TIDMELE
RNS Number : 7635W
Electric Word PLC
14 February 2017
14 February 2017
ELECTRIC WORD PLC
Preliminary Results to 30 November 2016
Electric Word, the specialist information business providing
information and consultancy to executives working in the business
of Sport, today announced audited results for the year ended 30
November 2016.
HIGHLIGHTS
-- Strategic refocus completed with disposals of the Group's
stake in iGaming Business, Optimus Education and Speechmark
Publishing, following 2015 disposals of Radcliffe Solutions and
Radcliffe Publishing.
-- Transformed Group now solely comprised of SportBusiness, a
growing business focused on information and consultancy in
sport.
-- Group profit for the year of GBP9.2m (2015: GBP2.3m loss)
including GBP10.7m profit (2015: GBP1.8m loss) from discontinued
operations.
-- GBP13.9m net cash inflow from disposals, leaves the Group
with GBP13.0m net cash at 30 November 2016 (2015: GBP0.4m).
-- Continuing revenues increased by 16% to GBP2.8m driven by
subscriptions growth of 18% (2015: GBP2.4m).
-- Adjusted EBITA* from trading activities (before central
costs) increased by 124% to GBP0.34m (2015: GBP0.15m).
-- Central costs increased from GBP0.7m to GBP1.3m due to lower
re-charges to business divisions. Following the disposals, cost
reductions are underway and due to complete in first half of
2017.
* Adjusted figures (note 5) exclude amortisation, impairment of
goodwill and intangible assets, non-recurring items, restructuring
credits and costs, share based payment costs, as well as the tax
impact of those adjusting items and any non-cash tax credits and
charges.
This definition applies throughout the Annual Report and
Financial Statements.
Julian Turner, Chief Executive of Electric Word, commented:
"We ended 2016 in a transformed position. The Group is now
focused solely on the business of sport as a result of the
successful disposals of iGaming Business, Optimus Education and
Speechmark Publishing, and we are able to report a GBP9.2m profit
for the year and a year-end cash balance of GBP13m. Our remaining
business, SportBusiness, achieved revenue growth of 16% and
Adjusted EBITA growth of 124% in 2016. Current trading is in line
with the Board's expectations, with SportBusiness continuing to
perform strongly and planned central cost reductions now taking
effect, not least as a result of our move to new premises later
this month."
Financial Summary
2016 2015
GBP'000 GBP'000
Restated
Revenue from continuing operations 2,780 2,394
----------------------------------------------- ---------- ----------
Gross profit from continuing operations 2,061 1,787
----------------------------------------------- ---------- ----------
Operating loss from continuing operations (1,469) (779)
----------------------------------------------- ---------- ----------
Loss for the financial year from continuing
operations (1,476) (454)
Profit / (loss) for the financial year
from discontinued operations 10,679 (1,838)
----------------------------------------------- ---------- ----------
Total comprehensive profit / (loss) 9,203 (2,292)
=============================================== ========== ==========
Operating loss from continuing operations (1,469) (779)
Amortisation^ 135 124
Non-recurring costs^ 321 -
Share-based payment charges^ 17 66
----------------------------------------------- ---------- ----------
Adjusted EBITA* from continuing operations (996) (589)
=============================================== ========== ==========
Net cash 12,976 449
* Adjusted results are presented to allow shareholders
to gain a further understanding of the trading performance
of the Group. A reconciliation between Operating
profits and losses and Adjusted EBITA is given in
note 5.
^ Details of adjusting items are given on page 7.
-----------------------------------------------------------------------
Comparative figures for the year to 30 November 2015 have been
reclassified to reflect the results of iGaming Business Ltd,
Optimus Education and Speechmark Publishing as discontinued
operations as a result of their disposals. Further details of these
disposals are given in note 9.
The audited report and accounts of the Company for the year
ended 30 November 2016 have been posted to the Company's website at
www.electricwordplc.com. The printed version, together with details
of the Annual General Meeting, will be posted to shareholders in
due course.
S
Enquiries:
Electric Word
Julian Turner, Chief Executive
020 7265 4170
Panmure Gordon
Andrew Potts 020 7459 3600
Notes to Editors
Electric Word plc is a specialist information business providing
market intelligence, decision-critical information and consultancy
through a combination of digital, print and in-person formats.
Following the disposal of Optimus Education, Speechmark
Publishing and the Group's stake in iGaming Business, the Group is
now focused on one market-facing business. SportBusiness Group
provides business insight, information and consultancy to
executives who work in sport, in rights-owning bodies, the media,
sports marketing, sponsorship and club and event management.
CHAIRMAN'S STATEMENT
Dear fellow shareholders,
Over the last few years, the Directors have been focussed on
simplifying the Group in order to maximise value for shareholders
and to direct resources to our businesses with the best prospects.
This has taken much work which has largely come to fruition during
the last year. In January, the Group's interest in iGaming was sold
realising a profit of GBP11.8 million. Following this, a market
review of Optimus, the education business, was completed. As well
as focussing the Optimus business on conferences, the review led
the Board to conclude that the business would benefit from being
part of a larger organisation rather than for the Group to invest
further. In November, this business was sold to Prospects Education
Services, and realised GBP1.6 million gross cash consideration and
GBP0.2 million profit on disposal. Around the same time, it was
decided that Speechmark Publishing, which had been merged into the
Education division, should also be sold and this was effected
through a sale to Taylor & Francis also in November which
resulted in cash consideration of GBP1.85 million and a GBP0.1
million profit. We end the year in a transformed position, with
SportBusiness Group as our single continuing operation, a total
reported profit of GBP9.2 million and with a significant cash
balance.
SportBusiness itself has had a good year, achieving revenue
growth of 16% and Adjusted EBITA growth of 124% as margins improved
from 6% to 12%. This was driven by continued success in two areas
in particular: TV Sports Markets subscriptions revenue (up 13%,
driven by the Rights Tracker premium data add-on) and a
particularly strong year for consultancy revenue in SportBusiness
Intelligence (up 53%). These successes enabled the business to
continue to build the newer Sport Sponsorship Insider product,
where revenue grew 31% from a relatively low base.
Significant progress has been made in 2016 in order to reach the
simplified position in which the Group has ended the year, and the
Group has undergone a great deal of change. In particular, these
disposals led to 55 people leaving the Group, the majority of whom
continued to have a role with the new owners of the disposed
businesses. The Board would like to thank all the people that have
contributed to that process, but particularly our staff. They have
all shown great resilience at a time of rapid change.
Since November, we have been working on bringing the scale of
the Group's infrastructure and central costs to the appropriate
level to support SportBusiness. We will be moving to new offices in
February 2017 and we are introducing a simpler, more flexible
cloud-based suite of technology. This will enable us to make
further cost savings. In 2017, we plan to make further investment
in Sports Sponsorship Insider as well as the SportBusiness online
platform and we are committed to building our consultancy
offering.
At the time that we announced the iGaming disposal, we also
announced that we were considering making a capital return to
shareholders subject to further analysis of the Group's cash
requirements and growth opportunities. This consideration has taken
longer than we expected as it became clear that we needed to
address the performance of the Education division, which led to the
disposal of Optimus as a first priority. We now anticipate updating
shareholders during the first half of 2017.
Andrew Brode
Chairman
13 February 2017
CHIEF EXECUTIVE'S STATEMENT
BUSINESS MODEL AND STRATEGY
Business model
Electric Word plc is a specialist information group supporting
commercial decision-making through a combination of digital, print
and in-person formats.
Our business model starts with the customer. By better
understanding our customers' aspirations and challenges we can
provide increasingly valuable information products that support
their critical decisions and key objectives. We provide
information, expert analysis and consultancy in the form of
subscription websites, magazines, in-depth reports and bespoke
research and consultancy. Within this mix, we favour high-quality
revenue streams from digital subscription services and tools that
connect directly with customer workflows.
We aim to increase the value of the services that we deliver
over the lifetime of each customer relationship. We deliver this by
increasing the penetration of our information within each customer
organisation and by innovating and developing new products in
collaboration with our customers.
Group Strategy
Our business model requires focus and investment, so it is
important that the activities we select for strategic development
are scalable and will ultimately generate high margins.
The deep knowledge of customers and markets needed to deliver
our business model also means that we concentrate on a small number
of market sectors and activities. We are therefore focusing the
business on doing fewer things, each at a greater scale, to seek to
achieve higher margins. Our objective has been a simpler business
that is better able to capitalise on the opportunities in our
markets and the changing technology underpinning our sector. In
2016 we accomplished this with the disposal of our interests in the
online gaming and education sectors. We are now focused on one
market only, the business of sport. As a result of this
simplification of the business we have embarked on a cost reduction
programme to ensure that the cost base is at a level appropriate to
our business objectives.
Operating segments
Following the disposal of iGaming Business, Optimus Education
and Speechmark Publishing, the Directors have restructured the
management of the Group's continuing operations and now organises
its management and reporting around one market-facing division.
GROUP PERFORMANCE
2016 2015
GBP'000 GBP'000
SUMMARY GROUP INCOME STATEMENT Restated
Revenue from continuing operations 2,780 2,394
----------------------------------------------- ---------- ----------
Gross profit from continuing operations 2,061 1,787
----------------------------------------------- ---------- ----------
Operating loss from continuing operations (1,469) (779)
----------------------------------------------- ---------- ----------
Loss for the financial year from continuing
operations (1,476) (454)
Profit / (loss) for the financial year
from discontinued operations 10,679 (1,838)
----------------------------------------------- ---------- ----------
Total comprehensive profit / (loss) 9,203 (2,292)
=============================================== ========== ==========
Comparative figures for the year to 30 November 2015
have been reclassified to reflect the results of iGaming
Business Ltd, Optimus Education and Speechmark Publishing
as discontinued operations as a result of their disposals.
See note 9.
*Adjusted results are presented to allow shareholders
to gain a further understanding of the trading performance
of the Group. A reconciliation between Operating profits
and losses and Adjusted EBITA is given in note 5 and
details of adjusting items are given on page 11.
-----------------------------------------------------------------------
Following the 2016 disposals of iGaming Business, Optimus
Education and Speechmark Publishing, continuing operations now
consist of SportBusiness Group, together with central costs.
Continuing revenues increased by 16% compared to 2015, and this
translated into a 15% increase in gross profits. Operating loss
increased by GBP0.7 million due to GBP0.3 million of non-recurring
costs as explained on page 11, and the continuation of certain
costs which were previously allocated to the businesses which have
been sold.
Profit from discontinued operations recognised in 2016 amounted
to GBP10.7 million, comprising GBP1.4 million post-tax losses,
offset by GBP12.1 million profits on disposal. In 2015,
discontinued operations contributed a loss of GBP1.8 million to
Group results. Further details are given in notes 9 and 26.
CONTINUING OPERATIONS
2015 Change 2015
SUMMARY GBP'000 % GBP'000
Restated
----------------------------------- ---------- ------- ----------
Trading activities
Revenue 2,742 16% 2,366
Adjusted EBITA* (before central
costs) 340 124% 152
Margin 12% 6%
Central costs
Revenue 38 36% 28
Adjusted EBITA* (1,336) 80% (741)
Total continuing operations
Revenue 2,780 16% 2,394
Adjusted EBITA* (996) 69% (589)
Margin -36% -25%
----------------------------------- ---------- ------- ----------
Comparative figures for the year to 30 November 2015
have been reclassified to reflect the results of iGaming
Business Ltd, Optimus Education and Speechmark Publishing
as discontinued operations as a result of their disposals.
