TIDMELE
RNS Number : 5359F
Electric Word PLC
23 February 2015
23(th) February 2015
ELECTRIC WORD PLC
Preliminary Results to 30 November 2014
Electric Word, the specialist information business with
divisions operating in the Sport & Gaming, education and Health
sectors, announced today audited results for the year ended 30
November 2014.
FINANCIAL HIGHLIGHTS
Revenue from continuing operations up 3% to GBP13.6m
* Live events revenue up 22% driven by growth in
iGaming events
* Revenue mix change: Digital and Live revenue up from
59% to 67% of Group revenue
o Live up to 42% (2013: 35%) of Group revenues
o 44% of publishing revenues include a digital format (2013: 40%)
* Sport & Gaming revenue up 18%; Education down 9%;
Health down 10%
Group adjusted EBITA* down 7% from GBP0.74 to GBP0.69m
* Sport & Gaming EBITA* up 34% from GBP1.4m to GBP1.9m
* Education EBITA* down from GBP0.1m loss to GBP0.4m
loss, due to lower sales linked to legacy products
and further investments
* Health EBITA* down from GBP0.2m profit to GBP0.1m
loss due to lower sales of non-book products
Loss from continuing operations improved from GBP0.32m to GBP0.27m
* Amortisation cost reduced from GBP0.9m to GBP0.6m
* Loss from discontinued operations of GBP1.0m
including GBP0.8m impairments, following disposal of
non-strategic businesses (2013: GBP0.3m loss)
* EBITA denotes adjusted EBITA as defined in Note 5 and excludes
amortisation and impairment of goodwill and intangible assets,
restructuring and acquisition-related credits and costs, and share
based payment costs, as well as the tax impact of those adjusting
items and any non-cash tax credits and charges. This definition
applies throughout the Annual Report and Financial Statements
OPERATIONAL HIGHLIGHTS
Sport & Gaming:
-- Significant growth in iGaming events revenues driven by
larger venues and new affiliate sectors
-- Development and launch of new premium digital subscription services
-- Subscriptions and live events account for 84% (up from 61%)
of total revenue for the division
Education:
-- Strategic realignment and rebrand of the product portfolio into three core services
-- Continued investment in digital product development and sales
-- Continued strong performance from conferences following
investment in new products and formats
-- Disposal of Incentive Plus business (2014)
Health:
-- Milton Keynes office closure completed to create a single multi-disciplinary team in London
-- Investment in digital infrastructure to improve distribution and sales of ebooks
-- Investment in new Speechmark digital products for launch in 2015
-- Disposal of Sports Performance (2014) and Radcliff Solutions (January 2015)
Julian Turner, Chief Executive of Electric Word, commented:
"In 2014 we started to see results from the investments the
company has made to improve our digital infrastructure and expand
our events. Progress has been made across the Group and we expect
this to continue in 2015. Trading in the current year is in line
with the Board's expectations for the divisions, although the
forthcoming General Election inevitably carries some uncertainty
for the education sector, while central costs are expected to
increase following a move into new premises in the second
quarter."
Financial summary (GBP'000) 2014 % 2013
GBP'000 Change GBP'000
GBP'000 Restated
Continuing operations
Revenue 13,624 +3% 13,200
Gross Profit 7,391 +6% 6,989
Adjusted EBITA* 685 738
------------------------------------------ ---------- --------- ----------
Adjusted profit before tax* 650 693
Amortisation (636) (865)
Impairment expense - (674)
Restructuring costs (84) (196)
Acquisition-related credits - 44
Share-based payment (charges)
/ credits (270) 27
------------------------------------------ ---------- --------- ----------
Loss before tax (340) (971)
========================================== ========== ========= ==========
Loss for the financial year from
continuing operations (266) (319)
========================================== ========== ========= ==========
Loss for the financial year from
continuing and discontinued operations (1,289) (614)
Diluted loss per share from continuing
operations (0.09)p (0.11)p
Adjusted diluted earnings per
share* 0.08p 0.11p
Diluted loss per share from continuing
and discontinued operations (0.33)p (0.18)p
========================================== ========== ========= ==========
* Adjusted figures (note 5) exclude amortisation,
impairment of goodwill and intangible assets, acquisition-related
and restructuring credits and costs, and share based
payment costs, as well as the tax impact of those
adjusting items and any non-cash tax credits and
charges.
-----------------------------------------------------------------------------
Comparative figures for the year to 30 November 2013 have been
restated to reclassify the results of the Sports Performance,
Incentive Plus and Radcliffe Solutions businesses as discontinued
operations as a result of their disposals. See note 10.
The audited report and accounts of the Company for the year
ended 30 November 2014 have been posted to the Company's website at
www.electricwordplc.com. The printed version, together with details
of the Annual General Meeting, will be posted to shareholders in
due course.
ENDS
Enquiries:
Electric Word
Julian Turner, Chief Executive
020 7954 3470
Panmure Gordon
Andrew Potts 020 7459 3600
Notes to Editors
Electric Word plc is a specialist media group supporting
professional development, compliance and management effectiveness
through a wide range of digital, print and live formats. Our
approach is to identify niche communities within our market sectors
and fulfil our customers' key information needs to enable them to
do their jobs better and enhance their careers. We achieve this by
developing a deep understanding of our sectors and our customers'
challenges and information requirements.
The Group provides content in many different formats, including
subscription websites, journals, magazines, events, face-to-face
training, online training, books, special reports, bespoke research
and consultancy. Competencies developed in one sector can be
transferred to another as opportunities arise.
The Group is composed of three market-facing divisions:
Sport & Gaming
This division provides business insight, data and analysis to
professionals in the global businesses of sport and online gaming.
SportBusiness Group provides subscription websites and magazines
for sports industry professionals who work in governing bodies, the
media, sports marketing, sponsorship and club and event management.
iGaming Business provides events, subscription websites and
magazines to both the online gaming industry itself and its
marketing affiliates, providing this global and fast-growing
industry with business-critical information and marketing
support.
Education
The Education division, operating through the Optimus Education
brand, supports the professional development of teachers and school
leaders through an online subscription-based information and
training service and through live conferences.
Health
The Health division provides professional education and training
products for doctors, healthcare managers, speech therapists and
other health professionals through the Radcliffe and Speechmark
brands. Radcliffe publishes books and other associated products to
support the education and professional development of doctors,
managers and professionals allied to health. Speechmark specialises
in resources for speech therapists, special needs co-ordinators and
teachers.
CHAIRMAN'S STATEMENT
Dear Fellow Stakeholders,
Our objective, as always, is to grow the long-term value of the
Group's strategic assets. We are doing this by increasing the focus
of the business, strengthening its leadership, investing to build
excellent, market-leading products and services and growing scale
and margins. In 2014 we made progress on all these fronts, while
recognising that there is further to go.
The business has been streamlined by disposing of several
non-core activities to enable us to focus management and resources
on the key areas of future growth. Leadership has been strengthened
by a new Managing Director of the Education division and the
addition of Henrietta Marsh as a Non-Executive Director.
New investment has been concentrated on developing, launching
and growing high-value digital subscription services and on
improving the infrastructure of our largest live events. In the
Sport & Gaming division the investments that we have made in
previous years have delivered increased profits, with adjusted
EBITA growth of 34%, an excellent return on the efforts of a
talented team.
In the Education and Health divisions we are investing in
building excellent digital services. The Optimus Education online
subscription service has been transformed through the course of the
year and now provides a competitive professional development and
compliance service for school leaders and a platform for future
growth.
In 2015 we look forward to further progress towards our
strategic goals. The success of the business relies as ever on our
dynamic and professional team and on behalf of the Board I would
like to thank our employees as well as the other stakeholders for
their effort and support.
Andrew Brode
Chairman
20 February 2015
CHIEF EXECUTIVE'S STATEMENT
BUSINESS MODEL AND STRATEGY
Business model
Electric Word plc is a specialist media group supporting
professional education, compliance and management through a wide
range of digital, live and paper formats. Our approach is to
identify niche communities within our market sectors and fulfil
their key information, professional development, best practice and
compliance needs.
Our business model starts with the customer. By better
understanding our customers' aspirations and challenges we can
provide increasingly valuable information products that support
their critical decisions and key objectives. We serve our
customers' needs through many different formats, including
subscription websites, events, face-to-face training, online
training, books, journals, magazines, special reports, bespoke
research and consultancy. Competencies developed in one sector can
then be transferred to another as opportunities arise. Within this
mix we favour high-quality revenue streams from digital
subscription services, tools that connect directly with customer
work requirements and live events with the scale to build brand
presence in their markets.
We aim to increase the value of the services that we deliver
over the lifetime of each customer relationship. We deliver this by
increasing the penetration of our information within each customer
organisation and also by innovating and developing new
products.
Group Strategy
Our business model requires focus and investment, so it is
important that the activities we select for strategic development
are scalable and will ultimately generate high margins.
The deep knowledge of customers and markets needed to deliver
our business model also means that we concentrate on a small number
of market sectors and activities. We are therefore focusing the
business on doing fewer things, each at a greater scale, to achieve
higher margins. Our objective is a simpler business that is better
able to capitalise on the opportunities in our markets and the
changing technology underpinning our sector. During 2014, we have
simplified the business further by disposing of the Sports
Performance and Incentive Plus businesses and after the year end in
January 2015 we also sold Radcliffe Solutions Ltd.
The strategy translates into different priorities within each
division according to the needs of the market and the development
of the business. These are described and evaluated in the Business
Performance Review.
GROUP PERFORMANCE
Revenues
The Group strategy has been consistent in recent years: to
develop higher value products and services, increasingly in digital
or live formats, by improving the depth and value of the content
and services we provide. This has required deep customer knowledge,
investment and focus: the aim has been to do fewer things, of more
value and at greater scale.
In 2014, new digital products or services were launched in each
of the Group's three divisions. Investment in growing the
infrastructure and scale of our live events resulted in events
revenue increasing by 22%. As a result, the proportion of Group
revenue derived from digital and live services increased from 59%
to 67%. The quality of revenue has also improved, with 37% of
non-events revenue now derived from subscriptions, up from 31% in
2013.
Profitability
Strong profit growth in the Sport & Gaming division has
enabled the Group to invest further in refocusing the Education
business, particularly its subscription products for school leaders
and managers. Overall, Group Adjusted EBITA is down 7% to GBP0.69m
from GBP0.74m.
Items that appear below the adjusted profit line, in general,
reflect our strategy and the changes that are being made in the
business. At the same time as investing in areas of strategic
growth, the Group has continued to disinvest from non-core
activities in order to simplify Group operations and increase
focus. During the year we disposed of the Sports Performance and
Incentive Plus business. Since the end of the year, we have also
disposed of Radcliffe Solutions Ltd. The results of these
businesses and the net loss on disposal have been treated as
discontinued activities for the year ended 30 November 2014 and
excluded from adjusted profits. The net loss from discontinued
activities is GBP1.0m (2013: GBP0.3m) and includes impairments of
goodwill and intangible assets associated with Radcliffe Solutions
Ltd of GBP0.8m (2013: GBPnil). I am pleased to report that during
2014, we have not felt it necessary to further impair the value of
the Company's continuing assets.
The introduction of a new share option scheme in December 2013
combined with a strong share price performance since then has
increased the share based payments charge to GBP0.27m in 2014.
These adjustments lead to a statutory loss after tax of GBP1.3m,
compared to a loss of GBP0.6m in 2013.
