TIDMWIL
RNS Number : 6705Q
Wilmington PLC
21 February 2019
For release 21 February 2019
Wilmington plc
('Wilmington', 'the Group' or 'the Company')
Financial results for the six months ended 31 December 2018
Wilmington plc, the provider of information, education and
networking services in Risk & Compliance, Professional and
Healthcare knowledge areas, today announces its half year results
for the six months ended 31 December 2018.
Financial Highlights
- Revenues for the period GBP58.3m (2017: GBP58.3m) unchanged on an organic(2) basis
o represents an improvement from 3% reduction in the first half
of last year and full year to June 2018
- Adjusted EBITA(3) GBP7.8m (2017: GBP10.1m(1) )
o reduction reflects anticipated increased costs including
impact of prior year infrastructure investments
- Adjusted profit before tax(4) GBP6.7m (2017: 9.1m(1) )
- Statutory profit before tax GBP5.8m (2017: GBP2.2m(1) )
o Benefits from GBP1.9m gain on sale of ICP business on 18 July
2018
o Comparative period impacted by one-off costs for new office
and upgraded IT
- Adjusted basic earnings per share(5) 6.16p (2017: 8.08p(1) )
- Statutory basic earnings per share of 5.70p (2017: 1.54p(1) )
- Interim dividend increased 3% to 4.1p (2017: 4.0p)
- Cash conversion(6) at 91% (2017: 77%(1) )
- Group net debt at 31 December 2018 was GBP43.8m (31 December
2017: GBP45.9m; 30 June 2018 GBP39.6m).
Operational Highlights
- 8% organic revenue growth in Risk & Compliance driven by
good demand within the main Compliance business
- Increased demand for in-house and online learning. Growth in
ICA membership by 2,000 in the period to over 14,000
- Other Risk & Compliance businesses trading in line with
last year. ICP business sold at start of period
- Healthcare business recovering from challenging prior year. 5%
organic revenue reduction year on year but decline slowing
- Strong new sales bookings in UK Healthcare materially up on weak prior year comparatives
- US Healthcare business continues to be impacted by previously
implemented rationalisation of events programme
- Professional division continuing revenues flat year on year
- Accountancy market impacted by Brexit related softness
- Legal benefitting from strong demand for witness training
- Business review completed within the period concluded that the
Group overall holds strong positions in healthy markets offering
opportunities for growth
Outlook and Current Trading
- Overall on track to achieve full year expectations
- Traditional second half weighting of trading once again anticipated
- Expectation that continued UK Healthcare new sales bookings
growth will lead to improved second half revenues
- Professional division prepared for second half Brexit related
opportunities once the outcome is known
Martin Morgan, Interim Executive Chairman, commented:
"The first six months of the current year have seen initial
progress in our stated goal of returning Wilmington to organic
revenue growth. With all three divisions demonstrating positive
trading momentum, overall the Group remains on track to achieve its
full year expectations."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement this inside information is now considered to be in the
public domain.
(1) Restated to reflect adoption of IFRS 15
2 Organic - eliminating the effects of exchange rate
fluctuations and the impact of acquisitions and disposals
3 Adjusted EBITA - see note 5
4 Adjusted profit before tax - see note 5
5 Adjusted earnings per share - see note 11
6 Cash conversion - see note 17
For further information, please contact:
Wilmington plc
Martin Morgan, Interim Executive
Chairman
Richard Amos, Chief Financial Officer 020 7490 0049
FTI Consulting
Charles Palmer / Dwight Burden /
Leah Dudley 020 3727 1000
Notes to Editors
Wilmington is the recognised knowledge leader and partner of
choice for information, education and networking in Risk &
Compliance, Professional and Healthcare areas. Wilmington employs
close to 1,000 people and operates in 120 countries. Wilmington plc
is a premium listed company on the main market of the London Stock
Exchange.
Chairman's Statement
Introduction
The first six months of the current year have seen initial
progress in our stated goal of returning Wilmington to organic
revenue growth. Overall the Group has recorded underlying revenue
which is flat on the same period twelve months ago which represents
a reversal of the declining trend of last year.
Across our businesses we have seen good organic revenue growth
in Risk & Compliance, improved sales and a slower revenue
decline in Healthcare compared to last year and a flat performance
in Professional.
Demand for compliance solutions continues to grow significantly,
and as a result our main Compliance business has benefitted,
delivering double digit organic growth.
In Healthcare, as we discussed in the latest Annual Report, we
faced challenges last year as we took actions to combine our
various UK healthcare assets. We are starting to see the benefits
of those actions this year, with new sales bookings in UK
Healthcare up significantly over the same period last year. The
timing of revenue recognition on these sales meant they were not
fully recognised as revenue in the first half. However we see the
positive sales trend as an important lead indicator for future
growth prospects.
In Professional, performance has been good although masked by
the natural slowing in the pace of regulatory change in the UK
accountancy market due to Brexit uncertainties impacting demand for
both training and marketing products. This is likely to persist
until the Brexit position becomes clear, although once it does we
anticipate a potential positive impact as our accountant and lawyer
clients seek to understand its implications.
Results and dividend
Revenue of GBP58.3m was unchanged on last year. On an organic
basis, i.e. at constant currency and adjusting for the impact of
acquisitions and disposals, revenue was also flat year on year,
which compares to an organic reduction of 3% last year in both the
first half and in the full year.
Adjusted profit before tax decreased to GBP6.7m (2017: GBP9.1m).
The reduction was as anticipated and represented the impact of
previously explained cost increases, including the investments in
infrastructure made last year as well as general cost inflation.
Statutory profit before tax increased to GBP5.8m (2017: GBP2.2m)
but benefitted this year from the GBP1.9m gain made on the sale of
our specialist credit reporting business, ICP, on 18 July 2018. The
year on year comparison is also affected by the GBP3.0m one-off
costs which were incurred last year for the London head office move
and associated IT upgrade.
Cash generation in the first half was as expected, with the
traditional seasonal first half cash outflow for items such as the
full year dividend resulting in net debt of GBP43.8m, up from
GBP39.6m at 30 June 2018 but lower than the GBP45.9m at 31 December
2017. Cash conversion of 91% (2017: 77%) reflected strong working
capital management.
In recognition of the progress made in the first half and the
confidence it has in the future prospects of the Group, the Board
is maintaining the previous progressive dividend policy that has
been in place since 2013/14. The interim dividend will be increased
3% to 4.1p (2017: 4.0p) and will be paid on 8 April 2019 to
shareholders on the share register as at 8 March 2019, with an
associated ex-dividend date of 7 March 2019.
Business Review
Following the trading update in July 2018, and as mentioned in
the last Annual Report, in conjunction with the rest of the Board I
initiated a review of the business. In order to obtain an
independent assessment we engaged a firm of consultants to support
us. Working with senior management their remit was to analyse our
key markets and competitors, and to assess our relative positions
in them. The work included an extensive programme of customer
referencing, plus understanding the underlying growth rates and
trends within our key markets. These external findings were
supplemented by some detailed analysis of our internal commercial
performance.
The review found that Wilmington is in the main operating in
healthy but competitive markets, that we have strong market shares
with number one or two positions, that brand recognition and
respect for what we offer is high and is coupled with good rates of
repeat purchasing. Of course it also found that our markets are
changing, for example in the way information is being consumed and
in the switch to digital learning propositions. It appears that we
are not facing imminent disruptive change but it is my observation
that there has been insufficient investment in new products and
services over the last few years as the Group focussed on expanding
its markets through acquisition. So we need to improve in this area
to ensure we capture our fair share of the growth opportunities
these changes are bringing about.
We generated ideas about how our core businesses might develop
their product offerings, and management are now working on their
three year strategy plans, through a new pre-budget process
introduced this year to take these to a more detailed level. We
decided to move our focus away from building a pan-European
healthcare information business, in favour of concentrating on the
UK and France where we already occupy good positions. We will be
able to build on the investments already made in a digital learning
platform, new marketing software and a CRM system, all of which are
well down the track of being implemented.
The consultants agreed that the efforts already underway to
share expertise across the Group were important and need to be
sustained.
The review also supports the Board's decision made last summer
to focus on improving organic growth for the time being in
preference to prioritising acquisitions. This needs to be
complemented by a heightened emphasis on sales and marketing
execution and on streamlining the organisation to enable it to move
at a faster pace. These will be top priorities for the new CEO.
However we have already launched a new process to encourage product
development. While it is early days we have a number of initiatives
underway or in the proof of concept stage.
I would conclude by saying that we firmly believe that
Wilmington has the opportunity to return to being a growth
business, through operationally executing to a high standard.
People
As announced on 16 January 2019, Pedro Ros stepped down as CEO
on 13 February 2019, and I became Interim Executive Chairman. I
will continue in that post until a replacement CEO is appointed at
which point I will revert to my previous position as Non-Executive
Chairman. On behalf of the Board I would like to place on record
our thanks to Pedro for his contribution to Wilmington over the
nearly five years that he was in charge. We have appointed a search
firm to find Pedro's replacement. In the meantime, I am actively
leading the Group and implementing the strategy set out above.
The period just undergone has been one of significant change and
challenge for our staff. Their reaction has been excellent and I
thank them on behalf of the Board for the professional way they
have dealt with the challenges and worked to overcome them. The
successes recorded in this report are entirely due to their efforts
and I have enjoyed meeting them and working with them as we strive
to take Wilmington to the next level.
Acquisitions and disposals
On 18 July 2018, Wilmington sold ICP, its specialist credit
reporting business, to the business's existing management team for
GBP3.0m. The consideration will be received over the next five
years. The disposal, effective from 1 July 2018, allows Wilmington
to focus its resources on its core client communities and secure
for shareholders a good return from historic investments.
Acquisitions have been an important part of the Wilmington
growth story over recent years. In the immediate future, as
explained above, our primary focus will be on deploying capital to
achieve organic growth from our existing businesses. In time, we
will continue to use acquisitions where we see clear opportunities
which support that strategy.
Current trading and outlook
The second half of the financial year is traditionally more
profitable for Wilmington as revenue is positively impacted by a
number of seasonal factors, including the timing of some key
industry events and conferences, whilst the cost base remains
largely fixed. The Board expects this second half weighting to
continue.
Revenue growth in Risk & Compliance is expected to continue
albeit at a slightly slower rate than in the first half because
some of that period's growth was timing related. In the main
Compliance business, a continued increase in registrations for
online courses and demand for in-house programmes are expected to
be the main drivers of growth. The second half of the year also
includes the Compliance Week Annual Conference, another key element
of second half performance.
In Healthcare, our expectation of a significant second half
revenue improvement is predicated on the continuation of the strong
first half new sales bookings' activity and the subsequent
conversion of those sales into revenue. This expectation is
supported by an encouraging current pipeline of new business
opportunities. Overall in the Healthcare division we believe we are
well positioned to deliver revenue growth in the second half
consistent with achieving our original expectations for the full
year.
The Professional division expects to build on a stable first
half to deliver full year revenue growth consistent with previous
expectations. This division is the one most closely impacted by
Brexit with potential opportunities to provide training to its
client communities once the Brexit outcome and its impact on
regulations is known.
