TIDMWIL
RNS Number : 8765M
Wilmington PLC
19 September 2019
19 September 2019
Wilmington plc
('Wilmington', 'the Group' or 'the Company')
Financial results for the twelve months ended 30 June 2019
Wilmington plc, the provider of information, education and
networking services in Risk & Compliance, Healthcare and
Professional knowledge areas, today announces its full year results
for the twelve months ended 30 June 2019.
Financial Highlights
- Revenues for the year up 1% to GBP122.5m (2018: GBP121.3m)
o Up 1.5% on an organic(1) basis reflecting a shift in momentum
given the declines of the last two years
- Adjusted EBITA(2) decreased by 9.7% to GBP21.5m (2018:
GBP23.8m) with EBITA margins at 17.6% (2018: 19.6%)
o Reflects previously signalled cost increases to support growth
initiatives
- Adjusted profit before tax(3) down 11.5% to GBP19.3m (2018: GBP21.8m)
- Profit before tax at GBP14.7m (2018: GBP2.3m)
o Increase reflects the benefit of the gain on sale of ICP
business of GBP1.9m plus the non repeat of one-off costs in the
prior year including head office move GBP3.1m, and goodwill
impairment GBP8.6m
- Adjusted earnings per share(4) down 11.9% to 17.44p (2018: 19.80p)
- Basic earnings per share of 12.74p (2018: loss per share of 0.45p)
- Final dividend increased 4% to 5.0p (2018: 4.8p); total
dividends up 3% to 9.1p (2018: 8.8p)
- Strong cash conversion(5) at 123% (2018: 108%)
- Group net debt at 30 June 2019 was GBP33.9m (2018: GBP39.6m).
Represents 1.4 times adjusted EBITDA (2018: 1.5 times)
o Debt facilities extended after the year end to July 2023 (with
option to extend to October 2024)
Operational Highlights
- 6% organic growth in Risk & Compliance driven mainly by
double digit growth in the main Compliance business
o Strong demand for online courses and bespoke in-house
programmes
o Investment in new platform for Compliance Week and new courses
developed for wealth management
o Axco secured a number of multi-year renewals with major
customers
- Healthcare division recovered from a challenging prior year to
achieve 1% organic revenue growth
o New business sales in UK improved as business started to see
benefits of prior year integration activities
o Success of new product, APMi in France supported strong
underlying performance
o US events business had good second half led by flagship RISE
event for which revenue was up 30% year-on-year
o Interactive Medica platform integrated with existing UK data
products to enhance user experience
- Professional impacted by UK economic/political climate
particularly in second half. Resulted in 2% organic revenue
decline
o Accountancy integrated its Mercia and SWAT businesses into a
single brand
o Strong performance in Legal by Bond Solon in witness
familiarisation and in winning framework contracts for regulatory
training
o Investment banking business transitioned to new learning
management system and launched student dashboard
- Mark Milner joined as Chief Executive Officer on 1 July 2019
Current Trading and Outlook
- Trading in first two months of year in line with Board
expectations with revenue growth on prior year
o Promising sales performance in first two months in all three
divisions
- Full year organic revenue growth expected to be in low to mid single digit range
Martin Morgan, Non-Executive Chairman commented:
"Wilmington made progress over the year on our objective of
focussing the Group on delivering organic growth. We built momentum
despite having to deal with the current uncertainties in the
political and economic climate. The Board maintains its view that
the Group is well positioned to build on this and deliver improved
performance and increased shareholder value."
1 Organic - eliminating the effects of exchange rate
fluctuations and the impact of acquisitions and disposals
2 Adjusted EBITA - see note 3
3 Adjusted profit before tax - see note 3
4 Adjusted earnings per share - see note 10
5 Cash conversion - see note 17
Mark Milner joined the Group as Chief Executive Officer on 1
July 2019 at the start of the new financial year. He commented:
"I am delighted to have joined Wilmington at this exciting time
in its development. My first two months have been busy, visiting as
many businesses as possible, meeting their teams and learning more
about their business models. Having spent my career in the media,
technology and data industries I recognise many of the dynamics of
the individual businesses. I have been struck by the passion and
enthusiasm that I have encountered across the Group and the deep
level of understanding that our people have of their markets, their
customers and those customers' needs. Our businesses are full of
ideas, so my immediate job is to work with these teams to develop
these opportunities, accelerate growth, and unlock the value we
believe exists within Wilmington as a group."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement this inside information is now considered to be in the
public domain.
For further information, please contact:
Wilmington plc
Mark Milner, Chief Executive Officer 020 7422 6800
Richard Amos, Chief Financial Officer
FTI Consulting
Charles Palmer / Dwight Burden /
Emma Hall / Leah Dudley 020 3727 1000
Notes to Editors
Wilmington plc is the recognised knowledge leader and partner of
choice for information, education and networking in Risk &
Compliance, Healthcare and Professional areas. Wilmington employs
close to 1,000 people and sells to around 120 countries. Wilmington
is a premium listed company on the main market of the London Stock
Exchange.
Chairman's Statement
I am pleased to present my report on the year ended 30 June
2019. We made progress on our objective of focussing the Group on
delivering organic revenue growth. We built momentum through the
year despite having to deal with the current uncertainties in the
political and economic climate. We completed a thorough, consultant
led review of our business, and instigated a bottom up three year
planning exercise for the first time. And of course at the start of
the new financial year we were delighted to welcome Mark Milner who
joined us as Chief Executive Officer, at which point I resumed my
role as Non-Executive Chairman. I very much look forward to working
with Mark and collaborating with him to unlock the potential for
increased shareholder value that I believe exists within our
portfolio of businesses.
Summary of Results
Overall financial performance was mixed. Revenue of GBP122.5m
(2018: GBP121.3m following restatement for adoption of IFRS15)
represented a modest organic growth rate of 1.5% but demonstrated
an encouraging shift in momentum given the declines suffered in the
previous two years. However due to previously signalled increases
in costs, partly through investments in infrastructure and product
development, adjusted profit before tax is down year-on-year at
GBP19.3m (2018 restated: GBP21.8m). Statutory profit before tax is
up at GBP14.7m (2018 restated: GBP2.3m), but this is because of the
impact of both one-off costs from last year which did not repeat
and a gain this year from the disposal completed at the start of
the year. However, cash generation was strong with net debt
decreasing by GBP5.7m to GBP33.9m (30 June 2018: GBP39.6m).
The performance in the year was achieved against a backdrop of
some difficult trading conditions, in particular impacting the
Professional division, where the political and economic uncertainty
gripping the UK economy impacted demand for training courses and
resulted in a 2% organic revenue decline. Offsetting that, Risk
& Compliance delivered good 6% organic revenue growth, and
within that our core Compliance business ICA achieved double digit
growth. Meanwhile, the Healthcare division has been recovering from
a challenging prior year. It achieved 1% organic revenue growth
with a 5% decline in H1 more than offset by improved momentum in
H2.
Dividend
In recognition of the progress that has been made and its
confidence in the future prospects of the Group, the Board is
maintaining the previous progressive dividend policy that has been
in place since 2013/14. At the AGM in November it will be proposed
that the final dividend be increased 4% to 5.0p (2018: 4.8p). Taken
in conjunction with the increased interim dividend paid in April
this takes the full year dividend to 9.1p, up 3% from the 8.8p paid
in 2018. This was covered 1.9 times in the year by adjusted
earnings per share. The Board is comfortable with this level of
cover although its medium term intention is to rebuild cover to two
times adjusted earnings per share whilst maintaining the
progressive dividend policy.
Strategy and Business Review
As mentioned in the last Annual Report, following my appointment
and the negative trading update in July 2018, in conjunction with
the rest of the Board I initiated a thorough review of the
business. In order to obtain an independent assessment we engaged a
firm of consultants to support us. Working with senior management
their remit was to analyse our key markets and competitors, and to
assess our relative positions in them. The work included an
extensive programme of customer referencing and analysis to
ascertain the underlying growth rates and identify trends within
our key markets. These external findings were supplemented by some
detailed analysis of our internal commercial performance.
The review concluded positively. It supports the Board's view
that Wilmington has the opportunity to return to being a growth
business, through operationally executing to a high standard.
It found that Wilmington is generally operating in healthy but
competitive markets; that we have strong market shares with number
one or two positions; that brand recognition and respect for what
we offer is high and is coupled with good rates of repeat
purchasing. Of course it also found that our markets are changing,
for example in the way information is being consumed and in the
switch to digital learning. It appears that we are not facing
significant imminent disruptive change but it is my observation
that there has been insufficient investment in new products and
services over the last few years as the Group focussed on expanding
through acquisition. The review generated ideas about how our core
businesses might develop their product offerings, and subsequent to
that we instigated a three year planning process undertaken at a
business unit level rather than at group level which had been the
case previously. That process has allowed us to identify, by
business, product roadmaps to generate new revenues, which in turn
is informing investment decisions. It is supported by a process
introduced earlier in the year that has introduced new rigour into
investment decision-making.
The review also identified some challenges with the strategy we
were pursuing in Healthcare, and as a result the Board subsequently
decided to move our focus away from building a pan-European
healthcare information business, in favour of concentrating on the
UK and France where we already occupy good positions.
Finally, the review also supported the Board's decision made
last summer to focus on improving organic growth for the time being
in preference to prioritising acquisitions. My observation whilst
undertaking the interim Executive role is that this needs to be
complemented by a heightened emphasis on sales and marketing
execution and on streamlining the organisation to enable it to move
at a faster pace. These are the top priorities for Mark in his role
as our new CEO.
Board changes
Mark joined us immediately after the year end on 1 July 2019.
His experience in digital data businesses and his extensive
background in sales and marketing are key strengths that we believe
are hugely relevant to and important for Wilmington. He has hit the
ground running and is already making a positive impact on the
business. His predecessor, Pedro Ros left the business on 13
February 2019 and I fulfilled the Executive role in the interim
period supported by Richard Amos our CFO. I would like to thank
Pedro for his contribution to the Group over the previous four
years.
People
The last twelve months have been challenging for the Group,
during a period of considerable change. The impact of this is of
course felt most keenly by our staff and their response has been
excellent, for which they deserve great credit. I would also like
to take this opportunity to thank them personally for the support
they offered me as I fulfilled the Executive Chairman role. I
greatly enjoyed working directly with so many of them and
appreciate their contribution through that period.
