Lion Hudson plc Annual Report 2010

Lion Hudson’s titles are sold successfully around the world. The following list is the 183 language territories to which our books have been sold.

AceheneseAdygei

AfrikaansAlbanianAmharic

AmisArabic

Eastern ArmenianWestern Armenian

AshantAssyrian

AvarAzeri

BaluchiBambaraBanglaBasqueBashkirBassaBaule

BelorussianBengaliBislamaBuglere

BulgarianBurmeseCatalan

CebuanoChechenChichewa

Chinese (Phonetic)Chinese (Simplified)Chinese (Traditional)

Cheke HoloChoctawChuvash

Congolese Swahili CroatianCzechDanishDargwa

DariDutch

English (N.America)Estonian

Falam Chia Faroese

FarsiFijian

Fijian HiadiFinnishFlemishFrenchFrisian

Gallic (Scottish)Gaelic (Irish)

GalicianGeorgianGerman

GreenlandicGreek

GujaratiHausa

HebrewHindi

HungarianIcelandic

IndonesianInuit

ItalianJapaneseJavanese

KabardianKarakalpak

KaldrasKalenjinKalmyk

KanareseKarachai-Balkar

KazakhKhaziKhmerKirgiz

KikambaKomering

Komi-ZyrianKonsoKoreanKreoleKumykKurdishKwatay

LakLamoogai

LaniLao

LatvianLezghianLingala

LithuanianLobi

MacedonianMakua Xirima

MalagasyMalay

MalayalamMalteseMamMari

MisimaMongolian

MongondowMordvin-Erzya

Mordvin-MokshaNavajo

NdebelleNepaleseNgbaka

NiasNorwegianNorth Sotho

New NorwegianOgea (Erima)

OriyaOssetian

PamirPaici

PapiamentoPashto

PNG PidginPo Karen

PolishPortuguese

PunjabiQuecuvaQuiche

RomanschRomany

RomanianRussianSamoanSango

SerbianSetswana

ShonaSiSwati

SimalungunSlovak

SlovenianSolomon Islands Pijin

South SothoSpanish

SudaneseSundanese

SwahiliSwedish

TabasaranTagalog

TajikTamilTartarTeluguThai

TibetanTok PisinTonganTsonga

TumbukuTurkmenTurkish

TuvinianTwi

UdmurtUighur

UkrainianUrdu

UzbekhVenda

VietnameseWelshXhosaZokanZulu

Notice is hereby given that the Annual General Meeting of Lion Hudson plc will be held at the company’s registered office in Oxford on 28 September 2010 at 12.30 pm for the following purposes:

1. To receive and adopt the financial statements for the year ended 31 March 2010 together with the reports of the directors and auditors.

2. To re-elect the following director: J O’Nions

3. To re-elect the following director: S Price.

4. To declare a dividend of 3p per share for payment on 19 November 2010 to those members on the register at 29 October 2010.

5. To re-appoint Rayner Essex as auditors to the company and to authorize the directors to fix their remuneration.

By order of the Board.V. PulleySecretary

Registered officeWilkinson House, Jordan Hill, Oxford OX2 8DR

27 July 2010

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

Documents available for inspection

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

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

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

The 2010 Annual Report can be found on the company website: www.lionhudson.com.

1 Notice of meeting

2 Lion Hudson plc

Registered officeWilkinson HouseJordan HillOxford OX2 8DR

Registered AuditorsRayner Essex Faulkner House Victoria Street St Albans Herts AL1 3SE

Principal BankersLLoyds TSB CommercialBlack Horse HousePO Box 1000Oxford BX1 1LT

RegistrarComputershare Investor Services plcPO Box 82The PavilionsBridgwater RoadBristol BS99 7NH

SecretaryV. Pulley, ACMA

Company Registration Number1051118England and Wales

Directors

Paul Clifford MA (Managing Director), read Modern History and Modern Languages at Oxford. He joined the Lion Board in 1997 after 8 years working for the retail and business division of Oxfam. Previously he spent 13 years in publishing, holding senior positions at Cambridge University Press and the Blackwell Group.

Nick Jones (Deputy Managing Director), is responsible for International sales including co-editions and rights. He is also Publishing Director of the Candle imprint. He was previously Managing Director of Angus Hudson Ltd. Having held senior management positions at Lonrho and divisional board positions at Maxwell Communications Corporation, he led the successful management buy out of Angus Hudson Ltd from MCC in 1989.

Alice Lawhead joined the Board as a non executive Director on 1st September 2009. She has had a varied career in marketing, fundraising and training at Director level in a range of commercial and not-for-profit organizations. For many years she has acted as editor and manager for her husband, the historical fantasy writer Stephen Lawhead. She is the author or joint author of six books.

Roy K McCloughry (Chairman), became a non-executive Director of Lion in 1998 and Chairman in 2009. Originally an economist, he has been involved in writing, research and lecturing on Christian approaches to social issues for more than thirty years. He has published fourteen books. He is Vice-President of the charity, Livability.

