6th Mar 2007 07:04
Electric Word PLC06 March 2007 6 March 2007 ELECTRIC WORD PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2006 Acquisitions, organic growth and margin improvements double profits •Adjusted profit* before tax improves to £920k (£451k) •Operating margin pre-goodwill up from 7% to 9% •Adjusted earnings per share* up 77% to 0.66p (0.37p). Basic up 103% €33% of profit growth organic, 67% from acquisitions •Turnover increases 72% to £10.7m (£6.2m) €45% of Group revenue from renewable subscriptions €134% growth in online and e-marketing revenues •Strong balance sheet supported by cashflow •Five acquisitions since December 2005, integrating well •Current year started well, with trading in line with Board's expectations * excluding goodwill, tax and minority interest Julian Turner, Chief Executive commented: "The strong profit improvement achieved in the year has been driven bysuccessful acquisitions, continued organic growth and an improvement inoperating margins. We have continued to invest in both existing and acquiredassets to drive future profits. The new competencies we have acquired this yearand evolving online opportunities will enable us to continue to diversify ourrevenues and make the most of our valuable niches in the public and sportsectors, both of which are supported by continuing government initiatives. "We expect this year will benefit from the full impact of our acquisitions in2006, underlying organic growth and increasing internal efficiencies. Thecurrent year has started well and in line with the Board's expectations. With astrong balance sheet and an established infrastructure the Group is primed tomake further acquisitions should the right opportunities arise" ENDS Enquiries: Julian Turner, Chief ExecutiveElectric Word 0207 954 3470 Tim Spratt / Darrel ConnellFinancial Dynamics 0207 831 3113 Extracts from Chairman's and Chief Executive's Reports INTRODUCTION When Electric Word started seven years ago we had a vision of creating abusiness with a broad range of publishing and marketing skills to make the mostof the opportunities in some very specialist, niche media markets. 2006 hasperhaps been the year in which the Company has the made the greatest progresstowards that goal. We have increased the scale of the business, itsprofitability and its breadth, adding to both our market sectors and our revenuetypes. Five acquisitions since December 2005 have played an important part in thisgrowth (four of them in the period covered by these accounts). Two of theseacquisitions, SportBusiness Group and Incentive Plus, had particular strategicsignificance in that they added new skills and new types of revenue to thebusiness. In addition to acquisitions the Group has continued to achieve goodorganic growth. In particular we have taken steps to scale up the e-marketingand e-publishing competencies nurtured over several years in the sportsperformance business. The Group's cashflows, strong balance sheet and established infrastructureensure that we are primed for further acquisitions should the opportunity arise. RESULTS Turnover in the year grew by 72% to £10.7m, driven by both acquisitions and thecontinued organic development of the business. Whilst renewable subscriptionsare the biggest single revenue stream, accounting for 45% of sales in 2006,increasingly the Company has been able to diversify and add revenues fromselling access to our customer base, notably from commerce and e-commerce(selling third-party products into our communities of information customers). In2006, commerce revenues represented 11% of the total, reflecting a part-yearcontribution from the Incentive Plus acquisition in May. Revenue growth was once again successfully converted into increased profits, asprofit before tax, goodwill and minority interest increased 104% to £920k, withoperating margins before goodwill and minority interest increasing from 7% to9%. Organic growth contributed 33% of our profit improvement, while acquisitionsprovided the remaining 67%. Earnings per share (pre-tax and goodwill) rose 77%to 0.66p from 0.37p, while basic EPS increased 75% to 0.21p, boosted by thepart-recognition of a tax asset in SportBusiness Group. Financial Summary £000 2006 2005 ChangeTurnover 