TIDMWIL
RNS Number : 6095X
Wilmington PLC
23 February 2017
23 February 2017
WILMINGTON PLC
('Wilmington', 'the Group' or 'the Company')
Financial Results for the six months ended 31 December 2016
Wilmington plc, the provider of information, education and
networking services in Risk & Compliance, Finance, Legal, and
Insight knowledge areas, today announces its interim results for
the six months ended 31 December 2016.
Financial Highlights
- Group revenues for the period up 11% at GBP54.8m (2015:
GBP49.4m); up 6% in constant currency(1) terms
- Adjusted EBITA(2) increased 3% to GBP10.0m (2015: GBP9.7m)
- Adjusted EBITA margins(3) at 18.3 % (2015: 19.7%)
- Adjusted Profit before Tax(4) up 2% to GBP9.1m (2015: GBP8.9m)
- Adjusted Earnings per Share(5) up 2% at 8.10p (2015: 7.93p)
- Basic Earnings per Share up to 4.43p (2015: 3.94p)
- Profit before tax at GBP5.0m (2015: GBP4.5m)
- Deferred revenue is up 13% to GBP24.2m (2015: GBP21.3m)
- Interim dividend increased 3% to 3.9p (2015: 3.8p), in line with progressive dividend policy
Operational Highlights
- Strong growth from Risk & Compliance with revenue up 11%
driven by Compliance (up 13% organic(6) )
- Finance revenue up 7% aided by maiden contribution from SWAT UK Ltd
- Legal revenue down 7% but profits up reflecting the reorganisation in 2015/16
- Insight delivered strong revenue growth up 26% driven by UK Healthcare (up 15% organic)
- Subscription and repeatable information sales at 78% of total revenue (2015: 76%)
- International revenues increased, representing 43% of total revenue (2015: 42%)
- SWAT acquired July 2016 extends presence in accountancy
training and adds scale to Finance Division
- Health Service Journal ("HSJ") acquired January 2017
strengthens client offerings and adds scale to Healthcare
Division
Strategy Update
- First stage of Wilmington's transformation is complete
- Second stage (") Sixth Gear' announced;
o Focus the business further into three divisions: Risk &
Compliance, Professional & Healthcare
o Maximise client relationships; and accelerate integration
o Planned exit from legal practice support markets
o Project Sixth Gear will focus business structure, helping to
drive scale and efficiencies in core markets
Current Trading
- Strong revenue momentum from key growth areas (compliance, insurance and healthcare)
- As in previous years Wilmington's trading performance remains second half weighted
- Acquisitions of SWAT and HSJ each expected to be earnings enhancing in first full year
- Expected profit growth partially offset by investment in
Compliance Week and weaker performance from AMT
Pedro Ros, Chief Executive Officer, commented:
"Today we announce project Sixth Gear to drive Wilmington's
transition to the next phase of our strategy. We will migrate to a
structure comprising three divisions: Risk & Compliance,
Professional and Healthcare. As our knowledge-based model evolves,
we will focus on areas with the greatest potential for growth.
Clients will remain at the centre of everything we do, and we will
strive to maximise our client relationships and build a more
integrated and international business.
As we move into the second half we are on target to deliver
another good set of results for the full year. We believe project
Sixth Gear will accelerate longer term growth and we look forward
to updating the market on our progress."
(1) Constant currency - eliminating the effects of exchange rate
fluctuations
(2) Adjusted EBITA - see note 5
(3) Adjusted EBITA margins - Adjusted EBITA divided by
Revenue
(4) Adjusted Profit before Tax - see note 5
(5) Adjusted Earnings per Share - see note 11
(6) Organic - eliminating the effects of acquisitions in the
year and exchange rate fluctuations
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.
For further information, please contact:
Wilmington plc 020 7422 6800
Pedro Ros, Chief Executive Officer
Anthony Foye, Chief Financial Officer
FTI Consulting 020 3727 1000
Charles Palmer / Emma Appleton / Adam
Davidson
Operating and Financial Review
Wilmington recorded strong revenue growth during the period from
Risk & Compliance and Insight, supported by acquisition-led
growth in Finance offset by the expected continued decline in our
Legal division. Profit growth was constrained by the previously
announced planned investments in our compliance businesses and from
a generally weaker performance from AMT and our US operations which
are being restructured in response. Recent acquisitions have
performed well in both revenue and profit contribution terms and
these results have also benefited from favourable currency exchange
effects on revenue and to a limited extent on profits.
Overall revenue grew GBP5.4m (11%) to GBP54.8m (2015: GBP49.4m)
and Adjusted EBITA grew GBP0.3m (3%) to GBP10.0m (2015: GBP9.7m).
Foreign currency exchange rate movements benefited revenue by
GBP2.4m and acquisitions contributed a further GBP3.8m. In
underlying terms, adjusting for acquisitions and the impact of
foreign currency exchange effects, organic revenue was down by
2%.
EBITA margins at 18.3% were down, largely as expected, compared
to 2015 (19.7%) reflecting, inter alia, the planned investments of
GBP0.3m in our compliance business combined with the previously
reported impact of AMT business lost last year and the weaker US
operations performance.
Finance costs, which include interest charges and associated
costs, increased to GBP0.9m from GBP0.8m reflecting the higher
average debt levels in this period compared to 2015. This higher
level is due primarily to GBP9.3m of acquisition and related spend
during 2016.
The growth in Adjusted EBITA was offset by increased finance
costs translated into Adjusted Profit before Tax up 2% (GBP0.2m) to
GBP9.1m (2015: GBP8.9m). Foreign currency translation impacts were
only marginally beneficial to overall profits in the period due to
the impact of foreign currency hedges taken out prior to
Brexit.
Business Vision and Strategy
Our vision which acts as our guide and underpins our strategy
is:
"To be the recognised knowledge leader and partner of choice for
information, education and networking in Risk & Compliance,
Finance and Legal as well as the Insight leader in a number of
chosen industries"
The first stage in implementing our new strategy announced in
January 2015 was to simplify the group structure, identifying gaps
in our offerings and to provide greater clarity on the Group's
capital allocation. We have made good progress in creating a more
compelling offering through a knowledge-based model and customer
focus. Through selective earnings enhancing acquisitions we have
now reached a key milestone with information, education and
networking capabilities for all four of our knowledge areas. We
have also continued to strengthen our infrastructure, technology
and resources to build a more integrated and international business
to help support our growth strategy.
Project Sixth Gear: more focus, more scale
The next stage of our strategy is to simplify and integrate the
business still further, maximising client relationships and
providing the basis for further organic and acquisition-led growth
and scale. To help achieve this, we have announced project Sixth
Gear. This project will accelerate Wilmington's transition to an
integrated global business with a more focused structure and an
emphasis on maximising client relationships. The accelerated
integration and pooling of resources will help capitalise on
internal economies of scale.
More focused structure
To simplify Wilmington further we will reorganise our business
into three divisions effective from this announcement: Risk &
Compliance, Professional, and Healthcare. Our three divisions
following the reorganisation will be of similar revenue size on a
pro forma basis(7) . Following our recent acquisition of HSJ in
January 2017 we are starting to build significant scale in our
Healthcare division and we will be looking to do the same for each
of our priority areas for investment: compliance, insurance (risk)
and healthcare.
As a result of our decision to focus the business around these
three knowledge areas we plan to exit legal practice support
services. We will therefore be looking to dispose of our Ark
business which contributed GBP3.1m to revenue and GBP0.7m to
profits in 2015/16. A process to find a new home for the Ark
business has already commenced.
New Reporting Structure
In order to operate in a more focused structure and to help us
build more scale in our areas of strength, the Group will report on
a divisional basis with effect from the results for the year to 30
June 2017 as follows:
Risk & Compliance division will concentrate on servicing the
existing strong organic demand supported by selective earnings
enhancing acquisitions in the areas of risk & compliance as
well as investments in new products, data services and new
territories. The emphasis will continue to be servicing the needs
of risk managers and compliance officers globally.
Professional division will provide information, education and
networking support to professionals in the accountancy, financial
services, and legal markets. This business will focus on supporting
the post-qualification needs of individual professionals and SMEs
with an increasing emphasis on exploiting international
opportunities, and an accelerated move to expand our online
e-learning solutions; areas where we feel the revenue growth
opportunities are greatest. The key brands will be maintained and
we will seek to integrate common functions such as venue bookings,
e-learning technology, marketing and support systems thereby
generating economies of scale. To speed up the integration and
exploitation of opportunities a new divisional MD will be appointed
and the emphasis will be on organic rather than acquisition led
growth.
