Final Results - Year Ended 29 February 2000

Wilmington Group Plc 16 May 2000 WILMINGTON GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 29TH FEBRUARY 2000 Financial Highlights 2000 1999 £'000 £'000 Turnover 57,808 44,642 +29% Profit before tax and amortisation 9,207 7,311 +26% Operating cashflow 9,451 7,574 +25% EPS before amortisation 8.54p 7.26p +18% Dividend 2.08p 1.73p +20% * Major acquisition of Central Law Group * Sales up by 29% * Seventh consecutive year of record profits, only part year contribution from Central Law Group * EPS before amortisation up by 18% * Dividend increases by 20% for the fourth consecutive year * £28.6 million received from placing since year end - platform for further development Brian Gilbert, Chief Executive of Wilmington Group states: 'These outstanding results, which underline a seventh successive year of record profits for Wilmington, have been generated from the ownership of quality communications assets that serve the needs of professional business communities. We increasingly service our customers by providing products delivered through the Internet. During the year we made a number of acquisitions, the largest being Central Law Group, a major provider of post-qualification legal training in Great Britain. The new financial year has opened with trading patterns that are in line with expectations and I am confident that this period will continue the successful development of our Group. The current range of publishing dates should deliver results that are weighted towards the second half of our financial year.' The Group, which floated in December 1995, owns a range of media and communication assets generating long-term revenue streams from business markets. In the four years since flotation, Wilmington Group has grown turnover by 129 per cent from £25.2 million to £57.8 million. It has completed nearly 20 acquisitions, launched numerous new products and grown earnings per share before amortisation by 175 per cent from 3.11p to 8.54p. The Group organised a successful placing in February 2000 which raised £28.6 million which was received shortly after the year end. This creates a platform for further growth particularly from the Internet and specifically in the Business to Business ('B2B') e-commerce sector. Commenting on the results, Dennis Rooke, Non-Executive Chairman said: 'These are an excellent set of results. Earnings per share before amortisation rose by 18 per cent to 8.54 pence from 7.26 pence. Even after charging non cash amortisation of goodwill and intangible assets arising on the significant acquisitions made during the year earnings per share were virtually unchanged at 6.00 pence. We are confident that we have a base from which we can continue to grow our assets and are keen to repeat and exceed the record we have established over the last seven years. We remain committed to investing in assets that generate real value and translate into cash earnings growth.' Enquiries: Brian Gilbert, Chief Executive Wilmington Group Tel: 020 7251 6499 Tim Linacre WestLB Panmure Tel: 020 7638 4010 John Webb Marshall Securities Tel: 020 7490 3788 HIGHLIGHTS TURNOVER Group turnover rose from £44,642,000 to £57,808,000 an increase of 29%. Revenues from non-advertising sources, including subscriptions and information services, represented approximately 53% of revenue (1999:43%). PROFIT BEFORE TAX Profit before tax rose from £6,444,000 to £7,156,000, an increase of 11%. Profit before tax and amortisation of goodwill and intangible assets ('adjusted profits') rose from £7,311,000 to £9,207,000, an increase of 26%. EARNINGS PER SHARE Adjusted earnings per share, which is calculated before the amortisation of goodwill and intangible assets, rose by 18% to 8.54p from 7.26p. Earnings per share were virtually unchanged at 6.00p (1999:6.08p), even after the significant non cash amortisation of goodwill and intangible assets arising on acquisitions, including CLG, made during the year. This is calculated on the weighted average number of shares in issue of 71,910,942. Diluted earnings per share calculated on the diluted average number of shares of 72,708,902 were also virtually unchanged at 5.94p (1999:6.02p). GEARING AND CASHFLOW At the balance sheet date the Group had net borrowings of £24,675,000 as a result of significant acquisitions during the year. Following a successful placing and open offer which raised £28.6 million net, these borrowings were fully repaid in March 2000. During the year there was a £9,451,000 operating cash inflow. After £1,775,000 replacement capital expenditure and the payment of corporation tax and dividends