Final Results
Wilmington Group Plc
21 September 2007
21 September 2007
WILMINGTON GROUP PLC
('Wilmington', 'the Group' or 'the Company')
Unaudited Preliminary Results for the Year Ended 30 June 2007
Wilmington Group plc, the professional information and training group, today
announces its unaudited preliminary results for the year ended 30 June 2007.
Highlights
• A year of significant progress in achieving strategic, financial and
structural goals
• Fourth successive year of impressive growth
o Revenue from continuing operations up 23.8% to £81.5m (2006: £65.8m)
o Adjusted profit before tax up 25.7% to £15.2m (2006: £12.1m)
o Adjusted EPS from continuing operations up 26.1% to 12.41p (2006: 9.84p)
o Total dividend for the year increased by 50% to 6.0p (2006: 4.0p)
o Continued strong operating cash flow
o Increased share buy back to £12m
• Another particularly strong performance by Legal & Regulatory division
• Business Information division performed well
• Restructuring and disposal of non-core activities completed since year
end; corporate activity over the last three years has significantly improved
the overall quality of the Group portfolio
• Wilmington's markets offer excellent opportunities for organic growth
and we continue to look for appropriate acquisitions to complement our existing
businesses
David Summers, Chairman, commented:
'It has been a momentous year in the development and re-positioning of
Wilmington Group Plc with significant progress in achieving our strategic,
financial and structural goals. We have delivered strong revenue and profit
growth from continuing operations, as well as capital profits from the disposal
of assets. We have also invested in a range of exciting initiatives for organic
growth, made further value-creating acquisitions and, since the year end,
completed the restructuring and disposal of the Group's portfolio of non-core
businesses.
'The Group is now focussed on serving the information and training requirements
of niche professional markets. We believe that these markets offer excellent
opportunities for above average growth over the longer term.
'The Board is very encouraged by the continued improvement in the underlying
quality of the Group's earnings and is confident of demonstrating further
progress in the current 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, Charlie Hooper or Georgia Dempsey
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. Capitalised at approximately £200 million, Wilmington floated on the
London Stock Exchange in 1995.
21 September 2007
WILMINGTON GROUP PLC
('Wilmington', 'the Group' or 'the Company')
CHAIRMAN'S STATEMENT
It has been a momentous year in the development and re-positioning of Wilmington
Group plc with significant progress in achieving our strategic, financial and
structural goals. We have delivered strong revenue and profit growth from
continuing operations, as well as capital profits from the disposal of assets.
We have also invested in a range of exciting initiatives for organic growth,
made further value-creating acquisitions and, since the year end, completed the
restructuring and disposal of the Group's portfolio of non-core businesses.
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 major professional markets
and by focusing investment in key niche sectors with the capacity for strong and
sustainable growth.
During the year ended 30 June 2007, we sold WDIS, the subscription and
circulation management bureau, for £1m. This was our fourth significant disposal
as part of our strategic review of the Group's portfolio of non-core assets.
On 14 August 2007 we completed the fifth and largest disposal when we sold
Wilmington Media and Dewberry Redpoint for a cash consideration of £12m.
Following this, Wilmington Group is now firmly focussed on niche professional
markets with strong presence in the important sectors of Law, Accountancy,
Charities, Banking, Pensions, Health, Journalism and PR. We will report our
results by reference to the Legal and Regulatory businesses and Business
Information.
Financial Performance
The financial results for the year ended 30 June 2007 show significant progress
as measured by our key financial targets of adjusted earnings per share,
adjusted profit before tax, cash flow and underlying margins.
Revenue from continuing operations in the year grew by 23.8% to £81.5m (2006:
£65.8m). Profit from continuing operations before tax, amortisation and interest
increased by 25.1% to £16.5m (2006: £13.2m). The adjusted profit, before
non-recurring items, tax and amortisation increased by 25.7% to £15.2m (2006:
£12.1m). Adjusted profit from continuing and discontinued operations increased
by 20.9% to £16.4m (2006: £13.6m).
This is the fourth successive year of impressive profit growth, which reflects a
significant improvement in the quality of the Wilmington Group businesses and
underpins our confidence that we can create additional value for shareholders.
Total earnings per share (from continuing and discontinued operations) increased
by 43.2% to 11.01p per share (2006: 7.69p). Adjusted earnings per share from
continuing operations grew by 26.1% to 12.41p per share (2006: 9.84p),
maintaining our recent trend of strong earnings per share growth.
The quality of the operating profits is underpinned by strong cash flow.
Operating cash flow increased by 12% to £19.0m (2006: £16.9m), representing 107%
of operating profit (before non-recurring costs, amortisation, interest and
taxation), reflecting a further increase in underlying subscription revenues. At
30 June 2007 the Group had net debt of £11.9m (2006: £13.1m). Since the year end
the Group received £12m in respect of the sale of Wilmington Media Limited and
Dewberry Redpoint Limited.
Share Buy Back
On 19 July 2007 the Group announced that 'given the continued strength of the
Group's balance sheet reflecting the strong cash flows of the Company, the Board
has assessed the capital required to support the ongoing plans for profitable
growth and its ordinary dividend payments, and has decided that it will buy back
initially up to £5m of its ordinary shares by market value in the coming months.
It is intended that the share buy-back programme will start on 23 July and
involve a rolling share buy-back programme within the limit approved by
shareholders at the Company's Annual General Meeting on 15 November 2006. It is
intended that any shares purchased will be transferred into Treasury.'
