trademarks £’000 Systems development £’000 Product development £’000 Assets under construction £’000 Total £’000 205 – 17 – – 5 227 31 – 4 262 6 – 6 – 12 7 – 19 6,664 10,160 270 43,426 – 895 – (42) 9 7,526 1,277 – 10 8,813 4,107 (42) 881 5 4,951 972 8 5,931 – 1,245 427 – 9 11,841 1,085 592 10 13,528 6,083 – 1,538 6 7,627 1,586 8 9,221 – 675 (427) – – 518 746 (592) – 672 – – – – – – – – 3,200 2,902 – (42) 93 49,579 4,005 – 90 53,674 23,541 (42) 4,139 51 27,689 4,301 54 32,044 6,714 6,835 5,770 6,147 1,042 1,386 243 215 2,882 2,575 4,307 4,214 672 518 21,630 21,890 1 The addition of £866,000 relates to the acquisition of Oberon Book’s publishing rights on 10 December 2019. 13. Investments Equity securities designated as at Fair Value through Other Comprehensive Income (“FVOCI”) Joint venture Total The amounts recognised in the Income Statement are as follows: Joint venture Total 29 February 2020 £’000 300 216 516 28 February 2019 £’000 300 – 300 29 February 2020 £’000 (7) (7) 28 February 2019 £’000 – – The addition in the year is in relation to the investment in Beijing CYP & Gakken Education Development Co., Ltd joint venture. 146 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements14. Property, plant and equipment At 28 February 2018 Additions Acquired through business combinations Disposals Exchange differences At 28 February 2019 Additions Disposals Exchange differences At 29 February 2020 Depreciation At 28 February 2018 Charge for the year Disposals Exchange differences At 28 February 2019 Charge for the year Disposals Exchange differences At 29 February 2020 Net book value At 29 February 2020 At 28 February 2019 Short leasehold improvements £’000 2,862 58 – – 3 2,923 22 (20) 4 2,929 Furniture and fittings £’000 893 22 5 – 13 933 52 (3) 14 996 Computers and other office equipment £’000 2,756 357 32 (565) 12 2,592 225 (1) 18 2,834 1,572 131 – – 1,703 125 (18) 2 1,812 1,117 1,220 662 90 – 8 760 104 (1) 11 874 122 173 2,194 248 (564) 12 1,890 273 (1) 13 2,175 659 702 Motor vehicles £’000 130 – – (94) (2) 34 – – 1 35 130 1 (94) (18) 19 – – – 19 16 15 The depreciation charge is included in administrative expenses. Total £’000 6,641 437 37 (659) 26 6,482 299 (24) 37 6,794 4,558 470 (658) 2 4,372 502 (20) 26 4,880 1,914 2,110 147 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS 15. Right-of-use assets At 28 February 2019 Adjustment on initial application of IFRS 16 (see note 2w) Additions Exchange differences At 29 February 2020 Depreciation At 28 February 2019 Charge for the year Exchange differences At 29 February 2020 Net book value At 29 February 2020 At 28 February 2019 Property £’000 – 13,444 1,412 117 14,973 – 1,691 (4) 1,687 13,286 – Cars £’000 – 90 – – 90 – 45 – 45 45 – Equipment £’000 – 51 – – 51 – 39 – 39 12 – Total £’000 – 13,585 1,412 117 15,114 – 1,775 (4) 1,771 13,343 – The depreciation charge is included in administrative expenses. 16. Deferred tax assets and liabilities a) Recognised deferred tax assets and liabilities Deferred tax is calculated in full on temporary differences using the tax rate appropriate to the jurisdiction in which the asset or liability arises and the tax rates that are expected to apply in the periods in which the asset or liability is settled. Movement in temporary differences during the year: At 28 February 2018 (restated*) Acquired through business combinations (Charge)/credit to the income statement Credit to other comprehensive income Credit to equity Exchange differences At 28 February 2019 Recognised on acquisition (Charge)/credit to the income statement Credit to other comprehensive income Credit to equity Exchange differences At 29 February 2020 Property, plant and equipment £’000 261 Retirement benefit obligation £’000 47 Tax losses £’000 47 Share-based payments £’000 29 Intangible assets £’000 (1,988) 626 (500) – – 9 182 227 (129) – – (6) 274 (1) (31) – – – 229 – (11) – – – 218 – (25) 1 – – 23 – 19 23 – – 65 – 67 – 33 – 129 – 107 – 46 – 282 (544) 194 – – – (2,338) (147) 202 – – – (2,283) Other £’000 1,971 37 (266) – – 49 1,791 – 26 – – 36 1,853 Total £’000 367 118 (561) 1 33 58 16 80 214 23 46 30 409 * The Group has applied IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial Instruments" at 1 March 2018. Deferred tax assets in respect of losses are only recognised to the extent that it is anticipated they will be utilised in the foreseeable future. The Other deferred tax asset predominantly relates to temporary differences i.e. valuation adjustments and return and inventory provisions held on the balance sheet recognised in the current tax calculation and tax return only when utilised. This predominantly relates to the US and Australia. 148 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements b) The analysis for financial reporting purposes is as follows: Deferred tax assets Deferred tax liabilities Total c) Unrecognised deferred tax assets The Group had deferred tax assets not recognised in the financial statements as follows: Trading losses Non-trading losses 29 February 2020 £’000 2,756 (2,347) 409 28 February 2019 £’000 2,376 (2,360) 16 29 February 2020 £’000 402 – 28 February 2019 £’000 370 – At 29 February 2020, the Group had trading losses of £2.4 million (2019: £1.7 million) and non-trading losses of approximately £nil (2019: £nil). A deferred tax asset has not been recognised in respect of these losses carried forward as it is not clear whether sufficient income against which the losses may be offset will arise in the Group in the foreseeable future. Deferred tax is not provided on unremitted earnings of subsidiaries where the Group controls the timing of remittance and it is probable that the temporary difference will not reverse in the foreseeable future. 17. Inventories Work in progress Finished goods for resale Total 29 February 2020 £’000 4,756 22,408 27,164 28 February 2019 £’000 3,964 22,112 26,076 The cost of inventories recognised as cost of sales amounted to £35,603,000 (2019: £35,953,000). The provision and write-down of inventories to net realisable value recognised in cost of sales amounted to £8,119,000 (2019: £8,340,000). 18. Trade and other receivables Non-current Prepayments and accrued income Current Gross trade receivables Less: loss allowance Net trade receivables Income tax recoverable Other receivables Prepayments and accrued income Royalty advances Total current trade and other receivables Total trade and other receivables 29 February 2020 £’000 28 February 2019 £’000 1,237 1,360 54,252 (1,832) 52,420 481 1,510 5,551 24,843 84,805 86,042 52,115 (2,102) 50,013 1,340 1,803 4,683 22,667 80,506 81,866 Non-current receivables relate to accrued income on long-term rights deals. A provision is held against gross advances payable in respect of published title advances which may not be fully earned down by anticipated future sales. As at 29 February 2020, £5,604,000 (2019: £5,434,000) of royalty advances are expected to be recovered after more than 12 months. Trade receivables principally comprise amounts receivable from the sale of books due from distributors. The majority of trade debtors are secured by credit insurance and in certain territories by third-party distributors. 149 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSThe Directors consider that the carrying amount of trade and other receivables approximates to their fair values. The Group’s exposure to credit and currency risks is disclosed in note 25. The average number of days’ credit taken for sales of books by the Group was 118 days (2019: 112 days). A loss allowance is made with reference to specific debts, past default experience, trading history and the current economic environment. Movements on the Group loss allowance for trade receivables are as follows: At start of year Acquired Adjustment on initial application of IFRS 9 Amounts created Amounts utilised Amounts released Exchange differences At end of year 19. Trade and other liabilities Current Trade payables Sales returns liability Taxation and social security Other payables Accruals Deferred income Total current trade and other liabilities Total trade and other liabilities 29 February 2020 £’000 2,102 3 – 507 (516) (263) (1) 1,832 28 February 2019 £’000 931 217 254 759 (56) – (3) 2,102 29 February 2020 £’000 28 February 2019 £’000 25,419 9,163 789 3,509 19,701 3,263 61,844 61,844 22,414 8,452 812 2,695 23,126 3,145 60,644 60,644 Trade payables are non-interest bearing and are normally settled on terms of between 30 and 90 days. If actual returns were 10% higher or lower in the year revenue would have been £1.9 million lower/higher (2019: £1.9 million lower/ higher). 150 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements 20. Loans and borrowings Reconciliation of movements of liabilities to cash flows arising from financing activities: Balance at 1 March 2019 Changes from financing cash flows Dividend paid Proceeds from exercise of share options Repayment of lease liabilities Interest paid Total changes from financing cash flows Other changes Liability-related IFRS 16 transition Right-of-use asset additions Foreign exchange movements Interest expense Total liability-related other changes Total equity-related other changes Balance at 29 February 2020 Balance at 1 March 2018 Changes from financing cash flows Dividend paid Proceeds from exercise of share options Repayment of overdraft Interest paid Total changes from financing cash flows Other changes Liability-related Overdraft acquired through business combinations Interest expense Total liability-related other changes Total equity-related other changes Balance at 28 February 2019 Liability Equity Bank overdrafts used for cash management purposes £’000 – Lease liability £’000 – Share capital/ share premium £’000 40,330 Other reserves £’000 15,769 – – (1,531) (492) (2,023) 14,519 1,412 130 492 16,553 – 14,530 – – – (3) (3) – – – 3 3 – – – – – – – – – – – – – 40,330 – 31 – – 31 – – – – – 1,485 17,285 Liability Equity Bank overdrafts used for cash management purposes £’000 – Lease liability £’000 – Share capital/ share premium £’000 40,330 Other reserves £’000 14,142 – – – – – – 241 – – 241 Retained earnings £’000 87,639 (6,009) (4) – – (6,013) – – – – – 10,432 92,058 Retained earnings £’000 85,091 (5,655) (27) – – (5,682) Total £’000 143,738 (6,009) 27 (1,531) (495) (8,008) 14,519 1,412 130 495 16,556 11,917 164,203 Total £’000 139,563 (5,655) 214 (201) (34) (5,676) – – – – – – – – – – – – (201) (34) (235) 201 34 235 – – – – – – 40,330 – – – 1,386 15,769 – – – 8,230 87,639 201 34 235 9,616 143,738 151 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS21. Provisions At 1 March 2019 Transferred in the year Created in the year Utilised in the year Exchange difference 29 February 2020 Non-current Current Author advances £’000 – 513 153 (66) 11 611 – 611 Property £’000 230 – 36 (43) (1) 222 182 40 Total £’000 230 513 189 (109) 10 833 182 651 The property provision includes amounts provided for dilapidations. The author advance provision relates a provision against future cash outflows on published titles where the Group does not expect to fully recover the advance. The timing of cash flows for onerous lease commitments is dependent on the terms of the leases. 22. Share capital and other reserves Share capital Authorised: 100,435,582 Ordinary shares of 1.25p each (2019: 100,435,582 Ordinary shares of 1.25p each) Allotted, called up and fully paid: 75,328,570 Ordinary shares of 1.25p each (2019: 75,328,570 Ordinary shares of 1.25p each) 29 February 2020 £’000 28 February 2019 £’000 1,255 1,255 942 942 The Company has one class of Ordinary share that carries equal voting rights and no contractual right to receive payment. No shares are held by the Company as Treasury shares. Directors and other employees of the Group have been granted options to purchase 2,128,260 (2019: 1,944,515) Ordinary shares with an aggregate nominal value of £26,603 (2019: £24,306) (see note 23). Share premium This reserve records the amount above nominal value received for shares sold less transaction costs. Translation reserve The translation reserve comprises all foreign currency differences arising from the translation of the financial information of foreign operations. Merger reserve The merger reserve comprises the amount that would otherwise arise in share premium relating to specific share issue, wherein more than 90% of the shares in a subsidiary are acquired and the consideration includes the issue of new shares by the Company, thereby attracting merger relief under the Companies Act 2006. Capital redemption reserve The capital redemption reserve arose on the purchase by the Company of its own shares and comprises the amount by which the distributable profits were reduced on these transactions. Share-based payment reserve The share-based payment reserve comprises cumulative amounts charged in respect of employee share-based payment arrangements. Own shares held by the Employee Benefit Trust The Employee Benefit Trust (“EBT”) is an independent discretionary trust established to acquire issued shares of the Company to satisfy any of the share-based incentive schemes (see note 23) and plans of the Company. All employees of the Group are potential beneficiaries of the EBT. The results and net assets of the EBT are included in the consolidated financial statements of the Group. The market value of the 481,093 shares of the Company held at 29 February 2020 (2019: 500,708) in the EBT was £1,179,000 (2019: £1,164,000). While the trustee has power to subscribe for Ordinary shares and to acquire Ordinary shares in the market or from Treasury, it is not permitted to hold more than 5% of the issued share capital without prior approval of the Shareholders. As at the date of signing this Annual Report, the Trust held 481,093 Ordinary shares of 1.25 pence being approximately 0.6% of the issued Ordinary share capital. 152 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements Retained earnings The retained earnings reserve comprises profit for the year attributable to owners of the Company and other items recognised directly through equity as presented on the consolidated statement of changes in equity. 