Costs in the second half are anticipated to be in line with
previous expectations, other than an additional GBP0.5m cost that
is anticipated in relation to the change of Chief Executive.
The second half of the year is expected to be an important
period in the development of Wilmington. There is much to do, but
with all three divisions demonstrating positive trading momentum,
overall the Group remains on track to achieve its full year
expectations.
Martin Morgan
Chairman
Segmental Review
Note that variances described below as 'organic' are after
adjusting for acquisitions and disposals and at constant
currency.
2017 comparative figures are restated to reflect the
reclassification of revenue between segments as set out in the 2018
Annual Report and also to reflect the adoption of IFRS 15 - Revenue
from contracts with customers' (IFRS 15). A reconciliation showing
the impact of the adoption is set out in Note 21 to the
accounts.
Risk & Compliance
H1 2018 H1 2017* Absolute Organic
Variance Variance
Revenue GBP'm GBP'm
Compliance 13.8 12.1 +14% +13%
Risk 6.3 7.5 -16% -
Total 20.1 19.6 +3% +8%
Operating
profit 5.9 5.4 +10% +23%
Margin 29% 27%
* 2017 comparatives have been restated to reflect adoption of
IFRS 15.
The overall Risk & Compliance division performed well, with
revenue of GBP20.1m (2017: GBP19.6m) representing 3% absolute
growth and 8% organic growth. The major difference between the two
measures represents the disposal at the start of the half year of
ICP, our specialist credit reporting business.
Revenue in the Compliance businesses overall grew 13%
organically. This growth came primarily from the activities of the
International Compliance Association ('ICA') and related training
that comprise our main Compliance business and account for around
55% of Compliance revenues. These grew organically by around 20%,
albeit with around a third of that growth coming from earlier
timing this year of the award of certain diplomas. This timing
impact is expected to reverse in the second half of the year. The
business is benefitting from the re-positioning of the last 18
months which saw it move away from the large multi-attendee
programmes that tier one banks previously required to more bespoke
developments and 'train the trainer' events. The growth was driven
in part by increasing demand for online compliance courses which
grew around 45% compared to the same period last year, and in part
from increased demand for in-house training. The latter was strong
across all geographies including the Middle East and Asia,
particularly in Malaysia. In Europe we won new business on the back
of a number of regulatory enquiries into banks across the region
which identified continued challenges with anti-money laundering
procedures. Professional membership levels in the ICA also
continued to rise, with paid memberships up 2,000 from the start of
the year to over 14,000.
Other Compliance businesses were overall flat, with growth in
training for wealth managers and from the Pendragon pensions
regulation business offsetting some weakness at Compliance Week.
The growth in the wealth manager business, although modest, was
particularly pleasing as it followed a difficult year at that
business which we have restructured with new management, a closer
operational integration with the main Compliance business and a
refresh of course materials. This included the development of more
online learning which we believe will open up new markets in what
is geographically a very diverse industry.
The Risk businesses reported flat overall organic revenue
performance. Axco, our insurance information business delivered a
2% organic increase in revenue at constant currency under the
leadership of a new management team who are seeking to widen the
product portfolio and enhance the value generated from the unique
database of global information that the business owns. In the
period we launched a joint venture to serve the insurance industry
with an innovative new information product that provides insight on
the many InsurTech businesses that are seeking to disrupt the
traditional insurance market. The new service has been well
received by potential clients and is on track to break even within
the next twelve months.
Against this, Inese, our Spanish insurance industry expert, had
a slightly disappointing first half after a strong previous year.
Revenue declined 8% on an organic basis, with demand for training
courses subdued in the period. Part of the decline was as a result
of phasing changes in the course programme which will benefit
second half revenues.
Divisional operating profit was up 10% in absolute terms to
GBP5.9m (2017: GBP5.4m). On an organic basis, and at constant
currency, the operating profit increase was 23%. This division has
been the least affected by the increased infrastructure costs
across the Group although it has seen some natural cost inflation.
Operating margin was up slightly to 29% (2017: 27%) due mainly to
the gearing impact of the higher revenue.
Healthcare
H1 2018 H1 2017* Absolute Organic
Variance Variance
Revenue GBP'm GBP'm
European Healthcare 14.6 14.2 +3% -2%
US Healthcare 2.5 3.1 -19% -21%
Other Information Businesses 3.4 3.5 -4% -4%
Total 20.5 20.8 -1% -5%
Operating profit 1.3 3.7 -66% -57%
Margin 6% 18%
* 2017 comparatives have been restated to reflect adoption of
IFRS 15 and to include business lines previously managed within
Professional.
Overall revenue for the Healthcare division fell 1% to GBP20.5m
(2017: GBP20.8m). This comparison is affected by minor currency
movements and more significantly by the effect of the acquisition
of Interactive Medica in February 2018 which delivered GBP0.7m of
revenue in the period. Adjusting for these factors underlying
revenue decreased on an organic basis by 5% which, while below our
full year target, represents an improvement on the 8% reduction
experienced last year. In particular, the UK Healthcare business,
which was a major drag on performance last year, declined in the
first half by 4% compared to the same period last year, with the
shortfall decreasing progressively across the half as the business
performance improved. The major reduction in the period was in the
events based US Healthcare business which continues to be impacted
by planned rationalisation of its programme to remove unprofitable
events. This is starting to settle down and we expect to see
positive progress in the second half of the year as set out
below.
The European Healthcare businesses reported a 2% organic revenue
reduction, with 7% growth in France offset by a 4% decline in the
UK. The UK decline primarily reflected the reduction in brought
forward deferred revenue at the start of the year from sales won in
the prior year. As explained in last year's Annual Report, the poor
prior year sales performance and a change in the revenue
recognition policy for certain data products meant we entered the
current year with GBP1.4m less pre-booked revenue than twelve
months earlier. Most of that shortfall impacted the early months of
the year. Encouragingly, sales performance in the UK Healthcare
business in the first half of this year is materially improved on
that poor comparative period last year. This has helped cover some
of the brought forward revenue shortfall and has also meant that we
enter the second half of this year with over GBP1m more revenue for
UK Healthcare already booked for the second half than we had twelve
months ago. Some of this improved sales performance is on the back
of investment made in the prior year in customer relationship
software that allows more effective sales opportunity management.
But the business has also benefitted from the launch of updated
versions of its Quantis and Investigator products that are at the
core of its data product set. Additionally the business has made
significant progress in the development of consulting solutions
that sit alongside its data products and assist pharmaceutical
companies in their interpretation and use of the data we
provide.
Interactive Medica, which we acquired in February 2018, had a
satisfactory six months although the timing of implementation
revenue in the period meant that it was loss-making. It continued
to win new external clients for its customer relationship software
platform but more significantly has been integrated as the
supporting platform for our other proprietary UK Healthcare data
products, providing a more flexible and attractive customer
interface for customers.
Growth in the French healthcare business came both from good
renewals of its traditional news information services, and also
from the initial sales of the APMi product that launched in July
2018. This product is based on the HSJi product that we sell in the
UK and offers deep insight data on French hospitals to
pharmaceutical companies and other suppliers of products and
services into that market. The development of this product
represented a significant investment for the Group in the year to
30 June 2018 and we are incurring GBP0.5m p.a. of incremental
operating costs supporting the data collection and its publication.
Sales of the product met our internal business plan in the first
six months of the year, and we are on track to deliver our plan of
a breakeven position in the second year of sales.
The first half of the year is traditionally a seasonally quiet
period for the US Healthcare businesses and it had a difficult six
month period with revenue declining 21% on an organic basis.
Approximately two-thirds of the decline was as a result of the net
impact of rationalising the portfolio to remove unprofitable
events, an exercise undertaken in the first half last year. However
the business also suffered from the underperformance of repeat
events from the prior year, with a lack of sales resource after the
cost base rationalisation last year identified as one of the
primary root causes. This has been addressed towards the end of the
half, and performance in the second half is expected to improve as
a result. In particular sales for the flagship RISE Nashville event
which is held in mid-March are running very strongly, with
sponsorship income already up 20% on the prior year and early
delegate bookings also ahead of the prior year.
The Other Information Businesses that provide a portfolio of
products including data suppression and charity information had a
slightly slow first half. However most of the 4% year on year
revenue reduction related to the timing of an event that will run
in H2 this year compared to H1 last year, and this should help
improve second half revenues.
Operating profit in the Healthcare division declined
significantly to GBP1.3m (2017: GBP3.7m). The significant reduction
reflects a number of factors including that Healthcare is the
division most significantly impacted by the increased investment in
infrastructure across the Group. Additionally profitability in the
division has been impacted by the incremental costs associated with
the first year of APMi, the cost-base acquired with Interactive
Medica, and general inflation. This has to some extent been offset
by cost reduction actions such as those taken in FRA in the last
year. The overall impact has been that the operating margin has
dropped to 6% in the period (2017: 18%). The fixed nature of much
of the cost base means that operating margin is expected to improve
significantly in the second half due to the benefits of the
improved sales performance and second half events such as RISE
Nashville.
Richard Adams, former divisional director for Healthcare, will
be leaving the business on 30 June 2019 to pursue other interests.
In the meantime he will focus his attention on driving our US
businesses. The existing Managing Directors of the European
Healthcare business will report directly to Martin Morgan until a
new Group CEO is appointed.
Professional
H1 2018 H1 2017* Absolute Organic
Variance Variance
Revenue GBP'm GBP'm
Ongoing businesses 17.7 17.7 - -
Ark business - closed - 0.2 - -
Total 17.7 17.9 -1% -2%
Operating profit 2.9 3.2 -9% -8%
Margin 17% 18%
* 2017 comparatives have been restated to reflect adoption of
IFRS 15 and to exclude business lines now managed within
Healthcare.
Overall revenue for the Professional division was down 1% on an
absolute and 2% on an organic basis at GBP17.7m (2017: GBP17.9m).
All of this reduction can be attributed to the closure last year of
the Ark business that served the UK legal services market.
Adjusting for that, the underlying revenue performance of the
continuing Professional businesses was flat, with growth in Legal
offsetting smaller declines in Accountancy and Investment
Banking.
Accountancy had a slightly challenging first half, with market
conditions subdued and revenue consequently down 4% on a strong
period twelve months ago. This was largely due to the current
absence of significant changes in UK accountancy and tax
regulation. As predicted by many commentators, the current
political focus meant that HM Government's October Budget brought
few substantive tax developments with the result that many of
Accountancy's clients reduced their spend with them on promoting
its impact to their clients. A Spring Statement is scheduled for
next month, and we anticipate revenue from that in the second half
year. Additionally the Accountancy business was impacted by the
timing of the 2018 Finance Act, which pushes training for our
clients into the second half of the year, adversely impacting year
on year comparison. Importantly though, the business has made
significant strides in integrating its three previous regional
operations into one UK wide-business. This has involved the closure
of the Bristol office, relocating the Leicester head office to new
modern premises and the initiation of a major project to integrate
Accountancy's customer management from the existing five systems
onto a single CRM solution. This latter project is underway
throughout the year and is expected to be live by 30 June 2019. It
will complete a major simplification of the business and allow more
efficient cross-selling and up-selling to clients.