Divisional PERFORMANCE
SPORT & GAMING DIVISION
2014 Change 2013
GBP'000 % GBP'000
----------------- --------- ------- ---------
Revenue 7,268 18% 6,152
----------------- --------- ------- ---------
Adjusted EBITA* 1,934 34% 1,439
----------------- --------- ------- ---------
Margin 27% 23%
----------------- --------- ------- ---------
The 18% increase in revenue in the Sport & Gaming division
has been largely driven by the expansion of the iGaming Business
Affiliate conferences into some new markets and the London and
Amsterdam events moved to larger venues. In addition, digital
subscriptions revenue grew as a result of subscribers moving to
digital subscriptions and the development and launch of new premium
services such as the new Rights Tracker data visualisation tool and
strong growth in TV Sports Markets and Sport Sponsorship
Insider.
Margins again improved as a result of increasing the scale of
the live events and the high marginal profits accrued from
additional digital subscription revenues, driving a 34% increase in
divisional EBITA.
EDUCATion DIVISION
2014 Change 2013
Continuing Operations GBP'000 % GBP'000
Restated
------------------------- --------- ------- ----------
Revenue 3,536 -9% 3,898
------------------------- --------- ------- ----------
Adjusted EBITA* (415) 205% (136)
------------------------- --------- ------- ----------
Margin -12% -3%
------------------------- --------- ------- ----------
The table above excludes the results of the Incentive Plus
business which was sold on 15 October 2014 - see note 10.
In 2014 this division has made some fundamental changes. During
the course of the year the leadership of the division was
strengthened with a new Managing Director, a new Sales Director and
a new Director of Product Strategy. The business offering has also
been changed significantly and is now focused on three core
services: an online subscription Knowledge Centre, an online
subscription Training service and a suite of live events.
These services have been the product of considerable investment,
particularly in the online product portfolio. Optimus In-House
Training was launched in 2014 to provide a new specialist digital
professional education service to support the continuing
development of teaching and management skills throughout the
school. The new Knowledge Centre has consolidated and streamlined
our digital compliance and information services for middle and
senior leaders in schools. These subscription services are
complemented by the highly successful range of Optimus conferences
which enable senior and middle school leaders to keep updated and
share best practice. These live events continued to trade well in
2014.
Overall, the division continues to be in transition and revenues
declined due to the loss of customers associated with legacy print
products and reduced book sales. We continue to be excited by the
prospects for the digital products in which we have invested.
Health DIVISION
2014 Change 2013
Continuing Operations GBP'000 % GBP'000
Restated
------------------------- --------- ------- ----------
Revenue 2,820 -10% 3,150
------------------------- --------- ------- ----------
Adjusted EBITA* (60) -134% 175
------------------------- --------- ------- ----------
Margin -2% 6%
------------------------- --------- ------- ----------
The table above excludes the results of the Sports Performance
businesses which was sold on 30 May 2014, and Radcliffe Solutions
Ltd which was sold on 28 January 2015 - see note 10.
The priorities of the Health division have been to improve the
digital infrastructure of the Radcliffe and Speechmark books
businesses while developing new digital products to enhance the
range of professional development, therapeutic and diagnostic
products. The publishing infrastructure of both businesses was
improved by the closure of the Milton Keynes office and relocation
into one office, investment in the modernisation of digital
distribution systems for e-books and investment in print on demand
capability which we expect to be implemented in 2015.
During the course of 2014 Radcliffe Publishing streamlined its
front-list into three areas of focus: medical professional
development, academic and student exam support. In Speechmark the
publishing team was strengthened and an investment made into a new
range of digital speech therapy products. Overall sales and
profitability in the division fell due to lower sales of non-book
products and investments in digital product development.
Central costs
These costs represent central group costs which are not directly
related to any particular Division and are therefore not included
in their results. They include Board fees and costs related to
being both a PLC and a Group.
2014 Change 2013
GBP'000 % GBP'000
--------------------------------------- --------- ------- ---------
Adjusted EBITA* (774) +5% (740)
--------------------------------------- --------- ------- ---------
As % of Group revenue from continuing
operations 6% 6%
--------------------------------------- --------- ------- ---------
Net interest payable (35) (45)
--------------------------------------- --------- ------- ---------
The Group has maintained its central costs at 6% of Group
revenues. The majority of investments made by the Group to date
have been directly related to the trade of the divisions and hence
been recharged to them, but during 2014, the Group has made further
central investments in the area of digital product development.
Net interest payable is consistent year on year with the
reduction in the Group's debt due to loan repayments made in 2013
and 2014.
Julian Turner
Chief Executive
20 February 2015
OPERATING AND FINANCIAL REVIEW
SUMMARY ADJUSTED RESULTS
Total Group 2014 Change 2013
GBP'000 % GBP'000
Continuing operations Restated
--------------------------------- --------- ------- ----------
Total Group
--------------------------------- --------- ------- ----------
Revenue 13,624 3% 13,200
--------------------------------- --------- ------- ----------
Adjusted EBITA* 685 -7% 738
--------------------------------- --------- ------- ----------
Margin 5% 6%
--------------------------------- --------- ------- ----------
Net interest charge (35) (45)
--------------------------------- --------- ------- ----------
Adjusted profit before tax from
continuing operations* 650 -6% 693
--------------------------------- --------- ------- ----------
* A reconciliation of the adjusted figures is set out in note 5.
Adjusted figures are presented to allow shareholders to gain a
further understanding of the trading performance of the Group.
Profits are adjusted for items not perceived by management to be
part of the underlying trends in the business together with their
related tax effect and the profit impact of movements in deferred
tax balances.
Acquisition-related and restructuring credits and costs
In 2014, a restructuring charge of GBP84,000 has been incurred
primarily relating to the cost of making major changes to the
Education senior management and content teams in order to meet the
needs of the business and its customers.
Impairment charges and reduction to goodwill
Impairment charges of GBP778,000 have been booked in 2014. These
have been classified as discontinued as they comprise GBP414,000
and GBP364,000 in impairments recognised on Radcliffe Solutions
Ltd's goodwill and intangible assets respectively.
Capital expenditure
During the year, the Group has invested an additional GBP511,000
in web development and enhancing its digital products (2013:
GBP493,000). The majority of web development spend this financial
year has concentrated on launching major enhancements to the
Education subscriptions website, the launch of new digital products
for Speechmark, and the creation of a new digital subscription
product in Sports Business.
Debt and cash flow
In May 2014, the Group secured additional lending of GBP200,000
from its lending bank to fund its continued investment
programme.
Net debt (note 28) at 30 November 2014 was GBP389,000 (2013: net
debt of GBP12,000). The Group has gross bank debt (note 19) of
GBP389,000 at November 2014 (2013: GBP475,000). Of this, GBP225,000
is being repaid over periods to November 2015, GBP161,000 is being
repaid over periods to May 2017 and GBP3,000 is repayable on
demand.
Cash conversion rate
GBP'000 2014 2013
GBP'000 GBP'000
Restated
----------------------------------------- --------- ----------
Cash from operating activities before
interest and tax 500 701
----------------------------------------- --------- ----------
Net cash outflow from restructuring
costs 84 196
----------------------------------------- --------- ----------
Adjusted cash from operating activities
before interest and tax 584 897
----------------------------------------- --------- ----------
Adjusted EBITA 685 738
----------------------------------------- --------- ----------
Adjusted cash conversion of operating
profits for year 85% 122%
----------------------------------------- --------- ----------
The high cash conversion rate in 2013 was primarily a result of
significant pre-billing and cash collection of 2014 events during
2013. This year, the relatively late timing of the Barcelona 2014
iGaming event coupled with the earlier timing of the London 2015
event has reduced the amount of cash that was invoiced and
collected at year end compared to the prior year, thereby impacting
on cash conversion. These changes of dates have also affected
deferred income compared to 2013.
In addition, Group cash flow has been impacted by a new
GBP200,000 bank loan, loan repayments of GBP289,000 and the payment
of GBP303,000 of dividends to the minority shareholder of iGaming
Business Ltd.
Earnings per share
Statutory diluted earnings per share are 0.33p loss (2013: 0.18p
loss). Adjusted diluted earnings per share (calculated using
adjusted profit from continuing operations) are 0.08p (2013: 0.11p)
reflecting the net impact of trading performance and investments
made during the year as noted in the Business and Performance
Review section of the Strategic Report.
Dividends
The Directors have not proposed a dividend to be paid in respect
of 2014 (2013: GBPnil).
William Fawbert
Finance Director
20 February 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 November 2014
2014 2013
Notes GBP'000 GBP'000
Restated
-------------------------------------- ------ ---------- ----------
CONTINUING OPERATIONS
Revenue 2 13,624 13,200
Cost of Sales - Direct costs (5,106) (4,714)
Cost of Sales - Marketing expenses (1,127) (1,497)
-------------------------------------- ------ ---------- ----------
GROSS PROFIT 2 7,391 6,989
Other operating expenses 8 (6,893) (6,138)
Restructuring costs 5 (84) (196)
Acquisition-related credits 5 - 44
Depreciation expense 8 (83) (86)
Amortisation expense 8 (636) (865)
Impairment charges 8 - (674)
Total administrative expenses (7,696) (7,915)
OPERATING LOSS (305) (926)
Finance costs 6 (35) (51)
Finance income 7 - 6
LOSS BEFORE TAX 8 (340) (971)
Taxation 9 74 652
LOSS FOR THE FINANCIAL YEAR FROM
CONTINUING OPERATIONS (266) (319)
DISCONTINUED OPERATIONS
LOSS FOR THE FINANCIAL YEAR FROM
DISCONTINUED OPERATIONS, NET OF TAX 10 (1,023) (295)
-------------------------------------- ------ ---------- ----------
LOSS FOR THE FINANCIAL YEAR (1,289) (614)
====================================== ====== ========== ==========
Attributable to:
- Equity holders of the parent (1,405) (733)
- Non-controlling interest 116 119
-------------------------------------- ------ ---------- ----------
Total comprehensive LOSS (1,289) (614)
====================================== ====== ========== ==========
LOSS PER SHARE
From continuing and discontinued
operations
Basic 11 (0.35)p (0.18)p
Diluted 11 (0.33)p (0.18)p
From continuing operations
Basic 11 (0.09)p (0.11)p
Diluted 11 (0.09)p (0.11)p
====================================== ====== ========== ==========
2013 results have been restated to show the effect of operations
which have been discontinued in the current period.
Of the loss for the financial year from discontinued operations,
GBP1,023,000 (2013: GBP295,000) is attributable to equity holders
of the parent and GBPnil (2013: GBPnil) is attributable to the
non-controlling interest.