10,712 6,234 +72%Gross Profit 4,919 2,623 +88%EBITDA 1,060 464 +128%Profit before tax,goodwill and MI 920 451 +104%Profit after tax (before minority) 288 114 +153%Operating cash flow 595 290 +105%Cash balance 1,475 881 +67% The cash-generating characteristics of the subscriptions base of the businesshas enabled the Group to invest in developing additional publishing formats andrevenue streams to leverage the niche customer databases that we have developed.This has enabled us to fund the development of book and commerce revenues,improve margins and make a significant online investment. OPERATIONAL PERFORMANCE Public Sector £000 2006 2005 ChangeTurnover 6,580 4,955 +33%Operating profit before goodwill 776 724 +7%Profit margin 11.8% 14.6% -19% Electric Word's public sector activities extend across education, health andlocal authorities but by far the biggest element is for middle and seniormanagers in primary and secondary schools. The Company publishes 28 subscriptionnewsletters or loose-leaf files on different areas of management or complianceresponsibility such as continuing professional development, special educationalneeds provision and finance. The subscription titles are complemented by events,books and other training or professional education products. The market for management information and professional development resourcescontinues to develop and evolve, driven by the high political profile of theeducation system and a continuous process of government reform. Middle andsenior managers in schools have acquired a wide range of non-teachingresponsibilities, requiring them to develop new skills and maintain awareness ofmany different compliance responsibilities. Our products help them to learn fromother schools' practical experiences of similar challenges and to develop theirprofessional expertise in key strategic areas of school management, ethos andteaching and learning. The education business was further enhanced by the £2m acquisition in April 2006of Incentive Plus, which sells 1,400 different resources around behaviour,violence prevention and emotional development, and the acquisitions in December2005 of Teaching Expertise magazine and in May 2006 of Chris Kington Publishing(CKP). Turnover grew 33% to £6.6m but both Incentive Plus and Teaching Expertise hadthe effect of reducing the sector margin in 2006. Incentive Plus added revenuesof £1.2m but its seasonally strongest quarter preceded the acquisition. Inaddition, the investment in test-marketing in the Autumn was increased toaccelerate growth in 2007. This reduced expected profits for the year by £45kand, along with the seasonal pattern, reduced margins for Incentive Plus to 5.7%in the period. Teaching Expertise was acquired for a nominal sum as a magazine aimed at a broadteaching audience that encompassed many of the sub-groups targeted by ElectricWord's newsletters and other specialist products. Over 2006 the business hasbeen reshaped and moved online. Following a significant investment the schoolsportal www.teachingexpertise.com was launched on November 30th 2006 as astrategically important new channel for the education business. CKP, acquired inMay 2006 for an initial consideration of £138k, is a leading publisher ofteacher resources in the growing field of thinking skills and wasearnings-enhancing in 2006. Margins in the existing education business were steady at 14.3% (14.6%). Organicsales growth came mainly from sales of specialist education management books(for the second successive year sales of one-off products grew by over 30%) withmargin improvements in education events, books and newsletters, driven by betterleverage of overhead costs as the business expands and, in the events businessin particular, higher gross profits in the key annually repeating conferences. Perhaps the most significant development outside of the acquisitions was thedevelopment in 2006 of a significant new channel in e-marketing. Schools have sofar been quicker to embrace digital technology in the classroom than in the backoffice, but this is now changing. Laptops for senior managers and therequirement to deliver key data online have been two drivers of an increasedopenness to online information. E-marketing made an immediate