23. Share-based payments Options over shares of the ultimate parent undertaking, Bloomsbury Publishing Plc, have been granted to employees of the Group under various schemes. The total share-based payment charge to the income statement for the year was as follows: Equity-settled share-based transactions Cash-settled share-based transactions Total 29 February 2020 £’000 629 132 761 28 February 2019 £’000 422 76 498 National Insurance contributions are payable by the Company in respect of some of the share-based payment transactions. These contributions are payable on the date of exercise based on the intrinsic value of the share-based payments and are therefore treated as cash-settled awards. The Group had an accrual for National Insurance at 29 February 2020 of £229,000 (2019: £100,000), of which none related to vested options. a) The Bloomsbury Performance Share Plan (“the PSP”) The Group operates the PSP for Directors and senior employees. Awards under the scheme are granted as conditional share awards. The number of Ordinary shares comprised in an award is calculated using a share value equal to the closing middle- market price on the dealing day before the award date. The vesting period is three years and 50% of the level of vesting is subject to the achievement of Earnings Per Share (“EPS”). The other 50% is subject to a Return on Capital Employed (“ROCE”) performance condition. For details of the performance conditions see the Directors’ Remuneration Report on pages 88 to 107. Awards are not exercisable after the vesting date and awards that vest on the vesting date are automatically exercised. Except in certain circumstances awards lapse if the employee leaves the Group. Outstanding at start of year Granted during the year Lapsed during the year Outstanding at end of year Exercisable at end of year Range of exercise price of outstanding awards (pence) Weighted average remaining contracted life (months) Expense recognised for the year (£’000) Year ended 29 February 2020 Number 1,663,528 605,506 (499,824) 1,769,210 530,624 Year ended 29 February 2020 – 18 718 Year ended 28 February 2019 Number 2,449,685 620,417 (1,406,574) 1,663,528 – Year ended 28 February 2019 – 17 481 153 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSThe share awards granted in the year to 29 February 2020 have been measured based on the share price at the date of grant as they are only subject to non-market conditions. The inputs were: Performance condition Share price Exercise price Expected term Expected volatility Risk-free interest rate Fair value charge per award Earnings Per Share 230 pence – 3 years N/A N/A 213–231 pence Return on Capital Employed 230 pence – 3 years N/A N/A 213–231 pence Half of each award is subject to an EPS performance condition and half of each award is subject to a Return on Capital Employed condition. The awards for Executive Directors only will be subject to clawback provisions and to a two-year post-vesting holding period. b) The Bloomsbury Sharesave Plan 2014 The Group operates an HM Revenue and Customs approved savings-related share option scheme under which employees are granted options to purchase Ordinary shares in the Company in three years’ time, dependent upon their entering into a contract to make monthly contributions to a savings account over the period of the savings term. The Sharesave Plan is open to all UK employees. Outstanding at start of year Granted during the year Exercised during the year Lapsed during the year Outstanding at end of year Exercisable at end of year Range of exercise price of outstanding options (pence) Weighted average remaining contracted life (months) Expense recognised for the year (£’000) Share options 2020 Number 175,475 200,654 (1,601) (15,478) 359,050 – Weighted average exercise price 2020 Pence 138 185 142 145 164 – Share options 2019 Number 372,775 – (150,303) (46,997) 175,475 7,140 2020 137–185 19 43 Weighted average exercise price 2019 Pence 140 – 142 139 138 142 2019 137–142 17 17 c) The Bloomsbury Company Share Option Plan 2014 (“the CSOP”) The Group operates the CSOP for senior employees. The vesting period is three years and the level of vesting is subject to the achievement of “Annualised EPS in excess of RPI” performance conditions. Options are exercisable by the participant after the vesting date whilst the participant continues in employment with the Group up to a period ending ten years after the date of grant. Share options 2020 Number 105,512 (105,512) – – Weighted average exercise price 2020 Pence 162 162 – – Share options 2019 Number 234,093 (128,581) 105,512 – 2020 – – – Weighted average exercise price 2019 Pence 160 159 162 – 2019 162 87 – Outstanding at the start of year Lapsed during the year Outstanding at end of year Exercisable at end of year Range of exercise price of outstanding awards (pence) Weighted average remaining contracted life (months) Expense recognised for the year (£’000) 154 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements24. Retirement benefit obligations Pension costs The pension costs charged to the income statement of £1,518,000 (2019: £1,340,000) relate to the Group’s defined contribution and defined benefit pension arrangements. Defined contribution plans The Group operates defined contribution retirement benefit plans for all qualifying employees. The total cost charged to the income statement of £1,502,000 (2019: £1,322,000) represents contributions payable to these schemes by the Group at rates specified in the rules of the schemes. At 29 February 2020, there were no prepaid contributions (28 February 2019: £nil). Defined benefit plan A subsidiary company operates a defined benefit scheme for some staff which is accounted for in accordance with IAS 19. Accrual of benefits ceased in 1997, with the scheme now operated as a closed fund. There is no obligation in respect of medical costs. The scheme is actuarially valued every three years. The last full actuarial valuation was carried out as at 28 February 2018 by a qualified independent actuary. Contributions are paid by the employer at the rate of £6,417 per month, plus expenses as and when required. Contributions paid to the scheme during the year were £90,000 (2019: £73,000). The Directors’ best estimate of the contributions including administration expenses to be paid for in the year ending 29 February 2020 is £92,000. In addition, PPF levies and other administration expenses are payable by the Group as and when due. The Group’s policy is to fund the deficit in the scheme by additional contributions to meet the scheme’s commitment to members. The financial assumptions used by the actuary for the update were as follows: Discount rate Inflation assumption 29 February 2020 £’000 1.70% 28 February 2018 £’000 2.70% 2.10–2.90% 2.20–3.20% 2.20–3.20% 28 February 2019 £’000 2.70% The scheme is closed and there are no active paying members, therefore no increases in payments have been applied. The assumptions used are estimates chosen from a range of possible actuarial assumptions which, due to the timescale covered, may not necessarily occur in practice. The mortality assumptions adopted at 29 February 2020 are 90% of the standard tables S2PxA, year of birth, no age rating for males and females, projected using CMI_2018 converging to 1.50% p.a. These imply the following life expectancies: Male retiring in 2040 Female retiring in 2040 Male retiring in 2020 Female retiring in 2020 29 February 2020 Years 24.5 26.5 22.8 24.7 The amounts recognised in the income statement in respect of the defined benefit scheme are as follows: Interest cost Return on pension plan assets Expenses Total Year ended 29 February 2020 £’000 (18) 16 (14) (16) 28 February 2019 Years 24.7 26.7 23.0 24.9 Year ended 28 February 2019 £’000 (17) 13 (14) (18) 155 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSA charge of £18,000 (2019: £17,000) has been included in finance costs and a credit of £16,000 (2019: £13,000) has been included in finance income. The amounts recognised in other comprehensive income in respect of the defined benefit scheme are as follows: Return on pension plan assets Experience gains and losses arising on the defined benefit obligation – gain/(loss) Effects of changes in the financial assumptions underlying the present value of the defined benefit obligation – loss Total Year ended 29 February 2020 £’000 9 6 Year ended 28 February 2019 £’000 9 (15) (153) (138) – (6) The amount included in the statement of financial position arising from the Group’s obligation in respect of the defined benefit pension scheme is as follows: Fair value of assets (with profit policy) Present value of defined benefit obligations Deficit in scheme Deferred tax assets Net liability to be recognised Analysis for reporting purposes: Non-current liabilities Deferred tax assets Movements in the present value of defined benefit obligations in the year were as follows: At start of year Expenses Interest cost Benefits paid and expenses Remeasurement losses At end of year Movements in the fair value of scheme assets in the year were as follows: At start of year Return on plan assets Remeasurement gains Employer contributions Benefits paid and expenses At end of year The actual return on scheme assets was £25,000 (2019: £22,000). 156 29 February 2020 £’000 633 (818) (185) 31 (154) 28 February 2019 £’000 540 (661) (121) 21 (100) (185) 31 (121) 21 Year ended 29 February 2020 £’000 (661) (14) (18) 22 (147) (818) Year ended 29 February 2020 £’000 540 16 9 90 (22) 633 Year ended 28 February 2019 £’000 (642) (14) (17) 27 (15) (661) Year ended 28 February 2019 £’000 472 13 9 73 (27) 540 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements Assets With profits Total assets 29 February 2020 £’000 633 633 28 February 2019 £’000 540 540 28 February 2018 £’000 472 472 None of the fair values of the assets shown above include any direct investments in the Company’s own financial instruments or any property occupied by, or other assets used by, the Company. All of the scheme assets have a quoted market price in an active market. 25. Financial instruments and risk management Capital management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to Shareholders as well as sustaining the future development of the business. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to Shareholders and issue new shares. The Group’s overall strategy remains unchanged from 2019. The capital structure of the Group comprises equity attributable to owners of the Company, comprising issued capital, reserves and retained earnings as disclosed in the consolidated statement of changes in equity and note 22. Categories of financial instruments Investments available for sale Equity securities designated as at FVOCI (Level 3) Joint venture Total investments available for sale Loans and receivables Cash and cash equivalents Trade receivables Accrued income Total loans and receivables Financial liabilities measured at amortised cost Trade payables Other payables due in less than one year Sales returns liability Accruals Lease liabilities Total financial liabilities measured at amortised cost Notes 13 13 18 19 19 19 29 February 2020 £’000 28 February 2019 £’000 300 216 516 31,345 52,420 5,254 89,019 25,419 4,298 9,163 19,701 14,530 73,111 300 – 300 27,580 50,013 3,751 81,344 22,414 3,507 8,452 23,126 – 57,499 Net financial instruments 16,424 24,145 The equity securities are classed as level 3 as the shares are not actively traded stock. The fair value is assessed based on recent share subscriptions where these are available and relevant to the fair value of the investment. There is no material difference between the fair value and book value of financial assets and liabilities. Financial risk management The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance from the key risks of market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The Board has approved the Group Treasury policies and procedures by which the Group Treasury function is to be managed. The Group Treasury function is headed by the Group Finance Director and is part of Bloomsbury’s Finance Department. It operates under a delegated authority from the Board. 157 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS The Treasury management policies and procedures focus on the investment of surplus operating cash likely to be needed in order to support Bloomsbury’s ongoing operations, foreign currency requirements and interest rate risk management. The Group does not use derivative contracts for speculative purposes. The policies are reviewed at least on an annual basis by the Group Finance Director and any amendments are approved by the Board. The Board is assisted in its oversight role by Internal Audit, which undertakes regular reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. a) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Group’s activities expose it mainly to the financial risks of changes in foreign currency exchange rates and changes in interest rates. The Group incurs costs in the same currencies as it earns revenue, creating some degree of natural hedging. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. Risk management is carried out by Group Treasury under policies approved by the Board of Directors. Group Treasury monitors the distribution of its cash assets so as to control exposure to the relative performance of any particular territory, currency or institution. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as funding, foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity. (i) Interest rate risk The Group has significant interest-bearing assets in the form of cash and cash equivalents, and as such, cash flows are dependent on changes in market interest rates. Interest rate profile of financial instruments Fixed rate instruments Financial assets Financial liabilities Total Variable rate instruments Financial assets Financial liabilities Total 29 February 2020 £’000 28 February 2019 £’000 1,967 – 1,967 29,378 – 29,378 1,772 – 1,772 25,808 – 25,808 Fixed rate financial assets are short-term bank deposits with a maturity date range of one day to one month. Variable rate financial assets are cash at bank. Fair value sensitivity analysis for fixed rate financial instruments The Group does not account for any fixed rate financial assets at fair value through profit or loss. Therefore, a change in interest rates at 29 February 2020 would not affect the income statement. Cash flow sensitivity analysis for variable rate financial instruments The Group derived the following sensitivities to assess the impact of changes in interest rates, based on the effect of the market volatility in the current climate and the previous 12 months. The analysis assumes all other variables remain constant. Impact on profit or loss and equity 1% increase in base rate of interest (2019: 1%) 0.5% decrease in base rate of interest (2019: 0.5%) 29 February 2020 28 February 2019 Profit or loss £’000 Equity £’000 Profit or loss £’000 Equity £’000 207 (123) – – (187) (102) – – 158 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements (ii) Currency risk The Directors believe that in its current circumstances, the Group’s risk from foreign currency exposure is limited and no active currency risk management by hedging is considered necessary, as a significant proportion of revenues is matched by expenditure in the same local currency, creating some degree of natural hedging. The Group’s exposure to foreign currency risk was as follows based on notional amounts: GBP USD EURO AUD INR Total Loans and receivables Financial liabilities 29 February 2020 £’000 53,596 26,076 841 5,576 2,930 89,019 28 February 2019 £’000 46,729 25,812 1,503 4,946 2,354 81,344 29 February 2020 £’000 51,933 16,520 166 3,835 657 73,111 28 February 2019 £’000 38,589 13,304 116 4,750 740 57,499 No significant amounts of loans and receivables or financial liabilities are denominated in currencies other than sterling, US dollars, euros, Australian dollars or Indian rupees. Foreign currency sensitivity analysis The Group derived the following sensitivities based on the outstanding foreign currency denominated financial assets and liabilities at the year end. The sensitivity analysis includes loans to foreign operations within the Group where the denomination of the loan is in a currency other than the functional currency of the lender or the borrower. The use of a 10% sensitivity rate has been determined based on the effect of the market volatility in exchange rates between the current and previous year end, and represents management’s assessment of the reasonably possible change in foreign exchange rates. A positive number below indicates an increase in profit or equity. 