Healthcare division will be the renamed Insight division
recognising that well over 80% of its revenue following the HSJ
acquisition will come from healthcare markets. We will look to
replicate the UK strategy of having information (particularly
insight data and analytics), education and networking capabilities
on a country by country basis with emphasis on our existing market
presence in France and the US either organically or by
acquisition.
In line with our strategy all three divisions will offer
information, networking and education capabilities servicing key
defined communities, supported by best-in-class technology. The
divisions will look to exploit international and digital
opportunities using and replicating expertise from their existing
market positions. Each division will also act as our specialist
knowledge expert and centre of excellence providing expertise and
R&D to support the two other divisions.
Pro forma financial information based on the new structure is
included as an appendix to this statement.
(7) Revenue for the year ended 30 June 2016 with HSJ's revenue
included for the same period
Maximising client relationships
Clients remain at the centre of everything we do at Wilmington.
As we continue to focus on building a more integrated and
international business to support our growth strategy, Sixth Gear
will deliver clear synergistic benefits enhancing cross-divisional
collaboration between all three divisions.
In order to maximise client relationships, we have launched our
Key Account Program (KAP) to reinforce account-management
capabilities prioritising the development of strategic corporate
partnerships and to identify cross-market potential. This
initiative will be supported by our group wide CRM platform
(Salesforce) which we started to implement 3 years ago.
We have seen initial successes of this account-management
initiative in our Insight division with traction from our
healthcare and pharma clients and we expect that our KAP will be a
driver of growth in the future.
These important planned changes will accelerate the central
theme of more focus and more scale.
Accelerating integration
There are a number of simultaneous workflows under project Sixth
Gear all with the common objective to bring our business closer,
enhancing Wilmington's collaborative culture. We will exploit
opportunities arising from the new structure and increase
commonality in terms of shared services and resources. There are a
number of workflows including the roll-out of common e-learning
technology and programmes, flexible working technology, centralised
marketing support, and centralisation of procurement. The main
workflows centre on London property consolidation, enhancing our
e-learning capability and the continued roll-out of common global
systems.
We operate across three properties in London and have been
actively reducing our office space requirements by implementing
more flexible working practices and through the transfer of back
office functions to lower cost locations which started last year
and finished in October 2016. Our objective is to consolidate all
London operations into one premises whilst retaining our purpose
built training facility acquired with SWAT.
Wilmington, particularly through its AMTO (AMT Online) platform,
has benefited from development of e-learning capabilities and
intends to expand and upgrade this capability as part of Sixth
Gear. We have, as previously reported, recruited a head of
e-learning and support team to resource this exciting
initiative.
Project Sixth Gear excluding the London property consolidation
will cost in total GBP1.2m (including GBP0.6m of capital
expenditure); of which GBP0.2m has been incurred to date. We expect
the project to yield benefits in terms of enhanced performance and
more focused operations but in any event to cover its costs within
two years. Any material developments on the London property
consolidation will be communicated as appropriate.
Acquisitions
On 19 July 2016, Wilmington acquired SWAT Group Limited
("SWAT"), a provider of training, and technical compliance support
to accountancy firms in London and the South West of England. The
consideration was settled by an initial cash payment of GBP2.4m
with a deferred cash consideration payment in September 2018
subject to SWAT achieving challenging profit targets over the two
financial years ending 30 June 2018. The acquisition provides
Wilmington with a bigger presence in the London face-to-face
accountancy training market, and extends Wilmington's business into
the South West of England where it has been under-represented. The
acquisition also provides a clear opportunity to sell technical and
marketing services to SWAT's clients as well as providing access to
the accountancy student training market.
On 31 January 2017, Wilmington announced the acquisition of HSJ,
the UK's leading health information, insight and networking
business, for and initial cash payment of GBP17m (GBP19m less a
GBP2m working capital adjustment). HSJ will sit within Wilmington's
Healthcare division and positions Wilmington as the leading
provider of insight, analytics, networking and education in the UK
healthcare market. Uniquely, Wilmington Healthcare will have a UK
industry presence across both provider/payer and the private sector
in Pharma and MedTech and other healthcare providers. Healthcare
expenditure is inexorably rising and businesses need the solutions
that Wilmington Healthcare provides to optimise their activities.
The acquisition will enhance Wilmington's access to senior decision
makers and to a wider group of healthcare stakeholders who will
benefit from Wilmington's enhanced solutions. This move will open
further cross-selling and network opportunities for Wilmington to
provide even more powerful, market leading insight and lead
generation opportunities to our clients.
Wilmington has been acquisitive in the past and we will continue
to review opportunities to enhance growth and to add expertise
through selective earnings enhancing acquisitions consistent with
our strategy. Our priority areas for capital allocation remain
compliance, insurance and healthcare as we focus on adding further
scale to our existing market positions.
Our People
As an increasingly digital information, education and networking
business, operating in dynamic and competitive markets, we are
fundamentally reliant on the quality and professionalism of our
people. We would once again like to express our own and our fellow
Board members' appreciation of the hard work and dedication of all
our people. We would also like to take the opportunity to welcome
our new colleagues from HSJ to the Wilmington family.
Dividend
The Board's policy is to pay a progressive dividend reflecting
our confidence in the vision and resilience of our business models.
I am pleased to confirm that the interim dividend for this year
will be 3.9p (2015: 3.8p) per share, an increase of 3% on last
year. It is the Board's intention to maintain its progressive
dividend policy whilst ensuring that a suitable dividend cover of
at least two times adjusted earnings per share compared to the
dividend per share is maintained.
The interim dividend of 3.9p per share will be paid on 11 April
2017 to shareholders on the share register as at 10 March 2016,
with an associated ex-dividend date of 9 March 2017.
Outlook and Current Trading
The financial year, as previously communicated, has had a mixed
start. Some of our businesses particularly in Healthcare, have
performed well. Other areas including our compliance businesses
have had significant planned investment which has held back their
reported profit as expected, whilst other business have not
performed and we have made appropriate changes.
We continue to see tighter regulatory control and more complex
legislation implemented in many of our key markets which in turn
continues to drive the demand for our products and services
globally. The Board will continue to review opportunities to add
additional growth and expertise through organic investment and
selective earnings enhancing acquisitions consistent with our
strategy with emphasis on compliance, insurance and healthcare.
The second half of the year tends to be more profitable for
Wilmington and will be boosted by the expected positive impacts
from the HSJ and SWAT acquisitions and strong momentum from our key
growth drivers of compliance, insurance and healthcare. However,
profit growth is expected to be partially offset by a weaker than
planned performance from AMT and Compliance Week and due to lower
initial revenue from our new US compliance investment.
As we move into the second half, we look forward to delivering
another good set of results for the full year. We believe project
Sixth Gear bodes well for the Group's prospects with a view to
accelerating longer term growth and we will update the market in
due course.
Business Review
Wilmington currently manages and reports its business by
reference to four knowledge based divisions: Risk & Compliance,
Finance, Legal and Insight. The results from the recent SWAT
acquisition are included within the Finance division.
From and including 30 June 2017 we will be presenting
information on the current structure and representing the same
information on our new three divisional structure of Risk &
Compliance, Professional and Healthcare.
Pro forma financial information based on the new structure is
included as an appendix to this statement.
Risk and Compliance (36% of Group revenue, 48% of Group
contribution)
This division provides in-depth regulatory and compliance
accredited training and information, market intelligence, and
analysis. It focuses on the international financial services and
international insurance markets as well as the UK pensions
industry. The main community that uses our offerings are risk and
compliance officers globally.
2016 2015 Movement
GBP'm GBP'm GBP'm %
Revenue 19.5 17.6 1.9 11
Contribution 5.6 5.6 0.0
Margin
% 29 32
Divisional revenue grew GBP1.9m (11%) and by 6% on an organic
basis.
Compliance
Our Compliance business, which accounts for just over 50% of the
division's revenue, grew 20% compared to 2015 (13% organic growth
in constant currency terms).
Wilmington provides accredited training programmes in anti-money
laundering, compliance and financial crime. It has also developed
compliance training programmes in the Banking, Oil & Gas,
Pharmaceuticals, Betting, Legal, Accountancy and Gaming sectors.
One of our objectives is to carefully expand our offerings across
existing Wilmington market verticals and into new geographical
territories whilst maintaining the strong business momentum derived
from verticals where we are already embedded.
Within the compliance business, public and in-house courses grew
by nearly 20% organic and our online training revenue grew by over
40%. Demand for our products and services continues to be strong in
the Asia Pacific markets, serviced mainly through our new larger
Singapore office which saw revenue grow by 20% (constant currency)
in the period. This continued strong organic performance across our
businesses reflects general demand for accredited compliance
training and qualifications supplied globally both for individual
professionals and as part of bespoke corporate assignments.