positivecontribution to sales in 2006 and we can expect a steady growth in onlinecontent and marketing channels in the future. As a consequence, 2006 was the right time to invest online and over the next twoto three years we expect www.teachingexpertise.com to become an importantadditional channel for our broadening range of information products as well ase-commerce revenues from Incentive Plus. The education market is still movingonline more slowly than other, more commercial sectors and one disappointment in2006 was the performance of the online training business, which did not respondto an increased investment in sales and content and which made a loss in theyear. As a result the business has been scaled back until the return oninvestment improves. Excluding the online training business the organic marginsfor the Public Sector division improved to 16%, which approaches our long-termtarget for this business. Prospects for the education business are exciting. The foundation ofstrongly-renewing subscription products is now enhanced by a series ofinter-connecting products in well-defined niches. The addition of Incentive Plusenables the business to monetize access to its customer base in a way that ismore appropriate and more effective for this market than through advertisingrevenues alone, and the development of online channels will both complement andsupport that development. The wide range of different product types and revenue streams, combined withconsistent systems and strong database marketing expertise, create a strongrationale for further acquisitions in existing or parallel market sectors. Sport Sector £000 2006 2005 ChangeTurnover 4,133 1,279 +223%Operating profit before goodwill 736 107 +588%Profit margin 17.8% 8.4% +119% Electric Word's publishing in the sport sector has been transformed this year bythe acquisition of SportBusiness Group (SBG) in December 2005 for £2.75m. SBGextends our sports publishing from sports performance (aimed at athletes andtheir professional supporters) into the business of sport, particularly aroundthe position of sport in media, marketing, gaming and the bidding and staging ofmajor sports events. SBG has brought important new sales competencies to Electric Word as well as anexcellent brand and some high-value products including magazines, a newsletterand a range of special reports. Electric Word has been able to add expertise inconferences, marketing and e-marketing and an established publishinginfrastructure. The result has been organic sales growth within SBG itself andsome savings in overhead, which together have moved the business into profit. In2006 SBG also delivered an additional publishing contract around the Asian Gamesrecently staged in Doha, which further improved revenues and profits. Overall,the division improved its margins to 17.8% from 8.4% In total, the acquisition added sales of £2.8m at a margin of 20%. However theexisting sports performance business also grew turnover by 9% as a result offurther growth (+40%) in revenues from the online business. This also had theeffect of improving margins to 11.3% (8.4%). Sport is a high-growth market, both in the UK and internationally. Personalfitness, the increasing recognition of the competitive benefits of sportsscience and the great commercial value attributed to sport by cities bidding formajor events, marketers of global brands and media businesses, all driveopportunities for growth in the future. Central Group Costs Central group costs not directly attributable to businesses amounted to £545k(£399k in 2005), declining as a proportion of Group revenue to 5.1% from 6.4%.In addition there was a net interest charge in the year of £37k (down from acredit in 2005 of £19k). Although bank balances increased during the year, theGroup took on some bank debt to provide additional working capital to supportthe growth of Incentive Plus. The interest line also includes an accountingcharge against the fair value of the convertible debt used to acquireSportBusiness Group, on which there would be a 2% coupon were it not to beconverted into equity. Outlook Since year end the structure of companies within the Group was reorganized on1st December 2006. We have also continued to build SportBusiness