The period has also seen much change in the leadership of the
business. Four members of our Executive Committee have stepped down
in the year and I would like to thank all of them for their
contributions whilst with us. In particular I would wish to
highlight Bill Howarth who has stepped down as Divisional Director
for Compliance as part of a planned succession. Bill has been a key
figure at Wilmington for many years, being the founder of the ICA
and the main architect of its success. He is remaining with us in a
part-time capacity as President of the ICA with a particular focus
on examinations and accreditations and I look forward to continuing
to work with him in that capacity. He is succeeded as Divisional
Director by Tamara Kahn who joined us in June, bringing the
strategic and marketing background which we believe will be key to
developing further our Compliance business. I welcome Tamara to
Wilmington as I also do Thomas Mount who joined us in December as
Chief Technology Officer.
During the year, as planned we grew our workforce, with the full
time equivalent headcount ('FTE') increasing by 26 to 860 at 30
June 2019 (30 June 2018: 834 after adjusting for the 15 FTE who
left following the disposal of ICP) to support our growth plans and
also to fill vacancies carried forward from the prior year.
Specific areas of investment have included the US Healthcare
business where we increased sales resource to deal with improved
demand in the second half.
Acquisitions and disposals
On 18 July 2018, Wilmington sold its specialist credit reporting
business ICP to its current management team for GBP3.0m. The sale
proceeds will be paid over five years. The sale allowed Wilmington
to focus its resources on its core client communities and secure
for shareholders a good return from historic investments.
The Group made no material acquisitions in the period under
review. As I set out in last year's Report, we are currently
placing less emphasis on the pursuit of acquisitions to focus on
organic growth from our existing portfolio. In time, once we are
comfortable that those businesses are growing appropriately, we
will consider acquisitions where we see clear opportunities which
support our strategy and deliver shareholder value.
Current trading and outlook
Maintaining and building on the momentum achieved over the last
twelve months is key to our aspirations for the new financial year.
Trading in the first two months has started in line with our
expectations with revenue ahead of last year. It is a seasonally
quiet period so caution needs to be exercised in extrapolating this
start into a trend. But sales activity in the first two months, an
increasingly key lead indicator of progress, has been promising in
each division with a number of positive developments.
Group organic revenue growth for the year is expected to improve
slightly on the prior year and achieve growth in the low to mid
single digit range. Within this, both Healthcare and Risk &
Compliance are expected to deliver similar organic revenue growth
to last year with Professional benefitting from the investments
made this year to achieve flat year-on-year performance. Allied to
this, costs are expected to increase in line with previously
discussed plans.
The Board retains its view that Wilmington is well positioned to
build on the work of the last twelve months and deliver improved
performance. With a portfolio of strong brands operating in markets
with good long term growth prospects we remain committed to
unlocking the significant shareholder value we believe exists
within the Group.
Martin Morgan
Non-Executive Chairman
Review of operations
Note that variances described below as 'organic' are after
adjusting for acquisitions and disposals and at constant currency
exchange rates.
Risk & Compliance
2019 2018* Absolute Organic
Variance Variance
GBP'm GBP'm % %
Revenue
Compliance 29.0 26.6 9% 8%
Risk 13.4 15.5 -14% 1%
Total 42.4 42.1 1% 6%
Operating profit 12.7 12.2 4% 9%
Margin % 30% 29%
* 2018 comparatives have been restated to reflect the adoption
of IFRS 15.
Business model
The main Compliance business is the International Compliance
Association ('ICA') which was developed organically within
Wilmington. It is an industry body we created in 2002 which offers
professional development and support to compliance officers
predominantly in the financial services sector. It has offices in
the UK, Singapore, Malaysia and Dubai.
Revenue earned by ICA is primarily training income that we
receive for running professional development courses and associated
examinations which allow students to achieve their professional
accreditation. The courses are open to public enrolment and
applicants for a particular course can be from a variety of
different organisations and territories. We currently offer 43
accredited qualifications, ranging from entry level certifications
up to post-graduate equivalent diplomas. These accreditations are
awarded in association with the University of Manchester's Alliance
Manchester Business School, and we retain a panel of independent
academic professionals who teach, set exams and carry out
assessments. The courses are predominantly run face to face, but an
increasing proportion are hosted online. Additional revenue comes
in the form of subscriptions paid by the professional members for
their ICA accreditation. These are either paid individually or via
corporate sponsorship. ICA earns additional revenue through
developing bespoke in-house programmes (both face to face and
online) for institutions to train staff across their businesses in
compliance procedures and protocols that are personalised to their
business and industry. The material for ICA courses is developed by
our own internal R&D team, and we own the associated
intellectual property. In total, revenue from the ICA and
associated training accounts for around 57% of total Compliance
revenue.
Outside of the ICA, the other Compliance businesses earn revenue
from running professional development programmes for wealth
managers, by offering subscription services for provision of
detailed information on regulations in the UK pensions industry and
from subscriptions to Compliance Week, the premium industry journal
for US and European compliance professionals. The Compliance Week
brand also generates revenue from lead generation to the compliance
community and from running industry networking events.
The Risk businesses serve the global insurance industry,
primarily with in-depth regulatory information, market intelligence
and analysis. In addition, we provide networking events and
training specifically focussed on the Spanish insurance market.
Revenue in Risk is mainly earned through subscriptions to the
information and analysis services and from attendance fees and
sponsorship at the networking events and training courses.
Market
Our Compliance businesses primarily serve the financial services
industry where market demand remains strong, reflecting a backdrop
of increasing regulation. This is helping drive increased interest
in related professional qualifications and training. This is an
evolving industry and with ever rising regulatory pressure there
has been increased interest at not only the Tier 1 but also the
Tier 2 and 3 level institutions for both public and in-house
bespoke programmes. In addition to financial services, the ICA also
saw growth from the insurance, oil and gas and gaming sectors.
Whilst the market served by the ICA has been strong, the benefit
from that has been diluted to some extent by consolidation in the
UK pensions industry and by the ongoing challenging trend in demand
for print publications which has continued to affect Compliance
Week.
The long term trend of consolidation amongst the major insurance
industry companies has been offset by growing underlying demand for
traditional insurance products, with newer threats such as cyber
risk gaining increased attention. Overall this is helping to
balance out demand for the services we provide in the risk
market.
Trading performance
Against this backdrop, the Risk & Compliance division
performed well. Overall revenue was up 1% to GBP42.4m (2018:
GBP42.1m) although comparison is affected by the disposal of ICP at
the start of the financial year. Adjusting for this and at constant
exchange rates, organic revenue growth was 6% (2018: 1%).
Within this total, revenue in the Compliance businesses combined
grew 8% organically. The main Compliance business, ICA, grew by
double digits, with strong demand for both bespoke in-house
training programmes and for online qualification programmes.
Despite growth in the latter, demand for traditional face-to-face
courses has continued at historic levels. Internationally, some
weakness in Singapore was offset by solid growth in the Middle East
and Malaysia. Accredited paid memberships of the ICA increased to
over 14,000 from around 12,000 at the start of the year.
The Other Compliance businesses delivered low single digit
growth, with an in-year recovery in demand for training for wealth
managers and some pricing improvements in the pensions area
offsetting challenges at Compliance Week. The wealth management
business benefited from new management and a refresh of course
materials that took place twelve months ago including the
development of more online learning which helped open up new
markets in what is geographically a very diverse industry. After a
relatively strong prior year, Compliance Week suffered in the year
from an over-reliance on lead generation income and the impact on
subscription renewals of an ageing online platform. The business
has been revitalised in the second half of the year with new
leadership and the launch of a new online platform that offers the
opportunity for its management team to exploit a wider variety of
business models and subscription offers.
The Risk businesses overall reported 1% organic increase in
revenue. Comparison on absolute revenue performance is impacted by
the disposal of ICP which contributed GBP2.1m revenue in FY18 and
was sold with effect from the start of the financial year.
Also under new leadership, Axco, our insurance information
business improved on a relatively weak prior year, with 2% organic
revenue increase coming from a strategy of developing strengthened
relationships with key customers. Solid renewal rates across Axco's
client base, including a number of multi-year contracts, helped
secure revenue growth. A joint venture to service the Insurtech
sector that was launched as a pilot in the year did not reach
commercial feasibility. Consequently, it was shut down and the
investment written off at the year end. Other significant
investment is underway in Axco to refresh its platform and develop
new products for current core clients and these are expected to
start rolling out over the next twelve months.
Inese, our Spanish insurance industry company, had a challenging
year, recording 2% organic revenue decline. This all came from the
recently opened Barcelona office where the Catalonian political
situation caused the retrenchment by insurance companies and hence
a decline in local training requirement. This situation is expected
to continue in the current year and the cost base has been
rationalised as a result. Outside of Barcelona the business
performed well, with its annual event in particular delivering
record results.
Divisional operating profit was up 4% in absolute terms to
GBP12.7m (2018: GBP12.2m). On an organic basis the operating profit
increase was 9% as the organic revenue growth fed through to
profit. Operating margin was essentially unchanged at 30% (2018:
29%).
Healthcare
2019 2018 Absolute Organic
Variance Variance
GBP'm GBP'm % %
Revenue
European Healthcare 29.0 27.9 4% 1%
US Healthcare 9.7 8.9 9% 5%
Other Information businesses 7.6 7.9 -4% -3%
Total 46.3 44.7 4% 1%
Operating profit 7.3 9.9 -26% -23%
Margin % 16% 22%
Business model
Wilmington offers a wide range of products and services through
its Healthcare businesses predominantly around the provision of
market and customer intelligence. Wilmington's Healthcare division
combines these information assets with others that provide similar
services to a number of other communities including charities and
not for profit organisations. In addition the division runs events
and offers a small amount of online training.
The core of the data supplied by the Healthcare division often
comes from publicly available sources. The value generated by our
services is based around its collation, verification, combination
with other complementary data sources and then its ease of
presentation and usage. Equally in some areas we provide
proprietary analysis of the data and editorial comment which
constitutes our own intellectual property.
Wilmington's European Healthcare businesses operate mainly in
the UK and France, complemented by services to the wider
pan-European market offered by the Interactive Medica subsidiary
acquired in February 2018. Services provided include the provision
of deep insight information on practitioners, facilities and
treatments in the UK and French health sector markets that enable
suppliers into those markets to better understand and connect with
their customers. Additionally, in the UK we publish the Health
Service Journal ('HSJ'), the leading online publication in the UK
for healthcare leaders. Associated with that we organise networking
and training events including the flagship HSJ Awards and in the UK
we also provide a suite of online learning courses that familiarise
industry participants with the complexities of the National Health
Service. The majority of revenue in this area is earned through
sales of discrete packages of data or through subscription services
either for the ongoing provision of information or for access to
regular publications and training courses. Events are typically
funded by supplier sponsorship although this is sometimes augmented
by delegate charges.