During the period as previously reported we have invested an
additional GBP0.3m on two important initiatives. The first
initiative was establishing a US office, with dedicated trainers,
resources and localised programmes to access the US public and
corporate compliance markets and to provide US qualifications and
certificates. Our second initiative has been the launch of a new
audit training business ("ICA Compass") to provide support to
client financial enterprises which seek to achieve ISO 19600
(Compliance Management Systems).
As part of the initiative, we have successfully completed our
first assignment for an international financial services client
under ISO 19600. The US compliance training office which was set up
earlier in this period will be formally launched in March 2017
starting with a public course open day. Initial forecast sales
demand is a little weaker than we had hoped but we are confident of
the medium term potential benefits of this initiative.
ICA, the global association for compliance professionals, has
seen its paid membership more than double in the space of six
months following from the significant expansion of networking
events and professional support services. Momentum is strong and
membership continues to climb strongly.
Compliance Week, our US governance, risk and compliance events
and information business, saw revenue down by 8% (constant
currency) largely due to a weaker than expected performance from
our annual Compliance Conference in Brussels. We have invested and
are continuing to invest in new content and people to reposition
the business as a global governance, risk and compliance ('GRC')
resource centre and events business collaborating with other parts
of Wilmington.
Risk
The Risk part of the division contains our insurance businesses:
Axco, ICP and Inese and our Pensions business Pendragon. Overall
growth was 3% (flat in constant currency terms) with Axco, the
industry leading provider of insurance market intelligence,
regulation and compliance information, reporting a 6% (4% constant
currency) revenue growth. In August 2016 we successfully opened a
new insurance events and training office in Barcelona in response
to increasing localised demand for our Insurance offerings.
Overall divisional contribution was flat at GBP5.6m (2015:
GBP5.6m) and down GBP0.1m (3%) on a constant currency basis.
Margins were down slightly, reflecting, inter alia, the GBP0.3m
investment in compliance and the impact on Compliance Week profits
which suffered from a revenue shortfall and increased investment
costs.
Finance (22% of Group revenue, 16% of Group contribution)
This division includes Wilmington's financial training
businesses of Mercia, SWAT and AMT and the financial services
networking business of FRA. The Finance division provides expert
and technical training, networking and support services to
professionals in corporate finance, hedge funds, mutual funds, PE,
and capital markets; and to qualified accountants in the UK in both
the profession and industry. This division serves primarily tier 1
banks, the international financial services industry, and small to
medium sized professional accountancy firms.
2016 2015 Movement
GBP'm GBP'm GBP'm %
Revenue 12.4 11.6 0.8 7
Contribution 1.9 2.4 (0.5) (21)
Margin
% 16 21
Divisional revenue grew GBP0.8m (7%) and by 2% on a constant
currency basis
As previously reported, AMT, which forms an important part of
the division and delivers most of its revenue and contribution in
the summer months, had a weak start. This was mainly due to the
competition issues previously highlighted but also due to some
softening of investment bank training assignments and margins in
the Asia Pacific region. The impact of this reduced high margin AMT
revenue has, as expected, had a material impact on the division's
profits. The US and UK business has stabilised, however, we are
closely monitoring our Asia Pacific operations and our local team
has been strengthened including the appointment of a Managing
Director for the Asia Pac region.
SWAT, acquired on 19 July 2016, contributed GBP2.2m to revenue
and GBP0.3m to profits. Integration has gone well and the business
is performing well and in line with plan.
Overall divisional contribution was down 21% (GBP0.5m) compared
to last year at GBP1.9m (2015: GBP2.4m). Margins were down due to
AMT and the impact of lower SWAT margins.
Legal (13% of Group revenue, 7% of Group contribution)
The Legal division provides a range of training, professional
support services and information including Continuing Legal
Education ("CLE"), expert witness training, databases and magazines
to legal professionals. The business, which offers a wide range of
services, is currently focusing on two basic offerings: providing
education services to lawyers in the profession and industry ('Law
for lawyers'); and training services for non-lawyers ('Law for
non-lawyers').
2016 2015 Movement
GBP'm GBP'm GBP'm %
Revenue 7.1 7.6 (0.5) (7)
Contribution 0.8 0.6 0.2 24
Margin
% 11 8
Divisional revenue reduced by GBP0.5m (7%) and reduced by 9% on
a constant currency basis.
The revenue reduction reflects to a large extent the challenging
market conditions previously reported surrounding reduced demand
for face-to-face training connected to the changes to the Legal CLE
rules which came into full effect in October 2016.
The law for lawyers business offers post qualification training
aimed at SME law firms (through CLT) as well as legal practice
support services (though Ark). As explained we are now refocusing
on providing e-learning and face-to-face training to individual
lawyers and SME firms whilst at the same time repositioning our
course output making it more relevant for our client's changing
demands. This renewed focus means we will be exiting some legal
markets and disposing of the Ark business. Ark revenues in 2015/16
were GBP3.1m.
Law for non-lawyers, which accounts for around 50% of the
division, saw a small reduction in revenue compared to a very
strong 2015 comparator period.
Despite the ongoing challenging market conditions, the division
managed to increase its contribution by GBP0.2m to GBP0.8m (2015:
GBP0.6m) benefiting from its reorganisation last year. Margins in
the Legal division increased from 8% in 2015 to 11% in the same
2016 period.
Insight (29% of Group revenue, 29% of Group contribution)
The Insight division increasingly provides analysis and clarity
to customer-focused organisations, enabling them to better
understand and connect with their markets. This division includes
our UK healthcare information businesses, our French language
medical news agency, the healthcare networking events of FRA and
our data suppression and charity information businesses.
2016 2015 Movement
GBP'm GBP'm GBP'm %
Revenue 15.8 12.5 3.2 26
Contribution 3.4 2.8 0.6 22
Margin
% 22 22
Divisional revenue grew GBP3.2m (26%) and by 19% on a constant
currency basis. Non-healthcare revenue was GBP3.6m (2015:
GBP3.7m).
Wilmington Healthcare business, which following the HSJ
acquisition will represent over 80% of the division by revenue on a
pro forma basis, had a good overall start to the year with organic
revenue from the UK businesses up 15%. The drivers of organic
growth continue to be higher margin assignment led projects
involving data analytics and expert market knowledge led by
NHiS.
Overall organic growth for the division was 3% due to a weaker
December quarter performance by FRA and underlying albeit low
single digit downward revenue trends from the mature non-Healthcare
businesses. Healthcare acquisitions contributed GBP1.7m to revenue
growth.
Benefiting from a contribution of GBP0.6m from acquisitions,
overall contribution increased by 22% (GBP0.6m) to GBP3.4m (2015:
GBP2.8m). Contribution growth was 19% in constant currency
terms.
Currency impact
All of our divisions are to varying degrees affected by
translation impacts from foreign currency exchange rate movements.
Risk & Compliance revenues are around 25% US dollars and
Wilmington in the year to 30 June 2016 generated around 20% of its
revenue in US $ and 10% in Euros. Prior to Brexit the Group entered
into foreign currency contracts to sell $10m at an average rate of
$1.46 and EUR3.5m at an average rate of EUR1.26 which was the
expected net currency earnings for 2016/17.
Group Overheads
Group overheads, which include plc Board costs, head office
salaries, as well as unallocated central overheads, were flat at
GBP1.7m (2015: GBP1.7m).
Financial Review
2016 2015 Movement
GBP'm GBP'm GBP'm %
Revenue 54.8 49.4 5.4 11
Adjusted EBITA 10.0 9.7 0.3 3
Adjusted EBITA
% 18.3 19.7
Adjusted Results
Reference is occasionally made in this financial review to
Adjusted Results. Adjusted Results in the opinion of the Directors
provide a more comparable indication of the Group's underlying
financial performance and exclude Adjusting Items set out in note
7.
Revenue
Revenue for the six months to 31 December 2016 increased by
GBP5.4m to GBP54.8m (2015: GBP49.4m). Excluding the impact of
acquisitions, foreign exchange and disposals, organic revenue was
down 2%.
Net Operating Expenses
Net operating expenses, excluding adjusting items, were GBP44.8m
(2014: GBP39.6m) up 13%.
Amortisation of Intangible Assets
Amortisation of intangible fixed assets (excluding computer
software) at GBP2.8m (2015: GBP3.0m) reflecting six months of
amortisation of intangible fixed assets arising on the acquisitions
of Wellards and Evantage acquired in 2015/16 and six months'
amortisation arising on the acquisitions of SWAT acquired in July
2016 offset by reductions from acquisitions now fully
amortised.
Adjusting Items - included in Operating Expenses
Adjusting items of GBP0.9m (2015: GBP0.9m) includes GBP0.3m in
respect of acquisitions, GBP0.2m in respect of an aborted property
disposal and GBP0.4m of project Sixth Gear costs including the back
office relocation started in May 2016.
