TIDMWIL
RNS Number : 5355D
Wilmington PLC
20 February 2020
Wilmington plc
('Wilmington', 'the Group' or 'the Company')
Financial results for the six months ended 31 December 2019
Wilmington plc, the provider of information, education and
networking services in Risk & Compliance, Healthcare and
Professional knowledge areas, today announces its half year results
for the six months ended 31 December 2019.
Financial Highlights
- Revenue for the period GBP59.5m (2018: GBP58.3m) up GBP1.2m or 2% on an organic 1 basis
o Building momentum from the achievements of the prior year
- Adjusted EBITA 2 GBP7.9m (2018: GBP7.8m) up 1%
o Underlying revenue growth offset by increased staff costs to
support growth initiatives
- Adjusted profit before tax 3 GBP6.9m (2018: GBP6.7m) up 4%
- Statutory profit before tax GBP4.1m (2018: GBP5.8m)
o One-off GBP1.9m gain on sale of ICP business in prior year not
repeated
- Adjusted basic earnings per share (4) 6.36p (2018: 6.16p) up 3%
- Statutory basic earnings per share of 3.59p (2018: 5.70p)
- Interim dividend increased 2% to 4.2p (2018: 4.1p)
- Cash conversion (5) of 70% (2018: 91%) on a comparable basis
to last year. Reduction reflects reversal of abnormal working
capital position at 30 June 2019
- Group net debt at 31 December 2019 was GBP41.3m (31 December
2018: GBP43.8m; 30 June 2019 GBP33.9m)
Operational Highlights
- Organic revenue growth in all three divisions
- Risk & Compliance division organic revenue growth of 2%
against a strong prior period comparator
o Year on year comparison impacted by the prior year's abnormal
course timing in ICA which shifted revenue into H1 last year
o ICA saw strong growth in online learning revenues
- Healthcare division delivered 3% organic revenue growth;
building momentum following challenging recent years
o UK Healthcare achieved sales growth but is taking longer to
convert those sales to revenue due to change in product mix
o US Healthcare business delivered strong organic growth of
20%
- Professional division stabilised to deliver modest organic
revenue growth of 1% following 2% decline in prior financial
year
o Good performance in Investment Banking training business
- Continued focus on three previously identified key areas to
deliver operational excellence: sales and
marketing, product management and technology
- Portfolio management: review of business portfolio conducted
by new Chief Executive Officer. Two businesses, CLT and Inese,
undergoing strategic reviews
Outlook and Current Trading
- Normal second half weighting of revenue expected. Good
progress on the specific events that impact H2
- On track to achieve full year revenue targets
- Action being taken with technology and digital content
creation to accelerate digital transformation
- Additional cost of investment means adjusted PBT this year
will be in line with that achieved last year; will also impact
following year
Mark Milner, Chief Executive Officer, commented:
"The first half of the year has seen positive trading
performance and we enter the second half with momentum continuing
to build."
"Looking beyond this financial year, it is becoming clear that
in order to drive the growth aspirations for the medium term, the
business needs to invest further in its technology and digital
content to ensure that its product portfolio is positioned in
growth areas. These investments support our aspirations to build a
focussed, modern, digital business portfolio capable of serving the
changing requirements of our growing customer communities and
through that deliver sustainable growth in shareholder value. "
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.
1 Organic - eliminating the effects of exchange rate
fluctuations
2 Adjusted EBITA - see note 5
3 Adjusted profit before tax - see note 5
4 Adjusted earnings per share - see note 11
5 Cash conversion - see note 17
For further information, please contact:
Wilmington plc
Mark Milner, Chief Executive Officer
Richard Amos, Chief Financial Officer 020 7490 0049
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 listed on the main market of the London Stock Exchange.
Operational and Strategic Review
Introduction
We are pleased to report on an encouraging period for Wilmington
in which we have built on the momentum that we started to see in
the prior year. All three divisions achieved organic revenue growth
in the first six months of the current financial year which is an
encouraging indication that the decision 18 months ago to focus on
organic growth is starting to yield results. Overall the Group
recorded underlying revenue growth of 2% which is an improvement on
both the comparative interim period where revenue was flat and the
prior full financial year growth of 1.5%.
All businesses within the Risk & Compliance division
contributed to 2% organic revenue growth with the exception of the
core Compliance business, ICA, which reported a slight decline.
This was in line with expectations as it was mainly caused by
timing differences which are expected to reverse in the second half
of the year.
The Healthcare division is building momentum, delivering 3%
organic revenue growth. This was driven by the overseas businesses
with particularly impressive growth in US Healthcare. UK Healthcare
continued to make progress with growth in new business sales. This
did not translate into revenue growth due to a change in product
mix, with the products driving the sales growth taking longer to
convert into delivered revenue than those which they replaced.
Organic revenue growth within the Professional division,
although modest, was a welcome reversal of the decline in the
previous full year. Accountancy was flat once the impact of the
Government's budget being delayed into the second half of the year
is taken into account. Legal, in particular, faced challenging
conditions in a market adversely impacted by Brexit uncertainty.
Against this, the Investment Banking business delivered a strong
performance in its key summer trading period.
Results and dividend
Revenue of GBP59.5m was up GBP1.2m or 2%. There were no
acquisitions or disposals impacting the current or prior period and
only minor impacts from changes in currency movements. As a result
the organic growth rate was also 2%.
Adjusted profit before tax of GBP6.9m (2018: GBP6.7m)
represented an increase of GBP0.2m or 4% with the additional
revenue offset by increased staff costs partly to support the
growth initiatives. This underlying cost increase was partially
mitigated by a small foreign exchange gain in the period and lower
underlying interest costs driven by a reduction in net debt.
Cash generation in the first half was as expected, with the
traditional seasonal first half cash outflow compounded by
additional tax payments due new UK tax payment on account
regulations and higher capital expenditure related to computer
software. Net debt at 31 December 2019 of GBP41.3m was up from
GBP33.9m at 30 June 2019 but lower than the GBP43.8m at 31 December
2018.
In recognition of the growth in revenue and adjusted profit
before tax as well as our confidence in the future prospects of the
Group the Board is maintaining the progressive dividend policy
which has been in place since 2013/14. The interim dividend will be
increased 2% to 4.2p (2018: 4.1p) and will be paid on 9 April 2020
to shareholders on the share register as at 6 March 2020, with an
associated ex-dividend date of 5 March 2020.
Operational excellence
As discussed in the latest Annual Report and to enable us to
achieve our goal of generating sustained organic growth, under the
leadership of our new Chief Executive Officer, Mark Milner, the
Board have identified three components of operational excellence to
focus on, namely sales and marketing, product management and
technology.
Sales and marketing execution is, of course, a key factor in
driving organic growth. Early in the year we identified that many
areas of Wilmington have traditionally concentrated on maintaining
existing customer relationships and have not focussed enough on
seeking out new opportunities and clients. We have implemented a
number of changes to develop a more proactive sales culture.
The implementation of a CRM system, Salesforce(c) which has now
been rolled out to over two thirds of the Group, replacing many
disjointed, legacy systems is beginning to yield results.
Implementing a centralised system has allowed us to start adopting
consistent, groupwide sales KPIs to enable more dynamic tracking of
sales data and management of sales opportunities and targets.
We have begun to take a more unified approach to sales
processes, sharing best practice across the Group's businesses.
This has included the physical relocation of sales teams to a new
centralised location or 'sales hub' in the London Head Office
building. A review of sales teams in the Group identified certain
businesses which would benefit from additional sales resource. This
has resulted in the Group-wide sales resources increasing by 10
from the start of the year.
Sales teams will now be progressively going through our newly
launched Sales Academy aimed at improving sales skills across the
Group. We have engaged external contractors with extensive
experience in our industries to develop a sales training programme.
This will be a three level programme targeted at managing
directors, sales leaders and sales staff and will be tailored to
the specific types of sales skills needed in different areas of the
Group.
We are already seeing the benefits of this increased sales
focus, with all three divisions showing encouraging year on year
growth in sales bookings for the six month period. We expect that,
as the further changes are made, they will continue to improve
sales execution performance across the Group.
Product management and new product development is another key to
driving organic growth which we feel has received insufficient
investment in recent years due to the previous focus on
acquisitions rather than organic growth.
The new product development process launched last year has
provided structure around assessing the opportunities for
development, prioritising those with the most potential as well as
tracking the progress of these investments throughout their
development, and once they go to market. Our product development
philosophy involves us creating 'minimum viable products' which
serve the basic needs of our customers and then utilising our
relationships with those customers to learn what additional
features would be of value to them once the initial version has
been launched.
A number of new products have been brought to market as part of
this process including the online student dashboard in AMT, our
investment banking training business, which allows both students
and tutors to track progress on their training programme in real
time. Where appropriate we now intend to roll this product out to
our other training businesses. In total five products were signed
off by our Investment Committee in the first half of the current
financial year compared to only two in the same period last
year.
Technology excellence was identified a number of years ago as a
key component of the Group's strategy given the market trends
towards digitisation and personalisation. There has been
considerable investment made in this area since that time including
rolling out group-wide CRM software, a marketing automation
solution and an online learning platform. While we have gained many
benefits from these investments already, we have identified a
number of opportunities to strengthen the interfaces between these
systems to allow us to gain enhanced value from them. To facilitate
this, we have recently centralised technology teams that previously
existed within specific businesses and brought them under the
direction of Thomas Mount, our Chief Technology Officer who joined
the business a year ago. Working with this combined team he will
focus on improving these integrations which will both enhance the
user experience and drive additional operational efficiencies.