The Legal businesses overall had a good six months, delivering
7% organic growth. The growth came from the Bond Solon law for
non-lawyers business, with a small amount of growth in La Touche in
Ireland offsetting a similar slight decline in the CLT law for
lawyers business. Bond Solon had a very strong autumn particularly
in the area of witness familiarisation training. It has had success
winning a number of framework contracts to provide Government
agencies with regulatory training and these are helping to provide
a stable base of business. Further success in the period included
in the area of employment law regulation training, and it expanded
its portfolio of courses with the acquisition of the rights to a
number of courses that cover intelligence and investigative skills
training for public and private agencies. Meanwhile, the main focus
in CLT in the period has been the development of a number of new
online courses. These were launched at the end of the half and we
anticipate initial revenues from them through the second half.
Investment Banking, through the AMT business, had a reasonable
first half, with a 3% organic revenue decline entirely resulting
from the non-repeat of one-off royalty revenue received in the
comparative period. Excluding this, the business performed well in
the peak summer season in what remains a very competitive market.
Revenues in the US were up on the prior year although this was
offset by a reduction in Asia against strong prior year
comparatives. As in Legal, significant investment is being
undertaken in Investment Banking on the development of our online
presence, consistent with the overall group initiative on digital
learning.
Overall across the Professional division operating profit was
down GBP0.3m to GBP2.9m (2017: GBP3.2m). Operating margin dipped
slightly to 17% (2017: 18%). The impact of increased costs from the
additional infrastructure and from general inflation has been
partially offset by cost reduction actions including those
resulting from the integration of the Accountancy businesses.
Unallocated central overheads
Unallocated central overheads represent board costs, head office
salaries as well as other centrally incurred costs not recharged to
the businesses. These increased by GBP0.4m to GBP2.3m (2017:
GBP1.9m). Most of the increase relates to the central share of
increased infrastructure costs plus one-off professional fees
incurred in the period including in relation to the business review
referred to in the Chairman's statement.
Financial review
Change in accounting policies
From 1 July 2018 the Group has adopted IFRS 15. In accordance
with the standard it has also restated the balance sheet at 1 July
2017, 31 December 2017 and 30 June 2018 and the results for the
period from 1 July 2017 to 30 June 2018. Adoption of the standard
has impacted revenue, deferred revenue, trade debtors and reserves,
as well as associated tax items and the commentary below explains
the impact on each of these items. A reconciliation of the
adjustments is also included in note 21.
Adjusting items, measures and adjusted results
Reference is made in this financial review to adjusted results
as well as the equivalent statutory measures. Adjusted results in
the opinion of the Directors can provide additional relevant
information on our future or past performance where equivalent
information cannot be presented using financial measures under
IFRS. Adjusted results exclude adjusting items, profit on disposal
of investments, property, plant and equipment (to the extent it is
material or significant in nature), impairment of goodwill and
intangible assets and amortisation of intangible assets (excluding
computer software).
H1 2018 H1 2017 Absolute Organic
Restated variance variance
GBP'm GBP'm GBP'm % %
Revenue 58.3 58.3 - - -
Adjusted EBITA 7.8 10.1 -2.3 -23% -13%
Margin % 13.4% 17.3%
Revenue
For the six months ended 31 December 2018 revenue was unchanged
at GBP58.3m. The Group's major non-Sterling revenues are in US
Dollars and Euros and in aggregate there was a GBP0.1m positive
impact of changes in rates between the periods. Reported revenue
was also impacted by acquisitions and disposals, with a net GBP0.3m
reduction coming from the combined impact of the disposal of ICP
with effect from 1 July 2018 and the additional revenue from
Interactive Medica that we acquired during the second half of last
year. Adjusting for these currency and portfolio change impacts,
the organic revenue performance was flat.
Adopting IFRS 15 had an immaterial impact on the income
statement as anticipated in the last Annual Report, with current
and prior year revenue both decreasing by GBP0.1m compared to
accounting under the previous revenue standard. The changes were
primarily within the Risk & Compliance division and related to
timing of revenue recognition on certain public courses and online
programmes.
Revenue from UK customers was essentially constant at 58% of the
total revenue (2017: 59%). In overseas revenue there was a shift in
revenue from US towards Europe that came from the acquisition of
Interactive Medica combined with the planned rationalisation of the
US events programme to remove unprofitable events.
Recurring revenue (i.e. subscription income and repeatable
revenues) as a percentage of total revenue was 73% compared to 77%
last year. The reduction is due to the disposal of ICP which had
highly recurring revenue streams together with a change in the mix
of revenues across the Group.
Across the entire business digital learning revenues as a
proportion of total training revenues increased from just over 20%
last year to around 30%.
Operating expenses before adjusting items, amortisation and
impairment
Adjusted operating expenses, i.e. before adjusting items,
amortisation of intangible assets (excluding computer software) and
impairment, were GBP50.5m (2017: GBP48.2m) up 5% or GBP2.3m. The
impact of acquisitions and disposals added a net GBP0.3m to the
cost base, whilst changes in FX rates increased costs by GBP0.4m.
The remaining GBP1.6m was in non-employee costs which went from
GBP23.5m in the first half last year to GBP25.8m this year. Half of
the increase was the previously explained impact of the new office
and related IT expenditure. The remaining GBP0.8m represented a
combination of non-employee cost inflation, one off costs
associated with the review of businesses referred to in the
Chairman's Statement and the impact of product mix changes within
the portfolio.
Within adjusted operating expenses, employee costs (salaries and
bonuses, social security and pension costs and share based
payments), were flat overall at GBP24.7m (2017: GBP24.7m). Within
this, share based payment costs reduced to GBPnil compared to
GBP0.3m in H1 last year due to the impact of changes in
expectations of vesting amounts, and underlying employee costs
increased by GBP0.3m compared to the first half last year. The
increase primarily relates to our French business where, as
planned, we have increased staff levels to support the newly
launched APMi product. Other employee cost increases, primarily
inflation, have been offset by cost reduction actions taken last
year including the closure of the Ark legal services business and
the restructuring of the US events business as part of its
programme rationalisation plan. The Group's full time equivalent
('FTE') headcount at 31 December 2018 was 838 compared to 834 at 1
July 2018, a figure which excludes 15 FTE employed within the
disposed of ICP business (31 December 2017, FTE headcount of 847
plus 17 acquired with Interactive Medica acquisition in January
2018). Our original plan for this financial year was to increase
headcount by around 30 across the Group, although this is being
managed in the light of current market conditions.
Adjusted operating profit ('Adjusted EBITA')
As a result of these changes in revenue and adjusted operating
expenses, adjusted EBITA was down GBP2.3m (23%) to GBP7.8m (2017:
GBP10.1m). Adjusted operating margin (adjusted EBITA expressed as a
percentage of revenue) decreased to 13% (2017: 17%).
Adjusting items within operating expenses
Adjusting items within operating expenses were GBP0.1m (2017:
GBP3.5m). Adjusting items in operating expenses are those items
that in the opinion of the Directors are one-off in nature and
which do not represent the ongoing trading performance of the
business. In the first half, the only such items were a small
amount of disposal and acquisition related fees, and minor
adjustments to the amounts recognised as deferred consideration for
the acquisition of SWAT, acquired in July 2017 for which the final
earn out payment was made in the period. This contrasts with the
same period last year which saw significant such expenditure
related to the move into the new London head office and associated
IT restructuring costs.
Amortisation excluding computer software
Amortisation of intangible assets (excluding computer software)
was GBP2.6m, compared to GBP3.4m in the comparative period. The
decrease reflects the full amortisation of certain assets acquired
with healthcare businesses offset by additions from the acquisition
of Interactive Medica.
Operating profit
After the various adjusting items detailed above, and a GBP1.9m
one-off gain on the sale of ICP, statutory operating profit was up
GBP3.9m at GBP7.0m.
Share of loss in equity accounted investments
A GBP0.1m cost (2017: GBPnil) has been recognised in the first
half for the share in losses incurred in the 50:50 joint venture
that we launched in the period as an investment of our Axco
insurance information business. We anticipate the joint venture
achieving a breakeven position in its second full year of
operation.
Finance costs
Finance costs remained constant at GBP1.0m. The impact of an
increase in interest rates affecting the portion of the loan not
subject to an interest rate hedge was offset by lower non
utilisation fees as a result of a GBP10m reduction in the debt
facility in November 2017.
Profit before taxation
Profit before tax was GBP5.8m (2017: GBP2.2m), although year on
year comparison was significantly affected by the different one-off
items in each period described above. Adjusting for these, adjusted
profit before tax was actually down GBP2.4m or 26% to GBP6.7m
(2017: GBP9.1m).
Taxation
The tax charge was GBP0.8m (2017: GBP0.8m). The overall
effective tax rate(7) is 14% (2017: 37%), the reduction reflecting
the high proportion of non-allowable adjusting items recognised in
the prior year. The underlying tax rate(8) which excludes the tax
effects of adjusting items decreased to 20% from 22% in H1 2017 due
primarily to the fall in US tax rates. The underlying tax rate in
the first half is considered a good guide to the rate expected for
the full year.
7The effective tax rate is calculated as the total tax charge
divided by profit before tax after adding back impairment
charges.
8The underlying tax rate is calculated as one minus the adjusted
profit after tax divided by the adjusted profit before tax
Earnings per share
Adjusted basic earnings per share decreased by 24% to 6.16p
(2017: 8.08p), owing to the reduction in adjusted profit before tax
offset by a lower underlying tax rate on an essentially unchanged
number of issued ordinary shares. Statutory basic earnings per
share were 5.70p compared to 1.54p in 2017 with the profit increase
driven by one-off items being the major factor for the change.
Balance Sheet
Non-current assets
Goodwill decreased by GBP7.3m from GBP84.8m at 31 December 2017
to GBP77.5m at 31 December 2018 primarily due to the GBP8.6m
impairment of the law for lawyers business, CLT, that took place in
the second half of the last financial year.
Intangible assets decreased by GBP3.4m from GBP28.5m at 31
December 2017 to GBP25.1m at 31 December 2018, primarily due to
amortisation but offset by GBP1.5m arising from the acquisition of
Interactive Medica in the second half of last year and by other
additions including capitalised and acquired computer software of
GBP0.8m in the first half of the year.
Property, plant and equipment was essentially unchanged at
GBP6.4m with additions of GBP0.6m offsetting depreciation of the
same amount.
Deferred consideration receivable
Following the disposal of ICP for GBP3.0m in July 2018, the
Group has recognised an amount of GBP2.2m for deferred
consideration receivable, as the consideration is expected to be
settled in cash over 5 years. The amount recognised represents the
amount due discounted to present value. The unwind of the discount
will be recognised in net finance costs over the period of receipt
of the consideration.
Trade and other receivables
Trade and other receivables were down GBP0.4m at GBP26.4m (2017:
GBP26.8m restated). The reduction reflects improved credit control
which reduced the trade debtors by GBP1.6m, offset by an increase
in prepayments and other receivables of GBP1.2m. Note that the
comparator figure for trade and other receivables at 31 December
2017 has been restated to GBP26.8m from the originally reported
GBP28.2m due to the adoption of IFRS 15. See note 21 for further
detail.
