RNS Number:2308S
Electric Word PLC
1 March 2002
Electric Word Plc ("Electric Word" or "the Company")
CHAIRMAN'S AND CHIEF EXECUTIVES REPORT
• Turnover up 122% to £1.4m
• Over £750,000 of revenue deferred to future years
• Cash positive in second half of year
• Q4 new business up 308% year-on-year
• One newsletter and three new conferences launched
• Immediately profitable books acquisition
• Only 2% of revenue derived from advertising
The year to November 2001, the first full year as a public company, has been a
successful one for Electric Word plc. Strong increases in subscription sales,
particularly in the fourth quarter, ensured that the group achieved cash
stability in the second half of the year and has laid a firm foundation for
continued growth in the future.
Group Overview
Electric Word plc is a provider of professional development information,
particularly for public sector managers. It operates in three key sectors:
education management, National Lottery funding and sports health, publishing 13
specialist newsletters, as well as conferences and books.
Business model
The business model is based around the three key principles of building
renewable revenues, creating valuable content for niche markets that can be
employed across different publishing formats, and maximising database value
through cross-selling and intelligent direct marketing. This approach typically
involves building a body of subscribers around a newsletter, which creates
long-term stable revenue, and then offering those customers additional related
products and services to increase the average spend. As a result of the focus on
subscription customers, only 2% of revenues were derived from advertising and
sponsorship, as opposed to 74% from subscriptions, 14% from conference delegate
fees and 10% from consulting and publishing services.
Priorities in 2001
Whereas the previous year to November 2000 saw a dramatic expansion of products
and market sectors, through two acquisitions and five newsletter launches, the
focus of this last year has been in building revenues and concentrating the
marketing investment in the areas of greatest return. Nevertheless, three new
conferences were developed, one newsletter launched and one acquisition
completed.
Financial highlights
The result of this activity has been a 122% increase in turnover to £1,416,609
(this follows last year's 67% increase to £639,057). Strong performances in both
the third and fourth quarters ensured that the pre-tax loss for the year of
£892,361 (£762,536 before amortisation and goodwill) was ahead of market
expectations and that the group was cash-positive during the second half of the
year.
Strong growth brings cash stability
Without any question, the most important achievement of 2001 has been the
concentration of resources on high-return sectors to produce that second-half
performance which delivered positive cashflows while maintaining and
accelerating the investment in growing subscription customers. The cash receipts
from new business in the fourth quarter represented a 308% increase over the
same period last year. As a result, we are pleased to report that Electric Word
has reached the critical mass of subscribers necessary for cash stability many
months earlier than planned.
Strong cashflow: cash ahead of earnings by £570,000
There is a substantial and telling difference between the operating loss of
£762,536 (before amortisation of goodwill) and the operating cash deficit for
the year of just £189,173. This demonstrates the extent to which cash leads
profits in subscription publishing - a function mainly of the conservative
subscription revenue recognition policy, typical for the sector, which has
deferred over £700,000 of subscription revenue to future years.
The position is accentuated by the fact that the business is growing quickly.
During the year the company invested £730,000 in acquiring 10,000 new
subscription customers: that marketing investment is fully expensed in the year
that the cash for those orders (all paid in advance) is received, whereas the
earnings are spread over the full period of the subscription.
In future years, these new customers will still pay for their subscriptions in
advance, but without the same initial marketing cost. The board estimates that
the existing subscriptions alone will generate cash receipts of £2.4m over the
next three years.
Cash management
Of the £1.2m raised in the flotation in March 2000, £500,000 has been invested
in acquisitions, and £340,000 used as working capital, leaving £360,000 at the
end of November 2001. It is estimated that the cash low-point for the existing
business has already been reached, some nine months ahead of forecast, in August
2001. This means that the remaining cash can be invested, at the company's
discretion, in creating new business for the future.