Portfolio Management
Following Mark Milner's appointment in July 2019, he has
completed a thorough review of our business portfolio, building on
the work that was carried out as part of the consultant led
business review conducted last year. This review has looked at each
part of the portfolio and assessed its market position and the
extent to which Wilmington is best placed to maximise its value.
Through this review we have identified two businesses, CLT and
Inese, where our ability to add value appears limited. Accordingly
we have instigated strategic reviews of both businesses which, in
combination, currently deliver annually around GBP7m of revenue and
GBP0.5m of profit.
CLT, within the Professional division, is our only remaining law
for lawyers business following the closure of Ark in 2017. The
business has suffered over a number of years from changing
requirements for continuing professional development for lawyers in
England. Plans to offset the corresponding revenue and profit
decline with growth in online training are not delivering the
required returns. A strategic review is being carried out to assess
alternatives for this business.
Inese, our Spanish business within the Risk & Compliance
division, whilst performing well in its market, struggles to
generate synergies with our other insurance business due to its
geographical location and focus on the Spanish speaking insurance
industry. We have therefore engaged external advisors to identify
potential purchasers of the business.
Driving organic growth in revenue and profit remains the main
focus of management and the Board in line with our stated
priorities. Complementing this, active portfolio management will
remain an important part of the Group's strategy. And, in time, we
will consider investing the capital generated from our existing
portfolio and that from any future disposals into acquisitions
where we see clear opportunities which support those of our
businesses with the most potential and which deliver shareholder
value.
Current trading and outlook
The first half of the year has seen positive trading performance
and we enter the second half with momentum continuing to build.
Good progress is being made on the specific key events and
opportunities that traditionally drive stronger second half revenue
and profit. Overall therefore the Group remains on track to achieve
its full year revenue growth expectations.
Looking beyond this financial year, it is becoming clear that in
order to drive the growth aspirations for the medium term, the
business needs to invest further in its technology and digital
content to ensure that its product portfolio is positioned in
growth areas. Those investments will include the integration of
existing technologies to improve user experience, development of
more structured data platforms to enhance the monetisation of
existing data assets and acceleration of the on-going transition
from face to face to online and blended learning. Associated
investment will be needed in additional staff with new skills to
drive these changes and in providing them with the required skills,
tools and infrastructure.
These investments will build on and utilise what has already
been invested over the last few years and much of what is now
needed was already included in previous plans. However, the work
conducted over the last six months has concluded that some of this
investment needs to be enhanced and some of it accelerated to
ensure that we can meet changing market demands. We expect those
investments to commence in the second half of this year with, for
example, initial work on building the platform and undertaking the
digitisation of current face to face courses in the Compliance
business. The cost implications of this investment, combined with
that incurred in the first half of the year will mean that adjusted
profit before tax for the current year is expected to be in line
with that achieved in the last full year, with a further
consequential impact in the following year.
These investments will allow the Group to accelerate its digital
transformation. They support the longer term growth aspirations as
we build a focussed, modern, digital business portfolio capable of
serving the changing requirements of our growing customer
communities and, through that, delivering sustainable growth in
shareholder value.
Segmental Review
Note that as there have been no acquisitions or disposals
impacting the current or prior period, variances described below as
'organic' reflect changes calculated at constant currency.
Risk & Compliance
H1 2019 H1 2018 Absolute Organic
Variance Variance
Revenue GBP'm GBP'm
Compliance 14.1 13.8 +2% +2%
Risk 6.5 6.3 +3% +1%
Total 20.6 20.1 +3% +2%
Operating
profit 6.1 5.9 +3% +2%
Margin 30% 29%
Overall revenue for the Risk & Compliance division was up 3%
on an absolute basis and 2% on an organic basis at GBP20.6m (2018:
GBP20.1m). This growth is in line with our expectations and
demonstrates a robust performance against the strong first half
comparatives in the prior year.
Within this, revenue in the Compliance businesses combined grew
2% on an absolute and organic basis. This reflected a good
performance in Compliance Week and CLTi offset by an anticipated
timing related reduction in the main Compliance business, ICA,
which recorded a 2% organic reduction in revenue. This reflects an
unusually strong comparative prior period due to the timing of
certain courses shifting what is normally second half revenue into
H1 in the prior year. This year reverts to a more normal pattern
and strong registrations and sales activity in the first half means
that ICA enters the second half with c.GBP1m more deferred revenue
than twelve months ago which supports ICA's full year growth
expectations.
Within ICA online learning is becoming an increasingly important
revenue stream, growing 54% in the period. Further work is being
undertaken to support the move to digitisation in ICA with a new
digital platform being built for launch in summer 2020. Within ICA
the Asia Pacific region experienced lower enrolments on public
courses towards the end of the prior year due to forthcoming
changes in the regulatory environment in Singapore which compounded
the timing issues mentioned above. Excluding Asia Pacific, ICA's
revenue grew by 5% on an organic basis. Accredited paid memberships
of ICA continued to increase to over 15,000 from around 14,000 at
the start of the financial year.
The remaining Compliance businesses performed well, delivering
combined 8% organic revenue growth with each business contributing
positively to the total. The wealth management business benefited
from a more favourable course schedule timing which accelerated
revenue into the first half. This will reverse in the second half
of the year but the business also continues to benefit from the
development of online learning materials opening up a more
international market. Compared to a weak prior year Compliance Week
had an encouraging period following its launch of a new online
platform and a revised pricing strategy. Pendragon, our pensions
regulation business also performed well due mainly to pricing
changes and better client retention rates.
The Risk businesses reported modest organic growth of 1% with
both businesses contributing positively. Axco, our insurance
information business, delivered 4% absolute growth (up 1% on an
organic basis). A new data platform with an enhanced regulatory
alert system was launched in January 2020. The data platform allows
the business to offer its data on a more targeted basis than was
previously possible and the new alerts platform offers clients more
timely regulatory updates on a large number of markets.
Inese, our Spanish insurance industry expert has delivered 2%
organic revenue growth despite the loss of the revenue generated by
the Barcelona office which was closed in July 2019. This growth is
based on improved subscriptions for its digital publications.
Divisional operating profit was up 3% in absolute terms to
GBP6.1m (2018: GBP5.9m). On an organic basis the increase was 2%
reflecting the increase in revenue. Operating margin increased
slightly to 30% (2018: 29%).
Healthcare
H1 2019 H1 2018 Absolute Organic
Variance Variance
Revenue GBP'm GBP'm
European Healthcare 14.5 14.6 -1% 0%
US Healthcare 3.1 2.5 23% 20%
Other Information Businesses 3.5 3.4 2% 2%
Total 21.1 20.5 3% 3%
Operating profit 1.3 1.3 -1% 0%
Margin 6% 6%
Overall revenue for the Healthcare division grew 3% on both an
organic and absolute basis to GBP21.1m (2018: GBP20.5m)
demonstrating the momentum rebuilding in this division following
challenges in recent years.
Within the division, the European Healthcare businesses overall
were flat on an organic basis with growth in APM in France offset
by a reduction in UK Healthcare.
APM continues to deliver good growth with revenue increasing by
8% on an organic basis. The growth was driven both by ongoing new
sales of the new APMi product that was launched in July 2018 as
well as growth from the business's traditional products.
In UK Healthcare revenue declined 3% on an organic basis despite
sales bookings growing by mid-single digits compared to the prior
period. This primarily reflected a shift in the mix of sales away
from products which are converted rapidly into revenue towards
products which take longer to deliver. One-off sales of contact
data have fallen, due in part to the market's hesitancy around
purchasing such data following the introduction of GDPR regulation.
Conversely sales of Specialist Share Data which provides
pharmaceutical companies with insight into the usage of products
have risen. This data is captured over time, often up to twelve
months, with the revenue recognised over the same period.
Good progress was achieved by the Interactive Medica products
which are now fully integrated within the UK Healthcare business.
The Interactive Medica platform now forms the core of the
Wilmington Healthcare cloud which is being progressively rolled out
as the delivery mechanism for various data products. This is being
supported by enhanced versions of a number of other products which
improves their value to clients and ultimately their competitive
position.
Our US healthcare business, FRA, made a good recovery from what
was a difficult prior year, delivering an organic revenue increase
of 20%. There has been a shift in focus to quality key events
delivering 19 in H1 this year compared to 24 in the prior year. A
number of events outperformed the previous year including RISE
West, held in San Diego, where delegate numbers increased by 50%.
In the second half of the year we will host FRA's flagship event -
RISE Nashville, which moves to a new larger venue following recent
growth. It will be complemented by a co-located sister event on
Social Determinants of Health which will run at the same time.
The other Information Businesses reported in this division
achieved 2% revenue growth for the period due to a one-off sale of
genealogy data. Also in the period we concluded a new agreement
with HM Court Services which secures access to wills and probate
orders that form the core of our mortality data products.
Operating profit in the Healthcare division was unchanged at
GBP1.3m (2018: GBP1.3m) with operating margin also remaining
unchanged at 6%. In addition to normal inflation, the increase in
costs reflected investment in sales resource in FRA in the second
half of the prior year to drive the revenue growth plus the filling
of previous staff vacancies in the UK Healthcare business. Given
the fixed nature of many of the costs and the weighting of revenue
towards H2, the operating margin in Healthcare is expected to
improve significantly in the second half of the year as it did last
year.
Professional
H1 2019 H1 2018 Absolute Organic
Variance Variance
GBP'm GBP'm
Revenue 17.8 17.7 1% 1%
Operating profit 2.7 2.9 -7% -6%
Margin 15% 17%
The Professional division overall delivered revenue of GBP17.8m
(2018: GBP17.7m) growing 1% on both an absolute and organic basis.