29 February 2020 £’000 28 February 2019 £’000 Impact on equity 10% weakening in US dollar against pound sterling (2019: 10%) 10% strengthening in US dollar against pound sterling (2019: 10%) 10% weakening in euro against pound sterling (2019: 10%) 10% strengthening in euro against pound sterling (2019: 10%) 10% weakening in AUS dollar against pound sterling (2019: 10%) 10% strengthening in AUS dollar against pound sterling (2019: 10%) 10% weakening in INR against pound sterling (2019: 10%) 10% strengthening in INR against pound sterling (2019: 10%) Impact on income statement 10% weakening in US dollar against pound sterling (2019: 10%) 10% strengthening in US dollar against pound sterling (2019: 10%) 10% weakening in euro against pound sterling (2019: 10%) 10% strengthening in euro against pound sterling (2019: 10%) 10% weakening in AUS dollar against pound sterling (2019: 10%) 10% strengthening in AUS dollar against pound sterling (2019: 10%) 10% weakening in INR against pound sterling (2019: 10%) 10% strengthening in INR against pound sterling (2019: 10%) (603) 737 – – (158) 193 (207) 252 (266) 325 (61) 75 – – – – b) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s trade and other receivables (note 18) and cash and cash equivalents. (689) 842 – – (18) 22 (147) 179 (448) 548 (126) 154 – – – – 159 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS Cash and cash equivalents The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings as assigned by international credit-rating agencies. Trade receivables The carrying amount of financial assets represents the maximum credit exposure. The amounts presented in the statement of financial position are net of allowances for doubtful receivables, estimated by the Group’s management based on trading experience and the current economic environment. An analysis of the relevant provisions is set out in note 18. The Group always measures the loss allowance for trade receivables at an amount equal to lifetime expected credit loss (“ECL”). To measure ECLs trade receivables are split into groups with the same characteristics to calculate loss rates. Where possible we have calculated this probability based on historic loss experience using recent sales history, the timing of when the cash was received for the debt and the level of debt not collected for that population. The Group determines its concentration of credit risk based on the individual characteristics of its customers and publicly available knowledge of specific circumstances affecting those customers. The Group defines counterparties as having similar characteristics if they are related entities. At 29 February 2020, the exposure to credit risk for gross trade receivables by geographical region was as follows: United Kingdom North America Australia India Total 29 February 2020 £’000 34,617 14,321 2,441 2,873 54,252 28 February 2019 £’000 34,634 13,130 2,071 2,280 52,115 The Group has a significant concentration of credit risk due to its use of third-party distributors. Credit limits for the final customers are set by the distributors based on a combination of payment history and third-party credit references. Credit limits are reviewed on a regular basis in conjunction with debt ageing and collection history. The distributors belong to established international groups whose business includes a number of publishing interests and clients. The Group’s risk is limited as significant amounts outstanding through the UK distributors are secured by credit insurance, and in the US credit risk for significant amounts outstanding through distributors rests with the distributor. The balances with the US distributor make up 93% (2019: 95%) of the North America trade receivable balance. In the United Kingdom balances with the distributors make up 87% (2019: 85%) of the United Kingdom trade receivable balance. c) Liquidity risk Currently, the Group has limited borrowing and has sufficient cash deposits to meet its debts as they fall due. However, the Group’s exposure to liquidity risk has increased since coronavirus. The Board has modelled a severe but plausible pessimistic downside scenario; see note 2c on going concern for further details. Under this scenario the Group is expected to have sufficient liquidity for at least 12 months from the date of approval of the financial statements. Cash flow budgets and forecasts are prepared by the operating entities of the Group, aggregated for the Group and regularly reviewed by the Board, and the actual cash position of the Group and each entity is compared monthly against budget. This allows management to ensure that each operating entity and the Group have sufficient cash to meet operational needs. Surplus cash held by the operating entities over and above the balance required for working capital management is invested in interest- bearing accounts and money market deposits. The Group has an unsecured revolving credit facility with Lloyds Bank Plc. At 29 February 2020, the Group had no draw down (2019: £nil) of this facility with £8.0 million of undrawn borrowing facilities (2019: £12.0 million) available. The facility comprises a committed revolving loan facility of £8 million in the first half and an additional £4 million in the second half, totalling £12 million, to match Bloomsbury’s cash flow cycle, and an uncommitted incremental term loan facility of up to £6 million. The facilities are subject to two covenants, being a maximum net debt to EBITDA ratio of 2.55 and a minimum interest cover covenant of 45. Subsequent to the year end, the maturity of the facility was extended to May 2022 and the covenants were amended to exclude IFRS 16. The Group’s financial liabilities are trade payables, accruals and other payables as shown above. All other financial liabilities are due within one year. 160 www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial Statements26. Leases The Group’s lease portfolio consists of office properties, vehicles and equipment. The Group has adopted IFRS 16 Leases at 1 March 2019 and applied the modified retrospective approach. Comparatives for 2019 have not been restated. The Group has elected not to recognise right-of use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low value assets. The Group recognises the lease payments associated with these leases as an expense on a straight- line basis over the lease term. Disclosure required for IFRS 16 The amounts recognised in the income statement are as follows: Interest on lease liabilities Expenses relating to short-term leases Expense relating to leases of low-value assets Depreciation of right-of-use assets The maturities of the Group’s lease liabilities are as follows: Less than one year One to five years More than five years Total undiscounted lease liabilities Lease liabilities included in the balance sheet Current Non-current IAS 17 disclosure required for 2019 The Group had the following outstanding commitments under non-cancellable operating leases: Within one year Later than one year and less than five years After more than five years Total Notes 6 15 29 February 2020 £’000 492 22 7 1,775 29 February 2020 £’000 2,068 7,978 6,941 16,987 14,530 1,585 12,945 28 February 2019 £’000 1,971 7,107 7,056 16,134 The operating leases represent rentals payable by the Group for certain office properties, vehicles and equipment. The lease at the headquarters in Bedford Square is for a period of 20 years from January 2011. The operating leases over vehicles are in respect of company cars driven by certain employees. The operating leases over equipment are in respect of computer and office equipment. 27. Commitments and contingent liabilities a) Capital commitments Property, plant and equipment Intangible assets Total 29 February 2020 £’000 – 238 238 28 February 2019 £’000 – 105 105 b) Other commitments The Group is committed to paying royalty advances to authors in subsequent financial years. At 29 February 2020, this commitment amounted to £20,187,000 (2019: £18,581,000). c) Guarantees The Company and certain of its subsidiaries have guarantees to Lloyds Bank Plc in place relating to the Group’s borrowing facilities – see note 25c. 161 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS28. Related party transactions The Group has no related party transactions other than key management remuneration as disclosed in note 5. 29. Post balance sheet events On 11 March 2020, the World Health Organisation declared the coronavirus a pandemic. Following IAS 10, this has been treated as a non-adjusting post balance sheet event , as the significant impact on the Group’s operations, markets, staff, customers, suppliers and other areas occurred after the year end. On 20 March 2020 the Group acquired certain assets of Zed Books Limited (“Zed”), the London-based academic and non-fiction publisher. The consideration was £1.75 million, of which £0.875 million was satisfied in cash on completion and the remainder to be paid within 12 months. Zed will operate within the Academic & Professional division and is expected to contribute approximately £0.8 million of revenue to the Group in its first year. On 17 April 2020 the Company completed the non-pre-emptive placing of 3,766,428 Ordinary shares in the capital of the Company, representing 5%. of the existing issued share capital, raising gross proceeds of £8.4 million. 30. Investments in subsidiary companies The Group’s subsidiary companies at 29 February 2020 are: Country of incorporation Subsidiary undertakings held directly by Bloomsbury Publishing Plc: England and Wales A & C Black Limited Bloomsbury India UK Limited England and Wales USA England and Wales England and Wales Australia England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales Bloomsbury Publishing Inc. Bloomsbury Information Limited Bloomsbury Professional Limited Bloomsbury Publishing PTY Limited The Continuum International Publishing Group Limited Hart Publishing Limited Osprey Publishing Limited Bloomsbury Book Publishing Company Limited I.B. Tauris & Co. Limited Oberon Books Limited Bloomsbury Media Limited Christian Knowledge Hub CIC Subsidiary undertakings held through a subsidiary company: A & C Black Publishers Limited Christopher Helm (Publishers) Limited Oxford International Publishers Limited t/a Berg Publishers John Wisden and Company Limited Shire Publications Limited British Wildlife Publishing Limited Bloomsbury Publishing India Private Limited Berg Fashion Library Limited A & C Black (Distribution) Limited A & C Black (Storage) Limited Adlard Coles Limited Alphabooks Limited F. Lewis (Publishers) Limited Featherstone Education Limited Hambledon and London Limited England and Wales England and Wales England and Wales India England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales 162 Proportion of equity capital held Nature of business during the year Registered office 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Intermediate holding company Intermediate holding company Publishing Publishing Publishing Publishing Publishing Publishing Publishing Publishing Publishing Publishing Dormant Dormant Publishing Publishing Publishing Publishing Publishing Publishing Publishing Dormant Dormant Dormant Dormant Dormant Dormant Dormant Dormant 1. 1. 2. 1. 1. 3. 1. 1. 1. 1. 1. 1. 1. 1. 1. 1. 1. 1. 1. 1. 4. 1. 1. 1. 1. 1. 1. 1. 1. www.bloomsbury.comBloomsbury Publishing PlccontinuedNotes to the Financial StatementsCountry of incorporation Proportion of equity capital held Nature of business during the year Registered office Subsidiary undertakings held through a subsidiary company: Herbert Press Limited John Wisden (Holdings) Limited Methuen Drama Limited Nautical Publishing Co Limited Philip Wilson Publishers Limited Reed’s Almanac Limited Sheffield Academic Press Limited T & T Clark Limited The Athlone Press Limited Thoemmes Limited England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales All subsidiary undertakings are included in the consolidation. 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Dormant Dormant Dormant Dormant Dormant Dormant Dormant Dormant Dormant Dormant 1. 1. 1. 1. 1. 1. 1. 5. 1. 1. The following lists all Bloomsbury registered office addresses. Please see wholly owned subsidiary list over for relevant registered office code. 1. 50 Bedford Square, London, WC1B 3DP, United Kingdom. 2. 1385 Broadway, Fifth Floor, New York, NY 10018, USA. 3. Level 4, 387 George Street, Sydney, NSW 2000, Australia. 4. DDA Complex, LSC, Building No. 4, Second Floor, Pocket C-6&7, Vasant Kunj, New Delhi, 110070, India. 5. C/O RSM, First Floor, Quay 2, 139 Fountainbridge, Edinburgh, EH3 9QG, United Kingdom. For the year ended 29 February 2020, the following subsidiary companies were entitled to exemption from audit under section 479A of the Companies Act 2006: Subsidiary name Bloomsbury Information Limited Bloomsbury Professional Limited The Continuum International Publishing Group Limited A & C Black Publishers Limited Christopher Helm (Publishers) Limited Oxford International Publishers Limited t/a Berg Publishers John Wisden and Company Limited Hart Publishing Limited Osprey Publishing Limited Shire Publications Limited British Wildlife Publishing Limited Bloomsbury Book Publishing Company Limited I.B. Tauris & Co. Limited Oberon Books Limited The Group’s joint venture undertakings at 29 February 2020 are: Company number 06409758 05233465 03833148 00189153 01953639 03143617 00135590 03307205 03471853 00868867 06810049 03830397 01761687 02082142 Joint venture undertakings held directly by Bloomsbury Publishing Plc: Beijing CYP & Gakken Education Development Co., Ltd China 50% Publishing 1. 1. Floor 5, B Block, No. 1132, Hui He South Road, Banbidian Village, Gaobeidian Township, Chaoyang District, Beijing, PRC. Country of incorporation Proportion of equity capital held Nature of business during the year Registered office 163 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSCompany Statement of Financial Position As at 29 February 2020 Company Number 1984336 Assets Intangible assets Property, plant and equipment Right-of-use assets Investments in subsidiary companies Other investments Deferred tax assets Total non-current assets Inventories Trade and other receivables Cash and cash equivalents Total current assets Total assets Liabilities Provisions Lease liabilities Total non-current liabilities Trade and other liabilities Provisions Lease liabilities Current tax liabilities Total current liabilities Total liabilities Net assets Equity Share capital Share premium Other reserves Retained earnings Total equity attributable to owners of the Company 29 February 2020 £’000 28 February 2019 £’000 Notes 33 34 35 36 37 38 39 40 43 47 41 43 47 44 44 44 44 3,107 1,613 10,016 81,159 516 503 96,914 6,729 62,009 19,995 88,733 185,647 144 9,932 10,076 72,444 151 906 932 74,433 84,509 101,138 942 39,388 8,549 52,259 101,138 2,639 1,645 – 83,250 300 470 88,304 6,156 56,977 16,996 80,129 168,433 108 – 108 71,874 – – 379 72,253 72,361 96,072 942 39,388 7,920 47,822 96,072 The Company financial statements were approved by the Board of Directors and authorised for issue on 26 May 2020. J N Newton Director P Scott-Bayfield Director 164 www.bloomsbury.comBloomsbury Publishing Plc Company Statement of Changes in Equity For the year ended 29 February 2020 At 28 February 2018 (restated*) Profit for the year and total comprehensive income for the year Transactions with owners Dividends to equity holders of the Company Unclaimed dividends Share options exercised Deferred tax on share-based payment transactions Share-based payment transactions Total transactions with owners of the Company At 28 February 2019 Profit for the year and total comprehensive income for the year Transactions with owners Dividends to equity holders of the Company Share options exercised Deferred tax on share-based payment transactions Share-based payment transactions Total transactions with owners of the Company At 29 February 2020 Share capital £’000 942 Share premium £’000 39,388 Merger reserve £’000 1,803 Capital redemption reserve £’000 22 Share-based payment reserve £’000 5,673 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 422 Retained earnings £’000 46,894 Total £’000 94,722 6,324 6,324 (5,655) 12 214 33 – (5,655) 12 214 33 422 – 942 – 39,388 – 1,803 – 22 422 6,095 (5,396) 47,822 (4,974) 96,072 – – – – – – – – – – – – – – – – – – – – – – – – 629 10,373 10,373 (6,009) 27 (6,009) 27 46 – 46 629 – 942 – 39,388 – 1,803 – 22 629 6,724 (5,936) 52,259 (5,307) 101,138 * The Company has adopted IFRS 9 "Financial Instruments" from 1 March 2018 and applied the cumulative effect method. The cumulative impact of adoption has been recognised as a decrease to opening retained earnings as at 28 February 2018. 165 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS Company Statement of Cash Flows For the year ended 29 February 2020 Cash flows from operating activities Profit for the year Adjustments for: Depreciation of property, plant and equipment Depreciation of right-of-use assets Amortisation of intangible assets Impairment of investments Finance income Finance costs Share of loss of joint venture Share-based payment charges Tax expense Increase in inventories (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other liabilities Cash generated from operations Income taxes paid Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Purchase of business Purchase of rights to assets Purchase of share in a joint venture Purchase of intangible assets Interest received Net cash used in investing activities Cash flows from financing activities Equity dividends paid Proceeds from exercise of share options Repayment of lease liabilities Lease liabilities interest paid Other interest paid Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 166 Year ended 29 February 2020 £’000 Year ended 28 February 2019 £’000 Notes 10,373 6,324 295 1,051 986 3,304 (191) 559 7 314 1,802 18,500 (573) (4,915) 1,984 14,996 (1,440) 13,556 (263) (310) (1,213) (223) (1,454) 91 (3,372) (6,009) 27 (880) (322) (1) (7,185) 2,999 16,996 19,995 290 – 890 – (122) 330 – 202 1,688 9,602 (200) 5,756 (1,307) 13,851 (2,469) 11,382 (217) (4,097) – – (1,007) 45 (5,276) (5,655) 214 – – (1) (5,442) 664 16,332 16,996 42 42 42 42 42 42 www.bloomsbury.comBloomsbury Publishing Plc Notes to the Company Financial Statement Accounting Policies 31. Reporting entity Bloomsbury Publishing Plc (the “Company”) is a company domiciled in the United Kingdom. The address of the Company’s registered office can be found on page 183. The Company is primarily involved in the publication of books and other related services. 