Final Results

Bloomsbury Publishing PLC 04 April 2006 4 APRIL 2006 BLOOMSBURY PUBLISHING PLC Preliminary Results for the Year Ended 31 December 2005 â€¢ Turnover increased 29.2% to Â£109.11m (2004, Â£84.45m). â€¢ Pre-tax profit before exceptional gain improved 23.6% to Â£20.13m (2004, Â£16.28m). â€¢ Basic earnings per share before exceptional gain rose 18.6% to 20.30p (2004, 17.12p). â€¢ Final dividend increased 21.1% to 3.0p (2004, 2.478p). Total dividend for the year increased by 20.0% to 3.60p (2004, 3.00p). â€¢ Investment in future titles at the year end up 7.5% at Â£22.41m (2004, Â£20.85m). â€¢ Significant investment in new business initiatives to drive future organic growth. New commissioning editors appointed. Up to Â£15m allocated for advances for new publishing area in music, TV, film and sport. â€¢ International presence now clearly established and operations in US and Germany performing well. â€¢ Good start to current year, in line with the Board's expectations with strong pipeline of new titles. Commenting on the results and prospects for Bloomsbury, Nigel Newton, Chairman, said: 'We achieved much in 2005, building our book list, expanding the number of our authors and improving the performance of our international operations. We have made particularly good progress in positioning the Group for growth in the future. 2006 has got off to a good start, in line with the Board's expectations and with a number of bestsellers on both sides of the Atlantic. Our position as an international publisher is now firmly established and we expect to see further benefits from this and the new areas of publishing that we are entering in the current year and beyond.' For further information, please contact: Tim Spratt, Charles Palmer, Financial Dynamics 020 7831 3113 Sandy Karon, PA to the Chairman, Bloomsbury Publishing Plc 020 7494 6015 Overview The significant publishing achievements of last year allowed us to meet our forecast made to the market this time last year of profit before tax of not less than Â£20.0 million. In recognition of this performance and our good start to the current year, we are raising the total dividend for 2005 by 20% to 3.60p (2004, 3.00p). The launch of Harry Potter and the Half-Blood Prince on July 16th broke all previous sales records both in the UK and in our other territories around the world. As we look to the future, we continue to see new launches for the Harry Potter series. The paperback edition of Harry Potter and the Half-Blood Prince will be launched in 2006, followed by the launch of the seventh book in the series, which is as yet unscheduled, and then the paperback edition of that book approximately twelve months later. In addition, there will be launches of boxed-set editions of seven books in the series when it is complete plus the launch of celebratory editions to coincide with film releases, of which the fifth is scheduled for July 2007. The cloth-bound gift edition of the seven books is also likely to become a major collector's item. In addition, under our joint venture with HNP, we will be releasing further audio editions of Harry Potter in 2006 as the audio backlist moves over to us from the BBC. We therefore envisage at least five more years of a variety of Harry Potter launches before it changes gear into the significant backlist life that awaits it. It will probably constitute one of the most significant backlists in modern publishing history. 2005 was also a successful year for Bloomsbury Paperbacks with bestselling paperback releases of The Two of Us by Sheila Hancock in June and Jonathan Strange & Mr Norrell by Susanna Clarke in September. One of our best paperbacks for the year was a backlist title, The Kite Runner by Khaled Hosseini, which sold more in 2005 than in previous years, and the acceleration of this remarkable book in the marketplace has continued in 2006. The Schott's Miscellany series has been one of the most successful in the Group's history and the challenge was how to transform the three one-off successes into a series. We have succeeded in doing this with the successful launch of Schott's Almanac in November 2005 - a title which will now be an annuity for many years to come with new editions currently scheduled for both 2006 and 2007. In addition we will publish completely localised editions in America and Germany as well as the UK. Finally, 2005 was the year of Berlin. In the two years since we acquired Berlin Verlag, we have turned the company around from losses to an operating profit in 2005 of Â£0.64m (2004, loss of Â£0.50m before re-organisation costs). This has been an important achievement, based on hard work by our colleagues in Berlin, the introduction of some outstanding titles for translation into German from our UK list, publication of novels by Ingo Schulze and Zeruya Shalev, improved cost controls and the benefits of selling Bloomsbury UK's English language titles in Germany. Above all, it is a testament to the benefits of our strategy of having an international publishing operation and cross-selling books across three major markets. We enter 2006 anticipating the paperback edition of Harry Potter and the Half-Blood Prince, being launched to coincide with the Celebration of British Children's Literature at Buckingham Palace on June 25th at the time of Her Majesty the Queen's 80th birthday celebrations. We begin 2006 with the strongest list we have ever assembled, with outstanding new books from a wide variety of authors - both established and new - including Joanna Trollope, A. C. Grayling, William