Interim Results - 6 Months to 31 August 1999

WILMINGTON GROUP PLC 15 October 1999 INTERIM RESULTS FOR THE SIX MONTHS TO 31ST AUGUST 1999 * Trading profits increase by 15.1% * Operating cash inflow increases by 48.1% * Adjusted earnings per share before amortisation of goodwill increases by 11.0% from 3.26p to 3.62p * Consolidation of major acquisition Brian Gilbert, Chief Executive of Wilmington Group reports: 'I am delighted to announce to our shareholders another set of favourable results which continue our unbroken record of growth. The major highlight of the period was the acquisition on 9th June 1999 of Central Law Group, the leading provider of post-qualification legal training in the UK. This acquisition has reinforced our already strong position in the supply of information to professional markets which will now account for 35% of Group turnover. Our results reflect the brief period for which Central Law Group has been consolidated and includes a budgeted seasonal loss in the summer months, after the interest cost on the borrowings raised to finance this acquisition. I remain confident of reporting a satisfactory result for the year. The contribution for a full six months from Central Law Group, together with an increased publishing programme, will produce results which are more weighted to the second half. The prospects for our industry are exciting. There is a marked increase in both acquisition prospects and the extraordinary pace at which business to business e-commerce is developing. We remain uniquely placed to take advantage of these opportunities.' For further information please contact:- Brian Gilbert, Chief Executive Wilmington Group plc Tel: 0171 251 6499 Basil Brookes, Finance Director Wilmington Group plc Tel: 0171 251 6499 John Webb Marshall Securities Ltd Tel: 0171 490 3788 Tim Linacre WestLB Panmure Ltd Tel: 0171 638 4010 CHAIRMAN'S STATEMENT RESULTS FOR THE SIX MONTHS ENDED 31ST AUGUST 1999 I am delighted to announce another set of good results for Wilmington Group plc for the six months to 31st August 1999. A combination of improving profits from existing businesses and the initial results of our recent acquisition, Central Law Group (CLG), which was acquired in June 1999, have created further increases in turnover and operating profit. The contribution for a full six months from this acquisition, together with an increased publishing programme, will produce results which are more weighted to the second half. The total results for the first six months of the year reflect the brief period for which CLG has been consolidated including a budgeted seasonal loss in the summer months, after the interest cost on the borrowings raised to finance its acquisition. Accordingly, comparison of the results with those of the same period last year is distorted. Profit before interest, tax and amortisation of goodwill and intangible assets ('adjusted profit') for the six months to 31st August 1999 increased by 15.1 per cent. to #3,996,000 from #3,473,000. Adjusted profit after interest, the charge for which rose both significantly and in line with expectations after the expenditure on the acquisition of CLG, rose by 9.0 per cent. to #3,725,000 from #3,417,000. Profit attributable to shareholders, which is after the amortisation of goodwill and intangible assets, fell by 5.7 per cent. from #1,902,000 to #1,793,000, largely as a result of the acquisition of CLG creating an increase in non cash amortisation charges of 107.9 per cent. from #433,000 to #900,000. Consequently, earnings per share fell by 6.0 per cent. from 2.67p to 2.51p. However, adjusted earnings per share, which is calculated before the amortisation of goodwill and intangible assets, rose by 11.0 per cent. from 3.26p to 3.62p. The strong cash generative characteristics of our business were underlined by net cash inflow from operating activities of #4,452,000, an increase of 48.1 per cent. from #3,007,000 in 1998. In accordance with existing policy we intend to pay one final annual dividend in June. BUSINESS REVIEW Wilmington addresses the information requirements of professional business communities and has developed a selection of leading brands in vertical markets. The focus of our corporate strategy is to provide information to these markets through magazines, directories, electronic information, events and other media. We aim to continue to build long-term revenue streams in these markets. Ownership of our key products and content is a defining characteristic of our Group. On 9th June 1999, Wilmington acquired CLG. Operating under the 'Central Law Training' brand, CLG is a major provider of post-qualification legal training and has expanded into legal publishing and high quality legal conferences. The first six month's figures include a loss for CLG after finance costs and before amortisation for the period from acquisition to 31st August 1999. This includes the holiday period of July and August during which the number of scheduled training events