News blog
Electric Word
- BY: Andrew Hore |
- POSTED: 15/02/2011 |
Information publisher Electric Word believes that the healthcare sector could provide it with the growth it needs to offset the falls in other areas of public spending.
Up until now education and sport have been the core customer sectors. The proposed changes in the NHS provide new opportunities for the Radcliffe business bought last November. This part of the business will be the main focus of investment.
Revenues fell 11% to £14.6m in the year to November 2010 with most of the decline coming in the educational sector. Underlying profit was flat at £1.94m thanks to timely cost cutting.
The professional division, which is mainly the educational publishing business, reported a 14% decline in organic revenues, although it made a greater profit contribution last year. The educational demand should recover slowly but the main growth in this division will come from Radcliffe.
The business information division, which includes sport business and online gaming information, continues to grow revenues and profit. This was a quiet year for sport because it was a low point in the bidding cycle for major events, such as the Olympics.
The MyChild business focused on consumers has been rebranded as The School Run and it is building up its database of names. The sports performance business and its sports health professional operations could provide opportunities for some of Radcliffe’s publications.
Net cash was £646,000 at the end of November 2010, although since then just over £1m has been spent on buying out the minority interest in the iGaming business. There is potential deferred consideration of up to £1m for Radcliffe. There is still scope to make further acquisitions.
House broker Panmure Gordon does not expect to make significant changes to its 2010-11 profit forecast of £2.13m. However, last year’s share issue will dilute earnings.
At 4.12p a share, down 0.62p, Electric Word is valued at £12.3m. The shares are trading on just over eight times prospective earnings for 2010-11 even though the earnings per share will be lower.
Download the February edition of AIM Journal at http://www.hubinvest.com/AIMPDFFebruary2011_17.pdf
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