Trade and other payables
Total balances decreased from GBP50.9m to GBP50.4m. Within this
subscriptions and deferred revenue decreased by GBP1.0m or 4% to
GBP26.6m (2017: GBP27.6m restated). This was largely due to invoice
timing differences on both contract renewals in Axco and invoicing
of committed orders in UK Healthcare. The remaining trade and other
payables increased by GBP0.5m to GBP23.8m (2017: GBP23.3m) due to
the timing of supplier payments. Note that the comparator figure
for subscriptions and deferred revenue at 31 December 2017 has been
restated to GBP27.6m from the originally reported GBP26.3m due to
the adoption of IFRS 15. See note 21 for further detail.
Current tax assets/(liabilities)
At 31 December 2018 there is a current tax asset of GBP0.5m
compared to a liability of GBP0.7m at 31 December 2017. The
difference reflects the impact of tax on adjusting items last year
and the calculation of payments on account which are based on a
time apportioned estimate of final tax liability rather than a
proportion of profits made year to date.
Deferred consideration payable
The liability for deferred consideration decreased from GBP2.6m
at 30 June 2018 to GBP1.3m at 31 December 2018. The reduction
primarily reflects the settlement of the final amount owing for
SWAT of GBP1.3m in September 2018. The remaining balance is mainly
due for payment in December 2019.
Net debt and cashflow
Net debt, which includes cash and cash equivalents, bank loans
(excluding capitalised loan arrangement fees) and bank overdrafts,
was GBP43.8m (30 June 2018: GBP39.6m; 31 December 2017: GBP45.9m).
Cash conversion of 91% (2017: 77%) was offset by the payment of the
deferred consideration for SWAT and by capital expenditure of
GBP1.2m.
Net debt at 31 December 2018 represented 58% of our debt and
overdraft facility of GBP75m (31 December 2017: 61%). The loan
facility is repayable on 1 July 2020.
Derivative financial instruments
The Group is exposed to foreign exchange risks, liquidity and
capital risks and credit risks. The Group has policies that
mitigate these risks which include the use of derivative products
such as forward contracts and swaps subject to Board approval. The
Group uses interest rate swap contracts to mitigate part of the
interest rate volatility risk. These forward contracts and swaps
have resulted in a liability of GBP0.5m at 31 December 2018 (30
June 2018: liability of GBP0.4m; 31 December 2017: asset of GBP0.2m
and liability of GBP0.5m). Of the current liability, GBP0.3m is
expected to unwind in the second half of the year as the forward
contracts used to hedge current year FX exposures crystallise.
Share capital
During the period 125,494 new ordinary shares of GBP0.05 were
issued in settlement of awards vesting under the Group's
Performance Share Plan. This resulted in an increase to the number
of ordinary shares outstanding at 31 December 2018 to 87,539,567
(30 June 2018 and 31 December 2017: 87,414,073).
Dividend
An interim dividend of 4.1p per share (2017: 4.0p) will be paid
on 8 April 2019 to shareholders on the share register as at 8 March
2019, with an associated ex-dividend date of 7 March 2019. The
increase in interim dividend is 2.5% and represents the intention
of the Directors to maintain the progressive dividend policy that
has been in place since 2013/14.
Appointment of auditors
In the 2018 Annual Report and Accounts, the Audit Committee
confirmed that it would commence an audit tender process such that
a new external auditor could be appointed during the financial year
ended 30 June 2019. The Board has recently carried out a
competitive tender process for the provision of audit services,
which has resulted in Grant Thornton UK LLP being appointed auditor
for the year ended 30 June 2019. Accordingly,
PricewaterhouseCoopers LLP has resigned as Wilmington's auditor
with effect from 28 January 2019, and the Board has appointed Grant
Thornton UK LLP to fill the casual vacancy until Wilmington plc's
next Annual General Meeting, in 2019, when shareholders will have
the opportunity to vote on their appointment.
There are no matters in connection with PricewaterhouseCoopers
LLP's resignation as auditors which, in the view of the Board, need
to be brought to the attention of shareholders.
Statement of directors' responsibilities
The Directors confirm to the best of their knowledge the interim
information has been prepared in accordance with International
Accounting Standard 34 Interim Financial Reporting as adopted by
the European Union. The Interim Management Report includes a fair
review of the Interim Information and, as required by DTR 4.2 TR
and DTR 4.2 8R, the following information:
-- an indication of important events that have occurred during
the first six months of the financial year, and their impact on the
condensed set of financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- disclosure of material related party transactions that have
taken place in the first six months of the current financial year
and of any material changes in the related party transactions
described in the last Annual Report and Financial Statements.
A list of current Directors is maintained on the Wilmington plc
website at: www.wilmingtonplc.com.
This responsibility statement was approved by the board of
Directors on 20 February 2019 and is signed on its behalf by
Richard Amos
Chief Financial Officer
Officers
Directors:
Martin Morgan
Interim Executive Chairman
Richard Amos
Chief Financial Officer
Derek Carter
Senior Independent
Non-Executive Director
Nathalie Schwarz
Non-Executive Director
Paul Dollman
Non-Executive Director
Company Secretary:
Daniel Barton
Registered Office:
10 Whitechapel High Street
London
E1 8QS
Tel: +44 (0)20 7490 0049
Company Registration Number:
03015847
Consolidated Income Statement
Six months Year
Six months ended 31 ended
ended 31 December 30 June
December 2017 2018
2018 Restated Restated
GBP'000 GBP'000 GBP'000
Notes (unaudited) (unaudited) (unaudited)
Continuing operations
Revenue 6 58,300 58,279 121,614
Operating expenses before amortisation of
intangibles excluding computer software,
impairment of goodwill and intangible assets
and adjusting items (50,501) (48,201) (97,532)
Adjusting items 7 (132) (3,526) (4,573)
Amortisation of intangibles excluding computer
software 7 (2,607) (3,407) (6,432)
Impairment of goodwill and intangible assets 7 - - (8,561)
----------------------------------------------- ----- ------------ ------------ ------------
Operating expenses (53,240) (55,134) (117,098)
Other income - gain on sale of subsidiary 20 1,906 - -
------------ ------------ ------------
Operating profit 6,966 3,145 4,516
------------ ------------ ------------
Net finance costs 8 (1,008) (986) (1,969)
Share of loss of equity accounted investment (115) - -
------------ ------------ ------------
Profit before tax 5 5,843 2,159 2,547
------------ ------------ ------------
Taxation 9 (843) (798) (2,672)
------------ ------------ ------------
Profit/(loss) for the period 5,000 1,361 (125)
------------ ------------ ------------
Attributable to:
Owners of the parent 4,983 1,342 (172)
Non-controlling interests 17 19 47
------------ ------------ ------------
5,000 1,361 (125)
Earnings per share attributable to the owners
of the parent:
Basic (p) 11 5.70 1.54 (0.20)
Diluted (p) 11 5.65 1.52 (0.20)
------------ ------------ ------------
Adjusted earnings per share attributable
to the owners of the parent:
Basic (p) 11 6.16 8.08 20.05
Diluted (p) 11 6.10 8.02 19.90
------------ ------------ ------------
The notes on pages 18 to 32 are an integral part of these
consolidated financial statements.
Consolidated Statement of Comprehensive Income
Six months Year
Six months ended ended
ended 31 December 30 June
31 December 2017 2018
2018 Restated Restated
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Profit/(loss) for the period 5,000 1,361 (125)
Other comprehensive income/(expense):
Items that may be reclassified subsequently
to the Income Statement
------------- ------------- ------------
Fair value movements on interest rate swap
(net of tax) 54 150 339
Currency translation differences 505 (909) (896)
Net investment hedges (net of tax) (409) 437 177
------------- ------------- ------------
Other comprehensive income/(expense) for
the period, net of tax 150 (322) (380)
------------- ------------- ------------
Total comprehensive income/(expense) for
the period 5,150 1,039 (505)
------------- ------------- ------------
Attributable to:
Owners of the parent 5,133 1,020 (552)
Non-controlling interests 17 19 47
------------- ------------- ------------
5,150 1,039 (505)
------------- ------------- ------------
Items in the statement above are disclosed net of tax. The notes
on pages 18 to 32 are an integral part of these financial
statements.
Consolidated Balance Sheet
31 December 30 June
31 December 2017 2018
2018 Restated Restated
(unaudited) (unaudited) (unaudited)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 12 77,497 84,812 77,103
Intangible assets 12 25,083 28,526 27,305
Property, plant and equipment 12 6,411 6,443 6,463
Deferred consideration receivable 20 2,154 - -
Deferred tax assets 849 956 937
Derivative financial instruments 4 - 36 113
------------ ------------ ------------
111,994 120,773 111,921
------------ ------------ ------------
Current assets
Trade and other receivables 13 26,350 26,750 28,233
Current tax asset 533 - -
Derivative financial instruments 4 - 178 -
Assets held for sale - - 317
Cash and cash equivalents 12,428 11,965 10,789
------------ ------------ ------------
39,311 38,893 39,339
------------ ------------ ------------
Total assets 151,305 159,666 151,260
------------ ------------ ------------
Current liabilities
Trade and other payables 14 (50,370) (50,897) (54,479)
Current tax liabilities - (735) (722)
Deferred consideration payable -
cash settled (1,256) (1,477) (1,320)
Derivative financial instruments 4 (278) (29) -
Borrowings 15 - (1,647) -
(51,904) (54,785) (56,521)
Non-current liabilities
Borrowings 15 (55,975) (55,844) (50,380)
Deferred consideration payable -
cash settled - (951) (1,286)
Derivative financial instruments 4 (177) (510) (356)
Deferred tax liabilities (2,847) (3,213) (3,087)
(58,999) (60,518) (55,109)
------------ ------------ ------------
Total liabilities (110,903) (115,303) (111,630)
------------ ------------ ------------
Net assets 40,402 44,363 39,630
------------ ------------ ------------
Equity
Share capital 16 4,377 4,371 4,371
Share premium 16 45,225 45,225 45,225
Treasury shares 16 (96) (96) (96)
Share based payments reserve 585 814 1,108
Translation reserve 3,150 2,632 2,645
Accumulated losses (12,904) (8,637) (13,705)
------------ ------------ ------------
Equity attributable to owners of
the parent 40,337 44,309 39,548
Non-controlling interests 65 54 82
------------ ------------ ------------
Total equity 40,402 44,363 39,630
------------ ------------ ------------
The notes on pages 18 to 32 are an integral part of these
consolidated financial statements.
