REG - Wilmington PLC - Final Results <Origin Href="QuoteRef">WIL.L</Origin> - Part 2
15/09/2015 07:01
- Part 2: For the preceding part double click ID:nRSO0300Za
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 knowledge areas to which it
provides information, education and networking. The four new 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 36,416 11,856 32,354 10,669
Finance 18,711 4,382 17,034 3,715
Legal 16,250 2,201 17,371 2,268
Insight 23,710 5,390 23,265 5,318
95,087 23,829 90,024 21,970
Unallocated central overheads - (3,411) - (3,266)
95,087 20,418 90,024 18,704
Amortisation of intangible assets - publishing rights, titles and benefits (6,118) (6,286)
Share based payments (918) (924)
Other adjusting items (1,112) (764)
Net finance costs (1,974) (2,138)
Profit before tax 10,296 8,592
Taxation (2,429) (2,034)
Profit for the financial year 7,867 6,558
(2,034)
Profit for the financial year
7,867
6,558
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.
Contribution is defined as Adjusted EBITA excluding unallocated central
overheads.
(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:
UK 57,797 57,135
Europe (excluding the UK) 16,248 15,060
North America 10,683 10,467
Rest of the World 10,359 7,362
Total revenue 95,087 90,024
Total revenue
95,087
90,024
5. Net operating expenses
Cost of sales 27,992 26,918
Distribution and selling costs 17,679 16,650
Administrative expenses (excluding amortisation of intangible assets - computer software) 27,993 26,936
Amortisation of intangible assets - computer software 1,005 816
Net operating expenses before adjusting items 74,669 71,320
Other adjusting items 1,112 764
Net operating expenses 75,781 72,084
Net operating expenses
75,781
72,084
Other adjusting items are all classified as administration expenses.
6. Profit from continuing operations
Profit for the year from continuing operations is stated after
charging/(crediting):
Depreciation of property, plant and equipment 918 1,025
Amortisation of intangible assets - publishing rights, titles and benefits 6,118 6,286
Amortisation of intangible assets - computer software 1,005 816
(Profit)/loss on disposal of property, plant and equipment (21) 34
Rentals under operating leases 959 972
Other adjusting items (see below) 1,112 764
Share based payments 918 924
Foreign exchange loss/(profit) (including forward currency contracts) 282 (31)
Fees payable to the Auditors for the audit of the Company and consolidated financial statements 65 65
Fees payable to the Auditors and its associates for other services:
- The audit of the Company's subsidiaries pursuant to legislation 211 200
- Audit-related assurance services 24 17
- Tax compliance services 23 23
- Tax advisory services 116 49
- Tax advisory services
116
49
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 22 380
Business review, restructuring and rationalisation costs 992 275
Compensation for loss of office 500 -
(Decrease)/increase in liability for deferred consideration (402) 109
Other adjusting items (included in operating expenses) 1,112 764
Amortisation of intangible assets - publishing rights, titles and benefits 6,118 6,286
Share based payments 918 924
Total adjusting items (classified in operating profit) 8,148 7,974
Unwinding of discount on the provisions for the future purchase of non-controlling interests - 39
Total adjusting items (classified in profit before tax) 8,148 8,013
Total adjusting items (classified in profit before tax)
8,148
8,013
Business review costs relate to the in-depth review undertaken during the year
as Wilmington evolves its business to a knowledge-based model and structure.
The outcome of the business review included the development of a new corporate
website (the Wilmington hub), the re-organisation of staff, a rebranding and a
new vision that will help Wilmington create a more compelling offering through
a knowledge-based model. Restructuring and rationalisation costs comprise
primarily of redundancy and termination costs. Offsetting these costs is a
reduction in the estimated deferred consideration liability for NHiS.
Compensation for loss of office of £500,000 relates to Neil Smith, a former
Director, who left the business on 31 December 2014. In addition, a further
expense of £103,000 is included within share based payments for a compensation
for loss of office.
The tax effect of the other adjusting items, amortisation of intangible assets
- publishing rights, titles and benefits and share based payments is a
£1,698,000 (2014: £1,868,000) decrease to the statutory taxation charge in the
income statement.
7. Net finance costs
Finance costs comprise:
Interest payable on bank loans and overdrafts (including facility fees) (1,754) (1,931)
Amortisation of capitalised loan arrangement fees (220) (168)
Unwinding of the discount on the provisions for the future purchase of non-controlling interests and deferred consideration - (39)
(1,974) (2,138)
(1,974)
(2,138)
8. Taxation
Current tax:
UK corporation tax at current rates on profits for the year 2,392 2,036
Adjustments in respect of previous years 16 (64)
2,408 1,972
Foreign tax 895 1,045
Adjustment in respect of previous years 36 (47)
Total current tax 3,339 2,970
Deferred tax credit (715) (458)
Adjustments to deferred tax in respect of previous years - 11
Effect on deferred tax of change in corporation tax rate (195) (489)
Total deferred tax (910) (936)
Taxation 2,429 2,034
Taxation
2,429
2,034
Factors affecting the tax charge for the year:
The tax assessed is higher (2014: higher) than the average rate of corporation
tax in the UK of 20.75% (2014: 22.50%). The differences are explained below:
Profit before tax 10,296 8,592
Profit multiplied by the average rate of corporation tax in the year of 20.75% (2014: 22.50%) 2,136 1,933
Tax effects of:
Depreciation and amortisation in excess of capital allowances 192 523
Foreign tax rate differences 242 358
Adjustment in respect of previous years 52 (111)
Other items not subject to tax 2 (180)
Effect on deferred tax of change of corporation tax rate from 21% to 20% (2014: 23% to 21%) (195) (489)
Taxation 2,429 2,034
Taxation
2,429
2,034
On 2 July 2013, the UK corporation tax rate was reduced from 21% to 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 2015
have been calculated using a rate of 20%, giving rise to a reduction in the
net deferred tax liability of £195,000 (2014: £489,000). The Company's profits
for this accounting year are taxed at an effective rate of 20.75%.
9. Dividends
Amounts recognised as distributions to owners of the parent in the year:
Final dividends recognised as distributions in the year 3.7 3.5 3,082 2,974
Interim dividends recognised as distributions in the year 3.7 3.6 3,288 3,084
Total dividends paid 6,370 6,058
Final dividend proposed 4.0 3.7 3,458 3,170
Final dividend proposed
4.0
3.7
3,458
3,170
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 7,737 6,485
Add/(remove):
Amortisation of intangible assets - publishing rights, titles and benefits 6,118 6,286
Other adjusting items 1,112 764
Share based payments 918 924
Unwinding of the discount on the provisions for the future purchase of non-controlling interests deferred consideration - 39
Tax effect (1,698) (1,868)
Adjusted earnings for the purposes of adjusted earnings per share 14,187 12,630
Adjusted earnings for the purposes of adjusted earnings per share
14,187
12,630
Weighted average number of ordinary shares for the purposes of basic and adjusted earnings per share 86,389,533 85,408,893
Effect of dilutive potential ordinary shares:
Future exercise of share awards 1,154,643 1,950,638
Deferred consideration to be settled by equity 107,059 372,855
Weighted average number of ordinary shares for the purposes of diluted and adjusted diluted earnings per share 87,651,235 87,732,386
Basic earnings per share 8.96p 7.59p
Diluted earnings per share 8.83p 7.39p
Adjusted basic earnings per share ('Adjusted Earnings Per Share') 16.42p 14.79p
Adjusted diluted earnings per share 16.19p 14.40p
Adjusted diluted earnings per share
16.19p
14.40p
11. Non-current asset held for sale
The assets and liabilities relating to The Knowledge, KFTV and Production
Intelligence (Media brands that form part of the Insight segment) have been
presented as held for sale following approval of the group's management in
June 2015 to sell. The completion date of the disposal was 31 July 2015. The
assets and liabilities held for sale are included at their fair value less
costs to sell. An accelerated amortisation charge of £175,000 has been
recorded as part of the exercise to remeasure associated intangible assets -
publishing rights, titles and benefits to fair value.
a) Assets of disposal group classified as held for sale
Year ended30 June2015 £'000 Year ended30 June2014£'000
Goodwill 100 -
Intangible assets 472 -
Trade and other receivables 323 -
Total 895 -
b) Liabilities of disposal group classified as held for sale
Year ended30 June2015 £'000 Year ended30 June2014£'000
Subscriptions and deferred revenue 423 -
Accruals and other payables 22 -
Total 445 -
12. Goodwill
Cost £'000
At 1 July 2013 80,532
Additions 60
Acquisitions 3,965
Exchange translation differences (443)
Movement in offset of provisions for the future purchase of non-controlling interests (9)
At 1 July 2014 84,105
Additions -
Assets held for sale (385)
Exchange translation differences 308
At 30 June 2015 84,028
Accumulated impairment
At 1 July 2013 and 1 July 2014 7,250
Asset held for sale (285)
At 1 July 2014 and 30 June 2015 6,965
Net book amount
At 30 June 2015 77,063
At 30 June 2014 76,855
At 1 July 2013 73,282
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. These pre-tax 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% (2014: 12.3%) across all CGUs in the UK except
for the Healthcare, Legal and Business Intelligence CGU which had a pre-tax
discount rate of 13.3% (2014: 13.3%) to reflect the greater market challenges
and risks. A pre-tax discount rate of 13.5% (2014: 12.3%) has been used for
Compliance Week that operates in North America. 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, Insight and Compliance Week as the Directors believe that
the risks are the same for each other 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% (2014: 2.0%).
Managements impairment calculations based upon the above assumptions show
significant headroom with the exception of Compliance Week. For Compliance
Week, the value in use exceeds the carrying value by 10%. The impairment
review of Compliance Week is sensitive to a reasonable possible change in the
key assumptions used; most notably the discount rate, the long-term growth
rate and projected operating cash flows. The value in use exceeds the carrying
value unless any of the assumptions are changed as follows:
· A decrease in the projected operating cash flows of 9% in each of the
next three years; or
· An increase in the pre-tax discount from 13.5% to 14.7%; or
· An decrease in the long-term rate from 2.0% to 0.6%.
Goodwill is allocated to significant CGUs as follows. A CGU is considered to
be significant if the goodwill allocated to it is greater than 10% of the
total goodwill net book value.
ICT & Legal 38,625 38,625
Axco and Pendragon 11,150 11,150
Others 27,288 27,080
77,063 76,855
27,080
77,063
76,855
13. Intangible assets
Group
Publishing rights, titles and benefits£'000 Computer software£'000 Total£'000
Cost
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 1 July 2014 65,882 5,862 71,744
Asset held for sale (2,492) (205) (2,697)
Reclassification between categories - (329) (329)
Additions - 1,738 1,738
Acquisitions 380 - 380
Exchange translation differences (62) (3) (65)
At 30 June 2015 63,708 7,063 70,771
Accumulated amortisation
At 1 July 2013 35,258 3,640 38,898
Charge for year 6,286 816 7,102
Disposals (3,002) - (3,002)
At 1 July 2014 38,542 4,456 42,998
Asset held for sale (2,030) (195) (2,225)
Reclassification between categories - (871) (871)
Charge for year 6,118 1,005 7,123
Exchange translation differences 124 (14) 110
At 30 June 2015 42,754 4,381 47,135
Net book amount
At 30 June 2015 20,954 2,682 23,636
At 30 June 2014 27,340 1,406 28,746
At 1 July 2013 30,204 1,289 31,493
Following an exercise to allocate capital resource to each new division
management reclassified the cost and accumulated depreciation included within
intangible assets - computer software and property, plant and equipment
certain amounts between categories. The reclassification did not result in an
adjustment to the income statement or any change to the overall aggregate net
book value of intangible assets - computer software and property, plant and
equipment.
Included within computer software are assets under construction with a net
book amount of £572k (2014: £251k).
14. Property, plant and equipment
Cost
At 1 July 2013 6,106 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 1 July 2014 6,111 2,817 3,771 482 13,181
Reclassification between categories (161) 729 (236) (3) 329
Additions - 392 243 194 829
Disposals - (10) (3) (178) (191)
Exchange translation differences - (19) (32) - (51)
At 30 June 2015 5,950 3,909 3,743 495 14,097
Accumulated depreciation
At 1 July 2013 2,407 1,731 2,961 190 7,289
Charge for the year 202 306 415 102 1,025
Disposals (54) (82) (635) (39) (810)
Exchange translation differences (5) (11) (34) - (50)
At 1 July 2014 2,550 1,944 2,707 253 7,454
Reclassification between categories (58) 459 472 (2) 871
Charge for the year 229 339 246 104 918
Disposals - (10) (1) (136) (147)
Exchange translation differences - 190 (30) - 160
At 30 June 2015 2,721 2,922 3,394 219 9,256
Net book amount
At 30 June 2015 3,229 987 349 276 4,841
At 30 June 2014 3,561 873 1,064 229 5,727
At 1 July 2013 3,699 1,034 892 284 5,909
At 1 July 2013
3,699
1,034
892
284
5,909
Included in land and buildings is £970,000 (2014: £970,000) of non-depreciated
land.
Depreciation of property, plant and equipment is charged to net operating
expenses within the income statement.
Following an exercise to allocate capital resource to each new division
management reclassified the cost and accumulated depreciation included within
intangible assets - computer software and property, plant and equipment
certain amounts between categories. The reclassification did not result in an
adjustment to the income statement or any change to the overall aggregate net
book value of intangible assets - computer software and property, plant and
equipment.
