Placing

17 August 2012

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, JAPAN, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR THE REPUBLIC OF IRELAND

Electric Word plc

("Electric Word" or the "Company")

Firm Placing of 88.3 million Ordinary Shares at 1.5 pence per share to raise £1.3 million and Open Offer to raise up to £0.5m

Highlights:

·; Conditional Firm Placing at 1.5 pence per share to raise gross proceeds of £1.3 million

·; The Offer Price represents a discount of 7.7 per cent. to the closing price of 1.625 pence per Ordinary Share on 16 August 2012 (being the business day prior to the announcement of the Firm Placing and Open Offer).

·; Net proceeds of the Firm Placing to be used:

o to increase web development capacity and additional content for new digital products;

o to strengthen senior management resource;

o to reduce bank debt to improve terms and flexibility; and

o for general working capital purposes.

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

Julian Turner, Chief Executive, commented on the Firm Placing and Open Offer:

"The proceeds from the fundraising will allow the Company the scope and capital to speed up investments over the medium term to take full advantage of the Group's opportunities over the next three years and enhance value within all three divisions. This will have a short term adverse impact on profitability but is expected by the Board to leave the businesses in a much stronger position in the medium term."

This summary should be read in conjunction with the full text of this announcement. 

For further information please contact:

This announcement has been issued by, and is the sole responsibility of, Electric Word. This announcement does not constitute an offer to underwrite, subscribe or otherwise acquire or dispose of any new Ordinary Shares or other shares in Electric Word.

The Ordinary Shares have not been, and will not be registered under the United States Securities Act of 1933, as amended (the 'Securities Act') or under the securities legislation of any state of the United States, and may not be offered or sold in the United States. The relevant clearances have not been, and will not be, obtained from the Securities Commission of any province or territory of Canada; no document in relation to the Firm Placing and/ or Open Offer has been, or will be, lodged with, or registered by, The Australian Securities and Investments Commission; no registration statement has been, or will be, filed with the Japanese Ministry of Finance in relation to the Placing; and no registration statement has been, or will be, filed with the Irish Stock Exchange in relation to the Firm Placing and/ or Open Offer. Accordingly, subject to certain exceptions, the Ordinary Shares the subject of the Firm Placing and/ or Open Offer may not, directly or indirectly, be offered or sold within the United States, Canada, Australia, Japan or the Republic of Ireland or offered or sold to a resident of the United States, Canada, Australia, Japan or the Republic of Ireland.

This press release may contain forward-looking statements with respect to Electric Word and its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe" or "continue" or the negative thereof or similar variations. The actual results and performance of Electric Word could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the transactions contemplated herein are completed. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulation. The cautionary statements qualify all forward-looking statements attributable to Electric Word and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release and the parties have no obligation to update such statements.

Panmure Gordon (UK) Limited is authorised and regulated in the United Kingdom by The Financial Services Authority and is advising Electric Word and no-one else in connection with the Firm Placing and Open Offer and will not be responsible to any person other than Electric Word for providing the protections afforded to their clients or for advising any other person in relation to the Firm Placing and Open Offer.

Electric Word plc

("Electric Word" or the "Company")

Firm Placing of 88.3 million Ordinary Shares at 1.5 pence per share to raise £1.3 million and Open Offer to raise up to £0.5m

Electric Word plc (AIM: ELE), the specialist information publisher, is pleased to announce that it has raised £1.3 million before expenses through a placing of 88,333,334 new Ordinary Shares at 1.5 pence each. The Offer Price is at a discount of 7.7 per cent. to the closing price of 1.625 pence per Ordinary Share on 16 August 2012 (being the business day prior to the announcement of the Firm Placing and Open Offer).

Reasons for the Placing and Use of Proceeds

The Board of Electric Word believes that the Group's three divisions, Education, Health and Sport & Gaming, each contain publishing assets whose value can be significantly enhanced over the medium term through a programme of investment. The fundraising will enable the Group to accelerate and extend this programme of investment by providing additional funds to invest and the working capital appropriate for a period of significant change and development.

Financing Facilities

Electric Word currently has a £1.1m term loan with its bank, Royal Bank of Scotland plc, with interest charged at 4.25 per cent. over LIBOR and repayments spread between 2012 and 2017.

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 of 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 Firm Placing and Open Offer are conditional on the binding agreement being entered into with the bank and the Directors anticipate this being in place prior to the General Meeting.