Boyd, William Dalrymple, David Blunkett, Ben Schott, Richard Ford, Patrick McCabe, Margaret Atwood, Jay McInerney, Alexander McCall Smith, Louis Sachar, Patricia Duncker, James Runcie, Bruce Robinson, Philip Reeve, Angie Sage, Louis Baum, Jeanette Winterson, Douglas Coupland, Kamran Nazeer, Edward Said, Kurt Vonnegut, Ronan Bennett, Aminatta Forna, T.C. Boyle, Jon McGregor, Susanna Clarke, Heston Blumenthal, and Hugh Fearnley-Whittingstall. For 2007 and beyond, we have signed new books by David Dimbleby, Rosie Boycott, Germaine Greer, Charlotte Rampling, Justine Picardie, Sarah Raven, Anchee Min, Justin Cartwright, Katie Hickman, Esther Freud, Sophie Dahl and Khaled Hosseini. It was announced today that Gordon Brown, Chancellor of the Exchequer, is to join Bloomsbury with the publication in September of Moving Britain Forward: Selected Speeches, 1997-2006, his political vision for Britain in an age of globalisation. 2006 has started well. We have two of the ten titles selected by the Richard and Judy Book Club - Moondust by Andrew Smith and Empress Orchid by Anchee Min - which has propelled both books into the paperback bestseller lists. Recognising the growing success of books about music, film, TV and sport, and the manner in which these are now promoted through major retail chains, supermarkets and the internet and their extensive media coverage, Bloomsbury will expand in this publishing area in addition to its well-established ones. Following the huge success in 2004 of Sheila Hancock's The Two of Us, about her life with John Thaw, this is a natural development for us. In the schedule now are books by Gary Barlow of Take That, Amir Khan, David Thomson on Nicole Kidman and Dave Marsh on Bruce Springsteen. We believe this development, while sometimes involving higher advances, will have a significant impact, making good use of Bloomsbury's proven ability to grow organically. In 2006 the company has allocated up to Â£15.0m of additional funds for the acquisition of titles for this market. This publishing model offers good organic growth opportunities, and a more attractive risk profile than most of the potential company acquisitions Bloomsbury has considered in the last year. Today sees the unveiling of Bloomsbury's first 24 titles available for electronic download. We firmly believe that the way forward is for publishers to host their own titles for electronic download and are backing this view by making titles available as from today for download from Bloomsbury.com at the paperback prices of those books. Whilst sales are expected to be small initially with the e-book reading devices of the future still in development, we wish to establish our position now in a market that could become very important in the future. Possibly up to 50% of fiction sales may be downloads within ten years, following the development of a popular e-book reader. Two of our first e-books are the current bestsellers Moondust by Andrew Smith and Empress Orchid by Anchee Min plus the novels of Will Self to coincide with their paperback re-launch, all of which are downloadable from Bloomsbury.com/ebooks from today. Financial performance Turnover increased by 29.2% to Â£109.11m (2004, Â£84.45m), reflecting strong performances from our international operations and sales of Harry Potter and the Half-Blood Prince, Jonathan Strange & Mr Norrell, The Two of Us and The Kite Runner. Revenues from the US operations rose 22.7% to Â£11.03m (2004, Â£8.99m), including the first-time contribution of revenues from Walker Publishing Company, Inc. Revenues from Continental Europe, which were generated by Berlin Verlag, increased 40.3% to Â£5.47m (2004, Â£3.90m). Profit before tax and exceptional gain increased 23.6% to Â£20.13m (2004, Â£16.28m). Basic earnings per share before exceptional gain rose by 18.6% to 20.30 pence (2004, 17.12 pence). Diluted earnings per share before exceptional gain increased by 18.6% to 19.93 pence (2004, 16.81 pence). At the end of the year the Group had increased its net cash balances to Â£53.51m (2004, Â£28.74m). We continue to invest in future growth through acquiring new authors and titles. Our strong balance sheet supports this strategy. At December 31st 2005 the Group had under contract 1,062 titles (2004, 978) for future publication, with a gross investment of Â£22.41m (2004, Â£20.85m). After payment of the initial tranches of advances to authors, our liability for future cash payments on these contracted titles at that date was Â£12.05m (2004, Â£11.88m). We continue to pursue strategic acquisitions that fit our strict criteria and complement our core activities. UK Children's The publication of Harry Potter and the Half-Blood Prince was a triumph of logistical planning, ensuring that the book was available at the same time around the world at one minute past midnight BST on July 16th when the book was launched from Edinburgh Castle. First-day sales in the UK broke all records. For the first time, we published in our joint publishing arrangement with HNP the audio editions of Harry Potter and the Half-Blood Prince on CD and cassette. We will also be releasing the audio editions of Harry Potter and the Chamber of Secrets and Harry Potter and the Prisoner of Azkaban in mid-2006. The film of Harry Potter and the Goblet of Fire was released in November and was the highest revenue-grossing film of 2005. The success of both the book and the film confirms that Harry Potter is still a growing worldwide phenomenon. We had a bestseller with Magyk by Angie Sage, the first of a five-book