Consolidated Statement of Changes in Equity
Share capital,
share premium Share
and treasury based Non-
shares (note payments Translation Accumulated controlling Total
16) reserve reserve losses Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 June 2017
Restated
(unaudited) 49,491 898 3,541 (6,550) 47,380 86 47,466
Profit for the
period - - - 1,342 1,342 19 1,361
Other comprehensive
(expense)/income
for
the period - - (909) 587 (322) - (322)
49,491 898 2,632 (4,621) 48,400 105 48,505
Dividends - - - (4,019) (4,019) (62) (4,081)
Issue of share
capital 9 (384) - 375 - - -
Share based
payments - 300 - - 300 - 300
Tax on share based
payments - - - (27) (27) - (27)
Movements in
non-controlling
interests - - - (345) (345) 11 (334)
At 31 December 2017
Restated
(unaudited) 49,500 814 2,632 (8,637) 44,309 54 44,363
--------------- ---------- -------------- -------------- --------- ------------- ---------
Profit for the
period - - - (1,514) (1,514) 28 (1,486)
Other comprehensive
income/(expense)
for
the period - - 13 (71) (58) - (58)
49,500 814 2,645 (10,222) 42,737 82 42,819
Dividends - - - (3,495) (3,495) - (3,495)
Share based
payments - 294 - - 294 - 294
Tax on share based
payments - - - 12 12 - 12
At 30 June 2018
Restated
(unaudited) 49,500 1,108 2,645 (13,705) 39,548 82 39,630
Profit for the
period - - - 4,983 4,983 17 5,000
Other comprehensive
income/(expense)
for
the period - - 505 (355) 150 - 150
49,500 1,108 3,150 (9,077) 44,681 99 44,780
Dividends - - - (4,200) (4,200) (34) (4,234)
Issue of share
capital 6 (472) - 466 - - -
Share based
payments - (51) - - (51) - (51)
Tax on share based
payments - - - (93) (93) - (93)
Movements in
non-controlling
interests - - - - - - -
At 31 December 2018
(unaudited) 49,506 585 3,150 (12,904) 40,337 65 40,402
--------------- ---------- -------------- -------------- --------- ------------- ---------
The notes on pages 18 to 32 are an integral part of these
consolidated financial statements.
Consolidated Cash Flow Statement
Six months ended 31 Six months ended 31 Year ended 30
December 2018 December 2017 Restated June 2018 Restated
(unaudited) (unaudited) (unaudited)
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Cash generated from
operations before
adjusting items 17 7,083 7,728 25,665
Cash flows for adjusting
items - operating
activities (412) (1,176) (2,951)
Cash flows from tax on
share based payments (33) (50) (50)
-------------------------- -------------------------- ----------------------
Cash generated from
operations 6,638 6,502 22,664
Interest paid (1,004) (1,027) (1,934)
Tax paid (2,254) (2,518) (4,738)
-------------------------- -------------------------- ----------------------
Net cash generated from
operating activities 3,380 2,957 15,992
-------------------------- -------------------------- ----------------------
Cash flows from investing
activities
Purchase of businesses
net of cash acquired (100) - (1,595)
Sale of subsidiary net of
cash 60 - -
Deferred consideration
paid (1,522) (205) (205)
Purchase of
non-controlling
interests - (335) (335)
Cash flows for adjusting
items - investing
activities (74) (781) (1,118)
Purchase of property,
plant and equipment (554) (2,860) (3,089)
Proceeds from disposal of
property, plant and
equipment 28 31 55
Purchase of intangible
assets (761) (1,047) (1,934)
-------------------------- -------------------------- ----------------------
Net cash used in
investing activities (2,923) (5,197) (8,221)
-------------------------- -------------------------- ----------------------
Cash flows from financing
activities
Dividends paid to owners
of the parent (4,200) (4,019) (7,514)
Dividends paid to
non-controlling
interests (34) (62) (62)
Share issuance costs (6) (8) (8)
Cash flows for adjusting
items - financing
activities (12) (23) (22)
Increase in bank loans 6,000 8,000 9,127
Decrease in bank loans (1,000) (1,000) (8,012)
Net cash generated
from/(used in) financing
activities 748 2,888 (6,491)
-------------------------- -------------------------- ----------------------
Net increase/(decrease)
in cash and cash
equivalents, net of bank
overdrafts 1,205 648 1,280
Cash and cash
equivalents, net of bank
overdrafts, at beginning
of the period 11,033 9,762 9,762
Exchange gains/(losses)
on cash and cash
equivalents 190 (92) (9)
-------------------------- -------------------------- ----------------------
Cash and cash
equivalents, net of bank
overdrafts at end of the
period 12,428 10,318 11,033
-------------------------- -------------------------- ----------------------
Reconciliation of net
debt
-------------------------- -------------------------- --------------------
Cash and cash equivalents
at beginning of the
period 10,789 10,687 10,687
Cash classified as held
for sale 244 - -
Bank overdrafts at
beginning of the period 15 - (925) (925)
Bank loans at beginning
of the period 15 (50,665) (49,781) (49,781)
-------------------------- -------------------------- --------------------
Net debt at beginning of
the period (39,632) (40,019) (40,019)
Net increase in cash and
cash equivalents (net of
bank overdrafts) 1,395 556 1,271
Net drawdown in bank
loans (5,000) (7,000) (1,115)
Exchange (loss)/gain on
bank loans (524) 570 231
-------------------------- -------------------------- --------------------
Cash and cash equivalents
at end of the period 12,428 11,965 10,789
Cash classified as held
for sale - - 244
Bank overdrafts at end of
the period 15 - (1,647) -
Bank loans at end of the
period 15 (56,189) (56,211) (50,665)
-------------------------- -------------------------- --------------------
Net debt at end of the
period (43,761) (45,893) (39,632)
-------------------------- -------------------------- --------------------
The notes on pages 18 to 32 are an integral part of these
consolidated financial statements.
Notes to the Financial Results
General information
The Company is a public limited company incorporated and
domiciled in the UK. The address of the Company's registered office
is 10 Whitechapel High Street, London, E1 8QS.
The Company is listed on the Main Market on the London Stock
Exchange. The Company is a provider of information, education and
networking to the professional markets.
This condensed consolidated interim financial information
('Interim Information') was approved for issue by the Board of
Directors on 20 February 2019.
The Interim Information is neither reviewed nor audited and does
not comprise statutory accounts within the meaning of Section 434
of the Companies Act 2006. Statutory accounts for the year ended 30
June 2018 were approved by the Board of Directors on 11 September
2018 and subsequently filed with the Registrar. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under Section 498 of the Companies Act 2006. As set out in note 21,
the results for the year ended 30 June 2018 have been restated to
reflect the adoption of IFRS 15. These adjustments have not been
audited and therefore the comparative results have been stated as
unaudited in the financial statements and related notes on pages 13
- 32.
1. Basis of preparation
This Interim Information for the six months ended 31 December
2018 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union. The Interim Information should be read in
conjunction with the Annual Financial Statements for the year ended
30 June 2018 which have been prepared in accordance with IFRSs as
adopted by the European Union, and are available on the Group's
website: wilmingtonplc.com.
The Group's forecast and projections, taking account of
reasonably possible changes in trading performance, show that the
Group will be able to operate well within the level of its current
banking facilities. The Directors have therefore adopted a going
concern basis in preparing the Interim Information.
2. Accounting policies
The accounting policies, significant judgements and key sources
of estimation adopted in the preparation of this Interim Report are
consistent with those applied by the Group in its consolidated
financial statements for the year ended 30 June 2018 except for the
adoption of new standards and interpretations effective as of 1
July 2018 listed below:
-- IFRS 15 Revenue from Contracts with Customers
-- IFRS 9 Financial Instruments
Except for the adoption of IFRS 15, the adoption of these
standards and interpretations has not led to any changes to the
Group's accounting policies or had any other material impact on the
financial position or performance of the Group. Other amendments to
IFRSs effective for the period ending 31 December 2018 have no
impact on the Group.
The preparation of this Interim Report requires 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 this Interim Report, the significant judgements
made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those
applied to the consolidated financial statements as at and for the
year ended 30 June 2018.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to the expected total annual profit
or loss.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 provides a single, principles based five-step model to
be applied to all sales contracts. It is based on the transfer of
control of goods and services to customers and replaces the
separate models for goods, services and construction contracts
previously included in IAS 11 Construction Contracts ("IAS 11") and
IAS 18 Revenue ("IAS 18").
The major change is the requirement to identify and assess the
satisfaction of delivery of each performance obligation in
contracts in order to recognise revenue.
Following an assessment of the financial impact of the changes
required from the adoption of this new standard, there is no
material change to the Consolidated Income Statement of the
Group.
A performance obligation is a promise in a contract with a
customer to transfer to the customer either a good or a service. A
performance obligation can either be distinct good or service or a
series of distinct goods or services that are substantially the
same that have the same pattern of transfer to the customer.
Notes to the Financial Results
2. Accounting policies (continued)
Revenue is recognised at a point in time when a performance
obligation is satisfied by transferring a good or service to the
customer. An asset is transferred when the customer obtains control
of that asset.
Revenue is recognised over time when a performance obligation is
satisfied by the customer simultaneously receiving and consuming
the benefits over the period of the contract.
When payment is received in advance of a performance obligation
being satisfied it is recorded on the balance sheet as deferred
revenue, revenue is then recognised at the point in time or over
the period that the performance obligation is satisfied.
The adoption of IFRS 15 affects the recognition of revenue on
education provided by the Risk & Compliance and Professional
Divisions.
Revenue from blended training courses comprising multiple
products or services used to be recognised on milestones which were
estimated by management based on the stage of completion of the
course but is now recognised as one performance obligation on a
straight-line basis over the period of provision of the training
course.
Revenue from online training courses used to be recognised at
the point that access to the training was first granted to the
customer but is now recognised as one performance obligation on a
straight-line basis over the period of access to the online
training material.
The consolidated balance sheet has been adjusted by the
requirement to net down deferred revenue against trade receivables
for amounts that have been invoiced but are not yet due. This
balance sheet adjustment has not affected the net assets of the
Group.
The Group has adopted IFRS 15 on 1 July 2018 using the 'full'
retrospective approach. As a result, the prior period results have
been restated as detailed in Note 21.
A revised Group accounting policy in alignment with the adoption
of IFRS 15 has been implemented as set out below.
Revenue
Revenue is measured at the fair value of consideration received
or receivable and represents amounts receivable for goods and
services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes, and provisions for
returns and cancellations.
The Group's revenue comprises three different types of product
and service; information, education and networking, across all
three divisions.
Information
-- Subscription income for online services, information and
journals is normally received in advance and is therefore recorded
as deferred revenue on the balance sheet. Revenue is then
recognised evenly over-time as the performance obligations are
satisfied over the term of the subscription.
-- Revenue is recognised on the sale of books, journals,
training material, research projects and similar publications once
the product has been delivered to the customer.
-- Marketing and advertising services revenues are recognised on
issue of the related publication or over the period of the
advertising subscription or over the period when the marketing
service is provided. When payment is received in advance it is
recorded on the balance sheet as deferred revenue and revenue is
then recognised over-time as the performance obligations are
satisfied over the term of the contract.
-- Revenue from the sale of static data reports is recognised
once the data has been delivered to the customer.
-- Revenue from the sale of static data reports where the
customer has access to the data for a finite period of time and the
reports have significant updates during that period is recognised
over the period of the contract. When payment is received in
advance it is recorded on the balance sheet as deferred revenue and
revenue is then recognised over-time as the performance obligations
are satisfied over the term of the contract
-- Revenue from providing customers with access to dynamic data
that is updated on an ongoing basis is recognised over the period
of the contract. When payment is received in advance it is recorded
on the balance sheet as deferred revenue and revenue is then
recognised over-time as the performance obligations are satisfied
over the term of the contract.