32. Significant accounting policies a) Basis of preparation The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations adopted by the European Union (“EU”) at the time of preparing these financial statements and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention. The financial statements have been prepared on the going concern basis as the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence at least until June 2021, being the period of the detailed going concern assessment reviewed by the Board. The Company accounting policies are consistent with the Group policies set out in note 2 to the consolidated financial statements. Key additional policies are stated below. b) Parent Company result The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006 not to present the Company income statement or statement of comprehensive income. The Company’s profit for the year was £10,373,000 (2019: £6,324,000). c) Use of estimates and judgements The preparation of the Company financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised and in any future years affected. Critical judgements and areas where the use of estimates is significant are disclosed in note 2v for the Group and are applicable to the Company. d) Application of new and amended standards and interpretations The following amendments and interpretations were introduced to accounting standards relevant to the Company during the year ended 29 February 2020. The table below summarises the impact of these changes to the Company: Accounting standard IFRS 16 Leases Other standards Description of change A description and the impact of the adoption of IFRS 16 Leases is set out in note 32h. A number of other new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2019. The standards and amendments have not had a material impact on the Group. Additional disclosure has been provided where relevant. Impact on financial statements The Company has not early adopted the following new and revised accounting standards, interpretations or amendments issued by the International Accounting Standards Board that are currently endorsed but not yet effective: Accounting standard Other standards Description of change A number of other new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2020 and have not been applied in preparing these financial statements. Impact on financial statements The Directors do not anticipate the application of these standards and amendments will have a material impact on the Company’s consolidated financial statements. e) Investment in subsidiaries Investments in subsidiaries are recorded at cost less accumulated impairment in the statement of financial position. Investments are reviewed at each reporting date to assess whether there are any indicators of impairment. Any impairment losses are recognised in the income statement in the year they occur. f) Employee benefit trust The Company operates an employee benefit trust and has de facto control of shares held by the trust and bears their benefits and risks. The Company considers the trust to be substantially under its control and so aggregates the financial information of the trust into the Company’s results. The Company records the assets and liabilities of the trust as its own. Finance costs and administrative expenses are charged as they accrue. 167 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSNotes to the Company Financial Statements Accounting Policies g) Share-based payments The Company issues equity-settled share-based payment instruments to certain employees of the Group. Equity-settled share- based payment transactions are measured at fair value at the date of grant. The fair value determined at the grant date of equity- settled share-based payments is charged to the income statement on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest. Options granted under the Company’s Sharesave scheme are equity-settled. The fair values of such options have been calculated using the Black-Scholes model based on publicly available market data. Awards granted under the Group’s Performance Share Plan are equity-settled. For the awards granted in 2016, part of any award granted under the Plan is subject to a Total Shareholder Return performance condition. The fair value of this element of the awards is calculated using the Stochastic model. For awards granted in 2017 and 2018, part of any award under the Plan is subject to a Return on Capital Employed performance condition. These have been measured based on the share price at the date of grant as they are only subject to non-market conditions. The other part of any award granted under the Plan is subject to an Earnings Per Share performance condition. The fair value of this element of the awards is calculated using the Black-Scholes model. Where the awards are subject to a holding period, we have used the Chaffe model to determine a discount for lack of marketability. Awards granted under the Company’s Share Option Plan are equity-settled. The award is subject to an adjusted Earnings Per Share growth performance condition. The fair value of this award is calculated using the Black-Scholes model. The Company recharges a share of the share-based payment charge to subsidiaries. This recharge is made via intercompany transactions. h) Change of accounting policy: IFRS 16 The Company has adopted IFRS 16 Leases from 1 March 2019 and applied the modified retrospective approach. Comparatives for 2019 have not been restated and there is no adjustment to equity at the date of application. On transition the Company elected not to reassess whether a contract is, or contains, a lease, instead relying on the assessment already made applying IAS 17 "Leases" and IFRIC 4 "Determining whether and Arrangement contains a Lease". In addition, the Company applied the available practical expedients as follows: • Reliance on assessment as to whether leases are onerous on 1 March 2019 with no impact identified; • Exclude leases of low value assets and short-term leases of less than 12 months from the application of IFRS 16, with payment for these leases continuing to be expensed directly to the income statement as operating leases; • The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease; and • Exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application. The major class of lease impacted by the new standard is property leases. The lease liability has been measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate at transition. The right-of-use assets are set to equal the lease liability adjusted for any prepaid or accrued lease payments. The weighted average incremental borrowing rate (“IBR”) applied to the lease liabilities on 1 March 2019 was 3.0%. A single IBR has been applied to a portfolio of leases when these have shared similar characteristics including location, duration and nature of the leases. The approach to use an IBR to discount leases has been followed since the transition date as the interest rate implicit in individual leases cannot be readily determined. At 1 March 2019 transition date adoption of IFRS 16 resulted in the Company recognising right-of-use assets of £9.7 million and lease liabilities of £10.3 million. There is a reduction of £0.3 million for prepaid rental amounts now netted against the right-of-use assets and a reduction of £0.9 million to liabilities for deferred rent-free amounts netted against the right-of-use asset. 168 www.bloomsbury.comBloomsbury Publishing PlcThe impact on the income statement for the year ended 29 February 2020 is as follows: Decrease in administrative expenses EBITDA benefit Increase in depreciation Operating profit benefit Increase in finance costs Profit before tax reduction Year ended 29 February 2020 £’000 1,232 1,232 (1,051) 181 (322) (141) Prior to the adoption of IFRS 16 rental payments were charged to the income statement on a straight-line basis. Under IFRS 16 rental costs in the income statement are replaced with depreciation on the right-of-use asset and interest charges on the lease liability. The adoption of IFRS 16 gives rise to a net £141,000 charge in the profit before tax for the year ended 29 February 2020. At operating profit, the adoption of IFRS 16 gives a benefit of £181,000. The impact is the same for both the statutory profit before tax and adjusted profit before tax. There is no overall impact on the Company’s cash and cash equivalents although there is a change to the classification of cash flows in the cash flow statement with lease payments previously categorised as net cash used in operations now being split between the principal element (categorised in financing activities) and the interest element (categorised as interest paid in financing activities). The impact on the cash flow statement for the year ended 29 February 2020 is as follows: Net cash used in operating activities Net cash used in financing activities Pre IFRS 16 £’000 12,354 (5,983) Repayment of lease liabilities £’000 880 (880) Interest paid £’000 322 (322) Post IFRS 16 £’000 13,556 (7,185) The lease liabilities as at 1 March 2019 can be reconciled to the operating lease commitments at 28 February 2019 as follows: Operating lease commitments disclosed at 28 February 2019 Less commitments relating to short-term leases Less commitments relating to low-value assets Discounted using the lease’s incremental borrowing rate Property leases novated from other Group companies Other liabilities now recognised within lease liabilities Lease liability recognised as at 1 March 2019 Analysed at: Current lease liabilities Non-current lease liabilities 1 March 2019 £’000 9,687 (10) – (1,822) 1,788 663 10,306 936 9,370 169 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSNotes to the Company Financial Statements continued 33. Intangible assets Cost At 28 February 2018 Additions At 28 February 2019 Additions At 29 February 2020 Amortisation At 28 February 2018 Charge for the year At 28 February 2019 Charge for the year At 29 February 2020 Net book value At 29 February 2020 At 28 February 2019 Publishing rights £’000 Systems development £’000 660 70 730 – 730 660 12 672 15 687 43 58 6,527 937 7,464 1,454 8,918 4,005 878 4,883 971 5,854 3,064 2,581 The amortisation charge of £986,000 (2019: £890,000) was included in administrative expenses in the year. 34. Property, plant and equipment Cost At 28 February 2018 Additions At 28 February 2019 Additions At 29 February 2020 Depreciation At 28 February 2018 Charge for the year At 28 February 2019 Charge for the year At 29 February 2020 Net book value At 29 February 2020 At 28 February 2019 Short leasehold improvements £’000 Furniture and fittings £’000 Computers and other office equipment £’000 2,664 54 2,718 20 2,738 1,473 97 1,570 104 1,674 1,064 1,148 432 21 453 49 502 355 25 380 31 411 91 73 1,600 143 1,743 194 1,937 1,151 168 1,319 160 1,479 458 424 The depreciation charge of £295,000 (2019: £290,000) was included in administrative expenses. 170 Total £’000 7,187 1,007 8,194 1,454 9,648 4,665 890 5,555 986 6,541 3,107 2,639 Total £’000 4,696 218 4,914 263 5,177 2,979 290 3,269 295 3,564 1,613 1,645 www.bloomsbury.comBloomsbury Publishing Plc 35. Right-of-use assets At 28 February 2019 Adjustment on initial application of IFRS 16 (see note 32h) Additions At 29 February 2020 Depreciation At 28 February 2019 Charge for the year At 29 February 2020 Net book value At 29 February 2020 At 28 February 2019 36. Investment in subsidiary companies Property £’000 – 9,523 1,412 10,935 – 970 970 9,965 – Cars £’000 – 90 – 90 – 45 45 45 – Equipment £’000 – 42 – 42 – 36 36 6 – Cost At 28 February 2019 Additions At 29 February 2020 Impairment At 28 February 2019 Charge for the year At 29 February 2020 Net book value At 29 February 2020 At 28 February 2019 Total £’000 – 9,655 1,412 11,067 – 1,051 1,051 10,016 – £’000 92,692 1,213 93,905 9,442 3,304 12,746 81,159 83,250 The addition in the year is in relation to the acquisition of Oberon Books Limited. The impairment in the year relates to the carrying value of Bloomsbury Professional Limited. 37. Other investments Equity securities designated as at FVOCI Joint venture Total The amounts recognised in the Income Statement are as follows: Joint venture Total 29 February 2020 £’000 300 216 516 28 February 2019 £’000 300 – 300 Year ended 29 February 2020 £’000 (7) (7) Year ended 28 February 2019 £’000 – – The addition in the year is in relation to the investment in Beijing CYP & Gakken Education Development Co., Ltd joint venture. 171 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS Notes to the Company Financial Statements continued 38. Deferred tax assets and liabilities Deferred tax is calculated in full on temporary differences using the tax rate appropriate to the jurisdiction in which the asset or liability arises and the tax rates that are expected to apply in the periods in which the asset or liability is settled. Movement in temporary differences during the year: At 28 February 2018 (Charge)/credit to the income statement Credit to equity At 28 February 2019 (Charge)/credit to the income statement Credit to equity At 29 February 2020 The analysis for financial reporting purposes is as follows: Deferred tax assets Deferred tax liabilities Total Property, plant and equipment £’000 15 (24) – (9) (22) – (31) Retirement benefit obligation £’000 19 (16) – 3 31 – 34 Share-based payments £’000 29 67 33 129 107 46 282 Provisions £’000 40 307 – 347 (129) – 218 Total £’000 103 334 33 470 (13) 46 503 29 February 2020 £’000 503 – 503 28 February 2019 £’000 470 – 470 Deferred tax is not provided on unremitted earnings of subsidiaries where the Company controls the timing of remittance and it is probable that the temporary difference will not reverse in the foreseeable future. 39. Inventories Work in progress Finished goods for resale Total 29 February 2020 £’000 1,879 4,850 6,729 28 February 2019 £’000 1,384 4,772 6,156 The cost of inventories recognised as cost of sales amounted to £17,644,000 (2019: £16,231,000). The provision and write down of inventories to net realisable value recognised in cost of sales amounted to £1,903,000 (2019: £2,018,000). 172 www.bloomsbury.comBloomsbury Publishing Plc40. Trade and other receivables Current Gross trade receivables Less loss allowance Net trade receivables Amounts owed by Group undertakings Other receivables Prepayments and accrued income Royalty advances Total trade and other receivables 29 February 2020 £’000 28 February 2019 £’000 32,835 (1,575) 31,260 12,824 2,033 3,372 12,520 62,009 30,457 (1,736) 28,721 12,209 2,254 2,946 10,847 56,977 A provision is held against gross advances payable in respect of published title advances, which may not be fully earned down by anticipated future sales. As at 29 February 2020, £2,534,000 (2019: £3,180,000) of royalty advances are expected to be recovered after more than 12 months. The Directors consider that the carrying amount of trade and other receivables approximates to their fair values. The Company’s exposure to credit and currency risks is disclosed in note 46. Trade receivables principally comprise amounts receivable from the sale of books due from distributors. The average number of days’ credit taken for sales of books by the Company was 181 days (2019: 163 days). Movements on the Company’s loss allowance for trade receivables are as follows: At start of year Adjustment on initial application of IFRS 9 Amounts created Amounts released Amounts utilised At end of year 41. Trade and other liabilities Current Trade payables Sales return liability Amounts owed to Group undertakings Taxation and social security Other payables Accruals and deferred income Total current trade and other liabilities Total trade and other payables liabilities 29 February 2020 £’000 1,736 – 401 (177) (385) 1,575 28 February 2019 £’000 927 212 641 – (44) 1,736 29 February 2020 £’000 28 February 2019 £’000 8,809 1,605 47,901 642 2,379 11,108 72,444 72,444 5,657 3,392 46,890 637 1,817 13,481 71,874 71,874 Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. If actual returns were 10% higher or lower in the year revenue would have been £0.5 million lower/higher (2019: £1 million). 