CONSOLIDATED GROUP AND COMPANY STATEMENTS OF CHANGES IN
EQUITY
For the year ended 30 November 2014
GROUP Reserve
Share for Non-
Share premium Merger own Retained controlling Total
capital account reserve shares earnings Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- --------- --------- --------- ---------- ---------- ------------- ---------
At 1 December
2012 3,996 7,452 105 (123) (3,200) 8,230 249 8,479
Total comprehensive
income - - - - (733) (733) 119 (614)
3,996 7,452 105 (123) (3,933) 7,497 368 7,865
Dividend paid
by subsidiary - - - - - - (100) (100)
Share issues 72 79 - - - 151 - 151
Share based
credits - - - - (27) (27) - (27)
At 30 November
2013 4,068 7,531 105 (123) (3,960) 7,621 268 7,889
Total comprehensive
income - - - - (1,405) (1,405) 116 (1,289)
Tax credited
directly to
equity (note
16) - - - - 112 112 - 112
4,068 7,531 105 (123) (5,253) 6,328 384 6,712
Dividend paid
by subsidiary - - - - - - (303) (303)
Share issues 8 - - - - 8 - 8
Share based
payments - - - - 270 270 - 270
At 30 November
2014 4,076 7,531 105 (123) (4,983) 6,606 81 6,687
======================= ========= ========= ========= ========= ========== ========== ============= =========
COMPANY Share
Share premium Retained Total
capital account earnings equity
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- ---------- ---------
At 1 December 2012 3,996 7,452 (5,471) 5,977
Total comprehensive income - - (686) (686)
3,996 7,452 (6,157) 5,291
Share issues 72 79 - 151
Share based payments - - (27) (27)
--------------------------------- --------- --------- ---------- ---------
At 30 November 2013 4,068 7,531 (6,184) 5,415
Total comprehensive income - - (2,569) (2,569)
Tax credited directly to equity
(note 16) - - 112 112
4,068 7,531 (8,641) 2,958
Share issues 8 - - 8
Share based payments - - 270 270
At 30 November 2014 4,076 7,531 (8,371) 3,236
================================= ========= ========= ========== =========
CONSOLIDATED GROUP AND COMPANY STATEMENTS OF FINANCIAL
POSITION
As at 30 November 2014
Group Company
2014 2013 2014 2013
Notes GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------ -------- -------- -------- --------
ASSETS
Non-current assets
Goodwill 12 4,869 5,283 - -
Other intangible assets 13 1,754 2,399 23 67
Property, plant and equipment 14 24 100 23 97
Investments 15 - - 6,380 6,860
Deferred tax assets 16 1,804 1,547 248 64
-------------------------------- ------ -------- -------- -------- --------
8,451 9,329 6,674 7,088
Current assets
Inventories 17 1,267 1,660 - -
Trade and other receivables 18 2,777 3,449 6,729 6,818
Cash and cash equivalents 28 - 463 152 379
-------------------------------- ------ -------- -------- -------- --------
4,044 5,572 6,881 7,197
Assets classified as
held for sale 10 81 - - -
-------------------------------- ------ -------- -------- -------- --------
Total current assets 4,125 5,572 6,881 7,197
-------------------------------- ------ -------- -------- -------- --------
TOTAL ASSETS 12,576 14,901 13,555 14,285
================================ ====== ======== ======== ======== ========
EQUITY AND LIABILITIES
Capital and Reserves
Called up ordinary share
capital 24 4,076 4,068 4,076 4,068
Share premium account 7,531 7,531 7,531 7,531
Merger reserve 105 105 - -
Reserve for own shares 25 (123) (123) - -
Retained earnings (4,983) (3,960) (8,371) (6,184)
Equity attributable to
equity holders of the
parent 6,606 7,621 3,236 5,415
Non-controlling interest 26 81 268 - -
-------------------------------- ------ -------- -------- -------- --------
TOTAL EQUITY 6,687 7,889 3,236 5,415
Non-current liabilities
Borrowings 19 94 350 94 350
Deferred tax liabilities 16 178 290 - -
272 640 94 350
Current liabilities
Borrowings 19 295 125 292 125
Current tax liabilities 61 21 - -
Trade payables and other
payables 20 2,543 2,985 9,873 8,395
Provisions 22 60 127 60 -
Deferred income 21 2,481 3,114 - -
-------------------------------- ------ -------- -------- -------- --------
5,440 6,372 10,225 8,520
Liabilities associated
with assets classified
as held for sale 10 177 - - -
-------------------------------- ------ -------- -------- -------- --------
Total current liabilities 5,617 6,372 10,225 8,520
-------------------------------- ------ -------- -------- -------- --------
TOTAL LIABILITIES 5,889 7,012 10,319 8,870
TOTAL EQUITY AND LIABILITIES 12,576 14,901 13,555 14,285
================================ ====== ======== ======== ======== ========
These financial statements on pages 24 to 59 were approved by
the Board of Directors and authorised for issue on 20 February 2015
and are signed on its behalf by
Julian Turner William Fawbert
Chief Executive Finance Director
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
For the year ended 30 November 2014
Group Company
2014 2013 2014 2013
Notes GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------ -------- -------- -------- --------
(Loss) / profit for the
financial year (1,289) (614) (2,569) (686)
Taxation (74) (590) (72) 24
Amortisation & impairment
expense, reduction in
goodwill 12,13 1,470 1,596 524 590
Depreciation 14 88 112 85 88
Loss from disposal of
property, plant and equipment 8,14 - 3 - 1
Loss on disposal of intangible
assets 8,13 - 50 - -
Profit on disposal of
discontinued operations 27 (4) - - -
Finance costs 35 51 35 51
Finance income - (6) - (6)
Share based payment charges
/ (credits) 8 270 (27) 270 (27)
Operating cash flows
before movement in working
capital 496 575 (1,727) 35
Decrease / (increase)
in inventories 343 (12) - -
Decrease / (increase)
in receivables 598 (731) 89 (2,721)
(Decrease) / increase
in payables (937) 869 1,538 2,912
Cash flow from operating
activities before interest
and tax 500 701 (100) 226
Interest paid 6 (35) (46) (35) (46)
Taxation paid (144) (124) - (121)
Cash inflow / (outflow)
from operating activities 321 531 (135) 59
-------------------------------- ------ -------- -------- -------- --------
INVESTING ACTIVITIES
Deferred consideration
paid 27 - (81) - (81)
Purchase of property
plant and equipment 14 (12) (112) (11) (110)
Purchase of intangible
assets 13 (511) (520) - (1)
Proceeds from disposal
of discontinued operations 27 120 - - -
Proceeds from disposal
of property, plant and
equipment 14 - 5 - 5
Interest received 7 - 6 - 6
Net cash used in investing
activities (403) (702) (11) (181)
-------------------------------- ------ -------- -------- -------- --------
FINANCING
Proceeds from issuance
of ordinary shares 24 8 151 8 151
Costs of issuing shares - - - -
Proceeds of new borrowings 28 200 - 200 -
Repayments of borrowings 28 (289) (400) (289) (400)
Payment of dividend to
minority interest (303) (100) - -
Net cash from financing
activities (384) (349) (81) (249)
-------------------------------- ------ -------- -------- -------- --------
NET (DECREASE) / INCREASE
IN CASH AND CASH EQUIVALENTS (466) (520) (227) (371)
CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF YEAR 463 983 379 750
CASH AND CASH EQUIVALENTS
AT END OF YEAR 28 (3) 463 152 379
================================ ====== ======== ======== ======== ========
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 November 2014
1. ACCOUNTING POLICIES
BASIS OF PREPARATION
The financial statements have been prepared in accordance with
International Financial Reporting Standards as endorsed by the
European Union ("IFRS"), IFRIC interpretations and the Companies
Act 2006 applicable to companies reporting under IFRS.
The financial statements of the Group and the Parent Company
have been prepared under the historical cost convention and in
accordance with applicable accounting standards. As permitted by
Section 408 of the Companies Act 2006, no separate income statement
is presented for the Company. The Company's loss for the year was
GBP2,569,000 (2013: GBP686,000 loss).
Operating profit is defined as profit before tax but excluding
net finance and related costs and investment income.
GOING CONCERN
The Group has made a loss for the year of GBP1,289,000 (2013:
GBP614,000) and has net assets of GBP6,687,000 (2013:
GBP7,889,000); notwithstanding this it has a net current
liabilities position at 30 November 2014 of GBP1,492,000 (2013:
GBP800,000). The level of bank debt has however reduced to
GBP389,000 (2013:GBP475,000). The Directors have prepared group
cash flow forecasts for the period ending 30 November 2017, which
take into account known factors in the business including the
expected impact of moving offices in 2015. These forecasts indicate
that the Group will continue to meet its liabilities and bank debt
requirements as they fall due for the foreseeable future. The
business is currently trading in line with these forecasts. In the
event of forecast trading levels not being met due to a weaker
economic climate than forecast, the Directors have the scope to
take further actions to enable the group to meet its liabilities as
they fall due for the foreseeable future and for it to remain
within its financial covenants and financial facilities. On this
basis the Directors believe that it remains appropriate to prepare
the financial statements on a going concern basis.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Within the consolidated and company financial statements there
are a number of areas where management has to include their best
estimate of likely outcomes based on their first hand knowledge of
the markets and situation. The preparation of consolidated and
company financial statements will require management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates.
In preparing these consolidated and company financial
statements, the significant judgements made by management in
applying the accounting policies and the key sources of estimation
uncertainty were:
-- Valuation and asset lives of intangible assets - which are
based on management's considered opinion of what has been bought
and what value it is to the Group in the future. Valuation
methodologies include the use of discounted cash flows, revenue and
profit multiples, whilst asset lives are estimated on the type of
asset acquired and range between three and ten years;
-- Impairment of assets - assets are subject to at least annual
impairment reviews and testing, and the running of these tests and
the numbers that form part of them will be based as far as possible
on actual known results but will by nature include predictions of
future outcomes. The asset carrying values are compared to
estimates of the assets' value in use. This value in use is
calculated by looking at the cash generating units underlying the
assets and management estimating the future cash flows after
applying a suitable discount factor. The estimates of future cash
flows are based on detailed forecasts produced by management.
Assumptions on the goodwill assets are given in note 12;
-- Provisioning: both trade receivables for bad debt and
inventories for returns and obsolescence are reviewed for potential
write down. The provisions created to cover these areas are based
on managements' experience and considered opinion of the assets'
current value;
-- Contingent consideration: provisions are made at the
Directors' best estimate of what the consideration will be but as
based on future results it can only be assessed on current
knowledge and expectations with no certainty. The provisions made
are considerably under the maximum amounts which could be payable
(note 22);
-- Valuation of share based payments - which are calculated from
modelling including estimates of non-transferability, exercise
restrictions, and behavioural considerations, including such
factors as the volatility of the Company's share price. These
inputs and the methods are set out in note 29;
-- Deferred tax: both assets and liabilities require judgement
in determining the amounts to be recognised, in particular the
extent to which assets should be recognised in consideration of the
timing and level of future taxable income.
2 REVENUE AND COST OF SALES
An analysis of the Group's income from continuing operations is
as follows:
2014 2013
GBP'000 GBP'000
Restated
------------------------------------ -------- ----------
Revenue
Sale of goods 6,296 6,642
Rendering of services 7,328 6,558
------------------------------------ -------- ----------
13,624 13,200
Cost of sales
Change in inventories of finished
goods (349) 105
Raw materials and consumables used (4,757) (4,819)
Marketing costs (1,127) (1,497)
------------------------------------ -------- ----------
(6,233) (6,211)
Gross profit 7,391 6,989
------------------------------------ -------- ----------
3 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 reviewed by the Board when
reviewing performance, allocating resources and making strategic
decisions.
-- Education (E): provides school management and professional
development information to professional communities in schools and
other institutions;
-- Health (H): provides professional education and training
products for doctors, healthcare managers, speech therapists,
elderly care professionals, and other health professionals.
-- Sport & Gaming (S&G): provides insight, data and
analysis to the business communities behind sport and online
gaming;
-- Central costs (PLC): the group function represents central
costs which are not directly related to the Divisions' trading and
are not recharged. Finance costs and investment income are also
included here as these are driven by central policy which manages
the cash position across the Group.
Operating profit is defined in note 1. The sector analysis
includes the adjusted operating profit (note 5) to allow
shareholders to gain a further understanding of the trading
performance of the Group and is considered by the Board alongside
operating profit and profit before tax to assess performance and
review strategy.
As described in note 10, three businesses have been classed as
discontinued in the current year. The information in the table
below excludes amounts relating to discontinued activities and 2013
comparatives have been restated accordingly.
