REG - Wilmington Group Plc - Half Year Results <Origin Href="QuoteRef">WIL.L</Origin> - Part 2

WilmingtonAnnouncement

25/02/2015 07:12

- Part 2: For the preceding part double click  ID:nRSY7805Fa 

                                                          
 Net cash (used)/generated from financing activities                                  (1,176)                            5,617                              (7,777)        
                                                                                                                                                                           
 Net increase/(decrease) in cash and cash equivalents, net of bank overdrafts         1,182                              1,286                              (2,414)        
 Cash and cash equivalents, net of bank overdrafts, at beginning of the period        4,378                              6,913                              6,913          
 Exchange gains/(losses) on cash and cash equivalents                                 206                                (20)                               (121)          
 Cash and cash equivalents, net of bank overdrafts, at end of the period              5,766                              8,179                              4,378          
                                                                                                                                                                             
 Reconciliation of net debt                                                                                                                                                  
 Cash and cash equivalents at beginning of the period                                 5,020                              7,803                              7,803            
 Bank overdrafts at beginning of the period                                     15    (642)                              (890)                              (890)            
 Bank loans at beginning of the period                                          15    (38,041)                           (40,286)                           (40,286)         
 Net debt at beginning of the period                                                  (33,663)                           (33,373)                           (33,373)         
 Net increase/(decrease) in cash and cash equivalents (net of bank overdrafts)        1,388                              1,266                              (2,535)          
 Net (drawdown)/repayment in bank loans                                               (2,000)                            (8,562)                            1,505            
 Exchange (loss)/gain on bank loans                                                   (294)                              331                                740              
 Cash and cash equivalents at end of the period                                       7,998                              8,077                              5,020            
 Bank overdrafts at end of the period                                           15    (2,232)                            (298)                              (642)            
 Bank loans at end of the period                                                15    (40,335)                           (48,117)                           (38,041)         
 Net debt at end of the period                                                        (34,569)                           (40,338)                           (33,663)         
                                                                                                                                                                                   
 
 
Notes to the Financial Results 
 
General information 
 
The Company is a public limited company incorporated and domiciled in the UK.
The address of its registered office is 6-14 Underwood Street, London N1 7JQ.
The Company has its primary listing on the London Stock Exchange. The Company
is the knowledge leader and partner of choice for information, education and
networking in the Risk & Compliance, Finance and Legal areas; as well as the
Insight leader in a number of chosen industries. 
 
This condensed consolidated interim financial information ("Interim
Information") was approved for issue on 
 
24 February 2015. 
 
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 2014 were approved by the
Board of Directors on 17 September 2014. 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 2014 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 2014 which have been prepared in accordance with IFRSs as adopted by
the European Union, and are available on the Group's website
wilmingtonplc.com. 
 
Going concern 
 
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.
Negotiations with external lenders will commence in April 2015, in advance of
the expiry of the existing facility on February 2016. 
 
2.   Accounting policies 
 
The accounting policies applied are consistent with those of the Annual
Financial Statements for the year ended 30 June 2014, as described in those
Annual Financial Statements. The following new standards and amendments to
standards are mandatory for the first time for the financial year beginning 1
July 2014 but are either not relevant to the Group or do not have a
significant impact: 
 
·    IFRS 10 "Consolidated Financial Statements''; 
 
·    IFRS 11 "Joint arrangements''; 
 
·    IFRS 12 "Disclosure of interests in other entities''; 
 
·    IAS 27 "Separate Financial Statements''; 
 
·    IAS 28 "Investments in associates and joint ventures''; 
 
 ·    Amendments to IFRS 10,11 and 12 on transition guidance (effective 1 January 2013) (endorsed 1 January 2014);                                               
 ·    Amendments to IFRS 10, 12 and IAS 27 on consolidation for investment entities (effective 1 January 2014 ;                                                  
 ·    Amendments to IAS 32 on Financial instruments asset and liability offsetting (effective 1 January 2014);                                                   
 ·    Amendment to IAS 36, 'Impairment of assets' on recoverable amount disclosures (effective 1 January 2014);                                                  
 ·    Amendment to IAS 39 'Financial instruments: Recognition and measurement', on novation of derivatives and hedge accounting (effective 1 January 2014); and  
 ·    IFRIC 21, 'Levies' (effective 1 January 2014) (endorsed 17 June 2014).                                                                                     
 
 
The following new standards and amendments to standards have been issued but
are not yet effective for the purposes of the Interim Report and have not been
early adopted: 
 
·    Amendment to IAS 19, Employee benefits on defined benefit plans; 
 
·    Annual improvements to IFRSs 2010-2012 Cycle; and 
 
·    Annual improvements to IFRSs 2011-2013 Cycle. 
 
3.   Principal risks and uncertainties 
 
The principal business risks that affect the Group are as stated on pages 30
to 32 of Our Performance in the 
 
Annual Report and Financial Statements for the year ended 30 June 2014. The
main financial risks that affect the Group are: 
 
(a) Liquidity and capital risk 
 
The Group has an unsecured committed bank facility of £65m (2013: £65m) to
February 2016. The facility currently comprises a revolving credit facility of
£60m (2013: £60m) and an overdraft facility of £5m (2013: £5m). At 31 December
2014, £40m (2013: £48m) of the revolving credit facility was drawn down. The
bank overdrafts are the subject of a Group set-off arrangement. 
 
The Group met the requirements of the bank facility financial covenants
throughout the period. 
 