totalling £3,855,000, there was a free cashflow of £3,821,000. DIVIDENDS The Board recommends a dividend of 2.08p (1999:1.73p) an increase of 20%. This dividend is payable on 30th June 2000 to eligible shareholders on the register on 26th May 2000. BUSINESS REVIEW Wilmington has maintained its excellent record of developing profits from the ownership of media and communications assets that generate long-term revenue streams. The Company owns key brands in professional publishing and information marketplaces. These comprise a selection of leading brands in vertical markets (such as legal, power and interior design) and a number of important products in broader sectors (such as automotive, catering and entertainment). Wilmington services these markets through two divisions: Publishing and Information; and Events. It remains committed to the ownership of the intellectual property rights and content of all its principal publications and products. Revenues originate from advertising, subscriptions and copy sales, data sales and list rentals, events and professional service fees. DEVELOPMENTS The majority of income derives from traditional hard copy publications. However, the Company has focused on the continued extension of its brands beyond the traditional areas and into new media. This is underlined by our involvement in high quality training through our investment in Central Law Group. The Company is also launching numerous income generating electronic initiatives including its own specialist business Internet service provider 'Connectingbusiness'. Development costs of our electronic and other initiatives are fully written off in this year's results. The philosophy at Wilmington has always been to manage its businesses effectively and the participation of the management, wherever possible, in the equity of the business remains a vital ingredient in its success. During the period the Board was significantly strengthened with the promotion of Nick Miller to Chief Operating Officer and the appointment of Charles Brady, the Chairman of CLG, as Executive Director responsible for the events division, and Richard Magee as an additional Non-Executive Director. As well as managing existing businesses Wilmington has been active in its search to acquire complementary assets. During the period the Group not only acquired Central Law Group but also acquired a number of specialist business titles from United News & Media Group; Caterbase a direct marketing database for the catering industry; and Blueprint, the critically acclaimed independent architecture and design title, from Aspen Group. In February 2000 the Company organised a successful placing and open offer which generated net proceeds of £28.6 million that were received in March 2000. THE FUTURE The development of Wilmington to date has been an enormous success. Firstly, the Company has developed a very strong, highly motivated management team. Secondly, its product portfolio is constantly expanding and improving, giving it key relationships with significant business and professional markets. These factors combine to give the Group the capability and energy to continue profitably serving its markets. The Board believes that current market developments, when combined with the Company's strengths, including its robust balance sheet and considerable borrowing power following the recent placing, will create many further opportunities. The Board is committed to drive the Company forward through further acquisition and organic development. It is resolute in its pursuit of assets that capture value for shareholders and are consistent with a strategy of owning quality communications assets. The ownership of 'content' remains the defining characteristic of the Group. The new financial year has opened with trading patterns that are in line with expectations and the Board is confident that the current financial year will continue the profitable development of long-term revenue streams for the Company. CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 29th February 2000 2000 1999 Continuing Acquisitions Total operations Notes £'000 £'000 £'000 £'000 Turnover 1 & 2 47,019 10,789 57,808 44,642 Cost of sales (14,674) (4,911) (19,585) (13,789) ------- ------- -------- -------- Gross profit 32,345 5,878 38,223 30,853 ------- ------- -------- -------- Operating expenses 3 (24,400) (3,613) (28,013) (23,472) Amortisation of goodwill and intangible assets (936) (1,115) (2,051) (867) ------- ------- ------- ------- Total operating expenses (25,336) (4,728) (30,064) (24,339) ------- ------- ------- ------- Operating profit 1 7,009 1,150 8,159 