Analysis Year ended 30 November Year ended 30 November
by market 2014 2013 - Restated
sector -
continuing
operations
E H S&G PLC Total E H S&G PLC Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Revenue 3,536 2,820 7,268 - 13,624 3,898 3,150 6,152 - 13,200
--------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Adjusted
operating
(loss) /profit
(note 5) (415) (60) 1,934 (774) 685 (136) 175 1,439 (740) 738
Share based
payment
credits/(charges) - - - (270) (270) - - - 27 27
Restructuring
costs (98) 15 (1) - (84) 39 (167) (18) (50) (196)
Acquisition-related
credits - - - - - - 44 - - 44
Amortisation
of intangible
assets (122) (301) (168) (45) (636) (116) (290) (405) (54) (865)
Impairment
expense - - - - - (37) (637) - - (674)
Operating
(loss) /
profit (635) (346) 1,765 (1,089) (305) (250) (875) 1,016 (817) (926)
Finance costs - - - (35) (35) - - - (51) (51)
Investment
income - - - - - - - - 6 6
(Loss) /
profit before
tax (635) (346) 1,765 (1,124) (340) (250) (875) 1,016 (862) (971)
===================== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
3 SEGMENTAL ANALYSIS (continued)
Analysis Year ended 30 November Year ended 30 November
by market 2014 2013 - Restated
sector
- continuing
operations
E H S&G PLC Total E H S&G 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 120 301 168 130 719 100 305 405 141 950
Impairment
expense - - - - - 37 637 - - 674
Expenditure
on intangible
assets 211 121 177 - 509 84 161 267 1 513
Expenditure
on property,
plant and
equipment - 1 - 11 12 - 1 1 110 112
Analysis by market sector Assets Liabilities
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- -------- --------
Education 2,815 2,642 5,444 4,641
Health 1,114 2,436 925 1,346
Sport & Gaming 5,205 4,582 2,034 2,039
----------------------------- -------- -------- -------- --------
9,134 9,660 8,403 8,026
Group function 6,096 7,257 1,316 1,763
Less inter-segment balances (4,458) (3,563) (4,458) (3,563)
Gross debt and taxation
(current and deferred) 1,804 1,547 628 786
12,576 14,901 5,889 7,012
============================= ======== ======== ======== ========
There are no inter-segmental sales.
4 EMPLOYEES
The average monthly number of persons (including directors)
employed by the Group during the year, analysed by category, was as
follows:
2014 2013
Number Number
------------------------------- ------- -------
Sales and marketing 51 55
Content and production 55 60
Administration and management 33 33
139 148
=============================== ======= =======
Their aggregate remuneration comprised:
2014 2013
GBP'000 GBP'000
------------------------------------- -------- --------
Wages and salaries 5,510 5,721
Social security costs 535 598
Pension costs 55 27
Equity-settled share-based payments
and related costs / (credits) 270 (27)
6,370 6,319
===================================== ======== ========
This remuneration is included in other operating expenses except
for: GBP362,000 (2013: GBP430,000) in discontinued operations,
GBP240,000 (2013: GBP235,000) included in cost of sales - direct
costs; GBP155,000 (2013: GBP165,000) included in cost of sales -
marketing expenses; GBP74,000 (2013: GBP26,000) included in
restructuring costs; GBPnil (2013: GBP179,000) capitalised in the
inventory for book development and GBP328,000 (2013: GBP419,000)
capitalised in intangible fixed assets for web site
development.
4 EMPLOYEES (continued)
The Group considers that the Board of Directors are the key
management personnel. Their remuneration is summarised below:
Directors' Salaries 30 November 30 November
emoluments and fees Pension 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- -------- ------------ ------------
Executive Directors
J Turner 146 3 149 145
Q Brocklebank - - - 136
WFawbert 113 1 114 101
Non-executive
Directors
P Rigby - - - 6
ABrode 30 - 30 15
S Routledge 20 - 20 11
H Marsh 18 - 18 -
--------------------- ---------- -------- ------------ ------------
327 4 331 414
--------------------- ---------- -------- ------------ ------------
Two Directors (2013: two) are accruing benefits under a defined
contribution pension scheme.
No Directors (2013: none) exercised share options in the year
and so no gains were made (2013: no gains). The amount for share
based payment charges which relates to Directors was GBP242,000
(2013: GBP29,000 credit).
At 30 November 2014, shares were receivable under long term
incentive schemes in respect of three Directors. On 13 December
2013, the Company updated its share option plan and made new awards
of share options (the "2013 Award"). The 2013 Award supersedes the
share options granted in 2010 which were due to expire in April
2014 and have now been cancelled. Under the updated option plan, J
Turner has a maximum total participation in the 2013 Award of
42,949,586 shares, W Fawbert has a maximum total participation in
the 2013 Award of 17,179,834 shares and A Brode has a maximum total
participation in the 2013 Award of 10,151,720 shares. In addition,
J Turner has 692,267 options under the Long Term Investment
Plan.
At 30 November 2013, shares were receivable under long term
incentive schemes in respect of one Director (J Turner). These
comprised 11,950,000 options under the Share Price Growth Scheme
and 692,267 under the Long Term Investment Plan.
The option schemes are defined in note 29.
5 ADJUSTED PROFIT
Adjusted profits are presented to allow shareholders to gain a
further understanding of the trading performance of the Group.
Profits are adjusted for items not considered by management to be
part of the underlying trends in the business together with the
related tax effect of those items. The adjustments add back items
which have no cash impact or are not trade related and of a
non-recurring type.
Adjusted figures exclude amortisation and impairment of goodwill
and intangible assets, restructuring and acquisition-related costs,
and share based payment costs, as well as the tax impact of those
adjusting items and any non-cash tax charges.
As noted in the Strategic Report, the Group has disposed of the
Sports Performance and Incentive Plus businesses whilst Radcliffe
Solutions Ltd was disposed of post year end. The results of these
businesses have therefore been classed as discontinued and excluded
from adjusted amounts in both 2014 and 2013 - see note 10. During
2014, the Group has also incurred a restructuring charge of
GBP84,000 related to the Education division.
In 2013, impairment charges relate to a reduction in the
carrying value of goodwill and intangible assets primarily related
to Radcliffe Publishing. The restructuring charge of GBP196,000
related to the closure of the Milton Keynes office which took place
in 2014, but was committed at 30 November 2013. The
acquisition-related credit of GBP44,000 related to a reduction in
provisions held for contingent consideration on the Radcliffe
Publishing Limited acquisition.
The 2014 and 2013 restructuring costs, but not the
acquisition-related credits or impairments, were considered to be
taxable items for corporation tax and thus attributable tax has
been included in the period at 21.7% (2013: 23.3%) of their value.
All other adjusting items do not have a tax affect on the
Group.
5 ADJUSTED PROFIT (continued)
2014 2013
Note GBP'000 GBP'000
Restated
----------------------------------------- ----- -------- ----------
Operating loss for the year from
continuing operations (305) (926)
----------------------------------------- ----- -------- ----------
Amortisation of intangible assets 8 636 865
Impairment expense 8 - 674
Acquisition-related credits - (44)
Restructuring costs 84 196
Share based payment charges / (credits) 8 270 (27)
Adjusting items to operating profit 990 1,664
Adjusted operating profit for the
year (Adjusted EBITA) 685 738
Depreciation 8 83 86
Adjusted earnings before interest,
tax, depreciation and amortisation
for the year 768 824
========================================= ===== ======== ==========
Loss before tax for the year from
continuing operations (340) (971)
----------------------------------------- ----- -------- ----------
Adjusting items to operating profit 990 1,664
Adjusting items to profit before
tax 990 1,664
Adjusted profit before tax for
the year from continuing operations 650 693
========================================= ===== ======== ==========
Loss for the year attributable
to equity holders of the parent (1,405) (733)
Add back loss for the year from
discontinued operations 1,023 295
----------------------------------------- ----- -------- ----------
Loss for the year attributable
to equity holders of the parent
from continuing operations (382) (438)
----------------------------------------- ----- -------- ----------
Adjusting items to operating profit 990 1,664
Attributable tax expense on adjusting
items (18) (47)
Exclude movements on deferred tax
assets and liabilities taken to
income statement 16 (257) (717)
Adjusting items to profit for the
year 715 900
Adjusted profit for the year 333 462
========================================= ===== ======== ==========
6 FINANCE COSTS
2014 2013
GBP'000 GBP'000
------------------------------------- -------- --------
Bank loans and overdrafts 35 46
Unwinding of discount on provisions - 5
35 51
===================================== ======== ========
7 FINANCE INCOME
2014 2013
GBP'000 GBP'000
-------------------------- --------- --------
Bank interest receivable - 6
========================== ========= ========
8 LOSS BEFORE TAXATION FROM CONTINUING OPERATIONS
2014 2013
GBP'000 GBP'000
Restated
----------------------------------------- -------- ----------
Loss before taxation from continuing
operations is stated after charging
/ (crediting):
Depreciation and amounts written off
property, plant and equipment - owned
assets 83 86
Amortisation of intangible fixed assets 636 865
Impairment charges - 674
Loss from disposal of property, plant
and equipment - 3
Loss on disposal of intangible assets - 50
Operating lease rentals:
- Land and buildings 112 144
- Plant and equipment 4 9
Share based payment charges / (credits) 270 (27)
========================================= ======== ==========
Other operating expenses as disclosed on the face of the income
statement include staff costs (note 4) of GBP5,211,000 (2013:
GBP4,865,000) and premises costs of GBP390,000 (2013:
GBP423,000).
Impairment charges in 2013 consist of GBP537,000 goodwill and
GBP74,000 intangible fixed assets relating to Radcliffe Publishing
Ltd; GBP16,000 leasehold improvement costs associated with the
closure of the Milton Keynes office and GBP47,000 relating to
intangible assets following a review of carrying amounts. In 2014,
impairment charges of GBP778,000 have been recognised in respect of
Radcliffe Solutions and are included in discontinued operations -
see note 10.
Amounts payable to KPMG LLP and their associates in respect of
both audit and non-audit services are as follows:
2014 2013
GBP'000 GBP'000
------------------------------------------- -------- --------
Fees payable to the company's auditor
for the audit of the company's annual
accounts 31 35
Fees payable to the company's auditor
and its associates for other services:
- the audit of the company's subsidiaries
pursuant to legislation 44 47
- other services relating to taxation 7 15
- other services - 5
------------------------------------------- -------- --------
82 102
=========================================== ======== ========
Fees in respect of other services in 2013, relate to the iXBRL
filing of the Group's tax returns with the HMRC.
9 TAXATION
2014 2013
GBP'000 GBP'000
Restated
------------------------------------------- -------- ----------
Current tax:
UK corporation tax on profits of the
year from continuing operations 149 111
Adjustment to prior year 34 (46)
Total current tax 183 65
Deferred taxation:
Origination and reversal of timing
differences (257) (747)
Adjustment to prior year - 30
Total deferred tax (257) (717)
Tax credit on loss on ordinary activities
from continuing operations (74) (652)
=========================================== ======== ==========
UK corporation tax is calculated at 21.7% as 23% for the first
four months of the financial year and then 21% for the remainder
(2013: 23.3% as 24% for the first four months of the financial year
and then 23% for the remainder) of the estimated assessable profit
for the year. The net credit of GBP652,000 recognised in 2013 is
principally due to the recognition of deferred tax assets in SBG
Companies Ltd in relation to its historic tax losses.
9 TAXATION (continued)
Effective from 1 April 2014, the United Kingdom corporation tax
rate reduced from 23% to 21% and a further reduction to 20% will
apply from 1 April 2015. The expected changes in the corporation
tax rate are reflected in the above table and included as an
adjustment to prior year deferred tax.
