TIDMELE
RNS Number : 1705A
Electric Word PLC
17 February 2014
17(th) February 2014
ELECTRIC WORD PLC
Preliminary Results to 30 November 2013
Electric Word, the specialist media company, announced today
audited results for the year ended 30 November 2013.
FINANCIAL HIGHLIGHTS
Results in line with Board expectations
Revenue of GBP14.6m up 2%
-- Live events revenue up 22% driven by growth in iGaming events and Education conferences
-- Revenue mix change: Digital and Live revenue up from 50% to 59% of Group revenue
o Live up to 32% (2012: 27%) of Group revenues
o 46% of publishing revenues include a digital format (2012:
38%)
-- Sport & Gaming revenue up 19%; Health down 12%; Education down 1%
Group adjusted EBITA* down from GBP1.2m to GBP0.6m
-- Sport & Gaming EBITA* up 10% despite investment in sales, marketing and new products
-- Education conferences EBITA* up 29% to GBP0.5m
-- Other Education EBITA* loss of GBP0.6m driven by GBP0.3m investment in sales and marketing
-- Health EBITA* down 89% due to lower sales and investments in digital products
Profit after Tax down from GBP0.2m profit to GBP0.6m loss after
impairments and restructure provisions
-- GBP0.3m restructure costs due to planned closure of Milton
Keynes operations and Incentive Plus
-- GBP0.7m impairments - GBP0.6m Radcliffe goodwill and intangible assets and GBP0.1m other
-- GBP0.7m SportBusiness deferred tax asset recognition as
future profitability becomes more visible
Gross debt paid down to GBP0.5m (2012: GBP0.9m): Cash/debt
neutral: (2012: GBP0.1m net funds)
* 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 (which relate to
movements on deferred tax such as the use of tax losses or tax
credits from the recognition of tax losses).
This definition applies throughout the Annual Report
Net funds / (debt) are cash held net of the gross debt which
include bank overdrafts and loans (note 27), but exclude provisions
for deferred and contingent consideration in relation to
acquisitions (note 21).
OPERATIONAL HIGHLIGHTS
Sport & Gaming:
-- New online subscription services launched in Sport & Gaming
-- TVSM online subscription earnings increased 43% as site licence yields increased
-- 32% growth in iGaming events revenues - London Affiliate
Conference 2014 moved to larger Earls Court venue
-- 50% stake acquired in iGaming North America conference
Education:
-- Subscription customers fully converted from print to new
digital services with majority of English secondary schools
retained as customers
-- GBP0.3m investment in sales and marketing in 2013
-- Average sales value per school up 18%
-- Conferences revenue up 17% and EBITA* up 29% - 36 conferences held (2012: 32)
-- Decision taken to wind-down loss making Incentive Plus business in 2014
Health:
-- Decision taken to close Milton Keynes location and centralise
Health team in new London HQ during Q1 2014
-- Radcliffe and Speechmark sales down 9% on 2012 but stabilised after weak Q1
-- Research and development now underway for new digital products
Julian Turner, Chief Executive of Electric Word, commented:
"In 2013 we have put in place the plans we set out at the end of
last year, investing in each of our three divisions to focus on the
long-term value of the most important products. To do that
effectively we have simplified the business and strengthened the
senior team, including at Board level. I am particularly pleased
with the progress we have made in the Sport & gaming division
last year and 2014 has got off to a great start with record
attendances and revenue from our London Affiliate Conference in
Earl's Court earlier this month. At this early stage, overall
trading for 2014 is in line with board expectations and ahead of
2013 and we expect to make further progress through the course of
the year".
Financial summary (GBP'000) 2013 2012 Change
------------------------------ ---------- -------- -------
Revenue 14,635 14,331 +2%
------------------------------ ---------- -------- -------
Gross Profit 7,548 7,129 +6%
------------------------------ ---------- -------- -------
Adjusted EBITA* 591 1,166 -49%
------------------------------ ---------- -------- -------
Adjusted profit before
tax* 546 1,086
------------------------------ ---------- -------- -------
Less amortisation and
impairment (1,596) (1,255)
------------------------------ ---------- -------- -------
Less restructuring costs (325) (201)
------------------------------ ---------- -------- -------
Add acquisition-related
credits 144 687
------------------------------ ---------- -------- -------
Add / (Less) share-based
payment credits and charges 27 (144)
------------------------------ ---------- -------- -------
(Loss)/profit before tax
(PBT) (1,204) 173
------------------------------ ---------- -------- -------
Tax credit 590 54
------------------------------ ---------- -------- -------
(Loss)/profit for the
financial year after tax (614) 227
------------------------------ ---------- -------- -------
Diluted earnings per share (0.18)p 0.03p
------------------------------ ---------- -------- -------
Adjusted diluted earnings
per share* 0.04p 0.24p -83%
------------------------------ ---------- -------- -------
Cash and cash equivalents 463 983
------------------------------ ---------- -------- -------
Net (debt) / funds (12) 108
------------------------------ ---------- -------- -------
* Adjusted numbers, as explained in note 5, exclude amortisation
and 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.
This definition applies throughout Annual Report.
Net funds / (debt) are cash held net of bank overdrafts and
loans (note 27), but exclude provisions for deferred and contingent
consideration in relation to acquisitions (note 21).
Revenue by activity 2013 2013 2012 2012
--------------------------- -------- ----- -------- -----
GBP'000 % GBP'000 %
--------------------------- -------- ----- -------- -----
Subscriptions 3,328 23% 3,485 24%
--------------------------- -------- ----- -------- -----
Event delegates and
training 2,236 15% 1,988 14%
--------------------------- -------- ----- -------- -----
Books and reports 3,467 24% 3,768 26%
--------------------------- -------- ----- -------- -----
Sales of content 9,031 62% 9,241 64%
--------------------------- -------- ----- -------- -----
Advertising, sponsorship
and exhibitions 4,470 30% 3,493 24%
--------------------------- -------- ----- -------- -----
Bespoke publishing
and consultancy services 532 4% 703 5%
--------------------------- -------- ----- -------- -----
Commerce 602 4% 894 6%
--------------------------- -------- ----- -------- -----
Sales of access to
communities 5,604 38% 5,090 36%
--------------------------- -------- ----- -------- -----
Total 14,635 100% 14,331 100%
--------------------------- -------- ----- -------- -----
The audited report and accounts of the Company for the year
ended 30 November 2013 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 education, compliance and management through a wide
range of digital, paper and live formats. Our approach is to
identify niche communities within our market sectors and fulfil
their key information, professional development, best practice and
compliance needs.
Increasingly, our aim is to provide higher-value services and
decision-critical data that help our customers to achieve their key
personal and organisational objectives. We achieve this by
developing a deep understanding of our sectors and our customers'
challenges and critical 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 then be
transferred to another as opportunities arise.
The Group is composed of three market-facing divisions:
Sport & Gaming
This division is an international provider of business insight,
data and analysis to professionals in both the business of sport
(working in governing bodies, the media, sports marketing and
management) and the online gaming industry and its marketing
affiliates. It provides information across a range of formats from
online subscriptions to live events and from daily news to bespoke
research.
SportBusiness Group publishes for sports industry professionals
who work in governing bodies, the media, sports marketing,
sponsorship and club and event management.
iGaming Business publish 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 provides management and professional
development information to school and general education managers,
teachers and other professionals.
Operating through the Optimus Education brand, its main products
comprise online subscription services, a market leading range of
conferences, training resources, books, and magazines.
It is supplemented by the Incentive Plus catalogue of
third-party products relating to children's behavioural and
emotional development. A decision has been taken to wind-down the
Incentive Plus business during 2014.
Health
The Health division provides professional education and training
products for doctors, healthcare managers, speech therapists,
elderly care and other health professionals through various
brands.
Radcliffe Publishing produces a range of books, journals and
training products focused on professional development for doctors,
managers and professions allied to health.
Speechmark Publishing specialises in resources for speech
therapists, special needs co-ordinators and teachers, care workers
and mental health professionals.
The Radcliffe Solutions workforce management software enables
online management and compliance reporting of appraisals, training
and professional development.
Sports Performance is a niche online publisher to competitive
sports athletes and coaches and related injury professionals.
CHAIRMAN'S STATEMENT
Dear Fellow Shareholders,
As this is my first set of results since taking the Chair at
Electric Word last June, I thought it would be useful to reiterate
what the Board see as the Group's key objectives.
Naturally we aim to create value for all the Group's
stakeholders, including staff, suppliers, business partners and
shareholders. Electric Word contains some high quality publishing
assets and we see the best way of delivering value for stakeholders
as working together to maximise the potential of those businesses.
To achieve this we have been working to simplify the number and
range of activities, increase our market focus and continue the
transition to digital and live business models with greater
earnings quality.
Simplifying the business has taken many forms. We have stopped
doing some activities that are either sub-scale or don't take us in
the right direction, so at the end of 2013 in two instances we
supported employees to separate from the Group some advertising and
contract publishing activities and we announced the winding down of
the Incentive Plus catalogue business and the closure of our Milton
Keynes office. In the Education and Sport markets we have also
reduced our product ranges and simplified how they are presented to
customers. The same process is being planned for the Health
business in 2014.
Increasing market focus means reducing the number of customer
groups that we aim to serve and delivering a deeper, more valuable
service. In Education we have reduced products that are aimed at
classroom teachers to focus on the needs of senior management
teams. In Sport & Gaming we have grown by penetrating deeper
into our core markets, created new higher-priced digital products
and increased the scale of our Affiliate events. In Health we have
identified the niches of medical education, professional
development, management and speech and language therapy that will
be the focus of future product development.
The Group raised funds in 2012 to support the transformation of
the business. These funds have been invested in web development, in
sales and marketing and in strengthening the central functions of
the company. During 2013 we recruited a new Finance Director, the
Head of the Health division and a Digital Development Director. We
launched new responsive websites for SportBusiness and iGaming
Business, incorporating new high-value digital subscription
services. In Education, we completed a full cycle of converting
print subscribers to new digital services and we have developed the
prototypes of new digital Health products.
The pace of change has been striking but we are not satisfied.