The US Healthcare businesses are distinct from our other
Healthcare assets in that they are predominantly events based with
only a small proportion of revenue earned from data and consist
predominantly of the business and industry events that were
acquired with FRA in July 2015. They serve the US healthcare/health
insurance markets and to a lesser extent the US financial services
and legal services communities. The prime brand is the RISE series
of events that address the Medicare and Medicaid markets, for which
the flagship event is RISE Nashville which takes place in March
each year. Revenue from these events is generated from both
sponsorship and delegate sales.
The Other Information businesses consist of a portfolio of data
products including charity fund-raising information and marketing
data suppression tools. They include services that are used by
organisations to help prevent identify fraud. Revenue is
traditionally earned through subscription to the relevant data
feed.
Markets
Healthcare spend globally continues to increase due to well
publicised challenges including ageing populations, greater
prevalence of chronic diseases and the need to develop innovative
new treatments and drugs. Industry experts predict c5% growth in
global healthcare expenditures over the next few years with a
similar expectation in the UK following nearly a decade of funding
growth running at historically low levels. Tied to this funding
increase however is a requirement for patients to have more access
to new drugs and medical technologies. Successful and efficient
delivery of this will rely on perceptive insight into the
healthcare market to ensure that investment and marketing are
carefully targeted to be as effective and efficient as possible.
Wilmington's Healthcare businesses facilitate that process by
providing such insight and hence we believe they are well
positioned to deliver long term growth.
The main US market that we serve in Healthcare continues to
offer growth opportunities. Enrolments for Medicare Advantage plans
continue to increase and this is driving growth in the industry
that provides and operates them. This growing community is the
target for most of our US Healthcare events. Enrolments are
expected to continue to rise for the foreseeable future and the
breadth of plans is expected to increase which provides
opportunities for additional content and events.
While Wilmington businesses do not deal with personalised
patient data, certain of our data products include information such
as the contact details of industry practitioners which are covered
by the new European data protection regulations 'GDPR' that came
into force in May 2018. The implementation of these regulations
caused an impact last year as customers became temporarily nervous
about using such personal data given the potential penalties for
misuse. These concerns have largely been assuaged by the
establishment of industry norms of best practice and activity
levels and sales cycles have returned to normal. However compliance
with the regulations has in some cases resulted in the need to
delete specific records where we do not have permission either
explicitly or through legitimate interest for the specific intended
data use. As a result in some cases databases have reduced in size
which has depressed prices.
Trading performance
Overall revenue for the Healthcare division increased 4% to
GBP46.3m (2018: GBP44.7m). This comparison is however affected by
both currency movements and the effect of the acquisition of
Interactive Medica in February 2018. Adjusting for these factors,
underlying revenue increased 1% on an organic basis (2018: organic
decrease of 8%). After significant organic declines in the prior
year, encouraging progress was made in both the UK and US
Healthcare businesses to turn the performance around. This was
augmented by good growth in France and in Interactive Medica for
the comparable period post acquisition.
Within the division, the European Healthcare businesses saw a
marked improvement over the challenging prior year with 1% full
year organic revenue growth. Momentum improved through the year
with 2% decline in the first half more than offset by a 3% increase
in H2. The main feature of the year was recovery in the UK business
where we started to see the benefits of the multiple integration
activities that had negatively impacted FY18. For example, the
newly integrated sales team delivered marked improvements in
pipeline management and opportunity closing rates, supported by
improved data from the new CRM solution rolled out in the prior
year. The volume of new business sales in the UK was up overall 6%,
and this helped close the gap in terms of brought-forward deferred
revenue that impacted results in the first few months of the year.
It also meant that the UK business started the new year with 4%
more pre-booked revenue than twelve months ago.
Part of the UK sales increase came from good growth in the
consulting offering that we effectively launched in the prior year.
Other enhancements in the period included upgrades for the
Investigator and Quantis data products, the former integrated with
the technology platform acquired with Interactive Medica. This
platform will be progressively rolled out across other applicable
products as they are enhanced in the future, Despite this progress,
improving momentum in the second half in the UK was not quite
enough to offset the 4% H1 decline that had been driven by the lack
of brought forward deferred revenue, such that for the full year UK
Healthcare revenue was down 1%. Offsetting this was France where 7%
organic growth reflected both continued good growth by core
products plus the enhancement from the APMi product that we
launched at the start of the financial year. This new data product,
which provides deep insight data on the French hospital market was
well received by pharmaceutical customers, with sales in line with
our internal business plan and a strong pipeline heading into the
product's second commercial year.
The US Healthcare business has been undergoing a substantial
restructure over the last two years, with its portfolio of events
reduced to remove unprofitable events and rationalise its cost
base. Investment has been made in new systems to facilitate
improved marketing and in extra sales resource to pursue the leads
created. This action delivered significant benefits in the second
half of the year resulting in a full year organic revenue increase
of 5%, despite a 21% decrease in the first half. In total 54 events
were run in the US compared to 70 in the prior year. The stand-out
performance was the RISE event in Nashville which, group-wide is
our single biggest event. Revenue from that event was up 30%
year-on-year with strong support from both sponsors and delegates.
That was the main contributor to the turnaround in performance in
the second half, but it was supported by a number of other events
which over-performed against our plans and which offer potential
for future growth in coming years.
The Other Information Businesses saw a continued slow decline in
their legacy portfolio although this was partially offset by growth
in newer products and success with new events in the Charities
space on which we intend to build in the coming twelve months. The
improvement in revenue performance across the division was
accompanied by an increase in overheads as explained below and this
meant that despite the increased revenue, as anticipated, operating
profit fell significantly.
Operating profit in the Healthcare division decreased 26% in
absolute terms to GBP7.3m (2018: GBP9.9m), with a 23% decline in
underlying terms. The operating margin declined to 16% (2018: 22%).
This level of reduction was anticipated and it reflected previously
highlighted year-on-year cost increases including GBP0.5m
investment in staff to support the new APMi product in France.
Additionally costs increased due to inflation, the reinstatement of
staff bonuses after their removal in the prior year and the impact
of the move to the new London office which occurred midway through
the prior year.
Professional
2019 2018* Absolute Organic
Variance Variance
GBP'm GBP'm % %
Revenue
Ongoing businesses 33.8 34.2 -1% -2%
Ark business - closed - 0.3 - -
Total 33.8 34.5 -2% -2%
Operating profit 5.8 6.2 -6% -6%
Margin % 17% 18%
* 2018 comparatives have been restated to reflect the adoption
of IFRS 15.
Business models
The Professional division predominantly provides education and
training for professionals employed in three target communities;
accountants in practice and in business, lawyers and investment
bankers. It runs face-to-face courses and offers online learning
for these communities. It provides training at various levels
including inducting new joiners to the investment banking industry,
providing continuing professional development for existing
qualified lawyers and accountants and in the case of the legal
profession, helping them train their clients for interaction with
the legal system. Additionally it provides technical support to
accountancy firms which enables them to keep abreast of technical
developments and changes in tax law, as well as supporting them to
promote the services they then offer to their clients.
The Accountancy and Legal businesses are predominantly UK and
Ireland based, reflecting the country specific laws and accounting
standards that govern their profession. Investment banking is of
course a global industry, and as such Wilmington's business in that
area has an international presence, with centres in Europe, North
America and Asia Pacific.
Around half the revenue in the Professional division is earned
through clients subscribing for ongoing training support and other
related activities over a period of time (usually twelve months),
with the rest through one-off course attendance fees. Course
content is a mix of owned and third party intellectual property.
Courses are delivered either by in-house experts or by a network of
independent tutors who are paid per course that they deliver.
Markets
The professional education markets that Wilmington serves offer
the prospect of medium term growth rates in the low single digit
range.
Accountancy markets were challenging last year, increasingly so
in the second half. Although the profession in the UK continues to
grow, consolidation amongst smaller firms partly offsets this
although that had little impact on Wilmington in the period.
Additionally Brexit concerns, relatively few newly published
accounting standards in the UK and a stable backdrop in terms of
tax legislation has resulted in a decline in demand for training
courses with accountants seemingly deferring training until they
have greater certainty on the post-Brexit regulatory
environment.
The markets for the legal business were mixed. Demand for Law
for Lawyers products continue to suffer from the removal of
requirement for CPD hours for lawyers in England and Wales which
came into full effect in October 2017. This has reduced the amount
of technical training that lawyers are required to undertake.
Conversely the market for Law for Non-Lawyers has been strong with
good demand for both witness familiarisation programmes and
training of expert witnesses. In the case of the latter in
particular, medium term growth prospects are encouraging as both
demand for expert witnesses and pressure on them to demonstrate
familiarity with legal procedure is increasing.
The market for investment banking training remains competitive.
Banks and other financial institutions continue to increase the
number of new recruits into the industry who need training, whilst
focussing hard on cost control. This was particularly apparent in
the Asia Pacific region in the year.
Trading performance
Overall revenue for the Professional division was down 2% at
GBP33.8m (2018: GBP34.5m). On an organic basis the revenue
reduction was also 2% (2018: organic decline of 2%). Within this,
modest growth in Legal was offset by a market-driven reduction in
Accountancy and a small decline in Investment Banking caused by
one-off factors described below.
Following a strong prior year, Accountancy had a tougher FY19
largely due to the market conditions described above. Considerable
operational progress was achieved however with the integration
activities following the 2016 purchase of SWAT including a re-brand
and significant work on upgrading business systems. The business
now offers clients one single nationwide programme of products and
services having combined the previous three entities into one.
Additionally the business relocated to modern, new headquarters in
Leicester, closing the original Mercia and Practice Track
offices.
Growth in the Legal business was driven by the Law for
Non-Lawyers business, Bond Solon, which saw particularly strong
demand for witness familiarisation training. It acquired new
intellectual property for training courses in the regulatory
training field which helped to broaden its portfolio and it has won
a number of training contracts in that area over the last twelve
months. Law for Lawyers, CLT, saw continued decline in demand for
CPD, its traditional training, but in recognition of this is
developing a suite of online courses more suited to the developing
needs of modern lawyers. These include both technical training
modules and courses in softer skills areas such as well-being, that
are highly relevant to the current challenges facing law firms and
lawyers.