The total tax charge can be reconciled to the accounting profit
as follows:
Factors affecting tax charge 2014 2013
for the year
GBP'000 % GBP'000 %
Restated
---------------------------------------- -------- ----- ---------- -----
Loss on ordinary activities before
tax from continuing operations (340) (971)
Loss on ordinary activities multiplied
at the standard rate of corporation
tax in the UK of 21.7% (2013
- 23.3%) (74) 22 (226) 23
Effect of:
(Credits)/charges not deductible
for tax purposes (31) 9 131 (13)
Recognition of prior year tax
losses (22) 6 (691) 71
Under provision in prior year 34 (10) 16 (2)
Change in tax rate 19 (5) 118 (12)
Tax credit and effective rate
for the year (74) 22 (652) 67
======================================== ======== ===== ========== =====
10 DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
On 30 May 2014, the Group disposed of the Peak Performance
and Sports Injury Bulletin businesses operated through
its subsidiary P2P Publishing Ltd for cash consideration
of GBP70,000. The disposal was effected as the businesses
were considered non-core to the Group's strategy.
These businesses were included within the Health
reportable segment.
On 15 October 2014, the Group disposed of the Incentive
Plus business for cash consideration of GBP50,000.
This disposal is consistent with the Group's strategy
to focus the Education division on digital and live
formats. This business was included within the Education
reportable segment.
Details of the assets and liabilities disposed of,
and the calculation of the profit and loss on disposal,
are disclosed in note 27.
On 28 January 2015, the Group disposed of the Radcliffe
Solutions business for cash consideration of GBP125,000
less a working capital adjustment to be determined
at a later date. As at 30 November 2014, the net
assets of Radcliffe Solutions were classified as
assets held for sale after recognising impairment
losses of GBP414,000 relating to Goodwill and GBP364,000
relating to intangible assets.
The combined results of the discontinued operations
(ie Peak Performance, Sports Injury Bulletin, Incentive
Plus and Radcliffe Solutions) included in the loss
for the year are set out below. The comparative
profit and cash flows from discontinued operations
have been restated to include those operations classified
as discontinued in the current year.
2014 2013
Loss for the year from discontinued GBP'000 GBP'000
activities
-------------------------------------------- --------- --------
Revenue 747 1,435
Expenses (996) (1,768)
Impairment losses (778) -
Deferred consideration adjustment - 100
-------------------------------------------- --------- --------
Loss before tax (1,027) (233)
Attributable tax credit - (62)
-------------------------------------------- --------- --------
(1,027) (295)
Profit on disposal of operation 4 -
-------------------------------------------- --------- --------
Loss for the year from discontinued
operations (1,023) (295)
============================================ ========= ========
Cash flows from discontinued activities
-------------------------------------------- --------- --------
Net cash (outflows) / inflows from
operating activities (203) 155
Net cash inflows / (outflows) from
investing activities 114 (82)
Net cash (outflows) / inflows (89) 73
============================================ ========= ========
10 DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
(continued)
As noted above, the net assets related to Radcliffe Solutions
have been classified as held for sale at 30 November 2014. The
major classes of assets and liabilities classed as held for sale
are as follows:
2014
GBP'000
-------------------------------------- --------
Intangible assets 5
Trade receivables 42
Prepayments and accrued income 33
Cash and bank balances 1
--------------------------------------- --------
Assets classified as held for sale 81
--------------------------------------- --------
Trade payables 54
Other payables 6
Accruals 34
Deferred income 83
--------------------------------------- --------
Liabilities associated with assets
held for sale 177
--------------------------------------- --------
Net liabilities classified as held
for sale 96
======================================= ========
11 EARNINGS PER ORDINARY SHARE
The calculation of earnings per ordinary share is based on the
following:
2014 2013
Number Number
------------------------------------- ------------ ------------
Weighted average number of shares 406,921,466 403,388,961
Adjustment in respect of SIP shares (684,925) (967,283)
Weighted average number of shares
used in basic earnings per share
calculations 406,236,541 402,421,678
-------------------------------------- ------------ ------------
Dilutive effect of share options 14,459,961 1,860,095
Weighted average number of shares
used in diluted earnings per share
calculations 420,696,502 404,281,773
-------------------------------------- ------------ ------------
2014 2013
GBP'000 GBP'000
Restated
------------------------------------------- -------- ----------
Loss for the year from continuing
and discontinued operations (1,405) (733)
Loss from discontinued operations
(Note 10) 1,023 295
-------------------------------------------- -------- ----------
Loss for the period from continuing
operations (382) (438)
Adjustment to earnings (Note 5) 715 900
-------------------------------------------- -------- ----------
Adjusted profit for the period from
continuing operations 333 462
-------------------------------------------- -------- ----------
Loss per share from continuing and
discontinued operations
Basic loss per share (0.35)p (0.18)p
============================================ ======== ==========
Diluted loss per share (0.33)p (0.18)p
============================================ ======== ==========
Loss per share from continuing operations
Basic loss per share (0.09)p (0.11)p
============================================ ======== ==========
Diluted loss per share (0.09)p (0.11)p
============================================ ======== ==========
Adjusted earnings per share
Adjusted basic earnings per share 0.08p 0.11p
============================================ ======== ==========
Adjusted diluted earnings per share 0.08p 0.11p
============================================ ======== ==========
12 GOODWILL
Group
2014 2013
GBP'000 GBP'000
------------------------------------- -------- --------
Cost
1 December 11,211 11,211
Reclassified as held for sale (note (414) -
10)
30 November 10,797 11,211
------------------------------------- -------- --------
Accumulated impairment provisions
1 December 5,928 5,391
Impairment charges for the year 414 537
Reclassified as held for sale (note (414) -
10)
30 November 5,928 5,928
------------------------------------- -------- --------
Carrying amount
30 November 4,869 5,283
===================================== ======== ========
Goodwill by segment
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating units ('CGUs') that are
expected to benefit from that business combination. CGU are
identified as individual operating units with specific market and
product types, usually derived from the original acquisition. The
carrying amount has been allocated to the operating segments as
follows:
2013 Impairment 2014
GBP'000 GBP'000 GBP'000
---------------- -------- ----------- --------
Education 1,874 - 1,874
Health 1,439 (414) 1,025
Sport & Gaming 1,970 - 1,970
------------------ -------- ----------- --------
5,283 (414) 4,869
================ ======== =========== ========
Goodwill associated with Radcliffe Solutions Ltd has been
impaired by GBP414,000 to GBPnil at 30 November 2014 to reflect the
estimated carrying value in light of its sale on 28 January 2015.
As described in note 10, the assets and liabilities of Radcliffe
Solutions Ltd have been classified as held for resale at year end.
In 2013, goodwill attributable to Radcliffe Publishing Ltd was
impaired by GBP537,000.
Impairment testing methodology
The Group tests each CGU's goodwill for impairment annually or
more frequently if there are indications that goodwill might be
impaired. The impairments in the periods reported are as disclosed
in note 8.
The recoverable amounts of the CGU are determined from value in
use calculations which are estimated using a discounted cash flow
model. The Group prepares cash flow forecasts derived from the most
recent financial budgets approved by management for the next 3
years and extrapolates further cash flows 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 rate used to discount the cash flows for all CGUs is
8.5% (2013: 8.5%). All CGUs are information provision businesses
consolidated within the same Group and so with the same financing
and structure risks.
The key assumptions across the CGU for the value in use
calculations are those regarding revenue growth, profit margin,
cash conversion, discount rate and terminal growth rate. The Group
has formally approved the budgets used for the initial three years.
The terminal growth rates are based on industry growth forecasts
and long-term growth in gross domestic product. Management estimate
discount rates using pre-tax rates that reflect current market
assessments of the time value of money and the risks specific to
the CGU.
Management has also conducted sensitivity analysis taking into
consideration the impact of changes in the key impairment test
assumptions. A 0.5% increase in the discount factor and 2% decrease
in forecast cash flows would not give rise to any further
impairments.
13 INTANGIBLE ASSETS
Group Company
Other
Publishing acquired Web Computer Web Computer
titles assets design software Total design software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
Cost
1 December
2012 4,842 1,235 1,059 200 7,336 176 141 317
Additions 25 - 493 2 520 - 1 1
Disposals (25) - (76) (2) (103) - - -
30 November
2013 4,842 1,235 1,476 200 7,753 176 142 318
Additions - - 511 - 511 - - -
Disposals - - (126) - (126) - - -
Written off (1,235) - - - (1,235) - - -
Reclassified
as held for
sale (note
10) (364) - (7) - (371) - - -
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
30 November
2014 3,243 1,235 1,854 200 6,532 176 142 318
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
Amortisation
and impairment
1 December
2012 3,021 842 408 93 4,364 128 70 198
Charge for
the year
Impairment 297 350 215 60 922 13 40 53
74 - 47 - 121 - - -
Disposals (5) - (47) (1) (53) - - -
30 November
2013 3,387 1,192 623 152 5,354 141 110 251
Charge for
the year
Impairment 292 43 309 48 692 13 31 44
364 - - - 364 - - -
Disposals - - (31) - (31) - - -
Written off (1,235) - - - (1,235) - - -
Reclassified
as held for
sale (note
10) (364) - (2) - (366) - - -
30 November
2014 2,444 1,235 899 200 4,778 154 141 295
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
Carrying
amount
30 November
2014 799 - 955 - 1,754 22 1 23
================= =========== ========== ======== ========== ======== ======== ========== ========
30 November
2013 1,455 43 853 48 2,399 35 32 67
================= =========== ========== ======== ========== ======== ======== ========== ========
The Group tests the assets annually for impairment or more
frequently if there are indications that they might be impaired
following the impairment methodology set out in note 12. In 2014,
intangible assets held by Radcliffe Solutions have been impaired by
GBP364,000 to a carrying value of GBPnil as a result of it's
disposal on 28 January 2015. Radcliffe Solutions Ltd's assets and
liabilities have been classified as held for sale at 30 November
2014 as described in note 10. In 2013 certain website assets in the
Health and Education divisions were assessed to be impaired by
GBP47,000. In addition, certain Radcliffe publishing titles in the
Health division were impaired by GBP74,000.
With regard to the remaining carrying value of intangible
assets, a 0.5% increase in the discount factor and 2% decrease in
forecast cash flows would not give rise to any further
impairments.
Of the significant publishing title carrying values:
-- GBP355,000 relates to Radcliffe Publishing Ltd and is
attributable to book and journal titles which were impaired by
GBP74,000 during 2013. These will be fully amortised in 6 years
(2013: 7 years).
-- GBP444,000 relates to over three hundred product title rights
acquired as part of the Speechmark Publishing Limited acquisition.
These will be fully amortised in 3 years (2013: 4 years).
During the year the Group has written off GBP1,235,000 of
intangible assets and amortisation associated with old assets that
have GBPnil net book value and are no longer used. Major additions
in 2014 include the enhancement of the Education subscription
products and development of new digital products in the Health and
Sport & Gaming segments.
