Final Results
Wilmington Group Plc
15 September 2005
Embargoed until 0700 15 September 2005
WILMINGTON GROUP PLC
('Wilmington', 'the Group' or 'the Company')
Preliminary Results for the year ended 30 June 2005
Wilmington Group plc, the professional information and training group, today
announces its preliminary results for the year ended 30 June 2005.
Highlights
• The Group returned a strong result, benefiting from the successful
restructuring last year
- adjusted profit before tax (before amortisation and exceptional items)
increased by 18% to £12.1m
- adjusted EPS increased by 20% to 9.28p
- total dividend for the year increased by 20% to 3.6p
- excellent operating cashflow of £14.5m, representing 121% cash conversion
• All core sectors of the business made good progress, increasing margin
and profit
• Particularly strong performance by the key Legal and Regulatory and
Healthcare divisions, which increased trading profit by 13% and 51%
respectively
• The Board is confident of future good progress
Charles Brady, Chief Executive of Wilmington, commented:
'Last year I indicated that Wilmington intended to focus on key market sectors
where we can develop complementary information and training assets, improve the
management team, increase efficiency and grow our business through both organic
development and acquisitions. It is clear that we are succeeding in our
objectives.
'Wilmington has in place an experienced and well-motivated management team able
to take advantage of the Group's strong cashflow and robust balance sheet to
develop the business. We have a strong reputation in areas that we want to
develop and are well-placed to uncover and exploit the exciting possibilities
that we believe the current market offers.
'The Board is encouraged by the progress made in the year to 30 June 2005 and
remains confident of further good progress this financial year.'
- ends -
For further information, please contact:
Wilmington Group Plc On the day: 020 7422 6800
Charles Brady, Chief Executive Thereafter: 0121 355 0900
Basil Brookes, Finance Director
Weber Shandwick Square Mile 020 7067 0700
Nick Oborne, Kirsty Raper or Yvonne Alexander
Note to Editors
Wilmington Group plc is one of the UK's leading providers of information and
training for professional business markets. The Group provides training,
arranges industry events and publishes magazines, directories, databases, and
special reports focused primarily on its four principal sectors of Legal and
Regulatory, Healthcare, Media and Entertainment and Design and Construction.
Capitalised at approximately £135 million, Wilmington floated on the London
Stock Exchange in 1995.
Chairman's Statement
Results
I am delighted to announce record results for the year to 30 June 2005. All
sectors of the business have made good progress and the improved quality of the
Group's portfolio of businesses reflects the successful restructuring last year.
Turnover in the year to 30 June 2005 was £85.1m (2004: £82.7m). Profit before
tax, amortisation of goodwill and intangible assets and exceptional items
('adjusted profit') increased by 18.4% to a record £12.1m (2004: £10.2m). The
modest increase in Group turnover reflects the disposal of the industrial
magazine portfolio towards the end of the prior financial year and the disposal
of the software development business, Abacus Software Limited, in January 2005.
The turnover of the Group's continuing businesses increased by 8.0%.
Adjusted earnings per share increased by 20% to 9.28p (2004: 7.73p). Cashflow of
£14.5m was generated from operating activities (2004: £12.0m), representing 121%
of operating profit before amortisation of goodwill and intangible assets (2004:
115%).
Dividend
The Board remains committed to increasing dividends progressively and therefore
is proposing a final dividend of 2.45p per share payable on 11 November 2005 to
shareholders on the register on 7 October 2005. Taken together with the interim
dividend of 1.15p per share, this will make a total dividend for the year of
3.6p per share, an increase of 20% over the 3.0p paid last year. The dividend is
covered 2.6 times by adjusted earnings per share (2004 : 2.6 times).
Strategy
Wilmington's strategy is to generate sustainable and growing profits from
servicing the information and training requirements of selected professional
business markets. We aim to develop strong positions in key market sectors by
focusing investment, both acquisitive and organic, on those markets and to
expand revenue streams by adding new products and delivery channels. In these
markets Wilmington provides researched and accurate information in a variety of
formats. These range from professional magazines providing news and updates, to
comprehensive databases delivered either electronically or in hard copy format.
Wilmington also provides comprehensive training and conference programmes and a
range of educational and accreditation schemes.
By understanding and working directly with our client base, Wilmington is able
to provide essential support and information which frequently requires regular
updating, thereby resulting in long-term and sustainable revenue sources. We
focus on those market sectors where we have critical mass and where there is a
demonstrable need for information and training. In many cases there are
mandatory professional or regulatory requirements for clients to use the
products we provide.
Highlights of the Year
The results for the year to 30 June 2005 reflect the significant progress made
across the Group with each core division reporting increased profits and
improved profit margins. An analysis of the Group's performance by market sector
is set out in the Chief Executive's Operational Review. I would however like to
highlight:-
The continuing growth in terms of profits and profit margins of our Legal and
Regulatory division which generated a trading profit of £10.9m (2004: £9.6m) at
a profit margin of 25.3%.
