RNS Number:2553V
Electric Word PLC
11 February 2004
ELECTRIC WORD PLC
FINAL RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2003
Overview
Electric Word plc specialises in providing professional development information
for managers and practitioners in health, education and local government. The
company has particular strengths in subscriptions publishing and conferences but
also produces books, reports, files and databases in both paper and electronic
formats.
Highlights
*Turnover up 22% to #3m
*Gross profits up 53% to #1.4m
*Profit before product development and exceptional costs of #94k (2002:
loss of #62k)
*Pre-tax loss excluding goodwill ahead of forecast at #418k
*Operating cashflow positive at #121k
*Cash balance up to #598k
*Deferred revenue up to #2.2m from #1.4m (2002)
*Acquisition of PFP Publishing Ltd successfully completed at year end
*Renewable subscriptions 75% of revenue, events 22%, other sales 3%
*Net investment in new product development increased to #416k (#278k in
2002)
*Seven new subscription titles launched and nine acquired taking the total
to 31
*Seven conferences held for the first time as the total increased from 13
to 23
*Trading conditions positive in all markets
*********************************************************************
2003 2002
Turnover 3,049,759 2,494,307
Pre-tax loss (557,295) (480,268)
Amortisation of goodwill 139,626 139,625
Pre-tax loss before goodwill (417,669) (340,643)
Investment in new product development 416,169 278,490
Investment in exceptional systems costs 95,491
------ ------
Pre-tax profit before product 93,991 (62,153)
development and exceptionals
*********************************************************************
CHAIRMAN'S STATEMENT
Dear Fellow Shareholders,
Last year I reported that we had brought our established products to cash
profitability and we announced our intention to invest that cash in further
expanding the business. We have been good to our word. 2003 has been a year of
investment and growth, with an exceptional drive in new product development
yielding seven new newsletters and anequal number of new conferences. And the
growth has not just been organic. The year closed with the completion of our
fourth and largest acquisition: PFP Publishing Limited added nine established
loose-leaf files for school managers sold on subscription and a range of related
books.
The result of all this activity has been a significant strengthening of our
product range at the same time as we continue to invest in marketing to build
subscriber numbers across the Group. A very strong fourth quarter has meant that
the loss for the year is less than forecast, even after the investment in new
subscribers and fledgling products.
The year therefore ends with the business further strengthened and poised to
move forward into profitability. Break-even has now become a realistic target
for 2004 and, just as important, the forward strides we have taken in 2003 have
been achieved while also maintaining our record of cash positive trading since
the second half of 2001.
So I am delighted to report that for 2003 the company increased turnover by 22%
to #3,049,759, of which 75% (up from 71% in 2002) derived from renewable
subscriptions revenues. The post-tax loss for 2003 is #407,295 (#480,268 last
year). It has been improved this yearbecause, in line with our accounting
policy, we have recognised the first #150k tranche of a deferred tax asset which
now amounts to #500k. This reflects our expectation that the company will start
to trade profitably within the foreseeable future.
The investment in new product development increased to #416,169 from #278,490.
Also in the year the Board invested in a new, more scalable subscription
fulfilment system to provide a firm administrative platform for future growth.
Excluding these development costs the company recorded its first annual profit
before goodwill of #93,991 (compared to a loss in 2002 of #62,153).
The year's biggest investment came at the very end of it when the company
acquired PFP Publishing Ltd for a cash consideration of just over #1m, funded by
a placing of shares. More detail on PFP and its products can be found later in
this report but it is important to note here that we have been delighted with
the quality and potential of the products that we have inherited, particularly
the subscription-based files, along with an able and experienced team and a
clutch of new opportunities. PFP is a much longer-established business than
Electric Word and its stable of generally more mature products will have an
immediately positive effect on our earnings.
One final observation. There has been a lot of work at Electric Word this year
to strengthen our systems, infrastructure and management to support our growth.
In doing so we have demonstrated the capacity as well as the opportunity to make
what remains a niche business genuinely scalable in the future. For their large
part in all of this, the Board would like to thank Electric Word's staff,
editors and contributors as we all look forward to an exciting year ahead.
Nigel Wray, Chairman
CHIEF EXECUTIVE'S STATEMENT
*Business built on high-quality subscriptions revenue
*75% of revenue from renewable subscriptions
*Average number of subscriptions up 30% to 26,750
*Strong growth in on-line subscriptions
*Conferences increase from 13 to 23
*Deferred revenue increases to #2.2m from #1.4m
*Profit contribution from established titles doubles to #596k
Developments in 2003
High-quality subscriptions revenue is fundamental to our business, so we have
been encouraged by the continued progress on subscriptions this year, with the
average number of paid subscribers increasing by 30% to 26,750 before the PFP
acquisition.