Investment Banking, through the AMT business, had a reasonable
year against the backdrop of a tough trading environment. Revenue
was down slightly, but this was essentially due to the planned
expiry of licensing arrangements with a third party. Its core
training revenues were flat year-on-year. The business has
broadened its customer base in the period to incorporate recruits
into other financial services sectors outside of investment banking
including fund managers and accountants. This has been particularly
successful in the Middle East. AMT migrated fully across to the
group-wide Totara(c) learning management platform in the period and
also developed and launched an online dashboard that enables both
the student and their employer to track progress through the online
training modules. Having been developed on Totara(c) this dashboard
has the capability of being rolled out to other Wilmington training
businesses.
Overall divisional operating profit decreased 6% on an absolute
and organic basis to GBP5.8m (2018: GBP6.2m). The operating margin
was essentially unchanged at 17% (2018: 18%). The decrease in
profit was largely due to the revenue reduction offset by some
headcount savings.
Unallocated central overheads
Unallocated central overheads represent board costs, head office
salaries as well as other centrally incurred costs not recharged to
the businesses. These increased by GBP0.3m to GBP4.1m (2018:
GBP3.8m) due to costs incurred for the business review described in
the Chairman's Statement.
Financial review
Change in accounting policies
From 1 July 2018 the Group has adopted IFRS 15. In accordance
with the standard it has also restated the balance sheet at 1 July
2017 and 30 June 2018 and the results for the period from 1 July
2017 to 30 June 2018. Adoption of the standard has impacted
revenue, deferred revenue, trade debtors and reserves, as well as
associated tax items and the commentary below explains the impact
on each of these items. A reconciliation of the adjustments is also
included in note 18.
Adjusting items, measures and adjusted results
Reference is made in this financial review to adjusted results
as well as the equivalent statutory measures. Adjusted results in
the opinion of the Directors can provide additional relevant
information on our future or past performance where equivalent
information cannot be presented using financial measures under
IFRS. Adjusted results exclude adjusting items, gain on sale of
subsidiaries, profit on disposal of property plant and equipment
(to the extent it is material or significant in nature), impairment
of goodwill and intangible assets and amortisation of intangible
assets (excluding computer software).
2019 2018 Restated Absolute Organic
variance variance
GBP'm GBP'm GBP'm % %
Revenue 122.5 121.3 1.2 1% 1%
Adjusted EBITA 21.5 23.8 (2.3) -10% -6%
Margin % 17.6 19.6
Revenue
In the year ended 30 June 2019 revenue increased by 1% (GBP1.2m)
to GBP122.5m (2018: GBP121.3m) or 0.5% on a constant currency
basis. The Group's major non-Sterling revenues are in US Dollars
and Euros. During the year the US Dollar strengthened against
Sterling while the Sterling Euro exchange rate was consistent with
prior year.
Reported revenue was also impacted by the disposal of ICP with
effect from 1 July 2018, which contributed GBP2.1m in the prior
year. In addition, the current year's revenue reflects a full year
of ownership of Interactive Medica compared to five months in the
prior year, contributing an additional GBP0.9m. Adjusting for these
factors, revenue grew organically by 1.5%, demonstrating a shift in
momentum from the reported declines in the previous two years.
Adopting IFRS 15 resulted in a decrease in revenue in the
current and prior year compared to the revenue recognised under the
previous revenue standard. The impact on the income statement was a
decrease in revenue and profit before tax of GBP0.5m and GBP0.7m in
the current and prior year respectively. The changes were primarily
within the Risk & Compliance division and related to timing of
revenue recognition on certain face-to-face courses and online
programmes.
Operating expenses before adjusting items, amortisation and
impairment
Adjusted operating expenses before adjusting items, amortisation
of intangible assets (excluding computer software) and impairment,
were GBP101.1m (2018: GBP97.5m) up 3.7% or GBP3.6m.
GBP0.5m of the increase came from foreign exchange (FX) impacts,
with the weakness of Sterling impacting the translation of overseas
costs denominated in foreign currencies, whilst costs from acquired
businesses essentially offset savings from those in disposed of
businesses. There was an increase of around GBP0.7m in direct costs
to support the revenue growth. However, the main drivers for the
extra costs were the well sign-posted increase in staff costs and
the full year effect of the investments made last year in the new
office and IT upgrade.
Staff costs increased by GBP1.8m to GBP51.8m (2018: GBP50.0m)
with the main elements being wage inflation of around GBP0.9m or 2%
per annum, GBP0.5m investment in new editorial staff to support the
APMi product launched in France, GBP0.4m of net other headcount
additions and FX and GBP0.4m of increased staff bonuses following
their removal in the prior year. This was offset by a GBP0.4m
reduction in share based payment costs due to staff departures and
the lapsing of a number of schemes in the year. The Group's full
time equivalent ('FTE') headcount at 30 June 2019 was 860 compared
to 849 at 30 June 2018. When adjusting for the reduction of 15 FTE
on the disposal of the ICP business in July 2018, the addition of
26 FTEs is in line with the previously announced planned increase
in headcount to support growth in targeted areas of the
business.
Non-staff costs also increased GBP1.8m to GBP49.3m (2018:
GBP47.5m) partly due to the extra direct costs and FX referred to
above. The full year impact of the new head office and the
associated IT integration were GBP0.8m while IT costs increased a
further GBP0.2m due to the roll-out of that technology to other
offices to improve resilience and reduce cyber risks. The cost of
the business review was offset by net savings elsewhere in the
organisation.
Adjusted operating profit ('Adjusted EBITA')
As a result of these changes in revenue and operating expenses,
adjusted EBITA was down GBP2.3m (9.7%) to GBP21.5m (2018:
GBP23.8m). Adjusted operating margin (adjusted EBITA expressed as a
percentage of revenue) decreased to 17.6% (2018: 19.6%).
Amortisation excluding computer software
Amortisation of intangible assets (excluding computer software)
was GBP5.0m, compared to GBP6.4m in the previous year. This
decrease relates to a number of assets in the healthcare business
that were fully amortised during the year, resulting in a lower
cost than the annualised comparative in the prior year.
Impairment of goodwill and intangible assets
Impairment reviews were completed for all the Group's Cash
Generating Units ('CGUs') and these reviews concluded that none of
the CGUs were impaired, therefore the impairment charge was GBPnil
(2018: GBP8.6m). Each CGU's recoverable amount was calculated using
value in use calculations. The value in use calculations used cash
flow projections based on financial budgets approved by senior
management covering a three-year period and on a long-term market
growth rate of 2% (2018: 2%).
Adjusting items within operating expenses
Adjusting items within operating expenses were GBP1.4m (2018:
GBP4.6m). Adjusting items in operating expenses are those items
that in the opinion of the Directors are one-off in nature and
which do not represent the ongoing trading performance of the
business. As anticipated these costs are significantly lower than
in the prior year during which GBP3.1m was incurred relating to the
move into the new London head office.
In the current year GBP0.6m of adjusting costs relate to
acquisition and disposal activity, including a small amount of
transaction fees and the recognition of deferred consideration
payable mainly in respect of Interactive Medica. A further GBP0.5m
of expenses has been included in adjusting items due to the costs
relating to the change in Chief Executive Officer. The remaining
GBP0.3m of expenses relates to the impairment of a receivable due
from Axco Digital Insurer Ratings PTE. Ltd, the joint venture that
was closed on 1 July 2019 due to its limited commercial feasibility
as outlined in the Review of Operations above.
Operating profit ('EBITA')
After the various adjusting items detailed above, operating
profit was GBP16.9m. This was up GBP12.7m from GBP4.2m in 2018. In
addition to the movements described above, the increase was
enhanced by the GBP1.9m profit on sale of ICP in July 2018.
Share of loss in equity accounted investments
A GBP0.1m cost (2018: GBPnil) has been recognised for the share
in losses incurred before closure of the joint venture referred to
above.
Net finance costs
Net finance costs increased by GBP0.1m to GBP2.1m (2018:
GBP2.0m), partly due to the increase in interest rates affecting
the portion of the loan not subject to an interest rate hedge. The
increase also reflected the write off of the remaining capitalised
loan arrangement fee relating to the 2015 facility that was renewed
in July 2019. This was partly offset by the benefit of a reduction
in net debt during the year, and lower non utilisation fees as a
result of a GBP10m reduction in the debt facility in November 2017.
There was also benefit from GBP0.1m of interest income recognised
on the unwind of the discounted deferred consideration receivable
in respect of ICP.
Profit before taxation
After finance costs, profit before tax was GBP14.7m (2018:
GBP2.3m). Adjusted profit before tax was down 11.5% to GBP19.3m
(2018: GBP21.8m).
Taxation
The tax charge was GBP3.5m (2018: GBP2.6m) with the increase
primarily driven by the increase in profit before tax. The overall
effective tax rate(6) fell to 23.9% from 24.2% in 2018 due to the
higher adjusting items relating to acquisitions in 2017 and 2018
which are for the most part not deductible for tax purposes.
The underlying tax rate(7) which ignores the tax effects of
adjusting items remained essentially flat at 20.9% (2018: 20.8%)
representing a reduction in corporation tax rates in the US offset
by a tax provision recognised in light of the uncertainty
surrounding the IFRS15 tax treatment of GBP0.2m and the impact of
prior year adjustments.
Earnings per share
Adjusted basic earnings per share decreased by 11.9% to 17.44p
(2018: 19.80p), owing to the decrease in adjusted profit before tax
and a flat underlying tax rate on an essentially unchanged number
of issued ordinary shares. Basic earnings per share was 12.74p
compared to (0.45)p in 2018 due to the increase in profit after
tax.
Balance Sheet
Non-current assets
Goodwill increased by GBP0.4m from GBP77.1m to GBP77.5m due to
fluctuations in foreign exchange rates.
Intangible assets decreased by GBP4.1m from GBP27.3m to GBP23.2m
due to amortisation of GBP6.4m, which was partly offset by
additions of GBP2.3m. Included within these additions were GBP0.6m
of internally generated assets related to investment in digital
platforms such as Totara(c), the Group wide LMS, with the remainder
a mix of off-the-shelf software and upgrades to existing technology
platforms.
Property, plant and equipment decreased by GBP0.5m to GBP6.0m
(2018: GBP6.5m) reflecting additions of GBP1.0m offset by
depreciation of GBP1.4m. The main addition in the year was the
fit-out of the new Leicester office for Accountancy.
6 The effective tax rate is calculated as the total tax charge
divided by profit before tax after adding back impairment
charges
7 The underlying tax rate is calculated as one minus the
adjusted profit after tax divided by the adjusted profit before
tax
Deferred consideration receivable
Following the disposal of ICP in July 2018, the Group recognised
GBP2.2m of deferred consideration receivable, which will be paid
over five years. The amount recognised represents the total amount
due discounted to present value. The unwind of the GBP0.6m discount
will continue be recognised as a credit to profit and loss in net
finance costs over the next four years.