Current Trading and Prospects

The Company today released its interim results for the 6 months to 31 May 2012 and included in the interim results is a statement by the Chairman and Chief Executive with regards to the Company's current trading and prospects. Below is an extract of this statement:

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.

Details of the Placing

The Company has conditionally raised £1.3 million before expenses by the Firm Placing of 88,333,334 New Ordinary Shares at the Offer Price to the Firm Placees.

The Firm Placing is conditional, inter alia, upon:

i. the passing of all of the Resolutions;

ii. a binding agreement being executed by the Company and the Bank confirming the amendments approved by the Bank's credit committee in principle;

iii. the Firm Placing and Open Offer Agreement becoming or being declared unconditional in all respects and not having been terminated in accordance with its terms prior to Admission; and

iv. Admission becoming effective by no later than 8.00 a.m. on 10 September 2012 or such later time and/or date (being no later than 8.00 a.m. on 19 September 2012) as Panmure Gordon and the Company may agree.

If any of the conditions are not satisfied, the Firm Placing Shares will not be issued and all monies received from the Firm Placees will be returned to them (at the Firm Placees' risk and without interest) as soon as possible thereafter.

The Firm Placing Shares are not subject to clawback and are not part of the Open Offer. The Firm Placing is not conditional on the completion of the Open Offer. The Firm Placing Shares (and the Offer Shares) will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the Admission of the Firm Placing Shares to trading on AIM. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 10 September 2012 at which time it is also expected that the Firm Placing Shares will be enabled for settlement in CREST.

Following discussions with ISIS, the Company's largest shareholder, conditional on completion of the Firm Placing, the Company has granted ISIS the right to appoint a representative of ISIS onto the Board. The Company will make an appropriate announcement to a Regulatory Information Service upon the new director's appointment.

Directors' participation in the Firm Placing

Julian Turner and Quentin Brocklebank are participating in the Firm Placing and have agreed to subscribe for 2,000,000 and 600,000 Firm Placing Shares respectively at the Offer Price. Julian Turner and Quentin Brocklebank have undertaken not to take up their entitlements under the Open Offer.

Details of the Open Offer

The Company is proposing to raise up to £0.5 million before expenses by the issue of 33,212,931 Offer Shares at the Offer Price to Qualifying Shareholders pursuant to the Open Offer.

Any Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility. The balance of any Offer Shares not subscribed for under the Excess Application Facility will not be available to Firm Placees under the Firm Placing.

Qualifying Shareholders may apply for Offer Shares under the Open Offer at the Offer Price on the following basis:

1 Offer Share for every 9 Existing Ordinary Shares

and so in proportion for any number of Existing Ordinary Shares held on the Record Date. Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Offer Shares. Fractional entitlements which would otherwise arise will not be issued to the Qualifying Shareholders but will be made available under the Excess Application Facility.

The Excess Application Facility enables Qualifying Shareholders to apply for Excess Shares in excess of their Open Offer Entitlement up to a maximum number of Offer Shares equal to 10 times the number of Existing Ordinary Shares registered in their name as at the Record Date. Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in certain overseas jurisdictions will not qualify to participate in the Open Offer.

Valid applications by Qualifying Shareholders will be satisfied in full up to their Open Offer Entitlements as shown on the Application Form for certificated Shareholders. Applicants can apply for less or more than their entitlements under the Open Offer but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied as this will depend in part on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements.

The Company may satisfy valid applications for Excess Shares of applicants in whole or in part but reserves the right not to satisfy any excess above any Open Offer Entitlement. The Board may scale back applications made in excess of Open Offer Entitlements on such basis as it reasonably considers to be appropriate.

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that such Open Offer Entitlements will be credited to CREST on 21 August 2012. The Open Offer Entitlements will be enabled for settlement in CREST until 11.00 a.m. on 4 September 2012. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of bona fide market claims. The Offer Shares must be paid in full on application. The latest time and date for receipt of completed Application Forms or CREST application and payment in respect of the Open Offer is 11.00 a.m. on 4 September 2012. The Open Offer is not being made to certain Overseas Shareholders.

Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore the Offer Shares which are not applied for by Qualifying Shareholders will not be sold in the market for the benefit of the Qualifying Shareholders who do not apply under the Open Offer. The Application Form is not a document of title and cannot be traded or otherwise transferred.

Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, are contained in Part 3 of the Circular which will be posted to shareholders today.

The Open Offer is conditional on the Firm Placing becoming or being declared unconditional in all respects and not being terminated before Admission.