Group and inFebruary acquired Ark Sports Ltd, which has an event and e-zine in the sport andtechnology niche, for £90,000. We are particularly pleased that Incentive Plus has recorded its strongest-everfirst quarter and that we have seen the successful launch of a new educationnewsletter (Learning and Teaching Update). Within SportBusiness Group, i-GamingBusiness enjoyed a successful inaugural event in January and that business looksset to grow on the back of (rather than despite) industry concerns over changesin the US regulatory environment. We expect this year will benefit from the full impact of our acquisitions in2006, underlying organic growth and increasing internal efficiencies. Thecurrent year has started well and in line with the Board's expectations. With astrong balance sheet and an established infrastructure the Group is primed tomake further acquisitions should the right opportunities arise. Electric Word plcConsolidated Profit and Loss AccountFor the Year Ended 30 November 2006 Continuing Acquisitions 2006 2005 Notes £ £ £ £ TURNOVER 2 6,738,220 3,974,213 10,712,433 6,234,499 COST OF SALES Cost of Sales (1,942,183) (1,691,108) (3,633,291) (1,727,251) Marketing (1,787,835) (372,518) (2,160,353) (1,884,240) --------- --------- --------- --------- GROSS PROFIT 3,008,202 1,910,587 4,918,789 2,623,008 Operating expenses (2,809,069) (1,153,211) (3,962,280) (2,190,768) Amortisation ofgoodwill (307,012) (396,991) (704,003) (286,498) -------- -------- -------- ---------- Totaladministrativeexpenses (3,116,081) (1,550,202) (4,666,283) (2,477,266) --------- --------- --------- --------- OPERATING(LOSS)/PROFIT (107,879) 360,385 252,506 145,742 Interest 26,700 1,303 28,003 21,020receivable Interest payable (17,434) (47,528) (64,962) (1,914) --------- --------- --------- --------- (LOSS)/PROFIT ONORDINARYACTIVITIES (98,613) 314,160 215,547 164,848BEFORE TAXATION Taxation 3 (65,167) 137,778 72,611 (50,756) --------- --------- --------- --------- (LOSS)/PROFIT ONORDINARYACTIVITIES (163,780) 451,938 288,158 114,092AFTER TAXATION Minority interests - (27,037) (27,037) - --------- --------- --------- --------- (LOSS)/PROFIT ONORDINARYACTIVITIESAFTER TAXATION AND (163,780) 424,901 261,121 114,092MINORITY INTERESTS --------- --------- --------- --------- EARNINGS PER SHARE Basic 4 0.21p 0.12p --------- --------- Diluted 0.17p 0.10p --------- --------- The operating profit for the year arises from the Group's continuing operations. No separate statement of Total Recognised Gains and Losses has been presented asall such gains and losses have been dealt with in the profit and loss account. Electric Word plcConsolidated Balance Sheet30 November 2006 Group Group 2006 2005 Notes £ £ FIXED ASSETS Intangible assets 7 6,122,743 2,037,287 Tangible assets 313,900 181,466 Investments 90,000 - --------- --------- 6,526,643 2,218,753 CURRENT ASSETS Stocks 284,462 53,117 Debtors due within one year 2,618,336 1,530,399 Debtors due after more than one year 578,097 292,651 Cash at bank and in hand 1,475,468 880,677 --------- --------- 4,956,363 2,756,844 --------- --------- CREDITORS: Amounts falling due within oneyear Deferred revenue (3,079,905) (2,708,560) Other creditors (1,823,530) (912,780) --------- --------- (4,903,435) (3,621,340) --------- --------- NET CURRENT ASSETS/(LIABILITIES) 52,928 (864,496) --------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 6,579,571 1,354,257 CREDITORS: Amounts falling due after morethan one year 8 (1,494,018) (105,402) PROVISIONS FOR LIABILITIES (330,592) (158,000) --------- --------- NET ASSETS 4,754,961 1,090,855 --------- --------- CAPITAL AND RESERVES Called up share capital 9 1,381,442 951,139 Share premium account 2,977,933 3,000 Merger reserve 105,011 105,011 ESOP reserve (53,497) (24,209) Profit and loss account 317,035 55,914 --------- --------- SHAREHOLDERS' FUNDS 6 4,727,924 1,090,855 Minority Interest 27,037 - --------- --------- 4,754,961 1,090,855 --------- --------- Electric Word plcConsolidated Cash Flow Statement30 November 2006 2006 2005 Notes £ £ Cash flow from operating activities 5a 531,092 289,517 Returns on investments and servicingof finance 5b (11,769) 19,106 Taxation (114,536) (420) Capital expenditure and financialinvestment 