Half Yearly Report

RNS Number : 7496B

Wilmington Group Plc

24 February 2011

 



24 February 2011

WILMINGTON GROUP PLC

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

Half Year Results for the six months ended 31 December 2010

Wilmington Group plc, the professional information and training group, today announces its half year results and interim management report for the six months ended 31 December 2010.

Highlights

· Robust performance, with year on year growth in revenue, up 7.4% to £39.7m (up 3.2% on a like for like basis, excluding acquisitions), and Adjusted Profit before Tax¹, up 10.3% to £6.1m

Statutory profit before tax, after £0.5m non-recurring items, was £2.5m (2009: £2.7m, no non-recurring items) 

· Strong performance from Training & Events

-     Profit² up by 10.1% to £3.1m on revenues up 5.4% to £21.9m; excluding incremental investment spend, profit increased by 22.9% to £3.5m

-     Matchett, which provides graduate entry training to international investment banks, showed significant growth; trading conditions in the legal sector remained difficult 

· Stable performance from Publishing & Information

-     Profit² grew by 6.7% to £4.8m on revenues up 9.9% to £17.7m, primarily reflecting contribution from Axco acquisition 

· £21.3m acquisition of Axco, the leading provider of international compliance and regulatory information for the global insurance industry, in September 2010

· Increased investment in organic growth opportunities - flexible Legal Practice Course, extending depth of content, accelerating move of remaining products into online environment, expanding webinar programme, further overseas expansion, extension of compliance and trusts training programmes  

· Strong cash conversion, increasing to 99% of operating profit (2009: 87%)

· Dividend maintained  

· Solid platform for long term growth

¹  Profit before non-recurring items, unwinding of the discount on the provision for future purchase of non-controlling interests, share based payments and amortisation

² Segmental profit before non-recurring items, central overheads, share based payments, amortisation, net finance costs and tax

David Summers, Chairman, commented: 

"As a result of the actions taken in prior years, Wilmington has built a solid platform for long term growth.  The Group has seen trading conditions improve in the six months ended 31 December 2010 as compared to the same period in 2009.  Indeed, throughout calendar year 2010 we have seen an improvement in trading performance compared to calendar year 2009.   We expect underlying trading conditions in the second half of our financial year to be broadly similar to the same period in the prior year.  Our investment plans are on target and we anticipate that investment will continue in the second half of the current financial year.  It is pleasing to report that the Group continues to generate strong cash flows. 

The Group continues to look for acquisitions that have a good strategic fit with our existing businesses and have the ability to generate long term shareholder value.  We anticipate that the recent acquisitions will at least match management's expectations at the time of acquisition.

Whilst underlying economic conditions remain tough we believe that there are many exciting opportunities within our professional markets."

ends

For further information, please contact:

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

Notes to Editors

Wilmington Group plc is one of the UK's leading providers of information and training for professional business markets. The Group provides training, arranges industry events and publishes directories, databases, magazines and special reports for a variety of markets including the legal, health, accounting, pension, charities, financial and insurance sectors. Capitalised at approximately £140 million, Wilmington floated on the London Stock Exchange in 1995.

WILMINGTON GROUP PLC

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

Interim Management Report

Results for the six months ended 31 December 2010

I am pleased to report that Wilmington has delivered a robust performance in the six months ended 31 December 2010, showing year on year growth in revenue and Adjusted Profit before Tax¹.

In September 2010 the Group acquired Axco Information Services ('Axco') for £21.3m.  Axco's trading for the three months ended 31 December 2010 has been in line with management's expectations.  We are further encouraged by the subscription renewal levels for 2011 and remain confident in the opportunities for further growth of this business.

In November 2010 the Group purchased an additional 5% shareholding in Beechwood House Publishing ('Beechwood'), taking the Group's holding to 90%.  The Group also acquired the remaining 17.3% of Mercia Group, thus making it a wholly owned subsidiary.

The Group's increased investment in organic opportunities is developing as planned. In addition to major investment in the flexible Legal Practice Course, we are extending the depth of content in the Group's information products, accelerating the move of our remaining print products into an online environment and expanding the webinar programme.  The Publishing and Information business supplemented its data assets during the period, purchasing the assets of Onmedica (health and pharmaceutical data) and Guidestar UK (charities data).  This period has also seen further overseas expansion of our training for investment banks and the extension of the compliance and trusts training programmes.

Financial Performance

Revenue in the six months to 31 December 2010 increased by 7.4% to £39.7m (2009: £36.9m).  On a like for like basis, excluding the acquisition of Axco, revenue increased by 3.2%.

Adjusted Profit before Tax¹ increased by 10.3% to £6.1m (2009: £5.5m).  This includes £0.7m of incremental investment costs expensed in the period in relation to the investments described above, together with £0.3m profit arising from the Axco acquisition.

Adjusted Basic Earnings per Share² increased by 10.5% to 4.86p (2009: 4.40p). Basic earnings per share decreased to 1.57p (2009: 1.83p).

Operating cash flow increased by 22.5% to £6.4m (2009: £5.2m), representing 98.5% of operating profit (before non-recurring costs, amortisation, net finance costs and taxation) (2009: 86.8%).