Adjusting Items - included in Net Finance Costs
The 2015 comparator figure of GBP0.2m relates to the write-off
of old capitalised loan arrangement fees and associated legal and
professional costs attached to the extension of the loan facility
on 1 July 2015 at more favourable rates.
Net Finance Costs
Net finance costs, which consist of interest payable and bank
charges, were up GBP0.1m from GBP0.8m (excluding adjusting items)
to GBP0.9m reflecting inter alia increased debt associated with
GBP9.3m spent on acquisitions and related costs since 1 January
2016 offset by strong cash generation.
The Group typically sees lower cash conversion in the first half
of its financial year although cash conversion in this period was
relatively weaker at 79% compared to 85% last year. One main reason
for the weaker cash conversion was the disruption associated with
the move of back office functions including credit control from
London to Basildon. The back office move is complete and
functioning normally.
Share Based Payments
The share based payment expense was GBP0.3m (2015: GBP0.3m).
Taxation
Taxation increased by GBP0.2m to GBP1.2m from GBP1.0m. The
increase in the tax expense is due to higher profits.
The underlying tax rate which ignores the tax effects of
adjusting items was maintained at 22.6% (2015: 23.0%).
Operating Profit
Operating profit increased 7% to GBP5.9m from GBP5.6m. Adjusted
EBITA was up 3% at GBP10.0m (2015: GBP9.7m) and Adjusted EBITA
margins were down 140bps to 18.3% (2015: 19.7%) reflecting
investment in Risk and Compliance and reduced profits from
Compliance Week and AMT.
Profit before Taxation
Profit before taxation was up GBP0.5m (11%) at GBP5.0m (2015:
GBP4.5m). Adjusted Profit before Tax increased by 2% (GBP0.2m) to
GBP9.1m from GBP8.9m
Earnings per Share
Adjusted Basic Earnings per Share increased by 2% to 8.10p
(2015: 7.93p). Basic earnings per share increased to 4.43p from
3.94p and diluted earnings per share increased to 4.39p from
3.90p.
Goodwill
Goodwill increased by GBP3.0m to GBP73.7m since 30 June 2016
resulting from the acquisition of SWAT in the year (GBP2.0m), and
currency translation impacts.
Intangible Assets
Intangible assets increased since 30 June 2016 by GBP0.8m
reflecting GBP3.2m of acquisitions and additions in the year and
exchange rate movements of GBP0.9m offset by amortisation of
GBP3.3m.
Property, Plant and Equipment
Property, plant and equipment increased since 30 June 2016 by
GBP0.3m to GBP4.9m reflecting additions to tangible fixed assets of
GBP0.2m from acquisitions and GBP0.6m of normal fixed asset
additions offset by depreciation.
Trade and Other Receivables
Trade and other receivables increased by GBP6.2m compared to 31
December 2015 reflecting acquisitions of GBP1.1m and higher trading
activity particularly in FRA in advance of the RISE event but also
slower payment collection associated with the move of UK back
office functions from London to Basildon.
Trade and Other Payables
Trade and other payables, which include deferred income, were up
GBP5.1m compared to 31 December 2015 reflecting the increase in
trade payables of GBP2.2m (GBP0.9m from acquisitions) and
subscriptions and deferred income. Subscriptions and deferred
income, which represents revenue received in advance increased by
13% from GBP21.3m in 2015 to GBP24.2m. Underlying growth was 8% (3%
constant currency) and acquisitions contributed GBP1.1m to the
increase. There was strong growth in deferred income balances for
ICA membership (up 47%), Axco (up 12%), FRA (up 15% constant
currency) offset by declines in Compliance Week, Finance and the
Charities businesses within Insight.
Net Debt
Net debt, which includes cash and cash equivalents, bank loans
and bank overdrafts, was GBP40.6m (2015: GBP36.6m), an increase of
GBP4.0m. Net debt increased, inter alia, due to the acquisitions of
SWAT, Wellards and Evantage for GBP9.3m net of cash offset by good
operating cash flow. In support of the acquisition of HSJ the group
increased its debt facility to GBP85 million from GBP65 million on
17 January 2017 under the accordion provision of the loan
agreement.
Current Tax Liabilities
Current tax liabilities increased by GBP0.1m to GBP0.8m at 31
December 2016 reflecting higher profits across the Group.
Deferred Consideration
The liabilities of GBP0.2m and GBP2.3m relate to the deferred
cash payments to the vendors of SWAT of GBP1.1m and to the vendors
of Evantage of GBP1.4m.
Dividend
It is the Board's intention to pay a progressive dividend whilst
ensuring a cover of at least two times the Group's adjusted
earnings per share over the dividend per share in respect of the
financial year. An interim dividend of 3.9p per share (December
2015: 3.8p) will be paid on 7 April 2016 to shareholders on the
register as at 10 March 2017, with an associated ex-dividend date
of 9 March 2017.
Pedro Ros Anthony M Foye
Chief Executive Officer Chief Financial Officer
Officers
Directors:
Mark Asplin
Non-Executive Chairman
Pedro Ros
Chief Executive Officer
Anthony Foye
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:
6-14 Underwood Street
London
N1 7JQ
Tel: +44 (0)20 7490 0049
Company Registration Number:
3015847
Consolidated Income Statement
Six months ended 31 December 2016 Six months ended 31 December 2015 Year ended 30 June 2016
(unaudited) (unaudited) (audited)
Notes Adjusted Adjusting Statutory results Adjusted Adjusting Statutory results Statutory results
results items results items
(note 7) (note 7)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ---------- ------------------ --- --------- ---------- ------------------ --- ------------------------
Continuing
operations
Revenue 6 54,813 - 54,813 49,363 - 49,363 105,724
Net operating
expenses (44,790) (947) (45,737) (39,630) (873) (40,503) (85,471)
Amortisation - (2,820) (2,820) - (3,011) (3,011) (5,545)
Share based
payments - (310) (310) - (278) (278) (563)
Impairment of
goodwill - - - - - - (15,659)
--------- ---------- ------------------ --------- ---------- ------------------ ------------------------
Operating
profit/(loss) 10,023 (4,077) 5,946 9,733 (4,162) 5,571 (1,514)
Net finance
costs 8 (915) - (915) (799) (225) (1,024) (1,920)
--------- ---------- ------------------ --------- ---------- ------------------ ------------------------
Profit/(loss)
before tax 9,108 (4,077) 5,031 8,934 (4,387) 4,547 (3,434)
Taxation 9 (1,160) (1,046) (2,841)
------------------ ------------------ ------------------------
Profit/(loss)
for the period 3,871 3,501 (6,275)
------------------ ------------------ ------------------------
Attributable to:
Owners of the
parent 3,853 3,418 (6,418)
Non-controlling
interests 18 83 143
------------------ ------------------ ------------------------
3,871 3,501 (6,275)
------------------ ------------------ ------------------------
Earnings per
share
attributable to
the owners of
the parent:
------------------ ------------------ ------------------------
Basic (p) 11 4.43 3.94 (7.39)
Diluted (p) 11 4.39 3.90 (7.39)
------------------ ------------------ ------------------------
Adjusted
earnings per
share
attributable to
the owners of
the parent:
--------- --------- ------------------------
Basic (p) 11 8.10 7.93 18.69
Diluted (p) 11 8.04 7.85 18.53
--------- --------- ------------------------
The notes on pages 17 to 30 are an integral part of these
consolidated financial statements.
Consolidated Statement of Comprehensive Income
Year
ended
Six months ended Six months ended 30 June
31 December 2016 31 December 2015 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Profit/(loss) for the period 3,871 3,501 (6,275)
Other comprehensive income/(expense):
Items that may be reclassified subsequently to the Income
Statement
------------------ ------------------ ----------
Fair value movements on interest rate swap (net of tax) 336 (118) (622)
Currency translation differences 1,703 853 2,966
Net investment hedges (net of tax) (1,034) (622) (1,474)
Other comprehensive income for the period, net of tax 1,005 113 870
------------------ ------------------ ----------
Total comprehensive income/(expense) for the period 4,876 3,614 (5,405)
------------------ ------------------ ----------
Total comprehensive income/(expense) for the period
attributable to:
Owners of the parent 4,858 3,531 (5,548)
Non-controlling interests 18 83 143
------------------ ------------------ ----------
4,876 3,614 (5,405)
------------------ ------------------ ----------
Items in the statement above are disclosed net of tax. The notes
on pages 17 to 30 are an integral part of these financial
statements.