Notes to the Financial Results
2. Accounting policies (continued)
Education
-- Revenue from training courses where the Group is providing
training that has a duration of over a week, where the training is
delivered as an ongoing process, is recognised on a straight-line
basis over the period that the training is provided to the
customer. When payment is received in advance it is recorded on the
balance sheet as deferred revenue and revenue is then recognised
over-time as the performance obligations are satisfied over the
term of the contract.
-- Revenue from training courses where the Group is providing
training courses which have a duration of less than one week, where
the training is delivered as short-term stand-alone courses, is
recognised on completion of the training course. When payment is
received in advance it is recorded on the balance sheet as deferred
revenue and revenue is then recognised over-time as the performance
obligations are satisfied over the term of the contract.
-- Revenue from training courses where the Group provides
in-house training to corporate customers is recognised on
completion of the training course.
-- Revenue from the memberships of professional organisations is
recognised on a straight-line basis over the period of membership.
When payment is received in advance it is recorded on the balance
sheet as deferred revenue and revenue is then recognised over-time
as the performance obligations are satisfied over the term of the
contract.
Networking
-- Networking revenue comprises exhibitions, conferences and
events (collectively known as events). Revenue typically includes
attendee fees, event sponsorship and advertising which is
recognised when the event is held. Customers and sponsors are often
required to pay in advance before commencement of the event, and
these advance receipts are recognised as deferred revenue on the
balance sheet from the point at which they become due.
3. Principal risks and uncertainties
The principal risks and uncertainties that affect the Group are
as stated on pages 32 to 39 of the Strategic Report in the Annual
Report and Financial Statements for the year ended 30 June 2018.
The main financial risks that affect the Group are:
(a) Interest rate risk
Risk
The Group financing arrangements include external debt that is
subject to a variable interest rate. The Group is consequently
exposed to cash flow volatility arising from fluctuations in market
interest rates applicable to that external finance. In particular,
interest is charged on the GBP56m (2017: GBP56m) amount drawn down
on the revolving credit facility at a rate of between 1.50 and 2.25
percent above LIBOR depending upon leverage. Cash flow volatility
therefore arises from movements in the LIBOR interest rates.
Group policy
The Group policy is to enter into interest rate swap contracts
to maintain the ratio of fixed to variable rate debt at a level
that achieves a reasonable cost of debt whilst reducing the
exposure to cash flow volatility arising from fluctuations in
market interest rates.
Risk management arrangements
The Group's interest rate swap contracts offset part of its
variable interest payments and replace them with fixed payments. In
particular, the Group has hedged its exposure to the LIBOR part of
the interest rate via interest rate swaps, as follows:
-- A $7.5m interest rate swap commencing on 13 July 2015 and
ending on 1 July 2020, whereby the Group receives interest on $7.5m
based on the USD LIBOR rate and pays interest on $7.5m at a fixed
rate of 1.79 percent.
-- A GBP15.0m interest rate swap commencing on 22 November 2016
and ending on 1 July 2020, whereby the Group receives interest on
GBP15m based on LIBOR rate and pays interest on GBP15m at a fixed
rate of 2.00 percent.
These derivatives have been designated as a cash flow hedge for
accounting purposes. The net settlement of interest on the interest
rate swap, which comprises a variable rate interest receipt and a
fixed rate interest payment, is recorded in net finance costs in
the income statement and so is matched against the corresponding
variable rate interest payment on the revolving credit facility.
The derivatives are remeasured at fair value at each reporting
date. This gives rise to a gain or loss, the entire amount of which
is recognised in Other Comprehensive Income ('OCI') following the
Directors' assessment of hedge effectiveness.
(b) Foreign currency risk
Risk
The currency of the primary economic environment in which the
Group operates is Sterling, and this is also the currency in which
the Group presents its financial statements. However, the Group has
significant Euro and US dollar cash flows arising from
international trading and overseas operations. The Group is
consequently exposed to cash flow volatility arising from
fluctuations in the applicable exchange rates for converting Euros
and US dollars to Sterling.
Notes to the Financial Results
3. Principal risks and uncertainties (continued)
Group policy
The Group policy is to fix the exchange rate in relation to a
periodically reassessed set percentage of expected Euro and US
Dollar net cash inflows arising from international trading, by
entering into foreign currency contracts to sell a specified amount
of Euros or US Dollars on a specified future date at a specified
exchange rate. This set percentage is approved by the Board as part
of the budgeting process and upon the acquisition of foreign
operations.
The Group policy is to finance investment in overseas operations
from borrowings in the local currency of the relevant operation, so
as to achieve a natural hedge of the foreign currency translation
risk. This natural hedge is designated as a net investment hedge
for accounting purposes. Debt of $19.2m (2017: $19.2m) and EUR2.3m
(2017: nil) has been designated as a net investment hedge relating
to the Group's interest in Compliance Week, FRA and Interactive
Medica.
Risk management arrangements
The following forward contracts were entered into in order to
provide certainty in Sterling terms of circa 75% of the Group's
expected net US dollar and Euro income:
-- On 2 July 2018, the Group sold $3.0m to 19 October 2018 at a rate of 1.3191
-- On 2 July 2018, the Group sold EUR1.0m to 16 November 2018 at a rate of 1.1242
-- On 2 July 2018, the Group sold EUR1.0m to 18 January 2019 at a rate of 1.1222
-- On 2 July 2018, the Group sold $5.0m to 15 March 2019 at a rate of 1.3292
-- On 2 July 2018, the Group sold EUR1.0m to 18 April 2019 at a rate of 1.1190
-- On 2 July 2018, the Group sold $5.0m to 17 May 2019 at a rate of 1.3336
The above derivatives are remeasured at fair value at each
reporting date. This gives rise to a gain or loss, the entire
amount of which is recognised in the Income Statement.
(c) Liquidity and capital risk
Risk
The Group has historically expanded its operations both
organically and via acquisition, financed partly by retained
profits but also via external finance. As well as financing cash
outflows, the Group's activities give rise to working capital
obligations and other operational cash outflows. The Group is
consequently exposed to the risk that it cannot meet its
obligations as they fall due, or can only meet them at an
uneconomic price.
Group policy
The Group policy is to preserve a strong capital base in order
to maintain investor, creditor and market confidence and to
safeguard the future development of the business, but also to
balance these objectives with the efficient use of capital. The
Group has, in previous years, made purchases of its own shares
whilst taking into account the availability of credit.
Risk management arrangements
The Group ensures its liquidity is maintained by entering into
short, medium and long-term financial instruments to support
operational and other funding requirements. The Group determines
its liquidity requirements by the use of short and long-term cash
forecasts.
On 1 July 2015 the Group extended its GBP65m revolving credit
facility with Barclays Bank PLC, HSBC Bank plc and The Royal Bank
of Scotland plc through to 1 July 2020. On 17 January 2017 GBP20m
of the accordion facility was triggered, increasing the total
unsecured bank facility to GBP85m. This extension was made to fund
the acquisition of HSJ. The extended facility comprised of a
revolving credit facility of GBP80.0m and an overdraft facility
across the Group of GBP5.0m. On 24 November 2017 the revolving
credit facility was reduced by GBP10.0m to GBP75.0m, to decrease
the non-utilised portion and the associated non-utilisation
fee.
(d) Credit risk
Risk
The Group's principal financial assets are receivables and bank
balances. The Group is consequently exposed to the risk that its
customers or the credit facility providers cannot meet their
obligations as they fall due.
Group policy
The Group policy is that the lines of business assess the
creditworthiness and financial strength of customers at inception
and on an ongoing basis. The Group also reviews the credit rating
of the bank. Cash is held in banks with a credit rating between AA
and BBB- per Fitch at 20 February 2019.
Notes to the Financial Results
3. Principal risks and uncertainties (continued)
Risk management arrangements
The Group's credit risk is primarily attributable to its trade
receivables. However, the Group has no significant exposure to
credit risk because its trading is spread over a large number of
customers. The payment terms offered to customers take into account
the assessment of their creditworthiness and financial strength,
and they are set in accordance with industry standards. The
creditworthiness of customers is considered before trading
commences. Most of the Group's customers are large and well
established institutions that pay on time and in accordance with
the Group's standard terms of business.
The amounts presented in the Balance Sheet are net of allowances
for bad and doubtful receivables estimated by management based on
prior experience and their assessment of the current economic
value.
4. Financial instruments and risk management
The methods and assumptions used to estimate the fair values of
financial assets and liabilities are as follows:
-- The carrying amount of trade receivables and payables
approximates to fair value due to the short maturity of the amounts
receivable and payable.
-- The fair value of the Group's borrowings is estimated on the
basis of the discounted value of future cash flows using
approximate discount rates in effect at the balance sheet date.
-- The fair value of the Group's outstanding interest rate
swaps, foreign exchange contracts are estimated using discounted
cash flow models and market rates of interest and foreign exchange
at the balance sheet date.
Financial instruments are measured at fair value via a valuation
method. The different levels have been defined as:
-- level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- level 2: Inputs other than quoted prices included within
level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and
-- level 3: Inputs for the assets or liabilities that are not
based on observable market data (that is, unobservable inputs).
The Group has recognised a level 2 financial liability of
GBP278,131 (2017: GBP150,311 asset) for foreign exchange trading
derivatives at fair value through income or expense. In addition
the Group has recognised a level 2 financial liability of
GBP176,605 (2017: GBP474,850) for two (2017: two) interest rate
swap contracts at fair value through other comprehensive income or
expense. The Group has no recognised level 1 or level 3 assets or
liabilities.
Notes to the Financial Results
5. Measures of profit
Reconciliation to profit on continuing activities before tax
To provide shareholders with additional understanding of the
trading performance of the Group, adjusted EBITA has been
calculated as profit before tax after adding back:
-- amortisation of intangible assets excluding computer software;
-- impairment of goodwill and intangible assets;
-- adjusting items (included in operating expenses);
-- other income - gain on sale of subsidiary
-- share of loss of equity accounted investment; and
-- finance costs.
Adjusted EBITA and adjusted EBITDA reconcile to profit on
continuing activities before tax as follows:
Six months Six months
ended ended Year
31 December 31 December ended 30
2018 2017 June 2018
Restated Restated
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
------------- ------------- -------------
Profit before tax 5,843 2,159 2,547
Amortisation of intangible assets excluding
computer software 2,607 3,407 6,432
Impairment of goodwill and intangible
assets - - 8,561
Adjusting items (included in operating
expenses) 132 3,526 4,573
Other income - gain on sale of subsidiary (1,906) - -
Share of loss of equity accounted investment 115 - -
Finance costs 1,008 986 1,969
------------- ------------- -------------
Adjusted operating profit ('adjusted EBITA') 7,799 10,078 24,082
Depreciation of property, plant and equipment
included in operating expenses 572 399 917
Amortisation of intangible assets - computer
software 652 653 1,302
------------- ------------- -------------
Adjusted EBITA before depreciation ('adjusted
EBITDA') 9,023 11,130 26,301
------------- ------------- -------------
Adjusted profit before tax reconciles to profit on continuing
activities before tax as follows:
Six months Six months
ended ended Year
31 December 31 December ended 30
2018 2017 June 2018
Restated Restated
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
------------- ------------- -------------
Profit before tax 5,843 2,159 2,547
Amortisation of intangible assets excluding
computer software 2,607 3,407 6,432
Impairment of goodwill and intangible
assets - - 8,561
Adjusting items (included in operating
expenses) 132 3,526 4,573
Other income - gain on sale of subsidiary (1,906) - -
------------- ------------- -------------
Adjusted profit before tax 6,676 9,092 22,113
------------- ------------- -------------
Notes to the Financial Results
6. Segmental information
In accordance with IFRS 8 the Group's operating segments are
based on the operating results reviewed by the Board, which
represents the chief operating decision maker.
