Final Results
17 September 2009
WILMINGTON GROUP PLC
('Wilmington', 'the Group' or 'the Company')
Full Year Results for the year ended 30 June 2009
Wilmington Group plc, the professional information and training group, today announces its full year results for the year ended 30 June 2009.
Highlights
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Year of challenging trading conditions brought about by global economic backdrop
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Resilience of the Group's portfolio of activities demonstrated by encouraging levels of turnover and profitability achieved by many of the Group's businesses
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Professional Publishing & Information revenues remained stable
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Professional Training & Events saw significantly lower demand for legal and financial training
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international fund management, compliance and accountancy training proved resilient
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During the year the Group restructured its operations to improve operational effectiveness and reduce costs
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Revenue from continuing operations declined by 2.9% to £86.3 million (2008: £88.8 million); adjusted profit from continuing operations (before tax, amortisation and impairment, share based payments, the unwinding of the discount on the provision for future purchase of minority interests and non recurring items) was 22.7% down at £13.3 million (2008: £17.2 million)
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Strong operating cash-flow, at 112% of operating profit
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Dividend maintained, reflecting the Group's strong cash generation and confidence in the future
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The Group has a strong balance sheet with committed long term banking facilities
David Summers, Chairman, commented:
'While we remain attuned to the current trading conditions across our markets and the general economic outlook, we believe the Group has resilient and robust assets and the resources, ambition, determination and proven management to continue to deliver sustainable medium and longer term growth, both organically and through acquisition.'
For further information, please contact:
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Wilmington Group Plc Charles Brady, Chief Executive Basil Brookes, Finance Director |
020 7422 6800 |
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Weber Shandwick Financial |
020 7067 0700 |
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Nick Oborne or Clare Thomas |
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Notes to Editors
Wilmington Group plc is one of the UK's leading providers of information and training for professional business markets. The Group provides training, arranges industry events and publishes directories, databases, magazines and special reports for a variety of markets including the legal, health, accounting, pension, charities and financial sectors. Capitalised at approximately £100 million, Wilmington floated on the London Stock Exchange in 1995.
Chairman's Statement
The year ended 30 June 2009 saw Wilmington face very challenging trading conditions brought about by the severe and unprecedented downturn in global economic conditions. The economic downturn adversely impacted Wilmington towards the end of 2008, however the extent of the downturn did not become fully apparent until 2009.
Despite the tough trading conditions, the resilience of Wilmington's portfolio of businesses is demonstrated by the encouraging levels of turnover and profitability achieved by many of the Group's businesses. However the severity and length of the downturn is having an effect on even our most resilient businesses. The biggest impact has been seen in our legal training businesses which are highly operationally geared and where reduced revenues have significantly hit operating margins.
Financial Performance
The financial results for the year ended 30 June 2009 reflect the challenging economic environment. Revenue from continuing operations in the year declined by 2.9% to £86.3m (2008: £88.8m). Profit from continuing operations before tax, amortisation and impairment, share based payments, non-recurring items and interest ('Adjusted EBITA') decreased by 20.3% to £14.6m (2008: £18.4m). The adjusted profit from continuing operations (before tax, amortisation and impairment, share based payments, the unwinding of the discount on the provision for future purchase of minority interests and non-recurring items ('Adjusted Profit Before Tax')) declined by 22.7% to £13.3m (2008: £17.2m).
The Group has taken a non-cash impairment charge of £2.7m (2008: £NIL) in respect of Matchett, the financial learning division serving the banking market, and also incurred non-recurring costs of £1.7m (2008: £NIL), of which £1.1m related to the costs of reorganising the business and £0.6m related to abortive transaction costs. These one-off charges have thus contributed to the reduction in reported profit before tax at £2.9m (2008: £11.9m).
Adjusted earnings per share from continuing operations before amortisation and impairment, share based payments, the unwinding of the discount on the provision for future purchase of minority interests and non-recurring items ('Adjusted Earnings Per Share') decreased by 21.3% to 10.50p per share (2008: 13.34p). Basic earnings per share, which is after non-recurring items, share based payments, the unwinding of the discount on the provision for future purchase of minority interests and amortisation and impairment declined to 0.46p (2008: 8.82p).
The quality of the operating profits continues to be underpinned by good cash flow. Operating cash flow was £13.9m (2008: £18.6m), representing 112% cash conversion of operating profit (before tax, amortisation and impairment and interest.) (2008: 106%).
At 30 June 2009 the net assets of the Group were £53.8m, (2008: £61.3m) with deferred revenue of £13.9m (2008: £15.1m).
At 30 June 2009 the Group had net debt (as set out in the consolidated cash flow statement) of £17.8m (2008: £17.9m), representing less than 30% utilisation of our £60m facilities which are committed to 2012.
Acquisitions and Disposals
During the financial year ended 30 June 2009 we made no further acquisitions, however we exited three businesses that were not core to our strategy;
On 30 September 2008 we completed the disposal of our holding in the joint venture Muze Europe Limited, a music information business serving the European market.
On 17 October 2008 we disposed of HPCi which published the magazines 'Soap, Perfumery and Cosmetics', 'Manufacturing Chemist' and 'Cleanroom Technology'. This divestment has further reduced our dependence on magazine advertising.
On 21 April 2009 we sold the Press Gazette magazine to Progressive Digital Media Group Plc. As part of this transaction we agreed a long term deal to work together with the new owners on the associated events which we retained.
These disposals increased our concentration on core professional markets. Supported by a strong balance sheet we continue to look for acquisitions which complement our strategic goals and where we believe we can create value. In difficult markets we are particularly careful to ensure that any investment we make is sustainable over the long term and will further our goal of long term profit growth.
Dividend
The Board is recommending that the dividend is maintained at the same level as the prior year, reflecting the Group's continuing strong cash generation and confidence in the future. The Board proposes a final dividend of 4.7p per share payable on the 13 November 2009 to shareholders on the register on 16 October 2009. Taken together with the interim dividend of 2.3p per share, this makes a total dividend for the year of 7.0p per share (2008: 7.0p). The dividend is covered 1.5 times by adjusted earnings per share from continuing operations.
Highlights of the Year
Wilmington Group contains many high quality, resilient businesses which have continued to perform well during the economic downturn.
During the year the Group restructured its operations both to reduce costs and to improve operational effectiveness. We have exited a number of properties and have streamlined our workforce, as a result of which we incurred related non-recurring costs of £1.1m. Where appropriate we have continued to invest in our business with the launch of new products, the development of new technologies and the recruitment of staff. As a result of this we ended the year with a more efficient and effective structure than at the start of the financial period.
Following the disposal of Muze and HPCi we reorganised the management of our Publishing businesses, consolidating the management of the Wilmington Business Information division with the Waterlow Legal and Regulatory division. This has created a Professional Publishing & Information business which for the year ended 30 June 2009 accounted for approximately 44.7% of the Group's turnover and contributed 60.1% of Group Trading Profits (segmental profits before amortisation and impairment) before central overheads. The Group has early adopted IFRS 8 'Operating Segments' and the Group's operations are now reported as two divisions: Professional Publishing & Information and Professional Training & Events. This reflects how these businesses are now managed and our desire to extend our range of activities across the professional market sector.
Professional Publishing & Information
Revenue from continuing operations has remained stable at £38.6m (2008: £38.4m), helped by a full year of APIS (acquired in February 2008). Segmental profits before non-recurring items, central overheads and amortisation have reduced by 9.1% to £10.4m (2008: £11.5m).
We have seen strong performances from a number of areas of this business, in particular from Pendragon, our pensions information business, and from the healthcare activities of Binley's and APM.
The disposal of our publishing interests in non-core markets provided the opportunity to reorganise the core Waterlow Professional Publishing division ('Waterlow') to benefit from synergies and cost savings and implement a more efficient operational structure. APIS was fully integrated into Waterlow during the financial year and, since the end of the financial year, Ark Publishing and our Media assets have both been incorporated into Waterlow. We have recently consolidated the business into fewer locations and reorganised the management structure. The Waterlow team has performed exceptionally well to assimilate APIS and to undertake a major restructuring whilst delivering robust results in extremely tough markets.
Our Professional Publishing & Information businesses are operating in very difficult market conditions. However, our portfolio includes a number of defensive assets where we maintain strong, long term relationships with clients. We believe that our resilient performance is a demonstration of the quality of these assets. We expect difficult trading conditions to continue, but we are confident that we will emerge from this challenging period with an even better business with strong long term prospects, and we are confident of improving our market position going forward.
Professional Training & Events
Revenue from continuing operations declined by 5.4% to £47.7m (2008: £50.4m). This includes a full year contribution from the Matchett Group (acquired in November 2007). Trading l profits have declined by 23.5% to £6.9m (2008: £9.0m).