Operating Review
Public sector change driving demand for information
The engine of this growth has been the strength of demand for the company's
public sector management information products. Education management in
particular, and also local authority funding, have been good sectors to be in
over the past year and will continue to grow in the future. Improvement in the
provision of public sector services has become one of the Government's top
investment priorities, and raising management and professional standards is a
key component of that change. Electric Word's newsletters, conferences and books
provide practical support to public sector managers and other professionals who
need to develop their understanding of a fast-changing regulatory environment
while improving the efficiency of their own performance.
Recession-resistant sectors and revenue mix
Electric Word's markets have been good defensive sectors in the recent period of
economic uncertainty, but the company has also been insulated against the
knock-on effect of weakness in other markets by the strength of the
subscriptions-based business model.
Retention rates reaching 80%
Subscriptions generate high-quality, stable earnings. Average retention rates
exceed 70% across the whole business, reaching 80% in nine of the education
management titles. As a result, the marketing investment necessary to acquire
new customers brings returns over many years at a high marginal profit. One
title now boasts an average subscription life of 5 1/2 years.
Subscription revenue base for 2002 of £1.1m
As subscription revenue is spread over the full term of the subscription, on
average only half of the cash for an annual subscription is recognised in the
year in which it is received. So Electric Word entered 2002 with over £700,000
of subscription revenue already assured for future years. Along with expected
renewal revenue, this creates a subscription revenue base for 2002 of £1.1m
before any growth from new subscriptions - compared to total subscription
revenue in 2001 of £1m.
Cross-selling at high margins
This strong revenue base will be enhanced by Electric Word's ability to generate
additional revenues at high margins by cross-selling further products to the
database of newsletter subscribers.
Three new conferences established and books business acquired
2001 saw the established conference business acquired with Lottery Monitor built
up from two to five events and, in the first quarter of 2002, conferences have
also been successfully launched for the Optimus education titles.
Late in 2001 the company acquired the schools management publishing business of
The Stationery Office. This comprised a valuable list of current books,
including stock, three newsletters and special reports. The acquisition was at
zero net cost, with a small royalty payable to The Stationery Office on future
sales. In addition to accelerating the company's future book publishing plans,
the acquisition has generated some immediate book sales revenue and further
demonstrated the value of cross-selling against the growing subscriber database.
Revenue per subscription up by 70%
Additional sales from conferences and books, combined with price increases,
increased the revenue per subscription by 70% to £101 in 2001 against 2000.
Divisions and current trading
Peak Performance
Peak Performance publishes professional education newsletters for sports
doctors, therapists, coaches and athletes themselves. The long-established Peak
Performance newsletter was followed in the second half of 2000 by Sports Injury
Bulletin (SIB), which has been built to a circulation of over 2,400.
The key to success in the Peak Performance division has been the fact that 85%
of subscribers pay by a continuous payment method. This improves the reliability
of renewal revenue and has meant that, following many years of strong growth,
the mature Peak Performance newsletter has this year been used to generate cash
to fund the marketing investment in newer products (such as SIB) that generate a
higher return on that investment.
The new financial year has started well for both products, with a strong
increase in new subscription orders from the internet which has lowered the cost
of acquiring new customers and broadened their geographical base.
Optimus
The most important engine of the company's growth this year has been the
strength of demand for the company's Optimus brand of education management
newsletters. Optimus was acquired with four titles in May 2000 on an all-share
performance-based deal completed in March 2001. The two Optimus principals
joined the Electric Word team and have built the division by launching five
further education management newsletters (four in 2000) and acquiring one (also
in 2000). Since then three further titles have been acquired as part of The
Stationery Office books acquisition and merged into similar existing Optimus
titles.
The priority over the last year has been to build subscription numbers, and this
has been achieved both in the new titles (all except one of which have now
reached break-even) and, equally, in the original, more mature titles, for which
new markets have been found and prices increased. The result has been an
outstanding year, with new subscriber acquisitions increasing tenfold between
the second and fourth quarters. The first quarter of 2002 has seen this
aggressive marketing investment successfully continue at the high levels
achieved in the last quarter of 2001.