John W O’Nions joined Lion as Sales Director in 1997. He is responsible for UK trade, special and educational sales and marketing. Prior to joining Lion he was a senior manager for Kraft Jacobs Suchard where his responsibilities included managing a team of account managers and negotiating contracts to board level.

Stephen W Price, joined the Board as Production Director following the merger with Angus Hudson Ltd. After a brief period in the printing industry, he has spent his entire career in publishing and has accumulated wide experience working for Hamlyn Publishing Group, Scripture Union, Granada Publishing, HarperCollins, and latterly Angus Hudson Ltd.

3 Chairman’s report 2010

Lion Hudson is the UK’s largest independent publisher of books inspired by the Christian faith and its values for worldwide markets.

Highlights

• record company turnover achieved, exceeding £9m for the first time• record International sales achieved, exceeding £6m for the first time• operating profit of nearly £250k• dividend reinstated

The 2009-10 financial year can only be described as extraordinary. It began in the depths of the worst economic environment for 75 years. In November Borders UK, Britain’s third-largest bricks and mortar book retailer, went into administration. At almost exactly the same time we felt an even more substantial blow when our largest domestic customer (IBS-STL UK) put itself up for sale. This caused major concern throughout the UK Christian publishing industry, particularly among those companies far more dependent on IBS-STL than us. Fortunately the charity was quickly broken into its constituent elements much of which was successfully sold so that at least a degree of continuity has been maintained.

It’s a tribute to the wide range of interesting and desirable books we published, as well as to the concerted efforts of salespeople and marketing staff in selling and promoting them, that we ended the year with a record turnover (for the second year in succession). Sales grew in the UK despite the major challenges outlined in the previous paragraph. Internationally, there is no question that exchange rates were an important factor, especially that of the £/euro which, at close to parity for some of the time, made our selling prices to Eurozone countries in particular highly attractive.

The loss of IBS-STL and Borders did unfortunately leave us with some bad debts which are fully provided for in the financial accounts.

This was also the year in which we published our first e-books (on the Kindle e-book reader in the USA). Not since the days of Gutenberg can a new technological development in publishing have been introduced with so much potential. And not since the days of Nostradamus can so much forecasting have been so speculative and uncertain. No one knows what will happen; you can only test and gain some hard experience – and even that may prove misleading.

Candle

Bible adventures for today’s kids

51 titles were published under the Candle imprint, 12 of which had been previously published in other editions.

The imprint made its first foray into fiction publishing, producing the Dragons in our Midst series under licence from its originating US publisher. Aimed at the pre-teen market, four titles were launched at two-monthly intervals and were well received.

Other highlights included the Bible Friends jigsaw in a convenient mini format, several lift-the-flap titles, a water-

pen activity book, Read and Play board books and play pieces as well as a Christmas stencil book. Safety

legislation for such books aimed at the under 3s is becoming increasingly onerous and complex, and testing to ensure that our titles comply is becoming more expensive. This combination is a challenge for an imprint which has specialised in adding

value to books in a range of ways and will have the effect of reducing our ability to publish such titles especially for that age group in future.

Two more titles, Tabernacle Model and Paul’s Travels, complete with letters in pockets on the page, were added to the Candle Discovery series. An Explore the Bible sticker book and a compact Book of Bible Facts enhanced Candle’s range of books which convey information in an attractive and novel way.

Several new illustrators were used for the first time in Candle’s books, extending the range of the imprint’s art styles. Each brought attractive contributions to which co-edition partners have responded favourably.

Lion

Christian information and inspiration for general readers

34 new titles were published including one new edition.The Lion Handbook to the Bible, the imprint’s flagship

title which has been continuously in print since its first appearance in 1973, was published in a fourth edition. It is a sign of the times that it went straight into flexiback rather than via the traditional hardback route. We also published flexiback editions of two other Lion Handbooks: the History of Christianity and World Religions.

Other important illustrated information and reference books were John Drane’s The World of the Bible, focussing on the context in which the various Bible books came to be written and how this influenced their authors, and Jonathan Hill’s

4 Chairman’s report

The Crucible of Christianity, a splendid overview of the first four hundred years of the faith with its gallery of larger-than-life characters, dramatic events and tense, sometimes violent debates. The Christian Bookseller’s Convention awarded its 2009 Reference Book of the Year prize to Tim Dowley’s lively account, The Christians: an Illustrated History.

The list tackled a range of contemporary issues. In addition to books on stress, motherhood and relationships in the workplace and the home, we published Brian Draper’s reflective and elegantly written Spiritual Intelligence, introducing many readers to this relatively new concept; Richard Reddie’s Black Muslims in Britain which asked why so many disaffected young black men look to Islam rather than Christianity as the answer to their problems; and Rob Parsons’ Sixty-minute Family, building on a very successful brand, which condensed decades of wisdom and experience built up by Care for the Family into a really valuable and accessible book.

An unusual book was Julia Ogilvy’s Turning Points, based on interviews with a range of different people, many unknown but several in the public eye including Gordon Brown and Bob Geldof, about major events in their lives which have shaped their moral direction. The book attracted considerable media attention.