15. Trade and other receivables
Trade receivables 18,518 17,917
Prepayments and other receivables 3,178 4,472
21,696 22,389
3,178
4,472
21,696
22,389
16. Derivative financial assets and liabilities
Group
Current assets 30 June2015£'000 30 June2014£'000
Forward currency contracts 338 37
Current liabilities
Interest rate swap - maturing in November 2014 - (78)
Non-current liabilities
Interest rate swap - maturing in November 2016 (423) (490)
17. Trade and other payables
Group
30 June2015£'000 30 June2014£'000
Trade and other payables 20,410 21,044
Subscriptions and deferred revenue 19,165 19,591
39,575 40,635
18. Borrowings
Bank overdrafts 496 642
Bank loans 37,306 -
Capitalised loan arrangement fees (147) -
37,655 642
Non-current liability
Bank loans - 38,041
Capitalised loan arrangement fees - (368)
Bank loans net of loan arrangement fees - 37,673
-
(368)
Bank loans net of loan arrangement fees
-
37,673
In accordance with relevant accounting standards bank loans due to expire in
February 2016 have been reclassified to current liabilities. On 1 July 2015
the Group extended its £65m revolving credit facility with Barclays Bank PLC,
HSBC Bank plc and The Royal Bank of Scotland plc through to 1 July 2020. The
terms of the old and the extended facility are included below.
Old facility that expired on 1 July 2015:
The Group had an unsecured committed bank facility of £65.0m (2014: £65.0m) to
February 2016. The facility comprised of a revolving credit facility of £60.0m
(2014: £60.0m) and an overdraft facility across the Group of £5.0m (2014:
£5.0m). At 30 June 2015, £37.3m of the revolving credit facility was drawn
down (2014: £38.0m). Interest was charged on the amount drawn down at between
2.00 and 2.75 per cent above LIBOR depending upon leverage, and drawdowns were
made for periods of up to six months in duration. Interest was charged on the
drawn element of the overdraft facility at 2.00 and 2.55 per cent (the
'Margin') above the Barclays bank base rate depending upon leverage. The Group
also paid a fee of 40 per cent of the applicable Margin on the undrawn element
of the credit facility and the undrawn overdraft. The Group has complied at
all times with the covenant requirements of the bank facility arrangement.
Extended facility that is effective from 1 July 2015 and expires on 1 July
2020:
The Group has an unsecured committed bank facility of £65.0m to 1 July 2020.
The facility comprised of a revolving credit facility of £60.0m and an
overdraft facility across the Group of £5.0m. In addition, the extended
facility also provides for an accordion option whereby the unsecured committed
bank facility may be increased by up to £35m to a total commitment of £100m 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.
19. Non-controlling interests
At 1 July 2013 145
Profit for the year 73
Dividends paid (26)
Movement in offset of provisions for the future purchase of non-controlling interests 43
At 30 June 2014 235
Profit for the year 130
Dividends paid (88)
At 30 June 2015 277
At 30 June 2015
277
20. Cash generated from operations
Profit from continuing operations before income tax 10,296 8,592
Other adjusting items (included in operating expenses) 1,112 764
Depreciation of property, plant and equipment 918 1,025
Amortisation of intangible assets 7,123 7,102
(Profit)/loss on disposal of property, plant and equipment (21) 34
Share based payments (including social security costs) 918 924
Net finance costs 1,974 2,138
Operating cash flows before movements in working capital 22,320 20,579
Decrease/(increase) in trade and other receivables 371 (452)
(Decrease)/increase in trade and other payables (811) 77
Cash generated from operations before adjusting items 21,880 20,204
(811)
77
Cash generated from operations before adjusting items
21,880
20,204
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 20,418 18,704
Amortisation of intangible assets - computer software 1,005 816
Depreciation of property, plant and equipment 918 1,025
(Profit)/loss on disposal of property, plant and equipment (21) 34
Operating cash before movement in working capital 22,320 20,579
Net working capital movement (440) (375)
Funds from operations before adjusting items 21,880 20,204
Cash conversion 107% 108%
Free cash flows:
Operating cash before movement in working capital 22,320 20,579
(Profit)/loss on disposal of property, plant and equipment (22) 34
Net working capital movement (440) (375)
Net finance costs paid (1,883) (1,863)
Tax paid (3,680) (3,285)
Purchase of property, plant and equipment (829) (883)
Purchase of intangible assets (1,739) (955)
Free cash flows 13,727 13,252
Free cash flows
13,727
13,252
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Wilmington
See all newsREG - Wilmington PLC - Proposed acquisition of Conversia
AnnouncementREG - Wilmington PLC - Director Declaration
AnnouncementREG - Wilmington PLC - Appointment of Joint Corporate Broker
AnnouncementREG - Wilmington PLC - Statement in relation to a potential acquisition
AnnouncementREG - Wilmington PLC - Trading Statement
Announcement