2 015R REP TOANN LUA

2 3

Notice of meeting

Notice is hereby given that the Annual General Meeting of Lion Hudson plc will be held at Wilkinson House, Jordan Hill, Oxford, OX2 8DR on 30 September 2015 at 10:30 a.m. for the following purposes:

1. To receive and adopt the financial statements for the year ended 31 March 2015 together with the reports of the directors and auditors

2. To re-elect the following director: Caroline Gregory

3. To re-elect the following director: Andrew Hodder-Williams

4. To elect the following director: Nicholas Gray

5. To tender for auditors to the company

6. To authorize the directors to fix remuneration

7. To elect new chairman: Nicholas Gray

By Order of the Board

C. Gregory

Secretary

Registered office

Wilkinson House, Jordan Hill, Oxford OX2 8DR

31st August 2015

ProxiesA member of the company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his or her stead. A proxy need not also be a member.

Documents available for inspection The following documents are available for inspection at the offices of Lion Hudson plc, Oxford, during normal business hours from the date of this notice until the date of the meeting:

1. A statement of the interests of directors and their families in the share capital of the company

2. Copies of service contracts of the directors of the company

The 2015 Annual Report can be found on the company website: www.lionhudson.com

Company information

DIRECTORS

Nicholas Jones (Managing Director) is responsible for international sales, including co-editions and rights. He was previously Managing Director of Angus Hudson Ltd. Having held senior management positions at Lonrho and divisional board positions at Maxwell Communications Corporation, he led the successful management buyout of Angus Hudson Ltd from MCC in 1989.

Alice Lawhead (Non-Executive Director) has had a varied career in marketing, fundraising, and training at Director level in a range of commercial and not-for-profit organizations. For many years she has acted as editor and manager for her husband, the historical fantasy writer Stephen Lawhead. She is the author or joint author of six books.

Roy K. McCloughry (Chairman and Non-Executive Director). Originally an economist, he has been involved in writing, research, and lecturing on Christian approaches to social issues for more than thirty years. He has published fourteen books and is Vice-President of the charity Livability.

Suzanne Wilson-Higgins (Deputy Managing Director, EU Sales and Marketing Director) has over twenty years’ experience in the UK publishing industry. She has focused on business development, sales, and marketing, with experience in bookselling, print-on-demand, and ebooks. As a director of Ingram’s Lightning Source UK Ltd, she launched print-on-demand and ebook services to the UK market and built them up over a decade. Previously she held senior management positions at B.H. Blackwell Ltd and at subsidiaries of Reed–Elsevier plc.

Andrew Hodder-Williams (Publishing Director) began his career at Lion Publishing, then worked at Hodder & Stoughton and Hodder Headline. Since gaining an MBA, he has worked as a consultant to the publishing and telecoms sectors, including KPMG Consulting and Atos.

Caroline Gregory (Finance Director/Company Secretary) has over thirty years’ experience within accounting and finance, having worked within the retail and charitable sectors, and held senior roles within the timber trade sector.

Nicholas Gray (Non-Executive Director) has over forty years’ experience as a Christian publisher and bookseller in the UK with Wm Collins, Zondervan, and Marshall Pickering, and most recently as founder-chairman of R L Allan, which publishes fine Bibles. He is a former Christian Bookseller of the Year. He currently serves on the board of the Oswald Chambers Publications Association, is a trustee of Media Associates International, and was formerly on the council of The Booksellers Association.

Company number 01051118

Registered office Wilkinson House Jordan Hill Oxford OX2 8DR Auditors Rayner Essex LLP Faulkner House Victoria Street St Albans Herts AL1 3SE

Bankers HSBC Plc – Oxford Thames Valley Commercial Centre Midland House, Seacourt West Way Botley Oxford OX2 0PL

Secretary Caroline Gregory

4 5

on Nativity Craft Book, alongside the Lion Book of Christmas Poems, Steve Eggleton’s innovative Brother Egbert’s Christmas, and Tiny Tots Christmas with its companion Tiny Tots Easter following.

Religious occasions such as baptism and dedication continue to be a key part of Lion Children’s portfolio with A Gift for Baby’s Christening, A Gift for Baby’s Dedication, and the maxi edition of My Baptism Book released during the year.

Monarch BooksMonarch seeks to encourage, inform, and build up the Christian church with a wide range of books that touch on diverse interests and aspects of the Christian life.

We published thirty-three titles under the Monarch imprint in the year to March 2015, of which six were devotional: an increasing part of our output, and very viable. Particular highlights were the hugely popular Choose Life by Simon Guillebaud; Love So Amazing by Pam Rhodes; and the paperback edition of

John Stott’s splendid Through the Bible Through the Year.

We also published seven volumes in the field of apologetics, including When Faith Gets Shaken, by Patrick Regan, and John Lennox’s magisterial book on Daniel, Against the Flow,

which reprinted before publication and is now in its fifth printing.

The valuable relationship with Spring Harvest continues, notably with Cris Rogers’s original and beautiful Immeasurably More, the Spring Harvest theme book. The prize for most original title – which has provoked a wave of interest – goes to The Introvert Charismatic,

by Mark Tanner. In terms of sheer encouragement we recommend Too Many to Jail by Mark Bradley, on the burgeoning church in Iran.

Chairman’s Report 2015Lion Hudson had another good year of trading despite many challenges. We also won, or were nominated for, a number of awards. We continue to have an enviable reputation as the UK’s largest independent publisher of Christian books for readers around the world.