series. The second book in the series, Flyte, has just been published. New business initiatives We continue to build a very strong international children's publication programme with Bloomsbury in New York and Berlin, with books published in all three territories now accounting for approximately 75% of our joint children's lists. The pre-school list in particular shows good potential in this respect with 21 titles in the 2006 publishing programme. One of the strong underlying themes for the list is that the majority of our pre-school books are interactive, with 3D collage art, pull-out tabs and sounds, making them very popular as an aid to a child's learning at an early age. Berlin is publishing the German language editions and Walker Publishing will be publishing the list in the US. We have also sold foreign-language rights in these books to third-party publishers. We are developing heavily branded, young-reader fiction series such as Ruby Rogers by Sue Limb and Araminta Spook by Angie Sage. And we also have Jeanette Winterson's children's novel, Tanglewreck, for which 12 foreign language deals have been completed prior to publication. The book will be co-published in the UK, US and Germany. Adult There have been a number of changes in the book industry that have had an impact on the type of books we acquire and how they are sold in the market. These are characterised by the rise of lead titles and the ability to sell them in bigger numbers than before. The rise of the supermarkets and the dramatic effect of bookshop promotions, particularly those linked to media promotions, are all contributory factors. 2005 was a very strong year for Bloomsbury's paperback list. We launched the paperback of Sheila Hancock's The Two of Us, which made the non-fiction paperback bestseller list, and Susanna Clarke's international bestseller Jonathan Strange & Mr Norrell, which also spent many weeks on the bestseller list. Other paperback bestsellers included Khaled Hosseini's The Kite Runner, which was our top-selling backlist paperback in 2005, The Promise of Happiness by Justin Cartwright, Frederick Taylor's Dresden and Anchee Min's Empress Orchid. In hardback, notable successes include The Icarus Girl by Helen Oyeyemi, which has rights deals in 18 countries, Joanna Briscoe's Sleep With Me and John Irving's latest novel, Until I Find You. It was a strong year for Bloomsbury non-fiction with notable successes, including The Hungry Years by William Leith, Olivier by Terry Coleman, the The Naming of Names by Anna Pavord, author of The Tulip, and the launch of Ben Schott's major new annual, Schott's Almanac, which went straight into the bestseller list. The non-fiction list has been significantly strengthened by the addition of Publishing Director Michael Fishwick, who joined us from HarperCollins in August 2005. He has already signed William Dalrymple, whose White Mughals is an enduring bestseller and whose next book, The Last Mughal, will launch a series of four books by him from Bloomsbury starting this autumn. In illustrated books, we have appointed the editor Richard Atkinson from Hodder and Stoughton as we expand into the illustrated, television tie-in and cookery market. This is marked by Hugh Fearnley-Whittingstall joining us with a multi-book contract. In addition to the success of Empress Orchid and Moondust, we have also begun the year with a No. 1 bestseller, the new Joanna Trollope novel, Second Honeymoon. This year has perhaps the most distinguished fiction list yet, with the addition of William Boyd with his new novel, Restless, the twice Booker-shortlisted author Patrick McCabe and the Pulitzer prize-winning novelist Richard Ford. On top of these titles, we have new books by bestselling Bloomsbury authors Jay McInerney, Margaret Atwood, Jon McGregor, Ronan Bennett and Susanna Clarke. New business initiatives Bloomsbury will continue to expand its editorial team through hiring top commissioning editors in particular fields and buying aggressively and competitively in those areas that have proven particularly successful in the current marketplace. In addition to hiring new commissioning editors, Bloomsbury has been acquiring books that reflect the current trend in non-fiction, including the autobiographies of the boxer Amir Khan and the singer and songwriter Gary Barlow from Take That. Reference 2005 saw steady growth of A&C Black sales, both from new reference and educational publications and from new editions of backlist titles such as Black's Medical Dictionary, published in its 42nd edition, the Bloomsbury Concise Dictionary 2nd edition and Reeds Nautical Almanac, acquired in 2004 and now in its second edition with A&C Black. We continued to develop the Whitaker's brand with the launch of Whitaker's World of Facts in September, which was extremely successful. A new edition of this popular family reference book will be published in 2006, bringing the brand to a broader and younger audience. Other significant new developments on the reference list included the launch of a new annual, The Sunday Times Rich List, and the publication of Who's Who as an online and mixed-media product available to individual subscribers. The educational list had a strong year, with sales to schools significantly increased. We have also expanded our bestselling Music Express series into the secondary-schools market, and we are already seeing a notable uplift in sales. Other publishing highlights included two collaborative publications with Wisden: Wisden Collection Volume 2 and Wisden, The Ashes in