173 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS Notes to the Company Financial Statements continued 42. Loans and borrowings Reconciliation of movements of liabilities to cash flows arising from financing activities: Liability Equity Bank overdrafts used for cash management purposes £’000 – Share capital/share premium £’000 40,330 Lease liability £’000 – – – (880) (322) (1,202) 10,306 1,412 322 12,040 – 10,838 – – – (1) (1) – – 1 1 – – – – – – – – – – – – 40,330 Other reserves £’000s 7,920 – – – – – – – – – 629 8,549 Liability Equity Bank overdrafts used for cash management purposes £’000 – Share capital/share premium £’000 40,330 Lease liability £’000 – Other reserves £’000s 7,498 – – – – – – – – Retained earnings £’000 47,822 (6,009) 27 – – (5,982) – – – – 10,419 52,259 Retained earnings £’000 47,065 (5,655) 214 – (5,441) Total £’000 96,072 (6,009) 27 (880) (323) (7,185) 10,306 1,412 323 12,041 11,048 111,976 Total £’000 94,893 (5,655) 214 (1) (5,442) – – – 40,330 – – 422 7,920 – – 6,198 47,822 1 1 6,620 96,072 – – – – – – – – – – (1) (1) 1 1 – – Balance at 1 March 2019 Changes from financing cash flows Dividend paid Proceeds from exercise of share options Repayment of lease liability Interest paid Total changes from financing cash flows Other changes Liability-related IFRS 16 transition Right-of-use asset additions Interest expense Total liability-related other changes Total equity-related other changes Balance at 29 February 2020 Balance at 1 March 2018 Changes from financing cash flows Dividend paid Proceeds from exercise of share options Interest paid Total changes from financing cash flows Other changes Liability-related Interest expense Total liability-related other changes Total equity-related other changes Balance at 28 February 2019 174 www.bloomsbury.comBloomsbury Publishing Plc43. Provisions At 1 March 2019 Transferred in the year Created in the year Utilised in the year At 29 February 2020 Non-current Current Author advance £’000 – 132 78 (59) 151 – 151 Property £’000 108 – 36 – 144 144 – Total £’000 108 132 114 (59) 295 144 151 The property provision is in respect of dilapidations for the Bedford Square head office. The author advance provision relates a provision against future cash outflows on published titles where the Group does not expect to fully recover the advance. 44. Share capital and other reserves For details of share capital, share premium, merger reserve, capital redemption reserve, share-based payment reserve and retained earnings see note 22 and the Company statement of changes in equity attributable to the owners of the Company. For details of the Company profit for the year see note 32b. For details of dividends see note 8. As at 29 February 2020, the Company had distributable reserves of £52.3 million. The total external dividends relating to the year ended 29 February 2020 amounted to £6.0 million. The Company distributable reserves support over eight times this annual dividend. 45. Share-based payments Options over shares of the Company have been granted to employees of the Company and Group under various schemes. The full share-based payment disclosures can be found in note 23. The total share-based payment charge to the income statement for the year was: Equity-settled share-based transactions Cash-settled share-based transactions Total £447,000 (2019: £296,000) of this amount was recharged to subsidiaries of the Company. 29 February 2020 £’000 629 132 761 28 February 2019 £’000 422 76 498 175 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSNotes to the Company Financial Statements continued 46. Financial instruments and risk management Full disclosures relating to the Group’s financial risk management strategies and other financial assets and liabilities are given in note 25 to the consolidated financial statements. Categories of financial instruments Investments available for sale Equity securities designated as FVOCI (Level 3) Joint venture Total investments available for sale Loans and receivables Cash and cash equivalents Amounts owed by Group undertakings Trade receivables Accrued income Total loans and receivables Financial liabilities measured at amortised cost Trade payables Sales return liability Accruals Other payables Amounts owed to Group undertakings Lease liabilities Total financial liabilities measured at amortised cost 29 February 2020 £’000 28 February 2019 £’000 Notes 300 216 516 19,995 12,824 31,260 2,597 66,676 8,809 1,605 11,108 3,021 47,901 10,838 83,282 37 40 40 41 41 41 47 300 – 300 16,996 12,209 28,721 1,693 59,619 5,657 3,392 13,436 2,454 46,890 – 71,829 Net financial instruments (16,090) (11,910) The equity securities are classed as level 3 as the shares are not actively traded stock. The fair value is assessed based on recent share subscriptions where these are available and relevant to the fair value of the investment. a) Market risk i. Interest rate risk Interest rate profile of financial assets: Variable rate financial assets 29 February 2020 £’000 19,995 28 February 2019 £’000 16,996 Interest rate sensitivity analysis The Company derived the following sensitivities to assess the impact of changes in interest rates, based on the effect of the market volatility in the current climate and the previous 12 months. The analysis assumes all other variables remain constant. Impact on profit and equity 1% increase in base rate of interest (2019: 1%) 0.5% decrease in base rate of interest (2019: 0.5%) 29 February 2020 £’000 28 February 2019 £’000 142 (79) 132 (67) 176 www.bloomsbury.comBloomsbury Publishing Plc ii. Currency risk The Company’s exposure to foreign currency risk was as follows based on notional amounts: GBP USD EURO AUD Total Loan and receivables Financial liabilities 29 February 2020 £’000 63,742 1,828 833 273 66,676 28 February 2019 £’000 54,176 3,793 1,474 176 59,619 29 February 2020 £’000 82,713 403 166 – 83,282 28 February 2019 £’000 70,758 955 116 – 71,829 Foreign currency sensitivity analysis The Company derived the following sensitivities based on the outstanding foreign currency denominated financial assets and liabilities at the year end. The use of a 10% sensitivity rate has been determined based on the effect of the market volatility in exchange rates between the current and previous year end, and represents management’s assessment of the reasonably possible change in foreign exchange rates. A positive number below indicates an increase in profit or loss and equity. Impact on profit or loss 10% weakening in US dollar against pound sterling (2019: 10%) 10% strengthening in US dollar against pound sterling (2019: 10%) 10% weakening in euro against pound sterling (2019: 10%) 10% strengthening in euro against pound sterling (2019: 10%) 10% weakening in AUS dollar against pound sterling (2019: 10%) 10% strengthening in AUS dollar against pound sterling (2019: 10%) 29 February 2020 £’000 28 February 2019 £’000 (129) 158 (61) 75 (25) 30 (258) 315 (123) 151 (16) 20 b) Credit risk The Company has a significant concentration of credit risk due to its use of third-party distributors. Credit limits for the final customers are set by the distributors based on a combination of payment history and third-party credit references. Credit limits are reviewed on a regular basis in conjunction with debt ageing and collection history. The distributors belong to established international groups whose business includes a number of publishing interests and clients. The Company’s risk is limited as significant amounts outstanding through the UK distributors are secured by credit insurance. The balances with the distributors make up 87% (2019: 85%) of the gross trade receivable balance. c) Liquidity risk Currently, the Company has limited borrowing and has sufficient cash deposits to meet its debts as they fall due. However, the Company’s exposure to liquidity risk has increased since coronavirus. The Board has modelled a severe but plausible pessimistic downside scenario; see note 2c on going concern for further details. Under this scenario the Group is expected to have sufficient liquidity for at least 12 months from the date of approval of the financial statements. The Company has an unsecured revolving credit facility with Lloyds Bank Plc. At 29 February 2020, the Group had no draw down (2019: £nil) of this facility with £8.0 million of undrawn borrowing facilities (2019: £12.0 million) available. The facility comprises a committed revolving loan facility of £8 million in the first half and an additional £4 million in the second half, totalling £12 million, to match Bloomsbury’s cash flow cycle, and an uncommitted incremental term loan facility of up to £6 million. The facilities are subject to two covenants, being a maximum net debt to EBITDA ratio of 2.55 and a minimum interest cover covenant of 45. Subsequent to the year end, the maturity of the facility was extended to May 2022 and the covenants were amended to exclude IFRS 16. 177 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS continued 47. Leases The Company’s lease portfolio consists of office properties, vehicles and equipment. The Company has adopted IFRS 16 Leases at 1 March 2019 and applied the modified retrospective approach. Comparatives for 2019 have not been restated. Disclosure required for IFRS 16 The maturities of the Group’s lease liabilities are as follows: Less than one year One to five years More than five years Total undiscounted lease liabilities Lease liabilities included in the balance sheet Current Non-current IAS 17 disclosures for 2019 The Company had the following outstanding commitments under non-cancellable operating leases: Within one year Later than one year and fewer than five years After more than five years Total 29 February 2020 £’000 1,248 4,831 6,813 12,892 10,838 906 9,932 28 February 2019 £’000 953 3,288 5,446 9,687 The operating leases represent rentals payable by the Company for certain office properties, vehicles and equipment; see note 26 for further details. 48. Commitments and contingent liabilities a) Capital commitments Property, plant and equipment Intangible assets Total 29 February 2020 £’000 – 238 238 28 February 2019 £’000 – 105 105 b) Other commitments The Company is committed to paying royalty advances in subsequent financial years. At 29 February 2020, this commitment amounted to £12,306,000 (2019: £10,957,000). c) Guarantees The Company and certain of its subsidiaries have guarantees to Lloyds Bank Plc in place relating to the Group’s borrowing facilities; see note 46c. The Company has guaranteed the liabilities of certain of its UK subsidiaries, being those listed in note 30, to enable them to take the audit exemption under section 479A of the Companies Act 2006. 178 www.bloomsbury.comBloomsbury Publishing PlcNotes to the Financial Statements49. Related parties Trading transactions During the year the Company entered into the following transactions and had the following balances with its subsidiaries: Sale of goods to subsidiaries Management recharges Commission payable to subsidiaries Finance income from subsidiaries Amounts owed by subsidiaries at year end Amounts owed to subsidiaries at year end 29 February 2020 £’000 9,525 9,422 (8) 91 12,824 47,901 28 February 2019 £’000 8,553 9,667 (5) 77 12,209 46,890 All amounts outstanding are unsecured and will be settled in cash. No provisions have been made for doubtful debts in respect of the amounts owed by subsidiaries. Key management remuneration is disclosed in note 5. 179 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTS← Harry Potter Harry Potter: The Complete Collection (Children's Paperback) continues to be Bloomsbury's number one bestseller in print for another year. 180 www.bloomsbury.comBloomsbury Publishing PlcAdditional information 182 Five Year Financial Summary 183 Company Information 184 Legal Notice 185 Notice of the Annual General Meeting 181 Stock code: BMYAnnual Report and Accounts 2020FINANCIAL STATEMENTSFive Year Financial Summary Revenue Adjusted profit† Adjusted diluted EPS‡ Dividend per share Return on Capital Employed Net assets Net cash* 2016 £’000 123,725 13,028 15.24p 6.40p 9.2% 132,967 5,166 2017 £’000 142,564 12,039 12.63p 6.70p 8.2% 139,299 15,478 2018 £’000 161,510 13,217 13.92p 7.51p 9.9% 139,563 25,428 2019 £’000 162,679 14,374 14.97p 7.96p 11.0% 143,738 27,580 2020 £’000 162,772 15,704 16.77p 1.28p 12.2% 149,673 31,345 † Adjusted profit is profit before taxation, amortisation of acquired intangible assets and other highlighted items. ‡ Adjusted diluted EPS is calculated from adjusted profit with tax on adjusted profit deducted. * Net cash is cash and cash equivalents net of the bank overdraft. Prior periods have not been restated to reflect the adoption of IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial Instruments" in 2019 IFRS 16 ‘Leases’ in 2020. 182 www.bloomsbury.comBloomsbury Publishing PlcCompany Information Chairman Executive Directors Independent Non-Executive Directors Company Secretary Registered Office Sir Richard Lambert – Non-Executive Chairman Nigel Newton – Founder and Chief Executive Penny Scott-Bayfield – Group Finance Director Jonathan Glasspool – Executive Director John Warren – Senior Independent Director Leslie-Ann Reed Steven Hall Maya Abu-Deeb 50 Bedford Square London WC1B 3DP +44 (0) 20 7631 5600 Registered number 01984336 (England and Wales) Auditor Bankers Stockbrokers and Financial Advisors Registrars KPMG LLP 15 Canada Square London E14 5GL Lloyds Bank 25 Gresham Street London EC2V 7HN Investec Investment Banking 30 Gresham Street London EC2V 7QP Link Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU 183 Stock code: BMYAnnual Report and Accounts 2020ADDITIONAL INFORMATIONLegal Notice Certain information in this document has not been audited or otherwise independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss whatsoever arising from any use of this document, or its contents, or otherwise arising in connection with this document. This document does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares in the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares of the Company. Certain statements, statistics and projections in this document are or may be forward looking. By their nature, forward-looking statements involve a number of risks, uncertainties or assumptions that may or may not occur and actual results or events may differ materially from those expressed or implied by the forward-looking statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Accordingly, forward- looking statements contained in this document regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which are based on the knowledge and information available only at the date of this document’s preparation. For a description of certain factors that may affect Bloomsbury’s business, financial performance or results of operations, please refer to the principal risks included in this Annual Report and Accounts; see pages 40 to 45. The Company does not undertake any obligation to update or keep current the information contained in this document, including any forward-looking statements, or to correct any inaccuracies, which may become apparent and any opinions expressed in it are subject to change without notice. References in this report to other reports or materials, such as a website address, have been provided to direct the reader to other sources of Bloomsbury information which may be of interest. Neither the content of Bloomsbury’s website nor any website accessible by hyperlinks from Bloomsbury’s website nor any additional materials contained or accessible thereon, are incorporated in, or form part of, this report. 184 www.bloomsbury.comBloomsbury Publishing PlcNotice of the Annual General Meeting Bloomsbury Publishing Plc To be held at the registered office of Bloomsbury Publishing Plc at: 50 Bedford Square, London WC1B 3DP* On Tuesday 21 July 2020 at 12.00 noon To Bloomsbury Shareholders THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to any aspect of the contents of this document or what action you should take, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, solicitor, accountant, fund manager or other appropriate independent financial adviser authorised under the Financial Services and Markets Act 2000. If you sell or have sold or otherwise transferred all of your shares in Bloomsbury Publishing Plc, please send this document together with the accompanying documents as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for delivery to the purchaser or the transferee. *ARRANGEMENTS IN LIGHT OF THE CORONAVIRUS PANDEMIC In light of the coronavirus pandemic and the Government’s “Stay Alert Measures”, please refer to the Company Secretary’s letter over the page which details the changes to the format of this year’s Annual General Meeting. 