21st Sep 2007 07:02
Wilmington Group Plc21 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, todayannounces 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 ofWilmington Group Plc with significant progress in achieving our strategic,financial and structural goals. We have delivered strong revenue and profitgrowth from continuing operations, as well as capital profits from the disposalof assets. We have also invested in a range of exciting initiatives for organicgrowth, made further value-creating acquisitions and, since the year end,completed the restructuring and disposal of the Group's portfolio of non-corebusinesses. "The Group is now focussed on serving the information and training requirementsof niche professional markets. We believe that these markets offer excellentopportunities for above average growth over the longer term. "The Board is very encouraged by the continued improvement in the underlyingquality of the Group's earnings and is confident of demonstrating furtherprogress in the current year." - ends - For further information, please contact: Wilmington Group Plc On the day: 020 7422 6800Charles Brady, Chief ExecutiveBasil Brookes, Finance Director Weber Shandwick Financial 020 7067 0700Nick Oborne, Charlie Hooper or Georgia Dempsey Notes to EditorsWilmington Group plc is one of the UK's leading providers of information andtraining for professional business markets. The Group provides training,arranges industry events and publishes magazines, directories, databases andspecial reports focused primarily on its two principal sectors of Legal &Regulatory, and Business Information which comprises Healthcare and Mediabusinesses. Capitalised at approximately £200 million, Wilmington floated on theLondon 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 WilmingtonGroup plc with significant progress in achieving our strategic, financial andstructural goals. We have delivered strong revenue and profit growth fromcontinuing 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 therestructuring and disposal of the Group's portfolio of non-core businesses. The Group's strategy is to concentrate on the provision of information andtraining to selected professional business markets. We believe we can derive thebest returns for our shareholders by concentrating on major professional marketsand by focusing investment in key niche sectors with the capacity for strong andsustainable growth. During the year ended 30 June 2007, we sold WDIS, the subscription andcirculation management bureau, for £1m. This was our fourth significant disposalas 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 soldWilmington Media and Dewberry Redpoint for a cash consideration of £12m.Following this, Wilmington Group is now firmly focussed on niche professionalmarkets with strong presence in the important sectors of Law, Accountancy,Charities, Banking, Pensions, Health, Journalism and PR. We will report ourresults by reference to the Legal and Regulatory businesses and BusinessInformation. Financial PerformanceThe financial results for the year ended 30 June 2007 show significant progressas 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 interestincreased by 25.1% to £16.5m (2006: £13.2m). The adjusted profit, beforenon-recurring items, tax and amortisation increased by 25.7% to £15.2m (2006:£12.1m). Adjusted profit from continuing and discontinued operations increasedby 20.9% to £16.4m (2006: £13.6m). This is the fourth successive year of impressive profit growth, which reflects asignificant improvement in the quality of the Wilmington Group businesses andunderpins our confidence that we can create additional value for shareholders. Total earnings per share (from continuing and discontinued operations) increasedby 43.2% to 11.01p per share (2006: 7.69p). Adjusted earnings per share fromcontinuing 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 andtaxation), reflecting a further increase in underlying subscription revenues. At30 June 2007 the Group had net debt of £11.9m (2006: £13.1m). Since the year endthe Group received £12m in respect of the sale of Wilmington Media Limited andDewberry Redpoint Limited. Share Buy BackOn 19 July 2007 the Group announced that "given the continued strength of theGroup's balance sheet reflecting the strong cash flows of the Company, the Boardhas assessed the capital required to support the ongoing plans for profitablegrowth and its ordinary dividend payments, and has decided that it will buy backinitially 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 andinvolve a rolling share buy-back programme within the limit approved byshareholders at the Company's Annual General Meeting on 15 November 2006. It isintended that any shares purchased will be transferred into Treasury." Following the disposal of WDIS, Wilmington Media and Dewberry Redpoint the Boardhas decided to extend the buy back from the initial target of £5m to £12m of itsordinary shares by market value. Whilst the Group is determined to retainflexibility and the ability to take advantage of the many opportunitiesavailable to