REG - Wilmington PLC - Interim Results <Origin Href="QuoteRef">WIL.L</Origin>
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Wilmington PLC
22 February 2018
22 February 2018
WILMINGTON PLC
('Wilmington', 'the Group' or 'the Company')
Financial Results for the six months ended 31 December 2017
Wilmington plc, the provider of information, education and networking services
in Risk & Compliance, Professional, and Healthcare knowledge areas, today
announces its interim results for the six months ended 31 December 2017.
Financial Highlights
- Group revenues for the period up 6% (underlying1 down 3%) to £58.2m (2016: £54.8m)
- Adjusted EBITA2 increased 3% to £10.0m (2016: £9.7m)
- Adjusted EBITA margins3 at 17.1% (2016: 17.7%) reflecting in part the additional investment in digitisation and automated marketing
- Adjusted Profit before Tax4 up 2% to £9.0m (2016: £8.8m)
- Adjusted Earnings per Share5 up 2% at 7.97p (2016: 7.81p)
- Operating Profit at £3.0m (2016: £5.9m)
- Profit before tax at £2.0m (2016: £5.0m)
- Basic Earnings per Share at 1.43p (2016: 4.43p)
- Deferred revenue up 9% to £26.3m (2016: £24.2m)
- Interim dividend increased 3% to 4.0p (2016: 3.9p), in line with progressive dividend policy
Operational Highlights
- Risk & Compliance revenue up marginally on 2016 with pleasing growth from Axco offset by lower in-house compliance training revenue. Investment in new compliance product lines showing good momentum.
- Professional revenue down 5% with strong growth in Accountancy revenue offset by the loss of unprofitable revenue associated with exiting the legal practice support market
- Healthcare revenue up 27% (down 3% on an underlying basis) driven by HSJ acquired January 2017
- Subscription and repeatable revenues at 77% of total revenue (2016: 78%)
- International revenues at 41% of total revenue (2016: 43%) reflecting HSJ boost to UK revenue
- Successful move to new London headquarters and transformation of the IT infrastructure enhances the working environment for UK staff
- Digital learning and automated marketing investment progressing well
Board Changes
- Martin Morgan joins the Board as Chairman on 1 May 2018 as announced separately today
Acquisition Update
- Interactive Medica Group ("IM") acquisition, which was completed on 12 February 2018, strengthens Pharmaceutical data offerings, adds further scale and capability to the Healthcare Division and increases access to European markets
Current Trading and Outlook
- Mixed performance in the first half of the year
- Slower start to the year continues for Healthcare which has been impacted by weaker than expected sales to UK Pharmaceutical clients. Risk & Compliance and Accountancy (within Professional) performing well.
- As in previous years Wilmington's trading performance remains second half weighted
- Launch and roll out of new digital training programs and products showing promising initial traction
- Further investment in the second half in automated marketing and digitisation as previously announced
- Acquisition of IM expected to be earnings enhancing in first full year of ownership
- Overall trading is broadly in line with expectations for the full year
Pedro Ros, Chief Executive Officer, commented:
"We continue to make progress in digitising the business and making our
offering more relevant and bespoke to clients. During the first half the Group
has worked hard to transform its culture and work practices, successfully
completing the London property move, with an emphasis on 'One Wilmington'.
The second half of the year tends to be more profitable for Wilmington, and
will be aided by recent acquisition contributions. As we move into the next
six months, we will continue to focus our attention on developing and
enhancing the next generation of digital training products and learning
support systems to leverage rapidly changing client demands."
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014. Upon the publication of this announcement this inside information is
now considered to be in the public domain.
1Underlying Revenue - Revenue eliminating the impact of any acquisitions or
disposals made in the year
2Adjusted EBITA - see note 5
3Adjusted EBITA margins - Adjusted EBITA divided by Revenue
4Adjusted Profit before Tax - see note 5
5Adjusted Earnings per Share - see note 11
For further information, please contact:
Wilmington plc 020 7422 6800
Pedro Ros, Chief Executive OfficerAnthony Foye, Chief Financial Officer
FTI Consulting 020 3727 1000
Charles Palmer / Emma Hall / Leah Dudley
Notes to Editors
Wilmington plc is the recognised knowledge leader and partner of choice for
information, education and networking in Risk & Compliance, Professional and
Healthcare areas. Capitalised at approximately £215 million, Wilmington
floated on the London Stock Exchange in 1995.