Although modest, this growth is supressed by adverse timing issues
and marks a turnaround from the 2% decline in the prior year. It
comes despite the division facing challenging market conditions
with demand for many of its products impacted by Brexit related
uncertainty that affected the UK economy in the second half of
2019.
Following a tough prior year in which three separate businesses
were integrated into a single nationwide programme of products,
performance in Accountancy has improved, delivering flat revenues
compared to the prior year once the impact of the anticipated
Government Budget being delayed until H2 is taken into account.
Progress is being made in the area of technical support, driven by
the current challenges in the UK accountancy / audit market and the
increasing regulatory pressure on small and mid-tier accountancy
firms which make up our core clients. We will be looking to
increase staffing in this area in the second half to support this
demand.
The Legal businesses experienced a 2% organic revenue decline as
growth in regulatory training offset a market-related reduction in
CPD training for lawyers. Progress was particularly made in the Law
for Non-Lawyers business, Bond Solon, where framework contracts to
provide Government agencies with regulatory training is helping to
provide a more predictable revenue stream. The business has also
continued to see good demand for witness familiarisation training
and for training of expert witnesses following a number of high
profile cases of court processes adversely impacted by
under-qualified expert witnesses.
AMT, our Investment Banking training business, whose peak summer
months fall into H1, performed well, recording double digit revenue
growth. This is a positive sign that the investment made in an
online learning dashboard and the move onto Totara(c) has been well
received in what is a very competitive market. A shortfall in
internal trainer capacity meant the business relied more on higher
cost consultant trainers in the peak season which slightly impacted
on operating margins in the period.
Operating profit in the Professional division fell by GBP0.2m to
GBP2.7m (2018: GBP2.9m). The relatively small cost increase that
caused this was due partly to the trainer cost issues discussed
above in AMT. Operating margins as a result declined to 15% (2018:
17%).
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 decreased by GBP0.5m to GBP1.8m from GBP2.3m
for the same six-month period in the prior year. This decrease was
attributable to the one-off business review conducted in the prior
year plus a reduction in tax and audit fees.
Financial review
Change in accounting policies
From 1 July 2019 the Group has adopted the new lease accounting
standard IFRS 16. Wilmington has opted to apply the modified
retrospective approach to adoption meaning the prior year
comparators have not been adjusted. In the current year adoption of
this standard has had immaterial impacts on profit before tax,
adjusted EBITA and adjusted PBT but resulted in the recognition of
material 'right of use assets' and 'lease liabilities' on the
Balance Sheet and a material reclassification of certain accruals
to right of use assets. The commentary below identifies the impact
of the changes. See note 19 for a full reconciliation.
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 future or past performance where equivalent
information cannot be presented using financial measures under
IFRS. Adjusted results exclude adjusting items, gain on sale of
subsidiary and amortisation of intangible assets (excluding
computer software).
H1 2019 H1 2018 Absolute Organic
variance variance
GBP'm GBP'm GBP'm
Revenue 59.5 58.3 1.2 2% 2%
Adjusted EBITA 7.9 7.8 0.1 1% 1%
Margin % 13.3% 13.4%
Revenue
For the six months ended 31 December 2019 revenue increased by
GBP1.2m or 2% to GBP59.5m (2018: GBP58.3m). The Group's major
non-Sterling revenues are in US Dollars and Euros. On average over
the period the US Dollar strengthened against Sterling whereas the
Euro weakened in the same period. These currency impacts
essentially netted off and, with no impact of acquisitions or
disposals in the period, accordingly organic revenue growth was
also 2%.
Revenue generated from customers outside the UK increased as a
percentage of overall revenue to 45% (2018: 42%) due to good
organic growth in our US businesses, particularly in the Healthcare
division.
Recurring revenue (i.e. subscription income and repeatable
revenues) as a percentage of total revenue dropped 2 percentage
points to 71% from 73% last year due to much of the revenue growth
in the period being generated by non-repeatable revenues such as
events.
Across the entire business, digital learning revenues as a
proportion of total training revenues continued to increase from
30% last
year to 33%.
Operating expenses before adjusting items, amortisation and
impairment
Adjusted operating expenses i.e. before adjusting items and
amortisation of intangible assets (excluding computer software)
were GBP51.6m up GBP1.1m or 2% from GBP50.5m in the comparative
six months ended 31 December 2018.
Within adjusted operating expenses non-employment related costs
fell GBP0.5m from GBP24.9m to GBP24.4m. This reduction includes
GBP0.6m of costs in the first half of the prior year which were
one-off in nature and have not repeated; namely GBP0.4m of business
review costs and a GBP0.2m foreign exchange cost. In the current
year GBP0.4m of costs recognised last year in H1 will move into H2
mirroring the timing shift in Compliance revenue. On an on-going
basis therefore, non-employment costs increased by GBP0.5m of which
GBP0.4m were the direct costs associated with delivering the
additional GBP1.2m of revenue. The remaining GBP0.1m increase
reflected general inflation of GBP0.3m offset by the on-going
reclassification of GBP0.2m of previous operating expense to
finance costs in line with the new lease accounting standard IFRS
16.
Employment costs at GBP27.2m (2018: GBP25.6m) increased GBP1.6m.
This reflects share-based payment costs of GBP0.4m compared to nil
in the prior period as a result of a change in vesting expectations
that period. Salary inflation accounted for GBP0.5m of the increase
with employment costs rising by a further GBP0.7m primarily due to
additional headcount, with the Group's full time equivalent ('FTE')
headcount at 31 December 2019 being 886 compared to 860 at 30 June
2019.
The Group's business model involves the engagement across a
typical year of around 1,000 part-time consultants or associates in
activities such as training, setting and marking exams, and
short-term development projects. Changes to the HMRC IR35
legislation which regulates the tax treatment of such individuals
is anticipated to come into effect on 5 April 2020. It is expected
to increase operating expenses on a full year basis by around
GBP0.5m with an impact in the final three months of this year of
GBP0.1m.
Adjusted operating profit ('Adjusted EBITA')
As a result of the increase in revenue and changes in adjusted
operating expenses, adjusted EBITA was up GBP0.1m or 1% to GBP7.9m
(2018: GBP7.8m). Adjusted operating margin (adjusted EBITA
expressed as a percentage of revenue) remained flat at 13%.
Adjusting items within operating expenses
Adjusting items within operating expenses were GBP0.5m (2018:
GBP0.1m). They represent 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. The amount recognised
in the period reflects deferred consideration for the acquisitions
of both Evantage, for which the final payment was made in the
period, and Interactive Medica, which will be settled in the second
half of the year.
Amortisation excluding computer software
Amortisation of intangible assets (excluding computer software)
was GBP2.4m (2018: GBP2.6m). The small decrease reflects certain
historic assets being fully amortised in the second half of the
prior year.
Finance costs
Underlying finance costs fell GBP0.2m to GBP0.8m (2018: GBP1.0m)
driven by a fall in net debt levels compared to the same period
twelve months ago. Offsetting this, the new lease accounting
standard IFRS 16 increased finance costs by GBP0.2m meaning overall
finance costs remained constant at GBP1.0m.
Profit before taxation
Profit before tax was GBP4.1m (2018: GBP5.8m), however the year
on year comparison was significantly affected by one-off items,
principally the gain on sale of ICP in the prior year. Adjusting
for these one-off items, adjusted profit before tax was up GBP0.3m
or 4% at GBP6.9m (2018: GBP6.7m).
Taxation
The tax charge was GBP0.9m compared to GBP0.8m in the prior
period. The overall effective tax rate (6) was 23% (2018: 14%) with
the increase reflecting the treatment of the gain on sale of ICP in
the prior period comparator.
The underlying tax rate 7 which ignores the tax effects of
adjusting items remained essentially flat at 20% (2018: 20%), which
is a good guide to the expected full year underlying tax rate.
Earnings per share
Adjusted basic earnings per share increased by 3% to 6.36p
(2018: 6.16p), owing to the increase in adjusted profit before tax.
Statutory basic earnings per share were 3.59p compared to 5.70p in
2018 with the decrease driven by the one-off gain on sale of ICP in
the prior year.
Balance Sheet
Non-current assets
Goodwill fell slightly to GBP77.1m at 31 December 2019 from
GBP77.5m at 31 December 2018 due to exchange translation
differences.
Intangible assets decreased by GBP3.3m to GBP21.7m at 31
December 2019 (31 December 2018: GBP25.1m) primarily due to
amortisation, offset by additions to capitalised and purchased
computer software of GBP3.2m over the last twelve months. Additions
in the first six months of the current year were GBP1.6m and
included significant investments in our ecommerce platforms, online
learning development and the ongoing integration of the technology
platforms in the Accountancy businesses.
Property, plant and equipment fell GBP1.1m to GBP5.3m at 31
December 2019 from GBP6.4m twelve months previous. Adoption of IFRS
16 caused GBP0.3m of this decrease, with the amount being
reclassified to right of use assets. The remaining GBP0.8m fall was
due to depreciation of GBP1.5m being only partially offset by
additions of which GBP0.3m were in H1 of the current financial
year.
Deferred consideration receivable
Upon the disposal of ICP in July 2018 GBP2.2m of deferred
consideration receivable, discounted to present value, was
recognised on the balance sheet. The value at 31 December 2019 is
GBP2.3m compared to GBP2.2m at 31 December 2018 due to an unwind of
the discounting which has been credited to finance costs in the
Income Statement. Of the GBP2.3m total, GBP0.2m sits within current
assets as it will be received within twelve months of the Balance
Sheet date.