There is much to do, and none of it would be possible without the
talent, energy and professionalism of our employees. I would like
to thank them on behalf of the Board. 2014 holds the promise of
much further progress and I look forward to reporting that next
year.
I would like to thank all of our stakeholders for their part in
the progress that the business has made this year.
Andrew Brode
Chairman
14 February 2014
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, paper and live 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, journals, magazines, events,
face-to-face training, online training, books, 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 product at a
greater premium.
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 knowledge of customers and markets needed to deliver our
business model also means that it makes sense to 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.
We raised funds in 2012 in order to make the investments needed
to align the business with these objectives. We have been using
those funds in four main ways: to increase our financial
flexibility by paying down bank debt; to increase our web
development capability and capacity to accelerate the transition
from paper to digital formats; to increase the resource in sales
and marketing; and to develop the Group's central team to improve
the capacity to support and guide the changes being made in each
market.
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
The objective of maximising the value of each of our strategic
publishing assets leads into goals for each division and for the
group as a whole. At group level the main goals for 2013 were
to:
-- increase the proportion of revenue derived from digital and live activities
-- make the investments needed to increase the quality as well
as the scale of revenue over the medium term
-- ensure that we had the structure and resources at the centre
of the company to manage those investments effectively
-- simplify the market focus and product mix with the
medium-term aim of generating more revenue from fewer activities at
higher profit margins
The revenue mix has continued to evolve in the right direction
during the year. We analyse revenue by format (live, print and
digital/mixed) and also by type (such as subscriptions or
advertising/sponsorship/exhibition sales). In 2012 live and
digital/mixed revenue reached 50% for the first time and in 2013
that increased to 59%. The strong growth in the iGaming Business
Affiliate events pushed up advertising, sponsorship and exhibition
revenue to 30% (from 24%) and digital/mixed subscriptions increased
by 9%. This increase masks a somewhat deeper shift in the balance
between digital and paper formats, with the content in all
Education subscription services now being delivered online first
and edited highlights being promoted subsequently in paper
form.
Investments in accelerating change have been made across the
group. The Sport & Gaming division is the most advanced in
developing high-value products and events and has invested further
in launching two new digital subscription services in 2013. The
Education division also has an events business with growing profits
and has completed its first full cycle of converting subscribers to
its new digital service. It is now well placed to grow its revenue
from an established base that includes the majority of English
secondary schools. The second generation of Education digital
products, at higher values, come on stream in the first half of
2014. The Health division is a stage behind and is developing
prototypes for its main sectors.
In addition to investing in the divisions, we have invested in
the strength and capacity of the central teams. These include the
appointment of a new Finance Director, a Digital Development
Director and the return from maternity leave of the Group Marketing
Director. They have joined excellent existing function leaders in
the IT Director and HR Director. The additional resource in the
centre of the company has also enabled us to make progress on the
simplification of the business, with activities closed or
outsourced in every division.
Overall, increases in profit have outweighed investments in the
Sport & Gaming division and the reverse has been true in
Education and Health. As a result, the Group posts an adjusted
EBITA result of GBP0.6m against GBP1.2m in 2012. This was in line
with our investment plan and slightly exceeded market
expectations.
Several items that appear below the adjusted profit line reflect
our strategy and the changes that are being made in the business.
Firstly, we have recognised a deferred tax asset in respect of an
additional GBP4.0m of SportBusiness tax losses as the development
of that business has increased the certainty of future profits.
This has contributed GBP0.7m of tax credit to the 2013 profit and
loss account. The reasons for this change in the outlook and
underlying value of the division are, firstly, visible future
growth in the iGB Affiliate events business; secondly, that the
amortisation of the purchase of a key contract in that business
from the previous joint venture partner comes to an end in February
2014; and thirdly, the increase in visible future profits from the
TV Sports Markets subscriptions business.
At the same time as making this change we have recognised the
uncertainties in the transition of the Radcliffe books business to
one with greater focus in content themes and new formats. We have
therefore impaired the carrying value of the goodwill and
intangible assets in that business by GBP0.6m. Part of this
transition has involved centralising the Health business in one
multi-disciplinary team in our London office. This, along with the
winding down of the Incentive Plus catalogue business to enable the
Education business to focus on digital and live products for school
managers, prompted the announcement in 2013 of the closure of the
Milton Keynes office. The 2013 accounts therefore include
exceptional costs of GBP0.3m and other impairments of GBP0.1m
associated with this restructuring.
These adjustments lead to a statutory loss after tax of GBP0.6m,
compared to a profit of GBP0.2m in 2012.
Divisional PERFORMANCE
SpORT & GAMING
GBP'000 2013 2012 Change
---------------- ------ ------ -------
Revenue 6,152 5,177 19%
---------------- ------ ------ -------
Adjusted EBITA 1,439 1,307 10%
---------------- ------ ------ -------
Profit margin 23% 25%
---------------- ------ ------ -------
The primary objective for SportBusiness and iGaming Business has
been to continue to transform its revenue mix away from print
advertising and towards digital subscriptions and live events. The
strategy for achieving this has been:
-- Increasing scale and profits in the highly successful
Affiliate events business by investing in the infrastructure to
support growth
-- Investment in the content and delivery of new high-value
subscription services to complement the successful TV Sports
Markets deals analysis service
-- Reduce contract publishing, print reports and print
advertising to the core elements of those activities that deliver
the highest margins
These goals have been met successfully, which has enabled
investments to be made at the same time as increasing adjusted
EBITA and improving the revenue mix. Subscriptions and events
revenue increased to 60% of the total (from 54%). This was driven
by the iGaming Business Affiliate events business growing revenue
by 34% and adjusted EBITA by 41% and by a 35% increase in
subscriptions revenue as a result of increasing the average value
of customer sites on renewal, through increased usage and perceived
value.
At the same time as growing revenue, the strength of the
information market in this sector has meant that the division has
been able to expand into new products and markets. In 2013 it has
invested in establishing the North American edition of iGaming
Business magazine; acquired a 50% stake in the annual iGaming North
America conference; and created content for new digital
subscription services such as the iGaming Intelligence Centre and
SportBusiness Knowledge Centre (both launched in 2013) and Sports
Sponsorship Insider (launched in 2012). On top of these
investments, the business also reinforced the iGaming Business
Affiliate team by enhancing both the sales leadership and the event
delivery capacity. This enabled the event to be moved to a larger
venue in February 2014 which has resulted in a further revenue
increase of approximately 50% over 2013.
Subscription revenue is also expected to follow the growth
achieved in 2013 with further increases in 2014 as average customer
value is enhanced by the planned launch of new premium services in
both the Sport and iGaming spaces.
EDUCATion
GBP'000 2013 2012 Change
---------------- ------ ------ -------
Revenue 4,568 4,601 -1%
---------------- ------ ------ -------
Adjusted EBITA (155) 263 -159%
---------------- ------ ------ -------
Profit margin -3% 6%
---------------- ------ ------ -------
The above table excludes 'The School Run' which was disposed of
for no consideration in April 2012 (note 26). In 2012, this
contributed revenue of GBP108,000 and adjusted EBITA* of GBP133,000
loss before disposal. The Division now receives a licence income
calculated as a percentage of revenue.
The table above also includes the results of Incentive Plus. The
Group has announced its intention to wind down this business during
2014. In 2013, Incentive Plus contributed revenue of GBP670,000 and
adjusted EBITA* of GBP19,000 loss (2012: Revenue of GBP990,000 and
adjusted EBITA* of GBP28,000 profit).
Optimus Education provides expert advice and support for senior
and middle managers in schools through digital and live formats.
The market opportunity for this service has been enhanced by the
reduced support available from surviving Local Education
Authorities. The objective for this business is to grow revenues
and exceed historic margins of 16-20%. The strategy for achieving
this is to:
-- Maintain a high level of market penetration in English
secondary schools while converting from print to digital
-- Add new premium products to increase the value of the subscription service
-- Continue to rebuild the scale and quality of the Education
conferences after a period of reduced profits in 2011
-- Cut out activities that are not aimed at the target group of school managers
Optimus conferences had another successful year, building on the
progress made in 2012, with revenue up by 17% on the back of four
extra events (up from 32 to 36) and an 20% increase in delegate
numbers also. Adjusted EBITA increased by 29% to GBP0.5m due to the
high marginal profitability of additional delegates. The live
events were complemented in the autumn of 2012 by the launch of a
new range of training products designed to be able to be delivered
in school by the relevant topic leader. In 2013, sales of these
training packs and other books increased by 37% and in the first
quarter of 2014 a group of these training sessions have been
brought together as an additional premium product to offer to
subscribers to the digital service.
One of the key goals for the digital subscription service was to
maintain a high level of penetration in the core market of English
secondary schools while converting schools that had been
subscribing to 14 different paper newsletter to subscribe to the
new digital service. The conversion process was completed in
September 2013 still with a majority of all English secondary
schools as subscription customers. This gives a strong platform
from which to grow the business in the future, with the next goal
to enhance the average value of each subscription.
Initial progress was made on this goal in 2013, with the average
sale value per school up by 18%. However there is far more to
achieve here as schools now have access to a much more extensive
service which competes favourably with other methods of supporting
middle and senior managers with both their immediate information
needs and their professional development. The addition of the new
training service is one part of a programme of product enhancements
planned for 2014 with the aim of achieving a further significant
uplift in average customer value. In 2014 we also plan to increase
market penetration, especially in primary schools, as we become
able to demonstrate the value for money delivered to subscribing
schools.
The investment in additional resource in the sales and marketing
and content teams has added GBP0.3m to the fixed costs of the
business, only partly offset by reduced marginal costs. At this
stage of the development of the subscription business, this
increase in fixed costs means that the subscription business is
loss making. Earned subscription revenue decreased as legacy paper
subscribers fell away, however the addition of new digital
subscribers meant that the value of subscription sales added in the
year increased by 21%. The business is not expected to be
profitable in 2014 but continued further sales growth will build
profitability in the medium term as subscriber numbers and
subscription values are increased at a high marginal profit.
