Half Yearly Report

24 August 2015

ELECTRIC WORD PLC

Interim Results to 31 May 2015

Electric Word, the specialist information business with divisions operating in the Sport and Gaming, Education and Health sectors, announced today interim results for the six months ended 31 May 2015.

Julian Turner, Chief Executive of Electric Word, commented:

"The group is in a strong position at the mid-year, having increased our focus and strengthened our balance sheet through improved cash generation and the disposal of non-core businesses. We have a clear plan to drive growth through a new generation of premium, digital subscription products and continue to invest in the resources and expertise we need to achieve that."

Electric Word plc

INTERIM RESULTS TO 31 May 2015

Comparative figures for the year to 30 November 2014 and six months to 31 May 2014 have been restated to reclassify the results of the Sports Performance, Incentive Plus, Radcliffe Solutions and Radcliffe Publishing businesses as discontinued as a result of their disposals. See note 8.

* Adjusted figures (note 3) exclude amortisation, impairment of goodwill and intangible assets, acquisition-related and restructuring 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.

† Net funds / (debt) (note 6) comprise cash held net of bank overdrafts and loans.

ENDS

GROUP OVERVIEW

* Adjusted figures (note 3) exclude amortisation and impairment of goodwill and intangible assets, acquisition-related and restructuring costs, and share based payment costs, as well as the tax impact of those adjusting items and any non-cash tax credits and charges.

The Group's strategy has been to increase the value that it adds for its customers by creating products and services that support their critical decisions and the achievement of their key organisational objectives. This has required a deeper engagement with our customers as well as some significant investments. Inevitably, in following this path, we have had to make some choices and are now doing fewer things, of greater value and on a larger scale.

The first half of 2015 has seen good progress towards these strategic objectives. The process of increasing focus has continued with the successful disposal of both Radcliffe Solutions and Radcliffe Publishing for a total of over £1m in cash. For the year ended 30 November 2014, the discontinued businesses contributed aggregate revenues of £1.7m and Adjusted EBITA of £0.4m loss. The impact of these disposals is therefore profit enhancing for the Group and they also added £1m in cash (of which £0.9m was received after the period end).

Cash generation from operating activities has been strong, increasing by 67% to £685k. This combined with the benefit of disposals put the Group in a net cash position, give the Group its strongest balance sheet for many years and put it in an excellent position to invest in the businesses that will drive future growth.

Our investment in the last two years has principally been in digital products and this has produced increased sales of higher-value, premium products which have pushed up average customer values in both SportBusiness and Optimus Education. The investment in digital development will continue across the Group, and is expected to drive an increase in the value of the Group's key brands in line with the goal of maximising shareholder value in the medium term.

SPORT & GAMING division

The Sport and Gaming division provides market information and knowledge to professionals in the global businesses of sport and online gaming. In this division, 73% of revenue was from live or digital products in the first half of 2015. IGaming's London conference successfully transitioned to Olympia in February and overall revenue from live events in the division grew by 9%. The June Amsterdam event was also successful. Subscription revenue is primarily from digital products and grew by 34%. This strong growth was driven by increases in the average customer value of all products but most notably TV Sports Markets, as a result of the introduction of the new premium TVSM Rights Tracker data visualisation tool.

EDUCATION divisioN

The table above excludes the results of the Incentive Plus business which was sold on 15 October 2014 - see note 8

The Optimus Education division supports teachers' professional development requirements through an online subscription-based information and training service and through live conferences.

This business is changing rapidly, with strong growth seen from its new, premium online professional development service but declining revenues in its information products. Conferences revenue was also lower than in 2014, partly as a result of moving some events into the second half of this year and partly as a result of some of the market preferring other formats. We are continuing to invest in our products that address this customer need.

The Group sees a large opportunity in scaling up its new higher-value professional development service, which will continue to evolve and improve. We believe this service will represent an efficient and cost-effective solution to schools' needs in this critical area at a time when the education market is changing rapidly with many schools becoming independent of their local authority and consequently having growing needs for support from elsewhere.

HEALTH division

The table above excludes the results of the Sports Performance business which was sold on 30 May 2014, and Radcliffe Solutions Ltd which was sold on 28 January 2015. It also excludes the results from Radcliffe Publishing, whose business and assets were sold on 19 June 2015 - see note 8.

Following the recent sales of Radcliffe Solutions and Radcliffe Publishing in 2015 and Sports Performance in 2014, the Health division is now solely focused on the Speechmark publishing business. Speechmark has a range of professional development, therapeutic and diagnostic tools aimed primarily at speech therapists in the healthcare and education sectors. It sells internationally as well as in the UK.

