BASIS OF ACCOUNTING

The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards.  They have also been prepared on the going concern basis since, as noted in the Chairman’s and Chief Executive’s Report, the second half of 2001 delivered positive cashflow and the cash low-point for the existing business has already been reached.

 

BASIS OF CONSOLIDATION

These financial statements incorporate those of the company and its subsidiary undertakings.

 

During the year Electric Word Plc issued fully paid 1p ordinary shares to satisfy the acquisition of the entire issued share capital of Optimus Publishing Limited.  In the company’s financial statements, advantage has been taken of section 131 of the Companies Act 1985 by transferring the premium arising on the issue of shares to a merger reserve.

 

No profit and loss account is presented for Electric Word Plc as provided by Section 230(3) of the Companies Act 1985.

 

PURCHASED GOODWILL

Goodwill representing the excess of the purchase price compared with the fair value of net assets acquired is capitalised and written off over 10 years as in the opinion of the directors this represents the life over which the goodwill is effective.  Provision is made for any impairment.

 

INVESTMENTS

Shares in subsidiary undertakings are considered long term investments and are classified as fixed assets.  All investments are stated at cost.  Provision is made for any impairment in the value of fixed asset investments.

 

TANGIBLE FIXED ASSETS

All fixed assets are stated at historical cost.

 

Depreciation is provided on all tangible fixed assets at rates calculated to write each asset down to its estimated residual value over its expected useful life, as follows:-

 

Fixtures, fittings and equipment                                30% reducing balance

Computer equipment                                               50% reducing balance

 

STOCK

Stock is valued at the lower of cost and net realisable value.  Provision is made for obsolete and slow moving items.

 

DEFERRED TAXATION

Provision is made for taxation deferred or accelerated by the effect of timing differences, to the extent that it is probable that a liability will crystallise, at the rate expected to be ruling at that date.

 

MAGAZINE TITLES

Magazine titles represents the cost of acquiring the magazine “Peak Performance” and is being amortised over its estimated useful life of 10 years.

 

TURNOVER

Turnover represents the value, net of Value Added Tax, of subscription income, events income and other income and is recognised in the profit and loss account on a receivable basis with that portion relating to subsequent years included in deferred revenue.