14 PROPERTY, PLANT AND EQUIPMENT
Group Leasehold Fixtures,
property Computer fittings
improvements equipment & equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------------- ----------- ------------- --------
Cost
1 December 2012 249 53 76 378
Additions 94 16 2 112
Disposals (203) (8) - (211)
30 November 2013 140 61 78 279
Additions - 6 6 12
Disposals (27) - (3) (30)
Reclassified as
held for sale
(note 10) - (2) - (2)
30 November 2014 113 65 81 259
------------------- -------------- ----------- ------------- --------
Depreciation and
impairment
1 December 2012 166 41 47 254
Charged in the
year 77 17 18 112
Impairment 16 - - 16
Disposals (201) (2) - (203)
30 November 2013 58 56 65 179
Charged in the
year 70 5 13 88
Disposals (27) - (3) (30)
Reclassified as
held for sale
(note 10) - (2) - (2)
30 November 2014 101 59 75 235
------------------- -------------- ----------- ------------- --------
Net book value
30 November 2014 12 6 6 24
=================== ============== =========== ============= ========
30 November 2013 82 5 13 100
=================== ============== =========== ============= ========
Company Leasehold Fixtures,
property Computer fittings
improvements equipment & equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------------- ----------- ------------- --------
Cost
1 December
2012 203 45 53 301
Additions 94 16 - 110
Write offs (203) (5) - (208)
30 November
2013 94 56 53 203
Additions - 5 6 11
30 November
2014 94 61 59 214
----------------- -------------- ----------- ------------- --------
Depreciation
1 December
2012 151 32 37 220
Charged in
the year 62 12 14 88
Write offs (201) (1) - (202)
30 November
2013 12 43 51 106
Charged in
the year 71 12 2 85
30 November
2014 83 55 53 191
----------------- -------------- ----------- ------------- --------
Net book value
30 November
2014 11 6 6 23
================= ============== =========== ============= ========
30 November
2013 82 13 2 97
================= ============== =========== ============= ========
15 INVESTMENTS
The Company holds more than 20% of the share capital of the
following companies, all of which are incorporated in England apart
from IGaming Business North America Inc and SAM Media LLC which are
incorporated in the USA:
Class % of Nature of
Subsidiary of shareholding shares business
undertakings: held
----------------------------- ----------------- -------- -----------
Optimus Professional Ordinary 100% Publisher
Publishing Limited
SBG Companies Ordinary 100% Publisher
Limited
I-Gaming Business Ordinary 70% Publisher
Limited *
Incentive Ordinary 100% Mail order
Plus Limited
P2P Publishing Limited Ordinary 100% Publisher
Speechmark Publishing Ordinary 100% Publisher
Limited
Radcliffe Publishing Limited Ordinary 100% Publisher
Radcliffe Solutions Limited Ordinary 100% Software
provider
IGaming Business North Ordinary 70% Publisher
America Inc. *
SAM Media LLC* Ordinary 35% Events
* Indirectly held
IGaming Business North America Inc. was incorporated on 1
October 2013 and on 23 October 2013 it acquired a 50% stake in SAM
Media LLC for a nominal amount.
Company 2014 2013
Shares Loans Shares Loans
in subsidiary to subsidiary in subsidiary to subsidiary
undertakings undertakings Total undertakings undertakings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------------- --------------- -------- --------------- --------------- --------
Cost:
At 1 December 13,791 2,595 16,386 13,791 2,595 16,386
Additions - - - - - -
At 30 November 13,791 2,595 16,386 13,791 2,595 16,386
----------------- --------------- --------------- -------- --------------- --------------- --------
Amounts written
off:
At 1 December 9,526 - 9,526 8,989 - 8,989
Impairment
in the year 480 - 480 537 - 537
----------------- --------------- --------------- -------- --------------- --------------- --------
At 30 November 10,006 - 10,006 9,526 - 9,526
----------------- --------------- --------------- -------- --------------- --------------- --------
Net book
value:
----------------- --------------- --------------- -------- --------------- --------------- --------
At 30 November 3,785 2,595 6,380 4,265 2,595 6,860
================= =============== =============== ======== =============== =============== ========
The Group tests the investments annually for impairment or more
frequently if there are indications that they might be impaired
following the impairment methodology set out in note 12. In 2014,
the investment in Radcliffe Solutions Ltd has been impaired as a
result of the sale of its shares on 28 January 2015 - see note 10.
The other investments would require substantial decreases in their
future forecast cash flows to be calculated as impaired. A 0.5%
increase in the discount factor and 10% decrease in forecast cash
flows would not give rise to any further impairments. The
impairment in 2013 relates to the investment in Radcliffe
Publishing Ltd.
16 DEFERRED TAX
Group Company
2014 2013 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- -------- --------
Deferred tax assets
Current 69 237 14 7
Non-current 1,735 1,310 234 57
----------------------------- -------- -------- -------- --------
1,804 1,547 248 64
----------------------------- -------- -------- -------- --------
Deferred tax liabilities
Current - - - -
Non-current (178) (290) - -
----------------------------- -------- -------- -------- --------
(178) (290) - -
----------------------------- -------- -------- -------- --------
Net position at 30 November 1,626 1,257 248 64
============================= ======== ======== ======== ========
Group Goodwill
and
Capital Tax Intangible
allowances losses assets Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------ -------- ------------ -------- --------
1 December 2012 165 762 (417) 92 602
Credit / (charge)
to income for the
year 5 646 127 (31) 747
Adjustment to prior
years (50) - - (42) (92)
30 November 2013 120 1,408 (290) 19 1,257
--------------------- ------------ -------- ------------ -------- --------
Credit to income
for the year 51 20 132 54 257
Credit to equity
for the year - - - 112 112
30 November 2014 171 1,428 (158) 185 1,626
--------------------- ------------ -------- ------------ -------- --------
There are accumulated losses of GBP9,448,000 (2013:
GBP13,568,000) 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
GBP7,142,000 (2013: GBP6,528,000) as the probability that future
taxable profits beyond five years will be available cannot be
certain.
Company Capital
allowances Other Total
GBP'0000 GBP'000 GBP'000
------------------------------- ------------ -------- --------
1 December 2012 54 76 130
Credit to income for the year 23 2 25
Adjustments to prior years (14) (77) (91)
30 November 2013 63 1 64
------------------------------- ------------ -------- --------
Credit to income for the year 17 55 72
Credit to equity for the year - 112 112
30 November 2014 80 168 248
------------------------------- ------------ -------- --------
17 INVENTORIES
Group Company
2014 2013 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- -------- -------- --------
Book inventories 1,267 1,660 - -
=================== ======== ======== ======== ========
Inventories were written down by GBP158,000 (2013: GBP101,000),
with GBP158,000 (2013: GBP95,000) included within cost of sales and
GBPnil (2013: GBP6,000) included as a restructuring charge, from a
carrying amount of GBP158,000 (2013: GBP101,000) down to GBPnil
(2013: GBP nil).
18 TRADE AND OTHER RECEIVABLES
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- -------- -------- --------
Due within one year:
Trade receivables 1,734 2,402 - -
Amounts owed by group undertakings - - 6,477 6,358
Other receivables 562 585 168 366
Prepayments and accrued
income 481 462 84 94
------------------------------------ -------- -------- -------- --------
2,777 3,449 6,729 6,818
==================================== ======== ======== ======== ========
The average credit period taken on sales of goods is 37 days
(2013: 40 days). Standard terms are thirty days but many of the
Group's goods and services, such as subscription renewals and
events, are invoiced in advance of the delivery date. An allowance
is maintained for estimated irrecoverable amounts and has been made
with reference to past default experience. The Directors consider
that the carrying amount of trade and other receivables
approximates to their fair values.
The Group's exposure to credit risk and impairment losses
related to trade and other receivables are disclosed in note
23.
The Group holds no collateral against these receivables at the
balance sheet date and charges no interest on its overdue
receivables.
19 BORROWINGS
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- --------
Non-current
Bank loans 94 350 94 350
--------------------------- -------- -------- -------- --------
94 350 94 350
--------------------------- -------- -------- -------- --------
Current
Bank overdraft 2 - - -
Cash balance reclassified 1 - - -
as held for sale (note
10)
--------------------------- -------- -------- -------- --------
3 - - -
Bank loans 292 125 292 125
295 125 292 125
--------------------------- -------- -------- -------- --------
389 475 386 475
=========================== ======== ======== ======== ========
The effective interest rates and applicable balances at the
balance sheet dates are as follows:
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------
Bank overdraft facility 3 - - -
(4.50% over the lending
Bank's base rate)
Bank loan A (4.25% over
LIBOR) 225 475 225 475
Bank loan B (4.73% over
the lending Bank's base
rate) 161 - 161 -
389 475 386 475
========================== ======== ======== ======== ========
19 BORROWINGS (continued)
At 30 November there were the following committed undrawn
borrowing facilities expiring as follows:
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
In one year or less - Bank
overdraft facility 747 750 747 750
============================ ======== ======== ======== ========
The weighted average interest rate implicit in the group's bank
loans at 30 November 2014 was 4.97% (2013: 4.85%) and the weighted
average period until maturity was 0.9 years (2013: 1.6 years). The
Directors estimate that the fair value of the Group's borrowings is
not significantly different to the carrying value.
The bank overdraft facility for GBP750,000 (2013: GBP750,000)
is, when utilised, repayable on demand.
Bank loan A is guaranteed by material subsidiaries of the Group.
It was renegotiated in November 2014 and is repayable over 1.0
years ending in November 2015 (2013: repayable over 2.5 years
ending in May 2016). Bank loan B is guaranteed by material
subsidiaries of the Group and is repayable over 2.5 years ending in
May 2017. The repayment profile is given in note 23.
20 TRADE AND OTHER PAYABLES
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Trade payables 929 1,268 140 268
Amounts due to group undertakings - - 9,158 7,498
Other payables 265 500 274 427
Accruals 1,349 1,217 301 202
Total current 2,543 2,985 9,873 8,395
=================================== ======== ======== ======== ========
Trade, other payables, and accruals principally comprise amounts
outstanding for trade and ongoing costs. The average credit period
taken for trade purchases is 39 days (2013: 43 days).
21 DEFERRED INCOME
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- --------
Subscription and events
fees received in advance 2,481 3,114 - -
=========================== ======== ======== ======== ========
22 PROVISIONS
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- -------- --------
1 December 127 220 - 220
Increase in year 60 127 60 -
Release of provisions in
year (18) (144) - (144)
Utilised during the year (109) (81) - (81)
Unwinding of discount - 5 - 5
--------------------------------- -------- -------- -------- --------
30 November 60 127 60 -
================================= ======== ======== ======== ========
Included in current liabilities 60 127 60 -
================================= ======== ======== ======== ========
Provisions of GBP127,000 were made at 30 November 2013 to
reflect anticipated costs arising from the closure of the Milton
Keynes office and wind-down of the Incentive Plus planned for 2014.
During the year, GBP109,000 of these have been utilised and
GBP18,000 released to the profit and loss account. Furthermore, a
new provision of GBP60,000 has been made at 30 November 2014 to
reflect an estimate of dilapidation costs due on termination of a
lease during 2015. Provisions utilised and released in 2013 related
to the final payments of deferred consideration due on the
acquisitions of Radcliffe Solutions Ltd and Radcliffe Publishing
Ltd.
23 FINANCIAL INSTRUMENTS
The Group's activities expose the Group to a number of risks
including capital risk management, market risk (foreign currency
risk and interest rate risk), liquidity risk and credit risk. The
policies for managing these risks are regularly reviewed and agreed
by the Board.
It is, and has been throughout the year under review, the
Group's policy that no trading in financial instruments shall be
undertaken.
Capital management
The Group's main objective when managing capital is to protect
returns to shareholders by ensuring the Group will continue to
trade in the foreseeable future. The Group also aims to maximise
its capital structure of debt and equity so as to minimise its cost
of capital. The Group in particular reviews its levels of borrowing
(note 19) and the repayment dates, setting these out against
forecast cash flows and reviewing the level of available funds.
The capital structure of the Group consists of debt, cash and
cash equivalents and equity attributable to holders of the parent,
comprising issued share capital, reserves and retained earnings.
Consistent with others in the industry, the Group reviews the
gearing ratio to monitor the capital. This ratio is calculated as
the net debt divided by total capital. Net debt is calculated as
total borrowings less cash and cash equivalents. Total capital is
calculated as equity (including capital, reserves and retained
earnings). This gearing ratio will be considered in the wider
macroeconomic environment. With the current restraints on the
availability of finance and economic pressures the Group has
lowered its gearing ratio expectations and has reduced debt
considerably in the last five years.