The Immigration & Asylum Accreditation scheme which has been a major project
requiring the development and launch of an accreditation scheme for over 2,000
Immigration and Asylum advisors.
The Healthcare division which has seen profits grow by 51% to £1.9m in the year
to 30 June 2005. We continue to invest, both domestically and internationally,
in the launch of new products from this division.
I am also pleased to report that the Design and Construction division has
recovered from a loss of £165,000 last year to a profit of £233,000 in the year
to 30 June 2005.
As I reported in the Interim Report for the six months to 31 December 2004, we
have incurred exceptional costs of £917,000 in the year to 30 June 2005. Most of
this expenditure related to termination and redundancy payments and also the
cost of exiting leasehold premises. Many of the businesses which have moved are
now located in buildings owned by Wilmington. We anticipate cost savings in the
region of £800,000 per annum, of which approximately half was realised in the
year to 30 June 2005.
The Group's businesses generate strong cashflows. Cash generated from operating
activities, before exceptional items, was £15.4m and even after exceptional
items amounted to £14.5m, an increase of 21.5% over the prior year. After the
servicing of interest and dividends, payment of taxes and capital expenditure,
there was a free cash flow of £6.0m (2004: £4.9m). During the year the Group's
investment activities resulted in expenditure of approximately £9m. This
included the acquisition of minority interests in three businesses, the
acquisition of Quorum Training, the payment of deferred consideration relating
to the acquisition of Bond Solon Training and the purchase of a freehold
property. As a result the net debt of the Group increased from £4.5m to a modest
£8.2m.
Board and Management Structure
The Board regularly reviews the performance of the Group to ensure that the
correct operating structure and people are in place to deliver growth and
enhanced shareholder value. During the year to 30 June 2005 we made extensive
changes to our Board to create a more efficient structure and to reflect current
corporate governance. First, we have reduced by two the number of executive
directors on the main Board and created an executive management board which
reports directly to the Chief Executive. Second, we have strengthened our
non-executive capability and, in line with current best practice, now have an
equal number of executive and non-executive directors in a board of six.
International Financial Reporting Standards ('IFRS')
We shall be adopting IFRS for the first time during the year ending 30 June
2006. The comparative figures for the year ended 30 June 2005 will be restated
to reflect IFRS in those accounts. Our review of the IFRS treatment of goodwill
and intangible assets has indicated that overall the carrying values in our
balance sheet are substantially lower than the discounted cashflows that they
are expected to generate. However, we have provided in these UK GAAP accounts
additional amortisation of £1.1m in relation to assets in a number of
miscellaneous markets which are included in the segmental analysis under the
category 'Other'.
Summary
I would like to thank my fellow directors, senior managers and all of the
Group's employees who contributed to this year's successful results for their
innovation, hard work and commitment.
Wilmington has in place an experienced and well-motivated management team able
to take advantage of the Group's strong cashflow and robust balance sheet to
develop the business. We have a strong reputation in areas that we want to
develop and are well-placed to uncover and exploit the exciting possibilities
both for organic growth and bolt-on acquisitions that we believe the current
market offers.
The Board is encouraged by the progress made in the year to 30 June 2005 and
remains confident of further good progress this financial year.
David Summers
Chairman
Chief Executive's Operational Review
Results
Last year I indicated that Wilmington intended to focus on key market sectors
where we can develop complementary information and training assets. To achieve
this we needed to streamline and improve the management team, increase
efficiency and grow our business through both organic development and
acquisitions. I outlined the Board's determination to take the action necessary
to improve the quality of the business whilst delivering consistent profit
growth.
With adjusted profit and earnings per share increasing by 18.4% and 20.1%, to
£12.1m (2004: £10.2m) and 9.28p (2004: 7.73p) respectively, and margins
improving across our operations, it is clear that there has been significant
progress in the Group's performance during the year and that we are succeeding
in our objectives.
Wilmington's People
Wilmington's growth and success depends on the quality of the people it employs
and we are fortunate to enjoy the entrepreneurship, professionalism and
flexibility that provide the basis for a successful business.
These characteristics have enabled us to make and sustain extensive changes
during the last couple of years. We have challenged the Wilmington team to
change working practices, develop new technologies, undergo additional training,
move location and to take on greater responsibility while continuing to grow
profitability and earnings per share. Wilmington employees have responded
positively to these challenges, delivering improved performance whilst
maintaining a professional and friendly outlook at work; I thank them for their
enthusiasm, hard work and support.
The pace of change is evidenced by our property moves. We have recently acquired
new premises for APM in Paris, moved CLT (Scotland) to new offices and training
centre in Glasgow, purchased new freehold premises for Beechwood in Basildon,
moved the design magazines and events from Chelmsford to Central London, moved
the Polygon business to Wilmington's existing premises at Foots Cray, Kent, and
moved our catering business, Dewberry Redpoint, into new office accommodation.
We have also purchased and equipped a new production unit for Central Law
Training in Sutton Coldfield. In total approximately 265 people are now in new
premises and our businesses are operating from better quality accommodation,
often occupying properties owned by the Group, and yielding substantial ongoing
cost savings.
At the same time there have been major changes to working practices and
significant investment in new technology and equipment. These developments have
required a lot of hard work and dedication from Wilmington's team, which has
planned and implemented major changes in premises and working practices, but
they bode well for the future. During the year to 30 June 2005 the average
number of people employed by the Group has decreased from 1,084 to 975, a
reduction in excess of 10%.
We do not anticipate any lessening in the pace of change. The property
reorganisation is now largely complete but we foresee continuing technological
development across the Group; in particular, the speed at which the Group is
developing Internet and e-technologies is increasing.
Wilmington's Directors and executive management team believe that the only way
that we can achieve the intended high levels of growth is to retain and attract
the very best people. The Board and I are determined to ensure that Wilmington
remains a great place to work where people have the opportunity to challenge
themselves, to grow professionally and to benefit from high levels of
remuneration and incentives. Only by continuing to develop the skills of our
current team and by recruiting the very best new talent can Wilmington continue
to grow at the rate we wish.
Acquisitions and Disposals
In August 2004 we purchased the 45% minority shareholding in International
Compliance Training ('ICT'). ICT, which provides anti-money laundering and
compliance training programmes in a number of jurisdictions including the UK,
has had a good year. We believe that there is considerable potential for further
growth in this area and will continue to invest in the recruitment of additional
staff and the development of new products.
In January 2005 we sold our 75% shareholding in Abacus Software for £760,000.
Wilmington originally acquired Abacus to help with the development of our
Internet activities. We have gained significant insight into the development of
web-based technologies and have benefited from the many applications developed
for us by Abacus. However, we no longer felt that it was necessary to own a
software development business to achieve our e-technology objectives.
We are experiencing increasing demands for information delivered electronically
across all aspects of our business. We continue to make extensive investment in
new applications which either increase the efficiency of our products, in some
cases creating new business models, or reducing the costs of operation.
Development is either undertaken internally within the Group or outsourced to a
number of leading specialists.
In May 2005 we acquired Quorum Training which provides training to finance and
accountancy professionals employed in commerce, industry, central and local
government. This is an area where there are increasing continuing professional
development regulations. Quorum has an excellent reputation for the quality of
its programmes and we believe it will provide a strong platform to substantially
develop the Group's activities in this area.
During the year we also acquired the outstanding minority shareholdings in
Redpoint Marketing (part of the Drinks and Catering division) and Polygon Media
(part of the Design and Construction division). Since the year end we have
completed the acquisition of the remaining minority interest in Bond Solon
Training (providers of witness training). We will also acquire the outstanding
minority shareholdings in Pendragon Professional Information and Hollis
Directories in the Autumn of 2005. All of these acquisitions will be earnings
enhancing.
In acquiring these outstanding minority interests we obtain greater management
flexibility and will benefit from further integration of our core businesses.
I have previously indicated that there were parts of Wilmington's portfolio that
were in markets the Group no longer intended to pursue, or did not have the
profit and growth characteristics that the Group sought. Subsequent to the year
end, we have disposed of a portfolio of assets servicing the drinks market. The
results of this business for the year to 30 June 2005 are shown as
'Discontinued'. The remainder of what was the Drinks and Catering division is
now included in the segmental analysis under the category 'Other'. This
continues the process whereby, in recent years, Wilmington has effectively
managed a number of non-core activities with a view to exiting at an appropriate
time.
Review of Operations
All our key business divisions showed increased profits and improved profit
margins against the previous year, with particularly strong performances by our
Legal and Regulatory and Healthcare businesses.
During the year we incurred exceptional costs of £917,000. Most of this
expenditure related to termination payments and the costs of exiting leasehold
premises. The reorganisation has created a more robust management team and
business infrastructure which will be better able to develop the Group in the
future.
Legal and Regulatory
Year ended Year ended
30 June 2005 30 June 2004
£'000 £'000
Turnover 43,228 39,087
Trading profit* 10,918 9,622
Margin 25.3% 24.6%
*Trading profit is before unallocated central overheads, amortisation, interest,
exceptional items and tax
This is our largest division accounting for 50.8% of Group turnover and
contributing 75.8% of Group trading profit. Turnover has grown by 10.6%, trading
profit increased by 13.5% and the operating margin grew to 25.3%. Our Legal and
Regulatory division is a resilient and growing business, combining high quality
'must have' information with a range of focused, market leading products and
events.
Waterlow provides information, magazines and services to the legal, accountancy,
surveying, pensions, finance and charity markets. Waterlow products, which date
back to 1844, are clear market leaders with high quality proprietary content and
strong customer renewal rates.
In addition to products for professional markets, published under the Waterlow
brand, subsidiary brands include:
•Pendragon which provides the leading electronic information service for
UK pensions lawyers
•ICP, a leading provider of financial information on companies worldwide,
specialising in emerging markets
•Charity Choice, the market leading products through which UK charities
promote themselves to the legal profession and individual donors
•Caritas, the leading provider of financial analysis of charitable
organisations in the UK
•Solicitors Journal, a leading weekly magazine and portfolio of products
for the legal profession (and winner of the law librarian's prestigious
BIALL 'Legal Journal of the Year' award for 2005).
All Waterlow's markets show common characteristics including large professional
client bases with strong information needs, increasing regulatory requirements
and lack of cyclicality. These characteristics have provided a stable base upon
which Waterlow has been able to develop a cash generative and growing business
with excellent margins.
The development of electronic publishing has been a major factor in the
development of the business, with the proportion of revenues derived from higher
margin products and services delivered electronically increasing last year to
over 47%.
The business has seen constant growth in sales and profits in recent years as a
result of both strong organic growth and the successful integration and
development of acquisitions.
The development of our recent acquisitions has continued in an encouraging
manner. Solicitors Journal and Pendragon, two recent acquisitions, saw their
combined revenues and profits grow by over 15%. As a demonstration of the value
created by these acquisitions, our return on investment in both cases is in
excess of 40%. We remain confident of continued development in these businesses
and are enthusiastically looking for other acquisitions where we can generate
value for our shareholders.
Our professional education and training activities continued to report good
turnover and profit growth. Central Law Training ('CLT'), which serves the legal
and financial markets, is the market leader for the provision of mandatory
post-qualification training courses and accredited programmes for UK lawyers. It
delivers more than 4,000 training courses per year.
Our legal training business is founded on a growing subscription membership base
and excellent marketing capability. These strengths are aligned with the success
of the CLT management team in establishing excellent working relationships with
National and Local Law Societies, major universities and professional bodies
including the Lawyer's Commerce & Industry Group, International Trust Companies
Association, Society of Trust and Estate Practitioners and the British Bankers
Association.
Over the past 12 months there has been substantial growth in the number of high
level Law Society accredited programmes presented by CLT, including those for
overseas lawyers (QLTT) and for lawyers requiring accreditation in areas of
Immigration and Asylum, Criminal Practice and Higher Rights of Audience. This
area remains buoyant, with a number of new initiatives planned. The launch of
the Commission for Legal Service's Immigration and Asylum Accreditation scheme
was a success with the vast majority of advisers assessed during the year ended
30 June 2005. We anticipate ongoing activity, albeit at a lower volume, from new
entrants and Immigration and Asylum advisers seeking to upgrade their
qualifications.
The major successes in the period have included the continuing growth of CLT
Scotland and the highly successful launch of CLT Ireland. This jurisdictional
expansion of CLT's training programmes is also typified by the launch of
accredited International Diplomas and Certified Programmes in Compliance and
Anti-Money Laundering. These latter programmes have benefited from strong
working relationships which have been established with the Compliance Institute
and the International Compliance Association.
At the start of the financial year we acquired the 45% minority shareholding in
ICT. ICT is still in its development phase, requiring ongoing investment.
Nevertheless it has performed well during the year with good growth in trading
profit.
Bond Solon, the witness training company acquired by CLT in 2001, has had
another excellent year with further growth in turnover and profit.
Towards the end of the year we also successfully acquired Quorum Training. Its
acquisition provides us with immediate skills and market presence through which
we can accelerate the development of training for finance professionals.
Healthcare
Year ended Year ended
30 June 2005 30 June 2004
£'000 £'000
Turnover 10,738 8,833
Trading profit* 1,880 1,246
Margin 17.5% 14.1%
*Trading profit is before unallocated central overheads, amortisation, interest,
exceptional items and tax
Healthcare accounted for 12.6 % of Group turnover and 13.1% of Group trading
profit. Healthcare is a high value market where a combination of accelerating
use of technology and rapid changes in information requirements are creating
many opportunities for us.
Binleys is a specialist data provider to healthcare and pharmaceutical
industries. It continues to invest strongly in organic growth and as part of its
development programme released two new electronic products for the
pharmaceutical market. These complement the existing online products and help to
plan and manage sales of drugs to the healthcare market place.
APM, our French Press Agency based in Paris, provided its first full year
contribution to Group and we are extremely pleased with its progress. It is the
leading provider of healthcare news to its home market and is building a
European brand as it develops a wider range of products.
We are managing these businesses on an increasingly strategic basis with product
sets from each being used to reinforce and enhance the offerings from the other
divisions. This will continue at an accelerating pace as we invest in the
European healthcare and pharmaceutical markets.
Media and Entertainment
Year ended Year ended
30 June 2005 30 June 2004
£'000 £'000
Turnover 7,001 6,647
Trading profit* 1,031 947
Margin 14.7% 14.2%
*Trading profit is before unallocated central overheads, amortisation, interest,
exceptional items and tax
Media and Entertainment, which accounts for 8.2% of Group turnover and 7.2% of
Group trading profit, had a satisfactory year.
The division provides information, data and services to the TV, music, public
relations, sponsorship and marketing sectors. Operating through a number of
leading brands including Hollis, RED-Muze, PCR and onMusic (formerly TMSS), it
provides its information as electronic products, newsletters, directories and
events. This sector is increasingly delivering its information through the
Internet.