185 Stock code: BMYAnnual Report and Accounts 2020ADDITIONAL INFORMATIONLetter to Shareholders 20 May 2020 Dear Shareholder Bloomsbury Publishing Plc - Annual General Meeting I am pleased to inform you that this year’s Annual General Meeting (“AGM”) of Bloomsbury Publishing Plc (the “Company”) will be held at 50 Bedford Square, London WC1B 3DP on Tuesday 21 July 2020 at 12.00 noon. Information regarding the AGM, including the information required by section 311A of the Companies Act 2006 is available from www.bloomsbury-ir.co.uk. Coronavirus and AGM arrangements The Company is continuing to closely monitor the evolving situation and Government advice relating to the coronavirus pandemic. As we publish this document, the “Stay Alert Measures” issued by the UK Government remain in place. Throughout this document, references to the Stay Alert Measures include any equivalent public safety measures which may be introduced by the Government after the date of this letter and Notice of Meeting. In light of these unprecedented circumstances, the AGM this year will be run as a closed meeting. We hope that Shareholders will understand that we are taking the following steps to protect our Shareholders, employees and the Board. At the time of writing, legislation to allow closed AGMs to be held virtually is anticipated, and we intend to avail ourselves of this option if such legislation is promulgated before our AGM. Format and proceedings of the meeting Assuming that the Stay Alert Measures remain in place at the date of the AGM, Shareholders will not be permitted to attend the AGM in person. In order to comply with quorum requirements under the Company’s Articles of Association, two Shareholders must be present in person or by proxy at the AGM, and the Company will make arrangements to ensure that the necessary quorum is present. The format of the meeting will be purely functional and will comprise only the formal business – there will be no corporate presentation or Q&A. All other Directors of the Company and professional advisers will not attend the AGM in person. Shareholder participation Given the Stay Alert Measures, any Shareholders seeking to attend the AGM will be refused entry to the meeting. However, Shareholders’ votes still matter. Shareholders are strongly encouraged to participate by submitting a proxy vote in advance of the meeting and appointing the Chair of the Meeting as their proxy (rather than a named person who will not be permitted to attend the meeting). Voting by proxy Similarly to last year, Shareholders will not receive a form of proxy for the AGM in the post. Instead, instructions can be found in the section entitled “Explanatory Notes to the Notice” to enable Shareholders to vote electronically and how to register to do so. To register, Shareholders will need their Investor Code, which can be found on their share certificate. Shareholders may request a paper form of proxy from our Registrar, Link Asset Services. Proxy votes should be submitted as early as possible and in any event by no later than 12.00 noon on Friday 17 July 2020 in order to count towards the vote. As mentioned above, Shareholders are strongly encouraged to appoint the Chair of the Meeting as their proxy for this year’s AGM. Shareholder questions Shareholders are invited to submit to the Board any questions they would otherwise have asked at the AGM ahead of the meeting by email to: AGM2020@bloomsbury.com, marked for the attention of the Company Secretary. Communication of changes The situation is constantly evolving, and it may become necessary to change the arrangements for this year’s AGM after the date of this letter, in particular, if the anticipated legislation to enable closed AGMs to be held virtually comes into effect. The Company will provide any appropriate updates in relation to the AGM via its investor relations website (www.bloomsbury-ir.com) and the Regulatory News Service. 186 www.bloomsbury.comBloomsbury Publishing PlcResolutions This document provides details of the resolutions to be voted upon at the AGM and includes the formal notice convening the AGM. You will also find notes in the section entitled “Explanatory Notes to the Resolutions” relating to the resolutions that you will be asked to consider and vote on at the AGM. Resolutions 1 to 13 will be proposed as ordinary resolutions and resolutions 14 to 17 will be proposed as special resolutions. If you have elected to receive information from the Company in hard copy, you will have received the Annual Report and Accounts 2020 with this document. Shareholders who have not elected to receive hard copy documents can view or download the Annual Report and Accounts 2020 and this Notice from our website at www.bloomsbury-ir.co.uk. Recommendation The Directors consider that all the resolutions that are to be considered at the AGM are in the best interests of the Company and its Shareholders as a whole and are most likely to promote the success of the Company for the benefit of Shareholders as a whole. The Directors unanimously recommend that you vote in favour of all the proposed resolutions as they intend to do so in respect of their own interests (both beneficial and non-beneficial). Yours faithfully Maya Abu-Deeb General Counsel & Group Company Secretary Bloomsbury Publishing Plc 20 May 2020 187 Stock code: BMYAnnual Report and Accounts 2020ADDITIONAL INFORMATIONNotice of the Annual General Meeting Bloomsbury Publishing Plc NOTICE IS HEREBY GIVEN that the Annual General Meeting of Bloomsbury Publishing Plc (the “Company”) will be held at 50 Bedford Square, London WC1B 3DP on Tuesday 21 July 2020 at 12.00 noon. You will be asked to consider and vote on the resolutions below. Resolutions 1 to 13 will be proposed as ordinary resolutions and resolutions 14 to 17 will be proposed as special resolutions. Ordinary Business Shareholders are asked to consider and, if thought fit, to pass the following resolutions as ordinary resolutions: 1. To receive the audited accounts of the Company for the year ended 29 February 2020, together with the Report of the Directors and the report of the Auditor thereon. 2. To approve the Annual Statement by the Chair of the Remuneration Committee and the Annual Report on Directors’ Remuneration for the year ended 29 February 2020, as set out on pages 88 to 90 and 96 to 108 respectively of the Company’s Annual Report and Accounts for the year ended 29 February 2020. 3. To approve the Directors’ Remuneration Policy as set out on pages 90 to 96 of the Company’s Annual Report and Accounts for the year ended 29 February 2020. 4. To authorise the Directors to settle the intended final dividend for the year ended 29 February 2020 of 6.89 pence per share by way of a bonus issue of new Ordinary Shares. 5. To re-appoint Steven Hall as a Director of the Company. 6. To re-appoint Sir Richard Lambert as a Director of the Company. 7. To re-appoint Nigel Newton as a Director of the Company. 8. To re-appoint Leslie-Ann Reed as a Director of the Company. 9. To re-appoint Penny Scott-Bayfield as a Director of the Company. 10. To re-appoint John Warren as a Director of the Company. 11. To re-appoint KPMG LLP as Auditor of the Company to hold office until the conclusion of the next Annual General Meeting at which financial statements for the Company are laid before the Company. 12. To authorise the Directors to determine the remuneration of the Auditor on behalf of the Company. Special Business Shareholders are asked to consider and, if thought fit, to pass the following resolutions of which Resolution 13 will be proposed as an ordinary resolution and resolutions 14, 15, 16 and 17 will be proposed as special resolutions. 13. THAT: a. the Directors be generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the “Act”) to exercise all the powers of the Company to allot any shares in the Company and to grant rights t o subscribe for or convert any security into shares in the Company to such persons and on such terms as they think proper up to a maximum aggregate nominal amount of £329,562 provided that: i. this authority shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or, if earlier, 15 months from the date of passing of this resolution, unless previously varied, revoked or renewed by the Company in general meeting; and ii. the Company shall be entitled to make, before the expiry of such authority, any offer or agreement which would or might require shares to be allotted or rights to subscribe for or convert any security into shares in the Company to be granted after the expiry of such authority and the Directors may allot any shares pursuant to such offer or agreement as if such authority had not expired; and iii. the Directors may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter; and b. all prior authorities to allot any shares in the Company and to grant rights to subscribe for or convert any security into shares in the Company given to the Directors by resolution of the Company be revoked but without prejudice to the allotment of any shares already made or agreed to be made pursuant to such authorities. 188 www.bloomsbury.comBloomsbury Publishing Plc14. THAT: if Resolution 13 is passed, the Directors be authorised to allot equity securities (as defined in the Companies Act 2006 (“the Act”)) for cash under the authority given by that resolution and/or to sell Ordinary shares held by the Company as treasury shares for cash as if section 561 of the Act did not apply to any such allotment or sale, such authority to be limited: a. to the allotment of equity securities in connection with a rights issue, open offer or other pre-emptive offer in favour of holders of Ordinary shares in the Company where the equity securities respectively attributable to the interests of all such holders of Ordinary shares are proportionate (as nearly as may be) to the respective numbers of and/or rights attaching to Ordinary shares held by them, subject to such exceptions, exclusions or other arrangements as the Directors may deem necessary or expedient to deal with fractional entitlements or legal or practical problems under the laws of any territory or the requirements of any regulatory body or any stock exchange or otherwise in any territory; b. to the allotment of equity securities pursuant to the terms of the Company’s existing employees’ share or share option schemes or any other employees’ share scheme approved by the Shareholders of the Company in general meeting; and c. to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph a. and b. above) up to a nominal value not exceeding in aggregate £49,434; and shall expire at the conclusion of the next Annual General Meeting of the Company after passing this resolution or, if earlier, 15 months from the date of passing of this resolution, unless previously varied, revoked or renewed by the Company in general meeting, and provided that the Company may, before such expiry, make any offer or agreement which would or might require equity securities to be allotted or Ordinary shares held by the Company as treasury shares to be sold after such expiry and the Directors may allot equity securities or sell treasury shares pursuant to any such offer or agreement as if the power hereby conferred had not expired; and all prior powers granted under section 571 of the Act revoked, provided that such revocation shall not have retrospective effect. 15. THAT: if Resolution 13 is passed, the Directors be authorised, in addition to any authority granted under Resolution 14, to allot equity securities (as defined in the Companies Act 2006 (“the Act”) for cash under the authority given by Resolution 13 and/or to sell Ordinary shares held by the Company as treasury shares for cash, as if section 561 of the Act did not apply to any such allotment or sale, such further authority to be: a. limited to the allotment of equity securities or sale of treasury shares up to a nominal amount of £49,434; and b. used only for the purposes of financing (or refinancing, if the authority is to be used within six months after the original transaction) a transaction which the Directors determine to be an acquisition or other capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre- Emption Group prior to the date of the notice of this resolution; and shall expire at the conclusion of the next Annual General Meeting of the Company after passing this resolution or, if earlier, 15 months from the date of passing of this resolution, unless previously varied, revoked or renewed by the Company in general meeting, and provided that the Company may, before such expiry, make any offer or agreement which would or might require equity securities to be allotted or Ordinary shares held by the Company as treasury shares to be sold after such expiry and the Directors may allot equity securities or sell treasury shares pursuant to any such offer or agreement as if the power hereby conferred had not expired; and all prior powers granted under section 571 of the Act revoked, provided that such revocation shall not have retrospective effect. 16. THAT: the Company be authorised, pursuant to section 701 of the Companies Act 2006 (“the Act”), to make market purchases (as defined in section 693(4) of the Act) of any of its Ordinary shares of 1.25p each (“Ordinary shares”) in such manner and on such terms as the Directors may from time to time determine provided that: a. the maximum number of Ordinary shares authorised to be purchased is 7,909,499 Ordinary shares being 10% of the issued Ordinary shares of the Company at the date of the notice of this resolution; b. the maximum price (exclusive of expenses) which may be paid for each Ordinary share is an amount equal to 105% of the average of the middle market quotations for an Ordinary share taken from the London Stock Exchange Daily Official List for the five business days immediately preceding the date on which such share is contracted to be purchased and the minimum price (exclusive of expenses) which may be paid for each Ordinary share is 1.25 pence; c. the authority hereby conferred shall, unless previously varied, revoked or renewed, expire at the conclusion of the next AGM of the Company to be held after passing this resolution or 15 months from the date of passing of this resolution, whichever shall be the earlier; and d. the Company shall be entitled under such authority to make at any time before its expiry or termination any contract to purchase its own shares which will or might be concluded wholly or partly after the expiry or termination of such authority and may purchase its own shares pursuant to such contract. 