Final Results

6 April 2016

ELECTRIC WORD PLC

Preliminary Results to 30 November 2015

Electric Word, the specialist information business with divisions operating in the Education and Sport sectors, today announced audited results for the year ended 30 November 2015.

HIGHLIGHTS

· Significant strategic progress with the disposals of the businesses of Radcliffe Solutions, Radcliffe Publishing and post year end, the 70% stake in iGaming Business for a total cash consideration of £14.9m.

· Management and reporting restructured around two market-facing divisions (Sport and Education) following sale of stake in iGaming Business.

· Adjusted EBITA* for continuing and discontinued operations increased by 75% to £937k (2014: £536k).

· Outcome of external review of Optimus business in 2016 leads to refocus on conferences and premium subscription products.

· Net cash increased from £389k debt in 2014 to cash of £449k in 2015, excluding £12.1m post year end receipts from sale of stake in iGaming Business.

* EBITA denotes adjusted EBITA as defined in Note 5 and excludes amortisation and impairment of goodwill and intangible assets, restructuring and acquisition-related credits and costs, and share based payment costs, as well as the tax impact of those adjusting items and any non-cash tax credits and charges. This definition applies throughout the Annual Report and Financial Statements.

Julian Turner, Chief Executive of Electric Word, commented:

"We made progress in 2015 in simplifying the Group and have transformed our balance sheet through the sale of iGaming Business Ltd, which demonstrated the group's ability to add value to its businesses. SportBusiness is also showing the benefit of our investments in digital development and the strategic move towards more subscription-based revenues. Trading in 2016 will be affected by higher unallocated central costs than in 2015 but net margins in both Sport and Education are currently running slightly ahead of Board expectations as a result of tighter cost control."

Comparative figures for the year to 30 November 2014 have been reclassified to reflect the results of Radcliffe Solutions, Radcliffe Publishing and iGaming Business Ltd as discontinued operations as a result of their disposals. See note 9.

The audited report and accounts of the Company for the year ended 30 November 2015 have been posted to the Company's website at www.electricwordplc.com. The printed version, together with details of the Annual General Meeting, will be posted to shareholders in due course.

ENDS

Enquiries:

Notes to Editors

Electric Word plc is a specialist media group supporting professional development, management effectiveness and market intelligence through a wide range of digital, print and live formats. Our approach is to identify niche communities within our market sectors and fulfil our customers' key information needs to enable them to make better-informed decisions and so improve their performance. We achieve this by developing a deep understanding of our sectors and our customers' challenges and information requirements.

The Group provides content in many different formats, including market data, subscription websites, magazines, conferences, face-to-face training, online training, books, special reports, bespoke research and consultancy.

Following the disposal of the Group's stake in iGaming Business, it is now composed of two market-facing divisions:

Education

Optimus Education supports the professional development of teachers and school leaders through an online subscription-based information and training service and through live conferences. Speechmark specialises in resources for speech therapists, mental health professionals and teachers.

Sport

SportBusiness Group provides business insight, data and analysis to executives in the global business of sport. It supports sports industry professionals who work in governing bodies, the media, sports marketing, sponsorship and club and event management through market data, subscription websites, magazines, special reports, bespoke research and consultancy.

CHAIRMAN'S STATEMENT

Dear shareholders,

2015 was a significant year for Electric Word during which the Group continued its plan to simplify and focus the business. The year started with the completion of the sale of Radcliffe Solutions Ltd in January, which provided IT services to the Health sector and continued with the sale in April of Radcliffe Publishing, which produced books for medics and other health professionals. After the year end, the Group exited from the online gaming sector after many years of successful growth.

The sale of the Group's 70% interest in iGaming Business enabled Electric Word to realise the value in an asset whose market sector carries a different risk profile to that of the Group's other businesses. The business also had a minority shareholder and was therefore an enterprise over which the Group did not have full control. Nevertheless, the Group was able to achieve a full valuation of £13.8m for its shareholding on the back of 18% revenue growth and a 24% improvement in adjusted EBITA in 2015. iGaming Business was originally acquired as part of SportBusiness Group at the end of 2005 for a total consideration of £2.7m and has grown considerably since that time as part of Electric Word. The board would like to thank the staff and management of iGaming Business for their excellent work over many years.