During the course of 2015, whilst Speechmark sales have remained flat, profitability of the legacy books and resources business has improved. Investment in digital products has continued and we now have five digital products fully launched.

Central costs

Central costs have increased as a result of moving offices in March 2015. Lower interest costs result from reduced levels of bank debt following loan repayments made in 2014 and 2015.

FINANCIAL REVIEW

Cash flow from operating activities was £685k for the period to 31 May 2015, compared to £411k in 2014 and is a result of continued focus on working capital management. Deferred revenue from continuing operations increased compared to 2014 as a result of growth in pre-billed subscriptions, conferences and events. Cash flows were positively impacted by a greater proportion of pre-billed revenues being received compared to the prior period. In addition, Group cash flow has also been impacted by the repayment of £158k of bank loans, reducing bank debt to £228k, and the payment of £185k dividends to the minority shareholder of iGaming Business Ltd.

Initial proceeds from the sale of Radcliffe Publishing of £857k were received after period end in June 2015 and are therefore not reflected in the Condensed Consolidated Cash Flow Statement at 31 May 2015. The remaining £100k of proceeds are due to be paid in June 2016.

Current Trading and Prospects

Current trading is in line with the Board's expectations. As we enter the fourth quarter, which is an important contributor to the Group's overall performance, we are expecting continued strong performance from our Sport and iGaming businesses. In Education and Health, our confidence in the potential of our digital product offerings has encouraged us to continue the investment in product development. Advance bookings for fourth quarter education conferences have been ahead of 2014. Central costs in the second half of the year will be lower than the first due to the one-off costs of the office move in March 2015.

Overall, we expect 2015 will be a year of continued profitable growth in Sport & Gaming coupled with targeted investments to create new value in Education and Health.

Andrew Brode Chairman

Julian Turner Chief Executive

Electric Word plc

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Prior period results have been restated to show the effect of operations which have been discontinued in the current and prior periods - see note 8. All of the loss from discontinued operations for the current and prior periods is attributable to equity holders of the parent.

Electric Word plc

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Electric Word plc

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Electric Word plc

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Electric Word plc

NOTES TO THE INTERIM REPORT

1 PRESENTATION OF INTERIM RESULTS

GENERAL INFORMATION

Electric Word plc (the "Company") is a company incorporated in the United Kingdom. The unaudited condensed set of consolidated financial statements as at May 2015 and for the six months then ended comprise those of the Company and its subsidiaries (together referred to as the "Group").

The information for the six months ended 31 May 2015 and the comparative information for the six months ended 31 May 2014 are not audited by the Group's auditors. The comparative figures for the financial year ended 30 November 2014 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The consolidated financial statements of the Group as at and for the year ended 30 November 2013 are available upon request from the Company's registered office at 2nd Floor, 5 Thomas More Square, London E1W 1YW or at www.electricwordplc.com.

The comparative information for the year to 30 November 2014 and the six months ended 31 May 2014 included in the condensed consolidated statements has been restated to reclassify the results of the Sports Performance, Incentive Plus, Radcliffe Solutions and Radcliffe Publishing businesses as discontinued as a result of their disposals. Further details are given in note 8.

ACCOUNTING POLICIES AND ESTIMATES

The financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards ("IFRS") as adopted for use in the European Union. The condensed set of consolidated financial statements included in this interim report has been prepared in accordance with International Accounting Standards 34 "Interim Financial Reporting", as adopted by the European Union.

The accounting policies, presentation and methods of computations applied by the Group in its consolidated financial statements are consistent with those applied by the Group in its consolidated financial statements for the year ended 30 November 2014.

The preparation of the condensed set of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and income and expense. Actual results may differ from these estimates.

In preparing these condensed set of consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that were applied to the consolidated financial statements as at and for the year ended 30 November 2014.

GOING CONCERN

The Group has a net current liability position as at 31 May 2015 at £1,552,000 (31 May 2014: £1,419,000 and 30 November 2014: £1,492,000). Excluding deferred revenues, the Group had net current assets of £1,980,000 (31 May 2014: £2,190,000 and 30 November 2014 £989,000). The level of net funds at 31 May 2015 is £11,000 (31 May 2014: Net debt of £89,000; 30 November 2014: Net debt of £389,000). The Directors have prepared group cash flow forecasts for the period ending 30 November 2017. 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 Directors also prepare a rolling 12-month cash flow forecast each month to monitor the Group's expected cash balances.