is significantly less than normal. We are actively investing time and money to take advantage of the consolidation opportunities of the CLG acquisition from which the main benefits will emerge next year. Overall turnover of the existing business has been broadly equal to last year. The publication date of a number of products has been moved to the second six months. Also, a number of products have faced static markets. However, margins have improved, in particular from our information service business as an increasing proportion of products are published electronically. We have been consistently increasing the pace of investment in electronic publishing. Not only have we launched a specialist business ISP under the name ConnectingBusiness.com but are actively developing numerous income generating electronic initiatives based on our own brands. We are already enjoying improved margins in some areas whilst making this investment and bearing the development costs for products which will enhance our profitability in the near future. OUTLOOK The Group has started the second half well and we are confident of reporting a satisfactory result for the year. The integration of CLG has started smoothly and we are already enjoying some of the benefits that were projected at the time of its acquisition. In addition, in our industry, there is currently a marked increase in both acquisition prospects and, more significantly, in the extraordinary pace at which business to business e-commerce is developing. We are uniquely placed to take advantage of these opportunities. We were delighted to strengthen our Board with the appointment of an additional non-executive director, Richard Magee, in August 1999. Mr Magee was formerly Chairman of Tullett & Tokyo Forex International Limited, a premier international financial services house operating in numerous markets with offices in Europe, North America, the Far East and the Middle East. Mr Magee's experience in managing international and fast growing businesses will enable him to contribute significantly to the Wilmington Group. I would like to thank my fellow directors, senior management and the Group's employees for their continued excellent performance. Dennis Rooke Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT Six months Six months Year ended ended ended 31st August 31st August 28th February 1999 1998 1999 (unaudited) (unaudited) (audited) Continuing operations Acquisitions Total Notes #'000 #'000 #'000 #'000 #'000 Turnover 22,388 2,015 24,403 22,469 44,642 Cost of sales (6,622) (1,174) (7,796) (7,297) (13,789) --------- ------- -------- -------- ------- Gross profit 15,766 841 16,607 15,172 30,853 Operating expenses (12,029) (582) (12,611) (11,699) (23,472) Amortisation of goodwill and intangible assets (473) (427) (900) (433) (867) Operating profit 3,264 (168) 3,096 3,040 6,514 ====== ====== Interest payable and similar charges (305) (56) (74) Interest receivable and similar income 34 - 4 ------- ------ ------ Profit on ordinary activities before taxation 2,825 2,984 6,444 Taxation 2 (1,007) (1,025) (1,866) ------- ------ ------ Profit on ordinary activities after taxation 1,818 1,959 4,578 Minority interests (25) (57) (239) ----- ------ ------ Profit for the period and attributable to shareholders 1,793 1,902 4,339 Dividends - - (1,235) ------ ------ ----- Retained profit for the period 1,793 1,902 3,104 ====== ===== ====== Earnings per ordinary share 3 2.51p 2.67p 6.08p ====== ====== ====== Diluted earnings per ordinary share 3 2.47p 2.64p 6.02p ====== ====== ====== Adjusted earnings per ordinary share 4 3.62p 3.26p 7.26p ====== ====== ====== There were no other recognised gains or losses in the six months ended 31st August 1999 (1998 #Nil) apart from those shown in the profit and loss account. CONSOLIDATED BALANCE SHEET As at As at As at 31st August 31st August 28th February 1999 1998 1999 (unaudited) (unaudited) (audited) #'000 #'000 #'000 Fixed assets Goodwill and intangible assets 48,726 14,639 15,162 Tangible assets 7,450 5,862 6,066 ------- ------- ------- 56,176 20,501 21,228 ------- ------- ------- Current assets Stock and work in progress 1,239 1,080 1,240 Debtors 10,068 7,833 9,351 Cash at bank and in hand - - 1,131 -------- ------- ------- 11,307 8,913 11,722 Creditors: Amounts falling due within one year (19,375) (11,247) (13,331) ------- ------- ------- Net current liabilities (8,068) (2,334) (1,609) ------- ------- ------- Total assets less current liabilities 48,108 18,167 19,619 Creditors: Amounts falling due after more than one year (20,000) - - ------- ------- ------- Net assets 28,108 18,167 19,619 ====== ====== ====== Capital and reserves Called up share capital 3,577 3,567 3,573 Share premium account 6,652 6,555 6,612 Other reserves 949 949 949 Profit and loss account 9,812 6,821 8,019 ------- ------- ------ Shareholders' funds 20,990 17,892 19,153 Minority interests 7,118 275 466 ------- ------ ------ 28,108 18,167 19,619 ====== ====== ====== CONSOLIDATED CASH FLOW Six months ended Six months ended Year ended 31st August 31st August 28th February 1999 1998 1999 (unaudited) (unaudited) (audited) Note #'000 #'000 #'000 Reconciliation of operating profit to net cash inflow from operating activities: Operating profit 3,096 3,040 6,514 Adjustment for items not involving the flow of funds 1,465 1,065 1,885 Net working capital movement 5 (109) (1,098) (825) ------ ------ ------ Net cash inflow from operating activities 4,452 3,007 7,574 Returns on investments and servicing of finance ------ ------ ------- Net interest paid (200) (56) (70) Dividend paid to minority shareholders in subsidiary undertaking - - (30) ------- ------ ------ Net cash outflow (200) (56) (100) Taxation Tax paid - - (1,535) Capital expenditure and financial investment ------- ------ ------ Purchase of goodwill and intangible assets (482) (114) (271) Purchase of tangible fixed assets (872) (1,045) (1,740) Sale of tangible fixed assets 54 121 125 ------ ------ ----- Net cash outflow (1,300) (1,038) (1,886) Acquisitions and disposals Purchase of subsidiary undertakings (25,274) - (94) Equity dividends paid (1,237) (1,027) (1,027) -------- ------ ------- Cash(outflow)/inflow before financing (23,559) 886 2,932 Financing ------- ------- ------- Issue of shares 44 - 63 Receipt/(repayment) of secured bank loan 20,000 (1,000) (1,000) ------- ------- ------- 20,044 (1,000) (937) ------- ------- ------- (Decrease)/increase in cash (3,515) (114) 1,995 ====== ====== ====== Reconciliation of net cash flow to movement in net(debt)/cash Six months ended Six months ended Year ended 31st August 31st August 28th February 1999 1998 1999 (unaudited) (unaudited) (audited) #'000 #'000 #'000 (Decrease)/increase in cash in the period (3,515) (114) 1,995 Cash(inflow)/outflow from (increase)/decrease in net debt (20,000) 1,000 1,000 -------- ------ ------- Change in net(debt)/cash resulting from cash flow (23,515) 886 2,995 Arising on acquisition 1,848 - (550) Net cash/(debt) brought forward 581 (1,864) (1,864) -------- ------- ------- Net(debt)/cash carried forward (21,086) (978) 581 ======= ====== ====== NOTES 1. Nature of information The interim accounts for the six months ended 31st August 1999 are neither audited nor reviewed by the Company's auditors. The comparative figures for the year ended 28th February 1999 do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985 but are abridged from such accounts which have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors on such accounts was unqualified. The interim accounts are prepared on the basis of the accounting policies set out in the accounts of the Group for the year ended 28th February 1999. 2. Taxation There is a taxation charge for the six months ended 31st August 1999 of #1,007,000 based on the Group's profits for the period at current corporation tax rates. 3. Earnings per ordinary share Earnings per share is calculated on the basis of profit on ordinary activities after taxation and minority interests divided by 71,506,890 (1998 - 71,329,635) being the weighted average number of ordinary shares of 5p in issue. The diluted earnings per share is calculated on the basis of profit on ordinary activities after taxation and minority interests divided by 72,472,143 (1998 - 72,077,380) being the diluted weighted average number of ordinary shares of 5p. 4. Adjusted earnings per ordinary share In order to show results on a comparable basis to prior years before adoption of FRS 10 'Goodwill and Intangible Assets', an adjusted earnings per ordinary share has been calculated using an adjusted profit after taxation and minority interest but before amortisation of goodwill and intangible assets of #2,592,000 (1998 - #2,322,000). 5. Net working capital movement Six months ended Six months ended Year ended 31st August 31st August 28th February 1999 1998 1999 (unaudited) (unaudited) (audited) #'000 #'000 #'000 Decrease in stock and work in progress 157 115 7 Decrease/(increase) in debtors 1,261 764 (403) (Decrease) in creditors (1,527) (1,977) (429) ------ ------ ------- (109) (1,098) (825) ====== ====== ====== 6. Computers and the year 2000 The year 2000 review of all systems that use digital technology has not uncovered any material issues. Where necessary, hardware and operating systems have been upgraded or replaced on an accelerated basis to ensure compliance. All additional compliance costs have been written off as incurred. These costs have not been material. All internal systems which will be operating on 1st January 2000 have been tested and found to be substantially compliant in all material respects. In addition, steps have been taken where possible, to ensure that external suppliers are year 2000 compliant. However, we cannot guarantee that all external interfaces will not have an impact on the business. Copies of this report are available from the Company's registered office at Paulton House, 8 Shepherdess Walk, London N1 7LB.

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