Trade and other receivables
Trade and other receivables increased GBP1.8m to GBP28.2m (2018:
GBP26.4m). This increase was largely due to increased billings in
December 2019, which were GBP1.6m higher than the previous year.
The aging of the trade receivables improved with overdue debtors
falling by 10% compared to 31 December 2018.
Trade and other payables
Total balances remained relatively unchanged at GBP50.1m from
GBP50.4m at 31 December 2018. Within this subscriptions and
deferred revenue increased by GBP3.5m or 13% to GBP30.1m (2018:
GBP26.6m). Of this increase GBP1.3m is the impact of a change in
the method of billing certain Accountancy subscriptions, with these
now being invoiced once at the start of the twelve-month
subscription instead of monthly as in prior years. The remaining
increase is due to improved sales, with GBP0.9m relating to
deferred revenue for the core Compliance business ICA.
Excluding subscriptions and deferred revenue, trade and other
payables decreased by GBP3.7m of which GBP1.6m was due to a
reclassification under IFRS 16 of accruals relating to rent free
periods from trade payables to right of use assets. The remaining
fall is due to a decrease in non-employment professional fees plus
a change in timings of invoices from suppliers.
Current tax assets/(liabilities)
At 31 December 2019 there was a current tax asset of GBP1.7m up
from an asset of GBP0.5m at 31 December 2018. This increase was due
to HMRC accelerating the payment of quarterly tax instalments for
large companies, resulting in an additional GBP1.2m of tax payments
on account in the period compared to the prior year.
Right of use assets and lease liabilities and the implementation
of IFRS 16 - Leases.
IFRS 16 has resulted in almost all leases being recognised on
the balance sheet. The amounts recognised for right of use assets
GBP10.9m and lease liabilities GBP12.5m reflect the adoption of
IFRS 16. As permitted by the standard, comparatives for 2018 have
not been restated and the cumulative brought forward impact of
rental expenses being replaced by depreciation and interest has
been recognised as an opening adjustment to retained earnings.
Deferred consideration payable
The liability for deferred consideration payable decreased by
GBP1.0m from GBP1.6m at 30 June 2019 to GBP0.6m at 31 December 2019
(31 December 2018: GBP1.3m). The movement in the period reflects
the GBP1.3m payment in relation to the settlement of the final
amount owing for Evantage partially offset by the build-up of the
deferred consideration relating to Interactive Medica. The
remaining balance is all due for payment within twelve months.
6 The effective tax rate is calculated as the total tax charge
divided by profit before tax
7 The underlying tax rate is calculated as one minus the
adjusted profit after tax divided by the adjusted profit before
tax
Net debt and cashflow
Net debt, which includes cash and cash equivalents, bank loans
(excluding capitalised loan arrangement fees) and bank
overdrafts, was GBP41.3m (30 June 2019: GBP33.9m; 31 December
2018: GBP43.8m). Cash conversion was 83% (2018: 91%), although year
on year comparison of the percentages is impacted by adoption of
IFRS 16. With this adjusted for, the comparable cash conversion
this year would be 70%. The fall in cash conversion is mainly due
to the unwind of the favourable working capital position at 30 June
2019.
This cash conversion was offset by the payment of the deferred
consideration, capital expenditure of GBP1.9m and corporation tax
payments of GBP3.4m.
Net debt at 31 December 2019 represented 64% of our GBP65m debt
and overdraft facility (31 December 2018: 58%).
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
forward contracts and swaps subject to Board approval. The
Group uses interest rate swap contracts to mitigate part of the
interest rate volatility risk. These forward contracts and
swaps
have resulted in an asset of GBP0.4m and a liability of GBP0.1m
at 31 December 2019 (30 June 2019: liability of GBP0.2m; 31
December 2018: liability of GBP0.5m). This asset and liability will
unwind in the next twelve months.
Share capital
During the period 64,350 new ordinary shares of GBP0.05 were
issued in settlement of awards vesting under the Group's
Performance Share Plan. This resulted in an increase to the
number of ordinary shares outstanding at 31 December 2019 to
87,603,917 (30 June 2019 and 31 December 2018: 87,539,567).
Treasury and ESOT reserve
During the period, the Employee Share Option Trust purchased
80,000 shares in Wilmington plc at a total cost of GBP0.2m to
satisfy future obligations under the Group's various share
plans.
Dividend
An interim dividend of 4.2p per share (2018: 4.1p) will be paid
on 9 April 2020 to shareholders on the share register as at 6
March 2020, with an associated ex-dividend date of 5 March 2020.
This represents an increase of 2% reflective of the Directors'
intention to maintain the progressive dividend policy that has
been in place since 2013/14.
Statement of directors' responsibilities
The Directors confirm to the best of their knowledge the interim
information has been prepared in accordance with International
Accounting Standard 34 Interim Financial Reporting as adopted by
the European Union. The Interim Management Report
includes a fair review of the Interim Information and, as
required by DTR 4.2 TR and DTR 4.2 8R, the following
information:
-- an indication of important events that have occurred during
the first six months of the financial year, and their impact on
the condensed set of financial statements, and a description of
the principal risks and uncertainties for the remaining
six months of the financial year; and
-- disclosure of material related party transactions that have
taken place in the first six months of the current financial
year and of any material changes in the related party
transactions described in the last Annual Report and Financial
Statements.
A list of current Directors is maintained on the Wilmington plc
website at: www.wilmingtonplc.com .
This responsibility statement was approved by the board of
Directors on 19 February 2020 and is signed on its behalf by
Richard Amos
Chief Financial Officer
Officers
Directors:
Martin Morgan
Chairman
Mark Milner
Chief Executive Officer
Richard Amos
Chief Financial Officer &
Company Secretary
Derek Carter
Senior Independent
Non-Executive Director
Nathalie Schwarz
Non-Executive Director
Paul Dollman
Non-Executive Director
Registered Office:
10 Whitechapel High Street
London
E1 8QS
Tel: +44 (0)20 7490 0049
Company Registration Number:
03015847
Consolidated Income Statement
Year
ended
Six months Six months
ended 31 ended 31
December December 30 June
2019 2018 2019
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 6 59,475 58,300 122,525
Operating expenses before amortisation of
intangibles excluding computer software
and adjusting items (51,563) (50,501) (101,074)
Adjusting items 7 (486) (132) (1,443)
Amortisation of intangibles excluding computer
software 7 (2,381) (2,607) (5,049)
Operating expenses (54,430) (53,240) (107,566)
Other income - gain on sale of subsidiary - 1,906 1,906
------------ ------------ ----------
Operating profit 5,045 6,966 16,865
------------ ------------ ----------
Net finance costs 8 (979) (1,008) (2,103)
Share of loss of equity accounted investment - (115) (50)
------------ ------------ ----------
Profit before tax 5 4,066 5,843 14,712
------------ ------------ ----------
Taxation 9 (924) (843) (3,519)
------------ ------------ ----------
Profit for the period 3,142 5,000 11,193
------------ ------------ ----------
Attributable to:
Owners of the parent 3,142 4,983 11,149
Non-controlling interests - 17 44
------------ ------------ ----------
3,142 5,000 11,193
Earnings per share attributable to the owners
of the parent:
Basic (p) 11 3.59 5.70 12.74
Diluted (p) 11 3.54 5.65 12.64
------------ ------------ ----------
Adjusted earnings per share attributable
to the owners of the parent:
Basic (p) 11 6.36 6.16 17.44
Diluted (p) 11 6.29 6.10 17.30
------------ ------------ ----------
The notes on pages 16 to 26 are an integral part of these
consolidated financial statements.
Consolidated Statement of Comprehensive Income
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Profit for the period 3,142 5,000 11,193
Other comprehensive income/(expense):
Items that may be reclassified subsequently
to the Income Statement
------------- ------------- ----------
Fair value movements on interest rate swap
(net of tax) 56 54 32
Currency translation differences (88) 505 643
Net investment hedges (net of tax) 345 (409) (424)
------------- ------------- ----------
Other comprehensive income for the period,
net of tax 313 150 251
------------- ------------- ----------
Total comprehensive income for the period 3,455 5,150 11,444
------------- ------------- ----------
Attributable to:
Owners of the parent 3,455 5,133 11,400
Non-controlling interests - 17 44
------------- ------------- ----------
3,455 5,150 11,444
------------- ------------- ----------
Items in the statement above are disclosed net of tax. The notes
on pages 16 to 26 are an integral part of these financial
statements.
Consolidated Balance Sheet
31 December 31 December 30 June
2019 2018 2019
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 12 77,078 77,497 77,535
Intangible assets 12 21,736 25,083 23,213
Property, plant and equipment 12 5,292 6,411 5,967
Right of use assets 12 10,942 - -
Deferred consideration receivable 2,098 2,154 2,221
Deferred tax assets 741 849 555
Derivative financial instruments 4 - - 23
------------ ------------ ----------
117,887 111,994 109,514
------------ ------------ ----------
Current assets
Trade and other receivables 13 28,178 26,350 29,112
Current tax asset 1,721 533 -
Derivative financial instruments 4 367 - -
Deferred consideration receivable 193 - -
Cash and cash equivalents 6,031 12,428 7,921
------------ ------------ ----------
36,490 39,311 37,033
------------ ------------ ----------
Total assets 154,377 151,305 146,547
------------ ------------ ----------
Current liabilities
Trade and other payables 14 (50,124) (50,370) (57,168)
Current tax liabilities - - (312)
Lease liabilities (2,424) - -
Deferred consideration payable -
cash settled (572) (1,256) (1,550)
Derivative financial instruments 4 (133) (278) -
(53,253) (51,904) (59,030)
Non-current liabilities
Borrowings 15 (46,711) (55,975) (41,790)
Lease liabilities (10,087) - -
Derivative financial instruments 4 - (177) (226)
Deferred tax liabilities (2,383) (2,847) (2,633)
(59,181) (58,999) (44,649)
------------ ------------ ----------
Total liabilities (112,434) (110,903) (103,679)
------------ ------------ ----------
Net assets 41,943 40,402 42,868
------------ ------------ ----------
Equity
Share capital 16 4,380 4,377 4,377
Share premium 16 45,225 45,225 45,225
Treasury and ESOT reserves 16 (300) (96) (96)
Share based payments reserve 915 585 839
Translation reserve 3,200 3,150 3,288
Accumulated losses (11,477) (12,904) (10,765)
------------ ------------ ----------
Equity attributable to owners of
the parent 41,943 40,337 42,868
Non-controlling interests - 65 -
------------ ------------ ----------
Total equity 41,943 40,402 42,868
------------ ------------ ----------
The notes on pages 16 to 26 are an integral part of these
consolidated financial statements.