it, it is also mindful of the benefits of an efficient balancesheet and is committed to achieving optimum efficiency, either by acquisition orreturn of capital to shareholders. DividendThe Board remains committed to a progressive dividend policy and proposes afinal dividend of 4p per share payable on the 12 November 2007 to shareholderson the register on 12 October 2007. Taken together with the interim dividend of2p per share, this makes a total dividend for the year of 6.0p per share, anincrease of 50% over the 4.0p paid last year. The dividend is covered 2.1 timesby adjusted earnings per share from continuing operations (2006: 2.5 times). Highlights of the YearOverall, we have achieved our ambition of delivering substantial growth inadjusted profit before tax and in adjusted earnings per share. The BusinessReview describes the performance of the business in greater detail. There arehowever some sectoral highlights which I would like to identify in thisstatement. Legal and RegulatoryRevenue has grown 25.6% to £65.3m (2006: £52.0m), boosted by the acquisition ofMercia Group Limited (October 2006). Segmental profits before central overheadsand amortisation have grown by 28.0% to a record £15.7m (2006: £12.3m). We haveseen excellent performances in many areas of this division. The previously recorded trend of growing Internet and digital revenues hascontinued. 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 CLTGroup. The acquisition of Mercia Group in October 2006 has continued ourexpansion into the accountancy market. Training in law for non-lawyers (BondSolon) has had an excellent year. Compliance training has also produced a strongtrading performance and at the end of the financial year we were delighted to beasked to develop a major programme of compliance training and assessment for theSingapore Government on behalf of the International Compliance Association. Aswe have previously highlighted, this will necessitate significant investmentduring the current financial year, but will start to produce positive returns inthe 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 theexpansion of our training activities during the current year. Business InformationFollowing the successful disposal of our publishing interests in non-corebusinesses we have taken the opportunity to reorganise our healthcare and mediaentertainment assets within the Wilmington Business Information ("WBI")subsidiary of the Group. This will now focus on these two key sectors to developboth the organic potential of the existing assets and increase the size of ourpresence in these markets through investment and acquisition when the rightopportunities arise. This division includes Binley's, our UK health information business, Agence dePresse Medicale, the French language health newswire service, and HPCi, ourhealth, pharmaceutical and cosmetic publications. Our media assets includeHollis, which serves the PR sector, Press Gazette in media and journalism andMuze, which serves the entertainment industry. I am delighted to report that both revenues and profits from continuingoperations in Business Information have shown strong growth in the year ended30th June 2007. Revenue has grown 17.0% to £16.1m (2006: £13.8m). Segmentalprofits before central overheads and amortisation have grown by 21.9% to £3.0m(2006: £2.4m). OutlookThe Group is now focussed on serving the information and training requirementsof niche professional markets. We believe that these markets offer excellentopportunities for above average growth over the longer term. We are investing in many organic initiatives that we expect to produce goodreturns in the current year and beyond. Having shown we can acquire qualityassets at competitive prices, and deliver synergies and growth from thosebusinesses acquired, we continue to look for appropriate acquisitions tocomplement our existing businesses. The Board is very encouraged by the continued improvement in the underlyingquality of the Group's earnings and is confident of demonstrating furtherprogress in the current year. Finally, and as always, I would like to thank my fellow Directors, SeniorManagers and all of the Group's employees who have contributed to this year'ssuccessful results for their innovation, hard work and commitment. BUSINESS REVIEW Overview of the Group's Financial PerformanceIn 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 EBITAfrom continuing businesses grew by 25.1% to £16.5m (2006: £13.2m). The EBITAmargin 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 netdebt 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 £1.2mreflecting the receipt of an inducement fee of £1.4m in respect of thenon-completion of the proposed merger with Metal Bulletin in the previous year,less residual non-recurring costs. Amortisation of intangible assets was £3.9min the year ended 30 June 2007 (2006: £2.5m) reflecting the finalisation of thefair value balance sheets of Ark, and Smee & Ford from the prior year togetherwith the acquisition during the year of Mercia and Practice Track. On 11 May 2007 the Group disposed of its subsidiary