Interim Results
Wilmington Group Plc
16 March 2006
Embargoed until 0700 16 March 2006
WILMINGTON GROUP PLC
('Wilmington', 'the Group' or 'the Company')
Interim Results for the six months to 31 December 2005
Wilmington Group plc, the information and training group, today announces its
interim results for the six months to 31 December 2005.
Highlights
• A period of significant progress
• Good levels of trading activity
• Strong financial performance:
- Revenue up 8% to £40 million
- Pre-tax profit up 41% to £3.5 million
- Adjusted EPS up 10% to 3.74p
- Dividend per share up 13% to 1.3p
• Continued development of business portfolio
• Outlook continues to be encouraging
Charles Brady, Chief Executive, commented:
'Wilmington's strategy is to generate sustainable and growing profits from
servicing the information and training requirements of key professional business
markets. In the six months to 31 December 2005 we have made substantial progress
in creating a focused dynamic group. At the same time we achieved adjusted
earnings per share growth of 10% and have increased our interim dividend by 13%.
'The outlook for the full year continues to be encouraging. As in previous years
we expect that the Group's performance will be weighted to the second half of
the financial year.'
- ends -
For further information, please contact:
Wilmington Group Plc On the day: 020 7422 6804
Charles Brady, Chief Executive Thereafter: 0121 355 0900
Basil Brookes, Finance Director
Weber Shandwick Square Mile 020 7067 0700
Nick Oborne, Kirsty Raper or Yvonne Alexander
Note to Editors
Wilmington Group plc is one of the UK's leading providers of information and
training for professional business markets. The Group provides training,
arranges industry events and publishes magazines, directories, databases, and
special reports focused primarily on its four principal sectors of Legal &
Regulatory, Healthcare, Media and Entertainment and Design and Construction.
Capitalised at approximately £157 million, Wilmington floated on the London
Stock Exchange in 1995.
Embargoed until 0700 16 March 2006
WILMINGTON GROUP PLC
('Wilmington', 'the Group' or 'the Company')
Interim Results for the six months to 31 December 2005
CHAIRMAN'S STATEMENT
I am pleased to announce the results for Wilmington Group plc for the six months
to 31 December 2005, which are presented under International Financial Reporting
Standards ('IFRS') for the first time.
In a pleasing first half, our trading performance was ahead of the corresponding
period in 2004. Revenue in the six months to 31 December 2005 from continuing
operations increased by 8% to £40m (2004: £37m). Profit on ordinary activities
before taxation and amortisation increased by 32% to £4.6m (2004: £3.5m) and
profit before taxation increased by 41% to £3.5m (2004: £2.5m).
Adjusted basic earnings per share from continuing operations (before
amortisation and non-recurring costs) increased by 10% to 3.74p (2004: 3.40p);
noting that in the six months to 31 December 2004 non-recurring costs of £917k
were incurred relating to restructuring and reorganisation. Basic earnings per
share from continuing operations increased by 58% to 2.64p (2004: 1.67p).
Earnings per share from continuing and discontinued operations (including the
aggregate profit from disposals), increased by 94% to 2.80p per share (2004:
1.44p).
An interim dividend for the current year of 1.3p per share (2004: 1.15p per
share) will be paid on 7 April 2006 to shareholders on the register on 24
March 2006.
Business Review
Wilmington has made significant progress during the six months to 31 December
2005 and this is illustrated by the level of activity during the last few
months.
Our Legal and Regulatory Division has seen considerable momentum. Turnover
increased by 16% with profits marginally ahead of the corresponding period in
the prior year. A series of internal investments in new products and systems
have been made which have resulted in extra costs in the current period which
should benefit the division this year and beyond. The one-off benefit from the
Immigration and Asylum accreditation scheme that assisted our performance last
year has been compensated for by other new activity. We acquired Quorum Training
in May 2005 and an 85% stake in the Ark Group in October 2005.
The Healthcare division has made good progress in the six months to 31 December
2005, benefiting from previous investment in the development of new products.
New launches continue and include APM Health Europe, a news service providing
information on the major European health markets aimed at senior executives in
pharmaceutical, financial and PR companies. Approximately £300k of development
expenditure will be spent on APM Health Europe in the current financial year.
Notwithstanding this we remain on track to achieve our full year profit
expectations.
In Media and Entertainment a challenging trading environment has had an adverse
impact on revenues and margin. We anticipate some recovery in the second half of
our financial year with continued growth from our music information activities.
At this time last year I indicated changes to the management structure and
substantial property reorganisation in our Design and Construction division.
Accordingly, I am pleased to report this division has made a contribution before
amortisation of £0.2m compared to break even in the prior year.
In September 2005 we disposed of our portfolio of Drinks magazines and events
for £2.2m and in October 2005 we disposed of TMSS, the royalty reporting
service. In the six months to 31 December 2005 there was an aggregate profit
after taxation from discontinued operations (including disposal profits) of
£126,000.
During the period under review we also acquired the outstanding minority
interests in Bond Solon Training, Pendragon Professional Information and Hollis
Directories. All of these acquisitions of minority interests will benefit the
Group going forward.
In February 2006 we acquired Smee & Ford, a subscription information business
which provides legacy information to charities and a database business relating
to deceased mailing lists and related identity fraud. Smee & Ford further
strengthens our Legal and Regulatory division's activities within the charity
and financial markets.
During the six months ended 31 December 2005 we have invested £10.3m in
acquisitions and the purchasing of minority interests, recouping £2.4m from
disposals. At the end of the period net debt was £16.4m compared to £8.2m at the
beginning of the period. This is part of the ongoing investment strategy whereby
Wilmington is focusing on high quality professional information and training
businesses.
Outlook
Wilmington's strategy is to generate sustainable and growing profits from
servicing the information and training requirements of key professional business
markets. We aim to develop strong positions in those markets by focused
investment, both acquisitive and organic, and by adding new products and
delivery channels in key areas of expertise. The growing requirement for high
quality information and training amongst the professional business communities
we serve provides the board with confidence in its ability to deliver continued
growth.