See note 9.
*Adjusted results are presented to allow shareholders
to gain a further understanding of the trading performance
of the Group. A reconciliation between Operating profits
and losses and Adjusted EBITA is given in note 5 and
details of adjusting items are given on page 11.
--------------------------------------------------------------------
Trading activities
The Sport division comprises SportBusiness Group (SBG). SBG
provides market information, analysis and advice to professionals
in the global business of sport, particularly on media rights,
sponsorship and event hosting.
Revenue in this division grew by 16% compared to 2015 with 65%
of revenue from live or digital services in 2016 (59% in 2015).
Subscriptions grew by 18% and now account for 69% of the revenue in
this division (67% in 2015). Revenue from bespoke consulting
increased by 53% compared to the prior year and accounted for 15%
of revenues (11% in 2015), whereas advertising was 16% of 2016
divisional revenues (18% in 2015).
Revenues from TV Sports Markets grew by 13% as a result of a
higher average customer value. This is as a result of increased
penetration of users in customer businesses and more subscribers
taking the premium Rights Tracker data service; TV Sports Markets
represented 41% of SBG revenues in 2016.
We are continuing to develop our Sports Sponsorship Insider
product and 2016 revenues have increased by 31% from 2015. This
product is loss making due to its early stage of development and
the fixed costs of building its database of sponsorship deals. We
anticipate that revenue will continue to grow in the medium term
and margins are therefore expected to improve.
Sports Business International magazine generated 34% of SBG
revenues in 2016 (2015: 37%). Approximately 53% of revenues are
subscriptions, and 47% are generated from advertising. This product
earns a comparatively low margin but also provides an effective
marketing channel for our other products and the business as a
whole.
In 2017 SportBusiness Group priorities are to continue to build
average revenue per customer, to further increase the market
penetration of Sports Sponsorship Insider and to invest in building
the capacity of the SportBusiness Intelligence advisory
business.
Central costs
In the continuing operations, adjusted profits from trading
(before central costs) increased from GBP152,000 to GBP340,000.
However, overall losses increased to GBP996,000 due to a higher
central cost component.
These costs represent those central group costs which have not
been recharged to the trading businesses. They include Board fees
and costs related to being both a public company and a Group as
well as some of the costs of central functions such as Finance, HR,
IT and unallocated property costs.
As we have previously reported, 2016 central costs were higher
than 2015 due to higher property costs and costs which were
previously allocated to the businesses which have been sold.
Following the disposals in 2016, we have taken steps to
significantly reduce central costs including staff reductions and a
planned move to a smaller, lower cost office in early 2017. There
has been some cash outflow associated with the cost reductions but
as a result, we anticipate that 2017 central costs will be
significantly lower than the 2016 costs, with the new lower level
being achieved in the second quarter.
Current trading
Current trading is in line with the Board's expectations, with
SportBusiness continuing to perform strongly and planned central
cost reductions coming to fruition.
Julian Turner
Chief Executive
13 February 2017
OPERATING AND FINANCIAL REVIEW
CONTINUING AND DISCONTINUED OPERATIONS
As noted in the Chairman's statement, on 4 January 2016, the
Group disposed of its 70% interest in iGaming Business Ltd. As at
30 November 2015, the net assets of iGaming Business Ltd were
classified as assets held for sale. The Group also disposed of
Optimus Professional Publishing Ltd on 1 November 2016, and the
trade and assets of Speechmark Publishing Ltd on 14 November 2016.
Customary warranties and indemnities were included in the sale and
purchase agreements for these disposals.
Details of the assets and liabilities disposed of, and the
calculation of the profit and loss on disposal, are disclosed in
note 26.
In 2015 the Group disposed of Radcliffe Solutions Ltd and
Radcliffe Publishing businesses, and their results were included in
2015 discontinued operations.
The results of iGaming Business, Optimus and Speechmark have
been classed as discontinued operations in 2016 as they no longer
form part of the Group and our 2015 results have been restated
accordingly. The total net profit from discontinued operations (net
of tax) included in the Consolidated Statement of Comprehensive
Income is GBP10,679,000 (2015: GBP1,838,000 loss).
Further details of results from discontinued operations are
given in notes 9 and 26.
ADJUSTED AND STATUTORY RESULTS
In this report, we refer to adjusted and statutory results.
Adjusted results are prepared to provide a more comparable
indication of the Group's underlying business performance. A full
reconciliation of statutory results to adjusted results is given in
note 5 and a summary of adjusting items affecting continuing
operations is given below.
2016 2015
GBP'000 GBP'000
Restated
Operating loss from continuing operations (1,469) (779)
Amortisation 135 124
Non-recurring costs 321 -
Share-based payment charges 17 66
---------------------------------------------- ---------- ----------
Adjusted EBITA* from continuing operations (996) (589)
============================================== ========== ==========
Amortisation
Amortisation of intangible fixed assets for continuing
operations charged in 2016 amounted to GBP135,000 (2015:
GBP124,000). Amortisation charged against discontinued operations
was GBP337,000 (2015: GBP458,000). Details of intangible fixed
assets are given in note 12.
Impairment charges
There were no impairment charges booked in continuing operations
in 2016 or 2015. An impairment expense of GBP1,000,000 was
recognised in 2015 discontinued operations against the carrying
value of goodwill in the Optimus business.
Non-recurring costs
During 2016, the Group's continuing operations were charged
GBP321,000 of non-recurring costs. These comprise GBP184,00 of
costs associated with the strategic review of the Optimus Education
business and GBP137,000 of redundancy costs arising from staff
restructuring. There were no non-recurring items recognised in
continuing operations in 2015.
Share-based payment charges
Share-based payment charges are recognised to spread the fair
value of each award over the vesting period on a straight-line
basis, after allowing for an estimate of the share awards that will
actually vest. The expense recognised in 2016 was GBP17,000 (2015:
GBP66,000).
OTHER KEY FINANCIAL ITEMS
Capital expenditure
During the year, the Group has invested an additional GBP233,000
in web development and GBP18,000 in software to enhance its digital
products (2015: GBP286,000). The majority of web development spend
this financial year has concentrated on further development of
digital subscription products in Sports Business and enhancements
made to the Education products prior to the disposal of the Optimus
and Speechmark businesses.
The Group also incurred GBP7,000 of additions to property, plant
and equipment, in relation to computer equipment. 2015 additions
amounted to GBP95,000, the majority of which related to office
fit-out costs.
Net cash
As a result of the disposals made in the year, the Group holds
net cash at 30 November 2016 of GBP12,976,000 (2015: net cash of
GBP449,000) - see note 27. The Group has fully paid off its bank
debt which is now GBPnil (2015: GBP94,000 gross bank debt).
Summary cash flow
2016 2015
GBP'000 GBP'000
Restated
--------------------------------------------- --------- ----------
Cash (outflow) / inflow from operating
activities (1,169) 683
Net cash inflow from investing activities 13,685 340
Net cash outflow from financing
activities (83) (477)
--------------------------------------------- --------- ----------
Net increase in cash and cash equivalents 12,433 546
============================================= ========= ==========
Cash flow from operating activities has significantly decreased
in 2016 primarily as a result of the disposal of iGaming Business
in January 2016. iGaming Business was both profitable and generated
relatively high positive cash flows as a result of significant
pre-billing of events. Similarly, the disposal of Optimus in
November 2016 has removed the cash generated from pre-billing of
conferences scheduled for early 2017.
Cash flow from investing activities in 2016 has benefited from
GBP13,909,000 of net cash proceeds from the business disposals
arising in the year (see note 26). Other items include GBP258,000
of fixed asset additions and GBP34,000 of bank interest received as
a result of carrying significant cash balances. 2015 investing
activities included GBP721,000 net proceeds from the disposal of
discontinued activities and GBP381,000 of fixed asset
additions.
2016 cash flows from financing activities include bank loan
repayments of GBP94,000 and GBP11,000 proceeds from the exercise of
share options. 2015 cash flows comprised GBP292,000 of bank loan
repayments and the payment of GBP185,000 of dividends to the
minority shareholder of iGaming Business Ltd.
Earnings per share
Statutory diluted earnings per share from continuing and
discontinued operations are 2.29p (2015: 0.62p loss). Adjusted
diluted loss per share (calculated using adjusted loss from
continuing operations) are 0.24p loss (2015: 0.12p loss).
Dividends
The Directors do not propose a dividend to be paid in respect of
2016 (2015: GBPnil).
William Fawbert
Finance Director
13 February 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 November 2016
2016 2015
Notes GBP'000 GBP'000
Restated
-------------------------------------- ------ --------- ----------
CONTINUING OPERATIONS
Revenue 2 2,780 2,394
Cost of Sales - Direct costs (510) (443)
Cost of Sales - Marketing expenses (209) (164)
-------------------------------------- ------ --------- ----------
GROSS PROFIT 2 2,061 1,787
Other operating expenses 7 (3,029) (2,369)
Non-recurring costs 5 (321) -
Depreciation expense 7 (45) (73)
Amortisation expense 7 (135) (124)
Total administrative expenses (3,530) (2,566)
OPERATING LOSS (1,469) (779)
Finance costs 6 (12) (16)
Finance income 6 34 -
LOSS BEFORE TAX 7 (1,447) (795)
Taxation 8 (29) 341
LOSS FOR THE FINANCIAL YEAR FROM
CONTINUING OPERATIONS (1,476) (454)
DISCONTINUED OPERATIONS
PROFIT / (LOSS) FOR THE FINANCIAL
YEAR FROM DISCONTINUED OPERATIONS,
NET OF TAX 9 10,679 (1,838)
-------------------------------------- ------ --------- ----------
PROFIT / (LOSS) FOR THE FINANCIAL
YEAR 9,203 (2,292)
====================================== ====== ========= ==========
Attributable to:
- Equity holders of the parent 9,330 (2,523)
- Non-controlling interest (127) 231
-------------------------------------- ------ --------- ----------
Total comprehensive PROFIT / (LOSS) 9,203 (2,292)
====================================== ====== ========= ==========
EARNINGS / (LOSS) PER SHARE
From continuing and discontinued
operations
Basic 10 2.29p (0.62)p
Diluted 10 2.22p (0.62)p
From continuing operations
Basic 10 (0.36)p (0.11)p
Diluted 10 (0.36)p (0.11)p
====================================== ====== ========= ==========
2015 results have been restated to show the effect of operations
which have been discontinued in the current period.
Of the profit / (loss) for the financial year from discontinued
operations, GBP10,806,000 (2015: GBP2,069,000 loss) is attributable
to equity holders of the parent and GBP127,000 loss (2015:
GBP231,000 profit) is attributable to the non-controlling
interest.