5b (229,216) (30,873) ------- ------ Cash inflow before acquisitions andfinancing 175,571 277,330 Acquisitions 5b (1,942,788) (269,806) --------- --------- Cash (outflow)/inflow before (1,767,217) 7,524financing Financing 5b 2,362,008 (28,272) --------- ------ INCREASE/(DECREASE) IN CASH IN THE 594,791 (20,748)YEAR --------- ------ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2006 2005 £ £ Increase/(decrease) in cash in the 594,791 (20,748)year Cash (inflow)/outflow from movementin lease financing 37,439 6,945 Cash outflow from increase in loans (650,000) - ------- ------ Change in net debt resulting fromcash flows (17,770) (13,803) New finance leases - (153,000) ------- ------ MOVEMENTS IN NET FUNDS IN YEAR (17,770) (166,803) NET FUNDS AT 1 DECEMBER 2005 734,622 901,425 ------- ------ NET FUNDS AT 30 NOVEMBER 2006 716,852 734,622 ------- ------ Electric Word plc NOTES TO THE PRELIMINARY ACCOUNTSFor the Year Ended 30 November 2006 1. The announcement was approved by the Directors on the 5th March 2007.The preliminary results for the year ended 30th November 2006 are unaudited. Thefinancial information set out in the announcement does not constitute theCompany's statutory accounts for the year ended 30th November 2006 or 30thNovember 2005. The financial information for the year ended 30th November 2005is derived from the statutory accounts for that year, which have been deliveredto the Registrar of Companies. The auditors reported on those accounts and theirreport was unqualified. Accounting policies remain consistent with those statedin the financial statements for the year ended 30 November 2005. 2. TURNOVER The Group's turnover and profit on ordinary activities before taxation were allderived from its principal activity. Sales were made in the followinggeographical markets: 2006 2005 £ £ United Kingdom 8,434,816 5,573,094Europe 381,107 661,405Rest of the World 1,896,510 - --------- --------- 10,712,433 6,234,499 --------- --------- Analysis by classof business Profit/(loss) on ordinary activities before taxation Turnover and minority interests Net assets 2006 2005 2006 2005 2006 2005 £ £ £ £ £ £ PublicSector 6,579,833 4,954,962 775,654 442,190 3,539,684 1,451,542 ManagementSport 4,132,600 1,279,537 736,093 102,432 1,267,122 (125,253) Group - - (1,296,200) (379,774) (51,845) (235,434)overheads --------- --------- --------- ------- --------- --------- 10,712,433 6,234,499 215,547 164,848 4,754,961 1,090,855 --------- --------- --------- ------- --------- --------- 3. TAXATION 2006 2005 £ £ Current tax:UK corporation tax on profits of the period 110,063 2,617 --------- --------Total current tax 110,063 2,617 --------- -------- Deferred taxation:Origination and reversal of timing differences (182,674) 48,139 --------- -------- (182,674) 48,139 --------- --------Tax on loss on ordinary activities (72,611) 50,756 --------- -------- Factors affecting tax charge for the period The tax assessed for the period is lower than the standard rate ofcorporation tax in the UK.The differences are explained below: Profit on ordinary activities before tax 215,547 164,848 --------- --------Profit on ordinary activities multiplies by the standardrate of corporation tax in the UK of 30% (2005 - 30%) 64,664 49,454Effect of: Expenses not deductible for tax purposes 87,115 14,279Amortisation of intangible fixed asset 213,047 79,531Capital allowances in excess of depreciation (33,080) 5,767Utilisation of tax losses (214,372) (142,725)Small companies relief (7,311) (3,689) --------- --------Current tax charge for the period 110,063 2,617 --------- -------- There are accumulated losses of £3.12 million (2005: £1.78 million) which,subject to agreement with the Inland Revenue, are available to offset futureprofits of the same trade. A deferred tax asset of £729,297 (2005: £546,623) has been recognised on thebalance sheet representing losses which are expected to reverse in theforeseeable future. 