The Professional Training & Events division has faced a very challenging trading environment, particularly in the legal and financial sectors. Market conditions have adversely and significantly impacted upon bookings for legal and some other short courses, particularly in the areas of investment banking and financial training.
In contrast, in the areas of international fund management, compliance and accountancy the training business has proved particularly resilient. We have seen a strong performance by Mercia Group, the provider of training and technical support for accountancy firms. Bond Solon, which provides expert witness training, investigatory training and law to non-lawyers, also continues to perform well. The CLT International business has made excellent progress, performing ahead of the prior year, through the provision of compliance, trusts and anti-money laundering training programmes. CLT International's Singapore operations have developed very satisfactorily, having achieved profitability during the financial year. This is in line with the CLT Group's strategy of substantial expensed investment in the development of new product areas and new markets.
The Professional Training & Events business continues to examine its cost base across all its operational areas. This has resulted in exiting properties and better utilising existing office space as well as reorganising management teams. The business is already experiencing positive benefits from the more efficient operational structure, and will benefit considerably from the cost savings already achieved.
The Matchett Group (acquired in November 2007) had a strong start to the financial year, with good enrolments on its graduate programmes for investment banks in July to September 2008. However, from October 2008 its performance was adversely impacted by the banking crisis. Profits for the year to 30 June 2009 were ahead of the eight month period ended 30 June 2008, but significantly below the level of our expectations at the beginning of the year.
Matchett reacted quickly to the banking crisis, significantly reducing its fixed cost base. The graduate programmes in summer 2009 have seen an increase in our market share, albeit with reduced numbers compared to 2008.
Outlook
While we remain attuned to the current trading conditions across our markets and the general economic outlook, we believe the Group has resilient and robust assets and the resources, ambition, determination and proven management to continue to deliver sustainable medium and longer term growth, both organically and through acquisition.
Whilst many parts of the Group are starting to see the benefits of cost savings and efficiencies resulting from earlier management initiatives, we continue to monitor our structure and cost base to ensure they are aligned with market conditions. We remain focused on optimising short term performance in difficult economic conditions whilst seeking strategic organic and acquisitive investment opportunities to generate additional shareholder value.
We remain committed to our strategy of delivering information and training to selected professional business markets. We believe that these markets have attractive long term prospects and despite the global recession we continue to invest in our business, both in new technology and new product offerings. We believe that we can deliver the best returns for our shareholders by focusing investment into key professional niche sectors to ensure we have the capacity, over the long term, to deliver strong and sustainable growth.
The Board expects that the current challenging economic conditions will continue for at least the first half of the new financial year. Given the downturn experienced in the early part of 2009 we anticipate that the financial performance for the first six months of the current year will be below the level achieved in the prior year, with like for like comparators becoming less difficult thereafter.
Finally, and as always, I would like to thank my fellow Directors, Senior Managers and all of the Group's employees who have contributed to this year's results for their innovation, hard work and commitment, particularly against such a challenging economic climate.
David Summers OBE
Chairman
Business Review
Overview of the Group's Financial Performance
In the year ended 30 June 2009 Wilmington generated revenues from continuing operations of £86.3m down 2.9% from £88.8m. Adjusted EBITA from continuing operations was £14.6m down 20.3% from £18.4m, with the operating margin down to 16.9% from 20.5%. The drop in Adjusted EBITA compared with the overall revenue decline results from the combination of a severe downturn in some of our businesses, particularly the highly operationally geared legal training business, partly offset by a positive full year contribution from two prior year acquisitions.
Revenue on a like-for-like basis declined by 7.7% with like-for-like profits declining by 28.0%. The full year impact of the acquisitions of Matchett and APIS contributed additional revenues of £3.8m at an overall margin of 20.8%.
Reported profit before tax decreased to £2.9m from £11.9m, reflecting additionally the increase in amortisation and impairment, non-recurring items and the unwinding of the discount on the provision for future purchase of minority interests
Accounting Policies
As previously announced on 23 July 2009, the Group's accounting policies are reviewed on a regular basis to ensure that they align with current best practice. In light of the growing importance of online product distribution, it was decided that online directory revenue, which was historically reported on publication, would now be recognised over the period of supply. Hard copy advertising revenue continues to be recognised on publication.
It was also decided that two further technical changes would be made, neither of which impact our adjusted earnings measures. The movement in the provision for the future purchase of minority interests was previously treated as an adjustment to goodwill. To the extent that this movement relates to the unwinding of the discount on the provision it is now reflected in the income statement as a finance charge over the discounting period. Secondly, a deferred tax asset relating to the amortisation of non qualifying intangible assets acquired prior to April 2002 which was first recognised on the transition to IFRS, whilst remaining a potential asset, is no longer recognised on the consolidated balance sheet. The bulk of this asset had already been written off on the disposal of the trade magazines in the year ended 30 June 2008.
None of the above changes have a cash impact on the Group. As a result of these changes at 30 June 2009 the net assets of the Group are reduced from £60.1m to £53.8m of which £3.7m reflects the increase in online directory deferred revenue. The profit before tax for the year ended 30 June 2009 is reduced from £3.8m to £2.9m. The adjusted profit before tax remains unchanged at £13.3m. Earnings per share and adjusted earnings per share reduced from 1.01p to a loss of 0.38p and 9.79p to 9.77p respectively. At 30 June 2008, the net assets of the Group are reduced from £66.3m to £61.3m of which £3.8m reflects the increase in the online directory deferred revenue. The previously reported profit before tax and adjusted profit before tax for the year to 30 June 2008 are changed from £12.1m to £11.9m and £17.1m to £17.2m respectively. Earnings per share and adjusted earnings per share from continuing operations for the year to 30 June 2008 are reduced from 9.80p to 8.82p and 13.48p to 13.34p.
Non-recurring costs
During the year the Group incurred non-recurring costs of £1.7m of which £1.1.m related to the costs of reorganising the business and £0.6m related to abortive transaction costs incurred during the year.
Amortisation and Impairment
In addition to the normal amortisation of intangible assets, the Group has booked a non cash impairment charge of £2.75m in respect of the Matchett Group. Despite the increase in market share achieved by the Matchett Group for the graduate intake in Summer 2009, which will be reported in the results for the year ending 30 June 2010, and the significant cost reductions already achieved, the forecast profitability of the Matchett Group has been adversely impacted by the downturn in its main market. The Board believes it has taken a prudent but realistic view of the likely time and extent of a recovery in the trading conditions affecting Matchett in arriving at this impairment charge.
Taxation
The Group tax charge of £1.9m represents 67.1% of the profits before tax (2008: 31.6%). The non cash charges for impairment and unwinding of the put option discount are not allowable for UK tax purposes. Adjusting for these items, the tax charge is 29.3% compared to the statutory UK rate of 28%, reflecting higher rates of tax paid on earnings in overseas territories
Earnings per Share
Adjusted Earnings per Share from continuing operations decreased by 21.3% to 10.50p (2008: 13.34p). Basic Earnings per Share from continuing operations decreased to 0.46p (2008: 8.82p).
Earnings and Adjusted Earnings per Share are calculated on the weighted average number of shares in issue of 82,590,096 for the year ended 30 June 2009 (2008: 83,356,950).
Balance Sheet and Net Debt
At 30 June 2009 the Group had net debt of £17.8m (2008: £17.9m). This modest reduction has been achieved despite paying shareholders an increased dividend during the period and incurring significant non-recurring costs. This demonstrates the strong underlying cash flows generated by the Group.
The Group had net debt at 30 June 2009 of £17.8m (2008: £17.9m) and had a committed bank facility of £60m (2008: £60m) of which £18m was drawn down at 30 June 2009 (2008: £18m).
Treasury Policy
Treasury policies are approved by the Board. The executive directors have delegated authority to approve finance transactions within agreed terms of reference. The Group's financial instruments comprise principally bank borrowings and associated hedges, cash and various other items that arise directly from its trading operations such as trade debtors, trade creditors and subscriptions and fees in advance. The main purpose of these financial instruments is to ensure that finance is available for the Group's operations.
The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. These policies are unchanged from the previous year.
a) Interest rate risk
The Group finances its operations through a mixture of retained profits and bank borrowings. Over recent years the Group has expanded rapidly its operations both organically and by acquisition. This expansion has led on occasions to the need for external finance. The Board has chosen a credit facility with a floating rate of interest linked to LIBOR and has hedged its interest exposure on a proportion of this facility. In November 2006 the Group entered into a 5 year £15m interest rate swap whereby it receives interest on £15m based on 3 month LIBOR and pays interest on £15m at a fixed rate of 5.23%. This derivative has been designated as a cash-flow hedge in order to manage interest rate risk associated with the first £15m of the credit facility. Payments received under the swap have been matched against interest paid quarterly during the year and the entire mark to market loss on the derivative has been recognised in equity, following the Directors' assessment of the hedge's effectiveness.
b) Liquidity risk
The Group's policy throughout the period has been to ensure continuity of funding by the use of a £5m overdraft facility, a £5m money market facility and a £60m revolving credit facility which is committed until 2012.
c) Foreign currency risk
The Group has a substantial customer base overseas. The Group maintains bank accounts in foreign currency and converts this currency to Sterling at the appropriate times minimising the exposure to exchange fluctuations. On 14 May 2009 the Group sold forward US$0.5m to October 2009 at a rate of 1.5155. This contract was entered into in order to provide certainty in Sterling terms of the bulk of the net US$ income of the Matchett business. Any gain or loss on this contract is recognised in the income statement.
