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Harry and his chums, Ron and Hermione, all helped to push first-half sales 78% higher to £11.4m. The creations of JK Rowling also helped Bloomsbury to generate an interim pre-tax profit of £280,000, a figure that compares well to the £103,000 loss generated in the prior year.
Although Master Potter has dominated the bestseller lists this year, Bloomsbury's success wasn't all down to the bespectacled young hero. Recent publications such as Kitchen Confidential by Anthony Bordain, Marrying the Mistress by Joanna Trollope and David Guterson's East of the Mountains also bumped up the top line. Importantly, improved revenues from the company's "backlist" also served the financial performance well, this "smoother" revenue stream now contributing 38% to the group's book sales.
In terms of book sales, the key Christmas run-up period appears very positive for Bloomsbury. Revenues from the latest Potter episode, the much-hyped Harry Potter and the Goblet of Fire, will all be recognised in the second half. With the company's embryonic US operation having an "exciting list of books in the pipeline" too, Bloomsbury states that current trading is "strong" and that they are likely to exceed their budgets for the full year.
A Change of Strategy
But the reliance on certain authors, an operational seasonal bias and the "lumpy" nature of revenues from successful publications has led to a slight change in strategy over the past year.
During 1999, in conjunction with Microsoft (Nasdaq: MSFT), Bloomsbury undertook the rather Herculean task of producing the Encarta World English Dictionary. Significantly, and unlike the group's novels, Bloomsbury owns the copyright of this endeavour. Sales of the dictionary "remain strong" and other similar efforts under development include a quotations database and a reference work for English language teaching. With increasing use of electronic media, the prospects for Bloomsbury's reference works are indicated as "very good".
Continuing the niche publication, copyright-owning and recurring revenue theme, Bloomsbury bought A&C Black in July. Although the corporate purchase was made too late to affect today's figures, bullish comments inevitably surround the new subsidiary. The newly acquired publications, such as Who's Who and the Writers' and Artists' Yearbook, are said to have "huge potential for electronic exploitation".
Although you can't really argue with the financial performance and the upbeat remarks, Bloomsbury shares, up 12.5p this morning to 850p, stand on a prospective price to earnings (P/E) ratio of 50. Undoubtedly, a lot of investor expectation still surrounds the Potter books. Given that four of the seven anticipated JK Rowling books have now been published, at current levels, Bloomsbury shares appear to be for die-hard Potter fans only.
Where Next?
• The Fool meets Nigel Newton, Chief Executive of Bloomsbury
• Visit the Bloomsbury discussion board | website