At 31 December 2010 the net assets of the Group were £50.9m (2009: £51.6m) with deferred revenue of £16.8m (2009: £12.1m).  At 31 December 2010, following the acquisition of Axco, the Group had net debt of £40.9m (2009: £20.5m), representing 68.2% utilisation of the Group's £60m facilities, which are committed to March 2012.

Dividend

It is the Board's intention to maintain the dividend at the same level as the prior year.  An interim dividend of 3.5p per share (2009 interim: 3.5p, June 2010 final: 3.5p), will be paid on 7 April 2011 to shareholders on the register as at 10 March 2011. 

Publishing & Information

The Publishing & Information Division has delivered a stable performance in the six months ended 31 December 2010.

Segmental revenue, including the contribution from Axco post acquisition, increased by 9.9% to £17.7m (2009: £16.2m).  Underlying revenue (before acquisitions) of £16.2m was broadly in line with last year (2009: £16.2m).

Segmental profits before non-recurring items, central overheads, share based payments, amortisation, net finance costs and tax have grown by 6.7% to £4.8m (2009; £4.5m); this includes incremental investment cost expensed during the six months to 31 December 2010 of £0.3m, which was broadly offset by the impact of the acquisition of Axco.

Axco is a leading provider of information for the global insurance industry. It provides comprehensive information on the markets, regulation and taxation environment for the insurance industry in 165 countries worldwide. This high value information is delivered electronically to Axco's subscriber base which includes international insurers, reinsurers and brokers. Subscriber renewal rates in recent years have been in excess of 95%.  The acquisition is highly complementary to our pension law and regulation information business and we believe that the Axco information assets together with its strong brand and subscription base will provide opportunities to develop further solutions for our current customers, who are operating in an increasingly regulated environment, and to develop new customers in emerging markets worldwide.  Pendragon, our pension information service, has seen continuing steady growth.  We are excited by the opportunities for long term growth within Axco's global insurance information market and we are confident that its development will be assisted by collaboration with Pendragon.

Wilmington Business Intelligence is accelerating the remaining transition from print to online by investing in product development and extending the content for data products to further assist professional markets.  The assets of Guidestar UK were acquired during the six months to reinforce our position as the leading provider of information on the charity sector in the UK.  Smee & Ford continues to grow as a result of securing long term partners and further investment in our data assets.

The healthcare businesses in both the UK and France have remained stable despite a difficult environment within which they are operating.  In July 2010 Beechwood purchased the assets of Onmedica, an online medical information service and digital pharmaceutical marketing business, further enhancing its healthcare data.  The Group continues to invest in the development of this service and is confident that it can benefit from the pharmaceutical sector knowledge within Wilmington's healthcare businesses.

Training & Events

The Training & Events Division has delivered strong financial results for the first six months of the financial year.

Segmental revenue in the six months ended 31 December 2010 increased by 5.4% to £21.9m (2009: £20.8m). 

Segmental profits in the six months to 31 December 2010, before non-recurring items, central overheads, share based payments, amortisation, net finance costs and tax increased by 10.1% to £3.1m (2009: £2.8m).  Excluding incremental investment spend profits increased by 22.9% to £3.5m.  The Training & Events business reacted quickly to the economic down turn by creating a robust structure and an efficient cost base.  This has allowed margins to grow as revenues improve.

Matchett Group, which provides graduate entrant training to international investment banks has shown significant growth year on year.  The graduate intake in the banking sector has shown an uplift on the previous year and the business has seen a positive impact from the growth in the Asian markets.  This is, however, a seasonal business and the Group therefore does not expect to see a significant impact from Matchett in the second half of the financial year.

As previously reported, trading conditions in the legal training sector, where UK lawyers have reduced training budgets, were difficult.  Webinars, an alternative to face-to-face training continue to be successful, showing strong year on year growth.  Central Law Training is currently developing a number of major course programmes for the second half of the financial year and we are seeing good enrolments on these programmes.

With the success of being appointed the lead training provider to the government of Singapore, International Compliance Training continues with further investment overseas.  A new contract has been awarded by the Malaysian authorities to develop training programmes on anti money laundering.  The next six months will also see significant investment to develop and localise training programmes.

Outlook

As a result of the actions taken in prior years, Wilmington has built a solid platform for long term growth.  The Group has seen trading conditions improve in the six months ended 31 December 2010 as compared to the same period in 2009.  Indeed throughout calendar year 2010 we have seen an improvement in trading performance compared to calendar year 2009.  We expect underlying trading conditions in the second half of our financial year to be broadly similar to the same period in the prior year.  Our investment plans are on target and we anticipate that investment will continue in the second half of the current financial year.  It is pleasing to report that the Group continues to generate strong cash flows. 

The Group continues to look for acquisitions that have a good strategic fit with our existing businesses and have the ability to generate long term shareholder value.  We anticipate that the recent acquisitions will at least match management's expectations at the time of acquisition.

Whilst underlying economic conditions remain tough we believe that there are many exciting opportunities within our professional markets.

