TIDMELE
RNS Number : 2255B
Electric Word PLC
15 February 2011
15 February 2011
ELECTRIC WORD PLC
Preliminary Results to 30 November 2010
Electric Word, the specialist information publisher, announced
today audited results for the year ended 30 November 2010.
-- Revenue of GBP14.6m down 11% with public sector spending
depressed between general election and comprehensive spending
review
-- The Group was prepared for the revenue decline and maintained
adjusted profit before tax* at GBP1.9m
-- Group operating margin* increases to 14% (2009: 13%)
-- Whilst diluted earnings per share is up 375% on higher
profits, adjusted earnings per share* is down 31% following the
share placing in August 2009
-- Cash generation from operations1 up 205% to GBP1.8m as
abnormally high 2009 year end debtors pay through and no
acquisition related working capital demands in period
-- Share placing in November 2010 raised GBP2.4m (net of costs)
with (including costs) GBP1.1m spent on acquiring Radcliffe
Publishing in November 2010 and GBP1.1m on buying out a contract in
the iGaming sector in January 2011
-- Integration of acquisitions on track and performance in line
with expectations
-- GBP1.5m debt facility renegotiated with the Group's bankers
in January 2011 with repayment profile over the period to November
2014
-- Continued opportunities for organic and acquired growth
-- Current trading is in line with the Board's expectations
Julian Turner, Chief Executive of Electric Word, commented:
"2010 was a year of difficult market conditions. However,
Electric Word showed resilience in its profits and cash generation.
Furthermore the Group made an exciting acquisition at the end of
the year in Radcliffe Publishing which supplies professional
development and other resources in primary healthcare.
The Board expects 2011 to continue to be challenging,
particularly in the public sector markets. Sentiment in the schools
market remains cautious and the trends seen in the second half of
2010 are likely to take some time to reverse through the course of
2011. However, the Business Information division continues to
progress and as a result current trading for the Group as a whole
remains in line with the Board's expectations."
Financial summary (GBP'000) 2010 2009 Change
------------------------------------- ------- -------- -------
Revenue 14,607 16,481 -11%
------------------------------------- ------- -------- -------
Gross Profit 7,006 7,431 -6%
------------------------------------- ------- -------- -------
Adjusted EBITA* 1,996 2,067 -3%
------------------------------------- ------- -------- -------
Adjusted profit before tax* 1,943 1,938 -%
------------------------------------- ------- -------- -------
Less: amortisation and impairment (623) (1,137)
------------------------------------- ------- -------- -------
Less: restructuring costs (138) (295)
------------------------------------- ------- -------- -------
Less: acquisition-related costs (231) -
------------------------------------- ------- -------- -------
Less: share based payment charges
and costs (187) (96)
------------------------------------- ------- -------- -------
Less: notional accounting charges - (55)
------------------------------------- ------- -------- -------
Profit / (loss) before tax (PBT) 764 355 +115%
------------------------------------- ------- -------- -------
Diluted earnings per share 0.19p 0.04p +375%
------------------------------------- ------- -------- -------
Adjusted diluted earnings per
share* 0.58p 0.84p -31%
------------------------------------- ------- -------- -------
Cash flow from operating activities
before interest and tax 1,751 574 +205%
------------------------------------- ------- -------- -------
Cash balance 2,146 704 +205%
------------------------------------- ------- -------- -------
Net funds / (debt) 646 (1,403)
------------------------------------- ------- -------- -------
* Adjusted numbers in the current year, as set out in note 5,
exclude amortisation and impairment of goodwill and intangible
assets, restructuring costs (non-trading and of a non-recurring
nature), share based payment costs, the tax impact of the adjusting
items, and non-cash tax charges.
Non-cash tax charges relate to movements on deferred tax such as
the use of tax losses or tax credits from the recognition of tax
losses.
The comparative amount for notional accounting charges is not a
cash item and encompasses the unwinding of discounts on preference
shares and provisions.
1 This excludes a loan to the Employee Benefit Trust of
GBP171,000.
The Company was founded in 2000 and has grown steadily through a
combination of organic growth and acquisitions, of which it has
made 15 so far. With net funds of GBP0.6m and adjusted EBITDA* of
GBP2.1m the Directors believe it is well capitalised.
Electric Word is characterised by a highly analytical approach
based on detailed marketing reporting and financial modelling to
ensure that investment and effort are clearly focused on the areas
of greatest return.
ENDS
Julian Turner, Chief Executive
Electric Word 020 7954 3470
Andrew Potts
Panmure Gordon
Nicola Biles / Tim Spratt 020 7459 3600
Financial Dynamics 020 7831 3113
Notes to Editors
Electric Word plc is a specialist media company operating in a
range of attractive and information-hungry niche markets. That
information is provided in a wide range of formats through three
divisions:
-- Professional: provides professional development and other
resources to the public sector through professional communities in
schools, primary health care and other institutions, including
school leaders and managers, teachers, special needs and speech
therapy professionals and General Practitioners and practice
managers - primarily in the UK.
-- Business information: is an international provider of insight
and analysis across the business of sport (for international sports
federations, brands and sponsors, broadcasters and media, major
event organisers), and includes a valuable niche in the online
gaming industry for both the affiliates that market the gaming
sites and the industry itself.
-- Specialist consumer: provides high-quality niche content,
mainly online, to specialist consumer markets including sport,
aimed at competitive athletes and coaches, and education, providing
information for parents to support their children's schooling and
development.
The range of products and services offered to these communities
include subscription content, magazines, websites, events, books,
special reports and bespoke research and publishing. In 2010 62% of
revenue came from selling content (2009: 65%), which included 23%
from subscription revenue (2009: 26%), and 38% came from selling
access to these communities (2009: 35%) in the form of advertising
and sponsorship, exhibition space at events, bespoke publishing and
sales of third-party products.
CHAIRMAN'S STATEMENT
For the year ended 30 November 2010
It is clear to all that 2010 was a very tough year for many
companies and Electric Word did not escape from that. What has been
shown though is that even in these difficult market conditions,
which significantly reduced the revenue year on year for the first
time in the Group's history, Electric Word's profits and cash
generation were resilient. Adjusted PBT* was maintained at the
levels of the previous year despite the revenue depression through
improved margins and lower interest costs and the Group generated
significant cash from its operating activities.
Further to that the Group made an exciting acquisition at the
end of the year in Radcliffe Publishing, which supplies
professional development and other resources in primary health
care. This acquisition significantly strengthens the Professional
division and sits well with the division's work for the schools
market through several cross-over services and similar products.
Furthermore the Board views the Health sector as a rich opportunity
for the Group's skills. With the devolution of control by the
current government and in a market where continuing professional
development and compliance are integral and mandatory, there are
opportunities for information businesses which are rich in content,
which Radcliffe brings to the Group, and strong on delivery
methods. Resources and skills will be channelled towards this
sector to ensure that the most is made of this opportunity.
The Radcliffe acquisition was funded through a placing of shares
in November 2010 which, combined with the strong improvement in
operating cash generation in the year, led to the Group finishing
with net funds of GBP0.6m and placed Electric Word in a strong
position to grow further. As reported in the November 2010 placing
announcement, since year end GBP1.05m has been invested in a deal
to buy out our partner (Affiliate Media, Inc) from our iGaming
Affiliate publishing and events business.
The Group has also continued to invest internally, with GBP0.25m
being spent on a major project to improve our e-mail marketing
infrastructure and web development through the year. Web
development has increased in every part of the business and the
biggest current project is the transition of the Professional
Education subscription products from paper to higher value online
offerings. This is expected to continue through 2011, with the
planned launch of a new integrated online service for schools
towards the end of this year.
The result of this digital transition is expected to be a
higher-margin and higher-value subscription business. In 2009 and
2010 however subscription revenues were impacted by reduced
spending in schools particularly in the uncertain period between
the General Election and the Comprehensive Spending review ("CSR")
when schools had very little visibility on future budgets.
The CSR itself provides considerable opportunity for the Group
as the professional development and compliance demands on schools
have remained while support from central government and Local
Authorities has been cut back. We expect demand to recover only
slowly through 2011 and beyond as schools will take time to regain
confidence in future funding and start to replace previously free
sources of information and advice.
Against that backdrop the Group is satisfied with what has been
achieved this year. It is pleasing that the Group has been able to
maintain trading profit (adjusted EBITA*) at a similar level to the
prior year. This has been achieved despite the revenue fall through
the cost savings implemented in the first half of 2009, reduced
marketing spend as that has moved online, and through continued
careful cost and margin review.
In the Business Information division iGaming Business has had
another good year of growth through its affiliate marketer events,
but Sport Business was in its lowest year of a four year cycle with
no major Olympic bidding spend, and the FIFA World Cup bidding
competition failing to replace much of that spend.
The Specialist Consumer division saw reduced revenue and profits
as it had a further transitional year of ceasing the final print
offerings, re-brandings and re-configuring its online content. It
has redefined its offering to its sports communities across ultra
dedicated sports players and coaches, injury practitioners, and
more general offerings. My Child was rebranded into The School Run,
a site still offering parents aid with their children's' learning
and practical skills together with a premium site for the children
to aid their own development in My Learning Journey.
