Preliminary Results

14 February 2017

ELECTRIC WORD PLC

Preliminary Results to 30 November 2016

Electric Word, the specialist information business providing information and consultancy to executives working in the business of Sport, today announced audited results for the year ended 30 November 2016.

HIGHLIGHTS

· Strategic refocus completed with disposals of the Group's stake in iGaming Business, Optimus Education and Speechmark Publishing, following 2015 disposals of Radcliffe Solutions and Radcliffe Publishing.

· Transformed Group now solely comprised of SportBusiness, a growing business focused on information and consultancy in sport.

· Group profit for the year of £9.2m (2015: £2.3m loss) including £10.7m profit (2015: £1.8m loss) from discontinued operations.

· £13.9m net cash inflow from disposals, leaves the Group with £13.0m net cash at 30 November 2016 (2015: £0.4m).

· Continuing revenues increased by 16% to £2.8m driven by subscriptions growth of 18% (2015: £2.4m).

· Adjusted EBITA* from trading activities (before central costs) increased by 124% to £0.34m (2015: £0.15m).

· Central costs increased from £0.7m to £1.3m due to lower re-charges to business divisions. Following the disposals, cost reductions are underway and due to complete in first half of 2017.

* Adjusted figures (note 5) exclude amortisation, impairment of goodwill and intangible assets, non-recurring items, restructuring credits and costs, 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 ended 2016 in a transformed position. The Group is now focused solely on the business of sport as a result of the successful disposals of iGaming Business, Optimus Education and Speechmark Publishing, and we are able to report a £9.2m profit for the year and a year-end cash balance of £13m. Our remaining business, SportBusiness, achieved revenue growth of 16% and Adjusted EBITA growth of 124% in 2016. Current trading is in line with the Board's expectations, with SportBusiness continuing to perform strongly and planned central cost reductions now taking effect, not least as a result of our move to new premises later this month."

Financial Summary

Comparative figures for the year to 30 November 2015 have been reclassified to reflect the results of iGaming Business Ltd, Optimus Education and Speechmark Publishing as discontinued operations as a result of their disposals. Further details of these disposals are given in note 9.

The audited report and accounts of the Company for the year ended 30 November 2016 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 information business providing market intelligence, decision-critical information and consultancy through a combination of digital, print and in-person formats.

Following the disposal of Optimus Education, Speechmark Publishing and the Group's stake in iGaming Business, the Group is now focused on one market-facing business. SportBusiness Group provides business insight, information and consultancy to executives who work in sport, in rights-owning bodies, the media, sports marketing, sponsorship and club and event management.

CHAIRMAN'S STATEMENT

Dear fellow shareholders,

Over the last few years, the Directors have been focussed on simplifying the Group in order to maximise value for shareholders and to direct resources to our businesses with the best prospects. This has taken much work which has largely come to fruition during the last year. In January, the Group's interest in iGaming was sold realising a profit of £11.8 million. Following this, a market review of Optimus, the education business, was completed. As well as focussing the Optimus business on conferences, the review led the Board to conclude that the business would benefit from being part of a larger organisation rather than for the Group to invest further. In November, this business was sold to Prospects Education Services, and realised £1.6 million gross cash consideration and £0.2 million profit on disposal. Around the same time, it was decided that Speechmark Publishing, which had been merged into the Education division, should also be sold and this was effected through a sale to Taylor & Francis also in November which resulted in cash consideration of £1.85 million and a £0.1 million profit. We end the year in a transformed position, with SportBusiness Group as our single continuing operation, a total reported profit of £9.2 million and with a significant cash balance.

SportBusiness itself has had a good year, achieving revenue growth of 16% and Adjusted EBITA growth of 124% as margins improved from 6% to 12%. This was driven by continued success in two areas in particular: TV Sports Markets subscriptions revenue (up 13%, driven by the Rights Tracker premium data add-on) and a particularly strong year for consultancy revenue in SportBusiness Intelligence (up 53%). These successes enabled the business to continue to build the newer Sport Sponsorship Insider product, where revenue grew 31% from a relatively low base.

Significant progress has been made in 2016 in order to reach the simplified position in which the Group has ended the year, and the Group has undergone a great deal of change. In particular, these disposals led to 55 people leaving the Group, the majority of whom continued to have a role with the new owners of the disposed businesses. The Board would like to thank all the people that have contributed to that process, but particularly our staff. They have all shown great resilience at a time of rapid change.