Trading overall across all businesses, including those sold, was solid with revenues broadly flat at £13.8m and Adjusted EBITA up 75% to £937k. We were particularly pleased with the performance of the continuing Sport division which saw revenues up 23% and a turnaround in profitability to an Adjusted EBITA of £152k. Trading in Education however continued to be difficult with an adjusted EBITA loss of £717k. This division is facing significant market change with tight customer budgets and the rapid consolidation of local authority managed schools into Multiple Academy Trusts (MATs or large groups of academies).

Outlook

In prior years, the Health division included the Radcliffe and Speechmark businesses. Speechmark publishes books and other resources for speech therapists, mental health professionals and special needs co-ordinators in schools. Schools are a significant market for Speechmark and as a result of the sale of Radcliffe Solutions, Radcliffe Publishing and iGaming Business Ltd, the Directors have restructured the management of the Group's continuing operations and now organise its management and reporting around two divisions: Sport and Education. The Education division now comprises Speechmark and Optimus Education.

In December 2015, the Group announced that it had commissioned an external review of the Optimus Education business, including underlying performance and growth opportunities. The review highlighted a number of options for bringing that business back to profitability which included focusing on developing its conferences and online training membership services and reducing its investment in the Knowledge Centre database of articles and case studies.

Following the sale of iGaming Business in January 2016, we are a smaller business so the Group is undertaking a comprehensive review of its infrastructure, systems and processes to ensure that its central costs are appropriate for the businesses they are there to support. Although we anticipate reducing central costs where possible, it is likely that central costs be higher than in 2015 as a result of higher property costs and costs which were previously allocated to the businesses which have been sold.

In the circular to shareholders dated 18 December 2015, the Board noted that it was mindful that the Company's cash balance following the sale of the stake in iGaming Business could exceed the Company's expected capital requirements for the foreseeable future and that it was giving consideration to making a capital return to shareholders. However, the Board is also mindful of the continuing adjusted EBITA losses reported for 2015, the increase in central costs and that the timing of the Group's return to profitability is uncertain. The Board considers that any such capital return to shareholders would be enhanced by improvements to profitability in the Optimus business. It has also received various views from shareholders and advisors which it is in the process of assessing. The Board continues to review the options available to them, taking into account consideration of risks and returns, and does not consider that a return of capital would be appropriate while this review is ongoing. Shareholders will be updated in due course.

On behalf of shareholders and the Board I would like to thank the staff and other stakeholders for their hard work this year as the group has continued to focus its activities, develop more coherence and build greater value in its most strategic areas.

Andrew Brode

Chairman

5 April 2016

CHIEF EXECUTIVE'S STATEMENT

BUSINESS MODEL AND STRATEGY

Business model

Electric Word plc is a specialist media group supporting management development and decision-making through a wide range of digital, live and paper formats. Our approach is to identify niche communities within our market sectors and fulfil their key information, professional development and best practice needs.

Our business model starts with the customer. By better understanding our customers' aspirations and challenges we can provide increasingly valuable information products that support their critical decisions and key objectives. We serve our customers' needs through many different formats, including subscription websites, events, face-to-face training, online training, books, magazines, special reports, bespoke research and consultancy. Competencies developed in one sector can then be transferred to another as opportunities arise. Within this mix we favour high-quality revenue streams from digital subscription services, tools that connect directly with customer work requirements and live events with the scale to build brand presence in their markets.

We aim to increase the value of the services that we deliver over the lifetime of each customer relationship. We deliver this by increasing the penetration of our information within each customer organisation and also by innovating and developing new products.

Group Strategy

Our business model requires focus and investment, so it is important that the activities we select for strategic development are scalable and will ultimately generate high margins.

The deep knowledge of customers and markets needed to deliver our business model also means that we concentrate on a small number of market sectors and activities. We are therefore focusing the business on doing fewer things, each at a greater scale, to seek to achieve higher margins. Our objective is a simpler business that is better able to capitalise on the opportunities in our markets and the changing technology underpinning our sector. During 2015, we simplified the business further by disposing of Radcliffe Solutions Ltd and the Radcliffe Publishing business which operated in the Health sector. On 4 January 2016, we also disposed of our interests in iGaming Business Ltd thereby exiting from the gaming sector.

As a result of this simplification of the business we have embarked on a programme of improving efficiency to ensure that costs in all businesses are at a level appropriate to their growth objectives.

