BLOOMSBURY ANNUAL REPORT AND ACCOUNTS two major titles, Harry Potter and the Deathly Hallows and A...

B LO O M S BU RY P U B L I S H I N G P LC A N N UA L R E P O RT A N D AC C O U N TS

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Contents:

02 Financialsummary03 Chairman’sstatement16 Financialreview20 Directors 21 Corporategovernance24 Internalcontrol27 Directors’remunerationreport35 Directors’report42 Statementofdirectors’ responsibilities43 Independentauditors’report45 Consolidatedincomestatement46 Consolidatedbalancesheet

47 Companybalancesheet48 Consolidatedstatementof

changesinequity49 Companystatementof

changesinequity50 Consolidatedcashflowstatement51 Companycashflowstatement52 Accountingpolicies55 Notestotheaccounts83 Directors,secretaryandadvisers84 Financialcalendar85 Shareholderinformation86 NoticeofAnnualGeneralMeeting

Contents:

02 Financialsummary03 Chairman’sstatement16 Financialreview20 Directors 21 Corporategovernance24 Internalcontrol27 Directors’remunerationreport35 Directors’report42 Statementofdirectors’ responsibilities43 Independentauditors’report45 Consolidatedincomestatement46 Consolidatedbalancesheet

47 Companybalancesheet48 Consolidatedstatementof

changesinequity49 Companystatementof

changesinequity50 Consolidatedcashflowstatement51 Companycashflowstatement52 Accountingpolicies55 Notestotheaccounts83 Directors,secretaryandadvisers84 Financialcalendar85 Shareholderinformation86 NoticeofAnnualGeneralMeeting

Financial summary

Thisdocumentdoesnotconstituteandshouldnotbeconstruedasanissueforsaleorsubscriptionorsolicitationofanyofferorinvitation;oradviceorrecommendationtosubscribefortheordinarysharesoftheCompany;norshoulditbereliedoninconnectionwithanycontracttobeenteredintobytherecipient;nordoesitconstituteaninvitationorinducementtoengageininvestmentactivityundersection21FinancialServicesandMarketsAct2000(FSMA);orconstituteaninvitationtoeffectanytransactionwiththeCompany;ortomakeuseoftheservicesprovidedbytheCompany.Pastperformancecannotbereliedonasaguidetofutureperformance.

20.127

16.280

15.381

109.108

84.449

83.114

68.016

2005

2004

2003

2002

Revenue - £m*

20.30

17.12

16.45

11.54

2005

2004

2003

2002

Basic earnings per share before goodwill amortisation and exceptional items - pence*

11.124

2005

2004

2003

2002

Profit before taxation, goodwill amortisation and exceptional items - £m*

74.7732006

4.992006

5.1962006

UKGAAP UKGAAP IFRS IFRS IFRS 2002 2003 2004 2005 2006 £m £m £m £m £m

Revenue 68.016 83.114 84.449 109.108 74.773

Profitbeforetaxation,goodwillamortisationandexceptionalitems 11.124 15.381 16.280 20.127 5.196

Basicearningspersharebeforegoodwillamortisationandexceptionalitems(p)** 11.54 16.45 17.12 20.30 4.99

TheCompanyadoptedInternationalFinancialReportingStandards(IRFS)witheffectfrom1January2004,andthefiguresfor2004onwardsareunderIFRS.Thefiguresfor2002and2003areunderUKgenerallyacceptedaccountingpractice(UKGAAP)beforegoodwillamortisation.

after4for1sharesplitinJune2003

*

**

BloomsburyPublishingPlc 3

Overview

2006wasachallengingyear.Ourresults,whiledisappointingandshowingadeclineinpre-taxprofits,areinlinewithourDecembertradingstatementandreflectsignificantfactorsattheendoftheyear,includingatoughpre-ChristmastradingenvironmentforBloomsbury,smallerbestsellersthaninpreviousyearsandnotcompletingbudgetedreferencerightssalesbytheyear-end.Whilewearenotsatisfiedwiththisoverallresult,itisimportanttorecognisestrongindividualperformanceswithintheGroupthatgiveusconfidenceaboutthefundamentalsofourbusinessaswelooktothefuture.

A&CBlack,whichweacquiredin2000,hadaparticularlygoodyear,providingstrongrepeatrevenuesandprofitabilityfortheGroup.BloomsburyUSAexceededitsrevenuetargetsfortheyear,onthestrengthofadiverseandgrowinglistoftitles,andourGermancompanyachieveditssecondconsecutiveyearofprofitability.AlthoughtheUKmarketprovedtobeproblematicforus,manyBloomsburytitlesachievedsuccessduringtheyear,includingEmpress OrchidbyAncheeMinandIn Search of PerfectionbyHestonBlumenthal.

Wearekeenlyawarethatthedynamicsofourindustryarechanging.Inaddition,thecombinationofpricingpressurefromretailersandpressurefromauthors’agentsforadvancesissqueezingmargins.Theindustryiscomingtogripswiththesefactors,andwearefocusedontakingtheinitiativebyadaptingourbusinesstothenewmarketenvironmentweface.

Chairman’s statement

4

Wehaveputinplaceastrategicplantogrowrevenuesfrom2007onwards.Thisbusinessdevelopmentstrategyismulti-faceted,buildingonourexistingstrengthsaswellasopeningdoorstonewopportunities.Itcanbesummarisedasfollows:

1. Author relationships and content creation –Capitalisingonourproventrackrecordindevelopingnewauthorsandprojects.Ourstaffhaveshowncreativityandflairinbringingunknownauthorstogreatsalessuccess.PreviouslyunpublishedauthorspublishedbyBloomsburywhoseworkshavesoldmorethanonemillioncopiesincludeBenSchott,DavidGuterson,KhaledHosseiniandJKRowling.Projectsconceivedin-housewhichhavehadturnoverwellinexcessof£1millionincludeBusiness: The Ultimate Resource,Encarta World English DictionaryandMacmillan English Dictionary.Wearecurrentlyacceleratingtheseactivitiesandourforwardprogrammeofnewprojectsforfuturepublicationisalreadyatasignificantlevel.

2. On-going revenues –Publishingnewworksbythesignificantstableofauthorswehavebuiltupandwhosemanybookshavefor21yearsformedavitalpartoftheon-goingrevenuesoftheGroup.Inmostcases,theseauthorsdonothavelong-termormulti-bookcontractsbutconsistentlybringtheirnewworkstoBloomsburybecauseofthelastingstrengthoftherelationshipstheyhavewiththeireditorsandtheCompany.RepeatauthorswhowillbepublishedthisyearandinSpring2008aloneincludeMichaelOndaatje,JoannaTrollope,CeliaRees,JKRowling,AnthonyBourdainandKhaledHosseini.

WewillalsocontinuetodevelopthenewauthorswhosefirstbooksfortheGrouphavebeenpublishedrecentlyorarestillinthepipeline.IntheUKtheseincludeinparticularournewhistoryauthorssuchasDavidDimbleby,WilliamDalrymple,ACGraylingandFrederickTaylor,andinfoodandcookeryHestonBlumenthalandHughFearnley-Whittingstall.

3. Geographic leverage –Investingtofurtherdevelopourbusinessinternationally,specificallyintheUSAandGermany,bothmarketswherewearesuccessfullygrowingmarketshareandwherethereisgreatpotentialtomakeevengreaterinroads.Keytooursuccesswillbethecontinuedacquisitionsofrightsacrossallourterritories.WithauthorssuchasBenSchottandWilliamBoyd,wehavealreadyprovedthatourinternationalpublishingstrategycandevelopbestsellersinternationally.


4 BloomsburyPublishingPlc 5

4. Content monetisation –Inthedigitalarenawearetakingfulladvantageofourexistingexpertiseasacontentcreator,ownerandlicensortomonetisethatcontentontheinternet,toseekopportunitiesinmarketing,toexploititinnewmarketsandpartnerships,andtobenefitfromthecost-reductionpotentialofferedbyprintondemandande-books.TVandfilmrightscanalsoprovidetheopportunityforsignificantrevenuestreamsaswehaveseenwithLarklight.

5. Web-based initiatives –Enhancingouralreadypioneeringactivitiesinnewmediaandelectronicpublishingtodevelopopportunitiesinwebmarketinganddistribution,capitalisingontheadvancesinprintondemandande-booksandotheropportunitiesofthedigitalera.Examplesofthisactivityincludeourinvolvementinaprojectwhichwillwebelievecreateauniquecommunityforreaders,writersandpublishers,hostuser-generatedcontentandgeneratesignificanton-lineadvertisingopportunitiesaswellasourdigitisationproject.

6. Acquisitions –Bloomsburyhassuccessfullymade10acquisitionswhichhavebroughtrealbenefitstothebusiness.Wearenowactivelyseekinglargeracquisitionsandlookingatcompaniesthatnotonlycomplementexistingactivitiesbutbroadenourmediainvolvement.Weremainfocusedonopportunitiesthatcaneitherdeliversignificantadvantagesofscaleortakeourbusinessintonew(butrelated)andprofitabledirections.Wehaveprovenourselvestobeeffectivemanagersandintegratorsthroughourprioracquisitionhistory.

6

FundamentaltooursuccessisthesuperbstableofauthorswhowriteregularlyforBloomsburyandthefirst-classteamofemployeeswhohavedemonstratedtheirabilityovermorethan20yearstofind,develop,promoteandpublishbooksofthehighestcalibre.Theyformthesolidfoundationofourbusinessaswecontinuetopublishcompellingbooksthatconsumerswanttopurchase.

Weseedigitisationasanopportunityratherthanathreat.Itholdsthepotentialtoexpanddistributionofourcontent,tomonetisethatcontentinnewwaysandtoradicallychangeourcoststructure.Inourreferencedivision,over200titlesarenowavailableine-bookformat,sellingtolibrariesworldwideandprovidinganextrarevenuestreamwhichisexpectedtoincreasesubstantiallyfrom2007onwards.Anewprogrammeofconvertingreferencetitleswhicharecurrentlyunavailable,orslowselling,

toprintondemandisalsoproducingnewsourcesofrepeatrevenueandsubstantialcostsavings.Wehavealsoputinplaceourowndigitisationprogrammewitha“LookInside”widgettoenablemoreofourcontenttobeaccessedinwebsearcheswhichwillleadtofuturebooksalesandharnessthepowerofonlinesocialnetworkingwebsites.Wehavealonghistoryofdigitalcontentlicensing,andweareconfidentthatwecanbuildonthathistoryasthedigitalworldcontinuestoexpandinnewandexcitingways.

Weexpect2007tobeastrongyearfortheCompany.IntheUK,RestlessandAgent Zigzag,twoofour2007titles,havealreadyachievedbestsellerstatus,andlaterintheyearwewillalsobepublishingtwomajortitles,Harry Potter and the Deathly HallowsandA Thousand Splendid Suns,anewbookbyKhaledHosseiniwhosefirstnovel,The Kite Runner,hassoldmorethanonemillioncopiesforus.

TheCompanyisactivelyseekinglargeracquisitions.SinceA&CBlack’sacquisitionbyBloomsbury,ithasdoubleditsturnoverwhileremainingstronglyprofitable.Oursmalleracquisitionsofthepastfewyears,includingmostrecentlytheMethuenDramalistinJune2006,areperformingwell.Webelievethatourdisciplinedapproachwillprovetobebeneficialandthattheopportunitiesforlargeracquisitionswillbemorefavourablein2007and2008.



Financialperformance

Turnoverdecreasedby31.5%to£74.77m(2005,£109.11m)duetolowerthanexpectedpre-ChristmassalesofourtitlesintheUKretailtrade,smallerbestsellingtitlesthaninpreviousyearsandnotcompletingbudgetedreferencerightssalespriortotheyear-end.Itshouldalsobeborneinmindforcomparativepurposesthatin2005wepublishedthehardbackofHarry Potter and the Half-Blood Prince.

RevenuesintheUKdecreased41.8%to£53.88m(2005,£92.62m).RevenuesfromUSoperationsrose36.1%to£15.01m(2005,£11.03m)onthebackofstrongsalesfromleadtitlesandgrowthinthebacklist.RevenuesfromContinentalEurope,whichweregeneratedbyBerlinVerlag,increased7.5%to£5.88m(2005,£5.47m).Profitbeforetaxdecreased74.2%to£5.20m(2005,£20.13m).Basicearningspersharedecreasedby75.4%to4.99pence(2005,20.30pence).Dilutedearningspersharedecreasedby75.4%to4.90pence(2005,19.93pence).

Attheendoftheyear,theGrouphadnetcashbalancesof£24.30m(2005,£53.51m).Thedeclineincashduringtheyearistheresultofworkingcapitalmovements,primarilypaymentofroyaltiesfrom2005publicationsandinvestmentsinnewtitlesforpublicationin2006andbeyond.WealsocompletedtheacquisitionforcashoftheMethuenDramalistduringtheyear.Wecontinuetoinvestinfuturegrowthbyacquiringnewauthorsandtitles.Ourstrongbalancesheetunderpinsourinvestmentprogrammeandaugurswellforourfuture.At31December2006,theGrouphadundercontract1,149titles(2005,1,062)forfuturepublication,withagrossinvestmentof£30.77m(2005,£22.41m).Afterpaymentoftheinitialtranchesofadvancestoauthors,ourliabilityforfuturecashpaymentsonthesecontractedtitlesatthatdatewas£18.48m(2005,£12.05m).

8Chairman’s statement

UKPublishing

Children’sTherehasbeenamovementinthechildren’sbookmarkettowardstheadultmodel:amarketprimarilydominatedbyfewerkeyauthors,andfewerbestsellers.Booksellersarefocusingonthoseauthorswithastrongtrackrecord,andsupermarketsaresellingmorechildren’stitles.

Againstthisbackdrop,wehadagoodyearin2006.Ourfictionwasstronglysupportedbythechainsinbothmonthlyandseasonalpromotions.Wealsohadexcellentreviewcoverageofourtitleswhichhelpedensuretheirsell-throughintheshops.Ourpicturebookscompetedwell,withtitlesbyMikeTerry,Ellie & ElvisandThe Selfish Crocodile and Other Animals,performingparticularlystrongly.

OurstrategywastopublishintonewareasforBloomsburyChildren’sBooks.Traditionallystrongintheareaofliteraryfiction,wefocusedonthecontinueddevelopmentofourpre-schoollistandco-editions,aswellaslaunchingnewseriesinthecommercial5–9year-oldfictionarea.Theseincludedatwelvebookseries,Mermaids SOS,ofwhichwepublishedthefirstsixtitlesin2006.Thenextsixtitlesarescheduledforpublicationinthefirsthalfof2007.

WealsopublishedOpen Season,ourfirstseriesoffilmtie-intitles,whichperformedwell.Surf’s UpisthenextseriesplannedfortheSummer,ananimatedadventurestarringJeffBridges,JamesWoodsandShiaLaBeoufwhichshouldbeabigSummerfamilyfilmforyoungchildren.

Wehavehadanumberofchildren’sbest-sellersin2006.Harry Potter and the Half-Blood Prince,aswellastheothertitlesintheseries,hasbeeninthepaperbackbestsellerlists.OthertitlesthathaveappearedonthelistsareRichardHorne’sverysuccessful101 things to do…booksandtheSeptimus Heapseriesinbothhardbackandpaperback,aswellasAraminta Spook,bothbyAngieSage.

Small StepsbyLouisSacharwasahardbackbestsellerforusin2006,andintheSummerof2007wewillpublishthepaperbackedition.Hispreviousnovel,Holes,hasbeenoneofourkeybacklisttitlesformanyyears.


Ourlong-standingstrategytoacquireworldrightsresultedinalargenumberoftranslationsub-licencedealsbeingconcludedduringtheyear.HighlightsincludeLarklightbyPhilipReevewhichwassoldtotwelvecountries,The Declarationsoldineleven,Tanglewreckinseventeen,aswellasaverystrongdealforfilmrightsforLarklight withWarner.Thisisthefirstinathree-bookseriesbythemulti-awardwinning,bestsellingauthorPhilipReeve.WewillpublishThe DeclarationbyGemmaMalleyinSeptember2007simultaneouslyintheUK,GermanyandAmerica.Oneofourleadtitlesfor2007,thisdebutnovelisbyaveryexcitingnewauthorintheworldofyoungadultliterature.

WewillalsocontinuetodevelopourcommercialseriesfictionaswellascontinuetobuildouralreadyestablishedauthorslikeAngieSage,PhilipReeve,SueLimb,BenjaminZephaniahandMaryHoffmanintohouseholdnames.

2007willalsoseethepublicationofthehugelyanticipatedfinalinstalmentintheHarry Potterseries,Harry Potter and the Deathly Hallows,whichwewillbepublishinginhardback.ForthefirsttimetherewillbeasimultaneousaudioreleasewhichwewillbepublishinginajointventurewithHelenNicoll.


AdultInfiction,theyearbeganwithaNo1bestseller,JoannaTrollope’sSecond Honeymoon,andendedwithWilliamBoyd’sRestlesswinningtheCostaNoveloftheYearAwardandbeingchosenbyRichard&Judyfortheir2007BookClub.DouglasCouplandjoinedBloomsburyintheUKwithJ Pod,asdidRichardFordwithThe Lay of the Land.OtherAutumnhighlightsincludedanewbookbySusannaClarke,authorofJonathan Strange & Mr Norrell,andtwiceBookershort-listedPatrickMcCabe’snewnovel,hisfirstforBloomsbury,Winterwood,whichhaswontheIrishNoveloftheYearAward.

2006wasaparticularlygoodyearfornon-fiction.WepublishedGordonBrown,AlGore’sbestsellingAn Inconvenient Truth(thefilmof

whichwonanOscar),My Take,theautobiographyofGaryBarlow(atoptenbestseller),andthetie-inbooktochefHestonBlumenthal’ssuccessfultelevisionseriesIn Search of Perfection.Twonewnon-fictioneditorsatBloomsburybroughtwiththemwritersincludingWilliamDalrympleandHughFearnley-Whittingstall.BenSchott’ssuccessfulsecondAlmanacwasalsopublished.

Thelistfor2007isconsistentlystrongwithbigtitlesbeingpublishedthroughouttheyear.BloomsburyisexpandingitslistwithTVtie-insandfoodandcookerybooks.FollowingonfromHestonBlumenthalwepublishedtwotelevisiontie-ins,The Truth about FoodandDon’t Die Young,intheearlySpring.ThesewillbefollowedwithDavidDimbleby’smajorseriesHow We

Built Britainandatie-intothenewseriesfromHestonBlumenthal.TheAutumnwillalsoseeimportantnewbooksbyGermaineGreerandHughFearnley-Whittingstall.InfictionwehavethenewnovelbyBookerPrizewinningMichaelOndaatje,authorofThe English Patient,whileA Thousand Splendid Suns,thenewnovelbyKhaledHosseini,authorofthebestsellingThe Kite Runner,willbeamajorpublishingeventoftheyear.

Wecontinuetostrengthenourinternationalties.WepublishedWilliamBoydinallthreeofourterritoriesandhehasbecomeabestsellerinGermanyforthefirsttime.WearealsotopublishamajorthrillerbyRonanBennettinourterritoriesintheAutumnofthisyear,aswellasSchott’s 2008 Almanac.


ReferenceA&CBlackcelebratesits200thanniversaryin2007.Thelongevityofthebusinessandthepropertiesitowns,suchasWho’s WhoandWhitaker’s Almanack,demonstratesthatthisisanoperationthatcan,andwill,continuetogeneratestrongrecurringrevenuesandprofitsformanyyearstocome.

Thenaturalhistorylisthadaparticularlystrongyear,withanumberofsuccessfulbookspublishedinassociationwiththeRSPB,aphotographicbookonThe World of the Polar BearandasuperblyillustratedbookonGlobal WarningbyGuardianjournalist,PaulBrown.Notablesuccessesinotherareasincludedanewrangeofmediayearbooks,thepublicationofThe Ultimate Teen Book GuideandthelaunchofthesecondeditionofBusiness: The Ultimate Resource,nowgeneratingsignificant

electronicrevenuesandpublishedinsevenlanguages,includingChineseandJapanese.

InJune2006weacquiredMethuenDrama,ahighlyprestigiousandestablishedlistwhichincludesplaysbytopcontemporaryauthorssuchasCarylChurchill,MichaelFraynandMarkRavenhill,aswellasestablishedclassicsbyBertoltBrecht,OscarWildeandDarioFo.ThelistisanexcellentfitwithA&CBlack’sexistingTheatreandDramabooksandthecombinationofthetwolistsgivesA&CBlackthelargestTheatreandDramalistintheUK.TheoperationhasnowbeenfullyintegratedwithourexistingTheatreandDramabusinessandabacklistre-issueandpublicityprogrammeisalreadyunderwaywhichisgeneratingahealthyincreaseinrevenues.

Prospectsfor2007aregood,withstronggrowthpredictedfortheMethuenDramalistinallEnglishlanguagemarkets.NewbookswillincludeaninnovativenewShakespeare in Performanceserieswithrecordingsofwellknownproductionspackagedwiththeplays,andthefirstanthologyofNoelCoward’sletters,manyofthempreviouslyunpublished,editedbyleadingCowardscholarBarryDay.OtherA&CBlackhighlightsfor2007willincludeYoung Wisden,acricketanthologyforchildreninassociationwithWisden;Left for Dead,thedramaticstoryofthelastsurvivorofBritain’smostdisastrousyachtrace;Stolen,anillustratedhistoryofthe200mostimportantstolenartmasterpieces;andthelaunchofanewrangeofeducationalbookstofitthenewlyrevisedPrimaryNationalCurriculum.


During2006westartedthedevelopmentofourfourthmajorelectronicdatabasecalledFinance - the Ultimate Resource.Thedatabaseplansareinternationalinscope,reflectingtheneedfororganisationstobeawareoftheglobalimplicationsoffinancialdecisions,aswellastheimpactofinternationalcorporategovernancechangesonbusinesspractices.Thedatabasewillofferfinanceprofessionalsup-to-datefinancialadviceinprintandonlinetogetherwithcompellingadditionaldailycontentupdatesandfunctionality(e.g.videostreaming,podcasts,onlineevents)targetedattheglobalfinancialcommunity.Thisisatrulyexcitingprojectforusthathasalreadygeneratedconsiderableinterestfromthirdpartieseagertoparticipateinitsdevelopment,brandingandlaunch.

Rightsdealsforanumberofourmajorreferenceprojectsareundernegotiation,someofwhichwerescheduledforcompletionin2006and,iftheyareexecutedin2007aswehope,willcontributeto2007.Theseincludebothexclusiveandnon-exclusivedealsforelectronicpublicationofanumberoftheCompany’sexistingdatabases.

OneofthemostexcitingdigitalprojectswithwhichBloomsburybecameinvolvedin2006isanewweb-basedinitiative.WhileYouTube,MySpaceandBebohavegrabbedthedigitalheadlinesandcreatedthedefinitivemusicandvideoonlinecommunityspace,noonehasyetdonethesameforbooks,especiallyinawaywhichwillbenefitallthemainplayersinthebookbusiness,namelyreaders,writers,booksellersandpublishers.Bloomsburyhasmadeasmallinitial

investmentforacontrollinginterestinthisstart-upoperation.TheprojectisbeingdevelopedbyasmallteambasedinSanFrancisco.Asthisisnotcoretoourbusiness,furtherthirdpartyfundingisbeingsoughttotakethebusinessthroughtolaunchtowardstheendof2007orearly2008.

Bloomsbury.comhascontinuedtooperatesuccessfullyasamarketingtoolandasarevenuegenerator.Thesitehadover7.5millionvisitorsin2006,andtheyviewedover50millionpages.BookshavebeensoldonthesiteformanyyearsbutmorerecentlywehavebeenlookingatotherwaystomonetisethesiteandtakeadvantageoftheUKonlineadrevenuemarketwhichiscurrentlygrowingat40%annually.Wehaveappointedanadvertisingsalesagenttogenerateadditionalrevenuesonourwebsites.


Internationalpublishing

Bloomsbury USA2006wasayearcharacterisedbysignificantsalesacrossthelist,withgrowthasplannedinbothfrontlistandbacklisttitles.Netrevenuesincreased36.1%to£15.01m(2005,£11.03m).Weincreasedourexpensebaseduringtheyeartofuelfutureorganicgrowth.Thisincludedtheadditionofnewcommissioningeditorsandexpansionofourofficespace.Revenuesassociatedwiththisexpansionprogrammearenotexpectedtostartcomingon-streamuntiltheendof2007.Asaresult,theoperationmadealossbeforeinvestmentincomein2006of£0.26m(2005,£0.48mprofit).

AspartofourexpansionprogrammewehavestartedanewimprintheadedbyPeterGinna,formerEditorialDirectoroftheOxfordUniversityPresstradedivisionintheUS.Theimprintwillfocusonhistory,science,economicsand

business.Peter’stalentliesintheabilitytospotaward-winning,high-endnon-fictionbookswithcrossovertradeappeal.WealsohiredNickTrautwein,formerlyofHarperCollins,whowillbedevelopingtitlesintheareasofsportsandcommercialmen’snon-fiction.Astheoperationgrowsandachievesgreatercriticalmasswecontinuetolookforfurthereconomiesofscale.During2006werenegotiatedourprintingcontractsandrestructuredthewaywecreateproductioncomponents,bothofwhichwillcontributetomoreefficientmanufacturingin2007andbeyond.