Business Objectives and Strategy
Wilmington's key strategy is to increase shareholder value by delivering sustainable and growing profits from servicing the information and training requirements of professional business markets. We believe that this strategy will deliver long term benefits for the Group. Whilst many professional business sectors are currently being adversely impacted by the recession, we believe that the professional markets we serve will, over the medium and longer term, require the information and training that Wilmington provides. This will provide the Group with good growth opportunities.
We aim to develop strong businesses, delivering sustainable profit growth, in our key markets by:
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focusing investment, both acquisitive and organic, on those markets;
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providing well researched and accurate information in a variety of formats and by developing innovative new products to extend and enhance our product range;
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investing in online and digital technology to create new products, access new markets and to manage our business efficiently; and
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maintaining strong sales and marketing capabilities.
Wilmington's realignment of its portfolio over recent years focusing on professional markets has, amongst other benefits, served to increase its resilience to changes in market conditions, which is particularly important in the current economic climate. Our strong subscriptions-based businesses reflect our investment strategy to acquire businesses with not only high repeatable revenues but also strong, cash generative income streams.
In the long term, an increase in demand for professional information and training services both in the UK and abroad should benefit Wilmington. Our percentage of revenues outside of the UK as a percentage of total revenue has continued to grow year on year and is now at 18.0%. This proportion has increased due to our investment in the South East Asian region, with the compliance programmes in Singapore now operating profitably.
Key Financial and Operational Targets
At a Group level we have five key financial and operational targets. In addition, each of the operating divisions monitor a number of key performance indicators. This year, for the first time in many years, we have not delivered an improved performance against our financial and operational targets. However, by continuing to focus on these essential benchmarks we have been able to concentrate on mitigating the adverse effects of the global recession and produce what we consider to be creditable results whilst establishing a more resilient and efficient platform to support future growth.
1. Adjusted Profit Before Tax
This measure indicates the trading profits of the Group, after bank and interest charges, but before amortisation and impairment of intangible assets, non-recurring items, the unwinding of the discount on the provision of the future purchase of minority interests and share based payments. Amortisation is a non-cash technical adjustment which does not necessarily reflect the inherent value of assets. This is particularly the case where the value of assets has been enhanced as a consequence of management action.
In the year to 30 June 2009 Adjusted Profit Before Tax from continuing operations reduced by 22.7% to £13.3m (2008: £17.2m).
2. Adjusted Earnings per Share
This key measure indicates the underlying profit attributable to shareholders. It measures not only trading performance, but also the impact of treasury management, bank and interest charges, as well as the efficient structuring of the Group to minimise taxes. Our business and financial strategy is directed at delivering consistent adjusted earnings per share growth. Our incentive programmes are designed to support this strategy.
In the year to 30 June 2009, Adjusted Earnings per Share from continuing operations decreased by 21.3% to 10.50p per share (2008: 13.34p).
3. Cashflow
The quality of the operating profits is underpinned by the strong cash flow. The Group's business is strongly cash generative; operating cashflow for the year ended 30 June 2009 of £13.9m was 112% of operating profit before interest, amortisation and impairment of intangible assets (2008: £18.6m, 106%). Free cashflow, which is calculated after deduction from operating cashflow of capital expenditure, payment of corporation tax and payment of interest, was £6.6m (2008: £10.4m).
4. Consistent and Sustainable Revenue Streams
The disposal of non-core assets in recent years has allowed the Group to focus on a portfolio of assets based in key professional markets. This push towards more robust and sustainable revenue streams has resulted in a strong portfolio of offerings, which includes:
• professional directories;
• information and solution sales;
• professional training;
• events and conferences;
• professional magazines; and
• professional accreditation and assessment
The Group has continued to increase the supply of its products and services online or digitally, but remains conscious of the needs of markets which continue to prefer some products produced in hard copy format. Our businesses are supported by management and delivery systems utilising the latest technology. We have invested considerable resources in the improvement of our operating systems and web sites which will deliver benefits in the current year and beyond.
The Group analyses its revenue streams on the following basis:
• Subscription and copy sales 27% of revenue (2008: 26%);
• Professional education and events 43% of revenue (2008: 42%);
• Information sales and professional services 20% of revenue (2008: 20%);
• Directory advertising 8% of revenue (2008: 9%);
• Magazine advertising 2% of revenue (2008: 3%);
This represents a broad revenue base and reflects the Group's ongoing strategy to ensure that there are no significant dependencies on specific sources of revenue.
5. Adjusted Operating Margin
The adjusted operating margin reflects the quality of the Group's revenue streams. Improving and maintaining the adjusted operating margin is a key goal for the Group. Reflecting the difficult economic conditions, our adjusted operating margin for the year just ended decreased to 16.9%, compared to 20.7% in 2008.
This performance indicator needs to be carefully analysed. It can be distorted by investments where expenditure on new products and services is written off when incurred. In addition, Wilmington seeks to acquire businesses where there is the potential for significant profit improvement and has a good track record of acquiring businesses where we have been able to substantially enhance profit margin and overall profit returns.
We seek to improve the Group's operating margin during the current year as we realise the benefit of the investments made in new initiatives and acquisitions.
A further measure to which we pay particular attention is the investment in digital and electronic systems. We have not presented any specific figures for the Group as a whole as they may be misleading without detailed analysis. However, we continue to invest heavily in digital content management, customer management and production systems, new web sites, online information delivery and online and electronic support systems. This investment has helped profit margins and efficiency and we believe that there are many opportunities to continue this development in the future.
Principal Risks and Uncertainties
The key challenges facing Wilmington arise from the highly competitive and rapidly changing nature of our markets, the increasing technological nature of our products and services and legal and regulatory uncertainties. Certain parts of our businesses are also affected by the (often positive) impact of changes in professional regulations and by the impact of the economic cycle on advertising and promotional spending. The prevailing economic climate also constitutes a risk factor, particularly in the legal and financial sectors, which has affected the Group's profitability. Key supplier and customer loss feature as a risk; however, we feel that our supplier and customer bases are both sufficiently diverse.
Wilmington has an established risk management procedure that is embedded in the operations of its trading divisions and is reviewed by the Board. All parts of the business identify risks and seek to ensure that procedures and strategies are in place so that risks can be managed wherever possible.
Some of the main challenges which affect the Group as a whole include the following:
1. Wilmington is a people based business where failure to attract or retain key employees could seriously impede future growth. To ensure staff retention the Group operates competitive remuneration packages for key individuals. Just as importantly, it operates a culture where each individual can maximise his or her potential. Wilmington is also committed to further develop staff and encourages training for key employees to build on their existing skill sets.
During the year under review we have seen many members of staff demonstrate their commitment and ability to adapt to changing conditions by taking on extra responsibilities. They have shown flexibility with their terms and conditions, and their loyalty and reliability during a demanding economic environment has been evident.
2. Wilmington's business is increasingly dependent on electronic platforms and distribution systems, primarily the Internet, for delivery of its products and services. Whilst our businesses could be adversely affected if these electronic delivery platforms and networks experienced a significant failure, interruption, or security breach, the Group is sufficiently diversified to ensure such disruption is minimised. During the year under review the Group has continued to invest in new systems and electronic platforms with greater protection against failure.
3. Our products and services largely consist of intellectual property content delivered through a variety of media. Wilmington relies on trademarks, copyrights, patents and other intellectual property laws to establish and protect its proprietary rights in these products and services. The Group makes every effort to protect this asset base and actively pursues any infringements. We are also ensuring we are compliant with the relevant data protection legislation with a thorough external audit of data management systems.
4. The businesses can be sensitive to disruptions such as Government legislation, adverse regulatory change, terrorism, natural disasters and other significant adverse events. During the year under review there were no major incidents to report. Nevertheless we maintain and have extended our disaster recovery plans to mitigate the consequences of potential adverse events. Our insurance cover includes acts of terrorism.
5. There is an element of reputational risk for Wilmington, particularly in areas where we have high profile products and services. Damage to reputation and/or brand could lead to an adverse impact on the Group. The success of the Group's businesses are in part dependent on the success of their branded publications and events. Wilmington is conscious of the need to ensure the careful management of products and services to reduce this risk.
