Acquisition and Trading Update (9830E)

TIDMELE

RNS Number : 9830E

Electric Word PLC

15 April 2011

15(th) April 2011

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, JAPAN, CANADA, AUSTRALIA OR THE REPUBLIC OF IRELAND

Electric Word plc

("Electric Word" or the "Company")

Further expansion in Healthcare sector with acquisition of HR system provider and Trading Update

Acquisition of Ikonami

Electric Word plc (AIM: ELE), the specialist information publisher, is pleased to announce the acquisition of Ikonami Ltd, a leading provider of software for the management of appraisals, training and professional development within the NHS. The acquisition is highly complementary to Radcliffe Publishing which Electric Word purchased in November 2010 and which is focused on professional development books, journals and training in primary healthcare.

Electric Word is acquiring Ikonami Ltd from its shareholders Arif Ahmed and Kubair Shirazee for an initial cash consideration of GBP151,250, to be paid over the twelve months following completion, and a deferred cash consideration based on profit performance for the year to November 2013 up to a maximum total consideration, including the initial payments, of GBP2.2m. The maximum consideration would be payable if profits before interest and tax in 2013 were to reach GBP1.15m. The minimum total consideration is GBP306,250. Ikonami reported a loss before tax for the financial year ended 31 October 2010 of GBP115,921, and had gross assets of GBP357,261 at 31 October 2010.

Ikonami, Electric Word's second purchase in the healthcare sector, will be rebranded Radcliffe Solutions and will complement the professional development books, journals, training, and medical education that Radcliffe already provides.

Ikonami Ltd offers three main software solutions supporting HR management, compliance and professional development within the NHS. E-KSF is the centrally developed system used by NHS managers to enable and monitor online appraisals. In Scotland and Wales the system is mandatory. AT-Learning is widely used by Training and Learning and Development managers to record, monitor and report on training for most grades of NHS staff, including mandatory training. AT-Performance is a new system for managing personal and professional development records. Between them, the three software solutions are currently used by or on behalf of over 1.2m people in the NHS, across 410 NHS Trusts.

Arif Ahmed, the Ikonami Managing Director, will stay with the business to drive growth within Electric Word and support for the systems will continue to be provided through an outsourcing contract with Ikonami Technologies Limited, which will continue to be managed by Kubair Shirazee, using their offshore team in Pakistan.

Trading Update

The Directors of Electric Word are also providing the following trading update. As highlighted in the preliminary results announcement on 15 February 2011, Electric Word's Business Information and Professional divisions are experiencing very different market conditions in the first part of the current year.

The Business Information Division is showing strong growth on 2010, boosted particularly by the buy-out of our joint venture partner's share of the iGaming Business Affiliate events and publishing activities announced on 25 January 2011. Organic growth is also ahead of expectations so current year profits from the Business Information Division are therefore expected to be significantly ahead of last year.

Trading has been more difficult in the Professional Division. Market conditions in the education sector continue to be very challenging due to uncertainty around both future funding and the practical impact on schools of policy changes that are yet to be fully understood. Conference bookings in particular are running below last year's strong Q1 performance as new professional development priorities start to emerge, and book sales have not improved from the low levels seen in Q4 2010. As a result, the contribution from the education sector is expected to be significantly below 2010 levels, although the Board expects the performance of the education businesses to return to 2009 levels in the medium term, driven by the further devolution of management autonomy to schools, greater clarity within the sector on its strategic priorities and the transition of the subscription business to an enhanced digital model.

The acquisition of Ikonami represents a further step towards achieving the Group's strategic aim of creating an at-scale professional development and compliance business in the fast-changing health sector, in which we expect to see long-term growth and which will complement the similar business we have built in Education through the last decade. We aim to continue to expand the Group's information activities in healthcare by a combination of further acquisitions and the exciting growth opportunities implicit in the recent acquisitions. However in 2011 any early stage profits added by the recently acquired health businesses are not expected to make up for reduced profits in education.

Overall the Group remains in a strong position and, as previously described, we have made 2011 a year of significant investment in the further development and enhancement of digital products across the Group. This investment is expected to accelerate the future recovery of profits in the education sector, and the growth of the newly acquired healthcare businesses, in 2012 and beyond.

Julian Turner, Chief Executive of Electric Word, commented:

"With the acquisition of Ikonami we are extending further into the Healthcare sector - an area which is evolving and for which there is significant government funding. Ikonami has an excellent reputation for its software within the NHS, a strong market position and an outstanding opportunity to grow in a fast-changing environment in which effective people management, training and compliance will be increasingly important within the new health service structures. As information and workflow tools become more integrated and Electric Word's services become more digital, this acquisition gives us an excellent platform for future organic growth in the healthcare sector and allows us to extend the Radcliffe brand so soon after we acquired it."

Arif Ahmed commented: "Ikonami has a close relationship with its customers which include over 400 NHS Trusts. We believe that they will benefit from the investment we will be able to make in bringing our software to more Trusts and further improving the quality and depth of services we can offer to NHS Training Managers, in particular as part of the growing range of Radcliffe products and services."

For further information please contact:

 
 Electric Word plc             Tel: +44 (0) 20 7954 3470 
 Julian Turner 
 
 Panmure Gordon (UK) Limited   Tel: +44 (0) 20 7459 3600 
 Andrew Potts 
  Callum Stewart 
 
 Financial Dynamics            Tel: +44 (0) 20 7831 3113 
 Clare Thomas 
 Tim Spratt

This information is provided by RNS

The company news service from the London Stock Exchange

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