ELECTRIC WORD PLC Preliminary Results to 30 November 2015
Electric Word, the specialist information business with divisions operating in the Education and Sport sectors, today announced audited results for the year ended 30 November 2015.
Significant strategic progress with the disposals of the businesses of Radcliffe Solutions, Radcliffe Publishing and post year end, the 70% stake in iGaming Business for a total cash consideration of £14.9m.
Management and reporting restructured around two market-facing divisions (Sport and Education) following sale of stake in iGaming Business.
Adjusted EBITA* for continuing and discontinued operations increased by 75% to £937k (2014: £536k).
Outcome of external review of Optimus business in 2016 leads to refocus on conferences and premium subscription products.
Net cash increased from £389k debt in 2014 to cash of £449k in 2015, excluding £12.1m post year end receipts from sale of stake in iGaming Business.
* 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.
"We made progress in 2015 in simplifying the Group and have transformed our balance sheet through the sale of iGaming Business Ltd, which demonstrated the group's ability to add value to its businesses. SportBusiness is also showing the benefit of our investments in digital development and the strategic move towards more subscription-based revenues. Trading in 2016 will be affected by higher unallocated central costs than in 2015 but net margins in both Sport and Education are currently running slightly ahead of Board expectations as a result of tighter cost control."
Financial summary (£'000) | 2015 £'000 | 2014 £'000 Restated |
Continuing operations | ||
Revenue | 6,893 | 7,076 |
Adjusted EBITA* | (1,333) | (1,063) |
Margin | -19% | -15% |
Discontinued operations | ||
Revenue | 6,914 | 7,295 |
Adjusted EBITA* | 2,270 | 1,599 |
Margin | 33% | 22% |
Continuing and Discontinued operations | ||
Revenue | 13,807 | 14,371 |
Adjusted EBITA* | 937 | 536 |
Margin | 7% | 4% |
Continuing operations | ||
Revenue | 6,893 | 7,076 |
Gross profit | 3,843 | 3,777 |
Adjusted EBITA* | (1,333) | (1,063) |
Amortisation | (470) | (471) |
Impairment expense | (1,000) | - |
Restructuring costs | - | (91) |
Share-based payment charges | (66) | (270) |
Loss before tax from continuing operations | (2,885) | (1,930) |
Loss for the financial year from continuing operations | (2,666) | (1,671) |
Loss for the financial year from continuing and discontinued operations | (2,292) | (1,289) |
* Adjusted figures (note 5) exclude amortisation, impairment of goodwill and intangible assets, acquisition-related and restructuring credits and costs, 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 2014 have been reclassified to reflect the results of Radcliffe Solutions, Radcliffe Publishing and iGaming Business Ltd as discontinued operations as a result of their disposals. See note 9.
The audited report and accounts of the Company for the year ended 30 November 2015 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.
Electric Word Julian Turner, Chief Executive 020 7265 4170 |
Panmure Gordon Andrew Potts 020 7459 3600 |
The Group provides content in many different formats, including market data, subscription websites, magazines, conferences, face-to-face training, online training, books, special reports, bespoke research and consultancy.
Following the disposal of the Group's stake in iGaming Business, it is now composed of two market-facing divisions:
Optimus Education supports the professional development of teachers and school leaders through an online subscription-based information and training service and through live conferences. Speechmark specialises in resources for speech therapists, mental health professionals and teachers.
SportBusiness Group provides business insight, data and analysis to executives in the global business of sport. It supports sports industry professionals who work in governing bodies, the media, sports marketing, sponsorship and club and event management through market data, subscription websites, magazines, special reports, bespoke research and consultancy.
CHAIRMAN'S STATEMENTDear shareholders,
2015 was a significant year for Electric Word during which the Group continued its plan to simplify and focus the business. The year started with the completion of the sale of Radcliffe Solutions Ltd in January, which provided IT services to the Health sector and continued with the sale in April of Radcliffe Publishing, which produced books for medics and other health professionals. After the year end, the Group exited from the online gaming sector after many years of successful growth.
The sale of the Group's 70% interest in iGaming Business enabled Electric Word to realise the value in an asset whose market sector carries a different risk profile to that of the Group's other businesses. The business also had a minority shareholder and was therefore an enterprise over which the Group did not have full control. Nevertheless, the Group was able to achieve a full valuation of £13.8m for its shareholding on the back of 18% revenue growth and a 24% improvement in adjusted EBITA in 2015. iGaming Business was originally acquired as part of SportBusiness Group at the end of 2005 for a total consideration of £2.7m and has grown considerably since that time as part of Electric Word. The board would like to thank the staff and management of iGaming Business for their excellent work over many years.
Trading overall across all businesses, including those sold, was solid with revenues broadly flat at £13.8m and Adjusted EBITA up 75% to
£937k. We were particularly pleased with the performance of the continuing Sport division which saw revenues up 23% and a turnaround in profitability to an Adjusted EBITA of £152k. Trading in Education however continued to be difficult with an adjusted EBITA loss of £717k. This division is facing significant market change with tight customer budgets and the rapid consolidation of local authority managed schools into Multiple Academy Trusts (MATs or large groups of academies).
In prior years, the Health division included the Radcliffe and Speechmark businesses. Speechmark publishes books and other resources for speech therapists, mental health professionals and special needs co-ordinators in schools. Schools are a significant market for Speechmark and as a result of the sale of Radcliffe Solutions, Radcliffe Publishing and iGaming Business Ltd, the Directors have restructured the management of the Group's continuing operations and now organise its management and reporting around two divisions: Sport and Education. The Education division now comprises Speechmark and Optimus Education.
In December 2015, the Group announced that it had commissioned an external review of the Optimus Education business, including underlying performance and growth opportunities. The review highlighted a number of options for bringing that business back to profitability which included focusing on developing its conferences and online training membership services and reducing its investment in the Knowledge Centre database of articles and case studies.
Following the sale of iGaming Business in January 2016, we are a smaller business so the Group is undertaking a comprehensive review of its infrastructure, systems and processes to ensure that its central costs are appropriate for the businesses they are there to support. Although we anticipate reducing central costs where possible, it is likely that central costs be higher than in 2015 as a result of higher property costs and costs which were previously allocated to the businesses which have been sold.
In the circular to shareholders dated 18 December 2015, the Board noted that it was mindful that the Company's cash balance following the sale of the stake in iGaming Business could exceed the Company's expected capital requirements for the foreseeable future and that it was giving consideration to making a capital return to shareholders. However, the Board is also mindful of the continuing adjusted EBITA losses reported for 2015, the increase in central costs and that the timing of the Group's return to profitability is uncertain. The Board considers that any such capital return to shareholders would be enhanced by improvements to profitability in the Optimus business. It has also received various views from shareholders and advisors which it is in the process of assessing. The Board continues to review the options available to them, taking into account consideration of risks and returns, and does not consider that a return of capital would be appropriate while this review is ongoing. Shareholders will be updated in due course.
On behalf of shareholders and the Board I would like to thank the staff and other stakeholders for their hard work this year as the group has continued to focus its activities, develop more coherence and build greater value in its most strategic areas.
Chairman
5 April 2016
Electric Word plc issued this content on 06 April 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 06 April 2016 08:07:09 UTC
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