CONSOLIDATED GROUP AND COMPANY STATEMENTS OF CHANGES IN
EQUITY
For the year ended 30 November 2016
GROUP Reserve
Share for Non-
Share premium Merger own Retained controlling Total
capital account reserve shares earnings Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- --------- --------- --------- ---------- ---------- ------------- ---------
At 30 November
2014 4,076 7,531 105 (123) (4,983) 6,606 81 6,687
Total comprehensive
(loss) / income - - - - (2,523) (2,523) 231 (2,292)
Tax debited
directly to
equity (note
15) - - - - (112) (112) - (112)
4,076 7,531 105 (123) (7,618) 3,971 312 4,283
Dividend paid
by subsidiary - - - - - - (185) (185)
Share based
payments - - - - 66 66 - 66
----------------------- --------- --------- --------- --------- ---------- ---------- ------------- ---------
At 30 November
2015 4,076 7,531 105 (123) (7,552) 4,037 127 4,164
Total comprehensive
income / (loss) - - - - 9,330 9,330 (127) 9,203
4,076 7,531 105 (123) 1,778 13,367 - 13,367
Share issue 11 - - - - 11 - 11
Share based
payments - - - - 17 17 - 17
----------------------- --------- --------- --------- --------- ---------- ---------- ------------- ---------
At 30 November
2016 4,087 7,531 105 (123) 1,795 13,395 - 13,395
======================= ========= ========= ========= ========= ========== ========== ============= =========
COMPANY Share
Share premium Retained Total
capital account earnings equity
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- --------- ---------- ---------
At 30 November 2014 4,076 7,531 (8,371) 3,236
Total comprehensive loss - - (2,035) (2,035)
Tax debited directly to equity
(note 15) - - (112) (112)
4,076 7,531 (10,518) 1,089
Share based payments - - 66 66
-------------------------------- --------- --------- ---------- ---------
At 30 November 2015 4,076 7,531 (10,452) 1,155
Total comprehensive loss - - (7,468) (7,468)
4,076 7,531 (17,920) (6,313)
Share issue 11 - - 11
Share based payments - - 17 17
At 30 November 2016 4,087 7,531 (17,903) (6,285)
================================ ========= ========= ========== =========
CONSOLIDATED GROUP AND COMPANY STATEMENTS OF FINANCIAL
POSITION
As at 30 November 2016
Group Company
2016 2015 2016 2015
Notes GBP'000 GBP'000 GBP'000 GBP'000
Restated Restated
------------------------------- ------ -------- ---------- --------- ----------
ASSETS
Non-current assets
Goodwill 11 1,470 3,050 - -
Intangible assets 12 250 882 47 34
Property, plant and
equipment 13 8 46 7 46
Investments 14 - - 2,988 4,736
Deferred tax assets 15 523 637 - -
------------------------------- ------ -------- ---------- --------- ----------
2,251 4,615 3,042 4,816
Current assets
Inventories 16 - 622 - -
Trade and other receivables 17 1,245 1,987 538 3,741
Cash and cash equivalents 27 12,976 542 12,943 468
------------------------------- ------ -------- ---------- --------- ----------
14,221 3,151 13,481 4,209
Assets classified as
held for sale 9 - 1,544 - -
------------------------------- ------ -------- ---------- --------- ----------
Total current assets 14,221 4,695 13,481 4,209
------------------------------- ------ -------- ---------- --------- ----------
TOTAL ASSETS 16,472 9,310 16,523 9,025
=============================== ====== ======== ========== ========= ==========
EQUITY AND LIABILITIES
Capital and Reserves
Called up ordinary share
capital 23 4,087 4,076 4,087 4,076
Share premium account 7,531 7,531 7,531 7,531
Merger reserve 105 105 - -
Reserve for own shares 24 (123) (123) - -
Retained earnings 1,795 (7,552) (17,903) (10,452)
Equity attributable
to equity holders of
the parent 13,395 4,037 (6,285) 1,155
Non-controlling interest 25 - 127 - -
------------------------------- ------ -------- ---------- --------- ----------
TOTAL EQUITY 13,395 4,164 (6,285) 1,155
------------------------------- ------ -------- ---------- --------- ----------
Non-current liabilities
Borrowings 18 - 28 - 28
Deferred tax liabilities 15 - 50 - -
- 78 - 28
Current liabilities
Borrowings 18 - 66 - 66
Trade payables and other
payables 19 1,710 1,640 22,748 7,716
Provisions 21 60 60 60 60
Deferred income 20 1,307 1,934 - -
------------------------------- ------ -------- ---------- --------- ----------
3,077 3,700 22,808 7,842
Liabilities associated
with assets classified
as held for sale 9 - 1,368 - -
------------------------------- ------ -------- ---------- --------- ----------
Total current liabilities 3,077 5,068 22,808 7,842
------------------------------- ------ -------- ---------- --------- ----------
TOTAL LIABILITIES 3,077 5,146 22,808 7,870
TOTAL EQUITY AND LIABILITIES 16,472 9,310 16,523 9,025
=============================== ====== ======== ========== ========= ==========
These financial statements were approved by the Board of
Directors and authorised for issue on 13 February 2017 and are
signed on its behalf by:
Julian Turner William Fawbert
Chief Executive Finance Director
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
For the year ended 30 November 2016
Group Company
2016 2015 2016 2015
Notes GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------ --------- -------- -------- --------
Profit / (loss) for the
financial year 9,203 (2,292) (7,468) (2,035)
Taxation (10) 1,196 - 136
Amortisation & impairment
expense, reduction in
goodwill 11,12 472 1,582 21 15
Depreciation 13 45 73 45 72
Impairment of investment
in subsidiary 14 - - 1,600 1,644
(Profit) / loss on disposal
of discontinued operations 26 (12,087) 384 (1,085) (121)
Finance costs 12 16 12 16
Finance income (34) - (34) -
Share based payment charges 7 17 66 17 66
Operating cash flows
before movement in working
capital (2,382) 1,025 (6,892) (207)
(Increase) / decrease
in inventories (68) 233 - -
(Increase) / decrease
in receivables (29) (132) 3,203 2,988
Increase / (decrease)
in payables 1,398 (273) 15,032 (2,157)
Cash flow from operating
activities before interest
and tax (1,081) 853 11,343 624
Interest paid 6 (12) (16) (12) (16)
Taxation paid (76) (154) - -
Cash (outflow) / inflow
from operating activities (1,169) 683 11,331 608
----------------------------- ------ --------- -------- -------- --------
INVESTING ACTIVITIES
Purchase of property
plant and equipment 13 (7) (95) (6) (95)
Purchase of intangible
assets 12 (251) (286) (34) (26)
Net proceeds from disposal
of discontinued operations 26 13,909 721 1,233 121
Interest received 6 34 - 34 -
Net cash inflow from
investing activities 13,685 340 1,227 -
----------------------------- ------ --------- -------- -------- --------
FINANCING
Proceeds from issuance
of ordinary shares 23 11 - 11 -
Repayments of borrowings 27 (94) (292) (94) (292)
Payment of dividend to - (185) - -
minority interest
Net cash outflow from
financing activities (83) (477) (83) (292)
----------------------------- ------ --------- -------- -------- --------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 12,433 546 12,475 316
CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF YEAR 543 (3) 468 152
CASH AND CASH EQUIVALENTS
AT OF YEAR 27 12,976 543 12,943 468
============================= ====== ========= ======== ======== ========
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 November 2016
1. ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented. There have
been no changes to accounting policies in the period.
BASIS OF PREPARATION
The financial statements have been prepared in accordance with
International Financial Reporting Standards as endorsed by the
European Union ("IFRS"), IFRIC interpretations and the Companies
Act 2006 applicable to companies reporting under IFRS.
The financial statements of the Group and the Parent Company
have been prepared under the historical cost convention and in
accordance with applicable accounting standards.
A discontinued operation is a component of the Group's business,
the operations and cash flows of which represents a separate major
line of business. Classification of a discontinued operation occurs
at the earlier of disposal or when the operation meets the criteria
to be classified as held for sale. When an operation is classified
as a discontinued operation, the comparative statement of profit or
loss is restated as if the operation had been discontinued from the
start of the prior year. Comparative figures for the year to 30
November 2015 have been reclassified to reflect the results of the
Radcliffe Solutions, Radcliffe Publishing, iGaming, Optimus and
Speechmark businesses as discontinued operations as a result of
their disposals.
As permitted by Section 408 of the Companies Act 2006, no
separate income statement is presented for the Company. The
Company's loss for the year was GBP7,468,000 (2015: GBP2,035,000
loss).
Operating profit is defined as profit before tax but excluding
net finance and related costs and investment income.
GOING CONCERN
The Group has made a profit for the year of GBP9,203,000 (2015:
GBP2,292,000 loss) and at 30 November 2016 had net assets of
GBP13,395,000 (2015: GBP4,164,000) and net current assets of
GBP11,144,000 (2015: GBP373,000 net current liabilities). The level
of bank debt has reduced to GBPnil (2015: GBP94,000). The Directors
have prepared group cash flow forecasts for the period ending 30
November 2019, which take account of known factors in the business
including the change of office lease in February 2017. These
forecasts indicate that the Group will continue to meet its
liabilities as they fall due for the foreseeable future. The
business is currently trading in line with these forecasts. In the
event of forecast trading levels not being met due to a weaker
economic climate than forecast, the Directors have the scope to
take further actions to enable the group to meet its liabilities as
they fall due for the foreseeable future and for it to remain
within its financial covenants and financial facilities. On this
basis the Directors believe that it remains appropriate to prepare
the financial statements on a going concern basis.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Within the consolidated and company financial statements there
are a number of areas where management has to include their best
estimate of likely outcomes based on their first-hand knowledge of
the markets and situation. The preparation of consolidated and
company financial statements will require management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates.
In preparing these consolidated and company financial
statements, the significant judgements made by management in
applying the accounting policies and the key sources of estimation
uncertainty were:
-- Valuation and asset lives of intangible assets - which are
based on management's considered opinion of what has been bought
and what value it is to the Group in the future. Valuation
methodologies include the use of discounted cash flows, revenue and
profit multiples, whilst asset lives are estimated on the type of
asset acquired or generated and range between three and ten
years;
-- Impairment of assets - assets are subject to at least annual
impairment reviews and testing, and the running of these tests and
the numbers that form part of them will be based as far as possible
on actual known results but will by nature include predictions of
future outcomes. The asset carrying values are compared to
estimates of the assets' value in use. This value in use is
calculated by looking at the cash generating units underlying the
assets and management estimating the future cash flows after
applying a suitable discount factor. The estimates of future cash
flows are based on detailed forecasts produced by management.
Assumptions on the goodwill assets are given in note 11;
-- Provisioning: both trade receivables for bad debt and
inventories for returns and obsolescence are reviewed for potential
write down. The provisions created to cover these areas are based
on managements' experience and considered opinion of the assets'
current value;
-- Contingent liabilities: liabilities are recognised when the
Group has a present obligation (legal or constructive) as a result
of a past event, it is probable that the Group will be required to
settle that obligation and a reliable estimate can be made of the
amount of the obligation;
-- Valuation of share based payments - which are calculated from
modelling including estimates of non-transferability, exercise
restrictions, and behavioural considerations, including such
factors as the volatility of the Company's share price. These
inputs and the methods are set out in note 28;
-- Deferred tax: both assets and liabilities require judgement
in determining the amounts to be recognised, in particular the
extent to which assets should be recognised in consideration of the
timing and level of future taxable income.