Lion Children’s

Bringing Good Values to Life

41 Lion Children’s titles were published, 7 of which had been previously published in other editions.

Lion Children’s publishes the world’s premier range of English-language children’s Bibles. Several million copies of our various children’s Bibles have been sold around the world in scores of languages since we began publishing them about 30 years ago. Ongoing demand means that one or two have been continuously in print for almost that long. But we continue to produce excellent, innovative titles, each of which takes its place in the list and is in significant demand. The latest was This is My Bible, a large-format, chunky volume aimed at the pre-school market, illustrated by Jamie Smith.

Much the same general observations are true of our prayer books, a number of which are designed as companion volumes to the Bibles. The two new major prayer books this year, The Lion Book of Prayers to Read and Know and The Lion Book of Day-by-Day Prayers, are both excellent examples of this strategy. Aimed at different age groups and with contrasting

illustrative styles, they offer real keepsake appeal combined with a friendly ease of use to make them practical as well as attractive.

The imprint has published a range of story anthologies in recent years and this continued. Bedtime Stories for Little Angels and Christmas Stories for Little Angels, both illustrated

by Dubravka Kolanovic, were sweet collections for very young children. Slightly older children enjoyed Five-minute Bedtime Stories, written by John Goodwin and illustrated by Russell Johnson, while those with shorter concentration spans (or less patient parents) could take advantage of Two-minute Bedtime Stories

written by Elena Pasquali, illustrated by Nicola Smee.

Consistent with its strapline, Lion Children’s Books also offers some titles on broad moral issues. Growing Strong and Ready, Steady Grow, complete with measuring tape, offered simple suggestions

on how to look after yourself by eating healthily, exercising well and behaving sensibly. It’s My World Too encouraged children to care for the environment while giving simple information about some rare and endangered species.

Monarch

Building Faith, Transforming Minds

36 new titles were published under the Monarch imprint, three of them new editions.

One of Monarch’s most successful publications has been the Freedom in Christ course which has sold steadily since it first appeared several years ago and is now widely used by a range of UK churches. This year built on the success of that with the launch of a Youth version, complete with Leader’s Guide and two different workbooks, one for the 11-14 age range and the other for 15-18 year olds. There were also new editions of some of the parent course’s books.


An important contribution to the current atheism-religion debate was Real Scientists, Real Faith, a compilation of short accounts by a range of prominent scientists from different disciplines of why they are Christians and what effect their faith has on their pursuit of science. A more overtly apologetic book was God,

Actually, a major book by Australian lawyer Roy Williams setting out in an appropriately careful and very thorough manner the arguments supporting the reasonableness of Christian belief.

Twilight Gospel was Dave Roberts’ thoughtful and balanced critique of the Stephanie Meyer vampire novels which have dominated children’s bestseller lists on both sides of the Atlantic since Harry Potter’s career came to an end.

Popular biographies continue to feature strongly in the list and three contrasting ones were published. Catherine’s Gift, a sequel to the very successful Hospital by the River, continued the account of Dr Catherine Hamelin and her work at the fistula hospital that she established with her husband in Ethiopia. In particular, it told a number of

the stories of women who have been successfully treated there. Scars and Stilettos recounted the life of Harmony Dust, an American exotic dancer who became a Christian after a long period of abuse and exploitation and now helps lead a ministry to women in the sex industry. From Buddha to Jesus was Steve Cicciolanti’s account of his own journey from Buddhism to Christianity and the issues,

theological, philosophical and personal, that he had to deal with on the way.

The list has a successful strand of humour titles. Losing the Thread was Ali Stibbe’s latest contribution, aimed principally at women and the very successful Basket of Gems was reissued in a new edition.

Two new novels were published: the contemporary romance Genoa Bay, set in the area around Vancouver, and Mel Starr’s A Corpse at St Andrew’s Chapel, his second medieval whodunit featuring Hugh de Singleton, our own answer to Cadfael.

UK sales and marketing

The struggles and then the collapse of STL dominated the year. Most of the shops in its Wesley Owen chain found some kind of future, even if in a few cases this may turn out to be short-lived. Meanwhile, Christian independents were often able to take advantage of gaps opening up to strengthen their own position. The Lion Hudson Alliance scheme of stockists grew to well over 200 across the UK and a number of them expressed real appreciation of the relationship with us. We are fortunate in having a very experienced team of Area Sales Managers who realise the key importance of strong personal relationships and this has stood us in good stead in a volatile year. To have exceeded sales forecasts in such a turbulent period is testimony to the focus and tenacity of the team as well as the quality of the books they have to sell.

In the general market Waterstone’s had a difficult year, notwithstanding the demise of Borders which, of course, made a dent in the number of high street shelves dedicated to books. Our relationship with WH Smith continued to strengthen as it did with the leading supermarkets.

A considerable amount of PR effort went into supporting several of our books: Turning Points was launched at 10

Downing Street and a number of authors were widely interviewed on radio and in newsprint. The growing importance of digital media was reflected in the use of websites of all kinds as well as blogs and tweets. Marketing staff are having to get up to speed with a rapidly-developing array of new opportunities to spread news and to influence opinion.