The new launches and growing numbers in paper subscription products have been
matched in two other areas. Firstly, the conferences business has taken another
significant step forward this year, with an investment in strengthening the
division's management rewarded by an increase in the number of events from 13 to
23. And secondly, the early promise shown by online subscriptions in the sports
health sector has been borne out by solid progress through the year.
Profitability and established products
These developments are exciting, but new launches are usually not profitable
(although they may be cash generative) for at least two years.
Like other growing subscription businesses, cash tends to run ahead of earnings
at Electric Word as subscribers pay for their newsletters at the start of their
subscription but we only recognise that revenue bit by bit as each issue is
published. In 2003, there was a #539k difference between the #418k loss before
tax and goodwill and the company's #121k positive cashflow before acquisitions
and financing. As a result, with subscriber growth and the acquisition, revenue
deferred to future years increased from #1.4m to #2.2m.
Profitability tends to be driven by the number and the performance of the
established titles of more than two years' standing, and the progress in this
area in 2003 has been extremely encouraging. By the end of 2003 we had 12
established titles, and their contribution to central overhead doubled from
#289k to #596k. As a result, gross profits moved on to #1.4m (#887k last year).
One important strategic outcome of the acquisition is the way that it changes
the shape of Electric Word's product portfolio and increases the number of these
established titles. Electric Word's intense programme of product development has
meant that in 2003 only just over half of our 22 titles were more than two
years' old. As a result of the acquisition that proportion has increased to 75%.
This change will significantly improve the Group's earnings in 2004,although we
are likely to give some of that back by redressing the historic under-investment
in marketing on some of the acquired titles.
Market sector and trading update
There is every indication that the positive market conditions of the fourth
quarter have continued into the new financial year.
Education
The new school year in September showed that the demand for management
information remains strong at a time of continuing change and organisational
development. Results of the first campaigns for PFP products have started to
come through and have so far performed at the top end of our expectations, which
suggests an exciting opportunity ahead.
Health and sports science
Our aim of developing new markets for Peak Performance and Sports Injury
Bulletin was advanced in 2003 by developing the Australian market for the paper
products and, particularly, online subscriptions. The reliability and strength
of this channel has continued throughout the year and now generates more orders,
and at a lower cost, than any other channel in this market.
Public sector funding
External Funding Bulletin has now been established alongside Lottery Monitor as
a successful and profitable title, with subscriptions in this sector growing by
29% over the year.
Despite the organic opportunities we are very aware of the value that the
Group's expertise, particularly in subscriptions marketing, can create from
potential acquisitions and we remain open to further acquisition opportunities
arising in the future.
Julian Turner, Chief Executive
DEVELOPMENT DIRECTOR'S REPORT
PFP Publishing Ltd
Primary File Publishing Limited was founded in 1986 by three former teachers,
two of them Heads. Their first product was a termly loose-leaf resource for
primary school managers, now called Primary Leadership, whose aim was to provide
practical, accessible and jargon-free support across a wide range of school
management issues.
Shortly afterwards PFP launched the Primary Assembly File, which provides
schools with ideas and materials for assemblies and religious education. Since
then the number of files has grown to nine, reflecting the growing number of
primary teachers with middle-management roles and developing some similar
resources for secondary schools.
At Electric Word we have always been aware of the parallels between our Optimus
imprint and PFP and the quality of the material they have produced. Since the
acquisition though we have been particularlyimpressed by the range and depth of
experience of PFP's editors. Combining the two pools of writers, editors and
advisors has created a very substantial body of expertise including several
current and former heads, school inspectors, practising and former teachers,
independent consultants, education academics and policy-makers.
The commercial benefits of bringing the two businesses together are apparent in
both the characteristics we share (a similar editorial approach and high-quality
subscription-based revenues) and the ways in which we differ - most obviously
that the majority of Optimus newsletters are aimed at secondary schools, whereas
PFP's subscribers are overwhelmingly based in primaries. As a result we have
found few areas of potential overlap or conflict and much potential for
cross-fertilisation of different products.
Organic development
The plan was to invest in new launches in 2003, and several possibilities were
tested in the first quarter. It is part of Electric Word's working method that
the risk on new launches is reduced by a carefully managed process of sifting
and testing. As a result, of the 16 titles launched since the company floated in
March 2000, only one has been closed subsequent to the launch test period.
In total seven newsletter titles started publishing in 2003: three in the health
and fitness market (including our first newsletter launched in a purely
electronic format) and four in education. Many of these areas of interest were
reflected in new conference developments. Perhaps most significant were three
education topics in which conferences led and to some extent prepared the ground
for future publishing opportunities. This is a pattern that we expect to recur
in the future as sector expertise spreads through the business.
Looking ahead, development prospects for 2004 are very exciting, with several
candidates for new newsletters as well as in the new subscription file product
line, conferences and one-off publications. In general, though, it is likely
that the priority will be to make the most of the recent acquisition and also to
balance last year's almost total emphasis on newsletter and conference
developments with a new list of high-value books and loose-leaf products for
2004 and 2005.