HighlightsThe company was named CRT Publisher of the Year

in 2014, and winner of Children’s Book of the Year 2014 with the Lion Bible to Keep For Ever.

It was also shortlisted for awards in 2015:

• Biography: Tails I Lose by Justyn Rees Larcombe

• Two Children’s nominations: The Lion Nursery Bible and the Candle Day by Day Bible

• Devotional: Choose Life by Simon Guillebaud

• Reference: the Candle Bible Handbook

Candle BooksCandle Books published a wide and varied range of titles throughout the year, combining innovative style and quality with strong faith-based content. With forty-five titles publishing in the year, the team has been in full flow.

We conitnued the learn and play theme throughout the list by introducing a wide variety of attractively priced formats, from pull-out tab books to first jigsaws, pop-out

books, lift-the-flap, and Bible dominoes.

Candle is renowned for its resource material. The Candle Pop-Up Bible Atlas, an interactive resource for younger children, was published in April 2014 and has been well received in both home and international markets.

This year also saw the introduction of the first two titles in the Would You Like to Know series – Would You Like to Know The Bible? and Would You Like to Know How to Pray? – with plans for this

brand to be expanded in the future.

We also published the Candle Bible for Toddlers anniversary gift edition this year, alongside reformats of the well-established and popular My Very First Prayers, My Very First Bible, and the combined My

Very First Bible and Prayers.

Publications for the Christmas season

included The Christmas Journey

Storybook and Play Scenes, complete with

play mat, pop-up scenes, and character pieces. Christmas

Dominoes, Christmas Sticker Scenes, Pull-Out Christmas, My First Story of Christmas, and My Little Story of Christmas were new products, but there are many Candle favourites that continue to sell every year.

Our Father and The Lord is my Shepherd were two popular gift editions published in the year, following on from Blessings for Little Girls and Prayers for Little Girls. We also published Candle Prayers for Kids as a companion title to Candle Bible for Kids, with expansion of this series planned for the future.

Lion Children’s BooksThe Lion Children’s list is built on the popularity of its children’s Bibles, and these have continued to be successful throughout the year.

We released the mini editions of The Lion First Bible and The Lion First Book of Prayers in a slipcase edition for the first time, and My Very First Bible Stories were launched in a Little Library edition, reinforcing the strength of these key Lion brands.

It is always important to refresh our range of children’s Bibles. During the year we published The Lion Bible to Keep For Ever, which won the CRT award for Children’s Book of the Year and

established itself as a favourite for the 7–9 age range. The Lion Picture Bible and The Lion Nursery Bible, the latter part of the Lion Nursery range, which also includes The Lion Book of Nursery Rhymes and The Lion Book of Nursery Fables,

continuing Lion Children’s aim to produce books that cover a wide range of children’s interests.

We also released a number of new picture books,

including Mr Super Poopy Pants and Missing Jack from Rebecca Elliott, to add to her growing portfolio and The Sheep in Wolf’s Clothing by the ever-popular Bob Hartman.

Lion Children’s continue to provide material for the older child, such as Look Inside the Time of Jesus and Jesus Detective (building on the success of Bible Detective).

Publications for the Christmas season included the popular 25 Crafts for Christmas and Hands-

6 7

Lion FictionLion Fiction, now in its second year, publishes books by writers of faith that are of interest to the general reader.

The Lion Fiction imprint published nineteen titles this year. Five of them were detective novels and five were

historical fiction. Titles that stand out include If You Follow Me, the one of the well-received Dunbridge Chronicles by Pam Rhodes; the award-winning debut novel Making Marion, by Beth Moran, which received a five-star review in Publishers Weekly; and the latest

instalment of the Hugh de Singleton stories, The Abbot’s Agreement by Mel Starr, which sold over 10,000 copies in its first six months.

Lion BooksAs the world remembered the start of the 1914–18 war, Lion Books released Philip Jenkins’s The Great and Holy War and G. R. Evans’s biography of the pacifist Bishop Edward Hicks, building on the success of last year’s WW1-related books Stretcher Bearer and

Woodbine Willie.

Major successes in the year included Justyn Rees Larcombe’s vivid account of his battle with gambling, Tails I Lose, launched into substantial media interest. My Secret Life in Hut 6, an account of life at Bletchley during World War II, has had strong and steady sales, as has Stargazers, Allan Chapman’s

masterly history of astronomy, published in the autumn. Other excellent biographies included Mary Colwell’s John Muir and Colin Duriez’s latest strong seller, The Oxford Inklings.

The year finished with, among others, New Habits, the follow-up

to the highly successful Kicking the Habit; Postcards from the Middle East, a positive account of a British family’s life in Lebanon; and Margaret Silf’s Sacred in the City, a companion to her Landscapes of Prayer.

EU Sales & MarketingOur EU Sales & Marketing team uses many ways of communicating information about our books to the markets. It is now possible, and necessary, to employ diverse methods, whether it is ebook sales channels, the redesigned Lion Hudson website, publicity campaigns, or social media.

We are increasingly selling books via online channels, reaching 22% of EU sales in 2014/15. Online sales to retailers reached 28% when online sales via wholesalers are included. Christian bookshops were on a more even keel this year. About 44% of EU sales were to Christian bookshops but sales to Christian organizations and outlets of all types, including events, equated to 57% of all EU sales. These figures demonstrate that we remain well supported by Christian communities but, importantly, remain visible in the general bookselling arena.