Consolidated Balance Sheet
31 December 31 December 30 June
2016 2015 2016
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 13 73,737 82,467 70,763
Intangible assets 13 29,879 25,680 29,038
Property, plant and equipment 13 4,899 4,682 4,628
Deferred tax assets 703 459 942
------------ ------------ ----------
109,218 113,288 105,371
------------ ------------ ----------
Current assets
Trade and other receivables 14 29,881 23,632 26,121
Cash and cash equivalents 17,233 11,928 14,642
------------ ------------ ----------
47,114 35,560 40,763
------------ ------------ ----------
Total assets 156,332 148,848 146,134
------------ ------------ ----------
Current liabilities
Trade and other payables 15 (44,914) (39,857) (43,896)
Current tax liabilities (787) (662) (1,553)
Deferred consideration - cash settled (177) (844) (1,272)
Derivative financial instruments (1,474) (404) (1,013)
Borrowings 16 (1,237) (2,151) (2,204)
(48,589) (43,918) (49,938)
Non-current liabilities
Borrowings 16 (56,220) (45,882) (46,697)
Deferred consideration - cash settled (2,252) - (1,370)
Derivative financial instruments (769) (264) (1,037)
Deferred tax liabilities (4,154) (3,295) (3,989)
Provision for future purchase of
non-controlling interests (100) (100) (100)
------------ ------------ ----------
(63,495) (49,541) (53,193)
------------ ------------ ----------
Total liabilities (112,084) (93,459) (103,131)
------------ ------------ ----------
Net assets 44,248 55,389 43,003
------------ ------------ ----------
Equity
Share capital 17 4,362 4,349 4,349
Share premium 17 45,225 45,225 45,225
Treasury shares 17 (96) (96) (96)
Share based payments reserve 683 649 886
Translation reserve 4,305 489 2,602
Retained earnings (10,297) 4,680 (10,116)
------------ ------------ ----------
Equity attributable to owners of
the parent 44,182 55,296 42,850
Non-controlling interests 66 93 153
------------ ------------ ----------
Total equity 44,248 55,389 43,003
------------ ------------ ----------
The notes on pages 17 to 30 are an integral part of these
consolidated financial statements.
Consolidated Statement of Changes in Equity
Equity attributable to shareholders
of the parent
Share
capital,
share
premium
and
treasury Share
shares based Accumulated(losses)/ Non-
(note payments Translation retained controlling Total
17) reserve reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 June 2015
(audited) 49,454 1,052 (364) 4,780 54,922 277 55,199
Profit for the
period - - - 3,418 3,418 83 3,501
Other
comprehensive
income for the
period - - 853 (740) 113 - 113
49,454 1,052 489 7,458 58,453 360 58,813
Dividends - - - (3,478) (3,478) (141) (3,619)
Issue of share
capital 24 (636) - 612 - - -
Share based
payments - 233 - - 233 - 233
Tax on share
based payments - - - 88 88 - 88
Movement in
non-controlling
interests - - - - - (126) (126)
At 31 December
2015
(unaudited) 49,478 649 489 4,680 55,296 93 55,389
(Loss)/profit
for the
period - - - (9,836) (9,836) 60 (9,776)
Other
comprehensive
income for the
period - - 2,113 (1,356) 757 - 757
49,478 649 2,602 (6,512) 46,217 153 46,370
Dividends - - - (3,304) (3,304) - (3,304)
Share based
payments - 237 - - 237 - 237
Tax on share
based payments - - - (92) (92) - (92)
Movements in
non-controlling
interests - - - (208) (208) - (208)
At 30 June 2016
(audited) 49,478 886 2,602 (10,116) 42,850 153 43,003
Profit for the
period - - - 3,853 3,853 18 3,871
Other
comprehensive
income for the
period - - 1,703 (698) 1,005 - 1,005
49,478 886 4,305 (6,961) 47,708 171 47,879
Dividends - - - (3,749) (3,749) (105) (3,854)
Issue of share
capital 13 (466) - 453 - - -
Share based
payments - 263 - - 263 - 263
Tax on share
based payments - - - (40) (40) - (40)
At 31 December
2016
(unaudited) 49,491 683 4,305 (10,297) 44,182 66 44,248
---------- ---------- ------------- ---------------------- --------- ------------ ---------
The notes on pages 17 to 30 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 2016 December 2015 June 2016
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Cash generated from
operations before
adjusting items 18 7,962 8,249 23,872
Cash flows for adjusting
items - operating
activities (1,073) - (186)
Cash flows for adjusting
items - share based
payments (87) (180) (180)
--------------------------- --------------------------- ----------------
Cash generated from
operations 6,802 8,069 23,506
Interest paid (880) (658) (1,502)
Tax paid (1,996) (1,431) (3,197)
--------------------------- --------------------------- ----------------
Net cash generated from
operating activities 3,926 5,980 18,807
--------------------------- --------------------------- ----------------
Cash flows from investing
activities
Purchase of businesses net
of cash acquired (2,122) (8,469) (13,912)
Proceeds from disposal
group held for sale - 343 343
Deferred consideration paid (1,295) - (330)
Purchase of non-controlling
interests - (333) (334)
Cash flows for adjusting
items - investing
activities (116) (198) (540)
Purchase of property, plant
and equipment (579) (290) (641)
Proceeds from disposal of
property, plant and
equipment 21 11 11
Purchase of intangible
assets (888) (472) (870)
--------------------------- --------------------------- ----------------
Net cash used in investing
activities (4,979) (9,408) (16,273)
--------------------------- --------------------------- ----------------
Cash flows from financing
activities
Dividends paid to owners of
the parent (3,749) (3,478) (6,782)
Dividends paid to
non-controlling interests (105) (141) (141)
Share issuance costs (5) (5) (5)
Cash flows for adjusting
items - financing
activities - (631) (631)
Increase in bank loans 8,104 8,404 7,696
Net cash generated from
financing activities 4,245 4,149 137
--------------------------- --------------------------- ----------------
Net increase in cash and
cash equivalents, net of
bank overdrafts 3,192 721 2,671
Cash and cash equivalents,
net of bank overdrafts, at
beginning of the period 12,438 8,698 8,698
Exchange gains on cash and
cash equivalents 366 358 1,069
--------------------------- --------------------------- ----------------
Cash and cash equivalents,
net of bank overdrafts at
end of the period 15,996 9,777 12,438
--------------------------- --------------------------- ----------------
Reconciliation of net debt
--------------------------- --------------------------- --------------
Cash and cash equivalents
at beginning of the period 14,642 9,194 9,194
Bank overdrafts at
beginning of the period 16 (2,204) (496) (496)
Bank loans at beginning of
the period 16 (47,126) (37,306) (37,306)
--------------------------- --------------------------- --------------
Net debt at beginning of
the period (34,688) (28,608) (28,608)
Net increase in cash and
cash equivalents (net of
bank overdrafts) 3,558 1,079 3,740
Net drawdown in bank loans (8,104) (8,404) (7,696)
Exchange loss on bank loans (1,376) (665) (2,124)
--------------------------- --------------------------- --------------
Cash and cash equivalents
at end of the period 17,233 11,928 14,642
Bank overdrafts at end of
the period 16 (1,237) (2,151) (2,204)
Bank loans at end of the
period 16 (56,606) (46,375) (47,126)
--------------------------- --------------------------- --------------
Net debt at end of the
period (40,610) (36,598) (34,688)
--------------------------- --------------------------- --------------
The notes on pages 17 to 30 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 its registered office is 6-14
Underwood Street, London, N1 7JQ.
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 on
22 February 2017.
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 2016 were approved by the Board of Directors on 13 September
2016. 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.
1. Basis of preparation
This Interim Information for the six months ended 31 December
2016 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 2016 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 applied are consistent with those of the
Annual Financial Statements for the year ended 30 June 2016, as
described in those Annual Financial Statements. The following new
standards, amendments and interpretations have been adopted in the
current year:
-- EU Account Directive (SI 2015/980)
The adoption of this interpretation 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 year ending 30 June 2016 have
no impact on the Group.
The following new standards and amendments to standards have
been issued but are not yet effective for the purposes of the
Interim Report and have not been early adopted:
-- FRS 9: Financial Instruments - endorsed by EU
-- IAS Amendments to IAS 7: Statement of cash flows on disclosure initiative - not yet EU endorsed
-- Amendments to IAS 12: Income taxes - not yet EU endorsed
-- Amendments to IFRS 2: Share based payments - not yet EU endorsed
-- IFRS 15: Revenue from Contracts with Customers - endorsed by EU
-- IFRS 16: Leases - not yet EU endorsed
-- IFRIC 22: Foreign currency transactions and advance consideration - not yet EU endorsed
-- Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception - not yet EU
endorsed
-- Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture - not yet EU endorsed
-- Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations - endorsed by EU
-- Amendments to IAS 1: Disclosure Initiative - endorsed by EU
-- Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation - endorsed
by EU
-- Amendments to IAS 27: Equity Method in Separate Financial Statements - endorsed by EU
-- Annual improvements to IFRSs 2012-2014 cycle - endorsed by EU
3. Principal risks and uncertainties
The principal risks and uncertainties that affect the Group are
as stated on pages 25 to 28 of the Strategic Report in the Annual
Report and Financial Statements for the year ended 30 June 2016.
