Shares digital

Bloomsbury Publishing (BMY) – Finals PTP: £17.9m (£5.2m) Divi: 3.3p (3p)

With 2007 being the year of the last Harry Potter book release most were expecting a bumper uplift in pre-tax profits at the publishing company, which duly obliged with a 244% rise to £17.9 million.

There was some weakness in in US operations where sales dipped by 10.8% to £13.4 million but the performance of its German arm, Berlin Verlag was in stark contrast with sales up 45.1% to £8.5 million. ‘We are now well positioned for the post Harry Potter era. We have reduced overhead costs, are successfully developing new business areas in specialist publishing, and have a strong pipeline of titles,’ says chief executive Nigel Newton who also noted that the first quarter of 2008 has started strongly. Analysts, however, are still concerned about the void Potter will leave, with consensus forecasts tipping its pre-tax profits to drop to £10.4 million in 2008 and £11 million the year after.

The company doubled its cash at the end of the year to £47.6 million and there is a great deal of expectation it will make some more acquisitions to boost its offerings. However, Altium analyst Roddy Davidson believes it should return some of the cash to shareholders if it does not pull off a major acquisition. He says that on a cash adjusted PE of 13.9 times for 2008 it is fully valued and has a target price of 155p, the same price as its current trading level. ‘We struggle to marry the group’s growth prospects with its premium valuation versus other media companies,’ Davidson says.

Shares says: Progress is being made but the Potter franchise is a huge void to fill.

by: Susanna Twidale