News blog

Electric Word

• BY: Andrew Hore |
• POSTED: 17/02/2014 |

Full year figures from specialist information publisher Electric Word indicate some of the progress that the company is making. 

The main switch from paper-based to digital subscription products has been made but the benefits in terms of subscriptions growth take time to show through in revenues due to the recognition of revenue over the subscription period. Deferred revenues in the balance sheet rose from £2.44m to £3.11m at the end of November 2013. Digital and live activities already account for more than 50% of recognised revenues.

The education and health divisions bore the brunt of the costs of the move to digital. Education fell into loss but it did make a second half profit but the move to digital has been completed here. This was after an additional £300,000 of investment in sales and marketing. The majority of English secondary schools are subscription customers. Average sales value per school has increased by 18%. The loss-making Incentive Plus retail business is being wound-down.

Health is still investing in the move to digital products and the product range is being more narrowly focused. Book sales declined but the division made a small, but significantly reduced, profit. The Milton Keynes office is being closed.

The sport and gaming business continues to prosper with underlying operating profit rising from £1.31m to £1.44m on the back of a 19% increase in revenues to £6.15m. The benefits of this spending and the investment in the iGaming North America conference are yet to show through. The equivalent UK exhibition increased revenues by 50% when it was held in February at a larger venue and next year it will move to Olympia so there is further scope for growth. 

In the year to November 2013, revenues improved 2% to £14.6m with growth from sport and gaming offsetting lower revenues elsewhere. The underlying profit fell from £1.09m to £546,000, which is more than £470,000 forecast at the interim stage. That figure excludes amortisation and impairment charges, share based payments and acquisition-related credits and restructuring costs.

Capitalised investment in web design and other intangibles increased from £429,000 to £520,000. There was also £179,000, down from £214,000, capitalised in inventory for book development.

Net debt was £12,000 at the end of November 2013. Electric Word has invested all of the cash it raised to transform the business. Improved profit should generate enough cash to cover capital expenditure this year.

Sport and gaming is likely to continue to grow its contribution but education is likely to continue to lose money for a little while longer. Even so, overall underlying profit is expected to recover this year. Tax losses in the sport operations will continue to minimise the tax payable.

At 3.63p a share, Electric Word is valued at £14.8m.

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