Trade and other receivables
Trade and other receivables were up GBP0.9m at GBP29.1m (2018:
GBP28.2m). Within this, trade receivables were essentially
unchanged at GBP23.1m (2018 GBP22.9m), with the movement being
driven by an increase in prepayments.
Trade and other payables
Trade and other payables increased by GBP2.4m from GBP54.8m to
GBP57.2m. Within this subscriptions and deferred revenue increased
by GBP2.4m or 8.5% to GBP30.8m (2018: GBP28.4m). Around half of
this increase was due to timing of invoices. The remaining trade
and other payables remained constant at GBP26.4m.
Current tax liabilities
Current tax liabilities decreased from GBP0.7m to GBP0.3m,
reflecting the reduction in adjusting items subject to taxation for
the year ended 30 June 2019.
Deferred consideration payable
The liability for deferred consideration decreased by GBP1.1m
from GBP2.6m at 30 June 2018 to GBP1.5m at 30 June 2019. This
reflects the settlement of the final amount owing for SWAT of
GBP1.3m in September 2018, partly offset by the increase in
deferred consideration mainly in respect of Interactive Medica. The
remaining balances are all due for repayment within twelve
months.
Net debt and cashflow
Net debt, which includes cash and cash equivalents, bank loans
(excluding capitalised loan arrangement fees) and bank overdrafts,
was GBP33.9m (30 June 2018: GBP39.6m). Net debt at the year end was
1.4 times adjusted EBITDA (2018: 1.5 times). Cash conversion for
the year ended 30 June 2019 was 123% (2018: 108%), slightly higher
than expected. The improvement reflects strong cash collections in
the latter part of the year. Post the year end on 3 July 2019, the
Group extended its debt facilities to expire on 3 July 2023 with an
option to extend to October 2024.
Derivative financial instruments
The Group is exposed to foreign exchange risks, liquidity and
capital risks and credit risks. The Group has policies that
mitigate these risks which include the use of derivative products
such as forwards and swaps subject to Board approval. The Group
uses interest rate swap contracts to mitigate part of the interest
rate volatility risk. These swaps have resulted in an asset of
GBP0.0m (2018: GBP0.1m) and a liability of GBP0.2m (2018: GBP0.4m)
at 30 June 2019.
On 3 July 2019 the Group entered into a number of foreign
currency transactions to mitigate possible exchange rate
fluctuations on its 2019/20 financial results. $12.5m USD were sold
forward to mature during the 2019/2020 financial year at an average
rate of $1.27 and EUR3.0m EUR were sold forward at an average rate
of EUR1.11 with similar maturities.
Share capital
During the year 125,494 new ordinary shares of GBP0.05 were
issued in settlement of shares vesting under the Group's
Performance Share Plan. This resulted in an increase to the number
of ordinary shares outstanding at 30 June 2019 to 87,539,567 (2018:
87,414,073).
Dividend
A final dividend of 5.0p per share (2018: 4.8p) will be proposed
at the AGM. If approved, it will be paid on 15 November 2019 to
shareholders on the register as at 18 October 2019, with an
associated ex-dividend date of 17 October 2019. This will give a
full year dividend of 9.1p (2018: 8.8p) and dividend cover of 1.9
times (2018: 2.3 times).
Statement of directors' responsibilities
The statement of directors' responsibilities below has been
prepared in connection with the Group's full annual report for the
year ended 30 June 2019. Certain parts of the annual report have
not been included in this announcement as set out in note 1 of the
financial information.
We confirm to the best of our knowledge that:
-- the consolidated financial statements, which have been
prepared in accordance with IFRSs as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial
position and profit of the Group;
-- the management report represented by the report of the
Directors, and material incorporated by reference, includes a fair
review of the development and performance of the business and the
position of the Group, together with a description of the principal
risks and uncertainties that they face; and
-- the annual report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to access the company's performance, business model
and strategy.
This responsibility statement was approved by the board of
Directors on 18 September 2019 and is signed on its behalf by
Richard Amos
Chief Financial Officer
Consolidated Income Statement for the year ended 30 June
2019
Year ended
Year ended 30 June
30 June 2018
2019 Restated
Notes GBP'000 GBP'000
---------- ----------
Continuing operations
Revenue 4 122,525 121,342
Operating expenses before amortisation of intangibles
excluding computer software, impairment of goodwill
and intangible assets and adjusting items (101,074) (97,532)
Amortisation of intangible assets excluding computer
software 5b (5,049) (6,432)
Impairment of goodwill and intangible assets 5b - (8,561)
Adjusting items 5b (1,443) (4,573)
------------------------------------------------------- ----- ---------- ----------
Operating expenses 6 (107,566) (117,098)
---------- ----------
Other income - gain on sale of subsidiary 5a 1,906 -
---------- ----------
Operating profit 16,865 4,244
---------- ----------
Net finance costs 7 (2,103) (1,969)
Share of net loss of associates and joint ventures
accounted for
using the equity method (50) -
Profit before tax 14,712 2,275
---------- ----------
Taxation 8 (3,519) (2,620)
Profit/(loss) for the year 11,193 (345)
---------- ----------
Attributable to:
Owners of the parent 11,149 (392)
Non-controlling interests 44 47
---------- ----------
11,193 (345)
---------- ----------
Earnings per share attributable to the owners of the
parent:
---------- ----------
Basic (p) 10 12.74 (0.45)
Diluted (p) 10 12.64 (0.45)
---------- ----------
Adjusted earnings per share attributable to the owners
of the parent:
---------- ----------
Basic (p) 10 17.44 19.80
Diluted (p) 10 17.30 19.65
---------- ----------
Consolidated Statement of Comprehensive Income for the year
ended 30 June 2019
Year ended
Year ended 30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
---------- ----------
Profit/(loss) for the year 11,193 (345)
Other comprehensive income/(expense):
Items that may be reclassified subsequently to the Income
Statement
---------- ----------
Fair value movements on interest rate swaps, net of tax 32 339
Currency translation differences 643 (896)
Net investment hedges, net of tax (424) 177
Other comprehensive income/(expense) for the year, net
of tax 251 (380)
----------
Total comprehensive income/(expense) for the year 11,444 (725)
---------- ----------
Attributable to:
Owners of the parent 11,400 (772)
Non-controlling interests 44 47
---------- ----------
11,444 (725)
---------- ----------
Items in the statement above are disclosed net of tax. The
income tax relating to each component of other comprehensive income
is disclosed in note 8.
Consolidated Balance Sheet as at 30 June 2019
2018 2017
2019 Restated Restated
Notes GBP'000 GBP'000 GBP'000
--------- ---------------- ----------------
Non-current assets
Goodwill 12 77,535 77,103 86,028
Intangible assets 13 23,213 27,305 31,911
Property, plant and equipment 14 5,967 6,463 4,444
Deferred consideration receivable 11 2,221 - -
Deferred tax assets 555 976 1,195
Derivative financial instruments 23 113 -
109,514 111,960 123,578
--------- ---------------- ----------------
Current assets
Trade and other receivables 15 29,112 28,233 28,444
Cash and cash equivalents 7,921 10,789 10,687
--------- ---------------- ----------------
37,033 39,022 39,131
--------- ---------------- ----------------
Assets held for sale - 317 -
37,033 39,339 39,131
--------- ---------------- ----------------
Total assets 146,547 151,299 162,709
--------- ---------------- ----------------
Current liabilities
Trade and other payables 16 (57,168) (54,752) (55,218)
Current tax liabilities (312) (722) (1,932)
Deferred consideration - cash settled (1,550) (1,320) (177)
Borrowings - - (925)
--------- ---------------- ----------------
(59,030) (56,794) (58,252)
--------- ---------------- ----------------
Non-current liabilities
Borrowings (41,790) (50,380) (49,353)
Deferred consideration - cash settled - (1,286) (2,305)
Derivative financial instruments (226) (356) (662)
Deferred tax liabilities (2,633) (3,087) (4,585)
Provisions for future purchase of non-controlling
interests - - (100)
(44,649) (55,109) (57,005)
--------- ---------------- ----------------
Total liabilities (103,679) (111,903) (115,257)
--------- ---------------- ----------------
Net assets 42,868 39,396 47,452
--------- ---------------- ----------------
Equity
Share capital 4,377 4,371 4,362
Share premium 45,225 45,225 45,225
Treasury shares (96) (96) (96)
Share based payments reserve 839 1,108 898
Translation reserve 3,288 2,645 3,541
Accumulated losses (10,765) (13,939) (6,564)
--------- ---------------- ----------------
Equity attributable to owners of the
parent 42,868 39,314 47,366
Non-controlling interests - 82 86
--------- ---------------- ----------------
Total equity 42,868 39,396 47,452
--------- ---------------- ----------------
Consolidated Statement of Changes in Equity for the year ended
30 June 2019
Share capital,
share premium Share based
and treasury payments Translation Accumulated Non-controlling
shares reserve reserve losses Total interests Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ----------- ----------- ----------- -------- --------------- ------------
Group
At 30 June 2017
Restated 49,491 898 3,541 (6,564) 47,366 86 47,452
(Loss)/profit for
the year - - - (392) (392) 47 (345)
Other comprehensive
(expense)/income
for the year - - (896) 516 (380) - (380)
-------------- ----------- ----------- ----------- -------- --------------- ------------
49,491 898 2,645 (6,440) 46,594 133 46,727
Transactions with
owners:
Dividends - - - (7,514) (7,514) (62) (7,576)
Issue of share capital 9 (384) - 375 - - -
Share based payments - 594 - - 594 - 594
Tax on share based
payments - - - (15) (15) - (15)
Movements in
non-controlling
interest - - - (345) (345) 11 (334)
At 30 June 2018
Restated 49,500 1,108 2,645 (13,939) 39,314 82 39,396
Profit for the year - - - 11,149 11,149 44 11,193
Other comprehensive
income/(expense)
for the year - - 643 (392) 251 - 251
-------------- ----------- ----------- ----------- -------- --------------- ------------
49,500 1,108 3,288 (3,182) 50,714 126 50,840
Transactions with
owners:
Dividends - - - (7,787) (7,787) (34) (7,821)
Issue of share capital 6 (472) - 466 - - -
Share based payments - 203 - - 203 - 203
Tax on share based
payments - - - (48) (48) - (48)
Movements in
non-controlling
interest - - - (214) (214) (92) (306)
-------------- ----------- ----------- ----------- -------- --------------- ------------
At 30 June 2019 49,506 839 3,288 (10,765) 42,868 - 42,868
-------------- ----------- ----------- ----------- -------- --------------- ------------
Consolidated Cash Flow Statement for the year ended 30 June
2019
Group
----------------------
Year ended Year ended
30 June 30 June
2019 2018
Notes GBP'000 GBP'000
---------- ----------
Cash flows from operating activities
Cash generated from operations before adjusting
items 17 26,439 25,665
Cash flows for adjusting items - operating
activities (810) (2,951)
Cash flows from share based payments (33) (50)
---------- ----------
Cash generated from operations 25,596 22,664
Interest paid (1,943) (1,934)
Tax paid (3,943) (4,738)
---------- ----------
Net cash generated from operating activities 19,710 15,992
---------- ----------
Cash flows from investing activities
Purchase of businesses net of cash acquired (79) (1,595)
Sale of subsidiary net of cash disposed 60 -
Deferred consideration paid (1,522) (205)