In addition to championing our Lion Hudson publishing output, our EU Sales team represented eight client publisher agreements: four American imported lists (Abingdon Press, Charisma House, and Kregel Publications, in addition to Baker Publishing Group’s consumer imprints) and four UK-published lists (Cambridge University Press Bibles, Darton, Longman & Todd, Elevation Music, and Instant Apostle). In line with our strategic plan we consolidated our sales representation agreements and are offering distribution services to some publishers under our agreement with Marston Book Services.

Client publishers are an important element of our work. A UK highlight of the year was Do What Jesus Did, published under Baker Publishing Group’s Chosen imprint, which required four local reprints to keep up with demand while its author, Robby Dawkins, was speaking across the UK.

Our inventory team supported us with sales and stock information, proactively managed reprints, author orders, and print-on-demand orders, and continued to manage the day-to-day relationship with Marston Book Services’ customer service teams. Their Christian Orders desk continued to provide customer service to our Christian trade customers.

There were several notable successes this year:

No Greatness Without Goodness: How a father’s love changed a company and sparked a movement – by Randy Lewis

Randy Lewis was interviewed on BBC Radio 2’s Good Morning Sunday, BBC Radio 4: Sunday, BBC Radio Guernsey, BBC Radio London: Inspirit, BBC Radio Sussex and Surrey, BBC Radio Wales, Premier Radio, and UCB Radio. His story was also covered by a number of autism publications and HR publications, and in Guardian Family. Randy was also a speaker at the Enabling Church conference.

Tails I Lose: The compulsive gambler who lost his shirt for good – by Justyn Rees Larcombe

Justyn was interviewed on ITV1: Lorraine, BBC Radio 5 Live: Breakfast, BBC South East, ITV News: Meridian, and Sky News; as well as in the Daily Mail, The Telegraph, Kent Messenger, Kent on Sunday, Kent & Sussex Courier, plus BBC Online. Justyn has taken part in major speaking tours of Ireland, and speaks in churches, prisons, and rugby clubs. Tails I Lose is nominated for CRT Biography of the Year.

I Have Seen God: The miraculous story of the Diospi Suyana hospital in Peru – by Klaus-Dieter John

Klaus toured the UK to promote the remarkable work that he and his wife have done and continue to do in Peru. He was interviewed on BBC Radio 5 Live: Stephen Nolan, Premier Radio, and in the Church Times, The Church of England Newspaper, Direction, Engage, Good News, and War Cry. Klaus also spoke at a number of UK churches, and at Spring Harvest 2015.

New Habits: From Sisterhood to Motherhood – by Eleanor Stewart

Following the successful media campaign for Eleanor’s first memoir, Kicking the Habit, we achieved further high-profile coverage for her follow-up book, including interviews in the Church Times, and Daily Mail, and an article in Take A Break, plus online coverage on Christian Today. We also conducted our first non-fiction blog tour, and Eleanor has spoken at Women’s Institute conferences.

8 9

Mr Super Poopy Pants – by Rebecca Elliott

Rebecca was interviewed by Claire Balding on BBC Radio 2: Good Morning Sunday, featured in The Telegraph, and reviewed in Prima Baby & Pregnancy magazine and Suffolk Norfolk Life. Rebecca also ran a Guardian Masterclass on “How to Write and Illustrate Children’s Books” and had her drawings featured on Guardian Online.

EbooksWe now have over1200 ebooks our list, as we continue to reformat all black and white books into digital form. We have accelerated the release of colour books into specific ebook channels that manage colour ebooks well such as iBookStore, KindleStore, and Kobo.

International Sales Co-Editioning and LicencingThe year saw more stable economies in most of our core international markets, but nevertheless very few countries saw growth in the publishing sector and for many “holding the line” was a good success. Many publishing partners have struggled and reduced both staff and their lists, responding to the tough and challenging situation. In summary, it has been a difficult year, running hard just to stay in the same place!

South America remains very significant for Lion Hudson and the International department has been able to continue to invest in some key partnerships with like-minded organisations in Brazil and Spanish markets in South America, with good effect. Children’s Bibles are key once again and the newly launched Candle Day by Day Bible and Lion Comic Book Hero Bible are major successes.

European markets held up well, with Germany seeing good orders for reprints and The Netherlands improving, which generated increased orders on new titles as well as reprints. Mediterranean customers had a very difficult year, with many having to drastically reduce their programme. However, we saw increased investment in Italy through some of our important partnerships. There was growing interest in France in some of the innovative

and novelty products that epitomize the Lion Hudson lists. Scandinavia was a mixed bag with some economies growing, while others were flatlining or contracting.

Eastern markets held up well, with some good self-print deals in China and Korea. Sales in Hong Kong and Japan were steady too, including an encouraging number of reprints.

We have already mentioned the important core market for children’s Bibles of all shapes and sizes, and these were again, fundamental to International sales, with many publishers going back to basics in the face of tough times. 99 Stories from the Bible printed in six languages with a total run of more than 25,000 copies. Tiny Tots Bible was released additionally in Japanese, French, Maltese, and German, with a total of ten languages now published.

In addition to this, the Candle Bible Handbook was launched and the first printing comprised French, Swedish, Welsh, Portuguese, and Spanish editions, with a total print run of over 30,000 copies. On the adult list, Story of the Holy Land by Peter Walker printed in Czech, German, Norwegian, Romanian, Spanish, and Welsh.