The next stage of development for this division is to increase average customer
values further by cross-selling other products. The year has already seen two
significant steps in this direction: firstly, the books acquired from The
Stationery Office at the end of 2001 have generated an immediate cash return at
a high margin from Optimus' newsletter customers and, secondly, the Electric
Word conference division was launched into the Optimus education management
sector. The result was that the PSHE & Citizenship Update newsletter provided
the foundation of a sell-out audience of 400 delegates for January's conference
on managing the implementation of the new Citizenship curriculum although the
majority of the delegates were non-subscribers and an excellent source of
further subscription sales.
Lottery Monitor and conferences
Lottery Monitor, the leading authority on the distribution of Lottery funding,
is aimed primarily at Local Authority external funding officers. Along with its
sister title for schools funding and two established conferences, Lottery
Monitor was acquired in July 2000.
The division's key objectives in 2001 were to build the subscription base and
expand the conferences. Both have been achieved: paid subscriber numbers for
this niche title have increased by 46% in 18 months, and the conferences have
expanded in both scope and type. The 5th annual UK Lottery conference was marked
by a record attendance and the fact that it provided one of the first platforms
for the new Secretary of State for Culture, Media and Sport following the
general election earlier that month. In addition, four other conferences were
successfully produced: a Scottish national event and three new regional events.
In the current year the conference division is planned to expand from five to 12
events, driven partly by the move in January 2002 into Optimus-branded education
management conferences.
Future prospects
Organic growth
The achievement of critical mass in the last quarter of 2001 means that the
existing businesses can themselves generate the cash required to fuel further
growth in their current markets. Electric Word's remaining cash can therefore be
invested in developing new products, both within existing and adjacent sectors,
to accelerate growth in future years.
Acquisitions
Electric Word's track record in growing acquired businesses has been very
encouraging. Optimus Publishing (acquired in May 2000) has been pushed from
revenues of £65,000 in 1999 to £315,000 in 2001. Turnover in Lottery Monitor
(acquired in August 2000) has grown by 23% in its first year. The marketing,
infrastructure and publishing management expertise that the company is able to
bring to acquired businesses make niche, targeted acquisitions that fit easily
within the existing product portfolio very attractive - if they can be financed
at a reasonable cost and without excessively diluting shareholders. At the same
time, the high returns on marketing money invested in the existing business in
the last year make organic growth the first priority for Electric Word's
existing resources. Acquisitions will become particularly important in future
years when they can be financed from the significant cashflows that are expected
to result from the current products reaching maturity.
The last year has been very good to Electric Word, particularly because of the
strength of our market sectors. But just as important has been the hard work of
our excellent staff, editors and writers. In particular we would like to record
our thanks to Ed Tranham, who joined Electric Word in May 2000 and leaves at the
end of June to pursue full-time his other business interests. He will retire
from the board by rotation at the Annual General Meeting. At the same time I
have great pleasure in announcing the appointment of Dominic Jacquesson aged 32
to the Board as Chief Operating Officer. This strong team, combined with a
proven, subscription-based business model provides a solid foundation for growth
and we look forward to the future with confidence.
Nigel Wray Julian Turner
Chairman Chief Executive
28 February 2002
Electric Word Plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 November 2001
2001 2000
Notes £ £
TURNOVER 1 1,416,609 639,057
COST OF SALES
Marketing costs (785,635) (237,472)
Other cost of sales (623,491) (226,208)
GROSS PROFIT 7,483 175,377
Operating expenses (net) 2 (770,019) (473,994)
(762,536) (298,617)
Amortisation of goodwill (139,625) (57,762)
OPERATING LOSS (902,161) (356,379)
Interest receivable 3 9,800 30,298
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 4 (892,361) (326,081)
Taxation 6 (251) -
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION 17 (892,612) (326,081)
LOSS PER SHARE
Basic 7 (1.24)p (0.62)p
Diluted 7 (1.24)p (0.62)p
The operating loss for the year arises from the group's continuing operations.
No separate statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the profit and loss account.
