REG - Wilmington Group Plc - Final Results <Origin Href="QuoteRef">WIL.L</Origin> - Part 2
29/10/2014 12:42
- Part 2: For the preceding part double click ID:nRSR9734Ra
6,256
Rest of the World 7,362 7,563
Total revenue 90,024 85,048
Total revenue
90,024
85,048
5. Net operating expenses
Cost of sales 26,918 26,064
Distribution and selling costs 16,650 15,814
Administrative expenses (excluding amortisation of intangible assets - computer software) 26,936 25,550
Amortisation of intangible assets - computer software 816 755
Net operating expenses before adjusting items 71,320 68,183
Other adjusting items (see note 6) 764 1,325
Net operating expenses 72,084 69,508
Net operating expenses
72,084
69,508
Other adjusting items are all classified as administration expenses.
6. Profit from continuing operations
Adjusting items:
The following items have been charged/(credited) to profit or loss during the
year but are of an unusual nature, size or incidence and so are shown
separately:
Costs written off relating to both successful and aborted acquisitions 380 270
Restructuring and rationalisation costs 275 593
Impairment of freehold property and associated property, plant and equipment - 325
Costs relating to rationalisation of publishing operations - 339
Increase/(decrease) in liability for deferred consideration 109 (440)
Termination costs of joint venture contract - 238
Other adjusting items (included in operating expenses) 764 1,325
Gain on the sale of property - (3,325)
Amortisation of intangible assets - publishing rights, titles and benefits 6,286 6,105
Impairment of goodwill - 4,500
Share-based payments 924 888
Total adjusting items (classified in operating profit) 7,974 9,493
Unwinding of discount on the provisions for the future purchase of non-controlling interests and deferred consideration 39 93
Total adjusting items (classified in profit before tax) 8,013 9,586
Total adjusting items (classified in profit before tax)
8,013
9,586
Restructuring and rationalisation costs comprise primarily redundancy and
termination costs together with associated reorganisation costs (including
associated gains and losses on disposal of fixed assets).
7. Net finance costs
Finance income comprises:
Bank interest receivable - 4
Finance costs comprise:
Interest payable on bank loans and overdrafts (1,718) (1,653)
Facility fees (213) (267)
Amortisation of capitalised loan arrangement fees (168) (247)
Unwinding of the discount on the provisions for the future purchase of non-controlling interests (13) (16)
Unwinding of the discount on deferred consideration (26) (77)
(2,138) (2,260)
(2,138)
(2,260)
8. Taxation
Current tax:
UK corporation tax at current rates on profits for the year 2,036 2,382
Adjustments in respect of previous years (64) 30
1,972 2,412
Foreign tax 1,045 854
Adjustment in respect of previous years (47) (4)
Total current tax 2,970 3,262
Deferred tax credit (458) (1,469)
Adjustments to deferred tax in respect of previous years 11 (41)
Effect on deferred tax of change in corporation tax rate (489) (268)
Total deferred tax (936) (1,778)
Taxation 2,034 1,484
Taxation
2,034
1,484
Factors affecting the tax charge for the year:
The tax assessed is higher (2013: higher) than the average rate of corporation
tax in the UK of 22.50% (2013: 23.75%). The differences are explained below:
Profit before Tax 8,592 5,116
Profit multiplied by the average rate of corporation tax in the year of 22.50% (2013: 23.75%) 1,933 1,215
Tax effects of:
Depreciation and amortisation in excess of capital allowances 523 124
Impairment not allowable for tax - 1,069
Foreign tax rate differences 358 179
Adjustment in respect of previous years (111) 26
Profit on sale of property on which no tax is payable - (790)
Other items not subject to tax (180) (71)
Effect on deferred tax of change of corporation tax rate from 23% to 21% (2013: 24% to 23%) (489) (268)
Taxation 2,034 1,484
Taxation
2,034
1,484
On 2 July 2013, the UK corporation tax rate was reduced from 23% to 21% from 1
April 2014 and 20% from 1 April 2015. This change has been substantively
enacted at the balance sheet date and, therefore, is included in these
financial statements. As deferred tax assets and liabilities are measured at
the rates that are expected to apply in the periods of the reversal, deferred
tax balances at 30 June 2014 have been calculated using a rate of 21% or 20%,
as appropriate, giving rise to a reduction in the net deferred tax liability
of £489,000 (2013: £268,000). The Company's profits for this accounting year
are taxed at an effective rate of 22.50%.
