Koninklijke Brill N.V.
Half Year Report 2022 - Unaudited
Leiden, 30 August, 2022
Brill reports strong digitally driven growth in HY 2022, full year growth expected to be lower due to economic situation and weaker sales pipeline
Key Figures (in thousands of euros) | 2022 H1 | 2021 H1 | Change |
Revenue | 23,893 | 19,304 | 23.8% |
Gross profit | 17,120 | 13,925 | 22.9% |
EBITDA | 2,588 | 1,677 | 54.3% |
Acquisition, integration and restructuring costs | 434 | 618 | |
Operating profit | 1,084 | 86 | 1165.0% |
Profit attributable to shareholders of Koninklijke Brill NV | 906 | -42 | 2260.5% |
Earnings per share (EPS) | 0.48 | (0.02) | 2260.5% |
Key Performance Indicators | |||
Organic growth (excluding acquisition and currency effects) | 11.9% | 3.9% | |
EBITDA margin | 10.8% | 8.7% | |
NOTE: The information in this report is based on unaudited interim financial statements.
Highlights
- Revenue up 23.8% compared to HY 2021, including acquisitions and currency effect
- Organic revenue growth 11.9%, driven by our focus on eBook sales
- Strong sales of the Brill Book Archive, launched in Q4 2021
- Journal revenue recovering from last year's operational problems
- Net profit includes V&R acquisition integration costs of EUR 434 thousand
- Revenue growth for full year 2022 to be lower than HY due to worldwide economic and geopolitical developments, timing of major deals and a weaker sales pipeline
- Net profit for the full year expected to be slightly below 2021 due to inflationary pressures and incidental costs
Jasmin Lange, CPO commented:
"The first half of the year saw strong, better than forecast growth in digital products driven by the success of the Brill Book Archive, Evidence Based Acquisition deals and Open Access sales. Supported by currency movements, the results benefited our margin and profit significantly. With the acquisition of Wageningen Academic, we continue our growth path by offering customers research publications of the highest quality and impact on one platform. Given the growing global economic and geopolitical challenges, we expect a slower H2/2022 when compared with the strong performance of H2/2021."
Developments in the first half year
Wageningen Academic Publishers
On April 15, 2022 Brill acquired all shares of Wageningen Academic, a publisher operating worldwide in the field of Life Sciences. Located at the heart of one of the most famous food and agriculture research centers, the imprint publishes seven journals and 30 books per year in areas such as Animal and Veterinary, Food and Health, Agribusiness and Rural Studies, and Agriculture and Environment. The program of Wageningen Academic supplements the animal biology portfolio at Brill and strengthens our market position in high impact research fields.
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Digital Transformation and distribution
Brill continued its program of Digital Transformation by upgrading its ERP system, moving data and applications to the cloud, preparing the move of V&R content to the Brill platform and investing in digital expertise. An improved financial reporting system is operational since Q2. To enhance customer service and internal data quality, Brill expects to move from its main UK distributor to new partners for its worldwide distribution of books and journals during the course of 2023.
Financial review
Revenue development
Revenue growth by publication format was as follows:
Revenue growth by publication format (in thousands of euros) | Revenue H1 | % of Total | Organic |
growth | Growth | ||
Total revenue 2021 | 19,304 | ||
Print books | -479 | -2.5% | -6.7% |
eBooks | 2,624 | 13.6% | 42.6% |
Journals | 59 | 0.3% | 1.1% |
Primary sources | 101 | 0.5% | 13.3% |
Organic revenue 2021 | 21,610 | 11.9% | 11.9% |
Acquisitions | 1,583 | 8.2% | |
Currency | 701 | 3.6% | |
Total revenue 2022 | 23,893 | 19.1% | |
In HY 2022 eBook revenue shows a very strong organic growth of over 40%, driven by the success of the Brill Book Archive, an increase in sales of Evidence Based Acquisitions and eBook collections, and the continuous move from print to online that has accelerated since COVID-19, illustrated by the -6.7% decline in print books. Total book revenues grew organically by 16%.
The journal renewals have performed better than in 2021 with a modest growth of 1.1%.
On April 15, 2022 Brill acquired all shares of Wageningen Academic Publishers B.V. Brill's HY 2022 revenue includes the May-June revenue from this acquisition for an amount of EUR 194 thousand.
On March 1, 2021 Brill acquired all business assets of Vandenhoeck & Ruprecht Verlage. As V&R revenue was included for March-June in HY 2021, in HY 2022 revenue the months January and February from the V&R acquisition are reported as an acquisition effect.
The total revenue grew organically by almost 12%. Due to worldwide economic and geopolitical developments, timing of major deals and the current sales pipeline, we expect this growth to be lower for full year 2022.