GROUP PERFORMANCE

Comparative figures for the year to 30 November 2014 have been reclassified to reflect the results of the Radcliffe Solutions, Radcliffe Publishing and iGaming businesses as discontinued operations as a result of their disposals. See note 9.

Revenues

Revenues from continuing operations were 3% lower than 2014 as growth in Sport was counterbalanced by reduced sales from Education. Subscriptions revenue grew by 8% and now accounts for 40% of total revenues from continuing operations (36% in 2014).

Revenues from discontinued operations reduced by 5% compared to 2014. This was driven by strong growth in iGaming revenues offset by lower book sales as a result of the Radcliffe Publishing disposal on 31 May 2015 and the impact of the Radcliffe Solutions disposal on 28 January 2015.

Profitability

In the continuing businesses, adjusted profit margins fell in Education but improved in Sport which returned to profit. Overall, Group Adjusted EBITA for continuing operations is down to a loss of £1.3m from a loss of £1.1m in 2014.

Adjusted EBITA from discontinued operations improved by 42% as a result of strong profit performance in the Gaming business. This improvement enabled the Group to realise the full value of this business when it was sold after year end.

Divisional PERFORMANCe - CONTINUING OPERATIONS

Following the disposal of iGaming Business in January 2016, the Directors have restructured the management of the Group's continuing operations and now organises its management and reporting around two market-facing divisions: Sport and Education.

SPORT DIVISION

The table above excludes the results of the iGaming Business Ltd which was sold on 4 January 2016 - see note 9.

The Sport division provides market information and knowledge to professionals in the global business of sport, particularly on media rights, sponsorship and event hosting.

Revenue in this division grew by 23%, with 59% of revenue from live or digital services in 2015 (53% in 2014). Subscriptions grew by 26% and now account for 67% of the revenue in this division (65% in 2014). Revenue from bespoke consulting projects also grew significantly and accounted for 11% of revenue (6% in 2014), whereas advertising reduced from 24% to 18% of divisional revenue. During the year the online sponsorship deals database was redeveloped to enhance the value of the Sports Sponsorship Insider service and the coverage of the Rights Tracker online database was broadened by further research.

The increase in revenues brought the division into profit in 2015, whilst still maintaining investment in development of our digital products and staff.

EDUCATion DIVISION

The table above now includes the results of the Speechmark business which was previously reported in the Health segment. The results of the Incentive Plus business which was sold on 15 October 2014 have been excluded- see note 9.

The Education division now includes the Optimus and Speechmark businesses. Optimus supports teachers' professional development requirements through an online subscription-based information and training service and through live conferences. Speechmark publishes books and other resources for speech and language therapists, mental health professionals and teachers in schools.

This business evolved further in 2015. New premium membership services were developed: Premium CPD, launched in 2014, is a subscription service providing schools with downloadable training courses and Unlimited CPD, launched in October 2015, gives access to all online membership services as well as Optimus conferences. These premium membership services grew through the year while subscriptions to the Knowledge Centre database of articles and case studies continued to decline. The conferences business had a more difficult year than in 2014 and book sales were lower following a decision to divest from this lower value activity. Following an external review, the business will now focus on conferences for a narrower group of school senior leaders alongside the Premium CPD and Unlimited services.

Speechmark revenues were down slightly although UK book sales increased by 8% driven by growing Amazon sales and a number of strong second editions.  

Central costs

These costs represent those central group costs which have not been recharged to the divisions and are therefore not included in the divisional results. They include Board fees and costs related to being both a public company and a Group as well as some of the costs of central functions such as HR, IT and unallocated property costs.

The Group maintained its central costs at broadly flat levels in 2015. For the current year, although we anticipate reducing central costs where possible, it is likely that central costs will be higher than in 2015 as a result of higher property costs and costs which were previously allocated to the businesses which have been sold.

Net interest payable is consistent with the reduction in the Group's debt due to loan repayments made in 2014 and 2015.

Julian Turner

Chief Executive

5 April 2016

OPERATING AND FINANCIAL REVIEW

A summary of the Group's financial results is given in the table above. Further details on revenue and adjusted profit performance are given in the Chief Executive's statement.