David L Summers OBE

Chairman

24 February 2011

[1] Adjusted Profit before Tax - see note 5 to the interim financial statements

² Adjusted Basic Earnings per Share - see note 11 to the interim financial statements

Consolidated Income Statement

		Six months ended 31 December 2010	Six months ended 31 December 2009	Twelve months ended 30  June  2010
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Revenue	6	39,671	36,948	78,404
Cost of sales		(12,361)	(12,280)	(24,833)
Gross profit		27,310	24,668	53,571
Operating expenses excluding amortisation and non-recurring items		(20,798)	(18,636)	(39,380)
Amortisation		(2,705)	(2,458)	(4,882)
Operating expenses before non-recurring items		(23,503)	(21,094)	(44,262)
Non-recurring items	7	(475)	-	(113)
Total operating expenses		(23,978)	(21,094)	(44,375)
Operating profit		3,332	3,574	9,196
Finance income		20	15	7
Finance costs		(883)	(931)	(1,874)
Profit before income tax		2,469	2,658	7,329
Income tax expense	8	(914)	(947)	(2,531)
Profit for the period		1,555	1,711	4,798
Profit is attributable to :
Equity Shareholders of the Company		1,299	1,514	4,447
Non-controlling interests		256	197	351
		1,555	1,711	4,798
Earnings per share attributable to Equity Shareholders of the Company	11
Basic earnings per share		1.57p	1.83p	5.38p
Diluted earnings per share		1.53p	1.81p	5.30p

All items in the current and comparative periods relate to continuing activities.

Consolidated Statement of Comprehensive Income

		Six months ended 31 December 2010	Six months ended 31 December 2009	Twelve months ended 30 June  2010
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Profit for the period		1,555	1,711	4,798
Other comprehensive income
Interest rate swap fair value gain/(loss) taken directly to equity		617	(3)	89
Tax on interest rate swap fair value gain/(loss) taken directly to equity		(171)	1	(25)
Exchange translation difference		3	26	(5)
Other comprehensive income for the period, net of tax		449	24	59
Total comprehensive income for the period		2,004	1,735	4,857
Total comprehensive income for the period is attributable to :
Equity Shareholders of the Company		1,748	1,538	4,501
Non-controlling interests		256	197	356
		2,004	1,735	4,857

Consolidated Statement of Changes in Equity

		Attributable to Equity Shareholders of the Company
		Share capital (note 17) £'000	Other reserves £'000	Retained earnings £'000	Total £'000	Non- controlling interests £'000	Total equity £'000
Balance at 1 July 2009		43,690	427	9,464	53,581	236	53,817
Profit for the period		-	-	1,514	1,514	197	1,711
Exchange translation difference		-	26	-	26	-	26
Interest rate swap fair value loss taken directly to equity		-	-	(3)	(3)	-	(3)
Tax on interest rate swap fair value loss taken directly to equity		-	-	1	1	-	1
		43,690	453	10,976	55,119	433	55,552
Dividends paid		-	-	(3,883)	(3,883)	(366)	(4,249)
Net movement on share based payment reserve		-	81	-	81	-	81
Movement in offset of provisions for future purchase of non-controlling interests		-	-	-	-	240	240
Balance at 31 December 2009 (unaudited)		43,690	534	7,093	51,317	307	51,624
Profit for the period		-	-	2,933	2,933	154	3,087
Exchange translation difference		-	(36)	-	(36)	5	(31)
Interest rate swap fair value gain taken directly to equity		-	-	92	92	-	92
Tax on interest rate swap fair value gain taken directly to equity		-	-	(26)	(26)	-	(26)
		43,690	498	10,092	54,280	466	54,746
Dividends paid		-		(2,890)	(2,890)	(278)	(3,168)
Net movement on share based payment reserve		-	112	-	112	-	112
Issue of share capital during the period		24	-	-	24	-	24
Movement in offset of provisions for future purchase of non-controlling interests		-	-	-	-	(135)	(135)
Balance at 30 June 2010 (audited)		43,714	610	7,202	51,526	53	51,579
Profit for the period		-	-	1,299	1,299	256	1,555
Exchange translation difference		-	3	-	3	-	3
Interest rate swap fair value gain taken directly to equity		-	-	617	617	-	617
Tax on interest rate swap fair value gain taken directly to equity		-	-	(171)	(171)	-	(171)
		43,714	613	8,947	53,274	309	53,583
Dividends paid		-	-	(2,894)	(2,894)	(258)	(3,152)
Net movement on share based payment reserve		-	116	-	116	-	116
Issue of share capital during the period		311	-	-	311	-	311
Movement in offset of provisions for future purchase of non-controlling interests		-	-	-	-	(2)	(2)
Balance at 31 December 2010 (unaudited)		44,025	729	6,053	50,807	49	50,856