WDIS, which providessubscription and circulation management services to a number of media companies.On 14 August 2007 the Group disposed of Wilmington Media and Dewberry Redpointwhich together owned the Group's business serving the Design and Construction,Catering, Automotive and other specialist markets. The after tax results of thebusinesses disposed of, together with the profit on disposal of WDIS, have beenshown as discontinued in the income statement. The gain on disposal of shares inWilmington Media and Dewberry Redpoint will be recognised in the results for theyear to 30 June 2008. The Group is grateful to all those employees of thebusinesses that have been included in these transactions for their vital part inthe history and progress of Wilmington, and wishes them well for the future. Earnings per ShareEarnings per share from continuing operations increased by 49.7% to 10.18p forthe year ended 30 June 2007 (2006: 6.80p). Adjusted earnings per share fromcontinuing operations increased by 26.1% to 12.41p (2006: 9.84p). This increasefollows three consecutive years of adjusted earnings per share growth at acompound rate in excess of 20%. Total earnings per share (from continuing and discontinued operations) increasedby 43.2% to 11.01p (2006: 7.69p). Total adjusted earnings per share (fromcontinuing and discontinued operations) increased by 20.9% to 13.87p (2006:11.47p). Earnings and adjusted earnings per share are calculated on the weighted averagenumber of shares in issue of 83,989,179 for the year ended 30 June 2007 (2006:83,600,179). TaxationThe 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 ratesarises primarily from the benefit of the reduction in future corporation taxrates to 28% in calculating the deferred tax liabilities. CashflowOperating cash flow for the year ended 30 June 2007 of £19.0m was 107% ofoperating profit before non-recurring items, amortisation, interest and taxation(2006: £16.9m, 116%). The free cash flow, calculated after deduction fromoperating cash flow of capital expenditure, payment of corporate taxes, andpayment of interest was £12.0m (2006: £10.9m). During the year £8.5m was spenton acquisitions net of disposals which was partially offset by cash acquiredwithin those businesses of £1.5m. At the balance sheet date the Group had netdebt of £11.9m (2006: £13.1m). Treasury PolicyCash and net debt is managed on a Group wide basis and subsidiaries operatewithin funding restrictions controlled by the Executive Directors of the Group. The Group does not have significant foreign exchange exposure but does have somenet income in US dollars, Euros, Australian and Singapore dollars. Thesecurrencies are sold periodically having regard to both prevailing exchange ratesand transaction charges. In November 2006 the Group adopted an interest hedging strategy which aims toprotect between 50% and 67% of its forecast debt from interest rate fluctuationsand specifically the first £15m of borrowings under its revolving creditagreement. A 5 year interest swap entered into on 16 November 2006 effectivelyfixed the interest rate payable on the first £15m of debt under the revolvingcredit agreement. Hedge accounting has been adopted for the treatment of thisfinancial instrument, as a result of which an unrealised gain of £560k isrequired to be recognised in equity rather than the income statement. Business Objectives and StrategyWilmington's strategy is to increase shareholder value by delivering sustainableand growing profits from servicing the information and training requirements ofniche professional markets. We aim to develop strong businesses delivering sustainable profit growth in ourkey 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 attractivegrowth prospects. Our businesses are strongly cash generative and we have aclear investment strategy to grow in those market sectors where we can see theopportunity to produce sustainable growth. Our long term growth prospects are expected to be sustained by the continuingdemand for professional information and high quality focused events. Thecontinued development of legislation and increasing levels of regulation, bothin the UK and abroad, as well as our commitment to developing new products anddelivery channels, create an environment which will enable us to capitalise onthe strength of our brands and our expertise in providing high qualityinformation and training. By understanding and working closely with our client base the Group is able toprovide essential information and training whilst building long term sustainablerelationships with our clients. Achieving and Exceeding Key Financial and Operational TargetsThe Group maintains its view that the following financial and operationaltargets are the key measures of the Group's success and the best long termindicators of enhanced shareholder value. We are delighted to have made excellent progress against all our financial andoperational 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 andrapidly changing nature of our markets, the increasing technological nature ofour products and services and the legal and