Focus, a photographic celebration of England's victory against Australia in the summer Test Series of 2005. New books for 2006 include The Ultimate Teen Book Guide, which was published in February, attracting excellent review coverage and selling its entire first print-run in the month of publication. In addition, there is the forthcoming re-launch of the long established Know the Game series, which includes popular sports, such as athletics, soccer, tennis and boxing. We will publish new titles in collaboration with the RSPB, including The Secret Lives of British Birds and a range of new business books, led by the 2nd edition of Business: The Ultimate Resource - a management library in one book - which sold over 100,000 copies in its first edition. New business initiatives In April A&C Black begins a new collaboration with the book publishing arm of the Guardian newspaper. A&C Black will be selling and distributing the Guardian's reference list, including the bestselling Media Directory. Going forward, the two companies will be developing joint publishing projects under the Guardian imprint. International publishing Bloomsbury USA and Walker Publishing Company, Inc. In Bloomsbury USA Jonathan Strange & Mr Norrell was released in paperback and was our top US selling title of the year, Walker Publishing had a major success with Kakuro Challenge, which is building to be the successor to Soduku. The integration of Walker has been completed. We combined sales and marketing departments, publicity, production and design, while keeping the editorial departments for all four divisions distinct. A CFO has been appointed to head up the US finance function as the operation prepares for increased organic growth. Paperback rights are now being retained on all Walker titles for publication by us. Prior to its acquisition by us, these were sold off to third-party licencees to fund the working capital of what was a relatively small business. The paperbacks are due to be published in 2006. We will be using our US distributor's large sales force for new mass-market editions of a selection of our titles including Jonathan Strange & Mr Norrell and Faerie Wars, beginning in the autumn of 2006. Exporting titles from the US has in previous years not been exploited. We are now using a third-party sales force and we plan to build this into a significant revenue stream over time. 2006 is expected to be a strong year for the operation. Already in the Children's division we have had two New York Times bestsellers with Princess Academy and Nanny McPhee, and we have to come books by Alexander McCall Smith, E.D. Baker and Herbie Brennan. Berlin Verlag 2005 was an excellent year for Berlin Verlag as the company made a good profit after two years of post-acquisition investment and integration. All four of Berlin's imprints showed improved performances. The new Bloomsbury Berlin imprint continued to thrive as Schotts Sammelsurium remained in the Der Spiegel bestseller list for 56 weeks, joined by the second Schott miscellany, Schotts Sammelsurium Essen & Trinken (Food and Drink Miscellany), on its publication in September. Other successes included Alina Reyes's novel, Die Siebte Nacht (The Seventh Night), which hit the bestseller list in spring after it was serialised in the BILD-Zeitung. Berlin Verlag published long-awaited new novels by two of its most important authors. Zeruya Shalev's Spate Familie (Late Family) was published in September and Ingo Schulze's third book Neue Leben (New Lives) appeared in October. Both titles dominated the literary press throughout the autumn. The paperback division, Berlin Verlag Taschenbuch, delivered an improved performance over 2004. Several backlist titles exceeded expectations, especially Khaled Hosseini's Der Drachenlaufer (The Kite Runner) and Zeruya Shalev's Mann und Frau (Husband and Wife). The paperback edition of our 2004 hardback success, Jonathan Strange & Mr. Norrell, was published in the autumn and sold strongly, continuing to backlist in 2006. The arrival of a new editor for the paperback imprint in the autumn will lead to the future development of this list. 2005 was also the first full year in which Berlin was responsible for selling Bloomsbury UK's English-language titles in Germany, Austria and Switzerland. Bloomsbury's English language edition of Harry Potter and the Half-Blood Prince was number one in the Der Spiegel bestseller list for several weeks, producing significant revenues. Our strategy of enabling German booksellers to order Bloomsbury UK's English books from our German warehouse is bearing fruit, as they can more readily order small quantities and settle in Euros. In addition to growing revenues, the focus on the business in 2005 was to continue reducing the cost base. In January 2005 Berlin's distribution moved to a more cost effective and efficient distributor, and we also renegotiated terms with our main printers and other suppliers, which played a significant role in improving the company's performance. Publications scheduled for 2006 include new titles by key authors, including Peter Esterhazy, Elke Schmitter, Ben Schott, Joanna Trollope, and the launch of a new children's non-fiction list. Following our successes in 2005, Berlin anticipates further significant growth in the German book market. Since 2003, the company's revenue growth has consistently grown, and we are confident that it will continue to do so. Dividend The directors are recommending a final dividend of 3.0 pence per share (2004, 2.478 pence per share) making a total of 3.6 