Consolidated Statement of Changes in Equity
Share capital,
share premium,
treasury Share
shares and based Non-
ESOT shares payments Translation Accumulated controlling Total
(note 16) reserve reserve losses Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 June 2018
(audited) 49,500 1,108 2,645 (13,939) 39,314 82 39,396
IFRS 15
restatement - - - 234 234 - 234
Profit for the
period - - - 4,983 4,983 17 5,000
Other
comprehensive
income/(expense)
for
the period - - 505 (355) 150 - 150
49,500 1,108 3,150 (9,077) 44,681 99 44,780
Dividends - - - (4,200) (4,200) (34) (4,234)
Issue of share
capital 6 (472) - 466 - - -
Share based
payments - (51) - - (51) - (51)
Tax on share based
payments - - - (93) (93) - (93)
At 31 December
2018
(unaudited) 49,506 585 3,150 (12,904) 40,337 65 40,402
---------------- ---------- -------------- -------------- --------- ------------- ---------
Profit for the
period - - - 5,932 5,932 27 5,959
Other
comprehensive
income/(expense)
for
the period - - 138 (37) 101 - 101
49,506 585 3,288 (7,009) 46,370 92 46,462
Dividends - - - (3,587) (3,587) - (3,587)
Share based
payments - 254 - - 254 - 254
Tax on share based
payments - - - 45 45 - 45
Movements in
non-controlling
interest - - - (214) (214) (92) (306)
At 30 June 2019
(audited) 49,506 839 3,288 (10,765) 42,868 - 42,868
Effect of initial
application
of IFRS 16 (note
19) - - - (182) (182) - (182)
Tax relating to
initial
application of
IFRS
16 - - - 35 35 - 35
At 1 July 2019
(unaudited) 49,506 839 3,288 (10,912) 42,721 - 42,721
Profit for the
period - - - 3,142 3,142 - 3,142
Other
comprehensive
(expense)/income
for
the period - - (88) 401 313 - 313
49,506 839 3,200 (7,369) 46,176 - 46,176
Dividends - - - (4,378) (4,378) - (4,378)
Issue of share
capital 3 (242) - 239 - - -
ESOT share
purchases (204) - - - (204) - (204)
Share based
payments - 318 - - 318 - 318
Tax on share based
payments - - - 31 31 - 31
At 31 December
2019
(unaudited) 49,305 915 3,200 (11,477) 41,943 - 41,943
---------------- ---------- -------------- -------------- --------- ------------- ---------
The notes on pages 16 to 26 are an integral part of these
consolidated financial statements.
Consolidated Cash Flow Statement
Six months ended 31 December Six months ended 31 December Year ended 30
2019 2018 June 2019
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Cash generated from
operations before adjusting
items 17 6,585 7,083 26,439
Cash flows for adjusting
items - operating activities (271) (412) (810)
Cash flows from tax on share
based payments (17) (33) (33)
------------------------------ ------------------------------ --------------
Cash generated from
operations 6,297 6,638 25,596
Interest paid (814) (1,004) (1,943)
Tax paid (3,420) (2,254) (3,943)
------------------------------ ------------------------------ --------------
Net cash generated from
operating activities 2,063 3,380 19,710
------------------------------ ------------------------------ --------------
Cash flows from investing
activities
Purchase of businesses net of
cash acquired - (100) (79)
Sale of subsidiary net of
cash - 60 60
Deferred consideration paid (1,385) (1,522) (1,522)
Purchase of non-controlling
interests - - (224)
Cash flows for adjusting
items - investing activities - (74) (405)
Purchase of property, plant
and equipment (304) (554) (1,332)
Proceeds from disposal of
property, plant and
equipment 18 28 112
Purchase of intangible assets (1,637) (761) (2,324)
------------------------------ ------------------------------ --------------
Net cash used in investing
activities (3,308) (2,923) (5,714)
------------------------------ ------------------------------ --------------
Cash flows from financing
activities
Dividends paid to owners of
the parent (4,378) (4,200) (7,787)
Dividends paid to
non-controlling interests - (34) (34)
Share issuance costs (3) (6) (6)
Payment of lease liabilities (1,129) - -
Purchase of shares by ESOT (204) - -
Cash flows for loan
arrangement fees (708) (12) (24)
Increase in bank loans 7,000 6,000 6,000
Decrease in bank loans (1,000) (1,000) (15,399)
Net cash (used in)/generated
from financing activities (422) 748 (17,250)
------------------------------ ------------------------------ --------------
Net (decrease)/increase in
cash and cash equivalents,
net of bank overdrafts (1,667) 1,205 (3,254)
Cash and cash equivalents,
net of bank overdrafts, at
beginning of the period 7,921 11,033 11,033
Exchange (losses)/gains on
cash and cash equivalents (223) 190 142
------------------------------ ------------------------------ --------------
Cash and cash equivalents,
net of bank overdrafts at
end of the period 6,031 12,428 7,921
------------------------------ ------------------------------ --------------
Reconciliation of net debt
------------------------------ ------------------------------ --------------
Cash and cash equivalents at
beginning of the period 7,921 10,789 10,789
Cash classified as held for
sale - 244 244
Bank loans at beginning of
the period 15 (41,790) (50,665) (50,665)
------------------------------ ------------------------------ --------------
Net debt at beginning of the
period (33,869) (39,632) (39,632)
Net (decrease)/increase in
cash and cash equivalents
(net of bank overdrafts) (1,890) 1,395 (3,112)
Net (drawdown)/repayment in
bank loans (6,000) (5,000) 9,399
Exchange gain/(loss) on bank
loans 423 (524) (524)
------------------------------ ------------------------------ --------------
Cash and cash equivalents at
end of the period 6,031 12,428 7,921
Bank loans at end of the
period 15 (47,367) (56,189) (41,790)
------------------------------ ------------------------------ --------------
Net debt at end of the period (41,336) (43,761) (33,869)
------------------------------ ------------------------------ --------------
The notes on pages 16 to 26 are an integral part of these
consolidated financial statements.
Notes to the Financial Results
General information
The Company is a public limited company incorporated and
domiciled in the UK. The address of the Company's registered office
is 10 Whitechapel High Street, London, E1 8QS.
The Company is listed on the Main Market on the London Stock
Exchange. The Company is a provider of information, education and
networking to the professional markets.
This condensed consolidated interim financial information
('Interim Information') was approved for issue by the Board of
Directors on 19 February 2020.
The Interim Information is neither reviewed nor audited and does
not comprise statutory accounts within the meaning of Section 434
of the Companies Act 2006. Statutory accounts for the year ended 30
June 2019 were approved by the Board of Directors on 18 September
2019 and subsequently filed with the Registrar. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under Section 498 of the Companies Act 2006.
1. Basis of preparation
This Interim Information for the six months ended 31 December
2019 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union. The Interim Information should be read in
conjunction with the Annual Financial Statements for the year ended
30 June 2019 which have been prepared in accordance with IFRSs as
adopted by the European Union, and are available on the Group's
website: wilmingtonplc.com.
The Group's forecast and projections, taking account of
reasonably possible changes in trading performance, show that the
Group will be able to operate well within the level of its current
banking facilities. The Directors have therefore adopted a going
concern basis in preparing the Interim Information.
2. Accounting policies
The accounting policies, significant judgements and key sources
of estimation adopted in the preparation of this Interim Report are
consistent with those applied by the Group in its consolidated
financial statements for the year ended 30 June 2019 except for the
adoption of the new standard and interpretation effective as of 1
July 2019 listed below:
-- IFRS 16 Leases
IFRS 16 is effective for accounting periods beginning on or
after 1 January 2019. The date of initial application of IFRS 16
for the Group was 1 July 2019.
IFRS 16 prescribes a single lessee accounting model that
requires the recognition of a right of use asset and corresponding
liability for all leases with terms over twelve months, unless the
underlying asset is of low value. The liability is initially
measured at the present value of future lease payments for the
lease term. The right of use asset is depreciated, with the
depreciation charge and the interest on the corresponding lease
liability being recognised in the income statement over the lease
term. In the cash flow statement the total amount of cash paid in
respect of lease payments is reflected in cash flows from financing
activities. Details of the transition and the impact on the
financial statements are specified in note 19.
The Group has adopted the modified retrospective approach to
application, using transitional reliefs available. It has not
restated comparatives and on transition the Group recognised a
cumulative adjustment to the opening balance of retained earnings
at 1 July 2019.
3. Principal risks and uncertainties
The principal risks and uncertainties that affect the Group are
as stated on pages 32 to 39 of the Strategic Report in the Annual
Report and Financial Statements for the year ended 30 June 2019.