2 REVENUE AND COST OF SALES
An analysis of the Group's income from continuing operations is
as follows:
2016 2015
GBP'000 GBP'000
Restated
------------------------------------ -------- ----------
Revenue
Sale of goods 16 76
Rendering of services 2,764 2,318
------------------------------------ -------- ----------
2,780 2,394
Cost of sales
Raw materials and consumables used (510) (443)
Marketing costs (209) (164)
------------------------------------ -------- ----------
(719) (607)
Gross profit 2,061 1,787
------------------------------------ -------- ----------
3 SEGMENTAL ANALYSIS
Following the disposal of iGaming Business in January 2016 and
the Optimus and Speechmark businesses in November 2016, the
Directors have restructured the management of the Group's
continuing operations and now organises its management and
reporting around the Sport Division only. As part of this, the
Directors continue to budget and report Group central costs
separately from the trading activities in order to facilitate
tighter management of these costs.
Operating profit is defined in note 1. The analysis below
includes adjusted operating profit (note 5) to allow shareholders
to gain a further understanding of the trading performance of the
Group and is considered by the Board alongside operating profit and
profit before tax to assess performance and review strategy. The
information in the table below excludes amounts relating to
discontinued activities and 2015 comparatives have been restated
accordingly
Year ended 30 Year ended 30
November 2016 November 2015
- restated
Trading Central Total Trading Central Total
costs Sport costs Sport
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- -------- -------- -------- --------
Revenue 2,742 38 2,780 2,366 28 2,394
-------------------- -------- -------- -------- -------- -------- --------
Adjusted
operating
(loss) /
profit (note
5) 340 (1,336) (996) 152 (741) (589)
Share based
payment
charges - (17) (17) - (66) (66)
Non-recurring
costs (note
5) - (321) (321) - - -
Amortisation
of intangible
assets (115) (20) (135) (112) (12) (124)
Operating
(loss) /
profit 225 (1,694) (1,469) 40 (819) (779)
Finance
costs - (12) (12) - (16) (16)
Finance
income - 34 34 - - -
-------------------- -------- -------- -------- -------- -------- --------
(Loss) /
profit before
tax 225 (1,672) (1,447) 40 (835) (795)
==================== ======== ======== ======== ======== ======== ========
Depreciation
and amortisation 115 65 180 112 85 197
Expenditure
on intangible
fixed assets 126 34 160 81 26 107
Expenditure
on property,
plant and
equipment - 6 6 - 95 95
3 SEGMENTAL ANALYSIS (continued)
Analysis by market sector Assets Liabilities
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Restated Restated
----------------------------- -------- ---------- -------- ----------
Trading 2,681 2,699 1,477 1,108
Central costs 13,421 855 1,005 735
----------------------------- -------- ---------- -------- ----------
Total Continuing operations 16,102 3,554 2,482 1,843
Discontinued operations 370 5,756 595 3,303
----------------------------- -------- ---------- -------- ----------
16,472 9,310 3,077 5,146
============================= ======== ========== ======== ==========
The UK is the Group's country of domicile and the majority of
revenues from external customers is generated there. There are no
inter-segmental sales. An analysis of continuing revenues split by
customers' country of origin is given below.
2016 2015
GBP'000 GBP'000
----------------------- -------- --------
UK 1,085 898
Europe (excluding UK) 994 1,058
North America 189 127
Rest of the World 512 311
2,780 2,394
======================= ======== ========
4 EMPLOYEES
The average monthly number of persons (including directors)
employed by the Group during the year, analysed by category, was as
follows:
2016 2015
Number Number
------------------------------- ------- -------
Sales and marketing 33 45
Content and production 34 49
Administration and management 27 33
94 127
=============================== ======= =======
Their aggregate remuneration comprised:
2016 2015
GBP'000 GBP'000
------------------------------------- -------- --------
Wages and salaries 4,411 5,136
Social security costs 451 518
Pension costs 69 86
Equity-settled share-based payments
and related costs 17 66
4,948 5,806
===================================== ======== ========
This remuneration is included in other operating expenses except
for: GBP1,845,000 (2015: GBP3,156,000) in discontinued operations,
GBP53,000 (2015: GBP24,000) included in cost of sales - direct
costs; GBP132,000 (2015: GBP128,000) included in cost of sales -
marketing expenses; GBP38.000 (2015: GBPnil) included in
restructuring costs and GBP106,000 (2015: GBP170,000) capitalised
in intangible fixed assets for web site development.
The Group considers that the Board of Directors are the key
management personnel. Their remuneration is summarised in the
Remuneration Report on page 19.
5 ADJUSTED RESULTS
Adjusted results are presented to allow shareholders to gain a
further understanding of the trading performance of the Group.
Results are adjusted for items not considered by management to be
part of the underlying trends in the business together with the
related tax effect of those items. The adjustments add back items
which have no cash impact or are not trade related and of a
non-recurring type.
Adjusted figures exclude amortisation and impairment of goodwill
and intangible assets, restructuring and acquisition-related costs,
share based payment costs, non-recurring items and as the tax
impact of those adjusting items and any non-cash tax charges.
The Group disposed of the Radcliffe Solutions Ltd and the
Radcliffe Publishing business during 2015, whilst the Group's 70%
stake in iGaming Business Ltd and the Optimus and Speechmark
businesses were disposed of in 2016. The results of these
businesses have therefore been classed as discontinued and excluded
from adjusted amounts in both 2016 and 2015 - see note 9.
A reconciliation of operating profit to Adjusted EBITA split
between continuing and discontinued operation is given in the table
below. Further detail on discontinued operations is given in note
9.
2016 2016 2016 2015 2015 2015
Continuing Disc'd Total Continuing Disc'd Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Restated Restated Restated
-------------------- ------ ------------ ----------- ----------- ------------ ---------- ----------
Operating profit
/ (loss) 7 (1,469) 10,640 9,171 (779) (301) (1,080)
-------------------- ------ ------------ ----------- ----------- ------------ ---------- ----------
Amortisation
of intangible
assets 7 135 337 472 124 458 582
Impairment expense 11,12 - - - - 1,000 1,000
Non-recurring
costs 321 209 530 - (15) (15)
(Profit) / loss
on disposal
of subsidiaries - (12,087) (12,087) - 384 384
Share based
payment charges 7 17 - 17 66 - 66
Adjusting items
to operating
profit 473 (11,541) (11,068) 190 1,827 2,017
Adjusted operating
(loss) / profit
for the year
(Adjusted EBITA) (996) (901) (1,897) (589) 1,526 937
Depreciation 7 45 - 45 73 - 73
Adjusted (loss)
/ earnings before
interest, tax,
depreciation
and amortisation
for the year (951) (901) (1,852) (516) 1,526 1,010
==================== ====== ============ =========== =========== ============ ========== ==========
During 2016, the Group incurred GBP530,000 of non-recurring
costs split as GBP321,000 against the continuing operations and
GBP209,000 against discontinued operations. Those charged to
continuing operations comprise GBP184,000 of costs associated with
the strategic review of the Optimus Education business and
GBP137,000 of redundancy costs arising from staff restructuring.
The GBP209,000 charge against discontinued operations relates to
GBP135,000 of stock-write offs, GBP85,000 of staff restructuring
costs and GBP11,000 of other credits.
An impairment expense of GBP1,000,000 was recognised in 2015
discontinued operations against the carrying value of goodwill in
the Optimus business.
5 ADJUSTED RESULTS (continued)
2016 2015
GBP'000 GBP'000
Restated
--------------------------------------------- ---------- ----------
Loss before tax for the year from
continuing operations (1,447) (795)
---------------------------------------------- ---------- ----------
Adjusting items to operating loss 473 190
Adjusting items to loss before
tax 473 190
Adjusted loss before tax for the
year from continuing operations (974) (605)
============================================== ========== ==========
2016 2015
GBP'000 GBP'000
Restated
--------------------------------------------- ---------- ----------
Profit / (loss) for the year attributable
to equity holders of the parent 9,330 (2,523)
(Deduct profit) / add loss for
the year from discontinued operations
attributable to equity holders
of the parent (10,806) 2,069
---------------------------------------------- ---------- ----------
Loss for the year attributable
to equity holders of the parent
from continuing operations (1,476) (454)
---------------------------------------------- ---------- ----------
Adjusting items to operating loss 473 190
Exclude movements on deferred tax
assets and liabilities taken to
income statement 29 (231)
Adjusting items to profit for the
year 502 (41)
Adjusted loss for the year (974) (495)
============================================== ========== ==========
6 FINANCE COSTS AND FINANCE INCOME
Finance costs 2016 2015
GBP'000 GBP'000
------------------------------------ -------- --------
Interest payable on bank loans and
overdrafts 12 16
==================================== ======== ========
Finance income 2016 2015
GBP'000 GBP'000
------------------------------------- -------- --------
Interest receivable on bank deposits 34 -
===================================== ======== ========
7 LOSS BEFORE TAXATION FROM CONTINUING OPERATIONS
2016 2015
GBP'000 GBP'000
Restated
----------------------------------------- -------- ----------
Loss before taxation from continuing
operations is stated after charging:
Depreciation and amounts written off
property, plant and equipment - owned
assets 45 73
Amortisation of intangible fixed assets 135 124
Operating lease rentals:
- Land and buildings 161 128
- Plant and equipment 4 6
Share based payment charges 17 66
========================================= ======== ==========
Other operating expenses as disclosed on the face of the income
statement include staff costs (note 4) of GBP2,774,000 (2015:
GBP2,328,000) and premises costs of GBP483,000 (2015:
GBP463,000).
There were no impairment charges recognised in continuing
operations in either 2015 or 2016. In 2015, discontinued operations
included goodwill impairment charges of GBP1,000,000 were
recognised in respect of Optimus Education.
7 LOSS BEFORE TAXATION FROM CONTINUING OPERATIONS
(continued)
Amounts payable to KPMG LLP and their associates in respect of
both audit and non-audit services are as follows:
2016 2015
GBP'000 GBP'000
------------------------------------------- -------- --------
Fees payable to the company's auditor
for the audit of the company's annual
accounts 34 31
Fees payable to the company's auditor
and its associates for other services:
- the audit of the company's subsidiaries
pursuant to legislation 24 37
- other services relating to taxation 39 10
97 78
=========================================== ======== ========
8 TAXATION
2016 2015
GBP'000 GBP'000
Restated
------------------------------------------- -------- ----------
Current tax:
UK corporation tax on profits of the - -
year from continuing operations
Total current tax - -
Deferred taxation:
Origination and reversal of timing
differences 29 (341)
Total deferred tax 29 (341)
Tax charge / (credit) on loss on ordinary
activities from continuing operations 29 (341)
=========================================== ======== ==========
UK corporation tax is calculated at 20.0% (2015: 20.3% as 21%
for the first four months of the financial year and then 20% for
the remainder) of the estimated assessable profit for the year.
Reductions in the UK corporation tax rate from 20% to 19%
(effective from 1 April 2017) and 18% (effective from 1 April 2020)
were substantively enacted on 26 October 2015. A further reduction
to the UK corporation tax rate was announced in the 2016 Budget to
further reduce the tax rate to 17% (to be effective from 1 April
2020). This reduction was substantively enacted on 15 September
2016. The deferred tax assets and liabilities at the balance sheet
date have been calculated based on the rate of 17% substantively
enacted at the balance sheet date.