pence per share (2004, 3.0 pence per share) for the year. This represents a 20.0% increase in the total dividend for the year which is in line with our progressive dividend policy to move towards a lower level of dividend cover over the medium term, and is underpinned by the company's rise in earnings. The final dividend will be payable on July 6th 2006 to Ordinary Shareholders on the register at the close of business on May 26th 2006. Management and Staff In April 2005 Richard Cordeschi was appointed Company Secretary for the Group. He was previously Company Secretary to Mansell Plc. In November 2005 Jeremy Wilson was appointed as Non-Executive Director. Jeremy is the Vice Chairman, Business Banking at Barclays Bank PLC. Today, Paul Scherer retires as a Non-Executive Director, having made a significant contribution to Bloomsbury. I am profoundly grateful to him for all that he has done for the company. Current Trading and Prospects 2006 has got off to a good start, in line with the Board's expectations and with a number of bestsellers on both sides of the Atlantic. Our position as an international publisher is now firmly established, and we expect to see further benefits from this and the new areas of publishing that we are entering in the current year and beyond, as well as from our exceptionally strong list for 2006. Nigel Newton Chairman 3rd April 2006 Financial Review Results Turnover for the Group increased 29.2% to Â£109.11m (2004, Â£84.45m). Bloomsbury's primary segmental analysis is by geographic breakdown, which follows our international publishing strategy. Turnover in the UK increased 29.4% to Â£92.62m (2004, Â£71.56m). In the US, turnover increased 22.7% to Â£11.03m (2004, Â£8.99m), which included the first-time contribution of revenues from Walker Publishing Company, Inc. of Â£3.9m. Bloomsbury USA's turnover was down by Â£1.86m due to the fact that 2004 benefited from the strong success of Jonathan Strange & Mr Norrell published in hardback last year. For Continental Europe, revenues, which were generated by Berlin Verlag, increased 40.3% to Â£5.47m (2004, Â£3.90m). The Group's secondary segmental disclosure is by division, which is split into three main operating areas: Children's, Adult and Reference publishing. For 2005 the breakdown of turnover between the three areas was: Children's 63% (2004, 48%), Adult 25% (2004, 36%) and Reference 12% (2004, 16%). Revenues in the Children's division increased 69.9% to Â£69.01m (2004, Â£40.62m) primarily on the back of the publication of Harry Potter and the Half-Blood Prince. In the Adult division, revenues decreased 8.8% to Â£27.47m (2004, Â£30.13m). In 2004 we had the release in hardback of two major bestsellers, The Two of Us and Jonathan Strange & Mr Norrell. Both were released as lower price point paperbacks in 2005. Revenues in the Reference division decreased 7.8% to Â£12.63m (2004, Â£13.70m) due to the phasing of titles in the publishing programme. Gross profit increased 31.8% to Â£55.59m (2004, Â£42.18m). Gross profit margin increased to 51.0% (2004, 50.0%) due to the economies of scale achieved from the printing of Harry Potter and the Half-Blood Prince. Marketing and distribution costs increased by 59.1% to Â£18.11m (2004, Â£11.38m). The increase included the first-time marketing costs from Walker Publishing Company, Inc. and the costs associated with the publication of Harry Potter and the Half-Blood Prince. Administrative expenses increased 17.9% to Â£18.68m (2004, Â£15.85m) which was primarily as a result of the inclusion for the first time of the overheads attributable to the Walker acquisition. Profit before exceptional items and investment income increased 25.8% to Â£18.81m (2004, Â£14.95m). Investment income reduced by 16.8% to Â£1.39m (2004, Â£1.67m) as a result of lower average cash balances during the year. Finance costs were reduced to Â£0.07m (2004, Â£0.34m) due to the redemption of the A&C Black loan notes. The loan notes have now been fully redeemed. In 2004 we had a one-off interest charge of Â£0.3m relating to prior years' corporation tax. The effective corporation tax rate for the year is 27.2% (2004, 23.7%) and takes account of share options exercised during the year and the recognition of prior period Berlin Verlag tax losses as a deferred tax asset. This represents Berlin Verlag's tax losses, which we expect will be utilised in the foreseeable future. The 2004 tax rate benefited from inclusion of the gain on disposal of the freehold distribution centre in A&C Black, which had no capital gains tax liability due to indexation and other allowances, and share options exercised during the year. In addition, the tax charge for 2004 was net of a deferred tax credit of Â£0.75m, which included Â£0.60m in respect of tax losses carried forward in Berlin Verlag. Basic earnings per share before exceptional gain increased by 18.6% to 20.30 pence (2004, 17.12 pence). Diluted earnings per share before exceptional gain increased by 18.6% to 19.93 pence (2004, 16.81 pence). Balance sheet Non current assets Property, plant and equipment increased to Â£1.62m (2004, Â£0.78m) reflecting the cost of refurbishment of the Group's offices in Soho Square. These costs are being amortised over the remaining life of the property leases. Goodwill has increased to Â£15.16m (2004, Â£13.87m) due to the deferred consideration on the acquisition of Berlin Verlag and fair value adjustments relating to the acquisition of Walker Publishing Company, Inc. Current assets Inventories increased 30.3% to Â£15.13m (2004, Â£11.61m), of