The Board would like to thank the staff in all of Electric
Word's divisions, as well as our external experts and partners, for
their efforts in a tough market through 2010. The expertise and
creativity they have shown will serve the Group well as we enter
the exciting period ahead.
Maintaining adjusted PBT in a difficult economic environment was
an achievement in 2010. The Board expects 2011 to continue to be
challenging, particularly in the public sector markets. Quarter one
in 2010 was especially strong with record numbers attending the
education events. Quarter one in 2011 therefore suffers by
comparison as the sentiment in the schools market remains cautious
and the trends seen in the second half of 2010 are likely to take
some time to reverse through the course of 2011. The Business
Information division continues to progress however and as a result
current trading for the Group as a whole remains in line with the
Board's expectations.
Against this backdrop the Group is now moving from a period of
consolidation to a greater emphasis on investing in future growth.
That means investing in new sectors such as Healthcare, in which
rapid change is creating many new opportunities and where existing
publishing skills can be applied to new niche communities; it means
investing in building profits and margins in the Business
Information division following the buyout of one of our joint
venture partners; and it means scaling up the investment in web
development and e-marketing infrastructure that had already been
increased in 2010. With a cash generative business and a strong
balance sheet the Group is well placed to make the most of the
expected medium-term market opportunities as well as further
potential acquisitions.
Peter Rigby
Chairman
14 February 2011
CHIEF EXECUTIVE'S STATEMENT
For the year ended 30 November 2010
Revenue by activity
GBP'000 2010 2009
-------------------------------- ------- ----- ------- -----
Subscriptions 3,406 23% 4,291 26%
-------------------------------- ------- ----- ------- -----
Event delegates 2,226 15% 2,382 15%
-------------------------------- ------- ----- ------- -----
Books and reports 3,428 24% 4,015 24%
-------------------------------- ------- ----- ------- -----
Sales of content 9,060 62% 10,688 65%
-------------------------------- ------- ----- ------- -----
Advertising, sponsorship
and exhibitions 3,356 23% 2,980 18%
-------------------------------- ------- ----- ------- -----
Bespoke publishing services 358 2% 487 3%
-------------------------------- ------- ----- ------- -----
Commerce 1,833 13% 2,326 14%
-------------------------------- ------- ----- ------- -----
Sales of access to communities 5,547 38% 5,793 35%
-------------------------------- ------- ----- ------- -----
Total 14,607 100% 16,481 100%
-------------------------------- ------- ----- ------- -----
Profit by division
GBP'000 2010 2009 %
--------------- ------- ------------ -------- -------------- ------------
Total Acquisition Organic Total Improvement
--------------- ------- ------------ -------- -------------- ------------
(all organic) (organic)
--------------- ------- ------------ -------- -------------- ------------
Professional
--------------- ------- ------------ -------- -------------- ------------
Revenue 9,058 21 9,037 10,569 -14%
--------------- ------- ------------ -------- -------------- ------------
Adjusted
EBITA* 1,887 4 1,883 1,748 +8%
--------------- ------- ------------ -------- -------------- ------------
Margin 21% 19% 21% 17%
--------------- ------- ------------ -------- -------------- ------------
Business
information
--------------- ------- ------------ -------- -------------- ------------
Revenue 4,431 - 4,431 4,272 +4%
--------------- ------- ------------ -------- -------------- ------------
Adjusted
EBITA* 837 - 837 772 +8%
--------------- ------- ------------ -------- -------------- ------------
Margin 19% 19% 18%
--------------- ------- ------------ -------- -------------- ------------
Specialist
consumer
--------------- ------- ------------ -------- -------------- ------------
Revenue 1,118 - 1,118 1,640 -32%
--------------- ------- ------------ -------- -------------- ------------
Adjusted
EBITA* 4 - 4 368 -99%
--------------- ------- ------------ -------- -------------- ------------
Margin -% -% 22%
--------------- ------- ------------ -------- -------------- ------------
Central Group
costs
--------------- ------- ------------ -------- -------------- ------------
Adjusted
EBITA* (732) - (732) (821) +11%
--------------- ------- ------------ -------- -------------- ------------
As % of Group
revenue 5% 5% 5%
--------------- ------- ------------ -------- -------------- ------------
Total Group
--------------- ------- ------------ -------- -------------- ------------
Revenue 14,607 21 14,586 16,481 -11%
--------------- ------- ------------ -------- -------------- ------------
Adjusted
EBITA* 1,996 4 1,992 2,067 -4%
--------------- ------- ------------ -------- -------------- ------------
Margin 14% 19% 14% 13%
--------------- ------- ------------ -------- -------------- ------------
Net interest
payable* (53) - (53) (129) +59%
--------------- ------- ------------ -------- -------------- ------------
Adjusted PBT* 1,943 4 1,939 1,938 -%
--------------- ------- ------------ -------- -------------- ------------
* Adjusted numbers in the current year, as set out in note 5,
exclude amortisation and impairment of goodwill and intangible
assets, restructuring costs (non-trading and of a non-recurring
nature), share based payment costs, the tax impact of the adjusting
items, and non-cash tax charges.
Non-cash tax charges relate to movements on deferred tax such as
the use of tax losses or tax credits from the recognition of tax
losses.
The comparative amount for notional accounting charges is not a
cash item and encompasses the unwinding of discounts on preference
shares and provisions.
In 2010 Electric Word saw its organic trading profit (adjusted
EBITA*) drop by only 4% despite an 11% reduction in revenue as a
result of the tough market conditions. It had removed less
profitable business activities, sacrificing revenue for margin, and
implemented restructuring for cost reduction in H1 2009, and
continued this careful deployment of resource through 2010. This
saw margin improve across the Group by over 1%.
Professional division
The division comprises the Optimus Education, Incentive Plus,
Speechmark and Radcliffe businesses and provides specialist
management and professional development information for school
teachers, general practitioners and other professionals working in
and with schools and primary health care. The provision of
education for children with special educational and behavioural
needs in mainstream schools continues to place new demands on
teachers' professional education and requires a range of specialist
resources, as does the devolution of a wide range of school and
general practice management responsibilities to schools and general
practices themselves. The division includes subscription
newsletters, conferences, books, magazines and a catalogue of
third-party products relating to children's behavioural and
emotional development.
GBP'000 2010 2009 Change
----------------- ------ ------------ -------- ---------------- -------
Total Acquisition Organic Total (organic)
----------------- ------ ------------ -------- ---------------- -------
Revenue 9,058 21 9,037 10,569 -14%
----------------- ------ ------------ -------- ---------------- -------
Adjusted EBITA* 1,887 4 1,883 1,748 +8%
----------------- ------ ------------ -------- ---------------- -------
Profit margin 21% 19% 21% 17%
----------------- ------ ------------ -------- ---------------- -------
Revenue down 14% reflecting tough market conditions but profits
up by 8% as operations prepared for the contraction
Revenue was down by 14% on the prior year as the market was seen
to contract between the general election and the CSR as schools and
other bodies waited to see how much money was going to be available
to them in the future and set their spending accordingly. Whilst
this has now been delivered and is largely favourable to our
products, with school budgets largely protected and generally more
devolved, school spending is expected to recover only slowly
through 2011, as the exact mechanics of the new funding environment
becomes clear.
Optimus Education has a mature portfolio of subscription
newsletters and a range of events aimed at middle and senior
managers in schools. This is supplemented by books and, now,
e-books, aimed at managers, special needs co-ordinators and
behaviour specialists. The management books area was again loss
making in the year but the division has experience of what a mature
book list can produce through its Speechmark business which has a
strong list of high-quality, practical and innovative resources for
the Education, Health and Social Care sectors which are published
for speech therapists, special needs co-ordinators and teachers,
care workers and mental health professionals. That business has
over 300 titles on its list, with some over 20 years old, and
enjoys a stable revenue base and high profit margin as a
result.
Subscription income from Optimus' management newsletters reduced
as some mature titles were closed and the market for new
subscriptions was particularly difficult. This market is however
now at the stage where it is ready to consider online subscriptions
and this year has seen much work on developing an integrated online
product bringing together all the existing websites and
newsletters. Websites for each paper newsletter were successfully
launched in 2009 and the transition to a richer and deeper digital
content offering can be expected to start to be fully sold in mid
2011. This would be expected to deliver higher margins and offer
substantial opportunities to increase the range and value of the
management information that schools are currently taking. This
transition has already taken place in both the Specialist Consumer
division and in business-to-business products such as TV Sports
Markets. Such a product offering ties in well with the reduction in
centrally provided information and services to schools and the
greater reliance on them to procure such services themselves. As a
result the medium-term prospects for renewable subscription
revenues and profits in the education business represent a
significant and exciting area of future growth.
Against the backdrop of a very hard market place, 2010 repeated
the success of 2009 in demonstrating the resilience and strength of
the valuable niches Electric Word holds in education information.