The Group's organisational structure reflects the main
communities to which it provides information, education and
networking. The three divisions (Risk & Compliance, Healthcare
and Professional) are the Group's segments and generate all of the
Group's revenue.
The Board considers the business from both a geographic and
product perspective. Geographically, management considers the
performance of the Group between the UK, North America, the rest of
Europe and the rest of the world.
(a) Business segments
Six months ended 31 December Year ended 30
2017 June 2018
Six months ended 31 December 2018 Restated Restated
(unaudited) (unaudited) (unaudited)
----------------------------------- -------------------------------- ----------------------
Revenue Contribution Revenue Contribution Revenue Contribution
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ---------------- -------------- ---------------- -------- ------------
Risk & Compliance 20,058 5,906 19,546 5,355 42,321 12,361
Healthcare 20,560 1,271 20,831 3,718 44,681 9,899
Professional 17,682 2,923 17,902 3,203 34,612 6,290
Group contribution 58,300 10,100 58,279 12,276 121,614 28,550
Unallocated central
overheads - (2,308) - (1,860) - (3,827)
Share based payments - 7 - (338) - (641)
58,300 7,799 58,279 10,078 121,614 24,082
Amortisation of
intangible assets
excluding computer
software (2,607) (3,407) (6,432)
Impairment of goodwill
and intangible assets - - (8,561)
Adjusting items
(included in operating
expenses) (132) (3,526) (4,573)
Other income - gain on
sale of subsidiary 1,906 - -
Finance costs (1,008) (986) (1,969)
Share of loss of equity
accounted investment (115) - -
Profit before tax 5,843 2,159 2,547
Taxation (843) (798) (2,672)
---------------- ---------------- ------------
Profit for the
financial period 5,000 1,361 (125)
---------------- ---------------- ------------
There are no intra-segmental revenues which are material for
disclosure. Unallocated central overheads represent head office
costs that are not specifically allocated to segments. Total assets
and liabilities for each reportable segment are not presented, as
such information is not provided to the Board.
(b) Segmental information by geography
The UK is the Group's country of domicile and the Group
generates the majority of its revenue from external customers in
the UK. The geographical analysis of revenue is on the basis of the
country of origin in which the customer is invoiced:
Six months Year
Six months ended 31 ended
ended 31 December 30 June
December 2017 2018
2018 Restated Restated
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
------------ ------------ ------------
UK 33,814 34,457 71,556
Europe (excluding the UK) 11,077 9,055 20,756
North America 8,745 9,599 18,314
Rest of the world 4,664 5,168 10,988
------------ ------------ ------------
Total revenue 58,300 58,279 121,614
------------ ------------ ------------
Notes to the Financial Results
7. Adjusting items
The following items have been charged to the Income Statement
during the period but are considered to be adjusting so are shown
separately:
Six months ended Six months ended Year ended
31 December 31 December 30 June
2018 2017 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------- ---------------- -----------
Adjusting items relating to property portfolio review and IT
infrastructure transformation - 3,018 3,090
Costs relating to successful and aborted acquisitions, disposals and
integration 84 188 721
Restructuring and rationalisation costs - 169 432
Net increase in the liability for deferred consideration 48 151 330
Other adjusting items (included in operating expenses) 132 3,526 4,573
Amortisation of intangible assets excluding computer software 2,607 3,407 6,432
Impairment of goodwill - - 8,561
---------------- ---------------- -----------
Total adjusting items (classified in profit before tax) 2,739 6,933 19,566
---------------- ---------------- -----------
Adjusting items relating to property portfolio review and IT
infrastructure transformation are costs associated with a review of
Wilmington's London property portfolio that took place in the year
ended 30 June 2017, that resulted in moving into its new London
head office premises in December 2017.
In the year ended 30 June 2018, GBP8.6m goodwill relating to CLT
was impaired in full. This impairment resulted from a review
concluding that the future economic benefit in the business did not
derive from the historical assets purchased to which the acquired
goodwill was attributed.
8. Net finance costs
Six months Six months Year
ended ended 31 ended 30
31 December December June
2018 2017 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Net finance costs comprise:
Interest payable & receivable on bank
loans and overdrafts 985 903 1,804
Unwinding of the discount on royalty
payments receivable (60) - -
Amortisation of capitalised loan arrangement
fees 83 83 165
1,008 986 1,969
------------- ------------ ----------
9. Taxation
Six months Year
Six months ended ended
ended 31 December 30 June
31 December 2017 2018
2018 Restated Restated
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Current tax:
Current tax on profits for the period 1,151 1,273 3,465
Adjustments in respect of previous years - 14 22
Total current tax 1,151 1,287 3,487
Deferred tax:
Deferred tax credit (308) (387) (765)
Effect on deferred tax of change in corporation
tax rate - (125) 41
Adjustments in respect of IFRS 15 - 23 (91)
------------- ------------- ------------
Total deferred tax (308) (489) (815)
Taxation 843 798 2,672
------------- ------------- ------------
Notes to the Financial Results
10. Dividends
Distributions to owners of the parent in the period:
Six Six Six Six
months months months months
ended 31 ended 31 Year ended ended 31 ended 31 Year ended
December December 30 June December December 30 June
2018 2017 2018 2018 2017 2018
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
pence per pence per pence
share share per share GBP'000 GBP'000 GBP'000
Final dividends recognised
as distributions in
the year 4.8 4.6 4.6 4,200 4,019 4,019
Interim dividends recognised
as distributions in
the year - - 4.0 - - 3,495
------------ ------------ ----------- ------------ ------------ -----------
Total dividends paid
in the period 4,200 4,019 7,514
------------ ------------ ----------- ------------ ------------ -----------
Interim/final dividend
proposed 4.1 4.0 4.8 3,587 3,495 4,194
------------ ------------ ----------- ------------ ------------ -----------
11. Earnings per share
Adjusted earnings per share has been calculated using adjusted
earnings calculated as profit after taxation and non-controlling
interests but before:
-- amortisation of intangible assets excluding computer software;
-- impairment of goodwill and intangible assets;
-- adjusting items (included in operating expenses);
-- other income - gain on sale of subsidiary; and
-- adjusting items (included in finance costs).
The calculation of the basic and diluted earnings per share is
based on the following data:
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2018 2017 2018
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Earnings from continuing operations for
the purpose of basic earnings per share 4,983 1,342 (172)
Add/(remove):
Amortisation of intangible assets excluding
computer software (net of non-controlling
interests) 2,607 3,407 6,432
Impairment of goodwill and intangible assets - - 8,561
Adjusting items (included in operating expenses) 132 3,526 4,573
Other income - gain on sale of subsidiary (1,906) - -
Tax effect of adjustments above (432) (1,220) (1,876)
Adjusted earnings for the purposes of adjusted
earnings per share 5,384 7,055 17,518
------------ ------------ ------------
Number Number Number
Weighted average number of ordinary shares
for the purpose of basic and adjusted earnings
per share 87,466,362 87,317,182 87,379,469
Effect of dilutive potential ordinary shares:
Future exercise of share awards and options 753,794 704,993 645,240
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 88,220,156 88,022,175 88,024,709
------------ ------------ ------------
Basic earnings per share 5.70p 1.54p (0.20)p
Diluted earnings per share 5.65p 1.52p (0.20)p
Adjusted basic earnings per share ('adjusted
earnings per share') 6.16p 8.08p 20.05p
Adjusted diluted earnings per share 6.10p 8.02p 19.90p
------------ ------------ ------------
Notes to the Financial Results
12. Goodwill, Intangible assets and Property, plant and equipment
Goodwill Intangible assets Property, plant and equipment
GBP'000 GBP'000 GBP'000
Closing net book amount as at 30 June 2017 (audited) 86,028 31,911 4,444
Additions - 1,047 2,860
Acquisitions (762) - -
Disposals - (4) (24)
Exchange translation differences (454) (368) (6)
Depreciation of property, plant and equipment - - (831)
Amortisation of intangible assets excluding computer
software - (3,407) -
Amortisation of computer software - (653) -
--------- ------------------ ------------------------------
Closing net book amount as at 31 December 2017
(unaudited) 84,812 28,526 6,443
--------- ------------------ ------------------------------
Additions 588 887 553
Acquisitions - 1,528 12
Disposals - 4 (20)
Exchange translation differences 264 92 2
Impairment (8,561) - -
Depreciation of property, plant and equipment - - (518)
Amortisation of intangible assets excluding computer
software - (3,025) -
Amortisation of computer software - (649) -
Reallocation - (58) (9)
--------- ------------------ ------------------------------
Closing net book amount as at 30 June 2018 (audited) 77,103 27,305 6,463
--------- ------------------ ------------------------------
Additions - 761 554
Acquisitions - 240 1
Disposals - - (26)
Exchange translation differences 394 36 (9)
Depreciation of property, plant and equipment - - (572)
Amortisation of intangible assets excluding computer
software - (2,607) -
Amortisation of computer software - (652) -
--------- ------------------ ------------------------------
Closing net book amount as at 31 December 2018
(unaudited) 77,497 25,083 6,411
--------- ------------------ ------------------------------
13. Trade and other receivables
31 December 31 December 30 June
2018 2017 2018
Restated
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Trade receivables 20,321 21,939 22,869
Prepayments and other receivables 6,029 4,811 5,364
------------- ------------- -----------
26,350 26,750 28,233
------------- ------------- -----------
14. Trade and other payables
31 December 30 June
2017 2018
31 December Restated Restated
2018 (unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Trade and other payables 23,770 23,270 26,368
Subscriptions and deferred revenue 26,600 27,627 28,111
50,370 50,897 54,479
------------------ ------------- -------------
Notes to the Financial Results
15. Borrowings
31 December 2018 31 December 2017 30 June 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Current liability
Bank overdrafts - 1,647 -
- 1,647 -
----------------- ----------------- -------------
Non-current liability
Bank loans 56,189 56,211 50,665
Capitalised loan arrangement fees (214) (367) (285)
----------------- ----------------- -------------
Bank loans net of facility fees 55,975 55,844 50,380
----------------- ----------------- -------------
16. Share capital
Number of ordinary
shares Ordinary shares Share premium account Treasury shares Total
of 5p each GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2017
(audited) 87,247,974 4,362 45,225 (96) 49,491
---------------------- ---------------- ---------------------- ---------------- ---------
Shares issued 166,099 9 - - 9
At 31 December 2017
(unaudited) and 30
June 2018 (audited) 87,414,073 4,371 45,225 (96) 49,500
---------------------- ---------------- ---------------------- ---------------- ---------
Shares issued 125,494 6 - - 6
At 31 December 2018
(unaudited) 87,539,567 4,377 45,225 (96) 49,506
---------------------- ---------------- ---------------------- ---------------- ---------
On 19 September 2018, 125,494 ordinary shares were issued in
respect of the vesting of the 2015 PSP Share Awards to employees
(including Directors).