which work in progress increased 14.3% to Â£3.84m (2004, Â£3.36m) due to the increase in number and timing of titles at the work in progress stage. Stocks of finished goods increased 38.1% to Â£11.11m (2004, Â£8.04m), due to a combination of the stock holding of an increased number of titles published by the Group during the year which contributed to the increase in turnover, and the timing of the release of titles at the end of the financial year. Trade and other receivables increased 14.7% to Â£49.87m (2004, Â£43.47m), of which trade debtors increased marginally to Â£21.27m (2004, Â£21.25m). Within trade and other receivables, prepayments and accrued income increased 28.7% to Â£26.59m (2004, Â£20.66m) reflecting the increase in investment in titles across all three divisions. Equity and liabilities At 31 December 2005 total equity stood at Â£88.78m (2004, Â£73.10m). The increase was principally due to retained earnings of Â£12.43m (2004, Â£11.18m) and share options exercised during the year. Current liabilities increased 79.7% to Â£46.72m (2004, Â£26.00m). Trade creditors decreased by 6.0% to Â£5.44m (2004, Â£5.79m), which was attributable to the timing of supplier payments at the year end. Accruals and deferred income, which is included in trade and other payables, increased to Â£36.36m (2004, Â£15.33m). Accruals and deferred income include royalty payments to authors, which vary from year to year depending on turnover and the authors' royalty rates which typically escalate at thresholds triggered as volume sales increase. The Group published the highest selling book in its history in the year under review. The royalties due to authors, accrued at 31st December were paid on 31st March 2006. The remaining Â£0.38m of the Guaranteed Loan Notes 2005, relating to the A&C Black acquisition in 2000, were redeemed during the year. Corporation tax payable decreased to Â£2.58m (2004, Â£2.76m) primarily due to allowances for share options exercised during the year. Berlin Verlag Berlin made its first operating profit in 2005. Turnover for the company increased 40.3% to Â£5.47m (2004, Â£3.90m). All four lists within the operation, including Bloomsbury Berlin and the Bloomsbury Kinder list, showed considerable improvement over 2004. The company, and indeed the Group, has benefited from the German translation rights retained by Bloomsbury and published through Berlin. The operation has continued to manage its cost base well with trading agreements reviewed with key suppliers including its distribution arrangements. Operating profit for the year was Â£0.64m (2004, loss of Â£0.50m before re-organisation costs). Bloomsbury USA The integration of Walker Publishing Company, Inc. was completed during the year. All back office service functions have now been consolidated whilst leaving the four editorial divisions to operate separately. Turnover for the combined operation was Â£11.03m (2004, Â£8.99m). The acquisition of Walker has provided the infrastructure to grow the US business, and the additional sales volume from the Walker business has given us the critical mass to start agreeing new trading agreements with key suppliers. This will be ongoing in 2006. Operating profit for the year for the combined operation was Â£0.48m (2004, loss of Â£0.54m). Cash Flow Â£31.07m of cash was generated from operating activities during the year (2004, Â£4.37m). Cash generation was particularly strong for the UK with the publication of Harry Potter and the Half-Blood Prince. Corporation tax paid during the year was Â£5.90m (2004, Â£3.71m). Included in the purchase of property, plant and equipment cost of Â£1.268m (2004, Â£0.21m) is the refurbishment cost of the Group's offices in Soho Square. The bulk of the costs have been incurred in 2005 but there will be some ongoing costs to be recognised in 2006. During the year Â£1.80m (2004, Â£1.61m) was received from the exercise of share options, and Â£2.22m of dividends were paid (2004, Â£1.56m). Future investment and strategy Investment in authors and acquiring world rights to new titles is still at the forefront of our strategy for growth. Berlin Verlag's success is a good illustration of the benefits that can be derived from acquiring world rights and exploiting them across the Group. Bloomsbury continues to generate good cashflow from its publishing operations that is being re-invested in new titles across our markets. In particular, we have allocated up to Â£15m of funds to invest in growing our non-fiction lists across the Group. We are reviewing other genres of publishing to evaluate their potential for growth. Corporate acquisitions remain an important part of our growth strategy. We have reviewed many potential acquisitions to date, applying strict criteria to ensure any targets complement the existing business and provide future growth opportunities for Bloomsbury. We are in a good position with a strong balance sheet and are well placed to fund any acquisitions that meet these criteria. Colin Adams ACA Group Finance Director 3rd April 2006 CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2005 Notes Year Year ended ended 31 December 31 December 2005 2004 Â£'000 Â£'000 Revenue 2 109,108 84,449 Cost of sales (53,514) (42,270) Gross profit 55,594 42,179 Marketing and distribution costs (18,107) (11,377) Administrative expenses (18,681) (15,854) Profit before exceptional items and investment income 18,806 14,948 Profit on sale of fixed assets in continuing - 1,076 operations Loss on sale of publishing assets - (77) Reorganisation costs in continuing