regulatory uncertainties. Certainparts of our businesses are also affected by the impact of changes inprofessional regulations (often positive) and by the impact of the economiccycle on advertising and promotional spending. Historically, Wilmington has been exposed to high levels of cyclical risk due toa reliance on magazine advertising as a major revenue source. With the disposalof our non-core assets, we have substantially reduced our exposure to variancesin spending on magazine advertising, putting us in a better position to achievesustainable profit growth. Wilmington has an established risk management procedure that is embedded in theoperations of its trading divisions and is reviewed by the Board. All parts ofthe business identify risks and seek to ensure that procedures and strategiesare in place so that risks can be managed wherever possible. Some of the main challenges which affect the Group as a whole include thefollowing: 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 theenvironment, principally through the use of energy, waste generation, paper useand print and production technologies. We are committed to reducing the impactwherever possible and to employing sustainable materials and technology. We seekto ensure that Wilmington's divisions are compliant with relevant environmentallegislation and require our suppliers and contractors to meet the sameobjectives. Furthermore, our progress towards a more digitally based business isreducing our environment impact. Accordingly whilst environmental issues areimportant we do not believe that they constitute a risk for the Group. Wilmington's PeopleIn a competitive environment, Wilmington's growth and success depends on thecapabilities, skills and dedication of the people it employs. We are fortunateto benefit from the entrepreneurialism, professionalism, and flexibility thatprovide the basis for a successful growing business. As Wilmington moves towards a greater emphasis on digital and interactiveservices we need to develop new capabilities, as well as new technical andmanagement skills to make these services work. We are responding by developingour people and injecting new talent where it is needed. Each of our businessesis working hard to identify and bring on the necessary talent, both from withinthe organisation and from outside. We are a talent dependent business, requiring excellent people with a passionfor their brands and subject matter. We are committed to developing andrewarding our people and creating a culture in which they can thrive. The shapeof this activity varies from business to business with each operation attractingand developing its people in ways appropriate to its own markets. Whilst recognising the benefits of Wilmington's devolved business culture wealso encourage links between teams and businesses where it makes sense tocollaborate to share ideas and technical expertise. We offer every opportunity for Wilmington people to advance their careers andfulfil their potential. There is plenty of evidence that this is happening.Vacancies are advertised internally, as well as externally in order to make itas easy as possible for employees to look for opportunities upwards and sidewayswithin the Group. We reported last year that there had been major changes to working practices andsignificant investment in new technology and equipment. This investment iscontinuing across all parts of the Group. Major changes to technology haverequired a lot of hard work and dedication from Wilmington's people who haveplanned and implemented the changes. This process is ongoing and we arecurrently 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 Groupcan achieve the high levels of growth it desires is to retain and attract thevery best people. The Board is determined to ensure that Wilmington remains agreat place to work, where people have the opportunity to challenge themselves,to grow professionally and to benefit from high levels of remuneration andincentives. Only by continuing to develop the skills of our current team and byrecruiting the very best new talent can Wilmington continue to grow at the ratewe wish. Legal and RegulatoryThis is our largest division, accounting for 80% of Group turnover fromcontinuing operations and contributing 84% of Group trading profit fromcontinuing operations. Revenue grew by 25.6%, to £65.3m (2006: £52.0m) whiletrading profit increased by 28.0% to £15.7m (2006: £12.3m) giving operatingmargins of 24.1% (2006: 23.6%). The increase in turnover and profits was partlydue to the acquisition of Mercia Group. We are pleased by the organic profitgrowth at a time when we were investing heavily in systems, new marketing andproduct development. Our Legal and Regulatory division is a resilient andgrowing business, combining high quality "must have" information with a range offocused, market leading products and events. Waterlow Legal and RegulatoryWaterlow provides information, magazines, events and services to the legal,charity, accountancy, surveying, pensions, knowledge management and financemarkets. Waterlow's products, some of which date back to 1844, are clear marketleaders 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 Waterlowbrand, 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 professionalclient bases with strong information needs, increasing regulatory requirementsand sustainable demand. These characteristics have provided a strong base uponwhich Waterlow has been able to develop a cash generative and growing businesswith excellent margins. The business has seen constant growth in sales and profits in recent years as aresult of both strong organic growth and the successful integration anddevelopment of acquisitions. We were encouraged to see subscription revenues increase to 26.3% of total salesthis year (2006: 22.5%). In addition an important characteristic of Waterlow'sprint publishing is the resilience and subscription-like characteristics of itsclassified 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 successof the business, with the proportion of revenues derived from higher marginproducts and services delivered electronically increasing last year to 49%(2006: 45%). Furthermore, electronic developments represented over 79% of theorganic profit growth last year and fuelled the increased overall margins forWaterlow. The development of our recent acquisitions has continued in an encouragingmanner. Ark and Smee & Ford, the two most recent acquisitions, contributedcombined operating profit of £1.8m up 78% on 2006 (£1m). Our margins on thesebusinesses increased by 4.6% to 19.4%. Our aggregate return on invested capitalfor both acquisitions exceeded 18%, comfortably ahead of our cost of capital anda demonstration of our ability to make value-enhancing acquisitions. We areenthusiastically looking for other acquisitions where we can generate furthervalue for our shareholders. In recent months Waterlow has also undertaken a significant reorganisation andinvestment in additional management. We believe that this will allow us tocontinue the strong growth the business has delivered in recent years andprovide a scaleable resource for further acquisitions. CLT GroupIn October 2006 the CLT Group made the second largest acquisition in the historyof the Wilmington Group plc with the purchase of Mercia Group. Mercia is theleading provider of technical, marketing and training support to the accountancyprofession. The acquisition also brought within the CLT Group both MerciaNorthern Ireland and Mercia Republic of Ireland, which provide a similar rangeof services to the accountancy profession in Ireland. The range of Mercia products has provided a number of synergies with othercompanies within the CLT Group which has resulted in, for example, the launch ofa web development service for the legal profession. This product has proved verysuccessful 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 toaccountants and the acquisition has enabled Practice Track to make cost savingswhile budgeting for current continuing turnover figures. Over the course of the year considerable time was expended upon therestructuring of the CLT Group, which was completed on 2nd July 2007. The majoreffect of the restructuring will be to strengthen and centralise the Group'srole for the benefit of the individual companies it comprises. CLT Group is nowstructured to provide support in the areas of IT, Accounts, HR and Productionthroughout the Group companies. Not only will this restructuring provide greatersupport to current group companies, but it will also enable an even moresuccessful 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 InformationWBI Health and Media accounted for 20% of Group revenue from continuingoperations and 16% of Group trading profit from continuing operations. Revenuegrew 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 isexcellent progress particularly as government healthcare budgets in our two keygeographic regions (UK and France) were both under severe pressure during thisfinancial year. Despite these issues healthcare is a market with significantpotential and will continue to create many opportunities for us. Binley's provides specialist contact information and sales management solutionsto the healthcare and pharmaceutical industries. It continues to invest stronglyin organic growth and has made excellent progress particularly with itspharmaceutical clients. Revenue overall has grown by 16.5% and profits by 23%.Revenues from delivering its products electronically have again shown goodprogress and it is also increasingly adding value for its clients throughanalytical tools, data-centric consultancy projects and other extensions to itsincreasingly valuable brand. APM is our specialist Press Agency based in Paris. A 4.2% improvement inrevenues shows progress being made despite a difficult market in France duringthe year. It is the leading provider of online healthcare news to its homemarket and it continues to build its European brand through its new Englishlanguage product APM Health Europe. The new product aimed at Europeanpharmaceutical clients generated solid revenues in its first full year. Weexpect good organic growth in both the home market products and the Europeanproduct in the new financial period. HPCi is the reorganised healthcare publishing division which providesinformation through periodicals, annuals, websites and events to themanufacturing side of the Health, Pharmaceutical and Cosmetics markets. Withrevenues of approximately £1.8m it includes leading titles such as ManufacturingChemist and Soap, Perfumery & Cosmetics (SPC) and is looking to extend its scopeand reach in these valuable and expanding markets. MediaThe division provides information, data and services to the music, publicrelations, sponsorship and marketing sectors. It operates through a number ofleading brands including Hollis, Press Gazette and Muze Europe. It provides itsinformation as electronic products, newsletters, directories and events. Thissector 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 overallrevenues and segmental profits grew. The changes in the market have required usto react rapidly and we have injected the expertise necessary to provide themarket with the information products it now requires. Changes include a newsenior management team and investment in a media neutral platform to allow us todeliver information over the Internet, as data, and in print to fully meetcustomer requirements. We expect further progress from this division in thecurrent financial period. Press Gazette acquired in December 2006 is re-establishing itself rapidly as thecentre of the journalist and editorial communities. The weekly magazine has beenrelaunched in both print and online and in our first six months the new teamalso ran a number of successful events including the British Press Awards andRegional Press Awards. In 2007 we will launch a new recruitment site for boththe 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 musicand entertainment products. Revenues increased by 6.5% in a very competitivemarket. We anticipate change in the structure of how music, video and games aredistributed to consumers and we are confident that we are well placed to meetthe needs of this evolving digital world. Acquisitions and DisposalsWe have carefully formulated acquisition and disposal criteria together withrigorous post acquisition analysis. As a result of this approach we are able toreport the success of our recent acquisitions both in terms of return oncapital, and also in terms of the improvement that we have been able to achievein profitability and profit margins. We seek not only to secure a good rate ofreturn on capital but also we only purchase assets if we believe we have thecapability of driving profit growth and improved margins from thoseacquisitions. In October 2006, we acquired 82.7% of the shares in Mercia Group, a company thatspecialises in providing technical marketing and training support to theaccounting profession. With effect from 30 April 2007, Mercia Group acquired theentire share capital of Practice Track. As referred to above, WDIS was sold in May 2007 and subsequent to the year endthe Group sold its interests in Wilmington Media and Dewberry Redpoint. WILMINGTON GROUP PLCConsolidated Income StatementFor the year ended 30 June 2007 Year Year ended ended 30 June 30 June 2007 2006 Notes £'000 £'000 (restated) Revenue 1 81,453 65,800Cost of sales (27,064) (21,214) ---------- ----------Gross profit 54,389 44,586Operating expenses excluding amortisation 2 (37,904) (31,407)Amortisation 2 (3,922) (2,465) ---------- ----------Profit from continuing operations beforenon-recurring items 12,563 10,714Non-recurring items 3 1,208 (1,200) ---------- ----------Profit from continuing operations afternon-recurring items 13,771 9,514Finance costs 4 (1,239) (1,049) ---------- ----------Profit on continuing activities beforetaxation 12,532 8,465Income tax expense 5 (3,343) (2,092) ---------- ----------Profit on continuing activities after taxation 9,189 6,373Profit 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 6,428parent ========== ========== Minority interest 639 687 ========== ========== Earnings per share attributable to equityholders of the parentContinuing operations: 8Basic earnings per share 10.18p 6.80pDiluted earnings per share 10.14p 6.76p Continuing and discontinued operations:Basic earnings per share 8 11.01p 7.69pDiluted earnings per share 10.97p 7.64p WILMINGTON GROUP PLCStatement of Recognised Income and ExpenseFor 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 offoreign operations - 5Interest rate swap gain taken directly to equity 560 -Actuarial gain taken directly to equity 197 96Tax on items taken directly to equity (227) (29) ---------- ----------Net income recognised directly in equity 530 72Net 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 PLCBalance SheetAs at 30 June 2007 As at As at 30 June 30 June 2007 2006 £'000 £'000 (restated)Non-current assetsGoodwill 47,934 47,187Intangible assets 31,615 32,897Property, plant and equipment 8,131 11,201Investments - -Deferred tax asset 228 212 ---------- ---------- 87,908 91,497 ---------- ----------Current assetsInventories 1,573 1,504Trade and other receivables 24,192 19,006Derivative 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 liabilitiesTrade and other payables (35,122) (30,168)Tax liabilities (2,649) (1,405)Bank overdrafts (3,306) - ---------- ---------- (41,077) (31,573) ---------- ----------Non-current liabilitiesBank 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 ========== ==========EquityShare capital 4,208 4,180Share premium account 43,006 42,658Capital reserve 949 949Translation reserve (11) (11)Share option reserve 125 91Retained earnings 18,677 12,841 ---------- ----------Equity shareholders' funds 66,954 60,708Minority interests 2,154 1,733 ---------- ----------Total equity 69,108 62,441 ========== ========== WILMINGTON GROUP PLCCash Flow StatementFor 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 activitiesPurchase of property, plant and equipment (1,092) (909)Sale of property, plant and equipment 35 40Purchase of subsidiary undertakings andminority interests (8,374) (14,524)Cash acquired on purchase of subsidiaryundertakings 1,534 1,567Cash movement of disposal of subsidiaryundertakings (32) -Sale of subsidiary undertakings 696 2,466Purchase of intangible assets (1,370) (2,269)Sale of intangible assets 28 - ---------- ----------Net cash used in investing activities (8,575) (13,629) ---------- ---------- Financing activitiesDividends paid to equity holders of the parent (3,940) (3,135)Dividends paid to minority shareholders insubsidiary undertakings (292) (601)Issue of ordinary shares 376 -(Decrease)/increase in long term loans (3,000) 6,000 ---------- ----------Net cash flows (used in)/from financingactivities (6,856) 2,264 ---------- ---------- Net (decrease)/increase in cash and cashequivalents (1,718) 1,051Cash and cash equivalents at beginning of theyear 2,855 1,804 ---------- ----------Cash and cash equivalents at end of the year 1,137 2,855 ========== ========== WILMINGTON GROUP PLCNotes 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 18,705Amortisation (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 operationsbefore non-recurring items 12,563Non-recurring items 1,208 ----------Profit from continuing operationsafter non-recurring items 13,771Finance costs (1,239) ----------Profit on continuing activities before taxation 12,532Income tax expense (3,343) ----------Profit on continuing activitiesafter taxation 9,189Profit from discontinuedoperations 696 ----------Net profit for the year 9,885 ========== (a) Primary reporting format - business segmentsYear 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 14,727Amortisation (1,500) (965) (2,465) ---------- ---------- ----------Segmental profit after amortisation 10,791 1,471 12,262 ========== ========== ========== Unallocated central overheads (1,548) ----------Profit from continuing operationsbefore non-recurring items 10,714Non-recurring items (1,200) ----------Profit from continuing operationsafter non-recurring items 9,514 Finance costs (1,049) ----------Profit on continuing activitiesbefore taxation 8,465Income tax expense (2,092) ----------Profit on continuing activitiesafter taxation 6,373Profit 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 55,218Overseas 11,932 10,582 ---------- ---------- 81,453 65,800 ========== ========== (c) Adjusted profit Adjusted profit is defined as profit before taxation, amortisation andnon-recurring items and reconciles to profit on continuing activities beforetaxation as follows: Year ended Year ended 30 June 30 June 2007 2006 £'000 £'000 (restated) Profit on continuing activities before taxation 12,532 8,465Amortisation and impairment 3,922 2,465Non-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 6,292Administrative expenses 30,689 25,115 ---------- ---------- 37,904 31,407Amortisation 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 feereceived, net of transaction costs, relating to the proposed merger with MetalBulletin plc. Non-recurring items for the year ended 30 June 2006 representedthe 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 944Pension 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 2,891Adjustment to previous year (12) (177) ---------- ---------- 4,509 2,714Foreign tax 317 300 ---------- ---------- 4,826 3,014Deferred 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 resultof the recognition of capital allowances in one of the Group subsidiaries whichhad previously not been recognised due to uncertainty over the timing and use ofthese assets. Factors affecting the tax charge for the year: The tax charge for the year is less than the standard rate of corporation tax inthe 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 thestandard rate of corporation tax in the year of 30% (2006: 30%) 3,760 2,540Effect of:Other items not subject to tax 4 (35)Capital allowances for the year (in excess of)/less than depreciation (124) 106Net loss/(profit) on sale of assets not taxable 3 (62)Foreign tax rate differences 66 2Adjustment 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 operationsThe 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, DewberryRedpoint Limited and Office Solutions Media Limited. The results of thesecompanies are treated as discontinued operations, their net profit has beenincluded in the consolidated income statement and the comparatives have beenrestated 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 24,277Expenses (20,503) (22,815) ---------- ----------Profit before amortisation and taxation 1,184 1,462Amortisation (753) (885) ---------- ----------Profit before taxation 431 577Attributable tax charge (129) (199) ---------- ----------Net operating profit attributable todiscontinued 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. DividendsAmounts 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 recognisedas distributions in the year 2.70 2.45 2,257 2,048Interim dividends recognised asdistributions 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 shareTo allow shareholders to gain a better understanding of the trading performanceof the Group, an adjusted earnings per ordinary share has been calculated usingan adjusted profit after taxation and minority interests but before amortisationof intangible assets and post-taxation non-recurring costs. (a) From continuing operationsThe calculation of the basic and diluted earnings per share is based on thefollowing data: Year ended Year ended 30 June 30 June 2007 2006 £'000 £'000 (restated) Earnings from continuing operations for thepurpose 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 forthe 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 forthe purposes of diluted earnings per share 84,307,103 84,155,441 ========== ==========Basic earnings per share 10.18p 6.80pDiluted earnings per share 10.14p 6.76pAdjusted basic earnings per share 12.41p 9.84pAdjusted 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 thepurpose of basic earnings per share excluding discontinued operations 8,550 5,686Adjustments to include the profit for the periodfrom discontinued operations 696 742 ---------- ---------- Earnings from continuing and discontinuedoperations 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 7.69pDiluted earnings per share 10.97p 7.64pAdjusted basic earnings per share 13.87p 11.47pAdjusted 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 thepurpose of basic earnings per share 696 742Add: 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 0.89pDiluted earnings per share 0.83p 0.88pAdjusted basic earnings per share 1.46p 1.63pAdjusted 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 9,514Non-recurring items (1,208) 1,200Operating profit from discontinued operations 431 577Depreciation of property, plant and equipment 1,519 1,574Amortisation of intangible assets 4,675 3,350Loss/(profit) on disposal of property, plant and equipment 10 (6)Exchange translation differences - 5Share 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) 507Increase in payables 2,900 182 ---------- ----------Cash generated by operations 18,966 16,941Tax 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 isnot practicable to separately identify the movements in working capitalattributable to discontinued operations. The operating cash flow fromdiscontinued operations before movements in working capital for the year ended30 June 2007 was £1,743,000 (2006: £1,980,000). Investing activities of thediscontinued operations for the year ended 30 June 2007 were a net cash inflowof £102,000 (2006: £1,317,000). As it is not practicable to separately identifyGroup financing movements for discontinued operations, financing activities forthe discontinued operations consist solely of dividends paid to minorityshareholdings during the year ended 30 June 2007 of £19,000 (2006: £13,000). 10. Nature of the financial informationThe foregoing financial information does not amount to full accounts within themeaning of Section 240 of Companies Act 1985. The financial information has beenextracted from the Group's Annual Report and Accounts for the year ended 30 June2007 on which the auditors have not yet expressed an opinion, but for which anunqualified report is expected. Statutory accounts for the year ended 30 June2006 have been delivered to the Registrar of Companies; the report of theauditors on those accounts was unqualified and did not contain a statement underSection 237(2) or (3) of the Companies Act 1985. As required by the EuropeanUnion's IAS Regulation and the Companies Act 1985 the Group now prepares itsconsolidated financial statements in accordance with International FinancialReporting Standards ("IFRS") as adopted by the European Union. Goodwill and intangible asset valuations arising on the acquisition of Ark Groupand Smee and Ford during the twelve months ended 30 June 2006 have now beenfinalised. The resulting reallocation between goodwill and intangible assets andthe consequential impact on deferred tax and amortisation have been treated as aprior year adjustment and the comparative figures have been restated. Copies of the Annual Report and Accounts will be posted to shareholders shortlyand will be available from the Company's registered office at Paulton House, 8Shepherdess Walk, London, N1 7LB. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Wilmington