1 PRESENTATION OF INTERIM RESULTS (continued)

In the event of forecast trading levels not being met, 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. The Group currently has an overdraft facility of up to £750,000 which is currently not utilised. On this basis the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis.

2 SEGMENTAL INFORMATION

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 in its financial information used in allocating resources and making strategic decisions.

The format consists of three market sectors and a central function:

· Education (E): provides school management and professional development information to professional communities in schools and other institutions;

· Health (H): specialises in resources for speech therapists, special needs co-ordinators and teachers.

· Sport & Gaming (S&G): provides insight, data and analysis to the business communities behind sport and online gaming;

· 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.

The sector analysis includes adjusted operating profit (note 3) 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 8, four businesses have been classed as discontinued. The information in the table below excludes amounts relating to discontinued activities and 2014 comparatives have been restated accordingly.

2 SEGMENTAL INFORMATION (continued)

3 ADJUSTED PROFITS

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.

3 ADJUSTED PROFITS (continued)

4 TAXATION

Income tax expense has been calculated based on management's best estimate of the weighted average annual income tax rate expected for the year ending 30 November 2015.

5 EARNINGS PER SHARE

The calculation of earnings per ordinary share is based on the following:

6 ANALYSIS OF NET FUNDS

Bank net funds

The Group also has an overdraft facility of £750,000 which, when utilised, is repayable on demand and charges an effective interest rate of 4.5% over the lending Bank's base rate.

7 PROVISIONS

The provision of £60,000 at 31 May 2015 and 30 November 2014 relates to an estimate of dilapidation costs due on termination of a lease.

8 DISCONTINUED OPERATIONS

On 30 May 2014, the Group disposed of the Peak Performance and Sports Injury Bulletin businesses operated through its subsidiary P2P Publishing Ltd for cash consideration of £70,000. These businesses were included within the Health reportable segment.

On 15 October 2014, the Group disposed of the Incentive Plus business for cash consideration of £50,000. This business was included within the Education reportable segment.

On 28 January 2015, the Group disposed of the Radcliffe Solutions Ltd for cash consideration of £125,000 less a £4,000 working capital adjustment. At 30 November 2014, the net assets of Radcliffe Solutions were classified as assets held for sale. This business was included within the Health reportable segment.

On 19 June 2015, the Group disposed of the Radcliffe Publishing business for cash consideration of £957,000. The contractual effective date of the disposal, and the date on which control over the business passed to the buyer was 31 May 2015. This business was included within the Health reportable segment.

The combined results of all discontinued operations (ie Peak Performance, Sports Injury Bulletin, Incentive Plus, Radcliffe Solutions and Radcliffe Publishing) included in the loss for the period and condensed consolidated cash flow statement are set out below. The comparative profit and cash flows from discontinued operations have been restated to include those operations classified as discontinued in the current year.

8 DISCONTINUED OPERATIONS (continued)

9 BUSINESS COMBINATIONS

As described in note 8, on 28 January 2015, the Group disposed of Radcliffe Solutions Ltd ("RSL"). The Group also disposed of the Radcliffe Publishing business ("RP"), with an effective date of 31 May 2015. Details of the assets and liabilities disposed of, and the calculation of the profit and loss on disposal are given in the table below.

Notes to Editors

Electric Word plc is a specialist media group supporting professional development, compliance and management effectiveness 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 do their jobs better and enhance their careers. 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 subscription websites, journals, magazines, events, face-to-face training, online training, books, special reports, bespoke research and consultancy. Competencies developed in one sector can be transferred to another as opportunities arise.

The Group is composed of three market-facing divisions:

Sport & Gaming

This division provides business insight, data and analysis to professionals in the global businesses of sport and online gaming. SportBusiness Group provides subscription websites and magazines for sports industry professionals who work in governing bodies, the media, sports marketing, sponsorship and club and event management. iGaming Business provides events, subscription websites and magazines to both the online gaming industry itself and its marketing affiliates, providing this global and fast-growing industry with business-critical information and marketing support.

Education

The Education division, operating through the Optimus Education brand, supports the professional development of teachers and school leaders through an online subscription-based information and training service and through live conferences.

Health

Following the disposal of the Radcliffe Solutions and Radcliffe Publishing businesses, the Health division operates through the Speechmark brand and specialises in resources for speech therapists, special needs co-ordinators and teachers.