The portfolio is focused on school management, special needs,
behaviour and child protection, all areas of continuing change and
importance. Speechmark's revenues held up well despite the
challenging climate, and profits grew strongly on the back of
reduced costs. The strong performance of the Optimus conferences
business continued from 2009 into the start of the year with
several record months, but then dramatically fell between the
general election and the CSR. It has already seen signs of recovery
post CSR however and with several of their portfolio seen as
must-attend events for the responsible party in a school we expect
the revenue to prove relatively resilient again in 2011. It will in
fact be an area of organic investment as the first Speechmark
branded event was successfully run in 2010 and this will be added
to in 2011 together with Radcliffe branded events. The margin in
the Optimus books business was again weak as a result of investment
in the forward publishing list to build scale and did suffer some
losses as stock was written off following policy change in 2010.
Incentive Plus, the catalogue business supplying third party
product as well as our own to the education market continued to
suffer as spending was impacted by the recession. This is the most
peripheral of the Group's portfolio and is somewhat small scale. It
did however improve margins and was profitable.
The divisional margin of 21% (2009: 17%) is well above the
Board's target range of 16-18% as a result of careful planning
around the market downturn as well as some year on year margin
improvement. As the markets return to an improved state, the Board
expect the margin to reduce again as the division invests in
profitable growth.
The acquisition of Radcliffe strengthens the Professional
publishing by extending deeper into the primary healthcare sector
where the Government's planned reforms will, we believe, require
GPs and others in the Health sector to extend their professional
development into new areas of management expertise and compliance
responsibilities. Radcliffe is a UK-based specialist publisher
founded in 1987, focused on professional development and compliance
in General Practice and primary healthcare. It produces a range of
books for primary healthcare and general practice, including
support for General Practitioners ("GPs"), GP practice managers and
professions allied to health. It covers general primary care,
specialist areas such as child protection and palliative care, and
medical education and exam support. It also produces six journals,
including Education for Primary Care, and runs training courses for
practice nurses and receptionists. The Board believes that the
Health sector is rich in opportunity for the Group as it looks to
couple Radcliffe's strong content with its many existing skills
across the range of delivery methods, not least reinvigorating the
subscription journals, seeking out the online opportunities and
launching events under the Radcliffe title.
2011 will be a challenging year but significantly part of that
challenge will be to position the business to make the most of the
significant opportunities which will arise from profound change in
the organisation of public services, particularly health, in this
difficult period for the economy. Continuing to invest in the
division's new products and initiatives to support future growth
will therefore be essential.
Business information division
The division is an international provider of insight and
analysis with skills and experience across a range of mediums
including subscriptions, advertising and sponsorship, directories,
conferences, managed events, contract publishing, special reports
and bespoke research. Through SportBusiness Group the division
publishes for professionals across the world working in the sports
industry in governing bodies, the media, sports marketing,
sponsorship and club and event management, and, through iGaming
Business, both the industry and affiliate marketers in the online
gaming business, the biggest sector for sports sponsorship and
itself a fast-growing industry with important information and
marketing needs.
GBP'000 2010 2009 Change
----------------- ------ ------ -------
Revenue 4,431 4,272 +4%
----------------- ------ ------ -------
Adjusted EBITA* 837 772 +8%
----------------- ------ ------ -------
Profit margin 19% 18%
----------------- ------ ------ -------
Revenue up 4%, despite this being the quietest year of the four
year cycle in the business of sport, as the iGaming events
increased again with divisional margin maintained at a high level
despite the historic profit share on the iGaming events
The division grew revenue by 4% year on year, an achievement
largely attained through the success and expansion of its events
aimed at affiliates in the online gaming market. The affiliate
events and publishing business, which operates under the iGaming
Affiliate brand, has been involved in a marketing arrangement with
a business partner who helped the initial establishment of this
successful business and has since received a fee based on the
profits of the business. In January 2011 it was announced that,
with effect from December 2010, this partner was bought out of
their rights and obligations under the joint venture agreement and
fees previously paid to the partner will now remain within the
Group. This will simplify management of the business and improve
margins.
Other revenue streams, including the advertising across the
magazines, have proved resilient again despite the current macro
environment. It is especially so given that in the SportBusiness
part of the division this is the lowest of its four-year revenue
cycle, which builds largely through the Olympic games bidding
processes culminating in a highest year with the award of the
Summer games, which helped last year's comparatives.
Profit margins in the division remain high at 19% and slightly
ahead of 2009 (18%) despite a drop in profits in SportBusiness
Group as a result of lower profits from high-margin contract
publishing deals. Margins will however benefit next year from the
additional profits from the iGaming Affiliate business as a result
of buying out its former partner.
The Group's two business-to-business ("B2B") sectors, the
businesses of sport and online gaming, continue to perform well and
hold well-respected positions in their respective niche
communities. There remain further opportunities for organic
development in both the affiliate business in moving beyond the
gaming industry and in Sport where the division continues to deepen
its offering in high-value information about television and online
sports rights and develop a new product analysing sponsorship deals
data.
Specialist consumer division
This division operates in the consumer niche markets of
competitive sports athletes and coaches and related injury
professionals (Sports Performance) and of parents to support their
children's educational development (The School Run, formerly My
Child). The division is principally on-line focussed with
significant active web communities already being serviced.
GBP'000 2010 2009 Change
----------------- ------ ------ -------
Revenue 1,118 1,640 -32%
----------------- ------ ------ -------
Adjusted EBITA* 4 368 -99%
----------------- ------ ------ -------
Profit margin -% 22%
----------------- ------ ------ -------
Web sites and product offerings in process of overhaul to be
well positioned with strong visitor traffic when markets pick
up
By far the smallest of the Group's three divisions, this
division offers a route to consumers for the Professional and
Business areas of the Group's markets. The Sports Performance
business serves dedicated coaches and athletes through its Peak
Performance products and injury therapists through Sports Injury
Bulletin, both as online subscription products. The School Run
links to the other side of the school gate from the professional
division's school management businesses, targeting parents and
explaining to them how their children's education is structured and
offering practical ways in which they can get involved and
help.
It was a tough year on Sports Performance as subscription
revenue fell as legacy print subscribers continued to reduce but
were not successfully replaced through online marketing. The
products are now being restructured to deliver a better service to
general sportspeople as well as high-performance athletes and take
better advantage of the high traffic numbers the sites attract - an
average of 655,000 unique visitors per month in 2010 (2009:
670,000). In 2011 the site will be re-launched as a '.com' to
achieve a better impact in the USA and the acquisition of Radcliffe
also brings new opportunities to improve the offering for sports
medics as well as provide a channel for Radcliffe's books for
Allied Health Professionals.
The rebranding of My Child as The School Run was completed in
2010 and a complete redesign of the site started in the last
quarter, aimed at improving navigation and driving engagement and
'stickiness'. The launch of a book list in April 2010 has proved
successful and there is a strong list of titles planned for 2011.
Subscriptions have grown steadily through 2010 and by the year end
there were 4,325 active subs, although subscription revenue is
lower than last year because of the remaining legacy print revenue
that continued into 2009. The addition (in November 2009) of a
forum to the site has continued to see high levels of activity and
forum traffic now constitutes 18% of total site traffic. The site
has a database of 406,000 names (2009: 205,000) receiving the
weekly e-zine with unique visitors in November 2010 of 169,000
(2009: 101,000). This contributes to a belief in the potential of
this sector which is attractive for the Group when coupled with the
knowledge from the Professional division's education portfolio.
These two business-to-consumer ("B2C") businesses employ a model
which combines free and paid-for content with strong database
building and offers a route to consumer markets for our public
sector and business information. Conversely it continues to lead on
the online knowledge and product offerings side which are then
leveraged across the other divisions in a completed state.
Central costs
These costs represent central PLC costs which are not directly
related to the divisional trading and are not recharged. They
include Board fees and costs related to being both a PLC and a
consolidated Group.
GBP'000 2010 2009 Change
----------------------- ------ ------ -------
Adjusted EBITA* (732) (821) +11%
----------------------- ------ ------ -------
As % of Group revenue 5% 5%
----------------------- ------ ------ -------
Net interest payable* (53) (129) +59%
----------------------- ------ ------ -------
Central costs maintained at 5% of the Group's revenue despite
the revenue decline with interest costs lower as debt substantially
repaid in 2009
The Group has again kept its central costs at 5% of Group
revenues, despite the decline in those revenues this year. It is
not anticipated that these costs would need to substantially
increase to manage the organic opportunities described above nor
the Radcliffe acquisition in 2010.
Net interest payable has decreased again this year as a result
of the decrease in interest rates year on year and also as a
function of paying down so much of the Group's debt in 2009.
Financial Review
The Group made an adjusted profit before tax* of GBP1.9m (2009:
GBP1.9m) as a result of the improvement in adjusted EBITA* margin
and the lower interest costs from both lower rates and a
significant reduction in net debt through the year.
Net funds at the end of the year stood at GBP0.6m (2009: net
debt of GBP1.4m). The Group has gross debt of GBP1.5m at November
2010 (2009: GBP2.1m) which is less than the adjusted EBITDA*
achieved in 2010. In January 2011 the Group announced the
renegotiation of its debt with its Bank - the Royal Bank of
Scotland. The revolving credit facility which was due to expire in
May 2011 has been converted into a term loan for the same fully
drawn down value of GBP1.5m with an interest rate of 4.25% over
LIBOR. This loan will be repaid over four years on a straight line
basis starting in May 2011 and finishing in November 2014 with one
third of the annual repayment being made in May each year and two
thirds in November in line with the Group's cash profile.
