Preliminary Results

15 February 2011

ELECTRIC WORD PLC

Preliminary Results to 30 November 2010

Electric Word, the specialist information publisher, announced today audited results for the year ended 30 November 2010.

·; Revenue of £14.6m down 11% with public sector spending depressed between general election and comprehensive spending review

·; The Group was prepared for the revenue decline and maintained adjusted profit before tax* at £1.9m

·; Group operating margin* increases to 14% (2009: 13%)

·; Whilst diluted earnings per share is up 375% on higher profits, adjusted earnings per share* is down 31% following the share placing in August 2009

·; Cash generation from operations1 up 205% to £1.8m as abnormally high 2009 year end debtors pay through and no acquisition related working capital demands in period

·; Share placing in November 2010 raised £2.4m (net of costs) with (including costs) £1.1m spent on acquiring Radcliffe Publishing in November 2010 and £1.1m on buying out a contract in the iGaming sector in January 2011

·; Integration of acquisitions on track and performance in line with expectations

·; £1.5m debt facility renegotiated with the Group's bankers in January 2011 with repayment profile over the period to November 2014

·; Continued opportunities for organic and acquired growth

·; Current trading is in line with the Board's expectations

Julian Turner, Chief Executive of Electric Word, commented:

"2010 was a year of difficult market conditions. However, Electric Word showed resilience in its profits and cash generation. Furthermore the Group made an exciting acquisition at the end of the year in Radcliffe Publishing which supplies professional development and other resources in primary healthcare.

The Board expects 2011 to continue to be challenging, particularly in the public sector markets. Sentiment in the schools market remains cautious and the trends seen in the second half of 2010 are likely to take some time to reverse through the course of 2011. However, the Business Information division continues to progress and as a result current trading for the Group as a whole remains in line with the Board's expectations."

* Adjusted numbers in the current year, as set out in note 5, exclude amortisation and impairment of goodwill and intangible assets, restructuring costs (non-trading and of a non-recurring nature), share based payment costs, the tax impact of the adjusting items, and non-cash tax charges.

Non-cash tax charges relate to movements on deferred tax such as the use of tax losses or tax credits from the recognition of tax losses.

The comparative amount for notional accounting charges is not a cash item and encompasses the unwinding of discounts on preference shares and provisions.

1 This excludes a loan to the Employee Benefit Trust of £171,000.

The Company was founded in 2000 and has grown steadily through a combination of organic growth and acquisitions, of which it has made 15 so far. With net funds of £0.6m and adjusted EBITDA* of £2.1m the Directors believe it is well capitalised.

Electric Word is characterised by a highly analytical approach based on detailed marketing reporting and financial modelling to ensure that investment and effort are clearly focused on the areas of greatest return.

ENDS

Notes to Editors

Electric Word plc is a specialist media company operating in a range of attractive and information-hungry niche markets. That information is provided in a wide range of formats through three divisions:

·; Professional: provides professional development and other resources to the public sector through professional communities in schools, primary health care and other institutions, including school leaders and managers, teachers, special needs and speech therapy professionals and General Practitioners and practice managers - primarily in the UK.

·; Business information: is an international provider of insight and analysis across the business of sport (for international sports federations, brands and sponsors, broadcasters and media, major event organisers), and includes a valuable niche in the online gaming industry, for both the affiliates that market the gaming sites and the industry itself.

·; Specialist consumer: provides high-quality niche content, mainly online, to specialist consumer markets including sport, aimed at competitive athletes and coaches, and education, providing information for parents to support their children's schooling and development.

The range of products and services offered to these communities include subscription content, magazines, websites, events, books, special reports and bespoke research and publishing. In 2010 62% of revenue came from selling content (2009: 65%), which included 23% from subscription revenue (2009: 26%), and 38% came from selling access to these communities (2009: 35%) in the form of advertising and sponsorship, exhibition space at events, bespoke publishing and sales of third-party products.