Consolidated Balance Sheet

		31 December 2010	31 December 2009	30 June 2010
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Goodwill	13	73,827	62,687	63,277
Intangible assets	13	37,839	26,407	24,303
Property, plant and equipment	13	7,245	7,419	7,192
Deferred income tax asset		303	137	488
		119,214	96,650	95,260
Current assets
Inventories		1,565	1,864	1,080
Trade and other receivables		20,324	14,698	18,664
Cash and cash equivalents		3,407	2,576	1,779
		25,296	19,138	21,523
Total assets		144,510	115,788	116,783
Current liabilities
Trade and other payables	14	(34,814)	(26,979)	(31,651)
Current tax liabilities		(2,001)	(1,550)	(1,873)
Derivative financial instruments		-	-	(22)
Bank overdrafts		(3,333)	(3,070)	(600)
Provisions for future purchase of non-controlling interests	15	(1,784)	(3,328)	(3,530)
		(41,932)	(34,927)	(37,676)
Non-current liabilities
Bank loans	16	(41,000)	(20,000)	(18,000)
Derivative financial instruments		(339)	(1,047)	(956)
Deferred tax liabilities		(9,026)	(5,838)	(5,425)
Provisions for future purchase of non-controlling interests	15	(1,357)	(2,352)	(3,147)
		(51,722)	(29,237)	(27,528)
Total liabilities		(93,654)	(64,164)	(65,204)
Net assets		50,856	51,624	51,579
Equity
Share capital	17	4,241	4,228	4,229
Share premium account	17	43,792	43,470	43,493
Treasury shares	17	(4,008)	(4,008)	(4,008)
Translation reserve		38	71	35
Share based payments reserve		691	463	575
Retained earnings		6,053	7,093	7,202
Shareholders' funds		50,807	51,317	51,526
Non-controlling interests		49	307	53
Total equity and reserves attributable to Equity Shareholders of the Company		50,856	51,624	51,579

Consolidated Statement of Cash Flow

		Six months ended 31 December 2010	Six months ended 31 December 2009	Twelve months              ended 30 June  2010
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Cash flows from operating activities
Cash generated from operations	18	6,412	5,235	15,537
Net interest paid		(680)	(563)	(1,305)
Net tax paid		(1,783)	(403)	(2,442)
Net cash flow from operating activities		3,949	4,269	11,790
Investing activities
Purchase of property, plant and equipment	13	(524)	(335)	(616)
Proceeds from sale of property, plant and equipment		-	-	8
Purchase of subsidiary undertakings	12	(21,325)	-	-
Purchase of non-controlling interests	15	(3,852)	(2,194)	(2,194)
Non recurring costs	7	(475)	-	(113)
Cash acquired on purchase of subsidiary undertakings	12	1,406	-	-
Purchase of intangible assets	13	(334)	(165)	(479)
Proceeds from sale of intangible assets		12	10	6
Net cash used in investing activities		(25,092)	(2,684)	(3,388)
Financing activities
Dividends paid to Equity Shareholders of the Company		(2,894)	(3,883)	(6,773)
Dividends paid to non-controlling interests in subsidiary undertakings		(258)	(366)	(644)
Issue of ordinary shares		190	-	24
Increase in long term loans		23,000	2,000	-
Net cash flows generated from/(used in) financing activities		20,038	(2,249)	(7,393)
Net (decrease)/increase in cash and cash equivalents, net of bank overdrafts		(1,105)	(664)	1,009
Cash and cash equivalents, net of bank overdrafts, at beginning of the period		1,179	170	170
Cash and cash equivalents, net of bank overdrafts, at end of the period		74	(494)	1,179
Reconciliation of net debt
Cash and cash equivalents at beginning of the period		1,779	1,506	1,506
Bank overdraft at beginning of the period		(600)	(1,336)	(1,336)
Borrowings at beginning of the period	16	(18,000)	(18,000)	(18,000)
Net debt at beginning of the period		(16,821)	(17,830)	(17,830)
Net (decrease)/increase in cash and cash equivalents, net of bank overdrafts		(1,105)	(664)	1,009
(Increase) in long term loans		(23,000)	(2,000)	-
Cash and cash equivalents at end of the period		3,407	2,576	1,779
Bank overdrafts at end of the period		(3,333)	(3,070)	(600)
Borrowings at end of the period	16	(41,000)	(20,000)	(18,000)
Net debt at end of the period		(40,926)	(20,494)	(16,821)

Notes to the Financial Information

1.   General information

The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 19-21 Christopher Street, London, EC2A 2BS.

The Company has its primary listing on the London Stock Exchange.

This condensed consolidated interim financial information was approved for issue on 24 February 2011.

This unaudited condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.  Statutory accounts for the year ended 30 June 2010 were approved by the board of Directors on 21 September 2010 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

2.   Basis of preparation

This condensed consolidated interim financial information for the six months ended 31 December 2010 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, ''Interim financial reporting'' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 30 June 2010, which have been prepared in accordance with IFRSs as adopted by the European Union.

The Group's forecast and projections, taking account of reasonably possible changes in trading performance, show that the Group will be able to operate well within the level of its current banking facilities. The Directors have therefore adopted a going concern basis in preparing this interim financial information.

3.   Accounting policies

The accounting policies applied are consistent with those of the Annual Financial Statements for the year ended 30 June 2010, as described in those Annual Financial Statements. 

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 July 2010, but are not currently relevant for the Group:

§ IFRS 5 (amendment), ''Non-current assets held for sale and discontinued operations'' effective for accounting periods beginning on or after 1 January 2010.