Ontheadultside,The Nasty BitsbyAnthonyBourdainledthelist,withotherstrongtitlesfollowingclosebehind:Schott’s Almanac,RestlessbyWilliamBoyd,Field Notes from a CatastrophebyElizabethKolbertandTheories of EverythingbyRozChast.Strongbacklistsalesincludethepaperbacks The Highest Tide,History of the World in Six Glasses,The Line of

BeautyandthehardbacksDon’t Try This at Home,Kitchen ConfidentialandThe Map Book.HalfofthemaresharedwithBloomsburyUKandtwowithGermany,withfouroutofthesixoriginatedintheUS.

AlthoughtheUSoperationperformedwellontherevenueline,marginswerehurtbypricingpressurefromretailersandupwardpressureonauthoradvances.

For2007wehaveastrongpublishingprogrammeacrosstheadultandchildren’soperations.Onthechildren’ssidewehaveFreckle Face StrawberrybytheactressJulianneMoore,Princess Academyinpaperback,andourbestsellerGone Wild,whichjustwonaCaldecottPrize.Ontheadultsidewehaveastronglistthroughouttheyear,anchoredbytheAutumntitles:How Life Imitates ChessbyGaryKasparov,No ReservationsbyAnthonyBourdain,JacquesCousteau’slastbookandThe US Constitution RevisedbyLarrySabato,amongstothers.


Berlin VerlagBerlinperformedwellin2006.Turnoverincreased7.5%to£5.88m(2005,£5.47m)andthecompanymadeanoperatingprofitof£0.20m(2005,£0.64m).Despitetheincreaseintheunderlyingbusiness,itwasachallengingyear.ThecompanyhashadtooperateinanincreasinglycomplexGermanretailmarket.Oursuccessin2006drewfromacrossallfourlists,whichshowsthatthecompanyasawholehasachievedmuchgreaterstabilityunderBloomsbury’sownership.

Ourpaperbacklistperformedwellintheyear.Astronglistwasenhancedbytheimpactofabetterfocusedmonthlyoutputandexcellentandmorecommercialcoverdesigns.ThestarperformerwastheGermanlanguageeditionofThe Kite Runner.

Growthinthechildren’sareawasencouragingasthelistcontinuedtoestablishitselfinthemarket.WenowpublishanumberofimportantGermanchildren’sauthors,especiallyZoranDvrenker.Particularlyencouragingwasthenewnon-fictionlist,whichlaunchedinAutumn2006.101 Dinge,

ourbestsellingchildren’stitleintheyear,camefromthisnewlistandwasatitlesharedacrosstheBloomsburyGroup.

BerlinVerlag,ourflagshiphardbackimprint,showedanimprovedperformanceover2005.AmonganumberoftitleswhichperformedwellwasErbin des Verlorenen Landes,theGermaneditionofKiranDesai’sBookerPrizewinningnovel,Inheritance of Loss.

Thesuccessofourmorecommercialhardbackimprint,BloomsburyBerlin,continuedwiththeworksofBenSchott.OtherimportanttitlesforthislistincludedUnentschlossen(Indecision)byBenjaminKunkel,oneofAmerica’smostimportantnewwriters,andAmericanbestsellinghealthguruDrAndrewWeil’sGesund Älter Werden.

2006wasayearofconsolidationintheGermanbooktradewithbook-sellingchainsgaininginmarketshareattheexpenseoftheindependentsector.Ourdecisionin2005toincreasethenumberofpublicationdatesacrosstheprogrammehascontinuedtobringbenefitsasweareableto

positionleadtitlesmoresuccessfullyacrosstherangeofcustomersandalsotoachieveexcellentlevelsofpublicityandpresscoverage.

Prospectsfor2007aregood.TheyeargotofftoaverypositivestartwhenWilliamBoyd’sRuhelos(Restless),anothertitleandauthorsharedacrosstheBloomsburyGroup,wasfeaturedontheimportantGermanTVshowLesen!justtwoweeksafteritwaspublishedinJanuary.ItimmediatelyenteredtheSpiegelbestsellerlist.BerlinVerlag’smostprestigiousGermanauthorIngoSchulze’snewshortstorycollectionhaswontheimportantLeipzigBookFairLiteraryPrizeandiscurrentlyalsointheSpiegelbestsellerlist.

OurstrategytoaddmoreGermanauthorstoourlists,whichhadpreviouslybeendominatedbyworksintranslation,isbearingfruitandwehavetwoTVtie-insonBloomsburyBerlin’sSpringlist.Thefirstofthese,Die FluchtbyGabrielaSperlandTatjanaGräfinDönhoff,wentintotheSpiegelbestsellerlistatNumber6inmid-March.


IntheAutumntheleadtitlewillbethesecondnovelbyKhaledHosseini,authorofThe Kite Runner,forwhichamajorcampaignisinpreparation.

Dividend

Thedirectorsarerecommendingafinaldividendof3.00pencepershare(2005,3.00pencepershare)makingatotalof3.66pencepershare(2005,3.60pencepershare)fortheyear.Thefinaldividendwillbepayableon5July2007toOrdinaryShareholdersontheregisteratthecloseofbusinesson25May2007.

Managementandstaff

Iwouldliketothankourstafffortheirtremendouscontributiontoaverybusyyearwherewehaveseenstrategicaswellasoperationalachievements.

Currenttrading,developmentsandprospects

Theseareexcitingtimesforthebookpublishingindustry.Digitisationofconsumerbookswillcontinuetogathermomentumasnewgeneratione-readersbecomeavailable.

Wearecontinuallylookingatwaysofimprovingtherevenue-generatingcapabilitiesofourintellectualproperty.WearecurrentlyworkingonanumberofpreferredpartnerarrangementswithUKTVandproductioncompanies.Therelationshipworkstwoways:firstly,Bloomsburycansub-licenseTVandfilmrightsofbooksdirecttothem,andsecondly,Bloomsburycanacquirebookpublishingrightstoup-comingTVprogrammesandfilms.

2006sawconsiderableinvestmentinestablishedauthorsforourfuturepublishingprogramme,andweexpectthisinvestmenttobearfruitoverthenexttenyears.Wewillcontinuetoinvestinoutstandingauthors,butwewillnotforgetthatourrootslieinidentifyingfirst-timeauthorsand

buildingtheirbooksintobestsellers.Withthecontinuingupwardpressureonauthoradvancesthiswillbeavitalpartofourstrategytomanageourworkingcapitalinthemostefficientmanner.

2007hasgotofftoagoodstartwithanumberofbooksalreadyinthebestsellerlists.TheseventhandhighlyanticipatedHarryPotterwillbepublishedon21July.Maximisingourbacklistincomeandcelebratingour21stbirthday,wehavere-released21ofourbestsellingtitles.Ourpositionasaninternationalpublisherisnowfirmlyestablished,andweexpecttoseefurtherbenefitsfromthisandthenewareasofpublishingthatweareenteringinthecurrentyearandintothefuture.

NigelNewtonChairman

16Financial review

Results

TurnoverfortheGroupdecreased31.5%to£74.77m(2005,£109.11m).Bloomsbury’sprimarysegmentalanalysisisbygeographicbreakdown,whichfollowsourinternationalpublishingstrategy.TurnoverintheUKdecreased41.8%to£53.88m(2005,£92.62m).USturnoverincreased36.1%to£15.01m(2005,£11.03m)onthebackofastrongpublishingprogramme.SomeofthekeyperformingtitleswereThe Nasty BitsbyAnthonyBourdain,Schott’s Almanac 2007andPrincess AcademybyShannonHale.ForContinentalEurope,revenues,whichweregeneratedbyBerlinVerlag,increased7.5%to£5.88m(2005,£5.47m).

TheGroup’ssecondarysegmentaldisclosureisbydivision,whichissplitintothreemainoperatingareas:Children’s,AdultandReferencepublishing.ThesedivisionsareacombinationoftheUK,USandGermanoperations.Inaddition

totheprovisionofturnoverbydivisionwhichhasbeendisclosedinpreviousyears,weareprovidingadditionaldisclosureongrossprofitandcontributiontodivisionaloperatingprofitbeforeadministrativeexpenses.For2006thebreakdownofturnoverbetweenthethreeareaswas:Children’s37%(2005,63%),Adult44%(2005,25%)andReference19%(2005,12%).

RevenuesintheChildren’sdivisiondecreased60.3%to£27.37m(2005,£69.01m).Harry Potter and the Half-Blood Princewaspublishedinhardbackin2005.Thegrossprofitfor2006wasdown61.0%to£13.25m(2005,£33.96m)withacontributiontoadministrativeexpensesdown62.9%to£9.39m(2005,£25.30m).ThereductionincontributionwasduetoHarry Potter and the Half-Blood Princebeingpublishedinhardbackin2005.

IntheAdultdivision,revenuesincreased18.9%to£32.67m(2005,£27.47m).Therevenue

increasewasdrivenbyanumberofstrongsellingtitlesincludingThe Kite Runner(UKandGermany),Schott’s Almanac 2007(UK,USandGermany),My Take(UK),The Nasty Bits(US)andIn Search of Perfection(UK).Thegrossprofitfor2006wasdown0.2%to£16.04m(2005,£16.07m)duetohigherroyaltycostsbothintheUKandtheUS.Contributiontoadministrativeexpenseswasdown5.3%to£9.10m(2005,£9.61m).

RevenuesintheReferencedivisionincreased16.7%to£14.74m(2005,£12.63m)duetoacombinationoftheacquisitionofMethuenDramaduringtheyear,increasedrevenuesfromtheexistingpublishinglistandstrongerrightssales.Thegrossprofitfor2006wasup23.5%to£6.88m(2005,£5.57m)withacontributiontoadministrativeexpensesup29.6%to£3.33m(2005,£2.57m).

Rightssalesandotherincomeincreased26.8%to£4.82m(2005,£3.80m).


Overallgrossprofitdecreased34.9%to£36.17m(2005,£55.59m).Grossprofitmargindecreasedto48.4%(2005,51.0%)duetothelowerthanexpectednumberofbestsellinghigher-marginbooksduringtheyearandalsotheabsenceofabookonthescaleofthehardbackeditionofHarry Potter and the Half-Blood Prince.

Marketinganddistributioncostsdecreasedby20.8%to£14.35m(2005,£18.11m).Thedifferencewasduetothelowerturnoverduring2006andalsothefactthatweincurredhighercostsonthelaunchofHarry Potter and the Half-Blood Princein2005.Administrativeexpensesdecreased2%to£18.31m(2005,£18.68m).AlthoughtherewassignificantinvestmentintheGroup’soverheadinfrastructuretocontinuetherateoforganicgrowth,thesewereoffsetbycostsincurredinthelaunchofHarry Potter and the Half-Blood Princein2005andtheabsenceofperformancerelatedbonusesin2006.Profitbeforeinvestmentincomedecreased81.3%to£3.51m(2005,£18.81m).

Investmentincomeincreasedby24.5%to£1.73m(2005,£1.39m)asaresultofincreasedaveragecashbalancesduringtheyearandhigherinterestrates.Financecostsreducedto£0.05m(2005,£0.07m).

Theeffectivecorporationtaxratefortheyearis29.7%(2005,27.2%),justbelowtheUKstatutoryrateof30%.Theincreasefrom2005mainlyreflectstheabsencein2006ofanyrecognitionofpriorperioddeferredtaxassets,

whichin2005reducedtheGroup’seffectivetaxrateby2.5%.

Basicearningspersharedecreasedby75.4%to4.99pence(2005,20.30pence).Dilutedearningspersharedecreasedby75.4%to4.90pence(2005,19.93pence).

Balancesheet

Non current assetsProperty,plantandequipmentincreased43.8%to£2.33m(2005,£1.62m)reflectingthefinalphaseofimprovementstotheGroup’sofficesinSohoSquare.Thesecostsarebeingamortisedovertheremaininglifeofthepropertyleases.Intangibleassets,whichcomprisegoodwillandpublishingrelationships,increasedto£17.67m(2005,£15.51m).Ofthis,goodwillhasincreasedto£17.40m(2005,£15.16m),whichisprimarilyduetothegoodwillarisingontheacquisitionofMethuenDrama.

Current assetsInventoriesincreased4.6%to£15.82m(2005,£15.13m),ofwhichworkinprogressdecreasedby20.1%to£3.07m(2005,£3.84m)duetothetimingoftitlesattheworkinprogressstage.Stocksoffinishedgoodsincreased11.8%to£12.42m(2005,£11.11m)duetoacombinationofthestockholdingofanincreasednumberoftitlespublishedbytheGroupduringtheyearandthetimingofthereleaseoftitlesattheendofthefinancialyear.

Tradeandotherreceivablesincreased1.2%to£49.22m(2005,£48.63m),ofwhichtradereceivablesdecreased17.2%to£17.61m(2005,£21.27m).Attheendof2005therewerestillreceivablesfromthepublicationofthehardbackofHarry Potter and the Half-Blood Princewhichwerereceivedin2006.

18Financial review

Withintradeandotherreceivables,prepaymentsandaccruedincomeincreased10.3%to£29.34m(2005,£26.59m)reflectingtheincreaseininvestmentintitlesacrossallthreedivisions.Asbooksarereturnablebycustomers,theGroupmakesaprovisionagainstbookssoldintheaccountingperiodwhichisthencarriedforwardintradedebtorsinthebalancesheetinanticipationofbookreturnsreceivedsubsequenttotheyearend.Aprovisionof£7.9mforfuturereturnsrelatingto2005andpriorsalesincludingHarry Potter and the Half-Blood Princewascarriedforwardintradedebtorsinthebalancesheetat31December2005andreturnsreceivedin2006wereoffsetagainstthisprovision.ThisprovisionrelatestotheUKtradeoperation(excludingA&CBlack,BloomsburyUSAandBerlinVerlag).Giventhelowerturnoverin2006andastherewasnonewHarry Potterduringtheyear,theclosingprovisioncarriedforwardintradedebtorsinthebalancesheetat31December2006was£1.6mforthispartofthebusiness.

Equity and liabilitiesAt31December2006totalequitystoodat£89.33m(2005,£88.78m).Theincreasewasprincipallyduetoretainedearningsof£0.98m(2005,£12.43m)andshareoptionsexercisedduringtheyear.

Tradeandotherpayablesdecreased52.7%to£20.79m(2005,£43.97m).Tradepayablesincreasedby15.6%to£6.29m(2005,£5.44m),whichwasattributabletothetimingofsupplierpaymentsattheyearend.Accrualsanddeferredincome,whichisincludedintradeandotherpayables,decreasedto£12.23m(2005,£36.36m).Accrualsanddeferredincomeincludesroyaltypaymentstoauthors,whichvaryfromyeartoyeardependingonturnoverandtheauthors’royaltyrateswhichtypicallyescalateontriggeredthresholdsasvolumesalesincrease.In2005theGrouppublishedthehighestsellingbookinitshistory.

Theroyaltiesduetoauthorsaccruedat31December2005werepaidon31March2006.Theabsenceofabookpublishedonthisscalegaverisetoalowerroyaltyliabilityat31December2006.Corporationtaxpayabledecreasedto£0.52m(2005,£2.58m)primarilyduetolowerprofitsgenerated.

Overseasoperations

TurnoverforBerlinincreased7.5%to£5.88m(2005,£5.47m).ThestrategytohaveGermantranslationrightspublishedthroughBerlinisworkingwellwithtitlessuchasRestless,The Kite RunnerandtheSchottseriesappearingontheGermanbestsellerlists.Profitbeforeinvestmentincomefortheyearwas£0.20m(2005,£0.64m).

TurnoverforBloomsburyUSAincreased36.1%to£15.01m(2005,£11.03m)onthebackofastrongpublishingprogramme.Higherroyaltycostsrelatingtothebookspublishedduringtheyearwereincurredand,aspartoftheGroup’sorganicgrowthstrategy,therewasadditionalinvestmentinnewcommissioningeditorsandrelatedsupportandservicecosts.Asaresultoftheincreasedinvestment,BloomsburyUSAmadealossbeforeinvestmentincomefortheyearof£0.26m(2005,£0.48mprofit).


CashflowTheGrouphadacashoutflowfromoperatingactivitiesbeforetaxof£19.92mfortheyear(2005,£31.14minflow).Thecashinflowin2005wasaresultofthehigherrevenuesgeneratedduringtheyear.Thedeclineincashduringtheyearistheresultofworkingcapitalmovements,primarilypaymentofroyaltiesfrom2005publications,whichwerepaidtoauthorson31March2006,andinvestmentsinnewtitlesforpublicationin2006andbeyond.Corporationtaxpaidduringtheyearwas£5.20m(2005,£5.90m).Includedinthepurchaseofproperty,plantandequipmentcostof£1.38m(2005,£1.27m)isthefinalrefurbishmentcostoftheGroup’sofficesinSohoSquare.£2.42mpurchaseofbusinesseswasfortheacquisitionofMethuenDrama(2005,£0.03m).Duringtheyear£0.80m(2005,£1.80m)wasreceivedfromtheexerciseofshareoptions,and£2.67mofdividendswerepaid(2005,£2.22m).

Futureinvestmentandstrategy

Corporateacquisitionsremainanimportantpartofourgrowthstrategy.Wehavereviewedanumberofpotentialacquisitionstodate,applyingstrictcriteriatoensureanytargetscomplementtheexistingbusinessandprovidefuturegrowthopportunitiesforBloomsbury.Weareinagoodpositionwithastrongbalancesheetandarewellplacedtofundanyacquisitionsthatmeetthesecriteria.

ColinAdamsACAGroupFinanceDirector

20Directors

Executive

Nigel Newton(51)isthefounderofBloomsbury,andisChairmanandChiefExecutive.AftertwoyearsasassistanttothesalesdirectoratMacmillanLondon,hejoinedSidgwick&Jacksonin1977where,duringthenextnineyears,hebecamesalesdirectoranddeputymanagingdirector,beforeleavingtofoundBloomsburyin1986whenhesawanopportunityforanew,independent,medium-sizedpublisherofbooksofexcellenceandoriginality.

Liz Calder(69)isaco-founderofBloomsburyandisPublisher.ShestartedherpublishingcareeratVictorGollanczin1970whereshewaspublicitymanagertheneditorialdirector.In1978shemovedtoJonathanCapeaseditorialdirectorwhereshewasresponsibleforthepublishingoftwoBookerPrizewinners,Midnight’sChildrenbySalmanRushdieandHotelduLacbyAnitaBrookner.AtBloomsburyshehasbeenresponsiblefortwofurtherBookerwinners,TheEnglishPatientbyMichaelOndaatjeandTheBlindAssassinbyMargaretAtwood.ShewasafoundingdirectoroftheGrouchoClubandhasservedontheLiteraturePaneloftheArtsCouncil.SheisaDirectorofBrazilianContemporaryArtsinLondon,andisthefounderpresidentoftheParatiInternationalLiteraryFestivalinBrazil.During2004shewasawardedtheNationalOrderoftheSouthernCrossandtheOrderofCulturalMeritbytheBrazilianGovernment.

Colin Adams ACA(46)isGroupFinanceDirector.HequalifiedasacharteredaccountantwithKPMGbeforejoiningCAMGalaxyHoldingsLtdasfinancialcontrollerin1989.In1991hejoinedLaroussePLC,theUKsubsidiaryofGroupedelaCiteSA,alargeFrenchpublisher,asfinancialcontroller,beforejoiningBloomsburyinApril1994asFinanceDirector.HeisalsoFinanceDirectorofA&CBlackPublishersLtd,WalkerPublishingCompany,Inc.andBerlinVerlag,aswellasExecutiveVicePresidentofDianaPublishingInc.

Non-executive

Charles Black (70)wasappointedViceChairmanandseniorindependentnon-executivedirectorofBloomsburyinJune2005havingoriginallyjoinedtheBloomsburyBoardinJune2004.HestartedworkingforA&CBlackin1960andwasappointedChairmanandJointManagingDirectoroftheBoardin1973.HesubsequentlysteppeddownfollowingtheacquisitionofA&CBlackbyBloomsburyin2000.MrBlackhasconsiderableknowledgeofreferenceandpracticalnon-fictionpublishingandwasinvolvedwiththestrategicacquisitionsA&CBlackmadeduringhistimeasChairman.HeisChairmanoftheAuditandRemunerationCommittees.

Michael Mayer(55)joinedtheBloomsburyBoardinJanuary2002.HeisaSanFrancisco-basedventurecapitalist.MrMayerwasactivelyinvolvedintheearlydevelopmentofAOLandhasworkedwithabroadrangeofcompaniesduringhis20yearsinventurecapital.Healsohasalonghistoryofinvolvementinstrategicacquisitiontransactions,whichshouldprovehelpfulastheCompanyseekstogrowthroughacquisition.MrMayerwaspreviouslyapartneratthethenPriceWaterhouse.

Jeremy Wilson(57)wasappointedtotheBloomsburyBoardinNovember2005.HeisViceChairman,BusinessBanking,BarclaysBankPLC.HejoinedBarclaysin1972.DuringhiscareeratBarclays,MrWilsonhasheldavarietyofseniormanagementpositions,bothintheUKandabroad,responsibleformajorcorporateandinstitutionalclientbusiness.Hehasseveralexternalinterestsincludingappointmentsintheeducationalfield.


Application of the Principles of Good Governance

TheBoardhasreviewedtherequirementsoftheCombinedCode,asissuedbytheFinancialReportingCouncil.ThewaysinwhichtheCompanyappliesandcomplieswiththeprinciplesoftheCodearedescribedbelowand,inrespectofremuneration,onpages27to34.

The Board

At31December2006,theBoardconsistedofthreeexecutivedirectorsandthreenon-executivedirectors,includingaseniorindependentnon-executivedirector.Thenamesofthesixcurrentdirectorsandtheirrespectiveresponsibilitiesareshownonpage20.PaulSchererretiredasanon-executivedirectoron3April2006.

TheBoardconsiderseachofthethreenon-executivedirectorstobeindependentincharacterandjudgementanddoesnotconsiderthatthereareanyrelationshipsorcircumstanceswhichaffect,orcouldappeartoaffect,theirindependentjudgement.PriortohisretirementfromtheBoardofBloomsburyon3April2006,oneofthenon-executivedirectors,PaulScherer,hadheldinthelastthreeyearsthepositionofnon-executivechairmanofaliteraryagencywithwhichtheGrouphasanongoingtradingrelationship.HeretiredfromthispositioninMay2004.HehadalsobeenontheBoardofBloomsburyforovertwelveyears.IntheopinionoftheBoardneitherhisholdingthechairmanshipoftheliteraryagencynorhislengthofserviceeverimpairedhisindependence.

TheBoardoperatesbothformally,throughBoardandCommitteemeetings,andinformally,throughregularcontactamongstdirectors.Highleveldecisionsonsuchmattersasstrategy,financialperformanceandreporting,dividends,riskmanagement,majorcapitalexpenditure,acquisitionsanddisposalsarereservedfortheBoardorBoardCommittees.Foritsregularformalmeetings,theBoardreceivesappropriateinformationinadvancefromthemanagement.

ThedirectorscanobtainindependentprofessionaladviceattheCompany’sownexpenseintheperformanceoftheirdutiesasdirectors.

TheBoardformallyapprovestheappointmentofallnewdirectorsputforwardbytheNominationsCommittee(seebelow).Alldirectorsarerequiredtosubmitthemselvesforre-electionatthefirstAnnualGeneralMeetingfollowingtheirappointmentandsubsequenttothissubmitthemselvesforre-electionattheAnnualGeneralMeetingonarotationalbasis,whichensuresthateachdirectorissubmittedforre-electionapproximatelyeverythreeyears.

Proposalstore-electdirectorsaresetoutintheDirectors’Reportonpage35andintheNoticeoftheAnnualGeneralMeetingonpage86.

Board Committees

Remuneration Committee ThecurrentcompositionoftheRemunerationCommitteeisshownonpage27andthestatementoftheremunerationpolicydevelopedbytheCommitteeanddetailsofeachdirector’sremunerationaregivenwithintheDirectors’RemunerationReportsetoutonpages27to34.ThetermsofreferenceoftheRemunerationCommitteeareavailableontheCompany’swebsite.

Audit Committee ThecompositionoftheAuditCommitteeisshownonpage24.TheAuditCommitteeoperatesundertermsofreferenceagreedbythewholeBoardandmeetswiththeexternalauditorstoconsidertheCompany’sfinancialreportinginadvanceofitspublication,andwiththeinternalauditorstoconsidertheinternalauditprogramme,feedbackandreports.ThetermsofreferenceoftheAuditCommitteeareavailableontheCompany’swebsite.

Nominations Committee ThemembershipoftheNominationsCommitteecomprisesNigelNewton(itsChairman),LizCalderandthethreenon-executivedirectors,CharlesBlack,MichaelMayerandJeremyWilson.PaulSchererwasamemberoftheCommitteeuntilheretiredfromtheBoardoftheCompany,andthereforefromthisCommittee,on3April2006.TheCommitteemeetsasrequiredandoperatesundertermsofreferenceagreedbythewholeBoard,andwhichareavailableontheCompany’swebsite.

Corporate governance

22Corporate governance

Board and Committee Attendance

ThefollowingtablesetsouttheattendanceofdirectorsatBoardandCommitteemeetingsduring2006.