The novelty Painting Books with their own special paint palette were added to the list, with many other activity books. Among the most innovative new titles unveiled were the amazing The Christmas Journey Storybook with pop-up play scenes and the new Candle Pop-Up Bible Atlas. Jigsaws, games, and stickers completed the exciting and ground-breaking Lion Hudson collection on offer to friends all over the globe.

International Sales – English ExportExport sales remained challenging in many markets during 2014/15. Countries such as South Africa, Nigeria, Kenya, and Ghana were hit hard by the devaluation of their currencies, which made maintaining volume and competitive pricing increasingly difficult. Despite this there were reasons for encouragement. Three thousand sets of the Bible Story Time series were sold to a new customer in East Africa; The Lion Children’s Bible continued to reprint in English, French, and local languages for Bible Societies around the world including Ghana, Nigeria, South Africa, the Lebanon, Kenya, Tanzania, Malawi, and Pakistan.

A total of over 1.25 million copies of The Lion Children’s Bible have now been printed in partnership with the United Bible Societies in the last twelve years. Co-edition sales of other children’s Bibles have been made to Kenya, Ghana, Nigeria, and India, among others.

North American sales were flat overall but showed signs of growth in non-book trade business, including a substantial sale to WalMart and SAMS Club. Unfortunately the bankruptcy of Family Christian Stores at the end of the year undid much of the hard work put in by our CBA distributor, Kregel Publications. The story of the collapse of Family Christian Stores is a tragic one not only because they were a major Christian book chain in the United States but also because many publishers have been caught up in the aftermath. Some will undoubtedly go to the wall because of the implications for them. Lion Hudson has also suffered as a result of having stock on consignment with them as well as not being able to recover incomes owed from sales. This has undoubtedly affected our financial position and we are still waiting for an official judicial ruling on the formal outcome of the bankruptcy. Initial indications are that we will only recover a small percentage of our expected returns.

Australia, New Zealand, and South Africa all saw a downturn in their economies and weaker currencies during 2014/15. South Africa was particularly hard hit as power outages reduced retailers’ trading hours significantly and the capacity of our distributors to conduct business. Our New Zealand business was also disrupted by the sale of New Holland NZ in late 2014 by a management buyout by its partner business in Australia. The inevitable management changes have now been completed and the strong relationship we’ve enjoyed with New Holland is being re-established.

New Publishing Management SystemWe are continuing to migrate information into our new integrated operating system, “Simba”, and are beginning to appreciate the significant improvements that it will bring us operationally. With better and more accessible data, and more efficient processes, we will be able to make even better business decisions and react more quickly and wisely to market demands.

It has been a mammoth project that has thrown up any

number of challenges, demanding both more staff time and more financial resource than we originally budgeted. But now we are operational and the switch over to the new system has created a buzz of activity around the company as people retrain themselves on processes and thinking.

March 2015 saw the launch of the Rights Master system, through which we produce high-quality royalty statements for all imprints. Some minor work still needs to be done on the system to make it more efficient, but on the whole our authors have been pleased with the results.

The metadata feeds into the markets are still being produced from the old system until 100% satisfaction has been achieved with the new system.

PersonnelPaul Whitton, Head of Lion Books International, had served in our International division for thirty-two years when he retired in April 2014. He has now joined his wife, Hana, in the operation of a small international rights agency.

Paul represented Lion Publishing and latterly Lion Hudson in diverse markets. His reputation for fair dealing and attention to the constraints under which many of our publishing partners must operate gave him stature internationally. He had a keen appetite to develop new products and pioneer new relationships. During his time with the company he greatly extended the reach of the books we publish. Paul will of course be sadly missed on a day-to-day basis, but he leaves an impressive international publishing legacy and network of friendships. This will long remain as a testimony of his heartfelt belief in the company’s mission to publish the Bible message.

Charles Wallis, Production Manager retired after thirty-six years with the company in March 2015. Sadly for us, he has now hung up his linen tester, stowed away his Pantone colour swatch, and turned off his colour proofing materials.

Charles was responsible for much of our production portfolio, in which he oversaw significant changes in the ways books are produced and where they are produced. He managed many complicated relationships and brought a high degree of professionalism to his work, leaving an impressive legacy both within and outside Lion Hudson. Each beautiful book we publish is a testament to

10 11

Charles’s diligence, and an expression of his commitment to the Lion Hudson mission to publish quality books.

The retirement of Lois Rock, Publisher, in May 2015 brought the end of an era to Lion Children’s Books. Lois was not just its publisher, but also author of a large part of its programme under both her own name and a range of noms de plume. Among her major titles were My Very First Bible and its spin-offs with illustrator Alex Ayliffe, The Lion Day-by-Day Bible with Amanda Hall, The Jesus Encyclopaedia, and most recently The Lion Bible to Keep For Ever with Sophie Allsopp. She worked with a range of other illustrators over the years, including Jane Ray, Christina Balit, Dubravka Kolanovic, and Rebecca Elliott and authors such as Margaret McAllister and Bob Hartman. Her shaping and authorship ranged from activity books to prayer books, Christmas retellings to innovative information books. Her range of contribution and creativity will be difficult to replace.

Aslan TrustFollowing the previous year’s significant donation, the Trust was able to make a number of major disbursements. These were mainly continuing our support to Media Associates International in their new initiatives and also to Mission Impossible UK to assist with their Bulgarian publishing project, the first result of which is about to be released.