§ IFRS 1 (amendment), ''Additional exemptions for first - time adopters'' effective for accounting periods beginning on or after 1 January 2010. This amendment is not relevant to the Group as it is an existing IFRS preparer.

§ IFRS 1 (amendment), ''First time adoption on financial instrument disclosures'' effective for accounting periods beginning on or after 1 July 2010. This amendment is not relevant to the Group as it is an existing IFRS preparer.

§ Annual improvements to International Financial Reporting Standards 2009 were issued in April 2009. The effective dates vary standard by standard but most are effective 1 January 2010.

§ IFRS 2 (amendment), ''Share based payments - Group cash-settled share based payment transactions'' effective for accounting periods beginning on or after 1 January 2010.

§ IAS 32 (amendment), ''Financial instruments - presentation on classification of rights issues'' effective for accounting periods beginning on or after 1 February 2010.

§ IFRIC 19 (amendment), ''Extinguishing Financial Liabilities with Equity Instruments'' effective for accounting periods beginning on or after 1 July 2010.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 July 2010 and have not been early adopted:

§ IFRS 9, ''Financial instruments'' effective for accounting periods beginning on or after 1 January 2013. Management will assess the impact on the Group of this standard prior to its effective date of implementation.

§ IAS 24 (revised), ''Related party disclosures'' effective for accounting periods beginning on or after 1 January 2011. Management will assess the impact on the Group of this standard prior to its effective date of implementation.

§ IFRIC 14 (amendment), ''Prepayments of a minimum funding requirement'' effective for accounting periods beginning on or after 1 January 2011.This amendment is not expected to be relevant to the Group.

§ Annual improvements to International Financial Reporting Standards 2010 effective for accounting periods beginning on or after 1 January 2011. Management will assess the impact on the Group of this standard prior to its effective date of implementation.

4.   Risks and uncertainties

The Group's principal risks and uncertainties remain as stated on pages 16 to 18 of the Business Review in the Annual Report and Financial Statements for the year ended 30 June 2010.

The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk and foreign currency risk. At 31 December 2010, the Group had undrawn committed borrowing facilities of £19m comprising a revolving credit facility provided by Barclays Capital, HSBC and Royal Bank of Scotland. Any non-compliance with covenants within the borrowing arrangements could, if not waived, constitute an event of default with respect to such arrangements. The Group was fully compliant with its financial covenants throughout the period.

The Board reviews and agrees policies for managing each of these risks and they are summarised below.  These policies are unchanged from the previous year.

a)  Interest rate risk

The Group finances its operations through a mixture of retained profits, operational cash flow and bank borrowings. Historically the Group has expanded its operations both organically and by acquisition, which has led on occasions to the need for external finance. The Board has chosen a credit facility with a floating rate of interest linked to LIBOR and has hedged its interest exposure on a proportion of this facility.  In November 2006 the Group entered into a 5 year £15m interest rate swap whereby it receives interest on £15m based on 3 month LIBOR and pays interest on £15m at a fixed rate of 5.23%. In November 2010, the Group entered into a further three hedging instruments. Firstly, a 5 year £15m interest rate swap fixed against 3 month LIBOR with a forward start of 21 November 2011 paying interest on £15m at a fixed rate of 2.68% was entered into. Secondly, a cap of 2% was put on a further £10m until November 2011. Finally, in November 2010, a 3 year £10m interest rate swap fixed against 3 month LIBOR with a forward start of 21 November 2011 paying interest on £10m at a fixed rate of 2.12% was entered into. These derivatives have been designated as a cash flow hedges in order to manage interest rate risk associated with the first £25m of the credit facility.  Payments received under the swaps have been matched against interest paid quarterly during the period and the entire mark to market loss on the derivatives have been recognised in equity, following the Directors' assessment of the hedge's effectiveness.

b) Liquidity risk

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

c) Foreign currency risk

The Group has a substantial customer base overseas.  The Group maintains bank accounts in foreign currency and converts this currency to Sterling at the appropriate times minimising the exposure to exchange fluctuations.  On 10 March 2010 the Group sold forward US$1.0m to 3 December 2010 at an average rate of 1.4972.  These contracts were entered into in order to provide certainty in Sterling terms of the bulk of the net US$ income of the Matchett business. The gains on these contracts are recognised in the Income Statement.

5.   Adjusted Profit

To allow shareholders to gain a better understanding of the trading performance of the Group, Adjusted Profit has been calculated as profit before income tax, amortisation of intangible assets, impairment of goodwill, unwinding of the discount on the provision for the future purchase of non-controlling interests, share based payments and non-recurring items and reconciles to profit on continuing activities before income tax as follows:

	Six months ended 31 December 2010	Six months ended 31 December 2009	Twelve months ended 30 June  2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Profit from continuing activities before taxation	2,469	2,658	7,329
Amortisation of intangible assets	2,705	2,458	4,882
Unwinding of the discount on the provision for future purchase of non-controlling interests	157	270	542
Share based payments	267	119	246
Non-recurring items (see note 7)	475	-	113
Adjusted profit before income tax (''Adjusted Profit before Tax'')	6,073	5,505	13,112
Net finance costs (excluding the unwinding of the discount on the provision for future purchase on non-controlling interests)	706	646	1,325
Adjusted Profit before Tax and net finance costs (''Adjusted EBITA'')	6,779	6,151	14,437
Depreciation	540	797	1,130
Adjusted EBITA before depreciation (''Adjusted EBITDA'')	7,319	6,948	15,567