(b) Interest rate risk 
 
The Group finances its operations through a mixture of retained profits,
operational cash flow and external debt. Historically the Group has expanded
its operations both organically and by acquisition, which has led on occasions
to the need for external finance. 
 
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. Interest is charged on the £40m (2013: £48m) amount
drawn down on the revolving credit facility at a rate of between 2.00 and 2.75
per cent above LIBOR depending upon leverage. Cash flow volatility therefore
arises from movements in the LIBOR interest rates. 
 
In November 2010, the Group entered into a 5-year £15m interest rate swap
derivative, fixed against 3-month LIBOR, paying interest on £15m at a fixed
rate of 2.68%. This derivative has been designated as a cash flow hedge in
order to manage interest rate risk associated with the first £15m of the
credit facility. Payments received under the swap has been matched against
interest paid quarterly during the period and the entire mark to market
gain/(loss) on the derivative has been recognised in Other comprehensive
income, following the Directors' assessment of the hedge's effectiveness. 
 
(c) Foreign currency risk 
 
Risk 
 
The currency of the primary economic environment in which the Group operates
is GBP, and this is also the currency in which the Group presents its
financial statements. However, the Group has significant EUR and USD 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 EUR and USD to GBP. 
 
Group policy 
 
The Group policy is to fix the exchange rate in relation to a periodically
reassessed set percentage of expected EUR and USD net cash inflows arising
from international trading, by entering into foreign currency contracts to
sell a specified amount of EUR or USD 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 uses forward currency contract derivatives to meet this policy. 
 
The Group policy is to finance investments 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. 
 
Risk management arrangements 
 
The following forward contracts entered into in order to provide certainty in
GBP terms of 80% of the Group's expected net USD and EUR income are
outstanding at the period end: 
 
·      On 12 June 2014, the Group sold $3.0m to 31 March 2015 at a rate of
1.6785; and 
 
·      On 16 June 2014, the Group sold $3.5m to 29 May 2015 at a rate of
1.6911. 
 
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 and put options for non-controlling interest 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 liability of £315,000 for foreign
exchange trading derivatives at fair value through income or expense. In
addition the group has recognised a level 2 financial liability of £562,000
for an interest rate swap 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 
 
To provide shareholders with a better understanding of the trading performance
of the Group, Adjusted Profit before Tax has been calculated as Profit before
Tax after adding back: 
 
·      amortisation of intangible assets - publishing rights, titles and
benefits; 
 
·      impairment of goodwill; 
 
·      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. 
 
Adjusted Profit before Tax, Adjusted EBITA and Adjusted EBITDA reconcile to
profit on continuing activities before tax as follows: 
 
 Profit before tax                                                           3,708   3,668  8,592   
 Amortisation of intangible assets - publishing rights, titles and benefits  3,038   2,805  6,286   
 Unwinding of the discounts                                                  -       22     39      
 Share based payments                                                        634     429    924     
 Other adjusting items                                                       727     200    764     
 Adjusted Profit before Tax                                                  8,107   7,124  16,605  
 Net finance costs (excluding the unwinding of the discounts)                1,024   1,094  2,099   
 Adjusted operating profit ('Adjusted EBITA')                                9,131   8,218  18,704  
 Depreciation of property, plant and equipment                               588     484    1,025   
 Amortisation of intangible assets - computer software                       685     433    816     
 Adjusted EBITA before depreciation ('Adjusted EBITDA')                      10,404  9,135  20,545  
 
 
Adjusted EBITA before depreciation ('Adjusted EBITDA') 
 
10,404 
 
9,135 
 
20,545 
 
6.   Segmental information 
 
In accordance with IFRS 8 the Group's operating segments are based on the
figures reviewed by the Board, which represents the chief operating decision
maker. 
 
The Group now reports its results in four segments as this more accurately
reflects the way the Group is now being managed. There is no change to any of
the Group's accounting policies and there is no restatement of either revenues
or profitability, other than this revised segmentation by the four operating
segment headings. 
 
The Group's organisational structure reflects the different professional
markets to which it provides information, compliance and education. The four
new professional divisions (Risk & Compliance, Finance, Legal; and Insight)
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 and overseas. 
 
(a) Business segments 
 
 Risk & Compliance                                                           16,771  5,282    14,636  4,842    32,354  10,669   
 Finance                                                                     9,983   2,250    9,075   2,036    17,034  3,715    
 Legal                                                                       7,896   678      8,398   577      17,371  2,268    
 Insight                                                                     11,435  2,569    11,038  2,318    23,265  5,318    
                                                                             46,085  10,779   43,147  9,773    90,024  21,970   
 Unallocated central overheads                                               -       (1,648)  -       (1,555)  -       (3,266)  
                                                                             46,085  9,131    43,147  8,218    90,024  18,704   
 Amortisation of intangible assets - publishing rights, titles and benefits          (3,038)          (2,805)          (6,286)  
 Share-based payments                                                                (634)            (429)            (924)    
 Other adjusting items                                                               (727)            (200)            (764)    
 Net finance costs                                                                   (1,024)          (1,116)          (2,138)  
 Profit before tax                                                                   3,708            3,668            8,592    
 Taxation                                                                            (876)            (992)            (2,034)  
 Profit for the financial year                                                       2,832            2,676            6,558    
 
 
Taxation 
 
(876) 
 
(992) 
 
(2,034) 
 
Profit for the financial year 
 
2,832 
 
2,676 
 
6,558 
 
(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 ended 31 December 2014  Six months ended 31 December 2013  Twelve months  ended 30  
                                                                                                  June