The main financial risks that affect the Group are:
(a) Interest rate risk
Risk
The Group financing arrangements include external debt that is
subject to a variable interest rate. The Group is consequently
exposed to cash flow volatility arising from fluctuations in market
interest rates applicable to that external finance. In particular,
interest is charged on the GBP47m (2018: GBP56m) amount drawn down
on the revolving credit facility at a rate of between 1.50 and 2.25
percent above LIBOR depending upon leverage. Cash flow volatility
therefore arises from movements in the LIBOR interest rates.
Group policy
The Group policy is to enter into interest rate swap contracts
to maintain the ratio of fixed to variable rate debt at a level
that achieves a reasonable cost of debt whilst reducing the
exposure to cash flow volatility arising from fluctuations in
market interest rates.
Notes to the Financial Results
3. Principal risks and uncertainties (continued)
(a) Interest rate risk (continued)
Risk management arrangements
The Group's interest rate swap contracts offset part of its
variable interest payments and replace them with fixed payments. In
particular, the Group has hedged its exposure to the LIBOR part of
the interest rate via interest rate swaps, as follows:
-- A $7.5m interest rate swap commencing on 13 July 2015 and
ending on 1 July 2020, whereby the Group receives interest on $7.5m
based on the USD LIBOR rate and pays interest on $7.5m at a fixed
rate of 1.79 percent.
-- A GBP15.0m interest rate swap commencing on 22 November 2016
and ending on 1 July 2020, whereby the Group receives interest on
GBP15m based on LIBOR rate and pays interest on GBP15m at a fixed
rate of 2.00 percent.
These derivatives have been designated as a cash flow hedge for
accounting purposes. The net settlement of interest on the interest
rate swap, which comprises a variable rate interest receipt and a
fixed rate interest payment, is recorded in net finance costs in
the income statement and so is matched against the corresponding
variable rate interest payment on the revolving credit facility.
The derivatives are remeasured at fair value at each reporting
date. This gives rise to a gain or loss, the entire amount of which
is recognised in Other Comprehensive Income ('OCI') following the
Directors' assessment of hedge effectiveness.
(b) Foreign currency risk
Risk
The currency of the primary economic environment in which the
Group operates is Sterling, and this is also the currency in which
the Group presents its financial statements. However, the Group has
significant Euro and US dollar cash flows arising from
international trading and overseas operations. The Group is
consequently exposed to cash flow volatility arising from
fluctuations in the applicable exchange rates for converting Euros
and US dollars to Sterling.
Group policy
The Group policy is to fix the exchange rate in relation to a
periodically reassessed set percentage of expected Euro and US
Dollar net cash inflows arising from international trading, by
entering into foreign currency contracts to sell a specified amount
of Euros or US Dollars on a specified future date at a specified
exchange rate. This set percentage is approved by the Board as part
of the budgeting process and upon the acquisition of foreign
operations.
The Group policy is to finance investment in overseas operations
from borrowings in the local currency of the relevant operation, so
as to achieve a natural hedge of the foreign currency translation
risk. This natural hedge is designated as a net investment hedge
for accounting purposes. Debt of $11.0m (2018: $19.2m) and EUR2.4m
(2018: EUR2.4m) has been designated as a net investment hedge
relating to the Group's interest in Compliance Week, FRA and
Interactive Medica.
Risk management arrangements
The following forward contracts were entered into in order to
provide certainty in Sterling terms of circa 80% of the Group's
expected net US dollar and Euro income:
Currency Amount (millions) Maturity date Foreign exchange
rate
----------- ------------------ ------------------ -----------------
US dollar 1.0 12 July 2019 1.2579
US dollar 1.0 27 September 2019 1.2622
US dollar 1.0 25 October 2019 1.2637
Euro 1.0 27 November 2019 1.1095
US dollar 1.0 20 December 2019 1.2663
US dollar 1.0 31 January 2020 1.2686
Euro 1.0 31 January 2020 1.1067
US dollar 2.0 28 February 2020 1.2698
US dollar 2.0 27 March 2020 1.2708
US dollar 2.0 24 April 2020 1.2721
Euro 1.0 24 April 2020 1.1033
US dollar 1.5 29 May 2020 1.2734
The above derivatives are remeasured at fair value at each
reporting date. This gives rise to a gain or loss, the entire
amount of which is recognised in the Income Statement.
(c) Liquidity and capital risk
Risk
The Group has historically expanded its operations both
organically and via acquisition, financed partly by retained
profits but also via external finance. As well as financing cash
outflows, the Group's activities give rise to working capital
obligations and other operational cash outflows. The Group is
consequently exposed to the risk that it cannot meet its
obligations as they fall due, or can only meet them at an
uneconomic price.
Notes to the Financial Results
3. Principal risks and uncertainties (continued)
(c) Liquidity and capital risk (continued)
Group policy
The Group policy is to preserve a strong capital base in order
to maintain investor, creditor and market confidence and to
safeguard the future development of the business, but also to
balance these objectives with the efficient use of capital. The
Group has, in previous years, made purchases of its own shares
whilst taking into account the availability of credit.
Risk management arrangements
The Group ensures its liquidity is maintained by entering into
short, medium and long-term financial instruments to support
operational and other funding requirements. The Group determines
its liquidity requirements by the use of short and long-term cash
forecasts.
On 3 July 2019 Wilmington plc extended its revolving credit
facility through to 3 July 2023 (with the option to extend it to 3
October 2024). The terms of the old and extended facility are
included below:
Old facility that expired on 3 July 2019
The Group had a GBP65m revolving credit facility with Barclays
Bank PLC, HSBC Bank plc and The Royal Bank of Scotland plc from 1
July 2015. The facility comprised of a revolving credit facility of
GBP60m and an overdraft facility across the Group of GBP5m. In
addition, the facility also provided an accordion option whereby
the unsecured committed bank facility may be increased by up to
GBP35m to a total commitment of GBP100m if required subject to
majority lending bank consent. On 17 January 2017 GBP20m of the
accordion facility was triggered, increasing the total unsecured
bank facility to GBP85m. This extension was made to fund the
acquisition of HSJ. The extended facility comprised of a revolving
credit facility of GBP80.0m and an overdraft facility across the
Group of GBP5.0m. On 24 November 2017 the revolving credit facility
was reduced by GBP10.0m to GBP75.0m, to decrease the non-utilised
portion and the associated non-utilisation fee.
Extended facility that is effective from 3 July 2019 and expires
on 3 July 2023 (with an option to extend it to 3 October 2024)
The Group has a GBP65m revolving credit facility with Barclays
Bank PLC, The Governor and Company of the Bank of Ireland and The
Royal Bank of Scotland plc from 3 July 2019. The facility comprised
of a revolving credit facility of GBP60m and an overdraft facility
across the Group of GBP5m. In addition, the extended facility also
provides for an accordion option whereby the unsecured committed
bank facility may be increased if required subject to majority
lending bank consent. Interest is charged on the amount drawn down
at between 1.50 and 2.25 (the 'Margin') per cent above LIBOR
depending upon leverage, and drawdowns are made for periods of up
to six months in duration. Interest is charged on the drawn element
of the overdraft facility at 1.50% and 2.25% per cent above the
Barclays bank base rate depending upon leverage. The Group also
pays a fee of 40% of the applicable Margin on the undrawn element
of the credit facility and the undrawn overdraft.
(d) Credit risk
Risk
The Group's principal financial assets are receivables and bank
balances. The Group is consequently exposed to the risk that its
customers or the credit facility providers cannot meet their
obligations as they fall due.
Group policy
The Group policy is that the lines of business assess the
creditworthiness and financial strength of customers at inception
and on an ongoing basis. The Group also reviews the credit rating
of the bank. Cash is held in banks with a credit rating between AA
and BBB+ per Fitch at 19 February 2020.
Risk management arrangements
The Group's credit risk is primarily attributable to its trade
receivables. However, the Group has no significant exposure to
credit risk because its trading is spread over a large number of
customers. The payment terms offered to customers take into account
the assessment of their creditworthiness and financial strength,
and they are set in accordance with industry standards. The
creditworthiness of customers is considered before trading
commences. Most of the Group's customers are large and well
established institutions that pay on time and in accordance with
the Group's standard terms of business.
The amounts presented in the Balance Sheet are net of the
expected credit loss allowance. The Group applies a simplified
approach to measure the expected credit loss allowance for trade
receivables classified at amortised cost, using the twelve month
expected loss provision.
The expected credit loss on trade receivables is estimated using
a provision matrix by reference to past default experience and
credit rating, adjusted as appropriate for current observable
data.
Notes to the Financial Results
4. Financial instruments and risk management
The methods and assumptions used to estimate the fair values of
financial assets and liabilities are as follows:
-- The carrying amount of trade receivables and payables
approximates to fair value due to the short maturity of the amounts
receivable and payable.
-- The fair value of the Group's borrowings is estimated on the
basis of the discounted value of future cash flows using
approximate discount rates in effect at the balance sheet date.
-- The fair value of the Group's outstanding interest rate
swaps, foreign exchange contracts are estimated using discounted
cash flow models and market rates of interest and foreign exchange
at the balance sheet date.
Financial instruments are measured at fair value via a valuation
method. The different levels have been defined as:
-- level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- level 2: Inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices); and
-- level 3: Inputs for the assets or liabilities that are not
based on observable market data (that is, unobservable inputs).
The Group has recognised a level 2 financial asset of GBP367,113
(2018: GBP278,131 liability) for foreign exchange trading
derivatives at fair value through income or expense. In addition,
the Group has recognised a level 2 financial liability of
GBP133,445 (2018: GBP176,605) for two (2018: two) interest rate
swap contracts at fair value through other comprehensive income or
expense. The Group has no recognised level 1 or level 3 assets or
liabilities.
5. Measures of profit
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;
-- adjusting items (included in operating expenses);
-- other income - gain on sale of subsidiary
-- share of loss of equity accounted investment ; and
-- net finance costs.
Adjusted profit before tax, adjusted EBITA and adjusted EBITDA
reconcile to profit on continuing activities before tax as
follows:
Six months Six months
ended ended
31 December 31 December Year ended
2019 2018 30 June 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- -------------- --------------
Profit before tax 4,066 5,843 14,712
Amortisation of intangible assets excluding
computer software 2,381 2,607 5,049
Adjusting items (included in operating
expenses) 486 132 1,443
Other income - gain on sale of subsidiary - (1,906) (1,906)
------------- -------------- --------------
Adjusted profit before tax 6,933 6,676 19,298
Share of loss of equity accounted investment - 115 50
Net finance costs 979 1,008 2,103
------------- -------------- --------------
Adjusted operating profit ('adjusted EBITA') 7,912 7,799 21,451
Depreciation of property, plant and equipment
included in operating expenses 684 572 1,359
Depreciation of right of use assets 1,006 - -
Amortisation of intangible assets - computer
software 752 652 1,477
------------- -------------- --------------
Adjusted EBITA before depreciation ('adjusted
EBITDA') 10,354 9,023 24,287
------------- -------------- --------------
Notes to the Financial Results
6. 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, Healthcare
and Professional) 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, the rest of
Europe and the rest of the world.
(a) Business segments
Year ended 30
Six months ended 31 December 2018 June 2019
Six months ended 31 December 2019 (unaudited) (unaudited) (audited)
----------------------------------------------- ----------------------------------- ----------------------
Revenue Contribution Revenue Contribution Revenue Contribution
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- -------------------------------- ----------- ---------------------- -------- ------------
Risk & Compliance 20,560 6,091 20,058 5,906 42,453 12,670
Healthcare 21,096 1,255 20,560 1,271 46,310 7,337
Professional 17,819 2,731 17,682 2,923 33,762 5,808
Group contribution 59,475 10,077 58,300 10,100 122,525 25,815
Unallocated central
overheads - (1,802) - (2,308) - (4,152)
Share based payments - (363) - 7 - (212)
59,475 7,912 58,300 7,799 122,525 21,451
Amortisation of
intangible assets
excluding computer
software (2,381) (2,607) (5,049)
Adjusting items
(included in operating
expenses) (486) (132) (1,443)
Other income - gain on
sale of subsidiary - 1,906 1,906
Net finance costs (979) (1,008) (2,103)
Share of loss of equity
accounted investment - (115) (50)
Profit before tax 4,066 5,843 14,712
Taxation (924) (843) (3,519)
-------------------------------- ---------------------- ------------
Profit for the
financial period 3,142 5,000 11,193
-------------------------------- ---------------------- ------------
There are no intra-segmental revenues which are material for
disclosure. Unallocated central overheads represent head office
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
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:
Six months Six months Year
ended 31 ended 31 ended
December December 30 June
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ ----------
UK 32,579 33,814 69,839
North America 10,920 8,745 20,829
Europe (excluding the UK) 10,778 11,077 22,055
Rest of the world 5,198 4,664 9,802
------------ ------------ ----------
Total revenue 59,475 58,300 122,525
------------ ------------ ----------
Notes to the Financial Results
7. Adjusting items
The following items have been charged to the Income Statement
during the period but are considered to be adjusting so are shown
separately:
Six months ended Six months ended Year ended
31 December 31 December 30 June
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------- ---------------- ----------
Costs relating to successful and aborted acquisitions, disposals and
integration - 84 74
Impairment of loan receivable - - 331
Costs associated with the change in CEO - - 549
Net increase in the liability for deferred consideration 486 48 489
Other adjusting items (included in operating expenses) 486 132 1,443
Amortisation of intangible assets excluding computer software 2,381 2,607 5,049
Total adjusting items (classified in profit before tax) 2,867 2,739 6,492
---------------- ---------------- ----------
The increase in the liability for deferred consideration relates
to adjustments to deferred consideration in respect of Interactive
Medica Limited and Evantage Consulting Limited.
8. Net finance costs
Year
Six months Six months ended 30
ended ended 31 June
31 December December 2019
2019 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Net finance costs comprise:
Interest payable & receivable on bank
loans and overdrafts 800 985 1,921
Unwinding of the discount on royalty
payments receivable (70) (60) (127)
Notional interest on lease liabilities 166 - -
Amortisation of capitalised loan arrangement
fees 83 83 309
979 1,008 2,103
-------------- ------------- ----------
9. Taxation
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Current tax:
Current tax on profits for the period 1,308 1,151 3,316
Adjustments in respect of previous years - - 244
Total current tax 1,308 1,151 3,560
Deferred tax:
Deferred tax credit (384) (308) (41)
Total deferred tax (384) (308) (41)
Taxation 924 843 3,519
------------- -------------- ----------
Notes to the Financial Results
10. Dividends
Distributions to owners of the parent in the period:
Six Six Six Six
months months months months
ended 31 ended 31 Year ended ended 31 ended 31 Year ended
December December 30 June December December 30 June
2019 2018 2019 2019 2018 2019
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
pence per pence per pence
share share per share GBP'000 GBP'000 GBP'000
Final dividends recognised
as distributions in
the year 5.0 4.8 4.8 4,378 4,200 4,200
Interim dividends recognised
as distributions in
the year - - 4.1 - - 3,587
------------ ------------ ----------- ------------ ------------ -----------
Total dividends paid
in the period 4,378 4,200 7,787
------------ ------------ ----------- ------------ ------------ -----------
Interim/final dividend
proposed 4.2 4.1 5.0 3,671 3,587 4,375
------------ ------------ ----------- ------------ ------------ -----------
The Trustee of the ESOT waived dividends on shares held by the
ESOT. At 19 February 2020, the ESOT held 160,000 shares in the
company.
11. 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;
-- adjusting items (included in operating expenses);
-- other income - gain on sale of subsidiary; and
-- adjusting items (included in finance costs).
The calculation of the basic and diluted earnings per share is
based on the following data:
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Earnings from continuing operations for
the purpose of basic earnings per share 3,142 4,983 11,149
Add/(remove):
Amortisation of intangible assets excluding
computer software (net of non-controlling
interests) 2,381 2,607 5,049
Adjusting items (included in operating
expenses) 486 132 1,443
Other income - gain on sale of subsidiary - (1,906) (1,906)
Tax effect of adjustments above (436) (432) (475)
Adjusted earnings for the purposes of adjusted
earnings per share 5,573 5,384 15,260
------------ ------------ -----------
Number Number Number
Weighted average number of ordinary shares
for the purpose of basic and adjusted earnings
per share 87,577,105 87,466,362 87,513,422
Effect of dilutive potential ordinary shares:
Future exercise of share awards and options 1,067,312 753,794 719,509
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 88,644,417 88,220,156 88,232,931
------------ ------------ -----------
Basic earnings per share 3.59p 5.70p 12.74p
Diluted earnings per share 3.54p 5.65p 12.64p
Adjusted basic earnings per share ('adjusted
earnings per share') 6.36p 6.16p 17.44p
Adjusted diluted earnings per share 6.29p 6.10p 17.30p
------------ ------------ -----------
Notes to the Financial Results
12. Goodwill, Intangible assets, Property, plant and equipment
and right of use assets
Goodwill Intangible assets Property, plant and equipment Right of use assets
GBP'000 GBP'000 GBP'000 GBP'000
Closing net book amount as at
30 June 2018 (audited) 77,103 27,305 6,463 -
Additions - 761 554 -
Acquisitions - 240 1 -
Disposals - - (26) -
Exchange translation
differences 394 36 (9) -
Depreciation of property, -
plant and equipment - - (572)
Amortisation of intangible -
assets excluding computer
software - (2,607) -
Amortisation of computer -
software - (652) -
--------- ------------------ ------------------------------ ----------------------
Closing net book amount as at
31 December 2018 (unaudited) 77,497 25,083 6,411 -
--------- ------------------ ------------------------------ ----------------------
Additions - 1,563 455 -
Disposals - (211) (123) -
Exchange translation
differences 38 45 11 -
Depreciation of property, -
plant and equipment - - (787)
Amortisation of intangible -
assets excluding computer
software - (2,442) -
Amortisation of computer -
software - (825) -
--------- ------------------ ------------------------------ ----------------------
Closing net book amount as at
30 June 2019 (audited) 77,535 23,213 5,967 -
Transition to IFRS 16 (note
19) - - (273) 11,105
--------- ------------------ ------------------------------ ----------------------
Opening net book amount as at
1 July 2019 (unaudited) 77,535 23,213 5,694 11,105
Additions - 1,637 304 843
Disposals - - (15) -
Exchange translation
differences (457) 19 (7) -
Depreciation of property, -
plant and equipment - - (684)
Depreciation of right of use
assets - - - (1,006)
Amortisation of intangible -
assets excluding computer
software - (2,381) -
Amortisation of computer -
software - (752) -
--------- ------------------ ------------------------------ ----------------------
Closing net book amount as at
31 December 2019 (unaudited) 77,078 21,736 5,292 10,942
--------- ------------------ ------------------------------ ----------------------
13. Trade and other receivables
30 June
31 December
31 December 2018 2019
2019 (unaudited) (audited)
(unaudited)
GBP'000 GBP'000 GBP'000
Trade receivables 22,101 20,321 23,058
Prepayments and other receivables 6,077 6,029 6,054
-------------- ------------- -----------
28,178 26,350 29,112
-------------- ------------- -----------
14. Trade and other payables
30 June
31 December
2018 2019
31 December
2019 (unaudited) (audited)
(unaudited)
GBP'000 GBP'000 GBP'000
Trade and other payables 20,031 23,770 26,374
Subscriptions and deferred revenue 30,093 26,600 30,794
50,124 50,370 57,168
------------- -------------- -----------
Notes to the Financial Results
15. Borrowings
30 June
31 December 2019 31 December 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Non-current liability
Bank loans 47,367 56,189 41,790
Capitalised loan arrangement fees (656) (214) -
----------------- ----------------- -----------
Bank loans net of facility fees 46,711 55,975 41,790
----------------- ----------------- -----------
16. Share capital
Number of ordinary Share premium
shares Ordinary shares account Treasury and ESOT Total
of 5p each GBP'000 GBP'000 reserves GBP'000 GBP'000
At 1 July 2018
(audited) 87,414,073 4,371 45,225 (96) 49,500
--------------------- ---------------- --------------------- -------------------- ---------
Shares issued 125,494 6 - - 6
At 31 December 2018
(unaudited) and 30
June 2019 (audited) 87,539,567 4,377 45,225 (96) 49,506
--------------------- ---------------- --------------------- -------------------- ---------
Shares issued 64,350 3 - - 3
ESOT share purchases - - - (204) (204)
At 31 December 2019
(unaudited) 87,603,917 4,380 45,225 (300) 49,305
--------------------- ---------------- --------------------- -------------------- ---------
On 19 September 2019, 64,350 ordinary shares were issued in
respect of the vesting of the 2016 PSP Share Awards to employees
(including Directors).