HEALTH
GBP'000 2013 2012 Change
---------------- ------ ------ -------
Revenue 3,915 4,445 -12%
---------------- ------ ------ -------
Adjusted EBITA 47 444 -89%
---------------- ------ ------ -------
Profit margin 1% 10%
---------------- ------ ------ -------
The Health division is at an earlier point of transition than
the Education and Sport & Gaming divisions, with several
businesses in development. Radcliffe Solutions provides software to
support training managers in the NHS to monitor and report on
training and appraisal processes. Radcliffe and Speechmark are
well-regarded books businesses at a largely pre-digital stage. The
strategy in this division is to:
-- Integrate and improve the efficiency of the existing book publishing operations
-- Complement Speechmark's successful paper product range for
speech and language therapists by evolving new digital formats
-- Improve Radcliffe's profit margins by focusing on a smaller
number of healthcare niches and reducing titles that are likely to
be sub-scale
-- Improve the user experience of Radcliffe Solutions' training
management software to build the value generated by its large base
of users in the NHS.
Book publishing had a difficult start to 2013 and combined sales
for Speechmark and Radcliffe fell 9% in 2013. Speechmark is
profitable and achieved an operating margin of 24% but Radcliffe is
currently loss-making. The goal for the new head of Health
Publishing is to complete the integration of the two businesses,
rationalise the frontlist to remove subscale titles and make the
most of strong sellers, convert appropriate titles to
print-on-demand and e-books, identify opportunities to develop new,
higher-value digital products and research the potential for adding
subscription services like those in the Education and Sport &
Gaming divisions. In the course of this process several activities
were closed in 2013 or out-sourced, including live training courses
and some experimental advertising-led products generating revenue
from the pharmaceutical industry. Others remain under review and
the modernisation of the publishing business will continue into
2014.
Radcliffe Solutions has an interesting market position and
manages the training records of over 450,000 NHS staff. Led by the
new Group Digital Development Director, the business aims to
enhance the value it provides for its customers and increase the
average revenue per subscribing Trust. If it is able to do so in
2014, the business has a substantial opportunity to grow.
Central costs
These costs represent central group costs which are not directly
related to the Divisions' trading and are not therefore included in
their results. They include Board fees and costs related to being
both a PLC and a consolidated Group.
GBP'000 2013 2012 Change
---------------- ------ ------ -------
Adjusted EBITA (740) (715) 3%
---------------- ------ ------ -------
As % of Group
revenue 5% 5%
---------------- ------ ------ -------
Net interest
charge (45) (80) -44%
---------------- ------ ------ -------
The Group has maintained its central costs at 5% of Group
revenues. The majority of investments made by the Group to date
have been directly related to the trade of Divisions and hence been
recharged to them, but during 2013, the Group has added resources
to central functions in the areas of Digital product development
and HR.
Net interest payable is consistent year on year with the
reduction in the Group's debt due to loan repayments made in 2013.
In addition to interest payable and receivable, the net interest
charge of GBP45,000 also includes notional interest of GBP5,000
(2012: GBP3,000) relating to the contingent consideration payable
on the Ikonami acquisition in April 2011. See note 21.
Julian Turner
Chief Executive
14 February 2014
OPERATING AND FINANCIAL REVIEW
Summary adjusted results to reflect underlying trading
performance
GBP'000 2013 2012 Change
----------------- ------- ------- -------
Total Group
----------------- ------- ------- -------
Revenue 14,635 14,331 2%
----------------- ------- ------- -------
Adjusted EBITA* 591 1,166 -49%
----------------- ------- ------- -------
Margin 4% 8%
----------------- ------- ------- -------
Net interest
charge (45) (80) 44%
----------------- ------- ------- -------
Adjusted PBT* 546 1,086 -50%
----------------- ------- ------- -------
* A reconciliation of the adjusted numbers is set out in note 5.
The adjusted numbers 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 2013, the decision was made to wind down the Incentive Plus
business during 2014 due its lack of profitability and as the Board
considered it non-core in the context of the Group's strategy. In
addition, the Board decided to close down the Milton Keynes office
during 2014 and centralise all its Health and back-office
operations in the London office. As a result, the Group has
recognised restructuring costs of GBP325,000 in 2013 relating to
staff redundancy costs, impairments in stock and intangible assets
and office closure costs.
In 2012, restructuring costs of GBP201,000 were booked relating
to advisory fees and other minor costs on the disposal of the
Education division's consumer arm, funding advice leading to the
fundraising in the year and a provision against costs of Board
level changes.
A credit of GBP687,000 was also recognised in 2012 to reflect
reduction is the provisions for contingent consideration made at
the time of the Radcliffe Publishing and Radcliffe Solutions
(formerly Ikonami) acquisitions. Further credits of GBP144,000 were
recognised in 2013 to reduce the provisions to GBPnil at 30
November 2013.
Impairment charges and reduction to goodwill
Impairment charges of GBP674,000 have been booked in 2013. Of
these, GBP537,000 and GBP74,000 relate to impairments recognised on
Radcliffe Publishing Ltd's goodwill and intangible assets
respectively. These assets were deemed to be impaired as the
outcomes expected from its evolution towards digital products are
not yet sufficiently certain to generate positive returns in the
short term to justify the previous carrying value. Additionally,
GBP47,000 of the impairment results from a review of the carrying
value of intangible assets in light of the planned closure of
Incentive Plus and restructure of the Health business and GBP16,000
relates to impairments of leasehold improvements at the Milton
Keynes office.
In 2012, a goodwill impairment charge of GBP300,000 was booked
to reflect the challenging trading environment experienced by
Radcliffe Solutions Ltd.
Capital expenditure
During the year, the Group has invested an additional GBP493,000
in web development and enhancing its digital products (2012:
GBP429,000). The majority of web development spend this financial
year has concentrated on launching new websites for SportBusiness
and iGaming and further enhancements to the Education subscription
offering including the building of a new training hub due to be
launched in the first half of 2014. In Health, web development has
been focused on improving the functionality of customer facing
websites and developing new digital products. In 2013, we have also
completed the implementation of a new email marketing channel which
commenced in 2012.
Our London office moved location during 2013 and we have
invested GBP94,000 on the fit out of the new premises.
Fundraising
In May 2013, the new Chairman subscribed for 7.2million new
shares at a price of 2.1 pence per share, thereby injecting
GBP151,000 of funds into the Group.
In September 2012 the Group raised GBP1,510,000 from a Firm
Placing to its largest shareholders and executive directors and an
Open Offer. Total costs of the share issue were GBP112,000 and the
issue price was 1.5 pence per share. The combined placing added
100.7 million shares and diluted shares in issue by 34%.
Debt and cash flow
During 2012, the Group's lending Bank agreed to the fundraising
and a change to the Loan Agreement. This change required that the
Group's repayments of GBP125,000 due in November 2012 and 2013 both
be made in November 2012. In return, much greater financial
headroom in its loan covenants was granted thereby enabling the
Group to pursue a heightened investment programme.
A further amendment was signed with the Bank in January 2013
which again changed the repayment profile but adds further
relaxation in covenant headroom. This required a repayment of
GBP400,000 in 2013 but eliminates the requirement for the Group to
meet certain covenants regarding capital expenditure and EBITDA
hurdles. This has enabled the Group to continue its investment
programme as planned.
Net debt (note 27) at 30 November 2013 stood at GBP12,000 (2012:
net funds of GBP108,000). The Group has gross Bank debt (note 18)
of GBP475,000 at November 2013 (2012: GBP875,000) which is being
repaid over the period to May 2016. Further to this the Group now
has provisions of GBPnil (2012: GBP220,000) deferred and contingent
consideration relating to two of its recent acquisitions (note
21).
Cash conversion rate
GBP'000 2013 2012
------------------------------------- ------ ------
Cash from operating activities
before interest and tax 701 215
------------------------------------- ------ ------
Net cash outflow from restructuring
costs 325 201
------------------------------------- ------ ------
Adjusted cash from operating
activities before interest
and tax 1,026 416
------------------------------------- ------ ------
Adjusted EBITA 591 1,166
------------------------------------- ------ ------
Adjusted cash conversion
of operating profits for
year 174% 31%
------------------------------------- ------ ------
The relatively low cash conversion rate in 2012 is a consequence
of three factors: investment in stock, notably development of new
lines; slower cash collection relating to the outsourcing of the
warehousing and fulfilment function to a third party in late 2011
and the pay-down of creditors compared to the prior year as a
reflection of the funds position held.
The high cash conversion rate in 2013 is primarily a result of
significant pre-billing and cash collection of 2014 events during
2013 and the return to a normalised creditor payment cycle compared
to the creditor pay-downs during 2012.
Earnings per share
Statutory diluted earnings per share ("eps") is 0.18p loss
(2012: 0.03p earnings). On an adjusted basis reflecting underlying
trading (by using adjusted profits against diluted shares) earnings
per share are 0.04p (2012: 0.24p) reflecting the net impact of
trading performance and investments during the year as noted in the
Business and Performance Review section of the Strategic
Report.
Dividends
At this stage of the Group's evolution, the Directors do not
propose a dividend this year (2012: GBPnil).
