Final Results

RNS Number : 7100D

Wilmington Group Plc

18 September 2008

 



    18 September 2008

WILMINGTON GROUP PLC

('Wilmington', 'the Group' or 'the Company')

Unaudited Preliminary Results for the Year Ended 30 June 2008

Wilmington Group plc, the professional information and training group, today announces its unaudited preliminary results for the year ended 30 June 2008.

Highlights

• An excellent year in the continued development of Wilmington - further significant progress in achieving strategic, financial and structural goals

• Fifth successive year of significant growth

• Revenue from continuing operations up 14.7% to £93.4m (2007: £81.5m)

• Adjusted profit before tax up 15.7% to £17.6m (2007: £15.2m)

• Adjusted EPS from continuing operations 11.9% to 13.9p (2007: 12.4p) 

• Total dividend for the year increased by 16.7%  to 7.0p (2007: 6.0p)

• Continued strong operating cash flow

• Strong growth in revenues and profit by Legal & Regulatory division; acquisitions contributing as expected 

• Business Information division re-organised following successful disposal of publishing interests in non-core markets; excellent performance by healthcare businesses  

• Wilmington's businesses enjoy strong subscription bases, high repeatable revenues and strong, cash generative income streams  

David Summers, Chairman, commented:  

'Following the disposals successfully achieved at the start of the year, Wilmington can face the future with a renewed confidence. Focused on 'must have' information and training, operating across an increasingly international platform, we expect the Group to continue to prosper and to create value for shareholders.

'While we remain alert to the current trading conditions across our markets and the general economic outlook, we believe the Group has resilient assets and the resources, ambition and proven management to continue delivering sustainable growth both organically and through acquisition.

'Trading for the first two months of the current financial year is in line with our expectations. Excluding last year's acquisitions, on a like for like basis revenue and profits are ahead of the prior year.'

- ends -

For further information, please contact:

Wilmington Group Plc                                                                                                On the day:    020 7422 6800

Charles Brady, Chief Executive     

Basil Brookes, Finance Director

Weber Shandwick Financial                                                                                                              020 7067 0700

Nick Oborne, Louise Robson or Hannah Marwood       

Notes to Editors

Wilmington Group plc is one of the UK's leading providers of information and training for professional business markets. The Group provides training, arranges industry events and publishes magazines, directories, databases and special reports focused primarily on its two principal sectors of Legal & Regulatory, and Business Information which comprises Healthcare and Media businesses.  

Chairman's Statement

It has been an excellent year in the continued development of Wilmington as a leading provider of information and training for professional markets. We have made significant progress in achieving our strategic, financial, and structural goals. We have delivered strong revenue growth, with record profits from continuing operations, underpinned by robust operating cash flow. The Group has also invested in a range of exciting initiatives for organic growth, made further value-creating acquisitions and seen strong progression in the returns from acquisitions made in prior years.

The Group's strategy is to concentrate on the provision of information and training to selected professional business markets. We believe we can derive the best returns for our shareholders by concentrating on resilient professional markets and by focusing investment in key niche sectors with the capacity for strong and sustainable growth.

On 14 August 2007 we completed the disposal of Wilmington Media and Dewberry Redpoint for a cash consideration of £12m. As a consequence of this disposal we have significantly reduced our dependency on magazine display advertising and non-professional markets - a timely decision given current economic conditions - having retained strong information-centric businesses with significant subscription revenues that historically have low cyclicality.

On 26 November 2007 we completed the acquisition of 80% of The Matchett Group Limited ('Matchett'), a professional training business specialising in the provision of graduate induction courses for major investment banks both in the UK and the US, for an initial cash consideration of £5.7m and the repayment of existing debt of £3.9m. The integration of Matchett into the CLT Group is progressing smoothly; it has performed to expectations since acquisition and provides an important additional dimension to our international expansion.

On 15 February 2008 we completed the acquisition of 100% of AP Information Services ('APIS'), an information and database publisher for the professional pensions, finance, and HR markets, for a total cash consideration of £5.5m. On 3 April 2008, through APIS, we completed the acquisition of 100% of Aspire Publications, a joint-venture business that was operated by APIS, for a total cash plus deferred consideration of £1.8m. These acquisitions have been integrated into the Waterlow Legal & Regulatory division, strengthening Waterlow's focus on high quality information businesses with high levels of subscription revenues and have traded in line with our expectations.

On 28 July 2008 Wilmington announced that it had received an approach that might, or might not, lead to an offer for the Group, and entered into an offer period as defined by the Takeover Panel.  On 15 September we announced that the Company is no longer in discussions with any party regarding a potential offer for the Company. Accordingly, the Company is no longer in an Offer Period for the purposes of the City Code on Takeovers and Mergers.

Financial Performance

The financial results for the year ended 30 June 2008 show significant progress as highlighted by our key financial and operational targets of:

• adjusted profit before tax

• adjusted earnings per share

• cash flow

• consistent and sustainable revenue streams 

• underlying operating margin.  

Revenue from continuing operations in the year grew by 14.7% to £93.4m (2007: £81.5m). Profit from continuing operations before tax, amortisation, non-recurring items and interest increased by 12.9% to £18.6m (2007: £16.5m). The adjusted profit, (before tax, amortisation, share based payments and non-recurring items) increased by 15.7% to £17.6m (2007: £15.2m). 

This is the fifth successive year of significant growth in adjusted profit, which underlines the quality of the Wilmington Group portfolio and reinforces our confidence that we can continue to create value for shareholders.

Adjusted earnings per share from continuing operations grew by 11.9% to 13.9p per share (2007: 12.4p), maintaining our trend of strong earnings per share growth. Basic earnings per share, which includes non-recurring items, declined largely due to the prior year benefiting from the recovery of an inducement fee of £1.2m in respect of professional costs incurred in 2006. 

During the year the Company purchased 1,917,000 of its own shares into treasury at a cost of £4m.

The quality of the operating profits continues to be underpinned by strong cash flow. Operating cash flow was £18.6m (2007: £19.0m), representing 100% of operating profit (before non-recurring costs, amortisation, interest and taxation). At 30 June 2008 the Group had net debt of £17.9m, representing less than 30% utilisation of our £60m committed facilities.

Dividend

The Board remains committed to a progressive dividend policy and proposes a final dividend of 4.7p per share payable on the 7 November 2008 to shareholders on the register on 10 October 2008. Taken together with the interim dividend of 2.3p per share, this makes a total dividend for the year of 7.0p per share ( 2007: 6.0p), an increase of 16.7% over the prior year, reflecting both the Group's continuing strong cash generation and the Board's confidence in the future. The dividend is covered 2.0 times by adjusted earnings per share from continuing operations (2007: 2.1 times).

Highlights of the Year

We have once again achieved our ambition of delivering strong growth in adjusted profit before tax and adjusted earnings per share. 

Legal and Regulatory 

Revenue has grown 15.4% to £75.4m (2007: £65.3m), boosted by the acquisitions of Matchett (November 2007) and APIS (February 2008). Segmental profits before central overheads and amortisation have grown by 14.0% to a record £17.9m (2007: £15.7m). We have seen excellent performances in many areas of this division.  

Waterlow Legal & Regulatory has performed well with Pendragon, Ark and Smee & Ford all growing strongly. We were pleased to acquire APIS and Aspire in February and April 2008, they are high quality information businesses with particular strength in the pensions market, which earn a large majority of their revenues from subscriptions. We are confident that these assets will continue to develop within our environment and deliver an excellent return on capital.