Electric Word Plc
CONSOLIDATED BALANCE SHEET
30 November 2001
Notes Group Group
2001 2000
£ £
FIXED ASSETS
Intangible assets 8 1,183,859 1,315,484
Tangible assets 9 17,671 25,925
1,201,530 1,341,409
CURRENT ASSETS
Stocks 11 3,750 7,368
Debtors 12 157,624 73,701
Cash at bank and in hand 368,649 574,679
530,023 655,748
CREDITORS: Amounts falling due within one year
(including convertible debt)
Deferred revenue (754,895) (357,670)
Other creditors (368,501) (106,718)
13 (1,123,396) (464,388)
NET CURRENT (LIABILITIES)/ASSETS (593,373) 191,360
TOTAL ASSETS LESS CURRENT LIABILITIES 608,157 1,532,769
CREDITORS: Amounts falling due after more than one year 14 - (400,000)
(including convertible debt)
NET ASSETS 608,157 1,132,769
CAPITAL AND RESERVES
Called up share capital 16 770,168 627,858
Share premium account 17 1,262,705 986,705
Merger reserve 17 105,011 (96,227)
Other reserve 17 - 251,548
Profit and loss account 17 (1,529,727) (637,115)
SHAREHOLDERS' FUNDS 608,157 1,132,769
Electric Word Plc
COMPANY BALANCE SHEET
30 November 2001
Notes Company Company
2001 2000
£ £
FIXED ASSETS
Intangible assets 8 1,183,859 978,045
Tangible assets 9 17,671 1,172
Investments 10 330,956 579,504
1,532,486 1,558,721
CURRENT ASSETS
Stocks 11 3,750 -
Debtors 12 157,624 450,841
Cash at bank and in hand 368,649 433,191
520,023 884,032
CREDITORS: Amounts falling due within one year (including convertible
debt)
Deferred revenue (754,895) (59,153)
Other creditors (371,601) (75,719)
13 (1,126,496) (134,872)
NET CURRENT (LIABILITIES)/ASSETS (596,473) 749,160
TOTAL ASSETS LESS CURRENT LIABILITIES 936,013 2,307,881
CREDITORS: Amounts falling due after more than one year 14 - (534,718)
(including convertible debt)
NET ASSETS 936,013 1,773,163
CAPITAL AND RESERVES
Called up share capital 16 770,168 627,858
Share premium account 17 1,262,705 986,705
Merger reserve 17 - -
Other reserve 17 - 251,548
Profit and loss account 17 (1,096,860) (92,948)
SHAREHOLDERS' FUNDS 936,013 1,773,163
Electric Word Plc
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 November 2001
Notes 2001 2000
£ £
Cash flow from operating activities 19a (189,173) (278,545)
Returns on investments and servicing of finance 19b 9,800 30,298
Taxation (20,870) -
Capital expenditure and financial investment 19b (5,787) (27,023)
Acquisitions and disposals 19b - (494,234)
(206,030) (769,504)
Financing 19b - 1,293,134
(DECREASE)/INCREASE IN CASH IN THE YEAR (206,030) 523,630
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN FUNDS
2001 2000
£ £
(Decrease)/increase in cash in the year (206,030) 523,630
MOVEMENT IN NET (DEBT)/FUNDS IN YEAR (206,030) 523,630
NET FUNDS AT 1 DECEMBER 2000 574,679 51,049
NET FUNDS AT 30 NOVEMBER 2001 368,649 574,679
NOTES TO THE FINANCIAL STATEMENTS
For the period ended 30 November 2001
1. TURNOVER
The group's turnover and loss on ordinary activities before taxation were
all derived from its principal activity. Sales were made in the following
geographical markets:
2001 2000
£ £
United Kingdom 1,399,136 611,305
Other 17,473 27,752
1,416,609 639,057
Publishing 1,065,663 629,942
Events 215,182 4,265
Other 135,764 4,850
1,416,609 639,057
Further segmental information has not been given since, in the opinion of
the directors, this might be seriously prejudicial to the commercial
interests of the group.
OPERATING EXPENSES (NET) 2001 2000
£ £
Other operating income (27,921) -
Administration expenses 797,940 473,994
770,019 473,994
INTEREST RECEIVABLE 2001 2000
£ £
Bank interest 9,800 30,298
LOSS ON ORDINARY ACTIVITIES 2001 2000
BEFORE TAXATION £ £
Loss on ordinary activities before
taxation is stated after charging:
Depreciation and amounts written
off tangible fixed assets 14,041 10,756
Amortisation of intangible
fixed assets 139,625 57,762
Operating lease rentals:
Land and buildings 25,083 -
Auditors' remuneration :
audit services 17,000 19,000
: non-audit services 16,355 10,750
EMPLOYEES 2001 2000
No. No.
The average monthly number of persons (including
directors) employed by the group during the year was:
Office and management 15 14
2001 2000
£ £
Staff costs for the above persons:
Wages and salaries 443,215 237,592
Social security costs 41,454 24,880
484,669 262,472
DIRECTORS' REMUNERATION
In respect of the directors of Electric Word Plc
2001 2000
Salary Bonus Total Salary Bonus Total
£ £ £ £ £ £
JJC Turner 63,333 5,850 69,183 40,462 - 40,462
SR Stein 38,000 - 38,000 35,273 - 35,273
E Tranham 38,000 10,000 48,000 17,481 8,667 26,148
NW Wray - - - - - -
A Ageh - - - - - -
P Rigby - - - - - -
139,333 15,850 155,183 93,216 8,667 101,883
The comparative figures represent directors' remuneration for the period
from appointment and do not represent a full year's charge.
TAXATION 2001 2000
£ £
UK corporation tax
Prior year under provision 251 -
There is no corporation tax charge for the current year due to the
availability of accumulated losses. Accumulated losses for the group at 30
November 2001 were approximately £1,300,000 (2000: £600,000).
2. LOSS PER ORDINARY SHARE
The calculation of loss per ordinary share is based on the following
losses and numbers of shares.
Basic Basic
2001 2000
£ £
Loss for the financial year (892,612) (326,081)
2001 2000
No. of No. of
shares shares
Weighted average number of shares 72,150,180 52,575,538
There is no dilutive effect from the issue of share options, warrants or
the future redemption of convertible loan stock.
INTANGIBLE FIXED ASSETS Goodwill Magazines Total
£ £ £
GROUP
Cost
1 December 2000 1,338,246 50,000 1,388,246
Additions 8,000 - 8,000
30 November 2001 1,346,246 50,000 1,396,246
Amortisation
1 December 2000 52,762 20,000 72,762
Charged in the year 134,625 5,000 139,625
30 November 2001 187,387 25,000 212,387
Net book value
30 November 2001 1,158,859 25,000 1,183,859
30 November 2000 1,285,484 30,000 1,315,484
8 INTANGIBLE FIXED ASSETS (continued) Goodwill Magazines Total
£ £ £
COMPANY
Cost
1 December 2000 1,011,770 - 1,011,770
Transferred from group company - 50,000 50,000
Additions 334,476 - 334,476
30 November 2001 1,346,246 50,000 1,396,246
Amortisation
1 December 2000 33,725 - 33,725
Transferred from group company - 20,000 20,000
Charged in the year 153,662 5,000 158,662
30 November 2001 187,387 25,000 212,387
Net book value
30 November 2001 1,158,859 25,000 1,183,859
30 November 2000 978,045 - 978,045
The increase in goodwill during the year arises principally from the
hive up of the trade, assets and liabilities of Optimus Publishing
Limited that took place on 1 December 2000.
TANGIBLE FIXED ASSETS
Computer Fixtures,
GROUP equipment fittings & Total
£ equipment £
£
Cost
1 December 2000 38,960 4,411 43,371
Additions 5,787 - 5,787
30 November 2001 44,747 4,411 49,158
Depreciation
1 December 2000 15,216 2,230 17,446
Charged in the year 13,371 670 14,041
30 November 2001 28,587 2,900 31,487
Net book value
30 November 2001 16,160 1,511 17,671
30 November 2000 23,744 2,181 25,925
9 TANGIBLE FIXED ASSETS (continued) Fixtures,
Computer fittings & Total
COMPANY equipment equipment £
£ £
Cost
1 December 2000 4,367 - 4,367
Transferred from group company 34,593 4,411 39,004
Additions 5,787 - 5,787
30 November 2001 44,747 4,411 49,158
Depreciation
1 December 2000 3,195 - 3,195
Transferred from group company 12,021 2,230 14,251
Charged in the year 13,371 670 14,041
30 November 2001 28,587 2,900 31,487
Net book value
30 November 2001 16,160 1,511 17,671
30 November 2000 1,172 - 1,172
INVESTMENTS Shares in
COMPANY subsidiary
undertakings
£
Cost
1 December 2000 and 30 November 2001 1,579,404
Provision for diminution in value
1 December 2000 999,900
Charged in the year 248,548
30 November 2001 1,248,448
Net book value
30 November 2001 330,956
30 November 2000 579,504
10 INVESTMENTS (continued)
The company holds more than 20% of the share capital of the following
companies, all of which are incorporated in England and Wales:
Subsidiary undertakings: Class of % of shares Nature of
shareholding held business
Electric Word Publishing Limited Ordinary 100% Dormant
Optimus Publishing Limited Ordinary 100% Dormant
Lottery Monitor Limited Ordinary 100% Dormant
Peak Performance Publishing Limited Ordinary 100% Dormant
STOCKS Group Group Company Company
2001 2000 2001 2000
£ £ £ £
Promotional goods 3,750 7,368 3,750 -
DEBTORS Group Group Company Company
2001 2000 2001 2000
£ £ £ £
Due within one year:
Trade debtors 54,498 634 54,498 494
Other debtors 6,189 26,784 6,189 3,162
Prepayments 96,937 46,283 96,937 4,504
157,624 73,701 157,624 8,160
Due after one year:
Amounts due from group undertakings - - - 442,681
157,624 73,701 157,624 450,841
CREDITORS: Amounts falling due within one year Group Group Company Company
2001 2000 2001 2000
£ £ £ £
Trade creditors 107,493 12,736 107,493 -
Corporation tax - 20,619 - 20,619
Other taxation and social security costs 135 - 135 -
Accruals 220,873 73,363 220,873 55,100
Deferred revenue 754,895 357,670 754,895 59,153
Unsecured convertible loan stock 40,000 - 40,000 -
Amounts due to group undertakings - - 3,100 -
1,123,396 464,388 1,126,496 134,872
The convertible unsecured loan stock will automatically be converted
into fully paid ordinary shares at the average mid-market price per
share on 30 March 2002 or before at the request of the loan stock
holders.
CREDITORS: Amounts falling due after more than Group Group Company Company
one year
2001 2000 2001 2000
£ £ £ £
Unsecured convertible loan stock - 400,000 - 400,000
Amounts due to group undertakings - - - 134,718
- 400,000 - 534,718
15 FINANCIAL INSTRUMENTS
The group's financial instruments comprise cash and short-term deposits.
The numerical disclosures in these notes deal with the financial assets
and liabilities defined in FRS 13 as financial instruments.
The main risks arising from the group's financial instruments are
interest rate risk and liquidity risk. The policies for managing these
risks are regularly reviewed and agreed by the Board.
It is, and has been throughout the year under review, the group's policy
that no trading in financial instruments shall be undertaken.
Short term debtors and creditors
Short term debtors and creditors have been excluded from the following
disclosures.
Interest Rate/Liquidity Risk
Cash balances are placed so as to maximise interest earned while
maintaining the liquidity requirements of the business. When seeking
borrowings, the directors consider the commercial terms available and,
in consultation with their advisers, consider whether such terms should
be fixed or variable and are appropriate to the business. The directors
review the placing of cash balances on an ongoing basis. Any surplus
cash balances during the year were placed on short term deposit accounts
at standard bank interest rates. The financial assets of the group at 30
November 2001 were designated in sterling and were earning standard bank
interest rates. These are disclosed under cash at bank and in hand of
£368,649 (2000: £574,679).