The outlook for the full year continues to be encouraging. As in previous years
we expect that the Group's performance will be weighted to the second half of
the financial year.
David L Summers
Chairman
Wilmington Group plc
Consolidated Income Statement
Six months Six months Twelve Months
ended ended ended
31 December 31 December 30 June
2005 2004 2005
(unaudited) (unaudited) (unaudited)
Notes £'000 £'000 £'000
Revenue 2 40,048 37,033 80,505
Cost of sales (15,453) (13,242) (27,463)
____________________________________________
Gross profit 24,595 23,791 53,042
Administration expenses (19,509) (19,832) (40,876)
Amortisation and impairment (1,143) (1,038) (3,433)
____________________________________________
Profit from operations 3,943 2,921 8,733
Finance costs (458) (452) (896)
____________________________________________
Profit on ordinary activities
before taxation 3,485 2,469 7,837
Income tax expense 3 (1,121) (812) (2,361)
____________________________________________
Profit on ordinary activities
after taxation 2,364 1,657 5,476
Profit/(loss) on discontinued
operations after taxation 4 126 (193) (283)
____________________________________________
Net profit for the period 2,490 1,464 5,193
____________________________________________
Attributable to equity holders
of the parent 2,337 1,201 4,480
____________________________________________
Minority interest 153 263 713
____________________________________________
Earnings per share attributable to
equity holders of the parent
Continuing operations: 6(a)
Basic earnings per share 2.64p 1.67p 5.71p
Diluted earnings per share 2.63p 1.67p 5.69p
Continuing and discontinued operations: 6(b)
Basic earnings per share 2.80p 1.44p 5.37p
Diluted earnings per share 2.78p 1.44p 5.35p
Consolidated Statement of Recognised Income and Expense
Six months Six months Twelve months
ended 31 ended 31 ended 30
December December June
2005 2004 2005
(unaudited) (unaudited) (unaudited)
£'000 £'000 £'000
Exchange differences on translation of
foreign operations 3 25 (16)
Actuarial gain taken directly in equity 74 39 120
Tax on items taken directly in equity (22) (12) (35)
_______________________________________
Net income recognised directly in equity 55 52 69
Net profit for the period 2,490 1,464 5,193
_______________________________________
Total recognised income and expense for the period 2,545 1,516 5,262
_______________________________________
Attributable to
Equity holders of the parent 2,392 1,253 4,549
Minority interests 153 263 713
_______________________________________
2,545 1,516 5,262
_______________________________________
Wilmington Group plc
Consolidated Balance Sheet
As at As at As at
31 December 31 December 30 June
2005 2004 2005
(unaudited) (unaudited) (unaudited)
£'000 £'000 £'000
Non-current assets
Goodwill 48,302 37,701 41,734
Intangible assets 24,208 29,152 26,926
Property, plant and equipment 11,424 12,338 11,830
Deferred tax asset 148 180 234
____________________________________
84,082 79,371 80,724
____________________________________
Current assets
Inventories 1,948 2,039 1,557
Trade and other receivables 16,328 15,803 17,803
Cash 3,181 1,668 1,841
____________________________________
21,457 19,510 21,201
____________________________________
Total assets 105,539 98,881 101,925
____________________________________
Current liabilities
Trade and other payables (22,887) (24,941) (27,715)
Tax liabilities (1,128) (855) (1,501)
Bank overdrafts and loans (3,601) (3,405) (37)
____________________________________
(27,616) (29,201) (29,253)
Non-current liabilities
Bank loans (16,000) (9,000) (10,000)
Retirement benefit obligation (292) (453) (378)
Deferred tax liability (2,602) (3,492) (2,775)
____________________________________
(18,894) (12,945) (13,153)
____________________________________
Total liabilities (46,510) (42,146) (42,406)
____________________________________
Net assets 59,029 56,735 59,519
____________________________________
Equity
Share capital 4,180 4,167 4,180
Share premium account 42,658 42,363 42,658
Capital reserve 949 949 949
Translation reserve (13) 25 (16)
Share option reserve 74 40 57
Retained earnings 9,823 7,104 9,481
____________________________________
Equity shareholders' funds 57,671 54,648 57,309
Minority interests 1,358 2,087 2,210
____________________________________
Total equity 59,029 56,735 59,519
____________________________________
Wilmington Group plc
Consolidated Cash Flow Statement
Six months Six months Twelve
ended 31 ended 31 months
December December ended 30
2005 2004 June 2005
(unaudited) (unaudited) (unaudited)
Note £'000 £'000 £'000
Net cash flow from operating activities 8 1,660 2,025 10,711
Investing activities
Purchase of tangible fixed assets (314) (1,758) (2,314)
Sale of tangible fixed assets 9 11 150
Purchase of subsidiary undertakings
and minority interests (10,338) (3,215) (8,735)
Cash acquired on purchase of 1,137 - 214
subsidiary undertakings
Sale of subsidiary undertakings 2,414 - 450
Purchase of goodwill and intangible
assets (228) (516) (623)
____________________________________
Net cash used in investing activities (7,320) (5,478) (10,858)
____________________________________
Financing activities
Dividends paid to equity holders
of the parent (2,048) (1,667) (2,627)
Dividends paid to minority shareholders
in subsidiary undertakings (516) (79) (192)
Issue of ordinary shares - - 308
Repayment of loan notes - (1,000) (1,000)
Increase in long term loans 6,000 2,000 3,000
Increase/(decrease) in bank overdrafts 3,564 2,913 (455)
____________________________________
Net cash flows from/(used in) financing activities 7,000 2,167 (966)
____________________________________
Net increase/(decrease) in cash 1,340 (1,286) (1,113)
Cash at beginning of the period 1,841 2,954 2,954
____________________________________
Cash at end of the period 3,181 1,668 1,841
____________________________________
Notes to the Accounts
1. Statement of Accounting Policies
The significant accounting policies applied in preparing the financial
statements are as follows:
a) Basis of preparation
The unaudited financial information presented in this document has been prepared
on the basis of the expected accounting policies which the Group will comply
with in the accounts to 30 June 2006 and on the basis of all International
Financial Reporting Standards ('IFRS'), including International Accounting
Standards ('IAS') and interpretations issued by the International Accounting
Standards Board ('IASB') and its committees, and as adopted by the EU. These are
subject to ongoing amendment by the IASB and subsequent endorsement by the
European Commission and are therefore subject to possible change. As a result,
information contained within this release will require updating for any
subsequent amendment to IFRS required for first time adoption or those new
standards that the Group may elect to adopt early.