The CLT Group had another year of continued growth, whilst at the same time maintaining its policy of substantial expensed investment in the development of new product areas and new markets.  This strategy is best illustrated by the investment of circa £500k this year in Singapore, following the request by the Singapore Government in July 2007 to develop a major programme of compliance training.  We are already beginning to see positive outcomes from this investment, with all the new programmes now having gained accreditation by the Singapore Government and Education Authorities.

The CLT Group, over the year, has continued its policy of integrating newly acquired companies within the Group and also making further acquisitions to extend the range of professional training markets it serves.  Mercia Group has just completed its first full year as part of the CLT Group and has produced a very strong performance, exceeding expectations in relation to both turnover and contribution.  The newly acquired Matchett, which became part of CLT Group in November 2007, has given us a strong foothold in the banking and finance markets and has achieved turnover and contribution fully in line with the pre-acquisition expectations.  There is a continuing process of integrating the Matchett Group within the CLT Group as a whole. Matchett's trading for the first two months of the current financial year, traditionally its two biggest months of the year, are ahead of the prior year and in line with our expectations.

Business Information

Revenue from continuing operations has grown 11.8% to £18.0m (2007:£16.1m). The Business Information division accounts for 19.3% of Group revenue producing 14.2% of Group trading profit. Segmental profits before central overheads and amortisation have remained stable at £3.0m (2007:£3.0m). Segmental profits have been impacted by a new structure for divisional overheads which was required following the disposal of Wilmington Media and Dewberry Redpoint in August 2007. 

The successful disposal of our publishing interests in non-core markets has allowed us to reorganise our healthcare and, in particular, the media & entertainment assets within the Wilmington Business Information ('WBI') subsidiary of the Group. Our recent focus has included consolidating these divisions into fewer locations, investing in their infrastructure and reorganising the management structures.

This division includes Binley's, our UK health information business, Agence de Presse Medicale, the French language health newswire service, and HPCi, our health, pharmaceutical and cosmetic publications. Media & Entertainment provides a range of titles and data assets in the Press, PR, Sponsorship and Entertainment markets.  

Prior Period Adjustment

The Financial Reporting Review Panel ('the Panel') has reviewed the report and accounts of the Company for the year ended 30 June 2007 and concluded that the Company's treatment of minority put options as contingent liabilities was not in accordance with paragraph 23 of IAS 32 'Financial instruments: presentation' which requires a liability to be recorded for all contracts that contain an obligation to purchase own equity instruments for cash.

The directors have accepted the Panel's conclusions and have corrected the treatment of the minority put options by way of a prior period adjustment. The effect of the adjustment at 30 June 2007  is to increase liabilities from £59.3m to £65.6m and to reduce shareholders' funds (within minority interests) from £69.1m to £67.7m, with a corresponding adjustment to goodwill. There is no effect on the income statement or the cash flows of the Group.

Outlook

Following the disposals successfully achieved at the start of the year, Wilmington can face the future with a renewed confidence. Focused on 'must have' information and training, operating across an increasingly international platform, we expect the Group to continue to prosper and to create value for shareholders.

While we remain alert to the current trading conditions across our markets and the general economic outlook, we believe the Group has resilient assets and the resources, ambition and proven management to continue delivering sustainable growth both organically and through acquisition.

Trading for the first two months of the current financial year is in line with our expectations. Excluding last year's acquisitions, on a like for like basis revenue and profits are ahead of the prior year.

Finally, and as always, I would like to thank my fellow Directors, Senior Managers and all of the Group's employees who have contributed to this year's successful results for their innovation, hard work and commitment.

David Summers

Chairman

BUSINESS REVIEW

Overview of the Group's Financial Performance

In the year ended 30 June 2008 Wilmington generated record profits and margins. Revenue from continuing operations grew by 14.7% to £93.4m (2007: £81.5m). Adjusted profit before tax grew by 15.7% to £17.6m (2007: £15.2m). The EBITA from continuing businesses grew by 12.9% to £18.6m (2007: £16.5m).  

On 14 August 2007 the Group received £12m from the disposal of Wilmington Media Limited and Dewberry Redpoint Limited, which together owned the Group's business serving the Design and Construction, Catering, Automotive and other specialist markets. The after tax results of the businesses disposed of have been shown as discontinued in the income statement. 

On 26 November 2007 the Group acquired 80% of Matchett for an initial cash consideration of £5.7m and the repayment of existing debt of £3.9m.

On 15 February 2008 the Group acquired 100% of the share capital of APIS, for a total cash consideration of £5.5m. On 3 April 2008, through APIS, the Group completed the acquisition of 100% of Aspire Publications, a joint-venture business that was operated by APIS, for a total cash plus deferred consideration of £1.8m. 

At the balance sheet date the Group had net debt of £17.9m (2007: £11.9m) reflecting the acquisitions of Matchett and APIS and £4.0m spent on the share buy back programme, partly offset by the cash received from the disposal of Wilmington Media and Dewberry Redpoint and the strong underlying operating cash flows generated by the Group.

Earnings per Share

Adjusted earnings per share from continuing operations increased by 11.9% to 13.9p (2007: 12.4p). This increase follows four consecutive years of strong growth in adjusted earnings per share.

Total earnings per share (from continuing and discontinued operations) decreased by 18.9% to 8.9p (2007:11.0p). Total adjusted earnings per share (for continuing and discontinued operations) decreased by 2.7% to 13.5p (2007:13.9p) Both of these reductions are largely due to the prior year benefiting from the recovery of an inducement fee of £1.2m in respect of professional costs incurred in 2006.

Earnings and adjusted earnings per share are calculated on the weighted average number of shares in issue of 83,356,950 for the year ended 30 June 2008 (2007: 83,989,179).

Taxation

The Group tax charge of £3.6m represents 29.4% of the profits before tax (2007: 26.7%). This rate is in line with the Group's effective Corporation tax rate of 29.5% following the reduction in UK Corporation tax from 30% to 28% on 1 April 2008.

Treasury Policy

Treasury policies are approved by the Board. The executive directors have delegated authority to approve finance transactions with agreed terms of reference. The Group's financial instruments comprise principally bank borrowings and associated hedges, cash and various other items that arise directly from its trading operations such as trade debtors, trade creditors and subscriptions and fees in advance. The main purpose of these financial instruments is to ensure that finance is available for the Group's operations. 

The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. These policies are unchanged from the previous year.

• Interest rate risk

The Group finances its operations through a mixture of retained profits and bank borrowings. The Group has expanded rapidly its operations both organically and by acquisition. This expansion has led on occasions to the need for external finance. The Board has chosen a credit facility with a floating rate of interest linked to LIBOR and has hedged its interest exposure on a proportion of this facility during the year. In November 2006 the Group entered into a 5 year £15 million interest rate swap whereby it receives interest on £15 million based on 3 month LIBOR and pays interest on £15 million at a fixed rate of 5.23%. This derivative has been designated as a cash-flow hedge in order to manage interest rate risk associated with the first £15m of the credit facility. Payments received under the swap have been matched against interest paid quarterly during the year and the entire gain on the hedge has been recognised in equity, following the directors' assessment of the hedge's effectiveness.  

The Group had net borrowings at 30 June 2008 of £17.9m (2007: £11.9m) and had a committed bank facility of £60 million (2007: £60 million) of which £18 million was drawn down at 30 June 2008 (2007: £13 million).

      b.  Liquidity risk

The Group and Company's policy throughout the period has been to ensure continuity of funding by the use of a £10 million overdraft facility and a committed revolving credit facility of £60 million.

      c.   Foreign currency risk

The Group has a substantial customer base overseas. The Group maintains bank accounts in foreign currency and converts this currency to sterling at the appropriate times minimising the exposure to exchange fluctuations. On 19 May 2008 the group sold forward 1 year €1m at a rate of 1.2497. This approximates to the after tax profits of APM, the Group's principal operation in the eurozone. Any gain or loss on this hedge is recognised in the income statement.