William Fawbert
Finance Director
14 February 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 November 2013
2013 2012
Notes GBP'000 GBP'000
------------------------------------- ------ -------- --------
Revenue 2 14,635 14,331
Cost of Sales - Direct costs (5,389) (5,464)
Cost of Sales - Marketing expenses (1,698) (1,738)
------------------------------------- ------ -------- --------
GROSS PROFIT 2 7,548 7,129
Other operating expenses 8 (6,818) (5,980)
Restructuring costs 5 (325) (201)
Acquisition-related credits 5 144 687
Depreciation expense 8 (112) (127)
Amortisation expense 12 (922) (955)
Impairment charges 8 (674) (300)
Total administrative expenses (8,707) (6,876)
OPERATING (LOSS) /PROFIT (1,159) 253
Finance costs 6 (51) (80)
Finance income 7 6 -
(LOSS) / PROFIT BEFORE TAX 8 (1,204) 173
Taxation 9 590 54
(LOSS) / PROFIT FOR THE FINANCIAL
YEAR (614) 227
===================================== ====== ======== ========
Attributable to:
- Equity holders of the parent (733) 111
- Non-controlling interest 119 116
------------------------------------- ------ -------- --------
Total comprehensive (loss) / income (614) 227
===================================== ====== ======== ========
(LOSS) / EARNINGS PER SHARE
Basic 10 (0.18)p 0.03p
===================================== ====== ======== ========
Diluted 10 (0.18)p 0.03p
===================================== ====== ======== ========
CONSOLIDATED GROUP AND COMPANY STATEMENTS OF CHANGES IN
EQUITY
For the year ended 30 November 2013
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
2011 2,989 7,061 105 (123) (3,425) 6,607 133 6,740
Total comprehensive
income - - - - 111 111 116 227
Tax taken
directly to
equity (note
15) - - - - (30) (30) - (30)
----------------------- --------- --------- --------- --------- ---------- ---------- ------------- ---------
2,989 7,061 105 (123) (3,344) 6,688 249 6,937
Share issues 1,007 503 - - - 1,510 - 1,510
Share issue
costs - (112) - - - (112) - (112)
Share based
payments - - - - 144 144 - 144
----------------------- --------- --------- --------- --------- ---------- ---------- ------------- ---------
At 30 November
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
======================= ========= ========= ========= ========= ========== ========== ============= =========
COMPANY Share
Share premium Retained Total
capital account earnings equity
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- ----------------------- ---------
At 1 December 2011 2,989 7,061 (2,866) 7,184
Total comprehensive income - - (2,719) (2,719)
Tax taken directly to equity
(note 15) - - (30) (30)
------------------------------ --------- --------- ----------------------- ---------
2,989 7,061 (5,615) 4,435
Share issues 1,007 503 - 1,510
Share issue costs - (112) - (112)
Share based payments - - 144 144
------------------------------ --------- --------- ----------------------- ---------
At 30 November 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 credits - - (27) (27)
At 30 November 2013 4,068 7,531 (6,184) 5,415
============================== ========= ========= ======================= =========
CONSOLIDATED GROUP AND COMPANY STATEMENTS OF FINANCIAL
POSITION
As at 30 November 2013
Group Company
2013 2012 2013 2012
Notes GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------ -------- -------- -------- --------
ASSETS
Non-current assets
Goodwill 11 5,283 5,820 - -
Other intangible assets 12 2,399 2,972 67 119
Property, plant and equipment 13 100 124 97 81
Investments 14 - - 6,860 7,397
Deferred tax assets 15 1,547 1,021 64 131
------------------------------- ------ -------- -------- -------- --------
9,329 9,937 7,088 7,728
CURRENT ASSETS
Inventories 16 1,660 1,648 - -
Trade and other receivables 17 3,449 2,718 6,818 3,933
Cash and cash equivalents 27 463 983 379 750
------------------------------- ------ -------- -------- -------- --------
5,572 5,349 7,197 4,683
TOTAL ASSETS 14,901 15,286 14,285 12,411
=============================== ====== ======== ======== ======== ========
EQUITY AND LIABILITIES
Capital and Reserves
Called up ordinary share
capital 23 4,068 3,996 4,068 3,996
Share premium account 7,531 7,452 7,531 7,452
Merger reserve 105 105 - -
Reserve for own shares 24 (123) (123) - -
Retained earnings (3,960) (3,200) (6,184) (5,471)
Equity attributable to
equity holders of the
parent 7,621 8,230 5,415 5,977
Non-controlling interest 25 268 249 - -
------------------------------- ------ -------- -------- -------- --------
TOTAL EQUITY 7,889 8,479 5,415 5,977
Non-current liabilities
Borrowings 18 350 475 350 475
Provisions 21 - 95 - 95
Deferred tax liabilities 15 290 419 - 1
640 989 350 571
Current liabilities
Borrowings 18 125 400 125 400
Current tax liabilities 21 80 - -
Trade payables and other
payables 19 2,985 2,769 8,395 5,338
Provisions 21 127 125 - 125
Deferred income 20 3,114 2,444 - -
------------------------------- ------ -------- -------- -------- --------
6,372 5,818 8,520 5,863
TOTAL LIABILITIES 7,012 6,807 8,870 6,434
TOTAL EQUITY AND LIABILITIES 14,901 15,286 14,285 12,411
=============================== ====== ======== ======== ======== ========
These financial statements were approved by the Board of
Directors and authorised for issue on 14 February 2014 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 2013
Group Company
2013 2012 2013 2012
Notes GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------ -------- -------- -------- --------
(Loss) / profit for the
financial year (614) 227 (686) (2,719)
Taxation (590) (54) 24 (54)
Amortisation & impairment
expense, reduction in
goodwill 8 1,596 1,255 590 729
Depreciation 8 112 127 88 101
Loss from disposal of
property, plant and equipment 8,13 3 - 1 -
Loss on disposal of intangible
assets 8,12 50 60 - -
Finance costs 51 80 51 77
Finance income (6) - (6) -
Share based payment (credits)
/ charges 8 (27) 144 (27) 144
Operating cash flows
before movement in working
capital 575 1,839 35 (1,722)
(Increase) / decrease
in inventories (12) (364) - -
(Increase) / decrease
in receivables (731) (52) (2,721) (61)
Increase / (decrease)
in payables 869 (1,208) 2,912 1,663
Cash flow from operating
activities before interest
and tax 701 215 226 (120)
Interest paid 6 (46) (77) (46) (77)
Taxation paid (124) (99) (121) (100)
Cash inflow / (outflow)
from operating activities 531 39 59 (297)
-------------------------------- ------ -------- -------- -------- --------
INVESTING ACTIVITIES
Deferred consideration 21,
paid 26 (81) (29) (81) (29)
Purchase of property
plant and equipment 13 (112) (51) (110) (16)
Purchase of intangible
assets 12 (520) (429) (1) (66)
Proceeds from disposal
of property, plant and
equipment 13 5 - 5 -
Interest received 7 6 - 6 -
Net cash used in investing
activities (702) (509) (181) (111)
-------------------------------- ------ -------- -------- -------- --------
FINANCING
Proceeds from issuance
of ordinary shares 23 151 1,510 151 1,510
Costs of issuing shares - (112) - (112)
Proceeds of new long
term borrowings 18 - 875 - 875
Proceeds of new short
term borrowings 18 - 250 - 250
Repayments of borrowings 18 (400) (1,375) (400) (1,375)
Payment of dividend to (100) - - -
minority interest
Net cash from financing
activities (349) 1,148 (249) 1,148
-------------------------------- ------ -------- -------- -------- --------
NET (DECREASE) / INCREASE
IN CASH AND CASH EQUIVALENTS (520) 678 (371) 740
CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF YEAR 983 305 750 10
CASH AND CASH EQUIVALENTS
AT END OF YEAR 27 463 983 379 750
================================ ====== ======== ======== ======== ========
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 November 2013
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
GBP686,000 (2012: GBP2,719,000 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 GBP614,000 (2012:
GBP227,000 profit) and has net assets of GBP7,889,000 (2012:
GBP8,479,000); notwithstanding this it has a net current
liabilities position at 30 November 2013 of GBP800,000 (2012:
GBP469,000). The level of bank debt has however reduced to
GBP475,000 (2012:GBP875,000) as a result of GBP400,000 repayments
made during 2013. The Directors have prepared group cash flow
forecasts for the period ending 30 November 2015, which take into
account the expected impact of closing down the Milton Keynes
office and winding down the loss making Incentive Plus business
during 2014. 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. There is long-term financing in place with the
Group's bank debt renewed in January 2013 to a term loan with
repayments over the period to May 2016 (note 18). The Group
currently has an overdraft facility of up to GBP750,000 which is
currently not utilised. On this basis the Directors believe that it
remains appropriate to prepare the financial statements on a going
concern basis.
Changes in accounting policies
There have been no changes to accounting policies in the
period.
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 11;
-- 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 21);
-- 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 28;
-- 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 is as follows:
2013 2012
GBP'000 GBP'000
------------------------------------ -------- --------
Revenue
Sale of goods 7,370 8,138
Rendering of services 7,265 6,193
------------------------------------ -------- --------
14,635 14,331
Cost of sales
Change in inventories of finished
goods 12 327
Raw materials and consumables used (5,401) (5,791)
Marketing costs (1,698) (1,738)
------------------------------------ -------- --------
(7,087) (7,202)
Gross profit 7,548 7,129
------------------------------------ -------- --------
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 seen by the Board in its
financial information used in allocating resources and making
strategic decisions. These segments were identified by how the
Group is focused on customer types and so does involve some
aggregation of how those customers are served and of diversity
within the customer bandings as niches are targeted within the
broader markets.
-- 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 as well
as HR management and training compliance software;
-- 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
PLC 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 positions across the Group.
Operating profit is defined in note 1. The sector analysis
includes the adjusted definition of operating profit (note 5) to
allow shareholders to gain a further understanding of the trading
performance of the Group and is considered by the Board alongside
operating profit and profit before tax to assess performance and
review strategy.
Analysis Year ended 30 November Year ended 30 November
by market 2013 2012
sector
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 4,568 3,915 6,152 - 14,635 4,709 4,445 5,177 - 14,331
Adjusted
operating
(loss) /profit
(note 5) (155) 47 1,439 (740) 591 130 444 1,307 (715) 1,166
Share based
payment
credits/(charges) - - - 27 27 - - - (144) (144)
Restructuring
costs (65) (192) (18) (50) (325) (41) - - (160) (201)
Acquisition-related
credits - 144 - - 144 - 687 - - 687
Amortisation
of intangible
assets (116) (347) (405) (54) (922) (151) (320) (383) (101) (955)
Impairment
expense (37) (637) - - (674) - (300) - - (300)
Operating
(loss) /
profit (373) (985) 1,016 (817) (1,159) (62) 511 924 (1,120) 253
Finance
costs - - - (51) (51) - - - (80) (80)
Investment
income - - - 6 6 - - - - -
(Loss) /
profit before
tax (373) (985) 1,016 (862) (1,204) (62) 511 924 (1,200) 173
===================== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
3 SEGMENTAL ANALYSIS (continued)
Analysis Year ended 30 November Year ended 30 November
by market 2013 2012
sector
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 122 366 405 141 1,034 158 336 384 204 1,082
Impairment
expense 37 637 - - 674 - 300 - - 300
Expenditure
on intangible
assets 88 164 267 1 520 151 195 17 66 429
Expenditure
on property,
plant and
equipment - 1 1 110 112 10 25 1 15 51
Analysis by market sector Assets Liabilities
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- --------
Education 131 292 2,131 1,798
Health 2,419 3,692 1,328 1,924
Sport & Gaming 4,582 3,223 2,040 1,051
--------------------------- -------- -------- -------- --------
7,132 7,207 5,499 4,773
Group function 6,222 7,058 727 660
Gross debt and taxation
(current and deferred) 1,547 1,021 786 1,374
14,901 15,286 7,012 6,807
=========================== ======== ======== ======== ========
There are no inter-segmental sales.
