Final Results

RNS Number : 0009T

Wilmington Group Plc

21 September 2010

 



 21 September 2010

WILMINGTON GROUP PLC

("Wilmington", "the Group" or "the Company")

Full Year Results for the year ended 30 June 2010

Wilmington Group plc, the professional information and training group, today announces its results for the year ended 30 June 2010.

Highlights

	2010			2009
	6 months to 31 Dec 2009 Unaudited	6 months to 30 June 2010 Unaudited	12 months to 30 June 2010 Audited	6 months to 31 Dec 2008 Unaudited	6 months to 30 June 2009 Unaudited	12 months to 30 June 2009 Audited
Revenue	£36.9m	£41.5m	£78.4m	£44.0m	£42.3m	£86.3m
Adjusted EBITA1	£6.2m	£8.2m	£14.4m	£7.8m	£6.8m	£14.6m
Profit before tax	£2.7m	£4.6m	£7.3m	£2.6m	£0.3m	£2.9m
Adjusted profit before tax1	£5.5m	£7.6m	£13.1m	£7.0m	£6.3m	£13.3m
Basic EPS	1.83p	3.55p	5.38p	1.24p	(0.78)p	0.46p
Adjusted EPS2	4.40p	6.19p	10.59p	5.16p	5.34p	10.50p

· Robust trading performance in an extremely tough year for the global economy, demonstrating the overall resilience of Wilmington's portfolio of businesses

· The second half year saw a marked improvement against the first half, benefiting from easing trading conditions and improved operational efficiencies

· Positive indicators bode well for the future

-             Legal and investment banking sectors showing signs of stabilisation and improvement

-             Resilient performance from accountancy, charities, healthcare, pensions, trust and compliance sectors

· Increased level of revenue investment, particularly in overseas expansion in the banking and finance sector and in new product development, in response to many exciting opportunities for growth available to the Group 

· Strong balance sheet and good cash conversion, at 110% of operating profit (before taxation, amortisation and impairment and interest) 

· Dividend per share for the year maintained at 7.0p

David Summers, Chairman, commented: 

"I am pleased to report that Wilmington has delivered a robust trading performance despite an extremely tough year for the global economy.

Wilmington's strategy to focus on providing key products and services which are required by our professional markets has served us well during the economic downturn.  This is particularly evident as our revenues and profits have continued to grow in some markets despite the changes in market conditions. 

We are confident that there are many exciting opportunities for growth available to the Group.  Change, particularly new legislation or regulation, usually drives information and training requirements in the professional markets we serve.  We have therefore increased the level of revenue investment in our businesses to achieve organic growth."

For further information, please contact:

Wilmington Group Plc   Charles Brady, Chief Executive Basil Brookes, Finance Director	020 7422 6800
Weber Shandwick Financial	020 7067 0700
Nick Oborne or Clare Thomas

Notes 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 directories, databases, magazines and special reports for a variety of markets including the legal, health, accounting, pension, charities and financial sectors. Capitalised at approximately £120 million, Wilmington floated on the London Stock Exchange in 1995.

¹ before income tax, amortisation of intangible assets, impairment of goodwill, unwinding of the discount on the provision for the future purchase of minority interests, share based payments and non-recurring items (see note 4 to this statement).

²after taxation and minority interests but before amortisation and impairment of intangible assets and goodwill, non-recurring costs, share-based payments and the unwinding of the discount on the provision for the future purchase of minority interests (see note 9 to this statement).

Chairman's Statement

I am pleased to report that Wilmington has delivered a robust trading performance despite an extremely tough year for the global economy. 

The first half of our financial year was impacted severely by the economic downturn with revenue from continuing operations down by 16% and Adjusted EBITA down by 21% compared to the prior year.  In the second half of the year we have seen trading conditions easing with revenue down 2% and Adjusted EBITA up 20% compared to the prior year.

There are a number of positive indicators which bode well for the future performance of Group.  In particular, booking levels in the legal training market have stabilised and conditions in the investment banking sector have improved.  We are also encouraged by the progress made with the webinar programme (live online seminars) which has gone from strength to strength, producing significant growth in delegate numbers.  A number of businesses within the Group, notably APIS, APM, Mercia, Pendragon and CLT International (trusts and compliance), have maintained good levels of revenue and profit growth throughout the period, demonstrating the strength of these assets and the overall resilience of Wilmington's portfolio of businesses. Operational efficiencies and cost savings have also helped us to maintain profits and margins during a challenging period.

We are confident that there are many exciting opportunities for growth available to the Group.  Change, particularly new legislation or regulation, usually drives information and training requirements in the professional markets we serve.  We have therefore increased the level of revenue investment in our businesses to achieve organic growth. 

·      In collaboration with the University of the West of England, we have launched a flexible Legal Practice Course, an innovative approach to studying for busy professionals. 

·      We have harnessed new technology with the success of the Legal Online Webinar training programmes, providing interactive and dynamic training to users' desktops.  This technology is being extended across the Group and is being adopted by other Group businesses.

·      Within our Publishing & Information Division we have seen the ongoing development of our online databases and information services along with the launch of new ones such as Charity Financials which provides detailed financial information on all 169,000 UK charities along with powerful analytical tools for organisations looking for intelligence on the UK charities sector.

Financial Performance

The financial results for the year ended 30 June 2010 show that prompt action at the onset of the economic downturn protected profits and margins. Whilst revenue from continuing operations for the year ended 30 June 2010 declined by 9.1% to £78.4m (2009: £86.3m), Adjusted EBITA decreased by less than 1.4% to £14.4m (2009: £14.6m). 

Adjusted Profit before Tax declined by 1.5% to £13.1m (2009: £13.3m).  Profit before Tax has increased by 157.2% to £7.3m (2009: £2.9m), reflecting the non-recurrence of any impairment charges, reduced charges for non-recurring items and the unwinding of the discount on the provision for the future purchase of minority interests.

Adjusted Earnings per Share increased by 0.9% to 10.59p per share (2009: 10.50p).  Basic Earnings per Share, which is after non-recurring items, share based payments, the unwinding of the discount on the provision for the future purchase of minority interests, amortisation and impairment increased to 5.38p (2009: 0.46p).

The quality of the operating profits continues to be underpinned by good cash flow. Operating cash flow was £15.4m (2009: £13.9 m), representing 110% of operating profit (before taxation, amortisation and impairment and interest) (2009: 108%).

At 30 June 2010 the net assets of the Group were £51.6m (2009: £53.8m), with deferred revenue increasing to £14.2m (2009: £13.9m). 

Wilmington has a strong balance sheet. The Group has reduced its debt despite spending £2.2m to acquire additional minority shareholdings in two existing subsidiaries and paying an increased interim dividend of £3.5m to achieve a smoother dividend distribution throughout the year.  At 30 June 2010 the Group had net debt of £16.8m (2009: £17.8m), representing 28% utilisation of our £60m facilities which are committed to March 2012. Our ratio of net debt to Adjusted EBITDA (see Note 4) was 1.1 times at the year end.

Acquisitions and Disposals

During the financial year ended 30 June 2010, no new acquisitions were made, although we acquired additional shareholdings of two existing subsidiaries.

In July 2009 we acquired the remaining 15% shareholding of Ark Group Limited. This business has been restructured with its training activities transferred to our Training & Events Division and its publishing activities integrated into our Publishing & Information Division.

In November 2009 we acquired an additional 5% shareholding of Beechwood House Publishing Limited, taking our shareholding to 85% of the company.

We are actively seeking acquisitions which complement our strategic goals and where we believe we can create value.  In uncertain markets we are particularly careful to ensure that any investment we make is sustainable over the long term and will further our goal of long term profit growth. We believe that the environment for growth by acquisition is improving following some difficult years and we are confident that we will make progress in the current financial year.

Dividend

The Board is recommending that the dividend for the year is maintained at the same level as the prior year.  In our Interim Management Report for the six months ended 31 December 2009 we announced the intention to move to an equal dividend distribution weighted throughout the year.  The Board proposes a final dividend of 3.5 pence per share payable on 12 November 2010 to shareholders on the register on 15 October 2010.  Taken together with the interim dividend of 3.5 pence per share, this makes a total dividend for the year of 7.0 pence per share (2009: 7.0 pence per share).  The dividend is covered 1.5 times by Adjusted Earnings per Share from continuing operations.

Outlook

Whilst the economic outlook remains uncertain and markets are unpredictable, the Group's businesses have proved resilient and delivered a robust trading performance despite the economic downturn.  We remain vigilant to the impact of changing economic conditions, but as a result of prompt action taken to reduce costs in the prior financial year, and an ongoing focus on efficiency, the Group is in a stronger position than it was this time last year. There is uncertainty surrounding the extent of Government spending cuts for those businesses with exposure to the UK public sector. However, with positive indications that trading conditions are easing or stabilising in those markets that have been most impacted by the economic downturn, we remain optimistic about the Group's prospects.

We are committed to our strategy of delivering information and training to professional business markets and continue to believe that these markets will provide a good environment for medium and long term growth.  As announced in our Interim Management Statement in May 2010, we believe that the time is now right to invest in overseas expansion in the banking and finance sector and in new product development, particularly with regard to deeper content and enhanced technology.  We expect to invest up to £2m and to see returns in the financial year ending June 2012 and beyond.

I would like to thank my fellow Directors, Senior Managers and all of the Group's employees who have contributed to this year's results for their hard work, enthusiasm and commitment.  I would particularly like to thank Rory Conwell, one of the founding directors of Wilmington and a former Chief Executive, who will be retiring from the Group and who will step down from the Board on 30 September 2010.  Rory has made a substantial contribution to the development and growth of Wilmington.  I wish him the very best for the future.

David Summers OBE

Chairman

Business Review

Business Objectives and Strategy

Wilmington's key strategy is to increase shareholder value by delivering sustainable and growing profits from servicing the information and training requirements of professional business markets.  We believe that professional markets will provide a good environment for medium term growth and will deliver long term benefits for the Group. 

We aim to develop strong businesses delivering sustainable profit growth, in our key markets by:

·      focusing investment, both acquisitive and organic, on those markets;

·      providing well researched and accurate information in a variety of formats and by developing innovative new products and business intelligence to extend and enhance our product range;

·      investing in online and digital technology to access new markets, manage our business efficiently and create new products which help our clients to manage their businesses; and

·      maintaining strong sales and marketing capabilities.

Wilmington's strategy to focus on providing key products and services which are required by our professional markets has served us well during the economic downturn.  This is particularly evident as our revenues and profits have continued to grow in some markets despite the difficult economic conditions. 

Our strong subscriptions-based businesses reflect our investment strategy to develop and acquire businesses with not only high repeat revenues but also strong, cash generative income streams. In the long term, an increase in demand for professional information and training services both in the UK and abroad should benefit Wilmington. Our percentage of revenues outside of the UK as a percentage of total revenue has continued to grow year on year and is now at 21% (2009: 18%). This proportion has increased partly due to our investment in the South East Asia region with the compliance and investment banking programmes.

Training & Events

Training & Events account for 55% of Group revenue producing 39% of Group trading profit. Although the very difficult trading conditions, particularly during calendar year 2009, resulted in a decline in course bookings in the legal and investment banking sectors, we are now seeing signs of stabilisation and growth, particularly in the banking sectors.  We are also seeing the benefits of cost reductions, improved operating efficiency and changes to course programmes. Revenue decreased by 9.9%, to £43.0m (2009: £47.7m) while segmental profit declined by 5.1% to £6.6m (2009: £6.9m) giving increased operating margins of 15.3% (2009: 14.5%).   

Central Law Training recently celebrated its 25^th anniversary servicing the legal and financial markets.  It is the market leader in the provision of mandatory post-qualification training for UK Lawyers.  It also provides paralegal training, mandatory accreditation programmes, including a major Immigration Re-Accreditation programme, and the New York Bar course.  In total it continues to deliver more than 4,000 training courses per annum.  Revenues in the second half of the financial year were broadly in line with the corresponding period in the prior year. The legal training market has been adversely affected by the recessionary conditions but we are seeing signs of stabilisation.   The webinar programme (live online seminars) has gone from strength to strength and we are seeing a significant growth in delegate numbers. This technology is also being harnessed by other Group companies to deliver webinar programmes throughout the UK and internationally.  Also, in collaboration with the University of West of England (UWE), we launched a flexible Legal Practice Course during the year to enable graduates to undertake the solicitor's qualification examinations in a cost effective way that can also accommodate part time working and family commitments through its innovative and flexible approach to studying.  Quorum Training and Ark Group have also been integrated successfully into Central Law Training during the year.

CLT Scotland, working closely with the University of Strathclyde, is the market leader for provision of mandatory post-qualification courses for lawyers in Scotland.  It also delivers a successful paralegal training programme which has been recognised as fulfilling the academic requirements for the Scottish Law Societies Registered Paralegal status.  CLT Scotland was awarded Training Provider of the Year by Scott & Co Legal Awards.  The webinar programme is also proving to be successful in Scotland.

Mercia is the leading provider of technical, marketing and training support to the accountancy profession.  The Mercia Group of companies have maintained revenue and achieved profit growth over the year.  Mercia has also introduced webinar programmes into the accountancy market.  A particular success has been the growing adoption of websites provided by Mercia to the accountancy profession.

CLT International is the leading provider of trust, compliance and anti-money laundering training. Operating internationally, it has seen excellent growth in both turnover and profitability.  The Singapore Compliance programme in particular performed well, with profits ahead of the prior year.  The operations in the Middle East are also progressing well with a growth in intakes. CLT International is also looking at opportunities in Russia and other parts of the world, which are expected to form part of Wilmington's investment plans for the year ahead.

Bond Solon is the market leader in the UK for the provision of expert and professional witness training programmes. Bond Solon continues to be successful in winning large tenders to provide specialist training.  During the year Bond Solon formed a number of strategic alliances reflecting the strength and quality of the brand.  The business has maintained revenues broadly in line with the previous year. The year ahead will be challenging due to cuts in public sector spending. 

Matchett Group is a leading provider of graduate entrant training to investment banks in London, New York and the Far East.  It is seeing a return to strong profit growth in its core markets as well as expanding both in its product range and jurisdictional base. In addition, it provides skills and management training to large corporates and public sector bodies.

 
Publishing & Information

Publishing & Information accounts for 45% of Group revenue from continuing operations and contributes 61% of Group trading profit.  This Division generally performed well during the economic downturn and has significantly benefitted from cost savings and an improved operating structure which has protected profit.  Whilst revenues declined by 8.1% to £35.4m (2009: £38.6m), trading profit reduced by only 1.5% to £10.3m (2009: £10.4m) giving increased operating margins of 28.9% (2009: 27.0%).

This Division provides intelligence, information, solutions, databases, directories, magazines and services to the accountancy, banking and finance, charity, healthcare, legal, media, pensions and pharmaceutical markets;

Wilmington Business Intelligence ("WBI") forms the largest business within this Division. This unit combines a number of our information businesses for professional markets including Waterlow, Charity Choice, CaritasData, Smee & Ford, Mortascreen and AP Pensions. WBI publishes a range of printed and electronic databases, online information and intelligence services, magazines and mailing data. Revenues were 7.3% lower at £17.2m (2009: £18.5m) mainly due to the difficult economic climate but partly driven by our work during the year to exit non-core products. However, a thorough review of the cost base and the resulting benefits of operational efficiencies has increased our profit margin and sheltered profits from the full impact of these revenue declines. Further progress was made during the year in the transition to becoming a fully digital business and in the development of new electronic services and higher value online intelligence tools.

Pendragon provides the leading electronic regulatory information service for the UK pensions industry. It maintained strong results despite difficult market conditions. Revenue and profits were ahead of the prior year. We continued the development of improved technology in this area and have identified additional regulatory information services as a key growth opportunity moving forward.

Binley's is the UK's leading provider of healthcare professional information to pharmaceutical companies, healthcare companies and the public sector. We saw a slight decline in revenues and profit in this unit. However, we have continued to invest in our content and technology and believe that the market offers some compelling future growth opportunities.

APM is our specialist healthcare Press Agency based in Paris and London. APM continued to see growth during the year, including the launch of a new service covering healthcare IT, and delivered a pleasing performance.

International Company Profile is a leading provider of financial information on companies based in emerging markets worldwide. Despite a significant contraction in the credit insurance market worldwide, ICP delivered a robust performance.

The Publishing & Information Division includes resilient businesses with sound long term growth prospects.  The review to maximise productivity and margins undertaken earlier in the financial year has clearly yielded results.  During the year this Division also exited minor activities which were not core to its strategy, enabling the business to achieve clearer focus on core market sectors. The resulting Division is a streamlined business, with a focused strategy supported by a strong operational structure.

Whilst there has been a necessary focus on efficiency over the last couple of years to respond to the cyclical downturn, this Division has continued its structural transformation towards a fully digital business. We aim to deliver increasingly valuable and unique content integrated, wherever possible, with powerful technology to increase the benefits to our clients.

The continued quality and strength of the Publishing & Information portfolio, and its strong client relationships, underpin the performance of this Division. Despite some early indications of a deterioration of trading conditions in markets with exposure to the UK public sector, we expect this Division to continue to deliver robust underlying profitability in the short term and we are excited about the significant long term profits which can be developed in our core markets from online intelligence and information solutions.  We believe that now is the time to be substantially increasing the level of our investment to achieve this.    

Acquisitions and Disposals

We have a continually reviewed acquisition and disposal strategy, including a realistic and disciplined valuation methodology backed up by thorough post-acquisition analysis.  We seek to fully justify acquisitions both in terms of return on capital and in terms of the added value we achieve in profitability and profit margins. We seek not only to secure a good rate of return on capital but also purchase assets only if we believe we can drive profit growth and improved margins from those acquisitions. 

During the year Wilmington did not complete any new acquisitions, but did acquire the remaining 15% shareholding of Ark Group Limited.  As mentioned previously this business has been restructured with its training activities transferred to our Training & Events Division and its publishing activities integrated into our Publishing & Information Division.  An additional 5% shareholding of Beechwood House Publishing Limited was also acquired, taking our shareholding to 85% of the company.

Overview of the Group's Financial Performance

In the year ended 30 June 2010, Wilmington generated revenues from continuing operations of £78.4m down 9.1% from £86.3m.  Adjusted EBITA was down less than 1.4% at £14.4m (2009: £14.6m), resulting in operating margin increasing to 18.4% from 16.9%. 

The year on year fall in revenues of 9.1% reflected a significant decline during the first half of our financial year (16%) with difficult comparators in the legal and investment banking sectors. In the second half of our financial year, during which we have seen booking levels in the legal training market stabilise and conditions in the investment banking sector improve, revenues fell by only 2%. This stabilisation of the revenue streams, together with the full benefit of costs taken out in the prior year, enabled the Group to report an increase in profits during the second half of our financial year with Adjusted EBITA increasing by 34.7 % from £6.2m in the first half of the year to £8.2m in the second half of the year. This increase in second half profitability has resulted in operating margin increasing from 16.9% for the prior year to 18.4% for the current year.

Reported Profit before Tax increased by 157.2% to £7.3m from £2.9m, reflecting the absence of any impairment charges, reduced charges for non-recurring items and the unwinding of the discount on the provision for the future purchase of minority interests.

Non-recurring costs

During the year the Group incurred non-recurring costs of £0.1m (2009: £1.7m) relating to the costs of merger and acquisition activity incurred during the year as we actively sought to acquire complementary businesses.

Taxation

The Group tax charge of £2.5m represents 34.5% of the profits before tax (2009: 67.1%). The non cash charges for unwinding of the put option discount and impairment of goodwill are not allowable for UK tax purposes.  Adjusting for these items, the tax charge is 32.2% (2009: 29.3%) compared to the statutory UK rate of 28%, reflecting other items not allowable for tax purposes.

Earnings per Share

Adjusted Earnings per Share from continuing operations increased by 0.9% to 10.59p (2009: 10.50p).  Basic Earnings per Share from continuing operations increased to 5.38p (2009: 0.46p).

Earnings and Adjusted Earnings per Share are calculated on the weighted average number of shares in issue of 82,616,512 for the year ended 30 June 2010 (2009: 82,590,096).

Balance Sheet and Net Debt

At 30 June 2010 the Group had net debt of £16.8m (2009: £17.8m).  This reduction has been achieved despite paying shareholders an increased interim dividend of £2.9m (2009: £1.9m) to achieve a smoother dividend distribution throughout the year and £2.2m acquiring additional minority shareholdings in two existing businesses.  This demonstrates the strong underlying cash flows generated by the Group.

Treasury Policy

Treasury policies are approved by the Board.  The Executive Directors have the delegated authority to approve financial transactions within agreed terms of reference. The Group's financial instruments comprise principally bank borrowings and associated cash flow hedges, cash and various other items that arise directly from its trading operations such as trade debtors, trade creditors and subscriptions and fees in advance.  The main purpose of these financial instruments is to ensure that finance is available for the Group's operations.

The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk and foreign currency risk.  The Group's credit risk is discussed in the notes to the financial statements. The Board reviews and agrees policies for managing each of these risks and they are summarised below.  These policies are unchanged from the previous year.

a) Interest rate risk

The Group finances its operations through a mixture of retained profits, operational cash flow and bank borrowings.  Historically the Group has expanded its operations both organically and by acquisition, which has led on occasions to the need for external finance. The Board has chosen a credit facility with a floating rate of interest linked to LIBOR and has hedged its interest exposure on a proportion of this facility.  In November 2006 the Group entered into a 5 year £15m interest rate swap whereby it receives interest on £15m based on 3 month LIBOR and pays interest on £15m at a fixed rate of 5.23%.  This derivative has been designated as a cash flow hedge in order to manage interest rate risk associated with the first £15m of the credit facility.  Payments received under the swap have been matched against interest paid quarterly during the year and the entire mark to market loss on the derivative has been recognised in equity, following the Directors' assessment of the hedge's effectiveness.

The Group had net debt at 30 June 2010 of £16.8m (30 June 2009: £17.8m) and had a committed bank facility of £60m (30 June 2009: £60m), of which £18m was drawn down at 30 June 2010 (30 June 2009: £18m).

b) Liquidity risk

The Group's policy throughout the year has been to ensure continuity of funding by the use of a £5m overdraft facility, a £5m money market facility and a £60m revolving credit facility which is committed until March 2012.

c) Foreign currency risk

The Group has a substantial customer base overseas.  The Group maintains bank accounts in foreign currency and converts this currency to Sterling at the appropriate times minimising the exposure to exchange fluctuations.  On 10 March 2010 the Group sold forward US$1.0m to December 2010 at an average rate of 1.4972.  These contracts were entered into in order to provide certainty in Sterling terms of the bulk of the net US$ income of the Matchett business.  Any gain or loss on this contract is recognised in the Income Statement.

Key Financial and Operational Targets

At a Group level we have five key financial and operational targets. In addition, each of the operating divisions monitors a number of key performance indicators. This year we delivered an improved performance against the majority of our financial and operational targets.  By continuing to focus on these essential benchmarks we have been able to concentrate on mitigating the adverse effects of the global recession and produce what we consider to be creditable results whilst establishing a more resilient and efficient platform to support future growth.

1. Adjusted Profit before Tax

This measure indicates the trading profits of the Group, after bank and interest charges, but before amortisation and impairment of intangible assets and goodwill, non-recurring items, the unwinding of the discount on the provision for the future purchase of minority interests and share based payments. Amortisation is a non-cash technical adjustment which does not necessarily reflect the inherent value of assets. This is particularly the case where the value of assets has been enhanced as a consequence of management action.

In the year ended 30 June 2010 Adjusted Profit before Tax from continuing operations reduced marginally by 1.5% to £13.1m (2009: £13.3m).

2. Adjusted Earnings per Share

This key measure indicates the underlying profit attributable to shareholders. It measures not only trading performance, but also the impact of treasury management, bank and interest charges, as well as the efficient structuring of the Group to minimise taxes.  Our business and financial strategy is directed at delivering consistent adjusted earnings per share growth.  Our incentive programmes are designed to support this strategy. 

In the year ended 30 June 2010, Adjusted Earnings per Share from continuing operations increased by 0.9% to 10.59p per share (2009: 10.50p).  The increase was partly due to the Group acquiring additional shares in two existing businesses and also reflects the slightly better overall performance achieved by wholly owned businesses.

3. Cash flow

The quality of the operating profits is underpinned by the strong cash flow.  The Group's business is strongly cash generative; operating cash flow for the year ended 30 June 2010 of £15.4m was 110% of operating profit before interest, amortisation and impairment of intangible assets and goodwill (2009: £13.9m, 108%). Free cash flow, which is calculated after deduction from operating cash flow of capital expenditure, payment of corporation tax and payment of interest, was £10.6m (2009: £6.6m).

4. Consistent and Sustainable Revenue Streams

The disposal of non-core assets in recent years has allowed the Group to focus on a portfolio of assets based in key professional markets.  This push towards more robust and sustainable revenue streams has resulted in a strong portfolio of offerings, which includes:

• data, information, magazines, intelligence and solution sales;

• professional training,  events and services and

• professional accreditation and assessment.

The Group has continued to increase the supply of its products and services online or digitally, but remains conscious of the needs of markets which continue to prefer some products produced in hard copy format or in person.  Our businesses are supported by management and delivery systems utilising the latest technology.  We have invested considerable resources in the improvement of our operating systems and online services which will deliver benefits in the current year and beyond. 

The Group analyses its revenue streams on the following basis:

• Subscription and copy sales 33% of revenue (2009: 27%);

• Professional education and events 37% of revenue (2009: 43%);

• Information sales and professional services 19% of revenue (2009: 20%);

• Directory advertising 9% of revenue (2009: 8%);

• Magazine advertising 2% of revenue (2009: 2%).

This represents a broad revenue base and reflects the Group's ongoing strategy to ensure that there are no significant dependencies on specific sources of revenue.

5. Adjusted Operating Margin

The adjusted operating margin reflects the quality of the Group's revenue streams. Improving and maintaining the adjusted operating margin is a key goal for the Group.  Reflecting the reduced cost base and improved operational efficiency our adjusted operating margin for the year just ended increased to 18.4% compared to 16.9% in 2009.

Whilst we constantly seek to improve the Group's operating margin, in May we announced that we would invest up to £2m over the next 12 months in overseas expansion in the banking and finance sector and in new product development particularly with regards to deeper content and enhanced technology.  This investment, which will be expensed as incurred, will depress margins in the short term.

Principal risks

The key challenges facing Wilmington arise from the highly competitive and rapidly changing nature of our markets, the increasing technological nature of our products and services and legal and regulatory uncertainties. Certain parts of our businesses are also affected by the (often positive) impact of changes in professional regulation and legislation and by the impact of the economic cycle on advertising and promotional spending.  The economic environment also constitutes a risk factor, particularly in the legal and financial sectors, which has impacted on the Group's profitability.  Key supplier and customer loss feature as a risk. However, we feel that our supplier and customer bases are both sufficiently diverse.

Wilmington has an established risk management procedure that is embedded in the operations of its trading divisions and is reviewed by the Board. All parts of the business identify risks and seek to ensure that procedures and strategies are in place so that risks can be managed wherever possible.

Some of the main risks which affect the Group as a whole include the following:

1.         Wilmington is a people based business; failure to attract or retain key employees could seriously impede future growth. To ensure staff retention the Group operates competitive remuneration packages for key individuals. Just as importantly, it operates a culture where each individual can maximise his or her potential.  Wilmington is also committed to further develop staff and has recently launched a Management Development Programme for senior managers. The retention and motivation of key personnel is fundamental in the future success of Wilmington, as is  the ability to recruit new personnel to support future growth.

2.         Wilmington's business is increasingly dependent on electronic platforms and distribution systems, primarily the Internet, for delivery of its products and services. Whilst our businesses could be adversely affected if these electronic delivery platforms and networks experienced a significant failure, interruption, or security breach, the Group is sufficiently diversified to ensure such disruption is minimised.  During the year under review the Group has continued to invest in new systems and electronic platforms with greater protection against failure.

3.         Our products and services largely consist of intellectual property content delivered through a variety of media. Wilmington relies on trademarks, copyrights, patents and other intellectual property laws to establish and protect its proprietary rights in these products and services. The Group makes every effort to protect this asset base and actively pursues any infringements.

4.         The Group is increasingly required to comply with strict privacy and data protection legislation.  The need to comply with these regulations can restrict the Group's ability to create and utilise its databases.  To ensure we are compliant with the relevant data protection legislation we are in the process of completing an extensive external audit of the Group's data management systems and we are adopting procedures to ensure compliance with best practice.

5.         The businesses can be sensitive to disruptions such as Government legislation, adverse regulatory change, terrorism, natural disasters and other significant adverse events. During the year under review there were no major incidents to report. Nevertheless we maintain and have extended our disaster recovery plans to mitigate the consequences of potential adverse events. Our insurance cover includes acts of terrorism.

6.         There is an element of reputational risk for Wilmington, particularly in areas where we have high profile products and services.  Damage to reputation and/or brand could lead to an adverse impact on the Group.  The success of the Group's businesses is in part dependent on the success of their branded publications and events.  Wilmington is conscious of the need to ensure the careful management of products and services to reduce this risk.

7.         The business operates in highly competitive markets that are constantly challenging the boundaries of technological advances, regulation and legislation and with new competitors entering the market space. Wilmington endeavours to invest resources to best respond to the competitive landscape.   

8.         Wilmington has a strong acquisition strategy to further grow the business and there is risk associated with making future acquisitions, in particular identifying targets, realising expected returns and integrating newly acquired businesses.  Whilst Wilmington has a strong track record for completing and executing acquisitions efficiently, there is no certainty in the future of being able to derive all the anticipated benefits from acquisitions.

9.         Wilmington is increasingly operating in an international environment. While this provides growth in new jurisdictions, it comes coupled with risks in terms of cultural and political conditions, foreign laws and legislations, tax changes, currency fluctuations, language barriers, differing regulatory requirements and protecting Wilmington IP.

10.        Freely available information principally via the internet poses a potential risk for the Group. The information may be free to access or inexpensive and may compete directly with paid for, value added information supplied by the Group. The risk element is largely in the case of government agencies that may make information publically available at no cost which could reduce demand for some product groups.  Wilmington endeavours to respond by offering enriched data available in an easily accessible format.

In addition to the risks identified above, further information on additional risks are provided in the Annual Report and financial statements:

·      The Overview of the Group's Financial Performance covers the main risks arising from the Group's financial instruments which are interest rate risk, liquidity risk and foreign currency risk.

·      The Group's credit risk is discussed in the notes to the financial statements.

Wilmington's People

In a competitive environment Wilmington's growth and success depends on a key asset - the abilities, skills and commitment of the people it employs. We are fortunate to benefit from their experience, professionalism, creativity, enthusiasm and flexibility that provide the basis for a successful growing business.

As Wilmington moves towards a greater emphasis on digital and interactive services we need to continue developing new capabilities, as well as new technical and management skills to make these services work. We are responding by developing our people through training and injecting new talent where it is needed. We therefore introduced a comprehensive market leading Management Development Programme which would equal or better anything offered by our peers.

We are a talent dependent business, requiring excellent people with a passion for their brands and subject matter. We are committed to developing and rewarding our people and creating a culture in which they can thrive. The shape of this activity varies from business to business with each operation attracting and developing its people in ways appropriate to its own markets.

Whilst recognising the benefits of Wilmington's devolved business culture we are actively encouraging links between our businesses where there are opportunities to collaborate and to share ideas, technical expertise and best practice.

We offer every opportunity for Wilmington people to advance their careers and fulfil their potential. There is plenty of evidence that this is happening. Vacancies are advertised internally as well as externally in order to make it as easy as possible for employees to look for opportunities within the Group.

We continue to invest in technology and systems across the Group. This year we have upgraded our telephone system throughout the Group.  Major upgrade changes to technology have required considerable perseverance and dedication from Wilmington's people who have planned and implemented the changes. We strive for continuous improvement within the Group, which often results in major investments being made in our systems to manage content, customers and processes.

Wilmington's Directors and executive management continue to believe that the best way for the Group to prosper and return to growth is to retain and attract the very best people.  The Board is determined to ensure that Wilmington remains a great place to work, where people have the opportunity to challenge themselves, grow professionally and benefit from high levels of remuneration and incentives. Only by continuing to develop the skills of our current teams and by recruiting the very best new talent can Wilmington continue to grow at a sustainable rate.

Consolidated Income Statement

For the year ended 30 June 2010

	Notes	Year ended 30 June 2010 £'000	Year ended 30 June 2009 £'000
Revenue	3	78,404	86,268
Cost of sales		(24,833)	(27,064)
Gross profit		53,571	59,204
Operating expenses excluding amortisation, impairment and non-recurring items	5	(39,380)	(44,647)
Amortisation and impairment	5	(4,882)	(7,784)
Operating expenses before non-recurring items		(44,262)	(52,431)
Non-recurring items	5	(113)	(1,674)
Total operating expenses		(44,375)	(54,105)
Operating profit from continuing operations		9,196	5,099
Finance income	6	7	175
Finance costs	6	(1,874)	(2,424)
Profit on continuing activities before income tax		7,329	2,850
Income tax expense	7	(2,531)	(1,911)
Profit on continuing activities after income tax		4,798	939
Loss on discontinued operations after income tax		-	(690)
Net profit for the financial year		4,798	249
Attributable to :
Equity Shareholders of the Company		4,447	(311)
Minority interest		351	560
		4,798	249
Earnings per share attributable to equity shareholders of the Company
Continuing operations:	9
Basic earnings per share		5.38p	0.46p
Diluted earnings per share		5.30p	0.45p
Continuing and discontinued operations:	9
Basic earnings per share		5.38p	(0.38)p
Diluted earnings per share		5.30p	(0.38)p

 Consolidated Statement of Comprehensive Income

For the year ended 30 June 2010

		Year ended 30 June 2010	Year ended 30 June 2009
		£'000	£'000
Profit for the year		4,798	249
Other comprehensive income
Interest rate swap fair value gain/(loss) taken directly to equity		89	(1,454)
Tax on interest rate swap gain/(loss) taken directly to equity		(25)	407
Exchange translation difference		(5)	(7)
Other comprehensive income for the year, net of tax		59	(1,054)
Total comprehensive income for the year		4,857	(805)
Total comprehensive income for the year  attributable to:
-Equity Shareholders of the Company		4,501	(1,365)
-Minority interests		356	560
		4,857	(805)

Consolidated Balance Sheet

As at 30 June 2010  

		As at 30 June 2010	As at 30 June 2009
	Notes	£'000	£'000
Non-current assets
Goodwill	11	63,277	62,401
Intangible assets	12	24,303	28,712
Property, plant and equipment		7,192	7,779
Deferred income tax asset		488	486
		95,260	99,378
Current assets
Inventories	13	1,080	1,342
Trade and other receivables	14	18,664	18,407
Derivative financial assets	15	-	25
Cash and cash equivalents		1,779	1,506
		21,523	21,280
Total assets		116,783	120,658
Current liabilities
Trade and other payables	16	(31,651)	(31,716)
Current income tax liabilities		(1,873)	(501)
Derivative financial liabilities	15	(22)	-
Bank overdrafts	17	(600)	(1,336)
Provisions for future purchase of minority interests	18	(3,530)	(2,148)
		(37,676)	(35,701)
Non-current liabilities
Bank loans	17	(18,000)	(18,000)
Derivative financial liabilities	15	(956)	(1,045)
Deferred tax liability		(5,425)	(6,685)
Provisions for future purchase of minority interests	18	(3,147)	(5,410)
		(27,528)	(31,140)
Total liabilities		(65,204)	(66,841)
Net assets		51,579	53,817
Equity
Share capital		4,229	4,228
Share premium account		43,493	43,470
Treasury shares		(4,008)	(4,008)
Translation reserve		35	45
Share option reserve		575	382
Retained earnings		7,202	9,464
Shareholders' funds		51,526	53,581
Minority interests	19	53	236
Total equity and reserves attributable to Equity Shareholders of the Company		51,579	53,817

 Consolidated Statement of Changes in Equity

	Share capital £'000	Share option reserve £'000	Translation reserve £'000	Retained earnings £'000	Total £'000	Net minority interest £'000	Total £'000
At 1 July 2008	43,669	302	52	16,601	60,624	725	61,349
(Loss)/profit for the year	-	-	-	(311)	(311)	560	249
Exchange translation difference	-	-	(7)	-	(7)	-	(7)
Interest rate swap fair value loss taken directly to equity	-	-	-	(1,454)	(1,454)	-	(1,454)
Tax on interest rate swap fair value losstaken directly to equity	-	-	-	407	407	-	407
	43,669	302	45	15,243	59,259	1,285	60,544
Dividends paid	-	-	-	(5,779)	(5,779)	(529)	(6,308)
Share option reserve	-	80	-	-	80	-	80
Issue of share capital during the year	61	-	-	-	61	-	61
Movement in offset of provisions for the future purchase of minority interests	-	-	-	-	-	205	205
Movements arising from company sold during the year with minority interests	-	-	-	-	-	(725)	(725)
Share buyback	(40)	-	-	-	(40)	-	(40)
At 1 July 2009	43,690	382	45	9,464	53,581	236	53,817
Profit for the year	-	-	-	4,447	4,447	351	4,798
Exchange translation difference	-	-	(10)	-	(10)	5	(5)
Interest rate swap fair value gain taken directly to equity	-	-	-	89	89	-	89
Tax on interest rate swap fair value gain taken directly to equity	-	-	-	(25)	(25)	-	(25)
	43,690	382	35	13,975	58,082	592	58,674
Dividends paid	-	-	-	(6,773)	(6,773)	(644)	(7,417)
Share option reserve	-	193	-	-	193	-	193
Issue of share capital during the year	24	-	-	-	24	-	24
Movement in offset of provisions for the future purchase of minority interests	-	-	-	-	-	105	105
At 30 June 2010	43,714	575	35	7,202	51,526	53	51,579

Consolidated Cash Flow Statement

For the year ended 30 June 2010

		Year ended 30 June 2010	Year ended 30 June 2009
	Notes	£'000	£'000
Cash flows from operating activities
Cash generated from operations	20	15,424	13,927
Net interest paid		(1,305)	(1,190)
Net tax paid		(2,442)	(4,704)
Net cash generated from operating activities		11,677	8,033
Investing activities
Purchase of property, plant and equipment		(616)	(1,036)
Proceeds from sale of property, plant and equipment		8	98
Purchase of subsidiary undertakings and minority interests	18	(2,194)	(678)
Cash movement on disposal of subsidiary undertakings		-	(224)
Proceeds from sale of subsidiary undertakings		-	457
Purchase of intangible assets	12	(479)	(558)
Proceeds from sale of intangible assets		6	301
Net cash used in investing activities		(3,275)	(1,640)
Financing activities
Dividends paid to Equity Shareholders of the Company		(6,773)	(5,779)
Dividends paid to minority shareholders in subsidiary undertakings		(644)	(529)
Issue of ordinary shares		24	61
Purchase of treasury shares		-	(40)
Net cash flows used in financing activities		(7,393)	(6,287)
Net increase in cash and cash equivalents, net of bank overdrafts		1,009	106
Cash and cash equivalents, net of bank overdrafts, at beginning of the year		170	64
Cash and cash equivalents, net of bank overdrafts, at end of the year		1,179	170
Reconciliation of net debt
Cash and cash equivalents at beginning of the year		1,506	3,697
Bank overdrafts at beginning of the year		(1,336)	(3,633)
Borrowings at beginning of the year		(18,000)	(18,000)
Net debt at beginning of the year		(17,830)	(17,936)
Net increase/(decrease) in cash and cash equivalents, net of bank overdrafts		1,009	106
Cash and cash equivalents at end of the year		1,779	1,506
Bank overdrafts at end of the year		(600)	(1,336)
Borrowings at end of the year		(18,000)	(18,000)
Net debt at end of the year		(16,821)	(17,830)

Notes to the Financial Statements

1. Nature of the financial information

The financial information does not amount to full financial statements within the meaning of Section 434 of Companies Act 2006. The financial information has been extracted from the Group's Annual Report and Financial Statements for the year ended 30 June 2010 on which an unqualified report has been made by the Company's Auditors.

Financial statements for the year ended 30 June 2009 have been delivered to the Registrar of Companies; the Report of the Auditors on those accounts was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The 2010 statutory accounts will be delivered in due course.

Copies of the Annual Report and financial statements will be posted to shareholders shortly and will be available from the Company's registered office at 19-21 Christopher St, London, EC2A 2BS.

2. Accounting Policies 

The preliminary announcement for the year ended 30 June 2010 has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The accounting policies applied in this preliminary announcement are consistent with those reported in the Group's annual financial statements for the year ended 30 June 2009 along with new standards and interpretations which became mandatory for the financial year.

New standards and interpretations applied

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 July 2009.

§   IAS 1 (revised), ''Presentation of financial statements''.

§   IFRS 3 (revised), "Business combinations" and consequential amendments to IAS 27, "Consolidated and separate financial statements", IAS 28, "Investments in associates" and IAS 31, "Interests in joint ventures.

§   IFRS 7 (amendment), ''Financial instruments'' disclosures.

§   IFRS 8 ''Operating segments''. (adopted early 30 June 2009)

3. Segmental information

Operating segments are reported in a manner consistent with the internal reporting provided to the Company's Board of Directors, which is considered to be the Group's chief operating decision maker.

The Board considers the business from both a geographic and product perspective. Geographically, management considers the performance of the group between the UK and overseas.

(a) Primary reporting format - business segments

Year ended 30 June 2010

	Training & events	Publishing & information	Total
	£'000	£'000	£'000
Revenue	42,958	35,446	78,404
Segmental profit before amortisation and impairment	6,554	10,261	16,815
Amortisation and impairment	(2,321)	(2,430)	(4,751)
Segmental profit after amortisation and impairment	4,233	7,831	12,064
Unallocated central overheads (includes amortisation of £131,000)			(2,755)
Profit from continuing operations before non-recurring items			9,309
Non-recurring items (see note 5)			(113)
Profit from continuing operations after non-recurring items			9,196
Net finance costs (see note 6)			(1,867)
Profit on continuing activities before tax			7,329
Income tax expense (see note 7)			(2,531)
Profit on continuing activities after tax			4,798
(Loss) from discontinued operations			-
Net profit for the year			4,798

Year ended 30 June 2009

	Training & events	Publishing & information	Total
	£'000	£'000	£'000
Revenue	47,701	38,567	86,268
Segmental profit before amortisation and impairment	6,909	10,418	17,327
Amortisation and impairment	(5,261)	(2,446)	(7,707)
Segmental profit after amortisation and impairment	1,648	7,972	9,620
Unallocated central overheads (includes amortisation of £77,000)			(2,847)
Profit from continuing operations before non-recurring items			6,773
Non-recurring items (see note 5)			(1,674)
Profit from continuing operations after non-recurring items			5,099
Net finance costs (see note 6)			(2,249)
Profit on continuing activities before tax			2,850
Income tax expense (see note 7)			(1,911)
Profit on continuing activities after tax			939
(Loss) from discontinued operations			(690)
Net profit for the year			249

 (b) Supplementary  segmental information by geography

The geographical analysis of revenue by destination is as follows:

	Year ended	Year ended
	30 June	30 June
	2010	2009
	£'000	£'000
United Kingdom	61,755	70,774
Overseas	16,649	15,494
	78,404	86,268
4. Adjusted profit
Adjusted profit is defined as profit before income tax, amortisation of intangible assets,  impairment of goodwill, unwinding of the discount on the provision for the future purchase of minority interests, share based payments and non-recurring items and reconciles to profit on continuing activities before income tax as follows:
	Year ended	Year ended
	30 June	30 June
	2010	2009
	£'000	£'000
Profit from continuing activities before income tax (''Profit before Tax'')	7,329	2,850
Amortisation of intangible assets	4,882	5,034
Impairment of goodwill	-	2,750
Unwinding of the discount on the provision for the future purchase of minority interests	542	927
Share based payments	246	80
Non-recurring items (see note 5)	113	1,674
Adjusted profit before income tax (''Adjusted Profit before Tax'')	13,112	13,315
Net interest and facility fees	1,325	1,322
Adjusted Profit before Tax and net interest and facility fees (''Adjusted EBITA'')	14,437	14,637
Depreciation	1,130	1,264
Adjusted EBITA before depreciation (''Adjusted EBITDA'')	15,567	15,901
5. Operating expenses
	Year ended	Year ended
	30 June	30 June
	2010	2009
	£'000	£'000
Distribution and selling costs	16,570	16,588
Administrative expenses (excluding amortisation and impairment of intangible assets and goodwill)	22,810	28,059
	39,380	44,647
Amortisation and impairment of intangible assets and goodwill (administrative expense)	4,882	7,784
Total operating expenses	44,262	52,431

Non-recurring items:

The following items of an unusual nature, size or incidence have been charged to profit during the year and shown as non-recurring items.

	Year ended	Year ended
	30 June	30 June
	2010	2009
	£'000	£'000
Restructuring costs	-	1,124
Merger and acquisition costs	113	550
	113	1,674

Restructuring costs reflect specific reorganisation and redundancy costs.

6. Finance income and costs

	Year ended	Year ended
	30 June	30 June
	2010	2009
	£'000	£'000
Finance income comprises:
Bank interest receivable	7	175
Finance costs comprise:
Interest payable on bank loans and overdrafts	(1,072)	(1,151)
Facility fees	(260)	(346)
Unwinding of the discount on the provision for the future purchase of minority interests	(542)	(927)
	(1,874)	(2,424)

7. Income tax expense

	Year ended	Year ended
	30 June	30 June
	2010	2009
	£'000	£'000
The tax charge comprises:
UK corporation tax at current rates	2,952	2,812
Adjustment to tax charge in respect of previous years	51	(397)
	3,003	2,415
Foreign tax	716	558
Adjustment to foreign tax charge in respect of previous years	99	-
Total current tax	3,818	2,973
Deferred income tax credit	(1,191)	(1,062)
Deferred income tax credit in respect of previous years	(96)	-
Income tax expense	2,531	1,911
Factors affecting the tax charge for the year:
The tax assessed for the year is higher than the effective rate of corporation tax in the UK of 28% (2009: 28%) for the year ended 30 June 2010. The differences are explained below:
	Year ended	Year ended
	30 June	30 June
	2010	2009
	£'000	£'000
Reconciliation of tax charge:
Profit on ordinary activities before tax	7,329	2,850
Profit on ordinary activities multiplied by the ''effective'' rate of corporation tax in the year of 28% (2009: 28%)
	2,052	798
Effect of:
Depreciation and amortisation in excess of capital allowances	142	254
Foreign tax rate differences	(1)	151
Adjustment to tax charge in respect of previous years	54	(397)
Impairment not subject to tax	-	770
Put option discount not deductible for tax	152	260
Other items not subject to tax	132	75
Income tax expense	2,531	1,911

8.   Dividends

Amounts recognised as distributions to equity holders in the year.

	Year ended	Year ended	Year ended	Year ended
	30 June	30 June	30 June	30 June
	2010	2009	2010	2009
	pence per share	pence per share	£'000	£'000
Final dividends recognised as distributions in the year	4.7	4.7	3,881	3,879
Interim dividends recognised as distributions in the year	3.5	2.3	2,892	1,900
Total dividends paid			6,773	5,779
Final dividend proposed	3.5	4.7	2,892	3,883

9. Earnings per share

To allow shareholders to gain a better understanding of the trading performance of the Group, Adjusted Earnings per Share has been calculated using an adjusted profit after taxation and minority interests but before amortisation and impairment of intangible assets and goodwill, non-recurring costs, share-based payments and the unwinding of the discount on the provision for the future purchase of minority interests.

 (a) From continuing operations

The calculation of the basic and diluted earnings per share is based on the following data:

	Year ended	Year ended
	30 June	30 June
	2010	2009
	£'000	£'000
Earnings from continuing and discontinuing operations for the purpose of basic earnings per share	4,447	(311)
Add back loss from discontinued operations	-	690
Earnings from continuing operations for the purpose of basic earnings per share	4,447	379
Add:  Amortisation (net of minority interest effect)	4,867	5,021
Non-recurring items	113	1,674
Share based payments Unwinding of the discount on the provision for the future purchase of minority interests Impairment Tax effect	246 542 - (1,463)	80 927 2,750 (2,157)
Adjusted earnings for the purposes of adjusted earnings per share	8,752	8,674
	Number	Number
Weighted average number of ordinary shares for the purposes of basic and adjusted earnings per share	82,616,512	82,590,096
Effect of dilutive potential ordinary shares:
Exercise of share options	1,266,280	806,790
Weighted average number of ordinary shares for the purpose of diluted earnings per share	83,882,792	83,396,886
Basic earnings per share	5.38p	0.46p
Diluted earnings per share	5.30p	0.45p
Adjusted basic earnings per share (''Adjusted Earnings Per Share'')	10.59p	10.50p
Adjusted diluted earnings per share	10.43p	10.40p

(b)  From continuing and discontinued operations

	Year ended	Year ended
	30 June	30 June
	2010	2009
	£'000	£'000
Earnings from continuing and discontinuing operations for the purpose of basic earnings per share	4,447	(311)
Add:  Amortisation (net of minority interest effect)	4,867	5,139
Non-recurring items	113	1,674
Share based payments Unwinding of the discount on the provision for the future purchase of minority interests	246 542	80 927
Impairment Tax effect	- (1,463)	2,750 (2,190)
Adjusted earnings for the purpose of adjusted earnings per share	8,752	8,069
Basic earnings/(loss) per share	5.38p	(0.38)p
Diluted earnings/(loss) per share	5.30p	(0.38)p
Adjusted basic earnings per share	10.59p	9.77p
Adjusted diluted earnings per share	10.43p	9.68p

(c) From discontinued operations

	Year ended	Year ended
	30 June	30 June
	2010	2009
	£'000	£'000
Loss from discontinued operations for the purpose of basic earnings per share	-	(690)
Add:  Amortisation (net of minority interest effect) Tax effect	- -	118 (33)
Adjusted loss for the purposes of adjusted earnings per share	-	(605)
Basic loss per share	-	(0.84)p
Diluted loss per share	-	(0.84)p
Adjusted loss per share	-	(0.73)p
Adjusted diluted loss per share	-	(0.73)p

10. Acquisitions and disposals

Acquisitions

There were no new acquisitions of subsidiaries during the year.

Minority interests acquired

In July 2009, the Group acquired the remaining 15% shareholding of Ark Group Limited. This business has been restructured with its training activities transferred to the Training & Events Division and its publishing activities integrated into the Publishing & Information Division.

In November 2009, the Group acquired an additional 5% shareholding of Beechwood House Publishing Limited, taking the Group's shareholding to 85% of the company.

Disposals

There were no disposals of subsidiaries during the year.

11. Goodwill

	£'000
Cost
At 1 July 2008	67,969
Acquisitions	(170)
Disposals	(103)
Change in provisions for the future purchase of minority interests (see note 18)	(2,750)
Movement in offset of provisions for the future purchase of minority interests (see note 19)	205
At 30 June 2009	65,151
Change in provisions for the future purchase of minority interests (see note 18)	771
Movement in offset of provisions for the future purchase of minority interests (see note 18)	105
At 30 June 2010	66,027
Impairment
At 1 July 2008	-
Charge for the year	2,750
At 1 July 2009	2,750
Charge for the year	-
At 30 June 2010	2,750
Net book amount
At 30 June 2010	63,277
At 30 June 2009	62,401
At 1 July 2008	67,969

Goodwill of £51,256,000 (2009: £50,402,000) relates to the Group's Training & Events Division. The remaining goodwill of £12,021,000 (2009: £11,999,000) relates to the Group's  Publishing & Information Division. The major constituents of the Training & Events Division are £32,696,000 (2009: £32,809,000) in respect of the Central Law Training cash generating unit, £6,084,000 (2009: £5,869,000) in respect of The Matchett Group and £6,830,000 (2009: £6,830,000) in respect of Bond Solon. The major constituent of the Publishing & Information Division's goodwill is £6,691,000 (2009: £6,710,000) in respect of Waterlow Professional Publishing cash generating unit.

The Group tests annually for impairment. The recoverable amount of the goodwill is determined from value in use calculations for each cash generating unit ("CGU"). These calculations use pre-tax cash flow projections based on financial budgets and forecasts approved by management covering a three year period. Cash flows beyond the three year period are extrapolated using estimated long term growth rates.

Key assumptions for the value in use calculations are those regarding discount rates and long term growth rates. Management has used a pre-tax discount rate of 11.1% (2009: 11.1%) that reflects current market assessments for the time value of money and the risks associated with the cash generating units as the Group manages its treasury function on a Group wide basis. The same discount rate has been used for all CGU's as the Directors believe that the risks are the same for each CGU. The long term growth rates used are based on management's expectations of future changes in the markets for each cash generating unit and fall within the range of a negative 5% to a positive 1.25%.

Management has performed sensitivity analyses on all the impairment calculations by reducing the growth rates by 1% and by increasing the pre-tax discount rate to 12.5%. No impairment charge would be required.

12.   Intangible assets

	Publishing
	rights, titles	Computer
	and benefits	software	Total
	£'000	£'000	£'000
Cost
At 1 July 2008	45,997	2,135	48,132
Additions	-	558	558
Disposals	(3,132)	(398)	(3,530)
At 1 July 2009	42,865	2,295	45,160
Additions	69	410	479
Disposals	-	(15)	(15)
At 30 June 2010	42,934	2,690	45,624
Amortisation
At 1 July 2008	12,368	946	13,314
Charge for year     - continuing	4,543	491	5,034
- discontinued	128	-	128
Disposals	(1,900)	(128)	(2,028)
At 1 July 2009	15,139	1,309	16,448
Charge for year     - continuing	4,391	491	4,882
- discontinued	-	-	-
Disposals	-	(9)	(9)
At 30 June 2010	19,530	1,791	21,321
Net book amount
At 30 June 2010	23,404	899	24,303
At 30 June 2009	27,726	986	28,712
At 1 July 2008	33,629	1,189	34,818

13.  Inventories

	30 June	30 June
	2010	2009
	£'000	£'000
Raw materials	11	16
Work in progress	1,019	1,285
Books held for sale	50	41
	1,080	1,342

14. Trade and other receivables

	30 June	30 June
	2010	2009
	£'000	£'000
Amounts due within one year
Trade receivables	14,891	13,940
Other receivables	1,021	813
Prepayments and accrued income	2,752	3,654
	18,664	18,407

15. Derivative financial instruments

	30 June	30 June
	2010	2009
	£'000	£'000
Interest rate  swap - cash flow hedge	(956)	(1,045)
Forward currency contract	(22)	25
	(978)	(1,020)

16. Trade and other payables

	30 June	30 June
	2010	2009
	£'000	£'000
Trade payables	2,654	3,098
Other payables	2,643	3,215
Other taxes and social security	3,006	2,327
Subscriptions and deferred revenue	14,246	13,913
Accruals	9,102	9,163
	31,651	31,716

17. Bank loans and overdrafts

	30 June	30 June
	2010	2009
	£'000	£'000
Current liability - bank overdrafts	600	1,336
Non-current liability - bank loans	18,000	18,000

The Group has an unsecured committed 5 year revolving credit facility of £60m (2009: £60m) to March 2012, of which £18m was drawn down at 30 June 2010 (2009: £18m). Interest is charged on the amount drawn down at 0.8 to 1.0 per cent above LIBOR depending upon leverage. Under the facility, drawdown is made for interest fixture periods of up to six months in duration.

The Group currently has a £5m overdraft facility and a £5m money market line.

The bank overdrafts are the subject of a Group set-off arrangement. Interest is charged on the overdraft at 2% over Barclays bank base rate. Interest is charged on the short term money market line at 1.55% over LIBOR.

18. Provisions for future purchase of minority interests

	Current provisions	Non-current provisions
	£'000	£'000
At 1 July 2008	939	9,268
Amounts paid in respect of acquisitions of minority interests	(826)	-
Unwinding of discount	-	927
Change in value of existing provisions	(113)	(2,637)
Non-current provisions becoming current	2,148	(2,148)
At 1 July 2009	2,148	5,410
Amounts paid in respect of acquisitions of minority interests	(2,194)	-
Unwinding of discount	-	542
Change in value of existing provisions	46	725
Non-current provisions becoming current	3,530	(3,530)
At 30 June 2010	3,530	3,147

Provisions represent the estimated future cost (discounted to reflect the time value of money) required to settle put options held by minority shareholders over minority interest shares, should said put options be exercised.

The actual settlement timing and value is dependent upon when (and if) the minority shareholders choose to exercise their options and the profitability of the underlying companies at the date of exercise. For the purposes of estimating the above provision, it has been assumed that put options are exercised at the first available opportunity.

During the year, the Group acquired 5% of the issued share capital of Beechwood House Publishing Limited and the remaining 15% of the issued share capital of Ark Group Limited under the terms of put agreements based on a predetermined multiple of the average prior two years profits for a total consideration of £2.194m.

19. Minority Interests

	Minority interest - share of results and funds	Minority interest - provision for future acquisition	Net Minority interest
	£'000	£'000	£'000
At 1 July 2008	3,274	(2,549)	725
Profit for the year	560	-	560
	3,834	(2,549)	1,285
Dividends paid	(529)	-	(529)
Acquisition of minorities during the year	(170)	170	-
Movement in offset of provisions for the future purchase of minority interests	-	205	205
Movement arising from company sold during the year with minority interests	(725)	-	(725)
At 1 July 2009	2,410	(2,174)	236
Profit for the year	351	-	351
	2,761	(2,174)	587
Dividends paid	(644)	-	(644)
Exchange translation difference	5	-	5
Acquisition of minorities during the year	(280)	280	-
Movement in offset of provisions for the future purchase of minority interests	-	105	105
At 30 June 2010	1,842	(1,789)	53

20. Net cash flow from operating activities

	Year ended 30 June	Year ended 30 June
	2010	2009
	£'000	£'000
Profit from operations before non-recurring items	9,309	6,773
Non-recurring items	(113)	(1,674)
Operating profit from continuing operations	9,196	5,099
Operating loss from discontinued operations	-	(523)
Depreciation of property, plant and equipment	1,130	1,264
Amortisation of intangible assets (note 12)	4,882	5,162
Impairment of goodwill	-	2,750
Loss on disposal of property, plant and equipment	74	25
Share based payments	246	80
Operating cash flows before movements in working capital	15,528	13,857
Decrease in inventories	262	427
(Increase)/decrease in receivables	(296)	4,748
(Decrease) in payables	(70)	(5,105)
Cash generated by operations	15,424	13,927

Cash conversion is calculated as a percentage of cash generated by operations to operating profit before amortisation and impairment as follows:

	Year ended 30 June	Year ended 30 June
	2010	2009
	£'000	£'000
Operating profit from continuing operations	9,196	5,099
Amortisation and impairment	4,882	7,784
Operating profit before amortisation and impairment	14,078	12,883
Cash generated by operations	15,424	13,927
Cash conversion	110%	108%

 

END

 

 

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