Since November, we have been working on bringing the scale of the Group's infrastructure and central costs to the appropriate level to support SportBusiness. We will be moving to new offices in February 2017 and we are introducing a simpler, more flexible cloud-based suite of technology. This will enable us to make further cost savings. In 2017, we plan to make further investment in Sports Sponsorship Insider as well as the SportBusiness online platform and we are committed to building our consultancy offering.

At the time that we announced the iGaming disposal, we also announced that we were considering making a capital return to shareholders subject to further analysis of the Group's cash requirements and growth opportunities. This consideration has taken longer than we expected as it became clear that we needed to address the performance of the Education division, which led to the disposal of Optimus as a first priority. We now anticipate updating shareholders during the first half of 2017.

Andrew Brode

Chairman

13 February 2017

CHIEF EXECUTIVE'S STATEMENT

BUSINESS MODEL AND STRATEGY

Business model

Electric Word plc is a specialist information group supporting commercial decision-making through a combination of digital, print and in-person formats.

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 provide information, expert analysis and consultancy in the form of subscription websites, magazines, in-depth reports and bespoke research and consultancy. Within this mix, we favour high-quality revenue streams from digital subscription services and tools that connect directly with customer workflows.

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 by innovating and developing new products in collaboration with our customers.

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 has been a simpler business that is better able to capitalise on the opportunities in our markets and the changing technology underpinning our sector. In 2016 we accomplished this with the disposal of our interests in the online gaming and education sectors. We are now focused on one market only, the business of sport. As a result of this simplification of the business we have embarked on a cost reduction programme to ensure that the cost base is at a level appropriate to our business objectives.

Operating segments

Following the disposal of iGaming Business, Optimus Education and Speechmark Publishing, the Directors have restructured the management of the Group's continuing operations and now organises its management and reporting around one market-facing division.

GROUP PERFORMANCE

Following the 2016 disposals of iGaming Business, Optimus Education and Speechmark Publishing, continuing operations now consist of SportBusiness Group, together with central costs. Continuing revenues increased by 16% compared to 2015, and this translated into a 15% increase in gross profits. Operating loss increased by £0.7 million due to £0.3 million of non-recurring costs as explained on page 11, and the continuation of certain costs which were previously allocated to the businesses which have been sold.

Profit from discontinued operations recognised in 2016 amounted to £10.7 million, comprising £1.4 million post-tax losses, offset by £12.1 million profits on disposal. In 2015, discontinued operations contributed a loss of £1.8 million to Group results. Further details are given in notes 9 and 26.

CONTINUING OPERATIONS

Trading activities

The Sport division comprises SportBusiness Group (SBG). SBG provides market information, analysis and advice to professionals in the global business of sport, particularly on media rights, sponsorship and event hosting.

Revenue in this division grew by 16% compared to 2015 with 65% of revenue from live or digital services in 2016 (59% in 2015). Subscriptions grew by 18% and now account for 69% of the revenue in this division (67% in 2015). Revenue from bespoke consulting increased by 53% compared to the prior year and accounted for 15% of revenues (11% in 2015), whereas advertising was 16% of 2016 divisional revenues (18% in 2015).

Revenues from TV Sports Markets grew by 13% as a result of a higher average customer value. This is as a result of increased penetration of users in customer businesses and more subscribers taking the premium Rights Tracker data service; TV Sports Markets represented 41% of SBG revenues in 2016.

We are continuing to develop our Sports Sponsorship Insider product and 2016 revenues have increased by 31% from 2015. This product is loss making due to its early stage of development and the fixed costs of building its database of sponsorship deals. We anticipate that revenue will continue to grow in the medium term and margins are therefore expected to improve.

Sports Business International magazine generated 34% of SBG revenues in 2016 (2015: 37%). Approximately 53% of revenues are subscriptions, and 47% are generated from advertising. This product earns a comparatively low margin but also provides an effective marketing channel for our other products and the business as a whole.

In 2017 SportBusiness Group priorities are to continue to build average revenue per customer, to further increase the market penetration of Sports Sponsorship Insider and to invest in building the capacity of the SportBusiness Intelligence advisory business.

Central costs

In the continuing operations, adjusted profits from trading (before central costs) increased from £152,000 to £340,000. However, overall losses increased to £996,000 due to a higher central cost component.

These costs represent those central group costs which have not been recharged to the trading businesses. 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 Finance, HR, IT and unallocated property costs.