CONTINUING AND DISCONTINUED OPERATIONS

As noted in the Chairman's statement, during 2015 the Group disposed of Radcliffe Solutions and Radcliffe Publishing Ltd, and on 4 January 2016 the Group's 70% interest in iGaming Business Ltd was sold for £13.8m.

As the sale of the stake in iGaming Business Ltd was after the date of the balance sheet, its assets and liabilities have been separately classified as held for sale in the Consolidated Group Statement of Financial Position (see note 9). The Group will recognise the profit on the sale of its interest in iGaming Business in its 2016 results which will also show the sale's impact on cash balances.

The results of Radcliffe Solutions, Radcliffe Publishing and iGaming Business have been classed as discontinued operations in 2015 as they no longer form part of the Group and our 2014 results have been restated accordingly. The total net profit from discontinued operations (net of tax) included in the Consolidated Statement of Comprehensive Income is £374,000 (2014: £382,000).

The profit from discontinued operations in 2015 is net of a tax charge of £1.2m arising from de-recognition of a deferred tax asset as a result of the disposal of iGaming Business. In accordance with International Financial Reporting Standards, the deferred tax charge has been recognised at 30 November 2015 as the reduction in the value of the deferred tax asset was reasonably foreseeable, whilst the profit on disposal will be recognised in 2016 aligned with the date the transaction completed.

Further details of results from discontinued operations are given in notes 9 and 26.

ADJUSTED AND STATUTORY RESULTS

In these results we refer to adjusted and statutory results. Adjusted results are prepared to provide a more comparable indication of the Group's underlying business performance. A reconciliation of statutory results to adjusted results is given in note 5, and further details of adjusting items are given below.

Amortisation

Amortisation of intangible fixed assets for continuing operations charged in 2015 amounted to £470,000 (2014: £471,000). Details of intangible fixed assets are given in note 12.

Impairment charges

An impairment expense of £1m has been recognised in 2015 against the carrying value of goodwill in the Optimus business. This reflects declining subscriptions to the Knowledge Centre product and the decision to focus the business on the conference and premium subscription products following an external review of the business. Further details are given in note 11.

There were no impairment charges recognised in 2014 in continuing operations. Impairment charges of £778,000 were booked in 2014 discontinued operations comprising £414,000 and £364,000 in impairments recognised on Radcliffe Solutions Ltd's goodwill and intangible assets respectively.

Restructuring costs

There were no restructuring costs in 2015 in relation to continuing operations. In 2014, a restructuring charge of £91,000 was incurred relating to the cost of making changes to the Education senior management and content teams.

Share-based payment charges

Share-based payment charges are recognised to spread the fair value of each award over the vesting period on a straight-line basis, after allowing for an estimate of the share awards that will actually vest. The expense recognised in 2015 was £66,000 (2014: £270,000).

OTHER KEY FINANCIAL ITEMS

Capital expenditure

During the year, the Group has invested an additional £286,000 in web development and enhancing its digital products (2014: £511,000). The majority of web development spend this financial year has concentrated on launching major enhancements to the Education subscriptions website, and further development of digital subscription products in Sports Business.

The Group also incurred £95,000 of additions to property, plant and equipment, the majority of which related to the fit-out of a new office (2014: £12,000).

Debt and cash flow

Net cash (note 27) at 30 November 2015 was £449,000 (2014: net debt of £389,000). The Group has gross bank debt (note 18) of £94,000 at November 2015 (2014: £389,000). This is being repaid over equal monthly instalments to May 2017.

Cash conversion rate

The high cash conversion rate in 2014 was primarily a result of significant pre-billing of 2015 events during 2014 and cash collection of annual subscriptions. In 2015, cash conversion was impacted by lower levels of cash collected against the iGaming 2016 London conference compared to the prior year, lower amounts of cash collected against annual Education subscriptions and the disposal of the Radcliffe Solutions business which used to bill software licences in advance.

In addition, Group cash flow has been impacted by £1,078,000 proceeds from the disposal of discontinued activities, bank loan repayments of £292,000 and the payment of £185,000 of dividends to the minority shareholder of iGaming Business Ltd.  

Earnings per share

Statutory diluted earnings per share from continuing and discontinued operations are 0.62p loss (2014: 0.35p loss). Adjusted diluted earnings per share (calculated using adjusted profit from continuing operations) are 0.33p loss (2014: 0.28p loss) reflecting the net impact of trading performance and investments made during the year as noted in the Business and Performance Review section of the Strategic Report.