The Group's adjusted results (note 5) allow shareholders to gain
a further understanding of the trading performance of the Group.
Profits are adjusted for items not perceived by management to be
part of the underlying trends in the business and the related tax
effect of those items.
GBP000 2010 2009 Change
--------------------------- ------ -------- -------
Adjusted profit before
tax* 1,943 1,938 -%
--------------------------- ------ -------- -------
Less: amortisation and
impairment (623) (1,137)
--------------------------- ------ -------- -------
Less: restructuring costs (138) (295)
--------------------------- ------ -------- -------
Less: acquisition-related
costs (231) -
--------------------------- ------ -------- -------
Less: share based payment
charges (187) (96)
--------------------------- ------ -------- -------
Less: notional accounting
charges - (55)
--------------------------- ------ -------- -------
Profit / (loss) before
tax (PBT) 764 355 +115%
--------------------------- ------ -------- -------
The Group made a profit before tax of GBP764,000 (2009:
GBP355,000). Items that the result is adjusted for include
amortisation and impairment expenses, restructuring costs and share
based payment charges and in the prior year included notional
interest costs (where interest has been charged under accounting
guidelines on items which do not in reality suffer any
interest).
The acquisition costs (note 5) in the current year of GBP231,000
relate to the acquisition of Radcliffe Publishing Limited (note
19). The restructuring costs of GBP138,000 relate to a provision
against stock of books following the acquisition as several
existing lines are now deemed as non-core and will not receive
sufficient marketing attention going forwards as to justify their
carrying value or are to be discontinued in their existing format.
In 2009 approximately half of the restructuring costs related to
advisory fees in reviewing the refinancing options prior to the
share placing and debt pay down, and the rest relate in
approximately equal parts to legal costs relating to a competitor
dispute and redundancy and other costs as the Group reshapes to
mirror evolving market demands.
Amortisation and impairment includes amortisation costs of
GBP623,000 (2009: GBP527,000). The impairment expenses (notes 10
and 11) of GBPnil (2009: GBP610,000) consists of GBPnil impairment
(2009: GBP604,000 in relation to the three Special Education
Publishing ("SEP") titles) and GBPnil reduction in goodwill (2009:
GBP6,000) upon recognition of deferred tax asset relating to
pre-acquisition losses from the SportBusiness Group. The
recognition of the SportBusiness losses is a positive sign of the
on-going value and profits generated by that business.
Impairment of goodwill and intangible assets is reviewed at
least annually and more frequently when issues suggest that
impairment may be necessary. All assets have been reviewed (as
detailed in notes 10 and 11). Of the other assets it should be
noted that all had considerable headroom of net asset value
exceeding carrying value.
As a result of higher statutory profits diluted earnings per
share ("eps") is up on prior year at 0.19p (2009: 0.04p). On an
adjusted basis reflecting underlying trading which is flat year on
year, eps is down as a result of the 2009 placing at 0.58p (2009:
0.84p).
The Group placed 47,310,345 shares in August 2009 which only
counted on the weighted average number of shares basis (as used for
eps) for a quarter of the 2009 year, and is a significant reason
why the 2010 numbers show a marked decline. A similar impact on the
share number will be seen next year as a result of the placing of
61,309,331 shares in November 2010 to fund the acquisition of
Radcliffe Publishing in November 2010and the buyout of its iGaming
affiliate partner from a profit share contract in January 2011.
These acquisitions are expected to be profits enhancing so should
not dilute.
The 2009 placing impact was forewarned last year and is
reflected in the following table together with the 2010 placing. On
an adjusted basis* where based on shares in issue at the end of the
year no decline is seen in eps as the relevant profits are
similar:
Note 2010 2010 2009 2009
----------------- ----- ------------ ------------- ------------ -------------
Adjusted
earnings
figure* 5 GBP1,396,000 GBP1,458,000
Earnings Earnings
per share per share
Number (p) Number (p)
----------------- ----- ------------ ------------- ------------ -------------
Basic number of
shares at 30
November (note
26) 298,717,462 0.47 228,750,973 0.64
Include November
2010 placing - 61,309,331
Adjustment in
respect of SIP
shares 9 (1,656,150) (859,007)
----------------- ----- ------------ ------------- ------------ -------------
297,061,312 289,201,297
Dilutive effect
of share
options and
warrants 9 4,301,644 7,428,294
Comparable
diluted number
of shares at 30
November 301,362,956 0.46 296,629,591 0.49
----------------- ----- ------------ ------------- ------------ -------------
Weighted average
number of
shares in
period (fully
diluted) 9 239,282,388 0.58 174,501,566 0.84
----------------- ----- ------------ ------------- ------------ -------------
Taking the impact of both share placings as if they had been in
issue throughout both periods and including the dilutive impact of
the relevant share options and warrants to each year, the eps would
be 0.46pence (2009: 0.49 pence).
Key performance indicators
The table below summarises the key performance indicators used
across the Group. These are compared against prior year and
forecast and analysed in light of that. Net profit is in line with
the forecast as are other key financial indicators as reported to
the stock markets and announced on. Some variances are seen across
other indicators but are followed up on as noted with performance
addressed or forecasts reset.
Key Performance Indicators
------------------------------- -------------------- --------------- ------
Frequency
Type Description Granularity reviewed Unit
--------- -------------------- -------------------- --------------- ------
Profit Trading profit 60 profit centres Monthly GBP
--------- -------------------- -------------------- --------------- ------
Gross profit margin 60 profit centres Monthly %
--------- -------------------- -------------------- --------------- ------
Trading profit
margin 60 profit centres Monthly %
--------- -------------------- -------------------- --------------- ------
30 account types,
Variance to over 60 profit
forecast centres Monthly %/GBP
--------- -------------------- -------------------- --------------- ------
ROI is tracked
across over 2,000
Marketing campaign individual
ROI (Revenue or marketing campaigns
Gross Profit return and over 5,000
per GBP1 of discrete
marketing money e-marketing
Revenue invested) activities Daily GBP
--------- -------------------- -------------------- --------------- ------
Sales value and
forward bookings By division Weekly GBP/#
--------- -------------------- -------------------- --------------- ------
Customer Lifetime Individual product
Value and price point Quarterly GBP
--------- -------------------- -------------------- --------------- ------
Average customer By customer group
life by product Quarterly Years
--------- -------------------- -------------------- --------------- ------
Subscriber By customer group
retention rate by product Monthly %
--------- -------------------- -------------------- --------------- ------
Marketing spend as
% revenue 60 profit centres Monthly %
--------- -------------------- -------------------- --------------- ------
Advertising yield
per page Per magazine Monthly GBP
--------- -------------------- -------------------- --------------- ------
Average yield per
subscriber Per product Monthly GBP
--------- -------------------- -------------------- --------------- ------
Average yield per
delegate Per event Monthly GBP
--------- -------------------- -------------------- --------------- ------
Lead times (weeks
of active marketing
preceding
conference) Per event Daily Days
--------- -------------------- -------------------- --------------- ------
Web traffic KPIs
(page views, unique
visitors, etc) Per website Daily '000
--------- -------------------- -------------------- --------------- ------
Revenue per
People employee 60 profit centres Monthly GBP
--------- -------------------- -------------------- --------------- ------
Revenue per
salesperson Individual Monthly GBP
--------- -------------------- -------------------- --------------- ------
Employee retention 4 divisions Annual %
--------- -------------------- -------------------- --------------- ------
36 dimensions
across 12 work
Employee engagement teams Annual survey /6
-------------------- -------------------- ------------------------- ------
Julian Turner
Chief Executive
14 February 2011
CONSOLIDATED INCOME STATEMENT
For the year ended 30 November 2010
2010 2009
Notes GBP'000 GBP'000
---------------------------------------------- ------- -------- --------
Revenue 3 14,607 16,481
Cost of Sales - Direct costs (5,524) (6,434)
Cost of Sales - Marketing expenses (2,077) (2,616)
---------------------------------------------- ------- -------- --------
GROSS PROFIT 3 7,006 7,431
Other operating expenses (5,111) (5,278)
Restructuring costs 5 (138) (295)
Acquisition-related costs 5 (231) -
Depreciation expense (86) (182)
Amortisation expense 11 (623) (527)
Impairment charges and reduction to goodwill 10, 11 - (610)
Total administrative expenses (6,189) (6,892)
OPERATING PROFIT 817 539
Finance costs 6 (55) (188)
Finance income 7 2 4
PROFIT BEFORE TAX 764 355
Taxation 8 (231) (206)
PROFIT FOR THE FINANCIAL YEAR 533 149
============================================== ======= ======== ========
Attributable to:
- Equity holders of the parent 450 76
- Non-controlling interest 83 73
---------------------------------------------- ------- -------- --------
533 149
============================================== ======= ======== ========
EARNINGS PER SHARE
Basic 9 0.19p 0.05p
============================================== ======= ======== ========
Diluted 9 0.19p 0.04p
============================================== ======= ======== ========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 November 2010
2010 2009
GBP'000 GBP'000
---------------------------------------- -------- --------
Profit for the year 533 149
Total comprehensive income 533 149