Business Objectives and Strategy

Wilmington's strategy is to increase shareholder value by delivering sustainable and growing profits from servicing the information and training requirements of professional business markets. 

We aim to develop strong businesses delivering sustainable profit growth in our key markets by:

• focusing investment, both acquisitive and organic, on those markets;

• providing well researched and accurate information in a variety of formats and by developing innovative new products and solutions to extend and enhance our product range;

• investing in on-line and digital technology to create new products, access new markets and to manage our business efficiently; and

• maintaining strong sales and marketing capabilities.

Wilmington's repositioning over recent years has, amongst other benefits, served to increase its resilience to changes in market conditions, a strategy that is proving sound in the current economic climate. Our strong subscriptions-based businesses reflect our investment strategy to acquire businesses with not only high repeatable revenues but also strong, cash generative income streams.

Long term, an increase in demand for professional information and training services both in the UK and abroad should benefit Wilmington. Our percentage of revenues outside of the UK as a percentage of total revenue has been growing strongly year on year and is now at 15.2% (2007: 14.6%). We expect this proportion to increase again next year as our investment in the South East Asian region begins to reap rewards.

Achieving and Exceeding Key Financial and Operational Targets

At a Group level we have five key financial and operational targets. In addition, each of the operating divisions monitor a number of key performance indicators. This year has marked another excellent period of progress against all our financial and operational targets.

     1.    Adjusted Profit Before Tax 

This measure indicates the trading profits of the Group, after bank and interest charges, but before amortisation and impairment of intangible assets, non-recurring items, and share based payments. Amortisation is a non-cash technical adjustment which does not necessarily reflect the inherent value of assets. This is particularly the case where the value of assets has been enhanced as a consequence of management action.

In the year to 30 June 2008 adjusted profit before tax increased by 15.7% to £17.6m (2007: £15.2m). This is the fifth year in succession we have seen strong growth in our key measure of adjusted profit before tax.

     2.    Adjusted Earnings per Share

      This key measure indicates the underlying profit attributable to shareholders. It measures not
      only  trading  performance, but also the impact of treasury management, bank and interest charges, as
      well as the efficient structuring of the Group to minimise taxes. Our business and financial strategy is        
     directed at delivering consistent adjusted earnings per share growth. Our incentive programmes are 
     designed to support this strategy.  

In the year to 30 June 2008, adjusted earnings per share from continuing operations increased by 11.9% to 13.9p per share (2007: 12.4p). This is the fifth year of strong adjusted earnings per share growth. 

       3.  Cash flow

The quality of the operating profits is underpinned by the strong cash flow. The Group's business is strongly cash generative; operating cashflow for the year ended 30 June 2008 of £18.6m was 100% of operating profit before interest, amortisation and impairment of intangible assets and non-recurring items (2007: £19.0m, 107%). Free cashflow, which is calculated after deduction from operating cashflow of capital expenditure, payment of corporation tax and payment of interest, was £10.4m (2007: £12.0m) reflecting higher tax payments than the prior year and an investment in working capital.

      4.   Consistent and Sustainable Revenue Streams

The disposal of the Group's non-core assets in August 2007 led Wilmington to consolidate its portfolio of assets with the core focus of its revenue streams based in key professional markets. Historically the Group derived the majority of its revenue from magazine display advertising. By contrast, in this financial year, magazine display advertising accounted for less than 3% of total revenues. This push towards more robust and sustainable revenue streams has resulted in a strong portfolio of offerings, which includes:     

• professional directories; 

• information sales;

• professional training;

• events and conferences;

• professional magazines; and

• professional accreditation and assessment 

The Group has continued its efforts to increase the supply of its products and services on-line or digitally, but remains conscious of the needs of markets which continue to prefer products produced in hard copy format. Our businesses are supported by management and delivery systems utilising the latest technology. We have invested considerable resources in the improvement of our operating systems and web sites which will deliver benefits in the current year and beyond.  

The Group analyses its revenue streams on the following basis:

• Subscription and copy sales 26% of revenue (2007: 26%);

• Professional education and events 42% of revenue (2007: 43%);

• Information sales and professional services 20% of revenue (2007: 19%);

• Directory advertising 9% of revenue (2007: 8%);

• Magazine advertising 3% of revenue (2007: 4%);

This represents a broad revenue base and reflects the Group's ongoing strategy to ensure that there are no significant dependencies on specific sources of revenue.

     5.    Operating Margin

The operating margin reflects the quality of the Group's revenue steams. Improving the operating margin is a key goal for the Group.  Our adjusted operating margin increased to 20.1% following the disposal of our non-core assets, compared to 17.1% during the period in which the non-core assets were included in the Group's operations.

 
This performance indicator needs to be carefully analysed. It can be distorted by investments where expenditure on new products and services is written off when incurred. In addition, Wilmington seeks to acquire businesses where there is the potential for significant profit improvement and has a good track record of acquiring businesses where we have been able to substantially enhance profit margin and overall profit returns.

We seek to achieve further improvement in the Group's operating margin during the current year as we realise the benefit of the investments made in new initiatives and acquisitions.

A further measure to which we pay particular attention is the investment in digital and electronic systems. We have not presented any specific figures for the Group as a whole as they may be misleading without detailed analysis. However, we continue to invest heavily in digital content management, customer management and production systems, new web sites, on-line information delivery and on-line and electronic support systems. This investment has helped achieve our goals of improved profit margins and greater efficiency, we believe that there are many opportunities to continue this development in the future.

Principal Risks and Uncertainties

The key challenges facing Wilmington arise from the highly competitive and rapidly changing nature of our markets, the increasing technological nature of our products and services and the legal and regulatory uncertainties. Certain parts of our businesses are also affected by the impact of changes in professional regulations (often positive) and by the impact of the economic cycle on advertising and promotional spending. 

Historically, Wilmington has been exposed to high levels of cyclical risk due to a reliance on magazine advertising as a major revenue source. With the disposal of our non-core assets, we have substantially reduced our exposure to variances in spending on magazine advertising, putting us in a better position to achieve sustainable profit growth.  

Wilmington has an established risk management procedure that is embedded in the operations of its trading divisions and is reviewed by the Board. All parts of the business identify risks and seek to ensure that procedures and strategies are in place so that risks can be managed wherever possible. 

Some of the main challenges which affect the Group as a whole include the following:

• Wilmington is a people based business where failure to attract or retain key employees could seriously impede future growth. To ensure staff retention the Group operates competitive remuneration packages with attractive bonus arrangements for key individuals. Just as importantly, it operates a culture where each individual can maximise his or her potential.

During the year under review the Group has extended the range of benefits offered to staff, with more flexibility to suit individual needs. Many members of staff have been given access to training programmes and in many cases entrusted with additional responsibilities.  

     2.    Wilmington's business is increasingly dependent on electronic platforms and distribution systems,      
            primarily the Internet for delivery of its products and services. Whilst our businesses could be 
            adversely affected if these electronic delivery platforms and networks experienced a significant failure, 
            interruption, or security breach, the Group is sufficiently diversified to ensure such disruption is 
            minimised. During the year under review the Group has continued to invest in new systems and 
            electronic platforms with greater protection against failure.