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Revenue by region was as follows:
Revenue growth by region (thousands of euros) | Revenue H1 | % of Total | Organic |
growth | Growth | ||
Total revenue 2021 | 19,304 | ||
Western Europe | 386 | 2.0% | 3.8% |
North America | 1,906 | 9.9% | 28.7% |
Asia Pacific | 351 | 1.8% | 23.8% |
Other | -338 | -1.8% | -36.6% |
Organic revenue 2022 | 21,610 | 11.9% | 11.9% |
Acquisitions | 1,583 | 8.2% | |
Currency | 701 | 3.6% | |
Total revenue 2022 | 23,893 | 23.8% | |
Revenues in Western Europe show a relatively modest growth due to decreased print book sales in mainly the DACH countries, reflecting market conditions. North America and APAC revenues increased due to the strong sales in eBooks. Other countries declined because we had some larger one-off deals there in 2021.
Digital revenue as a percentage of overall revenue increased to 59% from 54% in HY 2021.
Cost of goods sold
Our cost of goods sold are under pressure from the high inflation, especially for print products. As the print part of total revenue continued to decrease and we keep focusing on cost savings, Brill managed to keep the gross margin in HY 2022 in line with last year at 72%.
Selling, general and administrative expenses
Excluding the effect of acquisitions and exceptional items, selling, general & administrative expenses increased compared to HY 2021, mainly due to higher expenses for travel and conferences following the lifting of COVID-19 restrictions, as well as expenses incurred for management changes.
Wageningen Academic Publishers contributed EUR 65 thousand to the Group's HY 2022 EBITDA of EUR 2,588 thousand. HY 2022 results of the Group include EUR 434 thousand in acquisition and integration costs that are reported outside of EBITDA.
Balance sheet - Working Capital
The movement in working capital was EUR 2.2 million versus EUR 2.9 million in 2021. Our net cash flow was EUR -1.6 million versus EUR -2.3 million in 2021.
Balance sheet - Liquidity and financing
We financed the acquisition of Wageningen Academic Publishers with a EUR 2.2 million withdrawal from our acquisition facility, to be partly or fully converted into an interest-bearing loan latest in Q2 2024. Until then, this withdrawal is reported under Cash and cash equivalents.
Management update
On July 18 Brill announced that John Martin has been appointed Chief Executive Officer ad interim effective 1 September 2022, to be followed by his appointment as statutory director at an EGM, currently expected to be held in autumn this year. As CEO of Brill, Martin will be responsible for the general management and the future strategic development of Brill. His introduction program is in full swing.
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Risk management
No significant changes occurred in the company's assessment of relevant risks since the publication of the annual report 2021.
Outlook
As outlined in the finance review, the second half year of 2022 will be a challenging period due to the worldwide economic and geopolitical developments, timing of major deals and the current sales pipeline. We expect full year organic growth to end up slightly above our strategic goal of 2-3%. For the change of distribution partner, we expect around EUR 600 thousand in costs to be incurred in 2022 and EUR 300 thousand in 2023. Net profit is expected to be slightly below the 2021 level.
Responsibility statement
The Half Year Report 2022 is an accurate account of assets and liabilities, the financial position and the profit of Koninklijke Brill N.V. and the entities which are included in the consolidation. Also, the Half Year Report is an accurate account of the situation on the balance date, the state of affairs during the first half of the fiscal year of Koninklijke Brill N.V. and that of the entities whose data are included in the Half Year Report. Special attention is paid to investments and to the circumstances on which revenues and profitability depend. Please note that the figures per 30 June 2022 have not been reviewed nor audited by our auditors.
Leiden, 30 August, 2022
The Management Board
Jasmin Lange, Chief Publishing Officer (Jasmin.Lange@brill.com, +31 (0)6 21282145
Wim Dikstaal, Chief Financial Officer (Wim.Dikstaal@brill.com, +31 (0)6 83649491
About Brill
Founded in 1683 in Leiden, the Netherlands, Brill is a leading international academic publisher in the Humanities, Social Sciences, International Law, and Biology. With offices in the Netherlands, Germany, Austria, the USA and Asia, Brill today publishes more than 360 journals, and 2,000 new books and reference works each year as well as a large number of databases and primary source research collections. Commitment to Open Access and the latest publishing technologies are at the core of Brill's mission to make academic research available for the scholarly community worldwide. The company's key customers are academic and research institutions, libraries, and scholars. Brill is a publicly traded company and is listed on Euronext Amsterdam NV. For further information, please visit brill.com.
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Koninklijke Brill NV published this content on 30 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 August 2022 10:50:01 UTC.