189 Stock code: BMYAnnual Report and Accounts 2020ADDITIONAL INFORMATIONNotice of the Annual General Meeting Bloomsbury Publishing Plc continued 17. THAT: the Articles of Association contained in a document produced to the meeting and signed by the Chief Executive for the purposes of identification be approved and adopted as the New Articles of Association of the Company in substitution for, and to the exclusion of, the existing Articles of Association. By order of the Board Maya Abu-Deeb General Counsel & Group Company Secretary Bloomsbury Publishing Plc 20 May 2020 Registered Office 50 Bedford Square London WC1B 3DP 190 www.bloomsbury.comBloomsbury Publishing PlcExplanatory Notes to the Resolutions Resolutions 1 to 13 are proposed as ordinary resolutions. This means that for each of those resolutions to be passed, more than half of the votes cast must be in favour of the resolution. Resolutions 14 to 17 are proposed as special resolutions. This means that for each of those resolutions to be passed, at least three- quarters of the votes cast must be in favour of the resolution. Resolution 1 (ordinary resolution) – Report and Accounts To receive the report of the Directors and the financial statements for the year ended 29 February 2020, together with the report of the Auditor. Resolution 2 (ordinary resolution) – Approval of Annual Statement by the Chair of the Remuneration Committee and Annual Report on Directors’ Remuneration The Directors are required to prepare the Directors’ Remuneration Report, comprising an annual report detailing the remuneration of the Directors and an annual statement by the Chair of the Remuneration Committee. These are set out on pages 88 to 90 and 96 to 108 of the Annual Report and Accounts. The Company is required to seek Shareholders’ approval in respect of the contents of the Remuneration Report on an annual basis (excluding the part containing the Directors’ Remuneration Policy) and of the annual statement. The vote for Resolution 2 is an advisory one. Resolution 3 (ordinary resolution) – Approval of the Directors’ Remuneration Policy The Directors’ Remuneration Policy is set out on pages 90 to 96 of the Company’s Annual Report and Accounts for the year ended 29 February 2020. The Policy must be approved by Shareholders by means of a separate resolution (in accordance with section 439A of the Companies Act 2006) at least once every three years. The current Policy was approved by Shareholders at the AGM in 2017 and is therefore due for renewal. As part of the review of the Policy, the Company consulted with a number of the Company’s largest Shareholders and, where appropriate, their comments have been reflected. Subject to Shareholders' approval, it is intended that the new Policy will operate from 1 March 2020 and will become formally effective immediately after the AGM. Resolution 4 (ordinary resolution) – Approval of the payment of the final dividend by way of a bonus issue of shares The Company had intended to declare a final dividend for the year ended 29 February 2020 of 6.89 pence per share. This would have resulted in a total dividend for the year of 8.17 pence per share, up 3% on the previous year. As previously announced, the Company has decided, in light of the coronavirus pandemic, to conserve cash at the present time and therefore will not be paying a cash dividend. It is now proposed, subject to Shareholder approval, that the dividend is instead settled through the issuance of new Ordinary shares of 1.25 pence each (the “Bonus Shares”) by way of bonus issue, with a value equivalent to the proposed final dividend, (the “Bonus Issue”) to Shareholders on Bloomsbury’s register of members as at 11.59 pm on 31 July 2020 (the “Bonus Issue Record Time”), being the last date on which transfers will be accepted for registration to participate in the Bonus Issue. The Bonus Shares will be issued on 28 August 2020 (the “Bonus Issue Payment Date”) with the number of Bonus Shares (if any) to which each Shareholder on Bloomsbury’s register of members as at the Bonus Issue Record Time is entitled calculated using the following formula: a) the number of Ordinary shares held at the Bonus Issue Record Time multiplied by 6.89 pence; divided by b) the average of the middle market quotations of Bloomsbury’s Ordinary shares on the Daily Official List of the London Stock Exchange for the five consecutive dealing days commencing from and including 24 July 2020 (the “Reference Share Price”). No fraction of a Bonus Share will be issued and the calculation of entitlements to Bonus Shares will always be rounded down to the nearest whole Ordinary shares. Any fractional entitlements to Bonus Shares will be aggregated and Bloomsbury will procure that the maximum whole number of resulting Bonus Shares will be allotted and sold in the market with the net proceeds of sale (net of any commissions, expenses and applicable taxes) paid in due proportion to the relevant Shareholders (rounded down to the nearest penny), by way of cheque or credit to the relevant CREST account. Fractional entitlements to amounts (net of any commissions, expenses and applicable taxes) of £5 or less will not be paid to the relevant Shareholders who would otherwise be entitled to them due to the administrative costs incurred in doing so, but will be retained for the benefit of Bloomsbury. In Resolution 4 Shareholders are being asked to authorise the Directors to proceed with the Bonus Issue and to capitalise up to £5,720,000 standing to the credit of Bloomsbury’s distributable profits for the purposes of applying such amounts in paying up in full the Bonus Shares. The Bonus Shares will be fully paid up and rank pari passu in all respects with the existing Ordinary shares of Bloomsbury and will have the rights, and be subject to the restrictions, provided for in Bloomsbury’s Articles of Association (“Articles”). Shareholders are advised to consult their tax advisers on their tax position in respect of any Bonus Shares and/or cash proceeds they receive in respect of any fractional entitlements to Bonus Shares. 191 Stock code: BMYAnnual Report and Accounts 2020ADDITIONAL INFORMATIONExplanatory Notes to the Resolutions continued Expected Timetable of Events 1. Latest time for return of proxies for Annual General Meeting Annual General Meeting 2. 3. 4. 5. Ex-dividend date for the bonus issue of Ordinary Shares (the “Bonus Shares”) Thursday 30 July 2020 Bonus Issue Record Time (and the last date on which transfers will be accepted for registration to participate in the Bonus Issue) Friday 31 July 2020 Bonus Issue Payment Date and admission to trading of the Bonus Shares on the London Stock Exchange Friday 28 August 2020 12.00 noon on Friday 17 July 2020 Tuesday 21 July 2020 6. Despatch of share certificates for Bonus Shares to shareholders holding in certificated form (and CREST accounts of shareholders holding in uncertificated form credited with Bonus Shares) On or soon after 8.00 am on the Bonus Issue Payment Date 7. CREST accounts credited with any cash due in relation to the sale of fractional entitlements for shareholders who hold their shares in CREST (and despatch of cheques for any cash in relation to the sale of fractional entitlements for shareholders who do not hold their shares in CREST) Within 14 days after the Bonus Issue Payment Date Resolutions 5 to 10 (ordinary resolutions) – Re-appointment of Directors In accordance with best practice for issuers listed on the Main Market of the London Stock Exchange and the Articles, all the Directors will retire at the AGM and, being eligible, offer themselves for re-appointment except for Jonathan Glasspool who will resign as a Director of the Company. The Board has considered the appraisal of the performance of each Director offering themselves for re-appointment and has concluded that each of them makes positive and effective contributions to the meetings of the Board and the Committees on which they sit and that they demonstrate commitment to their roles. The Board is satisfied that each Non-Executive Director offering themselves for appointment or re-appointment is independent in character and there are no relationships or circumstances likely to affect their character or judgement. Biographical details for each of the Directors may be found on pages 68 to 69 of the Annual Report and Accounts. The Board unanimously recommends the appointment or re-appointment of each of the Directors. Resolution 11 (ordinary resolution) – Re-appointment of the Auditor The Board recommends that the incumbent External Auditor, KPMG LLP (who have been in office since the 2013/14 financial year), be re-appointed for a further year so that they are able to audit the Company’s report and accounts for the year ending 28 February 2021. Resolution 12 (ordinary resolution) – Remuneration of the Auditor The Board proposes that it be authorised to determine the level of the Auditor’s remuneration for the year ending 28 February 2021. Resolution 13 (ordinary resolution) – Authority to allot Ordinary shares This is an ordinary resolution to replace the general authority, last given at the 2019 AGM, for the Directors to be authorised to allot Ordinary shares pursuant to section 551 of the Act. This resolution, if passed, would give the Directors the authority to allot up to 26,364,999 Ordinary shares of 1.25 pence with a nominal value of £329,562, representing approximately 33.33% of the issued Ordinary share capital of the Company at the date of this Notice. This authority, if granted, will expire on the earlier of the conclusion of the Company’s next AGM and 15 months from the date of passing this resolution. The Board has no present intention of exercising the authority granted by this resolution save in the circumstances referred to below. The Board intends to seek its renewal at subsequent AGMs of the Company. As at the date of signing the Directors’ Remuneration Report for the 2020 Annual Report and Accounts, the Directors had beneficial holdings of Ordinary shares in the Company which, in aggregate, amounted to approximately 1.35% of the Ordinary shares in issue. The Directors have been granted awards under the Company’s share award schemes that, if they were to fully vest, would entitle the Directors to further Ordinary shares which in aggregate would amount to approximately a further 1.48% of the Ordinary shares in issue. Resolutions 14 and 15 (special resolutions) – Disapplication of statutory pre-emption provisions If the Directors wish to allot new shares and other equity securities, or to sell treasury shares, for cash (other than in connection with an employee share scheme), Company Law requires that these shares are offered first to Shareholders in proportion to their existing shareholdings. 192 www.bloomsbury.comBloomsbury Publishing PlcThe Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this Notice supports the annual disapplication of pre-emption rights in respect of allotments of shares and other equity securities and sales of treasury shares for cash representing no more than 5% of the issued Ordinary share capital of the Company (exclusive of treasury shares), without restriction as to the use of proceeds of those allotments. Accordingly, the purpose of Resolution 14 is to authorise the Directors to allot new Ordinary shares pursuant to the allotment authority given to them by Resolution 13, or to sell treasury shares, for cash (i) pursuant to the terms of the Company’s employees’ share schemes, (ii) in connection with a pre-emptive offer or rights issue to Shareholders or (iii) otherwise up to a nominal value equivalent to 5% of the issued Ordinary share capital (exclusive of treasury shares) without the shares first being offered to existing Shareholders in proportion to their existing shareholdings. The Board also intends to adhere to the provisions in the Pre-Emption Group’s Statement of Principles and not to allot shares or other equity securities or to sell treasury shares for cash on a non pre-emptive basis pursuant to the authority in Resolution 14 in excess of an amount equal to 7.5% of the issued Ordinary share capital (excluding treasury shares), within a rolling three-year period, other than: with prior consultation with Shareholders; or in connection with an acquisition or specified capital investment which is announced contemporaneously with the allotment or which has taken place in the preceding six-month period and is disclosed in the announcement of the allotment. The Pre-Emption Group’s Statement of Principles also supports the annual disapplication of pre-emption rights in respect of allotments of shares and other equity securities and sales of treasury shares for cash representing no more than an additional 5% of issued Ordinary share capital (exclusive of treasury shares), to be used only in connection with an acquisition or specified capital investment in respect of which sufficient information is made available to Shareholders to enable them to reach an assessment of the potential return. Accordingly, and in line with the template resolutions published by the Pre-Emption Group, the purpose of Resolution 15 is to authorise the Directors to allot new shares and other equity securities pursuant to the allotment authority given by Resolution 13, or sell treasury shares, for cash up to a further nominal amount equivalent to 5% of the issued Ordinary share capital (exclusive of treasury shares) only in connection with an acquisition or specified capital investment which is announced contemporaneously with the allotment, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issue. If the authority given in Resolution 15 is used, the Company will publish details of the placing in its next annual report. If Resolutions 14 and 15 are passed, the authority will expire on the earlier of the conclusion of the Company’s next AGM and 15 months from the date of passing the resolutions. The Board considers the authorities in Resolutions 14 and 15 to be appropriate in order to allow the Company flexibility to finance business opportunities or to conduct a pre-emptive offer or rights issue without the need to comply with the strict requirements of the statutory pre-emption provisions. The Directors have no current intention to exercise the authorities granted by Resolutions 14 and 15. The Company has not allotted Ordinary shares or sold treasury shares for cash on a non-pre-emptive basis in the previous six years other than as follows: 869,054 shares allotted during December 2014 in connection with the acquisition of Osprey Publishing; 247,393 shares allotted during August 2016 in connection with the acquisition of Berg Fashion Library; shares allotted under employee share option schemes; and, the non-pre-emptive equity placing of 3,766,428 Ordinary shares in the capital of the Company in April 2020. Resolution 16 (special resolution) – Authority for the Company to purchase Ordinary shares This is a resolution to replace the general authority, last given at the 2019 AGM, for the Company to purchase its own Ordinary shares and either to cancel them or to hold them as treasury shares. The Company would be authorised to make market purchases of up to 7,909,499 Ordinary shares with a nominal value of £98,869, being equivalent to 10% of the issued Ordinary share capital (excluding treasury shares) at the date of this Notice. Treasury shares are not taken into account in calculations of earnings per share and may only be transferred pursuant to an employee share scheme, cancelled or sold for cash. Shares would only be purchased if the Directors consider such purchases are in the best interests of Shareholders generally and can be expected to result in an increase in earnings per share. The authority will only be used after considering the prevailing market conditions, other investment opportunities, appropriate gearing levels and the overall financial position of the Company. Any purchases would be market purchases through the London Stock Exchange. The upper and lower limits on the price which may be paid for those shares are set out in the resolution itself. This authority would, if granted, expire on the earlier of the conclusion of the Company’s next AGM and 15 months from the date of passing this resolution. The Directors believe it is prudent to seek this general authority to be able to act if circumstances arise in which they consider such purchases to be in the best interests of Shareholders generally. The Directors have no current intention to exercise the authority granted by this resolution. The Company has not purchased its own Ordinary shares in the previous five years and holds no shares in treasury as at the date of this Notice. 193 Stock code: BMYAnnual Report and Accounts 2020ADDITIONAL INFORMATIONExplanatory Notes to the Resolutions continued Resolution 17 (special resolution) – New Articles of Association The Company’s Articles of Association were last amended in 2010. The Board has taken the decision to seek approval for the adoption of the New Articles of Association to allow it to more efficiently deal with general meetings, including AGMs, in circumstances where physical meetings are prevented due to extreme events such as the current coronavirus crisis. The changes provide new definitions of physical, electronic and hybrid meetings to allow maximum flexibility in the holding of Shareholder meetings in times when gatherings of large groups are limited in scope and therefore allowing for remote attendance and the casting of votes via virtual meetings. As such, the New Articles are being adopted to include the ability of holding a general meeting on an electronic platform and therefore allowing Shareholders to attend and vote remotely, and also to grant the Board the power to determine whether a general meeting will be a physical, electronic or hybrid meeting. All differences between the proposed New Articles and existing Articles are limited to those which are necessary to grant the power to hold meetings (wholly or partially) on electronic platforms and permit attendance and voting (wholly or partially) on a virtual basis. The proposed New Articles include the necessary consequential changes to the provisions dealing with how notices are given, how meetings may be postponed, how a quorum is calculated, and how a meeting is adjourned. No other changes are being proposed to the Articles. The Board wishes to emphasise its continued desire to hold physical meetings, including AGMs, whenever possible. As such, it only intends to use the power being requested by the New Articles to hold a virtual meeting in extreme circumstances such as a future outbreak of the coronavirus, or another event which means that the holding of a physical meeting may cause harm to life or is in fact restricted/prohibited by Government measures. A copy of the draft New Articles, setting out the proposed changes to the existing Articles, are available to view on the Company’s website (www.bloomsbury-ir.com). Explanatory Notes to the Notice The following notes explain your general rights as a Shareholder and your right to attend and vote at the AGM or to appoint someone else to vote on your behalf. As explained in the Letter to Shareholders on page 2 of this document, due to the Stay Alert Measures issued by the Government in response to the coronavirus pandemic, Shareholders will not be permitted to attend the AGM in person. In order to comply with quorum requirements under the Company’s Articles of Association, attendance at the AGM will be restricted to two Shareholders or their duly appointed proxies, and the Company will make the necessary arrangements to ensure the necessary quorum is present. Legislation to allow closed AGMs to be held virtually is anticipated, and we intend to avail ourselves of this option if such legislation is promulgated before our AGM. Shareholders are strongly encouraged to appoint the Chair of the Meeting to be their proxy at the AGM, given that no other named persons will be permitted to attend the AGM. 1. Entitlement to attend and vote. Shareholders included on the register of members (in relation to Ordinary shares held in CREST, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001) at close of business on Friday 17 July 2020 will be entitled to vote at the AGM in respect of the number of Ordinary shares registered in their name at that time. Changes to the register of members after that time will be disregarded in determining the rights of any person to attend or vote at the meeting subject to the Stay Alert Measures referred to above. 