     3.   Our products and services largely consist of intellectual property content delivered through a variety of 
            media. Wilmington relies on trademarks, copyrights, patents and other intellectual property laws to
            establish and protect its proprietary rights in these products and services. The Group makes every effort
             to protect this asset base and actively pursues any infringements. 

      4.   The businesses can be sensitive to disruptions such as Government legislation, adverse regulatory 
            change, terrorism, natural disasters and other significant adverse events. During the year under review
            there were no major incidents to report, nevertheless we maintain and have extended our disaster 
            recovery plans to mitigate the consequences of potential adverse events. Our insurance cover includes
            terrorist activities.

The Board recognises that Wilmington's business has an impact on the environment, principally through the use of energy, waste generation, paper use and print and production technologies. We are committed to reducing the impact wherever possible and to employing sustainable materials and technology. We seek to ensure that Wilmington's divisions are compliant with relevant environmental legislation and require our suppliers and contractors to meet the same objectives. Furthermore, our progress towards a more digitally based business is reducing our environmental impact. Accordingly whilst environmental issues are important we do not believe that they constitute a risk for the Group.

Wilmington's People

In a competitive environment, Wilmington's growth and success depends on a key asset - the abilities, skills and commitment of the people it employs. We are fortunate to benefit from their experience, professionalism and enthusiasm that provide the basis for a successful growing business. 

As Wilmington moves towards a greater emphasis on digital and interactive services we need to develop new capabilities, as well as new technical and management skills to make these services work. We are responding by developing our people through training and injecting new talent where it is needed. Each of our businesses is working hard to identify and bring on the necessary talent, both from within the organisation and from outside. 

We are a talent dependent business, requiring excellent people with a passion for their brands and subject matter. We are committed to developing and rewarding our people and creating a culture in which they can thrive. The shape of this activity varies from business to business with each operation attracting and developing its people in ways appropriate to its own markets. 

Whilst recognising the benefits of Wilmington's devolved business culture we are encouraging links between our businesses where there are opportunities to collaborate, share ideas, technical expertise and best practice. 

We offer every opportunity for Wilmington people to advance their careers and fulfil their potential. There is plenty of evidence that this is happening. Vacancies are advertised internally as well as externally in order to make it as easy as possible for employees to look for opportunities within the Group. 

We continue to invest in technology and systems across the Group. This year will see us upgrade our group accounting system, streamlining the process so that information can be analysed more thoroughly, leading to better decision making. Major upgrade changes to technology have required considerable perseverance and dedication from Wilmington's people who have planned and implemented the changes. We strive for continuous improvement within the Group, which often results in major investments being made in our systems to manage content, customers and processes.

Wilmington's Directors and executive management continue to believe that the best way for the Group to achieve the high levels of growth it desires is to retain and attract the very best people. The Board is determined to ensure that Wilmington remains a great place to work, where people have the opportunity to challenge themselves, grow professionally and benefit from high levels of remuneration and incentives. Only by continuing to develop the skills of our current teams and by recruiting the very best new talent can Wilmington achieve to grow at a sustainable rate. 

Legal and Regulatory

This is our largest division, accounting for 81% of Group turnover from continuing operations and contributing 86% of Group trading profit from continuing operations. Revenue grew by 15.4%, to £75.4m (2007: £65.3m) while trading profit increased by 14.0% to £17.9m (2007: £15.7m) giving operating margins of 23.8% (2007: 24.1%). Whilst the increase in turnover and profits was partly due to the acquisition of Matchett Group, APIS and Aspire we are pleased by the organic profit growth at a time when we are investing heavily in systems, new marketing and product development. Our Legal and Regulatory division is a resilient and growing business, combining high quality 'must have' information with a range of focused, market leading products and events.

Waterlow Legal and Regulatory

Waterlow provides information, magazines, events and services to the legal, charity, accountancy, surveying, pensions, knowledge management and finance markets. Waterlow's products, some of which date back over 160 years, are clear market leaders with high quality proprietary content and strong customer renewal rates. They provide resilient profit streams in solid professional markets.

In the year to 30 June 2008, Waterlow Legal and Regulatory's revenue grew by 6.2%. Trading profit grew by an encouraging 14.2%, due in part to the successful reorganisation of Ark, and margin consequently grew strongly by 2.1% to 31.4%.

In addition to products for professional markets, published under the Waterlow brand, subsidiary brands include:

Pendragon, which provides the leading electronic information service for UK pensions professionals.

AP Information, which was acquired in February 2008 and is the leading provider of information on UK and International Pension Funds and also publishes a range of business databases.

ICP, is a leading provider of financial information on companies worldwide, specialising in emerging markets.

Charity Choice, the market-leading product through which UK charities promote themselves to the legal profession and individual donors.

Smee & Ford, which has been a provider of legacy information to charities in the UK for over 100 years and the owner of the leading mortality data files for mailing suppression and the prevention of identity fraud.

Caritas, the leading provider of financial analysis of charitable organisations in the UK.

Solicitors Journal, a leading weekly magazine and portfolio of products for the legal profession.

Ark, a leading publishing and events business focusing on knowledge management and professional practice management. 

All Waterlow's markets have common characteristics including large professional client bases with strong information needs, increasing regulatory requirements and sustainable demand. These characteristics have provided a strong base upon which Waterlow has been able to develop a cash generative and growing business with excellent margins.

The business has seen constant growth in sales and profits in recent years as a result of both strong organic growth and the successful integration and development of acquisitions.

Acquisitions are chosen, acquired and developed with the clear objective of maximising return on capital. In recent years we have been able to generate returns of over 20%, significantly in excess of our cost of capital.

We were encouraged to see subscription and copy sale revenues increase to 31% of total sales this year (2007: 26%). This illustrates the increasing quality of earnings in the business. In addition to pure subscription sales, the revenues derived from these subscription customers amounted to 37% of total sales.

An important characteristic of Waterlow's publishing business is the resilience and subscription-like characteristics of its directory advertising, which achieved renewal rates approaching 75% in the last year.

The importance of the digital capture, manipulation and delivery of information for our business continues to grow and is a key driver of our increasing margins. In the year to June 2008 the proportion of revenues derived from products and services delivered electronically increased to 51% (2007: 49%). 

The development of our recent acquisitions has also continued in an encouraging manner. Ark and Smee & Ford, two recent acquisitions, saw their combined contribution increase by 32%. Our margins on these businesses increased by 9% to 28%, demonstrating the success we have achieved in improving profit margins of acquired businesses. APIS and Aspire, which we acquired in February and April 2008, contributed encouragingly in the year to June 2008. We are confident that they will show a healthy return on capital in the year to June 2009 and we have already been able to achieve some material synergies and technology exchange with other divisions within Waterlow. 

We continue to seek other acquisitions where we can generate further value for our shareholders and believe the current environment offers some excellent opportunities to acquire assets at attractive prices.  

CLT Group

In November 2007 the CLT Group made the second largest acquisition in the history of the Wilmington Group plc with the purchase of The Matchett Group Limited. Matchett is the leading provider of graduate entrant training to investment banks in London, New York and the Far East. In addition to providing skills and management training to large corporate companies and public sector bodies, Matchett also possesses a learning technology division which has provided great synergy for the development of online provision of services throughout the CLT Group. 

In the seven months to the end of June 2008, in which Matchett has been part of the CLT Group, its performance both in relation to turnover and contribution has been fully in line with pre-acquisition expectations. 

The CLT Group comprises a number of individual companies:-

Central Law Training serves the legal and financial markets and is the market leader for the provision of mandatory post-qualification training courses and accredited programmes for UK lawyers. It delivers more than 4,000 training courses per year.

On a like for like basis, revenue and profits were ahead of the previous year. The Public Continuing Legal Education events are underpinned by its subscription membership base which comprises most major law firms, government departments, local authorities and many in-house legal departments.  

The investment made in course administration programmes, product development and marketing capability has maintained Central Law Training as the market leader in Continuing Legal Education.  

CLT Scotland followed its business success in the year to 30 June 2007 with another record year, enjoying a 24% growth in contribution. 

The company has continued to present its programmes in association with the University of Strathclyde and, working with the University, has provided for the first time a training programme aimed at enabling lawyers outside Scotland to qualify as Scottish lawyers. 

The company continues to build upon its successful association with the University of West of England which has resulted in a successful paralegal training programme being provided throughout England and Wales. 

CLT Ireland continues to invest in the development of both professional witness training and legal training in Ireland. This investment has manifested itself not only in the development of new training programmes but also in the appointment of new personnel based at its city centre Dublin offices. The company has performed well ahead of expectations during the year with a 20% growth in turnover and a 48% growth in contribution. 

Mercia was acquired by CLT Group in October 2006 and has just completed its first full year as part of the CLT Group. Mercia is the leading provider of technical, marketing and training support to the Accountancy profession. It also has subsidiary companies being Mercia Northern Ireland and Mercia Republic of Ireland. The Mercia Group also comprises Practice Track, a company which it purchased in April 2007. 

The first full year trading of the Mercia Group has resulted in a very strong performance, exceeding expectations, both in relation to turnover and contribution.

Quorum was acquired by the Group in May 2005 and develops and presents high quality financial training programmes, primarily to finance professionals within large organisations in the public and private sectors. These programmes complement those presented by Mercia to the Accountancy private practice sector. 

CLT International's products comprise a range of programmes which include a programme for the Society of Trusts and Estate Practitioners which operate in the UK and Internationally. Overall revenues in this area have increased by 16% over the year with continuing growth in UK enrolments and overseas jurisdictions.

CLT International also comprises ICT, its compliance training arm, which operates both internationally and in the UK. One of the major outcomes of the continuing investment of the company has been in the compliance area with the commencement of a major training programme with the Singapore Government for the development and presentation of Compliance Training in Singapore. The Company has established a major office in Singapore and has appointed a high level team of administrative and professional staff. The enrolments on the training programmes in the first year of trading in Singapore have been in line with expectations. 

ICT has recently expanded its jurisdictional base with the establishment of offices in Dubai from where it presents compliance training and consultancy. 

Bond Solon is the market leader in the United Kingdom for the provision of expert and professional witness training programmes. The extension of its current programmes and the increasing provision of legal training for non-lawyers has again resulted in another year of growth for the company. 

Business Information  

This division provides information, magazines, events and services to the healthcare and media & entertainment markets. The Health businesses made excellent progress in the face of restructuring within the pharmaceutical industries. The Media & Entertainment assets were consolidated into our central London location and our organic investment in these products has provided a solid platform for growth and margin development.

APM is our specialist Press Agency based in Paris with an office in London. A 16% improvement in revenues reflects good progress despite difficult European and global markets in the Pharmaceutical sector. APM is the leading provider of online healthcare news to its home market. It continues to build its European brand through its new English language product APM Health Europe and we expect good organic growth in both the home market products and the European product in the current financial period.

Binley's provides specialist contact information and sales management solutions to the healthcare and pharmaceutical industries. It continues to invest strongly in organic growth and has made excellent progress particularly with its data and CRM services where quality has allowed it to take further market share in difficult conditions. Revenue overall has grown by an excellent 24%. Revenues from delivering its information products have been supplemented by increasingly adding value for its clients through analytical tools, data-centric consultancy projects and other extensions such as learning events delivered through its increasingly valuable brand.

HPCi provides information through periodicals, annuals, websites and events to the manufacturing side of the Health, Pharmaceutical and Cosmetics markets. The division was relocated from Kent to central London and delivered 6% revenue growth in the period. Its leading titles such as Manufacturing Chemist and Soap, Perfumery & Cosmetics (SPC) have an ongoing investment programme in electronic delivery and continue to meet market needs with web products which delivered revenue increases of 39% during the year, allowing HPCi to maintain advertising revenues and yields.  

Media & Entertainment provides information and services to the press, public relations, entertainment and sponsorship sectors. It operates through a number of leading brands including Hollis, Press Gazette, The Knowledge and PCR providing its information as electronic products, newsletters, directories and events. This sector is increasingly delivering its information through the Internet.  

During the period we closed our West London office (Teddington) and relocated the PR and Sponsorship teams to an existing central London office. In a challenging year for this division we have invested in infrastructure, product development and market presence. Revenues grew by 6% in the period and we expect the base created in 2007/8 to allow us to develop the profitability and margins in 2008/9.

Muze Europe is a 50:50 JV with our American partners Muze Inc, who are based In New York. It supplies information on music, video and games to retailers, e-retailers and increasingly companies involved in digital distribution of music and entertainment products. Last year we anticipated change in the structure of how music, video and games are distributed to consumers and that during the transition there would be a period of churn in this market. We consequently saw revenues decline by 6% as some key clients who had not reacted to the changing market either scaled back or ceased to trade. However, we remain well placed to take advantage of the growth that should resume as the market for digital products expands and matures, replacing the declining market for physical products.

Acquisitions and Disposals 

We have carefully formulated acquisition and disposal criteria together with rigorous post-acquisition analysis. As a result of this approach we are able to report the success of our recent acquisitions both in terms of return on capital and in terms of the improvement that we have been able to achieve in profitability and profit margins. We seek not only to secure a good rate of return on capital but also we purchase assets only if we believe we can drive profit growth and improved margins from those acquisitions. 

In July 2007 Mercia Group acquired 51% of Clientzone. The company provides a web based platform allowing online access to software applications and data to Mercia's clients.  

In August 2007 the Group sold its interests in Wilmington Media and Dewberry Redpoint.  

With effect from 15 August 2007 CLT Group acquired the remaining 20% share capital of La Touche Bond Solon Training.  

In November 2007 we acquired 80% of the shares of The Matchett Group, a professional training business with particular emphasis on the annual graduate induction courses for major investment banks in the UK and the US.

In February 2008 and April 2008 we acquired AP Information Services and Aspire Publications respectively, leading providers of specialist information on pension funds and their advisers.

  WILMINGTON GROUP PLC

Consolidated Income Statement 

For the year ended 30 June 2008 

	Notes	Year ended 30 June 2008 £'000	Year ended 30 June 2007 £'000
Revenue	2	93,403	81,453
Cost of sales		(28,594)	(27,064)
Gross profit		64,809	54,389
Operating expenses excluding amortisation	3	(46,202)	(37,904)
Amortisation	3	(5,276)	(3,922)
Profit from continuing operations before non-recurring items		13,331	12,563
Non-recurring items	4	-	1,208
Profit from continuing operations after non-recurring items		13,331	13,771
Finance revenue	5	331	140
Finance costs	5	(1,481)	(1,379)
Profit on continuing activities before taxation		12,181	12,532
Income tax expense	6	(3,585)	(3,343)
Profit on continuing activities after taxation		8,596	9,189
(Loss)/profit on discontinued operations after taxation	7	(365)	696
Net profit for the year		8,231	9,885
Attributable to equity holders of the parent		7,447	9,246
Minority interest		784	639
Earnings per share attributable to equity holders of the parent
Continuing operations:	9
Basic earnings per share		9.37p	10.18p
Diluted earnings per share		9.34p	10.14p
Continuing and discontinued operations:
Basic earnings per share	9	8.93p	11.01p
Diluted earnings per share		8.91p	10.97p

 WILMINGTON GROUP PLC

Consolidated Statement of Recognised Income and Expense 

For the year ended 30 June 2008 

Year ended 30 June 2008 £'000

Year ended 30 June 2007 £'000

Capital reserve realised on disposal of subsidiaries	949	-
Interest rate swap (loss)/gain taken directly to equity	(150)	560
Actuarial gain taken directly to equity	-	197
Tax on items taken directly to equity	(242)	(227)
Net income recognised directly in equity	557	530
Net profit for the year	8,231	9,885
Total recognised income and expense for the year	8,788	10,415
Attributable to
Equity holders of the parent	8,004	9,776
Minority interests	784	639
	8,788	10,415

 WILMINGTON GROUP PLC

Consolidated Balance Sheet

As at 30 June 2008     

	Notes	As at	As at
		30 June	30 June
		2008	2007
		£’000	£’000
			(Re-stated)
Non-current assets
Goodwill	11	69,435	52,941
Intangible assets		34,818	31,615
Property, plant and equipment		8,263	8,131
Deferred tax asset		245	228
		112,761	92,915
Current assets
Inventories		1,769	1,573
Trade and other receivables		23,413	24,192
Derivative financial assets		413	560
Cash		3,697	4,443
		29,292	30,768
Non-current assets held for sale		-	9,715
Total assets		142,053	133,398
Current liabilities
Trade and other payables		(33,704)	(35,122)
Tax liabilities		(3,368)	(2,649)
Bank overdrafts		(3,633)	(3,306)
Provisions for future purchase of minority interests	12	(939)	(118)
		(41,644)	(41,195)
Non-current liabilities
Bank loans		(18,000)	(13,000)
Retirement benefit obligation		-	(18)
Deferred tax liability		(6,808)	(5,188)
Provisions for future purchase of minority interests	12	(9,268)	(6,247)
		(34,076)	(24,453)
Total liabilities		(75,720)	(65,648)
Net assets		66,333	67,750
Equity
Share capital		4,224	4,208
Share premium account		43,413	43,006
Treasury shares		(3,968)	-
Capital reserve		-	949
Translation reserve		52	(11)
Share option reserve		302	125
Retained earnings		21,424	18,677
Equity shareholders’ funds		65,447	66,954
Minority interests	13	886	796
Total equity		66,333	67,750

WILMINGTON GROUP PLC

Consolidated Cash Flow Statement

For the year ended 30 June 2008

	Notes	Year ended	Year ended
		30 June	30 June
		2008	2007
		£’000	£’000
Net cash flow from operating activities	14	12,622	13,713
Investing activities
Purchase of property, plant and equipment		(1,475)	(1,092)
Sale of property, plant and equipment		122	35
Purchase of subsidiary undertakings and minority interests		(17,068)	(8,374)
Cash acquired on purchase of subsidiary undertakings		294	1,534
Cash movement of disposal of subsidiary undertakings		(783)	(32)
Sale of subsidiary undertakings		10,272	696
Purchase of intangible assets		(924)	(1,370)
Sale of intangible assets		-	28
Net cash used in investing activities		(9,562)	(8,575)
Financing activities
Dividends paid to equity holders of the parent		(5,257)	(3,940)
Dividends paid to minority shareholders in subsidiary undertakings		(331)	(292)
Issue of ordinary shares		423	376
Increase/( decrease) in long term loans		5,000	(3,000)
Share buy back		(3,968)	-
Net cash flows used in financing activities		(4,133)	(6,856)
Net (decrease) in cash and cash equivalents		(1,073)	(1,718)
Cash and cash equivalents at beginning of the year		1,137	2,855
Cash and cash equivalents at end of the year		64	1,137

  WILMINGTON GROUP PLC

Notes to the Accounts 

1    Prior Period Adjustment - Correction of error

The Financial Reporting Review Panel ('the Panel') has reviewed the report and accounts of the Company for the year ended 30 June 2007 and concluded that the Company's treatment of minority put options as contingent liabilities was not in accordance with paragraph 23 of IAS 32 'Financial instruments: presentation' which requires a liability to be recorded for all contracts that contain an obligation to purchase own equity instruments for cash. The directors have accepted the Panel's conclusions and have corrected the treatment of the minority put options by way of a prior period adjustment. The effect of the adjustment at 30 June 2007 is to increase liabilities from £59,283,000 to £65,648,000 and to reduce shareholders' funds (within minority interests) from £69,108,000 to £67,750,000, with a corresponding adjustment to goodwill. Notes 11 to 13 below show the restatements of goodwill, provisions for the future purchase of minority interests and minority interests.

2.   Segmental Information

(a)    Primary reporting format - business segments

Year ended 30 June 2008

	Legal and	Business
	Regulatory	Information	Total
	£'000	£'000	£'000
Revenue	75,370	18,033	93,403
Segmental profit before amortisation	17,936	2,964	20,900
Amortisation	(3,584)	(1,656)	(5,240)
Segmental profit after amortisation	14,352	1,308	15,660
Unallocated central overheads (including amortisation of £36,000)			(2,329)
Profit from continuing operations before non-recurring items			13,331
Non-recurring items (see note 4)			-
Profit from continuing operations after non-recurring items			13,331
Finance costs			(1,150)
Profit on continuing activities before taxation			12,181
Income tax expense			(3,585)
Profit on continuing activities after taxation			8,596
Loss from discontinued operations			(365)
Net profit for the year			8,231
Assets	113,489	25,802	139,291
Liabilities	(43,469)	(8,348)	(51,817)
Net assets	70,020	17,454	87,474
Less: net unallocated central assets and liabilities			(21,141)
			66,333
Capital expenditure    - Legal and Regulatory and                                           Business Information	1,682	460	2,142
- central			257
			2,399
Depreciation        - Legal and Regulatory and                                    Business  Information	899	312	1,211
- central			178
			1,389

(a)    Primary reporting format - business segments

        Year ended 30 June 2007

	Legal and	Business
	Regulatory	Information	Total
	£'000	£'000	£'000
Revenue	65,319	16,134	81,453
Segmental profit before amortisation	15,736	2,969	18,705
Amortisation	(2,751)	(1,147)	(3,898)
Segmental profit after amortisation	12,985	1,822	14,807
Unallocated central overheads (includes amortisation at £24,000)			(2,244)
Profit from continuing operations before non-recurring items			12,563
Non-recurring items (see note 4)			1,208
Profit from continuing operations after non-recurring items			13,771
Finance costs			(1,239)
Profit on continuing activities before taxation			12,532
Income tax expense			(3,343)
Profit on continuing activities after taxation			9,189
Profit from discontinued operations			696
Net profit for the year			9,885
Assets	89,247	24,497	113,744
Liabilities	(41,159)	(6,767)	(47,926)
Net assets	48,088	17,730	65,818
Plus: net discontinued and unallocated central assets and liabilities			1,932
			67,750
Capital expenditure    - Legal and Regulatory and               Business Information	649	1,202	1,851
- discontinued and central			765
			2,616
Depreciation        - Legal and Regulatory and                Business Information	663	176	839
- discontinued and central			680
			1,519

 (b)    Secondary reporting format - geographical segments

The geographical analysis of revenue is as follows:

	Year ended	Year ended
	30 June	30 June
	2008	2007
	£'000	£'000
United Kingdom	79,179	69,521
Overseas	14,224	11,932
	93,403	81,453
(c) Adjusted profit
Adjusted profit is defined as profit before taxation, amortisation, share based payments and non-recurring items and reconciles to profit on continuing activities before taxation as follows:
	Year ended	Year ended
	30 June	30 June
	2008	2007
	£'000	£'000
Profit on continuing activities before taxation	12,181	12,532
Amortisation	5,276	3,922
Share based payments	177	-
Non-recurring items (see note 4)	-	(1,208)
Adjusted profit	17,634	15,246
3. Operating expenses
	Year ended	Year ended
	30 June	30 June
	2008	2007
	£'000	£'000
Distribution and selling costs	10,124	7,215
Administrative expenses	36,078	30,689
	46,202	37,904
Amortisation of intangible assets (administrative expense)	5,276	3,922
Total operating expenses	51,478	41,826
4. Non-recurring items
	Year ended	Year ended
Net profit for the year is stated after crediting	30 June	30 June
	2008	2007
	£'000	£'000
Non-recurring items	-	1,208

Non-recurring items for the year ended 30 June 2007 principally represented the inducement fee received, net of transaction costs, relating to the proposed merger with Metal Bulletin plc. 

5.     Finance revenue and costs 

	Year ended	Year ended
	30 June	30 June
	2008	2007
	£'000	£'000
Finance revenue comprises:
Bank interest receivable	331	103
Pension scheme finance income	-	37
	331	140
Finance costs comprise:
Interest payable on loans and overdrafts	(1,222)	(1,211)
Facility fees	(259)	(168)
	(1,481)	(1,379)

6.    Income tax expense

	Year ended	Year ended
	30 June	30 June
	2008	2007
	£'000	£'000
The tax charge comprises:
UK corporation tax at current rates	4,532	4,521
Adjustment to previous year	18	(12)
	4,550	4,509
Foreign tax	483	317
	5,033	4,826
Deferred tax credit - current year	(1,448)	(1,483)
Income tax expense	3,585	3,343
Factors affecting the tax charge for the year:
Following the change in the UK Corporation tax rate from 30% to 28% on 1 April 2008, the effective rate of Corporation tax in the UK in the Group for the year is 29.5%.
The tax charge for the year is less than the effective rate of corporation tax in the UK of 29.5% for the year. The differences are explained below:
Reconciliation of tax charge:
Profit on ordinary activities before tax	12,181	12,532
Profit on ordinary activities multiplied by the effective rate of corporation tax in the year of 29.5% (2007: 30%)
	3,593	3,760
Effect of:
Capital allowances for the year in excess of depreciation	(14)	(124)
Net (profit)/loss on sale of assets not taxable	(3)	3
Foreign tax rate differences (including foreign tax losses not utilised)	105	66
Adjustment to tax charge in respect of previous years	18	(12)
Other items not subject to tax	(114)	4
Effect of change in future rate of corporation tax for deferred tax calculation from 30% to 28%	-	(354)
Income tax expense	3,585	3,343

7.     (Loss)profit for the period from discontinued operations 

On 14 August 2007, the Company sold all of its interest in Wilmington Media Limited, Dewberry Redpoint Limited and Office Solutions Media Limited. The results of these companies are treated as discontinued operations and their net profit has been included in the consolidated income statement. Their results are as follows: 

	Year ended	Year ended
	30 June	30 June
	2008	2007
	£'000	£'000
Revenue	1,937	21,687
Expenses	(2,147)	(20,503)
Loss/profit before amortisation and taxation	(210)	1,184
Amortisation	(63)	(753)
Loss/profit before taxation	(273)	431
Attributable tax credit/(charge)	82	(129)
Net operating (loss)/profit attributable to discontinued operations	(191)	302
Profit on disposal of discontinued operations	438	246
Attributable tax (charge)/credit	(612)	148
	(174)	394
(Loss)/profit on discontinued operations after taxation	(365)	696

8.    Dividends

Amounts recognised as distributions to equity holders in the year.

	Year ended	Year ended	Year ended	Year ended
	30 June	30 June	30 June	30 June
	2008	2007	2008	2007
	pence per share	pence per share	£'000	£'000
Final dividends recognised as distributions in the year	4.00	2.70	3,352	2,257
Interim dividends recognised as distributions in the year	2.30	2.00	1,905	1,683
Total dividends paid	6.30	4.70	5,257	3,940
Dividend proposed	4.70	4.00	3,904	3,366

9.    Earnings per share

To allow shareholders to gain a better understanding of the trading performance of the Group, an adjusted earnings per ordinary share has been calculated using an adjusted profit after taxation and minority interests but before amortisation of intangible assets and post-taxation non-recurring costs.

(a)    From continuing operations

The calculation of the basic and diluted earnings per share is based on the following data:

	Year ended	Year ended
	30 June	30 June
	2008	2007
	£'000	£'000
Earnings from continuing operations for the purpose of basic earnings per share excluding discontinued operations	7,812	8,550
Add: Amortisation (net of minority interest effect and deferred tax)	3,638	2,720
Non-recurring items after taxation	-	(846)
Share based payments (net of tax)	125	-
Earnings for the purposes of adjusted earnings per share	11,575	10,424
	Number	Number
Weighted average number of ordinary shares for the purposes of basic and adjusted earnings per share	83,356,950	83,989,179
Effect of dilutive potential ordinary shares:
Exercise of share options	242,139	317,924
Weighted average number of ordinary shares for the purposes of diluted earnings per share	83,599,089	84,307,103
Basic earnings per share	9.37p	10.18p
Diluted earnings per share	9.34p	10.14p
Adjusted basic earnings per share	13.89p	12.41p
Adjusted diluted earnings per share	13.85p	12.36p

(b)    From continuing and discontinued operations

	Year ended	Year ended
	30 June	30 June
	2008	2007
	£'000	£'000
Earnings from continuing operations for the purpose of basic earnings per share excluding discontinued operations	7,812	8,550
Adjustments to include the (loss)/profit for the period from discontinued operations	(365)	696
Earnings from continuing and discontinued operations for the purpose of basic earnings per share	7,447	9,246
Add: Amortisation (net of minority interest effect and deferred tax)	3,683	3,247
Non-recurring items after taxation	-	(846)
Share based payments (net of tax)	125	-
Earnings for the purposes of adjusted earnings per share	11,255	11,647
Basic earnings per share	8.93p	11.01p
Diluted earnings per share	8.91p	10.97p
Adjusted basic earnings per share	13.50p	13.87p
Adjusted diluted earnings per share	13.46p	13.81p

(c) From discontinued operations

	Year ended	Year ended
	30 June	30 June
	2008	2007
	£'000	£'000
Earnings from discontinued operations for the purpose of basic earnings per share	(365)	696
Add: Amortisation (net of minority interest effect and deferred tax)	45	527
Earnings for the purposes of adjusted earnings per share	(320)	1,223
Basic earnings per share	(0.44)p	0.83p
Diluted earnings per share	(0.44)p	0.83p
Adjusted basic earnings per share	(0.38)p	1.46p
Adjusted diluted earnings per share	(0.38)p	1.45p

10.     Acquisitions and disposals

Subsidiaries acquired 

On 26 November 2007 the Group acquired 80 per cent of the fully diluted share capital of The Matchett Group Limited for a cash consideration of £5.7m and the repayment of existing debt of £3.9m together with acquisition costs of £0.2m. Further consideration is payable in respect of the 80 per cent stake dependent on profits during the year ending 31 December 2008. The aggregate amount payable for the 80 per cent comprising the further consideration together with the initial consideration and repayment of debt is capped at £15m. Since acquisition The Matchett Group Limited has generated revenue of £4,084,000 and contributed a profit before tax and amortisation to the Group of £394,000. Had the Group owned The Matchett Group Limited for the whole twelve months since 30 June 2007, it would have generated revenue of £8,442,000 and contributed a profit before tax and amortisation to the Group of £1,113,000.