Director Board Remuneration Audit Meetings Committee Committee (Maximum13) (Maximum3) (Maximum5)

NigelNewton 13 - -ColinAdams 12 - -LizCalder 8 - -CharlesBlack# 13 3 5MichaelMayer# 13 3 5JeremyWilson# 11 3 5PaulScherer#* 5 - 1

#Non-executivedirector*ForPaulScherer,whoretiredasanon-executivedirectoron3April2006,pleasenotethatthemaximumnumberofmeetingsthathecouldhaveattendedisfiveBoard

meetings,oneAuditCommitteemeeting,butnoRemunerationCommitteemeetings.

TherewerenomeetingsoftheNominationsCommitteeduringtheyear.

Board Evaluation

DuringtheyearaformalBoardevaluationprocesswasinitiated.DesignedtoprovideamechanismtoassessindividualdirectorandoverallBoardandCommitteeperformance,theevaluationhastwostages:

Stage One: Self EvaluationAselfassessmentcompletedbyeachdirectorandreviewedbytheChairman(orinthecaseoftheChairman’sselfevaluation,bytheViceChairman,whoinvolvestheothernonexecutivedirectorsasnecessary).Thereviewerdeterminesfollow-upactionrequiredincludingfacetofacemeetings,traininganddevelopmentortheimplementationofnewprocessesorprocedures.ThismayalsogenerateitemsfordiscussioninStageTwo.CommencedinDecember2006,StageOnewascompletedinSpring2007.

Stage Two: Board/Committee Evaluation and CommunicationConductedwithinaBoardforumenvironmentandpromptedbykeypre-determinedquestions(includinganyitemsgeneratedfromStageOneoftheprocess),theBoardexaminesseparatelytheperformanceoftheBoard,theBoardCommitteesandBoardCommunication.Theforumisminutedandactionpointsnoted.StageTwowasalsocompletedinSpring2007.

Shareholder Communications

TheBoard’sassessmentoftheCompany’spositionandprospectsaresetoutintheChairman’sStatementonpages3to15,theFinancialReviewonpages16to19andwherenotcoveredinthosereports,theBusinessReviewascontainedintheDirectors’Reportonpages35to41.

TheexecutivedirectorsmeetregularlywithinstitutionalshareholderstodiscusstheCompany’sperformanceandfutureprospects.TheviewsofinstitutionalshareholdersarecanvassedandsubsequentlyreportedbacktotheBoard.TheAnnualGeneralMeetingisusedasaforumforcommunicationwithprivateshareholders.


Compliance with the Combined Code

TheBoardconsidersthattheCompanyhascompliedthroughouttheyearended31December2006withtheCombinedCodeexceptinrelationtothefollowingmatters:

Provision A.2.1TheChairmanisalsotheChiefExecutiveoftheGroup.GiventhenatureoftheCompanyandthecentralroleplayedbyNigelNewtoninthecontinuingdevelopmentofthebusinesswhichhefounded,itisconsideredthatthereisabenefitnottohavetheserolesdivided.TheBoardbelievesthat,giventhepresenceofaViceChairman,whoisalsoseniorindependentnon-executivedirector,anequalnumberofindependentnon-executivedirectorstoexecutivedirectorsontheBoard,andeachdirectorhavingequalvotingrights,abalanceofpowerandauthorityisensuredontheBoardsothatnooneindividualhassoledecisionmakingpowers.ThebalanceandcompositionoftheCompany’sBoard,however,isperiodicallyconsideredinformalmonthlyBoardmeetings,strategicreviewsandaspartoftheBoardEvaluationprocesssetoutabove.

Provision C.3.4 During2007theCompanyisputtinginplace,asrequiredbytheCombinedCode,arrangementsforstafftoraisequestionsaboutfinancialreporting,andfortheCompanytolookintoandfollowtheseupasnecessary.

24

TheCombinedCodeintroducedtherequirementsforthedirectorstoreviewonanongoingbasistheeffectivenessofthesystemsofinternalcontrol,includingfinancial,operational,complianceandriskmanagement.TheBoardacknowledgesthatithasoverallresponsibilityfortheGroup’ssystemofinternalcontrolandformonitoringitseffectiveness.

Audit Committee

TheAuditCommitteecomprisesthethreenon-executivedirectors,CharlesBlack(itsChairman),MichaelMayerandJeremyWilson.PaulSchererwasamemberoftheCommitteeuntilheretiredfromtheBoardoftheCompany,andthereforefromthisCommittee,on3April2006.AllmembersoftheCommitteehavesignificantfinancialexperienceduetotheseniorpositionstheyholdorhaveheldinthepast.

TheAuditCommitteereportstotheBoardonanymatterswhichitconsidersthatactionorimprovementisneeded,andmakesrecommendationsastothestepstobetaken.InparticulartheCommitteeisresponsiblefor:

• ensuring that the financial performance of the Group is properly monitored and reported;

• monitoring the formal announcements relating to financial performance;

• meeting the external auditors and reviewing reports prepared by the external auditors and management relating to accounts and internal control systems;

• appointing internal auditors, agreeing the internal audit plan and meeting with them to review reports and consider future internal audit strategy; and

• making recommendations to the Board in respect of external auditor appointment and remuneration.

Theeffectivenessoftheinternalcontrolssystemsfortheperiodcoveredbytheaccountshasbeenexamined.Theexaminationcomprisedadetailedreviewofinternalcontrolswithanysignificantfindingsoridentifiedrisksbeingcloselyexaminedsothatappropriateactioncanbetaken.Althoughtherewasnoformalinternalauditprogrammeduringtheyear,theaccountingfunctionsweresubjecttoperiodicinternalreview.

GiventheincreasingsizeoftheGroup,theAuditCommitteetookthedecisionduring2005toimplementaformalinternalauditprogramme.Initialstepsweretakenin2005,includingreviewingtheresourcenecessary,followingwhichtheAuditCommitteedecidedtoengageanexperiencedexternalproviderofinternalauditservices.KPMGLLPwereappointedtotheroleinDecember2006.SincetheirappointmenttheyhaveworkedwiththeCompanytodeveloparisk-basedinternalauditprogrammefor2007andbeyond.

Key Controls and Procedures

TheBoardmaintainsfullcontrolanddirectionoverappropriatestrategicfinancial,organisationalandcomplianceissues,andhasputinplaceanorganisationalstructurewithdefinedlinesofresponsibilityanddelegationsofauthority.

TheannualbudgetandforecastsarereviewedbytheBoardpriortoapprovalbeinggiven.ThisincludestheidentificationandassessmentofthebusinessrisksinherentintheGroupandthepublishingsectorasawholealongwithassociatedfinancialrisks.

Corporate governance internal control


Thesystemofinternalfinancialcontrolisdesignedtoprovidereasonable,butnotabsolute,assuranceagainstmaterialmis-statementorloss.Thekeyproceduresinclude:

• detailed budgeting programme with an annual budget approved by the Board;

• regular review by the Board of actual results compared with budget and forecasts;

• regular reviews by the Board of year end forecasts;

• established procedures for acquisition of books for future publication, capital expenditure and expenditure incurred in the ordinary course of business;

• detailed budgeting and monitoring of costs incurred on the development of reference databases;

• established procedures for credit evaluation of new and existing customers with credit insurance on material customer accounts;

• reporting to, and review by, the Board of changes in legislation and practices within the publishing sector and accounting and legal developments pertinent to the Group;

• appointing experienced and suitably qualified staff to take responsibility for key business functions to ensure maintenance of high standards of performance; and

• an internal audit programme for 2007 and beyond (see page 24).

Auditor Independence

TheAuditCommitteealsoundertakesaformalassessmentoftheexternalauditors’independenceeachyearwhichincludes:

• confirmation of the external auditors’ objectivity and independence in the provision of non-audit services provided to the Group by the use of separate teams to provide such services where appropriate;

• discussion with the external auditors of a written report detailing relationships with the Company and any other parties that could affect independence or the perception of independence;

• a review of the external auditors’ own procedures for ensuring independence of the audit firm and partners and staff involved in the audit, including the regular rotation of the audit partner; and

• obtaining written confirmation from the external auditors that, in their professional judgement, they are independent.

Ananalysisofthefeespayabletotheexternalauditfirminrespectofbothauditandnon-auditservicesduringtheyearissetoutinNote2totheaccounts.

26

Risk Management

TheBoardhasacommitteetodealwiththerecommendationsoftheTurnbullCommitteeonRiskManagement.NigelNewtonandColinAdamsrepresenttheBoardontheRiskManagementCommittee,whichmeetstoassesstherisksfacingthebusiness.Asaresultofthisexercise,theexistingcontrolsarereviewedandnewcontrolsimplementedwhereappropriateinthoseareaswhererisksarejudgedtohavethegreatestlikelihoodandimpact.AfullreviewoftheGroup’sRiskRegistersettingouttherisksfacingthebusinessandthecontrolsinplacewasconductedbytheRiskManagementCommitteeduring2006.ConsequentlythedirectorsbelievethattheGroupwascompliantwiththeTurnbullGuidelinesthroughouttheyearandsincetheyearend.

Principal Risks and Controls

Asdescribedabove,theCompanyunderstandstheimportantroleRiskManagementplaysinunderpinningtheGroup’scurrentperformanceandfuturesuccess.Thetotalavoidanceofriskinabusinessenvironmentisimpossible,howeveractionsaretakenandprocessesareputinplacetomanageandmitigateexposure.Materialriskstothebusinessfallintothefollowingthreecategories:

Title Acquisition RiskIncreasedpressuresfromauthors’agentsforhigheradvanceshavethepotentialtoreducemarginswhenthoseadvancesremainunearned.Whenconsideringatitleacquisition,aninitialpurchaseevaluationprocessiscarriedoutandsignedoffataseniorlevel.Thereisalsoasystemofcontinuousreview,analysisandfeedbackontitleperformancetobetterinformfutureacquisitions.

Market RiskTheprincipalmarketriskinbookpublishingisthatconsumersmaynotbuyabookwhichhasbeensoldtoretailers,andthatsuchunsoldbooksarereturnedforcredit.Alsocustomersareseekingtopricepromotemanytitleswhichcanreducemargins.ThestepstakentogrowrevenuesareasoutlinedintheChairman’sStatement.

Business Continuity RiskThesecurityandrobustnessofoursystems,inparticularourITsystems,areimportantinallaspectsofourbusiness,whetherinrespectoftheeditorialandproductionprocesses,publicity,marketingandsales,orinrespectofstockmonitoringandorderfulfilment.ITprocessesarecontinuallyupdatedandsecurityimproved,withdailyoffsitebackupofelectronicfiles.Theperformanceofourkeyprintanddistributionsuppliersisregularlymonitored.

Corporate governance internal control


TheRemunerationCommitteecomprisedat31December2006thethreenon-executivedirectors,CharlesBlack(itsChairman),MichaelMayerandJeremyWilson.PaulSchererretiredfromtheBoardoftheCompany,andthereforefromthisCommittee,on3April2006.

TheRemunerationCommitteeoperatesundertermsofreferenceagreedbythewholeBoard.

Remuneration Report

TheBoardhashadfullregardtotherequirementssetoutintheCompaniesAct1985Schedule7A(Directors’RemunerationReportRegulations2002)inpreparingthisreport.AresolutionwillbeputtotheshareholdersattheAnnualGeneralMeetingtobeheldon28June2007invitingthemtoconsiderandapprovethisreport.

Compliance

TheconstitutionandoperationoftheCommitteeisincompliancewiththeprinciplesandbestpracticeprovisionsassetoutintheCombinedCode,andfullconsiderationwasgiventotheseindeterminingtheremunerationpackagesfortheexecutivedirectorsfor2006and2007.

FrominformationavailableonthepublicrecordatCompaniesHouseinpublishedRemunerationReports,theCommitteewasabletoassessduring2005thattheremunerationlevelsoftheexecutivedirectorswereatalevelcomparabletoothermediacompaniesofasimilarsizeandcommensuratewiththeirdutiesandresponsibilities.In2006theRemunerationCommitteetookeconomicandbusinessforecastsintoconsiderationindeterminingtheexecutivedirectors’remunerationlevels

Policy on Remuneration of Executive Directors

TheRemunerationCommitteereviewstheperformanceofexecutivedirectorsandsetsthescaleandstructureoftheirremunerationandthebasisoftheirserviceagreementswithdueregardtotheinterestsofshareholders.Indeterminingthatremuneration,theRemunerationCommitteeseekstoofferacompetitiveremunerationstructuretomaintainthehighcalibreoftheCompany’sexecutiveboard.TheCommitteebelievesthatmaintainingtheGroup’sbusinessgrowthandprofitrecordrequiresanoverallcompensationpolicywithastrongperformance-relatedelement.

Themaincomponentsoftheexecutivedirectors’remunerationare:

1) Basic salaryBasicsalaryforeachdirectorisdeterminedbytheRemunerationCommitteetakingintoaccountexternalmarketdata.TheCommittee’spolicyistoreviewsalariesannually.

2) Annual bonusTheCompanyoperatesanannualbonusschemeforitsexecutivedirectorsbasedonacombinationofperformanceandprofitrelatedtargets.ForNigelNewtonandColinAdamstheamountpayableisdeterminedbyreferencetoacombinationofthefinallevelofpre-taxprofitachievedintheyearagainstthebudgetedpre-taxprofit(“theProfitRelatedElement”)andperformancetargetsfortheGroup’sUSandGermanbusinesses.ForLizCaldertheamountpayableisdeterminedbyreferencetoacombinationoftheProfitRelatedElementandperformancetargetsforherpublishinglist.

For2006thebonusforeachofthedirectors,whichisnotpensionable,waslimitedto100%ofbasicsalaryattheendofthefinancialyear.Nobonuseswerepaidtothedirectorsinrespectof2006.

3) Pension contributionsTheGroupdoesnotoperateapensionscheme,butNigelNewtonandColinAdamseachreceiveacontributionof10%oftheirbasicsalarytotheirprivatepensionschemeandLizCalderreceivesacontributionof18%ofherbasicsalarytoherprivatepensionscheme.

Directors’ remuneration report

28Directors’ remuneration report

4) Share options, the Performance Share Plan and Sharesave PlanTheGroupbelievesthatshareownershipbyexecutivedirectorsstrengthensthelinkbetweentheirpersonalinterestsandthoseoftheshareholdersinrespectofshareholdervalue.UponlistingoftheCompanyin1994,ApprovedandUnapprovedExecutiveShareOptionSchemes(“theSchemes”)wereintroduced.

AtthetimeoptionsweregrantedundertheApprovedandUnapprovedExecutiveShareOptionSchemes,theRemunerationCommitteeconsideredthattheperformancemeasurechosenfortheSchemes,namelygrowthinearningspershare(EPS),wasthekeylong-termindicatoroftheGroup’sfinancialsuccess.ApprovedoptionsareonlyexercisableontheconditionthatthegrowthintheCompany’searningspershareshallequalorexceedtheincreaseintheIndexofRetailPrices(AllItems)fromthedateofgrantoftheoptiontothedateofexerciseoftheoption.Unapprovedoptionsgrantedonorbefore2June2000hadthesameexercisepre-conditionasforApprovedoptions,howeverUnapprovedoptionsgrantedafterthisdateareonlyexercisableontheconditionthatthegrowthintheCompany’sEPSshallexceedtheincreaseintheIndexofRetailPrices(AllItems)by15.7625percent(representingfivepercentcompoundannually)forthethreefinancialyearsimmediatelyprecedingthedateofexerciseoftheoption.The10yearlifeoftheSchemeshasnowexpiredandnonewoptionshavebeengrantedundereitheroftheSchemessince2004.

During2004and2005theRemunerationCommitteeconsultedwithadvisorsandmajorshareholderstodevelopnewlong-termincentiveplans.TheCommitteewaskeentoensurethatanyreplacementschemesweredesignedtohelpachievethefollowingobjectives:

• they are market competitive in terms of quantum and exercisability;

• they are subject to performance conditions that the Remuneration Committee considers to be demanding;

• they provide an appropriate link between reward and performance;

• they have a less dilutive effect on the issued share capital of the Company than share option schemes; and

• broad employee participation is achieved through an incentive arrangement that is available to as many employees as possible.

AtanExtraordinaryGeneralMeetingoftheCompanyheldon27September2005resolutionswerepassedapprovingthesettingupofaPerformanceSharePlan(toincentivisetheexecutivedirectorsandothersenioremployees),aSharesavePlan(toincentivisetheBloomsburyworkforceasawhole)andanEmployeeBenefitTrust(tooperateinconjunctionwiththenewplans,asappropriate–furtherdetailontheEmployeeBenefitTrustissetoutonpage80).

Performance Share Plan (“the PSP”)TheplanallowstheRemunerationCommitteetograntconditionalallocationsofOrdinarySharestoeligibleemployeeswithamaximumvalue(normally)of150%ofbasesalaryperannum.AwardsgrantedunderthePSPwillnormallyonlyvestafterthreeyearsprovidedtheparticipantisstillemployedintheGroupandthatperformanceconditionshavefirstbeenachieved(theseconditionsaresetbytheRemunerationCommitteeeachyearpriortoaward).ThefirstawardsunderthePSPweremadeon4November2005,sincewhentherehavebeenfurtherawardson26October2006and8May2007.Detailsoftheawardstodirectorsandtheconditionsattachingtothoseawardsaresetoutonpage32.

TheRemunerationCommitteehasnopresentintentionofgrantingawardsgreaterthan100%ofbasesalaryperannum,butisconsciousthatitmaybeappropriatetoapplyevenmoredemandingperformanceconditionsifitisfeltappropriatetomakeawardsunderthePSPinexcessof100%ofsalaryinanyyear.

Sharesave PlanThisisanall-employeesavings-relatedshareoptionschemeunderwhichoptionscanbegrantedtoacquireOrdinarySharesafteravestingperiodofthree,fiveorsevenyearsatanexercisepricedeterminedattheoutset,onconditionthattheyagreetomakesavingsintoaspecialsavingsaccount.ThisplanisapprovedbyHMRevenueandCustomsandgivesparticipantstaxandnationalinsurancebenefits.Thefirstgrantof115,671optionsunderthisplanwasmadeon5May2006.AsecondinvitationtoparticipateintheSharesaveSchemewasissuedtoeligiblestaffon9May2007,withgrantsofoptionsexpectedtobemadeatthebeginningofJune2007.


Contracts of Service

Alltheexecutivedirectorshaveservicecontractswhichareterminablebyeitherpartygivingtotheothernotlessthantwelvemonths’writtennotice.

NigelNewton’scontract,dated24June2003,hadaninitialfixedtermofthreeyears.Underthetermsofthecontract,on24June2005thisagreementeffectivelybecameandcontinuestobeterminablebyeitherpartygivingtotheothernotlessthantwelvemonths’writtennoticeasrecommendedbytheCombinedCode.

ColinAdams’scontractisdated24September2004andLizCalder’scontractisdated1July2004.

Thenon-executivedirectors,CharlesBlack,MichaelMayer,andJeremyWilsondonothaveservicecontractsbuteachhasaletterofappointment.Eachletterofappointmentisdated7July2006,andallconfirmthatthetermofappointmentisuntilthe2007AnnualGeneralMeetingwhenitisenvisagedthatthelettersofappointmentwillberenewedforafurtherperiodoftwelvemonths.PaulScherer,whoretiredfromtheBoardon3April2006,hadaletterofappointmentdated22July2005.

Therearenospecificprovisionsforcompensationonearlyterminationofservicecontracts.CompensationonearlyterminationmaybepayablebytheCompanybyagreementbetweentheCompanyandthedirectorandwiththeapprovaloftheRemunerationCommittee.

NocompensationforlossofofficewaspaidtoPaulSchererfollowinghisretirementfromtheBoard.

Policy on Remuneration of Non-executive Directors

Theremunerationofthenon-executivedirectorsissetbytheBoardasawhole.


Directors’ Emoluments (audited)

2006 2005 £’000 £’000 Salaries 657 600Fees 123 107Profit-relatedbonuses - 530Otheremoluments 39 37 819 1,274

Pensioncontibutions 74 68Benefitonexerciseofshareoptions 693 936 1,586 2,278

Directors’emolumentsincludingbenefitsinkindandpensioncontributionspaidbytheGroupduringthefinancialyear,oruntildateofresignationinrespectofMrScherer,areasfollows:

Basic Profit- Other Total Share Pension salary related benefits options contributions or fees bonus (1) exercised 2006 2006 2006 2006 2006 2006 £’000 £’000 £’000 £’000 £’000 £’000

ChairmanJNNewton 350 - 13 363 569 35

Executive directorsENCalder 108 - 14 122 124 19CRAdams 198 - 12 210 - 20

Non-executive directors CAABlack 41 - - 41 - -PJScherer 9 - - 9 - -MJMayer 37 - - 37 - -JJO’BWilson 37 - - 37 - -

780 - 39 819 693 74

(1) Benefits-thecompanyprovidesamotorvehicleandmedicalinsurancecoverforallexecutivedirectors.


Thecomparativedirectors’emolumentsincludingbenefitsinkindandpensioncontributionsforthepreviousfinancialyear,orfromthedateofappointmentinrespectofMrWilson,areshownbelow:

Basic Profit- Other Total Share Pension salary related benefits options contributions or fees bonus (1) exercised 2005 2005 2005 2005 2005 2005 £’000 £’000 £’000 £’000 £’000 £’000

ChairmanJNNewton 315 268 12 595 780 32

Executive directorsENCalder 101 79 13 193 - 18CRAdams 184 183 12 379 156 18

Non-executive directorsCAABlack 37 - - 37 - -PJScherer 33 - - 33 - -MJMayer 33 - - 33 - -JJO’BWilson 4 - - 4 - -

707 530 37 1,274 936 68

(1)Benefits-theCompanyprovidesamotorvehicleandmedicalinsurancecoverforallexecutivedirectors.

ColinAdamsservesasanexecutivedirectorofA&CBlackPublishersLimited.IncludedaboveisasalarytoColinAdamsof£31,802(2005,£29,590)paidbyA&CBlackPublishersLimited.DuringtheyearCharlesBlackreceivedaconsultancyfeeof£4,000(2005,£4,000)fromA&CBlackPublishersLimited;thissumisincludedinCharlesBlack’sbasicsalaryfiguresabove.ThepaymentofthisconsultancyfeetoMrBlack,whichceasedon31December2006,wasnotconsideredtoimpacthisindependenceasanon-executivedirector.

Threedirectors(2005,three)wereaccruingbenefitsunderdefinedcontributionspensionarrangementsduringtheyear.


Directors’ Interests in Share Options (audited)

ThefollowingoptionshavebeengrantedtothedirectorsoverordinarysharesintheCompany:

Scheme At 1 Granted Exercised At 31 Exercise Date from Expiry Date January during the during the December price which 2006 year year 2006 exercisable

J N Newton Unapproved 220,000 - 220,000 - 66.25p 6July2002 5July2006J N Newton Unapproved 278,778 - - 278,778 220.25p 4October2003 3October2007J N Newton Sharesave - 3,397 - 3,397 275.20p 1June2009 1December2009

E N Calder Unapproved 139,389 - 139,389 - 220.25p 4October2003 3October2007E N Calder Sharesave - 2,718 - 2,718 275.20p 1June2009 1December2009

On4July2006,thedayNigelNewtonexercisedoptions,themarketvalueofeachoftheCompany’sOrdinaryShareswas325p,atwhichpricetheyweresold.

On26October2006,thedayLizCalderexercisedoptions,themarketvalueofeachoftheCompany’sOrdinaryShareswas309.25p,atwhichpricetheyweresold.

On5May20063,397and2,718optionsweregrantedundertheBloomsburySharesavePlan2005toNigelNewtonandLizCalder,respectively,atanexercisepriceof275.20ppershare.TheclosingmiddlemarketquotationforBloomsbury’sOrdinaryShareson5May2006was345p.

Directors’ Long-Term Incentive: the Performance Share Plan (audited)

ThefollowingawardshavebeenmadetothedirectorsoverordinarysharesintheCompanyundertheBloomsburyPerformanceSharePlan2005(“thePSP”):

Awarded Vested Lapsed Date of award At 1 January 2006 during the year during the year during the year At 31 December 2006

J N Newton 4November2005 100,621 - - - 100,621 26October2006 - 59,818 - - 59,818

E N Calder 4November2005 23,439 - - - 23,439 26October2006 - 13,935 - - 13,935

C R Adams 4November2005 42,616 - - - 42,616 26October2006 - 25,336 - - 25,336

(1)On8May2007therewerefurtherPSPawardstotheexecutivedirectorsasfollows:JNNewton120,466shares,ENCalder31,179sharesandCRAdams56,690shares.

(2)ForthepurposesofdeterminingthenumberofOrdinarySharescomprisedinanawardthemarketvalueofashareshallbeequaltotheaveragemiddle-marketpriceofashareduringthefivedealingdaysimmediatelyprecedingtheawarddate.Forthe2005awardsunderthePSPtheaveragepricewas337.9ppershareandtheclosingmiddlemarketpriceonthedateofawardwas342p.Forthe2006awardsunderthePSPtheaveragepricewas315.25pandtheclosingmiddlemarketpriceonthedateofawardwas312p.Forthe2007awardunderthePSPtheaveragepricewas181.4pandtheclosingmiddlemarketpriceonthedateofawardwas185.25p.