The Group has announced plans to wind down the Incentive Plus
business, part of the Education division. This will occur over the
course of 2014. In 2013, Incentive Plus contributed revenue of
GBP670,000 and adjusted EBITA before management charges,
restructuring costs and impairments of GBP19,000 loss (2012:
Revenue of GBP990,000 and adjusted EBITA of GBP28,000 profit before
management charges, restructuring costs and impairments.)
4 EMPLOYEES
The average monthly number of persons (including directors)
employed by the Group during the year, analysed by category, was as
follows:
2013 2012
Number Number
------------------------------- ------- -------
Sales and marketing 55 52
Content and production 60 57
Administration and management 33 31
148 140
=============================== ======= =======
Their aggregate remuneration comprised:
2013 2012
GBP'000 GBP'000
------------------------------------- -------- --------
Wages and salaries 5,721 5,068
Social security costs 598 538
Pension costs 27 27
Equity-settled share-based payments
and related (credits) / costs (27) 144
6,319 5,777
===================================== ======== ========
This remuneration is included in other operating expenses except
for: GBP235,000 (2012: GBP181,000) included in cost of sales -
direct costs; GBP165,000 (2012: GBP127,000) included in cost of
sales - marketing expenses; GBP100,000 (2012: GBP26,000) included
in restructuring costs; GBP179,000 (2012: GBP214,000) capitalised
in the inventory for book development and GBP419,000 (2012:
GBP404,000) 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 Compensation
emoluments and for loss 30 November 30 November
fees Bonus of office Pension 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- -------- ------------- -------- ------------ ------------
Executive Directors
J Turner 143 - - 2 145 165
Q Brocklebank 96 10 30 - 136 138
Will Fawbert 101 - - - 101 -
Non-executive
Directors
P Rigby 6 - - - 6 12
S Routledge 11 - - - 11 10
Andrew Brode 15 - - - 15 -
372 10 30 2 414 325
--------------------- --------- -------- ------------- -------- ------------ ------------
There were no retirement benefits accruing for the
Directors.
No Directors (2012: none) exercised share options in the year
and so no gains were made (2012: no gains). The amount for share
based payment charges (note 28) which relates to Directors was
GBP29,000 credit (2012: GBP138,000 charge).
At 30 November 2013, shares were receivable under long term
incentive schemes in respect of one Director (2012: two Directors).
J Turner has maximum numbers of options that could vest subject to
performance conditions of 11,950,000 under the Share Price Growth
Scheme (2012: 11,950,000 under the Share Price Growth Scheme). At
30 November 2012, Q Brocklebank had 7,170,000 under the Share Price
Growth Scheme. The schemes are defined in note 28.
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, Julian Turner has a maximum total
participation in the 2013 Award of 42,949,586 shares, William
Fawbert has a maximum total participation in the 2013 Award of
17,179,834 shares and Andrew Brode has a maximum total
participation in the 2013 Award of 10,151,720 shares.
5 ADJUSTED PROFIT
The adjusted profits have been prepared to allow shareholders to
gain a further understanding of the trading performance of the
Group. Profits are adjusted for items not perceived by management
to be part of the underlying trends in the business and the related
tax effect of those items. The adjustments add back items which
have no cash impact or are not trade related and of a non-recurring
type.
Adjusted numbers exclude amortisation and impairment of goodwill
and intangible assets, restructuring and acquisition-related costs,
and share based payment costs, as well as the tax impact of those
adjusting items and any non-cash tax charges. Non-cash tax charges
relate to movements on deferred tax such as the use of tax losses
or tax credits from the recognition of tax losses.
As noted in the Strategic Report, the Board has made the
decision to close the Milton Keynes office and wind down the
Incentive Plus business during 2014. The Group has also withdrawn
from the sponsorship based Cardiology business and streamlined the
Sport & Gaming division during the year. The 2013 restructuring
charge of GBP325,000 relates to closure costs of the Milton Keynes
office, staff redundancy costs, stock provisions and a loss on
disposal of intangible assets.
Restructuring costs of GBP201,000 in 2012 related to the
disposal of the trade: 'The School Run', funding advice in advance
of the fundraising in the year and changes at Board level.
The acquisition-related credits of GBP144,000 in 2013 and
GBP687,000 in 2012 relate to reductions in provisions held for
contingent consideration on both the Radcliffe Publishing Limited
and the Ikonami Limited acquisitions (see note 21).
The 2013 and 2012 restructuring and impairment costs, but not
the acquisition-related credits were considered to be taxable items
for corporation tax and thus attributable tax has been included in
the period at 23.3% (2012: 24.7%) of their value. All other
adjusting items do not have a tax affect on the Group.
5 ADJUSTED PROFIT (continued)
2013 2012
Note GBP'000 GBP'000
------------------------------------------- ----- -------- --------
OPERATING (LOSS) / PROFIT FOR THE
YEAR (1,159) 253
Amortisation of intangible assets 8 922 955
Impairment expense 8 674 300
Acquisition-related and restructuring
credits and costs 181 (486)
Share based payment (credits) /
charges (27) 144
Adjusting items to operating profit 1,750 913
Adjusted operating profit for the
year (Adjusted EBITA) 591 1,166
Depreciation 8 112 127
Adjusted earnings before interest,
tax, depreciation and amortisation
for the year 703 1,293
=========================================== ===== ======== ========
(LOSS) / PROFIT BEFORE TAX FOR
THE YEAR (1,204) 173
Adjusting items to operating profit 1,750 913
Adjusting items to profit before
tax 1,750 913
Adjusted profit before tax for
the year 546 1,086
=========================================== ===== ======== ========
(LOSS) / PROFIT FOR THE YEAR ATTRIBUTABLE
TO EQUITY HOLDERS OF THE PARENT (733) 111
Adjusting items to profit before
tax 1,750 913
Attributable tax expense on adjusting
items (216) (50)
Exclude movements on deferred tax
assets and liabilities taken to
income statement 15 (655) (185)
Adjusting items to profit for the
year 879 678
Adjusted profit for the year 146 789
=========================================== ===== ======== ========
6 FINANCE COSTS
2013 2012
GBP'000 GBP'000
------------------------------------- -------- --------
Bank loans and overdrafts 46 77
Unwinding of discount on provisions 5 3
51 80
===================================== ======== ========
7 FINANCE INCOME
2013 2012
GBP'000 GBP'000
------------------------- -------- --------
Bank interest receivable 6 -
========================= ======== ========
8 (LOSS) / PROFIT BEFORE TAXATION
2013 2012
GBP'000 GBP'000
----------------------------------------- -------- --------
(Loss) / profit before taxation is
stated after charging / (crediting):
Depreciation and amounts written off
property, plant and equipment - owned
assets 112 127
Amortisation of intangible fixed assets 922 955
Impairment charges and reduction to
goodwill 674 300
Loss from disposal of property, plant
and equipment 3 -
Loss on disposal of intangible assets 50 60
Operating lease rentals:
- Land and buildings 154 217
- Plant and equipment 11 19
Share based payment (credits) / charges (27) 144
Loss on foreign exchange 11 16
========================================= ======== ========
Other operating expenses as disclosed on the face of the income
statement include staff costs (note 4) of GBP5,221,000 (2012:
GBP4,825,000) and premises costs of GBP442,000 (2012:
GBP426,000).
Impairment charges in 2013 consist of GBP537,000 goodwill and
GBP74,000 intangible fixed assets relating to Radcliffe Publishing
Ltd (notes 11 and 12 respectively); GBP16,000 leasehold improvement
costs associated with the Milton Keynes office, now planned for
closure and GBP47,000 relating to intangible assets following a
review of carrying amounts. In 2012, goodwill from acquisitions was
impaired by GBP300,000 as detailed in note 11.
Amounts payable to KPMG Audit Plc and their associates in
respect of both audit and non-audit services are as follows:
2013 2012
GBP'000 GBP'000
------------------------------------------- -------- --------
Fees payable to the company's auditor
for the audit of the company's annual
accounts 35 34
Fees payable to the company's auditor
and its associates for other services:
- the audit of the company's subsidiaries
pursuant to legislation 47 45
- other services relating to taxation 15 33
- services relating to corporate finance
transactions involving the company
or its subsidiaries - 1
- other services 5 9
------------------------------------------- -------- --------
102 122
=========================================== ======== ========
Fees in respect of other services in 2013 and 2012, relate to
the iXBRL filing of the Group's tax returns with the HMRC.