======================================== ======== ========
Attributable to:
- Equity holders of the parent company 450 76
- Non-controlling interests 83 73
---------------------------------------- -------- --------
533 149
======================================== ======== ========
CONSOLIDATED GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 November 2010
Other
Preference Share reserves Reserve Non-
Share share premium (note for own Retained controlling Total
capital capital account 16) shares earnings Total interest equity
GROUP GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- ----------- -------- --------- -------- --------- -------- ------------ --------
At 1 December
2008 1,450 875 3,106 (349) (103) 347 5,326 72 5,398
Total
comprehensive
income - - - - - 76 76 94 170
Tax taken
directly to
equity (note
12) - - - - - 12 12 - 12
--------------- -------- ----------- -------- --------- -------- --------- -------- ------------ --------
1,450 875 3,106 (349) (103) 435 5,414 166 5,580
Dividend paid
by subsidiary - - - - - - - (135) (135)
Share issues 772 - 1,982 - - - 2,754 - 2,754
Share issue
costs - - (223) - - - (223) - (223)
Preference
share
conversion
(note 15) 66 (875) 355 454 - - - - -
Share based
payments - - - - - 96 96 - 96
--------------- -------- ----------- -------- --------- -------- --------- -------- ------------ --------
At 30 November
2009 2,288 - 5,220 105 (103) 531 8,041 31 8,072
Total
comprehensive
income - - - - - 450 450 83 533
Tax taken
directly to
equity (note
12) - - - - - (3) (3) - (3)
2,288 - 5,220 105 (103) 978 8,488 114 8,602
Share issues 699 - 1,992 - - - 2,691 - 2,691
Share issue
costs - - (151) - - - (151) - (151)
Purchase of
shares - - - - (20) - (20) - (20)
Share based
payments - - - - - 110 110 - 110
At 30 November
2010 2,987 - 7,061 105 (123) 1,088 11,118 114 11,232
=============== ======== =========== ======== ========= ======== ========= ======== ============ ========
CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION
As at 30 November 2010 Company registration number 3934419
Group
2010 2009
Notes GBP'000 GBP'000
----------------------------------- ------ -------- --------
ASSETS
Non-current assets
Goodwill 10 8,982 8,301
Other intangible assets 11 2,425 2,070
Property, plant and equipment 267 79
Deferred tax assets 12 780 711
----------------------------------- ------ -------- --------
12,454 11,161
CURRENT ASSETS
Inventories 1,763 1,304
Trade and other receivables 3,053 3,560
Cash and cash equivalents 18 2,146 704
----------------------------------- ------ -------- --------
6,962 5,568
TOTAL ASSETS 19, 416 16,729
=================================== ====== ======== ========
EQUITY AND LIABILITIES
Capital and Reserves
Called up ordinary share capital 15 2,987 2,288
Preference share capital 15 - -
Share premium account 7,061 5,220
Merger reserve 105 105
Reserve for own shares 16 (123) (103)
Retained earnings 1,088 531
Equity attributable to equity
holders of the parent 11,118 8,041
Non-controlling Interest 17 114 31
----------------------------------- ------ -------- --------
TOTAL EQUITY 11,232 8,072
Non-current liabilities
Borrowings 18 - 1,500
Deferred tax liabilities 12 578 511
Obligations under finance leases 18 - -
Preference shares 14 - -
----------------------------------- ------ -------- --------
578 2,011
Current liabilities
Borrowings 18 1,500 600
Current tax liabilities 103 246
Trade payables and other payables 3,049 2,502
Provisions 13 258 -
Obligations under finance leases 18 - 7
Deferred income 2,696 3,291
----------------------------------- ------ -------- --------
7,606 6,646
TOTAL LIABILITIES 8,184 8,657
TOTAL EQUITY AND LIABILITIES 19,416 16,729
=================================== ====== ======== ========
P Rigby Chairman J Turner Chief Executive
14 February 2011
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 November 2010
Group
2010 2009
Notes GBP'000 GBP'000
-------------------------------------------- ------- -------- --------
Profit for the financial year 533 149
Taxation 231 206
Amortisation and impairment expense 10, 11 623 1,137
Depreciation 86 182
Finance costs 6 55 188
Finance income 7 (2) (4)
Share based payment charges 110 96
Operating cash flows before movement in
working capital 1,636 1,954
Increase in inventories (254) (81)
Decrease / (increase) in receivables 835 (306)
(Decrease) / increase in payables (637) (993)
Cash flow from operating activities before
interest and tax 1,580 574
Interest paid (55) (134)
Taxation paid (428) (315)
Cash inflow / (outflow) from operating
activities 1,097 125
-------------------------------------------- ------- -------- --------
INVESTING ACTIVITIES
Acquisitions of subsidiaries, net of cash
acquired 19 (913) -
Deferred consideration paid 13 - (260)
Purchase of property plant and equipment (262) (18)
Purchase of intangible assets 11 (264) (106)
Interest received 7 2 4
Net cash used in investing activities (1,437) (380)
-------------------------------------------- ------- -------- --------
FINANCING
Proceeds from issuance of ordinary shares 15 2,560 2,754
Costs of issuing shares 15 (151) (223)
Repayments of preference shares 14 - (984)
Repayments of borrowings 18 (600) (909)
Repayments of obligations under finance
leases 18 (7) (19)
Purchase of own shares (20) -
Net cash from financing activities 1,782 619
-------------------------------------------- ------- -------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,442 364
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF YEAR 704 340
CASH AND CASH EQUIVALENTS AT END OF YEAR 18 2,146 704
============================================ ======= ======== ========
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 November 2010
1 BASIS OF ACCOUNTING
The financial information set out in this preliminary
announcement has been extracted from the group's audited statutory
accounts for the year ended 30 November 2010 which will be
delivered to the Registrar of Companies following the company's
annual general meeting. The auditor's report on these accounts was
unqualified, did not include references to any matters to which the
auditors drew attention by way of emphasis without qualifying their
report, and did not contain a statement under either Section 498
(2) or (3) of the Companies Act 2006.
Statutory accounts for the year ended 30 November 2009 have been
delivered to the registrar of companies and the auditors' report on
these accounts was unqualified, did not include references to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report, and did not contain a statement
under either Section 498 (2) or (3) of the Companies Act 2006.
The financial information set out in this preliminary
announcement does not constitute the group's statutory accounts for
the year ended 30 November 2010. The financial information
presented in this preliminary announcement has been prepared using
accounting policies consistent with International Financial
Reporting Standards as adopted by the European Union ('IFRS').
These accounting policies are as set out in the annual report for
the year ended 30 November 2009.
This preliminary announcement was approved by the board of
directors on 14 February 2011.
2 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 10;
-- Provisioning: both trade receivables for bad debt and
inventories for returns and obsolescence are reviewed for potential
write down. The provisions created to cover these areas are based
on managements' experience and considered opinion of the assets'
current value;
-- Contingent consideration: provisions are made at the
directors' best estimate of what the consideration will be but as
based on future results it can only be assessed on current
knowledge and expectations with no certainty. The provisions made
are considerably under the maximum amounts which could be payable
(note 19);
-- Valuation of share based payments - which are calculated from
modelling including estimates of non-transferability, exercise
restrictions, and behavioural considerations, including such
factors as the volatility of the Company's share price.
3 REVENUE AND COST OF SALES
An analysis of the Group's income is as follows:
2010 2009
GBP'000 GBP'000
----------------------------------------- -------- --------
Revenue
Sale of goods 9,060 11,120
Rendering of services 5,547 5,361
----------------------------------------- -------- --------
14,607 16,481
Cost of sales
Change in inventories of finished goods 460 80
Raw materials and consumables used (5,984) (6,514)
Marketing costs (2,077) (2,616)
----------------------------------------- -------- --------
(7,601) (9,050)
Gross profit 7,006 7,431
----------------------------------------- -------- --------
4 SEGMENTAL ANALYSIS
Segmental information is presented in respect of the Group's
business divisions. This format is based on the Group's management
and internal reporting structure, as seen by the Board in its
financial information used in allocating resources and making
strategic decisions. These segments were identified by how the
Group is focused on customer types and so does involve some
aggregation of how those customers are served and of diversity
within the customer bandings as niches are targeted within the
broader markets.
The format consists of three market sectors and a central
function:
-- P: serving professional communities in schools, primary
health care and other institutions with management information and
professional development;
-- BI: business information for the business communities behind
sport and on-line gaming;
-- SC: specialist consumer advice and instruction for
individuals' needs in both sport -competitive athletes and coaches
- and education - parents looking to support their children's
educational development; and
-- PLC: the group function represents central PLC costs which
are not directly related to the sector trading and are not
recharged. Finance costs and investment income are also included
here as these are driven by central policy which manages the cash
positions across the Group.
Operating profit is defined as profit before tax but excludes
finance costs and investment income. The sector analysis includes
the adjusted definition of operating profit (note 5) to allow
shareholders to gain a further understanding of the trading
performance of the Group and is considered by the Board alongside
operating profit and profit before tax to assess performance and
review strategy.