Purchase of non-controlling interests (224) (335)
Cash flows for adjusting items - investing
activities (405) (1,118)
Purchase of property, plant and equipment (1,332) (3,089)
Proceeds from disposal of property, plant
and equipment 112 55
Purchase of intangible assets (2,324) (1,934)
---------- ----------
Net cash used in investing activities (5,714) (8,221)
---------- ----------
Cash flows from financing activities
Dividends paid to owners of the parent (7,787) (7,514)
Dividends paid to non-controlling interests (34) (62)
Share issuance costs (6) (8)
Fees relating to new and extended loan facility (24) (22)
Increase in bank loans 6,000 9,127
Decrease in bank loans (15,399) (8,012)
---------- ----------
Net cash used in financing activities (17,250) (6,491)
---------- ----------
Net (decrease)/increase in cash and cash equivalents,
net of bank overdrafts (3,254) 1,280
---------- ----------
Cash and cash equivalents, net of bank overdrafts
at beginning of the year 11,033 9,762
Exchange gain/(loss) on cash and cash equivalents 142 (9)
---------- ----------
Cash and cash equivalents, net of bank overdrafts
at end of the year 7,921 11,033
---------- ----------
Reconciliation of net debt
Cash and cash equivalents at beginning of the year 10,789 10,687
Cash classified as held for sale 244 -
Bank overdrafts at beginning of the year - (925)
Bank loans at beginning of the year (50,665) (49,781)
-------- --------
Net debt at beginning of the year (39,632) (40,019)
-------- --------
Net (decrease)/increase in cash and cash equivalents,
net of bank overdrafts (3,112) 1,271
Net repayment/(drawdown) in bank loans 9,399 (1,115)
Exchange (loss)/gains on bank loans (524) 231
-------- --------
Cash and cash equivalents at end of the year 7,921 10,789
Cash classified as held for sale - 244
Bank overdrafts at the end of the period - -
Bank loans at end of the year (41,790) (50,665)
-------- --------
Net debt at end of the year (33,869) (39,632)
-------- --------
Notes to the Financial Statements
1. Nature of the financial statements
The following financial information does not amount to full
financial statements within the meaning of Section 434 of Companies
Act 2006. The financial information has been extracted from the
Group's Annual Report and Financial Statements for the year ended
30 June 2019 on which an unqualified report has been made by the
Company's auditors.
Financial statements for the year ended 30 June 2018 have been
delivered to the Registrar of Companies; the report of the auditors
on those accounts was unqualified and did not contain a statement
under Section 498 of the Companies Act 2006. The 2019 statutory
accounts will be delivered in due course.
Copies of the Annual Report and Financial Statements will be
posted to shareholders shortly and will be available from the
Company's registered office at 10 Whitechapel High Street, London,
E1 8QS.
2. Statement of accounting policies
The preliminary announcement for the year ended 30 June 2019 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 2018 along with new standards and interpretations
which became mandatory for the financial year. Of these new
standards and interpretations, the adoption of IFRS 15 and IFRS 9
has led to changes in the Group's accounting policies.
3. Measures of profit
(a) Reconciliation to profit on continuing activities before tax
To provide shareholders with additional understanding of the
trading performance of the Group, Adjusted EBITA has been
calculated as Profit before Tax after adding back:
-- amortisation of intangible assets excluding computer software;
-- impairment of goodwill and intangible assets;
-- adjusting items (included in operating expenses);
-- other income - gain on sale of subsidiary;
-- share of loss of equity accounted investment; and
-- finance costs.
Year ended
Year ended 30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
---------- ----------
Profit before tax 14,712 2,275
Amortisation of intangible assets excluding computer
software 5,049 6,432
Impairment of goodwill and intangibles - 8,561
Adjusting items (included in operating expenses) 1,443 4,573
Other income - gain on sale of subsidiary (1,906) -
Adjusted profit before tax 19,298 21,841
Share of loss of equity accounted investment 50 -
Finance costs 2,103 1,969
---------- ----------
Adjusted operating profit ('Adjusted EBITA') 21,451 23,810
Depreciation of property, plant and equipment included
in operating expenses 1,359 917
Amortisation of intangible assets - computer software 1,477 1,302
---------- ----------
Adjusted EBITA before depreciation ('Adjusted EBITDA') 24,287 26,029
---------- ----------
Adjusted profit before tax, adjusted EBITA and adjusted EBITDA
reconcile to profit on continuing activities before tax as
follows:
4. Segmental information
In accordance with IFRS 8 the Group's operating segments are
based on the operating results reviewed by the Board, which
represents the chief operating decision maker.
The Group's organisational structure reflects the main
communities to which it provides information, education and
networking. The three divisions (Risk & Compliance,
Professional and Healthcare) are the Group's segments and generate
all of the Group's revenue. The Board considers the business from
both a geographic and product perspective. Geographically,
management considers the performance of the Group between the UK,
North America, Europe (excluding the UK) and the Rest of the
World.
a) Business segments
Revenue Profit
Revenue Profit Year ended Year ended
Year ended Year ended 30 June 30 June
30 June 30 June 2018 2018
2019 2019 Restated Restated
GBP'000 GBP'000 GBP'000 GBP'000
----------- ----------- ----------- -----------
Risk & Compliance 42,453 12,670 42,149 12,188
Healthcare 46,310 7,337 44,681 9,899
Professional 33,762 5,808 34,512 6,191
Group total 122,525 25,815 121,342 28,278
Unallocated central overheads - (4,152) - (3,827)
Share based payments - (212) - (641)
122,525 21,451 121,342 23,810
Amortisation of intangible assets excluding
computer software (5,049) (6,432)
Impairment of goodwill and intangibles - (8,561)
Adjusting items (included in operating
expenses) (1,443) (4,573)
Other income - gain on sale of subsidiary 1,906 -
Finance costs (2,103) (1,969)
Share of loss of equity accounted investment (50) -
----------- ----------- ----------- -----------
Profit before tax 14,712 2,275
Taxation (3,519) (2,620)
----------- ----------- ----------- -----------
Profit/(loss) for the financial year 11,193 (345)
----------- ----------- ----------- -----------
There are no intra-segmental revenues which are material for
disclosure. Unallocated central overheads represent central costs
that are not specifically allocated to segments. Total assets and
liabilities for each reportable segment are not presented; as such,
information is not provided to the Board.
b) Segmental information by geography
Year ended
Year ended 30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
---------- ----------
UK 69,839 71,592
Europe (excluding the UK) 22,055 20,628
North America 20,829 18,201
Rest of the World 9,802 10,921
---------- ----------
Total revenue 122,525 121,342
---------- ----------
The UK is the Group's country of domicile and the Group
generates the majority of its revenue from external customers in
the UK. The geographical analysis of revenue is on the basis of the
country of origin in which the customer is invoiced:
c) Timing of revenue recognition
Year ended
Year ended 30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
---------- ----------
Revenue from products and services transferred at a point
in time 51,054 45,156
Revenue from products and services transferred over time 71,471 76,186
---------- ----------
Total revenue 122,525 121,342
---------- ----------
The timing of the Group's revenue recognition is as follows:
The value of revenue recognised in the year which was included
in subscriptions and deferred revenue at the start of the year was
GBP28,384,000 (year ended 30 June 2018: GBP29,861,000). The value
of revenue recognised in the reporting period from performance
obligations satisfied or partially satisfied in previous periods
was GBPnil (year ended 30 June 2019: GBPnil).
The Group has applied the practical expedient of paragraph 63 of
IFRS 15 not to adjust the promised amount of consideration for the
effects of a financing component, as it is expected that the period
between the transfer of goods or services, and when the customer
pays for that good or service, will be less than one year.
The Group has applied the practical expedient of paragraph 93 of
IFRS 15 to recognise the incremental costs of obtaining a contract
as an expense when incurred, because the amortisation period of any
such asset that the entity otherwise would have recognised is one
year or less.
The Group has applied the practical expedient of paragraph 121
of IFRS 15 not to disclose the transaction price allocated to the
remaining performance obligations, as required by paragraph 120 of
IFRS 15, as the Group's contracts are all for one year or less.
5. Profit from continuing operations
Year ended Year ended
30 June 30 June
2019 2018
GBP'000 GBP'000
---------- ----------
Depreciation of property, plant and equipment - included
in operating expenses 1,359 917
Amortisation of intangible assets - computer software 1,477 1,302
Profit on disposal of property, plant and equipment 36 (11)
Rentals under operating leases 2,661 2,942
Share based payments (including social security costs) 212 641
Amortisation of intangible assets excluding computer software 5,049 6,432
Impairment of goodwill and intangibles - 8,561
Adjusting items (included in operating expenses) 1,443 4,573
Gain on sale of subsidiary (1,906) -
Foreign exchange gain (including forward currency contracts) (55) (229)
Fees payable to the auditors for the audit of the Company
and consolidated financial statements 87 117
Fees payable to the auditors and their associates for
other services:
- The audit of the Company's subsidiaries pursuant to
legislation 154 183
- Other assurance services - 74
- Tax compliance services - 5
- Audit related other services 15 -
---------- ----------
a) Profit for the year from continuing operations is stated
after charging/(crediting):
Fees payable to the auditors in the year ended 30 June 2018 were
due to PricewaterhouseCoopers LLP.
b) Adjusting items:
Year ended Year ended
30 June 30 June
2019 2018
GBP'000 GBP'000
---------- ----------
Costs relating to successful and aborted acquisitions,
disposals and integration 74 721
Increase in liability for deferred consideration 489 330
---------- ----------
563 1,051
Impairment of loan receivable 331 -
Costs associated with the change in CEO 549 -
Adjusting items relating to property portfolio review
and IT infrastructure transformation - 3,090
Restructuring and rationalisation costs - 432
Other adjusting items (included in operating expenses) 1,443 4,573
Amortisation of intangible assets excluding computer software 5,049 6,432
Impairment of goodwill and intangible assets (note 12) - 8,561
Total adjusting items (classified in profit before tax) 6,492 19,566
---------- ----------
The following items have been charged to the Income Statement
during the year but are considered to be adjusting so are shown
separately:
Successful and aborted acquisition, disposal and integration
costs relate to transaction fees on the acquisition of The Training
Consultants Limited and the disposal of International Company
Profile FZ LLC. The increase in the liability for deferred
consideration relates to adjustments to deferred consideration in
respect of SWAT Group Limited ('SWAT'), Interactive Medica Limited,
The Training Consultants Limited and Evantage Consulting Limited.