Future Prospects and SharesThere can be no hiding two facts. Firstly, the publishing industry as a whole continues to go through an extraordinary amount of change as it adapts to new media and to changes in social trends. Secondly, the global economy is still fragile. One of our key markets, Brazil, has only just levelled out after contracting for some time. The US is still flat and, as already mentioned, has been deeply affected by the demise of Family Christian Stores. Recent changes in China threaten to slow down the fragile growth in the world economy. Lion Hudson continues, therefore, to trade in mixed markets benefitting from its global reach to ride out particular pressures.

The Board continues to be wholly committed to its mission to bring the Christian message to the world. It will be a sad day if we ever lose sight of that goal. The idea of children being read their first Bible stories, or of somebody coming to faith through a book we have published, should always be a source of encouragement and fulfilment for us. I would like to thank each member of the Board for their hard work and dedication to the company, and acknowledge that each of them is gifted in a way that enriches the work of the company.

As far as shares are concerned, the Board has maintained a matched-bargain facility managed by the Company Secretary. On the advice of our auditors the Board proposes to maintain the recent share price of 95p. It is important to remind shareholders that the company is obliged to inform them of any offer to buy their shares from another party, whatever the price offered may be. The Company takes no view of the price offered. It is up to the shareholders as to whether they sell their shares or retain them.

This is my last Annual Report as Chairman of the Company as I retire after twenty years as a Director and five as Chairman. It has been a privilege to serve Lion Hudson over so many years and to be associated with its reputation for excellence throughout publishing as well as in the Christian world. I am grateful to the Board for placing their trust in me over many years and pray that the company might flourish not only financially but also in the furtherance of the gospel, for many years to come.

Roy McCloughry

August 2015

12 13

LION HUDSON PLC

STRATEGIC REPORT

FOR THE YEAR ENDED 31 MARCH 2014

- 1 -

Review of the businessThe year end financial position was satisfactory and the directors expect that the present level of publishingactivity will be sustained for the foreseeable future.

Stock Turnover - 232 days (2013: 225 days)Overseas sales: Total sales 65% (2013: 66%)

Principal Risks and Uncertainties - Potential risks to the company are stock obsolescence and changes incurrency values. The directors mitigate these by carrying out regular stock reviews and hedging of currency inthe foreign exchange markets.

By order of the board

..............................Caroline GregorySecretary.........................

14 15

LION HUDSON PLC

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 MARCH 2014

- 2 -

The directors present their report and financial statements for the year ended 31 March 2014.

Principal activities and review of the businessThe principal activity of the company continued to be the publishing of Christian books.

Results and dividendsThe results for the year are set out on page 16.

An interim ordinary dividend was paid amounting to £51,468. The directors do not recommend payment of afinal dividend.

DirectorsThe following directors have held office since 1 April 2013:

Roy McCloughryNicholas JonesAlice LawheadSuzanne Wilson-HigginsAndrew Hodder-WilliamsCaroline Gregory

Creditor payment policyThe directors intend during the year ended 31 March 2015 to pay all suppliers in accordance with the creditterms agreed with them. During the year ended 31 March 2014 the average payment period was 145 days incomparison to 91 days last year. This figure has been calculated using closing amounts for the year.

AuditorsIn accordance with the company's articles, a resolution proposing that Rayner Essex LLP be reappointed asauditors of the company will be put at a General Meeting.

LION HUDSON PLC

DIRECTORS' REPORT (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2014

- 3 -

Statement of directors' responsibilitiesThe directors are responsible for preparing the Directors' Report and the financial statements in accordancewith applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law thedirectors have elected to prepare the financial statements in accordance with United Kingdom GenerallyAccepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under companylaw the directors must not approve the financial statements unless they are satisfied that they give a true andfair view of the state of affairs of the company and of the profit or loss of the company for that period. Inpreparing these financial statements, the directors are required to:

- select suitable accounting policies and then apply them consistently;- make judgements and accounting estimates that are reasonable and prudent;- state whether applicable UK Accounting Standards have been followed, subject to any material departuresdisclosed and explained in the financial statements;- prepare the financial statements on the going concern basis unless it is inappropriate to presume that thecompany will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explainthe company’s transactions and disclose with reasonable accuracy at any time the financial position of thecompany and enable them to ensure that the financial statements comply with the Companies Act 2006. Theyare also responsible for safeguarding the assets of the company and hence for taking reasonable steps for theprevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the company website. Legislation in theUnited Kingdom governing the preparation and dissemination of financial statements may differ fromlegislation in other jurisdictions.

Statement of disclosure to auditorsSo far as the directors are aware, there is no relevant audit information of which the company's auditors areunaware. Additionally, the directors have taken all the necessary steps that they ought to have taken asdirectors in order to make themselves aware of all relevant audit information and to establish that thecompany's auditors are aware of that information.

By order of the board

..............................Caroline GregorySecretary.........................

16 17

LION HUDSON PLC

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 MARCH 2014

- 6 -

2014 2013Notes £ £

Turnover 2 8,020,136 8,692,219

Cost of sales (4,638,811) (5,100,345)

Gross profit 3,381,325 3,591,874

Distribution costs (477,101) (466,782)Administrative expenses (2,706,316) (2,821,251)

Operating profit 3 197,908 303,841

Stock provision - (924,000)

Profit/(loss) on ordinary activities before interest 197,908 (620,159)

Interest payable and similar charges 4 (42,386) (32,330)

Profit/(loss) on ordinary activities before taxation 155,522 (652,489)

Tax on profit/(loss) on ordinary activities 5 - -

Profit/(loss) for the year 16 155,522 (652,489)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

There are no recognised gains and losses other than those passing through the profit and loss account.

