Interim Results

17 August 2012

ELECTRIC WORD PLC

Interim Results to 31 May 2012

Electric Word, the specialist information publisher, announced today interim results for the six months ended 31 May 2012 and plans to raise funds for additional investment through a Firm Placing and Open Offer.

Financial Headlines

·; Revenue of £7.7m flat on prior year, with 2011 restructuring reducing activity in the Education division compensated by growth in Health and Sport & Gaming

·; Education division returns to profit* from continuing activities with £0.1m profit (2011: £0.1m loss), from 2011 restructuring and improved event bookings

·; Adjusted profit before tax* of £0.4m (May 2011: £0.5m) through a period of much investment and development across all three divisions

·; Net debt† remains at £1.7m (May 2011: £1.7m)

·; £1.2m net Firm Placing to fund accelerated development and enhance value

·; Open Offer to allow existing shareholders to subscribe for shares at the same price as the Firm Placing

* Adjusted numbers (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 (which relate to movements on deferred tax such as the use of tax losses or tax credits from recognition of tax losses).

† Net debt (note 7) includes bank cash, overdrafts and loans, and deferred and contingent consideration.

Operational Headlines

·; Education division: successfully launched online subscription service for schools offering regulatory information, case studies and advice across many different staff roles; investment now in selling and marketing the new service

·; Health division: maintains revenue despite significant change both in the sector and products; investment now in marketing with substantial online development starting

·; Sport & Gaming division: launched new sponsorship deals data product; further investment in media rights and gaming

·; Proposed accelerated investment in the second half of the year

·; Opportunities for organic growth in all sectors

Julian Turner, Chief Executive of Electric Word, commented:

"We are engaged in a programme of investment to create businesses of lasting value in each of our markets. We have continued this programme despite the difficult trading conditions that we have faced in public sector markets because we see new opportunity in the structural changes that are taking place. While the turbulence is likely to continue for some time, particularly in the Health sector, we are taking the opportunity to build products and market positions to deliver future growth. The additional funds raised will allow us to accelerate that process as we seek to deliver significant increases in value across all three divisions in the coming years."

* Adjusted numbers (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 (which relate to movements on deferred tax such as the use of tax losses or tax credits from recognition of tax losses).

† Net debt (note 7) includes bank cash, overdrafts and loans, and deferred and contingent consideration.

ENDS

Notes to Editors

Electric Word plc is a specialist media company supporting professional education, compliance and management through a wide range of digital, paper and live formats to three market-facing divisions:

·; Education: provides school management and professional development information through an online subscription service supplemented by conferences and training products.

·; Health: provides professional education and training products for doctors, healthcare managers, speech therapists, elderly care professionals, and other health professionals as well as HR management and training compliance software.

·; Sport & Gaming: is an international provider of insight, data and analysis to professionals in both the business of sport (working in governing bodies, the media, sports marketing, sponsorship, and club and event management) and the online gaming industry (serving both the industry itself and its marketing affiliates).

The range of products and services offered to communities within these divisions include subscription websites, journals, magazines, events, training, books, special reports and bespoke research, and consultancy; with a concentration on activities with potential for higher margins and greater scale, such as site-level subscriptions and other services, consultancy and events.

The Group's aim is to support its customers in achieving their key commercial and professional objectives through higher-value advice, compliance reporting, professional development and decision-critical data. The Group aims to achieve this by employing teams immersed in their sectors that understand the challenges within those sectors and their customers' key requirements through close relationships.

In the six months to 31 May 2012, 63% (2011: 60%) of revenue came from selling content, including 24% (2011: 23%) from subscription revenue, and 37% (2011: 40%) from selling access to communities within the three divisions.

In the period the Group launched its online service for its Education subscription base, which significantly enhances the previous print periodical offerings.

Electric Word plc

INTERIM RESULTS TO 31 May 2012

Each of the Group's three divisions has made progress in developing its businesses despite what continues to be a challenging economic backdrop, particularly in the public sector markets.

The Education division has returned to profit* in the period (excluding the disposed of consumer arm) through stronger event bookings since quarter 4 last year and from the restructuring work last year improving margins and removing loss making products. This is achieved despite investment in development and sales of its online subscription service for managers in schools, which was successfully launched on schedule in January. The Optimus subscription service is supplemented by its well-established live events and new self-delivered training products to provide a broad range of school management and professional development resources.

