News Column

Electric Word Narrows Loss, Warns Investment To Hit Short-Term Profit

August 29, 2014

Hana Stewart-Smith

LONDON (Alliance News) - Electric Word PLC Friday said it is not currently expecting all parts of its business to trade ahead of the previous year, and warned that increased investment will hit its profitability in the short-term, as it posted a narrowed pretax loss in the half-year to the end of May.

The company posted a pretax loss of GBP466,000, narrowed from GBP745,000 the previous year, as revenue rose to GBP6.8 million from GBP6.5 million, and it lowered costs after closing its Milton Keynes office. Electric Word's previous year figures were restated to reclassify the results of its Sports Performance business as discontinued operations after it was disposed of on May 30.

The media company said deferred revenue increased over the previous year due to growth in pre-billed subscriptions, conferences and events.

Electric Word has been investing in transitioning towards digital and live formations which have higher quality of earnings, and simplifying its range of activities. It increased the level of revenues from subscriptions and live products to 59% from 51%, and said that all of these products are now delivered digitally.

In Sports and Gaming, revenue rose to GBP3.2 million from GBP2.4 million as it shifted focus to events and subscriptions, and ceasing some activities including contract publishing, a paper directory and some smaller events.

In Education, the company has been transferring its customers to an online subscription service from a printed product. It is winding down its Incentive Plus business, consolidating its subscription products and dis-investing in books and other one off products. In the second-half, it will add a new managing director in this segment, and make further investments in product development and sales, it said.

In Health, the company disposed of its Sports performance business, some publications and relocated its team to one office, in order to increase focus on publishing activities and growing digital product sales. Sales of ebooks and sales through e-commerce channels rose 29%, the company said, although sales of its less digitally evolved Speechmark products dropped 7%.

Electric Word also said that it will market test a set of Speechmark products for speech therapists at the end of the year.

The company said that it is upping investment on product development due to its confidence in its digital subscription businesses, and whilst this will reduce profit in the short-term, it said it believes it will have a "significant positive impact on the scale and value of the group in the medium term."

Shares in Electric Word were trading down 9.0% at 3.30 pence Friday morning.

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Source: Alliance News

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