Wilmington's People
In a competitive environment and in difficult trading conditions, Wilmington's growth and success depends on a key asset - the abilities, skills and commitment of the people it employs. We are fortunate to benefit from their experience, professionalism, enthusiasm and flexibility that provide the basis for a successful growing business.
As Wilmington moves towards a greater emphasis on digital and interactive services we need to continue developing new capabilities, as well as new technical and management skills to make these services work. We are responding by developing our people through training and injecting new talent where it is needed. Each of our businesses is working hard to identify and bring on the necessary talent, both from within the organisation and externally.
We are a talent dependent business, requiring excellent people with a passion for their brands and subject matter. We are committed to developing and rewarding our people and creating a culture in which they can thrive. The shape of this activity varies from business to business with each operation attracting and developing its people in ways appropriate to its own markets.
Whilst recognising the benefits of Wilmington's devolved business culture we are actively encouraging links between our businesses where there are opportunities to collaborate and to share ideas, technical expertise and best practice.
We offer every opportunity for Wilmington people to advance their careers and fulfil their potential. There is plenty of evidence that this is happening. Vacancies are advertised internally as well as externally in order to make it as easy as possible for employees to look for opportunities within the Group.
We continue to invest in technology and systems across the Group. This year we have upgraded our group accounting system, streamlining the process so that information is analysed more thoroughly leading to better decision making. Major upgrade changes to technology have required considerable perseverance and dedication from Wilmington's people who have planned and implemented the changes. We strive for continuous improvement within the Group, which often results in major investments being made in our systems to manage content, customers and processes.
Wilmington's Directors and executive management continue to believe that the best way for the Group to survive during the downturn and return to growth is to retain and attract the very best people. The Board is determined to ensure that Wilmington remains a great place to work, where people have the opportunity to challenge themselves, grow professionally and benefit from high levels of remuneration and incentives. Only by continuing to develop the skills of our current teams and by recruiting the very best new talent can Wilmington continue to grow at a sustainable rate.
Professional Training & Events
Professional Training & Events accounts for 55.3% of Group revenue producing 39.9% of Group trading profit. This division has seen a significant decline in course bookings upon its legally based training programmes. Revenue decreased by 5.4%, to £47.7m (2008: £50.4m) while segmental profit declined by 23.5% to £6.9m (2008 £9.0m) giving operating margins of 14.5% (2008 17.9%).
Central Law Training serves the legal and financial markets and is the market leader in the provision of mandatory post qualification training courses for UK lawyers. It also provides paralegal training, mandatory accreditation programmes and the New York Bar course. In total it delivers more than 4,000 training courses per annum. During the year ended 30 June 2009 there has been a decline in legal course bookings. This decline was particularly severe from January onwards and has resulted in a 24% reduction in turnover compared to the prior year. The downturn has been addressed by rationalising the course programme and refocusing the marketing strategy.
Despite the economic downturn there have been a number of successful developments. We are particularly pleased with the development of our webinar programme (live online seminars) which have seen significant growth in delegate numbers throughout the year ended 30 June 2009. We continue to develop new course programmes and have launched a range of prequalification Law courses, including a flexible legal practice course, in collaboration with the University of the West of England. The New York Bar training programmes have also shown good growth during the year.
CLT Scotland, working in association with the University of Strathclyde, is the market leader for provision of mandatory post qualification courses for lawyers in Scotland. It also delivers a highly successful paralegal training programme. CLT Scotland has also seen a sharp decline in revenue as a result of reduced course bookings. We have rationalised the course programme and refocused the marketing strategy. Particular emphasis has also been placed on the development of in-company training programme for many larger clients.
Mercia is the leading provider of technical, marketing and training support to the accountancy profession. The Mercia Group of companies has grown turnover and profitability while continuing to invest in the development of new business. We have seen good growth from our technical and marketing support provided to Accountancy firms.
CLT International is the leading provider of trust, compliance and anti money laundering training. Operating internationally it has seen strong growth in both turnover and profitability. Working in association with the Society of Trust and Estate Practitioners ('STEP') we have seen strong growth in both the international trust programmes and the UK Trust and Estate Diplomas.
The Singapore Compliance programme has performed well, achieving profitability during the financial year. We continue to invest in Singapore and expect to see further growth. Compliance training programmes have been launched in the Middle East, and are showing good potential. CLT International has also successfully launched a new Diploma programme for fund management. The trend towards greater regulation of banks and financial service companies and greater emphasis on compliance will provide opportunities for further growth.
Bond Solon is the market leader in the UK for the provision of expert and professional witness training programmes. Increasing provision of legal training for non lawyers has resulted in another year of strong revenue and profit growth. Bond Solon continues to be successful in securing large tenders to provide specialist training.
Quorum was acquired by the Group in May 2005 and presents financial training programmes, primarily to finance professionals within large organisations and the public sector. These programmes have been adversely impacted by the global downturn with a significant reduction in the number of delegate bookings. We have radically restructured the operation of this business, removing significant property costs and integrated management of the course programme into Central Law Training. Quorum has recently successfully launched a subscription membership scheme, which is now attracting some major clients.
Matchett Group was acquired by the Group in November 2007 and is the leading provider of graduate entrant training to investment banks in London, New York and the Far East. In addition it provides skills and management training to large corporate companies and public sector bodies. The Matchett Group had a strong start to the financial year, with good enrolments on its graduate programmes for investment banks in the Summer of 2008. However, from October 2008 its performance was adversely impacted by the banking crisis and the economic downturn. Its profits for the year to 30 June 2009 were ahead of the eight month period ending 30 June 2008, but significantly below our expectations at the beginning of the year.
Matchett has reacted quickly to the banking crisis, significantly reducing its fixed cost base. The graduate programmes for investments banks have started the 2009/10 financial year well, increasing market share, albeit with reduced numbers compared to the Summer of 2008. We are confident in the future prospects of the Matchett Group. However, as the level of profitability is significantly below our forecast when we acquired the business we have taken a £2.75m impairment charge to the carrying value of the Matchett Group.
Professional Publishing & Information
Professional Publishing & Information accounts for 44.7% of Group revenue from continuing operations and contributes 60.1% of Group trading profit. Revenue has remained stable with a marginal increase of 0.5% to £38.6m (2008: £38.4m), enhanced by a full year of APIS which was acquired in February 2008. Trading profit reduced by 9.1% to £10.4m (2008 £11.5m) giving operating margins of 27.0% (2008 29.8%).
This division provides information, solutions, directories, magazines and services to the legal, charity, accountancy, surveying, pensions, banking & finance, healthcare and pharmaceutical markets.
Waterlow Professional Publishing forms the largest business within this division. Waterlow's products, some of which date back over 160 years, are clear market leaders with high quality proprietary content and strong customer renewal rates. Although not immune to the advertising downturn and general recessionary pressures, this division proved relatively robust. This was partly down to an early and comprehensive review of the cost base, which coincided with the integration of APIS. Operating primarily within the pensions sector APIS, which has been fully integrated into Waterlow Professional Publishing, has made excellent progress. It is particularly encouraging that we have been able to make a value enhancing acquisition which has delivered strong returns despite a severe market downturn.
We saw a strong performance from our pension information business, Pendragon, which provides the leading electronic information solution for UK pensions professionals. Pendragon continued its record of steady growth despite a challenging market.
Binley's, a provider of specialist contact information and sales management solutions to the healthcare and pharmaceutical industries, also delivered further revenue and profit growth notwithstanding continued investment for further organic growth, principally electronic information services and solutions.
APM, our specialist Press Agency based in Paris with an office in London, continued to build its subscription revenues both in Europe and with the fledgling English language product, APM Health Europe. Helped by the strong Euro this division saw double digit growth in both revenues and profits.
International Company Profile (ICP) is a leading provider of financial information on companies worldwide, specialising in emerging markets. The past year saw a tumultuous period in credit insurance markets which proved beneficial to ICP and allowed us to deliver good growth.
Smee & Ford, a provider of legacy information to charities in the UK for over 100 years and the owner of the leading mortality data files for mailing suppression and the prevention of identity fraud, maintained its profitability despite the impact of the recession on the direct mail industry. This was partly a result of its growing fraud prevention product.
Wilmington Media & Entertainment (WME) had a very difficult year with unprecedented trading conditions in its PR, TV, Journalism and Sponsorship sectors. Following the sale of Press Gazette this division was extensively restructured and we are confident of an improved performance in the current year.
All of our Publishing and Information markets have common characteristics including large professional client bases with strong information needs, increasing regulatory requirements and sustainable medium and long term demand. These features provide us with a strong base upon which we will continue to build.
During the year our two publishing divisions were merged and we disposed of a number of non core divisions as part of our strategy of concentrating on core professional markets and focusing on high margin businesses, ideally with electronic products and with strong subscription revenues. This process has involved extensive work but is now almost complete.