6,514 ======= ====== Interest payable and similar charges (1,042) (74) Interest receivable and similar income 39 4 ------ ------- Profit on ordinary activities before taxation 1 7,156 6,444 Taxation (2,497) (1,866) ------ ------ Profit on ordinary activities after taxation 4,659 4,578 Minority interests (343) (239) ------ ------ Profit for the financial year and attributable to shareholders 4,316 4,339 Dividend proposed (1,515) (1,235) ------ ------ Retained profit for the year 2,801 3,104 ====== ====== Earnings per ordinary share 4 6.00p 6.08p ===== ===== Diluted earnings per ordinary share 4 5.94p 6.02p ===== ===== Adjusted earnings per ordinary share 4 8.54p 7.26p ===== ===== CONSOLIDATED BALANCE SHEET As at 29th February 2000 2000 1999 £'000 £'000 Fixed assets Goodwill and intangible assets 46,830 15,162 Tangible assets 8,044 6,066 ------ ------ 54,874 21,228 ------ ------ Current assets Stock and work in progress 996 1,240 Debtors 14,954 9,351 Cash at bank and in hand 1,188 1,131 ------ ------ 17,138 11,722 Creditors: Amounts falling due within one year (26,330) (13,331) ------- ------- Net current liabilities (9,192) (1,609) ------- ------- Total assets less current liabilities 45,682 19,619 Creditors: Amounts falling due after more than one year (20,750) - ------- ------- Net assets 24,932 19,619 ======= ======= Capital and reserves Called-up share capital 3,645 3,573 Share premium account 8,775 6,612 Other reserves 949 949 Profit and loss account 10,820 8,019 ------ ------ Equity shareholders' funds 24,189 19,153 Minority interests 743 466 ------ ------ 24,932 19,619 ====== ====== CONSOLIDATED CASH FLOW STATEMENT For the year ended 29th February 2000 2000 1999 Notes £'000 £'000 Net cash inflow from operating activities 6(a) 9,451 7,574 Returns on investments and servicing of finance ----- ------ Interest received 39 4 Interest paid (551) (74) Dividend paid to minority shareholders in subsidiary undertaking (26) (30) ------ ------ Net cash outflow (538) (100) Taxation Corporation tax paid (2,618) (1,535) Capital expenditure and financial investment ------- ------- Purchase of goodwill and intangible fixed assets (329) (271) Purchase of tangible fixed assets (2,261) (1,740) Sale of tangible fixed assets 123 125 ------- ------- Net cash outflow (2,467) (1,886) Acquisitions and disposals -------- ------- Purchase of subsidiary undertakings 5 (26,805) (94) Purchase of businesses 5 (3,733) - ------- ------- (30,538) (94) Equity dividends paid (1,237) (1,027) ------- ------- Cash (outflow)/inflow before financing (27,947) 2,932 Financing ------- ------- Issue of shares 315 63 Receipt/(repayment) of bank loans 23,933 (1,000) ------- ------- 24,248 (937) ------- ------- (Decrease)/increase in cash in the year 6(b) (3,699) 1,995 ======= ======= Reconciliation of net cash flow to movement in net cash/(debt) 6(b) (Decrease)/increase in cash in the year (3,699) 1,995 Cash (inflow)/outflow from (increase)/decrease in net debt (23,933) 1,000 ------- ------ Change in net (debt)/cash resulting from cash flow (27,632) 2,995 Cash/(debt) arising on acquisition 2,376 (550) Net cash/(debt) brought forward 581 (1,864) ------- ------- Net (debt)/cash carried forward (24,675) 581 ======= ======= NOTES TO THE PRELIMINARY RESULTS 1 Segmental information 2000 1999 £'000 £'000 Turnover: Publishing and Information 47,915 44,642 Events 9,893 - ------ ------- 57,808 44,642 ====== ======= 2000 1999 £'000 £'000 Profit before taxation: Publishing and Information 6,822 6,514 Events 1,337 - ------- ------ 8,159 6,514 Less: interest (1,003) (70) ------- ------ 7,156 6,444 ======= ====== 2000 1999 £'000 £'000 Net assets: Publishing and Information 24,239 19,619 Events 693 - ------ ------ 24,932 19,619 ====== ====== 2 Turnover The geographical analysis of turnover is as follows: 2000 1999 £'000 £'000 United Kingdom 49,484 36,775 Overseas 8,324 7,867 ------ ------ 57,808 44,642 ====== ====== 3 Operating expenses 2000 1999 £'000 £'000 Distribution and selling costs 18,617 17,508 Administrative expenses 9,396 5,964 ------ ------ 28,013 23,472 ====== ====== 4 Earnings per share 2000 1999 The calculation of earnings per share is based on profit after taxation and minority interests of £4,316,000 £4,339,000 and on the average number of ordinary shares in issue during the year 71,910,942 71,352,502 and on the diluted average number of ordinary shares in issue during the year 72,708,902 72,103,772 Earnings per ordinary share 6.00p 6.08p Diluted earnings per ordinary share 5.94p 6.02p Adjusted earnings per ordinary share 8.54p 7.26p In order to show the results on a comparable basis to prior years before the adoption of FRS 10, an adjusted earnings per ordinary share has been calculated using an adjusted profit after taxation and minority interests but before amortisation of goodwill and intangible assets of £6,143,000 (1999: £5,181,000). 5 Acquisitions During the year the Group acquired shares carrying 80.6 per cent. of all rights attached to the issued shares of Central Law Group Limited, part of the business of Wiggmoore Marketing Communications Limited and the business of Speed 7726 Limited (formerly Redpoint Marketing Limited) and certain titles from United News & Media Group Limited and Aspen Group Limited. The results of the Central Law Group for the year from 1st August 1997 to 31st July 1998 (the date of its last audited accounts prior to its acquisition) and its results for the period from 1st August 1998 to 9th June 1999, the date of acquisition, and from 10th June 1999 to 31st July 1999 (the date of its first audited accounts following acquisition) are as follows: Year to Period to 9th Period 10th 31st July June June to 31st July 1998 1999 1999 £'000 £'000 £'000 Turnover 10,933 11,391 1,690 Cost of sales (5,574) (5,634) (674) ------- ------- ----- 5,359 5,757 1,016 Operating expenses (2,900) (3,616) (413) ------- ------- ----- Operating profit 2,459 2,141 603 ====== ====== ===== Profit after tax and minority interests 1,810 1,734 448 ====== ====== ==== The effect of the Central Law Group since its acquisition on the Group's consolidated cash flow for the year ended 29th February 2000 can be summarised as follows: £'000 Net cash flow from operating activities 2,740 Returns on investments and servicing of finance 90 Taxation paid (387) Capital expenditure and financial investments (193) ----- Net cash inflow 2,250 ===== Assets and liabilities acquired: (a) Subsidiary undertakings acquired Book value Fair value adjustments Fair value £'000 £'000 £'000 Investments 5 (5) - Tangible fixed assets 1,107 (30) 1,077 Stock and work in progress 134 (134) - Debtors 2,029 (100) 1,929 Cash 2,376 - 2,376 Creditors due within one year (5,211) - (5,211) Goodwill and intangible assets - 28,682 28,682 ------- -------- ------ 440 28,413 28,853 ======= ======= Less minority interests (128) ------ Consideration 28,725 ====== Satisfied by: Cash 26,805 Shares 1,920 ------ 28,725 ====== (b) Businesses acquired: Book value Fair value adjustments Fair value £'000 £'000 £'000 Tangible fixed assets 58 - 58 Debtors 94 - 94 Creditors due within one year (639) - (639) Goodwill and intangible assets 4,270 - 4,270 ----- ------ ------ 3,783 - 3,783 ===== ====== Less minority interests (50) ----- Consideration 3,733 ===== Satisfied by: Cash 3,733 ===== Adjustments were made to the book values of the net assets acquired to reflect the their fair values and the application of group accounting policies. 6 Notes to the consolidated cash flow statement Reconciliation of operating profit to net cash inflow from operations 2000 1999 £'000 £'000 Operating profit 8,159 6,514 Depreciation of tangible fixed assets 1,359 1,100 Amortisation of goodwill and intangible fixed assets 2,051 867 (Profit) on sale of tangible fixed assets (64) (82) Decrease in stock and work in progress 244 7 (Increase) in debtors (3,849) (403) Increase/(decrease) in creditors 1,551 (429) ------ ----- Net cash inflow from operating activities 9,451 7,574 ====== ===== Analysis of movement in net cash/(debt) At 1st Cashflow Arising on At 29th March 1999 acquisition February 2000 £'000 £'000 £'000 £'000 Cash at bank and in hand 1,131 (2,319) 2,376 1,188 Bank overdraft (483) (1,380) - (1,863) ----- ------- ----- -------- 648 (3,699) 2,376 (675) Loans due after one year - (20,750) - (20,750) Loans due within one year (67) (3,183) - (3,250) ----- -------- ----- ------- 581 (27,632) 2,376 (24,675) ===== ======== ===== ======== 7 Post balance sheet event In March 2000 the Company raised net proceeds of £28.6 million from a placing of 7,289,627 Ordinary Shares of 5p each at 400p per share. The proceeds have been used to repay in full the Group's borrowings. 8 Nature of the financial information The foregoing financial information does not amount to full accounts within the meaning of Section 240 of the Companies Act 1985. The financial information has been extracted from the Group's Annual Report and Accounts for the year ended 29th February 2000 on which the auditors have given an unqualified report. Copies of the Annual Report and Accounts will be posted to shareholders shortly and will be available from the Company's registered office at Paulton House, 8 Shepherdess Walk, London N1 7LB.

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