Operating and Financial Review
Revenue for the six-month period was up (6%) against the same period last year
(up 6% on a constant currency basis) supported by the acquisition of Health
Service Journal ("HSJ"). Adjusting for acquisitions, underlying revenue was
down 3%. Underlying revenue performance partially reflects the exit from the
legal practice support market combined with delays previously highlighted in
our in-house compliance training assignments and a recent slowdown in the UK
Pharmaceutical area of our healthcare business. Wilmington overall saw revenue
growth in Risk & Compliance and 27% growth in Healthcare driven by HSJ with
the Professional division marginally down.
Revenue grew £3.4m to £58.2m (2016: £54.8m) and Adjusted EBITA grew £0.3m (3%)
to £10.0m (2016: £9.7m). HSJ, acquired in January 2017, contributed £4.8m to
revenue and £0.9m to EBITA. EBITA margins at 17.1% were down marginally,
compared to 2016 (17.7%) reflecting to some extent the planned operational
investments in our digitisation initiatives and the start of the rollout of
Marketo®, our new automated marketing system outlined in the 2017 annual
report.
Finance costs, which include interest charges and associated costs, increased
to £1.0m from £0.9m reflecting the higher average debt levels in this period
compared to the same period in 2016. This higher level of debt is due
primarily to £16.9m of acquisition and related spend during 2017 offset by the
£7.3m received from the London property disposal in June 2017 and £4.5m of
related costs including leasehold improvements, termination payments, and tax
in respect of the replacement building.
The growth in Adjusted EBITA was offset by increased finance costs and
translated into Adjusted Profit before Tax up 2% (£0.2m) to £9.0m (2016:
£8.8m). Foreign currency translation impacts were only marginal in the
period.
Business Vision and Strategy
Our vision, which acts as our guide and underpins our strategy, is:
"To be the recognised knowledge leader and partner of choice for information,
education and networking in Risk & Compliance, Professional and Healthcare."
In achieving our vision, we aim to turn knowledge into competitive advantage
for our clients.
Wilmington's strategy is to further develop its business into a
knowledge-based model and structure focussing on serving the needs of chosen
communities with an overall objective of becoming a single integrated
international business. This business structure will maximise Wilmington's
opportunities to help its clients and communities meet their information,
education and networking requirements as well as drive operational
efficiencies. As part of its evolution, Wilmington has, and is continuing to
be, more focussed on its core communities that provide a higher quality of
earnings.
Capital Markets Day
In May 2018 we will be hosting a Capital Markets Day at our new London offices
to showcase our products, our business leaders and to explain in more detail
our operational progress to date.
Learning management systems update
We have made further progress in developing products for the evolving digital
learning market. Wilmington, like its larger competitors, is positioning
itself to take advantage of rapidly changing client demands and is investing,
as well as in its existing digital areas, into blended digital learning
solutions, courses and packages. In our operational decision-making process we
are increasingly taking a "digital first" approach to new training product
launches and in support we have invested significant resource in setting up
and developing the next generation of digital training products and learning
support systems. During 2016/17 we set up a dedicated e-learning team using
Totara© as our learning management system. Totara© integrates with other key
systems such as SalesForce and our new automated marketing system Marketo® and
provides the end-to-end platform for all our products facilitating an
ambitious and ultimately seamless roll out of new digital training product.
As previously announced we have identified up to 250 existing training courses
across the Group which can be repurposed and restructured as blended digital
training products; learning and building from the established pioneering
digital training programs of SWAT and AMT and coordinated by the newly formed
e-learning team. The blended approach uses a combination of reading materials,
online discussion forums, personalised support, interim assessments and
feedback to improve the user experience, outcomes and ultimately the return on
our client's investment. To date we have 46 existing training courses under
conversion, to be completed by the end of the year.
Wilmington already has an extensive back catalogue of digital products
including webinars, talking heads and multi-channel products which are largely
produced in dedicated facilities within our UK offices.
We expect to see many commercial advantages from our digital learning
expansion aided by a greater ability to repurpose and repackage products
across Wilmington's communities and other opportunities, for example allowing
access to overseas markets currently uneconomic for us to address. We expect
these investments and opportunities to be reflected in higher operating
margins principally in our Professional division in the medium term.
Update on Project Sixth Gear and New London Office
With the appointment of the new Divisional director for the Professional
Division on 1 July 2017 an emphasis of Project Sixth Gear has been the closer
integration of our post qualification professional training businesses onto
single integrated platforms. As a result of this move towards single platforms
in November 2017 we have also now completed the final integration of the
remaining UK credit control teams with all credit control activities now based
in Basildon.
During the period we initiated the migration of all our UK IT infra-structure
to a UK based third party specialist. In doing this we are transforming our IT
Services to improve the experience for our global workforce in 24 offices. We
are consolidating four IT support functions into one, introducing 24/7 support
for all staff, and standardising our approach to business continuity. A shared
hosting facility for our internal systems giving us Tier 3 and ISO 27001 data
centres for extra security and a common disaster recovery position has also
been introduced. A third of our workforce is now benefitting from the new
services, and we are on track to complete the migration for all staff and
offices by the end of this financial year.
This initiative to outsource IT has not only strengthened our systems and
increased efficiency but has enabled improved communication, work station
flexibility and remote working as well as reducing our office property
requirements. The new structure, whilst improving business continuity
protection, also offers flexible working for our people which in turn helps
with talent attraction and retention. The costs of this project were £1.1m and
are shown as an adjusting item. The project includes restructuring costs in
respect of our separate IT departments across the UK.
On 2 January 2018 we officially opened our new centralised London offices
which now houses 300 of our London based staff and consolidates our London
office requirements. This investment represents an important step in improving
collaboration and moving to the objective of a "One Wilmington" culture.
We are nearing the end of the consolidation process surrounding Project Sixth
Gear which we expect to be completed during 2017/18.
Acquisitions
On 12 February 2018 Wilmington completed the acquisition of the Interactive
Medica group of companies ("IM") for an initial net cash consideration of
E2.2m with an adjustment for working capital, and further deferred
consideration of up to E1.6m subject to IM achieving stretching annual revenue
targets for the periods to 31 December 2019.
IM provides Wilmington with the high-quality technology solutions that enables
the users of our market leading information to capture, present and analyse
both numeric and text information. The addition of the IM technology will
offer Wilmington's pharmaceutical clients the ability to support an
increasingly complex "go to market" strategy which in turn will enable them to
engage with multiple stakeholders in the healthcare ecosystem.
In recent years, the increased sophistication of sales messages and the need
to demonstrate cost effective outcomes for drugs and other products to be
adopted by national health services or private insurers, has meant it is more
important than ever to have access to the right information at the right time.
IMs proven technology will not only enhance Wilmington's existing product
offerings in the UK but will increase its ability to access other European
markets; an area where Wilmington is actively looking to expand its
offerings.
Wilmington has been acquisitive in the past and we will continue to review
opportunities to enhance growth and to add expertise through selective
earnings enhancing acquisitions consistent with our strategy. Our priority
areas for capital allocation remain compliance, insurance and healthcare as we
focus on adding further scale and expertise to our existing market positions.
Our People
As an increasingly digital information education and networking business,
operating in dynamic and competitive markets, we are fundamentally reliant
upon the quality and professionalism of our people. We would once again like
to express our own and our fellow Board members' appreciation of the hard work
and dedication of all our people. We would also like to take the opportunity
to welcome our new colleagues from Interactive Medica to the Wilmington
family.
Board changes
Following from the announcement of Mark Asplin's intention to step down as
Chairman we are pleased to announce the appointment of Martin Morgan as
Chairman. Martin Morgan will take over as Chairman on 1 May 2018.
We are also pleased to confirm, as previously announced, that Richard Amos
will join the Board on 1 March 2018 succeeding Anthony Foye as Chief Financial
Officer.
Dividend
The Board's policy is to pay a progressive dividend reflecting our confidence
in the vision and resilience of our business models. We are pleased to confirm
that the interim dividend for this year will be 4.0p (2016: 3.9p) per share,
an increase of 3% on last year. It is the Board's intention to maintain its
progressive dividend policy whilst ensuring that a suitable dividend cover of
at least two times adjusted earnings per share compared to the dividend per
share is maintained.
The interim dividend of 4.0p per share will be paid on 6 April 2018 to
shareholders on the share register as at 9 March 2018, with an associated
ex-dividend date of 8 March 2018.
Business Review
Risk and Compliance (34% of Group revenue, 43% of Group contribution)
This division provides in-depth regulatory and compliance accredited training
and information, market intelligence, and analysis. It focuses on the
international financial services and international insurance markets as well
as the UK pensions industry. The main community that uses our offerings is
risk and compliance officers globally.
2017 2016 Movement
£'m £'m £'m %
Revenue 19.6 19.5 0.1 0
Contribution 5.2 5.6 -0.4 -7
Margin % 27 29
Divisional revenue was up £0.1m compared to 2016. We saw excellent growth from
the Risk businesses offsetting a slight decrease in the compliance businesses
with Axco our insurance market intelligence business recording encouraging
growth of 8%.
Compliance
Our Compliance business, which accounts for just over 50% of the division's
revenue, saw revenue down by £0.3m compared to a strong comparator in 2016
largely due to client delays and rescoping of some in-house training
assignments. We did however continue to see good performances in online and in
public courses as well as growth in the new audit programs supported by
continued strong momentum from the ICA membership drive. Reflected in the
in-house delays we are seeing a growing trend away from larger enterprise wide
assignments to specialist, more labour intensive bespoke assignments which now
account for around 30% of our in-house program (up from around 10% last year).
This combined with a downscale and rescope of one of the two major contracts
we had won last year has reduced our expected in-house revenue in the first
six months. In response to this new trend we have been increasing our library
of accredited compliance programs and now have 47 courses (which compares to
43 courses last year).
The contract pipeline for in-house projects for both general and bespoke
training remains robust and this, combined with deferred revenue up £0.7m
(20%) at 31 December 2017, provides encouragement for the start of the second
half year.
During the period we downsized our US office which was opened last year but
had not gained the traction we had hoped for in US public courses. We
transferred the responsibility for the US corporate in-house assignments won
in the US to our team in the UK but the costs and lack of revenue resulted in
an overall operational loss of £0.2m in the period.
Our audit training business ("ICA Audit") which provides support to client
financial enterprises seeking to achieve ISO 19600 (Compliance Management
Systems) has performed well in the period and has won further contracts with
the forward pipeline building strongly.
Compliance Week US Governance Risk and Compliance ("GRC") events and
information business reported revenue up 16% responding to the ongoing program
of investment in new content and technology to reposition the business as a
GRC resource centre which started in 2016/17.
The continued strong underlying performance and activity across our compliance
businesses, notwithstanding the first six months, reflects general demand for
accredited compliance training and qualifications and information supplied
globally both for individual professionals and as part of corporate
assignments. That demand is also reflected in growth of 27% in membership of
the ICA, the global association for compliance professionals, over the period.
Membership of the ICA has more than doubled over the last 12 months.
Risk
The Risk part of the division contains our insurance businesses: Axco, ICP and
Inese and our Pensions business Pendragon. Overall revenue growth was 4% with
Axco, the industry leading provider of insurance market intelligence,
regulation and compliance information, reporting an 8% growth in revenue.
Overall divisional contribution was down £0.4m to £5.2m (2016: £5.6m). Margins
were also down, reflecting, inter alia, reduced in-house compliance training
revenue with an increased technical salary cost base to respond to the demand
for more bespoke content and courses.
Professional (32% of Group revenue, 25% of Group contribution)
This division includes Wilmington's financial training businesses, financial
networking events and our repositioned legal product lines. The Professional
division provides expert and technical training as well as support services to
professionals in corporate finance and capital markets and to qualified
lawyers, expert witnesses and accountants in the UK in both the profession and
in industry. This division serves primarily tier 1 banks, the international
financial services industry, US Capital Markets and small to medium sized
professional accountancy and law firms.
2017 2016 Movement
£'m £'m £'m %
Revenue 18.5 19.5 -1.0 -5
Contribution 3.0 2.7 0.3 10
Margin % 16 14
Divisional revenue declined £1.0m (5%) of which the discontinued legal
practice support business accounted for £0.5m.
The Accountancy products performed strongly, boosted by demand for courses on
recent technical accounting changes including new UK GAAP and the impact on
small and micro-entities. Wilmington also supports over 1500 practices in
summarising the business context of the annual UK fiscal Budget for their
clients. The impact of moving the annual UK fiscal budget from March to
November meant a proportion of this revenue stream was realised in the first
half of the year rather than the second half.
The legal product lines have seen a levelling out of demand previously
associated with the October Continuing Professional Education ("CPE") year
following the recent change to the CPE requirements. Investment bank training
performed well with big client retentions and wins offset by slightly more
challenged trading in the Asia Pacific market.
Good initial progress has been made on rolling out digital products as
explained earlier in this report.
The division increased profits by £0.3m and increased associated margins
benefiting from removing the loss making legal practice support revenue as
well as good overhead control and the encouraging performance from the
Accountancy product lines.
The next six months look encouraging with deferred revenue up 4%.
Healthcare (34% of Group revenue, 32% of Group contribution)
The Healthcare division provides analysis and clarity to customer-focused
organisations predominantly in the Healthcare and Life Science markets,
enabling them to better understand and connect with their markets. This
division includes our UK healthcare information businesses, our Paris based
European healthcare news agency, healthcare networking events and our legacy
non-healthcare data suppression and charity information businesses. The main
communities that use our offerings are healthcare professionals on an
increasingly global basis.
2017 2016 Movement
£'m £'m £'m %
Revenue 20.1 15.8 4.3 27
Contribution 3.9 3.4 0.5 15
Margin % 20 22
Divisional revenue grew £4.3m (27%) driven by a maiden contribution from HSJ
(£4.8m) which performed well. Non-healthcare revenue which represents an
increasingly smaller proportion of the division at 17% was down by £0.2m to
£3.4m (2016: £3.6m) as expected. Overall revenue was down 3% on an underlying
basis.
Within the division the Wilmington healthcare business (excluding HSJ) had a
slower start than anticipated with overall revenue down 2% (£0.3m) albeit
against a strong comparative period last year. High margin pharmaceutical
contract wins in the traditionally strong November and December months, which
mark the end of the UK pharmaceutical financial year, were weaker than
expected, down £0.5m. This weaker demand was caused by delays and uncertainty
over areas such as GDPR, and the greater involvement of the procurement
function, all of which have started to feature in our clients' extended
decision-making process. We have also continued to experience competitive
pressures, particularly from Pan-European data offerings, which we will be in
a better position to counter following the IM acquisition.
Deferred revenue increased by 20% (23% constant currency) led by HSJ and US
healthcare events, but this was partly offset by UK healthcare deferred
revenue which was down by £1.1m reflecting the revenue performance issues
outlined above in December and November.
The sales pipeline for the second half of the year for the UK Healthcare
pharmaceutical business is not as strong as we would have expected. Combined
with the reduction of £1.1m in UK deferred income and a planned reduction in
the number of US healthcare events this will make revenue growth more
challenging overall for the full year.
Benefiting from a contribution of £0.9m from HSJ, overall contribution
increased by 15% (£0.5m) to £3.9m (2016: £3.4m).
Group Overheads
Group overheads, which include plc Board costs, head office salaries, as well
as unallocated central overheads, increased by £0.1m to £1.9m (2016: £1.7m).
Foreign Currency
All of our divisions are to varying degrees affected by translation impacts
from foreign currency exchange rate movements. Wilmington in the year to 30
June 2017 generated around 20% of its revenue in US $ and 10% in Euros. During
the year the Group entered into foreign currency contracts to sell $10m at an
average rate of $1.31 and E5.0m at an average rate of E1.14 which was 80% of
the expected net currency earnings for 2017/18.
Current Trading and Outlook
The performance of the Group in the first half year has been mixed. Healthcare
has had a slower start than expected (which is continuing) whilst other parts
of our business, particularly Insurance and Accountancy and our investments in
new compliance products and content, are performing well.
The second half of the year tends to be more profitable for Wilmington and
will be boosted by the expected positive impacts from IM and from the addition
of a full six months of HSJ. The new areas of compliance, in addition to
Insurance and Accountancy, have performed well and continue to do so. The
second half of the year has also started well for in-house compliance
assignments recovering from a slow start, and benefiting from the growth in
deferred revenue at 31 December 2017. In the case of our Healthcare division
non-pharma product demand is performing as expected but sales in the UK
pharmaceutical side of the business continue to be adversely affected by
uncertainties over GDPR, clients' extended decision making process, and the
impact of Pan-European competition. All of these factors have also been
reflected in a reduction to deferred revenue at 31 December 2017.
We continue to see tighter regulatory control and more complex legislation
implemented in many of our key markets which in turn continues to drive the
demand for our products and services globally. The Board will continue to
review opportunities to add additional growth and expertise through organic
investment and selective earnings enhancing acquisitions consistent with our
strategy with emphasis on compliance, insurance and healthcare.
As we move into the second half, we look forward to delivering another good
set of results for the full year with the business performing broadly in line
with expectations.
Financial Review
Adjusted Results
Reference is made in this financial review to adjusted results as well as the
equivalent statutory measures. Adjusted results, in the opinion of the
Directors, can provide additional relevant information on our future or past
performance where equivalent information cannot be presented using financial
measures under IFRS. Adjusted results exclude adjusting items, profit on
disposals of property, plant and equipment (to the extent it is material or
significant in nature) goodwill impairment and intangible amortisation
excluding computer software. As previously disclosed in the 2017 Annual
Report, share based payments are now included in operating expenses and the
adjusted results in all periods have been updated to reflect this.
2017 2016 Movement
£'m £'m £'m %
Revenue 58.2 54.8 3.4 6
Adjusted EBITA 10.0 9.7 0.3 3
Margin % 17.1 17.7
Revenue
Revenue for the six months to 31 December 2017 increased by £3.4m (6%) to
£58.2m (2016: £54.8m). Excluding the impact of acquisitions, underlying
revenue was down 3% (2016 down 2%).
Operating Expenses before amortisation of intangibles excluding computer
software, impairment of goodwill and intangible assets and adjusting items
Operating expenses before amortisation of intangibles excluding computer
software, impairment of goodwill and intangible assets and adjusting items,
were £48.2m (2016: £45.1m) up 7% reflecting, inter alia, ongoing investment in
new staff and new systems.
Adjusting Items - included in Operating Expenses
Adjusting items of £3.5m (2016: £0.9m) includes £1.9m costs in respect of the
London property portfolio review, £1.1m in respect of the IT outsourcing
project. £0.2m increase in deferred consideration payable in respect of SWAT
following improved financial forecasts, £0.2m in respect of aborted disposal
expense and £0.1m of Project Sixth Gear costs.
Amortisation of Intangible Assets (excluding computer software)
Amortisation of intangible fixed assets (excluding computer software) at £3.4m
(2016: £2.8m) reflecting six months of amortisation of intangible fixed assets
arising on the acquisition of HSJ acquired in January 2017.
Operating Profit
Operating profit was £3.0m compared to an operating profit of £5.9m in 2016
due to additional adjusting items of £2.6m and additional amortisation of
£0.6m, offset by increased adjusted EBITA (see note 5) which increased from
£9.7m to £10.0m.
Finance Costs
Finance costs, which consist of interest payable and bank charges, were up
£0.1m from £0.9m to £1.0m reflecting, inter alia, increased debt associated
with £16.9m spent on the acquisition of HSJ and related costs since 1 January
2017 offset by net cash inflows from the disposal of our Underwood Street
London property and strong cash generation.
Wilmington typically converts over 100% of its adjusted EBITA into funds from
operations before adjusting items over a twelve-month financial period. The
Group sees slightly lower cash conversion in the first half of its financial
year and cash conversion in this period was at 78% compared to 82% last year.
Profit before Taxation
Profit before taxation was down £3.0m from £5.0m to £2.0m.
Taxation
Taxation decreased by £0.4m to £0.8m from £1.2m. The decrease in the tax
expense is due to lower taxable profits but the higher average tax rate at 38%
(2016: 23%) reflects inter alia £2.3m of adjusting items which do not attract
a deduction for corporation tax purposes, and a deferred tax credit resulting
from changes to the US corporation tax rate.
The underlying tax rate which ignores the tax effects of adjusting items was
22% (2016: 23%) which is the underlying rate we anticipate for the remainder
of this financial year.
Earnings per Share
Adjusted Basic Earnings per Share increased by 2% to 7.97p (2016: 7.81p).
Basic earnings per share decreased to 1.43p from 4.43p and diluted earnings
per share decreased to 1.41p from 4.39p.
Goodwill
Goodwill decreased by £1.2m to £84.8m since 30 June 2017 due to currency
translation impacts and a change in the provisional value of the deferred tax
liability arising on the acquisition of Health Services Journal in the year
ended 30 June 2017.
Intangible Assets
Intangible assets decreased since 30 June 2017 by £3.4m reflecting additions
of £1.0m offset by exchange rate movements of £0.4m and offset by amortisation
of £4.0m.
Property, Plant and Equipment
Property, plant and equipment increased since 30 June 2017 by £2.0m to £6.4m
reflecting additions to tangible fixed assets of £2.9m including £2.4m of
leasehold improvements, furniture and computer equipment relating to the
London head office move.
Trade and Other Receivables
Trade and other receivables decreased by £1.6m compared to 31 December 2016
reflecting receivables transferred with the acquisition of HSJ offset by
improved cash collection following the movement of all UK credit control
functions to Basildon.
Trade and Other Payables
Trade and other payables, which include deferred revenue, were up £4.7m
compared to 31 December 2016 reflecting the increase in trade payables of
£2.6m and £2.1m increase in subscriptions and deferred revenue.
Subscriptions and deferred revenue, which represents revenue received in
advance increased by 9% from £24.2m in 2016 to £26.3m. Underlying growth was
1% (constant currency) and HSJ contributed £2.2m to the increase. There was
strong growth in deferred revenue balances for Compliance up 20% (£0.7m),
Professional up 4%, offset by Healthcare (excluding FRA) down £1.1m, and Axco
down £0.2m. FRA's deferred revenue was up £0.3m.
Net Debt
Net debt, which includes cash and cash equivalents, bank loans and bank
overdrafts, was £45.9m (2016: £40.6m), an increase of £5.3m. Net debt
increased, inter alia, due to the acquisitions of HSJ for £16.9m offset by
good operating cash flow. In support of the acquisition of HSJ the Group
increased its debt facility to £85.0m from £65.0m on 17 January 2017 under the
accordion provision of the loan agreement. On 24 November 2017 this facility
was reduced by £10.0m to £75.0m.
Current Tax Liabilities
Current tax liabilities were down by £0.1m to £0.7m at 31 December 2017.
Deferred Consideration
The liabilities of £1.5m and £0.9m relate to the deferred cash payments to the
vendors of SWAT of £1.3m and to the vendors of Evantage of £1.1m.
Dividend
It is the Board's intention to pay a progressive dividend whilst ensuring a
cover of at least two times the Group's adjusted earnings per share over the
dividend per share in respect of the financial year. An interim dividend of
4.0p per share (December 2016: 3.9p) will be paid on 6 April 2018 to
shareholders on the register as at 9 March 2018, with an associated
ex-dividend date of 8 March 2018.
Pedro RosChief Executive Officer Anthony M FoyeChief Financial Officer
Officers
Directors:
Mark AsplinNon-Executive Chairman
Pedro RosChief Executive Officer
Anthony FoyeChief Financial Officer
Derek CarterSenior IndependentNon-Executive Director Nathalie Schwarz Non-Executive Director
Paul DollmanNon-Executive Director
Company Secretary:Daniel Barton
Registered Office: 10 Whitechapel High StreetLondonE1 8QSTel: +44 (0)20 7490 0049 Company Registration Number: 3015847
Consolidated Income Statement
Continuing operations
Revenue 6 58,159 54,813 120,329
Operating expenses before amortisation of intangibles excluding computer software, impairment of goodwill and intangible assets and adjusting items (48,201) (45,100) (96,977)
Adjusting items 7 (3,526) (947) (3,468)
Amortisation of intangibles excluding computer software 7 (3,407) (2,820) (6,028)
Impairment of goodwill and intangible assets 7 - - (2,366)
Operating expenses (55,134) (48,867) (108,839)
Other income - gain on sale of leasehold property 7b - - 6,333
Operating profit 3,025 5,946 17,823
Finance costs 8 (986) (915) (1,961)
Profit before tax 5 2,039 5,031 15,862
Taxation 9 (775) (1,160) (2,988)
Profit for the year 1,264 3,871 12,874
Attributable to:
Owners of the parent 1,245 3,853 12,836
Non-controlling interests 19 18 38
1,264 3,871 12,874
Earnings per share attributable to the owners ofthe parent:
Basic (p) 11 1.43 4.43 14.72
Diluted (p) 11 1.41 4.39 14.62
Adjusted earnings per share attributable to the owners of the parent:
Basic (p) 11 7.97 7.81 19.05
Diluted (p) 11 7.91 7.76 18.91
Diluted (p)
11
7.91
7.76
18.91
The notes on pages 17 to 31 are an integral part of these consolidated
financial statements.