We are very satisfied with progress made by our joint venture RED-Muze, which
supplies information on recorded music and video to both retailers and
e-tailers. Our partners in the USA supply equivalent data to the American and
Asian markets and we expect continued progress from this division as we develop
further into the main European markets.
In January 2005 we disposed of Abacus, our specialist Internet software
subsidiary, and accordingly the results of Abacus have been excluded from this
division and are shown under Discontinued activities.
Design and Construction
Year ended Year ended
30 June 2005 30 June 2004
£'000 £'000
Turnover 11,444 11,282
Trading profit* 233 (165)
Margin 2.0% (1.5%)
*Trading profit is before unallocated central overheads, amortisation, interest,
exceptional items and tax
Design and Construction, which accounts for 13.5% of Group turnover and 1.6% of
Group trading profit, made good progress in the year under review and has
returned to profit in the year.
This division provides magazines, yearbooks, events and electronic products to
the construction industries. It has benefited from a management and
organisational restructuring which has streamlined the cost base whilst allowing
us to improve revenues. We expect further progress across all its activities in
the current year.
It is worth noting that display advertising in our leading products held up well
and, while advertising tightened slightly in the final quarter, we were
satisfied with all revenue streams in this division.
Other and Discontinued
The remainder of our turnover falls into a number of miscellaneous markets or
are revenues from discontinued businesses. Drinks and Catering, which in the
year ended 30 June 2005 accounted for 10.1% of Group turnover and 2.1% of Group
trading profit, made modest progress in the year. Revenues were affected by
continued depressed display advertising and also reflect the elimination of
non-contributing products. Events made solid progress with both catering
conferences and the 'International Wine Challenge', generating good results.
Summary and outlook
Wilmington has developed a number of resilient profitable businesses with a
solid record of performance. The Group is cash generative, with good profit
margins and substantial repeat revenues. We are building multi media businesses,
with diversified revenue streams, in our core markets. This diversity creates a
robust business model and allows a greater understanding and insight into the
dynamics of the markets we serve.
We are set to make further good progress this financial year, satisfying the
growing requirement for high quality information and training amongst the
professional business communities we serve. The current year has started in line
with our expectations and, as in the previous years, we expect that the Group's
performance will be weighted to the second half of the year.
Charles J Brady
Chief Executive
Consolidated Profit and Loss Account
For the year ended 30 June 2005
Year Year
Amortisation ended ended
Existing Discontinued Sub- and 30 June 30 June
Operations Acquisitions Operations Total Exceptionals 2005 2004
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000
Turnover
- continuing
operations 80,287 409 - 80,696 - 80,696 74,744
- discontinued
operations - - 4,384 4,384 - 4,384 7,914
--------- --------- --------- ------- ---------- -------- -------
1 and 2 80,287 409 4,384 85,080 - 85,080 82,658
Cost of Sales (27,346) (200) (925) (28,471) - (28,471) (27,473)
--------- --------- --------- ------- ---------- -------- -------
Gross profit 52,941 209 3,459 56,609 - 56,609 55,185
Operating expenses 3 (40,069) (190) (3,379) (43,638) (7,055) (50,693) (49,616)
--------------- ----- --------- --------- --------- ------- ---------- -------- -------
Operating
profit/(loss)
- continuing
operations 12,872 19 - 12,891 (6,913) 5,978 5,920
- discontinued
operations - - 80 80 (142) (62) (351)
--------------- ----- --------- --------- --------- ------- ---------- -------- -------
4 12,872 19 80 12,971 (7,055) 5,916 5,569
Non-operating
exceptionals -
discontinued
operations 4 - - - - - - 251
--------- --------- --------- ------- ---------- -------- -------
Profit before
interest and
taxation 12,872 19 80 12,971 (7,055) 5,916 5,820
--------- --------- --------- ------- ----------
Interest
receivable
and
similar income 16 15
Interest
payable and
similar
charges (908) (423)
-------- -------
Profit on
ordinary
activities
before
taxation 5,024 5,412
Taxation 5 (3,307) (2,695)
-------- -------
Profit on
ordinary
activities
after taxation 1,717 2,717
Minority
interests (713) (658)
-------- -------
Profit for the
financial
period and
attributable to
shareholders 1,004 2,059
Dividend paid
or proposed (3,008) (2,501)
-------- -------
Retained loss
for the period (2,004) (442)
-------- -------
Earnings per
ordinary share 7 1.20p 2.47p
-------- -------
Diluted
earnings per
ordinary share 7 1.20p 2.46p
-------- -------
Adjusted
earnings per
ordinary share 7 9.28p 7.73p
-------- -------
With the exception of exchange translation losses of £16,000 (2004: Nil) there
are no recognised gains and losses for the year other than those shown in the
consolidated profit and loss account.
Balance Sheets
Group Company
30 June 30 June 30 June 30 June
2005 2004 2005 2004
£'000 £'000 £'000 £'000
Fixed assets
Goodwill and intangible assets 65,728 64,453 - -
Tangible assets 12,291 11,665 1,805 1,883
Investments - - 42,626 48,552
-------- -------- -------- --------
78,019 76,118 44,431 50,435
-------- -------- -------- --------
Current assets
Stock and work in progress 1,557 1,874 - -
Debtors 17,803 17,802 39,709 30,460
Cash at bank and in hand 1,841 2,954 - 2,000
-------- -------- -------- --------
21,201 22,630 39,709 32,460
Creditors: Amounts falling due
within one year (31,094) (31,832) (9,789) (11,392)
-------- -------- -------- --------
Net current (liabilities)/assets (9,893) (9,202) 29,920 21,068
-------- -------- -------- --------
Total assets less current
liabilities 68,126 66,916 74,351 71,503
Creditors: Amounts falling due
after more than one year (10,000) (7,000) (10,000) (7,000)
Provision for liabilities and
charges (528) (604) (45) (51)
-------- -------- -------- --------
Net assets 57,598 59,312 64,306 64,452
-------- -------- -------- --------
Capital and reserves
Called-up share capital 4,180 4,167 4,180 4,167
Share premium account 42,658 42,363 42,658 42,363
Other reserves 949 949 - -
Profit and loss account 7,723 9,743 17,468 17,922
-------- -------- -------- --------
Equity Shareholders' funds 55,510 57,222 64,306 64,452
Minority interests 2,088 2,090 - -
-------- -------- -------- --------
57,598 59,312 64,306 64,452
-------- -------- -------- --------
Consolidated Cash Flow Statement
Year Year
Ended ended
30 June 30 June
2005 2004
Notes £'000 £'000
Net cash inflow from operating activities 8(a) 14,538 11,969
Returns on investments and servicing of
finance ----------- -----------
Interest received 16 15
Interest and similar charges paid (913) (545)
Dividends paid to minority shareholders in
subsidiary undertakings (192) (256)
----------- -----------
Net cash outflow (1,089) (786)
Taxation
UK and foreign corporation tax paid (2,930) (2,970)
Capital expenditure and financial investment
----------- -----------
Purchase of goodwill and intangible fixed assets (270) (309)
Purchase of tangible fixed assets (2,667) (3,854)
Sale of tangible fixed assets 150 223
----------- -----------
Net cash outflow (2,787) (3,940)
Acquisitions and disposals
----------- -----------
Purchase of subsidiary undertakings and
minority interests (8,735) (12,954)
Purchase of businesses - (493)
Settlement of loan notes (1,000) -
Sale of subsidiary undertakings 450 -
Sale of businesses - 44
----------- -----------
Net cash outflow (9,285) (13,403)
Equity dividends paid (2,627) (2,247)
---------- ----------
Cash outflow before financing (4,180) (11,377)
Financing
----------- -----------
Issue of shares 308 225
New borrowings 3,000 7,000
----------- -----------
Net cash inflow 3,308 7,225
---------- ----------
Increase in net debt in the year 8(b) (872) (4,152)
---------- ----------
Reconciliation of net cash flow to movement in 8(b)
net debt
Increase in net debt in the year (872) (4,152)
Cash arising on acquisitions and disposals 214 1,024
New borrowings (3,000) (7,000)
Net (debt)/cash brought forward (4,538) 5,590
---------- ----------
Net (debt) carried forward (8,196) (4,538)
---------- ----------
Notes to the Accounts
1. Segmental information
Set out below is the segmental information relating to the business by market
sector.
Year ended Year ended
30 June 30 June
2005 2004
£'000 £'000
Turnover:
Legal and Regulatory 43,228 39,087
Healthcare 10,738 8,833
Media and Entertainment 7,001 6,647
Design and Construction 11,444 11,282
Other 8,285 8,895
Discontinued 4,384 7,914
---------- ----------
85,080 82,658
---------- ----------
Profit before taxation:
£'000 £'000
Legal and Regulatory 10,918 9,622
Healthcare 1,880 1,246
Media and Entertainment 1,031 947
Design and Construction 233 (165)
Other 254 405
Discontinued 80 (209)
---------- ----------
Trading profit 14,396 11,846
Less: unallocated central overheads (1,425) (1,233)
---------- ----------
Operating profit before interest, exceptional items
and amortisation and impairment 12,971 10,613
Less: interest (892) (408)
---------- ----------
Profit before taxation, amortisation and impairment
and exceptional items ('adjusted profit') 12,079 10,205
Exceptional items
- operating (917) (250)
- non-operating - 251
---------- ----------
Profit before amortisation and taxation 11,162 10,206
Less: amortisation and impairment
- recurring (5,005) (4,794)
- non-recurring (1,133) -
---------- ----------
Profit before taxation 5,024 5,412
---------- ----------
The amortisation charge is split between Legal and Regulatory - £2,993,000
(2004: £3,124,000), Healthcare - £558,000 (2004: £364,000), Media and
Entertainment - £578,000 (2004: £617,000), Design and Construction £488,000
(2004: £385,000), Other £1,379,000 (2004: £162,000) and Discontinued - £142,000
(2004: £142,000).