9 TAXATION
2013 2012
GBP'000 GBP'000
------------------------------------------- -------- --------
Current tax:
UK corporation tax on profits of the
year 111 135
Adjustment to prior year (46) (4)
Total current tax 65 131
Deferred taxation:
Origination and reversal of timing
differences (747) (250)
Adjustment to prior year 92 65
Total deferred tax (note 15) (655) (185)
Tax credit on (loss) / profit on ordinary
activities (590) (54)
=========================================== ======== ========
UK corporation tax is calculated at 23.3% as 24% for the first
four months of the financial year and then 23% for the remainder
(2012: 24.7% as 26% for the first four months of the financial year
and then 24% for the remainder) of the estimated assessable profit
for the year. The net credit of GBP747,000 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 2013, the United Kingdom corporation tax
rate changed from 24% to 23%. Effective from 1 April 2014, the
United Kingdom corporation tax rate will reduce 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 2013 2012
for the year
GBP'000 % GBP'000 %
---------------------------------------- -------- ---- -------- -----
(Loss) / profit on ordinary activities
before tax (1,204) 280
(Loss) / profit on ordinary activities
multiplied at the standard rate
of corporation tax in the UK
of 23.3% (2012 - 24.7%) (281) 23 69 25
Effect of:
Credits not deductible for tax
purposes (100) 9 (18) (7)
Recognition prior year tax losses (255) 21 (202) (72)
Under provision in prior year 46 (4) 61 22
Share based payments - - 36 13
Tax credit and effective rate
for the year (590) 49 (54) (19)
======================================== ======== ==== ======== =====
10 EARNINGS PER ORDINARY SHARE
The calculation of earnings per ordinary share is based on the
following:
2013 2012
Number Number
------------------------------------- ------------ ------------
Weighted average number of shares 403,388,961 321,469,843
Adjustment in respect of SIP shares (967,283) (1,111,235)
Weighted average number of shares
used in basic earnings per share
calculations 402,421,678 320,358,608
------------------------------------- ------------ ------------
Dilutive effect of share options 1,860,095 1,955,076
Weighted average number of shares
used in diluted earnings per share
calculations 404,281,773 322,313,684
------------------------------------- ------------ ------------
2013 2012
GBP'000 GBP'000
------------------------------------- -------- --------
Basic and diluted (loss) / earnings (733) 111
Adjustment to earnings (Note 5) 879 678
------------------------------------- -------- --------
Adjusted basic and diluted earnings 146 789
------------------------------------- -------- --------
Earnings per share
Basic (loss) /earnings per share (0.18)p 0.03p
===================================== ======== ========
Diluted (loss) / earnings per share (0.18)p 0.03p
===================================== ======== ========
Adjusted earnings per share
Adjusted basic earnings per share 0.04p 0.25p
===================================== ======== ========
Adjusted diluted earnings per share 0.04p 0.24p
===================================== ======== ========
11 GOODWILL
Group
2013 2012
GBP'000 GBP'000
----------------------------------- -------- --------
Cost
1 December 11,211 11,211
30 November 11,211 11,211
----------------------------------- -------- --------
Accumulated impairment provisions
1 December 5,391 4,828
Reduction to goodwill - 263
Impairment charges for the year 537 300
30 November 5,928 5,391
----------------------------------- -------- --------
Carrying amount
30 November 5,283 5,820
=================================== ======== ========
Goodwill by segment
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating units ('CGU') that are expected
to benefit from that business combination. 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:
2012 Impairment 2013
GBP'000 GBP'000 GBP'000
----------------- -------- ----------- --------
Education 1,874 - 1,874
Health 1,976 (537) 1,439
Sport & Gaming 1,970 - 1,970
Group overheads - - -
----------------- -------- ----------- --------
5,820 (537) 5,283
================= ======== =========== ========
In 2013, goodwill attributable to Radcliffe Publishing Ltd has
been impaired by GBP537,000. The majority of Radcliffe Publishing's
business is print publishing and whilst investments are being made
to evolve the product mix from print to digital, the returns
expected from this are not sufficiently certain in the short term
to justify its previous carrying value. In 2012, a reduction to
goodwill of GBP263,000 was booked to derecognise deferred tax on
amortisation as subsequently determined as allowable. Also in 2012,
goodwill associated with Radcliffe Solutions was impaired by
GBP300,000 to reflect difficult trading conditions.
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% (2012: 8.3%). 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 10%
decrease in forecast cash flows would not give rise to any further
impairments, other than for Radcliffe Publishing Ltd.
12 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
2011 4,842 1,235 801 275 7,153 123 128 251
Additions - - 408 21 429 53 13 66
Disposals - - (150) (96) (246) - - -
30 November
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
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
Amortisation
and impairment
1 December
2011 2,692 492 282 129 3,595 69 28 97
Charge for
the year 329 350 216 60 955 59 42 101
Disposals - - (90) (96) (186) - - -
30 November
2012 3,021 842 408 93 4,364 128 70 198
Charge for
the year 297 350 215 60 922 13 40 53
Impairment 74 - 47 121 - -
Disposals (5) - (47) (1) (53) - - -
30 November
2013 3,387 1,192 623 152 5,354 141 110 251
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
Carrying
amount
30 November
2013 1,455 43 853 48 2,399 35 32 67
================= =========== ========== ======== ========== ======== ======== ========== ========
30 November
2012 1,821 393 651 107 2,972 48 71 119
================= =========== ========== ======== ========== ======== ======== ========== ========
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 11. In 2013,
as a result of the restructuring referred to in note 4, certain
website assets in the Health and Education divisions were assessed
to be impaired by GBP47,000 (2012: GBPnil). In addition, certain
Radcliffe publishing titles in the Health division were impaired by
GBP74,000 (2012: GBPnil). With respect to intangible assets not
deemed to be impaired, if the discount factor were increased by
0.5% there would be no impact on impairment at the 2013 balance
sheet date (2012: GBPnil), other than for Radcliffe Publishing
Ltd.
Of the significant publishing title carrying values:
-- GBP426,000 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 7 years
(2012: 8 years).
-- GBP608,000 relates to over three hundred product title rights
acquired as part of the Speechmark Publishing Limited acquisition.
These will be fully amortised in 4 years (2012: 5 years).
-- GBP421,000 relates to the trade of Radcliffe Solutions Ltd, a
software consultancy business. This will be fully amortised in 7
years (2012: 8 years).
In web design the major additions in 2012 and 2013 relate to the
development of improved e-marketing tools, the conversion of the
Group's various product sites to the latest Drupal version, both
allowing the cross fertilisation of features from site to site and
improved selling ability, and continuing digital migration of the
Group's products, notably the Education online subscription
service.
13 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
2011 252 82 86 420
Additions 34 13 4 51
Disposals (37) (42) (14) (93)
30 November
2012 249 53 76 378
Additions 94 16 2 112
Disposals (203) (8) - (211)
30 November
2013 140 61 78 279
----------------- -------------- ----------- ------------- --------
Depreciation
and impairment
1 December
2011 122 59 39 220
Charged in
the year 81 24 22 127
Disposals (37) (42) (14) (93)
30 November
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
----------------- -------------- ----------- ------------- --------
Net book value
30 November
2013 82 5 13 100
================= ============== =========== ============= ========
30 November
2012 83 12 29 124
================= ============== =========== ============= ========
Company Leasehold Fixtures,
property Computer fittings
improvements equipment & equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------------- ----------- ------------- --------
Cost
1 December
2011 201 36 50 287
Additions 2 10 4 16
Write offs - (1) (1) (2)
30 November
2012 203 45 53 301
Additions 94 16 - 110
Disposals (203) (5) - (208)
30 November
2013 94 56 53 203
---------------- -------------- ----------- ------------- --------
Depreciation
1 December
2011 85 16 20 121
Charged in
the year 66 17 18 101
Write offs - (1) (1) (2)
30 November
2012 151 32 37 220
Charged in
the year 62 12 14 88
Disposals (201) (1) - (202)
30 November
2013 12 43 51 106
---------------- -------------- ----------- ------------- --------
Net book value
30 November
2013 82 13 2 97
================ ============== =========== ============= ========
30 November
2012 52 13 16 81
================ ============== =========== ============= ========
14 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 2013 2012
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 10,999 2,595 13,594
Additions - - - 2,792 - 2,792
At 30 November 13,791 2,595 16,386 13,791 2,595 16,386
----------------- --------------- --------------- -------- --------------- --------------- --------
Amounts written
off:
At 1 December 8,989 - 8,989 5,569 - 5,569
Impairment
in the year 537 - 537 3,420 - 3,420
----------------- --------------- --------------- -------- --------------- --------------- --------
At 30 November 9,526 - 9,526 8,989 - 8,989
----------------- --------------- --------------- -------- --------------- --------------- --------
Net book
value:
----------------- --------------- --------------- -------- --------------- --------------- --------
At 30 November 4,265 2,595 6,860 4,802 2,595 7,397
================= =============== =============== ======== =============== =============== ========
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 11. In 2013,
the investment in Radcliffe Publishing Ltd was deemed to be
impaired as the outcomes expected from its evolution towards
digital products were not sufficiently certain to generate positive
returns in the short term to justify the carrying value. The other
investments would require substantial decreases in their 2014
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, other than for
Radcliffe Publishing Ltd.
The addition in 2012 reflects a capital contribution to a
subsidiary as its balances owed to group undertakings were written
down in the year. The entity's trade was then disposed of (note 26)
and so the same amount was then impaired. In 2012 two trading
investments were additionally impaired due to the inherent
uncertainty in a turnaround happening in their trading. The
carrying value for Radcliffe Solutions (formerly Ikonami) was
impaired by GBP300,000 reflecting the tough current trading
environment that the company operates in. Also the Special
Education Publishing asset was fully impaired at a charge of
GBP328,000 as, while valuable to the Education division's product
range, the results were not sufficiently certain to improve in the
short-term so as to not write down its value.
15 DEFERRED TAX
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- -------- --------
Deferred tax assets
Current 237 669 7 131
Non-current 1,310 352 57 -
----------------------------- -------- -------- -------- --------
1,547 1,021 64 131
----------------------------- -------- -------- -------- --------
Deferred tax liabilities
Current - (168) - (1)
Non-current (290) (251) - -
----------------------------- -------- -------- -------- --------
(290) (419) - (1)
----------------------------- -------- -------- -------- --------
Net position at 30 November 1,257 602 64 130
============================= ======== ======== ======== ========
Group Goodwill
and
Capital Tax Intangible
allowances losses assets Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------ -------- ------------ -------- --------
1 December 2011 2 807 (722) 97 184
Credit / (charge)
to income for the
year 163 (45) 42 25 185
Charge to equity
for the year - - - (30) (30)
Prior year acquisition
adjustment (note
11) - - 263 - 263
30 November 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 2012 120 1,408 (290) 19 1,257
------------------------ ------------ -------- ------------ -------- --------
There are accumulated losses of GBP13,568,000 (2012:
GBP13,009,000) 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
GBP6,528,000 (2012: GBP9,696,000) as the probability that future
taxable profits beyond five years will be available cannot be
certain.
