News blog
Electric Word
- BY: Andrew Hore |
- POSTED: 15/02/2012 |
Electric Word went through a period of restructuring and refocusing in the year to November 2011 but it still managed to make an underlying profit.
Overall revenues moved ahead from £14.6m to £15.1m, while the adjusted profit dipped from £1.94m to £1.39m. The reported loss was £4.68m but that is mainly due to asset impairment and restructuring costs. Net debt was £820,000 at the end of November 2011.
The business has been restructured into three divisions: education, health and sport and gaming. All of the business is being refocused with online increasingly replacing print product.
It was the education division that had the main problems last year as schools were uncertain about their budgets and cut back spending. Education made an operating profit of £81,000 on revenues of £5.91m. Conferences performed poorly and the conference portfolio is being reduced. Some publications have been discontinued and a training operation started. The move to online will help margins to recover and should help to improve yields from schools.
The gaming division continues to go from strength to strength with the full benefits of the acquisition of the rest of the affiliate business showing through. The profit contribution was £1.34m, with more than one-quarter relating to the additional affiliate profit, on £4.72m of revenues.
The US provides long-term potential for the gaming division. It appears that online gaming will be allowed in the US and casino operators are already seeking out information about the sector. A US publication is on the cards.
The health division is the newest and last year was a period of integration for the recent acquisitions. Even so it made a profit contribution of £774,000 on revenues of £4.5m. Sales and marketing are being improved and niche health communities are being built up.
At 2.12p a share, up 0.5p, Electric Word is valued at £5.23m. The shares are trading on seven times prospective 2011-12 earnings.
Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFFebruary2012_29.pdf
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