Consolidated Statement of Comprehensive Income
Six months ended 31 December 2017 Six months ended 31 December 2016 Year ended 30 June 2017
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the period 1,264 3,871 12,874
Other comprehensive income/(expense):Items that may be reclassified subsequently to the Income Statement
Fair value movements on interest rate swap (net of tax) 150 336 431
Currency translation differences (909) 1,703 939
Net investment hedges (net of tax) 437 (1,034) (395)
Other comprehensive (expense)/income for the period, net of tax (322) 1,005 975
Total comprehensive income for the period 942 4,876 13,849
Attributable to:
Owners of the parent 923 4,858 13,811
Non-controlling interests 19 18 38
942 4,876 13,849
Items in the statement above are disclosed net of tax. The notes on pages 17
to 31 are an integral part of these financial statements.
Consolidated Balance Sheet
31 December 2017 31 December 2016 30 June2017
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets
Goodwill 12 84,812 73,737 86,028
Intangible assets 12 28,526 29,879 31,911
Property, plant and equipment 12 6,443 4,899 4,444
Deferred tax assets 590 703 820
Derivative financial instruments 4 36 - -
120,407 109,218 123,203
Current assets
Trade and other receivables 13 28,233 29,881 28,444
Derivative financial instruments 4 178 - -
Cash and cash equivalents 11,965 17,233 10,687
40,376 47,114 39,131
Total assets 160,783 156,332 162,334
Current liabilities
Trade and other payables 14 (49,612) (44,914) (52,330)
Current tax liabilities (735) (787) (1,932)
Deferred consideration - cash settled (1,477) (177) (177)
Derivative financial instruments 3a (29) (1,474) -
Borrowings 15 (1,647) (1,237) (925)
(53,500) (48,589) (55,364)
Non-current liabilities
Borrowings 15 (55,844) (56,220) (49,353)
Deferred consideration - cash settled (951) (2,252) (2,305)
Derivative financial instruments 3a (510) (769) (662)
Deferred tax liabilities (3,213) (4,154) (4,585)
Provision for future purchase of non-controlling interests - (100) (100)
(60,518) (63,495) (57,005)
Total liabilities (114,018) (112,084) (112,369)
Net assets 46,765 44,248 49,965
Equity
Share capital 16 4,371 4,362 4,362
Share premium 16 45,225 45,225 45,225
Treasury shares 16 (96) (96) (96)
Share based payments reserve 814 683 898
Translation reserve 2,632 4,305 3,541
Accumulated losses (6,235) (10,297) (4,051)
Equity attributable to owners of the parent 46,711 44,182 49,879
Non-controlling interests 54 66 86
Total equity 46,765 44,248 49,965
The notes on pages 17 to 31 are an integral part of these consolidated
financial statements.
Consolidated Statement of Changes in Equity
Share capital, share premium and treasury shares (note 16)£'000 Share based payments reserve£'000 Translation reserve£'000 Accumulated losses£'000 Total£'000 Non- controlling interests£'000 Total equity£'000
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/(expense) 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
Profit for the period - - - 8,983 8,983 20 9,003
Other comprehensive (expense)/income for the period - - (764) 662 (102) - (102)
49,491 683 3,541 (652) 53,063 86 53,149
Dividends - - - (3,401) (3,401) - (3,401)
Share based payments - 215 - - 215 - 215
Tax on share based payments - - - 2 2 - 2
At 30 June 2017 (audited) 49,491 898 3,541 (4,051) 49,879 86 49,965
Profit for the period - - - 1,245 1,245 19 1,264
Other comprehensive (expense)/income for the period - - (909) 587 (322) - (322)
49,491 898 2,632 (2,219) 50,802 105 50,907
Dividends - - - (4,019) (4,019) (62) (4,081)
Issue of share capital 9 (384) - 375 - - -
Share based payments - 300 - - 300 - 300
Tax on share based payments - - - (27) (27) - (27)
Movements in non-controlling interests - - - (345)
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