The total tax charge can be reconciled to the accounting profit
as follows:
Factors affecting tax charge for the 2016 2015
year
GBP'000 GBP'000
Restated
---------------------------------------- -------- ----------
Loss on ordinary activities before tax
from continuing operations (1,447) (795)
Loss on ordinary activities multiplied
at the standard rate of corporation
tax in the UK of 20.0% (2015 - 20.3%) (289) (162)
Effect of:
Charges / (credits) not deductible for
tax purposes 20 (116)
Recognition of / (reduction to) prior
year tax losses - (152)
Deferred tax not recognised 276 -
Change in tax rate 22 89
Tax charge / (credit) for the year 29 (341)
======================================== ======== ==========
9 DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
On 4 January 2016, the Group disposed of its 70%
interest in iGaming Business Ltd for cash consideration
of GBP14,549,000. As at 30 November 2015, the net
assets of iGaming Business Ltd were classified
as assets held for sale.
On 1 November 2016, the Group disposed of Optimus
Professional Publishing Ltd for cash consideration
of GBP1,513,000 plus a completion accounts adjustment
of GBP51,000. Total cash consideration was therefore
GBP1,564,000.
On 14 November 2016, the Group disposed of the
trade and assets of Speechmark Publishing Ltd for
cash consideration of GBP1,850,000, GBP185,000
of which is due to be paid on 14 November 2017.
Details of the assets and liabilities disposed
of, and the calculation of the profit and loss
on disposal, are disclosed in note 26.
In 2015 the Group disposed of Radcliffe Solutions
Ltd and Radcliffe Publishing businesses.
The combined results of all discontinued operations
included in the results for the current and preceding
year are set out below. The comparative profit
and cash flows from discontinued operations have
been restated to include those operations classified
as discontinued in the current year.
2016 2015
Profit for the year from discontinued GBP'000 GBP'000
activities Restated
---------------------------------------------- -------- ----------
Revenue 3,832 11,413
Expenses (5,279) (10,331)
Impairment losses - (1,000)
(Loss) / profit before tax (1,447) 82
Attributable tax credit / (charge) 39 (1,536)
---------------------------------------------- -------- ----------
(1,408) (1,454)
Profit / (loss) on disposal of operation
(note 26) 12,087 (384)
---------------------------------------------- -------- ----------
Profit / (loss) for the year from
discontinued operations 10,679 (1,838)
============================================== ======== ==========
The total loss before tax of GBP1,447,000 comprises
a loss from iGaming of GBP35,000, GBP1,208,000
losses from Optimus, GBP208,000 losses from Speechmark
and GBP4,000 of profits from disposals made in
prior years. In 2015, profit before tax of GBP82,000
comprised iGaming profits of GBP2,374,000, GBP1,842,000
losses from Optimus, GBP249,000 losses from Speechmark,
GBP222,000 of Radcliffe Publishing losses, GBP17,000
of profits from Radcliffe Solutions and GBP4,000
profits from other disposals. Central costs of
GBP812,000 were allocated to discontinued businesses
in 2016 (2015: GBP1,319,000).
The 2015 tax charge attributable to discontinued
operations includes GBP1,163,000 arising from de-recognition
of a deferred tax asset as a result of the disposal
of iGaming Business. In accordance with International
Financial Reporting Standards, the deferred tax
charge was recognised at 30 November 2015, despite
the disposal after the balance sheet date.
2016 2015
Cash flows from discontinued activities GBP'000 GBP'000
---------------------------------------------- -------- ----------
Net cash (outflows) / inflows from
operating activities (1,969) 689
Net cash inflows from investing activities 13,818 581
Net cash outflows from financing - (185)
============================================== ======== ==========
Net cash inflows / (outflows) 11,849 (1,085)
============================================== ======== ==========
9 DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
(continued)
As noted above, at 30 November 2015, the net assets related to
iGaming Business Ltd were classified as held for sale. The major
classes of assets and liabilities classed as held for sale were as
follows:
2015
GBP'000
------------------------------------------- --------
Goodwill 500
Other intangible assets 75
Trade receivables 638
Prepayments and accrued income 330
Cash and bank balances 1
------------------------------------------- --------
Assets classified as held for sale 1,544
------------------------------------------- --------
Trade payables 346
Taxation 164
Other payables 28
Accruals 380
Deferred income 437
Deferred taxation 13
------------------------------------------- --------
Liabilities associated with assets held
for sale 1,368
------------------------------------------- --------
Net assets classified as held for sale 176
=========================================== ========
10 EARNINGS PER ORDINARY SHARE
The calculation of earnings per ordinary share is based on the
following:
2016 2015
Number Number
------------------------------------- ------------ ------------
Weighted average number of shares 408,170,695 407,590,795
Adjustment in respect of SIP shares (337,874) (619,749)
Weighted average number of shares
used in basic earnings per share
calculations 407,832,821 406,971,046
-------------------------------------- ------------ ------------
Dilutive effect of share options 12,649,261 13,265,034
Weighted average number of shares
used in diluted earnings per share
calculations 420,482,082 420,236,080
-------------------------------------- ------------ ------------
2016 2015
GBP'000 GBP'000
Restated
---------------------------------------------- ----------- ----------
Profit / (loss) for the year from
continuing and discontinued operations
attributable to equity holders of
the parent 9,330 (2,523)
(Deduct profit) / add loss from discontinued
operations attributable to equity
holders of the parent (10,806) 2,069
----------------------------------------------- ----------- ----------
Loss for the period from continuing
operations (1,476) (454)
Adjustment to earnings (Note 5) 502 (41)
----------------------------------------------- ----------- ----------
Adjusted loss for the period from
continuing operations (974) (495)
----------------------------------------------- ----------- ----------
10 EARNINGS PER ORDINARY SHARE (continued)
2016 2015
GBP'000 GBP'000
Restated
Earnings / (loss) per share from
continuing and discontinued operations
Basic earnings / (loss) per share 2.29p (0.62)p
============================================ ======== ==========
Diluted earnings / (loss) per share 2.22p (0.62)p
============================================ ======== ==========
Loss per share from continuing operations
Basic loss per share (0.36)p (0.11)p
============================================ ======== ==========
Diluted loss per share (0.36)p (0.11)p
============================================ ======== ==========
Earnings / (loss) per share from
discontinued operations
Basic earnings / (loss) per share 2.65p (0.51)p
============================================ ======== ==========
Diluted earnings / (loss) per share 2.57p (0.51)p
============================================ ======== ==========
Adjusted loss per share
Adjusted basic loss per share (0.24)p (0.12)p
============================================ ======== ==========
Adjusted diluted loss per share (0.24)p (0.12)p
============================================ ======== ==========
11 GOODWILL
Group
2016 2015
GBP'000 GBP'000
------------------------------------- -------- --------
Cost
1 December 9,978 10,797
Disposals (9,008) (319)
Reclassified as held for sale (note
9) 500 (500)
30 November 1,470 9,978
------------------------------------- -------- --------
Accumulated impairment provisions
1 December 6,928 5,928
Impairment charges for the year - 1,000
Disposals (6,928) -
30 November - 6,928
------------------------------------- -------- --------
Carrying amount
30 November 1,470 3,050
===================================== ======== ========
Goodwill by segment
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating units ('CGUs') that are
expected to benefit from that business combination. CGU are
identified as individual operating units with specific market and
product types, usually derived from the original acquisition. The
carrying amount has been allocated to the operating segments as
follows:
2015 Reclassified Disposals 2015
from held
for sale
GBP'000 GBP'000 GBP'000 GBP'000
Restated
-------------- ---------- ------------- ---------- --------
Sport 1,470 - - 1,470
Discontinued
operations 1,580 500 (2,080) -
--------------- ---------- ------------- ---------- --------
3,050 500 (2,080) 1,470
============== ========== ============= ========== ========
Goodwill has been restated in the table above to reflect the
change in reportable operating segments described in note 3. During
the year, goodwill has been reduced by GBP500,000 as a result of
the sale of iGaming Business (classified as held for sale in 2015);
GBP874,000 as a result of the Optimus disposal and GBP706,000
following the sale of Speechmark.
Impairment testing methodology
The Group tests each CGU's goodwill for impairment annually or
more frequently if there are indications that goodwill might be
impaired. There were no impairments recognised in 2016.
The recoverable amounts of the CGU are determined from value in
use calculations which are estimated using a discounted cash flow
model. The Group prepares cash flow forecasts derived from the most
recent financial budgets approved by management for the next 3
years and extrapolates further cash flows based on estimated
long-term growth of 3%. The rates do not exceed the average
long-term growth rate for the relevant markets. The pre-tax rate
used to discount the cash flows for SportBusiness is 8.5% which is
consistent with 2015.
11 GOODWILL (continued)
The key assumptions across the CGU for the value in use
calculations are those regarding revenue growth, profit margin,
cash conversion, discount rate and terminal growth rate. The Group
has formally approved the budgets used for the initial three years.
The terminal growth rates are based on industry growth forecasts.
Management estimate discount rates using pre-tax rates that reflect
the Group's weighted average cost of capital and the risks specific
to the CGU.
Management has also conducted sensitivity analysis taking into
consideration the impact of reasonably possible changes in the
discount factor, budgeted cash flows and growth assumptions. An
increase in the discount factor to 11.95% and 0% growth would not
give rise to any further impairments.
12 INTANGIBLE ASSETS
Group Company
Other
Publishing acquired Web Computer Web Computer
titles assets design software Total design software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
Cost
1 December
2014 3,243 1,235 1,854 200 6,532 176 142 318
Additions - - 286 - 286 26 - 26
Disposals (714) - (321) - (1,035) - - -
Written off (230) - (279) (181) (690) (122) (142) (264)
Reclassified
as held for
sale (note
9) - - (166) - (166) - - -
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
30 November
2015 2,299 1,235 1,374 19 4,927 80 - 80
Reclassified
from held
for sale
(note 9) - - 166 - 166 - - -
Additions - - 233 18 251 27 7 34
Disposals (2,299) - (1,048) - (3,347) - - -
Written off (1,235) (113) (18) (1,366) - - -
30 November
2016 - - 612 19 631 107 7 114
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
Amortisation
and impairment
1 December
2014 2,444 1,235 899 200 4,778 154 141 295
Charge for
the year 200 - 382 - 582 14 1 15
Disposals (395) - (139) - (534) - - -
Written off (230) - (279) (181) (690) (122) (142) (264)
Reclassified
as held for
sale (note
9) - - (91) - (91) - - -
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
30 November
2015 2,019 1,235 772 19 4,045 46 - 46
Reclassified
from held
for sale
(note 9) - - 91 - 91 - - -
Charge for
the year 150 - 319 3 472 20 1 21
Disposals (2,169) - (692) - (2,861) - - -
Written off - (1,235) (113) (18) (1,366) - - -
30 November
2016 - - 377 4 381 66 1 67
----------------- ----------- ---------- -------- ---------- -------- -------- ---------- --------
Carrying
amount
30 November
2016 - - 235 15 250 41 6 47
================= =========== ========== ======== ========== ======== ======== ========== ========
30 November
2015 280 - 602 - 882 34 - 34
================= =========== ========== ======== ========== ======== ======== ========== ========
During the year, the Group has written off GBP1,235,000 of
intangible assets and amortisation associated with old assets that
have GBPnil net book value and are no longer used. Major additions
in 2016 include the development of the Sport subscription products
and enhancement of the Education products prior to the disposal of
the Optimus and Speechmark businesses.