operations - (582) Profit before investment income 18,806 15,365 Investment income 1,392 1,669 Finance costs (71) (337) Profit before taxation 20,127 16,697 Income tax expense 3 (5,481) (3,956) Profit for the year 14,646 12,741 Basic earnings per share 5 20.30p 17.98p Diluted earnings per share 5 19.93p 17.66p CONSOLIDATED BALANCE SHEET at 31 December 2005 2005 2004 Â£'000 Â£'000 ASSETS Non-current assets Property, plant and equipment 1,615 776 Intangible assets 15,511 14,226 Total non-current assets 17,126 15,002 Current assets Inventories 15,129 11,614 Trade and other receivables 49,868 43,468 Cash and cash equivalents 53,511 29,120 Total current assets 118,508 84,202 TOTAL ASSETS 135,634 99,204 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Share capital 911 894 Share premium 38,123 35,763 Capital redemption reserve 20 20 Share-based payment reserve 453 217 Translation reserve 642 2 Retained earnings 48,634 36,206 Total equity 88,783 73,102 Non-current liabilities Employee benefits 130 102 Total non-current liabilities 130 102 Current liabilities Trade and other payables 44,137 22,792 Short-term borrowings - 445 Current tax payable 2,584 2,763 Total current liabilities 46,721 26,000 Total liabilities 46,851 26,102 TOTAL EQUITY AND LIABILITIES 135,634 99,204 STATEMENT OF CHANGES IN EQUITY The group Share Share Capital Share-based premium redemption payment Translation Retained Total capital reserve reserve reserve earnings Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balances at 1 January 2004 876 33,967 20 65 - 25,023 59,951 Exchange differences on - - - - 2 - 2 translating foreign operations Profit for the year - - - 152 - 12,741 12,893 Dividends - - - - - (1,558) (1,558) Share issues 18 1,796 - - - - 1,814 Balances at 31 December 894 35,763 20 217 2 36,206 73,102 2004 Exchange differences on - - - - 640 - 640 translating foreign operations Profit for the year - - - 236 - 14,646 14,882 Dividends - - - - - (2,218) (2,218) Share issues 17 2,360 - - - - 2,377 Balances at 31 December 911 38,123 20 453 642 48,634 88,783 2005 CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December 2005 Year Year ended ended 31 December 31 December 2004 2005 Â£'000 Â£'000 Cash flows from operating activities Net profit before tax 20,127 16,697 Adjustments for: Depreciation of tangible fixed assets 400 323 Amortisation of publishing relationships 35 - Profit on sale of property, plant and equipment (3) (1,076) Share-based payment charges 236 152 Investment income (1,392) (1,669) Finance costs 71 337 19,474 14,764 (Increase) / decrease in inventories (3,442) 1,162 Increase in trade and other receivables (6,353) (10,955) Increase / (decrease) in trade and other payables 21,394 (605) Cash generated from operations 31,073 4,366 Income taxes paid (5,898) (3,707) Net cash inflow from operating activities 25,175 659 Cash flows from investing activities Purchase of property, plant and equipment (1,268) (210) Proceeds from sale of property, plant and equipment 33 1,412 Purchase of subsidiaries (33) (3,296) Sale of publishing assets - 111 Interest received 1,392 1,669 Cash acquired with subsidiaries - 50 Net cash generated from / (used in) investing activities 124 (264) Cash flows from financing activities Share options exercised 1,796 1,607 Equity dividends paid (2,218) (1,558) Interest paid (118) (32) Repayment of loans (379) (764) Net cash used in financing activities (919) (747) Net increase / (decrease) in cash and cash equivalents 24,380 (352) Cash and cash equivalents at beginning of period 29,120 29,472 Unrealised exchange gain on cash and cash equivalents 11 - Cash and cash equivalents at end of period 53,511 29,120 NOTES 1. The above financial information does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The above figures for the year ended 31 December 2005 are an abridged version of the Company's audited accounts which will be reported on by the Company's auditors before dispatch to the shareholders and filing with the Registrar of Companies. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU). The accounting policies applied in 2005 are consistent with those applied in the Financial Statements for 2004 restated in accordance with IFRS by the company on 19th August 2005. The statutory accounts for the year ended 31st December 2004 have been lodged with the Registrar of Companies. These accounts received an audit report which was unqualified and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying their report. 2. Segmental analysis Geographical segments The Group considers that, as the main thrust of its growth is to develop its international publishing strategy, the primary segmental reporting should be based on geographical segments. The analysis by geographical segment is shown below. Year ended 31 December 2005 United North Continental Eliminations Total Kingdom America Europe Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Revenue External sales 92,616 11,027 5,465 - 109,108 Inter-segment sales * 199 - 594 (793) - Total revenue 92,815 11,027 6,059 (793) 109,108 Result Segment result 17,856 478 642 - 18,976 Unallocated central costs - - - (170) (170) Operating profit 17,856 478 642 (170) 18,806 Investment income 1,877 - - (485) 1,392 Finance costs (135) (211) (210) 485 (71) Profit before taxation 19,598 267 432 (170) 20,127 Income tax expense (5,567) (197) 283 - (5,481) Profit for the year 14,031 70 715 (170) 14,646 Other Information Capital additions 1,250 13 5 - 1,268 Depreciation and 383 42 10 - 435 amortisation Profit / (loss) on disposal of fixed