(3) AllawardsaregrantedfornilconsiderationandareinrespectofBloomsburyPublishingPlcOrdinarySharesof1.25p.

(4)Forallawardsmadetothedirectors,therearetwoperformanceconditionswhichneedtobesatisfiedifawardsaretovestattheendofthethreeyearperformanceperiod(the“PerformancePeriod”):(a) Inrespectof50%ofthetotalaward,theperformanceconditionisgrowthinBloomsbury’snormalisedEarningsPerShare(EPS)overtheRetailPricesIndex(RPI)duringthethreefullfinancialyearsimmediatelyprecedingtheendoftherelevantPerformancePeriod.IfEPSgrowthisbetween5%and8%p.a.overRPI,thenumberofsharesvestingwillbeproratatoactualgrowth,with17.5%oftotalawardvestingat5%p.a.,andthefull50%vestingat8%p.a.NoneofthispartoftheawardwillvestifEPSgrowthoverRPIislessthan5%p.a.(b) Inrespectof50%ofthetotalaward,theperformanceconditionisBloomsbury’srankovertherelevantPerformancePeriodintermsofitsTotalShareholderReturn(TSR)comparedtocompaniesconstitutingtheFTSEMid250(excludinginvestmenttrusts)atthedateofgrant.IftheCompany’sTSRrankingisbetweenmedianandtheupperquartile,thenumberofsharesvestingwillbeproratatoposition,with17.5%oftotalawardvestingatmedian,andthefull50%vestingiftheCompany’spositionisintheupperquartile.NoneofthispartoftheawardwillvestiftheCompany’sTSRrankingisbelowmedian.

(5)TherewillbenoopportunitytoretestperformanceiftheperformanceconditionsarenotsatisfiedovertherelevantPerformancePeriod.


Directors’ Interests

(a) Interests in sharesThedirectorswhoheldofficeattheyearendhadthefollowinginterestsinthesharecapitaloftheCompany.Allshareholdingsarebeneficialandincludetheinterestsofspousesandminorchildren.

Ordinary Shares Ordinary Shares of 1.25p each of 1.25p each 31 December 2006 1 January 2006 Number Number

J N Newton 2,758,488 2,758,488

E N Calder 27,019 29,367

C R Adams 50,000 50,000

C A A Black 126,000 126,000

M J Mayer 19,380 19,380

J J O’B Wilson 100 -

ThemarketpriceofanOrdinaryShareat31December2006was256.0p(2005,336.5p)andtherangefrom1January2006totheendoftheyearwas372.0pto220.0p(2005,301.5pto392.5p).

(b) Other interestsPaulSchererwas,untilhisretirementinMay2004,non-executivechairmanofCurtisBrownGroupLimited,aliteraryagencywithwhichtheGrouphasanongoingtradingrelationship.

Savefortheaforesaid,nodirectorhasorhashadanyinterest,directorindirect,inanytransaction,contractorarrangement(excludingserviceagreements),whichisorwasunusualinitsnatureorconditionsorsignificanttothebusinessoftheGroupduringthecurrentorimmediatelyprecedingfinancialyear.

34

Total Shareholder Return – Performance Graph

ThegraphaboveshowstheGroup’sTotalShareholderReturnfromApril1999to31December2006togetherwiththeFTSESmallCapMediaandEntertainmentsectorindex.TheindexisconsideredtobethemostappropriatecomparativeindexfortheCompany.

ApprovedbytheBoardofDirectorsandsignedonbehalfoftheBoard.

CharlesBlackChairman of the Remuneration Committee, 16 May 2007

1200

1000

800

600

400

200

0

1999 2000 2001 2002 2003 2004 2005

FTSESmallCapMediaandEntertainmentsector-TotalReturnIndex

BloomsburyPublishingPlc-TotalReturnIndex

Source:ThomsonDatastream

2006

Directors’ remuneration report

BloomsburyPublishingPlc 35Directors’ report

Principal Activities

TheprincipalactivitiesoftheGrouparethepublicationofbooksandthedevelopmentofelectronicreferencedatabases.

Review of Developments and Business Review

TheChairman’sStatementandFinancialReviewcontainareviewoftheGroup’sbusinessandactivitiesduringtheyear,itsfinancialpositionattheendoftheyearandthelikelyfuturedevelopments.Theelementscoveredinthesereports,aswellasinthesectionsdealingwithCorporateGovernanceandInternalControl,whicharecoveredbytheBusinessReview,areincorporatedintotheDirectors’Reportbyreference.

Results and Dividends

TheresultsoftheGroupfortheyeararesetoutonpages45to82.On17November2006,aninterimdividendof0.66pence(net)perOrdinarySharewaspaid.Thedirectorsrecommendthepaymentofafinaldividendof3.00pence(net)perOrdinarySharepayableon5July2007toOrdinaryShareholdersontheregisteratthecloseofbusinesson25May2007.

Directors

Thedirectorsatthedateofthisreport,allofwhomservedthroughouttheyearwere:

J N Newton,ExecutiveChairmanandChiefExecutiveC R Adams ACA,GroupFinanceDirectorE N Calder,PublishingDirectorC A A Black,SeniorIndependentNon-executiveDirectorandViceChairmanM J Mayer,IndependentNon-executiveDirectorJ J O’B Wilson,IndependentNon-executiveDirector

PaulSchererretiredasanon-executivedirectoron3April2006.

Thedirectors’interests,includinganychangesinthoseinterestsoccurringbetween31December2006and16May2007,aresetoutintheDirectors’RemunerationReportonpages27to34.

AttheAnnualGeneralMeeting,CharesBlackandLizCalderwillretirebyrotationinaccordancewiththearticlesofassociationoftheCompanyand,beingeligible,offerthemselvesforre-election.TheChairmanconfirmsthatCharlesBlack,theseniorindependentnonexecutivedirectorandViceChairmanretiringbyrotation,continuestobeeffectiveandtodemonstratehiscommitmenttotheroleandvaluetotheCompany,asevidencedbytheresultsofhisrecentformalevaluationandhisattendanceatBoardandBoardCommitteeMeetings.GivenMrBlack’svaluedcontribution,theBoardbelievesitisintheCompany’sbestinterestthathebere-elected.

DetailsoftheservicecontractofLizCalder,theexecutivedirectorwhoisputtingherselfforwardforre-election,aresetoutintheDirectors’RemunerationReportonpage29.LizCalder’sservicecontractisterminablebyeitherpartyongivingnotlessthan12months’notice.CharlesBlackdoesnothaveaservicecontract.

36Directors’ report

Directors’ Remuneration

TheDirectors’RemunerationReportissetoutonpages27to34.

Substantial Shareholdings

ThedirectorshavebeennotifiedorareawareofthefollowingholdingsofOrdinarySharesinexcessof3%oftheissuedsharecapitalat16May2007:

Number Percentage

TheCapitalGroupCompanies,Inc 10,476,087 14.27%StandardLifeInvestments 6,999,625 9.53%

SchroderInvestmentManagementLimited 4,911,385 6.89%

AberdeenAssetManagementPLC 4,086,778 5.57%

Legal&GeneralGroupPlc 3,923,961 5.34%

AmeripriseFinancial,Incanditsgroup 3,618,000 4.93%

NigelNewton 2,758,488 3.76%

JPMorganFlemingMercantileInvestmentTrustPlc 2,395,642 3.26%

Special Business – Annual General Meeting

Resolution 7 On29June2006,resolutionswerepassedbytheCompany’sshareholderswherebythedirectorsweregivenauthority,underSection80oftheCompaniesAct1985,untiltheconclusionofthe2007AnnualGeneralMeeting,toallotsharesuptoamaximumoftheauthorisedbutunissuedsharecapitaloftheCompany.ThedirectorsrecommendbyResolution7tobeproposedattheforthcomingAnnualGeneralMeetingthatthisauthorityshouldbeextendedsothatitappliesuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompany.IfResolution7isapprovedbyshareholders,thedirectorswillhaveauthoritytoallotupto18,565,429OrdinaryShares,representing25.3%oftheOrdinarySharescurrentlyinissue,ofwhich3,118,557(4.3%oftheOrdinarySharescurrentlyinissue)arereservedforissueundertheCompany’sshareoptionschemesandperformanceshareplan.Thebalanceavailableforallotmentistherefore15,446,872OrdinaryShares,representing21.0%oftheOrdinarySharescurrentlyinissue.TheCompanydoesnotcurrentlyhaveanytreasurysharesinissue.ThedirectorshavenopresentintentionofexercisingtheauthorityexceptinconnectionwiththeissueofsharesundertheCompany’sshareandshareoptionschemes.Theauthority,ifgranted,willexpireontheconclusionofthenextAnnualGeneralMeetingoftheCompanyafterthepassingoftheproposedResolution7,unlesspreviouslyvaried,revokedorrenewedbytheCompanyingeneralmeeting.

Resolution 8Inaddition,thedirectorsweregivenauthorityunderSection95oftheCompaniesAct1985,untiltheconclusionofthe2006AnnualGeneralMeeting,toallotequitysecuritiesforcash,otherthantoexistingshareholdersinproportiontotheirholding,inconnectionwitharightsissue,pursuanttothetermsofemployees’shareorshareoptionschemesapprovedbythemembersingeneralmeetingand,inaddition,uptoanaggregatenominalamountequalto5%oftheissuedOrdinarySharecapital.ThedirectorsrecommendthatthisauthorityshouldbereneweduntiltheconclusionofthenextAnnualGeneralMeetingorfifteenmonthsfromthedateofpassingofthisresolution,whicheveristheearlier,unlesspreviouslyvaried,revokedorrenewedbytheCompanyingeneralmeeting.

TheCompaniesAct1985allowssharespurchasedbytheCompanytobeheldastreasuryshares,whichmaythenbecancelled,soldforcashorusedtomeettheCompany’sobligationsunderitsshareorshareoptionschemes.TherequirementstoallotequitysecuritiesforcashtoexistingshareholderswillalsoapplytothesalebytheCompanyofanysharesitholdsastreasuryshares.Theserequirementsmaybesimilarlydisappliedbyshareholders.Theauthoritysought,andlimitsset,byResolution8willthenapplyalsotoasaleoftreasuryshares.ApartfrompotentiallyacquiringsharestosatisfythevestingofoptionsorawardsunderanyoftheCompany’sshareorshareoptionschemes,thedirectorshavenopresentintentionofholdingsharesintreasurypursuanttotheCompaniesAct1985.


Resolution 9 ThisresolutionrenewstheexistingauthorityfortheCompanytomakepurchasesofitsownshares.ThemaximumnumberofOrdinaryShareswhichmaybepurchasedpursuanttotheauthorityis3,671,729beingequalto5%oftheissuedsharecapitaloftheCompanyasatthedateofthisDirectors’Report.Thetotalnumberofoptionstosubscribeforequitysharescurrentlyoutstandingis1,437,497beingequalto2.0%oftheissuedsharecapital.Thetotalnumberofshareawardscurrentlyoutstandinggrantedundertheperformanceshareplanis1,681,060beingequalto2.3%oftheissuedsharecapital.Ifthefullauthoritytobuybacksharesisused,theoptionsandawardswillrepresent4.5%oftheequitysharecapital.TheminimumpricewhichmaybepaidforanOrdinaryShareis1.25pence(exclusiveofexpenses).ThemaximumpricewhichmaybepaidforanOrdinaryShare(exclusiveofexpenses)shallbeanamountequalto105%oftheaverageofthemiddlemarketquotationsfortheCompany’sordinarysharesforthe5businessdaysimmediatelyprecedingthedateofpurchase.

TheauthoritysoughttomakemarketpurchasesofitsownsharesisintendedtoapplyequallytosharestobeheldbytheCompanyastreasurysharesinaccordancewiththeCompaniesAct.However,asmentionedabove,thedirectorshavenopresentintentionofholdingsharesintreasurypursuanttotheCompaniesAct1985.

ThedirectorsconsiderthattheauthorityproposedtobegrantedbyResolution9maybenecessaryinordertoincreasetheearningspershareoftheGroup.Theyhavenointentionofexercisingtheauthorityatthepresenttimebut,iftheydo,thedirectorswillneitherbeencouragingnorrecommendingshareholderstobuyorsellsharesintheCompanynorinanywaysuggestingthatitisanappropriatetimetodealinsuchshares.Thisauthority,ifconferred,willonlybeexercisediftodosowouldresultinanincreaseintheearningspershareandisinthebestinterestsofshareholdersgenerally.

Resolution 10 TheexistingarticlesofassociationoftheCompanydonotpermittheCompanytocommunicateelectronicallywithshareholders.ByResolution10tobeproposedattheforthcomingAnnualGeneralMeeting,itisproposedthattheCompany’sarticlesofassociationbealteredtoallowtheCompanytocommunicateelectronicallywithitsshareholderssubjecttorelevantstatutes.TheproposedchangeswillenabletheCompanytotakeadvantageofthenewprovisionsoftheCompaniesAct2006relatingtoelectroniccommunications,whichcameintoforceinJanuary2007.IfResolution10ispassed,theCompanywillbeabletoaskeachshareholderindividuallytoagreethattheCompanymaysendoutorsupplydocumentsorinformationbymeansofawebsite.IftheCompanymakessucharequestandtheCompanydoesnotreceivearesponsetosucharequestwithin28daysbeginningwiththedateoftherelevantrequest,therelevantshareholderwouldbedeemedtohaveagreedtoreceivedocumentsorinformationbymeansofawebsite.TheCompanywould,however,notifyshareholderswhenadocumentorinformationismadeavailableonitswebsite,andashareholdermayalso“opt-in”againatanytimetoreceivehardcopydocumentsandinformation.

ThedirectorsrecommendthatshareholdersvoteinfavourofResolutions7,8,9and10,whichare,intheopinionofthedirectors,inthebestinterestsoftheshareholdersasawhole.

Directors’ Indemnities

InaccordancewiththeCompany’sArticlesofAssociation,directorsaregrantedanindemnityfromtheCompanytotheextentpermittedbylawinrespectofliabilitiesincurredasaresultoftheiroffice.

Insurance of Company Officers

TheGrouphasmaintainedinsurancethroughouttheyearforitsdirectorsandofficersagainsttheconsequencesofactionsbroughtagainsttheminrelationtotheirdutiesfortheGroup.

Policy on Supplier Payments

TheGroupdoesnotfollowastandardcodefordealingwiththepaymentofcreditors,butaimstopayallitssupplierswithinpre-agreedcreditterms,providedthatthesupplierhasperformedinaccordancewiththerelevanttermsandconditions.At31December2006,thenumberofdays’credittakenforpurchasesbytheGroupwas43days(2005,25days).Theincreaseinthenumberofdayswasduetothetimingofsupplierpaymentsattheyearend.

38Directors’ report

Social and Environmental Responsibility and Health and Safety

TheBoardtakesregularaccountofthesignificanceofsocial,environmentalandethicalissuesandhasidentifiedandassessedsignificantrisksandopportunitiestotheCompany’sshortandlong-termvaluearisingfromthesematters.OurcommitmentinthisareaisrecognisedbyourcontinuedinclusionintheFTSE4GoodIndex,FTSE’sresponsibleinvestmentindex.

Employees

Employee Involvement and CommunicationEmployeesareencouragedtoownsharesintheCompanyandover40%ofemployeesareshareholdersand/orholdoptionsundertheCompany’sshareoptionschemes.InformationabouttheGroup’saffairsiscommunicatedtoemployeesthroughregularmanagementmeetings,electronicnoticeboards,intranetandsocialevents.

Health and Safety TheCompanytakesreasonableandpracticablestepstosafeguardthehealth,safetyandwelfareofitsemployees,andrecognisesitsresponsibilitiesforthehealthandsafetyofotherswhomaybeaffectedbyitsactivities.ColinAdamshasexecutiveresponsibilitiesforhealthandsafetyissues.

Diversity in the WorkplaceTheCompanyiscommittedtoprovidingaworkingenvironmentinwhichitsemployeesareabletorealisetheirpotentialandtocontributetobusinesssuccessirrespectiveofgender,maritalstatus,ethnicorigin,nationality,religion,disability,sexualorientationorage.

TheCompanycontinuesitsworkwiththeArtsCouncilintheirDiversityinPublishingPositiveActionTraineeshipScheme.Designedtoencouragediversityinthepublishingindustry,theschemegivesagraduatefromanethnicminoritybackgroundtheopportunityoversixmonthstogainexperienceinthepublishingindustrywiththreemajorUKpublishers,ofwhichBloomsburyisone.

Employment of Disabled Persons ItistheGroup’spolicytoofferequalopportunitiestodisabledpersonsinmattersofrecruitment,training,careerdevelopmentandpromotion.Wherepeoplebecomedisabledduringthecourseoftheiremployment,theGroupseekstoretaintheirservicesandtoprovideretrainingwherenecessary.

Social Responsibility

TheCompanyrecognisestheimportanceofrespectingandsupportingthecommunitiesinwhichitoperates,and,thus,improvingthepositiveimpactofbusinessinsociety.

DuringtheyearBloomsburycontinueditsassociationwithWorldBookDay.Asasponsorandpartner,theCompanywasabletoprovidesupportforthisglobalinitiative,establishedin1995byUNESCOwiththeobjectiveofpromotingandcelebratingbooksandreadingamongstchildrenandadults.Thissupporthascontinuedthrough2007,withthecontributionthisyearofoneofourtitlestothetenspeciallycreated£1booksofferedbytheWorldBookDayOrganisationtochildrenintheUKthroughtheirschoolsandpre-schools.

TheCompanywasalsopleasedtosupportBookAidInternational,theregisteredcharityworkingindevelopingcountriestocreatereadingandlearningopportunitiesforpeopleofallagestohelpthemrealisetheirpotentialandalleviatepoverty.

Bloomsburysupportssocialaccountabilitythroughoutourmanufacturingsupplychain,andhassignedthepublishers’resolutionforethicalinternationalmanufacturingstandards(prelims)whichaimstoimprovesocialaccountabilityinaccordancewithauniformstandardcodeforbusinesspractices.Furtherinformationcanbefoundontheprelimswebsite:www.prelims.org.

Ethical BehaviourBloomsburyiscommittedto,andexpectsitsemployeestoexercise,highethicalandmoralstandardsatalltimeswhilstrepresentingtheCompany.Bloomsburyalsoexpectsallrelationshipswithcustomers,suppliersandotherthirdpartiestobeconductedonasoundethicalfooting.Asnotedonpage23,theCompanyiscurrentlyfinalisinganEmployeeandBusinessProtectionPolicywhichwillallowemployeestoraise,inconfidence,concernsaboutpossibleimproprietiesinsuchmatters.


Charitable and Political DonationsTheGroupisastrongsupporterof,andparticipantin,variouscharitiesandinitiatives.Charitabledonationsof£34,000weremadebytheGroupduringtheyear(2005,£126,215).InadditiontheGroupwasabletosupportnumerousschools,librariesandotherorganisations,includingcharitiessuchasBarnadosandShelter,withsignificantdonationsofbooks.

InSeptember2006theGrouppaid£35,000toBookAidInternational(2005,£100,000)fromthemoneyraisedbythesaleofNewBeginnings,theanthologyoffirstchapterspublishedbyBloomsburyinMarch2005toraisemoneyinresponsetothetsunami.

Nopoliticaldonationsweremadeduringtheyearorinthepreviousfinancialyear.

The Environment

TheCompanyrecognisesthatthewiseuseofresourcesdeliversbothenvironmentalandfinancialbenefits.Aspartofouroverallapproachtocorporatesocialresponsibility,weaimtopromotethemaintenanceofahealthyenvironmentthroughresponsibleandsustainableconsumptionandproduction.

Ourdirectoperationsarepredominatelyoffice-based,andouractivitieshavebeenassessedbyenvironmentalconsultantsTrucostashavingalowimpactontheenvironment.However,ourpolicyistoseektominimiseourimpactsbothinareaswherewehavedirectcontrolandthroughoursupplychain.Inparticular,wehaveidentifiedwasteandgreenhousegasemissionsasareasweshallbemonitoringgoingforward,andthereforeinaccordancewiththe2006GovernmentGuidelines,EnvironmentalKeyPerformanceIndicators:ReportingGuidelinesforUKBusinesses.Thesemeasurements,carriedoutbyTrucost,aresetoutbelow:

Greenhouse GassesBelowwereportourconsumptionofpurchasednaturalgasandelectricityinkWh,convertedtoCO2followingtheprotocolsprovidedbytheDepartmentforEnvironmentFoodandRuralAffairs(Defra).Wehavealsonormalisedthedatatoturnoverinordertoshowourproportionateperformance.

Direct Impacts (Operational): Quantity Data Source Absolute Normalised Greenhouse and Calculation TonnesCO2 TonnesCO2Per Gases Definition Methods 2006 £mTurnover2006

Building Operations 103.47 1.08

Indirect Impacts (Supply Chain): Quantity Data Source Absolute Normalised Greenhouse and Calculation TonnesCO2 TonnesCO2Per Gases Definition Methods 2006 £mTurnover2006

Energy Use 294.65 3.08

NotethatinformationinrelationtotheemissionsfromthesmallnumberofCompanyvehicleshasnotbeencapturedfor2006,howeveritistheintentionoftheCompanytocapturethisinformationinthefuture.

Emissionsfromnaturalgasconsumptioninutilityboilers

YearlyconsumptioninkWhcollectedfromfuelbills,convertedaccordingtoDefraGuidelinesforUKoperations.DatascaledupbynumberofemployeestoestimateemissionsforoperationsintheUSandGermanyoffices.

Directlypurchasedelectricity,whichgeneratesGreenhouseGasesincludingCO2emissions

YearlyconsumptionofdirectlypurchasedelectricityinkWhcollectedforUKoffices.DatascaledupbynumberofemployeestoestimateemissionsforoperationsintheUSandGermanyoffices.KWhsconvertedaccordingtoDefraandnationalemissionfactorvalues.

40

Forreference,inrespectofdirectimpacts,theaveragenormalisedtonnesofCO2per£mturnoverinthebankingsector,which,becauseofitsofficebasedfunctions,bearssimilaritiestothepublishingsectorintermsofitsdirectimpactsontheenvironment,isapproximately2.1tonnes.

ItshouldalsobenotedthatinLondonwehavecommenceddiscussionswiththeCarbonTrusttoseekadviceonhowwemightreducecarbonemissionsintheshorttomediumtermthroughenergyefficiency,whichwehopewillatthesametimedeliverenergycostsavings.

Waste

Belowwereportourwastedisposalbymethodofdisposalinmetrictonnesperannum.Onceagainwehavealsonormalisedthedatatoturnoverinordertoshowourproportionateperformance.

Direct Impacts: Quantity Data Source Absolute Normalised and Calculation Tonnes TonnesPer Waste Definition Methods 2006 £mTurnover2006

Landfill 54.00 0.56

Hazardous Waste 0.61 0.006(Incinerated)

Recycled 36.12 0.38

Thereissystematicrecyclingofpaperandcardboardatallofourofficesandwecontinuetomakestrenuouseffortstoreduceourlandfillwastebyensuringwastebothfromourofficesandremainderedbooksisrecycledwhereverpossible.In2006approximately40%oftheCompany’swastewasrecycled.

Directors’ report

Generalofficewaste(whichincludesamixtureofpaper,card,wood,plasticsandmetals)senttolandfillsites

VolumeofwastegeneratedperannumascalculatedbywastehaulerintheUKoperations.DatascaledupbynumberofemployeestoestimateemissionsforoperationsintheUSandGermanyoffices.

Generalofficehazardouswastesenttoincinerationfacilities


Generalofficewastesenttorecyclingfacilities



The Supply Chain

Ourindirectimpactsthroughoursuppliersareclearlymoresignificantthanourdirectimpacts,whichrelatetoourownoffice-basedoperations.Wehaveanalysedtheimpactofover25majorsuppliers,andwewillmonitorandengagewithourkeysupplierstoreduceourenvironmentalimpactwherepossible.

Werecognisethattheuseofpaperhasasignificantimpactontheenvironment.Wethereforestipulatethatthepulp,usedtoproducethepapersforourbooks,mustcomefromwell-managedforests.Wearealsoencouragingoursupplierstoobtain©1996ForestStewardshipCouncilA.C.(FSC)accreditationanduseFSCcertifiedpapers.DuringtheyeartherehasbeensignificantprogressinthisrespectwithanincreaseinthenumberofoursuppliersbecomingFSCChainofCustodycertified.OurpolicyistospreadtheuseofFSCcertifiedpapersacrossourlists.SinceDecember2005themajorityofourmonohardbackandtradeformatpaperbacks,manufacturedbyourUKsupplierClaysLtd,havebeenprintedon©1996FSCcertifiedmixedsourcespapersfromwellmanagedforestsandothercontrolledsources.WehaverecentlyextendedthistocolourbookssuchasAlGore’sAn Inconvenient Truth,publishedintheUKinAugust2006.ThisyearothercolourtitleswillfollowfrombothourAdultandChildren’slists.

Wherepossible,theCompanyisseekingtousepaperproducedfrom100%postconsumerwasterecycledpulp(PCW)–thisisbeingphasedinforuseinourlongerlengthmassmarketpaperbacks,startingwithSo Many Ways to BeginbyJonMcGregor,tobepublishedintheUKinMay2007.

