REG - Wilmington PLC - Final Results <Origin Href="QuoteRef">WIL.L</Origin> - Part 2
14/09/2016 07:05
- Part 2: For the preceding part double click ID:nRSN7510Ja
146,134 138,225
Current liabilities
Trade and other payables 17 (43,896) (39,575)
Current tax liabilities (1,553) (793)
Deferred consideration - cash settled (1,272) -
Derivative financial instruments 16 (1,013) -
Borrowings 18 (2,204) (37,655)
(49,938) (78,023)
Liabilities of disposal group held for sale 11 - (445)
(49,938) (78,468)
Non-current liabilities
Borrowings 18 (46,697) -
Deferred consideration - cash settled (1,370) (273)
Derivative financial instruments 16 (1,037) (423)
Deferred tax liabilities (3,989) (3,762)
Provisions for future purchase of non-controlling interests (100) (100)
(53,193) (4,558)
Total liabilities (103,131) (83,026)
Net assets 43,003 55,199
Equity
Share capital 4,349 4,325
Share premium 45,225 45,225
Treasury shares (96) (96)
Share based payments reserve 886 1,052
Translation reserve 2,602 (364)
Retained earnings (10,116) 4,780
Equity attributable to owners of the parent 42,850 54,922
Non-controlling interests 19 153 277
Total equity 43,003 55,199
19
153
277
Total equity
43,003
55,199
Statements of Changes in Equity for the year ended 30 June 2016
Group
At 1 July 2014 48,658 911 (942) 3,782 52,409 235 52,644
Profit for the year - - - 7,737 7,737 130 7,867
Other comprehensive income for the year - - 578 (149) 429 - 429
48,658 911 (364) 11,370 60,575 365 60,940
Dividends - - - (6,370) (6,370) (88) (6,458)
Issue of share capital 14 - - (20) (6) - (6)
Share based payments - 752 - - 752 - 752
Tax on share based payments - - - (27) (27) - (27)
Reissue of treasury shares 782 (611) - (173) (2) - (2)
At 30 June 2015 49,454 1,052 (364) 4,780 54,922 277 55,199
Loss for the year - - - (6,418) (6,418) 143 (6,275)
Other comprehensive income for the year - - 2,966 (2,096) 870 - 870
49,454 1,052 2,602 (3,734) 49,374 420 49,794
Dividends - - - (6,782) (6,782) (141) (6,923)
Issue of share capital 24 (636) - 612 - - -
Share based payments - 470 - - 470 - 470
Tax on share based payments - - - (4) (4) - (4)
Movements in non-controlling interests - - - (208) (208) (126) (334)
At 30 June 2016 49,478 886 2,602 (10,116) 42,850 153 43,003
At 30 June 2016
49,478
886
2,602
(10,116)
42,850
153
43,003
Cash Flow Statements for the year ended 30 June 2016
Cash flows from operating activities
Cash generated from operations before adjusting items 20 23,872 21,880
Cash flows for adjusting items - operating activities (186) (1,363)
Cash flows for adjusting items - share based payments (180) (230)
Cash generated from operations 23,506 20,287
Interest paid (1,502) (1,883)
Tax paid (3,197) (3,680)
Net cash generated from operating activities 18,807 14,724
Cash flows from investing activities
Purchase of businesses net of cash acquired (13,912) (173)
Proceeds from disposal group held for sale 343 -
Deferred consideration paid (330) (343)
Purchase of non-controlling interests (334) -
Cash flows for adjusting items - investing activities (540) -
Purchase of property, plant and equipment (641) (829)
Proceeds from disposal of property, plant and equipment 11 65
Purchase of intangible assets (870) (1,738)
Net cash used in investing activities (16,273) (3,018)
Cash flows from financing activities
Dividends paid to owners of the parent (6,782) (6,370)
Dividends paid to non-controlling interests (141) (88)
Share issuance costs (5) (6)
Cash flows for adjusting items - financing activities (631) -
Increase/(decrease) in bank loans 7,696 (1,000)
Net cash generated/(used) in financing activities 137 (7,464)
Net increase in cash and cash equivalents, net of bank overdrafts 2,671 4,242
Cash and cash equivalents, net of bank overdrafts at beginning of the year 8,698 4,378
Exchange gains on cash and cash equivalents 1,069 78
Cash and cash equivalents, net of bank overdrafts at end of the year 12,438 8,698
1,069
78
Cash and cash equivalents, net of bank overdrafts at end of the year
12,438
8,698
Reconciliation of net debt
Cash and cash equivalents at beginning of the year 9,194 5,020
Bank overdrafts at beginning of the year (496) (642)
Bank loans at beginning of the year 18 (37,306) (38,041)
Net debt at beginning of the year (28,608) (33,663)
Net increase/(decrease) in cash and cash equivalents (net of bank overdrafts) 3,740 4,320
Net (drawdown)/repayment in bank loans (7,696) 1,000
Exchange loss on bank loans (2,124) (265)
Cash and cash equivalents at end of the year 14,642 9,194
Bank overdrafts at end of the year (2,204) (496)
Bank loans at end of the year 18 (47,126) (37,306)
Net debt at end of the year (34,688) (28,608)
Notes to the Financial Statements
1. Nature of the financial statements
The following financial information does not amount to full financial
statements within the meaning of Section 434 of Companies Act 2006. The
financial information has been extracted from the Group's Annual Report and
Financial Statements for the year ended 30 June 2016 on which an unqualified
report has been made by the Company's auditors.
Financial statements for the year ended 30 June 2015 have been delivered to
the Registrar of Companies; the report of the auditors on those accounts was
unqualified and did not contain a statement under Section 498 of the Companies
Act 2006. The 2016 statutory accounts will be delivered in due course.
Copies of the Annual Report and Financial Statements will be posted to
shareholders shortly and will be available from the Company's registered
office at 6-14 Underwood St, London, N1 7JQ.
2. Statement of Accounting Policies
The preliminary announcement for the year ended 30 June 2016 has been prepared
in accordance with International Financial Reporting Standards as adopted by
the European Union. The accounting policies applied in this preliminary
announcement are consistent with those reported in the Group's annual
financial statements for the year ended 30 June 2015 along with new standards
and interpretations which became mandatory for the financial year.
3. Measures of profit
To provide shareholders with a better understanding of the trading performance
of the Group, Adjusted EBITA has been calculated as Profit before Tax after
adding back:
· amortisation of intangible assets - publishing rights, titles and
benefits;
· impairment of goodwill;
· share based payments;
· adjusting items; and
· net finance costs.
Adjusted EBITA and Adjusted EBITDA reconcile to profit on continuing
activities before tax as follows:
(Loss)/profit before tax (3,434) 10,296
Amortisation of intangible assets - publishing rights, titles and benefits 5,545 6,118
Impairment of goodwill 15,659 -
Share based payments (including social security costs) 563 918
Adjusting items (included in operating expenses) 2,352 1,112
Net finance costs 1,920 1,974
Adjusted operating profit ('Adjusted EBITA') 22,605 20,418
Depreciation of property, plant and equipment 911 918
Amortisation of intangible assets - computer software 1,050 1,005
Adjusted EBITA before depreciation ('Adjusted EBITDA') 24,566 22,341
Adjusted EBITA before depreciation ('Adjusted EBITDA')
24,566
22,341
Adjusted profit before tax reconciles to profit on continuing activities
before tax as follows:
(Loss)/profit before tax (3,434) 10,296
Amortisation of intangible assets - publishing rights, titles and benefits 5,545 6,118
Impairment of goodwill 15,659 -
Share based payments 563 918
Adjusting items (included in operating expenses) 2,352 1,112
Adjusting items (included in net finance costs) 225 -
Adjusted profit before tax 20,910 18,444
Adjusted profit before tax
20,910
18,444
4. Segmental information
In accordance with IFRS 8 the Group's operating segments are based on the
operating results reviewed by the Board, which represents the chief operating
decision maker. The Group reports its results in four segments as this
accurately reflects the way the Group is managed.
The Group's organisational structure reflects the main communities to which it
provides information, education and networking. The four 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, North America, Europe (excluding the UK) and the rest of the
World.
(a) Business segments
Risk & Compliance 38,802 12,678 36,416 11,856
Finance 21,219 4,473 18,711 4,382
Legal 15,524 1,686 16,250 2,201
Insight 30,179 7,316 23,710 5,390
105,724 26,153 95,087 23,829
Unallocated central overheads - (3,548) - (3,411)
105,724 22,605 95,087 20,418
Amortisation of intangible assets - publishing rights, titles and benefits (5,545) (6,118)
Impairment of goodwill (15,659) -
Share based payments (563) (918)
Adjusting items (included in operating expenses) (2,352) (1,112)
Net finance costs (1,920) (1,974)
(Loss)/profit before tax (3,434) 10,296
Taxation (2,841) (2,429)
(Loss)/profit for the financial year (6,275) 7,867
(2,429)
(Loss)/profit for the financial year
(6,275)
7,867
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.
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 61,321 57,797
Europe (excluding the UK) 15,859 16,248
North America 19,030 10,683
Rest of the World 9,514 10,359
Total revenue 105,724 95,087
Total revenue
105,724
95,087
5. Net operating expenses
Cost of sales 30,455 27,992
Distribution and selling costs 19,623 17,679
Administrative expenses 31,991 27,993
Amortisation of intangible assets - computer software 1,050 1,005
Net operating expenses before adjusting items 83,119 74,669
Adjusting items (included in operating expenses) 2,352 1,112
Net operating expenses 85,471 75,781
Net operating expenses
85,471
75,781
6. Profit from continuing operations
a) Profit for the year from continuing operations is stated after
charging/(crediting):
Depreciation of property, plant and equipment 911 918
Amortisation of intangible assets - publishing rights, titles and benefits 5,545 6,118
Amortisation of intangible assets - computer software 1,050 1,005
Profit on disposal of property, plant and equipment (4) (21)
Rentals under operating leases 1,110 959
Adjusting items (included in operating expenses) 2,352 1,112
Impairment of goodwill 15,659 -
Share based payments (including social security costs) 563 918
Foreign exchange loss (including forward currency contracts) 202 282
Fees payable to the Auditors for the audit of the Company and consolidated financial statements 110 65
Fees payable to the Auditors and its associates for other services:
- The audit of the Company's subsidiaries pursuant to legislation 280 211
- Audit-related assurance services 41 24
- Tax compliance services 54 23
- Tax advisory services 100 116
- Tax advisory services
100
116
b) 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:
Increase in liability for deferred consideration relating to the purchase of FRA 1,019 -
Increase/(decrease) in liability for deferred consideration relating to the purchase of NHiS 63 (402)
Costs written off relating to both successful and aborted acquisitions 585 22
1,667 (380)
Legal claim costs (net of settlement received) 73 -
Restructuring and rationalisation costs 612 992
Compensation for loss of office - 500
Other adjusting items (included in operating expenses) 2,352 1,112
Costs relating to the extension of the loan facility 225 -
Amortisation of intangible assets - publishing rights, titles and benefits 5,545 6,118
Share based payments 563 918
Impairment of goodwill 15,659 -
Total adjusting items (classified in profit before tax) 24,344 8,148
Total adjusting items (classified in profit before tax)
24,344
8,148
The increase in the liability for deferred consideration relate to Financial
Research Associates ('FRA') and NHiS. Successful and aborted acquisitions
relate to the acquisition of FRA, JMH Publishing (trading as Wellards),
Evantage Consulting and other aborted acquisitions.
Legal claim costs represent the net cost of legal expenses incurred, inter
alia, to enforce certain non-compete obligations net of an agreed repayment
from the third party being pursued. Restructuring and rationalisation costs
comprise primarily of redundancy and property costs following the Group's
decision to relocate part of the finance function from its head offices in
central London to our existing freehold premises in Basildon, Essex.
7. Net finance costs
Finance costs comprise:
Interest payable on bank loans and overdrafts 1,564 1,754
Amortisation of capitalised loan arrangement fees 131 220
1,695 1,974
Adjusting items - extension of loan facility costs 225 -
1,920 1,974
1,920
1,974
The extension of loan facility costs of £225,000 comprises £147,000 of old
capitalised loan arrangement fees written off and £78,000 of legal and
professional costs connected to the extension.
8. Taxation
Current tax:
UK corporation tax at current rates on UK profits for the year 2,520 2,392
Adjustments in respect of previous years 125 16
2,645 2,408
Foreign tax 1,272 895
Adjustment in respect of previous years 73 36
Total current tax 3,990 3,339
Deferred tax credit (971) (715)
Effect on deferred tax of change in corporation tax rate (178) (195)
Total deferred tax (1,149) (910)
Taxation 2,841 2,429
Taxation
2,841
2,429
Factors affecting the tax charge for the year:
The effective tax rate is higher (2015: higher) than the average rate of
corporation tax in the UK of 20.00% (2015: 20.75%). The differences are
explained below:
(Loss)/profit before tax (3,434) 10,296
Profit multiplied by the average rate of corporation tax in the year of 20.00% (2015: 20.75%) (687) 2,136
Tax effects of:
Depreciation and amortisation in excess of capital allowances 234 192
Impairment of goodwill not deductible for tax purposes 3,132 -
Foreign tax rate differences 233 242
Adjustment in respect of previous years 198 52
Other items not subject to tax (91) 2
Effect on deferred tax of change of corporation tax rate (178) (195)
Taxation 2,841 2,429
Taxation
2,841
2,429
On 26 October 2015, the UK corporation tax rate was reduced from 20% to 19%
from 1 April 2017 and from 19% to 18% from 1 April 2020. This change has been
substantively enacted at the balance sheet date and, therefore, is included in
these financial statements. 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 2016 have been calculated using the above
rates giving rise to a reduction in the net deferred tax liability of £178,000
(2015: £195,000). The Company's profits for this accounting year are taxed at
an effective rate of 20.00%.
Included in other comprehensive income are tax credits of £155,000 and
£369,000 relating to the interest rate swaps and net investment hedges
respectively.
9. Dividends
Amounts recognised as distributions to owners of the parent in the year:
Final dividends recognised as distributions in the year 4.0 3.7 3,478 3,082
Interim dividends recognised as distributions in the year 3.8 3.7 3,304 3,288
Total dividends paid 6,782 6,370
Final dividend proposed 4.3 4.0 3,738 3,458
Final dividend proposed
4.3
4.0
3,738
3,458
10. Earnings per share
Adjusted earnings per share has been calculated using adjusted earnings
calculated as (loss)/profit after taxation and non-controlling interests but
before:
· amortisation of intangible assets - publishing rights, titles and
benefits;
· impairment of goodwill;
· share based payments;
· adjusting items included in operating expenses; and
· adjusting items included in net finance costs.
The calculation of the basic and diluted earnings per share is based on the
following data:
(Loss)/earnings from continuing operations for the purpose of basic earnings per share (6,418) 7,737
Add/(remove):
Amortisation of intangible assets - publishing rights, titles and benefits 5,545 6,118
Impairment of goodwill 15,659 -
Adjusting items (included in operating expenses) 2,352 1,112
Adjusting items (included in net finance costs) 225 -
Share based payments 563 918
Tax effect of adjustments above (1,691) (1,698)
Adjusted earnings for the purposes of adjusted earnings per share 16,235 14,187
Adjusted earnings for the purposes of adjusted earnings per share
16,235
14,187
Weighted average number of ordinary shares for the purposes of basic and adjusted earnings per share 86,846,236 86,389,533
Effect of dilutive potential ordinary shares:
Future exercise of share awards and options 772,980 1,154,643
Deferred consideration to be settled by equity - 107,059
Weighted average number of ordinary shares for the purposes of diluted and adjusted diluted earnings per share 87,619,216 87,651,235
Basic (loss)/earnings per share (7.39p) 8.96p
Diluted (loss)/earnings per share (7.39p) 8.83p
Adjusted basic earnings per share ('Adjusted Earnings Per Share') 18.69p 16.42p
Adjusted diluted earnings per share 18.53p 16.19p
Adjusted diluted earnings per share
18.53p
16.19p
On 8 January 2016, Wilmington settled the final deferred consideration owing
to certain of the Sellers of NHiS. The settlement was made in cash in full and
no further obligation exists.
11. Acquisitions and disposals
All below acquisitions have been financed out of the extended £65.0m
multi-currency revolving credit facility.
a) Acquisitions - FRA - July 2015
On 6 July 2015 Wilmington FRA Inc. acquired the trading assets and the
assumption of certain liabilities of Financial Research Associates ('FRA') a
leading US conference and networking provider of specialist events in
healthcare and finance from Financial Research Associates LLC (the 'Seller').
FRA was acquired for initial consideration of $13,034,683 (£8,376,938) in
cash. Subsequently, a further payment of $142,923 (£91,852) was made to the
Sellers in respect of a final working capital adjustment.
Initially, deferred consideration totalling up to a maximum of $3,000,000 was
payable in cash to the Seller in equal instalments on 1 July 2016 and 1 July
2017 conditional upon the continued employment of the management team.
Following the resignation of the FRA Chief Executive Officer in May 2016
Wilmington have agreed with the Sellers that only $1,500,000 will be payable
in cash to the Seller on 1 July 2016. An expense of $1,500,000 (£1,019,000)
has been recognised in the income statement as an adjusting item - deferred
consideration (note 6b).
Further contingent consideration of up to $4,600,000 is potentially payable in
cash subject to FRA achieving challenging revenue and profit targets over the
two financial years ending 30 June 2016 and 30 June 2017.
Acquisition related costs of £166,000 have been expensed as an adjusting item
in the income statement (see note 6b).
The acquisition of FRA is consistent with Wilmington's strategy of acquiring
complementary businesses with high repeat revenues and strong, cash generative
income streams in the Group's key markets. FRA's business provides Wilmington
with additional networking expertise and will support the Insight and Finance
divisions.
Details of the fair value of the purchase consideration, the net assets
acquired and goodwill for the acquisition are as follows:
£'000
Purchase consideration:
Initial cash paid 8,377
Final working capital adjustment 92
Total consideration 8,469
The provisional fair values of assets and liabilities recognised as a result
of this acquisition are as follows:
£'000
Intangible assets - Customer relationships - Delegates 672
Intangible assets - Customer relationships - Sponsors 1,336
Intangible assets - Brand 862
Intangible assets - Tax amortisation benefit 1,848
Total intangible assets (see note 13) 4,718
Trade and other receivables (net of allowances) 353
Trade and other payables (193)
Subscriptions and deferred revenue (1,127)
Net identifiable assets acquired 3,751
Goodwill (see note 12) 4,718
Net assets acquired 8,469
The goodwill is attributable to FRA's strong position and profitability in
trading in specialist events in the US healthcare and finance sectors and
synergies to arise with other Wilmington businesses in the US and in the
Insight and Finance divisions after the acquisition. The estimated useful
economic life of the intangibles is as follows:
Intangible assets - Customer relationships - Delegates 5 years
Intangible assets - Customer relationships - Sponsors 10 years
Intangible assets - Brand 5 years
Intangible assets - Tax amortisation benefit 15 years
The acquired business contributed revenues of $11,941,357 (£8,168,822) and
contribution of $2,180,219 (£1,556,807) to the Group for the period from the
date of acquisition to 30 June 2016 which equates to a full years revenue and
contribution had it been acquired on 1 July 2015.
11. Acquisitions and disposals (continued)
b) Disposals - Media Brands - July 2015
The assets and liabilities relating to the Knowledge, KFTV and Production
Intelligence (Media Brands that formed part of the Insight division) were
disposed of on 31 July 2015 for sale proceeds of £343,000 (net of a working
capital adjustment). The assets and liabilities of the Media Brands were held
for sale at 30 June 2015.
c) Non-controlling interests acquired - October 2015 and December 2015
In October 2015 the Group purchased the remaining 20% shareholding in Mercia
Ireland Limited and Mercia NI Limited for £75,000, making them wholly owned
subsidiaries. In December 2015 the Group purchased an additional 8.75%
shareholding in Wilmington Millennium Limited for £259,000 taking the Group's
holding to 91.25%.
d) Deferred consideration settlement - NHiS - January 2016
On 8 January 2016, Wilmington settled the final deferred consideration owing
of £330,000 paid in cash.
e) Acquisition - JMH Publishing (trading as 'Wellards') - January 2016
On 18 January 2016 Wilmington Healthcare Limited acquired the entire issued
share capital of JMH Publishing Limited ('JMH'), a leading UK provider of
specialist and accredited online education for the healthcare industry, which
owns the respected trading brand 'Wellards' from Assetbond Limited and certain
individuals (the 'Sellers'). JMH was acquired for initial consideration of
£4,200,000 paid in cash. Subsequently, a further payment of £658,534 was made
to the Sellers in respect of a final working capital adjustment.
Acquisition related costs of £170,719 have been expensed as an adjusting item
in the income statement (see note 6b).
JMH will provide education capability to our Insight division and the
acquisition is consistent with Wilmington's strategy of acquiring
complementary businesses with high repeat revenues (70% of its revenue is
subscription based with over 90% renewal rates) and strong, cash generative
income streams in Wilmington's key communities.
Details of the fair value of the purchase consideration, the net assets
acquired and goodwill for the acquisition are as follows:
£'000
Purchase consideration:
Initial cash paid 4,200
Final working capital adjustment 659
Total consideration 4,859
The provisional fair values of assets and liabilities recognised as a result
of this acquisition are as follows:
£'000
Intangible assets - Customer relationships and brand 3,094
Intangible assets - Accreditation 275
Total intangible assets (see note 13) 3,369
Property, plant & equipment 35
Trade and other receivables (net of allowances) 590
Cash and cash equivalents 1,436
Trade and other payables (200)
Current tax liabilities (178)
Subscriptions and deferred revenue (984)
Deferred tax liabilities (674)
Net identifiable assets acquired 3,394
Goodwill (see note 12) 1,465
Net assets acquired 4,859
The estimated useful economic life of the intangibles is as follows:
Intangible assets - Customer relationships and brand 10 years
Intangible assets - Accreditation 10 years
The acquired business contributed revenues of £975,203 and contribution of
£341,611 to the Group for the period from the date of acquisition to 30 June
2016. Had Wellards been consolidated from 1 June 2015 the consolidated Income
Statement would include pro-forma revenue of £1,457,124 and contribution of
£514,117.
11. Acquisitions and disposals (continued)
f) Acquisition - Evantage Consulting - March 2016
On 24 March 2016 NHIS Limited acquired the entire issued share capital of
Evantage Consulting Limited ('Evantage'), a leading UK based provider of
specialist Healthcare and Pharmaceutical Analytics solutions. Evantage was
acquired for initial consideration of £1,400,000 paid in cash. Subsequently, a
further payment of £1,296,746 was made to the Sellers in respect of a final
working capital adjustment.
Deferred consideration of up to £4,600,000 is payable contingent on Evantage's
future performance for the years ended 31 October 2016, 2017, 2018 and 2019
and will be paid in cash in four annual instalments. Management has calculated
the expected value of these future payments to be £1,524,000 which has been
recognised in the total consideration. Any future movements of this contingent
consideration will be charged to the income statement as an adjusting item.
Acquisition related costs of £55,000 have been expensed as an adjusting item
in the income statement (see note 6b).
Wilmington, through its healthcare analytics subsidiary NHiS, the provider of
business intelligence and data analysis to the pharmaceutical industry has
partnered with Evantage for over five years. The acquisition will sit within
Wilmington's Insight division and will enhance its healthcare analytics offer
to UK and overseas clients, areas in which Wilmington has been seeing strong
growth. Evantage brings specialist knowledge and experience in the analysis of
healthcare admissions, pathway and treatment data as well as industry-leading
competence in customer engagement and optimisation solutions for the Life
Sciences sector.
Details of the fair value of the purchase consideration, the net assets
acquired and goodwill for the acquisition are as follows:
£'000
Purchase consideration:
Initial cash paid 1,400
Final working capital adjustment 1,297
Deferred consideration - cash settled 1,524
Total consideration 4,221
The provisional fair values of assets and liabilities recognised as a result
of this acquisition are as follows:
£'000
Intangible assets - Database 1,695
Total intangible assets (see note 13) 1,695
Property, plant & equipment 28
Trade and other receivables (net of allowances) 820
Cash and cash equivalents 677
Trade and other payables (165)
Current tax liabilities (270)
Deferred tax liabilities (339)
Net identifiable assets acquired 2,446
Goodwill (see note 12) 1,775
Net assets acquired 4,221
The estimated useful economic life of the intangibles is as follows:
Intangible assets - Database 5 years
The acquired business contributed revenues of £277,901 and contribution of
£164,067 to the Group for the period from the date of acquisition to 30 June
2016. Had Evantage been consolidated from 1 June 2015 the consolidated Income
Statement would show pro-forma revenue of £1,069,151 and contribution of
£685,288.