6.   Segmental information

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

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

(a) Primary reporting format - business segments

Six months ended 31 December 2010 (unaudited)  

	Training & Events	Publishing & Information	Total
	£'000	£'000	£'000
Revenue	21,924	17,747	39,671
Segmental profit before amortisation and share based payments	3,126	4,798	7,924
Share based payments	(70)	(69)	(139)
Amortisation	(946)	(1,695)	(2,641)
Segmental profit	2,110	3,034	5,144
Unallocated central overheads (including share based payments of £128,000 and amortisation of £64,000)			(1,337)
Profit from continuing operations before non-recurring items			3,807
Non-recurring items (see note 7)			(475)
Profit from continuing operations after non-recurring items			3,332
Net finance costs			(863)
Profit from continuing activities before tax			2,469
Income tax expense (see note 8)			(914)
Profit for the period			1,555

Six months ended 31 December 2009 (unaudited)

	Training & Events	Publishing & Information	Total
	£'000	£'000	£'000
Revenue	20,797	16,151	36,948
Segmental profit before amortisation and share based payments	2,840	4,495	7,335
Share based payments	(16)	(1)	(17)
Amortisation	(1,177)	(1,219)	(2,396)
Segmental profit	1,647	3,275	4,922
Unallocated central overheads (including share based payments of £102,000 and amortisation of £62,000)			(1,348)
Profit from continuing operations before non-recurring items			3,574
Non-recurring items (see note 7)			-
Profit from continuing operations after non-recurring items			3,574
Net finance costs			(916)
Profit from continuing activities before tax			2,658
Income tax expense (see note 8)			(947)
Profit for the period			1,711

Twelve months ended 30 June 2010 (audited)

	Training & Events	Publishing & Information	Total
	£'000	£'000	£'000
Revenue	42,958	35,446	78,404
Segmental profit before amortisation and share based payments	6,584	10,279	16,863
Share based payments	(30)	(18)	(48)
Amortisation	(2,321)	(2,430)	(4,751)
Segmental profit	4,233	7,831	12,064
Unallocated central overheads (including share based payments of £198,000 and amortisation of £131,000)			(2,755)
Profit from continuing operations before non-recurring items			9,309
Non-recurring items (see note 7)			(113)
Profit from continuing operations after non-recurring items			9,196
Net finance costs			(1,867)
Profit from continuing activities before tax			7,329
Income tax expense (see note 8)			(2,531)
Profit for the year			4,798

(b)   Supplementary segmental information by geography

The geographical analysis of revenue by destination is as follows:

	Six months ended 31 December 2010	Six months ended 31 December 2009	Twelve months  ended 30 June 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
United Kingdom	28,998	28,405	61,755
Overseas	10,673	8,543	16,649
	39,671	36,948	78,404

7.  Non recurring items

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

	Six months ended 31 December 2010 (unaudited) £'000	Six months ended 31 December 2009 (unaudited) £'000	Twelve months ended 30 June 2010 (audited) £'000
Non recurring costs	475	-	113

These costs include the costs incurred during the period of both successful and abortive acquisitions and the termination costs of a former Director.

8.   Income tax expense

	Six months ended 31 December 2010	Six months ended 31 December 2009	Twelve months ended 30  June 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
The tax charge comprises:
UK corporation tax at current rates	1,048	1,085	2,952
Adjustment to tax charge in respect of previous years	(29)	(63)	51
	1,019	1,022	3,003
Foreign tax	590	430	716
Adjustment to foreign tax charge in respect of previous years	-	-	99
Total current tax	1,609	1,452	3,818
Deferred income tax credit	(547)	(505)	(1,191)
Deferred income tax credit in respect of previous years	(148)	-	(96)
Income tax expense	914	947	2,531

9.   Profit/(loss) for the period from discontinued operations after income tax

During the six months ended 31 December 2010 and in the comparative periods presented, no operations met the definition of discontinued operations.

10. Dividends

Amounts recognised as distributions to Equity Shareholders in the period.

	Six  months ended 31 December 2010	Six months ended 31 December 2009	Twelve months ended 30 June 2010	Six  months ended 31 December 2010	Six  months ended 31 December 2009	Twelve months ended 30 June 2010
	pence per share (unaudited)	pence per share (unaudited)	pence per share (audited)	£'000 (unaudited)	£'000 (unaudited)	£'000 (audited)
Final dividends recognised as distributions in the period	3.50	4.70	4.70	2,894	3,883	3,883
Interim dividends recognised as distributions in the period	-	-	3.50	-	-	2,890
Total dividends paid				2,894	3,883	6,773
Interim dividend proposed	3.50	3.50	3.50	2,894	2,890	2,892

11. Earnings per share

Adjusted Earnings per Share has been calculated using an adjusted profit after taxation and minority interests but before amortisation and impairment of intangible assets and goodwill, non-recurring items, share-based payments and the unwinding of the discount on the provision for the future purchase of non-controlling interests. There were no discontinued operations during the period or for the comparative periods.