Categories of financial instruments
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised in respect of each class of financial asset, financial
liability and equity instrument are disclosed in Note 1 to the
financial statements.
Group Company
2014 2013 2014 2013
Notes GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Loans and receivables
Trade receivables 18 1,734 2,402 - -
Other receivables 18 562 585 6,645 6,724
Accrued income 70 50 - -
Cash and cash equivalents 28 - 463 152 379
Assets held for sale 10 59 - - -
-------------------------------- ------ -------- -------- -------- --------
Total financial assets 2,425 3,500 6,797 7,103
-------------------------------- ------ -------- -------- -------- --------
Financial liabilities
Amortised cost
Bank loans and overdrafts 19 389 475 386 475
Current tax liabilities 61 21 - -
Trade payables 20 929 1,268 140 268
Other payables 20 265 500 9,432 7,925
Accruals 20 1,349 1,217 301 202
Provisions 22 60 127 60 -
Deferred income 21 2,481 3,114 - -
Liabilities associated
with assets held for
sale 10 177 - - -
-------------------------------- ------ -------- -------- -------- --------
Total financial liabilities 5,711 6,722 10,319 8,870
-------------------------------- ------ -------- -------- -------- --------
Liquidity risk
Cash balances are placed so as to maximise interest earned while
maintaining the liquidity requirements of the business. When
seeking borrowings, the Directors consider the commercial terms
available and consider whether such terms should be fixed or
variable and are appropriate to the business. The Directors review
the placing of cash balances on an ongoing basis. Any surplus cash
balances during the year were kept in standard accounts at standard
bank interest rates. The financial assets of the group at 30
November 2014 were mainly designated in sterling and earned
floating rate standard bank interest.
The Group aims to ensure that sufficient cash is generated in
the operating cycle to meet the contractual cash flows through
effective cash management. In addition, the Group maintains a
committed bank facility of GBP750,000 (2013: GBP750,000) which can
be accessed as considered necessary. This facility is subject to
annual renewal and any borrowings under it are repayable on
demand.
Interest rate risk
The Group and company's interest rate exposure arises mainly
from interest bearing borrowings. Contractual agreements entered
into at floating rates expose the entity to cash flow risk while
any fixed rate borrowings would expose the entity to fair value
risk.
The tables below show the Group's financial assets and
liabilities split by those bearing fixed and floating rates and
those that are non-interest bearing.
23 FINANCIAL INSTRUMENTS (continued)
Floating Non-interest
Interest rate risk rate bearing Total
GBP'000 GBP'000 GBP'000
----------------------------- --------- ------------- --------
At 30 November 2014
Trade and other receivables - 2,366 2,366
Assets held for sale 1 58 59
----------------------------- --------- ------------- --------
1 2,424 2,425
============================= ========= ============= ========
Current tax liabilities - 61 61
Trade and other payables - 2,543 2,543
Deferred income - 2,481 2,481
Borrowings 389 - 389
Provisions - 60 60
Liabilities associated with
assets held for sale - 177 177
389 5,322 5,711
============================= ========= ============= ========
At 30 November 2013
Cash and cash equivalents 463 - 463
Trade and other receivables - 3,037 3,037
----------------------------- --------- ------------- --------
463 3,037 3,500
============================= ========= ============= ========
Current tax liabilities - 21 21
Trade and other payables - 2,985 2,985
Deferred income - 3,114 3,114
Borrowings 475 - 475
Provisions - 127 127
475 6,247 6,722
============================= ========= ============= ========
The Group has derived a sensitivity analysis based on a 1%
change in the floating interest rate:
2014 2013
GBP'000 GBP'000
-------------------------------------- -------- --------
Impact on equity and profit after
tax
1% increase in base rate of interest (4) (5)
1% decrease in base rate of interest 4 5
-------------------------------------- -------- --------
The undiscounted contractual cash flows, including interest
payments, are set out in the tables below.
UNDISCOUNTED CONTRACTUAL
CASH FLOWS
Between Between
In less one two
than and and
one two five
Group year years years Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- --------
Bank loans and overdrafts 307 72 30 409
Provisions 60 - - 60
Other liabilities 5,262 - - 5,262
At 30 November 2014 5,629 72 30 5,731
=========================== ======== ======== ======== ========
Bank loans 148 263 102 513
Provisions 127 - - 127
Other liabilities 6,120 - - 6,120
At 30 November 2013 6,395 263 102 6,760
=========================== ======== ======== ======== ========
23 FINANCIAL INSTRUMENTS (continued)
UNDISCOUNTED CONTRACTUAL
CASH FLOWS
Between Between
In less one two
than and and
one two five
Company year years years Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------
Bank loans 307 72 30 409
Other liabilities 9,933 - - 9,933
At 30 November 2014 10,240 72 30 10,342
========================== ======== ======== ======== ========
Bank loans 148 263 102 513
Other liabilities 8,395 - - 8,395
At 30 November 2013 8,543 263 102 8,908
========================== ======== ======== ======== ========
The terms, security and repayment information on these
borrowings are given in note 19. Contingent consideration,
provisions and other liabilities are not interest bearing and are
unsecured.
Foreign exchange risk
The Group and Company operates principally in the United Kingdom
and as such the majority of the Group and Company's financial
assets and liabilities are denominated in sterling and there is no
material exposure to exchange risks.
The Group and Company does suffer some exposure to exchange risk
as a proportion of its business is overseas. Where the Group and
Company enters into significant contracts denominated in overseas
currencies it is not currently the Group and Company's policy to
mitigate exchange risk by entering into forward currency contracts.
The Group and Company attempt to mitigate its exposure by
offsetting liabilities against foreign currency receipts as far as
is possible.
Credit risk
The Group's principal financial assets are cash and cash
equivalents, trade and other receivables and accrued income which
represent the Group's maximum exposure to credit risk in relation
to financial assets.
The Group's credit risk primarily relates to trade and other
receivables and accrued income. The amounts presented in the
balance sheet are net of allowances for doubtful receivables, as
estimated by the Group's management.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit ratings assigned by
international credit rating agencies.
The Group has no significant concentration of credit risk, with
exposure spread over a large number of counterparties and
customers.
The following table provides analysis of trade receivables that
were past due at 30 November, but not impaired. The Group believes
that the balances are ultimately recoverable based on a review of
past payment history and the current financial status of the
customers.
Ageing of receivables past due but
not impaired
2014 2013
GBP'000 GBP'000
------------------------------------ -------- --------
30-60 days 353 442
60-90 days 179 204
90-120 days 23 29
Greater than 120 days - 17
------------------------------------ -------- --------
555 692
==================================== ======== ========
The Group's policy is that debt is payable within 30 days. The
older debt above includes conferences and subscription renewals,
which have been billed in advance of delivery so some payments may
be delayed by customers.
23 FINANCIAL INSTRUMENTS (continued)
Movement in the provision for impairment for trade
receivables:
2014 2013
GBP'000 GBP'000
-------------------------------------- -------- --------
Opening balance at 1 December (97) (279)
Provision for receivables impairment
(charged) / released (61) 2
Receivables written off during the
year - 180
Closing balance at 30 November (158) (97)
====================================== ======== ========
Fair value
The Directors consider that the fair values of the Group's
financial instruments do not significantly differ from their book
values.
24 SHARE CAPITAL
The Company does not have an authorised share capital in either
year.
Allotted, issued and fully paid: 2014 2013
Ordinary Ordinary
shares shares
GBP'000 GBP'000
---------------------------------- --------- ---------
As at 1 December 4,068 3,996
Issue of share capital 8 72
As at 30 November 4,076 4,068
================================== ========= =========
A reconciliation of the movements in issued ordinary share
capital is as follows:
Number Total Share
of shares share price
capital at issue
Number GBP'000 Pence
---------------- -------------------- ------------ --------- ----------
At 1 December
2012 399,581,838 3,996
Share issue at 2.1
22 May 2013 pence per share 7,200,000 72 2.05p
At 30 November
2013 406,781,838 4,068
29 September Share issue at 1.0
2014 pence per share 808,957 8 3.62p
At 30 November
2014 407,590,795 4,076
====================================== ============ ========= ==========
The share issue on 29 September 2014 relates to the exercise of
share options by various employees. There have been no shares
issued since the year end.
25 RESERVES
The reserve for own shares relates to the employee Share
Incentive Plan (note 29a) under which the Group owns 1,265,852
shares (2013: 1,323,580 shares).
26 NON-CONTROLLING INTEREST
The Group's non-controlling interest in both 2014 and 2013 was
composed entirely of equity interests and represents the
non-controlling interest of 30% in IGaming Business Limited.
27 BUSINESS COMBINATIONS
As described in note 10, on 30 May 2014, the Group disposed of
the Peak Performance and Sports Injury Bulletin businesses
("PP/SIB") operated through its subsidiary P2P Publishing Ltd.
Also, on 15 October 2014, the Group disposed of the Incentive Plus
business ("IP"). Details of the assets and liabilities disposed of,
and the calculation of the profit and loss on disposal are given in
the table below.
2014 2014 2014
GBP'000 GBP'000 GBP'000
PP/SIB IP Total
----------------------------- -------- -------- --------
Non-current assets
Intangible assets 94 - 94
Current assets
Inventories 48 2 50
Other debtors 1 - 1
Current liabilities
Deferred income (29) - (29)
=============================== ======== ======== ========
Net assets disposed of 114 2 116
(Loss) / profit on disposal
included in discontinued
operations (44) 48 4
------------------------------- -------- -------- --------
Consideration received 70 50 120
=============================== ======== ======== ========
Cash paid net of cash acquired in relation to prior year
acquisitions is shown in the table below:
Date of acquisition 2014 2013
GBP'000 GBP'000
------------------------------- --------------------- --------- --------
Prior year acquisitions:
Radcliffe Solutions Limited
(formerly Ikonami Limited) 14 April 2011 - 75
23 November
Radcliffe Publishing Limited 2010 - 6
- 81
=============================================================== ========
Payments in 2013 relate to final deferred consideration payments
in relation to the acquisitions of Radcliffe Solutions Ltd and
Radcliffe Publishing Ltd.
28 ANALYSIS OF CHANGES IN NET DEBT
Group At 1 December Cash flow Non-cash At 30
2013 changes November
2014
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------------- ---------- --------- ----------
Cash at bank and in
hand 463 (463) - -
Overdraft - (2) - (2)
Reclassified as assets
held for sale - (1) - (1)
--------------------------- -------------- ---------- --------- ----------
Cash and cash equivalents 463 (466) - (3)
Bank loans due within
one year (125) 58 (225) (292)
--------------------------- -------------- ---------- --------- ----------
Debt due within one
year (125) 58 (225) (292)
Bank loans due after
one year (350) 31 225 (94)
Debt due after one
year (350) 31 225 (94)
Net debt (12) (377) - (389)
=========================== ============== ========== ========= ==========
In April 2014, the Group drew down a new loan of GBP200,000
which is repayable over 36 monthly instalments ending in May 2017.
Interest is payable at 4.73% over the lending bank's base rate.
During the year, the Group agreed with its lending bank to
accelerate its loan repayments in return for being released from
certain banking covenants. This increased the November 2104
repayment from GBP125,000 to GBP250,000.
Non-cash changes are where 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. The terms on
the debt is set out in note 19.