LION HUDSON PLC

BALANCE SHEET

AS AT 31 MARCH 2014

- 7 -

2014 2013Notes £ £ £ £

Fixed assetsIntangible assets 7 161,755 177,930 Tangible assets 8 656,132 203,050 Investments 9 1,000 1,000

818,887 381,980 Current assetsStocks 10 2,942,963 2,876,784 Debtors 11 2,229,680 1,661,057

5,172,643 4,537,841 Creditors: amounts falling due within one year 12 (3,193,782) (2,425,602)

Net current assets 1,978,861 2,112,239

Total assets less current liabilities 2,797,748 2,494,219

Creditors: amounts falling due after more than one year 13 (267,794) (68,604)

2,529,954 2,425,615

Capital and reservesCalled up share capital 15 857,993 857,898 Share premium account 16 782,016 781,826 Profit and loss account 16 889,945 785,891

Shareholders' funds 17 2,529,954 2,425,615

Approved by the Board and authorised for issue on 29th August 2014

.............................. ..............................Roy McCloughry Nicholas JonesDirector Director

Company Registration No. 01051118

18 19

LION HUDSON PLC

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2014

- 8 -

2014 2013£ £ £ £

Net cash inflow from operating activities 353,942 62,738

Returns on investments and servicing of financeInterest paid (42,386) (32,330)

Net cash outflow for returns on investments and servicing of finance (42,386) (32,330)

Taxation 38,806 (1,255)

Capital expenditurePayments to acquire tangible assets (185,281) (92,403)

Net cash outflow for capital expenditure (185,281) (92,403)

Equity dividends paid (51,468) (51,465)

Net cash inflow before management of liquid resources and financing 113,613 (114,715)

FinancingIssue of ordinary share capital 285 - Capital element of hire purchase contracts (40,357) -

Net cash outflow from financing (40,072) -

Increase in cash in the year 73,541 (114,715)

LION HUDSON PLC

NOTES TO THE CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2014

- 9 -

1 Reconciliation of operating profit to net cash inflow from operating activities

2014 2013

£ £

Operating profit/(loss) after exceptional items 197,908 (620,159)Depreciation of tangible assets 29,876 34,243 Amortisation of intangible assets 16,175 16,175 (Increase)/decrease in stocks (66,179) 683,590 (Increase)/decrease in debtors (607,429) 333,970 Increase/(decrease) in creditors within one year 783,591 (385,081)

Net cash inflow from operating activities 353,942 62,738

2 Analysis of net debt 1 April 2013 Cash flow Other non-cash changes

31 March 2014

£ £ £ £Net cash:Bank overdrafts (173,348) 73,541 - (99,807)

Bank deposits - - - - Debt:Finance leases (86,804) 40,357 (297,677) (344,124)

Net debt (260,152) 113,898 (297,677) (443,931)

3 Reconciliation of net cash flow to movement in net debt 2014 2013£ £

Increase/(decrease) in cash in the year 73,541 (114,715)Cash outflow from decrease in debt and lease financing 40,357 -

Change in net debt resulting from cash flows 113,898 (114,715)New finance lease (297,677) (86,804)

Movement in net debt in the year (183,779) (201,519)Opening net debt (260,152) (58,633)

Closing net debt (443,931) (260,152)

20 21

LION HUDSON PLC

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2014

- 10 -

1 Accounting policies

1.1 Accounting conventionThe financial statements are prepared under the historical cost convention.

1.2 Compliance with accounting standardsThe financial statements are prepared in accordance with applicable United Kingdom AccountingStandards (United Kingdom Generally Accepted Accounting Practice), which have been appliedconsistently (except as otherwise stated).

1.3 TurnoverTurnover represents amounts invoiced to customers, excluding Value Added Tax.

1.4 GoodwillGoodwill has been calculated as the difference between net assets acquired and the consideration paidfor Angus Hudson Ltd. The company is amortising the remaining goodwill over a maximum period of 20years, which the directors anticipate is its useful life.

1.5 Tangible fixed assets and depreciationTangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated towrite off the cost less estimated residual value of each asset over its expected useful life, as follows:

Computer equipment 20% - 50%Fixtures, fittings & equipment 10% - 50%

1.6 LeasingRentals payable under operating leases are charged against income on a straight line basis over thelease term.

1.7 InvestmentsFixed asset investments are stated at cost less provision for diminution in value.

1.8 Stock and work in progressStock and work in progress are valued at the lower of cost and net realisable value. Cost, using the first-in, first-out basis, consists of direct production costs.

Estimated net realisable value is calculated after providing for obsolescence based on the age andsaleability of the stocks.

1.9 PensionsThe company operates a defined contribution scheme for the benefit of its employees. Contributionspayable are charged to the profit and loss account in the year they are payable.

1.10 Deferred taxationDeferred taxation is provided in full in respect of taxation deferred by timing differences between thetreatment of certain items for taxation and accounting purposes. The deferred tax balance has not beendiscounted.

