Final Results

RNS Number : 9734R

Wilmington Group Plc

18 September 2014

 



18 September 2014

WILMINGTON GROUP PLC

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

Financial Results for the twelve months ended 30 June 2014

Wilmington Group plc, the provider of information, compliance and education to professional markets today announces its full year results for the twelve months ended 30 June 2014.

Financial Highlights

-       Group revenues for the period up 6% at £90.0m (2013: £85.0m)

-       Adjusted EBITA¹ increased 11% to £18.7m (2013: £16.9m)

-       Adjusted EBITA margins² improved to 20.8% (2013: 19.8%)

-       Adjusted Profit before Tax³ up 13% to £16.6m (2013: £14.7m)

-       Adjusted Earnings per Share⁴ up 13% at 14.79p  (2013: 13.06p)

-       Basic Earnings per Share up to 7.59p (2013: 4.17p)

-       Profit before tax up 68% at £8.6m (2013: £5.1m)

-       Net debt : EBITDA⁵ reduces to 1.6 times (2013 1.8 times)

-       Final dividend increased to 3.7p (2013: 3.5p) making a total dividend of 7.3p (2013: 7.0p) for the year

Operational Highlights

-       Appointment of new Group Chief Executive

-       Strong momentum from Pensions & Insurance and Banking & Compliance

-       Subscription and repeatable information sales at 79% of total revenue (2013: 79%)

-       Growing international revenues; now 37% of total revenue (2013: 32%)

-       Successful acquisition and integration of Compliance Week

Current Trading

-       Trading in line with management expectations, outlook for 2015 remains unchanged

¹ Adjusted EBITA - see note 3

²Adjusted EBITA margins - Adjusted EBITA divided by Revenue

³Adjusted Profit before Tax - see note 3

⁴Adjusted Earnings per Share - see note 10

⁵Net debt : EBITDA - Net debt divided by Adjusted EBITDA (see note 3)

Mark Asplin, Chairman, commented:

"Wilmington has produced another year of solid growth overall which is testament to our strategy of building a quality business focused on providing information, compliance and education to professional markets. With this in mind I would like to reiterate our thanks to Charles for his significant contribution to the business during his 12 years as Chief Executive.

"During the year, we have widened our geographical presence, integrated recently acquired acquisitions, strengthened our back office and operational management teams and invested in new strategic systems, providing a solid platform for future growth. The macro economic climate is still changing slowly for the better and the Group is in a good position to take advantage of this.

"Trading in the new financial year has started in line with the Board's expectations and as we continue to see tighter regulatory control and more complex legislation implemented in our key markets, we remain confident that these changes will continue to drive the demand for our products and services globally."

For further information please contact:

Wilmington Group plc	020 7422 6800
Mark Asplin, Chairman Charles Brady, Chief Executive Tony Foye, Finance Director
FTI Consulting	020 3727 1000
Charles Palmer / Emma Appleton

 

Chairman's Statement                                                                                                                                    

I am pleased to present my report on Wilmington's results for the twelve months ended 30 June 2014. It has been a successful year in the ongoing development of Wilmington as we continue to make good progress and have again achieved solid earnings growth.

I am pleased that the Group has produced another year of solid growth in adjusted profit. This is testament to our strategy of building a quality business focused on providing information, compliance and education to professional markets. In an increasingly regulated world we are seeing many exciting opportunities. Wilmington's businesses, which have become increasingly digital and international, are based on long term client relationships with a high proportion of subscription and repeatable revenues.

Revenues in the year ended 30 June 2014 increased by 6% to £90.0m (2013: £85.0m). Adjusted EBITA was up 11% (£1.8m) to £18.7m (2013: £16.9m), reflecting strong organic growth in our Banking & Compliance and Pensions & Insurance divisions. I am also pleased to report a maiden profit contribution of £0.9m from Compliance Week (acquired in August 2013) and a full year profit contribution from Inese and NHiS acquired earlier in 2013. The growth from our higher margin businesses, combined with the discontinuation of low margin activities and tight control of overheads has resulted in an improvement of 100 bpts in Adjusted EBITA Margin to 20.8% (2013: 19.8%). The growth in Adjusted EBITA combined with a reduced interest charge translated into Adjusted Profit before Tax up a pleasing 13% (£1.9m) to £16.6m (2013: £14.7m).

Although the year was successful overall, as previously indicated we have experienced challenging trading conditions in our Legal and Healthcare divisions which both suffered from adverse competitive pressures and as a result saw some underlying revenue and profit decline. In response we have made significant changes to the respective management teams and repositioned and strengthened our client offerings.

At 30 June 2014 net debt was broadly unchanged on the prior year at £33.7m (2013: £33.4m) despite investing £7.3m of net cash on the acquisition of Compliance Week at the beginning of the year. Gearing as calculated by Net Debt to Adjusted EBITDA has reduced to 1.6 times (2013: 1.8 times) and Cash Conversion (see note 20) remained strong at 108% (2013: 115%).

In the year we have invested in a number of initiatives designed to enhance the quality of our prospects. I reported in February that the Group is investing in Salesforce.com©, as a new Group-wide CRM. In doing so we are taking the opportunity to review and improve all of the processes which operate across our businesses to establish best practice and maximise efficiency. These reviews and investments will provide the foundation for future development, materially enhance the way in which we interact with our customers and transform the way we run our businesses. These projects are progressing well.

Acquisitions

In August 2013 we acquired Compliance Week for £7.3m in cash. This investment is consistent with our strategy of growth through selective value adding acquisitions. It also increases our exposure to the growing corporate risk management and compliance markets as well as giving us a significantly larger presence in North America.

Compliance Week is the leading provider of governance, risk and compliance information and events for public companies and large enterprises primarily in the US. Compliance Week has started to work with other Wilmington Group companies, providing access to their North American customers and markets as well as opportunities for developing new revenue streams. Wilmington is well placed to support Compliance Week's ambitions to grow outside of the US and in October 2013 the Group successfully launched 'Compliance Week Europe' in Brussels.

Business Strategy

Our strategy is to increase shareholder value by delivering sustainable and growing profits from servicing the information, compliance and education requirements of the global professional business markets.

We continue to progress our strategic aims of moving towards higher quality and more sustainable income streams. Revenue from subscriptions and repeatable revenue were maintained at 79% of Group turnover (2013: 79%).

In addition, we have actively sought to increase our income streams from outside the UK where we see good prospects for long term sustainable growth in many of the major professional markets we operate in. Revenue outside the UK has grown to 37% of total revenue compared to 32% last year. Alongside cost savings and product development which have already been implemented this should result in further progress being made in 2014/15.

This strategy has delivered a portfolio of businesses with a significant proportion of revenues derived from subscriptions to products which disseminate content-rich, high-value information digitally along with certificated education and compliance programmes.

Tighter regulatory control and more complex legislation in many of our key markets will continue to drive the demand for our products and services globally.

 Board Changes

As reported earlier this year, Charles J Brady ('Charlie') has announced his intention to retire as Chief Executive. At the request of the Board Charlie has agreed to stay on in a part time capacity as an Executive Director and to continue in his role in our Banking & Compliance division as Chairman of the International Compliance Association ('ICA'). Charlie has been a part of the ICA since its inception 12 years ago. We are pleased that he has agreed to continue to assist in the development of our growing international compliance training business.