Analysis by
market sector Year ended 30 November 2010 Year ended 30 November 2009
P BI SC PLC Total P BI SC PLC Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Revenue 9,058 4,431 1,118 - 14,607 10,569 4,272 1,640 - 16,481
Adjusted operating
profit (note
5) 1,887 837 4 (732) 1,996 1,748 772 368 (821) 2,067
Share based
payment charges (93) (50) (22) (22) (187) (49) (19) (19) (9) (96)
Restructuring
costs (138) - - - (138) (40) (75) (38) (142) (295)
Acquisition-related
costs (231) - - - (231) - - - - -
Amortisation
of intangible
assets (422) (20) (136) (45) (623) (396) (14) (109) (8) (527)
Impairment
expense - - - - - (604) (6) - - (610)
Operating profit 1,003 767 (154) (799) 817 659 658 202 (980) 539
Finance costs - - - (55) (55) - - - (188) (188)
Investment
income - - - 2 2 - - - 4 4
Profit before
tax 1,003 767 (154) (852) 764 659 658 202 (1,164) 355
===================== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Analysis by
market
sector Year ended 30 November 2010 Year ended 30 November 2009
P BI SC PLC Total P BI SC PLC Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Depreciation
and
amortisation 439 21 139 110 709 426 24 140 119 709
Expenditure
on
intangible
assets 69 7 56 132 264 40 31 23 8 102
Expenditure
on property,
plant and
equipment 7 1 - 254 262 4 2 - 19 25
Analysis by market sector Assets Liabilities
2010 2009 2010 2009
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- -------- -------- --------
Professional 4,694 5,290 3,756 3,518
Business information 2,584 1,728 1,112 1,053
Specialist consumer 95 371 322 410
------------------------------------ -------- -------- -------- --------
7,373 7,389 5,190 4,981
Group function 11,263 8,629 916 812
Net debt and taxation (current and
deferred) 780 711 2,078 2,864
19,416 16,729 8,184 8,657
==================================== ======== ======== ======== ========
There are no inter-segmental sales and no discontinued
operations.
5 ADJUSTED PROFIT
The adjusted profits have been prepared to allow shareholders to
gain a further understanding of the trading performance of the
Group. Profits are adjusted for items not perceived by management
to be part of the underlying trends in the business and the related
tax effect of those items. The adjustments add back items which
have no cash impact or are not trade related and of a non-recurring
type.
Adjusted numbers exclude amortisation and impairment of goodwill
and intangible assets, restructuring and acquisition costs
(non-trading and of a non-recurring nature), the tax impact of the
adjusting items, deferred tax asset or liability movements
recognised in the income statement and notional accounting charges.
The amount for notional accounting charges encompasses the
unwinding of discounts on preference shares and provisions and
share based payment costs.
The acquisition costs totalling GBP231,000 in 2010 relate to the
acquisition of Radcliffe Publishing Limited (note 19). Of this
GBP116 000 relate to corporate finance and public relations
advisory fees, GBP15,000 was charged by the Group's Bankers for
their approval of the acquisition with GBP23,000 paid to a firm
providing financial due diligence to enable that decision, legal
fees came to GBP65,000 across all work streams on this deal, and
GBP12,000 of internal staff bonuses awarded based on completion of
this deal and its financing.
The restructuring costs of GBP138,000 relate to a provision
against stock of books following the acquisition as several
existing lines are now deemed as non-core and will not receive
sufficient marketing attention going forwards as to justify their
carrying value or are to be discontinued in their existing
format.
The restructuring costs in 2009 relate to three activities. The
Group repaid a substantial part of its debt in the year following a
placing of shares. Advisory and legal firm costs totalling
GBP140,000 are included here in relation to the strategic review of
debt, financing options and transaction costs which were not
fundamentally part of the placing and so are not included in share
premium. The Group has also continued to evolve to mirror the
markets it operates in and has suffered product closure and
redundancy costs of GBP80,000. The Group has also had a legal case
with a competitor which has resulted in settlement and legal costs
of GBP75,000 being provided.
Components of the 2009 restructuring costs were considered to be
taxable items for corporation tax and thus attributable tax has
been included in the period at 28% of their value. All other
adjusting items do not have a tax affect on the Group.
2010 2009
Note GBP'000 GBP'000
--------------------------------------------------- ----- -------- --------
OPERATING PROFIT FOR THE YEAR 817 539
Amortisation of intangible assets 623 527
10,
Impairment expense 11 - 610
Restructuring costs 138 295
Acquisition-related costs 231 -
Share based payment charges 110 96
Share based payment costs 77 -
Adjusting items to operating profit 1,179 1,528
Adjusted operating profit for the year 1,996 2,067
Depreciation 86 182
Adjusted earnings before interest, tax,
depreciation and amortisation for the year 2,082 2,249
=================================================== ===== ======== ========
PROFIT BEFORE TAX FOR THE YEAR 764 355
Adjusting items to operating profit 1,179 1,528
Notional accounting charges - unwinding of
discounts 6 - 55
Adjusting items to profit before tax 1,179 1,583
Adjusted profit before tax for the year 1,943 1,938
=================================================== ===== ======== ========
PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT 450 76
Adjusting items to profit before tax 1,179 1,583
Attributable tax expense on adjusting items (104) (83)
Exclude movements on deferred tax assets and
liabilities taken to income statement 12 (129) (118)
Adjusting items to profit for the year 946 1,382
Adjusted profit for the year 1,396 1,458
=================================================== ===== ======== ========
6 FINANCE COSTS
2010 2009
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Bank loans and overdrafts 50 127
Finance lease interest 5 6
Unwinding of discount on preference shares and provisions - 55
55 188
========================================================== ======== ========
7 FINANCE INCOME
2010 2009
GBP'000 GBP'000
-------------------------- -------- --------
Bank interest receivable 2 4
========================== ======== ========
8 TAXATION
2010 2009
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Current tax:
UK corporation tax on profits of the year 370 359
Adjustment to prior year (38) (45)
Overseas tax suffered 28 10
Total current tax 360 324
Deferred taxation:
Origination and reversal of timing differences (note
12) (223) (118)
Adjustment to prior year 94 -
(129) (118)
Tax on profit on ordinary activities 231 206
====================================================== ======== ========
UK corporation tax is calculated at 28% (2009: 28%) of the
estimated assessable profit for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the relevant
jurisdictions.
The emergency budget on 22 June 2010 announced that the UK
corporation tax rate will reduce from 28% to 24% over a period of 4
years from 2011. The first reduction in UK corporation tax rate
from 28% to 27% was substantially enacted on 20 July 2010 and will
be effective from 1 April 2011. This will reduce the company's
future current tax charge.
The total tax charge can be reconciled to the accounting profit
as follows:
Factors affecting tax charge for the year 2010 2009
GBP'000 % GBP'000 %
-------------------------------------------- -------- ----- -------- -----
Profit on ordinary activities before tax 764 355
Profit on ordinary activities multiplied by
the standard rate of corporation tax in
the UK of 28% (2009 - 28%) 214 28 99 28
Effect of:
Expenses not deductible for tax purposes
(principally amortisation and impairment) (119) (16) 149 42
Recognition of tax losses for prior years - - (34) (10)
Tax losses not recognised - - - -
Under / (over) provision in prior year 56 7 (45) (12)
Share based payments 52 7 27 7
Overseas taxation 28 4 10 3
Tax expense and effective rate for the year 231 30 206 58
============================================ ======== ===== ======== =====
9 EARNINGS PER ORDINARY SHARE
The calculation of earnings per ordinary share is based on the
following:
2010 2009
Number Number
-------------------------------------------------- ------------ ------------
Weighted average number of shares 236,636,894 167,932,279
Adjustment in respect of SIP shares (1,656,150) (859,007)
Weighted average number of shares used in basic
earnings per share calculations 234,980,744 167,073,272
-------------------------------------------------- ------------ ------------
Dilutive effect of share options 2,402,941 1,114,970
Dilutive effect of warrants 1,898,703 6,313,324
Weighted average number of shares used in diluted
earnings per share calculations 239,282,388 174,501,566
-------------------------------------------------- ------------ ------------
2010 2009
GBP'000 GBP'000
-------------------------------------------- -------- --------
Basic and diluted earnings 450 76
Adjustment to earnings (Note 5) 871 1,382
-------------------------------------------- -------- --------
Adjusted basic and diluted earnings figure 1,321 1,458
-------------------------------------------- -------- --------
Earnings per share
Basic earnings per share 0.19p 0.05p
============================================ ======== ========
Diluted earnings per share 0.19p 0.04p
============================================ ======== ========
Adjusted earnings per share
Adjusted basic earnings per share 0.59p 0.87p
============================================ ======== ========
Adjusted diluted earnings per share 0.58p 0.84p
============================================ ======== ========
10 GOODWILL
Group
2010 2009
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Cost
1 December 9,378 9,378
Acquisition of subsidiaries 681 -
Additional goodwill recognised during the year relating
to prior year acquisitions - -
30 November 10,059 9,378
--------------------------------------------------------- -------- --------
Accumulated impairment losses
1 December 1,077 567
Impairment losses for the year - 510
30 November 1,077 1,077
--------------------------------------------------------- -------- --------
Carrying amount
30 November 8,982 8,301
========================================================= ======== ========
Goodwill acquired in a business combination is allocated, at
acquisition to the cash generating units ('CGU') that are expected
to benefit from that business combination. The carrying amount of
goodwill has been allocated as follows:
2010 2009
GBP'000 GBP'000
---------------------- -------- --------
Professional 5,073 4,392
Business information 2,122 2,122
Specialist consumer 1,787 1,787
Group overheads - -
---------------------- -------- --------
8,982 8,301
====================== ======== ========
The group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be
impaired.