We were encouraged, therefore, to see subscription revenues increase to 36% of total sales this year (2008: 33%). This illustrates how our increasing concentration on our core markets has also allowed us to focus on higher quality types of products, and there has been an associated increase in the quality of earnings in the business. In addition to pure subscription sales, the revenues derived from these subscription customers and customers who buy information under licence agreement amounted to 65% of total sales (2008: 59%) which demonstrates the value of leveraging our strong customer relationships.
We have transformed our publishing businesses over recent years from ones which were primarily print and advertising based to ones which are now primarily suppliers of information in electronic format. In the year to 30 June 2009 the proportion of revenues derived from products and services delivered electronically increased to 60% (2008: 56%). We are continuing to invest in this vital structural development.
During the period we exited our west London office (Putney) and relocated the Ark Publishing teams to an existing central London office. We have implemented a wide and deep cost reduction initiative across the whole business which will bring long term benefits.
While this year's results were below the Board's initial expectations, we believe that the continuing businesses which now form Professional Publishing & Information have demonstrated their resilience in a market which has exposed the structural weaknesses of many publishing assets. Most of our businesses provide 'must have' information and are market leaders. We believe that we have the right type of assets for the future and that we are well positioned to achieve good growth when markets improve.
We continue to seek other acquisitions where we can generate further value for our shareholders and believe the current environment offers some excellent opportunities to acquire assets at attractive prices.
Acquisitions and Disposals
We have carefully formulated acquisition and disposal criteria together with a thorough post-acquisition analysis. We seek to fully comprehend acquisitions both in terms of return on capital and in terms of the added value we have been able to achieve in profitability and profit margins. We seek not only to secure a good rate of return on capital but also purchase assets only if we believe we can drive profit growth and improved margins from those acquisitions. The economic climate has made us very cautious in our valuations and analysis and during the year Wilmington did not complete any new acquisitions.
In September 2008 we completed the disposal of our holding in the joint venture of Muze Europe, a music information business serving the European market.
In October 2008 we disposed of HPCi which published the magazines 'Soap, Perfumery and Cosmetics', 'Manufacturing Chemist', and 'Cleanroom Technology'.
In November 2008 we acquired an additional 5% of the share capital of Beechwood Publishing which operates under the Binley's brand, taking our holding to 80%.
In April 2009 we sold Press Gazette magazine to Progressive Digital Media Group Plc. As part of this transaction we agreed a long term deal to work together with the new owners on the associated events which we retained. The sale of Press Gazette represents a completion of our exit from trade magazine publications
With effect from July 2009 we acquired the remaining 15% share capital of Ark Group.
Unaudited Consolidated Income Statement
For the year ended 30 June 2009
|
|
Notes |
Year ended 30 June 2009 £'000 |
Year ended 30 June 2008 £'000 (Restated |
|
|
|
|
note 2(a)) |
|
Revenue |
3 |
86,268 |
88,828 |
|
Cost of sales |
|
(27,064) |
(27,098) |
|
Gross profit |
|
59,204 |
61,730 |
|
Operating expenses excluding amortisation and impairment and non-recurring items |
4 |
(44,647) |
(43,532) |
|
Amortisation and impairment |
4 |
(7,784) |
(4,560) |
|
Operating expenses before non-recurring items |
|
(52,431) |
(48,092) |
|
Non-recurring items |
5 |
(1,674) |
- |
|
Total operating expenses |
|
(54,105) |
(48,092) |
|
Operating profit from continuing operations |
|
5,099 |
13,638 |
|
Finance income |
6 |
175 |
331 |
|
Finance costs |
6 |
(2,424) |
(2,106) |
|
Profit on continuing activities before income tax |
|
2,850 |
11,863 |
|
Income tax expense |
7 |
(1,911) |
(3,749) |
|
Profit on continuing activities after income tax |
|
939 |
8,114 |
|
(Loss)/profit on discontinued operations after income tax |
8 |
(690) |
1,025 |
|
Net profit for the financial year |
|
249 |
9,139 |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Equity holders of the Company |
|
(311) |
8,376 |
|
Minority interest |
|
560 |
763 |
|
|
|
|
|
|
Earnings per share attributable to equity holders of the Company |
|
|
|
|
Continuing operations: |
10(a) |
|
|
|
Basic earnings per share |
|
0.46p |
8.82p |
|
Diluted earnings per share |
|
0.45p |
8.76p |
|
|
|
|
|
|
Continuing and discontinued operations: |
10(b) |
|
|
|
Basic (loss)/earnings per share |
|
(0.38)p |
10.05p |
|
Diluted (loss)/earnings per share |
|
(0.38)p |
9.98p |
Unaudited Consolidated Statement of Recognised Income and Expense
For the year ended 30 June 2009
|
|
Year ended 30 June 2009 £'000 |
Year ended 30 June 2008 £'000 (Restated note 2(a)) |
|
Capital reserves realised on disposal of subsidiaries |
- |
949 |
|
Cash flow hedge loss taken directly to equity |
(1,454) |
(150) |
|
Exchange translation difference |
(7) |
63 |
|
Deferred tax on items taken directly to equity |
407 |
(242) |
|
Net (loss)/income recognised directly in equity |
(1,054) |
620 |
|
Net profit for the year |
249 |
9,139 |
|
Total recognised income and expense for the year |
(805) |
9,759 |
|
|
|
|
|
Attributable to: |
|
|
|
Equity holders of the parent |
(1,365) |
8,996 |
|
Minority interests |
560 |
763 |
|
|
(805) |
9,759 |
Unaudited Consolidated Balance Sheet
As at 30 June 2009
|
|
|
As at 30 June 2009 |
As at 30 June 2008 |
|
|
Notes |
£'000 |
£'000 |
|
|
|
|
(Restated note 2(a)) |
|
Non-current assets |
|
|
|
|
Goodwill |
12 |
62,401 |
67,969 |
|
Intangible assets |
|
28,712 |
34,818 |
|
Property, plant and equipment |
|
7,779 |
8,263 |
|
Deferred tax asset |
|
486 |
245 |
|
|
|
99,378 |
111,295 |
|
Current assets |
|
|
|
|
Inventories |
13 |
1,342 |
1,769 |
|
Trade and other receivables |
14 |
18,407 |
23,413 |
|
Derivative financial assets |
15 |
25 |
413 |
|
Cash and cash equivalents |
|
1,506 |
3,697 |
|
|
|
21,280 |
29,292 |
|
Total assets |
|
120,658 |
140,587 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
16 |
(31,716) |
(37,462) |
|
Current income tax liabilities |
|
(501) |
(2,316) |
|
Bank overdrafts |
|
(1,336) |
(3,633) |
|
Provisions for future purchase of minority interests |
17 |
(2,148) |
(939) |
|
|
|
(35,701) |
(44,350) |
|
Non-current liabilities |
|
|
|
|
Bank loans |
|
(18,000) |
(18,000) |
|
Derivative financial liabilities |
15 |
(1,045) |
- |
|
Deferred tax liabilities |
|
(6,685) |
(7,620) |
|
Provisions for future purchase of minority interests |
17 |
(5,410) |
(9,268) |
|
|
|
(31,140) |
(34,888) |
|
Total liabilities |
|
(66,841) |
(79,238) |
|
Net assets |
|
53,817 |
61,349 |
|
Equity |
|
|
|
|
Share capital |
|
4,228 |
4,224 |
|
Share premium account |
|
43,470 |
43,413 |
|
Treasury shares |
|
(4,008) |
(3,968) |
|
Translation reserve |
|
45 |
52 |
|
Share option reserve |
|
382 |
302 |
|
Retained earnings |
|
9,464 |
16,601 |
|
Shareholders' funds |
|
53,581 |
60,624 |
|
Minority interests |
18 |
236 |
725 |
|
Total equity and revenue attributable to equity holders of the Company |
|
53,817 |
61,349 |
Unaudited Consolidated Cash Flow Statement
For the year ended 30 June 2009
|
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
Notes |
£'000 |
£'000 |
|
|
|
|
(Restated note 2(a)) |
|
Net cash flow from operating activities |
19 |
8,033 |
12,622 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Purchase of property, plant and equipment |
|
(1,036) |
(1,475) |
|
Proceeds from sale of property, plant and equipment |
|
98 |
122 |
|
Purchase of subsidiary undertakings and minority interests |
|
(678) |
(17,068) |
|
Cash acquired on purchase of subsidiary undertakings |
|
- |
294 |
|
Cash movement on disposal of subsidiary undertakings |
|
(224) |
(783) |
|
Proceeds from sale of subsidiary undertakings |
|
457 |
10,272 |
|
Purchase of intangible assets |
|
(558) |
(924) |
|
Proceeds from sale of intangible assets |
|
301 |
- |
|
Net cash used in investing activities |
|
(1,640) |
(9,562) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Dividends paid to equity holders of the Company |
|
(5,779) |
(5,257) |
|
Dividends paid to minority shareholders in subsidiary undertakings |
|
(529) |
(331) |
|
Issue of ordinary shares |
|
61 |
423 |
|
Increase in long term loans |
|
- |
5,000 |
|
Purchase of treasury shares |
|
(40) |
(3,968) |
|
Net cash flows used in financing activities |
|
(6,287) |
(4,133) |
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
106 |
(1,073) |
|
Cash, cash equivalents and bank overdrafts at beginning of the year |
|
64 |
1,137 |
|
|
|
|
|
|
Cash, cash equivalents and bank overdrafts at end of the year |
|
170 |
64 |
|
|
|
|
|
|
Reconciliation of net debt |
|
|
|
|
Cash and cash equivalents at beginning of the year |
|
3,697 |
4,443 |
|
Bank overdraft at beginning of the year |
|
(3,633) |
(3,306) |
|
Borrowings at beginning of the year |
|
(18,000) |
(13,000) |
|
Net debt at beginning of the year |
|
(17,936) |
(11,863) |
|
Net increase/(decrease) in cash and cash equivalents |
|
106 |
(1,073) |
|
Increase in long term loans |
|
- |
(5,000) |
|
|
|
|
|
|
Cash and cash equivalents at end of the year |
|
1,506 |
3,697 |
|
Bank overdrafts at end of the year |
|
(1,336) |
(3,633) |
|
Borrowings at end of the year |
|
(18,000) |
(18,000) |
|
Net debt at end of the year |
|
(17,830) |
(17,936) |
Notes
General Information
Wilmington Group plc ('the Company') is a public limited company which is listed on the London Stock Exchange and is incorporated and domiciled in the UK.