ForHarry Potter and the Deathly Hallows,whichispublishedinhardbackintheUKon21July2007,wewillbeusing100%ancient-forestfriendlypapersforthetext,jacketsandprintedpapercases.Thepapersusedfortheseare©1996FSCcertifiedandwillbeamixtureofFSCpulpandpost-consumerwasterecycledpulp.Thecaseboardswillbe100%recycledandtheendpaperswillbe100%FSCmixedsources.

Going Concern

Havingmadeenquiries,thedirectorshaveareasonableexpectationthattheCompanyandtheGroupasawholehasadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Forthisreason,theycontinuetoadoptthegoingconcernbasisinpreparingtheaccounts.

Statement as to Disclosure of Information to Auditors

Thedirectorswhowereinofficeonthedateofapprovalofthesefinancialstatementshaveconfirmedthat,asfarastheyareaware,thereisnorelevantauditinformationofwhichtheauditorsareunaware.Eachofthedirectorshaveconfirmedthattheyhavetakenallthestepsthattheyoughttohavetakenasdirectorsinordertomakethemselvesawareofanyrelevantauditinformationandtoestablishthatithasbeencommunicatedtotheauditor.

Auditors

Thedirectors,havingbeennotifiedofthecessationofthepartnershipknownasBakerTilly,resolvedthatBakerTillyUKAuditLLPbeappointedassuccessorauditorwitheffectfrom1April2007,inaccordancewiththeprovisionsoftheCompaniesAct1989Section26(5).AresolutiontoreappointBakerTillyUKAuditLLPasauditorswillbeproposedattheforthcomingAnnualGeneralMeeting.

ByorderoftheBoardR Cordeschi ACIS, Secretary, 16 May 2007

42Statement of directors’ responsibilities

Responsibilities relating to consolidated financial statements

ThedirectorsareresponsibleforpreparingtheAnnualReportandthefinancialstatementsinaccordancewithapplicablelawandregulations.UKcompanylawrequiresthedirectorstoprepareGroupandCompanyFinancialStatementsforeachfinancialyear.UnderthatlawthedirectorsarerequiredtoprepareGroupfinancialstatementsinaccordancewithInternationalFinancialReportingStandards(“IFRS”)asadoptedbytheEUandhaveelectedtopreparetheCompanyfinancialstatementsinaccordancewithIFRSasadoptedbytheEU.TheGroupfinancialstatementsarerequiredbylawandIFRSadoptedbytheEUtopresentfairlythefinancialpositionandperformanceoftheGroup;theCompaniesAct1985providesinrelationtosuchfinancialstatementsthatreferencesintherelevantpartofthatActtofinancialstatementsgivingatrueandfairviewarereferencestotheirachievingafairpresentation.

TheCompanyfinancialstatementsarerequiredbylawandIFRSadoptedbytheEUtopresentfairlythefinancialpositionoftheCompany;theCompaniesAct1985providesinrelationtosuchfinancialstatementsthatreferencesintherelevantpartofthatActtofinancialstatementsgivingatrueandfairviewarereferencestotheirachievingafairpresentation.Inpreparingeachofthegroupandcompanyfinancialstatements,thedirectorsarerequiredto:

(a)selectsuitableaccountingpoliciesandthenapplythemconsistently;

(b)makejudgementsandestimatesthatarereasonableandprudent;

(c)statewhethertheyhavebeenpreparedinaccordancewithIFRSsadoptedbytheEU;and

(d)preparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheGroupandtheCompanywillcontinueinbusiness.

ThedirectorsareresponsibleforkeepingproperaccountingrecordswhichdisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyandtoenablethemtoensurethatthefinancialstatementscomplywiththerequirementsoftheCompaniesAct1985.TheyarealsoresponsibleforsafeguardingtheassetsoftheGroupandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.ThedirectorsareresponsibleforthemaintenanceandintegrityofthecorporateandfinancialinformationincludedontheCompany’swebsite.LegislationintheUnitedKingdomgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.

ByorderoftheBoardR Cordeschi ACIS, Secretary, 16 May 2007

BloomsburyPublishingPlc 43Independent auditor’s report to the members of Bloomsbury Publishing Plc

WehaveauditedtheGroupandParentCompanyfinancialstatementsonpages45to82.Wehavealsoauditedtheinformationinpages30to32oftheDirectors’RemunerationReportthatisdescribedashavingbeenaudited.

ThisreportismadesolelytotheCompany’smembers,asabody,inaccordancewithsection235oftheCompaniesAct1985.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

Respective Responsibilities of Directors and Auditors

Thedirectors’responsibilitiesforpreparingtheAnnualReport,theDirectors’RemunerationReportandthefinancialstatementsinaccordancewithapplicablelawandInternationalFinancialReportingStandards(IFRSs)asadoptedforuseintheEuropeanUnionaresetoutintheStatementofDirectors’Responsibilities.

OurresponsibilityistoauditthefinancialstatementsandtheauditablepartoftheDirectors’RemunerationReportinaccordancewithrelevantlegalandregulatoryrequirementsandInternationalStandardsonAuditing(UKandIreland).

WereporttoyououropinionastowhetherthefinancialstatementsgiveatrueandfairviewandwhetherthefinancialstatementsandthepartoftheDirectors’RemunerationReporttobeauditedhavebeenproperlypreparedinaccordancewiththeCompaniesAct1985and,asregardstheGroupfinancialstatements,Article4oftheIASRegulation.Wealsoreporttoyouif,inouropinion,theDirectors’Reportisconsistentwiththefinancialstatements.TheinformationgivenintheDirectors’ReportincludesthatspecificinformationpresentedintheChairman’sStatementandFinancialReviewthatiscrossreferencedfromtheBusinessReviewsectionoftheDirectors’Report.

Inadditionwereporttoyouif,inouropinion,theCompanyhasnotkeptproperaccountingrecords,ifwehavenotreceivedalltheinformationandexplanationswerequireforouraudit,orifinformationspecifiedbylawregardingdirectors’remunerationandothertransactionsisnotdisclosed.

WereviewwhethertheCorporateGovernanceStatementreflectstheCompany’scompliancewiththenineprovisionsofthe2003FinancialReportingCouncilCodespecifiedforourreviewbytheListingRulesoftheFinancialServicesAuthority,andwereportifitdoesnot.Wearenotrequiredtoconsiderwhethertheboard’sstatementsoninternalcontrolcoverallrisksandcontrols,orformanopinionontheeffectivenessoftheGroup’scorporategovernanceproceduresoritsriskandcontrolprocedures.

WereadotherinformationcontainedintheAnnualReportandconsiderwhetheritisconsistentwiththeauditedfinancialstatements.TheotherinformationcomprisestheFinancialSummary,theChairman’sStatement,theFinancialReview,theDirectors’Biographies,theCorporateGovernanceandInternalControlStatements,theunauditedpartoftheDirectors’RemunerationReport,theDirectors’ReportandtheStatementofDirectors’Responsibilities.Weconsidertheimplicationsforourreportifwebecomeawareofanyapparentmisstatementsormaterialinconsistencieswiththefinancialstatements.Ourresponsibilitiesdonotextendtoanyotherinformation.

44

Basis of Audit Opinion

WeconductedourauditinaccordancewithInternationalStandardsonAuditing(UKandIreland)issuedbytheAuditingPracticesBoard.Anauditincludesexamination,onatestbasis,ofevidencerelevanttotheamountsanddisclosuresinthefinancialstatementsandthepartoftheDirectors’RemunerationReporttobeaudited.ItalsoincludesanassessmentofthesignificantestimatesandjudgementsmadebythedirectorsinthepreparationofthefinancialstatementsandofwhethertheaccountingpoliciesareappropriatetotheGroup’sandCompany’scircumstances,consistentlyappliedandadequatelydisclosed.

WeplannedandperformedourauditsoastoobtainalltheinformationandexplanationswhichweconsiderednecessaryinordertoprovideuswithsufficientevidencetogivereasonableassurancethatthefinancialstatementsandthepartoftheDirectors’RemunerationReporttobeauditedarefreefrommaterialmisstatement,whethercausedbyfraudorotherirregularityorerror.InformingouropinionwealsoevaluatedtheoveralladequacyofthepresentationofinformationinthefinancialstatementsandthepartoftheDirectors’RemunerationReporttobeaudited.

Opinion

Inouropinion:

•theGroupfinancialstatementsgiveatrueandfairview,inaccordancewithIFRSsasadoptedforuseintheEuropeanUnion,ofthestateoftheGroup’saffairsasat31December2006andoftheGroup’sprofitfortheyearthenended;

•theParentCompanyfinancialstatementsgiveatrueandfairview,inaccordancewithIFRSsasadoptedforuseintheEuropeanUnionasappliedinaccordancewiththeprovisionsoftheCompaniesAct1985,ofthestateoftheParentCompany’saffairsasat31December2006;

•thefinancialstatementsandthepartoftheDirectors’RemunerationReporttobeauditedhavebeenproperlypreparedinaccordancewiththeCompaniesAct1985and,asregardstheGroupfinancialstatements,Article4oftheIASRegulation;and

•theinformationgivenintheDirectors’Reportisconsistentwiththefinancialstatements.

Baker Tilly UK Audit LLPRegistered Auditor and Chartered Accountants2 Bloomsbury Street, London WC1B 3ST16 May 2007

Independent auditor’s report to the members of Bloomsbury Publishing Plc


Notes 2006 2005 £’000 £’000 Revenue 1 74,773 109,108Costofsales (38,602) (53,514)

Grossprofit 36,171 55,594Marketinganddistributioncosts (14,354) (18,107)Administrativeexpenses (18,308) (18,681)

Profitbeforeinvestmentincome 2 3,509 18,806Investmentincome 3a 1,734 1,392Financecosts 3b (47) (71)

Profitbeforetaxation 5,196 20,127Incometaxexpense 5 (1,544) (5,481)

Profit for the year 3,652 14,646

Basic earnings per share 7 4.99p 20.30p

Diluted earnings per share 7 4.90p 19.93p

Consolidated statement of recognised income and expensefor the year ended 31 December 2006

2006 2005 £’000 £’000 Profitfortheyear 3,652 14,646Exchangeadjustmentsrecognisedinreserves (1,878) 640

Total recognised income and expense for the year 1,774 15,286

Consolidated income statementfor the year ended 31 December 2006

46Consolidated balance sheet at 31 December 2006

Notes 2006 2005 £’000 £’000 Assets Non-current assets Property,plantandequipment 8 2,332 1,615Intangibleassets 9 17,672 15,511Deferredtaxassets 11 1,700 1,238Total non-current assets 21,704 18,364

Current assets Inventories 12 15,818 15,129Tradeandotherreceivables 13 49,217 48,630Cashandcashequivalents 24,304 53,511

Total current assets 89,339 117,270

Total assets 111,043 135,634

Equity and liabilities Capital and reserves attributable to equity holders of the parentOrdinaryshares 14 918 911Sharepremium 38,915 38,123Capitalredemptionreserve 20 20Share-basedpaymentreserve 1,104 453Translationreserve (1,236) 642Retainedearnings 49,612 48,634

Total equity 89,333 88,783LiabilitiesNon-current liabilities Deferredtax 11 36 -Retirementofbenefitobligations 15 144 130Otherpayables 223 163

Total non-current liabilities 403 293Current liabilitiesTradeandotherpayables 16 20,786 43,974Currenttaxliabilities 521 2,584

Total current liabilities 21,307 46,558

Total liabilities 21,710 46,851

Total equity and liabilities 111,043 135,634

ThefinancialstatementswereapprovedbytheBoardofDirectorsandauthorisedforissueon16May2007.

JNNewton Director CRAdams Director

BloomsburyPublishingPlc 47Company balance sheet at 31 December 2006

Notes 2006 2005 £’000 £’000 Assets Non-current assets Property,plantandequipment 8 1,993 1,324Investmentsinsubsidiarycompanies 10 25,448 25,412Deferredtaxassets 11 305 130Total non-current assets 27,746 26,866

Current assets Inventories 12 5,941 6,137Tradeandotherreceivables 13 48,701 42,961Cashandcashequivalents 22,148 51,536

Total current assets 76,790 100,634

Total assets 104,536 127,500

Equity and liabilities Capital and reserves attributable to equity holders of the parentOrdinaryshares 14 918 911Sharepremium 38,915 38,123Capitalredemptionreserve 20 20Share-basedpaymentreserve 1,104 453Retainedearnings 48,080 48,010

Total equity 89,037 87,517

LiabilitiesNon-current liabilities Otherpayables 223 163

Total non-current liabilities 223 163

Current liabilitiesTradeandotherpayables 16 14,926 37,481Currenttaxliabilities 350 2,339

Total current liabilities 15,276 39,820

Total liabilities 15,499 39,983

Total equity and liabilities 104,536 127,500

ThefinancialstatementswereapprovedbytheBoardofDirectorsandauthorisedforissueon16May2007.

JNNewton Director CRAdams Director

48Consolidated statement of changes in equity

Share Share Capital Share-based Translation Retained Total capital premium redemption payment reserve earnings reserve reserve £’000 £’000 £’000 £’000 £’000 £’000 £’000

Balancesat1January2005 894 35,763 20 217 2 36,206 73,102 Exchangedifferencesontranslatingforeignoperations - - - - 640 - 640 Profitfortheyear - - - - - 14,646 14,646 Share-basedpaymentcharges - - - 236 - - 236

Dividends - - - - - (2,218) (2,218) Shareissues 17 2,360 - - - - 2,377

Balances at 31 December 2005 911 38,123 20 453 642 48,634 88,783

Exchangedifferencesontranslatingforeignoperations - - - - (1,878) - (1,878) Profitfortheyear - - - - - 3,652 3,652

Share-basedpaymentcharges - - - 651 - - 651 Dividends - - - - - (2,674) (2,674) Shareissues 7 792 - - - - 799

Balances at 31 December 2006 918 38,915 20 1,104 (1,236) 49,612 89,333


Share Share Capital Share-based Retained Total capital premium redemption payment earnings reserve reserve £’000 £’000 £’000 £’000 £’000 £’000

Balancesat1January2005 894 35,763 20 217 37,202 74,096 Profitfortheyear - - - - 13,026 13,026

Share-basedpaymentcharges - - - 236 - 236 Dividends - - - - (2,218) (2,218) Shareissues 17 2,360 - - - 2,377

Balances at 31 December 2005 911 38,123 20 453 48,010 87,517

Profitfortheyear - - - - 2,744 2,744 Share-basedpaymentcharges - - - 651 - 651

Dividends - - - - (2,674) (2,674) Shareissues 7 792 - - - 799

Balances at 31 December 2006 918 38,915 20 1,104 48,080 89,037

Company statement of changes in equity

50

2006 2005 £’000 £’000

Cash flows from operating activities Netprofitbeforetax 5,196 20,127Adjustments for: Depreciationofproperty,plantandequipment 661 400Amortisationofpublishingrelationships 36 35Profitonsaleofproperty,plantandequipment (1) (3)Share-basedpaymentcharges 651 236Investmentincome (1,734) (1,392)Financecosts 47 71

4,856 19,474Increaseininventories (971) (3,442)Increaseintradeandotherreceivables (1,126) (6,353)(Decrease)/increaseintradeandotherpayables (22,682) 21,460

Cash (used in) / generated from operations (19,923) 31,139Incometaxespaid (5,195) (5,898)

Net cash (outflow) / inflow from operating activities (25,118) 25,241

Cash flows from investing activities Purchaseofproperty,plantandequipment (1,379) (1,268)Proceedsfromsaleofproperty,plantandequipment - 33Purchaseofbusinesses (2,419) (33)Interestreceived 1,734 1,392

Net cash (used in) / generated from investing activities (2,064) 124

Cash flows from financing activities Shareoptionsexercised 799 1,796Equitydividendspaid (2,674) (2,218)Interestpaid (47) (118)Repaymentofloans - (445)

Net cash used in financing activities (1,922) (985)

Net (decrease) / increase in cash and cash equivalents (29,104) 24,380Cashandcashequivalentsatbeginningofperiod 53,511 29,120Unrealisedexchange(loss)/gainoncashandcashequivalents (103) 11

Cash and cash equivalents at end of period 24,304 53,511

Consolidated cash flow statementfor the year ended 31 December 2006


2006 2005 £’000 £’000

Cash flows from operating activities Netprofitbeforetax 3,704 18,311Adjustments for: Depreciationofproperty,plantandequipment 508 252Share-basedpaymentcharges 651 236Investmentincome (2,558) (1,850)Financecosts - 11

2,305 16,960Decrease/(increase)ininventories 196 (1,399)Increaseintradeandotherreceivables (4,119) (6,503)(Decrease)/increaseintradeandotherpayables (22,495) 20,109

Cash (used in) / generated from operations (24,113) 29,167Incometaxespaid (4,745) (5,617)

Net cash (outflow) / inflow from operating activities (28,858) 23,550

Cash flows from investing activities Purchaseofproperty,plantandequipment (1,177) (1,084)Purchaseofsubsidiaries (36) (33)Interestreceived 2,558 1,850

Net cash generated from investing activities 1,345 733

Cash flows from financing activities Shareoptionsexercised 799 1,796Equitydividendspaid (2,674) (2,218)Interestpaid - (58)Repaymentofloans - (317)

Net cash used in financing activities (1,875) (797)

Net (decrease) / increase in cash and cash equivalents (29,388) 23,486Cashandcashequivalentsatbeginningofperiod 51,536 28,050

Cash and cash equivalents at end of period 22,148 51,536

Company cash flow statementfor the year ended 31 December 2006

52Accounting policies

(a) Basis of preparationThesefinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS)andInternationalFinancialReportingInterpretationsCommittee(IFRIC)interpretationsendorsedbytheEuropeanUnion(EU)andthosepartsoftheCompaniesAct1985applicabletocompaniesreportingunderIFRS.Thefinancialstatementshavebeenpreparedunderthehistoricalcostconvention.

Thesefinancialstatementshavebeenpreparedinaccordancewiththeaccountingpoliciessetoutbelow,whichhavebeenconsistentlyappliedtoalltheyears.TheseaccountingpoliciescomplywithapplicableIFRSstandardsandIFRICinterpretationsissuedandeffectiveatthetimeofpreparingthesestatements.

IAS19(Amendment)‘EmployeeBenefits’ismandatoryfortheGroup’saccountingperiodsbeginningonorafter1January2006.Itintroducestheoptionofanalternativerecognitionapproachforactuarialgainsandlosses,addsadditionalrecognitionrequirementsformultiemployerplanswhereinsufficientinformationisavailabletoapplydefinedbenefitaccountingandextendsdisclosurerequirements.SofarastheGroupisconcerned,theadoptionofthisamendmentonlyimpactstheformatandextentofdisclosurespresentedintheaccounts.

IFRS6‘Explorationforandevaluationofmineralresources’ismandatoryforaccountingperiodsbeginningonorafter1January2006butisnotrelevanttotheGroup’soperations.

Atthedateofauthorisationofthesefinancialstatements,thefollowingStandardsandInterpretations,whichhavenotyetbeenappliedinthesefinancialstatements,wereinissuebutnotyeteffective:

• IFRS 7 ‘Financial Instruments: Disclosures’, and the related amendment to IAS 1 on capital disclosures (effective for annual periods beginning on or after 1 January 2007); this Standard will require additional disclosures on capital and financial instruments; and

• IFRS 8 ‘Operating Segments’ (effective for annual periods beginning on or after 1 January 2009); this Standard replaces IAS 14 ‘Segment Reporting’ and requires segmental information reported to be based on that which management uses internally for evaluating performance of operating segments and requires increased disclosure relating to reportable segments.

ThedirectorsanticipatethatthefollowingStandardsandInterpretations,whichwerealsoinissuebutnoteffectiveatthedateofauthorisationofthesefinancialstatements,willhavenomaterialimpactonthefinancialstatementsoftheGroup:

• IFRIC 7 ‘Applying the Restatement Approach under IAS 29 ‘Reporting in Hyperinflatory Economies’’ (effective for annual periods beginning on or after 1 May 2006);

• IFRIC 8 ‘Scope of IFRS 2’ (effective for annual periods beginning on or after 1 May 2006);

• IFRIC 10 ‘Interim Financial Reporting and Impairment’ (effective for annual periods beginning on or after 1 November 2006);

• IFRIC 11 ‘IFRS 2 - Group and Treasury Share Transactions’ (effective for annual periods beginning on or after 1 March 2007); and

• IFRIC 12 ‘Service Concession Arrangements’ (effective for annual periods beginning on or after 1 January 2008).

(b) Goodwill and intangible assetsGoodwill,beingtheexcessofthecostofacquisitionoverthefairvalueofassetsacquired,iscapitalisedasanintangibleasset.

InaccordancewithIFRS3,goodwillhasbeenfrozenatitsnetbookvalueat1January2004andisnotamortised,butinsteadissubjecttoannualimpairmentreviews.Anyimpairmentlossesarerecognisedimmediatelyintheincomestatement.

Negativegoodwilliscreditedtotheincomestatementintheperiodinwhichitarises.

Otherintangibleassetsarecapitalisedandamortisedovertheirexpectedusefullivesbyequalannualinstalmentsatthefollowingrates:

PublishingRelationships 10%

Theamortisationisincludedinadministrativeexpenses.


(c) TurnoverTurnoverrepresentstheamountderivedfromtheprovisionofgoods,servicesandrightsfallingwithintheGroup’sordinaryactivities,afterdeductionoftradediscounts,valueaddedtaxandanticipatedreturns.Turnoverfrombookpublishingisrecognisedfromthedateofinvoice.Turnoverfromthesaleofpublishinganddistributionrights,includingfilm,paperback,electronic,overseaspublishingrightsandsponsorship,isrecognisedatthetimesuchsalesareachieved.

(d) InventoriesInventoriesincludepaper,sheetsandboundstock.ThecostofworkinprogressandfinishedstockrepresentstheamountsinvoicedtotheGroupforpaper,origination,printingandbinding.Inventoriesarevaluedatthelowerofcostandnetrealisablevalue.

(e) Property, plant and equipmentProperty,plantandequipmentarestatedatcostlessaccumulateddepreciationandanyrecognisedimpairmentloss.

Property,plantandequipmentaredepreciatedinordertowritedowntheircostbyequalannualinstalmentsovertheirexpectedusefullivesatthefollowingrates:

Shortleaseholdimprovements 7-17%perannumFurnitureandfittings 10%perannumComputerequipment 20%perannumOtherofficeequipment 20%perannumMotorvehicles 25%perannum

Depreciationispro-ratedintheyearsofacquisitionanddisposalofassets.

(f ) Royalty advances to authorsAdvancestoauthorsarewrittenofftotheextentthattheyarenotcoveredbyanticipatedfuturesalesorfirmcontractsforsubsidiaryrightsreceivable.

(g) Deferred taxationProvisionismadefordeferredtaxationonalltemporarydifferencesbetweenthecarryingamountandthetaxbasesofassetsandliabilities.Deferredtaxassetsareonlyincludedinthefinancialstatementswhererecoveryismorelikelythannot.Deferredtaxationismeasuredonanon-discountedbasis.

(h) Foreign currenciesAssetsandliabilitiesinforeigncurrenciesaretranslatedintosterlingatclosingratesofexchangeatthebalancesheetdate.Incomestatementsandcashflowsofoverseassubsidiarycompaniesaretranslatedintosterlingataverageexchangeratesfortheyear.

Exchangedifferencesarisingfromtheretranslationofopeningnetassetsandincomestatementsofoverseassubsidiarycompaniesatclosingratesofexchangearedealtwithasmovementsinequity.Allotherexchangedifferencesarechargedorcreditedtotheincomestatement.

(i) Cash and cash equivalentsCashandcashequivalentscomprisecashandshort-termdeposits.

(j) Operating leasesOperatingleaserentalsarechargedtotheincomestatementastheyfalldue.

(k) Pension costsPensioncostsrelatingtodefinedcontributionpensionschemesarechargedtotheincomestatementintheperiodforwhichcontributionsarepayable.

Until1997asubsidiarycompanyoperatedadefinedbenefitsscheme.Theliabilityinrespectofthedefinedbenefitsschemeisthepresentvalueofthedefinedbenefitobligationsatthebalancesheetdate,calculatedusingtheprojectedunitcreditmethod,lessthefairvalueofthescheme’sassets.

InaccordancewithIFRS1,theGrouphasrecognisedthepensionliabilityinfullasat1January2004.Thecurrentservicecost,interestonschemeliabilitiesandallactuarialgainsandlossesarerecognisedintheincomestatement.

54

(l) Share-based paymentChargesforemployees’servicesreceivedinexchangeforshare-basedpaymenthavebeenmadeforalloptionsgrantedafter7November2002inaccordancewithIFRS2.

OptionsgrantedundertheGroup’sshareoptionschemesandSharesaveschemeareequitysettled,asareawardsgrantedundertheGroup’sshareappreciationrightsscheme.ThefairvaluesofsuchoptionshasbeencalculatedusingtheBlackScholesmodeloramodifiedversionofthesame,basedonpubliclyavailablemarketdata,andarechargedtotheincomestatementoverthevestingperiods.

AwardsgrantedundertheGroup’sperformanceshareplanareequitysettled.BecauseoftheTotalShareholderReturnperformanceconditionthatappliestohalfofanyawardgrantedundertheplan,thefairvalueofawardshasbeencalculatedusingtheMonte-Carlostylestochasticmodel,andischargedtotheincomestatementoverthevestingperiod.