As we have previously reported, 2016 central costs were higher than 2015 due to higher property costs and costs which were previously allocated to the businesses which have been sold. Following the disposals in 2016, we have taken steps to significantly reduce central costs including staff reductions and a planned move to a smaller, lower cost office in early 2017. There has been some cash outflow associated with the cost reductions but as a result, we anticipate that 2017 central costs will be significantly lower than the 2016 costs, with the new lower level being achieved in the second quarter.

Current trading

Current trading is in line with the Board's expectations, with SportBusiness continuing to perform strongly and planned central cost reductions coming to fruition.

Julian Turner

Chief Executive

13 February 2017

OPERATING AND FINANCIAL REVIEW

CONTINUING AND DISCONTINUED OPERATIONS

As noted in the Chairman's statement, on 4 January 2016, the Group disposed of its 70% interest in iGaming Business Ltd. As at 30 November 2015, the net assets of iGaming Business Ltd were classified as assets held for sale. The Group also disposed of Optimus Professional Publishing Ltd on 1 November 2016, and the trade and assets of Speechmark Publishing Ltd on 14 November 2016. Customary warranties and indemnities were included in the sale and purchase agreements for these disposals.

Details of the assets and liabilities disposed of, and the calculation of the profit and loss on disposal, are disclosed in note 26.

In 2015 the Group disposed of Radcliffe Solutions Ltd and Radcliffe Publishing businesses, and their results were included in 2015 discontinued operations.

The results of iGaming Business, Optimus and Speechmark have been classed as discontinued operations in 2016 as they no longer form part of the Group and our 2015 results have been restated accordingly. The total net profit from discontinued operations (net of tax) included in the Consolidated Statement of Comprehensive Income is £10,679,000 (2015: £1,838,000 loss).

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

ADJUSTED AND STATUTORY RESULTS

In this report, 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 full reconciliation of statutory results to adjusted results is given in note 5 and a summary of adjusting items affecting continuing operations is given below.

Amortisation

Amortisation of intangible fixed assets for continuing operations charged in 2016 amounted to £135,000 (2015: £124,000). Amortisation charged against discontinued operations was £337,000 (2015: £458,000). Details of intangible fixed assets are given in note 12.

Impairment charges

There were no impairment charges booked in continuing operations in 2016 or 2015. An impairment expense of £1,000,000 was recognised in 2015 discontinued operations against the carrying value of goodwill in the Optimus business.

Non-recurring costs

During 2016, the Group's continuing operations were charged £321,000 of non-recurring costs. These comprise £184,00 of costs associated with the strategic review of the Optimus Education business and £137,000 of redundancy costs arising from staff restructuring. There were no non-recurring items recognised in continuing operations in 2015.

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 2016 was £17,000 (2015: £66,000).

OTHER KEY FINANCIAL ITEMS

Capital expenditure

During the year, the Group has invested an additional £233,000 in web development and £18,000 in software to enhance its digital products (2015: £286,000). The majority of web development spend this financial year has concentrated on further development of digital subscription products in Sports Business and enhancements made to the Education products prior to the disposal of the Optimus and Speechmark businesses.

The Group also incurred £7,000 of additions to property, plant and equipment, in relation to computer equipment. 2015 additions amounted to £95,000, the majority of which related to office fit-out costs.

Net cash

As a result of the disposals made in the year, the Group holds net cash at 30 November 2016 of £12,976,000 (2015: net cash of £449,000) - see note 27. The Group has fully paid off its bank debt which is now £nil (2015: £94,000 gross bank debt).

Summary cash flow

Cash flow from operating activities has significantly decreased in 2016 primarily as a result of the disposal of iGaming Business in January 2016. iGaming Business was both profitable and generated relatively high positive cash flows as a result of significant pre-billing of events. Similarly, the disposal of Optimus in November 2016 has removed the cash generated from pre-billing of conferences scheduled for early 2017.

Cash flow from investing activities in 2016 has benefited from £13,909,000 of net cash proceeds from the business disposals arising in the year (see note 26). Other items include £258,000 of fixed asset additions and £34,000 of bank interest received as a result of carrying significant cash balances. 2015 investing activities included £721,000 net proceeds from the disposal of discontinued activities and £381,000 of fixed asset additions.

2016 cash flows from financing activities include bank loan repayments of £94,000 and £11,000 proceeds from the exercise of share options. 2015 cash flows comprised £292,000 of bank loan repayments 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 2.29p (2015: 0.62p loss). Adjusted diluted loss per share (calculated using adjusted loss from continuing operations) are 0.24p loss (2015: 0.12p loss).