CHAIRMAN'S STATEMENT

For the year ended 30 November 2010

It is clear to all that 2010 was a very tough year for many companies and Electric Word did not escape from that. What has been shown though is that even in these difficult market conditions, which significantly reduced the revenue year on year for the first time in the Group's history, Electric Word's profits and cash generation were resilient. Adjusted PBT* was maintained at the levels of the previous year despite the revenue depression through improved margins and lower interest costs and the Group generated significant cash from its operating activities.

Further to that the Group made an exciting acquisition at the end of the year in Radcliffe Publishing, which supplies professional development and other resources in primary health care. This acquisition significantly strengthens the Professional division and sits well with the division's work for the schools market through several cross-over services and similar products. Furthermore the Board views the Health sector as a rich opportunity for the Group's skills. With the devolution of control by the current government and in a market where continuing professional development and compliance are integral and mandatory, there are opportunities for information businesses which are rich in content, which Radcliffe brings to the Group, and strong on delivery methods. Resources and skills will be channelled towards this sector to ensure that the most is made of this opportunity.

The Radcliffe acquisition was funded through a placing of shares in November 2010 which, combined with the strong improvement in operating cash generation in the year, led to the Group finishing with net funds of £0.6m and placed Electric Word in a strong position to grow further. As reported in the November 2010 placing announcement, since year end £1.05m has been invested in a deal to buy out our partner (Affiliate Media, Inc) from our iGaming Affiliate publishing and events business.

The Group has also continued to invest internally, with £0.25m being spent on a major project to improve our e-mail marketing infrastructure and web development through the year. Web development has increased in every part of the business and the biggest current project is the transition of the Professional Education subscription products from paper to higher value online offerings. This is expected to continue through 2011, with the planned launch of a new integrated online service for schools towards the end of this year.

The result of this digital transition is expected to be a higher-margin and higher-value subscription business. In 2009 and 2010 however subscription revenues were impacted by reduced spending in schools particularly in the uncertain period between the General Election and the Comprehensive Spending review ("CSR") when schools had very little visibility on future budgets.

The CSR itself provides considerable opportunity for the Group as the professional development and compliance demands on schools have remained while support from central government and Local Authorities has been cut back. We expect demand to recover only slowly through 2011 and beyond as schools will take time to regain confidence in future funding and start to replace previously free sources of information and advice.

Against that backdrop the Group is satisfied with what has been achieved this year. It is pleasing that the Group has been able to maintain trading profit (adjusted EBITA*) at a similar level to the prior year. This has been achieved despite the revenue fall through the cost savings implemented in the first half of 2009, reduced marketing spend as that has moved online, and through continued careful cost and margin review.

In the Business Information division iGaming Business has had another good year of growth through its affiliate marketer events, but Sport Business was in its lowest year of a four year cycle with no major Olympic bidding spend, and the FIFA World Cup bidding competition failing to replace much of that spend.

The Specialist Consumer division saw reduced revenue and profits as it had a further transitional year of ceasing the final print offerings, re-brandings and re-configuring its online content. It has redefined its offering to its sports communities across ultra dedicated sports players and coaches, injury practitioners, and more general offerings. My Child was rebranded into The School Run, a site still offering parents aid with their children's' learning and practical skills together with a premium site for the children to aid their own development in My Learning Journey.

The Board would like to thank the staff in all of Electric Word's divisions, as well as our external experts and partners, for their efforts in a tough market through 2010. The expertise and creativity they have shown will serve the Group well as we enter the exciting period ahead.

Maintaining adjusted PBT in a difficult economic environment was an achievement in 2010. The Board expects 2011 to continue to be challenging, particularly in the public sector markets. Quarter one in 2010 was especially strong with record numbers attending the education events. Quarter one in 2011 therefore suffers by comparison as the sentiment in the schools market remains cautious and the trends seen in the second half of 2010 are likely to take some time to reverse through the course of 2011. The Business Information division continues to progress however and as a result current trading for the Group as a whole remains in line with the Board's expectations.