AwardsgrantedundertheGroup’sshareappreciationrightsschemeareequitysettled.

(m) ConsolidationTheconsolidatedfinancialstatementscomprisetheaccountsoftheCompanyanditssubsidiariesattheyearend.Theresultsofthesubsidiariesareaccountedforintheincomestatementfromthedateofacquisition.

(n) Critical accounting estimates and judgementsEstimatesandjudgementsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactors,includingreasonableexpectationsoffutureevents.Theresultantestimateswill,bydefinition,notnecessarilyequaltherelatedactualresultsandmayrequireadjustmentinsubsequentaccountingperiods.Theestimatesandassumptionsthatmaycauseamaterialadjustmenttothecarryingamountofassetsandliabilitiesinthenextfinancialyearare:

Book returnsAsbooksarereturnablebycustomers,theGroupmakesaprovisionagainstbookssoldintheaccountingperiodwhichisthencarriedforwardintradedebtorsinthebalancesheetinanticipationofbookreturnsreceivedsubsequenttotheyearend.

Author advancesAprovisionismadebytheGroupagainstpublishedadvanceswhichmaynotbecoveredbyanticipatedfuturesales,paperbackeditionsorcontractsforsubsidiaryrightsreceivable.Attheendofeachfinancialyearareviewiscarriedoutonallpublishedtitleadvances.Ifitisunlikelythatroyaltiesfromfuturesales,paperbacksalesorsubsidiaryrightswillfullyearndowntheadvance,aprovisionismadetotheprofitandlossaccountforthedifferencebetweenthecarryingvalueandtherecoverableamountfromfutureearnings.

Accounting policies

BloomsburyPublishingPlc 55Notes to the accounts

1. Segmental analysis

Geographical segmentsTheGroupconsidersthatasthemainthrustofitsgrowthistodevelopitsinternationalpublishingstrategy,theprimarysegmentalreportingshouldbebasedongeographicalsegments.Theanalysisbygeographicalsegmentisshownbelow.

Year ended 31 December 2006 United North Continental Eliminations Total Kingdom America Europe £’000 £’000 £’000 £’000 £’000

Revenue Externalsales 53,880 15,011 5,882 - 74,773Inter-segmentsales* 145 - 110 (255) -

Total revenue 54,025 15,011 5,992 (255) 74,773

Result Segmentresult 3,724 (260) 199 - 3,663Unallocatedcentralcosts - - - (154) (154)

Profit/(loss)beforeinvestmentincome 3,724 (260) 199 (154) 3,509Investmentincome 2,595 10 - (871) 1,734Financecosts (143) (538) (237) 871 (47)

Profit/(loss)beforetaxation 6,176 (788) (38) (154) 5,196Incometaxexpense (1,732) 286 (98) - (1,544)

Profit / (loss) for the year 4,444 (502) (136) (154) 3,652

Other InformationCapitaladditions 1,311 32 41 - 1,384Depreciationandamortisation 638 44 15 - 697Profit/(loss)onsaleofproperty,plantandequipment (1) - - - (1)

Balance Sheet Assets Segmentassets 105,572 17,290 9,136 (20,955) 111,043

Liabilities Segmentliabilities 22,300 13,233 7,132 (20,955) 21,710

*Inter-segmentsalesarechargedatprevailingmarketrates.

56

1. Segmental analysis (continued)

Year ended 31 December 2005 United North Continental Eliminations Total Kingdom America Europe £’000 £’000 £’000 £’000 £’000

Revenue Externalsales 92,616 11,027 5,465 - 109,108Inter-segmentsales* 199 - 594 (793) -

Total revenue 92,815 11,027 6,059 (793) 109,108

Result Segmentresult 17,856 478 642 - 18,976Unallocatedcentralcosts - - - (170) (170)

Profitbeforeinvestmentincome 17,856 478 642 (170) 18,806Investmentincome 1,877 - - (485) 1,392Financecosts (135) (211) (210) 485 (71)

Profit/(loss)beforetaxation 19,598 267 432 (170) 20,127Incometaxexpense (5,567) (197) 283 - (5,481)

Profit / (loss) for the year 14,031 70 715 (170) 14,646

Other InformationCapitaladditions 1,250 13 5 - 1,268Depreciationandamortisation 383 42 10 - 435Profit/(loss)onsaleofproperty,plantandequipment 4 - (1) - 3

Balance Sheet Assets Segmentassets 124,564 17,866 8,541 (15,337) 135,634

Liabilities Segmentliabilities 43,984 11,927 6,277 (15,337) 46,851

*Inter-segmentsalesarechargedatprevailingmarketrates.

Notes to the accounts


External sales by destination United North Continental Total Kingdom America Europe £’000 £’000 £’000 £’000

Year ended 31 December 2006UnitedKingdom 42,365 - - 42,365NorthAmerica 1,852 15,011 - 16,863ContinentalEurope 3,797 - 5,882 9,679Australasia 3,637 - - 3,637Restoftheworld 2,229 - - 2,229

Total external sales 53,880 15,011 5,882 74,773

Year ended 31 December 2005 UnitedKingdom 56,436 - - 56,436NorthAmerica 7,221 11,027 - 18,248ContinentalEurope 16,450 - 5,465 21,915Australasia 6,520 - - 6,520Restoftheworld 5,989 - - 5,989

Total external sales 92,616 11,027 5,465 109,108

58Notes to the accounts

Business segmentsTheGroup’sbusinessisorganisedinthreeoperatingareas:Adult,Children’sandReference.Thefollowingtableprovidesthebreakdownofrevenueandprofitbeforeinvestmentincomefortheseareas.

Adult Children’s Reference Unallocated Total £’000 £’000 £’000 £’000 £’000

Year ended 31 December 2006Revenue 32,669 27,366 14,738 - 74,773Costofsales (16,627) (14,115) (7,860) - (38,602)

Grossprofit 16,042 13,251 6,878 - 36,171Marketinganddistributioncosts (6,947) (3,859) (3,548) - (14,354)

Contributionbeforeadministrativeexpenses 9,095 9,392 3,330 - 21,817Administrativeexpenses - - - (18,308) (18,308)

Profitbeforeinvestmentincome 9,095 9,392 3,330 (18,308) 3,509

Adult Children’s Reference Unallocated Total £’000 £’000 £’000 £’000 £’000

Year ended 31 December 2005Revenue 27,468 69,013 12,627 - 109,108Costofsales (11,400) (35,056) (7,058) - (53,514)

Grossprofit 16,068 33,957 5,569 - 55,594Marketinganddistributioncosts (6,456) (8,656) (2,995) - (18,107)

Contributionbeforeadministrativeexpenses 9,612 25,301 2,574 - 37,487Administrativeexpenses - - - (18,681) (18,681)

Profitbeforeinvestmentincome 9,612 25,301 2,574 (18,681) 18,806

Thefollowingisananalysisofthecarryingvalueofsegmentassets:

Carrying amount of segment assets Year ended Yearended 31 December 31December 2006 2005 £’000 £’000 Adult 31,954 31,975

Children’s 20,956 28,453

Reference 19,088 16,707

Unallocatedcentralassets 39,045 58,499

111,043 135,634

Capitaladditionsarenotspecifictobusinesssegments.


2. Profit before investment income

Profitbeforeinvestmentincomeisstatedaftercharging/(crediting)thefollowingamounts:

2006 2005 £’000 £’000

Auditors’remuneration(seebelow) 259 245Depreciationofproperty,plantandequipment 661 400Loss/(profit)ondisposalofproperty,plantandequipment 1 (3)Amortisationofpublishingrelationships 36 35Exchangeloss 59 15Staffcosts(seenote4) 13,241 13,243

AmountspayabletoBakerTillyorBakerTillyUKAuditLLPandtheirassociatesinrespectofbothauditandnon-auditservicesareasfollows:

2006 2006 2005 2005 £’000 % £’000 %

Audit services Statutoryauditofparentcompany 81 31 69 28

Other servicesTheauditingofaccountsofassociatesofthecompanypursuanttolegislation AuditofsubsidiarieswheresuchservicesareprovidedbyBakerTillyUKAuditLLPoritsassociates 52 20 51 21WorkperformedbyassociatesofBakerTillyUKAuditLLPinrespectofconsolidationreturnsorlocallegislativerequirements 10 4 - - Other services supplied pursuant to such legislation Interimresults 32 12 29 12Pensionschemeaudit 3 1 3 1AnnouncementreIFRSconversion - - 5 2 Tax services Complianceservices 46 18 45 18Advisoryservices 35 14 41 17 Other servicesEmbargoreview - - 2 1

259 100 245 100

Inadditiontothosecostsabove,BakerTillyprovidedservicestotheGroupinrelationtotheacquisitionofMethuenDramaamountingto£10,000(2005,£nil)whichhavebeenincludedinthecostofacquisition.


3a. Investment income 2006 2005 £’000 £’000

Interestonbankdeposits 1,651 1,323Otherinterestreceivable 69 55Expectedreturnonpensionplanassets 14 14

1,734 1,392

3b. Finance costs 2006 2005 £’000 £’000

Interestonloannotes - 11Interestcostonpensionobligations 25 24Actuariallossesondefinedbenefitpensionplan 22 36

47 71

4. Directors and employees

Staffcostsduringtheyearwere:

2006 2005 £’000 £’000

Salaries 10,741 11,196Socialsecuritycosts 1,318 1,396Otherpensioncosts 531 415Share-basedpaymentcharge 651 236

13,241 13,243

Theaveragenumberofemployeesduringtheyearwas:

2006 2005 Number Number

Editorial,productionandselling 232 236Financeandadministration 71 56

303 292

Fulldetailsconcerningdirectors’emoluments,shareholdings,optionsandotherinterestsareshownintheDirectors’RemunerationReportonpages27to34.


Pension costsThepensioncostssummarisedaboveof£531,000(2005,£415,000)relatetotheGroup’sdefinedcontributionanddefinedbenefitpensionarrangements.

Defined contribution plansTheGroupoperatesdefinedcontributionretirementbenefitplansforallqualifyingemployees.

Thetotalcostchargedtoincomeof£511,000(2005,£397,000)representscontributionspayabletotheseschemesbytheGroupatratesspecifiedintherulesoftheschemes.Asat31December2006,contributionsof£30,000(2005,£14,000)dueinrespectofthecurrentreportingperiodhadnotbeenpaidovertotheschemes.

Defined benefit planAsubsidiarycompanyoperatesadefinedbenefitschemeforsomestaff.Accrualofbenefitsceasedin1997,withtheschemenowbeingoperatedasaclosedfund.Afullactuarialvaluationwascarriedoutasat1January2004andupdatedto31December2006byaqualifiedindependentactuary.

Atthedateofthelastcompletedindependentactuarialvaluation,whichwas1January2004,themarketvalueoftheassetsoftheschemewas£359,000.Theactuaryadvisedthatatthatdatetheactuarialvaluationoftheassetsoftheschemewassufficienttocover69%ofthebenefitsthathadaccruedtomembers,afterallowingforexpectedincreasesinearnings.Theschemeisactuariallyvaluedeverythreeyears.Thenextvaluationoftheschemewillbeasat1January2007.

Contributionsarepaidbytheemployerasandwhenrequiredtocoveranyexpensesofthescheme.Inaddition,contributionspaidtotheschemeduringtheyearwere£19,000(2005,£18,000).

TheGroup’spolicyistofundthedeficitintheschemebyadditionalcontributionstomeetthescheme’scommitmenttomembers.

Themajorassumptionsusedbytheactuaryfortheupdatewereasfollows:

31 December 31December 31December 31December 31December 2006 2005 2004 2003 2002

Rateofincreaseinsalaries not applicable notapplicable notapplicable notapplicable notapplicableRateofincreaseinpensionsinpayment(LPI) 0.0% 0.0% 0.0% 0.0% 0.0%Discountrate 5.2% 4.8% 5.3% 5.4% 5.4%Inflationassumption 3.3% 2.9% 2.9% 2.9% 2.4%Expectedreturnonplanassets 5.1% 3.5% 3.8% 3.8% 6.5%

Theamountsrecognisedinincomeinrespectofthedefinedbenefitschemeareasfollows:

2006 2005 £’000 £’000

Currentservicecost - -Interestcost 25 24Expectedreturnonschemeassets (14) (14)Actuariallosses 22 36

33 46

Thenetchargefortheyearhasbeenincludedinfinancecostsandinterestreceived.

Actuarialgainsandlosseshavebeenreportedintheincomestatement.

Theactualreturnonschemeassetswas£29,000(2005,£11,000).


4. Directors and employees (continued)TheamountincludedinthebalancesheetarisingfromtheGroup’sobligationinrespectofdefinedbenefitpensionschemeisasfollows:

2006 2005 £’000 £’000

Totalvalueofassets(withprofitpolicy) 430 387Presentvalueofschemeliabilities (574) (517)

Liabilitybeforetaxation (144) (130)Deferredtaxation 43 39

Liability recognised in the balance sheet (101) (91)

Analysisforreportingpurposes: Non-currentliabilities (144) (130)Deferredtaxassets 43 39

Movementsinthepresentvalueofnetdefinedbenefitobligationsintheyearwereasfollows:

2006 2005 £’000 £’000

At1January (130) (102)Interestcost (25) (24)Expectedreturnonschemeassets 14 14Contributions 19 18Actuariallosses (22) (36)

At 31 December (144) (130)

Movementsinthepresentvalueofschemeassetsintheyearwereasfollows: 2006 2005 £’000 £’000

At1January 387 359Expectedreturnonschemeassets 14 14Actuarialgainsandlosses 15 (3)Contributions 19 18Benefitspaid (5) (1)

At 31 December 430 387


Thehistoryofexperienceadjustmentsisasfollows: 2006 2005 2004 2003 2002 £’000 £’000 £’000 £’000 £’000 Presentvalueofdefinedbenefitobligations (574) (517) (461) (451) (404)Fairvalueofschemeassets 430 387 359 359 352

Deficit in scheme (144) (130) (102) (92) (52)

Experience gains and losses on scheme assets:Amount(£’000) 15 (3) (2) (16) (5)Percentageofschemeassets 4% (1%) (1%) (4%) (1%)Experience gains and losses on scheme liabilities: Amount(£’000) (59) 12 11 (3) 3Percentageofthepresentvalueoftheschemeliabilities (10%) 2% 2% (1%) 1%

5. Taxation

(a) Tax charge for the year 2006 2005 £’000 £’000

Basedontheprofitfortheyear: UKcorporationtaxat30% 1,745 5,579 Under/(over)provisioninrespectofprioryear 9 (8) Overseastaxation–currentyear 42 386

1,796 5,957Deferredtax(notes11and15): UK (50) (45) Overseas (202) (431)

1,544 5,481

(b) Factors affecting tax charge for the yearThetaxassessedfortheyearisdifferentfromthestandardrateofcorporationtaxintheUK(30%).Thedifferencesareexplainedbelow:

2006 2005 £’000 £’000

Profit before taxation 5,196 20,127

ProfitonordinaryactivitiesmultipliedbythestandardrateofcorporationtaxintheUKof30% 1,559 6,038

Effectsof: Permanentdifferences (31) (180) Taxlosses 93 (506) Differentrateoftaxonoverseasresults (86) 137 Adjustmenttotaxchargeinrespectofpreviousperiods 9 (8)

Tax charge for the year 1,544 5,481

(c) Factors affecting tax charge for future yearsDetailsoftheGroup’sdeferredtaxassetsareshowninnote11.


6. Dividends

Adividendof3.00ppershare(£2,189,000)waspaidtotheequityshareholderson6July2006,beingtheamountproposedbythedirectors,andsubsequentlyapprovedbytheshareholdersatthe2006AnnualGeneralMeeting(2005:2.478ppershare,£1,773,000).

For the current yearOn17November2006aninterimdividendof0.66ppershare(£485,000)waspaidtotheequityshareholders(2005:0.60ppershare,£445,000).

Thedirectorsproposethatadividendof3.00ppersharewillbepaidtotheequityshareholderson5July2007.Basedonthenumberofsharescurrentlyinissue,thefinaldividendwillbe£2,203,000(2005,£2,189,000).ThisdividendissubjecttoapprovalbytheshareholdersattheAnnualGeneralMeetingandhasnotbeenincludedasaliabilityinthesefinancialstatements.

7. Earnings per share

Thebasicearningspersharehasbeencalculatedbyreferencetoearningsof£3,652,000(2005,£14,646,000)andaweightedaveragenumberofOrdinarySharesinissueof73,115,031(2005,72,134,014).ThedilutedearningspersharehasbeencalculatedbyreferencetoaweightedaveragenumberofOrdinarySharesof74,469,114(2005,73,493,581)whichtakesaccountofshareoptionsandawardsundertheGroup’sPerformanceSharePlan.

Thereconciliationbetweentheweightedaveragenumberofsharesforthebasicearningspershareandthedilutedearningspershareisasfollows:

2006 2005 Number Number

Weightedaveragenumberofsharesforbasicearningspershare 73,115,031 72,134,014DilutiveeffectofshareoptionsandawardsunderPerformanceSharePlan 1,354,083 1,359,567

Weighted average number of shares for diluted earnings per share 74,469,114 73,493,581


8. Property, plant and equipment

The Group Short Furniture Computers Motor Total leasehold and and other vehiclesYear ended 31 December 2006 improvements fittings office equipment £’000 £’000 £’000 £’000 £’000

Cost:At1January2006 1,016 328 1,994 178 3,516Additions 1,015 74 270 25 1,384Disposals - - (737) (9) (746)Exchangedifferences (1) - (4) - (5)

At 31 December 2006 2,030 402 1,523 194 4,149

Depreciation: At1January2006 131 182 1,483 105 1,901Chargefortheyear 364 35 223 39 661Disposals - - (736) (7) (743)Exchangedifferences - - (2) - (2)

At 31 December 2006 495 217 968 137 1,817

Net book value: At 31 December 2006 1,535 185 555 57 2,332

At1January2006 885 146 511 73 1,615

The Group Short Furniture Computers Motor Total leasehold and and other vehiclesYear ended 31 December 2005 improvements fittings office equipment £’000 £’000 £’000 £’000 £’000

Cost:At1January2005 113 287 1,732 229 2,361Additions 903 41 262 62 1,268Disposals - - (1) (113) (114)Exchangedifferences - - 1 - 1

At 31 December 2005 1,016 328 1,994 178 3,516

Depreciation: At1January2005 37 150 1,254 144 1,585Chargefortheyear 94 32 229 45 400Disposals - - - (84) (84)

At 31 December 2005 131 182 1,483 105 1,901

Net book value: At 31 December 2005 885 146 511 73 1,615

At1January2005 76 137 478 85 776

66

8. Property, plant and equipment (continued)

The Company Short Furniture Computers Total leasehold and and other Year ended 31 December 2006 improvements fittings office equipment £’000 £’000 £’000 £’000

Cost:At1January2006 1,006 328 794 2,128Additions 1,003 74 100 1,177

At 31 December 2006 2,009 402 894 3,305

Depreciation: At1January2006 121 182 501 804Chargefortheyear 357 35 116 508

At 31 December 2006 478 217 617 1,312

Net book value: At 31 December 2006 1,531 185 277 1,993

At1January2006 885 146 293 1,324

The Company Short Furniture Computers Total leasehold and and other Year ended 31 December 2005 improvements fittings office equipment £’000 £’000 £’000 £’000

Cost:At1January2005 103 287 654 1,044Additions 903 41 140 1,084

At 31 December 2005 1,006 328 794 2,128

Depreciation: At1January2005 27 150 375 552Chargefortheyear 94 32 126 252

At 31 December 2005 121 182 501 804

Net book value: At 31 December 2005 885 146 293 1,324

At1January2005 76 137 279 492



9. Intangible assets

Goodwill The Group The CompanyYear ended 31 December 2006 £’000 £’000

Cost: At1January2006 19,312 721Additions 2,678 -Exchangegain/(loss)onretranslation (441) -

At 31 December 2006 21,549 721

Accumulated impairment losses:At1January2006and31December2006 4,153 721

Carrying amount:At 31 December 2006 17,396 -

At1January2006 15,159 -

The Group The CompanyYear ended 31 December 2005 £’000 £’000

Cost: At1January2005 18,025 721Additions 983 -Exchangegain/(loss)onretranslation 304 -

At 31 December 2005 19,312 721

Accumulated impairment losses:At1January2005and31December2005 4,153 721

Carrying amount:At 31 December 2005 15,159 -

At1January2005 13,872 -

InaccordancewithIFRS3,goodwillhasbeenfrozenatitsnetbookvalueat1January2004andisnotamortised,butinsteadissubjecttoannualimpairmentreviews.Anyimpairmentlossesarerecognisedimmediatelyintheincomestatement.Thecarryingvalueisdeterminedonthebasisofvalueinuse.

On1June2006A&CBlackacquiredtheassetsofMethuenDramaforacashconsiderationof£2,383,000.Thegoodwillof£2,200,000arisingonthisacquisitionhasbeencapitalisedonthegroupbalancesheet.

On20November2006theCompanyacquiredthecontrollinginterestof51%intheissuedsharecapitalofWriter’sCafe,Inc.foracashconsiderationof£36,000.Writer’sCafe,Inc.isastart-upoperationwhichhadnoassetsorliabilitiesatthedateofacquisitionandhasnottradedsincetheacquisition.Thegoodwillof£36,000arisingonthisacquisitionhasbeencapitalisedonthegroupbalancesheet.


9. Intangible assets (continued)

Additionsrepresentthegoodwillontheacquisitionsduringtheyearandadjustmenttothefairvalueofassetspreviouslyacquired,asshownbelow: The Group £’000

AcquisitionofMethuenDrama 2,200AcquisitionofWriter’sCafe,Inc. 36Adjustmenttofairvalueofassets 442

Additions in the year 2,678

ThetablebelowsummarisesthebookvaluesofthemajorcategoriesofassetsandliabilitiesofMethuenDramaatthedateofacquisitionbytheGroupandtheirfairvaluesincludedintheconsolidatedfinancialstatementsatthatdate.

Provisions to Total fair reduce to net value to Book value realisable value the group £’000 £’000 £’000

Net assets acquired: Currentassets 283 100 183

283 100 183

Consideration 2,383

Goodwill arising on acquisition 2,200

ThegoodwillrepresentstheacquisitionoftheMethuennameandthesignificantsynergiesandeconomiesofscaleexperiencedpostacquisition.

TheprofitbeforeinvestmentincomeofMethuenDramasincetheacquisitionwas£282,000.PriortoitsacquisitionbytheGroup,thebusinessnowinMethuenDramawasadivisionwithinMethuenPublishingLimitedanddidnotproduceauditedaccounts.ItisthereforenotpossibletoprovidedetailsoftheresultsofMethuenDramafortheperiodpriortoacquisition.ThecarryingamountoftheGroup’sgoodwillrelatestothefollowinggeographicalsegments: 2006 2005 £’000 £’000

UnitedKingdom 13,445 11,245NorthAmerica 2,754 3,142ContinentalEurope 1,197 772

At 31 December 2006 17,396 15,159

Intestinggoodwillforimpairment,therecoverableamountofeachgeographicalsegment’sgoodwilliscalculatedonacombinationoffutureoperatingprofitsandcashflows,whilstalsotakingintoaccountpastperformanceforwellestablishedoperations,suchasintheUnitedKingdom.TheoperatingperformanceofeachsegmentisbasedontheBoard’sapprovedbudgetsfortheyearending31December2007forallsegmentsandforecastsforsubsequentyearsupto2008forContinentalEuropeandupto2014forNorthAmericaandtheUnitedKingdom.


Thefollowingkeyassumptionsinthevalueinusecalculationswereappliedtoeachgeographicalsegment:

• The discount rates used were 6% for the United Kingdom and 7% for North America and Continental Europe.

• The budgeted revenue and cost increases were based on the Group’s approved budgets.

• Forecast revenue and cost increases for subsequent years were based on growth rates applied to approved budgets and other factors which management consider should be taken into account such as growth in the backlist revenues, development of new revenue streams within each geographical segment and cost savings following ongoing operational reviews, as follows:

United Kingdom North America Continental Europe

Revenuegrowthafter2007 4.0% 7.0% notapplicableOverheadgrowthafter2007 4.0% 7.0% notapplicable

Managementareoftheopinionthatitdoesnotcurrentlyforeseeareasonablypossiblechangeinthekeyassumptionsithasemployedwhendeterminingthevalueinusecalculations.

Publishing relationships

The Group 2006 2005 £’000 £’000

Cost: At1January 387 354Exchange(loss)/gainonretranslation (40) 33


Amortisation: At1January 35 -Chargefortheyear 36 35


Carrying amount: At 31 December 276 352

At1January 352 354

Total carrying amount of intangible assets

The Group 2006 2005 £’000 £’000

At 31 December 17,672 15,511

At1January 15,511 14,226

70

10. Investments in subsidiary companies

The Company 2006 2005 £’000 £’000

Investments in share capital of wholly owned subsidiaries at cost: At1January 25,412 23,043Additions 36 2,369

At 31 December 25,448 25,412

TheadditionsrepresenttheCompany’sacquisitionofWriter’sCafe,Inc.foracashconsiderationof£36,000.

Thesubsidiarycompaniesat31December2006areasfollows:

Country of Proportion Nature of incorporation of equity business during capital held the year

Subsidiary undertakings held directly: A.&C.BlackPlc England 100% IntermediateholdingcompanyDianaPublishingInc USA 100% PublishingBVBerlinVerlagGmbH Germany 100% PublishingWalkerPublishingCompany,Inc. USA 100% PublishingPeterCollinPublishingLimited England 100% Non-tradingBloomsburyBookPublishingCompanyLimited England 100% Non-tradingWriter’sCafe,Inc. USA 51% Non-trading

Subsidiary undertakings held through a subsidiary company: BvTBerlinerTaschenbuchVerlagGmbH Germany 100% Non-tradingA&CBlackPublishersLimited England 100% PublishingA.&C.Black(Storage)Limited England 100% Non-tradingA.&C.Black(Distribution)Limited England 100% Non-tradingChristopherHelm(Publishers)Limited England 100% PublishingReed’sAlmanacLimited England 100% Non-tradingHerbertPressLimited England 100% Non-tradingAlphabooksLimited England 100% Non-tradingNauticalPublishingCompanyLimited England 100% Non-tradingF.Lewis,(Publishers),Limited England 100% Non-tradingAdlardColesLimited England 100% Non-tradingMethuenDramaLimited England 100% Non-trading



11. Deferred tax

Thedeferredtaxassetsareincludedatcurrenttaxratesandcomprisethefollowing:

The Group Tax losses Fixed asset Short term carried timing timing forward differences differences Total £’000 £’000 £’000 £’000

At1January2005 600 79 96 775Credit/(charge)fortheyear 365 (113) 224 476Exchangedifferences (13) - - (13)

At 31 December 2005 952 (34) 320 1,238

Credit/(charge)fortheyear 509 57 (74) 492Exchangedifferences (66) - - (66)

At 31 December 2006 1,395 23 246 1,664

The Company Tax losses Fixed asset Short term carried timing timing forward differences differences Total £’000 £’000 £’000 £’000

At1January2005 - 20 65 85Credit/(charge)fortheyear - (26) 71 45

At 31 December 2005 - (6) 136 130

Credit/(charge)fortheyear 1 (14) 188 175

At 31 December 2006 1 (20) 324 305

AdeferredtaxassethasbeenrecognisedinrespectoftheamountofthetaxlossesofBVBerlinVerlagGmbHandDianaPublishingInc,whichtheGroup’sprojectionsindicatewillberecoveredwithinthreeyearsofthebalancesheetdate.


11. Deferred tax (continued)

Theanalysisforfinancialreportingpurposesisasfollows: The Group The Company 2006 2005 2006 2005 £’000 £’000 £’000 £’000

Deferredtaxassets 1,700 1,238 305 130Deferredtaxliabilities (36) - - -

1,664 1,238 305 130

TheGroupandtheCompanyhaddeferredtaxassetsnotincludedintheaccountsasfollows:

The Group The Company 2006 2005 2006 2005 £’000 £’000 £’000 £’000

Taxlossescarriedforward 188 188 - 1Shorttermtimingdifferences 75 - - -

263 188 - 1

Thesedeferredtaxassetswillberecoverableagainstavailabletaxableprofitsofthesametypeorfromthesametradesinfutureyears.Theyhavenotbeenrecognisedintheaccountsasrecoveryisnotcertain.

12. Inventories


Rawmaterials 330 185 62 66Workinprogress 3,067 3,837 1,864 2,183Finishedgoodsforresale 12,421 11,107 4,015 3,888

15,818 15,129 5,941 6,137

Includedaboveareworkinprogressof£510,000(2005,£475,000)andfinishedgoodsof£2,866,000(2005,£2,526,000)carriedatnetrealisablevalue.Theamountincludedincostofsalesrelatingtothewritedownofinventoriesrecognisedasanexpenseis£4,072,000(2005,£3,480,000).Theamountincludedincostofsalesrelatingtothecostofinventoriessoldis£15,838,000(2005,£20,986,000).


13. Trade and other receivables


Amounts falling due within one year:Tradereceivables 17,610 21,271 8,314 12,953Amountsowedbygroupundertakings - - 19,841 14,539Incometaxrecoverable 1,668 76 1,650 -Otherreceivables 599 689 420 560Prepaymentsandaccruedincome 25,086 23,079 14,222 11,394

44,963 45,115 44,447 39,446Amounts falling due after more than one year:Prepaymentsandaccruedincome 4,254 3,515 4,254 3,515

49,217 48,630 48,701 42,961

Tradereceivablescompriseamountsreceivablefromthesaleofbooks.Paymentsarereceivedonthebasisofcontractedpaymenttermswiththedistributors.Anallowancehasbeenmadeforestimatedirrecoverableamountsfromthesaleofgoodsof£190,000(2005,£252,000).Thisallowancehasbeenmadebyreferencetospecificdebtsandpastdefaultexperience.

Asbooksarereturnablebycustomers,theGroupmakesaprovisionagainstbookssoldintheaccountingperiodwhichisthencarriedforwardintradedebtorsinthebalancesheetinanticipationofbookreturnsreceivedsubsequenttotheyearend.Aprovisionof£7.9mforfuturereturnsrelatingto2005andpriorsalesincludingHarry Potter and the Half-Blood Prince wascarriedforwardintradedebtorsinthebalancesheetat31December2005andreturnsreceivedin2006wereoffsetagainstthisprovision.ThisprovisionrelatestotheUKtradeoperation(excludingA&CBlack,BloomsburyUSAandBerlinVerlag).Giventhelowerturnoverin2006andastherewasnonewHarryPotterduringtheyear,theclosingprovisioncarriedforwardintradedebtorsinthebalancesheetat31December2006was£1.6mforthispartofthebusiness.


14. Equity share capital

2006 2005 £’000 £’000

Authorised:92,000,000OrdinarySharesof1.25peach(2005,92,000,000OrdinarySharesof1.25peach) 1,150 1,150

Allotted, called up and fully paid:73,402,571OrdinarySharesof1.25peach(2005,72,857,182OrdinarySharesof1.25peach) 918 911

Movementsintheallottedsharecapitalduringtheyearare:

Number £’000

At1January2006 72,857,182 911Shareoptionsexercised 545,389 7

At 31 December 2006 73,402,571 918

TheconsiderationreceivablebytheCompanyfortheshareoptionsexercisedduringtheyearwas£799,000.

Asat31December2006,1,362,076optionshadbeengrantedandwerestilloutstandinginrespectofOrdinarySharesunderthefollowingApprovedandUnapprovedShareOptionSchemes:

Number of Subscription shares price Exercisable

1994ApprovedExecutiveShareOptionScheme 17,354 173.75p 2003–20101994ApprovedExecutiveShareOptionScheme 84,240 220.25p 2003–20101994ApprovedExecutiveShareOptionScheme 46,116 175.50p 2004–20111994ApprovedExecutiveShareOptionScheme 48,688 179.75p 2004–20111994ApprovedExecutiveShareOptionScheme 22,000 143.50p 2005–20121994ApprovedExecutiveShareOptionScheme 95,836 178.75p 2006–20131994ApprovedExecutiveShareOptionScheme 24,000 246.00p 2006–20131994ApprovedExecutiveShareOptionScheme 58,000 249.50p 2007–20141994UnapprovedExecutiveShareOptionScheme 154,020 173.75p 2003–20071994UnapprovedExecutiveShareOptionScheme 351,538 220.25p 2003–20071994UnapprovedExecutiveShareOptionScheme 85,808 175.50p 2004–20081994UnapprovedExecutiveShareOptionScheme 3,312 179.75p 2004–20081994UnapprovedExecutiveShareOptionScheme 20,000 143.50p 2005–20091994UnapprovedExecutiveShareOptionScheme 196,164 178.75p 2006–20101994UnapprovedExecutiveShareOptionScheme 80,000 246.00p 2006–20101994UnapprovedExecutiveShareOptionScheme 75,000 249.50p 2007–2011


At31December2006,911,576shareshadbeenawardedandwerestilloutstandingundertheGroup’s2005PerformanceSharePlan.SubjecttothesatisfactionoftheperformancecriteriasetbytheRemunerationCommittee,theawardswillvestinwholeorinpartthreeyearsaftertheaward. No. of Strike price Date of shares at award award

2005PerformanceSharePlan 520,359 337.90p 4November20052005PerformanceSharePlan 391,217 315.25p 26October2006

On8May2007afurther769,484shareswereawardedunderthe2005PerformanceSharePlanwithastrikepriceof181.4ppershare.

At31December2006,109,421optionshadbeengrantedandwerestilloutstandingundertheBloomsburySharesavePlan2005.

No. of Exercise shares price Exercisable

BloomsburySharesavePlan2005 109,421 275.2p June2009–Dec2009

At31December2006,120,000appreciationrightshadbeenawardedandwerestilloutstandingunderthe2006ShareAppreciationRightsScheme.SubjecttothesatisfactionofanEarningsperSharetargetpre-condition,theseawardswillbeexercisableforaperiodoffouryearsfollowingthevestingdate. No. of Base shares price Exercisable

2006ShareAppreciationRightsScheme 40,000 249.50p Mar2007–Mar20112006ShareAppreciationRightsScheme 40,000 337.90p Nov2008–Nov20122006ShareAppreciationRightsScheme 40,000 315.25p Oct2009–Oct2013

15. Non-current liabilities

Theemployeebenefitsliabilityrepresentsthedeficitonthedefinedbenefitpensionschemeofasubsidiarycompany.Furtherdetailsoftheschemeareshowninnote4.

Thereisnounprovidedliabilityfordeferredtaxationasat31December2006(2005,£nil).

16. Trade and other payables


Amounts falling due within one year: Tradepayables 6,285 5,437 3,192 2,626Amountsowedtogroupundertakings - - 1,110 798Taxationandsocialsecurity 275 757 185 622Otherpayables 1,995 1,425 1,139 771Accrualsanddeferredincome 12,231 36,355 9,300 32,664

20,786 43,974 14,926 37,481

Tradepayablesprincipallycompriseamountsoutstandingfortradepurchasesandongoingcosts.TheaveragecreditperiodtakenforpurchasesbytheGroupis43days(2005,25days).AnexplanationofthechangeintheaveragecreditperiodtakenforpurchasesbytheGroupcanbefoundintheDirectors’Reportonpage37.


17. Lease obligations

The Group as a lessee:

2006 2005 £’000 £’000

Minimumleasepaymentsunderoperatingleasesrecognisedasexpensefortheperiod 1,685 1,746

At31December2006theGrouphadoutstandingcommitmentsundernon-cancellableoperatingleases,whichfalldueasfollows:

2006 2005 £’000 £’000

Withinoneyear 1,010 1,328Betweenoneandfiveyears 2,207 3,424Aftermorethanfiveyears - 145

3,217 4,897

TheoperatingleasesrepresentrentalspayablebytheGroupforcertainofitsofficeproperties,vehiclesandequipment.Theleasetermsoverpropertiesareforanaverageoffouryears.Theoperatingleasesovervehiclesareinrespectofcompanycarsdrivenbycertainemployees.Theleasetermsareforanaverageofthreeyears.Theoperatingleasesoverequipmentareinrespectofofficeequipment.Theleasetermsareforanaverageofthreeyears.

The Group as a lessor:

Propertyrentalincomeearnedduringtheyearwas£153,000(2005,£165,000).

At31December2006theGrouphadcontractswithtenantsforthefollowingfutureminimumleasepaymentsreceivable:

2006 2005 £’000 £’000

Withinoneyear 63 136Betweenoneandfiveyears 14 76

77 212


18. Share-based payments

TheCompanyoperatesfiveequity-settledshare-basedpaymentarrangements,namelythetwoexecutiveshareoptionschemes,theperformanceshareplan,thesharesaveschemeandashareappreciationrightsscheme.Fortheyearended31December2006theGrouprecognisedtotalexpensesrelatedtoequitysettledsharebasedpaymenttransactionssince7November2002of£651,000(2005,£236,000).

The 1994 Approved and Unapproved Executive Share Option Schemes (‘the Schemes’)UndertherulesoftheSchemestheexercisepriceonthedateofgrantofoptionsshallnotbelessthanthehigherofnominalvalueofanOrdinaryShareandtheaveragemiddlemarketquotationofanOrdinaryShareforthethreedealingdaysimmediatelyprecedingtheofferofoptionsundertheSchemes.ThevestingperiodisgenerallythreeyearsandissubjecttotheachievementofEarningsPerShareperformanceconditionssetbytheRemunerationCommittee.Ifanoptionremainsunexercisedafteraperiodoftenyears(Approved)orsevenyears(Unapproved)fromthedateofgrant,theoptionswillexpire.Furthermore,exceptincertaincircumstances,optionslapseiftheemployeeleavestheGroup.NooptionshavebeengrantedundertheSchemessince2004.

Options Weighted Options Weighted 2006 average 2005 average exercise price exercise price 2006 2005 Number Pence Number Pence

Outstandingat1January 1,911,465 186.26 3,103,597 176.03Grantedduringtheyear - - - -Forfeitedduringtheyear - - - -Exercisedduringtheyear (545,389) 146.55 (1,096,132) 156.34Expiredduringtheyear (4,000) 214.63 (96,000) 197.32

Outstanding at 31 December 1,362,076 202.08 1,911,465 186.26

Exercisable at 31 December 1,299,076 196.95 1,348,465 177.13

Theweightedaveragesharepriceatthedateofexerciseforshareoptionsexercisedduringtheyearwas322.58pence.Theoptionsoutstandingat31December2006hadaweightedaveragecontractuallifeoftwoyearsandtenmonths.

TheinputsintotheBlack-Scholesmodelusedbyourremunerationconsultants,NewBridgeStreetConsultants,areasfollows:

Date of grant 7 April 2003(1) 24 September 2003 26 March 2004

Expectedlife(years) 6 6 6Shareprice £1.7875 £2.5100 £2.5350Exerciseprice £1.7875 £2.4600 £2.4950Expectedvolatility 34.9% 35.6% 34.9%Expecteddividendyield 1.0% 0.7% 0.8%Riskfreeinterestrate 4.3% 4.4% 4.6%Fairvaluechargeperaward £0.67 £1.00 £0.99

(1)InJune2003thesharesweresubdividedona4:1basis–theshareandoptionpriceshavebeenadjustedaccordingly.

Aperiodofsixyearswasassumedfortheexpectedlife,beingapproximatelythemidpointoftheexercisewindow,andtheaveragetermasdemonstratedinextensiveexercisemodellingconductedbyNewBridgeStreetConsultantsfortheirclients.TheexpectedvolatilitywasbasedonBloomsbury’svolatilityovertheperiodpriortograntequalinlengthtotheexpectedsixyearlife.


The Bloomsbury Performance Share Plan 2005 (“the PSP Plan”)UndertherulesofthePSPPlan,awardsoffullypaidOrdinarySharesaregrantedfornilconsiderationbytheRemunerationCommittee.ForthepurposesofdeterminingthenumberofOrdinarySharescomprisedinanaward,thevalueofashareshallbeequaltotheaveragemiddlemarketpriceoftheOrdinaryShareforthefivedealingdaysimmediatelyprecedingtheawarddate.ThevestingperiodisgenerallythreeyearsandthelevelofvestingissubjecttotheachievementofEarningsPerShare(“EPS”)andTotalShareholderReturn(“TSR”)performanceconditionssetbytheRemunerationCommittee.Exceptincertaincircumstances,awardslapseiftheemployeeleavestheGroup.

NoawardsweremadeunderthePSPPlanpriorto4November2005.

Conditional Conditional Awards 2006 Awards 2005 Number Number

Outstandingat1January 528,608 -Grantedduringtheyear 391,217 528,608Lapsedorforfeitedduringtheyear (8,249) -Exercisedduringtheyear - -Expiredduringtheyear - -

Outstanding at 31 December 911,576 528,608

Exercisable at 31 December - -

TheinputsintotheMonte-Carlostylestochasticmodelusedbyourremunerationconsultants,NewBridgeStreetConsultants,areasfollows:

Date of grant 4 November 2005 26 October 2006

Performancecondition IncreaseinEPSoverRPI TotalShareholderReturn IncreaseinEPSoverRPI TotalShareholderReturnShareprice £3.42 £3.42 £3.12 £3.12Volatility 20.3% 20.3% - 20.0%Performanceconditiondiscount n/a 43.9% n/a 52.8%RiskFreeInterestRate 4.4% 4.4% 5.0% 5.0%FairValuechargeperaward £3.42 £1.92 £3.12 £1.47

ForallawardsmadeunderthePSPPlantodate,vestingisonthethirdanniversaryofgrant,athreeyearexpectedlifehasbeenassumed.TheexpectedvolatilitywasbasedonBloomsbury’svolatilityovertheperiodpriortograntequalinlengthtotheexpectedthreeyearlife.HalfofanyawardissubjecttoanEPSperformancecondition(whichisnotfactoredintothevaluation)andtheotherhalfissubjecttoaTotalShareholderReturnconditionwherebyperformanceiscomparedtotheFTSEMid250companies(excludingInvestmentTrusts)overathreeyearperiodfromthedateofgrant,with35%ofsharessubjecttothisperformanceconditionvestingforamedianrankingrisingto100%foranupperquartileranking.ThediscountforthisTSRconditioniscalculatedatthedateofgrantusingthe“Monte-Carlo”model.


Bloomsbury Sharesave Plan 2005TheCompanyoperatesanHMRevenueandCustomsapprovedsavingsrelatedshareoptionschemeunderwhichemployeesaregrantedoptionstopurchaseOrdinarySharesintheCompanyinthree,fiveorsevenyears’time,dependentupontheirenteringintoacontracttomakemonthlycontributionstoasavingsaccountovertheperiodofthesavingsterm.TheSharesavePlanisopentoemployeesbasedintheUK.Atotalof115,671optionsweregrantedon5May2006atanexercisepriceof£2.752pershare.

NoawardsweremadeundertheSharesavePlanpriorto5May2006. Sharesave options 2006 Number

Outstandingat1January2006 -Grantedduringtheyear 115,671Lapsedorforfeitedduringtheyear (6,250)Exercisedduringtheyear -Expiredduringtheyear -

Outstanding at 31 December 2006 109,421

Exercisable at 31 December 2006 -

TheoutstandingSharesaveoptionsat31December2006allhadanexercisepriceof£2.752pershareandremainingcontractuallifeoftwoyearsandelevenmonths.

TheassumptionsandinputsintothemodifiedBlack–Scholescalculationbyourremunerationconsultants,NewBridgeStreetConsultants,areasfollows:

Date of grant 5 May 2006

Expectedlife(years) 3.25Shareprice £3.45Exerciseprice £2.752Expectedvolatility 20.4%Expecteddividendyield 1.04%Riskfreeinterestrate 4.8%Fairvaluechargeperaward 1.073

80

2006 Share Appreciation Rights Scheme (“The SAR Scheme”)

DuringtheyeartheCompanyintroducedalimiteduse,equity-settledshareappreciationrightsscheme.UndertherulesoftheSARScheme,aparticipant,inrespectofthenumberofsharessetoutinanaward,willbegrantedtherighttoacquirefornominalvalueanumberofordinarysharesintheCompanywithavalueequaltothegaininexcessofthebasepriceoftheawarduptothemarketvalueofBloomsbury’sordinarysharesonthedateofexercise.AnawardbecomesexercisableforaperiodoffouryearsafterthevestingdatebutonlyifatthedateofexercisetheEarningsPerSharepre-conditionissatisfied.Anyrightnotexercisedafterthefourthanniversaryofthevestingdatewilllapse.

NoawardsweremadeundertheSARSchemepriorto17November2006.

SAR Scheme Weighted average Awards 2006 base price 2006 Number Pence

Outstandingat1January2006 - -Grantedduringtheyear 120,000 300.88Lapsedorforfeitedduringtheyear - -Exercisedduringtheyear - -Expiredduringtheyear - -

Outstanding at 31 December 2006 120,000 300.88

Exercisable at 31 December 2006 - -

TheSARSchemeawardsoutstandingat31December2006hadaweightedaveragecontractuallifeoffiveyearsandeightmonths.

TheassumptionsandinputsintothemodifiedBlack–Scholescalculationbyourremunerationconsultants,NewBridgeStreetConsultants,areasfollows:

Date of award 17 November 17 November 17 November 2006 2006 2006

Expectedlife(years) 2.33 4 5Shareprice £3.1425 £3.1425 £3.1425Exerciseprice £2.495 £3.379 £3.1525Expectedvolatility 21.0% 20.0% 21.0%Expecteddividendyield 1.2% 1.2% 1.2%Riskfreeinterestrate 5.0% 5.0% 4.8%Fairvaluechargeperaward £0.9025 £0.5825 £0.7875

The Bloomsbury Employee Benefit Trust 2005 (“the EBT”)Setupin2005,theEBTisadiscretionarytrustofwhichallemployeesoftheGrouparepotentialbeneficiaries.ThetrusteeisindependentoftheCompany.ItsmainpurposeistooperatewiththeCompany’sshareschemes,inparticularwiththePSPPlan.WhilethetrusteehaspowertosubscribeforOrdinarySharesandacquireOrdinarySharesinthemarketorfromtreasury,itisnotpermittedtoholdmorethanfivepercentoftheCompany’sissuedsharecapitalwithoutpriorapprovaloftheshareholders.At31December2006thetrustheld£100,representingtheinitialinvestmentintotheEBT.TheresultsandnetassetsoftheEBTareincludedinthefinancialstatementsoftheCompanyandtheGroup.



19. Commitments and contingent liabilities

TheGroupiscommittedtopayingroyaltyadvancestoauthorsunderpublishingcontractsduringsubsequentfinancialyears.At31December2006thiscommitmentamountedto£15,366,000(2005,£11,571,000).

20. Post balance sheet events

Thedirectorshaveproposedafinaldividendof3.0pencepershare(2005,3.0pencepershare),whichwillbepaidon5July2007toOrdinaryShareholdersontheregisteratcloseofbusinesson25May2007.Basedonthenumberofsharescurrentlyinissue,thefinaldividendwillbe£2,203,000(2005,£2,189,000).

21. Parent company result

TheCompanyhastakenanadvantageoftheexemptionavailableundertheCompaniesAct1985nottopresentthecompanyincomestatementandthestatementofrecognisedincomeandexpenditure.Theonlymovementwasprofitfortheyear.

22. Financial instruments and risk summary

TheGrouphasfinanceditsoperationsfromequityshareissuesandreinvestmentoftradingprofits.TheGrouphasnetcashfunds.

ThemainriskarisingfromtheGroup’sfinancialinstrumentsisinterestraterisk.TheBoardreviewsandagreespoliciesformanagingrisks,whicharesummarisedbelow:

(i) Interest rate riskAsnotedabove,theGrouphasfinanceditsoperationsthroughequityshareissuesandreinvestmentoftradingprofits.Surpluscashfundsareinvestedonshort-termdeposit.ThedirectorscontinuallyreviewtheGroup’sportfolioofshort-termdepositstoensurethatbestratesofreturnarebeingachieved,basedontheamountofdepositedfundsandtheperiodforwhichtheyareinvested,whilstminimisingtherisksinvolvedbyplacingfundswithreputablethird-partybankingorganisations.ThetermsunderwhichtheGroupinvestssurpluscashfundspermitimmediateaccesstothesefundsifrequired.

TheGrouphasfinancialassetsof£24,304,000at31December2006(2005,£53,511,000)comprisingcashandshort-termdeposits.Short-termdepositsareatfixedrates,andthematuritytermsrangebetweenonedayandoneyear.Theaveragerateofinterestoncashdepositsduringtheyearended31December2006was4.51%(2005,4.56%).

TheGrouphadnofinancialliabilitiesat31December2006and31December2005.

(ii) Liquidity riskThedirectorsdonotconsiderthattheGroupcurrentlyhasaliquidityrisk.

(iii) Currency riskTheCompanybelieves,initscurrentcircumstances,thathedgingforexchangerateriskisnotappropriate,asasignificantproportionofrevenuescanbematchedagainstexpenditureinlocalcurrency.

Ofthetotalmonetarynetassetsof£51,811,000(2005,£55,290,000),£8,664,000isdenominatedinUSdollars(2005,£9,110,000)and£3,058,000isdenominatedineuro(2005,£3,763,000).Nomaterialmonetarynetassetsaredenominatedincurrenciesotherthansterling,USdollarsandeuro.

(iv) Credit riskTheGroup’screditriskisprimarilyattributabletoitstradereceivables,themajorityofwhicharesecuredbycreditinsuranceandlettersofcredit.Theamountspresentedinthebalancesheetarenetofallowancesfordoubtfulreceivables,estimatedbytheGroup’smanagementbasedonthetradingexperienceandthecurrenteconomicenvironment.

Thecreditriskonliquidfundsislimitedbecausethecounterpartiesarebankswithhighcreditratingsassignedbyinternationalcredit-ratingagencies.TheGrouphasnosignificantconcentrationofcreditrisk,withexposurespreadoveralargenumberofcounterpartiesandcustomers.

Fair value of financial instrumentsThereisnomaterialdifferencebetweenthefairvalueandbookvalueoffinancialassetsandliabilities.