We undertook a rigorous process to find a successor to Charlie, supported by external recruitment consultants and led by the Nominations Committee. I am delighted that Pedro Ros has joined the Board and will take Wilmington to the next level in its development as our new Chief Executive. Pedro is a highly experienced executive who previously held senior Board positions at WPP plc and TNS plc. Pedro brings to the Group a wealth of international acquisition, market research and social media experience together with a proven ability to grow information and professional services businesses.

I would now like to take this opportunity on behalf of the Board to formally thank Charlie for his leadership over the last 12 years and for handing over the business in such a strong position as his legacy. Charlie spearheaded Wilmington's digital transformation, shifting the Group from a predominantly print based trade magazine publisher to the multinational digital provider of high quality information compliance and education it is today. Charlie will ensure an orderly handover to Pedro and will step down as Chief Executive on the 1 October 2014.

Pedro, working with the executive management team and the Board is currently undertaking a review of our business and will provide an update in December 2014. I am confident that he will bring a new perspective and fresh ideas, all of which should make for an exciting future.

Richard Cockton, the Company Secretary, has also indicated that he will retire at the AGM in November 2014. I am delighted to announce that Linda Wake will become Company Secretary in succession to Richard, whilst maintaining her role as Deputy Finance Director. On behalf of myself and the Board I would like to thank Richard for his excellent contribution to the Group, both as Company Secretary and as Chief Accountant over the past 16 years.

Dividend

I am proud of the Group's record of maintaining its dividend over the recent years. It reflects our confidence in the strategy and resilience of our business models. The improved financial performance has reflected in increased dividend cover. I am pleased to confirm that the final dividend for this year will be 3.7p (2013: 3.5p) per share making a total dividend of 7.3p (2013: 7.0p) per share for the year an increase of 4%. The dividend cover following for this year is 2.0 times (2013: 1.9) and it is the Board's intention to maintain its progressive dividend policy whilst ensuring that a suitable dividend cover is maintained. 

The final dividend of 3.7p per share will be paid on 10 November 2014 to shareholders on the share register as at 17 October 2014.

Wilmington's People

As a digital information compliance and education company, operating in dynamic and competitive markets, we are fundamentally reliant on the quality and professionalism of our people. I would once again like to express my own and my fellow Board members' appreciation of the hard work and dedication of our people.

Outlook and Current Trading

I am pleased to report that the new financial year has started in line with our expectations.

The Group is well positioned to move to the next stage of its development; we have widened our geographical presence, strengthened our back office and operational management teams and invested in new strategic systems. The business continues to offer good opportunities for us to generate attractive returns over the long term.

The macro economic climate is still changing slowly for the better and the Group is in a good position to take advantage of this. We are seeing tighter regulatory control and more complex legislation implemented in our key markets and remain confident that these changes will continue to drive the demand for our products and services globally.

Chief Executive's review

Operational Review

Our strategy has been to systematically transform Wilmington into a high quality information, compliance and education provider servicing major professional markets.

By focusing on the fundamentals of our business we are able to improve the quality of our earnings. By investing in higher growth businesses and exiting from structurally challenged businesses and, in particular, reducing the drag from legacy print products we have created a Group with more predictable revenues, higher margins, growth prospects and strong cash flows.  The strong cash flow generated by the Group provides the momentum for organic and acquisition investment.

During the year, Wilmington produced another strong performance with Adjusted EBITA up 11% to £18.7m from £16.9m in 2013. Adjusted Profit before Tax was up 13% to £16.6m (2013: £14.7m). Adjusting for acquisitions, currency fluctuations and the termination of non-core activities underlying Adjusted EBITA growth was 4%.

Group revenues in the year ended 30 June 2014 were up 6% to £90.0m (2013: £85.0m), reflecting full year contributions from the two acquisitions made in 2013 and the more recent acquisition of Compliance Week. Adjusting for acquisitions, currency fluctuations and the termination of non-core activities underlying revenue was up slightly on the same period last year.

The two largest divisions, Pensions & Insurance and Banking & Compliance, both continue to perform very well with strong organic revenue and contribution growth. It is in these areas where we see the best opportunities and where we are investing most heavily. However, as previously highlighted we have continued to witness more challenging conditions in our Healthcare and Legal divisions.

On 15 August 2013 we acquired Compliance Week, the leading provider of governance, risk and compliance information and events for public companies and large enterprises primarily in the US, which contributed £3.2m to revenue and £0.9m to operating profit in the year.

Pensions & Insurance (19% of total revenue, 31% of total contribution)

This division, which includes Axco, Pendragon, Inese and International Company Profile ('ICP') provides in-depth regulatory and compliance information, market intelligence, events, training, analysis and workflow tools for the international insurance markets and the UK pensions industry.

	2014	2013	Change
	£'m	£'m	%
Revenue	17.0	14.6	16
Divisional contribution	6.8	6.1	11
Margin (%)	40	42

Divisional revenue grew 16% (£2.4m) helped by a full year revenue contribution of £2.7m (2013: £1.1m) from Inese, a provider of Spanish language subscription based publications, events and online services for the Spanish insurance market, which was acquired in March 2013. Underlying revenue growth was 7% after adjusting for adverse currency movements. As expected the divisional margin was a little lower than the previous year due to the full year impact of the acquisition of Inese which has operating profit margins of just under 30%.

Axco, which provides subscription information, market and regulatory intelligence, workflow tools and analytics for the multinational insurance market reported an 8% constant currency sales growth. Sales, which are driven predominantly by demand for in depth insurance market and regulatory information for all countries globally, benefitted from increased demand for our new 'Insight' delivery platform which provides clients with tailored information which can be integrated into their own systems. We maintained our commitment to invest in and develop Axco content, products and services as well as continued investment in technology for content management and product delivery. In July 2014 we launched Insight Risk Manager, a regulatory intelligence service for the risk managers in multinational firms. This launch was supported by the major global insurance brokers and Airmic, the UK Risk Managers Association.

Pendragon, the leading digital regulatory information service for the UK pension industry, maintained its market leading position in the UK pensions market and recorded revenue growth of 4%. The business is investing in new delivery technology for launch later this year which will help strengthen the backbone of its information offerings for the future.

ICP, the leading provider of credit insurance reports for developing markets, has enjoyed another successful year with continued increase in demand for credit insurance reports, particularly in the Middle East. ICP recorded revenue growth of 9%.

Inese, which was acquired in March 2013, had a good year with revenue of £2.7m and a contribution of £0.7m to operating profits. This contribution of £0.7m when added to last year's contribution of £0.4m represents a very satisfactory pre-tax return on our acquisition cost of £1.2m. The integration of Inese has gone very well and we are now focusing on investing in their products and services, which will include the implementation of new CMS and delivery technology based on the systems developed this year for Compliance Week.

Overall the division's contribution grew by 11% to £6.8m (2013: £6.1m). Adjusting for acquisitions and currency fluctuations underlying profits were up 8% on 7% underlying revenue growth.

Banking & Compliance (24% of total revenue, 25% of total contribution)

The Banking & Compliance division provides corporate finance and capital markets training and accredited programmes in anti-money laundering, compliance, wealth management, financial crime and trust management along with subscription information and events. This division serves primarily tier one banks, the international financial services industry and major multinational companies.