The impairment of loan receivable relates to the write off of the
receivable from the joint venture Axco Digital Insurer Ratings PTE.
Ltd (Singapore) in the year.
6. Operating expenses
Year ended 30 June 2019 Year ended 30 June 2018
Cost of Administration Total Cost of Administration Total
sales GBP'000 GBP'000 sales GBP'000 GBP'000
GBP'000 GBP'000
-------- -------------- -------- -------- -------------- --------
Operating expenses before depreciation,
amortisation and impairment 93,626 4,612 98,238 90,845 4,468 95,313
Depreciation of property, plant
and equipment 1,359 - 1,359 917 - 917
Amortisation of intangible assets
- computer software 1,477 - 1,477 1,302 - 1,302
-------- -------------- -------- -------- -------------- --------
Operating expenses before amortisation
of intangible assets excluding
computer software and impairment 96,462 4,612 101,074 93,064 4,468 97,532
Amortisation of intangible assets
- databases 1,745 - 1,745 1,933 - 1,933
Amortisation of intangible assets
- customer relationships 1,501 - 1,501 2,038 - 2,038
Amortisation of intangible assets
- brands 1,185 - 1,185 1,272 - 1,272
Amortisation of intangible assets
- publishing rights and titles 618 - 618 1,189 - 1,189
Goodwill and intangibles impairment
charge (note 12) - - - - 8,561 8,561
Other adjusting items (note
5) - 1,443 1,443 - 4,573 4,573
-------- -------------- -------- -------- -------------- --------
Operating expenses 101,511 6,055 107,566 99,496 17,602 117,098
-------- -------------- -------- -------- -------------- --------
7. Net finance costs
Year ended Year ended
30 June 30 June
2019 2018
GBP'000 GBP'000
Finance costs comprise:
Interest payable on bank loans and overdrafts 1,921 1,804
Unwinding of the discount on royalty payments receivable (127) -
Amortisation of capitalised loan arrangement fees 309 165
2,103 1,969
---------- ----------
Included within amortisation of capitalised loan arrangement
fees is GBP143,000 relating to the write off of the remaining fees
on the 2015 debt facility following its renewal in July 2019.
8. Taxation
Year ended
Year ended 30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
---------- ----------
Current tax
UK corporation tax at current rates on UK profits for
the year 2,163 2,208
Adjustments in respect of previous years (106) 63
---------- ----------
2,057 2,271
Foreign tax 1,153 1,114
Adjustments in respect of previous years 350 (41)
---------- ----------
Total current tax 3,560 3,344
---------- ----------
Deferred tax credit (41) (765)
Effect on deferred tax of change in corporation tax rate - 41
Total deferred tax (41) (724)
---------- ----------
Taxation 3,519 2,620
---------- ----------
Factors affecting the tax charge for the year:
The effective tax rate is higher (2018: higher) than the average
rate of corporation tax in the UK of 19.00% (2018: 19.00%). The
differences are explained below:
Year ended
Year ended 30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
---------- ----------
Profit before tax 14,712 2,275
---------- ----------
Profit before tax multiplied by the average rate of corporation
tax in the year of 19.00% (2018: 19.00%) 2,795 432
Tax effects of:
Impairment of goodwill not deductible for tax purposes - 1,627
Foreign tax rate differences 384 384
Adjustment in respect of previous years 244 22
Other items not subject to tax 96 114
Effect on deferred tax of change of corporation tax rate - 41
Taxation 3,519 2,620
---------- ----------
It was announced on 23 November 2016 that the UK corporation tax
rate will be reduced from 19% to 17% from 1 April 2020. Deferred
tax assets and liabilities are measured at the rates that are
expected to apply in the periods of the reversal.
The Company's profits for this accounting year are taxed at an
effective rate of 23.9% (2018 restated: 24.2%).
Included in other comprehensive income are a tax charge of
GBP8,000 (2018: GBP80,000) and a tax credit of GBP99,000 (2018:
GBP42,000 charge) relating to the interest rate swaps and net
investment hedges respectively.
The tax effect of adjusting items as disclosed in note 10 is a
credit of GBP475,000 (2018: GBP1,876,000).
9. Dividends
Amounts recognised as distributions to owners of the parent in
the year:
Year ended Year ended
30 June 30 June Year ended Year ended
2019 2018 30 June 30 June
Pence per Pence per 2019 2018
share share GBP'000 GBP'000
---------- ---------- ---------- ----------
Final dividends recognised as distributions
in the year 4.8 4.6 4,200 4,019
Interim dividends recognised as distributions
in the year 4.1 4.0 3,587 3,495
---------- ---------- ---------- ----------
Total dividends paid 7,787 7,514
---------- ---------- ---------- ----------
Final dividend proposed 5.0 4.8 4,375 4,194
---------- ---------- ---------- ----------
10. Earnings per share
Adjusted earnings per share has been calculated using adjusted
earnings calculated as profit after taxation and non-controlling
interests but before:
-- amortisation of intangible assets excluding computer software;
-- impairment of goodwill and intangible assets;
-- adjusting items (included in operating expenses);
-- share of loss of equity accounted investment; and
-- other income - gain on sale of subsidiary.
The calculation of the basic and diluted earnings per share is
based on the following data:
Year ended
Year ended 30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
---------- ----------
Earnings from continuing operations for the purpose of
basic earnings per share 11,149 (392)
Add/(remove):
Amortisation of intangible assets excluding computer software 5,049 6,432
Impairment of goodwill and intangibles - 8,561
Adjusting items (included in operating expenses) 1,443 4,573
Other income - gain on sale of subsidiary (1,906) -
Tax effect of adjustments above (475) (1,876)
---------- ----------
Adjusted earnings for the purposes of adjusted earnings
per share 15,260 17,298
---------- ----------
Number Number
---------- ----------
Weighted average number of ordinary shares for the purposes
of basic and adjusted earnings per share 87,513,422 87,379,469
Effect of dilutive potential ordinary shares:
Future exercise of share awards and options 719,509 645,240
Weighted average number of ordinary shares for the purposes
of diluted and adjusted diluted earnings per share 88,232,931 88,024,709
---------- ----------
Basic earnings per share 12.74p (0.45)p
Diluted earnings per share 12.64p (0.45)p
Adjusted basic earnings per share ('Adjusted Earnings
Per Share') 17.44p 19.80p
Adjusted diluted earnings per share 17.30p 19.65p
---------- ----------
11. Disposal - International Company Profile FZ LLC
On 18 July 2018 Wilmington Publishing and Information Limited (a
wholly owned subsidiary of Wilmington plc) sold the trade and
assets of International Company Profile ('ICP'), including its 100%
shareholding in International Company Profile FZ LLC, the statutory
entity incorporated in Dubai, to its management team. The sale was
effective from 1 July 2018.
ICP was the credit reporting business previously held within the
Risk & Compliance division and was classified as held for sale
at 30 June 2018.
The profit on disposal of International Company Profile was
GBP1,906,000 which is calculated as follows:
GBP'000
-------
Sale price 300
Royalty payments 2,700
-------
Undiscounted consideration 3,000
-------
Discount of royalty payments (606)
-------
Fair value of consideration 2,394
-------
Property, plant and equipment 9
Intangible assets 58
Cash 240
Trade receivables 100
Other receivables 81
-------
Net assets disposed of 488
-------
Profit on disposal of ICP 1,906
-------
The sale price for ICP was GBP3,000,000, which includes future
royalty payments of GBP2,700,000 which have been accounted for as
deferred consideration. The deferred consideration receivable is
accounted for as a financial asset at amortised cost.
In accordance with IFRS 3: Business combinations and IAS 10:
Consolidated Financial Statements, the royalty payments have been
accounted for as consideration as part of the disposal transaction
because the business sale agreement and royalty licence agreement
were entered into at the same time, to achieve the same overall
commercial effect, and both arrangements were dependent on each
other.
At 30 June 2019 the fair value of the future royalty payments
was GBP2,221,050. The royalty payments are due to be paid in
instalments from 18 July 2020 to 18 July 2023.