29 SHARE BASED PAYMENTS
The Company has the following option or share ownership schemes
and warrants in issue. All the schemes use the Monte Carlo
valuation method with the exception of the Long Term Incentive Plan
which uses the Black Scholes Method. The relevant inputs for each
scheme have been outlined below:
2014 2013
------------------ ------------------------- ----------------------------
Black Monte Carlo Black Scholes Monte Carlo
Scholes
------------------ ----------- ------------ -------------- ------------
Expected life 3.00 - 4.80 3.00 - 3.20 -
(years) 3.25 3.25 5.00
Risk free rate 4.8039 3 4.8039 0.0126
(%) - 4.9315 - 4.9315 - 5.1720
Volatility (%) 30.473 49.66 30.473 39.740-
- 31.1165 - 31.1165 57.562
Dividend yield
(%) 0 0 0 0
Weighted average
share price (p) 2.10 2.38 2.10 2.10
Weighted average
exercise price 1.00 -
(p) 1.00 1.50 1.00 5.40
The volatility of the Company's share price on each date of
grant was calculated as the average of the standard deviations of
daily continuously compounded returns on the stock of the Company,
calculated back over a period commensurate with the expected life
of the option. The risk-free rate used is the yield to maturity on
the date of grant of a UK Gilt Strip, with term to maturity equal
to the expected life of the option. It was assumed that options
would be exercised within two years of the date on which they vest.
The number of options exercisable for each scheme at the year end
is based on the year end share price.
There have been no transactions with non employees.
a Share Incentive Plan
In September 2005, the Group introduced a Share Incentive Plan
(SIP) and has run it in three further years (2006, 2007 and 2010).
Under this plan the employees are eligible to acquire shares in the
following ways:
-- Free Shares
-- Partnership Shares
-- Matching Shares
The Free shares were available to all eligible employees and the
shares must be held in the trust for a minimum period of 3 years
unless the employee leaves the Company, in which case the Free
shares may either be forfeited or withdrawn from the Plan.
Partnership shares were available for purchase by employees at
current market value. Employees could invest any amount from
between GBP10 - GBP1,500 (or 10% of the employee's salary if
lower). The Partnership shares were matched by the Matching shares
on a 1 for 1 basis in 2010 (2 for 1 basis in 2006 and 2005).
The Partnership and Matching shares must be held in the Trust
for a minimum of 3 years unless the employee leaves the Company in
which case the Free shares may either be forfeited or withdrawn
from the Plan. All of the shares were purchased at fair value in
the market and the cash cost of the Partnership shares was expensed
in the year of issue. The total fair value of the options granted
in the year was GBPnil (2013: GBPnil).
2014 2013
Number Weighted Number Weighted
of options average of options average
exercise exercise
price price
------------------------------ ------------ ---------- ------------ ----------
Outstanding at the beginning
of the period 967,282 6.79 1,111,235 6.68
Withdrawn during the period (282,357) 6.88 (143,953) 5.96
Outstanding at the end
of the period 684,925 6.75 967,282 6.79
============================== ============ ========== ============ ==========
Exercisable at the end
of the period 684,925 6.75 967,282 6.79
============================== ============ ========== ============ ==========
The weighted average remaining contractual life of share options
outstanding at the end of the period was 4 years (2013: 5 years).
The exercise price of the outstanding options ranges from 4.75 -
10.37 pence, but was paid at the outset on these options and
nothing will be receivable by the Group.
b Long Term Incentive Plan
In November 2007, the Group introduced a Long Term Incentive
Plan ('LTIP'), under which at that time 14 members of senior
management were granted a maximum of 5,658,824 share options
dependent on performance criteria. The options, all with an
exercise price of 1 pence, vested in February 2010 as the
performance criteria of the Company achieving an average of at
least 15% annualised adjusted earnings per share growth over the
three years to November 2009 was met, although the maximum criteria
which required growth of 25% per year was not. During the year,
259,600 of these options were forfeited and 728,957 options were
exercised. 969,174 of the vested options remain at 30 November 2014
(2013: 1,957,731) and the weighted average remaining contractual
life of these options is 3 years (2013: 4 years).
In 2010 a new LTIP scheme was launched in two parts, a Profit
Growth Plan ('PGP') and a Share Price Growth Scheme ('SPGS').
Under the PGP, 8 members of senior management were granted a
maximum of 9,650,000 options in April 2010 to acquire shares in the
Company at nominal value under a new 2010 Company Share Option Plan
("2010 Plan"). The scheme was subject to performance conditions
relating to the growth in adjusted operating profit (note 5) in the
business unit for which the participant was responsible over the
two years to 30th November 2011 or, in the case of Directors, the
Group as a whole. Vesting rights in these options accrued if profit
growth exceeded certain minimum growth thresholds that were set for
each individual business unit and ranged from 3% to 8% per annum.
The number of shares that have vested under the Profit Growth Plan
is 1,500,000 and relate to one individual only.
Options were granted in September 2010 under the SPGS to the two
executive Directors at that time and were exercisable at their
nominal value of 1p subject to performance conditions which reward
share price growth from November 30th 2009 to April 2014 above a
threshold of 10% annual compound growth. The award was made wholly
under the unapproved part of the 2010 Plan. The maximum number of
shares allowed under the Share Price Growth Scheme was 19,120,000,
which would require annualised compound share price growth over the
period of 45% per annum. Of these, 7,170,000 options were forfeited
during 2013 and 11,950,000 were forfeited in December 2013.
2014 2013
Number Weighted Number Weighted
of options average of options average
exercise exercise
price price
------------------------------ ------------- ---------- ------------ ----------
Outstanding at the beginning
of the period 15,407,731 1.00 22,577,731 1.00
Forfeited during the period (12,209,600) 1.00 (7,170,000) 1.00
Exercised during the period (728,957) - - -
Expired during the period - - - -
Outstanding at the end
of the period 2,469,174 1.00 15,407,731 1.00
============================== ============= ========== ============ ==========
Exercisable at the end
of the period 2,469,174 1.00 3,457,731 1.00
============================== ============= ========== ============ ==========
The weighted average remaining contractual life of share options
outstanding at the end of the period was 4 years (2013: 6 years).
For all share options outstanding at the year end the exercise
price was 1.0p
29 SHARE BASED PAYMENT (continued)
c Enterprise Management Incentive Scheme
These options were awarded to key members of management and
staff and are exercisable, subject to various trigger price
restriction, at any time between the third and tenth anniversaries
of the date of grant. During the year, 790,000 options have been
forfeited and 80,000 options were exercised. There are no remaining
options at 30 November 2014.
2014 2013
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
------------------------------ ------------ ---------- ------------ ----------
Outstanding at the beginning
of the period 870,000 3.01 1,220,000 3.47
Forfeited during the period (790,000) 3.22 - -
Exercised during the period (80,000) 1.00 - -
Expired during the period - - (350,000) 4.84
Outstanding at the end
of the period - - 870,000 3.01
============================== ============ ========== ============ ==========
Exercisable at the end
of the period - - 480,000 2.83
============================== ============ ========== ============ ==========
d The 2013 Award
In December 2013, the Group made a new award of share options
("2013 Award"). Options were granted to the two Executive
Directors, the non-Executive Chairman and two other members of
management. Options under this plan are exercisable at the 2012
placing price of 1.5p and will vest according to a scale if the
Company's average share price, over any four-month period after the
date of grant, exceeds 3.5p up to the maximum entitlement if the
share price reaches 9p. A maximum of 78,090,157 ordinary shares may
be issued under the 2013 Award. Where individual options have
vested, up to 10% of the vested shares may be exercised from 12
months following vesting, up to 20% from two years and up to 30%
from three years. Subject to the vesting conditions, unexercised
options may be exercised from September 2018 until they expire in
September 2022.
2014 2013
Number Weighted Number Weighted
of options average of options average
exercise exercise
price price
------------------------------ ------------ ---------- ------------ ----------
Outstanding at the beginning - - - -
of the period
Options granted during
the period 78,090,157 1.5
Forfeited during the period (2,576,975) 1.5 - -
Outstanding at the end
of the period 75,513,182 1.5 - -
============================== ============ ========== ============ ==========
Exercisable at the end - 1.5 - -
of the period
============================== ============ ========== ============ ==========
The weighted average remaining contractual life of share options
outstanding at the end of the period was 8 years. The exercise
price of the outstanding options is 1.5p.
30 COMMITMENTS UNDER OPERATING LEASES
The minimum lease payments under non-cancellable operating lease
rentals are in aggregate as follows:
Land and buildings Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
Within one year 19 139 19 98
Between two and five years - 19 - 19
19 158 19 117
============================ ======== ======== ======== ========
Operating lease payments represent rentals payable by the Group
for its office properties. Leases are negotiated for an average
term, excluding break clauses, of 1 year (2013: 3 years) and
rentals are fixed for an average of 1 year (2013: 3 years).
Plant and machinery Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
Within one year 4 11 4 2
Between two and five years 6 5 6 3
10 16 10 5
============================ ======== ======== ======== ========
Operating lease payments represent rentals payable by the Group
for printers and copiers. Leases are negotiated for an average
term, excluding break clauses, of 3 years (2013: 4 years) and
rentals are fixed for an average of 3 years (2013: 4 years).
31 POST BALANCE SHEET EVENTS
As described in note 10, on 28 January 2015, Radcliffe Solution
Ltd was disposed of for consideration of GBP125,000 less a working
capital adjustment to be determined at a later date. At the balance
sheet date, the assets and liabilities of Radcliffe Solutions Ltd
have been classified as held for sale.
32 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
There are no capital commitments at the balance sheet date
(2013: GBPnil). The Group does not have any contingent
liabilities.
33 RELATED PARTY TRANSACTIONS
All related party balances held at November 2014 and 2013 are
unsecured.
Subsidiaries
Its 70% (2013: 70%) owned subsidiary, I-Gaming Limited, is owed
by other Group undertakings GBP5,765,000 (2013: GBP4,590,000) and
owes GBP4,678,000 at 30 November 2014 (2013: GBP2,931,000),
including debt due from the Company of GBP5,227,000 (2013:
GBP4,553,000), after being charged costs and allocated staff time
in the year of GBP1,341,000 (2013: GBP994,000).
Advisory Services
The Board receives financial advice from Trillium Partners
Limited ("Trillium Partners"). Trillium Partners is a specialist
media advisory firm, in which voting control of 45.0% (2013: 45.0%)
is held by Stephen Routledge, a non-executive Director of Electric
Word, and as such is a related party. Accordingly, the Directors
(other than Stephen Routledge) consider, having consulted with
Panmure Gordon (UK) Limited, its nominated adviser, that the terms
of the fees payable to Trillium Partners are fair and reasonable.
The total fee for the advice and work in the year is GBP6,000
(2013: GBP60,000). The Group continues to receive advice into
2015.
33 RELATED PARTY TRANSACTIONS (continued)
Company
The table below sets out the transactions and balances with
other group undertakings:
Balance Transactions
in year
Receivable Income / (expenditure)
/ (payable)
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- ------------ -----------
iGaming Business Limited (5,227) (4,553) (674) (1,534)
Incentive Plus Limited (14) 461 (475) 222
Speechmark Publishing Limited (3,917) (2,673) (1,244) (1,182)
Optimus Professional Publishing
Limited 2,891 1,450 1,441 647
P2P Publishing Limited 33 (272) 305 (218)
SBG Companies Limited 785 1,539 (754) 480
Radcliffe Publishing Limited 2,597 2,075 522 1,282
Radcliffe Solutions Limited - 662 (662) 191
Electric Word Employee
Benefit Trust 171 171 - -
-------- --------
(2,681) (1,140)
-------- --------
The natures of the transactions with group undertakings comprise
salary recharges, recharges of various trading activities, and cash
draw downs.
Key management personnel
For details of related party transactions with key management
personnel see note 4.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Electric Word (LSE:ELE)
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