Put and call options have been entered into by CLT Group whereby the 20 per cent shareholders of The Matchett Group Limited can require CLT Group to acquire their shares for a consideration based on a formula linked to future profits. Similarly from 2015, CLT Group can require any remaining minority shareholders to sell their shares to CLT Group, again based on a formula linked to profits. The amount payable under the arrangements is capped at £21m (including the initial and deferred consideration and debt repayments).

Assets and liabilities of subsidiary undertaking acquired:	Book value	Adjustments	Fair value
	£'000	£'000	£'000
Property, plant and equipment	256	(157)	99
Inventories	62	(33)	29
Trade and other receivables	1,115	102	1,217
Cash	247	-	247
Trade and other payables	(1,848)	(333)	(2,181)
Intangible assets	1,851	1,300	3,151
Deferred tax	19	(871)	(852)
	1,702	8	1,710
Less: minority interests			(793)
			917
Goodwill arising on consolidation			8,901
Consideration			9,818
Satisfied by cash (including acquisition costs)			9,818

Adjustments have been made in respect of fair value adjustments and to reflect alignment with the Group's accounting policies. 

On 15 February 2008 the Group acquired 100 per cent. of AP Information Services Limited for an initial cash consideration of £5.3m. AP Information Services Limited on 3 April 2008 then acquired 100 per cent of Aspire Publications Limited for an initial cash consideration of £1.3m.  Deferred consideration of £0.3m was also paid prior to 30 June 2008.  Since acquisition, AP Information Services Limited and Aspire Publications Limited have generated revenue of £1,530,000 and contributed profit before divisional overheads, tax and amortisation to the Group of £759,000. Had the Group owned AP Information Services Limited and Aspire Publications Limited for the whole twelve months since 30 June 2007, they would have generated revenue of £3,426,000 and contributed a profit before divisional overheads, tax and amortisation to the Group of £1,027,000.

Assets and liabilities of subsidiary undertaking acquired:	Book value	Adjustments	Fair value
	£'000	£'000	£'000
Property, plant and equipment	34	(29)	5
Inventories	11	177	188
Trade and other receivables	443	(83)	360
Cash	47	-	47
Trade and other payables	(1,053)	(198)	(1,251)
Intangible assets	795	3,605	4,400
Deferred tax	(6)	(1,226)	(1,232)
	271	2,246	2,517
Goodwill arising on consolidation			4,752
Consideration			7,269
Satisfied by cash (including acquisition costs)			6,879
Deferred consideration			390
			7,269

Adjustments have been made in respect of fair value adjustments and to reflect alignment with the Group's accounting policies. 

Other acquisitions 

In July 2007, the Group acquired 51 per cent of Clientzone Limited for a cash consideration of £108,000.

Minority Interest acquired

During the year the Group acquired the remaining 20 per cent of La Touche Bond Solon Limited for a cash consideration of £119,000.

Disposals 

On 14 August 2007, the Company sold all of its interest in Wilmington Media Limited, Dewberry Redpoint Limited and Office Solutions Media Limited for a cash consideration net disposal of costs (including the costs of providing transitional services to the business disposed of) of £10.3m which has resulted in a modest pre-tax gain on disposal.

11. Goodwill

	£'000
	(Re-stated)
Cost
At 1 July 2006, previously reported	47,187
Adjustment re provisions for acquisition of minority interests	3,479
At 1 July 2006 as restated	50,666
Acquisitions	2,653
Transfer to assets held for sale	(1,906)
Change in provisions for acquisition of minority interests	1,954
Change in minority interest reserve	(426)
At 1 July 2007 as restated (previously £47,934,000)	52,941
Acquisitions	13,752
Change in provisions for acquisitions of minority interests	3,167
Change in minority interest reserve	(425)
	69,435
Net Book Value
At 30 June 2008	69,435
At 30 June 2007 (as restated)	52,941

12. Provisions for future purchase of minority interests

	Current provisions (as re-stated)	Non current provisions (as re-stated)
	£'000	£'000
At 1 July 2006 (as restated - previously nil)	130	4,207
Provision for new put options issued over minority interests                                                                              - taken to goodwill	-	1,807
- taken to minority reserve	-	74
Change in value of existing provisions (including unwinding of discounting)	(12)	159
At 1 July 2007 (as restated - previously nil)	118	6,247
Provision for new put options issued over minority interests                                                                               -  taken to goodwill	-	977
- taken to minority reserve	-	793
Provisions utilised in respect of acquisitions of minority interests	(118)	-
Change in value of existing provisions (including unwinding of discounting)	-	2,190
Non-current provisions becoming current	939	(939)
At 30 June 2008	939	9,268

Provisions represent the estimated future cost (discounted at a rate of 10% to reflect the time value of money) required to settle put options held by minority shareholders over minority interest shares, should said put options be exercised.

The actual settlement timing and value is dependant upon when (and if) the minority shareholders choose to exercise their options and the profitability of the underlying companies at the date of exercise. For the purposes of estimating the above provision it has been assumed that put options are exercised at the first available opportunity.

13. Minority Interests

	Minority interest - share of results and funds	Minority interest - provision for future acquisition (as restated, previously nil)	Net Minority interest
	£'000	£'000	£'000
At 1 July 2006	1,733	(858)	875
Profit for the year	639	(514)	125
	2,372	(1,372)	1,000
Dividends paid	(292)	88	(204)
Acquisitions during the year	74	(74)	-
At 1 July 2007	2,154	(1,358)	796
Profit for the year	784	(756)	28
	2,938	(2,114)	824
Dividends paid	(331)	331	-
Acquisitions during the year	913	(793)	120
Acquisition of minorities during the year	(27)	27	-
Movement in minorities due to company sold during the year	(58)	-	(58)
	3,435	(2,549)	886

14.    Net cash flow from operating activities

	Year ended	Year ended
	30 June	30 June
	2008	2007
	£’000	£’000
Profit from operations	13,331	13,771
Non-recurring items	-	(1,208)
Operating (loss)/profit from discontinued operations	(273)	431
Depreciation of property, plant and equipment	1,389	1,519
Amortisation of intangible assets	5,339	4,675
(Profit)/loss on disposal of property, plant and equipment	(13)	10
Share based payments	177	34
	19,950	19,232
Operating cash flows before movements in working capital
Increase in inventories	(433)	(69)
(Increase)/decrease in receivables	(1,103)	(3,097)
(Decrease)/increase in payables	177	2,900
Cash generated by operations	18,591	18,966
Tax paid	(4,866)	(3,902)
Interest paid	(1,103)	(1,351)
Net cash flow from operating activities	12,622	13,713

        15. Nature of the financial information

The foregoing financial information does not amount to full accounts within the meaning of Section 240 of Companies Act 1985. The financial information has been extracted from the Group's Annual Report and Accounts for the year ended 30 June 2008 on which the auditors have not yet expressed an opinion, but for which an unqualified report is expected. Statutory accounts for the year ended 30 June 2007 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 237(2) or (3) of the Companies Act 1985. As required by the European Union's IAS Regulation and the Companies Act 1985, the Group now prepares its consolidated financial statements in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union.

Copies of the Annual Report and Accounts will be posted to shareholders shortly and will be available from the Company's registered office at Paulton House, 8 Shepherdess Walk, London N1 7LB.

 

END

 

 

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