9. Dividends
Amounts recognised as distributions to owners of the parent in the year:
Final dividends recognised as distributions in the year 3.5 3.5 2,974 2,973
Interim dividends recognised as distributions in the year 3.6 3.5 3,084 2,974
Total dividends paid 6,058 5,947
Final dividend proposed 3.7 3.5 3,170 2,974
Final dividend proposed
3.7
3.5
3,170
2,974
10. Earnings per share
Adjusted earnings per share has been calculated using adjusted earnings
calculated as profit after taxation and non-controlling interests but before:
· Amortisation of intangible assets - publishing rights, titles and
benefits;
· Impairment of goodwill;
· Gain on the disposal of property;
· Unwinding of the discount on the provisions for the future purchase of
non-controlling interests and deferred consideration;
· Share-based payments; and
· Other adjusting items.
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings from continuing operations for the purpose of basic earnings per share 6,485 3,537
Add/(remove):
Amortisation of intangible assets - publishing rights, titles and benefits 6,286 6,105
Impairment of goodwill - 4,500
Gain on disposal of property - (3,325)
Other adjusting items 764 1,325
Share based payments 924 888
Unwinding of the discount on the provisions for the future purchase of non-controlling interests deferred consideration 39 93
Tax effect (1,868) (2,057)
Adjusted earnings for the purposes of adjusted earnings per share 12,630 11,066
Adjusted earnings for the purposes of adjusted earnings per share
12,630
11,066
Weighted average number of ordinary shares for the purposes of basic and adjusted earnings per share 85,408,893 84,727,804
Effect of dilutive potential ordinary shares:
Future exercise of share awards and share options 1,950,638 1,992,729
Deferred consideration to be settled by equity 372,855 156,550
Weighted average number of ordinary shares for the purposes of diluted and adjusted diluted earnings per share 87,732,386 86,877,083
Basic earnings per share 7.59p 4.17p
Diluted earnings per share 7.39p 4.07p
Adjusted basic earnings per share ('Adjusted Earnings Per Share'') 14.79p 13.06p
Adjusted diluted earnings per share 14.40p 12.74p
Adjusted diluted earnings per share
14.40p
12.74p
11. Acquisitions and disposals
Business combinations
The Group acquired the trading assets and certain liabilities of Compliance
Week, the leading provider of governance, risk and compliance ('GRC')
information and events for public companies and large enterprises, primarily
in the US, on 15 August 2013 from Haymarket Media, Inc. Compliance Week was
acquired for consideration of $11.22m (£7.3m) in cash. Subsequently, $0.2m
(£0.1m) was repaid to the Group in respect of the final working capital
adjustment. Further contingent consideration of up to $3.0m (£1.8m) is
potentially payable in cash, subject to Compliance Week achieving challenging
growth targets in the financial year ending 30 June 2015.
Acquisition related costs of £0.3m have been recognised as part of the costs
written off relating to both successful and abortive acquisitions of £0.4m
shown as other adjusted items in the income statement (see note 6).
The acquisition of Compliance Week is consistent with Wilmington's strategy of
acquiring businesses with high repeat revenues and strong, cash generative
income streams in the Group's key markets. This business forms part of the
Banking & Compliance Division and works closely with other Group companies,
providing them with closer access to their North American customers and
markets, as well as opportunities for developing new revenue streams.
Details of the purchase consideration, the net assets acquired and goodwill
for the acquisition are as follows:
Purchase consideration:
Initial cash paid 7,411
Cash received in respect of final working capital adjustment (129)
Net purchase consideration 7,282
Net purchase consideration
7,282
The provisional fair values of assets and liabilities recognised as a result
of this acquisition are as follows:
Customer relationships 1,446
Data 698
Brand 1,322
Other intangible assets 499
Total intangible assets (see note 13) 3,965
Trade and other receivables (net of allowances) 558
Subscriptions and deferred revenue (1,206)
Net identifiable assets acquired 3,317
Goodwill (see note 12) 3,965
Net assets acquired 7,282
Net assets acquired
7,282
The goodwill is attributable to Compliance Week's strong position and
profitability in trading in the international compliance and regulatory
information market, the new product development potential and synergies to
arise after the Group's acquisition of the new business.
The acquired business contributed revenues of £3,203,000 and contribution of
£878,000 (£792,000 after adjusting items) to the Group for the period from the
date of acquisition to 30 June 2014. If the acquisition had occurred on 1 July
2013, consolidated revenue and consolidated operating profit before adjusting
items for the twelve months ended 30 June 2014 would have been £90,244,000 and
£18,688,000 respectively.
Non-controlling interests
During the year, the Group acquired an additional 20.0% of the issued share
capital of Mercia NI Limited and Mercia Ireland Limited for £58,000 thus
increasing the ownership in these businesses to 80.0%.