Dividends

The Directors do not propose a dividend to be paid in respect of 2016 (2015: £nil).

William Fawbert

Finance Director

13 February 2017

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 November 2016

2015 results have been restated to show the effect of operations which have been discontinued in the current period.

Of the profit / (loss) for the financial year from discontinued operations, £10,806,000 (2015: £2,069,000 loss) is attributable to equity holders of the parent and £127,000 loss (2015: £231,000 profit) is attributable to the non-controlling interest.

CONSOLIDATED GROUP AND COMPANY STATEMENTS OF CHANGES IN EQUITY

For the year ended 30 November 2016

CONSOLIDATED GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION

As at 30 November 2016

These financial statements were approved by the Board of Directors and authorised for issue on 13 February 2017 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 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 November 2016

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 2015 have been reclassified to reflect the results of the Radcliffe Solutions, Radcliffe Publishing, iGaming, Optimus and Speechmark 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 £7,468,000 (2015: £2,035,000 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 profit for the year of £9,203,000 (2015: £2,292,000 loss) and at 30 November 2016 had net assets of £13,395,000 (2015: £4,164,000) and net current assets of £11,144,000 (2015: £373,000 net current liabilities). The level of bank debt has reduced to £nil (2015: £94,000). The Directors have prepared group cash flow forecasts for the period ending 30 November 2019, which take account of known factors in the business including the change of office lease in February 2017. These forecasts indicate that the Group will continue to meet its liabilities 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 liabilities: liabilities are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation;

· 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:

Following the disposal of iGaming Business in January 2016 and the Optimus and Speechmark businesses in November 2016, the Directors have restructured the management of the Group's continuing operations and now organises its management and reporting around the Sport Division only. As part of this, the Directors continue to budget and report Group central costs separately from the trading activities in order to facilitate tighter management of these costs.

Operating profit is defined in note 1. The analysis below includes 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. The information in the table below excludes amounts relating to discontinued activities and 2015 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: £1,845,000 (2015: £3,156,000) in discontinued operations, £53,000 (2015: £24,000) included in cost of sales - direct costs; £132,000 (2015: £128,000) included in cost of sales - marketing expenses; £38.000 (2015: £nil) included in restructuring costs and £106,000 (2015: £170,000) 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 19.

Adjusted results are presented to allow shareholders to gain a further understanding of the trading performance of the Group. Results 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, share based payment costs, non-recurring items and as the tax impact of those adjusting items and any non-cash tax charges.

The Group disposed of the Radcliffe Solutions Ltd and the Radcliffe Publishing business during 2015, whilst the Group's 70% stake in iGaming Business Ltd and the Optimus and Speechmark businesses were disposed of in 2016. The results of these businesses have therefore been classed as discontinued and excluded from adjusted amounts in both 2016 and 2015 - see note 9.

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.

During 2016, the Group incurred £530,000 of non-recurring costs split as £321,000 against the continuing operations and £209,000 against discontinued operations. Those charged to continuing operations comprise £184,000 of costs associated with the strategic review of the Optimus Education business and £137,000 of redundancy costs arising from staff restructuring. The £209,000 charge against discontinued operations relates to £135,000 of stock-write offs, £85,000 of staff restructuring costs and £11,000 of other credits.

An impairment expense of £1,000,000 was recognised in 2015 discontinued operations against the carrying value of goodwill in the Optimus business.

Other operating expenses as disclosed on the face of the income statement include staff costs (note 4) of £2,774,000 (2015: £2,328,000) and premises costs of £483,000 (2015: £463,000).

There were no impairment charges recognised in continuing operations in either 2015 or 2016. In 2015, discontinued operations included goodwill impairment charges of £1,000,000 were recognised in respect of Optimus Education.

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

UK corporation tax is calculated at 20.0% (2015: 20.3% as 21% for the first four months of the financial year and then 20% for the remainder) of the estimated assessable profit for the year.

Reductions in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and 18% (effective from 1 April 2020) were substantively enacted on 26 October 2015. A further reduction to the UK corporation tax rate was announced in the 2016 Budget to further reduce the tax rate to 17% (to be effective from 1 April 2020). This reduction was substantively enacted on 15 September 2016. The deferred tax assets and liabilities at the balance sheet date have been calculated based on the rate of 17% substantively enacted at the balance sheet date.

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

As noted above, at 30 November 2015, the net assets related to iGaming Business Ltd were classified as held for sale. The major classes of assets and liabilities classed as held for sale were as follows: