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Bloomsbury USA Suffers Decline In First Half

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September 20 – September 27, 2007 Edition

Bloomsbury USA
Suffers Decline
In First Half

LONDON/9/18/07–Sales at Bloomsbury USA, a division of the UK’s Bloomsbury Publishing Plc, declined by 14.9% to £5.8 million ($12 million) in the first six months of 2007, the company reported today. Bloomsbury Plc Chairman Nigel Newton attributed the decline to lower buying commitments from bookstore chains and higher returns. Future profitability was also uncertain.

“W e do not expect the US to make a profit for the full year 2007, although we expect the position to improve in 2008 when the revenues from the books published under our new imprint, Bloomsbury Press, come fully on stream,” said Newton in his report to investors. “The paperbacks of books published in the UK in hardback in 2006 will be published this year and we will be reviewing the level of provisioning, as we always do, in the light of their performance at the end of this year.”

The company as a whole had a gain of 36.5% in revenues to £51.41m (2006, £37.66m) for the six-month period, led by a number of bestselling titles and the release of Harry Potter and the Deathly Hallows into the export markets. Gross profit increased 16.5% to £21.80m (2006, £18.71m), with the gross margin down at 42.4% (2006, 49.7%) due to a combination of royalty costs on Harry Potter and the Deathly Hallows, the high level of returns experienced in the UK, US and Germany for other titles and increased provisions for stock and advances on books published in previous financial years.

Newton said the company is well positioned for future growth and has strong publishing lists for the second half and into 2008. “This is a good set of results which puts us back on track following last year’s profit warning. Between April and June, Bloomsbury enjoyed one of the most sustained periods of publishing bestsellers in its history. Four major reference rights deals which had been in the pipeline have now been completed and will provide very important revenue streams going forward.

We are also starting to see the benefits of the strategic approach which we outlined in my previous Chairman’s statement and our publishing program for the second half of the year is very strong.”

Though no staff layoffs in the U.S. have been announced, if declines continue, the company may consider reducing staff as a cost-cutting measure.

Directors declared a 6.1% increase in the interim dividend to 0.70 pence per share (2006, 0.66 pence per share), to be paid on November 16, 2007 to registered shareholders. The dividend takes account of the profit growth while also recognizing the need to retain funds to respond to opportunities for future expansion and acquisition growth, the financial report said.