Following the disposal of WDIS, Wilmington Media and Dewberry Redpoint the Board
has decided to extend the buy back from the initial target of £5m to £12m of its
ordinary shares by market value. Whilst the Group is determined to retain
flexibility and the ability to take advantage of the many opportunities
available to it, it is also mindful of the benefits of an efficient balance
sheet and is committed to achieving optimum efficiency, either by acquisition or
return of capital to shareholders.
Dividend
The Board remains committed to a progressive dividend policy and proposes a
final dividend of 4p per share payable on the 12 November 2007 to shareholders
on the register on 12 October 2007. Taken together with the interim dividend of
2p per share, this makes a total dividend for the year of 6.0p per share, an
increase of 50% over the 4.0p paid last year. The dividend is covered 2.1 times
by adjusted earnings per share from continuing operations (2006: 2.5 times).
Highlights of the Year
Overall, we have achieved our ambition of delivering substantial growth in
adjusted profit before tax and in adjusted earnings per share. The Business
Review describes the performance of the business in greater detail. There are
however some sectoral highlights which I would like to identify in this
statement.
Legal and Regulatory
Revenue has grown 25.6% to £65.3m (2006: £52.0m), boosted by the acquisition of
Mercia Group Limited (October 2006). Segmental profits before central overheads
and amortisation have grown by 28.0% to a record £15.7m (2006: £12.3m). We have
seen excellent performances in many areas of this division.
The previously recorded trend of growing Internet and digital revenues has
continued. This has enhanced the performance of all our publishing businesses,
with particular success enjoyed by Pendragon (pensions) and Smee & Ford
(charities).
We have also seen very good growth from our training businesses in the CLT
Group. The acquisition of Mercia Group in October 2006 has continued our
expansion into the accountancy market. Training in law for non-lawyers (Bond
Solon) has had an excellent year. Compliance training has also produced a strong
trading performance and at the end of the financial year we were delighted to be
asked to develop a major programme of compliance training and assessment for the
Singapore Government on behalf of the International Compliance Association. As
we have previously highlighted, this will necessitate significant investment
during the current financial year, but will start to produce positive returns in
the next financial year and beyond.
These are exciting developments and, despite our investment across the division,
we expect to see further growth in both our Internet and digital profits and the
expansion of our training activities during the current year.
Business Information
Following the successful disposal of our publishing interests in non-core
businesses we have taken the opportunity to reorganise our healthcare and media
entertainment assets within the Wilmington Business Information ('WBI')
subsidiary of the Group. This will now focus on these two key sectors to develop
both the organic potential of the existing assets and increase the size of our
presence in these markets through investment and acquisition when the right
opportunities arise.
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. Our media assets include
Hollis, which serves the PR sector, Press Gazette in media and journalism and
Muze, which serves the entertainment industry.
I am delighted to report that both revenues and profits from continuing
operations in Business Information have shown strong growth in the year ended
30th June 2007. Revenue has grown 17.0% to £16.1m (2006: £13.8m). Segmental
profits before central overheads and amortisation have grown by 21.9% to £3.0m
(2006: £2.4m).
Outlook
The Group is now focussed on serving the information and training requirements
of niche professional markets. We believe that these markets offer excellent
opportunities for above average growth over the longer term.
We are investing in many organic initiatives that we expect to produce good
returns in the current year and beyond. Having shown we can acquire quality
assets at competitive prices, and deliver synergies and growth from those
businesses acquired, we continue to look for appropriate acquisitions to
complement our existing businesses.
The Board is very encouraged by the continued improvement in the underlying
quality of the Group's earnings and is confident of demonstrating further
progress in the current 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.
BUSINESS REVIEW
Overview of the Group's Financial Performance
In the year ended 30 June 2007 Wilmington generated record profits and margins.
Revenue from continuing operations grew by 23.8% to £81.5m (2006: £65.8m).
Adjusted profit before tax grew by 25.7% to £15.2m (2006: £12.1m). The EBITA
from continuing businesses grew by 25.1% to £16.5m (2006: £13.2m). The EBITA
margin from continuing businesses was 20.2%, up from 20.0% in the prior year.
The cash generative nature of our business was reflected by the reduction in net
debt to £11.9m (2006: £13.1m) despite significant investment in the business and
£8.5m spent on acquisitions net of disposal proceeds.
The financial performance was enhanced further by non-recurring items of £1.2m
reflecting the receipt of an inducement fee of £1.4m in respect of the
non-completion of the proposed merger with Metal Bulletin in the previous year,
less residual non-recurring costs. Amortisation of intangible assets was £3.9m
in the year ended 30 June 2007 (2006: £2.5m) reflecting the finalisation of the
fair value balance sheets of Ark, and Smee & Ford from the prior year together
with the acquisition during the year of Mercia and Practice Track.
On 11 May 2007 the Group disposed of its subsidiary WDIS, which provides
subscription and circulation management services to a number of media companies.
On 14 August 2007 the Group disposed of Wilmington Media and Dewberry Redpoint
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, together with the profit on disposal of WDIS, have been
shown as discontinued in the income statement. The gain on disposal of shares in
Wilmington Media and Dewberry Redpoint will be recognised in the results for the
year to 30 June 2008. The Group is grateful to all those employees of the
businesses that have been included in these transactions for their vital part in
the history and progress of Wilmington, and wishes them well for the future.
Earnings per Share
Earnings per share from continuing operations increased by 49.7% to 10.18p for
the year ended 30 June 2007 (2006: 6.80p). Adjusted earnings per share from
continuing operations increased by 26.1% to 12.41p (2006: 9.84p). This increase
follows three consecutive years of adjusted earnings per share growth at a
compound rate in excess of 20%.
Total earnings per share (from continuing and discontinued operations) increased
by 43.2% to 11.01p (2006: 7.69p). Total adjusted earnings per share (from
continuing and discontinued operations) increased by 20.9% to 13.87p (2006:
11.47p).
Earnings and adjusted earnings per share are calculated on the weighted average
number of shares in issue of 83,989,179 for the year ended 30 June 2007 (2006:
83,600,179).
Taxation
The Group tax charge of £3.3m represents 26.7% of the profits before tax (2006:
£2.1m, 24.7%). The reduction in tax charge below the normal statutory rates
arises primarily from the benefit of the reduction in future corporation tax
rates to 28% in calculating the deferred tax liabilities.
Cashflow
Operating cash flow for the year ended 30 June 2007 of £19.0m was 107% of
operating profit before non-recurring items, amortisation, interest and taxation
(2006: £16.9m, 116%). The free cash flow, calculated after deduction from
operating cash flow of capital expenditure, payment of corporate taxes, and
payment of interest was £12.0m (2006: £10.9m). During the year £8.5m was spent
on acquisitions net of disposals which was partially offset by cash acquired
within those businesses of £1.5m. At the balance sheet date the Group had net
debt of £11.9m (2006: £13.1m).
Treasury Policy
Cash and net debt is managed on a Group wide basis and subsidiaries operate
within funding restrictions controlled by the Executive Directors of the Group.
The Group does not have significant foreign exchange exposure but does have some
net income in US dollars, Euros, Australian and Singapore dollars. These
currencies are sold periodically having regard to both prevailing exchange rates
and transaction charges.
In November 2006 the Group adopted an interest hedging strategy which aims to
protect between 50% and 67% of its forecast debt from interest rate fluctuations
and specifically the first £15m of borrowings under its revolving credit
agreement. A 5 year interest swap entered into on 16 November 2006 effectively
fixed the interest rate payable on the first £15m of debt under the revolving
credit agreement. Hedge accounting has been adopted for the treatment of this
financial instrument, as a result of which an unrealised gain of £560k is
required to be recognised in equity rather than 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
niche professional 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 researched and accurate information in a variety of formats
and by developing innovative new products 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 is well positioned with strong brands in markets with attractive
growth prospects. Our businesses are strongly cash generative and we have a
clear investment strategy to grow in those market sectors where we can see the
opportunity to produce sustainable growth.
Our long term growth prospects are expected to be sustained by the continuing
demand for professional information and high quality focused events. The
continued development of legislation and increasing levels of regulation, both
in the UK and abroad, as well as our commitment to developing new products and
delivery channels, create an environment which will enable us to capitalise on
the strength of our brands and our expertise in providing high quality
information and training.
By understanding and working closely with our client base the Group is able to
provide essential information and training whilst building long term sustainable
relationships with our clients.
Achieving and Exceeding Key Financial and Operational Targets
The Group maintains its view that the following financial and operational
targets are the key measures of the Group's success and the best long term
indicators of enhanced shareholder value.
We are delighted to have made excellent progress against all our financial and
operational targets.
1. 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 incentivisation
programmes are designed to support this strategy.
In the year to 30 June 2007, adjusted earnings per share from continuing
operations increased by 26.1% to 12.41p per share (2006: 9.84p). This is the
fourth year of strong earnings per share growth. Last year we reported three
years of adjusted earnings per share growth at a compound rate in excess of 20%.
2. Adjusted Profit Before Tax
This measure indicates the trading profits of the Group, after bank and interest
charges, but before amortisation of intangible assets and non-recurring items.
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 2007 adjusted profit before tax increased by 25.7% to
£15.2m (2006: £12.1m). This is the fourth year in succession we have seen strong
growth in our key measure of adjusted profit before tax.
3. Cashflow
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 2007 of £19.0m was 107% of operating profit before interest,
amortisation of intangible assets and non-recurring items (2006: £16.9m, 116%).
Free cashflow, which is calculated after deduction from operating cashflow of
replacement of capital expenditure, payment of corporation tax, and payment of
interest, was £12.0m (2006: £10.9m).
4. Consistent and Sustainable Revenue Streams
In this financial year Wilmington has consolidated its portfolio of assets with
the core focus of its revenue streams based in key professional markets. Since
its London Stock Exchange listing in 1995, the Group's revenues have evolved
from predominantly magazine display advertising to more robust and sustainable
revenue streams as witnessed by our current portfolio, which includes:
• professional directories;
• information sales;
• professional training;
• events and conferences;
• professional magazines
• professional accreditation and assessment
The Group has continued its efforts to increase the supply of its products and
services on-line or digitally, but will also be conscious of markets which still
prefer its products produced in hard copy format. Our businesses are supported
by management and delivery systems utilising the latest technology. We have
invested considerable resources to the improvement of our operating systems and
web sites which will deliver benefit in the current year and beyond.
The Group analyses its revenue streams on the following basis:
• Subscription and copy sales 26% of revenue (2006: 18%);
• Professional education and events 43% of revenue (2006: 37%);
• Information sales and professional services 19% of revenue (2006: 19%);
• Directory advertising 8% of revenue (2006: 8%);
• Magazine advertising 4% of revenue (2006: 18%);
The Group has improved on and continued its endeavour to ensure that there are
no sole dependencies on specific sources of revenue, and this is reflected in
our services split. The 2006 review analysis above is as previously reported
whereas 2007 relates to the continuing business. The movements reflect the
reduced dependence on magazine advertising as a result of the businesses
disposed of being shown as discontinued.
5. Operating Margin
The Group seeks to improve the quality of its revenue streams. This is in part
judged by the profit margin. With the disposal of our non-core assets we have
successfully improved on our already healthy margins in 2007 with adjusted
operating margins increasing to 20.2% across the Group. On a like for like basis
this increased from 20.0% in the prior year.
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. Moreover, 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.
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 have invested substantially over the last few years 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. This investment in technology will continue in the current year.
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:
1. 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.
5. The disposal of our non-core assets represented approximately 20% of the
Group's total revenue. A major challenge the Group faces is to ensure a
smooth transition of these assets to the purchaser and minimal disruptions
to our existing businesses. Wilmington's success at integrations from
previous acquisitions and disposals should enable us to accomplish this task
on time and without incident.
A consequence of the disposal of Wilmington Media and Dewberry Redpoint is that
the Group now has no defined benefit pension liabilities.
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 environment 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 the
capabilities, skills and dedication of the people it employs. We are fortunate
to benefit from the entrepreneurialism, professionalism, and flexibility 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 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
also encourage links between teams and businesses where it makes sense to
collaborate to share ideas and technical expertise.
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 upwards and sideways
within the Group.
We reported last year that there had been major changes to working practices and
significant investment in new technology and equipment. This investment is
continuing across all parts of the Group. Major changes to technology have
required a lot of hard work and dedication from Wilmington's people who have
planned and implemented the changes. This process is ongoing and we are
currently developing and installing many new systems to manage content,
customers and processes throughout the Group.
Wilmington's directors and executive management believe the only way the Group
can 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,
to grow professionally and to benefit from high levels of remuneration and
incentives. Only by continuing to develop the skills of our current team and by
recruiting the very best new talent can Wilmington continue to grow at the rate
we wish.
Legal and Regulatory
This is our largest division, accounting for 80% of Group turnover from
continuing operations and contributing 84% of Group trading profit from
continuing operations. Revenue grew by 25.6%, to £65.3m (2006: £52.0m) while
trading profit increased by 28.0% to £15.7m (2006: £12.3m) giving operating
margins of 24.1% (2006: 23.6%). The increase in turnover and profits was partly
due to the acquisition of Mercia Group. We are pleased by the organic profit
growth at a time when we were 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 to 1844, are clear market
leaders with high quality proprietary content and strong customer renewal rates.
In the year to 30 June 2007 revenue grew by 13.7%. Trading profit grew by 18.7%.
Margin grew by 1.2% to 29.2%.
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;
• ICP, 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, 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.
We were encouraged to see subscription revenues increase to 26.3% of total sales
this year (2006: 22.5%). In addition an important characteristic of Waterlow's
print publishing is the resilience and subscription-like characteristics of its
classified directory advertising, which achieved renewal rates in excess of 70%
in the last year.
The development of electronic publishing has been a major factor in the success
of the business, with the proportion of revenues derived from higher margin
products and services delivered electronically increasing last year to 49%
(2006: 45%). Furthermore, electronic developments represented over 79% of the
organic profit growth last year and fuelled the increased overall margins for
Waterlow.
The development of our recent acquisitions has continued in an encouraging
manner. Ark and Smee & Ford, the two most recent acquisitions, contributed
combined operating profit of £1.8m up 78% on 2006 (£1m). Our margins on these
businesses increased by 4.6% to 19.4%. Our aggregate return on invested capital
for both acquisitions exceeded 18%, comfortably ahead of our cost of capital and
a demonstration of our ability to make value-enhancing acquisitions. We are
enthusiastically looking for other acquisitions where we can generate further
value for our shareholders.
In recent months Waterlow has also undertaken a significant reorganisation and
investment in additional management. We believe that this will allow us to
continue the strong growth the business has delivered in recent years and
provide a scaleable resource for further acquisitions.
CLT Group
In October 2006 the CLT Group made the second largest acquisition in the history
of the Wilmington Group plc with the purchase of Mercia Group. Mercia is the
leading provider of technical, marketing and training support to the accountancy
profession. The acquisition also brought within the CLT Group both Mercia
Northern Ireland and Mercia Republic of Ireland, which provide a similar range
of services to the accountancy profession in Ireland.
The range of Mercia products has provided a number of synergies with other
companies within the CLT Group which has resulted in, for example, the launch of
a web development service for the legal profession. This product has proved very
successful for Mercia within the accountancy market.
In April 2007, Mercia itself made its first acquisition, namely Practice Track.
Practice Track is a company specialising in technical and web based support to
accountants and the acquisition has enabled Practice Track to make cost savings
while budgeting for current continuing turnover figures.
Over the course of the year considerable time was expended upon the
restructuring of the CLT Group, which was completed on 2nd July 2007. The major
effect of the restructuring will be to strengthen and centralise the Group's
role for the benefit of the individual companies it comprises. CLT Group is now
structured to provide support in the areas of IT, Accounts, HR and Production
throughout the Group companies. Not only will this restructuring provide greater
support to current group companies, but it will also enable an even more
successful integration process in the event of new acquisitions.
The individual CLT Group companies have had a very successful year:-
(i) Central Law Training
The company 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 4000 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 under-pinned by a growing
subscription membership base which comprises most major law firms, government
departments, local authorities and many in-house legal departments.
The company has invested in sales resource for the expansion of its in-house
training provision. This investment has resulted in an increased contribution of
27% in this part of the business over the course of the year and expectations
are that revenue from these training programmes will continue to develop in the
future.
The investment made in course administration programmes, product development and
marketing capability have maintained Central Law Training as market leader in
Continuing Legal Education.
(ii) CLT International
CLT International's product range comprises a range of programmes which it
provides for the Society of Trusts and Estate Practitioners in development and
education programmes which operate in the UK and internationally. Overall
revenues in this area have increased by 23% 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 by the company has been in the compliance area with the
award of a major contract with the Singapore Government for the development and
presentation of compliance training in Singapore. The company has established a
major office in Singapore and is currently appointing a high level team of
administrative and professional staff necessary to successfully perform the
contract.
(iii) Quorum Training
Quorum was acquired by the Group in May 2005 and has continued its excellent
performance in developing and presenting high level financial training
programmes primarily to large organisations in the public and private sectors.
The company has achieved a 60% growth in contribution during the year which is
as a result of more delegates attending both public and in-house programmes.
Quorum is working closely with the newly acquired Mercia in order to provide
comprehensive programmes throughout the accountancy and financial sectors.
(iv) Bond Solon
Bond Solon is the market leader in the United Kingdom for the provision of
expert and professional witness training programmes. 2006/07 saw the first full
year of the new management team being in position and this has resulted in 26%
growth in turnover and a contribution 45% over the previous year.
(v) CLT Scotland
Following its business success during 2005/06, the company has achieved another
record year in 2006/07 with turnover growing by 22% and contribution growing by
27%.
During the course of the year the company extended its association with
Strathclyde University for the provision of joint training in Scotland for a
further 10 years. CLT has worked closely with Strathclyde University for the
past 9 years in the provision of joint training programmes.
The company has also entered into an association with the University of the West
of England for the provision of specialist certificated paralegal training
programmes throughout England and Wales.
(vi) CLT Ireland
The company 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 and the acquisition of office and training premises
in the centre of Dublin. The company has performed well ahead of expectations
during the year.
Business Information
WBI Health and Media accounted for 20% of Group revenue from continuing
operations and 16% of Group trading profit from continuing operations. Revenue
grew by 17% to £16.1m (2006: £13.8m) and trading profit increased by 22% to
£3.0m (2006: £2.4m) giving operating margins of 18.4% (2006: 17.7%). This is
excellent progress particularly as government healthcare budgets in our two key
geographic regions (UK and France) were both under severe pressure during this
financial year. Despite these issues healthcare is a market with significant
potential and will continue to create many opportunities for us.
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
pharmaceutical clients. Revenue overall has grown by 16.5% and profits by 23%.
Revenues from delivering its products electronically have again shown good
progress and it is also increasingly adding value for its clients through
analytical tools, data-centric consultancy projects and other extensions to its
increasingly valuable brand.
APM is our specialist Press Agency based in Paris. A 4.2% improvement in
revenues shows progress being made despite a difficult market in France during
the year. It is the leading provider of online healthcare news to its home
market and it continues to build its European brand through its new English
language product APM Health Europe. The new product aimed at European
pharmaceutical clients generated solid revenues in its first full year. We
expect good organic growth in both the home market products and the European
product in the new financial period.
HPCi is the reorganised healthcare publishing division which provides
information through periodicals, annuals, websites and events to the
manufacturing side of the Health, Pharmaceutical and Cosmetics markets. With
revenues of approximately £1.8m it includes leading titles such as Manufacturing
Chemist and Soap, Perfumery & Cosmetics (SPC) and is looking to extend its scope
and reach in these valuable and expanding markets.
Media
The division provides information, data and services to the music, public
relations, sponsorship and marketing sectors. It operates through a number of
leading brands including Hollis, Press Gazette and Muze Europe. It provides its
information as electronic products, newsletters, directories and events. This
sector is increasingly delivering its information through the Internet.
Hollis, which provides reference information and data to the public relations,
sponsorship and performing arts market, had a challenging year. However overall
revenues and segmental profits grew. The changes in the market have required us
to react rapidly and we have injected the expertise necessary to provide the
market with the information products it now requires. Changes include a new
senior management team and investment in a media neutral platform to allow us to
deliver information over the Internet, as data, and in print to fully meet
customer requirements. We expect further progress from this division in the
current financial period.
Press Gazette acquired in December 2006 is re-establishing itself rapidly as the
centre of the journalist and editorial communities. The weekly magazine has been
relaunched in both print and online and in our first six months the new team
also ran a number of successful events including the British Press Awards and
Regional Press Awards. In 2007 we will launch a new recruitment site for both
the press and PR communities and extend the brand further.
Muze Europe supplies information on recorded music and video to retailers,
e-tailers and increasingly companies involved in digital distribution of music
and entertainment products. Revenues increased by 6.5% in a very competitive
market. We anticipate change in the structure of how music, video and games are
distributed to consumers and we are confident that we are well placed to meet
the needs of this evolving digital world.
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 also 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 only purchase assets if we believe we have the
capability of driving profit growth and improved margins from those
acquisitions.
In October 2006, we acquired 82.7% of the shares in Mercia Group, a company that
specialises in providing technical marketing and training support to the
accounting profession. With effect from 30 April 2007, Mercia Group acquired the
entire share capital of Practice Track.
As referred to above, WDIS was sold in May 2007 and subsequent to the year end
the Group sold its interests in Wilmington Media and Dewberry Redpoint.
WILMINGTON GROUP PLC
Consolidated Income Statement
For the year ended 30 June 2007
Year Year
ended ended
30 June 30 June
2007 2006
Notes £'000 £'000
(restated)
Revenue 1 81,453 65,800
Cost of sales (27,064) (21,214)
---------- ----------
Gross profit 54,389 44,586
Operating expenses excluding amortisation 2 (37,904) (31,407)
Amortisation 2 (3,922) (2,465)
---------- ----------
Profit from continuing operations before
non-recurring items 12,563 10,714
Non-recurring items 3 1,208 (1,200)
---------- ----------
Profit from continuing operations after
non-recurring items 13,771 9,514
Finance costs 4 (1,239) (1,049)
---------- ----------
Profit on continuing activities before
taxation 12,532 8,465
Income tax expense 5 (3,343) (2,092)
---------- ----------
Profit on continuing activities after
taxation 9,189 6,373
Profit on discontinued operations after
taxation 6 696 742
---------- ----------
Net profit for the year 9,885 7,115
========== ==========
Attributable to equity holders of the 9,246 6,428
parent
========== ==========
Minority interest 639 687
========== ==========
Earnings per share attributable to equity
holders of the parent
Continuing operations: 8
Basic earnings per share 10.18p 6.80p
Diluted earnings per share 10.14p 6.76p
Continuing and discontinued operations:
Basic earnings per share 8 11.01p 7.69p
Diluted earnings per share 10.97p 7.64p
WILMINGTON GROUP PLC
Statement of Recognised Income and Expense
For the year ended 30 June 2007
Year Year
ended ended
30 June 30 June
2007 2006
£'000 £'000
(restated)
Exchange differences on translation of results of
foreign operations - 5
Interest rate swap gain taken directly to equity 560 -
Actuarial gain taken directly to equity 197 96
Tax on items taken directly to equity (227) (29)
---------- ----------
Net income recognised directly in equity 530 72
Net profit for the year 9,885 7,115
---------- ----------
Total recognised income and expense for the year 10,415 7,187
========== ==========
Attributable to
Equity holders of the parent 9,776 6,500
Minority interests 639 687
---------- ----------
10,415 7,187
========== ==========
WILMINGTON GROUP PLC
Balance Sheet
As at 30 June 2007
As at As at
30 June 30 June
2007 2006
£'000 £'000
(restated)
Non-current assets
Goodwill 47,934 47,187
Intangible assets 31,615 32,897
Property, plant and equipment 8,131 11,201
Investments - -
Deferred tax asset 228 212
---------- ----------
87,908 91,497
---------- ----------
Current assets
Inventories 1,573 1,504
Trade and other receivables 24,192 19,006
Derivative financial asset 560 -
Cash 4,443 2,855
---------- ----------
30,768 23,365
---------- ----------
Non-current assets held for sale 9,715 -
---------- ----------
Total assets 128,391 114,862
---------- ----------
Current liabilities
Trade and other payables (35,122) (30,168)
Tax liabilities (2,649) (1,405)
Bank overdrafts (3,306) -
---------- ----------
(41,077) (31,573)
---------- ----------
Non-current liabilities
Bank loans (13,000) (16,000)
Retirement benefit obligation (18) (254)
Deferred tax liability (5,188) (4,594)
---------- ----------
(18,206) (20,848)
---------- ----------
Total liabilities (59,283) (52,421)
---------- ----------
Net assets 69,108 62,441
========== ==========
Equity
Share capital 4,208 4,180
Share premium account 43,006 42,658
Capital reserve 949 949
Translation reserve (11) (11)
Share option reserve 125 91
Retained earnings 18,677 12,841
---------- ----------
Equity shareholders' funds 66,954 60,708
Minority interests 2,154 1,733
---------- ----------
Total equity 69,108 62,441
========== ==========
WILMINGTON GROUP PLC
Cash Flow Statement
For the year ended 30 June 2007
Year Year
ended ended
30 June 30 June
2007 2006
Notes £'000 £'000
Net cash flow from operating activities 9 13,713 12,416
Investing activities
Purchase of property, plant and equipment (1,092) (909)
Sale of property, plant and equipment 35 40
Purchase of subsidiary undertakings and
minority interests (8,374) (14,524)
Cash acquired on purchase of subsidiary
undertakings 1,534 1,567
Cash movement of disposal of subsidiary
undertakings (32) -
Sale of subsidiary undertakings 696 2,466
Purchase of intangible assets (1,370) (2,269)
Sale of intangible assets 28 -
---------- ----------
Net cash used in investing activities (8,575) (13,629)
---------- ----------
Financing activities
Dividends paid to equity holders of the parent (3,940) (3,135)
Dividends paid to minority shareholders in
subsidiary undertakings (292) (601)
Issue of ordinary shares 376 -
(Decrease)/increase in long term loans (3,000) 6,000
---------- ----------
Net cash flows (used in)/from financing
activities (6,856) 2,264
---------- ----------
Net (decrease)/increase in cash and cash
equivalents (1,718) 1,051
Cash and cash equivalents at beginning of the
year 2,855 1,804
---------- ----------
Cash and cash equivalents at end of the year 1,137 2,855
========== ==========
WILMINGTON GROUP PLC
Notes to the Accounts
1. Segmental information
Following the disposal of the Group's publishing interests in non-core business,
the Group has taken the opportunity to reorganise its healthcare and media
entertainment business into one Business Information segment.
(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 (including
amortisation of £24,000) (2,244)
----------
Profit from continuing operations
before non-recurring items 12,563
Non-recurring items 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
==========
(a) Primary reporting format - business segments
Year ended 30 June 2006
Legal and Business
Regulatory Information Total
£'000 £'000 £'000
(restated)
Revenue 52,014 13,786 65,800
========== ========== ==========
Segmental profit before amortisation 12,291 2,436 14,727
Amortisation (1,500) (965) (2,465)
---------- ---------- ----------
Segmental profit after amortisation 10,791 1,471 12,262
========== ========== ==========
Unallocated central overheads (1,548)
----------
Profit from continuing operations
before non-recurring items 10,714
Non-recurring items (1,200)
----------
Profit from continuing operations
after non-recurring items 9,514
Finance costs (1,049)
----------
Profit on continuing activities
before taxation 8,465
Income tax expense (2,092)
----------
Profit on continuing activities
after taxation 6,373
Profit from discontinued operations 742
----------
Net profit for the year 7,115
==========
(b) Secondary reporting format - geographical segments
The geographical analysis of turnover is as follows:
Year ended Year ended
30 June 30 June
2007 2006
£'000 £'000
(restated)
United Kingdom 69,521 55,218
Overseas 11,932 10,582
---------- ----------
81,453 65,800
========== ==========
(c) Adjusted profit
Adjusted profit is defined as profit before taxation, amortisation and
non-recurring items and reconciles to profit on continuing activities before
taxation as follows:
Year ended Year ended
30 June 30 June
2007 2006
£'000 £'000
(restated)
Profit on continuing activities before taxation 12,532 8,465
Amortisation and impairment 3,922 2,465
Non-recurring items (see note 3) (1,208) 1,200
---------- ----------
Adjusted profit 15,246 12,130
========== ==========
2. Operating expenses
Year ended Year ended
30 June 30 June
2007 2006
£'000 £'000
(restated)
Distribution and selling costs 7,215 6,292
Administrative expenses 30,689 25,115
---------- ----------
37,904 31,407
Amortisation of goodwill and intangible assets 3,922 2,465
---------- ----------
Total operating expenses 41,826 33,872
========== ==========
3. Non recurring items
Year ended Year ended
30 June 30 June
2007 2006
£'000 £'000
Non-recurring items 1,208 (1,200)
---------- ----------
Non-recurring items for the year principally represented the inducement fee
received, net of transaction costs, relating to the proposed merger with Metal
Bulletin plc. Non-recurring items for the year ended 30 June 2006 represented
the costs incurred in that year relating to this proposed merger.
4. Finance costs
Year ended Year ended
30 June 30 June
2007 2006
£'000 £'000
Bank interest receivable (103) (22)
Interest payable on loans and overdrafts 1,211 944
Pension scheme finance income (37) (19)
Facility fees 168 146
---------- ----------
1,239 1,049
========== ==========
5. Income tax expense
Year ended Year ended
30 June 30 June
2007 2006
£'000 £'000
(restated)
The tax charge comprises:
UK corporation tax at current rates 4,521 2,891
Adjustment to previous year (12) (177)
---------- ----------
4,509 2,714
Foreign tax 317 300
---------- ----------
4,826 3,014
Deferred tax credit - current year (1,483) (640)
- prior year - (282)
---------- ----------
Income tax expense 3,343 2,092
========== ==========
The prior year deferred tax credit in the comparative period arises as a result
of the recognition of capital allowances in one of the Group subsidiaries which
had previously not been recognised due to uncertainty over the timing and use of
these assets.
Factors affecting the tax charge for the year:
The tax charge for the year is less than the standard rate of corporation tax in
the UK of 30%. The differences are explained below:
Reconciliation of tax charge:
Profit on ordinary activities before tax 12,532 8,465
========== ==========
Profit on ordinary activities multiplied by the
standard rate of corporation tax in the year of
30% (2006: 30%) 3,760 2,540
Effect of:
Other items not subject to tax 4 (35)
Capital allowances for the year (in excess of)/
less than depreciation (124) 106
Net loss/(profit) on sale of assets not taxable 3 (62)
Foreign tax rate differences 66 2
Adjustment to tax charge in respect of previous years (12) (177)
Prior year deferred tax credit - (282)
Effect of change in future rate of corporation tax
for deferred tax calculations from 30% to 28% (354) -
---------- ----------
Current tax charge for year 3,343 2,092
========== ==========
6. Profit for the period from discontinued operations
The Group sold its shares in WDIS Limited during the year. On 14 August 2007,
the Company also 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, their net profit has been
included in the consolidated income statement and the comparatives have been
restated on a consistent basis. Their results are as follows:
Year ended Year ended
30 June 30 June
2007 2006
£'000 £'000
(restated)
Revenue 21,687 24,277
Expenses (20,503) (22,815)
---------- ----------
Profit before amortisation and taxation 1,184 1,462
Amortisation (753) (885)
---------- ----------
Profit before taxation 431 577
Attributable tax charge (129) (199)
---------- ----------
Net operating profit attributable to
discontinued operations 302 378
-------- --------
Profit on disposal of discontinued operations | 246| | 475|
Attributable tax credit/(charge) | 148| | (111)|
-------- --------
394 364
---------- ----------
Profit on discontinued operations after taxation 696 742
========== ==========
7. 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
2007 2006 2007 2006
pence per share pence per share £'000 £'000
Final dividends recognised
as distributions in the year 2.70 2.45 2,257 2,048
Interim dividends recognised as
distributions in the year 2.00 1.30 1,683 1,087
---------- ---------- ---------- ----------
Total dividends paid 4.70 3.75 3,940 3,135
========== ========== ========== ==========
Dividend proposed 4.00 2.70 3,366 2,257
========== ========== ========== ==========
8. 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
2007 2006
£'000 £'000
(restated)
Earnings from continuing operations for the
purpose of basic earnings per share excluding
discontinued operations 8,550 5,686
Add: Amortisation (net of minority interest
effect and deferred tax) 2,720 1,701
Non-recurring items after taxation (846) 840
---------- ----------
Earnings for the purposes of adjusted earnings per share 10,424 8,227
========== ==========
Number Number
Weighted average number of ordinary shares for
the purposes of basic and adjusted earnings per share 83,989,179 83,600,179
Effect of dilutive potential ordinary shares:
Exercise of share options 317,924 555,262
---------- ----------
Weighted average number of ordinary shares for
the purposes of diluted earnings per share 84,307,103 84,155,441
========== ==========
Basic earnings per share 10.18p 6.80p
Diluted earnings per share 10.14p 6.76p
Adjusted basic earnings per share 12.41p 9.84p
Adjusted diluted earnings per share 12.36p 9.78p
========== ==========
(b) From continuing and discontinued operations
Year ended Year ended
30 June 30 June
2007 2006
£'000 £'000
(restated)
Earnings from continuing operations for the
purpose of basic earnings per share excluding
discontinued operations 8,550 5,686
Adjustments to include the profit for the period
from discontinued operations 696 742
---------- ----------
Earnings from continuing and discontinued
operations for the purpose of basic earnings per share 9,246 6,428
Add: Amortisation (net of minority interest
effect and deferred tax) 3,247 2,321
Non-recurring items after taxation (846) 840
---------- ----------
Earnings for the purposes of adjusted earnings per share 11,647 9,589
========== ==========
Basic earnings per share 11.01p 7.69p
Diluted earnings per share 10.97p 7.64p
Adjusted basic earnings per share 13.87p 11.47p
Adjusted diluted earnings per share 13.81p 11.39p
========== ==========
(c) From discontinued operations
Year ended Year ended
30 June 30 June
2007 2006
£'000 £'000
(restated)
Earnings from discontinued operations for the
purpose of basic earnings per share 696 742
Add: Amortisation (net of minority interest
effect and deferred tax) 527 619
---------- ----------
Earnings for the purposes of adjusted earnings per share 1,223 1,361
========== ==========
Basic earnings per share 0.83p 0.89p
Diluted earnings per share 0.83p 0.88p
Adjusted basic earnings per share 1.46p 1.63p
Adjusted diluted earnings per share 1.45p 1.62p
========== ==========
9. Net cash flow from operating activities
Year ended Year ended
30 June 30 June
2007 2006
£'000 £'000
(restated)
Profit from operations 13,771 9,514
Non-recurring items (1,208) 1,200
Operating profit from discontinued operations 431 577
Depreciation of property, plant and equipment 1,519 1,574
Amortisation of intangible assets 4,675 3,350
Loss/(profit) on disposal of property, plant and equipment 10 (6)
Exchange translation differences - 5
Share option charge 34 34
---------- ----------
Operating cash flows before movements in working capital 19,232 16,248
(Increase)/decrease in inventories (69) 4
(Increase)/decrease in receivables (3,097) 507
Increase in payables 2,900 182
---------- ----------
Cash generated by operations 18,966 16,941
Tax paid (3,902) (3,547)
Interest paid (1,351) (978)
---------- ----------
Net cash flow from operating activities 13,713 12,416
========== ==========
The Group manages its treasury function on a group wide basis. As a result it is
not practicable to separately identify the movements in working capital
attributable to discontinued operations. The operating cash flow from
discontinued operations before movements in working capital for the year ended
30 June 2007 was £1,743,000 (2006: £1,980,000). Investing activities of the
discontinued operations for the year ended 30 June 2007 were a net cash inflow
of £102,000 (2006: £1,317,000). As it is not practicable to separately identify
Group financing movements for discontinued operations, financing activities for
the discontinued operations consist solely of dividends paid to minority
shareholdings during the year ended 30 June 2007 of £19,000 (2006: £13,000).
10. 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
2007 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
2006 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.
Goodwill and intangible asset valuations arising on the acquisition of Ark Group
and Smee and Ford during the twelve months ended 30 June 2006 have now been
finalised. The resulting reallocation between goodwill and intangible assets and
the consequential impact on deferred tax and amortisation have been treated as a
prior year adjustment and the comparative figures have been restated.
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.
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