Company Capital Tax
allowances losses Other Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------ -------- -------- --------
1 December 2011 - 25 82 107
Credit / (charge) to income
for the year 54 (25) 24 53
Charge to equity for the
year - - (30) (30)
30 November 2012 54 - 76 130
----------------------------- ------------ -------- -------- --------
Credit / (charge) to income
for the year 23 - 2 25
Adjustments to prior years (14) - (77) (91)
30 November 2013 63 - 1 64
----------------------------- ------------ -------- -------- --------
16 INVENTORIES
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- -------- -------- --------
Book inventories 1,660 1,648 - -
=================== ======== ======== ======== ========
Inventories were written down by GBP101,000 (2012: GBP30,000),
with GBP95,000 (2012: GBP30,000) included within cost of sales and
GBP6,000 (2012: GBPnil) included as a restructuring charge, from a
carrying amount of GBP101,000 (2012: GBP30,000) down to GBPnil
(2012: GBP nil).
17 TRADE AND OTHER RECEIVABLES
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- -------- -------- --------
Due within one year:
Trade receivables 2,402 1,827 - -
Amounts owed by group undertakings - - 6,358 3,536
Other receivables 585 298 366 228
Prepayments and accrued
income 462 593 94 169
------------------------------------ -------- -------- -------- --------
3,449 2,718 6,818 3,933
==================================== ======== ======== ======== ========
The average credit period taken on sales of goods is 40 days
(2012: 46 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 (note 22) 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
22.
The Group holds no collateral against these receivables at the
balance sheet date and charges no interest on its overdue
receivables.
18 BORROWINGS
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
------------- -------- -------- -------- --------
Non-current
Bank loans 350 475 350 475
------------- -------- -------- -------- --------
350 475 350 475
------------- -------- -------- -------- --------
Current
Bank loans 125 400 125 400
125 400 125 400
------------- -------- -------- -------- --------
475 875 475 875
============= ======== ======== ======== ========
The effective interest rates and applicable balances at the
balance sheet dates are as follows:
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------
Bank overdraft facility - - - -
(2.25% over the lending
Bank's base rate)
Bank loans (4.25% over
LIBOR) 475 875 475 875
475 875 475 875
========================== ======== ======== ======== ========
18 BORROWINGS (continued)
At 30 November there were the following committed undrawn
borrowing facilities expiring as follows:
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
In one year or less - Bank
overdraft facility 750 750 750 750
============================ ======== ======== ======== ========
The weighted average interest rate implicit in the group's bank
loans at 30 November 2013 was 4.85% (2012: 5.41%) and the weighted
average period until maturity was 1.6 years (2012: 1.7 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 (2012: GBP750,000)
is, when utilised, repayable on demand.
The bank loan is guaranteed by material subsidiaries of the
Group. It was renegotiated in January 2013 and is repayable over
2.5 years ending in May 2016 (2012: repayable over 3.5 years ending
in May 2016). The repayment profile is given in note 22.
19 TRADE AND OTHER PAYABLES
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Trade payables 1,268 885 268 52
Amounts due to group undertakings - - 7,498 4,564
Other payables 500 419 427 328
Accruals 1,217 1,465 202 394
Total current 2,985 2,769 8,395 5,338
=================================== ======== ======== ======== ========
Trade, other payables, and accruals principally comprise amounts
outstanding for trade and ongoing costs. The average credit period
taken for trade purchases is 43 days (2012: 43 days).
20 DEFERRED INCOME
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- --------
Subscription and events
fees received in advance 3,114 2,444 - -
=========================== ======== ======== ======== ========
21 PROVISIONS
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- -------- --------
1 December 220 932 220 932
Increase in year 127 1 - 1
Release of provisions in
year (144) (687) (144) (687)
Utilised during the year (81) (29) (81) (29)
Unwinding of discount 5 3 5 3
--------------------------------- -------- -------- -------- --------
30 November 127 220 - 220
================================= ======== ======== ======== ========
Included in current liabilities 127 125 - 125
================================= ======== ======== ======== ========
Included in non-current
liabilities - 95 - 95
================================= ======== ======== ======== ========
In 2010 a provision of GBP257,000 was made for the contingent
consideration relating to the acquisition of Radcliffe Publishing
Limited which could be payable in 2013 based on results in the 2012
financial year, with a maximum payable of GBP800,000. The provision
was reduced during the year ended 30 November 2012 to an expected
payment in 2013 of GBP50,000. During 2013, the final amount payable
was confirmed at GBP6,000 and this was paid to the vendors. The
remaining GBP44,000 provision release is reflected in
acquisition-related credits in the income statement.
21 PROVISIONS (continued)
In 2011, provisions were made in relation to the acquisition of
Radcliffe Solutions, (formerly Ikonami Limited,) representing up to
GBP150,000 payable in January 2013 plus an earn-out payable in 2014
based on results in the 2013 financial year. The maximum payable in
2014 is GBP1,850,000 but GBP550,000 was originally provided (net of
a notional interest discount of GBP71,000 which is unwinding
through to the payment date). At 30 November 2012, the January 2013
provision was reduced to GBP75,000 and the 2014 provision was
reduced to GBP100,000 net of the corresponding reduction to
notional interest. The January 2013 provision of GBP75,000 was paid
out in full in 2012, and the remaining provision of GBP100,000 has
been released on the basis of Radcliffe Solutions 2013 results.
This is reflected in acquisition-related credits in the income
statement.
New provisions of GBP127,000 have been made in 2012 to reflect
anticipated costs arising from the closure of the Milton Keynes
office and wind-down of the Incentive Plus business.
22 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 18) 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
2013 2012 2013 2012
Notes GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Loans and receivables
Trade receivables 17 2,402 1,827 - -
Other receivables 17 585 298 6,724 3,764
Accrued income 50 112 - -
Cash and cash equivalents 27 463 983 379 750
Total financial assets 3,500 3,220 7,103 4,514
--------------------------------- ------ -------- -------- -------- --------
Financial liabilities
Amortised cost
Bank loans 18 475 875 475 875
Current tax liabilities 21 80 - -
Trade payables 19 1,268 885 268 52
Other payables 19 500 419 7,925 4,892
Accruals 19 1,217 1,465 202 394
Contingent consideration 21 - 220 - 220
Provisions 21 127 - - -
Deferred income 20 3,114 2,444 - -
Total financial liabilities 6,722 6,388 8,870 6,433
--------------------------------- ------ -------- -------- -------- --------
22 FINANCIAL INSTRUMENTS (continued)
Liquidity risk
Cash balances are placed so as to maximise interest earned while
maintaining the liquidity requirements of the business. When
seeking borrowings, the Directors consider the commercial terms
available and, in consultation with their advisers, consider
whether such terms should be fixed or variable and are appropriate
to the business. The Directors review the placing of cash balances
on an ongoing basis. Any surplus cash balances during the year were
kept in standard accounts at standard bank interest rates. The
financial assets of the group at 30 November 2013 were mainly
designated in sterling and earned floating rate standard bank
interest. These are disclosed under cash at bank and in hand of
GBP463,000 (2012: GBP983,000).
The Group would normally expect 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 undrawn bank facility of GBP750,000 (2012: 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 the 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.
Floating Non-interest
Interest rate risk rate bearing Total
GBP'000 GBP'000 GBP'000
--------------------------------------- --------- ------------- --------
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
======================================= ========= ============= ========
At 30 November 2012
Cash and cash equivalents 983 - 983
Trade and other receivables - 2,237 2,237
--------------------------------------- --------- ------------- --------
983 2,237 3,220
======================================= ========= ============= ========
Current tax liabilities - 80 80
Trade and other payables - 2,769 2,769
Deferred income - 2,444 2,444
Borrowings 875 - 875
Provisions - contingent consideration - 220 220
875 5,513 6,388
======================================= ========= ============= ========
The Group has derived a sensitivity analysis based on a 1%
change in the floating interest rate:
2013 2012
GBP'000 GBP'000
-------------------------------------- -------- --------
Impact on equity and profit after
tax
1% increase in base rate of interest (5) (9)
1% decrease in base rate of interest 5 9
-------------------------------------- -------- --------
22 FINANCIAL INSTRUMENTS (continued)
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 148 263 102 513
Provisions 127 - - 127
Other liabilities 6,120 - - 6,120
At 30 November 2013 6,395 263 102 6,760
========================== ======== ======== ======== ========
Bank loans 440 148 368 956
Contingent consideration 125 100 - 225
Other liabilities 5,293 - - 5,293
At 30 November 2012 5,858 248 368 6,474
========================== ======== ======== ======== ========
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 148 263 102 513
Other liabilities 8,395 - - 8,395
At 30 November 2013 8,543 263 102 8,908
========================== ======== ======== ======== ========
Bank loans 440 148 368 956
Contingent consideration 125 100 - 225
Other liabilities 5,338 - - 5,338
At 30 November 2012 5,903 248 368 6,519
========================== ======== ======== ======== ========
The terms, security and repayment information on these
borrowings are given in note 18. 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.
22 FINANCIAL INSTRUMENTS (continued)
Ageing of receivables past due but
not impaired
2013 2012
GBP'000 GBP'000
-------------------------------------- -------- --------
30-60 days 442 381
60-90 days 204 220
90-120 days 29 43
Greater than 120 days 17 23
-------------------------------------- -------- --------
692 667
====================================== ======== ========
The Group's policy is that debt is payable within 30 days. The
older debt above will include items such as conferences and
subscription renewals, which have been billed in advance of
delivery so some payments may be delayed by customers.
Movement in the provision for impairment for trade
receivables:
2013 2012
GBP'000 GBP'000
-------------------------------------- -------- --------
Opening balance at 1 December (279) (360)
Provision for receivables impairment
released / (charged) 2 (5)
Receivables written off during the
year 180 86
Closing balance at 30 November (97) (279)
====================================== ======== ========
Fair value
The Directors consider that the fair values of the Group's
financial instruments do not significantly differ from their book
values.
23 SHARE CAPITAL
The Company does not have an authorised share capital in either
year.
Allotted, issued and fully paid: 2013 2012
Ordinary Ordinary
shares shares
GBP'000 GBP'000
---------------------------------- --------- ---------
As at 1 December 3,996 2,989
Issue of share capital 72 1,007
As at 30 November 4,068 3,996
================================== ========= =========
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
2011 298,916,380 2,989
10 September Share issue at 1.5
2012 pence per share 100,665,458 1,007 1.80p
At 30 November
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
====================================== ============ ========= ==========
There have been no shares issued since the year end.