23. Related party transactions

Trading transactionsDuringtheyeartheCompanyenteredintothefollowingtransactionswithitssubsidiaries: 2006 2005 £’000 £’000

Purchasesofgoodsintheyear 145 199Commissionpayable 110 594Interestreceivable 871 485Amountsowedbysubsidiariesatyearend 19,841 14,539Amountsowedtosubsidiariesatyearend 1,110 798

PurchasesofgoodsandcommissionpayablewerebasedontheGroup’susuallistprices.Theamountsoutstandingareunsecuredandwillbesettledincash.Noguaranteeshavebeengivenorreceived.Noprovisionshavebeenmadefordoubtfuldebtsinrespectoftheamountsowedbysubsidiaries.

Remuneration of key management personnelTheremunerationofthekeymanagementpersonneloftheGroupissetoutbelowinaggregateforeachofthecategoriesspecifiedinIAS24RelatedPartyDisclosures.FurtherinformationabouttheremunerationofindividualdirectorsisprovidedintheauditablepartoftheDirectors’RemunerationReportonpages30to32.

2006 2005 £’000 £’000

Short-termemployeebenefits 2,128 3,100Post-employmentbenefits 171 157Share-basedpayments 386 59

2,685 3,316

BloomsburyPublishingPlc 83Directors, secretary and advisers

Directors JNNewton(Chairman) CRAdamsACA ENCalder CAABlack(SeniorNon-executiveandViceChairman) MJMayer(Non-executive) JJO’BWilson(Non-executive)

Secretary RCordeschiACIS

Registered Office 36SohoSquare,LondonW1D3QY Tel02074942111

Registered Number 1984336

Auditor BakerTillyUKAuditLLP 2BloomsburyStreet,LondonWC1B3ST

Bankers TheRoyalBankofScotlandPlc 280Bishopsgate,LondonEC2M4RB

Joint Stockbrokers InvestecInvestmentBankingand Financial Advisers 2GreshamStreet,LondonEC2V7QP

DresdnerKleinwortWassersteinSecuritiesLimited POBox52715,30GreshamStreet,LondonEC2P2XY

Merchant Bankers InvestecInvestmentBanking 2GreshamStreet,LondonEC2V7QP

DresdnerKleinwortWassersteinSecuritiesLimited POBox52715,30GreshamStreet,LondonEC2P2XY

Solicitors DechertLLP 160QueenVictoriaStreet,LondonEC4V4QQ

Registrars CapitaRegistrarsLimited TheRegistry,34BeckenhamRoad Beckenham,KentBR34TU

84

Annual General Meeting 28June2007

ResultsAnnouncementofhalfyearresultsto30June2007 September2007Announcementofannualresultsto31December2007 March/April2008 DividendFinaldividend-2006 5July2007Interimdividend-2007 November2007Finaldividend-2007 July2008

Share Price and Investor InformationBloomsbury’ssharepriceisquotedintheFinancialTimes,theTimes,theDailyTelegraphandtheEveningStandard,andisalsoavailableontheFinancialTimesCitylinetelephoneservice(09068434444)chargedatpremiumcallrates.Investorinformationisalsoavailableonthewebatwww.bloomsbury-ir.co.uk.

Managing your shareholding onlineCapitaRegistrarsprovidesawiderangeofonlineshareholderservicesthroughtheirSharePortal.

ThroughtheSharePortalyouwillbeabletoaccessandmaintainyourholdingatyourownconvenience,includingtheabilityto:

• View your holdings and indicative share price and valuation;

• View a full transaction audit trail;

• View your dividend history including payment dates;

• Change your address;

• Register and change bank mandate instructions; and

• Contact Capita’s specialised shareholder help-line, or submit email enquiries.

ToregistertousetheSharePortal,simplyvisitCapita’swebsiteatwww.capitaregistrars.com/shareholders. Eitherlog-inorregisterasanewuserandfollowtheinstructions.ToregisterfortheserviceyouwillneedyourInvestorCodewhichisfoundonyoursharecertificateordividendvoucher.

IfyouhaveanyqueriescontactCapitaRegistrarson0870 162 [email protected].

Financial calendar


Analysis of registered shareholdings at 16 May 2007

Size of shareholding Number Percentage Number Percentage of of total of of shareholders number of Ordinary Ordinary shareholders Shares Shares

5,000,001+ 1 0.07 5,405,000 7.361,000,001-5,000,000 19 1.33 37,008,519 50.40 500,001-1,000,000 17 1.19 12,077,950 16.45 100,001-500,000 55 3.84 12,137,497 16.53 50,001-100,000 34 2.37 2,442,414 3.33 10,001-50,000 105 7.33 2,329,558 3.17 1-10,000 1,202 83.87 2,033,633 2.76

1,433 100.00 73,434,571 100.00

Analysis by number of registered shareholders at 16 May 2007

Shareholder Number Percentage Number Percentage of of total of of shareholders number of Ordinary Ordinary shareholders Shares Shares

Institutionalshareholders/nomineecompanies 528 36.84 68,738,064 93.61Directors 6 0.42 2,980,987 4.06Employees 15 1.05 347,300 0.47Privateshareholders 884 61.69 1,368,220 1.86

1,433 100.00 73,434,571 100.00

Shareholder information

86Notice of Annual General MeetingBloomsbury Publishing Plc

Notice is hereby giventhattheAnnualGeneralMeetingoftheCompanywillbeheldat36SohoSquare,London,W1D3QYon28June2007at12.00noonforthefollowingpurposes:-

Routine Business1. Toreceivethereportofthedirectorsandtheauditedaccountsfortheyearended31December2006.2. ToapprovetheDirectors’RemunerationReportfortheyearended31December2006.3. Todeclareafinaldividendforthefinancialyearended31December2006.4. Tore-electMrCAABlackasadirectoroftheCompany.5. Tore-electMsENCalderasadirectoroftheCompany.6. ToreappointBakerTillyUKAuditLLPasauditorsandtoauthorisethedirectorstofixtheirremuneration.

Special BusinessToconsiderand,ifthoughtfit,topassthefollowingresolutionsofwhichresolution7willbeproposedasanordinaryresolutionandresolutions8,9and10willbeproposedasspecialresolutions.

7. That:-(a) thedirectorsbegenerallyandunconditionallyauthorisedpursuanttosection80oftheCompaniesAct1985(“theAct”)toallot,

tosuchpersonsandonsuchtermsastheythinkproper,anyrelevantsecurities(asdefinedinsection80(2)oftheAct)oftheCompanyuptoamaximumaggregatenominalamountof£232,068providedthat:

(i)thisauthorityshallexpireattheconclusionofthenextAnnualGeneralMeetingoftheCompanyafterthepassingofthisresolutionunlesspreviouslyvaried,revokedorrenewedbytheCompanyingeneralmeeting;and

(ii)theCompanyshallbeentitledtomake,beforetheexpiryofsuchauthority,anyofferoragreementwhichwouldormightrequirerelevantsecuritiestobeallottedaftertheexpiryofsuchauthorityandthedirectorsmayallotanyrelevantsecuritiespursuanttosuchofferoragreementasifsuchauthorityhadnotexpired;and

(b) allpriorauthoritiestoallotrelevantsecuritiesgiventothedirectorsbyresolutionoftheCompanyberevokedbutwithoutprejudicetotheallotmentofanyrelevantsecuritiesalreadymadeortobemadepursuanttosuchauthorities.

8. That,subjecttothepassingofresolution7above:-

(a) thedirectorsbegrantedpowerpursuanttosection95oftheActtoallotequitysecurities(withinthemeaningofsection94oftheCompaniesAct1985(“theAct”))whollyforcashpursuanttotheauthorityconferredonthembyresolution7aboveasifsection89(1)oftheActdidnotapplytoanysuchallotmentprovidedthatthispowershallbelimitedto:-

(i)theallotmentofequitysecurities,inconnectionwitharightsissue,openofferorotherwise,infavourofholdersofOrdinarySharesintheCompany(“OrdinaryShares”)wheretheequitysecuritiesrespectivelyattributabletotheinterestsofallsuchholdersofOrdinarySharesareproportionate(asnearlyasmaybe)totherespectivenumbersofand/orrightsattachingtoOrdinarySharesheldbythem,subjecttosuchexceptions,exclusionsorotherarrangementsasthedirectorsmaydeemnecessaryorexpedienttodealwithfractionalentitlementsorlegalorpracticalproblemsunderthelawsofanyterritoryortherequirementsofanyregulatorybodyoranystockexchangeorotherwiseinanyterritory;

(ii)theallotmentofequitysecuritiespursuanttothetermsoftheCompany’sexistingemployees’shareorshareoptionschemesoranyotheremployees’shareschemeapprovedbythemembersoftheCompanyingeneralmeeting;

(iii)theallotment(otherwisethanpursuanttoparagraphs(i)or(ii)above)ofequitysecuritieshavinganominalvaluenotexceedinginaggregate£45,897;

andshallexpireattheconclusionofthenextAnnualGeneralMeetingoftheCompanyor,ifearlier,15monthsfromthedateofpassingofthisresolutionunlesspreviouslyvaried,revokedorrenewedbytheCompanyingeneralmeeting,andprovidedthattheCompanymay,beforesuchexpiry,makeanyofferoragreementwhichwouldormightrequireequitysecuritiestobeallottedaftersuchexpiryandthedirectorsmayallotequitysecuritiespursuanttoanysuchofferoragreementasifthepowerherebyconferredhadnotexpired;and

(b) allpriorpowersgrantedundersection95oftheActberevokedprovidedthatsuchrevocationshallnothaveretrospectiveeffect.


9. ThattheCompanybeauthorised,pursuanttosection166oftheCompaniesAct1985(“theAct”),tomakemarketpurchases(asdefinedinsection163oftheAct)ofanyofitsOrdinarySharesof1.25peach(“OrdinaryShares”)insuchmannerandonsuchtermsasthedirectorsmayfromtimetotimedetermineprovidedthat:-

(a) themaximumnumberofOrdinarySharesauthorisedtobepurchasedis3,671,729;

(b) themaximumprice(exclusiveofexpenses)whichmaybepaidforeachOrdinaryShareisanamountequalto105percentoftheaverageofthemiddlemarketquotationsforanOrdinarySharetakenfromtheLondonStockExchangeDailyOfficialListforthefivebusinessdaysimmediatelyprecedingthedateonwhichsuchshareiscontractedtobepurchasedandtheminimumprice(exclusiveofexpenses)whichmaybepaidforeachOrdinaryShareis1.25pence;

(c) theauthorityherebyconferredshall,unlesspreviouslyvaried,revokedorrenewed,expireattheconclusionofthenextAnnualGeneralMeetingoftheCompanytobeheldin2008or15monthsfromthedateofpassingofthisresolution,whichevershallbetheearlier;and

(d) theCompanyshallbeentitledundersuchauthoritytomakeatanytimebeforeitsexpiryorterminationanycontracttopurchaseitsownshareswhichwillormightbeconcludedwhollyorpartlyaftertheexpiryorterminationofsuchauthorityandmaypurchaseitsownsharespursuanttosuchcontract.

10. ThattheArticlesofAssociationoftheCompanybealteredbymakingthefollowingchangestotheexistingArticlesofAssociation:

(a) bytheinsertioninArticle2ofthefollowingdefinitions:

“address” includes,inthecontextofelectroniccommunicationsexpresslypermittedbyorpursuanttotheseArticles,suchnumberoraddressforthetimebeingnotifiedtothesender(andiftheCompany,notifiedinsuchmannerashasbeenspecifiedbytheDirectors)byoronbehalfoftherecipientasbeingacceptabletotherecipientfortheparticularmannerofelectroniccommunicationforthesubjectorclassofsubjectmatterconcerned;and

“electronic communication” shall,wherethecontextsoadmits,havethesamemeaningasintheElectronicCommunicationsAct2000including,withoutlimitation,e-mail,facsimile,CDRom,audiotape,telephonetransmissionandpublicationonawebsiteand“electroniccommunications”shallbeconstruedaccordingly;

(b) bythedeletionofthedefinitionof“in writing” and“written”inArticle2andthesubstitutionthereforofthefollowing:

“in writing” and“written”inthecontextofelectroniccommunicationsanddocumentscontainedtherein,shallmeanacommunicationordocumentwhichcanbereceivedinlegibleformorwhichcanbemadelegiblefollowingreceiptinaformwhichisnotlegible;andincasesofcommunicationsanddocumentswhicharenotelectroniccommunications,shallmeanthatwhichislegiblebeforebeingsentorotherwisesuppliedandwhichdoesnotchangeformduringthatprocess;

(c) bythedeletionofthedefinitionof“Statutes”inArticle2andthesubstitutionthereforofthefollowing:

“Statutes” meanstheAct,theRegulations,theElectronicCommunicationsActandeveryotheract,order,regulationorothersubordinatelegislationmadepursuanttheretoforthetimebeinginforceconcerningoraffectingcompaniesandaffectingtheCompany

(d) bytheinsertionofthefollowingasanewArticle125.4(Accounts)andtherenumberingoftheexistingArticles125.4and125.5:

125.4 AnydocumentsrequiredorpermittedtobesentbytheCompanytoapersonpursuanttoArticle125.2or125.3maybesentbyelectroniccommunicationtoanaddressforthetimebeingnotifiedbythatpersonforthatpurpose.

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(e) bythedeletionofArticle127(Serviceofnoticeonmembers)andthesubstitutionthereforofthefollowing:

127 Service of notice on members

127.1 Anynoticeordocument(includingasharecertificate)maybeservedonordeliveredtoanymemberbythecompanyeitherpersonallyorbysendingitthroughthepostinaprepaidcoveraddressedtosuchmemberathisregisteredaddress,or(ifhehasnoregisteredaddresswithintheUnitedKingdom)totheaddress,ifany,withintheUnitedKingdomsuppliedbyhimtothecompanyashisaddressfortheserviceofnotices,orbydeliveringittosuchaddressaddressedtothemember,orbyservingorsendingitbymeansofelectroniccommunicationtoanaddressforthetimebeingnotifiedtotheCompanyforthatpurpose,orbyothermeansauthorisedinwritingbyoronbehalfofthememberconcerned.

127.2 SubjecttotheprovisionsoftheStatutes,whereanoticeorotherdocumentaddressedtoamemberathisregisteredaddressoraddressforserviceintheUnitedKingdomisservedorsentbypost,serviceordeliveryshallbedeemedtobegivenonthefirstdayfollowingthatonwhichthesameispostedifprepaidasfirstclassandontheseconddayafteritispostedifprepaidassecondclassandinprovingsuchserviceitshallbesufficienttoprovethattheenvelopecontainingsuchnoteordocumentwasproperlyaddressed,prepaidandposted.

127.3 AnynoticeordocumentleftataregisteredaddressoraddressforserviceintheUnitedKingdomshallbedeemedtohavebeenservedordeliveredonthedayitwassoleft.

127.4 WhereanoticeorotherdocumentisservedorsenttoamemberbymeansofelectroniccommunicationmadeinaccordancewithorpursuanttotheseArticlesthenoticeordocumentshallbedeemedtobeserveduponorreceivedbythemember48hoursafterthetimeitwassent.InprovingserviceofanoticeordocumentcontainedinanelectroniccommunicationitshallbesufficienttoprovethatthenoticeordocumentwassentinaccordancewithguidancefromtimetotimeissuedbytheInstituteofCharteredSecretariesandAdministrators.

127.5 AmemberpresentinpersonorbyproxyatanymeetingoftheCompanyoroftheholdersofanyclassofsharesintheCompanyshallbedeemedtohavereceivedduenoticeofthemeetingand,whererequisite,ofthepurposesforwhichitwascalled.

127.6 AnynoticegiventothatoneofthejointholdersofasharewhosenamestandsfirstintheRegisterinrespectoftheshareshallbesufficientnoticetoallthejointholdersintheircapacityassuch.ForsuchpurposeajointholderhavingnoregisteredaddressintheUnitedKingdomandnothavingsuppliedanaddresswithintheUnitedKingdomfortheserviceofnotices,shallbedisregarded.

127.7 Amember(orinthecaseofjointholders,thepersonnamedfirstontheregister)who(havingnoregisteredaddresswithintheUnitedKingdom)hasnotsuppliedtotheCompanyanaddresswithintheUnitedKingdomfortheserviceofnoticesshallnotbeentitledtoreceivenoticesfromtheCompany.WithoutprejudicetothegeneralityoftheforegoingsuchmembershallnotbeentitledtoreceiveanynoticeorotherdocumentfromtheCompanyevenifhehassuppliedanaddressforthepurposeofreceivingelectroniccommunications.

127.8 NothingintheseArticlesshallaffectanyrequirementoftheStatutesthatanyparticularoffer,noticeorotherdocumentbeservedinanyparticularmanner.

(f ) bythedeletionofArticle128.1(Noticeincaseofdeathorbankruptcyormentaldisorder)andthesubstitutionthereforofthefollowing:

128.1 Apersonentitledtoashareinconsequenceofthedeathorbankruptcyofamember,orotherwisebyoperationoflaw,uponsupplyingtothecompanysuchevidenceastheDirectorsmayreasonablyrequiretoshowhistitletotheshareanduponsupplyingalsoanaddresswithintheUnitedKingdomfortheserviceofnotices(whichmaybeanaddressforthepurposeofservicebyelectroniccommunication),shallbeentitledtohaveserveduponordeliveredtohimatsuchaddressanynoticeordocumenttowhichthememberbutforhisdeathorbankruptcyorothereventwouldbeentitled,andsuchserviceordeliveryshallforallpurposesbedeemedasufficientserviceordeliveryofsuchnoticeordocumentonallpersonsinterested(whetherjointlywithorasclaimingthroughorunderhim)intheshare.

Notice of Annual General MeetingBloomsbury Publishing Plc


(g) bythedeletionofArticle129(Noticebyadvertisement)andthesubstitutionthereforofthefollowing:

129 Notice by advertisement IfatanytimebyreasonofthesuspensionorcurtailmentofpostalserviceswithintheUnitedKingdomorof

meansofelectroniccommunication,orothercircumstancesbeyondthecompany’scontrol,thecompanyisunableeffectivelytoconveneageneralmeetingbynoticessentthroughthepostor(inthecaseofthosemembersinrespectofwhomanaddresshasforthetimebeingbeennotifiedtotheCompanyforthepurpose)byelectroniccommunication,ageneralmeetingmaybeconvenedbyanoticeadvertisedonthesamedateinatleastoneUnitedKingdomnationaldailynewspaperandonelocaldailynewspaperandsuchnoticeshallbedeemedtohavebeendulyservedonallmembersentitledtheretoatnoononthedaywhentheadvertisementsappear.InanysuchcasethecompanyshallsendconfirmatorycopiesofthenoticebypostorbyelectroniccommunicationifatleastsevencleardayspriortothemeetingthepostingofnoticestoaddressesthroughouttheUnitedKingdomorthesendingofnoticesbyelectroniccommunicationagainbecomespracticable.

(h) bytheinsertionofthefollowingasanewArticle131andtherenumberingoftheexistingArticles131to135accordingly:

131 Web site, other electronic communications and signature NotwithstandinganythingintheseArticlestothecontrary,butsubjecttotheStatutes:

131.1 anynoticeorotherdocumenttobegivenorsenttoanypersonbytheCompanyisalsotobetreatedasgivenorsentwhere:

131.1.1 theCompanyandthatpersonhaveagreedthatanynoticeorotherdocumentrequiredtobegivenorsenttothatpersonmayinsteadbeaccessedbyhimonawebsite;

131.1.2 themeeting(inthecaseofanoticeofmeeting)orotherdocument(inanyothercase)isonetowhichthatagreementapplies;

131.1.3 thatpersonisnotified,inamannerforthetimebeingagreedbetweenhimandtheCompany,ofthepublicationofthenoticeor(asthecasemaybe)otherdocumentonawebsite,theaddressofthewebsiteandtheplaceonthatwebsitewherethenoticeor(asthecasemaybe)otherdocumentmaybeaccessedandhowitmaybeaccessed;

131.1.4 inthecaseofanoticeofmeeting,suchnoticeofmeetingispublishedinaccordancewithArticle131.2belowandthenotificationreferredtoinArticle131.1.3statesthatitconcernsanoticeofacompanymeetingservedinaccordancewiththeAct;specifiestheplace,dateandtimeofthemeeting;andstateswhetherthemeetingistobeanannualorextraordinarygeneralmeeting;andinanysuchcasethenotificationreferredtoaboveshallbetreatedastherelevantnoticeordocumentforthepurposesoftheseArticlesand

131.1.5 inthecaseofadocumentreferredtoinsection238oftheAct,andinthecaseofadocumentcomprisingasummaryfinancialstatementreferredtoinsection251oftheAct,suchdocumentispublishedinaccordancewithArticle131.2;

and,inthecaseofanoticeofmeetingorotherdocumentsotreated,suchnoticeorotherdocumentistobetreatedassogivenorsent,asthecasemaybe,atthetimeofthenotificationmentionedinArticle131.1.3.

131.2 WhereanoticeofmeetingorotherdocumentisrequiredbyArticle131.1.4or131.1.5tobepublishedinaccordancewiththisArticle131.2,itshallbetreatedassopublishedonlyif:

131.2.1 inthecaseofthenoticeofmeeting,thenoticeispublishedonthewebsitethroughouttheperiodbeginningwiththegivingofthenotificationreferredtoinArticle131.1.3andendingwiththeconclusionoftherelevantmeeting;and

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131.2.2 inthecaseofadocumentreferredtoinArticle131.1.5,thedocumentispublishedonthewebsitethroughouttheperiodbeginningatleast21daysbeforethedateoftherelevantmeetingandendingwiththeconclusionofthemeetingandthenotificationreferredtoinArticle131.1.3isgivennotlessthan21daysbeforethedateofthemeeting,butsothatnothinginthisArticle131.2shallinvalidatetheproceedingsofthemeetingwherethenoticeorotherdocumentispublishedforpart,butnotall,oftheperiodmentionedinthisarticle131.2.1or,asthecasemaybe,131.2.2orispublishedforanypartofthattimeinaplaceonthewebsiteconcernedwhichisdifferenttothatstatedandthefailuretopublishthenoticeorotherdocumentthroughoutthatperiodatallorinthestatedareaofthewebsiteiswhollyattributabletocircumstanceswhichitwouldnotbereasonabletohaveexpectedtheCompanytopreventoravoid.

131.3 TheDirectorsmayfromtimetotimemakesucharrangementsorregulations(ifany)astheymayfromtimetotimeintheirabsolutediscretionthinkfitinrelationtothegivingofnoticesorotherdocumentsbyelectroniccommunicationbyortotheCompanyandotherwiseforthepurposeofimplementationand/orsupplementingtheprovisionsoftheseArticlesandStatutesinrelationtoelectroniccommunication;andsucharrangementsandregulations(asthecasemaybe)shallhavethesameeffectasifsetoutinthisArticle.

131.4 WhereunderorpursuanttotheseArticlesadocumentorcommunicationisrequiredtobesignedbyamemberorotherpersonandthesameiscontainedinorconsistsofanelectroniccommunication,theCompanyshallbeentitledtotreatthesameasvalidlyexecutedandtheauthenticdocumentorcommunicationofthememberorotherpersonandtorelyuponthesameassucheitherwherethedocumentorothercommunicationincorporatestheelectronicsignatureorpersonalidentificationdetailspreviouslyallocatedbytheCompanyofthatmemberorotherpersoninsuchformastheDirectorsmayapproveorwherethedocumentorcommunicationisaccompaniedbysuchotherevidenceastheDirectorsmayrequiretosatisfythemselvesastoauthenticity.

Byorderoftheboard Dated16May2007

RegisteredOffice: 36SohoSquare London W1D3QY

RichardCordeschiACISCompany Secretary

Notes

1. Onlytheholdersofordinarysharesareentitledtoattendthemeetingandvote.Amemberentitledtoattendandvotemayappointoneormoreproxiestoattendand,onapoll,tovoteonhisbehalf.AproxyneednotbeamemberoftheCompany.

2. Tobeeffective,aformofproxymustbecompleted,signedand(togetherwiththeoriginaloranotariallycertifiedcopyofanypowerofattorneyorotherauthorityunderwhichitisexecuted)lodgedattheofficeoftheCompany’sregistrarsnotlaterthan48hoursbeforethetimeofthemeeting.Depositingacompletedformofproxywillnotprecludeamemberfromattendingthemeetingandvotinginperson.

3. Pursuanttoregulation41oftheUncertificatedSecuritiesRegulations2001,tobeentitledtoattendandvoteatthemeeting(andforthepurposesofthedeterminationbytheCompanyofthenumberofvotestheymaycast),membersmustbeenteredontheCompany’sregisterofmembersby12.00noonon26June2007.

4. CopiesofallserviceagreementsunderwhichdirectorsoftheCompanyareemployedbytheCompanyoranysubsidiarieswillbeavailableforinspectionattheCompany’sregisteredoffice,36SohoSquare,W1D3QY,duringusualbusinesshoursonanyweekday,Saturdaysandpublicholidaysexcepted,fromthedateofthisnoticeuntilthedateoftheAnnualGeneralMeetingandattheplaceoftheAnnualGeneralMeetingfor15minutespriortoandduringthemeeting.

Notice of Annual General MeetingBloomsbury Publishing Plc


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PrintedbySt Ives Financial Limited, St Ives Plc. DesignedbySmall Back Roomwww.smallbackroom.com

www.bloomsbury.comcorporate: www.bloomsbury-ir.co.uk

Bloomsbury Publishing Plc36 Soho SquareLondon W1D 3QY

Telephone 020 7494 2111Fax 020 7434 0151

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