The Health division has increased revenues on an organic basis despite a period of great uncertainty and change throughout the sector. Profits were reduced in the six months to May 2012 compared to the six months to May 2011, due to a combination of investment in building this relatively new division (notably in adding a marketing team) and the transition of Radcliffe Solutions' HR software products from a single central contract to individual sales to the Trusts. On the latter, the Board believes that ultimately this will create additional opportunity and the effect was known and planned into the long-term development of the business.

The Sport & Gaming division saw a harder trading environment during the first half of the year after strong growth in 2011 but still produced an operating margin* of 22% (six months to May 2011: 27%; six months to November 2011: 28%) while investing in the launch of a new subscription service for the sponsorship market. Within the division the gaming and TV Sports Markets areas have grown profits in this period, but advertising in SportBusiness was lower.

* Adjusted numbers (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 (which relate to movements on deferred tax such as the use of tax losses or tax credits from recognition of tax losses).

EDUCATION division

The above results exclude 'The School Run' which was disposed of for no consideration in April 2012 (note 9). This contributed revenue of £110,000 (31 May 2011: £153,000; 30 November 2011: £329,000) and adjusted EBITA* of £129,000 loss (31 May 2011: £111,000 loss; 30 November 2011: £167,000 loss) before disposal whilst the Group now receives a licence income calculated as a percentage of revenue.

In January, the Optimus Education online subscription information service for schools was launched. This replaces fourteen role-specific newsletters which were sold to individuals in the school communities and contained news and case studies. These were supported in key areas by separately marketed conferences and books.

The new service continues the news and case studies of the newsletters and indeed in the near term the newsletters continue to be printed to support the transition while the new site and the added value it brings are introduced to the market. The enhanced service includes areas of frequently updated content, practical case studies and the opportunity to ask advice from a panel of experts if the information sought cannot be found on site. Rather than being role specific, the online service is split into seven broader areas each engaging several members of the school's senior team. This allows better sharing of knowledge and, when the seven are taken together, provides comprehensive support for a school's key managerial roles including Heads, Deputies, Governors and middle managers working in special needs, child protection, teacher education and early years.

Within these subject areas the sites then market other relevant Optimus resources such as conferences, training resources and books and allow individual employees of a subscribing school to manage all of their Optimus products. Training resources were launched in the period and are a higher priced product than the book products which were cut in the 2011 restructuring and are perceived as being a better fit with customer needs.

Customer feedback has been very positive but the migration process is at the early stage of a journey which is expected to result in more users per site and, ultimately, higher average revenues as the benefits of the improved service are recognised.

The period's lower revenue is due to the reduction in the range of books following last year's restructuring, but which has seen it become profitable this period, and the catalogue business which continues to be hardest hit by squeezed public sector spending. The profit impact here has been greatly reduced through the warehouse and fulfilment outsourcing which also formed part of the prior year restructuring. The catalogue will in future focus on special educational needs.

With Optimus conferences continuing the stronger performance seen at the very end of last year, and now delivering higher profits from fewer events off higher average delegates, the division has been able to rebuild its products while still delivering a profit in the period.

HEALTH division

There are three main strands to the Group's Health division as well as its original consumer business. Radcliffe Publishing, acquired in November 2010, provides doctors, medical students and healthcare managers with professional education and training products. Speechmark, acquired in October 2007, publishes books and resources for speech therapists and mental health and elderly care professionals. Radcliffe Solutions, acquired in April 2011, has developed HR software to measure and report on compliance and staff performance within health and social care organisations.

The three businesses have been pulled together to share knowledge and cross-over opportunities. The current stage is one of integrating the books publishing businesses, developing new marketing channels and building data. The increased investment in staff has reduced profits year on year and the investment will continue and deepen into a programme of online development as new digital products evolve and the Group's web development team shifts focus from the Education division to Health over the course of this year.

Targeted niche communities are being identified around key products such as Radcliffe Publishing's journals with a target of delivering their professional education needs, which will be provided online in many cases.

Double digit margins have been maintained through this period, despite static revenues and investment costs. Revenue has declined in the consumer arm (with limited profit impact) and in the HR software business, Radcliffe Solutions. This business was originally built around a centrally funded contract to provide a system for online appraisals for NHS staff. This contract expired in March 2012 and the system is now being sold to individual Trusts along with a separate system for recording and managing staff training for compliance and insurance risk purposes. Through the current period of NHS Trust mergers and rationalisation this process is understandably slow. In the medium term the direct contracts are expected to offer growth opportunities as the cost savings and management benefits that the system provides are recognised through a number of established users, including all Trusts in Scotland, and with new strategic consultancy services potentially added. Investment has been and continues to be made to cover these sales opportunities.