Chris Kington, Development Director
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 November 2003
2003 2003 2002 2002
# # # #
TURNOVER 3,049,759 2,494,307
COST OF SALES
Marketing costs (866,989) (830,730)
Other cost of (823,653) (776,480)
sales
--------- ---------
GROSS PROFIT 1,359,117 887,097
Operating expenses (1,133,632) (921,730)
(net)
New product (648,167) (310,333)
development costs
-------- --------
(422,682) (344,966)
Amortisation of (139,626) (139,625)
goodwill
-------- --------
Total (1,921,425) (1,371,688)
administrative -------- --------
expenses
OPERATING LOSS (562,308) (484,591)
Interest 5,013 4,323
receivable
-------- --------
LOSS ON ORDINARY (557,295) (480,268)
ACTIVITIES BEFORE
TAXATION
Taxation 150,000 -
-------- --------
LOSS ON ORDINARY (407,295) (480,268)
ACTIVITIES AFTER
TAXATION
======= =======
LOSS PER SHARE
Basic (0.52)p (0.62)p
====== ======
Diluted (0.52)p (0.62)p
====== ======
The operating loss forthe year arises from the group's continuing operations.
No separate statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the profit and loss account.
RECONCILIATION OF PRE-TAXLOSS TO PRE-TAX PROFIT/(LOSS) BEFORE GOODWILL, NEW
PRODUCT DEVELOPMENT AND EXCEPTIONAL COSTS
2003 2002
# #
Pre-tax loss (557,295) (480,268)
Amortisation of goodwill 139,626 139,625
New product development revenue (231,998) (31,843)
New product development costs 648,167 310,333
Exceptional costs 95,491 -
Pre-tax profit/(loss) before goodwill, new
product
development and exceptional costs 93,991 (62,153)
CONSOLIDATED BALANCE SHEET
for the year ended 30 November 2003
Group Group
2003 2002
# #
FIXED ASSETS
Intangible assets 2,169,999 1,044,234
Tangible assets 40,976 29,833
2,210,975 1,074,067
CURRENT ASSETS
Stocks 95,657 24,797
Debtors 784,031 283,569
Cash at bank and in hand 597,913 559,396
1,477,601 867,762
CREDITORS: Amounts falling due within one
year
(including convertible debt)
Deferred revenue (2,248,299) (1,382,884)
Other creditors (706,612) (422,485)
(2,954,911) (1,805,369)
NET CURRENT LIABILITIES (1,477,310) (937,607)
TOTAL ASSETS LESS CURRENT LIABILITIES 733,665 136,460
CAPITAL AND RESERVES
Called up share capital 945,139 778,739
Share premium account 2,100,805 1,262,705
Merger reserve 105,011 105,011
Profit and loss account (2,417,290) (2,009,995)
SHAREHOLDERS' FUNDS 733,665 136,460
Company Company
2003 2002
# #
FIXED ASSETS
Intangible assets 2,169,999 1,044,234
Tangible assets 40,976 29,833
Investments 35,066 9,829
2,246,041 1,083,896
CURRENT ASSETS
Stocks 95,657 24,797
Debtors 784,031 283,569
Cash at bank and in hand 597,913 559,396
1,477,601 867,762
CREDITORS: Amounts falling due within one
year (including convertible debt)
Deferred revenue (2,248,299) (1,382,884)
Other creditors (734,949) (425,585)
(2,983,248) (1,808,469)
NET CURRENT LIABILITIES (1,505,647) (940,707)
TOTAL ASSETS LESS CURRENT LIABILITIES 740,394 143,189
CAPITAL AND RESERVES
Called up share capital 945,139 778,739
Share premium account 2,100,805 1,262,705
Profit and loss account (2,305,550) (1,898,255)
SHAREHOLDERS' FUNDS 740,394 143,189
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 November 2003
2003 2002
# #
Cash flow from operating activities 145,845 206,473
Returns on investments and servicing of finance 5,013 4,323
Taxation - -
Capital expenditure and financial investment (29,752) (28,620)
Cash inflow before acquistions and financing 121,106 182,176
------ ------
Acquisitions (1,087,089) -
Cash (outflow)/inflow before financing (965,983) 182,176
Financing 1,004,500 8,571
INCREASE IN CASH IN THE YEAR 38,517 190,747
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2003 2002
# #
Increase in cash in the year 38,517 190,747
MOVEMENT IN NET FUNDS IN YEAR 38,517 190,747
NET FUNDS AT 1 DECEMBER 2002 559,396 368,649
NET FUNDS AT 30 NOVEMBER 2003 597,913 559,396
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR TMMLTMMTBBTI
Electric Word (LSE:ELE)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Electric Word (LSE:ELE)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