4. EARNINGS PER ORDINARY SHARE The calculation of earnings per ordinary share is based on the following: Weighted 2006 Weighted average 2005 Earnings number of Earnings Earnings number of shares Earnings per share shares per share £ p £ p Basicearnings 261,121 126,251,152 0.21 114,092 95,055,772 0.12per share ------ --------- -------- -------- -------- -------- Dilutedearningsper share Basicearnings 261,121 126,251,152 0.21 114,092 95,055,772 0.12per shareDilutiveeffect ofshare options 14,002,811 (0.03) - 11,435,522 (0.01) Dilutiveeffect ofwarrants 10,089,713 (0.01) - 9,755,302 (0.01) Dilutiveeffect ofshareincentive 63,788 0.00 - - - plan ------ --------- -------- -------- ---------- -------- 261,121 150,407,464 0.17 114,092 116,246,596 0.10 ------ --------- -------- -------- ---------- -------- 5. CASH FLOWS a Reconciliation of operating loss to net cash inflow from operating activities 2006 2005 £ £ Operating profit 252,175 145,742Amortisation 704,003 286,494Depreciation 118,687 32,221(Increase)/decrease in stocks (17,504) 51,839Increase in debtors (684,759) (508,614)Increase in creditors 144,490 122,717Increase in provision - 158,000Adjustment re ESOP 14,000 1,118 --------- ---------Net cash inflow from operating activities 531,092 289,517 --------- -------- b Analysis of cash flows for headings netted in the cash flow statement 2006 2005 £ £ Returns on investments and servicing of finance Interest received 28,003 21,020Interest element of finance lease rental payments (39,772) (1,914) --------- --------Net cash inflow from returns on investments andservicing of finance (11,769) 19,106 --------- -------- Capital expenditure and financial investmentPurchase of tangible fixed assets (229,216) (30,873) --------- -------- AcquisitionsPurchase of subsidiary undertakings (2,142,112) (269,806)Purchase of unincorporated businesses (63,092) -Cash acquired with subsidiary undertakings 262,416 - --------- --------Net cash outflow from acquisitions (1,942,788) (269,806) --------- -------- 2006 2005 £ £ Financing Issue of share capital 1,900,000 4,000Share issue costs (107,265) -Cash inflow from long term bank loan 750,000 -Repayment of long term loans (100,000) -Capital element of finance lease rental payments (37,439) (6,945)Contribution to ESOP (43,288) (25,327) --------- --------Net cash inflow/(outflow) from financing 2,362,008 (28,272) --------- -------- c. Analysis of funds At 1 December Other At 30 November 2005 non-cash 2006 changes Cash flow £ £ £ £ Cash at bank andin hand 880,677 615,423 - 1,496,100Bank overdraft - (20,632) - (20,632) --------- --------- --------- ---------Cash 880,677 594,791 - 1,475,468 --------- --------- -------- --------- Loans due withinone year - (150,000) - (150,000)Finance leasesdue within oneyear (40,653) 37,439 (35,249) (38,463) --------- --------- --------- ---------Debt due withinone year (40,653) (112,561) (35,249) (188,463) --------- --------- -------- --------- Loans due afterone year (500,000) - (500,000)Finance leasesdue after oneyear (105,402) - 35,249 (70,153) --------- --------- -------- ---------Debt due afterone year (105,402) (500,000) 35,249 (570,153) --------- --------- -------- --------- Net funds 734,622 (17,770) - 716,852 --------- --------- -------- --------- 6. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS FUNDS Group Group 2006 2005 £ £Profit for the financial year 261,121 114,092Issue of shares 430,303 1,000Premium of allotment during year 3,082,198 3,000Share issue costs (107,265) -Purchase of shares - (25,327)Movement in ESOP reserve (29,288) 1,118 --------- -------- 3,637,069 93,883Opening shareholders' funds 1,090,855 996,972 --------- --------Closing shareholders' funds 4,727,924 1,090,855 --------- -------- 7. INTANGIBLE ASSETS AND ACQUISITIONS Goodwill Magazines Total £ £ £ Group 1 December 2005 3,031,583 50,000 3,081,583Additions 4,538,782 - 4,538,782Goodwill on acquisition 350,146 - 350,146Fair value adjustments (99,469) - (99,469) -------- --------- --------30 November 2006 7,821,042 50,000 7,871,042 -------- --------- --------Amortisation1 December 2005 999,296 45,000 1,044,296Charged in the year 699,003 5,000 704,003 -------- --------- --------30 November 2006 1,698,299 50,000 1,748,299 -------- --------- -------- Net book value30 November 2006 6,122,743 - 6,122,743 -------- ---------- -------- 30 November 2005 2,032,287 5,000 2,037,287 -------- ---------- -------- Fair value adjustments relate to adjustments of estimated fair values ofacquisitions in the prior year in accordance with FRS 7. On 31 December 