2. Appointment of proxies. If a Shareholder meets the criteria set out in Note 1 above, they are entitled to attend and vote or may appoint one or more proxies to attend, speak and vote on their behalf, subject to the Stay Alert Measures referred to above. A proxy need not be a Shareholder of the Company. A Shareholder can only appoint a proxy using the procedures set out in these notes. If a Shareholder wishes their proxy to speak on their behalf at the meeting, they will need to appoint their own choice of proxy (who is not the Chair) and give instructions directly to the proxy. A Shareholder may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. A Shareholder may not appoint more than one proxy to exercise rights attached to any one share. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, the Shareholder’s proxy will vote or abstain from voting at their discretion. The Shareholder’s proxy will vote (or abstain from voting) as they think fit in relation to any other matter which is put before the AGM. Shareholders are recommended to vote their shares electronically at www.signalshares.com. On the home page, search “Bloomsbury Publishing Plc” and then register or log in, using your Investor Code. To vote at the AGM, click on the “Vote Online Now” button by not later than 12.00 noon on Friday 17 July 2020 (or 48 hours (excluding weekends and public holidays) before the time appointed for any adjournment of it). Electronic votes and proxy votes should be submitted as early as possible and, in any event, to be received by no later than 12.00 noon on Friday 17 July 2020. Any power of attorney or other authority under which the proxy is submitted must be sent to the Company’s Registrar (Link Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF) so as to have been received by the Company’s Registrars by not later than 12.00 noon on Friday 17 July 2020 (or 48 hours (excluding weekends and public holidays) before the time appointed for any adjournment of it). 194 www.bloomsbury.comBloomsbury Publishing PlcYou are entitled to request a hard copy form of proxy directly from the Registrar, Link Asset Services, whose contact details can be found in Note 14. If a paper form of proxy is requested from the Company’s Registrar, it must be completed and sent to the Company’s Registrar (Link Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF) so as to have been received by the Company’s Registrars by not later than 12.00 noon on Friday 17 July 2020 (or 48 hours (excluding weekends and public holidays) before the time appointed for any adjournment of it). 3. Appointment of proxies through CREST. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the AGM and any adjournment(s) thereof by utilising the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s (“EUI”) specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the issuer’s agent (ID - RA10) not later than 48 hours before the time appointed for holding the AGM. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to a proxy appointed through CREST should be communicated to the proxy by other means. For further information on CREST procedures, limitations and systems timings, please refer to the CREST Manual. In all cases, for a proxy form to be valid, the CREST Voting Service information must be received by the Company’s Registrar no later than 48 hours before the time appointed for the holding of the AGM. CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that their CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 4. Appointment of proxy by joint members. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior). 5. Changing proxy instructions. To change your proxy instructions simply submit a new proxy appointment using the methods set out in Note 2. Note that the cut-off time for receipt of proxy appointments (see above) also applies in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded. Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy proxy form, please contact Link Asset Services at PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. 6. Termination of proxy appointments. In order to revoke a proxy instruction electronically please follow the method set out in Note 2 and elect to withhold your vote on each resolution. To revoke a hard copy proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Link Asset Services at PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF. In the case of a Shareholder which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice. The revocation notice must be received by Link Asset Services no later than 12.00 noon on Friday 17 July 2020. If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid. Appointment of a proxy does not preclude you from attending the AGM and voting in person, subject to the Stay Alert Measures referred to above. If you have appointed a proxy and attend the AGM in person, your proxy appointment will automatically be terminated. 7. Corporate representatives. A corporation which is a Shareholder can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a Shareholder provided that no more than one corporate representative exercises powers over the same shares. 8. Issued shares and total voting rights. As at 19 May 2020 (being the last business day prior to the date of this Notice), the Company’s issued share capital comprised 79,094,998 Ordinary shares of 1.25 pence each (subject to any changes that will be notified to you at the beginning of the AGM). Each Ordinary share carries the right to one vote at a General Meeting of the Company and, therefore, the total number of voting rights in the Company as at 19 May 2020 is 79,094,998. 195 Stock code: BMYAnnual Report and Accounts 2020ADDITIONAL INFORMATIONExplanatory Notes to the Notice continued 9. Questions at the AGM. If the Stay Alert Measures remain in force at the date of the AGM, Shareholders are invited to submit to the Board any questions they would otherwise have asked at the AGM ahead of the meeting by email to: AGM2020@bloomsbury.com, marked for the attention of the Company Secretary. Any Shareholder who would have attended the meeting has the right to ask questions. Under section 319A of the Companies Act 2006, the Company must answer any question relating to the business being dealt with at the meeting, except in certain circumstances, including (i) if to do so would interfere unduly with the preparation for the mee ting or involve the disclosure of confidential information, (ii) the answer has already been given on a website in the form of an answer to a question, or (iii) if it is undesirable in the interest of the Company or the good order of the meeting that the question be answered. 10. Website publication of audit concerns. Under Section 527 of the Companies Act 2006, Shareholders meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts (including the Auditor’s Report and the conduct of the audit) that are to be laid before the AGM; or (ii) any circumstance connected with an Auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Act. The Company may not require the Shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Act. Where the Company is required to place a statement on a website under section 527 of the Act, it must forward the statement to the Company’s Auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the AGM includes any statement that the Company has been required under section 527 of the Act to publish on a website. 11. Nominated Persons. Any person to whom this Notice is sent who is a person nominated under section 146 of the Act to enjoy information rights (a “Nominated Person”) may, under an agreement between them and the Shareholder by whom they were nominated (“Relevant Member”), have a right to be appointed (or to have someone else appointed) as a proxy for the AGM. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, they, under any such agreement, may have a right to give instructions to the Relevant Member as to the exercise of voting rights. Your main point of contact in terms of your investment in the Company remains the Relevant Member (or, perhaps, your custodian or broker) and you should continue to contact them (and not the Company) regarding any changes or queries relating to your personal details and your interest in the Company (including any administrative matters). The only exception to this is where the Company expressly requests a response from you. The statement of the rights of Shareholders in relation to the appointment of proxies does not apply to Nominated Persons. The rights described in this regard can only be exercised by Shareholders of the Company. 12. Members’ Rights. Under section 338 and section 338A of the Companies Act 2006, a member or members meeting the qualification criteria in those sections have the right to require the Company (i) to give to members of the Company entitled to receive notice of the AGM, notice of a resolution which may properly be moved and is intended to be moved at the AGM and/or (ii) to include in the business to be dealt with at the AGM any matter (other than a proposed resolution) which may be properly included in the business. A resolution may properly be moved or a matter may properly be included in the business unless (a) (in the case of a resolution only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company’s constitution or otherwise); or (b) it is defamatory of any person; or (c) it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, must identify the resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons making it. The request must be received by the Company not later than the later of the dates falling six weeks before the AGM and the time of giving this Notice of AGM, and (in the case of a matter to be included in the business only) must be accompanied by a statement setting out the grounds for the request. 13. Documents. For such time that the Stay Alert Measures continue to remain in force, the Company is unable to make available for inspection the documents that would otherwise customarily be available at the Company’s registered office. In the event that the Stay Alert Measures cease to have effect, copies of the following documents will be available for inspection at the Company’s Registered Office, 50 Bedford Square, London WC1B 3DP, during usual business hours on any weekday, Saturdays and public holidays excepted, from the date of this Notice until the date of the AGM and at the place of the AGM for 15 minutes prior to and during the meeting: • copies of the service agreements under which the Executive Directors of the Company are employed by the Company or its subsidiaries; • copies of letters of appointment of the Non-Executive Directors; • a copy of the Articles of Association of the Company; and • the terms of reference of the Audit Committee, the Remuneration Committee and Nomination Committee of the Board. 14. Communication. Except as provided above, members who have general queries about the AGM should call the Company’s Shareholder helpline on 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 9:00am to 5:30pm, Monday to Friday excluding public holidays in England and Wales. Calls may be recorded and monitored for security and training purposes; no other methods of communication will be accepted. You may not use any electronic address provided in this Notice of Meeting to communicate with the Company for any purposes other than those expressly stated. 15. Website giving information regarding the AGM. Information regarding the meeting, including the information required by section 311A of the Companies Act 2006, is available from www.bloomsbury-ir.co.uk. 196 www.bloomsbury.comBloomsbury Publishing PlcADDITIONAL INFORMATION 1 Methuen Drama Modern Plays’ 60th Anniversary event at RADA Studios. From left to right: Dom O’Hanlon, Senior Commissioning Editor for Plays, Kwame Kwei-Armah, Playwright, Artistic Director of the Young Vic Theatre, Mel Kenyon, Agent, Casarotto Ramsay, Kate McGrath Director, Fuel Theatre, and James Graham, Playwright, Screenwriter. 2 Elizabeth Gilbert speaking on her Sunday Times bestseller novel, City of Girls, at the London Book Fair 3 Bloomsbury colleagues celebrate at launch event with Kiley Reid, the Sunday Times bestselling author of Such A Fun Age. From left to right: Glen Holmes, Jasmine Horsey, Kiley Reid, Greg Heinemann and Alexis Kirschbaum 4 Maisie Hill, author of Period Power with other guest speakers at the Alternatively Healthy Magazine event. From left to right: Maisie Hill, Megan Rose Lane, beauty and lifestyle influencer, Angelique Panagos, nutritionist, and Becki Rabin, founder of Alternatively Healthy Magazine 5 Richard Norton-Taylor at the double book launch for the publication of his book, The State of Secrecy, and for Geoff Andrews’ Agent Moliere 6 Bloomsbury Institute collaborates with London Horror Festival on the art of constructing dread in the Horror genre and writing scary stories. From left to right, Joe Willis, horror writer/producer and co-producer of London Horror Festival, Sasha Wilson, artistic director of Out of the Forest Theatre and author of plays, Laura Purcell, author of gothic horror novels for Raven Books and Carrie Thompson, one half of Hermetic Arts and writer of horror plays 7 Literary legend Isabel Allende speaking to writer Rosianna Halse Rojas about her new novel, The Long Petal of the Sea. Bloomsbury played host to an exclusive live stream interview in conjunction with the UNHCR 8 Award-winning BBC radio producer and broadcaster, Kavita Puri, author of Partition Voices, discussing her book with novelist, Nikita Lalwani, at a Bloomsbury Institute event at the London Library 9 Alexandra Pringle speaking to writer, art historian and filmmaker Nana Oforiatta Ayim at a Bloomsbury Lunches Live event about her book, The God Child 10 Alison Hennessey speaking to Laura Purcell at a Bloomsbury Lunches Live event on her title, Bone China 11 Illustrator Jim Kay signing copies of Harry Potter and the Goblet of Fire, the illustrated edition at Bloomsbury’s offices 27040 11 June 2020 8:07 pm Proof 2 27040-Bloomsbury-AR2020 - financials.indd 3 27040 27040 27040 27040 27040 11 June 2020 8:07 pm 11 June 2020 8:07 pm 11 June 2020 8:07 pm 11 June 2020 8:07 pm 11 June 2020 8:07 pm Proof 2 Proof 2 Proof 2 Proof 2 Proof 2 11-Jun-20 9:50:50 PM Stock code: BMY Annual Report and Accounts 2020 27040 11 June 2020 9:44 pm Proof 227040 11 June 2020 9:44 pm Proof 2Bloomsbury Publishing Plc50 Bedford Square, London, WC1B 3DP+44 (0)20 7631 5600www.bloomsbury.com www.bloomsbury-ir.co.ukBloomsbury Publishing Plc Annual Report and Accounts for the year ended 29 February 2020Stock code: BMY123645789101127040-Bloomsbury-AR2020 - strategic.indd 311-Jun-20 9:49:39 PM

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