The Group tests the assets annually for impairment or more
frequently if there are indications that they might be impaired
following the impairment methodology set out in note 11. Management
has also conducted sensitivity analysis taking into consideration
the impact of reasonably possible changes in the discount factor,
budgeted cash flows and growth assumptions. The results of this
analysis indicate no impairments are required.
13 PROPERTY, PLANT AND EQUIPMENT
Group Leasehold Fixtures,
property Computer fittings
improvements equipment & equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------------- ----------- ------------- --------
Cost
1 December 2014 113 65 81 259
Additions 82 13 - 95
Written off (113) (60) (68) (241)
30 November 2015 82 18 13 113
Additions - 7 - 7
Disposals - - (6) (6)
30 November 2016 82 25 7 114
------------------- -------------- ----------- ------------- --------
Depreciation and
impairment
1 December 2014 101 59 75 235
Charged in the
year 61 9 3 73
Written off (113) (60) (68) (241)
------------------- -------------- ----------- ------------- --------
30 November 2015 49 8 10 67
Charged in the
year 33 9 3 45
Disposals - - (6) (6)
30 November 2016 82 17 7 106
------------------- -------------- ----------- ------------- --------
Net book value
30 November 2016 - 8 - 8
=================== ============== =========== ============= ========
30 November 2015 33 10 3 46
=================== ============== =========== ============= ========
Company Leasehold Fixtures,
property Computer fittings
improvements equipment & equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------- --- -------------- ----------- ------------- --------
Cost
1 December
2014 94 61 59 214
Additions 82 13 - 95
Written off (94) (57) (52) (203)
----------------- -------------- ----------- ------------- --------
30 November
2015 82 17 7 106
Additions - 6 - 6
30 November
2016 82 23 7 112
--------------------- -------------- ----------- ------------- --------
Depreciation
30 November
2014 83 55 53 191
Charged in
the year 60 9 3 72
Written off (94) (57) (52) (203)
----------------- -------------- ----------- ------------- --------
30 November
2015 49 7 4 60
Charged in
the year 33 9 3 45
30 November
2016 82 16 7 105
--------------------- -------------- ----------- ------------- --------
Net book value
30 November
2016 - 7 - 7
===================== ============== =========== ============= ========
30 November
2015 33 10 3 46
===================== ============== =========== ============= ========
14 INVESTMENTS
The Company holds more than 20% of the share capital of the
following companies, all of which are incorporated in England
Class % of Nature of
Subsidiary of shareholding shares business
undertakings: held
----------------------------- ----------------- -------- ----------
SBG Companies Ordinary 100% Publisher
Limited
Incentive Ordinary 100% Dormant
Plus Limited
P2P Publishing Limited Ordinary 100% Dormant
Speechmark Publishing Ordinary 100% Dormant
Limited
Radcliffe Publishing Limited Ordinary 100% Dormant
Company 2016 2015
Shares Loans Shares Loans
in subsidiary to subsidiary in subsidiary to subsidiary
undertakings undertakings Total undertakings undertakings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------------- --------------- -------- --------------- --------------- --------
Cost:
At 1 December 13,311 2,595 15,906 13,791 2,595 16,386
Disposal (148) - (148) (480) - (480)
----------------- --------------- --------------- -------- --------------- --------------- --------
At 30 November 13,163 2,595 15,758 13,311 2,595 15,906
----------------- --------------- --------------- -------- --------------- --------------- --------
Amounts written
off:
At 1 December 11,170 - 11,170 10,006 - 10,006
Impairment
in the year 1,600 - 1,600 1,644 - 1,644
Disposal - - - (480) - (480)
----------------- --------------- --------------- -------- --------------- --------------- --------
At 30 November 12,770 - 12,770 11,170 - 11,170
----------------- --------------- --------------- -------- --------------- --------------- --------
Net book
value:
----------------- --------------- --------------- -------- --------------- --------------- --------
At 30 November 393 2,595 2,988 2,141 2,595 4,736
================= =============== =============== ======== =============== =============== ========
The Group tests the investments annually for impairment or more
frequently if there are indications that they might be impaired
following the impairment methodology set out in note 11. In 2015
the investment in Radcliffe Publishing Ltd was fully impaired as a
result of its sale from GBP1,227,000 to GBPnil and the investment
in Speechmark was impaired by GBP417,000 to GBP1,600,000 to reflect
the Board's estimate of its net realisable value. In 2016,
GBP148,000 of investments were disposed of as a result of the
Optimus sale, and the investment in Speechmark was fully impaired
from GBP1,600,000 to GBPnil following the disposal of its trade and
assets. Management has also conducted sensitivity analysis taking
into consideration the impact of reasonably possible changes in the
discount factor, budgeted cash flows and growth assumptions. The
results of this analysis indicate no further impairments are
required.
15 DEFERRED TAX
GROUP Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- -------- --------
Deferred tax assets
Non-current 523 637 - -
----------------------------- -------- -------- -------- --------
523 637 - -
----------------------------- -------- -------- -------- --------
Deferred tax liabilities
Non-current - (63) - -
Classified as liabilities
associated with assets - 13 - -
held for sale (note 9)
----------------------------- -------- -------- -------- --------
- (50) - -
----------------------------- -------- -------- -------- --------
Net position at 30 November 523 587 - -
============================= ======== ======== ======== ========
Group Goodwill
and
Capital Tax Intangible
allowances losses assets Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------ -------- ------------ -------- --------
1 December 2014 171 1,428 (158) 185 1,626
Debit to income for
the year (78) (916) 108 (54) (940)
Debit to equity for
the year - - - (112) (112)
Classified as liabilities
associated with assets
held for sale (note
9) 13 - - - 13
30 November 2015 106 512 (50) 19 587
--------------------------- ------------ -------- ------------ -------- --------
Reclassified from
liabilities held
for sale (13) - - - (13)
Disposed of with
subsidiary 13 - - - 13
(Charge) / credit
to income for the
year (53) (59) 50 (2) (64)
30 November 2016 53 453 - 17 523
=========================== ============ ======== ============ ======== ========
There are accumulated losses of GBP7,878,000 (2015:
GBP11,105,000) which, subject to agreement with the HM Revenue
& Customs, are available to offset future profits of the same
trade. Of this, the Group has not recognised tax losses of
GBP5,216,000 (2015: GBP8,246,000) as management does not believe
that recovery is probable.
Company Capital
allowances Other Total
GBP'000 GBP'000 GBP'000
------------------------------- ------------ -------- --------
1 December 2014 80 168 248
Charge to income for the year (80) (56) (136)
Charge to equity for the year - (112) (112)
30 November 2015 - - -
------------------------------- ------------ -------- --------
30 November 2016 - - -
=============================== ============ ======== ========
16 INVENTORIES
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- -------- --------
Book inventories - 622 - -
=================== ======== ======== ======== ========
2015 inventories were written down by GBP285,000 from a carrying
amount of GBP285,000 down to GBPnil. The cost of inventories,
including the write-down, is included within discontinued
activities.
17 TRADE AND OTHER RECEIVABLES
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- -------- -------- --------
Due within one year:
Trade receivables 687 1,069 - 4
Amounts owed by group undertakings
(see note 32) - - 171 3,391
Other receivables 342 585 184 151
Prepayments and accrued
income 216 333 183 195
------------------------------------ -------- -------- -------- --------
1,245 1,987 538 3,741
==================================== ======== ======== ======== ========
The average credit period taken on sales of goods and services
is 39 days (2015: 36 days). Standard terms are thirty days but many
of the Group's goods and services, such as subscription renewals
and events, are invoiced in advance of the delivery date. An
allowance is maintained for estimated irrecoverable amounts and has
been made with reference to past default experience. The Directors
consider that the carrying amount of trade and other receivables
approximates to their fair values.
The Group's exposure to credit risk and impairment losses
related to trade and other receivables are disclosed in note
22.
The Group holds no collateral against these receivables at the
balance sheet date and charges no interest on its overdue
receivables.
18 BORROWINGS
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
------------- --------- -------- -------- --------
Non-current
Bank loans - 28 - 28
------------- --------- -------- -------- --------
- 28 - 28
----------------------- -------- -------- --------
Current
Bank loans - 66 - 66
- 66 - 66
----------------------- -------- -------- --------
- 94 - 94
======================= ======== ======== ========
The effective interest rates and applicable balances at the
balance sheet dates are as follows:
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- -------- -------- --------
Bank loan B (4.73% over
the lending Bank's base
rate) - 94 - 94
- 94 - 94
==================================== ======== ======== ========
At 30 November there were the following committed undrawn
borrowing facilities expiring as follows:
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- -------- -------- --------
In one year or less - Bank
overdraft facility - 750 - 750
============================ ========= ======== ======== ========
Bank loan B was fully repaid during the year. Given the Group's
significant cash balances, the GBP750,000 bank overdraft facility
has not been renewed.
19 TRADE AND OTHER PAYABLES
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Trade payables 123 415 71 147
Amounts due to group undertakings
(see note 32) - - 21,794 7,046
Other payables 125 307 121 260
Accruals 1,462 918 762 263
Total current 1,710 1,640 22,748 7,716
=================================== ======== ======== ======== ========
Trade, other payables, and accruals principally comprise amounts
outstanding for trade and ongoing costs. The average credit period
taken for trade purchases is 36 days (2015: 34 days).
20 DEFERRED INCOME
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- --------
Subscription and events
fees received in advance 1,307 1,934 - -
=========================== ======== ======== ======== ========
21 PROVISIONS
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- --------
1 December 60 60 60 60
Increase in year - 60 - 60
Release of provisions
in year - (60) - (60)
30 November 60 60 60 60
======================= ======== ======== ======== ========
Included in current
liabilities 60 60 60 60
======================= ======== ======== ======== ========
Provisions of GBP60,000 were made at 30 November 2015 to reflect
anticipated costs arising reflect an estimate of dilapidation costs
due on termination of a lease during 2016. During the year, the
lease was extended to February 2017, and hence the provision has
been retained at 30 November 2016.
22 FINANCIAL INSTRUMENTS
The Group's activities expose the Group to a number of risks
including capital risk management, market risk (foreign currency
risk and interest rate risk), liquidity risk and credit risk. The
policies for managing these risks are regularly reviewed and agreed
by the Board.
It is, and has been throughout the year under review, the
Group's policy that no trading in financial instruments shall be
undertaken.
Capital management
The Group's main objective when managing capital is to protect
returns to shareholders by ensuring the Group will continue to
trade in the foreseeable future. The Group also aims to maximise
its capital structure of debt and equity so as to minimise its cost
of capital.
The capital structure of the Group consists of debt, cash and
cash equivalents and equity attributable to holders of the parent,
comprising issued share capital, reserves and retained earnings.
Consistent with others in the industry, the Group reviews the
gearing ratio to monitor the capital. This ratio is calculated as
the net debt divided by total capital. Net debt is calculated as
total borrowings less cash and cash equivalents. Total capital is
calculated as equity (including capital, reserves and retained
earnings). This gearing ratio will be considered in the wider
macroeconomic environment. With the current restraints on the
availability of finance and economic pressures the Group has
lowered its gearing ratio expectations and has reduced debt
considerably in the last five years.
Categories of financial instruments
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised in respect of each class of financial asset, financial
liability and equity instrument are disclosed in Note 1 to the
financial statements.
22 FINANCIAL INSTRUMENTS (continued)
Group Company
2016 2015 2016 2015
Notes GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Loans and receivables
Trade receivables 17 687 1,069 - 4
Other receivables 17 342 585 355 3,542
Accrued income 54 15 24 -
Cash and cash equivalents 27 12,976 542 12,943 468
Assets held for sale 9 - 737 - -
-------------------------------- ------ -------- -------- -------- --------
Total financial assets 14,059 2,948 13,322 4,014
-------------------------------- ------ -------- -------- -------- --------
Financial liabilities
Amortised cost
Bank loans and overdrafts 18 - 94 - 94
Trade payables 19 123 415 71 147
Other payables 19 125 307 21,915 7,306
Accruals 19 1,462 918 762 263
Provisions 21 60 60 60 60
Deferred income 20 1,307 1,934 - -
Liabilities associated
with assets held for
sale 9 - 1,355 - -
-------------------------------- ------ -------- -------- -------- --------
Total financial liabilities 3,077 5,083 22,808 7,870
-------------------------------- ------ -------- -------- -------- --------
Liquidity risk
Cash balances are placed so as to maximise interest earned while
maintaining the liquidity requirements of the business. When
seeking borrowings, the Directors consider the commercial terms
available and consider whether such terms should be fixed or
variable and are appropriate to the business. The Directors review
the placing of cash balances on an ongoing basis. Surplus cash
balances arising from the disposals during the year are credited to
NatWest Bank's instant access, Special Interest Bearing Account.
The financial assets of the group at 30 November 2016 were mainly
designated in sterling and earned floating rate bank interest.
The Group aims to ensure that sufficient cash is generated in
the operating cycle to meet the contractual cash flows through
effective cash management.
Interest rate risk
The Group and company's interest rate exposure arises mainly
from interest bearing borrowings. Contractual agreements entered
into at floating rates expose the entity to cash flow risk while
any fixed rate borrowings would expose the entity to fair value
risk.
The tables below show the Group's financial assets and
liabilities split by those bearing fixed and floating rates and
those that are non-interest bearing.
Floating Non-interest
Interest rate risk rate bearing Total
GBP'000 GBP'000 GBP'000
----------------------------- --------- ------------- --------
At 30 November 2016
Cash and cash equivalents 12,976 - 12,976
Trade and other receivables - 1,083 1,083
12,976 1,083 14,059
============================= ========= ============= ========
Trade and other payables - 1,710 1,710
Deferred income - 1,307 1,307
Provisions - 60 60
- 3,077 3,077
============================= ========= ============= ========
At 30 November 2015
Cash and cash equivalents 542 - 542
Trade and other receivables - 1,669 1,669
Assets held for sale 1 736 737
----------------------------- --------- ------------- --------
543 2,405 2,948
============================= ========= ============= ========
Trade and other payables - 1,640 1,640
Deferred income - 1,934 1,934
Borrowings 94 - 94
Provisions - 60 60
Liabilities associated with
assets held for sale - 1,355 1,355
----------------------------- --------- ------------- --------
94 4,989 5,083
============================= ========= ============= ========
22 FINANCIAL INSTRUMENTS (continued)
The Group has derived a sensitivity analysis based on a 1%
change in the floating interest rate charged on its interest
bearing financial liabilities:
2016 2015
GBP'000 GBP'000
-------------------------------------- --------- --------
Impact on equity and profit after
tax
1% increase in base rate of interest - (1)
1% decrease in base rate of interest - 1
-------------------------------------- --------- --------
The undiscounted contractual cash flows, including interest
payments, are set out in the tables below.
UNDISCOUNTED CONTRACTUAL CASH
FLOWS
Between
In less one
than and two
Group one year years Total
GBP'000 GBP'000 GBP'000
------------------------------- ---------- --------- --------
Provisions 60 - 60
Other liabilities 3,017 - 3,017
At 30 November 2016 3,077 - 3,077
=============================== ========== ========= ========
Bank loans and overdrafts 72 30 102
Provisions 60 - 60
Other liabilities 4,929 - 4,929
At 30 November 2015 5,061 30 5,091
=============================== ========== ========= ========
UNDISCOUNTED CONTRACTUAL CASH
FLOWS
In less Between
than one and
Company one year two years Total
GBP'000 GBP'000 GBP'000
------------------------------- ---------- ----------- --------
Other liabilities 22,808 - 22,808
At 30 November 2016 22,808 - 22,808
=============================== ========== =========== ========
Bank loans 72 30 102
Other liabilities 7,776 - 7,776
At 30 November 2015 7,848 30 7,878
=============================== ========== =========== ========
Other liabilities are not interest bearing and are
unsecured.
Foreign exchange risk
The Group and Company operates principally in the United Kingdom
and as such the majority of the Group and Company's financial
assets and liabilities are denominated in sterling and there is no
material exposure to exchange risks.
The Group and Company does suffer some exposure to exchange risk
as a proportion of its business is overseas. Where the Group and
Company enters into significant contracts denominated in overseas
currencies it is not currently the Group and Company's policy to
mitigate exchange risk by entering into forward currency contracts.
The Group and Company attempt to mitigate its exposure by
offsetting liabilities against foreign currency receipts as far as
is possible.
Credit risk
The Group's principal financial assets are cash and cash
equivalents, trade and other receivables and accrued income which
represent the Group's maximum exposure to credit risk in relation
to financial assets.
The Group's credit risk primarily relates to trade and other
receivables and accrued income. The amounts presented in the
balance sheet are net of allowances for doubtful receivables, as
estimated by the Group's management.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit ratings assigned by
international credit rating agencies.
The Group has no significant concentration of credit risk, with
exposure spread over a large number of counterparties and
customers.
22 FINANCIAL INSTRUMENTS (continued)
The following table provides analysis of trade receivables that
were past due at 30 November, but not impaired. The Group believes
that the balances are ultimately recoverable based on a review of
past payment history and the current financial status of the
customers.
Ageing of receivables past due but
not impaired
2016 2015
GBP'000 GBP'000
------------------------------------ -------- --------
30-60 days 72 300
60-90 days 73 153
90-120 days 14 65
Greater than 120 days 28 -
------------------------------------ -------- --------
187 518
==================================== ======== ========
The Group's policy is that debt is payable within 30 days. The
older debt above includes conferences and subscription renewals,
which have been billed in advance of delivery so some payments may
be delayed by customers.
Movement in the provision for impairment for trade
receivables:
2016 2015
GBP'000 GBP'000
--------------------------------------- -------- --------
Opening balance at 1 December (248) (158)
Provision for receivables impairment
credited / (charged) 35 (90)
Reduction in provision resulting from 181 -
business disposals
Closing balance at 30 November (32) (248)
======================================= ======== ========
Fair value
The Directors consider that the fair values of the Group's
financial instruments do not significantly differ from their book
values.
23 SHARE CAPITAL
The Company does not have an authorised share capital in either
year.
Allotted, issued and fully paid: 2016 2015
Ordinary Ordinary
shares shares
GBP'000 GBP'000
---------------------------------- --------- ---------
As at 1 December 4,076 4,076
Issue of share capital 11 -
As at 30 November 4,087 4,076
================================== ========= =========
A reconciliation of the movements in issued ordinary share
capital is as follows:
Number Total Share
of shares share price
capital at issue
Number GBP'000 Pence
---------------- -------------------- ------------ --------- ----------
At 1 December
2014 407,590,795 4,076
At 30 November
2015 407,590,795 4,076
Share issue at 1.0
27 May 2016 pence per share 1,134,992 11 3.65p
At 30 November
2016 408,725,787 4,087
====================================== ============ ========= ==========
The share issue on 27 May 2016 related to the exercise of share
options by a former employee. There have been no shares issued
since the year end.
24 RESERVES
The reserve for own shares relates to the employee Share
Incentive Plan (note 28a) under which the Group owns 1,241,780
shares (2015: 1,465,391 shares).
25 NON-CONTROLLING INTEREST
The Group's non-controlling interest in both 2016 and 2015 was
composed entirely of equity interests and represents the
non-controlling interest of 30% in iGaming Business Limited.
26 BUSINESS COMBINATIONS
As described in note 9, on 4 January 2016, the Group disposed of
its 70% interest in iGaming Business. The Group also disposed of
Optimus Professional Publishing on 1 November 2016 and the trade
and assets of Speechmark Publishing on 14 November 2016. Details of
the assets and liabilities disposed of, and the calculation of the
profit and loss on disposal are given in the table below.
2016 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
iGaming Optimus Speechmark Total
--------------------------------- -------- -------- ----------- --------
Non-current assets
Goodwill 500 874 706 2,080
Intangible assets 71 235 176 482
Current assets
Cash 220 653 - 873
Inventories - - 690 690
Trade and other debtors 1,003 768 - 1,771
Intercompany 1,550 20 - 1,570
Deferred tax - 14 - 14
Current liabilities
Trade and other payables (737) (377) - (1,114)
Deferred income (922) (1,135) - (2,057)
Current and deferred tax (44) - - (44)
---------------------------------- -------- -------- ----------- --------
Net assets disposed of 1,641 1,052 1,572 4,265
Consideration received 14,549 1,564 1,850 17,963
---------------------------------- -------- -------- ----------- --------
12,908 512 278 13,698
Directly attributable
costs of disposal 1,116 312 183 1,611
---------------------------------- -------- -------- ----------- --------
Profit on disposal included
in discontinued operations 11,792 200 95 12,087
================================== ======== ======== =========== ========
Net cash inflow arising
on disposal
--------------------------------- -------- -------- ----------- --------
Consideration 14,549 1,564 1,850 17,963
Less directly attributable
costs of disposal (1,116) (312) (183) (1,611)
---------------------------------- -------- -------- ----------- --------
13,433 1,252 1,667 16,352
Less cash disposed of (220) (653) - (873)
Less settlement of intercompany
balance (1,550) (20) - (1,570)
---------------------------------- -------- -------- ----------- --------
Net cash inflow 11,663 579 1,667 13,909
================================== ======== ======== =========== ========
26 BUSINESS COMBINATIONS (continued)
On 28 January 2015, the Group disposed of Radcliffe Solutions
Ltd ("RSL") and on 19 June 2015, the Group disposed of the
Radcliffe Publishing business ("RP"). The contractual effective
date of the disposal, and the date on which control over the
business passed to the buyer was 31 May 2015. Details of the assets
and liabilities disposed of, and the calculation of the profit and
loss on disposal are given in the table below.