assets 4 - (1) - 3 Balance Sheet ASSETS Segment assets 124,564 17,866 8,541 - 150,971 Unallocated corporate assets - - - (15,337) (15,337) Total assets 124,564 17,866 8,541 (15,337) 135,634 LIABILITIES Segment liabilities 43,984 11,927 6,277 - 62,188 Unallocated corporate - - - (15,337) (15,337) liabilities Total liabilities 43,984 11,927 6,277 (15,337) 46,851 * Inter-segment sales are charged at prevailing market rates. NOTES TO THE ACCOUNTS 2. Segmental analysis (continued) Year ended 31 December 2004 United North Continental Eliminations Total Kingdom America Europe Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Revenue External sales 71,564 8,985 3,900 - 84,449 Inter-segment sales - - - - - Total revenue 71,564 8,985 3,900 - 84,449 Result Segment result 16,899 (543) (1,405) - 14,951 Unallocated central costs - - - (3) (3) Operating profit 16,899 (543) (1,405) (3) 14,948 Profit on sale of fixed 1,076 - - - 1,076 assets in continuing operations Loss on sale of publishing (77) - - - (77) assets Reorganisation costs in (582) - - - (582) continuing operations Investment income 1,838 - - (169) 1,669 Finance costs (420) - (86) 169 (337) Profit before taxation 18,734 (543) (1,491) (3) 16,697 Income tax expense (4,556) - 600 - (3,956) Profit for the year 14,178 (543) (891) (3) 12,741 Other Information Capital additions 203 - 7 - 210 Depreciation and 314 - 9 - 323 amortisation Balance Sheet ASSETS Segment assets 86,212 12,587 5,840 - 104,639 Unallocated corporate - - - (5,435) (5,435) assets Total assets 86,212 12,587 5,840 (5,435) 99,204 LIABILITIES Segment liabilities 24,717 1,889 4,931 - 31,537 Unallocated corporate - - - (5,435) (5,435) liabilities Total liabilities 24,717 1,889 4,931 (5,435) 26,102 3. Taxation (a) Tax charge for the year 2005 2004 Â£'000 Â£'000 Based on the profit for the year: Corporation tax at 30% 5,579 4,807 Over provision in respect of prior years (8) (54) Overseas taxation - current year 386 - 5,957 4,753 Deferred tax -UK (45) (197) -Overseas (431) (600) 5,481 3,956 (b) Factors affecting tax charge for the year The tax assessed for the year is different from the standard rate of corporation tax in the UK (30%). The differences are explained below: 2005 2004 Â£'000 Â£'000 Profit on ordinary activities before tax 20,127 16,697 Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% 6,038 5,009 Effects of: Expenses not deductible for tax purposes 412 165 Difference between depreciation and capital allowances 76 87 Expenses deductible for tax purposes in different periods 61 - Utilisation of tax losses (234) - Losses for the year in subsidiary company not utilised 79 564 Corporation tax relief on share options exercised (604) (575) Difference between profit on disposal of freehold property and taxable gain - (324) Different rate of tax on overseas results 137 (119) Adjustment to tax charge in respect of previous periods (8) (54) Current tax charge for the year 5,957 4,753 4. Dividends A dividend of 2.478p per share (Â£1,773,000) was paid to the equity shareholders on 7 July 2005, being the amount proposed by the directors, and subsequently approved by the shareholders at the Annual General Meeting for the year ended 31 December 2004. For the current year On 18 November 2005 an interim dividend of 0.600p per share (Â£445,000) was paid to the equity holders (2004: 0.522p per share, Â£383,000). The directors propose that a dividend of 3.0p per share will be paid to the equity holders on 6 July 2006. Based on the number of shares currently in issue, the final dividend will be Â£2,186,000 (2004, Â£1,773,000). This dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. 5. Earnings per share The basic earnings per share has been calculated by reference to earnings of Â£14,646,000 (2004, Â£12,741,000) and a weighted average number of Ordinary Shares in issue of 72,134,014 (2004, 70,841,627). The diluted earnings per share has been calculated by reference to a weighted average number of Ordinary Shares in issue of 73,493,581 (2004, 72,135,053), which takes account of share options and awards under the Group's Performance Share Plan. The reconciliation between the weighted average number of shares for the basic earnings per share and the diluted earnings per share is as follows: 2005 2004 Number Number Weighted average number of shares for basic earnings per share 72,134,014 70,841,627 Dilutive effect of share options and awards under the Group's performance share plan 1,359,567 1,293,426 Weighted average number of shares for diluted earnings per share 73,493,581 72,135,053 The earnings per share before exceptional gain are shown below. 2005 2004 Basic earnings per share before exceptional gain 20.30p 17.12p Diluted earnings per share before exceptional 19.93p 16.81p gain The reconciliation between earnings before and after exceptional gain is as follows: 2005 2004 Â£'000 Â£'000 Earnings after exceptional gain 14,646 12,741 Exceptional gain (net) - (417) Tax relief on exceptional costs - (198) Earnings before exceptional gain 14,646 12,126 6. Annual General Meeting The Annual General Meeting will be held at 12 noon on Thursday 29 June 2006 at 36 Soho Square, London W1D 3QY. 7. Report and Accounts Copies of the Report and Accounts will be circulated to shareholders shortly and may be obtained after the posting date from the Company Secretary, Bloomsbury Publishing Plc, 36 Soho Square, London W1D 3QY. This information is provided by RNS The company news service from the London Stock Exchange END FR SSSEFDSMSEIL

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