Accordingly, if the conditions stated above under 'Details of the Placing' are not satisfied or waived (where capable of waiver), the Open Offer will not proceed and the Offer Shares will not be issued and all monies received by Computershare will be returned to the applicants (at the applicants' risk and without interest) as soon as possible thereafter. Any Open Offer Entitlements admitted to CREST will thereafter be disabled.

The Offer Shares (and the Firm Placing Shares) will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the Admission of the Offer Shares to trading on AIM. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 10 September 2012 at which time it is also expected that the Offer Shares will be enabled for settlement in CREST.

Related Party Transactions

Firm Placing

Stewart Newton (and entities associated with Stewart Newton) has agreed to subscribe for 25,000,000 Firm Placing Shares at the Offer Price pursuant to the Firm Placing. Stewart Newton (and entities associated with Stewart Newton) holds a beneficial interest in 78,873,524 Existing Ordinary Shares prior to the Firm Placing (representing 26.39 per cent. of the Existing Ordinary Shares of the Company). Following completion of the Firm Placing, the enlarged holding of Stewart Newton (and entities associated with Stewart Newton) in Electric Word is expected to be 103,873,524 Ordinary Shares representing 26.82 per cent. of the Enlarged Share Capital (assuming no take-up under the Open Offer). Stewart Newton (and entities associated with Stewart Newton) has undertaken not to take up his entitlement under the Open Offer.

ISIS has agreed to subscribe for 26,666,667 Firm Placing Shares at the Offer Price pursuant to the Firm Placing. ISIS holds 85,990,873 Existing Ordinary Shares prior to the Firm Placing (representing 28.77 per cent. of the Existing Ordinary Shares of the Company). Following completion of the Firm Placing, the enlarged holding of ISIS in Electric Word is expected to be 112,657,540 Ordinary Shares, representing 29.09 per cent. of the Enlarged Share Capital (assuming no take-up under the Open Offer). ISIS has undertaken not to take up its entitlement under the Open Offer.

Following discussions with ISIS, the Company's largest shareholder, conditional on completion of the Firm Placing, the Company has granted ISIS the right to appoint a representative of ISIS onto the Board. The Company will make an appropriate announcement to a Regulatory Information Service upon the new director's appointment.

Nigel Wray (and entities associated with Nigel Wray) has agreed to subscribe for 30,000,000 Firm Placing Shares at the Offer Price pursuant to the Firm Placing. Nigel Wray (and entities associated with Nigel Wray) holds a beneficial interest in 34,602,269 Existing Ordinary Shares prior to the Firm Placing (representing 11.58 per cent. of the Existing Ordinary Shares of the Company). Following completion of the Firm Placing, the enlarged holding of Nigel Wray (and entities associated with Nigel Wray) in Electric Word is expected to be 64,602,269 Ordinary Shares representing 16.68 per cent. of the Enlarged Share Capital (assuming no take-up under the Open Offer).

Under the AIM Rules for Companies, Stewart Newton (and entities associated with Stewart Newton that hold Ordinary Shares in the Company), ISIS and Nigel Wray (and entities associated with Nigel Wray that hold Ordinary Shares in the Company), are separately treated as related parties of Electric Word. The Directors of Electric Word consider, having consulted with Panmure Gordon, the Company's nominated adviser, that the terms of the Firm Placing are fair and reasonable insofar as its shareholders are concerned.

Taxation

The Directors believe that the New Ordinary Shares should be eligible (subject to the circumstances of investors) for tax reliefs under EIS and for investment by VCTs. The Company has obtained advance assurance from HMRC who confirmed that on the basis of information provided, (i) following receipt of a properly completed form EIS 1, they will be able to authorise the Company to issue certificates under section 204 ITA 2007 in respect of the New Ordinary Shares; and (ii) the New Ordinary Shares will be eligible shares for the purpose of section 285(3), ITA 2007 and may be part of a qualifying holding for the purposes of Chapter 4 of Part 6, ITA 2007. The Directors are not aware of any subsequent change in the qualifying conditions or the Company's circumstances that would prevent the New Ordinary Shares from being eligible VCT and EIS investments on this occasion. Further details with regards to Taxation are provided in Part 1 the Circular.

As the rules governing EIS and VCT reliefs are complex and interrelated with other legislation, if Shareholders or any potential investors are in any doubt as to their tax position, require more detailed information than the general outline above, or are subject to tax in a jurisdiction other than the United Kingdom, they should consult their professional adviser.

Definitions

The following definitions apply throughout this announcement, unless the context requires otherwise.