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

	Six months ended 31 December 2010	Six months ended 31 December 2009	Twelve months ended 30 June 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Earnings from continuing operations for the purpose of basic earnings per share	1,299	1,514	4,447
Add:  Amortisation (net of non-controlling interest effect)	2,699	2,452	4,867
Non-recurring items	475	-	113
Share based payments	267	119	246
Unwinding of the discount on the provision for the future purchase of non-controlling interests	157	270	542
Tax effect of above adjustments	(880)	(720)	(1,463)
Adjusted earnings for the purposes of adjusted earnings per share	4,017	3,635	8,752
	Number	Number	Number
Weighted average number of ordinary shares for the purposes of basic and adjusted earnings per share	82,670,525	82,615,679	82,616,512
Effect of dilutive potential ordinary shares:
Exercise of share options	2,092,289	1,134,927	1,266,280
Weighted average number of ordinary shares for the purposes of diluted earnings per share	84,762,814	83,750,606	83,882,792
Basic earnings per share	1.57p	1.83p	5.38p
Diluted earnings per share	1.53p	1.81p	5.30p
Adjusted basic earnings per share	4.86p	4.40p	10.59p
Adjusted diluted earnings per share	4.74p	4.34p	10.43p

12. Business combinations

IFRS 3 (revised) was applied to the acquisition of Axco Insurance Information Services Limited on 21 September 2010. Acquisition-related costs of £299,000 have been recognised as part of the non-recurring items in the Income Statement (see note 7). These would previously have been included in the consideration for the business combination.

On 21 September 2010, Wilmington Group Plc's wholly owned subsidiary Wilmington Publishing & Information Limited acquired 100% of the issued share capital of Axco Insurance Information Services Limited, the leading provider of international compliance and regulatory information for the global insurance industry, for an initial consideration of £21,325,000. Deferred consideration which, under the acquisition agreement, was capped at £675,000 did not become payable. Instead, a repayment of £31,000 was due from the vendors and £21,000 has been received since the balance sheet date. This was calculated by reference to the net current assets of Axco Insurance Information Services Limited at 30 September 2010.

The acquisition improves the quality of the Group's earnings by increasing the proportion of revenues derived from subscriptions and the extent to which the revenue is derived from ''must have'' intelligence. The acquisition is expected to increase the Group's presence in legal and regulatory information and training.

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

	Purchase consideration
	£'000
Cash paid	21,325
Deferred consideration	(31)
Total purchase consideration	21,294
The provisional fair value assets and liabilities recognised as a result of the acquisition are as follows:
	Provisional fair value
	£'000
Data	12,167
Customer relationships	3,163
Brand	593
Total intangible assets (see note 13)	15,923
Property, plant and equipment (see note 13)	73
Cash and cash equivalents	1,406
Trade and other receivables	910
Subscriptions and deferred revenue	(2,372)
Trade and other payables	(728)
Net deferred tax liabilities	(4,310)
Net identifiable assets acquired	10,902
Provisional goodwill (see note 13)	10,392
	21,294

The goodwill is attributable to Axco Insurance Information Services Limited's strong position and profitability in trading in the international compliance and regulatory information market, the new product development potential and synergies expected to arise after the Company's acquisition of the new subsidiary. None of the goodwill is expected to be deductible for tax purposes.

(a) Acquired receivables

The fair value of trade and other receivables is £910,000 and includes trade receivables with a fair value of £857,000. The gross contractual amount for trade receivables due is £858,000, of which £1,000 is expected to be uncollectible.

(b) Revenue and profit contribution

The acquired business contributed revenues of £1,552,000 and profit after finance costs, but before divisional overheads, tax and amortisation of £300,000 to the Group for the period from 30 September 2010 to 31 December 2010. If the acquisition had occurred on 1 July 2010, consolidated revenue and consolidated adjusted profit before tax and amortisation for the six months ended 31 December 2010 would have been £41,223,000 and £6,374,000 respectively.

13.  Property, plant and equipment, intangible assets and goodwill

	Property, plant and equipment £'000	Intangible assets £'000	Goodwill £'000
At 1 July 2009	7,779	28,712	62,401
Additions	335	165	-
Acquisitions	-	-	-
Disposals	(1)	(12)	-
Exchange translation differences	103	-	-
Depreciation and amortisation	(797)	(2,458)	-
Change in provisions for the future purchase of non-controlling interests	-	-	240
Movement in offset of provision for future purchase of non-controlling interests	-	-	46
Closing net book amount as at 31 December 2009 (unaudited)	7,419	26,407	62,687
Additions	281	314	-
Acquisitions	-	6	-
Disposals	(81)	-	-
Exchange translation differences	(94)	-	-
Depreciation and amortisation	(333)	(2,424)	-
Change in provisions for the future purchase of non-controlling interests	-	-	(135)
Movement in offset of provision for future purchase of non-controlling interests	-	-	725
Closing net book amount as at 30 June 2010 (audited)	7,192	24,303	63,277
Additions	524	334	-
Acquisitions	73	15,923	10,392
Disposals	(11)	(16)	-
Exchange translation differences	7	-	-
Depreciation and amortisation	(540)	(2,705)	-
Change in provisions for the future purchase of non-controlling interests	-	-	155
Movement in offset of provision for future purchase of non-controlling interests	-	-	3
Closing net book amount as at 31 December 2010 (unaudited)	7,245	37,839	73,827