At 31 December 2019, 46,584 shares (2018: 46,584) were held in
Treasury, which represents 0.1 % (2018: 0.1%) of the called up
share capital of the Company.
At 31 December 2019, the ESOT held 80,000 shares (2018: nil) in
the company, which represents 0.1 % (2018: nil%) of the called up
share capital. At 19 February 2020, the ESOT held 160,000 shares in
the company.
17. Cash generated from operations
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Profit from continuing operations before
income tax 4,066 5,843 14,712
Adjusting items 486 132 1,443
Depreciation of property, plant and equipment 684 572 1,359
Depreciation of right of use assets 1,006 - -
Gain on sale of subsidiary - (1,906) (1,906)
Amortisation of intangible assets 3,133 3,259 6,526
Profit on disposal of property, plant
and equipment (3) (2) 36
Share based payments (including social
security costs) 363 (7) 212
Share of loss of equity accounted investment - 115 50
Net finance costs 979 1,008 2,103
------------ ------------ -----------
Operating cash flows before movements
in working capital 10,714 9,014 24,535
Decrease/(increase) in trade and other
receivables 664 3,027 (258)
(Decrease)/increase in trade and other
payables (4,793) (4,958) 2,162
------------ ------------ -----------
Cash generated from operations before
adjusting items 6,585 7,083 26,439
------------ ------------ -----------
Notes to the Financial Results
17. Cash generated from operations (continued)
Cash conversion is calculated as a percentage of cash generated
by operations to Adjusted EBITA as follows:
Year ended
30 June
Six months Six months
ended 31 ended 31
December December
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Funds from operations before adjusting
items:
Adjusted EBITA 7,912 7,799 21,451
Share based payments (including social
security costs) 363 (7) 212
Amortisation of intangible assets - computer
software 752 652 1,477
Depreciation of property, plant and equipment
included in operating expenses 684 572 1,359
Depreciation of right of use assets 1,006 - -
(Profit)/loss on disposal of property,
plant and equipment (3) (2) 36
------------- -------------- -----------
Operating cash flows before movements
in working capital 10,714 9,014 24,535
Net working capital movement (4,129) (1,931) 1,904
------------- -------------- -----------
Funds from operations before adjusting
items 6,585 7,083 26,439
------------- -------------- -----------
Cash conversion 83% 91% 123%
------------- -------------- -----------
The 83% conversion percentage this year is not comparable to the 91%
last year due to the different treatment of lease rental costs in the
current year following adoption of IFRS 16. On a comparable basis to
last year the cash conversion would be 70%.
Free cash flows:
Operating cash flows before movement in
working capital 10,714 9,014 24,535
Proceeds on disposal of property, plant
and equipment 18 28 112
Net working capital movement (4,129) (1,931) 1,904
Interest paid (814) (1,004) (1,943)
Payment of lease liabilities (1,129) - -
Tax paid (3,420) (2,254) (3,943)
Purchase of property, plant and equipment (304) (554) (1,332)
Purchase of intangible assets (1,637) (761) (2,324)
------------- -------------- -----------
Free cash flows (701) 2,538 17,009
------------- -------------- -----------
18. Related party transactions
The Company and its wholly owned subsidiary undertakings offer
certain Group-wide purchasing facilities to the Company's other
subsidiary undertakings whereby the actual costs are recharged.
Close family members of key management personnel provided
services to the Group during the period for lecturing. The total
invoiced for these services was GBP49,883 (2018: GBP55,006).
19. Transition to IFRS 16
On 1 July 2019 the Group adopted the new accounting standard
IFRS 16 Leases.
The Group has adopted the modified retrospective approach to
application, using transitional reliefs available. It has not
restated comparatives and on transition the Group recognised a
cumulative adjustment to the opening balance of retained earnings
at 1 July 2019. The Group has also made use of the following
transitional reliefs:
-- Exclusion of initial direct costs from the measurement of the
right-of-use assets at the date of application
-- Exemption from transition of leases with a remaining term
less than twelve months
-- Application of the discount rate at the date of transition,
rather that the date of lease commencement, to calculate the value
of the lease liabilities
-- Leases for low value assets have been excluded from
transition
-- The group will not reassess whether a contract is or contains
a lease, and the definition of a lease under IAS 17 will continue
to apply to leases entered into before 1 July 2019.
Notes to the Financial Results
19. Transition to IFRS 16 (continued)
At the 1 July 2019 transition date, adoption of IFRS 16 resulted
in the Group recognising right-of-use assets of GBP11.1m and lease
liabilities of GBP12.5m. There is a reduction of GBP1.6m to other
payables in respect of accrued rent free amounts netted against the
right of use assets. There is a GBP0.1m opening adjustment to
retained earnings to reflect the difference between carrying values
of right of use assets and lease liabilities at the transition
date, and an associated deferred tax asset has also been
recognised. There is also a GBP0.3m reclassification between
property plant and equipment and right of use assets, relating to
an asset retirement obligation.
Impact on the consolidated balance sheet
The effect on the consolidated balance sheet of the
implementation of IFRS16 Leases on 1 July 2019 is summarised
below:
Group
------------------------------------------------
Reported Adjusted
30 June 2019 IFRS 16 adjustments 1 July 2019
(audited) 1 July 2019 (unaudited)
GBP'000 GBP'000 GBP'000
------------- ------------------- ------------
Non-current assets
Property, plant and equipment 5,967 (273) 5,694
Right of use assets - 11,105 11,105
Deferred tax assets 555 35 590
Other non current assets 102,992 - 102,992
109,514 10,867 120,381
------------- ------------------- ------------
Current assets 37,033 - 37,033
------------- ------------------- ------------
Total assets 146,547 10,867 157,414
------------- ------------------- ------------
Current liabilities
Trade and other payables (57,168) 1,616 (55,552)
Lease liabilities - (2,475) (2,475)
Other current liabilities (1,862) - (1,862)
(59,030) (859) (59,889)
------------- ------------------- ------------
Non-current liabilities
Lease liabilities - (10,155) (10,155)
Other non-current liabilities (44,649) - (44,649)
------------- ------------------- ------------
Total liabilities (103,679) (11,014) (114,693)
------------- ------------------- ------------
Net assets 42,868 (147) 42,721
------------- ------------------- ------------
Equity
Share capital, share premium and
treasury shares 49,506 - 49,506
Other reserves 4,127 - 4,127
Accumulated losses (10,765) (147) (10,912)
------------- ------------------- ------------
Total equity 42,868 (147) 42,721
------------- ------------------- ------------
Impact on the consolidated income statement
For the 6 months ended 31 December 2019 there was an income
statement depreciation charge of GBP1.0m relating to right of use
assets associated with IFRS 16 leases and an interest cost relating
to the IFRS 16 lease liabilities of GBP0.2m.
Impact on the consolidated cash flow statement
Payments in respect of leases which were previously recognised
within cash flows from operating activities are now recorded within
cash flow from financing activities.
20. Seasonality
The Group has traditionally generated the majority of its
revenues and profits during the second half of the financial year.
This has historically resulted from two factors. Firstly, most of
the Group's businesses (the notable exception being AMT) deliver
seasonally low revenue in July, August and December which include
holiday periods for many of the Group's clients. Secondly, Inese,
Compliance Week and FRA have major annual events in the second half
of the year.
21. Events after the reporting period
Inese, our Spanish business within the Risk & Compliance
division, whilst performing well in its market, struggles to
generate synergies with our other insurance business due to its
geographical location and focus on the Spanish speaking insurance
industry. We have therefore engaged external advisors to identify
potential purchasers of the business and since the balance sheet
date have commenced active marking at a reasonable sale price. As a
result, after the balance sheet date the assets and liabilities
related to Inese meet the criteria of an asset held for sale under
IFRS 5.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR TLMJTMTMBTJM
(END) Dow Jones Newswires
February 20, 2020 02:00 ET (07:00 GMT)
Wilmington (LSE:WIL)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Wilmington (LSE:WIL)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