	2014	2013	Change
	£'m	£'m	%
Revenue	21.9	16.6	32
Divisional contribution	5.5	3.5	58
Margin (%)	25	21

The division continued to show strong revenue growth momentum with an increase of 32% compared to 2013 helped by £3.2m of new revenues from Compliance Week. Growth drivers included increased demand for Compliance and Anti Money Laundering programmes to international banks. Underlying revenue growth was 14% after adjusting for adverse currency movements. Margins grew from 21% to 25% helped by a contribution of £0.9m (28% margin) from Compliance Week and increased margins from our compliance training programmes. Underlying contribution grew by 34%.

International Compliance Training ('ICT') which provides accredited training programmes in Anti Money Laundering, Compliance and Financial Crime has continued to secure major in-house training assignments during the year and has a strong and growing pipeline of projects into the 2014/15 financial year. Growth drivers for this division include the provision of major anti-money laundering programmes to international banks. Demand for accredited face to face training is growing and we anticipate significant revenue growth from this area moving forward. We also continue to see opportunities in emerging markets with recent initiatives in Malaysia and Poland. To support this revenue growth we are investing in significantly more training and administrative capacity.

The financial year 2013/14 was a record year for Adkins Matchett & Toy Group ('AMT'), which provides corporate finance and capital markets training to major international investment banks. AMT saw revenue grow 10% and contribution up 9% on 2013. AMT has benefitted from significant investments in its client offerings and is increasingly using technology to support and supplement its core face to face courses. Initiatives included a cross divisional Massive Online Open Course ('MOOC') system for a global client covering fundamental banking skills. Elsewhere AMT Online is now an integral part of client offerings allowing for structured online self-study, complete assessments and online exams with detailed feedback and reporting to the learning and development function.

AMT has had an excellent start to the 2014/15 financial year with its graduate entrant training for investment banks in its main centres of New York, Hong Kong and London. As AMT generates 50% of its revenue in the first quarter of the financial year this again bodes well for the rest of the year.  

Compliance Week has integrated well into the business since its acquisition in August and the redevelopment of its key content, management and delivery technology has been successfully completed. With the assistance of some of our UK based businesses Compliance Week also launched their first event outside of the US with the inaugural 'Compliance Week Europe' which was held in October 2013 in Brussels.

Healthcare (15% of total revenue, 13% of total contribution)

This division includes Agence de Presse Médicale ('APM'), the French language medical news agency, Binley's, the UK healthcare information business, and NHiS, a provider of business intelligence and data analysis to the pharmaceutical industry.

	2014	2013	Change
	£'m	£'m	%
Revenue	13.7	13.1	5
Divisional contribution	2.8	2.8	-
Margin (%)	21	22

The division has experienced challenging market conditions in the period and although revenue was up 5% (£0.6m) adjusting for currency fluctuations and the full year of contribution from NHiS (acquired February 2013) of £2.2m (2013: £0.9m) underlying revenue was down 6%. Contribution was maintained at the same levels as 2013 but underlying profits were down £0.3m (11%).

APM has had another strong year with underlying revenue up 3%. APM has one of the highest proportions of subscription income in the Group at over 95%, with renewal rates also in excess of 95%. All of APM's revenues are delivered digitally. Despite a difficult economic backdrop in France the quality of APM's editorial content has ensured its continued growth.

Binley's underlying revenue was down 12% (£0.8m) due mainly to the fall-off in lower margin mailing services as reported in our half year results and the reduction in expenditure by some of our pharmaceutical clients. The business mitigated the impact on its profits by reducing its associated overhead base to offset some of the revenue loss. Onmedica, our permissioned GP email market access service had a good year with revenue up 13%; albeit from a relatively small base.

NHiS, a provider of business intelligence, data analysis, workflow tools and other services to pharmaceutical companies in the UK, which was acquired in February 2013, recorded revenue of £2.2m. NHiS has seen a shift towards consultancy led analytical assignments over the last few months as our clients seek deeper insight into the changing requirements of the NHiS., We are  investing in the next generation of data visualisation subscription products as well as developing integrated solutions with Binley's to our major pharmaceutical clients. We are also exploring some potentially exciting international opportunities where the NHiS technology and processes are very compatible.

During the year we have significantly strengthened the Healthcare management team, with five senior appointments. I am optimistic that this team will bring new momentum and expertise to the division.

Legal (19% of total revenue, 10% of total contribution)

The division provides training, conferences, professional support services and information including legal continuing professional development (CPD), expert witness training, databases, magazines and specialist reports.

	2014	2013	Change
	£'m	£'m	%
Revenue	17.4	19.3	-10
Divisional contribution	2.3	2.9	-21
Margin (%)	13	15

As previously indicated the Legal Division's revenue was reduced by 10% (£1.9m) in the year. Underlying revenue decline was 8% adjusting for the disposal of Ark Australia in 2013.

Central Law Training has continued to experience difficult trading conditions in its legal CPD courses. Legal CPD training is undergoing significant changes with the regulations governing minimum CPD requirements being relaxed by the Solicitors' Regulatory Authority. This will mean that solicitors will, over the next 18 months have to reassess how they undertake CPD to ensure that they are "Competent". We believe that this change may bring positive future opportunities for the Group, but will also result in a period of less activity whilst solicitors reassess their training objectives and requirements. We have also experienced strong price competition and have seen the exit of some competitors from the market. Legal CPD revenue represents less than 30% of the overall division's turnover.

Central Law Training's course programmes have been modified to reflect current market conditions. We have also changed the management team, with a number of executives leaving the Group. New appointments have been made, including the MD of Bond Solon taking over as Divisional MD and the promotion of new senior executives appointed at Central Law Training. These changes inter alia resulted in reorganisation costs of £0.2m.

Other than legal CPD the division has performed well. We have seen good growth in Bond Solon, our witness familiarisation business, which enjoyed a record sales year with revenue up 7% in the UK and 13% in Ireland. We have also seen a 27% increase in revenue from our Scottish legal training business.

Overall, despite the £1.9m (10%) decrease in revenue the impact on contribution from the division was mitigated due to good cost control to show a reduction of £0.6m. Margins had dropped slightly to 13%.

Business Intelligence (11% of total revenue, 11% of total contribution)

This division includes our Data Suppression and Fraud Prevention services as well as our Charities, Fund Management and Film & TV services.

	2014	2013	Change
	£'m	£'m	%
Revenue	9.6	10.9	-12
Divisional contribution	2.5	2.5	-
Margin (%)	26	23

Over recent years the division has undergone the most significant transformation of all our businesses, with the transition from a print and advertising based business to digital services, subscription information products and workflow tools.

Overall revenue was down 12% (£1.3m) but £0.8m of this reduction was due to exiting non-core activities including the low margin list brokerage service operated by Millennium. As previously reported we are seeing the expected decline in legacy print revenues being partially offset by growth of new, higher margin digital businesses. This has allowed us to increase overall margins from 23% to 26%.

The remainder of the division; our fund data, charities, data suppression, fraud prevention services and legacy notification businesses have seen underlying stable revenue and improved profit performance.

Overall contribution was maintained at £2.5m.

Accountancy (12% of total revenue, 10% of total contribution)

The Accountancy division is the leading provider of training, technical support and marketing services to UK Accountancy firms and accountants in commerce and industry. 

	2014	2013	Change
	£'m	£'m	%
Revenue	10.4	10.6	-1
Divisional contribution	2.1	2.1	-
Margin (%)	20	20

Overall revenues declined by 1% in what was expected to be a quiet year in terms of legislation and regulation change. We saw a slight drop off in face to face training as a result. We are very pleased that despite the reduction in revenue contribution has been maintained at last year's levels as a result of good cost control.