Against this backdrop the Group is now moving from a period of consolidation to a greater emphasis on investing in future growth. That means investing in new sectors such as Healthcare, in which rapid change is creating many new opportunities and where existing publishing skills can be applied to new niche communities; it means investing in building profits and margins in the Business Information division following the buyout of one of our joint venture partners; and it means scaling up the investment in web development and e-marketing infrastructure that had already been increased in 2010. With a cash generative business and a strong balance sheet the Group is well placed to make the most of the expected medium-term market opportunities as well as further potential acquisitions.

Peter Rigby

Chairman

14 February 2011

CHIEF EXECUTIVE'S STATEMENT

For the year ended 30 November 2010

Revenue by activity

Profit by division

* Adjusted numbers in the current year, as set out in note 5, exclude amortisation and impairment of goodwill and intangible assets, restructuring costs (non-trading and of a non-recurring nature), share based payment costs, the tax impact of the adjusting items, and non-cash tax charges.

Non-cash tax charges relate to movements on deferred tax such as the use of tax losses or tax credits from the recognition of tax losses.

The comparative amount for notional accounting charges is not a cash item and encompasses the unwinding of discounts on preference shares and provisions.

In 2010 Electric Word saw its organic trading profit (adjusted EBITA*) drop by only 4% despite an 11% reduction in revenue as a result of the tough market conditions. It had removed less profitable business activities, sacrificing revenue for margin, and implemented restructuring for cost reduction in H1 2009, and continued this careful deployment of resource through 2010. This saw margin improve across the Group by over 1%.

Professional division

The division comprises the Optimus Education, Incentive Plus, Speechmark and Radcliffe businesses and provides specialist management and professional development information for school teachers, general practitioners and other professionals working in and with schools and primary health care. The provision of education for children with special educational and behavioural needs in mainstream schools continues to place new demands on teachers' professional education and requires a range of specialist resources, as does the devolution of a wide range of school and general practice management responsibilities to schools and general practices themselves. The division includes subscription newsletters, conferences, books, magazines and a catalogue of third-party products relating to children's behavioural and emotional development.

Revenue down 14% reflecting tough market conditions but profits up by 8% as operations prepared for the contraction

Revenue was down by 14% on the prior year as the market was seen to contract between the general election and the CSR as schools and other bodies waited to see how much money was going to be available to them in the future and set their spending accordingly. Whilst this has now been delivered and is largely favourable to our products, with school budgets largely protected and generally more devolved, school spending is expected to recover only slowly through 2011, as the exact mechanics of the new funding environment becomes clear.

Optimus Education has a mature portfolio of subscription newsletters and a range of events aimed at middle and senior managers in schools. This is supplemented by books and, now, e-books, aimed at managers, special needs co-ordinators and behaviour specialists. The management books area was again loss making in the year but the division has experience of what a mature book list can produce through its Speechmark business which has a strong list of high-quality, practical and innovative resources for the Education, Health and Social Care sectors which are published for speech therapists, special needs co-ordinators and teachers, care workers and mental health professionals. That business has over 300 titles on its list, with some over 20 years old, and enjoys a stable revenue base and high profit margin as a result.

Subscription income from Optimus' management newsletters reduced as some mature titles were closed and the market for new subscriptions was particularly difficult. This market is however now at the stage where it is ready to consider online subscriptions and this year has seen much work on developing an integrated online product bringing together all the existing websites and newsletters. Websites for each paper newsletter were successfully launched in 2009 and the transition to a richer and deeper digital content offering can be expected to start to be fully sold in mid 2011. This would be expected to deliver higher margins and offer substantial opportunities to increase the range and value of the management information that schools are currently taking. This transition has already taken place in both the Specialist Consumer division and in business-to-business products such as TV Sports Markets. Such a product offering ties in well with the reduction in centrally provided information and services to schools and the greater reliance on them to procure such services themselves. As a result the medium-term prospects for renewable subscription revenues and profits in the education business represent a significant and exciting area of future growth.

Against the backdrop of a very hard market place, 2010 repeated the success of 2009 in demonstrating the resilience and strength of the valuable niches Electric Word holds in education information. The portfolio is focused on school management, special needs, behaviour and child protection, all areas of continuing change and importance. Speechmark's revenues held up well despite the challenging climate, and profits grew strongly on the back of reduced costs. The strong performance of the Optimus conferences business continued from 2009 into the start of the year with several record months, but then dramatically fell between the general election and the CSR. It has already seen signs of recovery post CSR however and with several of their portfolio seen as must-attend events for the responsible party in a school we expect the revenue to prove relatively resilient again in 2011. It will in fact be an area of organic investment as the first Speechmark branded event was successfully run in 2010 and this will be added to in 2011 together with Radcliffe branded events. The margin in the Optimus books business was again weak as a result of investment in the forward publishing list to build scale and did suffer some losses as stock was written off following policy change in 2010. Incentive Plus, the catalogue business supplying third party product as well as our own to the education market, continued to suffer as spending was impacted by the recession. This is the most peripheral of the Group's portfolio and is somewhat small scale. It did however improve margins and was profitable.

The divisional margin of 21% (2009: 17%) is well above the Board's target range of 16-18% as a result of careful planning around the market downturn as well as some year on year margin improvement. As the markets return to an improved state, the Board expect the margin to reduce again as the division invests in profitable growth.

The acquisition of Radcliffe strengthens the Professional publishing by extending deeper into the primary healthcare sector where the Government's planned reforms will, we believe, require GPs and others in the Health sector to extend their professional development into new areas of management expertise and compliance responsibilities. Radcliffe is a UK-based specialist publisher founded in 1987, focused on professional development and compliance in General Practice and primary healthcare. It produces a range of books for primary healthcare and general practice, including support for General Practitioners ("GPs"), GP practice managers and professions allied to health. It covers general primary care, specialist areas such as child protection and palliative care, and medical education and exam support. It also produces six journals, including Education for Primary Care, and runs training courses for practice nurses and receptionists. The Board believes that the Health sector is rich in opportunity for the Group as it looks to couple Radcliffe's strong content with its many existing skills across the range of delivery methods, not least reinvigorating the subscription journals, seeking out the online opportunities and launching events under the Radcliffe title.

2011 will be a challenging year but significantly part of that challenge will be to position the business to make the most of the significant opportunities which will arise from profound change in the organisation of public services, particularly health, in this difficult period for the economy. Continuing to invest in the division's new products and initiatives to support future growth will therefore be essential.

Business information division

The division is an international provider of insight and analysis with skills and experience across a range of mediums including subscriptions, advertising and sponsorship, directories, conferences, managed events, contract publishing, special reports and bespoke research. Through SportBusiness Group the division publishes for professionals across the world working in the sports industry in governing bodies, the media, sports marketing, sponsorship and club and event management, and, through iGaming Business, both the industry and affiliate marketers in the online gaming business, the biggest sector for sports sponsorship and itself a fast-growing industry with important information and marketing needs.

Revenue up 4%, despite this being the quietest year of the four year cycle in the business of sport, as the iGaming events increased again with divisional margin maintained at a high level despite the historic profit share on the iGaming events

The division grew revenue by 4% year on year, an achievement largely attained through the success and expansion of its events aimed at affiliates in the online gaming market. The affiliate events and publishing business, which operates under the iGaming Affiliate brand, has been involved in a marketing arrangement with a business partner who helped the initial establishment of this successful business and has since received a fee based on the profits of the business. In January 2011 it was announced that, with effect from December 2010, this partner was bought out of their rights and obligations under the joint venture agreement and fees previously paid to the partner will now remain within the Group. This will simplify management of the business and improve margins.

Other revenue streams, including the advertising across the magazines, have proved resilient again despite the current macro environment. It is especially so given that in the SportBusiness part of the division this is the lowest of its four-year revenue cycle, which builds largely through the Olympic games bidding processes culminating in a highest year with the award of the Summer games, which helped last year's comparatives.

Profit margins in the division remain high at 19% and slightly ahead of 2009 (18%) despite a drop in profits in SportBusiness Group as a result of lower profits from high-margin contract publishing deals. Margins will however benefit next year from the additional profits from the iGaming Affiliate business as a result of buying out its former partner.

The Group's two business-to-business ("B2B") sectors, the businesses of sport and online gaming, continue to perform well and hold well-respected positions in their respective niche communities. There remain further opportunities for organic development in both the affiliate business in moving beyond the gaming industry and in Sport where the division continues to deepen its offering in high-value information about television and online sports rights and develop a new product analysing sponsorship deals data.

Specialist consumer division

This division operates in the consumer niche markets of competitive sports athletes and coaches and related injury professionals (Sports Performance) and of parents to support their children's educational development (The School Run, formerly My Child). The division is principally on-line focussed with significant active web communities already being serviced.

Web sites and product offerings in process of overhaul to be well positioned with strong visitor traffic when markets pick up

By far the smallest of the Group's three divisions, this division offers a route to consumers for the Professional and Business areas of the Group's markets. The Sports Performance business serves dedicated coaches and athletes through its Peak Performance products and injury therapists through Sports Injury Bulletin, both as online subscription products. The School Run links to the other side of the school gate from the professional division's school management businesses, targeting parents and explaining to them how their children's education is structured and offering practical ways in which they can get involved and help.

It was a tough year on Sports Performance as subscription revenue fell as legacy print subscribers continued to reduce but were not successfully replaced through online marketing. The products are now being restructured to deliver a better service to general sportspeople as well as high-performance athletes and take better advantage of the high traffic numbers the sites attract - an average of 655,000 unique visitors per month in 2010 (2009: 670,000). In 2011 the site will be re-launched as a '.com' to achieve a better impact in the USA and the acquisition of Radcliffe also brings new opportunities to improve the offering for sports medics as well as provide a channel for Radcliffe's books for Allied Health Professionals.

The rebranding of My Child as The School Run was completed in 2010 and a complete redesign of the site started in the last quarter, aimed at improving navigation and driving engagement and 'stickiness'. The launch of a book list in April 2010 has proved successful and there is a strong list of titles planned for 2011. Subscriptions have grown steadily through 2010 and by the year end there were 4,325 active subs, although subscription revenue is lower than last year because of the remaining legacy print revenue that continued into 2009. The addition (in November 2009) of a forum to the site has continued to see high levels of activity and forum traffic now constitutes 18% of total site traffic. The site has a database of 406,000 names (2009: 205,000) receiving the weekly e-zine with unique visitors in November 2010 of 169,000 (2009: 101,000). This contributes to a belief in the potential of this sector which is attractive for the Group when coupled with the knowledge from the Professional division's education portfolio.

These two business-to-consumer ("B2C") businesses employ a model which combines free and paid-for content with strong database building and offers a route to consumer markets for our public sector and business information. Conversely it continues to lead on the online knowledge and product offerings side which are then leveraged across the other divisions in a completed state.

Central costs

These costs represent central PLC costs which are not directly related to the divisional trading and are not recharged. They include Board fees and costs related to being both a PLC and a consolidated Group.

Central costs maintained at 5% of the Group's revenue despite the revenue decline with interest costs lower as debt substantially repaid in 2009

The Group has again kept its central costs at 5% of Group revenues, despite the decline in those revenues this year. It is not anticipated that these costs would need to substantially increase to manage the organic opportunities described above nor the Radcliffe acquisition in 2010.

Net interest payable has decreased again this year as a result of the decrease in interest rates year on year and also as a function of paying down so much of the Group's debt in 2009.

Financial Review

The Group made an adjusted profit before tax* of £1.9m (2009: £1.9m) as a result of the improvement in adjusted EBITA* margin and the lower interest costs from both lower rates and a significant reduction in net debt through the year.

Net funds at the end of the year stood at £0.6m (2009: net debt of £1.4m). The Group has gross debt of £1.5m at November 2010 (2009: £2.1m) which is less than the adjusted EBITDA* achieved in 2010. In January 2011 the Group announced the renegotiation of its debt with its Bank - the Royal Bank of Scotland. The revolving credit facility which was due to expire in May 2011 has been converted into a term loan for the same fully drawn down value of £1.5m with an interest rate of 4.25% over LIBOR. This loan will be repaid over four years on a straight line basis starting in May 2011 and finishing in November 2014 with one third of the annual repayment being made in May each year and two thirds in November in line with the Group's cash profile.

The Group's adjusted results (note 5) 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 Group made a profit before tax of £764,000 (2009: £355,000). Items that the result is adjusted for include amortisation and impairment expenses, restructuring costs and share based payment charges, and in the prior year included notional interest costs (where interest has been charged under accounting guidelines on items which do not in reality suffer any interest).

The acquisition costs (note 5) in the current year of £231,000 relate to the acquisition of Radcliffe Publishing Limited (note 19). The restructuring costs of £138,000 relate to a provision against stock of books following the acquisition as several existing lines are now deemed as non-core and will not receive sufficient marketing attention going forwards as to justify their carrying value or are to be discontinued in their existing format. In 2009 approximately half of the restructuring costs related to advisory fees in reviewing the refinancing options prior to the share placing and debt pay down, and the rest relate in approximately equal parts to legal costs relating to a competitor dispute and redundancy and other costs as the Group reshapes to mirror evolving market demands.

Amortisation and impairment includes amortisation costs of £623,000 (2009: £527,000). The impairment expenses (notes 10 and 11) of £nil (2009: £610,000) consists of £nil impairment (2009: £604,000 in relation to the three Special Education Publishing ("SEP") titles) and £nil reduction in goodwill (2009: £6,000) upon recognition of deferred tax asset relating to pre-acquisition losses from the SportBusiness Group. The recognition of the SportBusiness losses is a positive sign of the on-going value and profits generated by that business.

Impairment of goodwill and intangible assets is reviewed at least annually and more frequently when issues suggest that impairment may be necessary. All assets have been reviewed (as detailed in notes 10 and 11). Of the other assets it should be noted that all had considerable headroom of net asset value exceeding carrying value.

As a result of higher statutory profits diluted earnings per share ("eps") is up on prior year at 0.19p (2009: 0.04p). On an adjusted basis reflecting underlying trading which is flat year on year, eps is down as a result of the 2009 placing at 0.58p (2009: 0.84p).

The Group placed 47,310,345 shares in August 2009 which only counted on the weighted average number of shares basis (as used for eps) for a quarter of the 2009 year, and is a significant reason why the 2010 numbers show a marked decline. A similar impact on the share number will be seen next year as a result of the placing of 61,309,331 shares in November 2010 to fund the acquisition of Radcliffe Publishing in November 2010and the buyout of its iGaming affiliate partner from a profit share contract in January 2011. These acquisitions are expected to be profits enhancing so should not dilute.

The 2009 placing impact was forewarned last year and is reflected in the following table together with the 2010 placing. On an adjusted basis* where based on shares in issue at the end of the year no decline is seen in eps as the relevant profits are similar:

Taking the impact of both share placings as if they had been in issue throughout both periods and including the dilutive impact of the relevant share options and warrants to each year, the eps would be 0.46pence (2009: 0.49 pence).

Key performance indicators

The table below summarises the key performance indicators used across the Group. These are compared against prior year and forecast and analysed in light of that. Net profit is in line with the forecast as are other key financial indicators as reported to the stock markets and announced on. Some variances are seen across other indicators but are followed up on as noted with performance addressed or forecasts reset.

Julian Turner

Chief Executive

14 February 2011

CONSOLIDATED INCOME STATEMENT

For the year ended 30 November 2010

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 November 2010

CONSOLIDATED GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30 November 2010

CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION

As at 30 November 2010 Company registration number 3934419

P Rigby ChairmanJ Turner Chief Executive

14 February 2011

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 November 2010

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 November 2010

The financial information set out in this preliminary announcement has been extracted from the group's audited statutory accounts for the year ended 30 November 2010 which will be delivered to the Registrar of Companies following the company's annual general meeting. The auditor's report on these accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain a statement under either Section 498 (2) or (3) of the Companies Act 2006.

Statutory accounts for the year ended 30 November 2009 have been delivered to the registrar of companies and the auditors' report on these accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain a statement under either Section 498 (2) or (3) of the Companies Act 2006.

The financial information set out in this preliminary announcement does not constitute the group's statutory accounts for the year ended 30 November 2010. The financial information presented in this preliminary announcement has been prepared using accounting policies consistent with International Financial Reporting Standards as adopted by the European Union ('IFRS'). These accounting policies are as set out in the annual report for the year ended 30 November 2009.

This preliminary announcement was approved by the board of directors on 14 February 2011.

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 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 10;

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

·; Contingent consideration: provisions are made at the directors' best estimate of what the consideration will be but as based on future results it can only be assessed on current knowledge and expectations with no certainty. The provisions made are considerably under the maximum amounts which could be payable (note 19);

·; 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.

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

Segmental information is presented in respect of the Group's business divisions. This format is based on the Group's management and internal reporting structure, as seen by the Board in its financial information used in allocating resources and making strategic decisions. These segments were identified by how the Group is focused on customer types and so does involve some aggregation of how those customers are served and of diversity within the customer bandings as niches are targeted within the broader markets.

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

·; P: serving professional communities in schools, primary health care and other institutions with management information and professional development;

·; BI: business information for the business communities behind sport and on-line gaming;

·; SC: specialist consumer advice and instruction for individuals' needs in both sport -competitive athletes and coaches - and education - parents looking to support their children's educational development; and

·; 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.

Operating profit is defined as profit before tax but excludes finance costs and investment income. The sector analysis includes the adjusted definition of 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.

There are no inter-segmental sales and no discontinued operations.

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 are not trade related and of a non-recurring type.

Adjusted numbers exclude amortisation and impairment of goodwill and intangible assets, restructuring and acquisition costs (non-trading and of a non-recurring nature), the tax impact of the adjusting items, deferred tax asset or liability movements recognised in the income statement and notional accounting charges. The amount for notional accounting charges encompasses the unwinding of discounts on preference shares and provisions and share based payment costs.

The acquisition costs totalling £231,000 in 2010 relate to the acquisition of Radcliffe Publishing Limited (note 19). Of this £116,000 relate to corporate finance and public relations advisory fees, £15,000 was charged by the Group's Bankers for their approval of the acquisition with £23,000 paid to a firm providing financial due diligence to enable that decision, legal fees came to £65,000 across all work streams on this deal, and £12,000 of internal staff bonuses awarded based on completion of this deal and its financing.

The restructuring costs of £138,000 relate to a provision against stock of books following the acquisition as several existing lines are now deemed as non-core and will not receive sufficient marketing attention going forwards as to justify their carrying value or are to be discontinued in their existing format.

The restructuring costs in 2009 relate to three activities. The Group repaid a substantial part of its debt in the year following a placing of shares. Advisory and legal firm costs totalling £140,000 are included here in relation to the strategic review of debt, financing options and transaction costs which were not fundamentally part of the placing and so are not included in share premium. The Group has also continued to evolve to mirror the markets it operates in and has suffered product closure and redundancy costs of £80,000. The Group has also had a legal case with a competitor which has resulted in settlement and legal costs of £75,000 being provided.

Components of the 2009 restructuring costs were considered to be taxable items for corporation tax and thus attributable tax has been included in the period at 28% of their value. All other adjusting items do not have a tax affect on the Group.

UK corporation tax is calculated at 28% (2009: 28%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

The emergency budget on 22 June 2010 announced that the UK corporation tax rate will reduce from 28% to 24% over a period of 4 years from 2011. The first reduction in UK corporation tax rate from 28% to 27% was substantially enacted on 20 July 2010 and will be effective from 1 April 2011. This will reduce the company's future current tax charge.

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

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