Attached as an Appendix to these statements is a document issued on 9 November
2005 setting out the effects of restatement of the Group's accounts under IFRS.
Certain figures in this Appendix have subsequently been amended to reflect a
further discontinued operation.
i) IFRS 1 exemptions
IFRS 1, 'First-time Adoption of International Financial Reporting Standards'
sets out the procedures that the Group must follow when it adopts IFRS for the
first time as the basis for preparing its consolidated financial statements. The
Group is required to establish its IFRS accounting policies as at 30 June 2005
and, in general, apply these retrospectively to determine the IFRS opening
balance sheet at its date of transition, 1 July 2004.
This standard provides a number of optional exceptions to this general
principle. The most significant of these are set out below, together with a
description in each case of the exception adopted by the Group.
• Business combinations that occurred before the opening IFRS balance
sheet date (IFRS 3, 'Business Combinations')
The Group has elected not to apply IFRS 3 retrospectively to business
combinations prior to 1 July 2004.
• Employee Benefits - actuarial gains and losses (IAS 19, 'Employee
Benefits')
The cumulative net deficit on defined benefit pension schemes and similar
benefits at the transition date has been recognised in full in equity.
• Share-based Payments (IFRS 2, 'Share-based Payment')
IFRS 2 has been applied to all grants of equity instruments after 7 November
2002 that had not vested at 1 January 2005.
• Foreign Currency Translation differences (IAS 21, 'The effects of
changes in foreign exchange rates')
The Group has taken advantage of the IFRS 1 exemption allowing the cumulative
translation difference on retranslation of subsidiaries' net assets to be set to
zero (for all subsidiaries) at the date of transition to IFRS.
ii) Presentation of financial information
The primary statements within the financial information contained in this
document have been presented in accordance with IAS 1, 'Presentation of
Financial Statements'. However, this format and presentation may require
modification in the event that further guidance is issued and as practice
develops.
b) Basis of consolidation
The consolidated financial information combines the financial statements of the
Company and its subsidiaries.
Where, on the acquisition of a business prior to 1 July 2004, all of the
specific criteria for the combination to fall within the definition of a merger
are met, merger accounting has been applied.
In all other instances prior to 1 July 2004, acquisition accounting is applied.
Fair values are attributed to the Group's share of net assets. Where the cost of
acquisition exceeds the fair values attributable to such net assets, the
difference is treated as purchased goodwill and is capitalised (see note 1(f)).
From 1 July 2004, business acquisitions have been accounted for in accordance
with IFRS 3, 'Business Combinations'. In the case of subsequent/ acquisitions of
minority interests in subsidiaries, the difference between the consideration
payable for the additional interest in the subsidiary and the minority
interest's share of the assets and liabilities reflected in the consolidated
balance sheet at the date of acquisition of the minority interest has been
treated as goodwill.
Results are consolidated from the date of acquisition of a subsidiary or to the
date of disposal of a subsidiary as appropriate.
c) Revenue
Revenue represents the invoiced value of goods sold and services provided during
the period, stated net of Value Added Tax. Subscription revenue is allocated to
the relevant accounting periods covered by the subscription. Event revenue is
recognised in the month that the event takes place. Advertising revenue is
recognised on publication. Subscriptions and fees in advance are carried forward
in trade and other payables.
d) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation.
Depreciation is not provided on freehold land. On other assets it is provided at
the following annual rates, on a straight line basis, in order to write off each
asset over its estimated useful life.
Freehold buildings 2 per cent. per annum
Leasehold properties over the term of the lease to a maximum of 50 years
Leasehold improvements 10 per cent. per annum
or over the term of the lease if less than 10 years
Motor vehicles 25 per cent. per annum
Computer equipment 25-33 per cent. per annum
Fixtures and fittings 10-20 per cent. per annum
e) Intangible assets
Intangible assets are capitalised and amortised through the income statement
over their estimated useful lives not exceeding 20 years.
Computer software that is integral to a related item of hardware is included as
property, plant and equipment. All other computer software is recorded as an
intangible asset.
f) Goodwill
Goodwill is not amortised. Instead it is subject to an annual impairment review
using discounted cash flows based on an appropriate weighted average cost of
capital.
g) Investments
Fixed asset investments are stated at cost less provision for any impairment in
value.
h) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
includes materials, direct labour, and overheads appropriate to the relevant
stage of production. Net realisable value is based on estimated selling price
less all the further costs to completion and all relevant marketing, selling and
distribution costs.
i) Foreign currencies
Assets and liabilities expressed in foreign currencies are translated into
sterling at rates of exchange ruling at the end of the financial period. Trading
activities are translated into sterling at the rate of exchange ruling at the
date of the transaction. Any resultant gain or loss on exchange is shown as part
of the period's profit or loss from ordinary activities.
Profits and losses of overseas subsidiary undertakings are translated into
sterling at average rates for the year. The balance sheets of overseas
subsidiary undertakings are translated at the rate ruling at the balance sheet
date. Differences arising from the translation of Group investments in overseas
subsidiary undertakings are dealt with in equity.
Net exchange differences classified as equity are separately tracked and the
cumulative amount disclosed as a translation reserve.
j) Taxation
Corporation tax has been provided on profit for the period at appropriate rates.
k) Deferred taxation
Deferred taxation is provided on all temporary differences between the carrying
amounts of assets and liabilities in the accounting and tax balance sheets
except where IAS 12 'Income Taxes' specifies that it should not. Deferred
taxation is measured at the tax rates that are expected to apply in the periods
in which temporary differences reverse, based on tax rates or laws enacted or
substantively enacted at the balance sheet date.