14. Trade and other payables

	31 December 2010 (unaudited) £'000	31 December  2009 (unaudited) £'000	30 June   2010 (audited) £'000
Trade payables	1,933	2,060	2,654
Other payables	4,455	3,307	2,643
Other taxes and social security	2,706	1,775	3,006
Subscriptions and deferred revenue	16,772	12,096	14,246
Accruals	8,948	7,741	9,102
	34,814	26,979	31,651

15.  Provisions for future purchase of non-controlling interests

	Current provisions £'000	Non current provisions £'000
At 1 July 2009	2,148	5,410
Amounts paid in respect of acquisitions of non-controlling interests	(2,194)	-
Unwinding of discount	-	270
Change in value of existing provisions	46	-
Non-current provisions becoming current	3,328	(3,328)
At 31 December 2009 (unaudited)	3,328	2,352
Amounts paid in respect of acquisitions of non-controlling interests	-	-
Unwinding of discount	-	272
Change in value of existing provisions	202	523
At 30 June 2010 (audited)	3,530	3,147
Amounts paid in respect of acquisitions of non-controlling interests	(3,852)	-
Unwinding of discount	-	157
Change in value of existing provisions	322	(163)
Non-current provisions becoming current	1,784	(1,784)
At 31 December 2010 (unaudited)	1,784	1,357

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

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

During the period the Group acquired 5% of the issued share capital of Beechwood Publishing Limited and the remaining 17.3% of the issued share capital of Mercia Group Limited under the terms of put agreements based on a predetermined multiple of the average prior two years profits for a total consideration of £3.9m.

16.  Bank loans

	31 December 2010 (unaudited) £'000	31 December  2009 (unaudited) £'000	30 June   2010 (audited) £'000
Current	-	-	-
Non-current	41,000	20,000	18,000
	41,000	20,000	18,000

The Group has an unsecured committed 5 year revolving credit facility of £60m (2009: £60m) to March 2012.

17. Share capital

	Number of shares of 5p each	Ordinary shares £'000	Share premium £'000	Treasury shares £'000	Total £'000
Opening balance as at 1 July 2009	84,557,679	4,228	43,470	(4,008)	43,690
Proceeds from shares issued under
Employee share option schemes	-	-	-	-	-
At 31 December 2009 (unaudited)	84,557,679	4,228	43,470	(4,008)	43,690
Proceeds from shares issued under
Employee share option schemes	20,000	1	23	-	24
As at 30 June 2010 (audited)	84,577,679	4,229	43,493	(4,008)	43,714
Proceeds from shares issued under
Employee share option schemes	236,302	12	299	-	311
At 31 December 2010 (unaudited)	84,813,981	4,241	43,792	(4,008)	44,025

During the period ended 31 December 2010, 236,302 ordinary shares were issued in respect of share options exercised by members of staff (2009: nil).

As part of the Company's share buy-back programme, during the period ended 31 December 2010, the Company did not purchase any shares (2009: nil). At 31 December 2010, the Company held 1,942,000 shares in Treasury (2009: 1,942,000).

18. Net cash flow from operating activities

		Six months ended 31 December 2010	Six months ended 31 December 2009	Twelve months ended 30  June  2010
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Operating profit from continuing operations		3,332	3,574	9,196
Non-recurring items	7	475	-	113
Operating profit from continuing operations before non-recurring items		3,807	3,574	9,309
Depreciation of property, plant and equipment	13	540	797	1,130
Amortisation of intangible assets	13	2,705	2,458	4,882
(Profit)/loss on disposal of property, plant and equipment		(2)	-	74
Loss on disposal of intangible assets		15	2	-
Share based payments		267	119	246
Operating cash flows before movements in working capital		7,332	6,950	15,641
(Increase)/decrease in inventories		(485)	(522)	262
(Increase)/decrease in receivables		(751)	3,734	(296)
Increase/(decrease) in payables		316	(4,927)	(70)
Cash generated by operations		6,412	5,235	15,537

19. Related party transactions

The only related party transactions to have taken place during the period were normal business transactions between the Company and its subsidiary undertakings.

Certain administrative expenses totalling £170,000 (2009: £159,000) have been recharged by the Company at cost to its subsidiaries.

20. Seasonality

The Group has traditionally generated the majority of its revenues and profits during the second half of the financial year. This has historically resulted from two factors. Firstly, most of the Group's businesses (the notable exception being The Matchett Group) produce seasonally low sales in July, August and December which include holiday periods for many of the Group's clients. Secondly, the Publishing business produces a number of annual directory and database products, most of which are published in the second half of the financial year. To the extent that revenue is generated in the hard copy products this is recognised on publication. To the extent revenue relates to online content revenue is recognised over the period the content remains online. The migration over recent years of much of this revenue to the online products has resulted in a corresponding reduction in the seasonality of this revenue.

 

END

 

 

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