During the year we also revamped our website, giving it a greater balance between business-to-consumer and business-to-business appeal, introducing some new features and steadily increasing the number of visitors it receives.

International sales

This was a record year for international sales which now account for two-thirds of our turnover. Blown by the following wind of favourable exchange rates, co-editions and rights sales, especially of children’s books, had an outstanding year. Brazil, with a strongly growing economy and burgeoning middle class, was a notably important export market. We achieved total sales in that one country alone of more than 10% of our international turnover. It is now comfortably our largest single foreign-language market.

Other countries also continued to grow: Japan, in particular for Christmas books, and Korea; and there was an extremely enthusiastic response to our presence at the Beijing International Bookfair with a significant number of orders resulting.

There was a welcome increase in sales to France, strong sales in several east European markets including Poland and the Czech Republic, and a resilient performance in the Netherlands.

As ever, children’s Bibles spearheaded the effort: Lift-the-flap Bible Stories sold 41,000 copies in its first co-edition printing and our close alliance with the Bible Societies yielded a further 60,000-copy printing of The Lion Children’s Bible. The information and reference books on the Lion Children’s imprint also did well with 23,000 copies of


The Lion Encyclopedia of the Bible sold. Similar material for adults proved more difficult and this may be part of a long, slow trend away from books (even our attractively designed and presented ones) as sources of information, which, combined with very high translation costs because of their length, make them a more difficult proposition to sell. Nevertheless, we sold the New Lion Handbook to World Religions in five eastern European languages.

Occasional subsidiary sales boosted the total and we sold 50,000 copies of Greg Watts’ biography of Mother Teresa to a Polish newspaper, and the Bible Story Time set of individual stories to a Spanish newpaper. Digital rights are also an increasing aspect of our business and we licensed The Read and Know Bible for use on interactive whiteboards in Dutch schools.

Export sales of English-language books were more variable, though the USA bounced back strongly from the recession-induced decline of the previous year, growing almost to the levels of 2007-08. We continued our strategy of dual-market distribution there rather than selling rights to US publishers (though we still sold a few of these where the economics made sense to do so). Australia generally held up well again, buoyed by an economy which seemed to avoid the worst excesses of the credit crunch and the banking crisis. This helped to offset the re-organisation of our general market distributor there following its purchase in 2009 by Gordon and Gotch.

Publishing services

The demise of STL created an unparalleled amount of movement in the market as clients who had used a variety of STL’s services looked for new homes. We entered two new agreements. One was with Memralife, the organisation resulting from the merger in 2009 of Spring Harvest with International Christian Communications (ICC). Under their Elevation brand, they publish a range of Christian music, including a number of well-known artists, which we began representing to the UK Christian trade in January. This is being followed later in 2010 by a co-publishing book agreement. The second is with Alpha International for whom we began providing a range of publishing services in April this year.

We have therefore gained strategic alliances with two of the best-known names in the UK Christian world and will be looking to develop and build on them in the next few years. We have deliberately chosen to work with those who complement our existing strategic alliances with Baker Publishing Group and Cambridge University Press’s Bibles division.

Staffing

After the changes of the previous year, there were few movements in 2009-10. However, we were delighted to welcome in September a new non-executive Board member in Alice Lawhead. A long-standing friend of the company and wife of best-selling fantasy author, Stephen Lawhead, Alice has brought to the Board a wealth of experience in marketing, HR and management in a variety of different organisations, and has already put in more work than she could have anticipated.

Aslan Trust

As we had made no contribution to it in the previous year, the Trust was not able to make any disbursements during 2009-10. However, we did see grants from earlier years bear fruit. One was the Burmese edition of The Lion Handbook to the Bible, funded in part by a grant from the Trust, printed locally and hand-bound by volunteers. The majority of the first printing of 5,000 copies has been sold.

Future prospects and shares

The Board is pleased with the overall performance in 2009-10. A second consecutive year of record turnover in such a difficult environment is a cause for celebration, though not complacency. The economic outlook remains uncertain almost everywhere and our publishing programmes face their own individual challenges. However, we are confident that we have the expertise and experience at all levels in the company to respond to a rapidly-changing environment.

The company’s shares continued to be traded throughout the year on a matched-bargain facility offered by the Company Secretary. The Board has decided to maintain the share price at 95p.

RK McCloughry27th July 2010

The directors present their report and the financial statements for the year ended 31 March 2010.

Statement of directors’ responsibilitiesCompany law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those financial statements, the directors are required to:

select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006 and United Kingdom Generally Accepted Accounting Practice (UK GAAP). They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of Disclosure to auditor(a) so far as the directors are aware, there is no relevant information of which the company’s auditors are unaware, and(b) they have taken all the steps that they ought to have taken as directors to make themselves aware of any relevant audit information and to establish that the company’s auditors are aware of that information.