2005 the Group acquired 100% of the issued share capital of DMWSL370 Limited. The assets at acquisition were as follows: Fair value adjustment Book value Fair value £ £ £ Tangible assets 4,001 (2,978) 1,023 Investments 90,000 - 90,000Debtors 382,039 21,732 403,771Cash at bank and inhand 180,575 - 180,575Creditors: amountfalling due within oneyear (790,537) 74,000 (716,537) -------- --------- --------Net assets (133,922) 92,754 (41,168) -------- --------- ---------Goodwill arising onconsolidation 2,734,912 -------- 2,693,744 Total consideration --------Satisfied by:Consideration - ordinary shares at fair 1,500,000 value - preference shares at fair 900,625 valueDeferred contingentconsideration at fairvalue - cash 236,967Acquisition costs 56,152 -------- 2,693,744 -------- On 6 May 2006 the Group acquired 100% of the issued share capital of IncentivePlus Ltd. The assets at acquisition were as follows: Fair value adjustment Book value Fair value £ £ £ Intangible assets 350,146 350,146 Tangible Assets 17,904 (5,898) 12,006Stock 118,577 118,577Debtors 151,166 80,945 232,111Cash 81,841 81,841Creditors: amount falling duewithin one year (264,029) (97,842) (361,871) -------- --------- --------Net assets 455,605 (22,795) 432,810 -------- ---------Goodwill arising on consolidation 1,604,455 -------- 2,037,265 Total consideration --------Satisfied by:Cash 1,917,418Costs 119,847 -------- 2,037,265 -------- 8. CREDITORS DUE IN MORE THAN ONE YEAR Group Group 2006 2005 £ £ Group Bank loans 500,000 -Obligations under finance leases 70,153 105,402Preference shares (note 9) 919,149 -Accruals 4,716 - --------- -------- 1,494,018 105,402 --------- -------- Group Group 2006 2005 £ £Group Amounts payable:In more than one year but not more than two years 36,995 40,654Within two to five years 33,158 64,748 --------- -------- 70,153 105,402 --------- -------- 9. SHARE CAPITAL Share capital classed as equity: 2006 2005 £ £ Authorised:300,000,000 ordinary shares of 1p each 3,000,000 3,000,000 --------- -------- Allotted, issued and fully paid:138,144,157 (2005: 95,113,854) ordinary shares of 1peach 1,381,442 951,139 --------- -------- On 30 December 2005 the company issued 18,750,000 ordinary shares with anaggregate nominal value of £187,500 for 8p each. On 5 May 2006 23,030,303 ordinary shares with aggregate nominal value of£230,303 were issued for 8.25p each. On 1 June 2006 the company issued another 1,250,000 ordinary shares of 1p eachfor 9p each Shares classed as liabilitiesConvertible redeemable preference shares 2006 2005 £ £ Authorised:1,000,000 convertible redeemable preference shares of£1 each 1,000,000 - --------- -------- Allotted:987,500 convertible redeemable preference shares of £1each 987,500 -Future interest costs (68,351) - --------- ---------Liability (note 8) 919,149 - --------- -------- On 28 March 2006 the company issued 987,500 convertible redeemable preferenceshares of £1 each at par. These shares were issued as part consideration for theentire issued share capital of DMWSL 370 Limited as is more fully described innote 8. Up to 625,000 preference shares can be redeemed prior to the 31 December 2007 atthe company's option on repayment of the nominal value and a coupon rate of 2%.Between 1 January 2008 and 31 December 2009 each preference share is convertibleinto ten ordinary shares at the option of the shareholder. All unconverted orunredeemed preference shares are repayable at their nominal value on 31 December2009. Warrants As at 30 November 2006 the following warrants had been granted and remainedoutstanding: . Number of Exercise price ordinary sharesDate of grant 17 March 2000 11,357,158 1p The warrants are exercisable from the date of grant until the tenth anniversaryof the date of grant over ordinary shares of 1p each in electric Word PublishingLimited. There is a put and call option in place whereby the warrant holdersgranted the Company an option to require them to sell and the Company grantedthe warrant holders an option to require the Company to purchase any shares inElectric Word Publishing Limited arising on the exercise of the warrants on aone for one basis in exchange for the same number of shares in the Company. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ELE.L