24 RESERVES
The reserve for own shares relates to the employee Share
Incentive Plan (note 28 a) under which the Group owns 1,323,580
shares (2012: 1,434,296 shares).
25 NON-CONTROLLING INTEREST
The Group's non-controlling interest in both 2013 and 2012 was
composed entirely of equity interests and represents the
non-controlling interest of 30% in IGaming Business Limited.
26 BUSINESS COMBINATIONS AND DISPOSALS
Cash paid net of cash acquired:
Date of acquisition 2013 2012
GBP'000 GBP'000
------------------------------- --------------------- -------- --------
Prior year acquisitions:
Radcliffe Solutions Limited
(formerly Ikonami Limited) 14 April 2011 75 29
23 November
Radcliffe Publishing Limited 2010 6 -
81 29
===================================================== ======== ========
Radcliffe Solutions Ltd
On 14 April 2011 the Group acquired 100% of the issued share
capital of Ikonami Ltd for an initial consideration of GBP65,000
and renamed it Radcliffe Solutions Limited. There were two tranches
of deferred consideration payable with GBP86,000 paid over 12 equal
monthly instalments from the month of acquisition and GBP75,000
being payable in January 2013 (net of working capital adjustment).
The GBP29,000 payment in 2012 relates to the four final instalments
of the first tranche of deferred consideration. The GBP75,000
payment in 2013 settled the second tranche of deferred
consideration.
Radcliffe Publishing Ltd
On 23 November 2010, the Group Acquired 100% of the issued share
capital of Radcliffe Publishing Ltd. Part of the consideration
included an amount contingent on the November 2012 results. During
2013, the final amount payable was confirmed at GBP6,000 and this
was paid to the vendors.
The School Run ("TSR")
On 4 April 2012 the trade of TSR was disposed of for no
consideration. In 2012, this contributed revenue of GBP107,000 and
adjusted EBITA* (before allocation of the central division costs)
of GBP103,000 loss. Post disposal the Group now receives a licence
income calculated as a percentage of revenue and has the option to
buy the trade back at a set multiple which is not valued in the
Group's balance sheet as of immaterial value to the Group at the
present date based on current trading.
27 ANALYSIS OF CHANGES IN NET FUNDS AND DEBT
Group At 1 December Cash flow Non-cash At 30
2012 changes November
2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------- ---------- --------- ----------
Cash at bank and in
hand 983 (520) - 463
Overdraft - - - -
----------------------- -------------- ---------- --------- ----------
Net cash 983 (520) - 463
Bank loans due within
one year (400) 400 (125) (125)
----------------------- -------------- ---------- --------- ----------
Debt due within one
year (400) 400 (125) (125)
Bank loans due after
one year (475) - 125 (350)
Debt due after one
year (475) - 125 (350)
Net funds / (debt) 108 (120) - (12)
======================= ============== ========== ========= ==========
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 notes 18 and 22.
28 SHARE BASED PAYMENT
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:
2013 2012
------------------ ------------------------- ----------------------------
Black Monte Carlo Black Scholes Monte Carlo
Scholes
------------------ ----------- ------------ -------------- ------------
Expected life 3.00 - 3.20 - 3.00 - 3.20 -
(years) 3.25 5.00 3.25 5.00
Risk free rate 4.8039 0.0126 4.8039 0.0126
(%) - 4.9315 - 5.1720 - 4.9315 - 5.1720
Volatility (%) 30.473 39.740- 30.473 39.740-
- 31.1165 57.562 - 31.1165 57.562
Dividend yield
(%) 0 0 0 0
Weighted average
share price (p) 2.10 2.10 2.10 2.10
Weighted average
exercise price 1.00 - 1.00 -
(p) 1.00 5.40 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 will purchased at fair value in
the market and the cash cost of the Partnership shares is expensed
in the year of issue. The total fair value of the options granted
in the year (excluding the paid for Partnership shares) was GBPnil
(2012: GBPnil).
2013 2012
Number Weighted Number Weighted
of options average of options average
exercise exercise
price price
------------------------------ ------------ ---------- ------------ ----------
Outstanding at the beginning
of the period 1,111,235 6.68 1,400,064 6.79
Forfeited during the period (143,953) 5.96 (288,829) 7.21
Outstanding at the end
of the period 967,282 6.79 1,111,235 6.68
============================== ============ ========== ============ ==========
Exercisable at the end
of the period 967,282 6.79 480,551 9.22
============================== ============ ========== ============ ==========
The weighted average remaining contractual life of share options
outstanding at the end of the period was 5 years (2012: 6 years).
The exercise price of the outstanding options ranges from 4.75 -
10.37 pence, but will have been paid at the outset on these options
and nothing will be receivable by the Group.
28 SHARE BASED PAYMENT (continued)
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. 1,957,731 of the
vested options remain (2012: 1,957,731) and the weighted average
remaining contractual life of these options is 4 years (2012: 5
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 start to accrue
if profit growth exceeds certain minimum growth thresholds that
have been 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 are 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 the year.
2013 2012
Number Weighted Number Weighted
of options average of options average
exercise exercise
price price
------------------------------ ------------ ---------- ------------ ----------
Outstanding at the beginning
of the period 22,577,731 1.00 22,712,723 1.00
Forfeited during the period (7,170,000) 1.00 (134,992) 1.00
Exercised during the period - - - -
Expired during the period - - - -
Outstanding at the end
of the period 15,407,731 1.00 22,577,731 1.00
============================== ============ ========== ============ ==========
Exercisable at the end
of the period 3,457,731 1.00 3,457,731 1.00
============================== ============ ========== ============ ==========
The weighted average remaining contractual life of share options
outstanding at the end of the period was 6 years (2012: 8 years).
For all share options outstanding at the year end the exercise
price was 1 pence.
c Unapproved Share Option Scheme
These options were awarded to key members of management and
staff and were exercisable, subject to various trigger price
restrictions, at any time between the third and tenth anniversaries
of the date of grant. The weighted average remaining contractual
life of these options is 0 years (2012: 0 years) and there are no
outstanding exercisable options at either 30 November 2013 or the
prior year.
2013 2012
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
------------------------------ ------------- ----------- ------------ ----------
Outstanding at the beginning
of the period - - 370,130 4.62
Forfeited during the period - - (370,130) 4.62
Outstanding at the end - - - -
of the period
============================== ============= =========== ============ ==========
Exercisable at the end - - - -
of the period
============================== ============= =========== ============ ==========
28 SHARE BASED PAYMENT (continued)
d Enterprise Management Incentive Scheme
These options have been 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. The weighted average remaining contractual
life of these options is 1 year (2012: 2 years). For share options
outstanding at the year end the exercise price ranged from
1.00-5.38 pence.
2013 2012
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
------------------------------ ------------ ---------- ------------ ----------
Outstanding at the beginning
of the period 1,220,000 3.47 2,732,054 3.42
Forfeited during the period - - (1,512,054) 3.37
Exercised during the period - - - -
Expired during the period (350,000) 4.84 - -
Outstanding at the end
of the period 870,000 3.01 1,220,000 3.47
============================== ============ ========== ============ ==========
Exercisable at the end
of the period 480,000 2.83 830,000 3.58
============================== ============ ========== ============ ==========
No options were granted in the year (2012: none) with a total
fair value of GBPnil (2012: GBPnil). For the Group's options to
vest where a trigger price is included, the Group's market share
price must meet that trigger. Of the options outstanding at the end
of the period 200,000 (2012: 200,000) had a trigger price of 12
pence and 190,000 (2012: 190,000) of 15 pence and these have not
been triggered.
29 COMMITMENTS UNDER OPERATING LEASES
The minimum lease payments under non-cancellable operating lease
rentals are in aggregate as follows:
Land and buildings Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
Within one year 139 252 98 210
Between two and five years 19 520 19 395
158 772 117 605
============================ ======== ======== ======== ========
Operating lease payments represent rentals payable by the Group
for its office properties. Leases are negotiated for an average
term, excluding break clauses, of 3 years (2012: 4 years) and
rentals are fixed for an average of 3 years (2012: 4 years).
Plant and machinery Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
Within one year 11 10 2 -
Between two and five years 5 12 3 -
16 22 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 4 years (2012: 4 years) and
rentals are fixed for an average of 4 years (2012: 4 years).
30 POST BALANCE SHEET EVENTS
There have been no significant events since the balance sheet
date.
31 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
There are no capital commitments at the balance sheet date
(2012: GBPnil). The Group does not have any contingent
liabilities.
32 RELATED PARTY TRANSACTIONS
All related party balances held at November 2013 and 2012 are
unsecured.
Subsidiaries
Its 70% (2012: 70%) owned subsidiary, I-Gaming Limited, is owed
by other Group undertakings GBP4,590,000 (2012: GBP3,020,000) and
owes GBP2,931,000 at 30 November 2013 (2012: GBP1,820,000),
including debt due from the Company of GBP4,553,000 (2012: from the
Company GBP3,019,000), after being charged costs and allocated
staff time in the year of GBP994,000 (2012: GBP828,000).
32 RELATED PARTY TRANSACTIONS (continued)
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% (2012: 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
insofar as the Company's shareholders are concerned. The total fee
for the advice and work in the year is GBP60,000 (2012: GBP60,000).
The Group continues to receive advice at a similar level into
2014.
Company
The table below sets out the transactions and balances with
other group undertakings:
Balance Transactions
in year
Debtor / (creditor) Income / (expenditure)
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------- ---------- ------------ -----------
iGaming Business Limited (4,553) (3,019) (1,534) (1,097)
Incentive Plus Limited 461 239 222 333
Speechmark Publishing Limited (2,673) (1,491) (1,182) (808)
Optimus Professional Publishing
Limited 1,450 803 647 743
P2P Publishing Limited (272) (54) (218) (2,330)
SBG Companies Limited 1,539 1,059 480 278
Radcliffe Publishing Limited 2,075 793 1,282 868
Radcliffe Solutions Limited 662 471 191 299
Electric Word Employee
Benefit Trust 171 171 - -
---------- ----------
(1,140) (1,028)
---------- ----------
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
FR TIMMTMBJBTII
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