A growing percentage of the division's revenue is generated from technical and marketing support for accountancy clients. Technical support initiatives include our market leading accountancy firm website platform and SEM solutions optimised for specialist accountancy practices.

Regulation and deregulation provide opportunities in the Accountancy market. With audit exemption limits continuing to rise and the introduction of micro-entity accounting simplification this is likely to be a constraining factor on short term revenue growth. However, offsetting this are opportunities from the implementation of IFRS to UK entities and the demand for more sophisticated technical and marketing support. 

Operating profits and margins were maintained at £2.1m and 20 percent respectively.

Group Overheads

Group overheads, which include Board and head office salaries as well as unallocated central overheads, increased by 5% to £3.3m.

Financial review

 

	2014 £'m	2013 £'m	Change %
Revenue	90.0	85.0	6
Adjusted EBITA	18.7	16.9	11
Adjusted EBITA Margin	20.8	19.8

Adjusted results

Reference is occasionally made in this financial review to adjusted results. Adjusted results in the opinion of the Directors provide a more comparable indication of the Group's underlying financial performance and exclude adjusting items set out in note 3.

Revenue

Revenue for the twelve months to 30 June 2014 increased by £5.0m to £90.0m (2013: £85.0m). On a like-for-like basis (excluding the impact of acquisitions, foreign exchange and disposals) underlying revenue was up slightly.

Net operating expenses

Net operating expenses, excluding adjusting items, were £71.3m (2013: £68.2m) up 5% reflecting the impact of acquisitions made in 2013 and in the period.

Amortisation of Intangible assets

Amortisation of intangible assets (excluding computer software) increased from £6.1m to £6.3m reflecting the acquisitions of the businesses made in the period offset by assets which had been fully amortised in previous years. Also included in the 2013 comparative is £0.8m of accelerated amortisation in respect of intangibles within our Business Intelligence division.

Adjusting items

The Group incurred other adjusting items of £0.8m compared to a net cost of £1.3m in 2013. £0.4m of other adjusting items relate to costs of acquisitions made or aborted in the year and £0.1m in respect of the recruitment costs of the new Chief Executive. £0.2m of these costs were associated with a reorganisation of the Legal division.

Interest payable

Interest payable was down 5% from £2.3m to £2.1m supported by strong cash flow in the period. The Group had seen cash inflows associated with the sale of assets including a surplus freehold property at net book value for £0.7m, and strong operational cash inflows, offset by the acquisition of businesses and the purchase of minority interests. This resulted in net debt of £33.7m by the year end (2013: £33.4m). A dividend of £6.1m (2013: £5.9m) has been paid in the year.

Taxation

Taxation increased by £0.5m (37%) from £1.5m to £2.0m. The increase in the tax expense is due to larger deferred tax credits in 2013 and the non-tax deductibility of the impairment provision which is partly offset by the tax free property disposal in 2013.

The underlying tax rate which ignores the tax effects of adjusting items decreased from 24.7% to 24.0%. This reduction reflects inter alia the reduction in UK corporation tax rates during the year.

Operating profit

Operating profit was up from £7.4m to £10.7m largely due to the impairment charge of £4.5m in 2013 (offset by the profit on disposal of property of £3.3m). Adjusted EBITA was up 11% at £18.7m (2013: £16.9m) and Adjusted EBITA margins were up 100 bpts to 20.8% (2013 19.8%). Acquisitions in the year contributed £0.9m to operating profits.

Profit before taxation

Profit before taxation was up from £5.1m to £8.6m. This reflects higher operating profits and a small net reduction in finance costs. Adjusted Profit before Tax increased by 13% to £16.6m (2013: £14.7m). 

Earnings per share

Adjusted Basic Earnings per Share increased by 13% to 14.79p (2013: 13.06p).  Basic earnings per share increased to 7.59p from 4.17p and diluted earnings per share increased to 7.39p from 4.07p.

Goodwill

Goodwill increased by £3.6m to £76.9m due to additions from  acquisitions in the year (£4.0m) offset by exchange rate movements £0.4m.

Intangible assets

Intangible assets declined £2.7m reflecting amortisation, offset by £4.0m from acquisitions made in the year.

Property, plant and equipment

Property, plant and equipment decreased by £0.2m to £5.7m reflecting additions to tangible fixed assets of £0.9m (2013: £1.2m) offset by depreciation and disposals.

Trade and other receivables

Trade receivables within trade and other receivables increased by £0.7m compared to 30 June 2013 reflecting acquisitions made during the year.

Trade and other payables

Trade and other payables which include deferred income were up £1.4m compared to 30 June 2013 reflecting the increase in deferred income and acquisitions made in the year.

Subscriptions and deferred income, which represents revenue received in advance increased by 6% from £18.6m in 2013 to £19.6m. Included in this category was £1.0m which related to Compliance Week acquired during the year. The underlying position was flat however subscription information subscriptions were up 5% offsetting declines in lower margin training revenue received in advance.

Net debt

Net debt, which includes cash and cash equivalents, bank loans and bank overdrafts, was £33.7m (2013: £33.4m) an increase of £0.3m despite spending a net £7.3m in cash on acquisitions in the period. Operating cash flow and strong cash conversion supplemented by £0.7m from the disposal of a surplus freehold property helped towards the debt reduction. Free cash flow (see note 20) increased to £13.2m from £12.4m.

The net debt at 30 June represented just over half of our debt and overdraft facility of £65m.

Cash received on disposal of property

In October 2013 the Group disposed of one of its freehold properties for £0.7m in cash.

Treasury shares

During the year 716,410 shares were reissued in settlement of shares vesting under the Group's profit share plan and share option scheme. This resulted in a transfer to share capital at the weighted average cost of shares held in treasury.

Dividend

It is the Board's intention to pay a progressive dividend whilst ensuring a cover of at least two times the Group's adjusted earnings per share over the dividend per share in respect of the year. A final dividend of 3.7p per share (June 2013 final 3.5p) will be paid on 10 November 2014 to shareholders on the register as at 17 October 2014.

Consolidated Income Statement for the year ended 30 June 2014

	Notes	Adjusted results June 2014 £'000	Adjusting items (note 6) June 2014 £'000	Statutory results June 2014 £'000	Adjusted results June 2013 £'000	Adjusting items (note 6) June 2013 £'000	Statutory results June 2013 £'000
Continuing operations
Revenue	4	90,024	-	90,024	85,048	-	85,048
Net operating expenses	5	(71,320)	(764)	(72,084)	(68,183)	(1,325)	(69,508)
Gain on disposal of property	6	-	-	-	-	3,325	3,325
Amortisation	6	-	(6,286)	(6,286)	-	(6,105)	(6,105)
Impairment	6	-	-	-	-	(4,500)	(4,500)
Share-based payments	6	-	(924)	(924)	-	(888)	(888)
Operating profit		18,704	(7,974)	10,730	16,865	(9,493)	7,372
Net finance costs	7	(2,099)	(39)	(2,138)	(2,163)	(93)	(2,256)
Profit before tax		16,605	(8,013)	8,592	14,702	(9,586)	5,116
Taxation	8			(2,034)			(1,484)
Profit for the year				6,558			3,632
Attributable to:
Owners of the parent				6,485			3,537
Non-controlling interests	18			73			95
				6,558			3,632
Earnings per share attributable to the owners of the parent:
Basic (p)	10			7.59p			4.17p
Diluted (p)	10			7.39p			4.07p
Adjusted earnings per share attributable to the owners of the parent:
Basic (p)	10	14.79p			13.06p
Diluted (p)	10	14.40p			12.74p

Consolidated Statement of Comprehensive Income for the year ended 30 June 2014

	Year ended 30 June 2014 £'000	Year ended 30 June  2013 £'000
Profit for the year	6,558	3,632
Other comprehensive income:
Items that may be reclassified subsequently to the income statement
Net fair value movements on interest rate swaps	381	206
Currency translation differences	(1,001)	51
Net investment hedges	497	21
Other comprehensive (expense)/income for the year, net of tax	(123)	278
Total comprehensive income for the year	6,435	3,910
Attributable to:
- Owners of the parent	6,362	3,815
- Non-controlling interests	73	95
	6,435	3,910

Balance Sheet as at 30 June 2014

		Group
	Notes	2014 £'000	2013 £'000
Non-current assets
Goodwill	12	76,855	73,282
Intangible assets	13	28,746	31,493
Property, plant and equipment	14	5,727	5,909
Deferred tax assets		562	887
		111,890	111,571
Current assets
Trade and other receivables	15	22,389	21,379
Cash and cash equivalents		5,020	7,803
Derivative financial instruments	16	37	-
		27,446	29,182
Non-current assets held for sale		-	657
Total assets		139,336	141,410
Current liabilities
Trade and other payables	17	(40,635)	(39,254)
Current tax liabilities		(1,333)	(1,533)
Deferred consideration - cash settled		(343)	(224)
Derivative financial liabilities	16	(78)	(63)
Borrowings	18	(642)	(890)
		(43,031)	(41,964)
Non-current liabilities
Borrowings	18	(37,673)	(39,751)
Deferred consideration - equity settled		(728)	(619)
Deferred consideration - cash settled		-	(261)
Derivative financial instruments	16	(490)	(1,096)
Deferred tax liabilities		(4,670)	(5,822)
Provisions for future purchase of non-controlling interests		(100)	(183)
		(43,661)	(47,732)
Total liabilities		(86,692)	(89,696)
Net assets		52,644	51,714
Equity
Share capital		4,305	4,305
Share premium		45,231	45,231
Treasury shares		(878)	(2,356)
Translation reserve		(942)	59
Share-based payments reserve		911	1,560
Retained earnings		3,782	2,770
Equity attributable to owners of the parent		52,409	51,569
Non-controlling interests	19	235	145
Total equity		52,644	51,714

Statements of Changes in Equity for the year ended 30 June 2014

	Share capital, share premium and treasury shares £'000	Share based payments reserve £'000	Translation reserve £'000	Retained earnings £'000	Total £'000	Non-controlling interests (note 19) £'000	Total equity £'000
Group
At 1 July 2012	45,528	815	93	5,160	51,596	-	51,596
Profit for the year	-	-	-	3,537	3,537	95	3,632
Other comprehensive income for the year	-	-	51	227	278	-	278
	45,528	815	144	8,924	55,411	95	55,506
Dividends	-	-	-	(5,947)	(5,947)	(27)	(5,974)
Share-based payments	-	745	-	322	1,067	-	1,067
Translation reserve realised on overseas subsidiary	-	-	(85)	85	-	-	-
Reissue of treasury shares	1,652	-	-	(614)	1,038	-	1,038
Movement in non-controlling interests	-	-	-	-	-	80	80
Movements in offset of provisions for the future purchase of non-controlling interests	-	-	-	-	-	(3)	(3)
At 30 June 2013	47,180	1,560	59	2,770	51,569	145	51,714
Profit for the year	-	-	-	6,485	6,485	73	6,558
Other comprehensive income for the year	-	-	(1,001)	878	(123)	-	(123)
	47,180	1,560	(942)	10,133	57,931	218	58,149
Dividends	-	-	-	(6,058)	(6,058)	(26)	(6,084)
Share-based payments	-	440	-	41	481	-	481
Reissue of treasury shares	1,478	(1,089)	-	(334)	55	-	55
Movements in non-controlling interests	-	-	-	-	-	52	52
Movements in offset of provisions for the future purchase of non-controlling interests	-	-	-	-	-	(9)	(9)
At 30 June 2014	48,658	911	(942)	3,782	52,409	235	52,644

Cash Flow Statement for the year ended 30 June 2014

		Group
	Notes	Year ended 30 June 2014  £'000	Year ended 30 June 2013  £'000
Cash flows from operating activities
Cash generated from operations before adjusting items	20	20,204	19,385
Cash flows for adjusting items - operating activities		(372)	(239)
Cash flows for adjusting items - share based payments		(358)	-
Cash generated from operations		19,474	19,146
Net finance costs paid		(1,863)	(2,011)
Tax paid		(3,285)	(2,926)
Net cash generated from operating activities		14,326	14,209
Cash flows from investing activities
Purchase of businesses		(7,342)	(1,151)
Deferred consideration paid		(168)	(171)
Purchase of subsidiaries, net of cash acquired		-	(4,976)
Purchase of non-controlling interests	19	(58)	(1,707)
Cash received from non-controlling interest		-	80
Cash flows for adjusting items - investing activities		(267)	(1,025)
Purchase of property, plant and equipment		(883)	(1,217)
Proceeds from disposal of property, plant and equipment		710	4,450
Purchase of intangible assets	13	(955)	(764)
Net cash used in investing activities		(8,963)	(6,481)
Cash flows from financing activities
Dividends paid to owners of the parent	9	(6,058)	(5,947)
Dividends paid to non-controlling interests		(26)	(27)
Reissue of treasury shares		55	1,038
(Decrease)/increase in long-term loans		(1,748)	2,286
Net cash used in financing activities		(7,777)	(2,650)
Net (decrease)/increase in cash and cash equivalents, net of bank overdrafts		(2,414)	5,078
Cash and cash equivalents, net of bank overdrafts at beginning of the year		6,913	1,795
Exchange (losses)/gains on cash and cash equivalents		(121)	40
Cash and cash equivalents, net of bank overdrafts at end of the year		4,378	6,913

Reconciliation of net debt

Cash and cash equivalents at beginning of the year	7,803	3,954
Bank overdrafts at beginning of the year	(890)	(2,159)
Bank loans at beginning of the year	(40,286)	(38,000)
Net debt at beginning of the year	(33,373)	(36,205)
Net (decrease)/increase in cash and cash equivalents (net of bank overdrafts)	(2,535)	5,118
Net repayment/(draw down) in bank loans	1,505	(2,286)
Exchange gain on bank loans	740	-
Cash and cash equivalents at end of the year	5,020	7,803
Bank overdrafts at end of the year	(642)	(890)
Bank loans at end of the year	(38,041)	(40,286)
Net debt at end of the year	(33,663)	(33,373)

Notes to the Financial Statements

1. Nature of the financial statements

The following 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 2014 on which an unqualified report has been made by the Company's auditors.

Financial statements for the year ended 30 June 2013 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 2014 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 6-14 Underwood St, London, N1 7JQ.

2. Statement of accounting policies

The preliminary announcement for the year ended 30 June 2014 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 2013 along with new standards and interpretations which became mandatory for the financial year.