1. Nature of the financial information
The following financial information does not amount to full accounts within the meaning of Section 434 of Companies Act 2006. The financial information has been extracted from the Group's Annual Report and Accounts for the year ended 30 June 2009 on which the auditors have not yet expressed an opinion. Statutory accounts for the year ended 30 June 2008 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. As required by the European Union's IAS Regulation and the Companies Act 2006, the Group now prepares its consolidated financial statements in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union.
Copies of the Annual Report and Accounts will be posted to shareholders shortly and will be available from the Company's registered office at Paulton House, 8 Shepherdess Walk, London N1 7LB.
2. Accounting Policies
The preliminary announcement for the year ended 30 June 2009 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 2008, except as stated below.
(a) Prior period adjustments
Management have reviewed the accounting policies adopted by the Group and have made the following adjustments in the year to be in line with industry best practice:
-
Revenue recognition relating to on-line content has been amended in the year. Online directory advertisement revenue, which historically was recognised on publication, is now recognised over the period that the advertisement remains online.
-
In addition, the movement relating to the unwinding of the discount on the provision for the future purchase of minority interests which was previously treated as an adjustment to goodwill is now reflected in the Income Statement as a finance charge over the discounting period and also a deferred tax asset relating to the amortisation of non qualifying intangible assets acquired prior to April 2002, which was first recognised on the transition to IFRS, whilst remaining a potential benefit, is no longer recognised in the Consolidated Balance Sheet.
The effect of these adjustments (which are not affected by the reclassification of certain operations to discontinued) at 30 June 2008 is to reduce goodwill from £69,435,000 to £67,969,000, to increase deferred revenue carried forward from £11,323,000 to £15,081,000, decrease income tax liabilities from £3,368,000 to £2,316,000, increase deferred tax liabilities from £6,808,000 to £7,620,000 and to reduce shareholder's funds from £65,447,000 to £60,624,000 with a minority interest reduction from £886,000 to £725,000. Notes 12, 16 and 18 show the restatements of goodwill, deferred revenue, and minority interests respectively. The effect of these adjustments is to reduce profit on continuing activities before income tax for the year ended 30 June 2008 by £789,000 and to reduce profit on continuing activities after tax by £814,000.
(b) New standards and interpretations applied
IFRS 8 'Operating segments' which is effective for annual periods beginning on or after 1 January 2009 has been early adopted. IFRS 8 replaces IAS 14, 'Segment reporting', and requires a 'management approach' under which segment information is presented on the same basis as that used for internal reporting purposes.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 July 2008, but are not currently relevant for the Group.
-
IFRIC 12, 'Service concession arrangements'.
-
IFRIC 13, 'Customer loyalty programmes'.
-
IFRIC 14 'IAS 19 - the limit on a defined benefit asset, minimum funding requirements and their interaction'.
-
IFRIC 15, 'Agreement for the Construction of Real Estate'.
-
IFRIC 16, 'Hedges of a Net Investment in a Foreign Operation'.
-
IFRIC 17, 'Distribution of Non-cash Assets'.
-
IFRIC 18, 'Transfers of Assets from Customers'.
3. Segmental information
As explained in the Business Review the Group has adjusted the presentation of its segmental results shown below. Prior period comparatives have been restated. The Group has early adopted IFRS8 'Operating Segments' and the analysis below is therefore on a 'management approach' basis.
(a) Primary reporting format - business segments
Year ended 30 June 2009
|
|
Professional Training & Events |
Professional Publishing & Information |
Total |
|
|
£'000 |
£'000 |
£'000 |
|
Revenue |
47,701 |
38,567 |
86,268 |
|
Profit before amortisation and impairment |
6,909 |
10,418 |
17,327 |
|
Amortisation and impairment |
(5,261) |
(2,446) |
(7,707) |
|
Profit after amortisation and impairment |
1,648 |
7,972 |
9,620 |
|
|
|
|
|
|
Unallocated central overheads (includes amortisation of £77,000) |
|
|
(2,847) |
|
Profit from continuing operations before non-recurring items |
|
|
6,773 |
|
Non-recurring items |
|
|
(1,674) |
|
Profit from continuing operations after non-recurring items |
|
|
5,099 |
|
Net finance costs |
|
|
(2,249) |
|
Profit on continuing activities before taxation |
|
|
2,850 |
|
Income tax expense |
|
|
(1,911) |
|
Profit on continuing activities after taxation |
|
|
939 |
|
Loss from discontinued operations |
|
|
(690) |
|
Net profit for the year |
|
|
249 |
(a) Primary reporting format - business segments
Year ended 30 June 2008 (Restated note 2(a))
|
|
Professional Training & Events |
Professional Publishing & Information |
Total |
|
|
£'000 |
£'000 |
£'000 |
|
Revenue |
50,437 |
38,391 |
88,828 |
|
Profit before amortisation and impairment |
9,034 |
11,457 |
20,491 |
|
Amortisation and impairment |
(2,832) |
(1,692) |
(4,524) |
|
Profit after amortisation and impairment |
6,202 |
9,765 |
15,967 |
|
Unallocated central overheads (includes amortisation of £36,000) |
|
|
(2,329) |
|
Profit from continuing operations before non-recurring items |
|
|
13,638 |
|
Non-recurring items |
|
|
- |
|
|
|
|
|
|
Profit from continuing operations after non-recurring items |
|
|
13,638 |
|
Net finance costs |
|
|
(1,775) |
|
Profit on continuing activities before taxation |
|
|
11,863 |
|
Income tax expense |
|
|
(3,749) |
|
Profit on continuing activities after taxation |
|
|
8,114 |
|
Profit from discontinued operations |
|
|
1,025 |
|
Net profit for the year |
|
|
9,139 |
(b) Secondary reporting format - geographical segments
The geographical analysis of revenue by destination is as follows:
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
(Restated note 2(a)) |
|
United Kingdom |
70,774 |
74,604 |
|
Overseas |
15,494 |
14,224 |
|
|
86,268 |
88,828 |
|
|
|
|
|
(c) Adjusted profit |
|
|
|
Adjusted profit is defined as profit before taxation, amortisation and non-recurring items and reconciles to profit on continuing activities before taxation as follows: |
||
|
|
|
|
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
(Restated note 2(a)) |
|
Profit on continuing activities before taxation |
2,850 |
11,863 |
|
Amortisation of intangible assets |
5,034 |
4,560 |
|
Impairment of goodwill |
2,750 |
- |
|
Unwinding of the discount on the provision for future purchase of minority interests |
927 |
625 |
|
Share based payments |
80 |
177 |
|
Non-recurring items (see note 5) |
1,674 |
- |
|
Adjusted profit |
13,315 |
17,225 |
|
|
|
|
|
4. Operating expenses |
|
|
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
(Restated note 2(a)) |
|
Distribution and selling costs |
7,704 |
7,887 |
|
Administrative expenses (excluding amortisation and impairment of intangible assets) |
36,943 |
35,645 |
|
|
44,647 |
43,532 |
|
Amortisation and impairment of intangible assets (administrative expense) |
7,784 |
4,560 |
|
Total operating expenses before non-recurring items |
52,431 |
48,092 |
5. Non-recurring items
The following items of an unusual nature, size or incidence have been charged to profit during the period and shown as non-recurring items.