LION HUDSON PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2014

- 11 -

1 Accounting policies (continued)

1.11 Foreign currency translationMonetary assets and liabilities denominated in foreign currencies are translated into sterling at the ratesof exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rateruling at the date of the transaction. All differences are taken to profit and loss account.

2 Turnover

Geographical marketTurnover2014 2013

£ £

UK 2,781,995 2,984,320 USA 995,000 1,120,695 Other 4,243,141 4,587,204

8,020,136 8,692,219

3 Operating profit 2014 2013£ £

Operating profit is stated after charging:Amortisation of intangible assets 16,175 16,175 Depreciation of tangible assets 29,876 34,243 Loss on foreign exchange transactions - 7,129 Operating lease rentals 139,500 139,500 Fees payable to the company's auditor for the audit of the company'sannual accounts 18,000 16,000

and after crediting:Profit on foreign exchange transactions (41,828) -

Exceptional items

In the prior year, cost of sales contained a provision against the value of finished stock of £795,526 and aprovision of £128,474 against the value of origination costs in work in progress pertaining to the finishedgoods provision. This provision is an exceptional item under the definition in FRS3. In 2012 the directorsreviewed the finished goods held by the company. They identified stock held that was published morethan 2 years ago and would, based on current sales, take more than 3 years to sell and made provisionagainst it. During the year the directors have brought stock that now falls into the above criteria into theprovision. It is the director's intention to maintain this process going forwards.

22 2322 23

LION HUDSON PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2014

- 12 -

4 Interest payable 2014 2013£ £

On bank loans and overdrafts - 4,983 Other interest 42,386 27,347

42,386 32,330

5 Taxation 2014 2013Total current tax - -

Factors affecting the tax charge for the yearProfit/(loss) on ordinary activities before taxation 155,522 (652,489)

Profit/(loss) on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 20.00% (2013 - 20.00%) 31,104 (130,498)

Effects of:Non deductible expenses 3,573 - Depreciation add back 5,975 10,084 Capital allowances (63,174) (22,088)Other tax adjustments 22,522 142,502

(31,104) 130,498

Current tax charge for the year - -

The company has estimated taxable losses of £ 784,698 (2013 - £ 712,513) available for carry forwardagainst future taxable profits.

6 Dividends 2014 2013£ £

Ordinary interim paid 51,468 51,465

LION HUDSON PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2014

- 13 -

7 Intangible fixed assetsGoodwill

£CostAt 1 April 2013 & at 31 March 2014 323,505

AmortisationAt 1 April 2013 145,575 Charge for the year 16,175

At 31 March 2014 161,750

Net book valueAt 31 March 2014 161,755

At 31 March 2013 177,930

24 25

LION HUDSON PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2014

- 14 -

8 Tangible fixed assetsComputer

equipmentFixtures,fittings &

equipment

Total

£ £ £CostAt 1 April 2013 452,750 258,471 711,221 Additions 480,245 2,713 482,958

At 31 March 2014 932,995 261,184 1,194,179

DepreciationAt 1 April 2013 253,549 254,622 508,171 Charge for the year 28,579 1,297 29,876

At 31 March 2014 282,128 255,919 538,047

Net book valueAt 31 March 2014 650,867 5,265 656,132

At 31 March 2013 199,201 3,849 203,050

Included above are assets held under finance leases or hire purchase contracts as follows:

Plant andmachinery

£Net book valuesAt 31 March 2014 576,435

At 31 March 2013 102,477

Depreciation charge for the yearAt 31 March 2014 -

LION HUDSON PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2014

- 15 -

9 Fixed asset investments

Shares insubsidiary

undertakings£

CostAt 1 April 2013 & at 31 March 2014 1,000

Net book valueAt 31 March 2014 1,000

At 31 March 2013 1,000

Holdings of more than 20%The company holds more than 20% of the share capital of the following companies:

Company Country of registration or Shares heldincorporation Class %

Subsidiary undertakingsAngus Hudson Limited England and Wales Ordinary 100.00

The aggregate amount of capital and reserves and the results of these undertakings for the last relevantfinancial year were as follows:

Capital andreserves

Profit/(loss)for the year

2014 2014Principal activity £ £

Angus Hudson Limited Dormant 1,000 -

10 Stocks and work in progress 2014 2013£ £

Work in progress 887,866 799,455 Finished goods and goods for resale 2,055,097 2,077,329

2,942,963 2,876,784

27

26

LION HUDSON PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2014

- 16 -

11 Debtors 2014 2013£ £

Trade debtors 1,975,695 1,423,725 Corporation tax - 38,806 Other debtors 139,494 108,584 Prepayments and accrued income 114,491 89,942

2,229,680 1,661,057

Included within other debtors is a £2 share holding of our wholly owned subsidiary, Aslan PublishingServices Limited, incorporated in England and Wales.

12 Creditors: amounts falling due within one year 2014 2013£ £

Bank loans and overdrafts 99,807 173,348 Net obligations under finance leases 76,330 18,200 Trade creditors 1,848,247 1,397,465 Taxes and social security costs 45,195 48,525 Other creditors 269,756 65,749 Accruals and deferred income 854,447 722,315

3,193,782 2,425,602

Included in other creditors is an amount of £221,513 (2013: £NIL) relating to invoice discounting. This issecured by a fixed charge on all debts purchased and a floating charge over all the assets of thecompany.

The bank overdraft facility is secured by a fixed and floating charge over the assets of the company.

Included within accruals is an amount of £114,692 relating to the Company's obligation to refurbish itsformer offices.

