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Electric Word

  • BY: Andrew Hore |
  • POSTED: 17/02/2009 |

Electric Word grew its revenues and profits last year and is still optimistic about the current year.

The educational and sporting information publisher says that its forward order book is strong and even advertising in its sports publications is running at record levels.

Chief executive Julian Turner says that the current weak stock market means that acquisitions will be difficult in the short-term. He likens the conditions to those the business encountered in 2002. It describes that as one of the best years the business ever had because of the amount achieved. When the market turned up in the following years Electric Word was able to expand by acquisition from a much stronger base.

The professional education division benefited from acquisitions. Revenues grew by nearly one-quarter and operating profits rose from £1.3m to £1.96m. Operating margins improved from 15% to 18% thanks to the strong sales of the backlist of book titles of one of the acquisitions.

The professional sport division improved its revenues by 8% to £3.83m and operating profits by 3% to £748,000. Online gaming advertising revenues continue to grow.

The MyChild publishing business has been a problematic business. Electric Word has majority control but it does not acquire the rest of the shareholding for a few more weeks. Even so, Turner has already started to restructure the business and closed the magazine. The restructuring cost £340,000 and £700,000 was written off the goodwill of the business.

The trading losses of MyChild led to a reduction in the profit contribution from the newly spun out consumer division. The athlete-focused publications made an increased contribution.

Overall revenues grew 28% to £17.3m in the year to November 2008. Electric Word fell into loss because of the MyChild write-offs. Stripping out restructuring costs, write-offs and other exceptionals, pre-tax profits improved from £1.47m to £1.79m.

The full year figures sparked a 1.25p rise in the Electric Word share price to 4.5p, which values the publisher at £6.5m.

House broker Panmure Gordon forecasts steady earnings per share of 1.07p in the year to November 2009. That means that the shares are trading on less than five times 2008-09 prospective earnings. 

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