Dividends

The Directors have not proposed a dividend to be paid in respect of 2015 (2014: £nil).

William Fawbert

Finance Director

5 April 2016

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 November 2015

2014 results have been restated to show the effect of operations which have been discontinued in the current period.

Of the profit for the financial year from discontinued operations, £143,000 (2014: £266,000) is attributable to equity holders of the parent and £231,000 (2014: £116,000) is attributable to the non-controlling interest.

CONSOLIDATED GROUP AND COMPANY STATEMENTS OF CHANGES IN EQUITY

For the year ended 30 November 2015

CONSOLIDATED GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION

As at 30 November 2015

These financial statements were approved by the Board of Directors and authorised for issue on 5 April 2016 and are signed on its behalf by:

Julian Turner William Fawbert

Chief Executive Finance Director

CONSOLIDATED AND COMPANY CASH FLOW STATEMENT

For the year ended 30 November 2015

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 November 2015

1. ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented. There have been no changes to accounting policies in the period.

BASIS OF PREPARATION

The financial statements have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union ("IFRS"), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.

The financial statements of the Group and the Parent Company have been prepared under the historical cost convention and in accordance with applicable accounting standards.

A discontinued operation is a component of the Group's business, the operations and cash flows of which represents a separate major line of business. Classification of a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale. When an operation is classified as a discontinued operation, the comparative statement of profit or loss is restated as if the operation had been discontinued from the start of the prior year. Comparative figures for the year to 30 November 2014 have been reclassified to reflect the results of the Radcliffe Solutions, Radcliffe Publishing and iGaming businesses as discontinued operations as a result of their disposals.

As permitted by Section 408 of the Companies Act 2006, no separate income statement is presented for the Company. The Company's loss for the year was £2,035,000 (2014: £2,569,000 loss).

Operating profit is defined as profit before tax but excluding net finance and related costs and investment income.

GOING CONCERN

The Group has made a loss for the year of £2,292,000 (2014: £1,289,000) and has net assets of £4,164,000 (2014: £6,687,000); notwithstanding this it has a net current liabilities position at 30 November 2015 of £373,000 (2014: £1,492,000). The level of bank debt has however reduced to £94,000 (2014:£389,000), and the Group also received net proceeds of £12.1m in January 2016 from the sale of iGaming Business Ltd. The Directors have prepared group cash flow forecasts for the period ending 30 November 2018, which take into account known factors in the business including the disposal of iGaming Business Ltd in January 2016. These forecasts indicate that the Group will continue to meet its liabilities and bank debt requirements as they fall due for the foreseeable future. The business is currently trading in line with these forecasts. In the event of forecast trading levels not being met due to a weaker economic climate than forecast, the Directors have the scope to take further actions to enable the group to meet its liabilities as they fall due for the foreseeable future and for it to remain within its financial covenants and financial facilities. On this basis the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Within the consolidated and company financial statements there are a number of areas where management has to include their best estimate of likely outcomes based on their first-hand knowledge of the markets and situation. The preparation of consolidated and company financial statements will require management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these consolidated and company financial statements, the significant judgements made by management in applying the accounting policies and the key sources of estimation uncertainty were:

· Valuation and asset lives of intangible assets - which are based on management's considered opinion of what has been bought and what value it is to the Group in the future. Valuation methodologies include the use of discounted cash flows, revenue and profit multiples, whilst asset lives are estimated on the type of asset acquired or generated and range between three and ten years;

· Impairment of assets - assets are subject to at least annual impairment reviews and testing, and the running of these tests and the numbers that form part of them will be based as far as possible on actual known results but will by nature include predictions of future outcomes. The asset carrying values are compared to estimates of the assets' value in use. This value in use is calculated by looking at the cash generating units underlying the assets and management estimating the future cash flows after applying a suitable discount factor. The estimates of future cash flows are based on detailed forecasts produced by management. Assumptions on the goodwill assets are given in note 11;

· Provisioning: both trade receivables for bad debt and inventories for returns and obsolescence are reviewed for potential write down. The provisions created to cover these areas are based on managements' experience and considered opinion of the assets' current value;

· Contingent consideration: provisions are made at the Directors' best estimate of what the consideration will be but as based on future results it can only be assessed on current knowledge and expectations with no certainty. The provisions made are considerably under the maximum amounts which could be payable

· Valuation of share based payments - which are calculated from modelling including estimates of non-transferability, exercise restrictions, and behavioural considerations, including such factors as the volatility of the Company's share price. These inputs and the methods are set out in note 28;

· Deferred tax: both assets and liabilities require judgement in determining the amounts to be recognised, in particular the extent to which assets should be recognised in consideration of the timing and level of future taxable income.

