REG - Wilmington PLC - Interim Results <Origin Href="QuoteRef">WIL.L</Origin> - Part 2
23/02/2017 07:10
- Part 2: For the preceding part double click ID:nRSW6095Xa
(3,304) - (3,304)
Share based payments - 237 - - 237 - 237
Tax on share based payments - - - (92) (92) - (92)
Movements in non-controlling interests - - - (208) (208) - (208)
At 30 June 2016 (audited) 49,478 886 2,602 (10,116) 42,850 153 43,003
Profit for the period - - - 3,853 3,853 18 3,871
Other comprehensive income for the period - - 1,703 (698) 1,005 - 1,005
49,478 886 4,305 (6,961) 47,708 171 47,879
Dividends - - - (3,749) (3,749) (105) (3,854)
Issue of share capital 13 (466) - 453 - - -
Share based payments - 263 - - 263 - 263
Tax on share based payments - - - (40) (40) - (40)
At 31 December 2016 (unaudited) 49,491 683 4,305 (10,297) 44,182 66 44,248
The notes on pages 17 to 30 are an integral part of these consolidated
financial statements.
Consolidated Cash Flow Statement
Six months ended 31 December 2016 Six months ended 31 December 2015 Year ended 30
June 2016
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations before adjusting items 18 7,962 8,249 23,872
Cash flows for adjusting items - operating activities (1,073) - (186)
Cash flows for adjusting items - share based payments (87) (180) (180)
Cash generated from operations 6,802 8,069 23,506
Interest paid (880) (658) (1,502)
Tax paid (1,996) (1,431) (3,197)
Net cash generated from operating activities 3,926 5,980 18,807
Cash flows from investing activities
Purchase of businesses net of cash acquired (2,122) (8,469) (13,912)
Proceeds from disposal group held for sale - 343 343
Deferred consideration paid (1,295) - (330)
Purchase of non-controlling interests - (333) (334)
Cash flows for adjusting items - investing activities (116) (198) (540)
Purchase of property, plant and equipment (579) (290) (641)
Proceeds from disposal of property, plant and equipment 21 11 11
Purchase of intangible assets (888) (472) (870)
Net cash used in investing activities (4,979) (9,408) (16,273)
Cash flows from financing activities
Dividends paid to owners of the parent (3,749) (3,478) (6,782)
Dividends paid to non-controlling interests (105) (141) (141)
Share issuance costs (5) (5) (5)
Cash flows for adjusting items - financing activities - (631) (631)
Increase in bank loans 8,104 8,404 7,696
Net cash generated from financing activities 4,245 4,149 137
Net increase in cash and cash equivalents, net of bank overdrafts 3,192 721 2,671
Cash and cash equivalents, net of bank overdrafts, at beginning of the period 12,438 8,698 8,698
Exchange gains on cash and cash equivalents 366 358 1,069
Cash and cash equivalents, net of bank overdrafts at end of the period 15,996 9,777 12,438
Reconciliation of net debt
Cash and cash equivalents at beginning of the period 14,642 9,194 9,194
Bank overdrafts at beginning of the period 16 (2,204) (496) (496)
Bank loans at beginning of the period 16 (47,126) (37,306) (37,306)
Net debt at beginning of the period (34,688) (28,608) (28,608)
Net increase in cash and cash equivalents (net of bank overdrafts) 3,558 1,079 3,740
Net drawdown in bank loans (8,104) (8,404) (7,696)
Exchange loss on bank loans (1,376) (665) (2,124)
Cash and cash equivalents at end of the period 17,233 11,928 14,642
Bank overdrafts at end of the period 16 (1,237) (2,151) (2,204)
Bank loans at end of the period 16 (56,606) (46,375) (47,126)
Net debt at end of the period (40,610) (36,598) (34,688)
The notes on pages 17 to 30 are an integral part of these consolidated
financial statements.
Notes to the Financial Results
General information
The Company is a public limited company incorporated and domiciled in the UK.
The address of its registered office is 6-14 Underwood Street, London, N1
7JQ.
The Company is listed on the main market on the London Stock Exchange. The
Company is a provider of information, education and networking to the
professional markets.
This condensed consolidated interim financial information ('Interim
Information') was approved for issue on
22 February 2017.
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 2016 were approved by the
Board of Directors on 13 September 2016. 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 2016 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 2016 which have been prepared in accordance with IFRSs as adopted by the
European Union, and are available on the Group's website: wilmingtonplc.com.
The Group's forecast and projections, taking account of reasonably possible
changes in trading performance, show that the Group will be able to operate
well within the level of its current banking facilities. The Directors have
therefore adopted a going concern basis in preparing the Interim Information.
2. Accounting policies
The accounting policies applied are consistent with those of the Annual
Financial Statements for the year ended 30 June 2016, as described in those
Annual Financial Statements. The following new standards, amendments and
interpretations have been adopted in the current year:
· EU Account Directive (SI 2015/980)
The adoption of this interpretation has not led to any changes to the Group's
accounting policies or had any other material impact on the financial position
or performance of the Group. Other amendments to IFRSs effective for the year
ending 30 June 2016 have no impact on the Group.
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:
* FRS 9: Financial Instruments - endorsed by EU
* IAS Amendments to IAS 7: Statement of cash flows on disclosure initiative -
not yet EU endorsed
* Amendments to IAS 12: Income taxes - not yet EU endorsed
* Amendments to IFRS 2: Share based payments - not yet EU endorsed
* IFRS 15: Revenue from Contracts with Customers - endorsed by EU
* IFRS 16: Leases - not yet EU endorsed
* IFRIC 22: Foreign currency transactions and advance consideration - not yet
EU endorsed
* Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the
Consolidation Exception - not yet EU endorsed
* Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture - not yet EU endorsed
* Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint
Operations - endorsed by EU
* Amendments to IAS 1: Disclosure Initiative - endorsed by EU
* Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of
Depreciation and Amortisation - endorsed by EU
* Amendments to IAS 27: Equity Method in Separate Financial Statements -
endorsed by EU
* Annual improvements to IFRSs 2012-2014 cycle - endorsed by EU
3. Principal risks and uncertainties
The principal risks and uncertainties that affect the Group are as stated on
pages 25 to 28 of the Strategic Report in the Annual Report and Financial
Statements for the year ended 30 June 2016. The main financial risks that
affect the Group are:
(a) Interest rate risk
Risk
The Group financing arrangements include external debt that is subject to a
variable interest rate. The Group is consequently exposed to cash flow
volatility arising from fluctuations in market interest rates applicable to
that external finance. In particular, interest is charged on the £57m (2015:
£46m) amount drawn down on the revolving credit facility at a rate of between
1.50 and 2.25 per cent above LIBOR depending upon leverage. Cash flow
volatility therefore arises from movements in the LIBOR interest rates.
Group policy
The Group policy is to enter into interest rate swap contracts to maintain the
ratio of fixed to variable rate debt at a level that achieves a reasonable
cost of debt whilst reducing the exposure to cash flow volatility arising from
fluctuations in market interest rates.
Risk management arrangements
The Group's interest rate swap contracts offset part of its variable interest
payments and replace them with fixed payments. In particular, the Group has
hedged its exposure to the LIBOR part of the interest rate via interest rate
swaps, as follows:
* A 5 year £15.0m interest rate swap commencing on 21 November 2011, whereby
the Group receives interest on £15m based on the LIBOR rate and pays interest
on £15m at a fixed rate of 2.68%. This contract expired in the period.
* A $7.5m interest rate swap commencing on 13 July 2015 and ending on 1 July
2020, whereby the Group receives interest on $7.5m based on the USD LIBOR rate
and pays interest on $7.5m at a fixed rate of 1.79%.
* A £15.0m interest rate swap commencing on 22 November 2016 and ending on 1
July 2020, whereby the Group receives interest on £15m based on LIBOR rate and
pays interest on £15m at a fixed rate of 2.00%.
These derivatives have been designated as a cash flow hedge for accounting
purposes. The net settlement of interest on the interest rate swap, which
comprises a variable rate interest receipt and a fixed rate interest payment,
is recorded in net finance costs in the income statement and so is matched
against the corresponding variable rate interest payment on the revolving
credit facility. The derivatives are remeasured at fair value at each
reporting date. This gives rise to a gain or loss, the entire amount of which
is recognised in Other Comprehensive Income ('OCI') following the Directors'
assessment of hedge effectiveness.
(b) Foreign currency risk
Risk
The currency of the primary economic environment in which the Group operates
is Sterling, and this is also the currency in which the Group presents its
financial statements. However, the Group has significant Euro and US dollar
cash flows arising from international trading and overseas operations. The
Group is consequently exposed to cash flow volatility arising from
fluctuations in the applicable exchange rates for converting Euros and US
dollars to Sterling.
Group policy
The Group policy is to fix the exchange rate in relation to a periodically
reassessed set percentage of expected Euro and US dollar net cash inflows
arising from international trading, by entering into foreign currency
contracts to sell a specified amount of Euros or US dollars on a specified
future date at a specified exchange rate. This set percentage is approved by
the Board as part of the budgeting process and upon the acquisition of foreign
operations.
The Group policy is to finance investment in overseas operations from
borrowings in the local currency of the relevant operation, so as to achieve a
natural hedge of the foreign currency translation risk. This natural hedge is
designated as a net investment hedge for accounting purposes. Debt of $18.2m
(2015: $18.2m) has been designated as a net investment hedge relating to the
Group's interest in Compliance Week and FRA.
3. Principal risks and uncertainties (continued)
Risk management arrangements
The following forward contracts were entered into in order to provide
certainty in Sterling terms of circa 80% of the Group's expected net US dollar
and Euro income:
* On 13 May 2016, the Group sold E1.2m to 24 February 2017 at a rate of 1.2609
* On 13 May 2016, the Group sold E1.2m to 3 March 2017 at a rate of 1.2606
* On 13 May 2016, the Group sold E1.1m to 10 March 2017 at a rate of 1.2601
* On 20 May 2016, the Group sold $3.5m to 28 April 2017 at a rate of 1.4622
* On 20 May 2016, the Group sold $3.5m to 26 May 2017 at a rate of 1.4637
* On 20 May 2016, the Group sold $3.0m to 28 June 2017 at a rate of 1.4657
The above derivatives are remeasured at fair value at each reporting date.
This gives rise to a gain or loss, the entire amount of which is recognised in
the Income Statement.
(c) Liquidity and capital risk
Risk
The Group has historically expanded its operations both organically and via
acquisition, financed partly by retained profits but also via external
finance. As well as financing cash outflows, the Group's activities give rise
to working capital obligations and other operational cash outflows. The Group
is consequently exposed to the risk that it cannot meet its obligations as
they fall due, or can only meet them at an uneconomic price.
Group policy
The Group policy is to preserve a strong capital base in order to maintain
investor, creditor and market confidence and to safeguard the future
development of the business, but also to balance these objectives with the
efficient use of capital. The Group has, in previous years, made purchases of
its own shares whilst taking into account the availability of credit.
Risk management arrangements
The Group ensures its liquidity is maintained by entering into short, medium
and long-term financial instruments to support operational and other funding
requirements. The Group determines its liquidity requirements by the use of
short and long-term cash forecasts.
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.
On 31 January 2017 Wilmington acquired HSJ the UK's leading health
information, insight and networking business for £19.0m less a £2.0m working
capital adjustment. To fund this investment £20.0m of the accordion facility
was triggered giving a total unsecured bank facility of £85.0m.
3. Principal risks and uncertainties (continued)
(d) Credit Risk
Risk
The Group's principal financial assets are receivables and bank balances. The
Group is consequently exposed to the risk that its customers or the credit
facility providers cannot meet their obligations as they fall due.
Group policy
The Group policy is that the lines of business assess the creditworthiness and
financial strength of customers at inception and on an ongoing basis. The
Group also reviews the credit rating of the bank.
Risk management arrangements
The Group's credit risk is primarily attributable to its trade receivables.
However, the Group has no significant exposure to credit risk because its
trading is spread over a large number of customers. The payment terms offered
to customers take into account the assessment of their creditworthiness and
financial strength, and they are set in accordance with industry standards.
The creditworthiness of customers is considered before trading commences. Most
of the Group's customers are large and well established institutions that pay
on time and in accordance with the Group's standard terms of business.
The amounts presented in the Balance Sheet are net of allowances for bad and
doubtful receivables estimated by management based on prior experience and
their assessment of the current economic value.
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 option 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 £1,474,217 (2015:
£105,311) for foreign exchange trading derivatives at fair value through
income or expense. In addition the group has recognised a level 2 financial
liability of £769,278 (2015: £562,451) for three interest rate swap contracts
at fair value through other comprehensive income or expense. The group has no
recognised level 1 or level 3 assets or liabilities.
5. Measures of profit
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:
Profit/(loss) before tax 5,031 4,547 (3,434)
Amortisation of intangible assets - publishing rights, titles and benefits 2,820 3,011 5,545
Impairment of goodwill - - 15,659
Share based payments (including social security costs) 310 278 563
Adjusting items (included in operating expenses) 947 873 2,352
Net finance costs 915 1,024 1,920
Adjusted operating profit ('Adjusted EBITA') 10,023 9,733 22,605
Depreciation of property, plant and equipment 493 447 911
Amortisation of intangible assets - computer software 455 512 1,050
Adjusted EBITA before depreciation ('Adjusted EBITDA') 10,971 10,692 24,566
Adjusted EBITA before depreciation ('Adjusted EBITDA')
10,971
10,692
24,566
Adjusted profit before tax reconciles to profit on continuing activities
before tax as follows:
Profit/(loss) before tax 5,031 4,547 (3,434)
Amortisation of intangible assets - publishing rights, titles and benefits 2,820 3,011 5,545
Impairment of goodwill - - 15,659
Share based payments (including social security costs) 310 278 563
Adjusting items (included in operating expenses) 947 873 2,352
Adjusting items (included in net finance costs) - 225 225
Adjusted profit before tax 9,108 8,934 20,910
Adjusted profit before tax
9,108
8,934
20,910
6. Segmental information
In accordance with IFRS 8 the Group's operating segments are based on the
operating results reviewed by the Board, which represents the chief operating
decision maker. The Group reports its results in four operating 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, the rest of Europe and the rest of the World.
(a) Business segments
Risk & Compliance 19,535 5,630 17,593 5,595 38,802 12,678
Finance 12,388 1,929 11,595 2,435 21,219 4,473
Legal 7,118 797 7,638 643 15,524 1,686
Insight 15,772 3,413 12,537 2,790 30,179 7,316
54,813 11,769 49,363 11,463 105,724 26,153
Unallocated central overheads - (1,746) - (1,730) - (3,548)
54,813 10,023 49,363 9,733 105,724 22,605
Amortisation of intangible assets - publishing rights, titles and benefits (2,820) (3,011) (5,545)
Impairment of goodwill - - (15,659)
Share based payments (310) (278) (563)
Adjusting items (included in operating expenses) (947) (873) (2,352)
Net finance costs (915) (1,024) (1,920)
Profit/(loss) before tax 5,031 4,547 (3,434)
Taxation (1,160) (1,046) (2,841)
Profit/(loss) for the financial year 3,871 3,501 (6,275)
Taxation
(1,160)
(1,046)
(2,841)
Profit/(loss) for the financial year
3,871
3,501
(6,275)
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.
8Contribution is defined as Adjusted EBITA excluding unallocated central
overheads.
6. Segmental information (continued)
(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 monthsended 31December2016 Six months ended 31 December 2015 Yearended 30 June 2016
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
UK 31,275 28,714 61,321
Europe (excluding the UK) 9,310 7,207 15,859
North America 9,191 8,846 19,030
Rest of the World 5,037 4,596 9,514
Total revenue 54,813 49,363 105,724
7. Adjusting items
The following items have been charged/(credited) to the income statement
during the year but are of an unusual nature, size or incidence and so are
shown separately:
Build-up of the liability for deferred consideration contingent on continued employment - 531 1,019
Increase in the liability for deferred consideration not contingent on continued employment - 20 63
Costs relating to successful and aborted acquisitions and integration 328 172 585
Aborted leasehold property sale 217 - -
Legal claim costs (net of settlement received) - 150 73
Restructuring and rationalisation costs 402 - 612
Other adjusting items (included in operating expenses) 947 873 2,352
Costs relating to the extension of the loan facility - 225 225
Amortisation of intangible assets - publishing rights, titles and benefits 2,820 3,011 5,545
Share based payments 310 278 563
Impairment of goodwill - - 15,659
Total adjusting items (classified in profit before tax) 4,077 4,387 24,344
Total adjusting items (classified in profit before tax)
4,077
4,387
24,344
Successful and aborted acquisitions relate to the acquisition and integration
of SWAT.
During 2016 we actively sought and had received a number of cash offers for
our Underwood Street long leasehold offices of up to £10m; however for various
reasons including Brexit none of these offers were concluded. Aborted
leasehold property costs comprise of professional fees related to this and
costs for a potential new London location.
Restructuring and rationalisation costs comprise £267,000 of redundancy and
property costs following the Group's decision to relocate part of the finance
and HR function from its head offices in central London to our existing
freehold premises in Basildon, Essex. It also includes £135,000 of costs
relating to the implementation of project Sixth Gear, the reorganisation of
our business into three segments, see the Interim Results page 2 for further
details.
8. Net finance costs
Six months ended 31 December 2016 Six months ended 31 December 2015 Year ended 30
June
2016
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Finance costs comprise:
Interest payable on bank loans and overdrafts (849) (733) (1,564)
Amortisation of capitalised loan arrangement fees (66) (66) (131)
Adjusting item - extension of loan facility costs - (225) (225)
(915) (1,024) (1,920)
9. Taxation
Six months ended 31 December 2016 Six months ended 31 December 2015 Year ended 30 June
2016
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Current tax:
Current tax on profits for the period 1,463 1,465 3,792
Adjustments in respect of previous years - 83 198
Total current tax 1,463 1,548 3,990
Deferred tax:Deferred tax credit (312) (432) (971)
Effect on deferred tax of change in corporation tax rate 9 (70) (178)
Total deferred tax (303) (502) (1,149)
Taxation 1,160 1,046 2,841
10. Dividends
Distributions to owners of the parent in the period:
Sixmonths ended 31 December 2016 Sixmonths ended 31 December 2015 Year ended 30 June2016 Sixmonths ended 31 December 2016 Sixmonths ended 31 December 2015 Year months ended 30 June2016
pence per share pence per share pence per share £'000 £'000 £'000
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Final dividends recognised as distributions in the year 4.3 4.0 4.0 3,749 3,478 3,478
Interim dividends recognised as distributions in the year - - 3.8 - - 3,304
Total dividends paid in the period 3,749 3,478 6,782
Interim/final dividend proposed 3.9 3.8 4.3 3,401 3,304 3,738
11. Earnings per Share
Adjusted earnings per share has been calculated using adjusted earnings
calculated as profit/(loss) 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:
Six months ended 31 December 2016 Six months ended 31 December 2015 Year ended 30 June
2016
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Earnings/(loss) from continuing operations for the purpose of basic earnings per share 3,853 3,418 (6,418)
Add/(remove):
Amortisation of intangible assets - publishing rights, titles and benefits (net of non-controlling interests) 2,820 3,011 5,545
Impairment of goodwill - - 15,659
Adjusting items (included in operating expenses) 947 873 2,352
Adjusting items (included in net finance costs) - 225 225
Share based payments 310 278 563
Tax effect of adjustments above (881) (926) (1,691)
Adjusted earnings for the purposes of adjusted earnings per share 7,049 6,879 16,235
Number Number Number
Weighted average number of ordinary shares for the purpose of basic and adjusted earnings per share 87,062,219 86,706,740 86,846,236
Effect of dilutive potential ordinary shares:
Future exercise of share awards and options 610,495 906,717 772,980
Weighted average number of ordinary shares for the purposes of diluted earnings per share 87,672,714 87,613,457 87,619,216
Basic earnings per share 4.43p 3.94p (7.39p)
Diluted earnings per share 4.39p 3.90p (7.39p)
Adjusted basic earnings per share ('Adjusted Earnings Per Share') 8.10p 7.93p 18.69p
Adjusted diluted Earnings per Share 8.04p 7.85p 18.53p
12. Acquisitions and disposals
Acquisition - SWAT Group Limited - July 2016
On 19 July 2016 Mercia Group Limited acquired the entire issued share capital
of SWAT Group Limited ('SWAT'), a provider of training and technical
compliance support to accountancy firms in London and the South West of
England.
SWAT was acquired for initial consideration of £2,870,000, of which £500,000
was withheld in relation to the Net Asset adjustment. Subsequently, this
initial consideration was reduced by £387,538 in relation to the final Net
Asset adjustment.
Deferred consideration of up to £3,000,000 is payable contingent on SWAT's
future performance for the years ended 30 June 2017 and 2018 and will be paid
in cash in one instalment. Management has estimated the expected value of
these future payments to be £1,082,000 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 £278,000 have been expensed as an adjusting item
in the income statement (see note 7).
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 consideration 2,870
Net asset adjustment (388)
Deferred consideration - cash settled 1,082
Total consideration 3,564
The provisional fair values of assets and liabilities recognised as a result
of this acquisition are as follows:
£'000
Intangible assets - Customer relationships 2,337
Total intangible assets (see note 13) 2,337
Property, plant & equipment 196
Trade and other receivables (net of allowances) 365
Cash and cash equivalents 360
Trade and other payables (598)
Deferred revenue (579)
Current tax liabilities (137)
Deferred tax liabilities (444)
Net identifiable assets acquired 1,500
Goodwill (see note 13) 2,064
Net assets acquired 3,564
The estimated useful economic life of the intangibles is as follows:
Intangible assets - Customer Relationships 10 years
The acquired business contributed revenues of £2,242,659 and contribution of
£309,599 to the Group for the period from the date of acquisition to 31
December 2016. Had SWAT been consolidated from 1 June 2016 the group
consolidated Income Statement would include pro forma revenue of £2,463,660
and contribution of £309,899.
13. Goodwill, Intangible assets and Property, plant and equipment
Goodwill£'000 Intangible assets£'000 Property, plant and equipment£'000
Closing net book amount as at 30 June 2015 (audited) 77,063 23,636 4,841
Acquisitions 4,935 4,718 -
Additions - 472 290
Disposals - - (7)
Exchange translation differences 469 377 5
Depreciation of property, plant and equipment - - (447)
Amortisation of publishing rights, titles and benefits - (3,011) -
Amortisation of computer software - (512) -
Closing net book amount as at 31 December 2015 (unaudited) 82,467 25,680 4,682
Additions 3,023 398 351
Acquisitions - 5,088 42
Disposals - - (9)
Exchange translation differences 932 944 26
Impairment (15,659)
Depreciation of property, plant and equipment - - (464)
Amortisation of publishing rights, titles and benefits - (2,534) -
Amortisation of computer software - (538) -
Closing net book amount as at 30 June 2016 (audited) 70,763 29,038 4,628
Acquisitions (provisional) 2,064 2,350 183
Additions - 888 579
Disposals - - (13)
Exchange translation differences 910 878 15
Depreciation of property, plant and equipment - - (493)
Amortisation of publishing rights, titles and benefits - (2,820) -
Amortisation of computer software - (455) -
Closing net book amount as at 31 December 2016 (unaudited) 73,737 29,879 4,899
Acquisitions (provisional) in goodwill and intangibles relate to the
acquisition of SWAT (see note 12).
14. Trade and other receivables
31 December 2016 (unaudited) £'000 31 December 2015(unaudited)£'000 30 June 2016(audited)£'000
Trade receivables 25,371 20,151 21,993
Prepayments and other receivables 4,510 3,481 4,128
29,881 23,632 26,121
15. Trade and other payables
31 December 2016 (unaudited) £'000 31 December 2015(unaudited)£'000 30 June2016(audited)£'000
Trade and other payables 20,748 18,560 21,591
Subscriptions and deferred revenue 24,166 21,297 22,305
44,914 39,857 43,896
16. Borrowings
31 December 2016£'000(unaudited) 31 December 2015£'000(unaudited) 30 June 2016£'000(audited)
Current liability
Bank overdrafts 1,237 2,151 2,204
1,237 2,151 2,204
Non-current liabilityBank loans 56,606 46,375 47,126
Capitalised loan arrangement fees (386) (493) (429)
Bank loans net of facility fees 56,220 45,882 46,697
On 31 January 2017 Wilmington acquired HSJ the UK's leading health
information, insight and networking business for £19.0m less a £2.0m working
capital adjustment. To fund this investment £20.0m of the accordion facility
was triggered giving a total unsecured bank facility of £85.0m.
17. Share capital
Number of ordinary sharesof 5p each Ordinary shares£'000 Share premium account£'000 Treasury shares£'000 Total£'000
At 1 July 2015 (audited) 86,507,461 4,325 45,225 (96) 49,454
Shares issued 478,270 24 - - 24
At 31 December 2015 (unaudited) and 30 June 2016 (audited) 86,985,731 4,349 45,225 (96) 49,478
Shares issued 262,243 13 - - 13
At 31 December 2016 (unaudited) 87,247,974 4,362 45,225 (96) 49,491
On 19 September, 2016 262,243 ordinary shares were issued in respect of the
vesting of the 2013 PSP Share Awards to employees (including Directors).
At 31 December 2016,
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