Exchange risk
The group operates in the United Kingdom and as such all the group's
financial assets and liabilities are denominated in sterling and there
is no exposure to exchange risks.
Facility
The group does not currently have an overdraft facility.
Fair value
The directors consider that the fair value of the group's financial
instruments do not significantly differ from their book values.
SHARE CAPITAL 2001 2000
£ £
Authorised:
200,000,000 ordinary shares of 1p each 2,000,000 2,000,000
Allotted, issued and fully paid:
77,016,710 (2000: 62,785,758) ordinary shares of 1p each 770,168 627,858
On 29 March 2001, 5,030,952 ordinary shares of 1p each were issued at 5p
per share to satisfy the deferred consideration for the purchase of
Optimus Publishing Limited.
In accordance with the provisons of section 131 of the Companies Act
1985, the company has transferred to merger reserve the premium arising
on the issue of shares as consideration for the subsidiary undertaking
acquired.
On 7 April 2001, 9,200,000 shares were issued at 4p per share to satisfy
the purchase of Lottery Monitor Limited.
Unapproved share option scheme
Date of Grant Number of ordinary shares Exercise price
21 March 2000 (note 1) 9,200,000 5p
These options are exercisable, subject to certain restrictions, at any
time between the third and tenth anniversaries of the date of grant.
Enterprise Management Incentive scheme
Date of Grant Number of ordinary shares Exercise price
29 March 2001 (note 1) 9,800,000 5p
29 March 2001 2,000,000 4p
25 October 2001 5,700,000 2p
These options are exercisable, subject to certain restrictions, at any
time between the third and tenth anniversaries of the date of the grant.
Note 1
Options originally in issue at the time of the Placing and Admission to
AIM.
16. SHARE CAPITAL (continued)
Warrants
As at 30 November 2001 the following warrants had been granted:
Date of Grant Notes Number of ordinary shares Exercise price
17 March 2000 1 12,857,160 1p
23 March 2000 2 5,550,000 5p
1. Warrants exercisable from the date of grant until the sixth anniversary
of the date of grant over ordinary shares of 1p each in Electric Word
Publishing Limited. There is a put and call option in place whereby the
warrant holders granted the company an option to require them to sell
and the company granted the warrant holders an option to require the
company to purchase any shares in Electric Word Publishing Limited
arising on the exercise of the warrants on a one for one basis in
exchange for the same number of shares in the company.
2. Warrants exercisable at any time up to five years from the date of grant.
RESERVES Share Merger Other Profit and Total
premium reserve reserve loss account
£ £ £ £ £
GROUP
1 December 2000 986,705 (96,227) 251,548 (637,115) 504,911
Loss for year - - - (892,612) (892,612)
Premium on allotment during year 276,000 201,238 - - 477,238
Issue of shares - - (251,548) - (251,548)
30 November 2001 1,262,705 105,011 - (1,529,727) (162,011)
COMPANY
1 December 2000 986,705 - 251,548 (92,948) 1,145,305
Loss for year - - - (1,205,150) (1,205,150)
Premium on allotment during year 276,000 201,238 - - 477,238
Issue of shares - - (251,548) - (251,548)
Transfer - (201,238) - 201,238 -
30 November 2001 1,262,705 - - (1,096,860) 165,845
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS Group Group Company Company
2001 2000 2000
2001
£ £ £ £
Loss for the financial year (892,612) (326,081) (1,205,150) (92,948)
Issue of shares 142,310 306,429 142,310 627,858
Premium on allotment during year 477,238 986,705 276,000 986,705
Transfer (251,548) 251,548 (50,310) 251,548
(524,612) 1,218,601 (837,150) 1,773,163
Opening shareholders' funds 1,132,769 (85,832) 1,773,163 -
Closing shareholders' funds 608,157 1,132,769 936,013 1,773,163