12. Goodwill
Cost £'000
At 1 July 2014 84,105
Assets held for sale (385)
Exchange translation differences 308
At 1 July 2015 84,028
Additions 7,958
Exchange translation differences 1,401
At 30 June 2016 93,387
Accumulated impairment
At 1 July 2014 7,250
Asset held for sale (285)
At 1 July 2015 6,965
Impairment 15,659
At 30 June 2016 22,624
Net book amount
At 30 June 2016 70,763
At 30 June 2015 77,063
At 1 July 2014 76,855
The Group tests goodwill annually for impairment. The recoverable amount of
the goodwill is determined as the higher of the value in use calculation or
fair value less cost of disposal for each cash generating unit ('CGU'). The
value in use 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% (2015: 12.3%) across all CGUs in the UK except
for the CLT and Ark CGU which had a pre-tax discount rate of 13.3% (2015:
13.3%) to reflect the greater market challenges and risks. A pre-tax discount
rate of 13.5% (2015: 13.5%) has been used for Compliance Week and FRA that
both operate 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 CLT and Ark,
Compliance Week and FRA 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% (2015:
2.0%).
Managements impairment calculations based upon the above assumptions show
significant headroom with the exception of Ark, CLT and Compliance Week.
Impairment of Ark and CLT
An impairment provision of £15,659k was recognised in the year relating to
goodwill allocated to the Ark (£1,025k) and CLT (£14,634k) CGUs following the
Group's decision in February 2016 to restructure the Legal division by
reference to the main communities served - Law for lawyers and Law for
non-lawyers. As a result of this decision the Group has been required to
assess the carrying value of Ark and CLT as standalone CGUs and, consequently,
the Group has recognised an impairment of goodwill. Despite this non-cash
charge, the Group considers that both the Ark and CLT business presents many
opportunities for growth.
The carrying value of CLT and Ark was determined by reference to a value in
use calculation. Due to the fact that the CLT and Ark goodwill was written off
to its carrying value there is no headroom and the carrying value of the CGUs
are sensitive to changes in the key assumptions used to calculate its value in
use. An illustration of the sensitivity to reasonably possible changes in key
assumptions is as follows:
Revenue Increase/decrease by 10.0% Increase/decrease by £0.3m/£0.3m
Operating cash flows Increase/decrease by 3.0% Increase/decrease by £0.2m/£0.2m
Long-term growth rate Increase/decrease by 50 basis points Increase/decrease by £0.3m/£0.3m
Pre-tax discount rate Decrease/increase by 50 basis points Increase/decrease by £0.4m/£0.3m
Pre-tax discount rate
Decrease/increase by 50 basis points
Increase/decrease by £0.4m/£0.3m
12. Goodwill (continued)
Compliance week
For Compliance Week, the value in use exceeds the carrying value by 15.0%
(2015: 10.0%). The impairment review of Compliance Week is sensitive to a
reasonably possible change in the key assumptions used; most notably the
projected cash flows, the long-term growth rate and the pre-tax discount rate.
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 20.0% in each of
the next three years; or
· An increase in the pre-tax discount from 13.5% to 15.0%.
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.
Axco and Pendragon 11,150 11,150
CLT 8,563 23,195
ICT 7,972 7,972
Others 43,078 34,746
70,763 77,063
34,746
70,763
77,063
13. Intangible assets
Group
Publishing rights, titles and benefits£'000 Computer software£'000 Total£'000
Cost
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 1 July 2015 63,708 7,063 70,771
Additions - 870 870
Acquisitions 9,782 191 9,973
Disposals (304) - (304)
Exchange translation differences 1,587 78 1,665
At 30 June 2016 74,773 8,202 82,975
Accumulated amortisation
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 1 July 2015 42,754 4,381 47,135
Charge for year 5,545 1,050 6,595
Acquisitions - 167 167
Disposals (304) - (304)
Exchange translation differences 306 38 344
At 30 June 2016 48,301 5,636 53,937
Net book amount
At 30 June 2016 26,472 2,566 29,038
At 30 June 2015 20,954 2,682 23,636
At 1 July 2014 27,340 1,406 28,746
Included within computer software are assets under construction with a net
book amount of £44,000 (2015: £572,000).
14. Property, plant and equipment
Cost
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 1 July 2015 5,950 3,909 3,743 495 14,097
Additions - 312 230 99 641
Acquisitions - 40 28 - 68
Disposals - (189) (42) (107) (338)
Exchange translation differences - 45 73 - 118
At 30 June 2016 5,950 4,117 4,032 487 14,586
Accumulated depreciation
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 1 July 2015 2,721 2,922 3,394 219 9,256
Charge for the year 158 394 270 89 911
Disposals - (189) (42) (91) (322)
Acquisitions - 26 - - 26
Exchange translation differences - 34 53 - 87
At 30 June 2016 2,879 3,187 3,675 217 9,958
Net book amount
At 30 June 2016 3,071 930 357 270 4,628
At 30 June 2015 3,229 987 349 276 4,841
At 30 June 2014 3,561 873 1,064 229 5,727
At 30 June 2014
3,561
873
1,064
229
5,727
Included in land, freehold and leasehold buildings is £970,000 (2015:
£970,000) of non-depreciated land.
Depreciation of property, plant and equipment is charged to net operating
expenses within the income statement.
15. Trade and other receivables
Current
Trade receivables 21,993 18,518
Prepayments and other receivables 4,128 3,178
26,121 21,696
4,128
3,178
26,121
21,696
16. Derivative financial investments
Group
Current assets 30 June2016£'000 30 June2015£'000
Forward currency contracts - 338
Current liabilities
Interest rate swap - maturing in November 2016 (162) -
Forward currency contracts (851) -
(1,013) -
Non-current liabilities
Interest rate swaps - maturing in November 2020 (1,037) (423)
17. Trade and other payables
Group
30 June2016£'000 30 June2015£'000
Trade and other payables 21,591 20,410
Subscriptions and deferred revenue 22,305 19,165
43,896 39,575
18. Borrowings
Bank overdrafts 2,204 496
Bank loans - 37,306
Capitalised loan arrangement fees - (147)
2,204 37,655
Non-current liability
Bank loans 47,126 -
Capitalised loan arrangement fees (429) -
Bank loans net of loan arrangement fees 46,697 -
(429)
-
Bank loans net of loan arrangement fees
46,697
-
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 to February 2016.
The facility comprised of a revolving credit facility of £60.0m and an
overdraft facility across the Group of £5.0m. At 30 June 2015, £37.3m of the
revolving credit facility was drawn down. 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.
Bank overdrafts comprise of the net of gross overdraft balances of £10.3m
(2015: £11.8m) and cash positions of £8.1m (2015: £11.3m) held at Barclays
Bank PLC in certain UK companies included in the offsetting agreement.
19. Non-controlling interests
At 1 July 2014 235
Profit for the year 130
Dividends paid (88)
At 30 June 2015 277
Profit for the year 143
Dividends paid (141)
Movements in non-controlling interests (126)
At 30 June 2016 153
At 30 June 2016
153
See note 11 for details of the non-controlling interest purchases during the
year.
20. Cash generated from operations
(Loss)/profit from continuing operations before income tax (3,434) 10,296
Other adjusting items (included in operating expenses) 2,352 1,112
Depreciation of property, plant and equipment 911 918
Amortisation of intangible assets 6,595 7,123
Impairment of goodwill 15,659 -
Profit on disposal of property, plant and equipment (4) (21)
Share based payments (including social security costs) 563 918
Net finance costs 1,920 1,974
Operating cash flows before movements in working capital 24,562 22,320
(Increase)/decrease in trade and other receivables (2,434) 371
Increase/(decrease) in trade and other payables 1,744 (811)
Cash generated from operations before adjusting items 23,872 21,880
1,744
(811)
Cash generated from operations before adjusting items
23,872
21,880
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 22,605 20,418
Amortisation of intangible assets - computer software 1,050 1,005
Depreciation of property, plant and equipment 911 918
- More to follow, for following part double click ID:nRSN7510JcRecent 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