Corporate GovernanceThe Board has reviewed the guidelines on corporate governance for small and medium companies which have been issued by monitoring bodies following the Greenbury and Hampel Reports. As a result, an audit committee and a remuneration committee have been established. The Board is satisfied that its provisions on corporate governance are appropriate for a company of its size.

Review of the business and future developmentsThe principal activity of the company continued to be the publishing of Christian books. The year-end financial position was satisfactory and the directors expect that the present level of publishing activity will be sustained for the foreseeable future.

The Key Performance Indicators used by the company to monitor the business are:- 1. Stock Turnover and 2. the proportion of overseas sales to total sales.

Stock Turnover 220 days (2009 - 225 days)Overseas sales: Total sales 68% (2009 - 66%)

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

Results and dividendsThe results of the company for the year ended 31 March 2010 are set out in the financial statements on pages 8 to 15. The directors propose a dividend of 3 pence per share amounting to £51,451 for the year (2009: Nil).

Policy and practice on payment of CreditorsThe directors intend during the year ended 31 March 2011 to pay all suppliers in accordance with the credit terms agreed with them. During the year ended 31 March 2010 the average payment period was 112 days in comparison to 111 days last year. This figure has been calculated using closing amounts for the year.

DirectorsThe directors set out below have held office during the whole of the period from 1 April 2009 to the date of this report, with the exception of D O Cole who resigned from the Board on 27 October 2009 and A Lawhead who was appointed to the Board on 1st Septemberr 2009. The interests of the directors holding office on 31 March 2010 in the shares of the company, according to the register of directors’ interests, were as shown below:

Ordinary 50p shares Beneficial Interests Beneficial Interests Interests as Trustees Interests as Trustees 31 March 2010 1 April 2009

P Clifford 5,150 5,150A Lawhead - -J W O’Nions 514 514R K McCloughry 805 805N Jones 127,388 127,388 S W Price 50 -

In accordance with the articles of association J O’Nions and S Price retire by rotation and, being eligible, offer themselves for re-election.

DonationsDuring the year the company made no donations (2009: £151) for charitable purposes.

AuditorsIn accordance with section 487(2) of the Companies Act 2006, a resolution to re-appoint Rayner Essex as auditors to the company and to authorise the directors to fix their remuneration will be put to the members at the forthcoming Annual General Meeting.

Approved by the Board on 27 July 2010 and signed on its behalf byV. PulleySecretaryWilkinson HouseJordan Hill, Oxford, OX2 8DR

7 Directors’ report

Notes 2010 2009

£ £ £ £

Total turnover 3 9,038,380 8,859,393

Change in stocks of finished goods and work-in-progress (138,999) 469,017

8,899,381 9,328,410

External charges (6,820,257) (7,110,154)

Staff costs 5 (1,788,445) (2,176,793)

Depreciation 2 (47,986) (45,170)

Payment to Aslan Trust 20 - -

(8,656,688) (9,332,117)

OPERATING PROFIT/(LOSS 242,693 (3,707)

Interest receivable and similar income 3,438 61

Interest payable and similar charges (50,021) (49,712)

(46,583) (49,651)

PROFIT/(LOSS) ON ORDINARY ACTIVITIES

BEFORE TAXATION 196,110 (53,358)

Taxation on profit on ordinary activities 6 (24,760) (9,382)

PROFIT/(LOSS) FOR THE YEAR 14 171,350 (62,740)

RETAINED PROFIT/(LOSS) FOR THE YEAR 13 171,350 (62,740)

The Profit and Loss Account has been prepared on the basis that all operations are continuing operations.

The company has had no recognized gains or losses other than the retained profit for the year.

The profit for the year has been calculated on the historical cost basis.

8 Profit and loss account for the year ended 31 March 2010

UK

35%

US

20%

Europe

22%

Australasia

7%

Africa/Asia

7%

S America

9%

Sales by Territory 2009/10

UK

US

Europe

Australasia

Lion

18%

Lion Children's

30%

Monarch

12%

Candle

25%

Hudson International

15%

Sales by Imprint 09/10

Lion

Lion Children's

Monarch

Candle

Hudson International

Sales by Imprint 2009/10

Sales by Territory 2009/10

Notes 2010 2009

FIXED ASSETS £ £

Goodwill 22 226,455 242,630

Tangible assets 7 106,118 115,085

Investment 21 1,000 1,000

333,573 358,715

CURRENT ASSETS

Stocks and work-in-progress 8 3,883,236 4,022,236

Debtors 9 2,014,482 1,857,240

Cash at bank and in hand 108,614 -

6,006,332 5,879,476

CREDITORS–amounts falling

due within one year 10 (3,092,211) (3,162,322)

NET CURRENT ASSETS 2,914,121 2,717,154

TOTAL ASSETS LESS CURRENT LIABILITIES 3,247,694 3,075,869

NET ASSETS £3,247,694 £3,075,869

CAPITAL AND RESERVES

Called up share capital 12 857,518 857,268

Share premium account 13 781,826 781,601

Profit and loss account 13 1,608,350 1,437,000

Shareholders’ Funds 14 £3,247,694 £3,075,869

9 Balance sheet as at 31 March 2010

Approved by the Board on 28th July 2010

and signed on its behalf:

R K McCloughry)

P. Clifford ) Directors

Co Number 1051118

2010 2009

Note £ £ £ £

Net cash inflow(outflow) from operating activities 17 193,084 117,024

Returns on investment and servicing of finance

– Interest received 3,438 61

– Interest paid and similar charges (50,021) (49,712)

Net cash outflow from returns on investment

and servicing of finance (46,583) (49,651)

Taxation () (9,382)

Capital expenditure

– Payments to acquire tangible fixed assets (39,019) (18,652)

Net cash (outflow) (39,019) (28,034)

Net cash inflow before financing 107,482 39,339

Increase in cash in the year 19 £107,482 39,339

10 Cash flow statement for the year ended 31 March 2010

1 ACCOUNTING POLICIES

The financial statements have been prepared in accordance with applicable accounting standards.

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

1.2 Basis of preparation of financial statementsConsolidated financial statements have not been prepared as the subsidiaries Aslan Publishing Services Limited and Angus Hudson Limited have been dormant throughout the period. In the opinion of the directors, consolidation of these subsidiaries is not required to give a true and fair view of Lion Hudson plc’s affairs. Therefore these financial statements present information about the company as an individual undertaking and not about its group.

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

1.4 DepreciationDepreciation is calculated to write off the cost of fixed assets on a straight line basis over their effective useful lives. Average depreciation rates are:

Office equipment 10% – 50%Computer equipment 20% – 50%

1.5 TaxationThe charge for taxation is based on the profit for the year at cur-rent rates of tax. Deferred tax is provided in respect of the tax effect of all timing differences, to the extent that it is probable that a liability will crystallize in the foreseeable future, at the rates of tax expected to apply when the timing differences reverse.

1.6 Stocks and work-in-progressStocks and work-in-progress are valued at the lower of cost and estimated net realizable value. Cost, using the first-in, first-out basis, consists of direct production costs.Estimated net realizable value is calculated after providing for obsolescence based on the age and saleability of the stocks.

1.7 RoyaltiesRoyalties payable to authors which are dependent on the number of books sold are accounted for on an accruals basis. Royalties receivable are accounted for on a received basis.

1.8 Foreign currenciesAssets, liabilities, revenue and costs expressed in foreign cur-rencies are translated into sterling at rates of exchange ruling on the date on which the transaction occurs, except for: i) monetary assets and liabilities which are translated at the rate ruling at the balance sheet date and ii) transactions to be settled at a contract-ed rate and trading transactions covered by a related or matching forward contract which are translated at those contracted rates. Differences arising on the translation of such items are dealt with in the profit and loss account

1.9 Leases and hire purchase agreements

Finance leases No assets are held under finance leases.

Operating leasesRentals payable under operating leases are charged on a straight line basis over the term of the lease.

Hire purchase agreementsNo assets were acquired under hire purchase agreements.

1.10 Pension costsContributions payable to the company’s pension schemes are charged to the profit and loss account in the period to which they relate. (See also note 15.)

1.11 Investment PolicyInvestments are stated at cost.

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

2 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2010 2009The profit on ordinary activities before £ £taxation is stated after charging/(crediting):Depreciation of owned tangiblefixed assets 47,986 45,170Amortisation of Goodwill 16,175 16,175 Auditors’ remuneration: - Audit fee 14,500 14,500Hire of plant and machinery–operating leases 40,435 50,767Hire of other assets–operating leases 89,547 92,394Rent of premises 123,505 120,648Bank Interest 12,489 12,271Other interest 41,628 19,679Foreign Exchange (Gain) /Loss (4,096) 17,762

11 Notes to the financial statements for the year ended 31 March 2010

5 STAFF COSTS 2010 2009 £ £Salaries 1,462,452 1,677,516Social Security costs 166,164 191,822Other staff costs 70,328 207,542Pension costs 89,501 99,913 ______________________________ __________________________

£1,788,445 £2,176,793 ______________________________ __________________________

The average number of persons employed by the company (including directors) during the year was as follows: 2010 2009Editorial, design and production 19 24Sales and marketing 26 27Accounts and computer staff 5 5Others 2 2 ______________________________ __________________________

Total employees 52 58 ______________________________ __________________________

4 DIRECTORS 2010 2009 £ £Remuneration: Emoluments 266,718 441,035Contributions to group personal pension schemes 34,458 52,515 ______________________________ __________________________

Total remuneration £301,176 £493,550 ______________________________ __________________________

The emoluments of directors above include amounts paid to: 2010 2009Highest paid director: £ £Remuneration: Emoluments 77,301 134,077 Contributions to group personal pension schemes 12,000 16,079 ______________________________ __________________________

Total remuneration £89,301 £150,156 ______________________________ __________________________

The number of directors for whom retirement benefits are accruing under defined contribution group personal pension schemes amounted to 4 (2009:4).