An analysis of the Group's income from continuing operations is as follows:

Segmental information is presented in respect of the Group's business divisions. This format is based on the Group's management and internal reporting structure, as reviewed by the Board when reviewing performance, allocating resources and making strategic decisions. Following the disposal of iGaming Business Ltd, the Directors have restructured the management of the Group's continuing operations and now organises its management and reporting around two market-facing divisions: Education and Sport.

· Sport (S): provides insight, data and analysis to the business communities behind sport.

· Education (E): provides professional education, development, training and resources to professional communities in schools and other institutions including school managers, teachers, speech and language therapists and special needs co-ordinators.

· Central costs (PLC): the group function represents central costs which are not directly related to the Divisions' trading and are not recharged. Finance costs and investment income are also included here as these are driven by central policy which manages the cash position across the Group.

Operating profit is defined in note 1. The sector analysis includes the adjusted operating profit (note 5) to allow shareholders to gain a further understanding of the trading performance of the Group and is considered by the Board alongside operating profit and profit before tax to assess performance and review strategy.

As described in note 9, three businesses have been classed as discontinued in the current year. The information in the table below excludes amounts relating to discontinued activities and 2014 comparatives have been restated accordingly

The UK is the Group's country of domicile and the majority of revenues from external customers is generated there. There are no inter-segmental sales. An analysis of continuing revenues split by customers' country of origin is given below.

The average monthly number of persons (including directors) employed by the Group during the year, analysed by category, was as follows:

Their aggregate remuneration comprised:

This remuneration is included in other operating expenses except for: £1,314,000 (2014: £1,759,000) in discontinued operations, £24,000 (2014: £144,000) included in cost of sales - direct costs; £220,000 (2014: £131,000) included in cost of sales - marketing expenses; £nil (2014: £91,000) included in restructuring costs and £170,000 (2014: £328,000) capitalised in intangible fixed assets for web site development.

The Group considers that the Board of Directors are the key management personnel. Their remuneration is summarised in the Remuneration Report on page 22.

Adjusted profits are presented to allow shareholders to gain a further understanding of the trading performance of the Group. Profits are adjusted for items not considered by management to be part of the underlying trends in the business together with the related tax effect of those items. The adjustments add back items which have no cash impact or are not trade related and of a non-recurring type.

Adjusted figures exclude amortisation and impairment of goodwill and intangible assets, restructuring and acquisition-related costs, and share based payment costs, as well as the tax impact of those adjusting items and any non-cash tax charges.

As noted in the Strategic Report, the Group has disposed of the Radcliffe Solutions Ltd and the Radcliffe Publishing business during 2015, whilst the Group's 70% stake in iGaming Business Ltd was disposed of post year end. The results of these businesses have therefore been classed as discontinued and excluded from adjusted amounts in both 2015 and 2014 - see note 9. During 2014, the Group also incurred a restructuring charge of £91,000 related to the Education division.

The 2014 restructuring costs were considered to be taxable items for corporation tax and thus attributable tax has been included in the period 21.7% of their value.

A reconciliation of operating profit to Adjusted EBITA split between continuing and discontinued operation is given in the table below. Further detail on discontinued operations is given in note 9.

Other operating expenses as disclosed on the face of the income statement include staff costs (note 4) of £4,078,000 (2014: £3,917,000) and premises costs of £463,000 (2014: £390,000).

In 2015, impairment charges of £1,000,000 have been recognised in respect of goodwill as described in note 11 (2014: £nil).

There were no impairment charges recognised in discontinued operations in 2015. In 2014, impairment charges of £778,000 were recognised in respect of Radcliffe Solutions included in discontinued operations. £414,000 related to goodwill and £364,000 was in respect of intangible fixed assets.

Amounts payable to KPMG LLP and their associates in respect of both audit and non-audit services are as follows: