Preliminary Results to 30 November 2014

23th February 2015

ELECTRIC WORD PLC

Preliminary Results to 30 November 2014

Electric Word, the specialist information business with divisions operating in the Sport & Gaming, education and Health sectors, announced today audited results for the year ended 30 November 2014.

FINANCIAL HIGHLIGHTS

* EBITA denotes adjusted EBITA as defined in Note 5 and excludes amortisation and impairment of goodwill and intangible assets, restructuring and acquisition-related credits and costs, and share based payment costs, as well as the tax impact of those adjusting items and any non-cash tax credits and charges. This definition applies throughout the Annual Report and Financial Statements

OPERATIONAL HIGHLIGHTS

Sport & Gaming:

· Significant growth in iGaming events revenues driven by larger venues and new affiliate sectors

· Development and launch of new premium digital subscription services

· Subscriptions and live events account for 84% (up from 61%) of total revenue for the division

Education:

· Strategic realignment and rebrand of the product portfolio into three core services

· Continued investment in digital product development and sales

· Continued strong performance from conferences following investment in new products and formats

· Disposal of Incentive Plus business (2014)

Health:

· Milton Keynes office closure completed to create a single multi-disciplinary team in London

· Investment in digital infrastructure to improve distribution and sales of ebooks

· Investment in new Speechmark digital products for launch in 2015

· Disposal of Sports Performance (2014) and Radcliff Solutions (January 2015)

Julian Turner, Chief Executive of Electric Word, commented:

"In 2014 we started to see results from the investments the company has made to improve our digital infrastructure and expand our events. Progress has been made across the Group and we expect this to continue in 2015. Trading in the current year is in line with the Board's expectations for the divisions, although the forthcoming General Election inevitably carries some uncertainty for the education sector, while central costs are expected to increase following a move into new premises in the second quarter."

Comparative figures for the year to 30 November 2013 have been restated to reclassify the results of the Sports Performance, Incentive Plus and Radcliffe Solutions businesses as discontinued operations as a result of their disposals. See note 10.

The audited report and accounts of the Company for the year ended 30 November 2014 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 media group supporting professional development, compliance and management effectiveness through a wide range of digital, print and live formats. Our approach is to identify niche communities within our market sectors and fulfil our customers' key information needs to enable them to do their jobs better and enhance their careers. We achieve this by developing a deep understanding of our sectors and our customers' challenges and information requirements.

The Group provides content in many different formats, including subscription websites, journals, magazines, events, face-to-face training, online training, books, special reports, bespoke research and consultancy. Competencies developed in one sector can be transferred to another as opportunities arise.

The Group is composed of three market-facing divisions:

Sport & Gaming

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

Education

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

Health

The Health division provides professional education and training products for doctors, healthcare managers, speech therapists and other health professionals through the Radcliffe and Speechmark brands. Radcliffe publishes books and other associated products to support the education and professional development of doctors, managers and professionals allied to health. Speechmark specialises in resources for speech therapists, special needs co-ordinators and teachers.

CHAIRMAN'S STATEMENT

Dear Fellow Stakeholders,

Our objective, as always, is to grow the long-term value of the Group's strategic assets. We are doing this by increasing the focus of the business, strengthening its leadership, investing to build excellent, market-leading products and services and growing scale and margins. In 2014 we made progress on all these fronts, while recognising that there is further to go.

The business has been streamlined by disposing of several non-core activities to enable us to focus management and resources on the key areas of future growth. Leadership has been strengthened by a new Managing Director of the Education division and the addition of Henrietta Marsh as a Non-Executive Director.

New investment has been concentrated on developing, launching and growing high-value digital subscription services and on improving the infrastructure of our largest live events. In the Sport & Gaming division the investments that we have made in previous years have delivered increased profits, with adjusted EBITA growth of 34%, an excellent return on the efforts of a talented team.

In the Education and Health divisions we are investing in building excellent digital services. The Optimus Education online subscription service has been transformed through the course of the year and now provides a competitive professional development and compliance service for school leaders and a platform for future growth.

In 2015 we look forward to further progress towards our strategic goals. The success of the business relies as ever on our dynamic and professional team and on behalf of the Board I would like to thank our employees as well as the other stakeholders for their effort and support.

Andrew Brode

Chairman

20 February 2015

CHIEF EXECUTIVE'S STATEMENT

BUSINESS MODEL AND STRATEGY

Business model

Electric Word plc is a specialist media group supporting professional education, compliance and management through a wide range of digital, live and paper formats. Our approach is to identify niche communities within our market sectors and fulfil their key information, professional development, best practice and compliance needs.

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 serve our customers' needs through many different formats, including subscription websites, events, face-to-face training, online training, books, journals, magazines, special reports, bespoke research and consultancy. Competencies developed in one sector can then be transferred to another as opportunities arise. Within this mix we favour high-quality revenue streams from digital subscription services, tools that connect directly with customer work requirements and live events with the scale to build brand presence in their markets.

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 also by innovating and developing new products.

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 achieve higher margins. Our objective is a simpler business that is better able to capitalise on the opportunities in our markets and the changing technology underpinning our sector. During 2014, we have simplified the business further by disposing of the Sports Performance and Incentive Plus businesses and after the year end in January 2015 we also sold Radcliffe Solutions Ltd.

The strategy translates into different priorities within each division according to the needs of the market and the development of the business. These are described and evaluated in the Business Performance Review.

GROUP PERFORMANCE

Revenues

The Group strategy has been consistent in recent years: to develop higher value products and services, increasingly in digital or live formats, by improving the depth and value of the content and services we provide. This has required deep customer knowledge, investment and focus: the aim has been to do fewer things, of more value and at greater scale.

In 2014, new digital products or services were launched in each of the Group's three divisions. Investment in growing the infrastructure and scale of our live events resulted in events revenue increasing by 22%. As a result, the proportion of Group revenue derived from digital and live services increased from 59% to 67%. The quality of revenue has also improved, with 37% of non-events revenue now derived from subscriptions, up from 31% in 2013.

Profitability

Strong profit growth in the Sport & Gaming division has enabled the Group to invest further in refocusing the Education business, particularly its subscription products for school leaders and managers. Overall, Group Adjusted EBITA is down 7% to £0.69m from £0.74m.

Items that appear below the adjusted profit line, in general, reflect our strategy and the changes that are being made in the business. At the same time as investing in areas of strategic growth, the Group has continued to disinvest from non-core activities in order to simplify Group operations and increase focus. During the year we disposed of the Sports Performance and Incentive Plus business. Since the end of the year, we have also disposed of Radcliffe Solutions Ltd. The results of these businesses and the net loss on disposal have been treated as discontinued activities for the year ended 30 November 2014 and excluded from adjusted profits. The net loss from discontinued activities is £1.0m (2013: £0.3m) and includes impairments of goodwill and intangible assets associated with Radcliffe Solutions Ltd of £0.8m (2013: £nil). I am pleased to report that during 2014, we have not felt it necessary to further impair the value of the Company's continuing assets.

The introduction of a new share option scheme in December 2013 combined with a strong share price performance since then has increased the share based payments charge to £0.27m in 2014.

These adjustments lead to a statutory loss after tax of £1.3m, compared to a loss of £0.6m in 2013.

Divisional PERFORMANCE

SPORT & GAMING DIVISION

The 18% increase in revenue in the Sport & Gaming division has been largely driven by the expansion of the iGaming Business Affiliate conferences into some new markets and the London and Amsterdam events moved to larger venues. In addition, digital subscriptions revenue grew as a result of subscribers moving to digital subscriptions and the development and launch of new premium services such as the new Rights Tracker data visualisation tool and strong growth in TV Sports Markets and Sport Sponsorship Insider.

Margins again improved as a result of increasing the scale of the live events and the high marginal profits accrued from additional digital subscription revenues, driving a 34% increase in divisional EBITA.

EDUCATion DIVISION

The table above excludes the results of the Incentive Plus business which was sold on 15 October 2014 - see note 10.

In 2014 this division has made some fundamental changes. During the course of the year the leadership of the division was strengthened with a new Managing Director, a new Sales Director and a new Director of Product Strategy. The business offering has also been changed significantly and is now focused on three core services: an online subscription Knowledge Centre, an online subscription Training service and a suite of live events.

These services have been the product of considerable investment, particularly in the online product portfolio. Optimus In-House Training was launched in 2014 to provide a new specialist digital professional education service to support the continuing development of teaching and management skills throughout the school. The new Knowledge Centre has consolidated and streamlined our digital compliance and information services for middle and senior leaders in schools. These subscription services are complemented by the highly successful range of Optimus conferences which enable senior and middle school leaders to keep updated and share best practice. These live events continued to trade well in 2014.

Overall, the division continues to be in transition and revenues declined due to the loss of customers associated with legacy print products and reduced book sales. We continue to be excited by the prospects for the digital products in which we have invested.

Health DIVISION

The table above excludes the results of the Sports Performance businesses which was sold on 30 May 2014, and Radcliffe Solutions Ltd which was sold on 28 January 2015 - see note 10.

The priorities of the Health division have been to improve the digital infrastructure of the Radcliffe and Speechmark books businesses while developing new digital products to enhance the range of professional development, therapeutic and diagnostic products. The publishing infrastructure of both businesses was improved by the closure of the Milton Keynes office and relocation into one office, investment in the modernisation of digital distribution systems for e-books and investment in print on demand capability which we expect to be implemented in 2015.

During the course of 2014 Radcliffe Publishing streamlined its front-list into three areas of focus: medical professional development, academic and student exam support. In Speechmark the publishing team was strengthened and an investment made into a new range of digital speech therapy products. Overall sales and profitability in the division fell due to lower sales of non-book products and investments in digital product development.

Central costs

These costs represent central group costs which are not directly related to any particular Division and are therefore not included in their results. They include Board fees and costs related to being both a PLC and a Group.

The Group has maintained its central costs at 6% of Group revenues. The majority of investments made by the Group to date have been directly related to the trade of the divisions and hence been recharged to them, but during 2014, the Group has made further central investments in the area of digital product development.

Net interest payable is consistent year on year with the reduction in the Group's debt due to loan repayments made in 2013 and 2014.

Julian Turner

Chief Executive

20 February 2015

OPERATING AND FINANCIAL REVIEW

SUMMARY ADJUSTED RESULTS

* A reconciliation of the adjusted figures is set out in note 5. Adjusted figures are presented 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 together with their related tax effect and the profit impact of movements in deferred tax balances.

Acquisition-related and restructuring credits and costs

In 2014, a restructuring charge of £84,000 has been incurred primarily relating to the cost of making major changes to the Education senior management and content teams in order to meet the needs of the business and its customers.

Impairment charges and reduction to goodwill

Impairment charges of £778,000 have been booked in 2014. These have been classified as discontinued as they comprise £414,000 and £364,000 in impairments recognised on Radcliffe Solutions Ltd's goodwill and intangible assets respectively.

Capital expenditure

During the year, the Group has invested an additional £511,000 in web development and enhancing its digital products (2013: £493,000). The majority of web development spend this financial year has concentrated on launching major enhancements to the Education subscriptions website, the launch of new digital products for Speechmark, and the creation of a new digital subscription product in Sports Business.

Debt and cash flow

In May 2014, the Group secured additional lending of £200,000 from its lending bank to fund its continued investment programme.

Net debt (note 28) at 30 November 2014 was £389,000 (2013: net debt of £12,000). The Group has gross bank debt (note 19) of £389,000 at November 2014 (2013: £475,000). Of this, £225,000 is being repaid over periods to November 2015, £161,000 is being repaid over periods to May 2017 and £3,000 is repayable on demand.

Cash conversion rate

The high cash conversion rate in 2013 was primarily a result of significant pre-billing and cash collection of 2014 events during 2013. This year, the relatively late timing of the Barcelona 2014 iGaming event coupled with the earlier timing of the London 2015 event has reduced the amount of cash that was invoiced and collected at year end compared to the prior year, thereby impacting on cash conversion. These changes of dates have also affected deferred income compared to 2013.

In addition, Group cash flow has been impacted by a new £200,000 bank loan, loan repayments of £289,000 and the payment of £303,000 of dividends to the minority shareholder of iGaming Business Ltd.

Earnings per share

Statutory diluted earnings per share are 0.33p loss (2013: 0.18p loss). Adjusted diluted earnings per share (calculated using adjusted profit from continuing operations) are 0.08p (2013: 0.11p) reflecting the net impact of trading performance and investments made during the year as noted in the Business and Performance Review section of the Strategic Report.

Dividends

The Directors have not proposed a dividend to be paid in respect of 2014 (2013: £nil).

William Fawbert

Finance Director

20 February 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 November 2014

2013 results have been restated to show the effect of operations which have been discontinued in the current period.

Of the loss for the financial year from discontinued operations, £1,023,000 (2013: £295,000) is attributable to equity holders of the parent and £nil (2013: £nil) is attributable to the non-controlling interest.

CONSOLIDATED GROUP AND COMPANY STATEMENTS OF CHANGES IN EQUITY

For the year ended 30 November 2014

CONSOLIDATED GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION

As at 30 November 2014

These financial statements on pages 24 to 59 were approved by the Board of Directors and authorised for issue on 20 February 2015 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 2014

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 November 2014

1. ACCOUNTING POLICIES

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. 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 £2,569,000 (2013: £686,000 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 loss for the year of £1,289,000 (2013: £614,000) and has net assets of £6,687,000 (2013: £7,889,000); notwithstanding this it has a net current liabilities position at 30 November 2014 of £1,492,000 (2013: £800,000). The level of bank debt has however reduced to £389,000 (2013:£475,000). The Directors have prepared group cash flow forecasts for the period ending 30 November 2017, which take into account known factors in the business including the expected impact of moving offices in 2015. These forecasts indicate that the Group will continue to meet its liabilities and bank debt requirements as they fall due for the foreseeable future. The business is currently trading in line with these forecasts. In the event of forecast trading levels not being met due to a weaker economic climate than forecast, the Directors have the scope to take further actions to enable the group to meet its liabilities as they fall due for the foreseeable future and for it to remain within its financial covenants 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 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 12;

· 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 22);

· 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 29;

· 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:

Segmental information is presented in respect of the Group's business divisions. This format is based on the Group's management and internal reporting structure, as reviewed by the Board when reviewing performance, allocating resources and making strategic decisions.

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

· Health (H): provides professional education and training products for doctors, healthcare managers, speech therapists, elderly care professionals, and other health professionals.

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

· Central costs (PLC): the group function represents central costs which are not directly related to the Divisions' trading and are not recharged. Finance costs and investment income are also included here as these are driven by central policy which manages the cash position across the Group.

Operating profit is defined in note 1. The sector analysis includes the 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.

As described in note 10, three businesses have been classed as discontinued in the current year. The information in the table below excludes amounts relating to discontinued activities and 2013 comparatives have been restated accordingly.

There are no inter-segmental sales.

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: £362,000 (2013: £430,000) in discontinued operations, £240,000 (2013: £235,000) included in cost of sales - direct costs; £155,000 (2013: £165,000) included in cost of sales - marketing expenses; £74,000 (2013: £26,000) included in restructuring costs; £nil (2013: £179,000) capitalised in the inventory for book development and £328,000 (2013: £419,000) 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 below:

Two Directors (2013: two) are accruing benefits under a defined contribution pension scheme.

No Directors (2013: none) exercised share options in the year and so no gains were made (2013: no gains). The amount for share based payment charges which relates to Directors was £242,000 (2013: £29,000 credit).

At 30 November 2014, shares were receivable under long term incentive schemes in respect of three Directors. On 13 December 2013, the Company updated its share option plan and made new awards of share options (the "2013 Award"). The 2013 Award supersedes the share options granted in 2010 which were due to expire in April 2014 and have now been cancelled. Under the updated option plan, J Turner has a maximum total participation in the 2013 Award of 42,949,586 shares, W Fawbert has a maximum total participation in the 2013 Award of 17,179,834 shares and A Brode has a maximum total participation in the 2013 Award of 10,151,720 shares. In addition, J Turner has 692,267 options under the Long Term Investment Plan.

At 30 November 2013, shares were receivable under long term incentive schemes in respect of one Director (J Turner). These comprised 11,950,000 options under the Share Price Growth Scheme and 692,267 under the Long Term Investment Plan.

The option schemes are defined in note 29.

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

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

As noted in the Strategic Report, the Group has disposed of the Sports Performance and Incentive Plus businesses whilst Radcliffe Solutions Ltd was disposed of post year end. The results of these businesses have therefore been classed as discontinued and excluded from adjusted amounts in both 2014 and 2013 - see note 10. During 2014, the Group has also incurred a restructuring charge of £84,000 related to the Education division.

In 2013, impairment charges relate to a reduction in the carrying value of goodwill and intangible assets primarily related to Radcliffe Publishing. The restructuring charge of £196,000 related to the closure of the Milton Keynes office which took place in 2014, but was committed at 30 November 2013. The acquisition-related credit of £44,000 related to a reduction in provisions held for contingent consideration on the Radcliffe Publishing Limited acquisition.

The 2014 and 2013 restructuring costs, but not the acquisition-related credits or impairments, were considered to be taxable items for corporation tax and thus attributable tax has been included in the period at 21.7% (2013: 23.3%) of their value. All other adjusting items do not have a tax affect on the Group.

Other operating expenses as disclosed on the face of the income statement include staff costs (note 4) of £5,211,000 (2013: £4,865,000) and premises costs of £390,000 (2013: £423,000).

Impairment charges in 2013 consist of £537,000 goodwill and £74,000 intangible fixed assets relating to Radcliffe Publishing Ltd; £16,000 leasehold improvement costs associated with the closure of the Milton Keynes office and £47,000 relating to intangible assets following a review of carrying amounts. In 2014, impairment charges of £778,000 have been recognised in respect of Radcliffe Solutions and are included in discontinued operations - see note 10.

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

Fees in respect of other services in 2013, relate to the iXBRL filing of the Group's tax returns with the HMRC.

UK corporation tax is calculated at 21.7% as 23% for the first four months of the financial year and then 21% for the remainder (2013: 23.3% as 24% for the first four months of the financial year and then 23% for the remainder) of the estimated assessable profit for the year. The net credit of £652,000 recognised in 2013 is principally due to the recognition of deferred tax assets in SBG Companies Ltd in relation to its historic tax losses.

Effective from 1 April 2014, the United Kingdom corporation tax rate reduced from 23% to 21% and a further reduction to 20% will apply from 1 April 2015. The expected changes in the corporation tax rate are reflected in the above table and included as an adjustment to prior year deferred tax.

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