3. Measures of profit

To provide shareholders with a better understanding of the trading performance of the Group, adjusted profit before tax has been calculated as profit before tax after adding back:

·      amortisation of intangible assets - publishing rights, titles and benefits;

·      impairment of goodwill;

·      unwinding of the discount on the provisions for the future purchase of non-controlling interests and deferred consideration;

·      share-based payments; and,

·      other adjusting items (including net gains on the disposal of property).

Adjusted profit before tax, Adjusted EBITA and Adjusted EBITDA reconcile to profit on continuing activities before tax as follows:

	Year ended  30 June 2014 £'000	Year ended  30 June 2013 £'000
Profit before tax	8,592	5,116
Amortisation of intangible assets - publishing rights, titles and benefits (see note 13)	6,286	6,105
Impairment of goodwill	-	4,500
Unwinding of the discounts	39	93
Share based payments	924	888
Gain on disposal of property	-	(3,325)
Other adjusting items (see note 6)	764	1,325
Adjusted profit before tax ('Adjusted Profit before Tax'')	16,605	14,702
Net finance costs (excluding the unwinding of the discounts above)	2,099	2,163
Adjusted operating profit (''Adjusted EBITA'')	18,704	16,865
Depreciation of property, plant and equipment	1,025	1,043
Amortisation of intangible assets - computer software (see note 13)	816	755
Adjusted EBITA before depreciation (''Adjusted EBITDA'')	20,545	18,663

4. Segmental information

The Group's operating segments are reported in a manner consistent with the internal financial information provided to the Board, which represents the chief operating decision maker.

The Group's organisational structure reflects the different professional markets to which it provides information, compliance and education. The six professional divisions (Pensions & Insurance, Banking & Compliance, Healthcare, Legal, Business Intelligence and Accountancy) are the Group's reportable segments and generate substantially all of the Group's revenue.

There are no changes to any of the Group's accounting policies.

The Board considers the business from both a geographic and product perspective. Geographically, management considers the performance of the Group split between the UK, Europe (excluding the UK), North America and the Rest of the World.

(a)   Business segments

	Revenue Year ended 30 June 2014 £'000	Operating profit  Year ended 30 June  2014 £'000	Revenue Year ended 30 June 2013 £'000	Operating profit  Year ended 30 June 2013 £'000
Pensions & Insurance	17,006	6,765	14,629	6,093
Banking & Compliance	21,938	5,543	16,566	3,513
Healthcare	13,684	2,818	13,058	2,836
Legal	17,371	2,268	19,266	2,884
Business Intelligence	9,581	2,500	10,948	2,523
Accountancy	10,444	2,076	10,581	2,135
Unallocated central overheads	-	(3,266)	-	(3,119)
	90,024	18,704	85,048	16,865
Amortisation of intangible assets - publishing rights, titles and benefits (see note 13)		(6,286)		(6,105)
Impairment of goodwill		-		(4,500)
Share-based payments		(924)		(888)
Gain on disposal of property		-		3,325
Other adjusting items (see note 6)		(764)		(1,325)
Net finance costs (see note 7)		(2,138)		(2,256)
Profit before tax		8,592		5,116
Taxation (see note 8)		(2,034)		(1,484)
Profit for the financial year		6,558		3,632

Unallocated central overheads represent head office costs that are not specifically allocated to segments.

(b) Segmental information by geography

The UK is the Group's country of domicile and the Group generates the majority of its revenue from external customers in the UK. The geographical analysis of revenue is on the basis of the country of origin in which the customer is invoiced:

	Year ended 30 June 2014 £'000	Year ended 30 June 2013  £'000
UK	57,135	58,159
Europe (excluding the UK)	15,060	13,070
North America	10,467	6,256
Rest of the World	7,362	7,563
Total revenue	90,024	85,048

5. Net operating expenses

	Year ended 30 June 2014 £'000	Year ended 30 June 2013 £'000
Cost of sales	26,918	26,064
Distribution and selling costs	16,650	15,814
Administrative expenses (excluding amortisation of intangible assets - computer software)	26,936	25,550
Amortisation of intangible assets - computer software	816	755
Net operating expenses before adjusting items	71,320	68,183
Other adjusting items (see note 6)	764	1,325
Net operating expenses	72,084	69,508

Other adjusting items are all classified as administration expenses.

 

6. Profit from continuing operations

 

Adjusting items:

The following items have been charged/(credited) to profit or loss during the year but are of an unusual nature, size or incidence and so are shown separately:

	Year ended 30 June 2014 £'000	Year ended 30 June 2013 £'000
Costs written off relating to both successful and aborted acquisitions	380	270
Restructuring and rationalisation costs	275	593
Impairment of freehold property and associated property, plant and equipment	-	325
Costs relating to rationalisation of publishing operations	-	339
Increase/(decrease) in liability for deferred consideration	109	(440)
Termination costs of joint venture contract	-	238
Other adjusting items (included in operating expenses)	764	1,325
Gain on the sale of property	-	(3,325)
Amortisation of intangible assets - publishing rights, titles and benefits	6,286	6,105
Impairment of goodwill	-	4,500
Share-based payments	924	888
Total adjusting items (classified in operating profit)	7,974	9,493
Unwinding of discount on the provisions for the future purchase of non-controlling interests and deferred consideration	39	93
Total adjusting items (classified in profit before tax)	8,013	9,586

Restructuring and rationalisation costs comprise primarily redundancy and termination costs together with associated reorganisation costs (including associated gains and losses on disposal of fixed assets).

7. Net finance costs

	Year ended 30 June 2014 £'000	Year ended 30 June 2013 £'000
Finance income comprises:
Bank interest receivable	-	4
Finance costs comprise:
Interest payable on bank loans and overdrafts	(1,718)	(1,653)
Facility fees	(213)	(267)
Amortisation of capitalised loan arrangement fees	(168)	(247)
Unwinding of the discount on the provisions for the future purchase of non-controlling interests	(13)	(16)
Unwinding of the discount on deferred consideration	(26)	(77)
	(2,138)	(2,260)

8. Taxation

	Year ended 30 June 2014 £'000	Year ended 30 June 2013 £'000
Current tax:
UK corporation tax at current rates on profits for the year	2,036	2,382
Adjustments in respect of previous years	(64)	30
	1,972	2,412
Foreign tax	1,045	854
Adjustment in respect of previous years	(47)	(4)
Total current tax	2,970	3,262
Deferred tax credit	(458)	(1,469)
Adjustments to deferred tax in respect of previous years	11	(41)
Effect on deferred tax of change in corporation tax rate	(489)	(268)
Total deferred tax	(936)	(1,778)
Taxation	2,034	1,484

Factors affecting the tax charge for the year:

The tax assessed is higher (2013: higher) than the average rate of corporation tax in the UK of 22.50% (2013: 23.75%). The differences are explained below:

	Year ended 30 June 2014  £'000	Year ended 30 June 2013 £'000
Profit before Tax	8,592	5,116
Profit multiplied by the average rate of corporation tax in the year of 22.50% (2013: 23.75%)	1,933	1,215
Tax effects of:
Depreciation and amortisation in excess of capital allowances	523	124
Impairment not allowable for tax	-	1,069
Foreign tax rate differences	358	179
Adjustment in respect of previous years	(111)	26
Profit on sale of property on which no tax is payable	-	(790)
Other items not subject to tax	(180)	(71)
Effect on deferred tax of change of corporation tax rate from 23% to 21% (2013: 24% to 23%)	(489)	(268)
Taxation	2,034	1,484

On 2 July 2013, the UK corporation tax rate was reduced from 23% to 21% from 1 April 2014 and 20% from 1 April 2015. This change has been substantively enacted at the balance sheet date and, therefore, is included in these financial statements. As deferred tax assets and liabilities are measured at the rates that are expected to apply in the periods of the reversal, deferred tax balances at 30 June 2014 have been calculated using a rate of 21% or 20%, as appropriate, giving rise to a reduction in the net deferred tax liability of £489,000 (2013: £268,000). The Company's profits for this accounting year are taxed at an effective rate of 22.50%.

9. Dividends

Amounts recognised as distributions to owners of the parent in the year:

	Year ended 30 June 2014 pence per share	Year ended 30 June 2013 pence per share	Year ended 30 June 2014 £'000	Year ended 30 June 2013 £'000
Final dividends recognised as distributions in the year	3.5	3.5	2,974	2,973
Interim dividends recognised as distributions in the year	3.6	3.5	3,084	2,974
Total dividends paid			6,058	5,947
Final dividend proposed	3.7	3.5	3,170	2,974

 

10. Earnings per share

Adjusted earnings per share has been calculated using adjusted earnings calculated as profit after taxation and non-controlling interests but before:

·      Amortisation of intangible assets - publishing rights, titles and benefits;

·      Impairment of goodwill;

·      Gain on the disposal of property;

·      Unwinding of the discount on the provisions for the future purchase of non-controlling interests and deferred consideration;

·      Share-based payments; and

·      Other adjusting items.

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

	Year ended 30 June 2014 £'000	Year ended  30 June 2013 £'000
Earnings from continuing operations for the purpose of basic earnings per share	6,485	3,537
Add/(remove):
Amortisation of intangible assets - publishing rights, titles and benefits	6,286	6,105
Impairment of goodwill	-	4,500
Gain on disposal of property	-	(3,325)
Other adjusting items	764	1,325
Share based payments	924	888
Unwinding of the discount on the provisions for the future purchase of non-controlling interests deferred consideration	39	93
Tax effect	(1,868)	(2,057)
Adjusted earnings for the purposes of adjusted earnings per share	12,630	11,066

	Number	Number
Weighted average number of ordinary shares for the purposes of basic and adjusted earnings per share	85,408,893	84,727,804
Effect of dilutive potential ordinary shares:
Future exercise of share awards and share options	1,950,638	1,992,729
Deferred consideration to be settled by equity	372,855	156,550
Weighted average number of ordinary shares for the purposes of diluted and adjusted diluted earnings per share	87,732,386	86,877,083
Basic earnings per share	7.59p	4.17p
Diluted earnings per share	7.39p	4.07p
Adjusted basic earnings per share ('Adjusted Earnings Per Share'')	14.79p	13.06p
Adjusted diluted earnings per share	14.40p	12.74p

11. Acquisitions and disposals

 

Business combinations

The Group acquired the trading assets and certain liabilities of Compliance Week, the leading provider of governance, risk and compliance ('GRC') information and events for public companies and large enterprises, primarily in the US, on 15 August 2013 from Haymarket Media, Inc. Compliance Week was acquired for consideration of $11.22m (£7.3m) in cash. Subsequently, $0.2m (£0.1m) was repaid to the Group in respect of the final working capital adjustment. Further contingent consideration of up to $3.0m (£1.8m) is potentially payable in cash, subject to Compliance Week achieving challenging growth targets in the financial year ending 30 June 2015.

Acquisition related costs of £0.3m have been recognised as part of the costs written off relating to both successful and abortive acquisitions of £0.4m shown as other adjusted items in the income statement (see note 6).

The acquisition of Compliance Week is consistent with Wilmington's strategy of acquiring businesses with high repeat revenues and strong, cash generative income streams in the Group's key markets. This business forms part of the Banking & Compliance Division and works closely with other Group companies, providing them with closer access to their North American customers and markets, as well as opportunities for developing new revenue streams.

Details of the purchase consideration, the net assets acquired and goodwill for the acquisition are as follows:

	£'000
Purchase consideration:
Initial cash paid	7,411
Cash received in respect of final working capital adjustment	(129)
Net purchase consideration	7,282

The provisional fair values of assets and liabilities recognised as a result of this acquisition are as follows:

	Provisional fair value £'000
Customer relationships	1,446
Data	698
Brand	1,322
Other intangible assets	499
Total intangible assets (see note 13)	3,965
Trade and other receivables (net of allowances)	558
Subscriptions and deferred revenue	(1,206)
Net identifiable assets acquired	3,317
Goodwill (see note 12)	3,965
Net assets acquired	7,282

The goodwill is attributable to Compliance Week's strong position and profitability in trading in the international compliance and regulatory information market, the new product development potential and synergies to arise after the Group's acquisition of the new business.

The acquired business contributed revenues of £3,203,000 and contribution of £878,000 (£792,000 after adjusting items) to the Group for the period from the date of acquisition to 30 June 2014. If the acquisition had occurred on 1 July 2013, consolidated revenue and consolidated operating profit before adjusting items for the twelve months ended 30 June 2014 would have been £90,244,000 and £18,688,000 respectively.

Non-controlling interests

During the year, the Group acquired an additional 20.0% of the issued share capital of Mercia NI Limited and Mercia Ireland Limited for £58,000 thus increasing the ownership in these businesses to 80.0%.

12. Goodwill

Cost	£'000
At 1 July 2012	77,343
Acquisitions	3,291
Change in provisions for the future purchase of non-controlling interests	(99)
Movement in offset of provisions for the future purchase of non-controlling interests	(3)
At 1 July 2013	80,532
Additions	60
Acquisitions (see note 11)	3,965
Exchange translation differences	(443)
Movement in offset of provisions for the future purchase of non-controlling interests	(9)
At 30 June 2014	84,105
Accumulated impairment
At 1 July 2012	2,750
Impairment charge	4,500
At 1 July 2013 and 30 June 2014	7,250
Net book amount
At 30 June 2014	76,855
At 30 June 2013	73,282
At 1 July 2012	74,593

The Group tests goodwill 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 the Board 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, cash flow forecasts and long-term growth rates. Management has used a pre-tax discount rate of 12.3% (2013: 12.3%) across all CGUs except for the Healthcare, Legal and Business Intelligence CGU which had a pre-tax discount rate of 13.3% (2013: 13.3%) to reflect the greater market challenges and risks. These pre-tax discount rates reflect current market assessments for the time value of money and the risks associated with the CGUs as the Group manages its treasury function on a Group-wide basis. The same discount rate has been used for all CGUs except Healthcare, Legal and Business Intelligence, 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 CGU and are 2.0% (2013: 2.0%).

Managements impairment calculations based upon the above assumptions show significant headroom. There are no CGU's which management consider a reasonable possible change in a key assumption would give rise to any impairment.

13. Intangible assets

	Group
	Publishing rights, titles and benefits £'000	Computer software £'000	Total £'000
Cost
At 1 July 2012	59,395	4,165	63,560
Additions	262	764	1,026
Acquisitions	5,784	-	5,784
Exchange translation differences	21	-	21
At 1 July 2013	65,462	4,929	70,391
Additions	22	933	955
Acquisitions	3,965	-	3,965
Disposals	(3,002)	-	(3,002)
Exchange translation differences	(565)	-	(565)
At 30 June 2014	65,882	5,862	71,744
Accumulated amortisation
At 1 July 2012	29,153	2,885	32,038
Charge for year	6,105	755	6,860
At 1 July 2013	35,258	3,640	38,898
Charge for year	6,286	816	7,102
Disposals	(3,002)	-	(3,002)
At 30 June 2014	38,542	4,456	42,998
Net book amount
At 30 June 2014	27,340	1,406	28,746
At 30 June 2013	30,204	1,289	31,493
At 1 July 2012	30,242	1,280	31,522

The prior year includes an accelerated amortisation charge of £748,000 to reflect a reduction in the useful life of the Group's legacy print businesses.

14. Property, plant and equipment

Group	Freehold property £'000	Long leasehold property £'000	Short leasehold property  £'000	Fixtures and fittings £'000	Computer equipment £'000	Motor vehicles £'000	Total  £'000
Cost
At 1 July 2012	3,051	3,999	148	3,140	5,320	469	16,127
Additions	-	-	22	550	528	117	1,217
Acquisitions	-	-	-	23	12	-	35
Sale of subsidiary undertakings	-	-	-	(70)	-	-	(70)
Disposals	-	-	(31)	(843)	(2,000)	(112)	(2,986)
Transfer to assets held for sale	(1,049)	(44)	-	(45)	(34)	-	(1,172)
Exchange translation differences	-	-	10	10	27	-	47
At 1 July 2013	2,002	3,955	149	2,765	3,853	474	13,198
Additions	-	-	74	172	588	49	883
Disposals	-	-	(61)	(107)	(635)	(41)	(844)
Exchange translation differences	-	-	(8)	(13)	(35)	-	(56)
At 30 June 2014	2,002	3,955	154	2,817	3,771	482	13,181
Accumulated depreciation
At 1 July 2012	338	1,900	101	2,264	4,591	161	9,355
Charge for the year	65	161	2	341	369	105	1,043
Impairment	258	37	-	24	6	-	325
Sale of subsidiary undertakings	-	-	-	(68)	-	-	(68)
Disposals	-	-	(29)	(789)	(2,000)	(76)	(2,894)
Transfer to assets held for sale	(391)	(44)	-	(45)	(34)	-	(514)
Exchange translation differences	-	-	9	4	29	-	42
At 1 July 2013	270	2,054	83	1,731	2,961	190	7,289
Charge for the year	31	150	21	306	415	102	1,025
Disposals	-	-	(54)	(82)	(635)	(39)	(810)
Exchange translation differences	-	-	(5)	(11)	(34)	-	(50)
At 30 June 2014	301	2,204	45	1,944	2,707	253	7,454
Net book amount
At 30 June 2014	1,701	1,751	109	873	1,064	229	5,727
At 30 June 2013	1,732	1,901	66	1,034	892	284	5,909
At 1 July 2012	2,713	2,099	47	876	729	308	6,772

Included in freehold property is £970,000 (2013: £970,000) of non-depreciated land.

15. Trade and other receivables

	Group
	30 June 2014 £'000	30 June 2013 £'000
Current
Trade receivables	17,917	17, 211
Other receivables	2,230	2,022
Prepayments and accrued income	2,242	2,146
	22,389	21,379

16. Derivative financial assets and liabilities

	Group
Current assets	30 June 2014 £'000	30 June 2013 £'000
Forward currency contracts	37	-
Current liabilities
Interest rate swaps - maturing in November 2014	(78)	(63)
Non-current liabilities
Interest rate swaps - maturing in November 2016	(490)	(1,096)

17. Trade and other payables

	Group
	30 June 2014 £'000	30 June 2013 £'000
Trade payables	3,429	3,995
Other payables	2,233	2,623
Social security and other taxes	3,746	3,591
Subscriptions and deferred revenue	19,591	18,563
Accruals	11,636	10,482
	40,635	39,254

18. Borrowings

	Group
Current liability	30 June 2014  £'000	30 June 2013 £'000
Bank overdrafts	642	890
Non-current liability
Bank loans	38,041	40,286
Capitalised loan arrangement fees	(368)	(535)
Bank loans net of loan arrangement fees	37,673	39,751

The Group has an unsecured committed bank facility of £65.0m (2013: £65.0m) to February 2016. The facility currently comprises a revolving credit facility of £60.0m (2013: £60.0m) and an overdraft facility across the Group of £5.0m (2013: £5.0m). At 30 June 2014, £38.0m of the revolving credit facility was drawn down (2013: £40.3m). Interest is charged on the amount drawn down at between 2.00 and 2.75 per cent above LIBOR depending upon leverage, and drawdowns are made for periods of up to six months in duration. Interest is charged on the drawn element of the overdraft facility at 2.25% above the Barclays bank base rate. The Group also pays a fee of 0.9% on the undrawn element of the credit facility and 0.09% on the undrawn overdraft. The Group has complied at all times with the covenant requirements of the bank facility arrangement.

19. Non-controlling interests

	Non-controlling interests - share of assets and funds £'000	Non-controlling interests - provisions for future acquisition £'000	Net Non- controlling interests £'000
At 1 July 2012	1,107	(1,107)	-
Profit for the year	95	-	95
Dividends paid	(27)	-	(27)
New contribution from non-controlling interest	80	-	80
Acquisition of non-controlling interests during the year	(982)	982	-
Movement in offset of provisions for the future purchase of non-controlling interests	-	(3)	(3)
At 1 July 2013	273	(128)	145
Profit for the year	73	-	73
Dividends paid	(26)	-	(26)
Acquisition of non-controlling interests during the year	(58)	58	-
Movement in offset of provisions for the future purchase of non-controlling interests	52	(9)	43
At 30 June 2014	314	(79)	235

20. Cash generated from operations

	Group
	Year ended 30 June 2014 £'000	Year ended 30 June 2013 £'000
Profit from continuing operations before income tax	8,592	5,116
Gain on disposal of property	-	(3,325)
Cash flows from other adjusting items (see note 6)	764	1,325
Depreciation of property, plant and equipment	1,025	1,043
Impairment of goodwill	-	4,500
Amortisation of intangible assets (see note 13)	7,102	6,860
Loss on disposal of property, plant and equipment	34	94
Share based payments (including social security costs)	924	888
Net finance costs (see note 7)	2,138	2,256
Operating cash flows before movements in working capital	20,579	18,757
(Increase)/decrease in trade and other receivables	(452)	64
Increase in trade and other payables	77	564
Cash generated from operations before adjusting items	20,204	19,385

Cash conversion is calculated as a percentage of cash generated by operations to Adjusted EBITA as follows:

	Year ended 30 June 2014 £'000	Year ended 30 June 2013 £'000
Funds from operations before adjusting items:
Adjusted EBITA (see note 3)	18,704	16,865
Amortisation of intangible assets - computer software	816	755
Depreciation of property, plant and equipment	1,025	1,043
Loss on disposal of property, plant and equipment	34	94
Operating cash before movement in working capital	20,579	18,757
Net working capital movement	(375)	628
Funds from operations before adjusting items	20,204	19,385
Cash conversion	108%	115%
Free cash flows:
Operating cash before movement in working capital	20,579	18,757
Loss on disposal of property, plant and equipment	(34)	(94)
Net working capital movement	(375)	628
Net finance costs paid	(1,863)	(2,011)
Tax paid	(3,285)	(2,926)
Purchase of property, plant and equipment	(883)	(1,217)
Purchase of intangible assets	(955)	(764)
Free cash flows	13,184	12,373

 

END

 

 

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