2015 2015 2015
GBP'000 GBP'000 GBP'000
RSL RP Total
------------------------------- -------- -------- --------
Non-current assets
Goodwill - 319 319
Intangible assets - 502 502
Property, plant and equipment 5 - 5
Current assets
Inventories - 412 412
Other debtors 29 - 29
Current liabilities
Other payables (33) (5) (38)
Deferred income (49) (75) (124)
Net (liabilities) / assets
disposed of (48) 1,153 1,105
Consideration received 121 957 1,078
--------------------------------- -------- -------- --------
169 (196) (27)
Directly attributable
costs of disposal 97 260 357
--------------------------------- -------- -------- --------
Profit / (loss) on disposal
included in discontinued
operations 72 (456) (384)
================================= ======== ======== ========
Net cash inflow arising
on disposal
------------------------------- -------- -------- --------
Consideration 121 957 1,078
Less directly attributable
costs of disposal (97) (260) (357)
--------------------------------- -------- -------- --------
Net cash inflow 24 697 721
================================= ======== ======== ========
27 ANALYSIS OF CHANGES IN NET CASH
Group At 1 December Cash flow At 30
2015 November
2016
GBP'000 GBP'000 GBP'000
--------------------------- -------------- ---------- ----------
Cash at bank and in
hand 542 12,434 12,976
Classified as held
for sale 1 (1) -
---------------------------- -------------- ---------- ----------
Cash and cash equivalents 543 12,433 12,976
Bank loans due within
one year (66) 66 -
---------------------------- -------------- ---------- ----------
Debt due within one
year (66) 66 -
Bank loans due after
one year (28) 28 -
Debt due after one
year (28) 28 -
Net cash 449 12,527 12,976
============================ ============== ========== ==========
28 SHARE BASED PAYMENTS
The Company has the following option or share ownership schemes
and warrants in issue. All the schemes use the Monte Carlo
valuation method except for the Long Term Incentive Plan which uses
the Black Scholes Method. The relevant inputs for each scheme have
been outlined below:
2015 2014
------------------ ------------------------- ----------------------------
Black Monte Carlo Black Scholes Monte Carlo
Scholes
------------------ ----------- ------------ -------------- ------------
Expected life 3.00 - 3.00 -
(years) 3.25 4.80 3.25 4.80
Risk free rate 4.8039 4.8039
(%) - 4.9315 3 - 4.9315 3
30.473 30.473
Volatility (%) - 31.1165 49.66 - 31.1165 49.66
Dividend yield
(%) 0 0 0 0
Weighted average
share price (p) 2.10 2.38 2.10 2.38
Weighted average
exercise price
(p) 1.00 1.50 1.00 1.50
The volatility of the Company's share price on each date of
grant was calculated as the average of the standard deviations of
daily continuously compounded returns on the stock of the Company,
calculated back over a period commensurate with the expected life
of the option. The risk-free rate used is the yield to maturity on
the date of grant of a UK Gilt Strip, with term to maturity equal
to the expected life of the option. It was assumed that options
would be exercised within two years of the date on which they vest.
The number of options exercisable for each scheme at the year-end
is based on the year end share price.
There have been no transactions with non-employees.
a Share Incentive Plan
In September 2005, the Group introduced a Share Incentive Plan
(SIP) and has run it in three further years (2006, 2007 and 2010).
Under this plan the employees are eligible to acquire shares in the
following ways:
-- Free Shares
-- Partnership Shares
-- Matching Shares
The Free shares were available to all eligible employees and the
shares must be held in the trust for a minimum period of 3 years
unless the employee leaves the Company, in which case the Free
shares may either be forfeited or withdrawn from the Plan.
Partnership shares were available for purchase by employees at
current market value. Employees could invest any amount from
between GBP10 - GBP1,500 (or 10% of the employee's salary if
lower). The Partnership shares were matched by the Matching shares
on a 1 for 1 basis in 2010 (2 for 1 basis in 2006 and 2005).
The Partnership and Matching shares must be held in the Trust
for a minimum of 3 years unless the employee leaves the Company in
which case the Free shares may either be forfeited or withdrawn
from the Plan. All of the shares were purchased at fair value in
the market and the cash cost of the Partnership shares was expensed
in the year of issue. The total fair value of the options granted
in the year was GBPnil (2015: GBPnil).
2016 2015
Number Weighted Number Weighted
of options average of options average
exercise exercise
price price
------------------------------ ------------ ---------- ------------ ----------
Outstanding at the beginning
of the period 619,749 6.75 684,925 6.75
Withdrawn during the period (281,875) 7.09 (65,176) 5.46
Outstanding at the end
of the period 337,874 6.72 619,749 6.89
============================== ============ ========== ============ ==========
Exercisable at the end
of the period 337,874 6.72 619,749 6.89
============================== ============ ========== ============ ==========
The weighted average remaining contractual life of share options
outstanding at the end of the period was 2 years (2015: 3 years).
The exercise price of the outstanding options ranges from 4.75 -
10.37 pence, but was paid at the outset on these options and
nothing will be receivable by the Group.
28 SHARE BASED PAYMENT (continued)
b Long Term Incentive Plan
In November 2007, the Group introduced a Long Term Incentive
Plan ('LTIP'), under which at that time 14 members of senior
management were granted a maximum of 5,658,824 share options
dependent on performance criteria. The options, all with an
exercise price of 1 pence, vested in February 2010 as the
performance criteria of the Company achieving an average of at
least 15% annualised adjusted earnings per share growth over the
three years to November 2009 was met, although the maximum criteria
which required growth of 25% per year was not. During the year,
141,915 vested options were forfeited and 134,992 options were
exercised at 1 pence leaving 692,267 of the vested options
remaining at 30 November 2016 (2015: 969,174). The weighted average
remaining contractual life of these options is 1 year (2015: 2
years).
In 2010 a new LTIP scheme was launched in two parts, a Profit
Growth Plan ('PGP') and a Share Price Growth Scheme ('SPGS').
Under the PGP, 8 members of senior management were granted a
maximum of 9,650,000 options in April 2010 to acquire shares in the
Company at nominal value under a new 2010 Company Share Option Plan
("2010 Plan"). The scheme was subject to performance conditions
relating to the growth in adjusted operating profit (note 5) in the
business unit for which the participant was responsible over the
two years to 30th November 2011 or, in the case of Directors, the
Group as a whole. Vesting rights in these options accrued if profit
growth exceeded certain minimum growth thresholds that were set for
each individual business unit and ranged from 3% to 8% per annum.
During the year, 1,000,000 options were exercised at 1 pence and
500,000 were forfeited. The number of vested options outstanding at
30 November 2016 is nil (2015: 1,500,000).
2016 2015
Number Weighted Number Weighted
of options average of options average
exercise exercise
price price
------------------------------ ------------ ---------- ------------ ----------
Outstanding at the beginning
of the period 2,469,174 1.00 2,469,174 1.00
Forfeited during the
period (641,915) 1.00 - 1.00
Exercised during the
period (1,134,992) 1.00 - -
Expired during the period - - - -
Outstanding at the end
of the period 692,267 1.00 2,469,174 1.00
============================== ============ ========== ============ ==========
Exercisable at the end
of the period 692,267 1.00 2,469,174 1.00
============================== ============ ========== ============ ==========
The weighted average remaining contractual life of share options
outstanding at the end of the period was 1 year (2015: 3 years).
For all share options outstanding at the year end the exercise
price was 1.0p
c The 2013 Award
In December 2013, the Group made a new award of share options
("2013 Award"). Options were granted to the two Executive
Directors, the non-Executive Chairman and two other members of
management. Options under this plan are exercisable at the 2012
placing price of 1.5p and will vest according to a scale if the
Company's average share price, over any four-month period after the
date of grant, exceeds a target share price. The target share price
is 3.5p for 27.1% of the options, 5.0p for 20.8% of the options, 6p
for 13.0% of the options, 7p for 13.0% of the options, 8p for 13.0%
of the options and 9p for the remaining 13.0% of the options. A
maximum of 78,090,157 ordinary shares may be issued under the 2013
Award. Where individual options have vested, up to 10% of the
vested shares may be exercised from 12 months following vesting, up
to 20% from two years and up to 30% from three years. Subject to
the vesting conditions, unexercised options may be exercised from
September 2018 until they expire in September 2022.
2015 2014
Number Weighted Number Weighted
of options average of options average
exercise exercise
price price
------------------------------ ------------ ---------- ------------ ----------
Outstanding at the beginning
of the period 75,513,182 1.5 75,513,182 1.5
Outstanding at the end
of the period 75,513,182 1.5 75,513,182 1.5
============================== ============ ========== ============ ==========
Exercisable at the end
of the period 4,088,612 1.5 2,044,306 1.5
============================== ============ ========== ============ ==========
The weighted average remaining contractual life of share options
outstanding at the end of the period was 6 years (2015: 7 years).
The exercise price of the outstanding options is 1.5p.
29 COMMITMENTS UNDER OPERATING LEASES
The minimum lease payments under non-cancellable operating lease
rentals are in aggregate as follows:
Land and buildings Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
Within one year 82 69 82 69
Between two and five years - - - -
82 69 82 69
============================ ======== ======== ======== ========
Operating lease payments represent rentals payable by the Group
for its office properties. Leases are negotiated for an average
term, excluding break clauses, of 0.5 years (2016: 1 year) and
rentals are fixed for an average of 0.5 years (2016: 1 year).
Plant and machinery Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------
Within one year 2 4 2 4
Between two and five years - 2 - 2
- 6 - 6
============================ ======== ======== ======== ========
Operating lease payments represent rentals payable by the Group
for printers and copiers. Leases are negotiated for an average
term, excluding break clauses, of 3 years (2015: 3 years) and
rentals are fixed for an average of 3 years (2015: 3 years).
31 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
There are no capital commitments at the balance sheet date
(2015: GBPnil).
32 RELATED PARTY TRANSACTIONS
Group related party balances held at November 2016 and 2015 are
unsecured.
Subsidiaries
The Group's 70% (2014: 70%) owned subsidiary, iGaming Business
Ltd, was disposed of on 4 January 2016. At 30 November 2016, it was
owed GBPnil (2014: GBP7,774,000) by other Group undertakings and
owed GBPnil (2015: GBP6,078,000), including debt due from the
Company of GBPnil (2015: GBP6,078,000), after being charged costs
and allocated staff time in the period prior to its disposal of
GBP99,000 (2015: GBP1,157,000).
Advisory Services
From time to time, the Board receives financial advice from
Trillium Partners Limited ("Trillium Partners"). Trillium Partners
is a specialist media advisory firm, in which voting control of
50.0% (2015: 50.0%) is held by Stephen Routledge, who was a
non-executive Director of Electric Word plc until his resignation
on 31 August 2016. As set out in the 18 December 2015 shareholder
circular, the Group was charged fees of GBP480,000 in January 2016
in connection with the disposal of iGaming Business Ltd as
disclosed in note 9. There were no fees paid to Trillium in
2015.
Company
The table below sets out the transactions and balances with
other group undertakings:
Balance Transactions
in year
Receivable Income / (expenditure)
/ (payable)
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- -------- ------------- ----------
iGaming Business Limited - (1,696) 1,696 3,531
Incentive Plus Limited (14) - (14) 14
Speechmark Publishing Limited (3,462) (939) (2,523) 2,978
Optimus Professional Publishing
Limited (21) 3,220 (3,241) 329
P2P Publishing Limited (32) (9) (23) (42)
SBG Companies Limited (18,265) (4,402) (13,863) (5,187)
Radcliffe Publishing Limited - - - (2,597)
Radcliffe Solutions Limited - - - -
Electric Word Employee
Benefit Trust 171 171 - -
--------- --------
(21,623) (3,655)
--------- --------
The nature of the transactions with group undertakings comprises
salary recharges, recharges of various trading activities, waiver
of intercompany balances in relation to business disposals, and
cash transfers. All intra-group balances are payable on demand and
non-interest bearing.
Key management personnel
For details of related party transactions with key management
personnel, see the Remuneration Report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BLGDDGGBBGRX
(END) Dow Jones Newswires
February 14, 2017 02:00 ET (07:00 GMT)
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