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
Restructuring costs |
1,124 |
- |
|
Abortive transaction costs |
550 |
- |
|
|
|
|
|
|
1,674 |
- |
Restructuring costs reflect specific reorganisation and redundancy costs arising as a result of the restructuring referred to in the Chairman's Statement.
On 28 July 2008, the Company announced that it had received an approach which may or may not have led to an offer. On 17 September 2008, the Company announced that it was no longer in discussion with any party regarding a potential offer for the Company. The abortive transaction costs relate to the investigation of this approach together with the due diligence costs of a potential acquisition which, had the approach led to a successful offer for the company, would have been subject to the same financing.
6. Finance income and costs
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
(Restated note 2(a)) |
|
Finance income comprises: |
|
|
|
Bank interest receivable |
175 |
331 |
|
|
|
|
|
Finance costs comprise: |
|
|
|
Interest payable on bank loans and overdrafts |
(1,151) |
(1,222) |
|
Facility fees |
(346) |
(259) |
|
Unwinding of the discount on the provision for future purchase of minority interests |
(927) |
(625) |
|
|
(2,424) |
(2,106) |
7. Income tax expense
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
The tax charge comprises: |
|
(Restated note 2(a)) |
|
UK corporation tax at current rates |
2,812 |
4,625 |
|
Adjustment to tax charge in respect of previous years |
(397) |
18 |
|
|
2,415 |
4,643 |
|
Foreign tax |
558 |
483 |
|
Total current tax |
2,973 |
5,126 |
|
Deferred income tax credit |
(1,062) |
(1,377) |
|
Income tax expense |
1,911 |
3,749 |
|
|
||
|
|
|
|
|
Factors affecting the tax charge for the year: |
|
|
|
|
||
|
|
|
|
|
The tax assessed for the year is higher than the effective rate of corporation tax in the UK of 28% (2008: 29.5%) for the year ended 30 June 2009. The differences are explained below: |
||
|
|
|
|
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Reconciliation of tax charge: |
|
|
|
Profit on ordinary activities before tax |
2,850 |
11,863 |
|
|
|
|
|
Profit on ordinary activities multiplied by the 'effective' rate of corporation tax in the year of 28% (2008: 29.5%) |
798 |
3,500 |
|
|
|
|
|
Effect of: |
|
|
|
Depreciation and amortisation in excess of capital allowances |
254 |
76 |
|
Foreign tax rate differences |
151 |
105 |
|
Adjustment to tax charge in respect of previous years |
(397) |
18 |
|
Impairment not subject to tax |
770 |
- |
|
Put option discount not subject to tax |
260 |
184 |
|
Other items not subject to tax |
75 |
(134) |
|
Income tax expense |
1,911 |
3,749 |
8. (Loss)/profit for the year from discontinued operations
As referred to in note 11, during the current year the Group disposed off its interests in Muze Europe Limited, HPCi and Press Gazette.
The results of these businesses are treated as discontinued operations, their net results have been included in the consolidated Income Statement as the loss on discontinued operations after taxation and the comparatives have been restated on a consistent basis.
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Revenue |
1,071 |
6,348 |
|
Expenses |
(1,467) |
(6,376) |
|
Loss before amortisation and taxation |
(396) |
(28) |
|
Amortisation |
(127) |
(716) |
|
Loss before taxation |
(523) |
(744) |
|
Attributable tax credit |
147 |
221 |
|
Net operating loss attributable to discontinued operations |
(376) |
(523) |
|
(Loss)/profit on disposal of discontinued operations before taxation |
(286) |
2,160 |
|
Attributable tax charge |
(28) |
(612) |
|
|
(314) |
1,548 |
|
(Loss)/profit on discontinued operations after taxation |
(690) |
1,025 |
9. Dividends
Amounts recognised as distributions to equity holders in the year:
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
pence per share |
pence per share |
£'000 |
£'000 |
|
Final dividends recognised as distributions in the year |
4.7 |
4.0 |
3,879 |
3,352 |
|
Interim dividends recognised as distributions in the year |
2.3 |
2.3 |
1,900 |
1,905 |
|
Total dividends paid |
7.0 |
6.3 |
5,779 |
5,257 |
|
Dividend proposed |
4.7 |
4.7 |
3,883 |
3,879 |
10. Earnings/(loss) per share
To allow shareholders to gain a better understanding of the trading performance of the Group, adjusted earnings per ordinary share has been calculated using an adjusted profit after taxation and minority interests but before amortisation and impairment of intangible assets and goodwill, non-recurring costs, share based payments and unwinding of the discount on the provision for the future purchase of minority interests.
(a) From continuing operations
The calculation of the basic and diluted earnings per share is based on the following data:
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
(Restated note 2(a)) |
|
Earnings from continuing and discontinuing operations for the purpose of basic earnings per share |
(311) |
8,376 |
|
Add back loss/(profit) from discontinued operations |
690 |
(1,025) |
|
Earnings from continuing operations for the purpose of basic earnings per share |
379 |
7,351 |
|
Add: Amortisation (net of minority interest effect) |
5,021 |
4,544 |
|
Non-recurring items |
1,674 |
- |
|
Share based payments |
80 |
177 |
|
Unwinding of the discount on the provision for the future purchase of minority interests |
927 |
625 |
|
Tax effect of the above adjustments |
(2,157) |
(1,577) |
|
Impairment |
2,750 |
- |
|
Adjusted earnings for the purposes of adjusted earnings per share |
8,674 |
11,120 |
|
|
|
|
|
|
Number |
Number |
|
Weighted average number of ordinary shares for the purposes of basic and adjusted earnings per share |
82,590,096 |
83,356,950 |
|
|
|
|
|
Effect of dilutive potential ordinary shares: |
|
|
|
|
|
|
|
Exercise of share options |
806,790 |
557,373 |
|
Weighted average number of ordinary shares for the purposes of diluted earnings per share |
83,396,886 |
83,914,323 |
|
|
|
|
|
Basic earnings per share |
0.46p |
8.82p |
|
Diluted earnings per share |
0.45p |
8.76p |
|
Adjusted basic earnings per share |
10.50p |
13.34p |
|
Adjusted diluted earnings per share |
10.40p |
13.25p |
(b) From continuing and discontinued operations
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
(Restated note 2(a)) |
|
(Loss)/earnings from continuing and discontinuing operations for the purpose of basic earnings per share |
(311) |
8,376 |
|
Add: Amortisation (net of minority interest effect ) |
5,139 |
5,224 |
|
Non-recurring items |
1,674 |
- |
|
Share based payments |
80 |
177 |
|
Unwinding of the discount on the provision for the future purchase of minority interests |
927 |
625 |
|
Tax effect of the above adjustments |
(2,190) |
(1,778) |
|
Impairment |
2,750 |
- |
|
Adjusted earnings for the purposes of adjusted earnings per share |
8,069 |
12,624 |
|
|
|
|
|
Basic (loss)/earnings per share |
(0.38)p |
10.05p |
|
Diluted (loss)/earnings per share |
(0.38)p |
9.98p |
|
Adjusted basic earnings per share |
9.77p |
15.14p |
|
Adjusted diluted earnings per share |
9.68p |
15.04p |
(c) From discontinued operations
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
(Restated note 2(a)) |
|
(Loss)/profit from discontinued operations for the purpose of basic earnings per share |
(690) |
1,025 |
|
Add: Amortisation (net of minority interest effect) Tax effect of the above adjustment |
118 (33) |
680 (201) |
|
Adjusted (loss)/profit for the purposes of adjusted earnings per share |
(605) |
1,504 |
|
|
|
|
|
Basic (loss)/earnings per share |
(0.84)p |
1.23p |
|
Diluted (loss)/earnings per share |
(0.84)p |
1.22p |
|
Adjusted (loss)/earnings per share |
(0.73)p |
1.80p |
|
Adjusted (loss)/earnings per share |
(0.73)p |
1.79p |
11. Acquisitions and disposals
Acquisitions
There were no new acquisitions of subsidiaries during the year. As a result of changes in the estimates of the deferred consideration payable for the acquisitions of The Matchett Group Limited, AP Information Services Limited and Aspire Publications Limited, the goodwill arising on these acquisitions has been reduced by £164,000.
Minority Interest acquired
During the year the Group acquired an additional 5% of the issued share capital of Beechwood House Publishing Limited under the terms of a put agreement based on a predetermined multiple of the average prior two years profits.