The recoverable amounts of the CGU are determined from value in
use calculations. CGU are identified as individual operating units
with specific market and product types, usually derived from the
original acquisition. The key assumptions across the CGU for the
value in use calculations are those regarding the discount rates
and growth rates for the period. Management estimate discount rates
using post-tax rates that reflect current market assessments of the
time value of money and the risks specific to the CGU. The growth
rates are based on industry growth forecasts and long-term growth
in gross domestic product.
The Group prepares cash flow forecasts derived from the most
recent financial budgets approved by management for the next 2
years and extrapolates cash flows for a further 18 years based on
estimated long-term growth in gross domestic product of 3%. The
rates do not exceed the average long-term growth rate for the
relevant markets. The pre-tax rates used to discount the cash flows
for all CGU are 9.23% (2009: 11.63%).
At 30 November 2010 and 30 November 2009, the carrying amounts
of goodwill for CGU were tested for impairment. The recoverable
amounts were calculated based on future projected cash flows
discounted at rates as disclosed above, which represented the
Group's weighted average cost of capital, plus a premium for risk.
The weighted average cost of capital for the Group at 30 November
2010 was estimated as 8.97% (2009: 6.51 %) and was relevant and
used on all CGU. All CGU are information provision businesses
consolidated within the same Group and so with the same financing
and structure risks.
In 2010 no CGU has been deemed to be impaired. Except for
Incentive Plus Limited they would all require substantial decreases
in their 2011 forecast cash flows to be calculated as impaired. The
least of these is My Child Limited which would have to lower its
2011 forecast by 45% to be calculated as impaired. In the case of
Incentive Plus Limited, it is not deemed to be impaired despite
headroom of only GBP35,000 as it is felt that whilst trading in its
business of catalogues selling third party product is at a low at
present across the whole market, it is expected to improve and
return to profit levels previously experienced as nothing has
fundamentally damaged this market in terms of a new alternative or
stronger competition. The cause is seen as the current weaker spend
in the public sector and markets as a whole with this trade always
expected to suffer in periods of relatively lower school spending.
Meanwhile margins in this business have improved on the previous
year.
In 2009 one CGU was deemed to be impaired. Special Education
Publishing Limited, value of GBP504,000, was written off to reflect
some lower trading expectations across the titles but also the fact
that two titles are now folded into other of the Group's product
offerings.
On considering sensitivities if the discount factor were
increased by 0.5% then there would be further impairment of
GBP64,000 all on Incentive Plus (2009: GBP76,000 all on Incentive
Plus). There are no other significant factors to be considered that
would cause impairment.
A reduction to goodwill of GBPnil (2009: GBP6,000) has been
booked in the period under IFRS in relation to the acquisition of
DMWSL 370 Limited. The entity contained substantial unrecognised
tax losses at the time of acquisition which as they are
subsequently recognised cause a reduction of the goodwill
calculated at the acquisition date. This is solely because more
value is recognised on the assets acquired and hence the goodwill
value becomes less rather than any deterioration in the value of
the business.
11 INTANGIBLE ASSETS
Group
Other
Publishing acquired Computer
titles assets Web design software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ----------- -------------- ----------- ---------- --------
Cost
1 December
2008 3,552 185 329 129 4,195
Additions 5 - 93 13 111
Disposals - - - (6) (6)
30 November
2009 3,557 185 422 136 4,300
Additions 714 - 243 21 978
Disposals - - - - -
-------------- ----------- -------------- ----------- ---------- --------
30 November
2010 4,271 185 665 157 5,278
-------------- ----------- -------------- ----------- ---------- --------
Amortisation
1 December
2008 1,171 173 127 57 1,528
Charge for
the year 467 12 81 48 608
Disposals - - - (6) (6)
Impairment
charge 100 - - - 100
30 November
2009 1,738 185 208 99 2,230
Charge for
the year 491 - 98 34 623
Disposals - - - - -
Impairment
charge - - - - -
-------------- ----------- -------------- ----------- ---------- --------
30 November
2010 2,229 185 306 133 2,853
-------------- ----------- -------------- ----------- ---------- --------
Carrying
amount
30 November
2010 2,042 - 359 24 2,425
============== =========== ============== =========== ========== ========
30 November
2009 1,819 - 214 37 2,070
============== =========== ============== =========== ========== ========
There are no individually material intangible assets included in
the publishing titles. The Group tests the assets annually for
impairment or more frequently if there are indications that they
might be impaired.
The Group prepares cash flow forecasts derived from the most
recent financial budgets approved by management for the next 3
years and extrapolates cash flows for up to a further 7 years
(depending on remaining asset life) based on estimated long-term
growth in gross domestic product of 3%. The life of a further 7
years is deemed to be appropriate as the Group has many publishing
assets with lives of this length or more in some cases, but the
Group has not recognised asset lives over 10 years post acquisition
to date. The rates do not exceed the average long-term growth rate
for the relevant markets. The pre-tax rates used to discount the
cash flows for all cash generating units ('CGU') are 9.23% (2009:
11.63%).
At 30 November 2010 and 2009, the carrying amounts of intangible
assets for CGU were tested for impairment. The recoverable amounts
were calculated based on future projected pre-tax cash flows
discounted at the rate as disclosed above, which represented the
Group's weighted average cost of capital, plus a premium for risk.
The weighted average cost of capital for the Group at 30 November
2010 was estimated as 8.97% (2009: 6.51%) and was used on all CGU.
All CGU are information provision businesses consolidated within
the same Group and so with the same financing and structure
risks.
In 2009 impairment was deemed necessary on two titles, both of
which were part of the Special Education Publishing Limited ('SEP')
acquisition in 2008. One title was impaired to reflect some lower
current market expectations across the education advertising and
the other title had been folded into other of the Group's product
offerings. The latter title's carrying value of GBP54,000 was
written off whilst the former title's carrying value of GBP435,000
was written down by GBP46,000. The remaining asset value on that
title at November 2010 will be fully amortised over the next
fifteen months and represents only just over 1.5 times the 2010
gross profit made on the title so is not close to being impaired
again.
Of the rest of the intangible assets' carrying values,
GBP714,000 relates to the newly acquired Radcliffe Publishing (note
19) and are attributable to book and journal titles in the acquired
entity valued by a net present value of their future expected cash
flows over ten years. Then GBP1,098,000 relates to over three
hundred product title rights acquired as part of the Speechmark
Publishing Limited acquisition which have been reviewed
individually for impairment and are seen not to be impaired.
Finally GBP16,000 relates to the My Child Limited acquisition which
will be fully amortised in 2011 and are not impaired.
If the discount factor were increased by 0.5% there would be no
impact on impairment at the 2010 balance sheet date.
12 DEFERRED TAX
Group
2010 2009
GBP'000 GBP'000
----------------------------- -------- --------
Deferred tax assets
Current 290 454
Non-current 490 257
----------------------------- -------- --------
780 711
----------------------------- -------- --------
Deferred tax liabilities
Current (131) (432)
Non-current (447) (79)
----------------------------- -------- --------
(578) (511)
----------------------------- -------- --------
Net position at 30 November 202 200
============================= ======== ========
Goodwill and
Capital Intangible
Group allowances Tax losses assets Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------ ----------- -------------- -------- --------
1 December
2008 2 666 (670) 72 70
(Charge) /
credit to
income for
the year - (89) 161 46 118
(Charge) /
credit to
equity for
the year - - - 12 12
30 November
2009 2 577 (509) 130 200
--------------- ------------ ----------- -------------- -------- --------
(Charge) /
credit to
income for
the year - (34) 138 25 129
(Charge) /
credit to
equity for
the year - - - (3) (3)
Acquisition - 76 (200) - (124)
30 November
2010 2 619 (571) 152 202
--------------- ------------ ----------- -------------- -------- --------
There are accumulated losses of GBP11,952,000 (2009:
GBP11,710,000) which, subject to agreement with the HM Revenue
& Customs, are available to offset future profits of the same
trade. Of this the Group has not recognised tax losses of
GBP9,765,000 (2009: GBP9,770,000) as the probability that future
taxable profits beyond five years will be available cannot be
certain.
13 PROVISIONS
The provisions relate to contingent consideration for various
acquisitions of subsidiaries.