SPORT & GAMING division

The division contains three main businesses, all with long-term growth potential and reasonable scale.

In the online gaming sector organic revenue growth has continued in both the events and paid information products. To support that, investment has been made in both the sales team, in the expectation that it will deliver revenues in future years, and in new products, with the launch of a North American edition of the business magazine and planned launches of social gaming events later in the year. Further opportunities exist and will be evaluated to launch or expand where possible including consideration of all US opportunities and further online revenues.

TV Sports Markets operates a high-value online deals analysis subscription service and a research and consultancy business for the media rights industry. It has shown strong revenue growth but much of that has been reinvested in the sales team and building the consultancy arm. Further revenue growth and higher margins are expected to follow as yields continue to grow and the subscription business matures.

In SportBusiness, a similar model is being developed in the area of sponsorship deals with the launch of the new product earlier in 2012, Sports Marketing Frontiers. As a new subscription business it will carry an investment cost in this year whilst the SportBusiness Intelligence consultancy, launched in 2011, is growing. The other products in this area include Sports Business International magazine, for professionals working in sport governing bodies, media and club or event management, in which advertising has been lower than the previous year, and contract publishing, including for example a tablet magazine for the sport of fencing.

Central costs

Despite the acquisitions in the previous years, the Group's central costs continue to represent only 4% of the Group's revenue. The amount has increased marginally over the previous year with no significant factors.

FINANCIAL REVIEW

The Group has secured a new term loan with its bank in the period (note 7), increasing the length of the loan by 30 months but otherwise on consistent terms.

Outsourcing cash collection to the company fulfilling warehousing and customer services has reduced cash conversion in the year while bringing benefits in flexibility and cost. Otherwise, the underlying cash performance of the Group remains in line with previous periods.

Trade debt and trade payables decreased by abnormally high amounts in first half 2011 as both were increased by acquisition impacts.

The expensed investments will weaken margins in the short term and reduce cash conversion. The intended placing funds are intended to cover that working capital deficit and provide for capital investment as the business continues to develop its products and markets.

FUND RAISING

The Board believes that the Group's three divisions each contain publishing assets whose value can be significantly enhanced over the medium term through an accelerated programme of investment in the short term. Maximising the potential of each division should reflect positively on the Group and marry with the focus on growing shareholder value.

The fundraising (note 11) will enable the Group to accelerate and extend these investments by providing additional funds to invest and the working capital appropriate for a period of significant change and development.

The Company intends to use the funds to: increase web development capacity; pay for additional content for new digital products; strengthen senior management; reduce bank debt to improve terms and flexibility; and for general working capital purposes as required by this heavy investment programme.

The Company has received credit committee approval from its Bank, subject to entering into legally binding documentation, to amend the current facility agreement:

i. to permit the Company to make an accelerated repayment of £250,000 of its existing term loan (previously payable as £125,000 on 1 November both 2012 and 2013); and

ii. to provide the Company with improved banking terms which will provide the Company with greater financial headroom.

This in turn will enable the Company to accelerate its investment programme across its three divisions.

The binding agreement with the Bank will be conditional on the Firm Placing becoming unconditional in all respects. The fundraising is conditional on, amongst other things, a binding agreement being entered into with the Bank and the Directors anticipate this being in place prior to the General Meeting (details of which are set out in note 11).

Current Trading and Prospects

Current trading is in line with the Board's expectations but will be impacted by its plans to accelerate its programme of investment through the rest of the year. This takes place against a background that includes a number of short term risks and opportunities. The migration online of the Education subscriptions business is a significant change and will take time to become established. In the Health division, the customers for Radcliffe Solutions' HR software business are going through considerable and rapid change. Both offer great opportunity in the medium term but with short term variables. At the same time, the Group is building on its previous investment in a new online publishing system to develop new digital products in the Health and Sport & Gaming divisions, with the objective of adding to the long-term value of those businesses.

The equity fundraising announced with these results will allow the business the scope and capital to speed up these investments to take full advantage of the Group's opportunities over the next three years. This will have a short term adverse impact on profitability but is expected to leave the businesses in a much stronger position in the medium term.

Peter Rigby Chairman

Julian Turner Chief Executive

Electric Word plc

The result for the period arises from the Group's continuing operations (note 9).