CASH FLOWS 2001 2000
£ £
a Reconciliation of operating loss to net cash outflow from operating
activities
Operating loss (902,161) (356,379)
Amortisation 139,625 57,762
Depreciation 14,041 10,756
Decrease in stocks 3,618 1,832
Increase in debtors (83,923) (34,403)
Increase in creditors 639,627 41,887
Net cash outflow from operating activities (189,173) (278,545)
16. CASHFLOW (continued)
b Analysis of cash flows for headings netted in the cash flow statement 2001 2000
£ £
Returns on investments and servicing of finance
Interest received 9,800 30,298
Net cash inflow from returns on investments and servicing of finance 9,800 30,298
Capital expenditure and financial investment
Purchase of tangible fixed assets (5,787) (27,023)
Net cash outflow from capital expenditure and financial investment (5,787) (27,023)
Acquisitions and disposals
Purchase of subsidiary undertakings - (638,712)
Net cash acquired with subsidiary undertakings - 144,478
Net cash outflow from acquisitions and disposals - (494,234)
Financing
Issue of share capital - 1,506,429
Equity share issue expenses - (213,295)
Net cash outflow from financing - 1,293,134
c Analysis of funds At Cash flow At 30
1 December £ November
2000 2001
£ £
Cash at bank and in hand 574,679 (206,030) 368,649
19. DIRECTORS' INTERESTS IN SHARE OPTIONS AND WARRANTS
In addition to their interests in shares, the directors have the
following interests in share options and warrants.
Unapproved share option scheme
Number Number Number of Number Exercise Date from Expiry
options
of options of options of options price which Date
lapsed
at 1 granted at 30 (pence) exercisable
in year
December during November
2000 the year 2001
A Ageh 700,000 - - 700,000 5p 21/3/03 21/3/10
P Rigby 500,000 - - 500,000 5p 21/3/03 21/3/10
S Stein 2,000,000 - (2,000,000) - - - -
J Turner 7,000,000 - (3,000,000) 4,000,000 5p 21/3/03 21/3/10
N Wray 3,000,000 - - 3,000,000 5p 21/3/03 21/3/10
E Tranham 900,000 - (900,000) - - - -
700,000 - (700,000) - - - -
Enterprise Management Incentive scheme
Number Number Number of Number Exercise Date from Expiry
options
of options of options of options price which Date
lapsed
at 1 granted at 30 (pence) exercisable
in year
December during November
2000 the year 2001
S Stein - 2,000,000 - 2,000,000 5p 29/3/03 29/3/10
J Turner - 3,000,000 - 3,000,000 5p 29/3/03 29/3/10
E Tranham - 900,000 - 900,000 5p 29/3/03 29/3/10
- 700,000 - 700,000 4p 29/3/03 29/3/10
- 150,000 - 150,000 2p 25/10/04 25/10/11
The share options granted above will only be exercisable if, at the date
of exercise, the share price exceeds the trigger price of between 5p and
15p for 90 consecutive days or the control of the company changes.
20 DIRECTORS' INTERESTS IN SHARE OPTIONS AND WARRANTS (continued)
Warrants Number of Exercise Date from
warrants held at price which Expiry
1/12/00 and (pence) exercisable date
30/11/01
J Turner 9,428,584 1p 17/3/00 -
N Wray 1,928,574 1p 17/3/00 -
S Stein 857,144 1p 17/3/00 -
The warrants noted above are exercisable over the 1p ordinary shares of
Electric Word Publishing Limited but are subject to a put and call
option as described in note 16 to the financial statements.
COMMITMENTS UNDER OPERATING LEASES
At 30 November 2001 the group and company had annual commitments under
non-cancellable operating leases as follows:
2001 2000
£ £
Land and buildings
expiring in the second to fifth year 43,000 -
For further information please call
Julian Turner, Chief Executive 020 7251 9034
Electric Word plc
www.electricwordplc.com
John Depasquale 020 7648 8731
Seymour Pierce
Jdp@seymourpierce.com
This information is provided by RNS
The company news service from the London Stock Exchange
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