12 Notes to the financial statements

3 TURNOVER

The turnover, profit or loss before taxation and net assets are attributable to the principal activity, the publishing of Christian books.A geographical analysis of total turnover is as follows:

GEOGRAPHICAL SEGMENTS UK USA OTHER TOTAL 2010 2009 2010 2009 2010 2009 2010 2009 £000s £000s £000s £000s £000s £000s £000s £000s

TURNOVER

Turnover by destination:Sales to third parties 3,027 2,986 1,845 1,406 4,166 4,467 9,038 8,859 Turnover by origin:Total sales 9,038 8,859 – – – – 9,038 8,859

PROFIT BEFORE TAXATION

Segment profit/(loss) 196 (53) – – – 196 (53) NET ASSETSSegment net assets 3,247 3,076 – – – – 3,247 3,076

6 TAXATION 2010 2009 £ £Based on the profit for the year:United Kingdom corporationtax at 21% 40,148 0Taxation in relation to prior year (9,382) Double Taxation Relief (15,388)

______________________________ __________________________

Total taxation £24,760 £9,382 ______________________________ __________________________

Factors affecting tax charge for the period

Profit /(loss)on ordinary activities pre-tax 196,110 (53,358)

Profit /(loss) on ordinary activities multipliedby standard rate of UK corporation taxof 21% (2009-20%) 41,183 (10,672)

Effects of:

Non deductible expenses 1,748 4,780Depreciation 13,474 12,269

Capital allowances (13,462) (9,069)Other Tax Adjustments (18,183) 2,692 Adjustments for previous years 0 9,382 ______________________________ __________________________

Total adjustments (£16,423) 20,054 ______________________________ __________________________

7 TANGIBLE FIXED ASSETSEquipment 2010 £CostAt 1 April 2009 441,190Additions 39,019

______________________________ __________________________

At 31 March 2010 £480,209 ______________________________ __________________________

Accumulated depreciationAt 1 April 2009 326,105 Charge for Year 47,986On Disposal ______________________________ __________________________

At 31 March 2010 £374,091

Net Book ValuesAt 31 March 2010 £106,118

______________________________ __________________________

At 31 March 2009 £115,085 ______________________________ __________________________

8 STOCKS AND WORK-IN-PROGRESS 2010 2009 £ £Stocks of finished goods 2,993,476 3,160,308Work-in-progress 889,760 861,928 ______________________________ __________________________

£3,883,236 £4,022,236 ______________________________ __________________________

9 DEBTORS

Due within one year 2010 2009 £ £Trade debtors 1,835,750 1,699,725Other debtors 51,187 40,478Prepayments and accrued income 127,545 117,037 ______________________________ __________________________

£2,014,482 £1,857,240 ______________________________ __________________________

Included within other debtors is a £2 share holding of our wholly owned subsidiary Aslan Publishing Services Limited, incorpo-rated in England and Wales.

10 CREDITORS

Amounts falling due within one year 2010 2009 £ £ Trade creditors 1,811,119 1,850,164 Taxation and Social security costs 44,232 60,663Other creditors 85,995 44,039Accruals and deferred income 998,269 1,055,997Bank Overdrafts and Loans 152,596 151,459 ______________________________ __________________________

£3,092,211 £3,162,322 ______________________________ __________________________

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

The bank facility was secured by a charge over debtors.


11 DEFERRED TAXATION

There is no potential liability for deferred taxation and therefore no provision is necessary.

12 SHARE CAPITAL

Authorized 2010 2009 Ordinary shares of 50p each £1,260,000 £1,260,000 ______________________________ __________________________

Allotted, issued and fully paid 2010 2009Ordinary shares of 50p each £857,518 £857,268 ______________________________ __________________________

Movements in share capital £ No

Ordinary shares of 50p each 250 500 ______________________________ __________________________

500 Ordinary shares with a nominal value of 50 pence per share each were issued to staff for a consideration of 95 pence per share.

13 RESERVES

Share Premium Profit and Loss Account Account Total £ £ £At 1 April 2009 781,601 1,437,000 2,218,601Retained profit for the year 225 171,350 171,575 At 31 March 2010 £781,826 £1,608,350 £2,390,176

Reserves of £781,826 are not available for distribution under the terms of the Companies Act 2006.

14 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

2010 2009 £ £Profit for the financial year after taxation 171,350 (62,740) ______________________________ __________________________

171,350 (£62,740) ______________________________ __________________________

Opening shareholders’ funds £3,075,869 £3,138,609Called Up Share Capital 250 -Share Premium Account 225 -

______________________________ __________________________

Closing shareholders’ funds £ 3,247,694 £3,075,869 ______________________________ __________________________

15 PENSION SCHEME

The company operates defined contribution group personal pension schemes with funds assigned for individual members. The assets of the schemes are held separately from those of the company in independently administered funds. The company contributes a minimum of 5.0% of a member’s salary into the original scheme. The company also operates executive group personal pension schemes for the benefit of certain of its direc-tors. The assets of these schemes are held separately from those of the company in an independently administered fund.