Disposals
During the year the Group disposed of its interests in Muze Europe Limited, a music information business, HPCi, a magazine publishing business and Press Gazette magazine. The consideration received for the Group's stake in Muze Europe Limited was £500,000 of which £250,000 was received on completion together with the repayment of an intercompany loan. The remaining £250,000 was received in May 2009. The consideration receivable for HPCi is £500,000 of which £250,000 is receivable in October 2009 and the remainder in October 2010. The consideration received for the sale of Press Gazette magazine was £75,000.
12. Goodwill
|
|
£'000 |
|
|
(Restated note 2(a)) |
|
Cost |
|
|
At 1 July 2007 as previously reported |
52,941 |
|
Adjustment relating to the unwinding of the discount on the provision for future purchase of minority interests (see note 2(a)) |
(841) |
|
At 1 July 2007 as restated |
52,100 |
|
Acquisitions |
13,725 |
|
Change in provisions for future purchase of minority interests |
2,542 |
|
Change in minority interest reserve |
(398) |
|
At 1 July 2008 as restated (previously £69,435,000) |
67,969 |
|
|
|
|
Acquisitions (see note 11) |
(164) |
|
Disposals |
(103) |
|
Change in provisions for future purchase of minority interests |
(2,551) |
|
As at 30 June 2009 |
65,151 |
|
|
|
|
Impairment |
|
|
At 1 July 2007 and 1 July 2008 |
- |
|
|
|
|
Charge for the year |
2,750 |
|
At 30 June 2009 |
2,750 |
|
|
|
|
Net book amount |
|
|
At 30 June 2009 |
62,401 |
|
At 30 June 2008 |
67,969 |
Goodwill of £50,402,000 (2008: £55,378,000) relates to the Group's Professional, Training and Events division. The remaining goodwill of £11,999,000 (2008: £12,488,000) relates to the Group's Professional Publishing and Information division. The major constituents of the Professional Training and Events division are £32,809,000 (2008: £33,475,000) in respect of the Group's Central Law Training cash generating unit, £5,974,000 (2008: £9,831,000) in respect of the Matchett Group and £6,830,000 (2008: £6,830,000) in respect of Bond Solon. The major constituent of the Professional Publishing and Information division's goodwill is £4,712,000 (2008: £4,752,000) in respect of AP Information Service/Aspire.
The Group tests annually for impairment. The recoverable amount of the goodwill is determined from value in use calculations for each cash generating unit ('CGU'). These calculations use pre tax cash flow projections based on financial budgets and forecasts approved by management covering a three year period. Cash flows beyond the three year period are extrapolated using estimated long term growth rates.
Key assumptions for the value in use calculations are those regarding discount rates and long term growth rates. Management has used a pre tax discount rate of 11.1% (2008: 10%) that reflect current market assessments for the time value of money and the risks associated with the cash generating units. As the Group manages its treasury function on a Group wide basis, the same discounted rate has been used for all CGU's as the Directors believe that the risks are the same for each CGU. The long term growth rates used are based on management's expectations of future changes in the markets for each cash generating unit and fall within the range - 5% to 1.25%.
The impairment charge of £2,750,000 arose in relation to The Matchett Group which has been adversely impacted by the downturn in the investment banking sector.
Management has performed sensitivity analysis on the impairment calculations by reducing the growth rates by 1% and by increasing the pre tax discount rate to 12.5%. This would result in the impairment charge in respect of The Matchett Group increasing to £797,000 and £929,000 respectively. No other impairment charge would be required.
13. Inventories
|
|
30 June 2009 |
30 June 2008 |
|
|
£'000 |
£'000 |
|
Raw materials |
16 |
55 |
|
Work in progress |
1,285 |
1,652 |
|
Books held for sale |
41 |
62 |
|
|
1,342 |
1,769 |
14. Trade and other receivables
|
|
30 June 2009 |
30 June 2008 |
|
|
£'000 |
£'000 |
|
Amounts due within one year |
|
|
|
Trade receivables |
13,940 |
19,402 |
|
Other receivables |
813 |
1,829 |
|
Prepayments and accrued income |
3,654 |
2,182 |
|
|
18,407 |
23,413 |
15. Derivative financial instruments
|
|
30 June 2009 |
30 June 2008 |
|
|
£'000 |
£'000 |
|
Interest rate swap - cash flow hedge |
(1,045) |
409 |
|
Forward currency contract |
25 |
4 |
|
|
(1,020) |
413 |
16. Trade and other payables
|
|
30 June 2009 |
30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
(Restated note 2(a)) |
|
Trade payables |
3,098 |
6,117 |
|
Other payables |
3,215 |
2,092 |
|
Other taxes and social security |
2,327 |
3,240 |
|
Subscriptions and deferred revenue |
13,913 |
15,081 |
|
Accruals |
9,163 |
10,932 |
|
|
31,716 |
37,462 |
17. Provisions for future purchase of minority interests
|
|
Current provisions |
Non current provisions |
|
|
|
£'000 |
£'000 |
|
|
At 1 July 2007 |
118 |
6,247 |
|
|
Provision for new put options issued over minority interests |
- taken to goodwill |
- |
977 |
|
|
- taken to minority reserve |
- |
793 |
|
Provisions utilised in respect of acquisitions of minority interests |
(118) |
- |
|
|
Unwinding of discount |
- |
626 |
|
|
Change in value of existing provisions |
- |
1,564 |
|
|
Non-current provisions becoming current |
939 |
(939) |
|
|
At 1 July 2008 |
939 |
9,268 |
|
|
Provisions utilised in respect of acquisitions of minority interests |
(939) |
- |
|
|
Unwinding of discount |
- |
927 |
|
|
Change in value of existing provisions |
- |
(2,637) |
|
|
Non-current provisions becoming current |
2,148 |
(2,148) |
|
|
At 30 June 2009 |
2,148 |
5,410 |
|
Provisions represent the estimated future cost (discounted at a rate of 10% (2008: 10%) to reflect the time value of money) required to settle put options held by minority shareholders over minority interest shares, should said put options be exercised.
The actual settlement timing and value is dependant upon when (and if) the minority shareholders choose to exercise their options and the profitability of the underlying companies at the date of exercise. For the purposes of estimating the above provision and the classification between current and non-current, it has been assumed that put options are exercised at the first available opportunity being the Directors' best estimate of when the option will be exercised.
18. Minority Interests
|
|
Minority interest - share of results and funds |
Minority interest - provision for future acquisition |
Net Minority interest |
|
|
(Restated note 2(a) ) |
|
|
|
|
£'000 |
£'000 |
£'000 |
|
At 1 July 2007 as previously reported |
2,154 |
(1,358) |
796 |
|
Adjustment relating to change in revenue recognition policy (see note 2(a)) |
(139) |
- |
(139) |
|
At 1 July 2007 as restated |
2,015 |
(1,358) |
657 |
|
Profit for the year |
762 |
(756) |
6 |
|
|
2,777 |
(2,114) |
663 |
|
Dividends paid |
(331) |
331 |
- |
|
Acquisitions during the year |
913 |
(793) |
120 |
|
Acquisition of minorities during the year |
(27) |
27 |
- |
|
Movement in minorities due to company sold during the year |
(58) |
- |
(58) |
|
At 1 July 2008 |
3,274 |
(2,549) |
725 |
|
Profit for the year |
560 |
(324) |
236 |
|
|
3,834 |
(2,873) |
961 |
|
Dividends paid |
(529) |
529 |
- |
|
Movement in minorities due to company sold during the year |
(725) |
- |
(725) |
|
Acquisition of minorities during the year |
(170) |
170 |
- |
|
As at 30 June 2009 |
2,410 |
(2,174) |
236 |
19. Net cash flow from operating activities
|
|
Year ended 30 June 2009 |
Year ended 30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
(Restated note 2(a)) |
|
Profit from operations before non-recurring items |
6,773 |
13,638 |
|
Non-recurring items |
(1,674) |
- |
|
Profit after non-recurring items |
5,099 |
13,638 |
|
Operating loss from discontinued operations |
(523) |
(744) |
|
Depreciation of property, plant and equipment |
1,264 |
1,389 |
|
Amortisation of intangible assets |
5,162 |
5,276 |
|
Impairment of goodwill |
2,750 |
- |
|
Loss/(profit) on disposal of property, plant and equipment |
25 |
(13) |
|
Share based payments |
80 |
177 |
|
|
13,857 |
19,723 |
|
Operating cash flows before movements in working capital |
|
|
|
Decrease/(increase) in inventories |
427 |
(433) |
|
Decrease/(increase) in receivables |
4,748 |
(1,103) |
|
(Decrease)/increase in payables |
(5,105) |
404 |
|
Cash generated by operations |
13,927 |
18,591 |
|
Tax paid |
(4,704) |
(4,866) |
|
Interest paid |
(1,365) |
(1,434) |
|
Interest received |
175 |
331 |
|
Net cash flow from operating activities |
8,033 |
12,622 |
This information is provided by RNS
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