Interim Results - 6 Months to 31 August 1999
WILMINGTON GROUP PLC
15 October 1999
INTERIM RESULTS FOR THE SIX MONTHS TO 31ST AUGUST 1999
* Trading profits increase by 15.1%
* Operating cash inflow increases by 48.1%
* Adjusted earnings per share before amortisation of goodwill increases
by 11.0% from 3.26p to 3.62p
* Consolidation of major acquisition
Brian Gilbert, Chief Executive of Wilmington Group reports:
'I am delighted to announce to our shareholders another set of favourable
results which continue our unbroken record of growth.
The major highlight of the period was the acquisition on 9th June 1999 of
Central Law Group, the leading provider of post-qualification legal training
in the UK. This acquisition has reinforced our already strong position in the
supply of information to professional markets which will now account for 35%
of Group turnover. Our results reflect the brief period for which Central
Law Group has been consolidated and includes a budgeted seasonal loss in the
summer months, after the interest cost on the borrowings raised to finance
this acquisition.
I remain confident of reporting a satisfactory result for the year. The
contribution for a full six months from Central Law Group, together with an
increased publishing programme, will produce results which are more weighted
to the second half.
The prospects for our industry are exciting. There is a marked increase in
both acquisition prospects and the extraordinary pace at which business to
business e-commerce is developing. We remain uniquely placed to take
advantage of these opportunities.'
For further information please contact:-
Brian Gilbert, Chief Executive
Wilmington Group plc Tel: 0171 251 6499
Basil Brookes, Finance Director
Wilmington Group plc Tel: 0171 251 6499
John Webb
Marshall Securities Ltd Tel: 0171 490 3788
Tim Linacre
WestLB Panmure Ltd Tel: 0171 638 4010
CHAIRMAN'S STATEMENT
RESULTS FOR THE SIX MONTHS ENDED 31ST AUGUST 1999
I am delighted to announce another set of good results for Wilmington Group
plc for the six months to 31st August 1999.
A combination of improving profits from existing businesses and the initial
results of our recent acquisition, Central Law Group (CLG), which was acquired
in June 1999, have created further increases in turnover and operating
profit. The contribution for a full six months from this acquisition,
together with an increased publishing programme, will produce results which
are more weighted to the second half.
The total results for the first six months of the year reflect the brief
period for which CLG has been consolidated including a budgeted seasonal loss
in the summer months, after the interest cost on the borrowings raised to
finance its acquisition. Accordingly, comparison of the results with those of
the same period last year is distorted.
Profit before interest, tax and amortisation of goodwill and intangible assets
('adjusted profit') for the six months to 31st August 1999 increased by 15.1
per cent. to #3,996,000 from #3,473,000. Adjusted profit after interest, the
charge for which rose both significantly and in line with expectations after
the expenditure on the acquisition of CLG, rose by 9.0 per cent. to #3,725,000
from #3,417,000.
Profit attributable to shareholders, which is after the amortisation of
goodwill and intangible assets, fell by 5.7 per cent. from #1,902,000 to
#1,793,000, largely as a result of the acquisition of CLG creating an increase
in non cash amortisation charges of 107.9 per cent. from #433,000 to #900,000.
Consequently, earnings per share fell by 6.0 per cent. from 2.67p to 2.51p.
However, adjusted earnings per share, which is calculated before the
amortisation of goodwill and intangible assets, rose by 11.0 per cent. from
3.26p to 3.62p.
The strong cash generative characteristics of our business were underlined by
net cash inflow from operating activities of #4,452,000, an increase of 48.1
per cent. from #3,007,000 in 1998.
In accordance with existing policy we intend to pay one final annual dividend
in June.
BUSINESS REVIEW
Wilmington addresses the information requirements of professional business
communities and has developed a selection of leading brands in vertical
markets. The focus of our corporate strategy is to provide information to
these markets through magazines, directories, electronic information, events
and other media.
We aim to continue to build long-term revenue streams in these markets.
Ownership of our key products and content is a defining characteristic of our
Group.
On 9th June 1999, Wilmington acquired CLG. Operating under the 'Central Law
Training' brand, CLG is a major provider of post-qualification legal training
and has expanded into legal publishing and high quality legal conferences.
The first six month's figures include a loss for CLG after finance costs and
before amortisation for the period from acquisition to 31st August 1999. This
includes the holiday period of July and August during which the number of
scheduled training events is significantly less than normal. We are actively
investing time and money to take advantage of the consolidation opportunities
of the CLG acquisition from which the main benefits will emerge next year.
Overall turnover of the existing business has been broadly equal to last year.
The publication date of a number of products has been moved to the second six
months. Also, a number of products have faced static markets. However, margins
have improved, in particular from our information service business as an
increasing proportion of products are published electronically.
We have been consistently increasing the pace of investment in electronic
publishing. Not only have we launched a specialist business ISP under the name
ConnectingBusiness.com but are actively developing numerous income generating
electronic initiatives based on our own brands. We are already enjoying
improved margins in some areas whilst making this investment and bearing the
development costs for products which will enhance our profitability in the
near future.
OUTLOOK
The Group has started the second half well and we are confident of reporting a
satisfactory result for the year. The integration of CLG has started smoothly
and we are already enjoying some of the benefits that were projected at the
time of its acquisition.
In addition, in our industry, there is currently a marked increase in both
acquisition prospects and, more significantly, in the extraordinary pace at
which business to business e-commerce is developing. We are uniquely placed to
take advantage of these opportunities.
We were delighted to strengthen our Board with the appointment of an
additional non-executive director, Richard Magee, in August 1999. Mr Magee was
formerly Chairman of Tullett & Tokyo Forex International Limited, a premier
international financial services house operating in numerous markets with
offices in Europe, North America, the Far East and the Middle East. Mr Magee's
experience in managing international and fast growing businesses will enable
him to contribute significantly to the Wilmington Group.
I would like to thank my fellow directors, senior management and the Group's
employees for their continued excellent performance.
Dennis Rooke
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months Six months Year
ended ended ended
31st August 31st August 28th February
1999 1998 1999
(unaudited) (unaudited) (audited)
Continuing
operations Acquisitions Total
Notes #'000 #'000 #'000 #'000 #'000
Turnover 22,388 2,015 24,403 22,469 44,642
Cost of sales (6,622) (1,174) (7,796) (7,297) (13,789)
--------- ------- -------- -------- -------
Gross profit 15,766 841 16,607 15,172 30,853
Operating expenses (12,029) (582) (12,611) (11,699) (23,472)
Amortisation of
goodwill and
intangible assets (473) (427) (900) (433) (867)
Operating profit 3,264 (168) 3,096 3,040 6,514
====== ======
Interest payable
and similar charges (305) (56) (74)
Interest receivable
and similar income 34 - 4
------- ------ ------
Profit on ordinary
activities before taxation 2,825 2,984 6,444
Taxation 2 (1,007) (1,025) (1,866)
------- ------ ------
Profit on ordinary
activities after taxation 1,818 1,959 4,578
Minority interests (25) (57) (239)
----- ------ ------
Profit for the period and
attributable to shareholders 1,793 1,902 4,339
Dividends - - (1,235)
------ ------ -----
Retained profit for the period 1,793 1,902 3,104
====== ===== ======
Earnings per
ordinary share 3 2.51p 2.67p 6.08p
====== ====== ======
Diluted earnings per
ordinary share 3 2.47p 2.64p 6.02p
====== ====== ======
Adjusted earnings per
ordinary share 4 3.62p 3.26p 7.26p
====== ====== ======
There were no other recognised gains or losses in the six months ended 31st
August 1999 (1998 #Nil) apart from those shown in the profit and loss
account.
CONSOLIDATED BALANCE SHEET
As at As at As at
31st August 31st August 28th February
1999 1998 1999
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Goodwill and intangible assets 48,726 14,639 15,162
Tangible assets 7,450 5,862 6,066
------- ------- -------
56,176 20,501 21,228
------- ------- -------
Current assets
Stock and work in progress 1,239 1,080 1,240
Debtors 10,068 7,833 9,351
Cash at bank and in hand - - 1,131
-------- ------- -------
11,307 8,913 11,722
Creditors: Amounts falling due
within one year (19,375) (11,247) (13,331)
------- ------- -------
Net current liabilities (8,068) (2,334) (1,609)
------- ------- -------
Total assets less
current liabilities 48,108 18,167 19,619
Creditors: Amounts falling
due after more than one year (20,000) - -
------- ------- -------
Net assets 28,108 18,167 19,619
====== ====== ======
Capital and reserves
Called up share capital 3,577 3,567 3,573
Share premium account 6,652 6,555 6,612
Other reserves 949 949 949
Profit and loss account 9,812 6,821 8,019
------- ------- ------
Shareholders' funds 20,990 17,892 19,153
Minority interests 7,118 275 466
------- ------ ------
28,108 18,167 19,619
====== ====== ======
CONSOLIDATED CASH FLOW
Six months ended Six months ended Year ended
31st August 31st August 28th February
1999 1998 1999
(unaudited) (unaudited) (audited)
Note #'000 #'000 #'000
Reconciliation of operating
profit to net cash inflow
from operating activities:
Operating profit 3,096 3,040 6,514
Adjustment for items not
involving the flow of funds 1,465 1,065 1,885
Net working capital movement 5 (109) (1,098) (825)
------ ------ ------
Net cash inflow from
operating activities 4,452 3,007 7,574
Returns on investments and
servicing of finance
------ ------ -------
Net interest paid (200) (56) (70)
Dividend paid to minority
shareholders in subsidiary
undertaking - - (30)
------- ------ ------
Net cash outflow (200) (56) (100)
Taxation
Tax paid - - (1,535)
Capital expenditure and
financial investment
------- ------ ------
Purchase of goodwill and
intangible assets (482) (114) (271)
Purchase of tangible fixed assets (872) (1,045) (1,740)
Sale of tangible fixed assets 54 121 125
------ ------ -----
Net cash outflow (1,300) (1,038) (1,886)
Acquisitions and disposals
Purchase of subsidiary undertakings (25,274) - (94)
Equity dividends paid (1,237) (1,027) (1,027)
-------- ------ -------
Cash(outflow)/inflow
before financing (23,559) 886 2,932
Financing
------- ------- -------
Issue of shares 44 - 63
Receipt/(repayment) of
secured bank loan 20,000 (1,000) (1,000)
------- ------- -------
20,044 (1,000) (937)
------- ------- -------
(Decrease)/increase in cash (3,515) (114) 1,995
====== ====== ======
Reconciliation of net cash flow to movement in net(debt)/cash
Six months ended Six months ended Year ended
31st August 31st August 28th February
1999 1998 1999
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
(Decrease)/increase in cash
in the period (3,515) (114) 1,995
Cash(inflow)/outflow from
(increase)/decrease in net debt (20,000) 1,000 1,000
-------- ------ -------
Change in net(debt)/cash
resulting from cash flow (23,515) 886 2,995
Arising on acquisition 1,848 - (550)
Net cash/(debt) brought forward 581 (1,864) (1,864)
-------- ------- -------
Net(debt)/cash carried forward (21,086) (978) 581
======= ====== ======
NOTES
1. Nature of information
The interim accounts for the six months ended 31st August 1999 are neither
audited nor reviewed by the Company's auditors. The comparative figures for
the year ended 28th February 1999 do not constitute full accounts within the
meaning of Section 240 of the Companies Act 1985 but are abridged from such
accounts which have been reported on by the Company's auditors and delivered
to the Registrar of Companies. The report of the auditors on such accounts was
unqualified.
The interim accounts are prepared on the basis of the accounting policies set
out in the accounts of the Group for the year ended 28th February 1999.
2. Taxation
There is a taxation charge for the six months ended 31st August 1999 of
#1,007,000 based on the Group's profits for the period at current corporation
tax rates.
3. Earnings per ordinary share
Earnings per share is calculated on the basis of profit on ordinary activities
after taxation and minority interests divided by 71,506,890 (1998 -
71,329,635) being the weighted average number of ordinary shares of 5p in
issue.
The diluted earnings per share is calculated on the basis of profit on
ordinary activities after taxation and minority interests divided by
72,472,143 (1998 - 72,077,380) being the diluted weighted average number of
ordinary shares of 5p.
4. Adjusted earnings per ordinary share
In order to show results on a comparable basis to prior years before adoption
of FRS 10 'Goodwill and Intangible Assets', an adjusted earnings per ordinary
share has been calculated using an adjusted profit after taxation and minority
interest but before amortisation of goodwill and intangible assets of
#2,592,000 (1998 - #2,322,000).
5. Net working capital movement
Six months ended Six months ended Year ended
31st August 31st August 28th February
1999 1998 1999
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Decrease in stock and work in progress 157 115 7
Decrease/(increase) in debtors 1,261 764 (403)
(Decrease) in creditors (1,527) (1,977) (429)
------ ------ -------
(109) (1,098) (825)
====== ====== ======
6. Computers and the year 2000
The year 2000 review of all systems that use digital technology has not
uncovered any material issues. Where necessary, hardware and operating systems
have been upgraded or replaced on an accelerated basis to ensure compliance.
All additional compliance costs have been written off as incurred. These costs
have not been material. All internal systems which will be operating on 1st
January 2000 have been tested and found to be substantially compliant in all
material respects. In addition, steps have been taken where possible, to
ensure that external suppliers are year 2000 compliant. However, we cannot
guarantee that all external interfaces will not have an impact on the
business.
Copies of this report are available from the Company's registered office at
Paulton House, 8 Shepherdess Walk, London N1 7LB.
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