LION HUDSON PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2014

- 17 -

13 Creditors: amounts falling due after more than one year 2014 2013£ £

Net obligations under finance leases 267,794 68,604

The hire purchase creditor is secured on the assets it funds.

Net obligations under finance leasesRepayable within one year 76,330 18,200 Repayable between one and five years 267,794 68,604

344,124 86,804 Included in liabilities falling due within one year (76,330) (18,200)

267,794 68,604

14 Pension and other post-retirement benefit commitmentsDefined contribution

2014 2013£ £

Contributions payable by the company for the year 255,909 252,592

15 Share capital 2014 2013£ £

Authorised2,520,000 Ordinary shares of 50p each 1,260,000 1,260,000

Allotted, called up and fully paid1,715,986 Ordinary shares of 50p each 857,993 857,898

27

28 29

LION HUDSON PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2014

- 18 -

16 Statement of movements on reservesShare

premiumaccount

Profit andloss

account£ £

Balance at 1 April 2013 781,826 785,891 Profit for the year - 155,522 Premium on shares issued during the year 190 - Dividends paid - (51,468)

Balance at 31 March 2014 782,016 889,945

Reserves of £782,016 are not available for distribution under the terms of the Companies Act 2006.

17 Reconciliation of movements in shareholders' funds 2014 2013£ £

Profit/(Loss) for the financial year 155,522 (652,489)Dividends (51,468) (51,465)

104,054 (703,954)Proceeds from issue of shares 285 -

Net addition to/(depletion in) shareholders' funds 104,339 (703,954)Opening shareholders' funds 2,425,615 3,129,569

Closing shareholders' funds 2,529,954 2,425,615

18 Financial commitments

At 31 March 2014 the company was committed to making the following payments under non-cancellableoperating leases in the year to 31 March 2015:

Land and buildings Other2014 2013 2014 2013

£ £ £ £Operating leases which expire:Within one year - - - 25,891 Between two and five years - - - 35,708 In over five years 139,500 133,813 - -

139,500 133,813 - 61,599

LION HUDSON PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 MARCH 2014

- 19 -

19 Directors' remuneration 2014 2013£ £

Remuneration for qualifying services 294,086 246,807

Remuneration disclosed above include the following amounts paid to thehighest paid director:

Remuneration for qualifying services 72,000 71,511

20 Employees

Number of employeesThe average monthly number of employees (including directors) during the year was:

2014 2013Number Number

Editorial, design and production 25 22 Sales and marketing 27 28 Accounts and computer staff 6 6 Others - 1

58 57

Employment costs 2014 2013£ £

Wages and salaries 1,733,323 1,753,969 Social security costs 181,571 178,788 Other pension costs 255,909 252,592

2,170,803 2,185,349

21 Related party relationships and transactions

A donation of £Nil (2013 - £11,465) was made to the Aslan Trust. The Aslan Trust trustees are thedirectors of Lion Hudson PLC.

29

30 31

LION HUDSON PLC

INDEPENDENT AUDITORS' REPORT

TO THE MEMBERS OF LION HUDSON PLC

- 4 -

We have audited the financial statements of Lion Hudson Plc for the year ended 31 March 2014 set out onpages 13 to 29. The financial reporting framework that has been applied in their preparation is applicable lawand United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 ofthe Companies Act 2006. Our audit work has been undertaken so that we might state to the company'smembers those matters we are required to state to them in an auditors' report and for no other purpose. Tothe fullest extent permitted by law, we do not accept or assume responsibility to anyone other than thecompany and the company's members as a body, for our audit work, for this report, or for the opinions wehave formed.

Respective responsibilities of directors and auditorsAs explained more fully in the Directors' Responsibilities Statement set out on page 15, the directors areresponsible for the preparation of the financial statements and for being satisfied that they give a true and fairview. Our responsibility is to audit and express an opinion on the financial statements in accordance withapplicable law and International Standards on Auditing (UK and Ireland). Those standards require us tocomply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficientto give reasonable assurance that the financial statements are free from material misstatement, whethercaused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate tothe company's circumstances and have been consistently applied and adequately disclosed; thereasonableness of significant accounting estimates made by the directors; and the overall presentation of thefinancial statements. In addition, we read all the financial and non-financial information in the Annual Report toidentify material inconsistencies with the audited financial statements and to identify any information that isapparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in thecourse of performing the audit. If we become aware of any apparent material misstatements orinconsistencies we consider the implications for our report.

Opinion on financial statementsIn our opinion the financial statements:- give a true and fair view of the state of the company's affairs as at 31 March 2014 and of its profit for the

year then ended;- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting

Practice; and- have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006In our opinion the information given in the Strategic Report and Directors' Report for the financial year forwhich the financial statements are prepared is consistent with the financial statements.

LION HUDSON PLC

INDEPENDENT AUDITORS' REPORT (CONTINUED)

TO THE MEMBERS OF LION HUDSON PLC

- 5 -

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us toreport to you if, in our opinion:- adequate accounting records have not been kept, or returns adequate for our audit have not been

received from branches not visited by us; or- the financial statements 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.

Mr Stephen Jacobs FCA (Senior Statutory Auditor)for and on behalf of Rayner Essex LLP .........................

Chartered AccountantsStatutory Auditor Faulkner House

Victoria StreetSt AlbansHertfordshireAL1 3SE

30 31

www.lionhudson.comLION FICTION