£13,000 of the Legal and Regulatory amortisation charge and £20,000 of the
Healthcare amortisation charge relate to acquisitions made during the year to 30
June 2005.
30 June 30 June
2005 2004
£'000 £'000
Net assets:
Legal and Regulatory 40,955 39,148
Healthcare 9,469 8,755
Media and Entertainment 7,884 7,389
Design and Construction 6,094 6,250
Other 3,174 3,469
Discontinued 1,958 3,001
---------- ----------
69,534 68,012
Unallocated central net liabilities (11,936) (8,700)
---------- ----------
57,598 59,312
---------- ----------
2. Turnover
The geographical analysis of turnover is as follows:
Year ended Year ended
30 June 30 June
2005 2004
£'000 £'000
United Kingdom 69,408 68,743
Overseas 15,672 13,915
---------- ----------
85,080 82,658
---------- ----------
3. Operating expenses
Year ended Year ended
30 June 30 June
2005 2004
£'000 £'000
Distribution and selling costs 21,460 23,183
Administrative expenses 22,178 21,389
Exceptional item - restructuring costs (2004:
abortive transaction costs) 917 250
---------- ----------
44,555 44,822
Amortisation and impairment of goodwill and
intangible assets 6,138 4,794
---------- ----------
Total operating expenses 50,693 49,616
---------- ----------
Included in operating expenses are £2,147,000 (2004: £3,890,000) of distribution
and selling costs and £1,232,000 (2004: £2,264,000) of administrative expenses
in respect of discontinued operations. Cost of sales in respect of discontinued
operations were £925,000 (2004: £1,969,000). Also included in operating expenses
are £32,000 of distribution and selling costs and £158,000 of administration
expenses relating to acquisitions made during the year ended 30 June 2005. Total
administration expenses for the year ended 30 June 2005 were £29,233,000 (2004:
£26,433,000).
The exceptional item of £917,000 of restructuring costs comprises mainly
expenditure related to termination/redundancy payments and also the cost of
exiting leasehold premises. A tax credit of £279,000 arises on this exceptional
item.
4. Operating profit and exceptional items
Operating profit is stated after charging/(crediting)
Year ended Year ended
30 June 30 June
2005 2004
£'000 £'000
Depreciation of owned tangible fixed assets 1,794 1,766
Amortisation and impairment of goodwill and
intangible assets 6,138 4,794
Loss / (profit) on sale of fixed assets 36 (4)
Rentals under operating leases:
Machinery 8 16
Other operating leases 316 470
Auditors' remuneration:
Audit fees 196 166
Other services 35 30
Exceptional items - restructuring costs 917 -
Exceptional items - abortive transaction costs - 250
---------- ----------
Non-operating exceptional items comprise
Profit on sale of businesses - 251
---------- ----------
5. Taxation
Year ended Year ended
30 June 30 June
2005 2004
£'000 £'000
The tax charge comprises:
UK corporation tax at current rates 3,313 2,965
Adjustment to previous years (17) (93)
---------- ----------
3,296 2,872
Foreign tax 366 176
Tax on exceptional items (279) (279)
---------- ----------
Total current tax 3,383 2,769
Deferred tax credit (76) (74)
---------- ----------
3,307 2,695
---------- ----------
The deferred tax credit has been discounted by £34,000 (2004:
£38,000)
Factors affecting the tax charge for the year
The tax charge for the year is greater than the standard rate of corporation tax
in the UK of 30%. The differences are explained below:
Reconciliation of tax charge:
Profit on ordinary activities before tax 5,024 5,412
---------- ----------
Profit on ordinary activities multiplied by the
standard rate of corporation tax in the year of 30%
(2004: 30%) 1,507 1,624
Effect of:
Goodwill and intangible asset amortisation and
impairment not deductible for tax purposes 1,751 1,373
Other expenses not deductible for tax purposes 63 81
Capital allowances for the year less than/(in excess
of) depreciation 40 (37)
Foreign tax rate differences 39 25
Adjustment to tax charge in respect of previous
years (17) (93)
Gain on sale of business not taxable - (204)
---------- ----------
Current tax charge for year 3,383 2,769
---------- ----------
The tax charge in future years will continue to be greater than the standard
rate of corporation tax in the UK of 30% due to the goodwill and intangible
asset amortisation and impairment not deductible for tax purposes.
6. Acquisitions and Disposals
Subsidiaries acquired
In May 2005 a wholly owned subsidiary of the Company acquired 100 per cent. of
Quorum Training Limited.
Assets and liabilities of subsidiary undertaking
acquired:
Fair value
Book value Adjustments Fair value
£'000 £'000 £'000
Tangible fixed assets 86 (59) 27
Debtors 453 (151) 302
Cash 214 - 214
Creditors due within one year (574) - (574)
Deferred tax (10) 10 -
Goodwill and intangible assets - - -
---------- ---------- ----------
169 (200) (31)
---------- ----------
Goodwill arising on consolidation 1,610
----------
Consideration 1,579
----------
Satisfied by cash 1,579
----------
Fair value adjustments have been made to reflect the Group's accounting policies
for depreciation of tangible fixed assets, deferred tax and the writing off of
marketing expenditure as incurred.
Quorum Training Limited made a profit after taxation in the twelve months prior
to acquisition of £63,000 on turnover of £1,794,000.
Other acquisitions
During the year the company acquired an additional title, Institute of
Healthcare Management Yearbook, for a total cash consideration of £235,000 plus
associated costs.
The Group also paid in April 2005 deferred consideration of £3,884,000 in
respect of the acquisition of Bond Solon Training Limited.
Minority interests acquired
During the year the Company indirectly acquired the remaining 25 per cent. of
Polygon Media Limited for a total cash consideration of £1,442,000 giving rise
to an increase in goodwill and intangible assets of £1,334,000. During the year
the Company also indirectly acquired the remaining 25 per cent. of Redpoint
Marketing Limited for a total cash consideration of £804,000 giving rise to an
increase in goodwill and intangible assets of £679,000. During the year the
Company also indirectly acquired the remaining 45 per cent. of International
Compliance Training Limited for a total cash consideration of £993,000 giving
rise to an increase in goodwill and intangible assets of £942,000. Since the
year end the Company indirectly completed the acquisition of the remaining 25
per cent. of Bond Solon Training Limited for a total cash consideration of
£2,500,000 giving rise to an increase in goodwill and intangible assets of
£2,467,000. This consideration was paid in July 2005 and is included in
Creditors; amounts falling due within one year in these accounts.
Disposals
In January 2005 the company sold its interest in Abacus Software Limited for a
total consideration of £760,000. The net profit arising on this disposal has not
been treated as a non-operating exceptional item as the gain involved is not
material to the Group's results.
7. Earnings per ordinary share
Year ended Year ended
30 June 30 June
2005 2004
The calculation of earnings per ordinary share is
based on profit after taxation and minority
interests of £1,004,000 £2,059,000
----------- -----------
and an adjusted profit being
profit after taxation and minority interests of 1,004,000 2,059,000
and after adding back amortisation and impairment of
goodwill and intangible assets (net of minority
interest effect) 6,097,000 4,660,000
exceptional items after tax 638,000 (280,000)
----------- -----------
Adjusted profit £7,739,000 £6,439,000
----------- -----------
and on the average number of ordinary shares
in issue during the year of 83,394,158 83,292,467
----------- -----------
and, after adjusting for 387,373 outstanding share
options (2004: 274,502), on the diluted average number
of ordinary shares during the year of 83,781,531 83,566,969
----------- -----------
Earnings per ordinary share 1.20p 2.47p
----------- -----------
Diluted earnings per ordinary share 1.20p 2.46p
----------- -----------
Adjusted earnings per ordinary share 9.28p 7.73p
----------- -----------
To allow shareholders to gain a better understanding of the trading performance
of the Group, an adjusted earnings per ordinary share has been calculated using
an adjusted profit after taxation and minority interests but before amortisation
and impairment of goodwill and intangible assets and post taxation exceptional
items of £7,739,000 (2004: £6,439,000).
8. Notes to the consolidated cash flow statement
(a) Reconciliation of operating profit to net cash inflow from operating
activities:
Year Year
ended ended
30 June 30 June
2005 2004
£'000 £'000
Operating profit 5,916 5,569
Depreciation of tangible fixed assets 1,794 1,766
Amortisation and impairment of goodwill and intangible
fixed assets 6,138 4,794
Profit/(loss) on sale of tangible fixed assets 36 (4)
Exchange translation differences (16) -
Decrease in stock and work in progress 251 136
(Increase)/decrease in debtors (189) 372
Decrease/(increase) in creditors 608 (664)
--------- ---------
Net cash inflow from operating activities 14,538 11,969
--------- ---------
Included above is a net cash inflow of £136,000 in respect of the operating
activities of the Group's acquisitions. Acquisitions also accounted for £Nil of
the tax paid by the Group in the twelve months to 30 June 2005.
Included above is a net cash outflow of £35,000 in respect of operating
activities of the Group's disposal of Abacus Software Limited. This disposal
also accounted for £Nil of the tax paid by the Group in the twelve months to 30
June 2005.
No figures can be disclosed for the other discontinued operations as they are
not separately identifiable.
(b) Analysis of movement in net cash/(debt)
Arising on
At 1 July acquisitions At 30 June
2004 Cash flow and disposals 2005
£'000 £'000 £'000 £'000
Cash at bank and in hand 2,954 (1,327) 214 1,841
Bank overdraft (492) 455 - (37)
--------- --------- --------- ---------
2,462 (872) 214 1,804
Bank loan (7,000) (3,000) - (10,000)
--------- --------- --------- ---------
(4,538) (3,872) 214 (8,196)
--------- --------- --------- ---------
9. Nature of the financial information
The foregoing financial information does not amount to full accounts within the
meaning of Section 240 of Companies Act 1985. The financial information has been
extracted from the Group's Annual Report and Accounts for the year ended 30 June
2005 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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