12. Goodwill
Cost GBP'000
At 1 July 2017 110,188
Additions 588
Fair value adjustment (762)
Exchange translation differences (190)
-------
At 30 June 2018 109,824
-------
Exchange translation differences 432
At 30 June 2019 110,256
Accumulated impairment
At 1 July 2017 24,160
Impairment 8,561
-------
At 30 June 2018 and 30 June 2019 32,721
-------
Net book amount
At 30 June 2019 77,535
-------
At 30 June 2018 77,103
-------
At 30 June 2017 86,028
-------
13. Intangible assets
Customer Publishing
Computer relationships rights and
software Databases GBP'000 Brands titles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- -------------- -------- ----------- --------
Cost
At 1 July 2017 9,946 16,143 24,355 13,341 30,289 94,074
Additions 1,934 - - - - 1,934
Acquisitions 583 611 514 348 - 2,056
Disposals (2,161) - - - - (2,161)
Reclassification to held
for sale (111) - - - - (111)
Exchange translation differences 2 (13) (67) (56) - (134)
--------- --------- -------------- -------- ----------- --------
At 30 June 2018 10,193 16,741 24,802 13,633 30,289 95,658
Additions 2,324 - - - - 2,324
Acquisitions - - - - 104 104
Disposal (326) - - - - (326)
Exchange translation differences (17) 30 167 124 - 304
At 30 June 2019 12,174 16,771 24,969 13,757 30,393 98,064
Accumulated amortisation
At 1 July 2017 7,004 10,110 14,987 4,188 25,874 62,163
Charge for the year 1,302 1,933 2,038 1,272 1,189 7,734
Acquisitions 528 - - - - 528
Disposals (2,161) - - - - (2,161)
Reclassification to held
for sale (53) - - - - (53)
Exchange translation differences 22 5 71 36 8 142
--------- --------- -------------- -------- ----------- --------
At 30 June 2018 6,642 12,048 17,096 5,496 27,071 68,353
Charge for the year 1,477 1,745 1,501 1,185 618 6,526
Disposals (251) - - - - (251)
Exchange translation differences (18) 17 123 101 - 223
At 30 June 2019 7,850 13,810 18,720 6,782 27,689 74,851
Net book amount
At 30 June 2019 4,324 2,961 6,249 6,975 2,704 23,213
--------- --------- -------------- -------- ----------- --------
At 30 June 2018 3,551 4,693 7,706 8,137 3,218 27,305
--------- --------- -------------- -------- ----------- --------
At 30 June 2017 2,942 6,033 9,368 9,153 4,415 31,911
--------- --------- -------------- -------- ----------- --------
Land, freehold and Motor
leasehold buildings Fixtures and fittings Computer equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------------------- ----------------------- --------- --------
Cost
At 1 July 2017 3,161 5,239 4,292 534 13,226
Additions 2,122 436 787 68 3,413
Acquisitions - 119 123 - 242
Disposals - (1,760) (1,289) (142) (3,191)
Reclassification to held
for sale - - (11) - (11)
Exchange translation
differences - (1) (2) - (3)
----------------------- --------------------- ----------------------- --------- --------
At 30 June 2018 5,283 4,033 3,900 460 13,676
Additions 248 324 302 135 1,009
Acquisitions - - 13 - 13
Disposals - (786) (477) (198) (1,461)
Exchange translation
differences - 14 7 - 21
At 30 June 2019 5,531 3,585 3,745 397 13,258
Accumulated
depreciation
At 1 July 2017 820 3,956 3,767 239 8,782
Charge for the year 142 649 468 90 1,349
Disposals - 116 114 - 230
Acquisitions (3) (1,760) (1,289) (95) (3,147)
Reclassification to held
for sale - - (2) - (2)
Exchange translation
differences - - 1 - 1
----------------------- --------------------- ----------------------- --------- --------
At 30 June 2018 959 2,961 3,059 234 7,213
Charge for the year 325 491 452 91 1,359
Disposals - (693) (467) (153) (1,313)
Acquisitions - - 13 - 13
Exchange translation
differences - 11 8 - 19
At 30 June 2019 1,284 2,770 3,065 172 7,291
Net book amount
At 30 June 2019 4,247 815 680 225 5,967
----------------------- --------------------- ----------------------- --------- --------
At 30 June 2018 4,324 1,072 841 226 6,463
----------------------- --------------------- ----------------------- --------- --------
At 30 June 2017 2,341 1,283 525 295 4,444
----------------------- --------------------- ----------------------- --------- --------
14. Property, plant and equipment
Included in land, freehold and leasehold buildings is GBP970,000
(2018: GBP970,000) of non-depreciated land.
Depreciation of property, plant and equipment is charged to
operating expenses within the Income Statement.
15. Trade and other receivables
30 June 30 June
2019 2018
GBP'000 GBP'000
-------- --------
Current
Trade receivables 23,058 22,869
Prepayments and other receivables 6,054 5,364
29,112 28,233
-------- --------
16. Trade and other payables
30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
-------- ---------
Trade and other payables 26,374 26,368
Subscriptions and deferred revenue 30,794 28,384
57,168 54,752
-------- ---------
17. Cash generated from operations
Year ended
Year ended 30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
---------- ----------
Profit from continuing operations before income tax 14,712 2,275
Gain on sale of subsidiary (1,906) -
Adjusting items - excluding depreciation of property
plant and equipment 1,443 4,141
Adjusting items - depreciation of property, plant and
equipment - 432
Depreciation of property, plant and equipment included
in operating expenses 1,359 917
Amortisation of intangible assets 6,526 7,734
Impairment of goodwill and intangible assets - 8,561
Loss/(profit) on disposal of property, plant and equipment 36 (11)
Share based payments (including social security costs) 212 641
Share of loss of equity accounted investment 50 -
Finance costs 2,103 1,969
---------- ----------
Operating cash flows before movements in working capital 24,535 26,659
(Increase)/decrease in trade and other receivables (258) 160
Increase/(decrease) in trade and other payables 2,162 (1,154)
---------- ----------
Cash generated from operations before adjusting items 26,439 25,665
---------- ----------
Cash conversion is calculated as a percentage of cash generated
by operations to Adjusted EBITA as follows:
Year ended
Year ended 30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
---------- ----------
Funds from operations before adjusting items:
Adjusted EBITA (note 3) 21,451 23,810
Share based payments (including social security costs) 212 641
Amortisation of intangible assets - computer software 1,477 1,302
Depreciation of property, plant and equipment included
in operating expenses 1,359 917
Profit on disposal of property, plant and equipment 36 (11)
---------- ----------
Operating cash flows before movement in working capital 24,535 26,659
Net working capital movement 1,904 (994)
---------- ----------
Funds from operations before adjusting items 26,439 25,665
---------- ----------
Cash conversion 123% 108%
---------- ----------
Year ended
Year ended 30 June
30 June 2018
2019 Restated
GBP'000 GBP'000
Free cash flow:
Operating cash flows before movement in working capital 24,535 26,659
Proceeds on disposal of property, plant and equipment 112 55
Net working capital movement 1,904 (994)
Interest paid (1,943) (1,934)
Tax paid (3,943) (4,738)
Purchase of property, plant and equipment (1,332) (3,089)
Purchase of intangible assets (2,324) (1,934)
---------- ----------
Free cash flow 17,009 14,025
---------- ----------
18. Restatement on adoption of IFRS 15
The results for the year ended 30 June 2018 have been restated
following the adoption in 2018 of IFRS 15.
In the year ended 30 June 2018 the adjustment to revenue
recognised under the new standard resulted in a decrease in revenue
of GBP750,000, profit before tax of GBP750,000 and profit after tax
of GBP607,000, with these adjustments affecting the Risk &
Compliance and Professional divisions, with profit before tax
adjustments of GBP711,000 and GBP39,000 respectively.
This adjustment resulted in a decrease in basic earnings per
share from 0.25p to (0.45p), and a decrease in diluted earnings per
share from 0.24p to (0.45p) for the year ended 30 June 2018.
Consolidated balance sheet at 30 June 2018
The consolidated balance sheet at 30 June 2018 has been restated
following the adoption in 2018 of IFRS 15.
Deferred revenue at the balance sheet date has increased by
GBP3,638,000 due to changes in the revenue recognition for training
courses provided by the Risk & Compliance and Professional
divisions.
The deferred tax asset of GBP458,000 has increased by GBP518,000
to GBP976,000 to reflect the cumulative tax adjustment to 30 June
2018.
Consolidated balance sheet at 30 June 2018
IFRS 15 adjustment - revenue
Previously reported recognition Restated
GBP'000 GBP'000 GBP'000
Non-current assets: Deferred tax assets 458 518 976
Other non-current assets
Current assets: Trade and other
receivables 110,984 - 110,984
28,233 - 28,233
Other current assets 11,106 - 11,106
Total assets 150,781 518 151,299
-------------------- --------------------------------------- ----------
Current liabilities: Trade and Other
Payables (26,368) - (26,368)
Current liabilities: Deferred revenue (24,746) (3,638) (28,384)
Other current liabilities (2,042) - (2,042)
Other non-current liabilities (55,109) - (55,109)
Total liabilities (108,265) (3,638) (111,903)
-------------------- --------------------------------------- ----------
Net assets 42,516 (3,120) 39,396
-------------------- --------------------------------------- ----------
Accumulated losses (10,819) (3,120) (13,939)
-------------------- --------------------------------------- ----------
The only changes to the Statement of Comprehensive Income and
Expense and the Statement of Changes in Equity for the year ended
30 June 2018 are to reflect the impact of the restatement of
results for the year ended 30 June 2018.
The only changes to the Statement of Cash Flows for the year
ended 30 June 2018 are to reflect the impact of the restatement of
results for the year ended 30 June 2018 and the balance sheet at 30
June 2018. The adoption of IFRS 15 has not impacted the Group's
cash flows or cash balances.
Consolidated balance sheet at 30 June 2017
The consolidated balance sheet at 30 June 2017 has been restated
following the adoption in 2018 of IFRS 15.
Deferred revenue at the balance sheet date has increased by
GBP2,888,000 due to changes in the revenue recognition for training
courses provided by the Risk & Compliance and Professional
divisions.
The deferred tax asset of GBP820,000 has increased by GBP375,000
to GBP1,195,000 to reflect the cumulative tax adjustment to 30 June
2017.
Consolidated balance sheet at 30 June 2017
IFRS 15 adjustment - revenue
Previously reported recognition Restated
GBP'000 GBP'000 GBP'000
Non-current assets: Deferred tax assets 820 375 1,195
Other non-current assets
Current assets: Trade and other
receivables 122,383 - 122,383
28,444 - 28,444
Other current assets 10,687 - 10,687
Total assets 162,334 375 162,709
-------------------- --------------------------------------- ----------
Current liabilities: Trade and Other
Payables (25,357) - (25,357)
Current liabilities: Deferred revenue (26,973) (2,888) (29,861)
Other current liabilities (3,034) - (3,034)
Other non-current liabilities (57,005) - (57,005)
Total liabilities (112,369) (2,888) (115,257)
-------------------- --------------------------------------- ----------
Net assets 49,965 (2,513) 47,452
-------------------- --------------------------------------- ----------
Accumulated losses (4,051) (2,513) (6,564)
-------------------- --------------------------------------- ----------
19. Events after the reporting period
Extension of debt facilities
On 4 July 2019, the Company signed a revised revolving credit
facility that extends its existing facility from 1 July 2020 to 3
July 2023, with an option to further extend to 3 October 2024. The
revised facility is with Barclays Bank PLC, Royal Bank of Scotland
plc and The Governor and Company of the Bank of Ireland and is on
materially the same terms as the previous arrangement. The initial
limit on the revised facility is GBP65m and the agreement provides
for an accordion option whereby the facility limit may be increased
by up to GBP35m to a total commitment of GBP100m.
END
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END
FR SFFFWAFUSEDU
(END) Dow Jones Newswires
September 19, 2019 02:00 ET (06:00 GMT)
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