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 GBP57m (2015: GBP46m) amount drawn down
on the revolving credit facility at a rate of between 1.50 and 2.25
per cent 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 5 year GBP15.0m interest rate swap commencing on 21 November 2011, whereby the Group receives interest on
GBP15m based on the LIBOR rate and pays interest on GBP15m at a fixed rate of 2.68%. This contract expired in the
period.
-- 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%.
-- 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%.
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.
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 $18.2m (2015: $18.2m) has been
designated as a net investment hedge relating to the Group's
interest in Compliance Week and FRA.
3. Principal risks and uncertainties (continued)
Risk management arrangements
The following forward contracts were entered into in order to
provide certainty in Sterling terms of circa 80% of the Group's
expected net US dollar and Euro income:
-- On 13 May 2016, the Group sold EUR1.2m to 24 February 2017 at a rate of 1.2609
-- On 13 May 2016, the Group sold EUR1.2m to 3 March 2017 at a rate of 1.2606
-- On 13 May 2016, the Group sold EUR1.1m to 10 March 2017 at a rate of 1.2601
-- On 20 May 2016, the Group sold $3.5m to 28 April 2017 at a rate of 1.4622
-- On 20 May 2016, the Group sold $3.5m to 26 May 2017 at a rate of 1.4637
-- On 20 May 2016, the Group sold $3.0m to 28 June 2017 at a rate of 1.4657
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.
The Group has an unsecured committed bank facility of GBP65.0m
to 1 July 2020. The facility comprised of a revolving credit
facility of GBP60.0m and an overdraft facility across the Group of
GBP5.0m. In addition, the extended facility also provides for an
accordion option whereby the unsecured committed bank facility may
be increased by up to GBP35m to a total commitment of GBP100m if
required subject to majority lending bank consent. Interest is
charged on the amount drawn down at between 1.50 and 2.25 (the
'Margin') per cent above LIBOR depending upon leverage, and
drawdowns are made for periods of up to six months in duration.
Interest is charged on the drawn element of the overdraft facility
at 1.50% and 2.25% per cent above the Barclays bank base rate
depending upon leverage. The Group also pays a fee of 40% of the
applicable Margin on the undrawn element of the credit facility and
the undrawn overdraft.
On 31 January 2017 Wilmington acquired HSJ the UK's leading
health information, insight and networking business for GBP19.0m
less a GBP2.0m working capital adjustment. To fund this investment
GBP20.0m of the accordion facility was triggered giving a total
unsecured bank facility of GBP85.0m.
3. Principal risks and uncertainties (continued)
(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.
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 and put option for
non-controlling interest 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
GBP1,474,217 (2015: GBP105,311) for foreign exchange trading
derivatives at fair value through income or expense. In addition
the group has recognised a level 2 financial liability of
GBP769,278 (2015: GBP562,451) for three 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.
5. Measures of profit
To provide shareholders with a better understanding of the
trading performance of the Group, Adjusted EBITA has been
calculated as Profit before Tax after adding back:
-- amortisation of intangible assets - publishing rights, titles
and benefits;
-- impairment of goodwill;
-- share based payments;
-- adjusting items; and
-- net 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
2016 2015 June 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- ------------- -----------
Profit/(loss) before tax 5,031 4,547 (3,434)
Amortisation of intangible assets - publishing
rights, titles and benefits 2,820 3,011 5,545
Impairment of goodwill - - 15,659
Share based payments (including social
security costs) 310 278 563
Adjusting items (included in operating
expenses) 947 873 2,352
Net finance costs 915 1,024 1,920
------------- ------------- -----------
Adjusted operating profit ('Adjusted EBITA') 10,023 9,733 22,605
Depreciation of property, plant and equipment 493 447 911
Amortisation of intangible assets - computer
software 455 512 1,050
------------- ------------- -----------
Adjusted EBITA before depreciation ('Adjusted
EBITDA') 10,971 10,692 24,566
------------- ------------- -----------
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
2016 2015 June 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- ------------- -----------
Profit/(loss) before tax 5,031 4,547 (3,434)
Amortisation of intangible assets - publishing
rights, titles and benefits 2,820 3,011 5,545
Impairment of goodwill - - 15,659
Share based payments (including social
security costs) 310 278 563
Adjusting items (included in operating
expenses) 947 873 2,352
Adjusting items (included in net finance
costs) - 225 225
------------- ------------- -----------
Adjusted profit before tax 9,108 8,934 20,910
------------- ------------- -----------
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 reports
its results in four operating segments as this accurately reflects
the way the Group is managed.
The Group's organisational structure reflects the main
communities to which it provides information, education and
networking. The four divisions (Risk & Compliance, Finance,
Legal; and Insight) 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
Year ended 30
June 2016
Six months ended 31 December 2016 (unaudited) Six months ended 31 December 2015 (unaudited) (audited)
----------------------------------------------- ----------------------------------------------- ---------------------
Revenue Contribution(8) Revenue Contribution Revenue Contribution
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ---------------------------------- ------------ --------------------------------- ------- ------------
Risk & Compliance 19,535 5,630 17,593 5,595 38,802 12,678
Finance 12,388 1,929 11,595 2,435 21,219 4,473
Legal 7,118 797 7,638 643 15,524 1,686
Insight 15,772 3,413 12,537 2,790 30,179 7,316
----------- ---------------------------------- ------------ --------------------------------- ------- ------------
54,813 11,769 49,363 11,463 105,724 26,153
Unallocated central
overheads - (1,746) - (1,730) - (3,548)
54,813 10,023 49,363 9,733 105,724 22,605
Amortisation of
intangible assets -
publishing rights,
titles and benefits (2,820) (3,011) (5,545)
Impairment of goodwill - - (15,659)
Share based payments (310) (278) (563)
Adjusting items
(included in operating
expenses) (947) (873) (2,352)
Net finance costs (915) (1,024) (1,920)
Profit/(loss) before
tax 5,031 4,547 (3,434)
Taxation (1,160) (1,046) (2,841)
---------------------------------- --------------------------------- ------------
Profit/(loss) for the
financial year 3,871 3,501 (6,275)
---------------------------------- --------------------------------- ------------
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.
(8) Contribution is defined as Adjusted EBITA excluding
unallocated central overheads.
6. Segmental information (continued)
(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 Six months Year
ended 31 ended 31 ended
December December 30 June
2016 2015 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ ----------
UK 31,275 28,714 61,321
Europe (excluding the UK) 9,310 7,207 15,859
North America 9,191 8,846 19,030
Rest of the World 5,037 4,596 9,514
------------ ------------ ----------
Total revenue 54,813 49,363 105,724
------------ ------------ ----------
7. Adjusting items
The following items have been charged/(credited) to the income
statement during the year but are of an unusual nature, size or
incidence and so are shown separately:
Six months ended Year ended
31 December Six months ended 30 June
2016 31 December 2016
(unaudited) 2015 (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------- ----------------- ----------
Build-up of the liability for deferred consideration contingent on
continued employment - 531 1,019
Increase in the liability for deferred consideration not contingent
on continued employment - 20 63
Costs relating to successful and aborted acquisitions and integration 328 172 585
Aborted leasehold property sale 217 - -
Legal claim costs (net of settlement received) - 150 73
Restructuring and rationalisation costs 402 - 612
Other adjusting items (included in operating expenses) 947 873 2,352
Costs relating to the extension of the loan facility - 225 225
Amortisation of intangible assets - publishing rights, titles and
benefits 2,820 3,011 5,545
Share based payments 310 278 563
Impairment of goodwill - - 15,659
---------------- ----------------- ----------
Total adjusting items (classified in profit before tax) 4,077 4,387 24,344
---------------- ----------------- ----------
Successful and aborted acquisitions relate to the acquisition
and integration of SWAT.
During 2016 we actively sought and had received a number of cash
offers for our Underwood Street long leasehold offices of up to
GBP10m; however for various reasons including Brexit none of these
offers were concluded. Aborted leasehold property costs comprise of
professional fees related to this and costs for a potential new
London location.
Restructuring and rationalisation costs comprise GBP267,000 of
redundancy and property costs following the Group's decision to
relocate part of the finance and HR function from its head offices
in central London to our existing freehold premises in Basildon,
Essex. It also includes GBP135,000 of costs relating to the
implementation of project Sixth Gear, the reorganisation of our
business into three segments, see the Interim Results page 2 for
further details.
8. Net finance costs
Six months Six months Year
ended 31 ended 31 ended 30
December December June
2016 2015 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Finance costs comprise:
Interest payable on bank loans and overdrafts (849) (733) (1,564)
Amortisation of capitalised loan arrangement
fees (66) (66) (131)
Adjusting item - extension of loan facility
costs - (225) (225)
------------ ------------ ----------
(915) (1,024) (1,920)
------------ ------------ ----------
9. Taxation
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2016 2015 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Current tax:
Current tax on profits for the period 1,463 1,465 3,792
Adjustments in respect of previous years - 83 198
------------- ------------- ----------
Total current tax 1,463 1,548 3,990
Deferred tax:
Deferred tax credit (312) (432) (971)
Effect on deferred tax of change in corporation
tax rate 9 (70) (178)
------------- ------------- ----------
Total deferred tax (303) (502) (1,149)
------------- ------------- ----------
Taxation 1,160 1,046 2,841
------------- ------------- ----------
10. Dividends
Distributions to owners of the parent in the period:
Six Six Six Six
months months months months Year months
ended 31 ended 31 Year ended ended 31 ended 31 ended
December December 30 June December December 30 June
2016 2015 2016 2016 2015 2016
pence per pence per pence
share share per share GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Final dividends recognised
as distributions in
the year 4.3 4.0 4.0 3,749 3,478 3,478
Interim dividends recognised
as distributions in
the year - - 3.8 - - 3,304
------------ ------------ ----------- ------------ ------------ ------------
Total dividends paid
in the period 3,749 3,478 6,782
------------ ------------ ----------- ------------ ------------ ------------
Interim/final dividend
proposed 3.9 3.8 4.3 3,401 3,304 3,738
------------ ------------ ----------- ------------ ------------ ------------
11. Earnings per Share
Adjusted earnings per share has been calculated using adjusted
earnings calculated as profit/(loss) after taxation and
non-controlling interests but before:
-- amortisation of intangible assets - publishing rights, titles and benefits;
-- impairment of goodwill;
-- share based payments;
-- adjusting items included in operating expenses; and
-- adjusting items included in net 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
2016 2015 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Earnings/(loss) from continuing operations
for the purpose of basic earnings per
share 3,853 3,418 (6,418)
Add/(remove):
Amortisation of intangible assets -
publishing rights, titles and benefits
(net of non-controlling interests) 2,820 3,011 5,545
Impairment of goodwill - - 15,659
Adjusting items (included in operating
expenses) 947 873 2,352
Adjusting items (included in net finance
costs) - 225 225
Share based payments 310 278 563
Tax effect of adjustments above (881) (926) (1,691)
Adjusted earnings for the purposes
of adjusted earnings per share 7,049 6,879 16,235
------------ ------------ -----------
Number Number Number
Weighted average number of ordinary
shares for the purpose of basic and
adjusted earnings per share 87,062,219 86,706,740 86,846,236
Effect of dilutive potential ordinary
shares:
Future exercise of share awards and
options 610,495 906,717 772,980
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 87,672,714 87,613,457 87,619,216
------------ ------------ -----------
Basic earnings per share 4.43p 3.94p (7.39p)
Diluted earnings per share 4.39p 3.90p (7.39p)
Adjusted basic earnings per share ('Adjusted
Earnings Per Share') 8.10p 7.93p 18.69p
Adjusted diluted Earnings per Share 8.04p 7.85p 18.53p
------------ ------------ -----------
12. Acquisitions and disposals
Acquisition - SWAT Group Limited - July 2016
On 19 July 2016 Mercia Group Limited acquired the entire issued
share capital of SWAT Group Limited ('SWAT'), a provider of
training and technical compliance support to accountancy firms in
London and the South West of England.
SWAT was acquired for initial consideration of GBP2,870,000, of
which GBP500,000 was withheld in relation to the Net Asset
adjustment. Subsequently, this initial consideration was reduced by
GBP387,538 in relation to the final Net Asset adjustment.
Deferred consideration of up to GBP3,000,000 is payable
contingent on SWAT's future performance for the years ended 30 June
2017 and 2018 and will be paid in cash in one instalment.
Management has estimated the expected value of these future
payments to be GBP1,082,000 which has been recognised in the total
consideration. Any future movements of this contingent
consideration will be charged to the income statement as an
adjusting item.
Acquisition related costs of GBP278,000 have been expensed as an
adjusting item in the income statement (see note 7).
Details of the fair value of the purchase consideration, the net
assets acquired and goodwill for the acquisition are as
follows:
GBP'000
Purchase consideration:
Initial consideration 2,870
Net asset adjustment (388)
Deferred consideration - cash settled 1,082
Total consideration 3,564
The provisional fair values of assets and liabilities recognised
as a result of this acquisition are as follows:
GBP'000
Intangible assets - Customer relationships 2,337
Total intangible assets (see note 13) 2,337
Property, plant & equipment 196
Trade and other receivables (net of allowances) 365
Cash and cash equivalents 360
Trade and other payables (598)
Deferred revenue (579)
Current tax liabilities (137)
Deferred tax liabilities (444)
--------
Net identifiable assets acquired 1,500
Goodwill (see note 13) 2,064
--------
Net assets acquired 3,564
The estimated useful economic life of the intangibles is as
follows:
Intangible assets - Customer Relationships 10 years
The acquired business contributed revenues of GBP2,242,659 and
contribution of GBP309,599 to the Group for the period from the
date of acquisition to 31 December 2016. Had SWAT been consolidated
from 1 June 2016 the group consolidated Income Statement would
include pro forma revenue of GBP2,463,660 and contribution of
GBP309,899.
13. 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 2015 (audited) 77,063 23,636 4,841
Acquisitions 4,935 4,718 -
Additions - 472 290
Disposals - - (7)
Exchange translation differences 469 377 5
Depreciation of property, plant and equipment - - (447)
Amortisation of publishing rights, titles and benefits - (3,011) -
Amortisation of computer software - (512) -
Closing net book amount as at 31 December 2015
(unaudited) 82,467 25,680 4,682
Additions 3,023 398 351
Acquisitions - 5,088 42
Disposals - - (9)
Exchange translation differences 932 944 26
Impairment (15,659)
Depreciation of property, plant and equipment - - (464)
Amortisation of publishing rights, titles and benefits - (2,534) -
Amortisation of computer software - (538) -
Closing net book amount as at 30 June 2016 (audited) 70,763 29,038 4,628
Acquisitions (provisional) 2,064 2,350 183
Additions - 888 579
Disposals - - (13)
Exchange translation differences 910 878 15
Depreciation of property, plant and equipment - - (493)
Amortisation of publishing rights, titles and benefits - (2,820) -
Amortisation of computer software - (455) -
--------- ------------------ ------------------------------
Closing net book amount as at 31 December 2016
(unaudited) 73,737 29,879 4,899
--------- ------------------ ------------------------------
Acquisitions (provisional) in goodwill and intangibles relate to
the acquisition of SWAT (see note 12).
14. Trade and other receivables
30 June
31 December
2015 2016
(unaudited) (audited)
31 December
2016 (unaudited)
GBP'000 GBP'000 GBP'000
Trade receivables 25,371 20,151 21,993
Prepayments and other receivables 4,510 3,481 4,128
------------------ ------------- -----------
29,881 23,632 26,121
------------------ ------------- -----------
15. Trade and other payables
30 June
31 December
2015 2016
(unaudited) (audited)
31 December
2016 (unaudited)
GBP'000 GBP'000 GBP'000
Trade and other payables 20,748 18,560 21,591
Subscriptions and deferred revenue 24,166 21,297 22,305
------------------ ------------- -----------
44,914 39,857 43,896
------------------ ------------- -----------
16. Borrowings
31 December 2016 31 December 2015 30 June 2016
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Current liability
Bank overdrafts 1,237 2,151 2,204
1,237 2,151 2,204
----------------- ----------------- -------------
Non-current liability
Bank loans 56,606 46,375 47,126
Capitalised loan arrangement fees (386) (493) (429)
----------------- ----------------- -------------
Bank loans net of facility fees 56,220 45,882 46,697
----------------- ----------------- -------------
On 31 January 2017 Wilmington acquired HSJ the UK's leading
health information, insight and networking business for GBP19.0m
less a GBP2.0m working capital adjustment. To fund this investment
GBP20.0m of the accordion facility was triggered giving a total
unsecured bank facility of GBP85.0m.
17. 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 2015
(audited) 86,507,461 4,325 45,225 (96) 49,454
Shares issued 478,270 24 - - 24
At 31 December 2015
(unaudited) and 30
June 2016 (audited) 86,985,731 4,349 45,225 (96) 49,478
Shares issued 262,243 13 - - 13
At 31 December 2016
(unaudited) 87,247,974 4,362 45,225 (96) 49,491
---------------------- ---------------- ---------------------- ---------------- ---------
On 19 September, 2016 262,243 ordinary shares were issued in
respect of the vesting of the 2013 PSP Share Awards to employees
(including Directors).
At 31 December 2016, 46,584 shares (2015: 46,584) were held in
Treasury, which represents 0.1% (2015: 0.1%) of the called up share
capital of the Company.
18. Cash generated from operations
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2016 2015 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Profit/(loss) from continuing operations
before income tax 5,031 4,547 (3,434)
Other adjusting items (included in operating
expenses) 947 873 2,352
Depreciation of property, plant and equipment 493 447 911
Amortisation of intangible assets 3,275 3,523 6,595
Impairment of goodwill - - 15,659
Profit/(loss) on disposal of property,
plant and equipment 8 (4) (4)
Share based payments (including social
security costs) 310 278 563
Net finance costs 915 1,024 1,920
------------ ------------ -----------
Operating cash flows before movements in
working capital 10,979 10,688 24,562
Increase in trade and other receivables (3,614) (1,583) (2,434)
Increase/(decrease) in trade and other
payables 597 (856) 1,744
------------ ------------ -----------
Cash generated from operations before adjusting
items 7,962 8,249 23,872
------------ ------------ -----------
Cash conversion is calculated as a percentage of cash generated
by operations to Adjusted EBITA as follows:
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2016 2015 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Funds from operations before adjusting
items:
Adjusted EBITA 10,023 9,733 22,605
Amortisation of intangible assets - computer
software 455 512 1,050
Depreciation of property, plant and equipment 493 447 911
Profit/(loss) on disposal of property,
plant and equipment 8 (4) (4)
------------- ------------- -----------
Operating cash flows before movements in
working capital 10,979 10,688 24,562
Net working capital movement (3,017) (2,439) (690)
------------- ------------- -----------
Funds from operations before adjusting
items 7,962 8,249 23,872
------------- ------------- -----------
Cash conversion 79% 85% 106%
------------- ------------- -----------
Free cash flows:
Operating cash flows before movement in
working capital 10,979 10,688 24,562
Profit/(loss) on disposal of property,
plant and equipment 21 (4) (4)
Net working capital movement (3,017) (2,439) (690)
Interest paid (880) (658) (1,502)
Tax paid (1,996) (1,431) (3,197)
Purchase of property, plant and equipment (579) (290) (641)
Purchase of intangible assets (888) (472) (870)
------------- ------------- -----------
Free cash flows 3,640 5,394 17,658
------------- ------------- -----------
19. 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 Chief Executive Officer, Pedro Ros, owns a minority
shareholding in SMARP OY (a company incorporated in Finland), which
provides social media services to the Group, the subsidiary paid
GBPnil (2015: GBP11,160) during the year to SMARP UK Limited, a
subsidiary of SMARP OY.
Close family members of key management personnel provided
photography services for the group during the period. The total
invoiced for these services was GBP120 (2015: nil).
20. 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 and FRA, have major annual events in the second
half of the year. The acquisition of HSJ on 31 January 2017 should
also benefit reported revenue and earnings in the second half of
the year.
21. Events after the reporting period
a) Acquisition - Health Service Journal
On 31 January 2017 the Group acquired the trading assets and the
assumption of certain liabilities of Health Service Journal ('HSJ')
the UK's leading health information, insight and networking
business, from Ascential plc for GBP19m less an adjustment for
working capital. The consideration will be financed out of the
Group's GBP85m revolving multi-currency credit facility following
the activation of the accordion. The process of fair valuing HSJ
has not been completed at the date of these financial statements.
Subject to this process to fair value, the group acquired
intangible assets comprising the HSJ brand and customer
relationships together with certain net liabilities (including
deferred revenue). The excess consideration above the fair value of
these acquired net liabilities and deferred revenue will be
recognised as goodwill and intangible asset following completion of
the exercise to fair value. All amounts are disclosed as
provisional.
b) Asset held for sale - Ark Group Limited
In line with the Group's strategy to focus the business around
three new knowledge areas going forward, the decision was made to
exit the legal practice support services market that Ark Group
Limited ('Ark'), which is currently presented in the 'Legal'
segment, operates in. Since the balance sheet date the business has
been actively marketed at a reasonable sale price and on 16
February 2017 the Board approved the disposal of Ark. The
completion date of the transaction is expected to be within twelve
months.
As a result after the balance sheet date the assets and
liabilities related to Ark Group Limited meet the criteria of an
asset held for sale under IFRS 5.
Statement of Directors' Responsibilities
The Directors confirm that, 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 4.2.7R 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: wilmingtonplc.com.
By order of the Board
Anthony Foye
Chief Financial Officer
22 February 2017
Appendix 1 - New operating segments (unaudited)
Wilmington currently manages and reports its business by
reference to four knowledge based divisions; Risk & Compliance,
Finance, Legal and Insight. The results from the recent SWAT
acquisition are included within the Finance division.
From and including 30 June 2017 we will be presenting
information on the current structure and representing the same
information on our new three divisional structure of Risk &
Compliance, Professional and Healthcare.
Wilmington restates below its historical performance to reflect
the new structure.
Revenue Adjusted EBITA
------------------------------------- -------------------------------------
Six months Six months Year ended Six months Six months Year ended
ended 31 ended 31 30 June ended 31 ended 31 30 June
December December 2016 December December 2016
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Risk & Compliance 19,535 17,593 38,802 5,630 5,595 12,678
Professional 19,506 19,233 36,743 2,726 3,078 6,159
Healthcare 15,772 12,537 30,179 3,413 2,790 7,316
Unallocated
central overheads (1,746) (1,730) (3,548)
----------- ----------- ----------- ----------- ----------- -----------
54,813 49,363 105,724 11,769 11,463 26,153
Reconciliation December 2016
Revenue Risk & Compliance Professional Healthcare
GBP'000 GBP'000 GBP'000 GBP'000
Risk & Compliance 19,535 19,535
Finance 12,388 12,388
Legal 7,118 7,118
Insight 15,772 15,772
------------ ------------------ ------------- -----------
Revenue 54,813 19,535 19,506 15,772
As % of revenue 36% 36% 29%
Adjusted
EBITA Risk & Compliance Professional Healthcare
GBP'000 GBP'000 GBP'000 GBP'000
Risk & Compliance 5,630 5,630
Finance 1,929 1,929
Legal 797 797
Insight 3,413 3,413
--------- ------------------ ------------- -----------
Contribution 11,769 5,630 2,726 3,413
As % of contribution 48% 23% 29%
Unallocated central overheads (1,746)
Adjusted EBITA 10,023
Reconciliation December 2015
Revenue Risk & Compliance Professional Healthcare
GBP'000 GBP'000 GBP'000 GBP'000
Risk & Compliance 17,593 17,593
Finance 11,595 11,595
Legal 7,638 7,638
Insight 12,537 12,537
------------ ------------------ ------------- -----------
Revenue 49,363 17,593 19,233 12,537
As % of revenue 36% 39% 25%
Adjusted
EBITA Risk & Compliance Professional Healthcare
GBP'000 GBP'000 GBP'000 GBP'000
Risk & Compliance 5,595 5,595
Finance 2,435 2,435
Legal 643 643
Insight 2,790 2,790
--------- ------------------ ------------- -----------
Contribution 11,463 5,595 3,078 2,790
As % of contribution 49% 27% 24%
Unallocated central overheads (1,730)
Adjusted EBITA 9,733
Reconciliation June 2016
Revenue Risk & Compliance Professional Healthcare
GBP'000 GBP'000 GBP'000 GBP'000
Risk & Compliance 38,802 38,802
Finance 21,219 21,219
Legal 15,524 15,524
Insight 30,179 30,179
------------ ------------------ ------------- -----------
Revenue 105,724 38,802 36,743 30,179
As % of revenue 37% 35% 29%
Adjusted
EBITA Risk & Compliance Professional Healthcare
GBP'000 GBP'000 GBP'000 GBP'000
Risk & Compliance 12,678 12,678
Finance 4,473 4,473
Legal 1,686 1,686
Insight 7,316 7,316
--------- ------------------ ------------- -----------
Contribution 26,153 12,678 6,159 7,316
As % of contribution 48% 24% 28%
Unallocated central overheads (3,548)
Adjusted EBITA 22,605
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EANAAALNXEFF
(END) Dow Jones Newswires
February 23, 2017 02:01 ET (07:01 GMT)