Bloomsbury, the UK publisher of JK Rowling's Harry Potter books, has reported a 74 per cent decline in annual profits.

The London-based firm made a pre-tax profit of £5.2m in the year to December 31, down from £20.1m in 2005.

Bloomsbury's turnover for the year dropped 32 per cent to £74.8m.

Investment in future titles reached £30.77m in 2006, up from £22.41m a year earlier.

The company announced in December that its annual profits would be down on the previous 12 months.

Nigel Newton, Bloomsbury chairman, said: "2006 was a challenging year. These results are in line with the trading update we gave in December.

"Turning to the current year and beyond, we have in place a growth strategy which includes expanding on our current author relationships, developing new authors, web-based initiatives, content monetisation, leveraging our geographic presence, and acquisitions, all of which we believe will enhance and strengthen our position as a leading publisher."

Bloomsbury will be hoping that the upcoming release of Harry Potter and the Deathly Hallows, the seventh and final Harry Potter book, will boost its sales and profits.

The firm will also be publishing a number of new books by Khaled Hosseini, author of The Kite Runner.