Deferred taxation is provided in respect of the Group's liabilities under its
post employment benefit arrangements and on other employee benefits such as
share and share option schemes.
l) Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
(i) Trade receivables
Trade receivables do not carry any interest and are stated at their nominal
value as reduced by appropriate allowances for estimated irrecoverable amounts.
(ii) Borrowings
Interest-bearing loans and bank overdrafts are recorded at the proceeds
received. Finance charges, including premiums payable on settlement or
redemption and direct issue costs, are accounted for on an accrual basis to the
income statement using the effective interest method.
(iii) Trade payables
Trade payable are not interest-bearing and are stated at their nominal value.
m) Operating leases
Rentals incurred in respect of operating leases are charged in the income
statement on a straight line basis.
n) Pension scheme arrangements
The Group operates a defined benefit pension scheme, for a limited number of
employees, which requires contributions to be made to a separately administered
fund. The fund is actuarially valued every three years.
The Group also contributes to defined contribution pension arrangements for a
limited number of other employees. Contributions to these arrangements are
charged in the income statement in the period in which they are incurred.
The Group accounts for its pension scheme arrangements in accordance with IAS 19
'Employee benefits'. Actuarial gains and losses are taken directly in full to
equity.
The Group's balance sheet reflects the assets less liabilities of the Group's
defined benefit schemes.
o) Share-based Payments
An expense for equity instruments granted is recognised in the financial
statements based on their fair value at the date of grant. This expense which is
in relation to employee option and performance share schemes is recognised over
the vesting period of the scheme.
IFRS 2 has been applied to all options granted after 7 November 2002 and not
vested by 1 January 2005.
The Group has adopted the Black Scholes model for the purposes of computing fair
value.
2. Segmental information
Six months Six months
ended 31 ended 31 Twelve months
December December ended 30 June
2005 2004 2005
(unaudited) (unaudited) (unaudited)
£'000 £'000 £'000
Revenue:
Legal and Regulatory 21,933 18,941 43,228
Healthcare 4,847 4,740 10,738
Media and Entertainment 3,229 3,336 6,810
Design and Construction 5,594 5,651 11,444
Other 4,445 4,365 8,285
________________________________________
40,048 37,033 80,505
________________________________________
To allow shareholders to gain a better understanding of the trading performance of the
Group, segmental results are shown both before and after allocating non-recurring costs
and amortisation.
Six months Six months
ended 31 ended 31 Twelve months
December December ended 30 June
2005 2004 2005
(unaudited) (unaudited) (unaudited)
Note £'000 £'000 £'000
Segmental results (before allocating
non-recurring costs and amortisation):
Legal and Regulatory 4,383 4,354 10,901
Healthcare 744 529 1,944
Media and Entertainment 231 411 1,142
Design and Construction 205 5 254
Other 278 226 267
________________________________________
Total segmental results 5,841 5,525 14,508
Less: unallocated central overheads (755) (649) (1,425)
________________________________________
Profit from operations before non-recurring
costs and amortisation 5,086 4,876 13,083
Less: unallocated non-recurring costs - (917) (917)
________________________________________
Profit from operations before amortisation 5,086 3,959 12,166
Less: finance costs (458) (452) (896)
________________________________________
Profit before taxation and amortisation 4,628 3,507 11,270
Less: amortisation (1,143) (1,038) (3,433)
________________________________________
Profit on ordinary activities before taxation 3,485 2,469 7,837
Income tax expense (1,121) (812) (2,361)
Profit/(loss) on discontinued operations
after taxation 4 126 (193) (283)
________________________________________
Net profit for the period 2,490 1,464 5,193
________________________________________
Segmental results (after allocating
non-recurring costs and amortisation):
Legal and Regulatory 4,153 4,151 10,439
Healthcare 411 138 1233
Media and Entertainment (5) 218 699
Design and Construction (45) (769) (779)
Other 184 (108) (1374)
________________________________________
Total segmental results 4,698 3,630 10,218
Less: unallocated central overheads (755) (709) (1,485)
________________________________________
Profit from operations 3,943 2,921 8,733
Less: finance cost (458) (452) (896)
________________________________________
Profit on ordinary activities before taxation 3,485 2,469 7,837
Tax on ordinary activities (1,121) (812) (2,361)
Profit/(loss) for the period from
discontinued operations 4 126 (193) (283)
________________________________________
Net profit for the period 2,490 1,464 5,193
________________________________________
Non-recurring costs in the six months to 31 December 2004 and twelve months to
30 June 2005 comprised restructuring costs of £917,000.
3. Income tax expense
Six months Six months Twelve months
ended 31 ended 31 ended 30
December December June
2005 2004 2005
(unaudited) (unaudited) (unaudited)
£'000 £'000 £'000
The tax charge comprises:
UK corporation tax at current rates 1,198 801 3,066
Adjustment to previous year 8 11 (17)
________________________________________
1,206 812 3,049
Foreign tax 133 184 366
________________________________________
1,339 996 3,415
Deferred tax credit (218) (184) (1,054)
________________________________________
1,121 812 2,361
________________________________________
4. Profit / (loss) for the period from discontinued operations
The results of the discontinued operations, which have been included in the
consolidated income statement, were as follows:
Notes Six months Six months Twelve months
ended 31 ended 31 ended 30
December December June
2005 2004 2005
(unaudited) (unaudited) (unaudited)
£'000 £'000 £'000
Revenue 316 2,682 4,575
Expenses (528) (2,767) (4,597)
_________________________________________
Loss before amortisation and taxation (212) (85) (22)
Amortisation (84) (134) (269)
_________________________________________
Loss before taxation (296) (219) (291)
Attributable tax credit 64 26 8
_________________________________________
Net operating loss attributable to
discontinued operations (232) (193) (283)
___________ ___________ ___________
Profit on disposal of discontinued
operations 462 - -
Attributable tax charge (104) - -
___________ ___________ ___________
358 - -
_________________________________________
_________________________________________
Profit / (loss) on discontinued
operations after taxation 126 (193) (283)
_________________________________________
5. Dividends
Amounts recognised as distributions to equity holders in the period.
Six months Six months Twelve months Six months Six months Twelve months
ended ended ended ended ended ended
31 December 31 December 30 June 31 December 31 December 30 June
2005 2004 2005 2005 2004 2005
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Pence per share Pence per share Pence per share £'000 £'000 £'000
Final dividends recognised as
distributions in the period 2.45 2.00 2.00 2,048 1,667 1,667
Interim dividends recognised
as distributions in the period - - 1.15 - - 960
_______________________________________________________________________________________
Total dividends paid 2.45 2.00 3.15 2,048 1,667 2,627
_______________________________________________________________________________________
Dividend proposed 1.30 1.15 2.45 1,087 960 2,048
_______________________________________________________________________________________
6. Earnings per share
To allow shareholders to gain a better understanding of the trading performance
of the Group, an adjusted earnings per ordinary share has been calculated using
an adjusted profit after taxation and minority interests but before amortisation
of intangible assets and post-taxation non-recurring costs.
(a) From continuing operations
The calculation of the basic and diluted earnings per share is based on the
following data:
Six months Six months Twelve
ended 31 ended 31 months
December December ended 30
2005 2004 June 2005
(unaudited) (unaudited) (unaudited)
£'000 £'000 £'000
Earnings from continuing operations for the purpose
of basic earnings per share excluding discontinued
operations 2,211 1,394 4,763
Add: Amortisation (net of minority interest effect
and deferred tax) 918 799 2,467
Non-recurring costs after taxation - 638 638
_____________________________________
Earnings for the purposes of adjusted earnings per share 3,129 2,831 7,868
_____________________________________
Number Number Number
Weighted average number of ordinary shares for the
purposes of basic and adjusted earnings per share 83,600,179 83,351,679 83,394,158
Effect of dilutive potential ordinary shares
Exercise of share options 554,211 325,463 387,373
_____________________________________
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 84,154,390 83,677,142 83,781,531
_____________________________________
Basic earnings per share 2.64p 1.67p 5.71p
Diluted earnings per share 2.63p 1.67p 5.69p
Adjusted basic earnings per share 3.74p 3.40p 9.43p
Adjusted diluted earnings per share 3.72p 3.38p 9.39p
_____________________________________
(b) From continuing and discontinued operations
Six months Six months Twelve
ended 31 ended 31 months
December December ended 30
2005 2004 June 2005
(unaudited) (unaudited) (unaudited)
£'000 £'000 £'000
Earnings from continuing operations for the purpose
of basic earnings per share excluding discontinued
operations 2,211 1,394 4,763
Adjustments to include the profit/ (loss) for the
period from discontinued operations 126 (193) (283)
_____________________________________
Earnings from continuing and discontinued operations
for the purpose of basic earnings per share 2,337 1,201 4,480
Add: Amortisation (net of minority interest effect
and deferred tax) 1,012 861 2,638
Non-recurring costs after taxation - 638 638
_____________________________________
Earnings for the purposes of adjusted earnings per share 3,349 2,700 7,756
_____________________________________
Basic earnings per share 2.80p 1.44p 5.37p
Diluted earnings per share 2.78p 1.44p 5.35p
Adjusted basic earnings per share 4.01p 3.24p 9.30p
Adjusted diluted earnings per share 3.98p 3.23p 9.26p
_____________________________________
7. Acquisitions
In October 2005 the Group acquired 85 per cent of Ark Group Limited for an
initial cash consideration of £5,355,000. At this stage the fair value of the
assets and liabilities acquired has not yet been finalised. Full details will be
given in the Group's accounts for the year ending 30 June 2006. Since
acquisition Ark Group Limited has generated revenue of £1,947,000 and made a
profit from operations of £94,000. Had the Group owned Ark Group Limited for the
whole six months since 30 June 2005 it would have generated revenue of
£3,377,000 and made a profit from operations of £69,000.
8. Net Cash from Operating Activities
Six months Six months Twelve
ended 31 ended 31 months ended
December December 30 June
2005 2004 2005
(unaudited) (unaudited) (unaudited)
£'000 £'000 £'000
Profit from operations 3,943 2,921 8,733
Operating loss from discontinued operations (296) (219) (291)
Depreciation of property, plant and equipment 808 797 1,621
Amortisation of intangible assets 1,227 1,172 3,702
(Profit)/loss on disposal of property, plant and equipment (28) (5) 36
Exchange translation differences 3 25 (16)
Share option charge 17 17 34
____________________________________
Operating cash flows before movements in working capital 5,674 4,708 13,819
(Increase)/decrease in inventories (441) (165) 251
Decrease/(increase) in receivables 2,575 1,951 (189)
(Decrease)/increase in payables (3,939) (2,870) 657
____________________________________
Cash generated by operations 3,869 3,624 14,538
Tax paid (1,786) (1,158) (2,930)
Interest paid (423) (441) (897)
____________________________________
Net cash flow from operating activities 1,660 2,025 10,711
____________________________________
9. Nature of Information
The interim accounts for the six months ended 31 December 2005 and the
comparative figures for the six months ended 31 December 2004 are neither
audited nor reviewed by the Company's auditors. The comparative figures for the
twelve months ended 30 June 2005 are not the Company's statutory accounts within
the meaning of Section 240 of the Companies Act 1985 but are abridged from such
accounts and then restated under IFRS. The financial statements for the twelve
months ended 30 June 2005 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 and did not contain any statement under Sections 237(2)
or 237(3) of the Companies Act 1985.
Copies of this report are available from the Company's registered office at
Paulton House, 8 Shepherdess Walk, London N1 7LB.
Appendix
Key Impact Analysis
The analysis below sets out the most significant adjustments arising from the
transition to IFRS for the year ended 30 June 2005. Similar adjustments arise
from the transition to IFRS for the six months ended 31 December 2004.
1) Presentation of Financial Statements
The format of the Group's primary financial statements has been presented in
accordance with IAS 1, 'Presentation of Financial Statements'.
IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' requires
the presentation of a single amount on the face of the income statement relating
to discontinued operations. The results of the Group's discontinued operations
in the year ended 30 June 2005 have been shown as a single amount in the Group's
income statement for that period.
2) Intangible Assets
(a) Goodwill and acquired intangible asset amortisation
IFRS 3 'Business Combinations' requires that goodwill is not amortised. Instead
it is subject to an annual impairment review. As the Group has elected not to
apply IFRS 3 retrospectively to business combinations prior to the opening
balance sheet date under IFRS, the UK GAAP goodwill balance at 30 June 2004
(£34.7m) has been included in the opening IFRS consolidated balance sheet and is
no longer amortised.
From 1 July 2004, business acquisitions have been accounted for in accordance
with IFRS 3, 'Business Combinations'. In the case of subsequent acquisitions of
minority interests in subsidiaries, the difference between the consideration
payable for the additional interest in the subsidiary and the minority
interest's share of the assets and liabilities reflected in the consolidated
balance sheet at the date of acquisition of the minority interest has been
treated as goodwill.
(b) Computer software
Under UK GAAP, all capitalised computer software is included within tangible
fixed assets on the balance sheet. Under IFRS, only computer software that is
integral to a related item of hardware should be included as property, plant and
equipment. All other computer software should be recorded as an intangible
asset. Accordingly, a reclassification has been made in the opening balance
sheet of £0.3m between property, plant and equipment and intangible assets.
3) Deferred and Current Taxes
The scope of IAS 12, 'Income Taxes' is wider than the corresponding UK GAAP
standards, and requires deferred tax to be provided on all temporary differences
rather than just timing differences under UK GAAP. In particular this has
resulted in deferred tax assets and liabilities being set up in respect of
differences between the accounts net book value and tax base cost of intangible
assets.
It also does not allow the deferred tax liability to be discounted which was the
Group's policy under UK GAAP.
IAS 12 also requires deferred tax to be provided in respect of the Group's
liabilities under its post employment benefit arrangements and on other employee
benefits such as share and share option schemes. The tax impact of these and
other IFRS adjustments is quantified in the relevant section of this release.
4) Share-based Payments
IFRS 2, 'Share-based Payment' requires that an expense for equity instruments
granted be recognised in the financial statements based on their fair value at
the date of grant. This expense which is in relation to employee option and
performance share schemes is recognised over the vesting period of the scheme.
IFRS 2 has been applied to all options granted after 7 November 2002 and not
vested by 1 January 2005.
The Group has adopted the Black Scholes model for the purposes of computing fair
value under IFRS.
5) Post Employment Benefits
The Group currently applies the provisions of SSAP 24 under UK GAAP and provides
detailed disclosure under FRS 17 in accounting for pensions and other
post-employment benefits.
The Group's opening IFRS balance sheet reflects the assets less liabilities of
the Group's defined benefit schemes totalling a net liability of £0.5m. The
transitional adjustment of £0.5m to opening reserves comprises the reversal of
entries in relation to UK GAAP accounting under SSAP 24 less the recognition of
the net liabilities of the Group's defined benefit schemes. The impact on the
Group's income statement arising from the adoption of the IAS 19 is a charge of
£20k. A related tax credit of £6k was recognised for the year ended 30 June
2005. A movement of £120k in respect of actuarial gains has been recognised as a
change in equity for the year ended 30 June 2005.
6) Foreign Exchange Differences
Under IAS 21, net exchange differences classified as equity must be separately
tracked and the cumulative amounts disclosed. SSAP 20 does not require separate
tracking.
7) Holiday Pay
Under IAS 19, accruals for holiday pay should be made.
8) Post Balance Sheet Events
IAS 10, 'Events after the Balance Sheet Date' requires that dividends declared
after the balance sheet date should not be recognised as a liability at that
balance sheet date as the liability does not represent a present obligation as
defined by IAS 37, 'Provisions, Contingent Liabilities and Contingent Assets'.
The final dividends proposed in relation to the financial years ended 30 June
2004 and 30 June 2005 (including those payable to minority shareholders in
subsidiaries) of £1.7m and £2.2m respectively have been reversed in the relevant
balance sheets and have been or will be charged to equity in the balance sheets
at 30 June 2005 and 30 June 2006.
Wilmington Group plc
Reconciliation of UK GAAP to IFRS consolidated balance sheet as at 1 July 2004
(date of transition)
IFRS2
UK GAAP IAS 38 Share IAS19 IAS12 IAS19
IFRS format Intangible Based Employee Deferred IAS 10 Holiday IFRS
(unaudited) Assets Payments Benefits Tax Dividends Pay (unaudited)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Goodwill 34,681 - - - - - - 34,681
Intangible assets 29,772 106 - - - - - 29,878
Property, plant and equipment 11,665 (281) - - - - - 11,384
Deferred tax asset - - 9 143 - - 89 241
_____________________________________________________________________________________
76,118 (175) 9 143 - - 89 76,184
_____________________________________________________________________________________
Current Assets
Inventories 1,874 - - - - - - 1,874
Trade and other receivables 17,802 - - - - - - 17,802
Cash 2,954 - - - - - - 2,954
_____________________________________________________________________________________
22,630 - - - - - - 22,630
_____________________________________________________________________________________
Total Assets 98,748 (175) 9 143 - - 89 98,814
_____________________________________________________________________________________
Current liabilities
Trade and other payables (30,312) - - - - 1,746 (296) (28,862)
Tax liabilities (1,028) - - - - - - (1,028)
Bank overdrafts and loans (492) - - - - - - (492)
_____________________________________________________________________________________
(31,832) - - - - 1,746 (296) (30,382)
_____________________________________________________________________________________
Non-current liabilities
Bank loans (7,000) - - - - - - (7,000)
Retirement benefit obligation - - - (478) - - - (478)
Deferred tax liability (604) - - - (3,136) - - (3,740)
_____________________________________________________________________________________
(7,604) - - (478) (3,136) - - (11,218)
_____________________________________________________________________________________
Total liabilities (39,436) - - (478) (3,136) 1,746 (296) (41,600)
_____________________________________________________________________________________
Net Assets 59,312 (175) 9 (335) (3,136) 1,746 (207) 57,214
_____________________________________________________________________________________
Capital and Reserves
Share capital 4,167 - - - - - - 4,167
Share premium account 42,363 - - - - - - 42,363
Capital Reserve 949 - - - - - - 949
Share option reserve - - 23 - - - - 23
Retained Earnings 9,743 (175) (14) (335) (3,136) 1,667 (207) 7,543
_____________________________________________________________________________________
Equity Shareholders' Funds 57,222 (175) 9 (335) (3,136) 1,667 (207) 55,045
Minority interests 2,090 - - - - 79 - 2,169
_____________________________________________________________________________________
Total equity 59,312 (175) 9 (335) (3,136) 1,746 (207) 57,214
_____________________________________________________________________________________
Wilmington Group plc
Reconciliation of UK GAAP to IFRS consolidated balance sheet as at 31 December 2004
UK GAAP IFRS2
IFRS IAS38 IFRS3 Share IAS 19 IAS12 IAS 21 IAS 19
format Intangible Business Based Employee Deferred IAS 10 Foreign Holiday IFRS
(unaudited) Assets Combinations Payments Benefits Tax Dividends Exchange Pay (unaudited)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Goodwill 34,542 - 3,159 - - - - - - 37,701
Intangible assets 30,854 182 (1,884) - - - - - - 29,152
Property, plant and
equipment 12,666 (328) - - - - - - - 12,338
Deferred tax asset - - - 15 136 - - - 29 180
__________________________________________________________________________________________________
78,062 (146) 1,275 15 136 - - - 29 79,371
__________________________________________________________________________________________________
Current Assets
Inventories 2,039 - - - - - - - - 2,039
Trade and other
receivables 15,803 - - - - - - - - 15,803
Cash 1,668 - - - - - - - - 1,668
__________________________________________________________________________________________________
19,510 - - - - - - - - 19,510
__________________________________________________________________________________________________
Total Assets 97,572 (146) 1,275 15 136 - - - 29 98,881
__________________________________________________________________________________________________
Current liabilities
Trade and other
payables (25,804) - - - - - 959 - (96) (24,941)
Tax liabilities (855) - - - - - - - - (855)
Bank overdrafts
and loans (3,405) - - - - - - - - (3,405)
__________________________________________________________________________________________________
(30,064) - - - - - 959 - (96) (29,201)
__________________________________________________________________________________________________
Non-current
liabilities
Bank loans (9,000) - - - - - - - - (9,000)
Retirement benefit
obligation - - - - (453) - - - - (453)
Deferred tax
liability (578) - - - - (2,914) - - - (3,492)
__________________________________________________________________________________________________
(9,578) - - - (453) (2,914) - - - (12,945)
__________________________________________________________________________________________________
Total liabilities (39,642) - - - (453) (2,914) 959 - (96) (42,146)
__________________________________________________________________________________________________
Net Assets 57,930 (146) 1,275 15 (317) (2,914) 959 - (67) 56,735
__________________________________________________________________________________________________
Equity
Share capital 4,167 - - - - - - - - 4,167
Share premium
account 42,363 - - - - - - - - 42,363
Capital Reserve 949 - - - - - - - - 949
Translation reserve - - - - - - - 25 - 25
Share option reserve - - - 40 - - - - - 40
Retained Earnings 8,364 (146) 1,275 (25) (317) (2,914) 959 (25) (67) 7,104
__________________________________________________________________________________________________
Equity Share-holders'
Funds 55,843 (146) 1,275 15 (317) (2,914) 959 - (67) 54,648
Minority interests 2,087 - - - - - - - - 2,087
__________________________________________________________________________________________________
Total equity 57,930 (146) 1,275 15 (317) (2,914) 959 - (67) 56,735
__________________________________________________________________________________________________
Wilmington Group plc
Reconciliation of UK GAAP to IFRS consolidated balance sheet as at 30 June 2005
UK GAAP IFRS2
IFRS IAS38 IFRS3 Share IAS 19 IAS12 IAS 21 IAS 19
format Intangible Business Based Employee Deferred IAS 10 Foreign Holiday IFRS
(unaudited) Assets Combinations Payments Benefits Tax Dividends Exchange Pay (unaudited)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Goodwill 37,413 - 4,321 - - - - - - 41,734
Intangible assets 28,315 344 (1,733) - - - - - - 26,926
Property, plant
and equipment 12,291 (461) - - - - - - - 11,830
Deferred tax asset - - - 22 113 - - - 99 234
__________________________________________________________________________________________________
78,019 (117) 2,588 22 113 - - - 99 80,724
__________________________________________________________________________________________________
Current Assets
Inventories 1,557 - - - - - - - - 1,557
Trade and other
receivables 17,803 - - - - - - - - 17,803
Cash and cash
equivalents 1,841 - - - - - - - - 1,841
__________________________________________________________________________________________________
21,201 - - - - - - - - 21,201
__________________________________________________________________________________________________
Total Assets 99,220 (117) 2,588 22 113 - - - 99 101,925
__________________________________________________________________________________________________
Current liabilities
Trade and other
payables (29,556) - - - - - 2,170 - (329) (27,715)
Tax liabilities (1,501) - - - - - - - - (1,501)
Bank overdrafts
and loans (37) - - - - - - - - (37)
__________________________________________________________________________________________________
(31,094) - - - - - 2,170 - (329) (29,253)
__________________________________________________________________________________________________
Non-current liabilities
Bank loans (10,000) - - - - - - - - (10,000)
Retirement benefit
obligation - - - - (378) - - - - (378)
Deferred tax liability (528) - (37) - - (2,210) - - - (2,775)
__________________________________________________________________________________________________
(10,528) - (37) - (378) (2,210) - - - (13,153)
__________________________________________________________________________________________________
Total liabilities (41,622) - (37) - (378) (2,210) 2,170 - (329) (42,406)
__________________________________________________________________________________________________
Net Assets 57,598 (117) 2,551 22 (265) (2,210) 2,170 - (230) 59,519
__________________________________________________________________________________________________
Equity
Share capital 4,180 - - - - - - - - 4,180
Share premium account 42,658 - - - - - - - - 42,658
Capital reserve 949 - - - - - - - - 949
Translation reserve - - - - - - - (16) - (16)
Share option reserve - - - 57 - - - - - 57
Retained Earnings 7,723 (117) 2,551 (35) (265) (2,210) 2,048 16 (230) 9,481
__________________________________________________________________________________________________
Equity Shareholders'
Funds 55,510 (117) 2,551 22 (265) (2,210) 2,048 - (230) 57,309
__________________________________________________________________________________________________
Minority interests 2,088 - - - - - 122 - - 2,210
__________________________________________________________________________________________________
Total equity 57,598 (117) 2,551 22 (265) (2,210) 2,170 - (230) 59,519
__________________________________________________________________________________________________
Wilmington Group plc
Reconciliation of UK GAAP consolidated profit and loss account to IFRS
consolidated income statement for the six months ended 31 December 2004
IFRS 5
UK GAAP IFRS 5 IFRS3 IFRS2 Additional
IFRS Discon- IAS 38 Business Share IAS19 IAS12 IAS19 Discon- IFRS
format tinued Intangible Combin- Based Employee Deferred Holiday IFRS tinued (Unaudited)
(unaudited) Operations Assets ations Payments Benefits Tax Pay (unaudited) Operations (restated)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 39,715 (2,563) - - - - - - 37,152 (119) 37,033
Cost
of sales (13,774) 489 - - - - - - (13,285) 43 (13,242)
______________________________________________________________________________________________________________
Gross
profit 25,941 (2,074) - - - - - - 23,867 (76) 23,791
Admini-
stration
expenses (22,325) 2,124 87 - (17) (12) - 200 (19,943) 111 (19,832)
Amorti-
sation
and
impair-
ment (2,389) 71 (58) 1,275 - - - - (1,101) 63 (1,038)
______________________________________________________________________________________________________________
Profit
from
opera-
tions 1,227 121 29 1,275 (17) (12) - 200 2,823 98 2,921
______________________________________________________________________________________________________________
Finance
costs (450) - - - - (2) - - (452) - (452)
______________________________________________________________________________________________________________
Profit
on
ordinary
activities
before
taxation 777 121 29 1,275 (17) (14) - 200 2,371 98 2,469
Income tax
expense (959) (15) - - 6 5 222 (60) (801) (11) (812)
______________________________________________________________________________________________________________
(Loss)/profit
on ordinary
activities
after
taxation (182) 106 29 1,275 (11) (9) 222 140 1,570 87 1,657
Loss on
discontinued
operations
after
taxation - (106) - - - - - - (106) (87) (193)
______________________________________________________________________________________________________________
Net profit
for the
period (182) - 29 1,275 (11) (9) 222 140 1,464 - 1,464
______________________________________________________________________________________________________________
Attributable
to Equity
holders of
the parent (445) - 29 1,275 (11) (9) 222 140 1,201 - 1,201
______________________________________________________________________________________________________________
Minority
interest 263 - - - - - - - 263 - 263
______________________________________________________________________________________________________________
Wilmington Group plc
Reconciliation of UK GAAP consolidated profit and loss account to IFRS
consolidated income statement for the year ended 30 June 2005
IFRS 5
UK GAAP IFRS 5 IFRS3 IFRS2 Additional
IFRS Discon- IAS 38 Business Share IAS19 IAS12 IAS19 Discon- IFRS
format tinued Intangible Combin- Based Employee Deferred Holiday IFRS tinued (Unaudited)
(unaudited) Operations Assets ations Payments Benefits Tax Pay (unaudited) Operations (restated)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 85,080 (4,384) - - - - - - 80,696 (191) 80,505
Cost of
sales (28,471) 925 - - - - - - (27,546) 83 (27,463)
______________________________________________________________________________________________________________
Gross
profit 56,609 (3,459) - - - - - - 53,150 (108) 53,042
Admini-
stration
expenses (44,555) 3,379 173 - (34) (16) - (33) (41,086) 210 (40,876)
Amorti-
sation
and
impair-
ment (6,138) 142 (115) 2,551 - - - - (3,560) 127 (3,433)
______________________________________________________________________________________________________________
Profit
from
opera-
tions 5,916 62 58 2,551 (34) (16) - (33) 8,504 229 8,733
Finance
costs (892) - - - - (4) - - (896) - (896)
______________________________________________________________________________________________________________
Profit
on
ordinary
activities
before
taxation 5,024 62 58 2,551 (34) (20) - (33) 7,608 229 7,837
Income
tax
expense (3,307) 24 - - 13 6 925 10 (2,329) (32) (2,361)
______________________________________________________________________________________________________________
Profit
on
ordinary
activities
after
taxation 1,717 86 58 2,551 (21) (14) 925 (23) 5,279 197 5,476
Loss
on
discontinued
operations
after
taxation - (86) - - - - - - (86) (197) (283)
______________________________________________________________________________________________________________
Net
profit
for the
period 1,717 - 58 2,551 (21) (14) 925 (23) 5,193 - 5,193
______________________________________________________________________________________________________________
Attributable
to Equity
holders
of the
parent 1,004 - 58 2,551 (21) (14) 925 (23) 4,480 - 4,480
______________________________________________________________________________________________________________
Minority
interest
713 - - - - - - - 713 - 713
______________________________________________________________________________________________________________
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