12. Goodwill
Cost £'000
At 1 July 2012 77,343
Acquisitions 3,291
Change in provisions for the future purchase of non-controlling interests (99)
Movement in offset of provisions for the future purchase of non-controlling interests (3)
At 1 July 2013 80,532
Additions 60
Acquisitions (see note 11) 3,965
Exchange translation differences (443)
Movement in offset of provisions for the future purchase of non-controlling interests (9)
At 30 June 2014 84,105
Accumulated impairment
At 1 July 2012 2,750
Impairment charge 4,500
At 1 July 2013 and 30 June 2014 7,250
Net book amount
At 30 June 2014 76,855
At 30 June 2013 73,282
At 1 July 2012 74,593
The Group tests goodwill annually for impairment. The recoverable amount of
the goodwill is determined from value in use calculations for each cash
generating unit ('CGU'). These calculations use pre-tax cash flow projections
based on financial budgets and forecasts approved by the Board covering a
three year period. Cash flows beyond the three year period are extrapolated
using estimated long-term growth rates.
Key assumptions for the value in use calculations are those regarding discount
rates, cash flow forecasts and long-term growth rates. Management has used a
pre-tax discount rate of 12.3% (2013: 12.3%) across all CGUs except for the
Healthcare, Legal and Business Intelligence CGU which had a pre-tax discount
rate of 13.3% (2013: 13.3%) to reflect the greater market challenges and
risks. These pre-tax discount rates reflect current market assessments for the
time value of money and the risks associated with the CGUs as the Group
manages its treasury function on a Group-wide basis. The same discount rate
has been used for all CGUs except Healthcare, Legal and Business Intelligence,
as the Directors believe that the risks are the same for each CGU. The
long-term growth rates used are based on management's expectations of future
changes in the markets for each CGU and are 2.0% (2013: 2.0%).
Managements impairment calculations based upon the above assumptions show
significant headroom. There are no CGU's which management consider a
reasonable possible change in a key assumption would give rise to any
impairment.
13. Intangible assets
Group
Publishing rights, titles and benefits£'000 Computer software£'000 Total£'000
Cost
At 1 July 2012 59,395 4,165 63,560
Additions 262 764 1,026
Acquisitions 5,784 - 5,784
Exchange translation differences 21 - 21
At 1 July 2013 65,462 4,929 70,391
Additions 22 933 955
Acquisitions 3,965 - 3,965
Disposals (3,002) - (3,002)
Exchange translation differences (565) - (565)
At 30 June 2014 65,882 5,862 71,744
Accumulated amortisation
At 1 July 2012 29,153 2,885 32,038
Charge for year 6,105 755 6,860
At 1 July 2013 35,258 3,640 38,898
Charge for year 6,286 816 7,102
Disposals (3,002) - (3,002)
At 30 June 2014 38,542 4,456 42,998
Net book amount
At 30 June 2014 27,340 1,406 28,746
At 30 June 2013 30,204 1,289 31,493
At 1 July 2012 30,242 1,280 31,522
The prior year includes an accelerated amortisation charge of £748,000 to
reflect a reduction in the useful life of the Group's legacy print
businesses.
14. Property, plant and equipment
Cost
At 1 July 2012 3,051 3,999 148 3,140 5,320 469 16,127
Additions - - 22 550 528 117 1,217
Acquisitions - - - 23 12 - 35
Sale of subsidiary undertakings - - - (70) - - (70)
Disposals - - (31) (843) (2,000) (112) (2,986)
Transfer to assets held for sale (1,049) (44) - (45) (34) - (1,172)
Exchange translation differences - - 10 10 27 - 47
At 1 July 2013 2,002 3,955 149 2,765 3,853 474 13,198
Additions - - 74 172 588 49 883
Disposals - - (61) (107) (635) (41) (844)
Exchange translation differences - - (8) (13) (35) - (56)
At 30 June 2014 2,002 3,955 154 2,817 3,771 482 13,181
Accumulated depreciation
At 1 July 2012 338 1,900 101 2,264 4,591 161 9,355
Charge for the year 65 161 2 341 369 105 1,043
Impairment 258 37 - 24 6 - 325
Sale of subsidiary undertakings - - - (68) - - (68)
Disposals - - (29) (789) (2,000) (76) (2,894)
Transfer to assets held for sale (391) (44) - (45) (34) - (514)
Exchange translation differences - - 9 4 29 - 42
At 1 July 2013 270 2,054 83 1,731 2,961 190 7,289
Charge for the year 31 150 21 306 415 102 1,025
Disposals - - (54) (82) (635) (39) (810)
Exchange translation differences - - (5) (11) (34) - (50)
At 30 June 2014 301 2,204 45 1,944 2,707 253 7,454
Net book amount
At 30 June 2014 1,701 1,751 109 873 1,064 229 5,727
At 30 June 2013 1,732 1,901 66 1,034 892 284 5,909
At 1 July 2012 2,713 2,099 47 876 729 308 6,772
At 1 July 2012
2,713
2,099
47
876
729
308
6,772
Included in freehold property is £970,000 (2013: £970,000) of non-depreciated
land.
15. Trade and other receivables
Current
Trade receivables 17,917 17, 211
Other receivables 2,230 2,022
Prepayments and accrued income 2,242 2,146
22,389 21,379
2,242
2,146
22,389
21,379
16. Derivative financial assets and liabilities
Group
Current assets 30 June2014£'000 30 June2013£'000
Forward currency contracts 37 -
Current liabilities
Interest rate swaps - maturing in November 2014 (78) (63)
Non-current liabilities
Interest rate swaps - maturing in November 2016 (490) (1,096)
17. Trade and other payables
Group
30 June2014£'000 30 June2013£'000
Trade payables 3,429 3,995
Other payables 2,233 2,623
Social security and other taxes 3,746 3,591
Subscriptions and deferred revenue 19,591 18,563
Accruals 11,636 10,482
40,635 39,254
18. Borrowings
Bank overdrafts 642 890
Non-current liability
Bank loans 38,041 40,286
Capitalised loan arrangement fees (368) (535)
Bank loans net of loan arrangement fees 37,673 39,751
(368)
(535)
Bank loans net of loan arrangement fees
37,673
39,751
The Group has an unsecured committed bank facility of £65.0m (2013: £65.0m) to
February 2016. The facility currently comprises a revolving credit facility of
£60.0m (2013: £60.0m) and an overdraft facility across the Group of £5.0m
(2013: £5.0m). At 30 June 2014, £38.0m of the revolving credit facility was
drawn down (2013: £40.3m). Interest is charged on the amount drawn down at
between 2.00 and 2.75 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 2.25% above the
Barclays bank base rate. The Group also pays a fee of 0.9% on the undrawn
element of the credit facility and 0.09% on the undrawn overdraft. The Group
has complied at all times with the covenant requirements of the bank facility
arrangement.
19. Non-controlling interests
At 1 July 2012 1,107 (1,107) -
Profit for the year 95 - 95
Dividends paid (27) - (27)
New contribution from non-controlling interest 80 - 80
Acquisition of non-controlling interests during the year (982) 982 -
Movement in offset of provisions for the future purchase of non-controlling interests - (3) (3)
At 1 July 2013 273 (128) 145
Profit for the year 73 - 73
Dividends paid (26) - (26)
Acquisition of non-controlling interests during the year (58) 58 -
Movement in offset of provisions for the future purchase of non-controlling interests 52 (9) 43
At 30 June 2014 314 (79) 235
At 30 June 2014
314
(79)
235
20. Cash generated from operations
Profit from continuing operations before income tax 8,592 5,116
Gain on disposal of property - (3,325)
Cash flows from other adjusting items (see note 6) 764 1,325
Depreciation of property, plant and equipment 1,025 1,043
Impairment of goodwill - 4,500
Amortisation of intangible assets (see note 13) 7,102 6,860
Loss on disposal of property, plant and equipment 34 94
Share based payments (including social security costs) 924 888
Net finance costs (see note 7) 2,138 2,256
Operating cash flows before movements in working capital 20,579 18,757
(Increase)/decrease in trade and other receivables (452) 64
Increase in trade and other payables 77 564
Cash generated from operations before adjusting items 20,204 19,385
77
564
Cash generated from operations before adjusting items
20,204
19,385
Cash conversion is calculated as a percentage of cash generated by operations
to Adjusted EBITA as follows:
Funds from operations before adjusting items:
Adjusted EBITA (see note 3) 18,704 16,865
Amortisation of intangible assets - computer software 816 755
Depreciation of property, plant and equipment 1,025 1,043
Loss on disposal of property, plant and equipment 34 94
Operating cash before movement in working capital 20,579 18,757
Net working capital movement (375) 628
Funds from operations before adjusting items 20,204 19,385
Cash conversion 108% 115%
Free cash flows:
Operating cash before movement in working capital 20,579 18,757
Loss on disposal of property, plant and equipment (34) (94)
Net working capital movement (375) 628
Net finance costs paid (1,863) (2,011)
Tax paid (3,285) (2,926)
Purchase of property, plant and equipment (883) (1,217)
Purchase of intangible assets (955) (764)
Free cash flows 13,184 12,373
Free cash flows
13,184
12,373
This information is provided by RNS
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