The pension charge for the year of £89,501 (2009: £99,913) represents contributions payable by the company to all schemes.At 31 March 2010 there were no outstanding contributions pay-able to the schemes.

16 OTHER FINANCIAL COMMITMENTS

At 31 March 2010 the company was committed to making the following payments under non-cancellable operating leases in the year to 31 March 2011:

2010 2009 Land and Land and Buildings Other Buildings Other £ £ £ £Operating leases which expire:Within 1 year - 23,342 - 25,106Between 2 and 5 years - 95,778 - 86,134Over 5 years 123,360 - 123,360 - £123,360 £119,120 123,360 £111,240



17 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES

2010 2009 £ £Operating Profit/(Loss) 242,693 (3,707)Issue of Shares as Bonus 475 -Depreciation charges 47,986 45,170Amortisation of Goodwill 16,175 16,175Changes in stocks 139,000 (469,017)Change in debtors (157,242) 108,542Change in creditors (96,003) 419,861 ______________________________ __________________________

Net cash inflow from continuing operating activities £193,084 £117,024 ______________________________ __________________________

18 RECONCILIATION OF NET CASH FLOW

2010 2009 £ £Increase in cash in the year 107,482 39,339 ______________________________ __________________________

Change in net funds resulting from cash flows 107,482 39,339)

Net funds at 1 April 2009 (151,459) (190,798) ______________________________ __________________________

Net funds at 31 March 2010 £(43,977) £(151,459) ______________________________ __________________________

19 ANALYSIS OF NET DEBT

At 1 April Cash At 31 March 2009 flows 2010 £ £ £Cash at bank (151,459) 107,482 (43,977) _________________________ _________________________ __________________________

£(151,459) £107,482 £(43,977) _________________________ _________________________ __________________________

20 RELATED PARTY TRANSACTIONS

There were no related party transactions during the year. (2009 - Nil).

21 INVESTMENTSANGUS HUDSON LTD 2010 2009

Cost at beginning of period £1,000 £1,000 ______________________________ __________________________

Cost at end of period £1,000 £1,000 __________________________ _______________________

Angus Hudson Ltd incorporated in England and Wales. Group accounts have not been prepared as in the opinion of the directors, consolidation is not required to give a true and fair view of Lion Hudson’s financial affairs. Lion Hudson owns 100% of the share capital. The capital and reserves total £1,000. The company has been dormant since its acquisition on 18 December 2003.

ASLAN PUBLISHING SERVICES LTD 2010 2009

Cost at beginning of period £2 £2 ______________________________ __________________________

Cost at end of period £2 £2 __________________________ _______________________

Aslan Publishing Services Ltd incorporated in England and Wales. Group accounts have not been prepared as in the opinion of the directors, consolidation is not required to give a true and fair view of Lion Hudson’s financial affairs. Lion Hudson owns 100% of the share capital. The capital and reserves total £2. The company has been dormant since 31 March 1988.

22 GOODWILL 2010

Cost at 1 April 2009 £323,505 Cost at 31 March 2010 £323,505

Accumulated Amortisationat 1 April 2009 £80,875Charge for the Year £16,175 ______________________________

Cost at 31 March 2010 £97,050 Net Book ValueAt 31 March 2010 £226,455At 31 March 2009 £242,630 __________________________

Goodwill of £323,505 arose on the hive-up of net assets from Angus Hudson Ltd

Independent auditors’ report to the shareholders of Lion Hudson plcWe have audited the financial statements of Lion Hudson plc for the year ended 31 March 2010 set out on Pages 8 - 15. These financial statements have been prepared under the historic cost convention and the accounting policies set out therein.

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

Respective responsibilities of directors and auditorsAs explained more fully in the Directors’ Responsibilities Statement on page 7, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland.) These standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free

from material misstatement, whether caused by fraud or er-ror. This includes an assessment of: whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors, and the overall presentation of the financial statements.

Opinion on financial statementsIn our opinion the financial statements:-- give a true and fair view of the state of the company’s affairs as at 31 March 2010 and of its profit for the year then ended;- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, and- have been prepared in accordance with the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for which the financial statements are prepared is consistent with the Companies Act 2006.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us, or- the financial statements are not in agreement with the accounting records and returns, or

- certain disclosures of directors’ remuneration specified by law are not made; or- we have not received all the information and explanations we require for our audit.

Mr Stephen Jacobs (Senior and Statutory Auditor)Rayner Essex LLPChartered AccountantsRegistered AuditorsFaulkner HouseVictoria StreetSt AlbansHertsAL1 3SE

27 July 2010

16 Independent auditors’ report to the members of Lion Hudson plc

Printed in Britainon recycled paper

www.lionhudson.com

Cover photograph taken by Ian Bradley for his book Pilgrimage, published by Lion in 2009. In his beautifully illustrated book, Ian Bradley explores the origins of pilgrimage and then goes on to look at the contemporary experience of pilgrimage, visiting popular, well-loved sites.

Lion Hudson plc Annual Report 2010 - Eden.co.uk

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Transcript of Lion Hudson plc Annual Report 2010 - Eden.co.uk