Group
2010 2009
GBP'000 GBP'000
------------------------------------- -------- --------
1 December - 255
Increase in year 258 5
Utilised during the year - (260)
Unwinding of discount - -
------------------------------------- -------- --------
30 November 258 -
===================================== ======== ========
Included in current liabilities 258 -
===================================== ======== ========
Included in non-current liabilities - -
===================================== ======== ========
Of the 2008 provision held by the Group and Company, GBP250,000
was deferred consideration on the Speechmark Publishing Limited
acquisition and was paid in March 2009. The remainder held by the
Group was contingent consideration on the Smallwood Publishing
Limited acquisition and represented the best estimate of the amount
of GBP10,000 subsequently paid in June 2009.
In the year an amount has been provided on the contingent
consideration relating to the acquisition of Radcliffe Publishing
Limited by the Group (note 19).
14 PREFERENCE SHARES CLASSIFIED AS A LIABILITY
The Group had 987,500 convertible preference shares of GBP1 each
which could have converted into ten ordinary shares at the option
of the shareholder, else they would redeem at their nominal value
on 30 December 2009. The shares were not converted and agreement
was reached to redeem the preference shares early at less than
nominal value to reflect the early redemption with GBP983,523 being
paid on 10 November 2009.
15 SHARE CAPITAL
2010 2009
GBP'000 GBP'000
----------------------------------------------- -------- --------
Authorised:
300,000,000 ordinary shares of 1p each 3,000 3,000
=============================================== ======== ========
875,000 convertible preference shares of GBP1 - -
=============================================== ======== ========
Allotted, issued and fully
paid: 2010 2009
Ordinary Preference Ordinary Preference
shares shares shares shares
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ --------- ----------- --------- -----------
As at 1 December 2,288 - 1,450 875
Issue of share capital 613 - 745 -
Options exercised 86 - 27 -
Preference shares converted - - 66 (875)
As at 30 November 2,987 - 2,288 -
============================== ========= =========== ========= ===========
The preference shares were fair valued on issue as they
converted at the Company's call at 13.25p but the share price at
the time was 6.87p. The shares must be disclosed at nominal value
so an Other Reserve was created to hold the fair value adjustment
of GBP454,000. The preference shares were classed as equity as it
was the Company's call and the share price was much below the
13.25p conversion price. These preference shares were converted on
3 September 2009.
A reconciliation of the movements in issued ordinary share
capital is as follows:
Total Share
Number Share price
of shares capital at issue
Number GBP'000 Pence
-------------------- ------------------- ------------ --------- ----------
At 1 December 2008 144,964,441 1,450
Exercise of share
17 March 2009 options 2,700,000 27 3.375p
20 August 2009 Share issue 27,172,414 272 4.000p
3 September 2009 Share issue 47,310,345 473 4.000p
Conversion of
preference
3 September 2009 shares 6,603,773 66 4.000p
At 30 November 2009 228,750,973 2,288
Exercise of share
15 March 2010 warrants 8,657,158 86 4.750p
19 November 2010 Share issue 22,352,941 223 4.750p
22 November 2010 Share issue 38,956,390 390 4.750p
At 30 November 2010 298,717,462 2,987
========================================= ============ ========= ==========
There have been no shares issued since the year end.
16 RESERVES
The statement of changes in equity combines into other reserves
a merger reserve of GBP105,000 and a reserve relating to the
adjustment of the preference share capital issued as part
consideration for the acquisition of Special Education Publishing
Limited.
The reserve for own shares relates to the employee Share
Incentive Plan under which the Group owns 1,746,259 shares (2009:
1,218,575 shares).
17 NON-CONTROLLING INTEREST
The Group's non-controlling interest in both 2010 and 2009 was
composed entirely of equity interests and represents the
non-controlling interest of 30% in IGaming Business Limited. The
non-controlling interest of 30% in IGaming Business Limited
increased from 25% in 2009 in exchange for the Company taking
ownership of a domain name.
18 ANALYSIS OF CHANGES IN NET DEBT
Other
At 1 December non-cash At 30 November
Group 2009 Cash flow changes 2010
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------------- ---------- ---------- ---------------
Cash at bank and in
hand 704 1,442 - 2,146
Overdraft - - - -
--------------------- -------------- ---------- ---------- ---------------
Net cash 704 1,442 - 2,146
Bank loans due
within one year - - (1,500) (1,500)
Other loans due
within one year (600) 600 - -
Finance leases due
within one year (7) 7 - -
--------------------- -------------- ---------- ---------- ---------------
Debt due within one
year (607) 607 (1,500) (1,500)
Bank loans due after
one year (1,500) - 1,500 -
Other loans due
after one year - - - -
Finance leases due
after one year - - - -
Debt due after one
year (1,500) - 1,500 -
Net debt (1,403) 2,049 - 646
===================== ============== ========== ========== ===============
Non cash items will be when applicable reclassifications from
due after one year to due within one year and recognition of
overdraft positions where the right of set-off does not apply.
19 BUSINESS COMBINATIONS
Cash paid net of cash acquired:
Date of acquisition 2010 2009
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Current year acquisitions:
Radcliffe Publishing Limited 23 November 2010 913 -
Prior year acquisitions:
None - -
Pre 2008 acquisitions:
Speechmark Publishing Limited 8 October 2007 - 250
Smallwood Publishing Limited 1 May 2007 - 10
913 260
===================================================== ======== ========
1 Cash consideration on the acquisition of Radcliffe Publishing
Limited was GBP1,408,000 but net of cash in the business of
GBP495,000 as set out below.
2 In respect of Speechmark Publishing Limited deferred cash
consideration of GBP250,000 was paid in April 2009, GBP250,000 was
paid in October 2008 and GBP154,000 including interest was paid in
March 2008.
3 In respect of Smallwood Publishing Limited deferred cash
consideration of GBP10,000 was paid in July 2009 and a total of
GBP8,000 was paid in May and November 2008.
Radcliffe Publishing Limited ("RP")
On 22 November 2010 the Group acquired 100% of the issued share
capital of RP for an initial consideration of GBP1,527,000 and
GBP13,000 of related costs (stamp duty). There are two tranches of
contingent consideration with one payable in April 2011 dependent
on a gross profit measure for the year to 31 March 2011 and one
payable in December 2012 dependent on a gross profit measure for
the year to 30 November 2012.
Fair value Adjusted
previously Fair value Fair
RP reported adjustment value
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ ---------
Intangible assets - 714 714
Property, plant and equipment 43 (31) 12
Inventories 231 (26) 205
Trade and other receivables 298 (36) 262
Cash and cash equivalents 495 - 495
Trade payables and other payables (235) (155) (390)
Current tax liabilities (1) - (1)
Deferred tax - losses 9 67 76
Deferred tax - amortisation - (200) (200)
Deferred revenue (90) - (90)
--------------------------------------- ------------ ------------ ---------
Net assets 750 333 1,083
Goodwill 681
Total consideration 1,764
======================================= ============ ============ =========
Satisfied by:
Consideration - ordinary shares 132 - 132
Consideration - cash and cash
equivalents 1,408 - 1,408
Contingent debtor (receivable March
2011) (34) - (34)
Contingent consideration tranche 1
(maximum GBP197,000) - - -
Contingent consideration tranche 2
(maximum GBP800,000) 258 - 258
1,764 - 1,764
======================================= ============ ============ =========
RP is a specialist medical publisher for the primary healthcare
market with an established back list of book titles and journals,
together with running courses. The intangibles acquired represent
the book and journal titles. These were valued, in line with the
Group's standard method, based on discounting their future
projected cash flows over ten years, the same period as which the
resultant intangibles will be amortised. This was seen to be a
reasonable period through which the titles can be fully expected to
be published and sell. The goodwill represents the commercial value
of the deferred subscription liability acquired, the scale and
presence it brings to the Group's professional division, and the
brand's position in a market which the Group has had limited
presence in to date.
In the year to November 2010, RP contributed to the Group post
acquisition revenue of GBP20,000, profit after tax of GBP3,000 and
generated cash of GBP32,000. In the year to March 2010 RP
recognised revenue of GBP1,715,000 and profit after tax of
GBP81,000.
20 POST BALANCE SHEET EVENTS
Since the balance sheet there have been two significant
events.
On 24 January 2011 the Group and Company converted its GBP1.5m
revolving credit facility which was due to expire in May 2011 into
a term loan starting on 1 February 2011. The term loan will be
repayable over 4 years with repayments starting in May 2011 and
ending in November 2014 and in equal annual amounts payable as one
third in May and two thirds in November in line with the Group's
cash flow profile. Interest is payable at 4.25% over LIBOR.
Also in January 2011 the Group completed the buyout of its
partner Affiliate Media Inc, in the online gaming affiliate events
and publishing business for a cash consideration of GBP1.05
million. Under the terms of the existing contract between Affiliate
Media and the Group's 70% owned subsidiary iGaming Business
Limited, Affiliate Media provides marketing support in return for a
fee. SBG Companies Limited, a wholly owned subsidiary of Electric
Word, has bought Affiliate Media out of its benefits and
obligations under the existing contract. Approximately half of the
profits made on the affiliate events and publications were payable
to Affiliate Media under this contract in both 2009 and 2010.
Following the Buyout, all fees previously payable to Affiliate
Media will be payable to SBG Companies Limited in return for the
services outlined in the contract.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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