At 31 December 2018, 46,584 shares (2017: 46,584) were held in
Treasury, which represents 0.1% (2017: 0.1%) of the called up share
capital of the Company.
17. Cash generated from operations
Six months
Six months ended 31 Year ended
ended 31 December 30 June
December 2017 2018
2018 Restated Restated
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Profit from continuing operations before
income tax 5,843 2,159 2,547
Adjusting items - excluding depreciation
of property plant and equipment 132 3,094 4,141
Adjusting items - depreciation of property,
plant and equipment - 432 432
Depreciation of property, plant and equipment
included in operating expenses 572 399 917
Gain on sale of subsidiary (1,906) - -
Amortisation of intangible assets 3,259 4,060 7,734
Impairment of goodwill and intangible assets - - 8,561
Profit on disposal of property, plant and
equipment (2) (3) (11)
Share based payments (including social
security costs) (7) 338 641
Share of loss of equity accounted investment 115 - -
Net finance costs 1,008 986 1,969
------------ ------------ ------------
Operating cash flows before movements in
working capital 9,014 11,465 26,931
Decrease in trade and other receivables 3,027 968 160
Decrease in trade and other payables (4,958) (4,705) (1,426)
------------ ------------ ------------
Cash generated from operations before adjusting
items 7,083 7,728 25,665
------------ ------------ ------------
Notes to the Financial Results
17. Cash generated from operations (continued)
Cash conversion is calculated as a percentage of cash generated
by operations to Adjusted EBITA as follows:
Six months
Six months ended 31 Year ended
ended 31 December 30 June
December 2017 2018
2018 Restated Restated
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Funds from operations before adjusting
items:
Adjusted EBITA 7,799 10,078 24,082
Share based payments (including social
security costs) (7) 338 641
Amortisation of intangible assets - computer
software 652 653 1,302
Depreciation of property, plant and equipment
included in operating expenses 572 399 917
Profit on disposal of property, plant and
equipment (2) (3) (11)
------------- ------------- -------------
Operating cash flows before movements in
working capital 9,014 11,465 26,931
Net working capital movement (1,931) (3,737) (1,266)
------------- ------------- -------------
Funds from operations before adjusting
items 7,083 7,728 25,665
------------- ------------- -------------
Cash conversion 91% 77% 107%
------------- ------------- -------------
Free cash flows:
Operating cash flows before movement in
working capital 9,014 11,465 26,931
Proceeds on disposal of property, plant
and equipment 28 31 55
Net working capital movement (1,931) (3,737) (1,266)
Interest paid (1,004) (1,027) (1,934)
Tax paid (2,254) (2,518) (4,738)
Purchase of property, plant and equipment (554) (2,860) (3,089)
Purchase of intangible assets (761) (1,047) (1,934)
------------- ------------- -------------
Free cash flows 2,538 307 14,025
------------- ------------- -------------
18. Related party transactions
The Company and its wholly owned subsidiary undertakings offer
certain Group-wide purchasing facilities to the Company's other
subsidiary undertakings whereby the actual costs are recharged.
The former Chief Executive Officer, Pedro Ros, owns a minority
shareholding in SMARP OY (a company incorporated in Finland) which
provides ongoing social media services to the Group, invoiced on an
annual basis. SMARP UK Limited, a subsidiary of SMARP OY, invoiced
GBPnil (2017: GBPnil) during the period.
Close family members of key management personnel provided
services to the Group during the period for lecturing. The total
invoiced for these services was GBP55,006 (2017: GBP40,466).
19. Seasonality
The Group has traditionally generated the majority of its
revenues and profits during the second half of the financial year.
This has historically resulted from two factors. Firstly, most of
the Group's businesses (the notable exception being AMT) produce
seasonally low sales in July, August and December which include
holiday periods for many of the Group's clients. Secondly, Inese,
Compliance Week, FRA and HSJ, have major annual events in the
second half of the year.
Notes to the Financial Results
20. Disposal of International Company Profile
On 18 July 2018 Wilmington Publishing and Information Limited (a
wholly owned subsidiary of Wilmington plc) sold the trade and
assets of International Company Profile ("ICP"), including its 100%
shareholding in International Company Profile FZ LLC, the statutory
entity incorporated in Dubai, to its management team.
ICP was the credit reporting business previously held within the
Risk & Compliance division and was classified as held for sale
at 30 June 2018.
The profit on disposal of International Company Profile was
GBP1,906,000 which is calculated as follows:
GBP'000
-------
Initial consideration 300
Deferred consideration: royalty payments 2,700
-------
Total consolidation 3,000
-------
Discount of royalty payments (606)
-------
Fair value of consideration 2,394
-------
Less:
Property, plant and equipment 9
Intangible assets 58
Cash 240
Trade receivables 100
Other receivables 81
-------
Net assets disposed off 488
-------
Profit on disposal of ICP 1,906
-------
The sale price for ICP was GBP3,000,000, which includes future
royalty payments of GBP2,700,000 which have been accounted for as
deferred consideration.
In accordance with IFRS 3: Business combinations and IAS 10:
Consolidated Financial Statements, the royalty payments have been
accounted for as consideration as part of the disposal transaction
because the business sale agreement and royalty licence agreement
were entered into at the same time, to achieve the same overall
commercial effect, and both arrangements were dependent on each
other.
At 31 December 2018 the fair value of the future royalty
payments was GBP2,154,000.
Notes to the Financial Results
21. Restatement in respect of IFRS 15
Restatement of results for the six months ended 31 December
2017
The results for the six months ended 31 December 2017 have been
restated following the adoption in 2018 of IFRS 15.
In the six months ended 31 December 2017 the adjustment to
revenue recognised under the new standard resulted in an increase
in revenue of GBP120,000, profit before tax of GBP120,000 and
profit after tax of GBP97,000, with these adjustments affecting the
Risk & Compliance and Professional divisions.
Consolidated balance sheet at 31 December 2017
The consolidated balance sheet at 31 December 2017 has been
restated following the adoption in 2018 of IFRS 15.
Deferred revenue at the balance sheet date has increased by
GBP2,768,000 due to changes in the revenue recognition for training
courses provided by the Risk & Compliance and Professional
divisions.
The Consolidated Balance Sheet at 31 December 2017 has also been
adjusted for the reclassification of GBP1,483,000 of deferred
revenue against trade receivables, for amounts that had been
invoiced and where services had not been provided and amounts were
not due.
The deferred tax asset of GBP590,000 has increased by GBP366,000
to GBP956,000 to reflect the cumulative tax adjustment to 31
December 2017.
Consolidated balance sheet at 31 December 2017
IFRS 15 adjustment - IFRS 15 adjustment - net
Previously reported revenue recognition down of balance sheet Restated
GBP'000 GBP'000 GBP'000 GBP'000
Non current assets:
Deferred tax assets 590 366 - 956
Other non-current assets
Current assets: Trade and
other receivables 119,817 - - 119,817
28,233 - (1,483) 26,750
Other current assets 12,143 - - 12,143
Total assets 160,783 366 (1,483) 159,666
-------------------- --------------------------- -------------------------- ----------
Current liabilities: Trade
and Other Payables (23,270) - - (23,270)
Current liabilities:
Deferred revenue (26,342) (2,768) 1,483 (27,627)
Other current liabilities (3,888) - - (3,888)
Other non-current
liabilities (60,518) - - (60,518)
Total liabilities (114,018) (2,768) 1,483 (115,303)
-------------------- --------------------------- -------------------------- ----------
Net assets 46,765 (2,402) - 44,363
-------------------- --------------------------- -------------------------- ----------
The only changes to the Statement of Comprehensive Income and
Expense and the Statement of Changes in Equity for the six months
ended 31 December 2018 are to reflect the impact of the restatement
of results for the six months ended 31 December 2017.
The only changes to the Statement of Cash Flows for the six
months ended 31 December 2018 are to reflect the impact of the
restatement of results for the six months ended 31 December 2017
and the balance sheet at 31 December 2017. The adoption of IFRS 15
has not impacted the Group's cash flows or cash balances.
Notes to the Financial Results
21. Restatement in respect of IFRS 15 (continued)
Restatement of results for the year ended 30 June 2018
The results for the year ended 30 June 2018 have been restated
following the adoption in 2018 of IFRS 15.
In the year ended 30 June 2018 the adjustment to revenue
recognised under the new standard resulted in a decrease in revenue
of GBP478,000, profit before tax of GBP478,000 and profit after tax
of GBP387,000, with these adjustments affecting the Risk &
Compliance and Professional divisions.
Consolidated balance sheet at 30 June 2018
The consolidated balance sheet at 30 June 2018 has been restated
following the adoption in 2018 of IFRS 15.
Deferred revenue has increased by GBP3,365,000 due to changes in
the revenue recognition for training courses provided by the Risk
& Compliance and Professional divisions.
There was no reclassification of deferred revenue against trade
receivables in the consolidated balance sheet at 30 June 2018.
The deferred tax asset of GBP458,000 has increased by GBP479,000
to GBP937,000 to reflect the cumulative tax adjustment to 31
December 2017.
Consolidated balance sheet at 30 June 2018
IFRS 15 adjustment - IFRS 15 adjustment - net
Previously reported revenue recognition down of balance sheet Restated
GBP'000 GBP'000 GBP'000 GBP'000
Non current assets:
Deferred tax assets 458 479 - 937
Other non-current assets
Current assets: Trade and
other receivables 110,984 - - 110,984
28,233 - - 28,233
Other current assets 11,106 - - 11,106
Total assets 150,781 479 - 151,260
-------------------- --------------------------- -------------------------- ----------
Current liabilities: Trade
and Other Payables (26,368) - - (26,368)
Current liabilities:
Deferred revenue (24,746) (3,365) - (28,111)
Other current liabilities (2,042) - - (2,042)
Other non-current
liabilities (55,109) - - (55,109)
Total liabilities (108,265) (3,365) - (111,630)
-------------------- --------------------------- -------------------------- ----------
Net assets 42,516 (2,886) - 39,630
-------------------- --------------------------- -------------------------- ----------
The only changes to the Statement of Comprehensive Income and
Expense and the Statement of Changes in Equity for the year ended
30 June 2018 are to reflect the impact of the restatement of
results for the year ended 30 June 2018.
The only changes to the Statement of Cash Flows for the year
ended 30 June 2018 are to reflect the impact of the restatement of
results for the year ended 30 June 2018 and the balance sheet at 30
June 2018. The adoption of IFRS 15 has not impacted the Group's
cash flows or cash balances.
22. Events after the reporting period
Pedro Ros gave notice of his intention to step down from his
position as Chief Executive Officer of the Company on 16 January
2019. Mr Ros retired from the Board on 13 February, after which
date his employment with the Company will continue until 30 June
2019 to ensure a smooth and orderly handover.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SEDFUSFUSESE
(END) Dow Jones Newswires
February 21, 2019 02:00 ET (07:00 GMT)
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