Electric Word plc

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period ended 31 May 2012 - unaudited

Electric Word plc

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 31 May 2012 - unaudited

Electric Word plc

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 May 2012 - unaudited

Electric Word plc

CONSOLIDATED CASH FLOW STATEMENT

For the period ended 31 May 2012 - unaudited

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 2012 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 2012 and the comparative information for the six months ended 31 May 2011 are not audited by the Group's auditors. The comparative figures for the financial year ended 30 November 2011 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 2011 are available upon request from the Company's registered office at 33-41 Dallington Street, London, EC1V 0BB or at www.electricwordplc.com.

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 2011.

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 2011.

GOING CONCERN

The Group has a net current liability position as at 31 May 2012 at £1,811,000 (31 May 2011: £664,000 and 30 November 2011 £1,903,000). The directors have prepared Group cash flow forecasts for the period ending 30 November 2013. 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. There is long-term financing in place with the Group's bank debt converted in May 2012 to a term loan with repayments over the period to May 2017 (note 7). The Group continues to maintain positive cash flows excluding acquisition spend. 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 seen 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;

·; Health (H): provides professional education and training products for doctors and healthcare managers, speech therapists and mental health and elderly care professionals, and athletes, coaches and sports injury therapists;

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

·; Central costs (PLC): the group function represents central PLC costs which are not directly related to the sector 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 positions across the Group.

The sector analysis includes the adjusted definition of 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.

2 SEGMENTAL INFORMATION (continued)

3 ADJUSTED PROFITS

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

Adjusted numbers exclude amortisation and impairment of goodwill and intangible assets, restructuring and acquisition-related costs and share based payment costs, and any related tax impact of those, and non-cash tax charges. Non-cash tax charges relate to movements on deferred tax such as the use of tax losses and tax credits from recognition of tax losses.

A reduction to goodwill of £32,000 (31 May 2011: £112,000 and 30 November 2011 £151,000) was booked under IFRS in relation to the acquisition of DMWSL 370 Limited. The acquired entity contained substantial unrecognised tax losses which on subsequent recognition cause a reduction of the goodwill recognised at the acquisition date.

The restructuring costs in 2012 relate to the disposal of the trade 'The School Run' (note 9). Costs include the related professional fees, asset write offs and redundancies where staff did not transfer across. These restructuring costs were all considered to be taxable items for corporation tax and thus attributable tax has been added back in the relevant periods at the relevant rate (note 4). All other adjusting items do not have a tax affect on the Group.

Acquisition-related costs in the period reflect a total of £307,000 of credits from reductions in the provisions for contingent consideration (note 7).

4 TAXATION

UK corporation tax is calculated in 2012 at 24.7% as 26% for the first four months of the financial year and 24% for the remainder (2011: 26.7% as 28% for the first four months of the financial year and 26% for the remainder) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

The total tax charge can be reconciled to the accounting profit as follows:

5 DIVIDENDS

The directors do not recommend the payment of a dividend.

6 EARNINGS PER SHARE

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

7 ANALYSIS OF NET DEBT

Bank net debt

The Group has two types of lending facility from its Bankers. The first is an overdraft facility of £750,000 which when utilised is repayable on demand and charges an effective interest rate of 2.5% over the lending Bank's base rate.

The second is a term loan facility which was due to expire in November 2014. This was converted in May 2012 into a new term loan with an extended repayment profile out to May 2017. Other terms are consistent with the original loan with interest payable at 4.25% over LIBOR.

Acquisition consideration

On the acquisitions of Radcliffe Publishing and Ikonami there is deferred and contingent consideration debt. On Radcliffe there is an earn out dependent on the gross profit in the year to November 2012 with £150,000 (2011: £257,000) provided against a maximum of £800,000. On Ikonami deferred consideration of £150,000 is due in January 2013 and there is contingent consideration based on profit in the year to November 2013 with £350,000 (2011: £550,000) provided net of notional interest (£26,000 yet to be charged as at 31 May 2012) against a maximum of £2,000,000.

8 CAPITAL AND RESERVES

In this period no share options have been exercised (31 May 2011: 198,918 and 30 November 2011: 198,918).

The reserve for own shares relates to the Share Incentive Plan under which the Group owns 1,652,094 shares (31 May 2011: 1,689,871 shares; 30 November 2011: 1,652,094 shares).

9 BUSINESS COMBINATIONS, TRADE CONTRACT BUYOUTS AND DISPOSALS

Business combinations

Cash paid net of cash acquired: