Final Results

WILMINGTON GROUP PLC

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

Full Year Results for the year ended 30 June 2011

Wilmington Group plc, the professional information and training group, today announces its results for the year ended 30 June 2011.

Highlights

·; Adjusted EBITA increased by 3.5% to £14.9m (2010: £14.4m)

·; Adjusted Profit before Tax1 increased by 2.2% to £13.4 million (2010: £13.1 million)

·; Statutory profit before tax £6.1m (2010: £7.3m) reflecting higher amortisation charges and increased acquisition costs

·; Adjusted Earnings per Share2 increased by 11.3% to 11.79 pence per share (2010: 10.59 pence per share)

·; Cash generated by operations before non-recurring items £15.8m (2010: £15.5m); cash conversion rate of 111% (2010: 110%) of operating profit

·; Proposed final dividend of 3.5 pence per share, making a full year maintained dividend of 7.0 pence per share

·; Higher quality digital income increased to 72% of Publishing & Information revenues, demonstrating success of continuing organic and acquisitive investment to build long term, high value, defensible revenue streams

·; Axco, the leading provider of international compliance and regulatory information for the global insurance industry, was acquired in September 2010 for £21.3m and has performed well

·; Training & Events businesses performed well, save for legal training where market conditions continue to be challenging; excellent performances by Mercia in the accountancy market and Matchett in the investment banking market

·; Overseas expansion continues: 26% (2010: 21%) of Group revenues were generated outside the UK, with offices in Sydney, Hong Kong, Singapore, Dubai, Dublin, Paris, New York and Chicago

1 See Note 4

2 See Note 9

David Summers, Chairman, commented:

"The Group has shown resilience during the recent economic downturn, transitioning its activities to sustainable professional business markets and operating increasingly internationally. The Group has continued to invest in exciting new developments in subscription based digital publishing and professional training. We are also investing in the development of the International Compliance Training business to meet the significant demand for anti-money laundering and compliance training programmes.

The current level of development activity is unprecedented in the history of the Group and I believe that these investments will deliver strong levels of growth in the medium term.

While generally the economic environment continues to be very tough, with few signs of sustained improvement in the global economy, Wilmington's business is robust. I anticipate that it will continue to deliver good levels of profitability and, once markets recover and the returns on our many exciting developments are realised, I believe it will deliver excellent returns for its shareholders."

ends

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Notes to Editors

Wilmington Group plc provides information and training to professional business markets globally. It operates in a variety of professional markets including accountancy, banking and finance, charities, healthcare, insurance, legal and pensions. Capitalised at approximately £71 million, Wilmington floated on the London Stock Exchange in 1995.

Chairman's Statement

I am pleased to report Wilmington's results for the year ended 30 June 2011. During the year the Group has made progress in many of its markets and has delivered Adjusted EBITA 3.5% ahead of the prior year with Adjusted Earnings per Share growth of 11.3%. This is after expensing incremental investment spend of £1.6m in new product developments and includes a nine month EBITA contribution from Axco of £1.5m.

This is the last occasion on which I shall report on the Company's progress. An important part of my role as Chairman has been to ensure that the Nomination Committee has kept succession issues at the forefront of its agenda. A year ago I asked the Committee to give consideration to my own length of service on the Board, and my personal preference to step down when I reached 70 in November 2011. We are therefore in the process of appointing my successor who will take over early in the New Year.

When I became a Non-Executive Director of Wilmington Group plc in 2001 it had a very different strategic direction. It was primarily a publisher of trade magazines together with a predominantly print based directory information business and had recently acquired Central Law Training, a legal training company.

The strategy which the Board adopted when I became Chairman in 2005 has transformed the focus of the Company. Wilmington has disposed of its highly cyclical trade magazine portfolio and concentrated instead on generating long term, sustainable profits by fulfilling the information and training needs of professional business markets both in the UK and progressively in overseas markets. We have been an early mover in the now rapidly growing market for digital subscription-based products which continues to develop. We have remodelled the Group by acquisition and by organic investment and have created a robust business which has maintained attractive returns for investors.

The professional business sectors we serve now include accounting, banking, charities, financial compliance, healthcare, insurance, law and pensions, all sectors which have the potential for sustainable profit growth. As a result of the changed business mix, the Group has built solid positions in a number of dependable markets, with greater revenue resilience and less cyclical volatility. Dependency on advertising has significantly reduced, with high quality subscription and information sales now accounting for 57% of Group revenues.

Wilmington was one of the early pioneers of electronic publishing and now has 15 years' experience of digital publishing. As a consequence of the Group's organic investments in and acquisition strategy towards digital publishing, in 2010/11 digital income represented 72% of our Publishing & Information revenues in 2010/11 (as compared to 45% in 2005/6). For information/data businesses the opportunities resulting from the digital revolution have been positive. We are able to offer greater functionality with richer, more comprehensive and more valuable content to our clients. Consequently we are generating much better margins from our electronic/online activities than from the legacy print products and building long term, high value and defensible revenue streams. Many print products have already migrated to digital and we intend to migrate the majority of our remaining print product to an electronic/online environment within the new few years. Accordingly we have closed 16 print titles in July 2011, absorbing most of their content into new digital products whilst reducing the overhead base of the relevant divisions.

In most of our professional training markets we have maintained or grown profits. The legal market is the exception where the extent of the economic downturn has been longer and more pronounced than anticipated. It is a matter of disappointment to the Board, as it must be to shareholders, that some strategies we employed to combat the downturn in the legal training market have proved less effective than might reasonably have been expected based on previous experience. We had previously reduced operating costs in the legal training business but since the year end we have commenced a major restructuring of the business to better reflect the current market conditions and the future training requirements of the legal marketplace.

The Group's strategic priorities have included directing organic and acquisition investment towards international businesses. Wilmington now generates 26% of its revenues outside the UK, with offices in Sydney, Hong Kong, Singapore, Dubai, Dublin, Paris, New York and Chicago. We anticipate that Group revenues will become progressively more international over the next few years.

In the five year period ended 30 June 2011 the Group has paid £27.6m in dividends and also bought back 1.9m Wilmington shares at a cost of £4.0m. During the same period, the Group has spent £46.1m on acquisitions and undertaken heavy investment in new organic developments. We have delivered good levels of return from those investments. At 30 June 2011 the Group's net debt was £40.0m (2006: £13.2m). I believe this represents a sensible balance between providing a cash return to shareholders and investing in the future of the business.

A significant part of this investment was the acquisition of Axco Insurance Information Services ("Axco") in September 2010 for £21.3m. Axco digitally provides high level data to the international insurance industry, with 52% of revenues coming from North America and a further 26% from outside the UK. In the 9 months to 30 June 2011 Axco has performed well, very much in line with our expectations.

In November 2010 the Group acquired the remaining 17.3% of Mercia Group for £2.6m, thus making it a wholly owned subsidiary. In addition the Group acquired a further 5% shareholding in its subsidiary Beechwood House Publishing ("Beechwood") for a cash consideration of £1.2m. Subsequent to the balance sheet date, the remaining 10% of Beechwood was acquired in exchange for 1,289,156 new Wilmington Ordinary shares resulting in Beechwood becoming wholly owned by the Group.

During the year ended 30 June 2011 the Group has invested heavily in organic development expensing £1.6m in new product development in relation to the flexible legal practice course, the overseas expansion of our training businesses in banking and finance and in deeper content and enhanced functionality for a number of our information products.

Financial Performance

Revenue in the twelve months to 30 June 2011 increased by 6.9% to £83.8m (2010: £78.4m). On a like-for-like basis, excluding the acquisition of Axco revenue increased by 0.6%.

Adjusted EBITA increased by 3.5% to £14.9m (2010: £14.4m). This increase includes a nine month profit contribution from Axco of £1.5m and is stated after new product development expense of £1.6m. Statutory EBITA reduced by 3.4% to £13.6m (2010: £14.1m) due to the increase in non-recurring costs.

Adjusted Profit before Tax increased by 2.2% to £13.4m (2010: £13.1m). Profit before tax decreased by 17.1% to £6.1m reflecting the increase in amortisation following the acquisition of Axco and the non-recurring items which relate to merger and acquisition activity, together with an increase in the provision for share based payments. Crucially, our operating cash flow continues to be strong with a cash conversion rate of 111% (2010: 110%) of operating profit into operating cash flow.

Adjusted Earnings per Share increased by 11.3% to 11.79 pence (2010: 10.59 pence). Basic earnings per share were 5.20 pence (2010: 5.38 pence).

At 30 June 2011 the net bank debt of the group was £40.0m (2010: £16.8m). This increase reflects the cash spent on acquisitions of £25.8m (including non-recurring costs expensed in the Income Statement) and demonstrates that, absent acquisitions, the cash flow of the business is strong.

We were pleased to announce in June 2011 that we had concluded the refinancing of our bank facilities, which were due to mature in March 2012, with a new £65 million facility which is committed until February 2016.

Dividend

The Board is recommending that the dividend for the year is maintained at the same level as the prior year. The Board proposes a final dividend of 3.5 pence per share payable on 17 November 2011 to shareholders on the register on 21 October 2011. Taken together with the interim dividend of 3.5 pence per share this makes a total dividend for the year of 7.0 pence per share (2010: 7.0 pence per share). The dividend is covered 1.7 times by Adjusted Earnings per Share (2010: 1.5 times covered).

Board Changes

In addition to my own position there are other significant Board and senior management changes taking place. Basil Brookes, the Group Finance Director, has indicated that he intends to retire from the Group in the second half of 2012. Basil has been a Director of Wilmington since its flotation in 1995 and has provided excellent advice to the Group since then. He has made a major contribution to the development of the business and can justifiably be proud of his achievements.

Stephen Broome, the Chief Operating Officer of Wilmington Training & Events, is also retiring from the Group after 21 years with Central Law Training. I thank him for his contribution and wish him well in his retirement.

We are in the process of strengthening the Non-Executive membership of the plc Board.

Neil Smith, who was previously Chief Operating Officer for the Publishing & Information division has been appointed Group Chief Operating Officer. He will assume Stephen Broome's reports and will facilitate greater collaboration across the Group and co-ordinate the operational management in order to enhance efficiency in the business.

In addition, a number of Executive Board appointments have already been made. Alison Moss has been recruited as the Group's HR Director and will co-ordinate employment activities across the Group. Linda Wake, who was previously the Finance Director of the Publishing & Information division, has been promoted to Group Director of Operational Finance. She will manage the Group's internal financial reporting and processing.

Outlook

The Group has shown resilience during the recent economic downturn, transitioning its activities to sustainable professional business markets and operating increasingly internationally. The Group has continued to invest in exciting new developments in subscription based digital publishing and professional training. We are also investing in the development of the International Compliance Training business to meet the significant demand for anti-money laundering and compliance training programmes.

We are in the process of changing the structure of Central Law Training to ensure that its activities and operational management are more closely aligned with current legal training market conditions and future legal training opportunities. The publishing businesses are developing new products and operating platforms to complete the move to a fully online/electronic publishing based business. These developments will help secure medium term growth but in the short term require investment, the costs of which will generally be expensed as incurred, while income will be recognised over the duration of the subscription.

The current level of development activity is unprecedented in the history of the Group and I believe that these investments will deliver strong levels of growth in the medium term.

While generally the economic environment continues to be very tough, with few signs of sustained improvement in the global economy, Wilmington's business is robust. I anticipate that it will continue to deliver good levels of profitability and, once markets recover and the returns on our many exciting developments are realised, I believe it will deliver excellent returns for its shareholders.

Finally, I should like to thank my colleagues for their support during my tenure of office. I have been fortunate to have chaired a Board which has worked effectively and harmoniously in pursuit of shareholders' interests.

Business Review

Business Objectives and Strategy

Wilmington's key strategy is to increase shareholder value by delivering sustainable and growing profits from servicing the information and training requirements of professional business markets. We believe that professional markets provide a good environment for growth and will deliver long term benefits for the Group.

Our strong subscriptions-based businesses reflect our investment strategy to develop and acquire businesses with high repeat revenues and strong, cash generative income streams. In the long term, we anticipate that tighter regulatory control and more complex legislation will increase demand for professional information and training, both in the UK and abroad.

Backdrop to the current trading environment

In the years leading up to the banking crisis in 2008 Wilmington had an excellent growth record which was delivered when we implemented a strategy designed to focus on professional markets and exit trade markets. From 2009 onwards the business has faced the following major challenges:

·; A very significant deterioration in the UK legal market which had previously represented in excess of 40% of group revenues. The impact of this has been most pronounced in the highly operationally geared legal training market.

·; Significant volatility in the banking sector.

·; Structural change in the publishing businesses resulting in the need to invest in the development of higher value online information products whilst managing the decline of our legacy print products.

We have sought to address these challenges in the following ways:

·; Reducing our cost base, particularly in the legal training business where we maintained core capability in anticipation of some market recovery.

·; Development of highly focussed interactive webinars, usually on niche topics, delivered to clients without the need for travel time and costs

·; Investment in deeper content and better functionality in our Publishing & Information businesses with increasing focus on subscription revenues, some of which will replace legacy print businesses.

·; Continuing to acquire content rich, high value information businesses with digital delivery, subscription based and, where possible, exposure to overseas markets.

At the same time we have continued to invest to grow our businesses organically particularly through overseas expansion of our training businesses in banking and finance and by the development of a flexible legal practice course in response to regulatory changes and the changing higher education market.

Training & Events

Our training businesses have generally performed well over the last year, save for the legal training business where market conditions continue to be challenging and where the downturn has been tougher and more pronounced than anticipated.

Central Law Training is the leading provider of post qualification legal training for UK lawyers. It also provides specialist courses for professionals in Commerce & Industry, mandatory accreditation programmes and the New York Bar course.

Whilst the number of face-to-face training delegates has continued to show a decline, we believe that we have grown our market share and have developed a market leading Webinar position with increasing numbers of firms booking packages based around specialist departmental needs. Whilst this tends to lead to a lower unit price it increases the margins considerably compared to face-to-face training.

An exciting development has been the launch of the flexible Legal Practice Course in collaboration with the University of West of England (UWE). This course enables graduates to undertake the solicitor's qualification examinations in a cost effective way that can accommodate family and job commitments through its flexibility. The course was launched in September 2010 with 116 enrolments with three weekend study centres across England. The bookings for the 2011 intake are encouraging with study centres available in an increased number of locations.

CLT Scotland, working closely with the University of Strathclyde, is the leading provider of post qualification courses for lawyers in Scotland. It also provides paralegal training which is recognised as fulfilling the academic requirements for the Scottish Law Society's Registered Paralegal status. The performance of CLT Scotland has been very creditable and in a difficult market there has been some recovery in revenues and profits compared to the prior year.

Elsewhere in the Training & Events business there have been excellent performances in the accountancy market from Mercia and in the investment banking market from Matchett. Both of these businesses were acquired before the banking crisis and we have since grown their revenues, profits and margins. The performance of these businesses since acquisition reinforce our successful track record of developing businesses once we have acquired them to help derive shareholder value.

Mercia is the leading provider of technical, marketing and training support to the accountancy profession. It produced record revenue and profits for yet another year. This is a truly outstanding performance.

Matchett Group is a leading provider of graduate entrant training to investment banks in London, New York and Hong Kong. Its revenues substantially recovered the ground lost during the depths of the banking crisis which impacted on financial years ended June 2009 and particularly June 2010. Managing the cost base through such volatile markets has not been easy and the team deserve huge credit for the way in which the business firstly remained profitable in the downturn and now is showing increasing returns. This business has seen good growth in revenue in its major centres, particularly the US and the Far East where there has been considerable investment during the year to prepare for the seasonally busy summer programmes.

CLT International is the leading provider of trust, compliance and anti-money laundering training. It operates internationally and has grown organically over the past 10 years. This growth requires investment, which is expensed as incurred, and in the year under review has seen considerable investment in new programmes in Malaysia, Australia and Russia. The Singapore compliance programme has continued to perform well and further progress has been made in the Middle East. We have recently won a contract to provide one client with training in 16 jurisdictions with interest being shown by a number of other organisations for similar multi-location programmes.

Bond Solon is the market leader in the UK for the provision of expert and professional witness training programmes. Most professional witnesses are employed in the public sector and accordingly this part of Bond Solon's business has seen some weakness with revenues and profits showing year-on-year decline. The focus has been to grow revenues from its private sector clients and the team have responded well to this challenge with some exciting product innovation and tight cost control.

Publishing & Information

This division provides intelligence, information, solutions, databases, directories, magazines and services to the accountancy, banking and finance, charity, healthcare, insurance, legal, media and pensions sectors.

Our Publishing & Information businesses have had to deal with significant structural challenges along with weakness in some or our core professional markets, particularly legal. In general they have performed well and shown resilience. The revenues and profits include a nine month contribution from Axco which was acquired in September 2010.

Many of the businesses we have developed, and all of those which we have acquired in recent years, have been wholly digital. Overall the Publishing & Information business generated 72% of revenues from digital delivery in the year. Our digital businesses have proved extremely resilient during the economic downturn.

As previously reported we are accelerating our already good progress with the digital evolution of the products in those businesses which were historically print based and are investing in improved technology and deeper content to mitigate their declining legacy print products.

Wilmington Business Intelligence ("WBI") operates under a number of brands including Waterlow, Charity Choice, Caritas, Smee & Ford, Mortascreen, AP Pensions, ICP and The Knowledge. During the year there has been a reduction in revenue, driven by the declining legacy print products.

This continuing structural transformation towards a fully digital business involves the redevelopment of websites, online technology, mobile applications, databases and content management technology. For the minority of WBI revenues which are derived from advertising we are developing integrated marketing solutions which we are increasingly looking to sell on a subscription basis. However, the majority of our revenues will be based on selling subscriptions to information products with deeper content and enhanced functionality.

The advertising dependent assets face the greatest challenges and some of our new developments may ultimately fail to fully recover all of the revenues we historically enjoyed; however, for those that succeed we expect to generate much higher margins. In addition to the investments required it is worth noting that the returns in the Income Statement are delayed due to the way revenues and costs are accounted for i.e. revenues are deferred over the life of a subscription, whilst expensing costs when incurred. Overall, whilst there is a cost to developing deeper content and enhanced functionality, and some of the returns will take time to come through, by increasing the value for our customers we believe that we will be able to build long term, high value, defensible new revenue streams. As previously mentioned since the balance sheet date we have closed 16 print titles absorbing most of their content into new digital products whilst reducing the overhead base.

Axco is the leading provider of international market, compliance and regulatory information for the global insurance industry. Axco's acquisition in September 2010 improved the quality of the Group's earnings by increasing the proportion of revenues derived from subscriptions and the extent to which revenue is derived from "must have" intelligence. The acquisition has increased the Group's presence in legal and regulatory information as well as our exposure to markets outside of the UK. Axco has unique insurance content with a global customer base. Recently Axco succesfully launched its first workflow tool "Compliance Point" which allows clients to model insurance programmes and highlights associated regulatory and taxation issues. Since acquisition Axco has won its first Chinese client and there is significant development activity in South America and Europe. Further investment is being made in new statistical and analytical tools and services and a new content management system is being implemented to create additional operational efficiency and the flexibility to meet the needs of major clients as they develop in future years.

Pendragon provides the leading electronic regulatory information service for the UK pensions industry. Once again, despite difficult market conditions, revenue and profits were ahead of the prior year.

Binley's is the UK's leading provider of healthcare professional information to pharmaceutical companies, healthcare companies and the public sector. After a difficult year in the prior year, Binley's core business returned to growth with both revenues and profits ahead of the prior year. During the year a significant investment was made in Onmedica which provides a permissioned digital marketing channel for pharmaceutical companies. Digital marketing for pharmaceutical companies is highly regulated but represents a growing proportion of their marketing spend. We are developing the Onmedica business to meet this growing need and expected to show returns in 2012/13 and beyond.

APM is our specialist healthcare Press Agency based in Paris and London. During the year the business produced another solid performance.

International Company Profile is a leading provider of financial information on companies based in emerging markets worldwide. ICP produced a pleasing performance during the year given the turbulence in some of its core Middle East markets, with profits slightly ahead of the prior year. Our first overseas research and sales office for ICP was opened in Dubai.

Acquisition and Disposals

During the year, Wilmington Group Plc's wholly owned subsidiary Wilmington Publishing & Information Limited acquired 100% of the issued share capital of Axco Insurance Information Services Limited ("Axco"), the leading provider of international compliance and regulatory information for the global insurance industry, for an initial consideration of £21,325,000. Deferred consideration which, under the acquisition agreement, was capped at £675,000 did not become payable. Instead, a repayment of £31,000 was received from the vendors. This was calculated by reference to the net current assets of Axco at 30 September 2010.

The acquisition improves the quality of the Group's earnings by increasing the proportion of revenues derived from subscriptions and the extent to which the revenue is derived from ''must have'' intelligence. The acquisition increases the Group's presence in legal and regulatory information and also our exposure to markets outside of the UK. All of Axco's products are digitally delivered.

In June 2011 we acquired "Kemps", the leading international database for the film and TV industry. Kemps derives all of its revenues online and complements our product "The Knowledge" which is the leading UK database. No initial consideration was paid for this asset. Consideration of up to £1.5m will be paid based on the success of the business over the 3 years to June 2014

We also acquired additional shareholdings of two existing subsidiaries.

·; In November 2010 we acquired the remaining 17.3% shareholding of Mercia Group Limited.

·; In November 2010 we acquired an additional 5% shareholding of Beechwood House Publishing Limited ("Beechwood"), taking our shareholding to 90% of the company. Subsequent to the balance sheet date the Group completed the purchase of the remaining 10% non-controlling interest in Beechwood. Under the terms of the acquisition agreement and a subsequent variation agreement the consideration of £1.82m was satisfied by the issue of 1,289,156 Wilmington ordinary shares.

We have a continually reviewed acquisition and disposal strategy, including a realistic and disciplined valuation methodology backed up by thorough post-acquisition analysis. We seek to fully justify acquisitions both in terms of return on capital and in terms of the added value we achieve in profitability and profit margins. We seek not only to secure a good rate of return on capital but also purchase assets only if we believe we can drive profit growth and improved margins from those acquisitions.

Despite challenging markets for delivering value from acquisitions over recent years we are proud of our record of consistent returns, well in excess of our cost of capital, which have been achieved through the application of our prudent acquisition criteria and the subsequent development of acquired assets.

Overview of the Group's financial performance

In the year ended 30 June 2011 Wilmington generated revenues of £83.8m, an increase of 6.9% from £78.4m in the year to June 2010. These revenues included revenues of Axco which was acquired in September 2010. On a like-for-like basis, excluding Axco, revenues increased by 0.6%.

Adjusted EBITA increased by 3.5% to £14.9m (2010: £14.4m). This increase includes a nine month EBITA contribution from Axco of £1.5m and new product development expensed amounting to £1.6m.

Adjusted Profit before Tax increased by 2.2% to £13.4m (2010: £13.1m). Reported profit before tax decreased by 17.1% to £6.1m reflecting the increase in amortisation following the acquisition of Axco and non-recurring items of £0.7m which relate mainly to acquisition activity, together with an increase in provision for share based payments.

Non-recurring costs

During the year the Group incurred non-recurring costs of £0.7m (2010: £0.1m) relating to the costs of acquisition activity incurred during the year as we actively sought to acquire complementary businesses.

Taxation

The Group tax charge of £1.4m represents 23.8% of the profits before tax (2010: 34.5%). This reduction is primarily due to the reduction of rates in corporation tax applied to the deferred tax calculation. Without this reduction the effective tax rate for the year would have been 33.4%. This is higher than the standard rate of UK corporation tax for the year under review due to higher overseas rates and disallowable acquisition costs and discounting costs.

Earnings per Share

Adjusted Earnings per Share increased by 11.3% to 11.79p (2010: 10.59p). Basic Earnings per Share decreased to 5.20p (2010: 5.38p).

Earnings and Adjusted Earnings per Share are calculated on the weighted average number of shares in issue of 82,788,676 for the year ended 30 June 2011 (2010: 82,616,512).

Balance Sheet and Net Debt

At 30 June 2011 the Group had net debt of £40.0m (2010: £16.8m). This increase arises from the acquisition activity on which we expended £25.8m in cash including non-recurring costs. This demonstrates the strong underlying cash flows generated by the Group.

Treasury Policy

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

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

a) Interest rate risk

The Group finances its operations through a mixture of retained profits, operational cash flow and bank borrowings. Historically the Group has expanded its operations both organically and by acquisition, which has led on occasions to the need for external finance. The Board has chosen a credit facility with a floating rate of interest linked to LIBOR and has hedged its interest exposure on a proportion of this facility. In November 2006 the Group entered into a 5 year £15m interest rate swap whereby it receives interest on £15m based on 3 month LIBOR and pays interest on £15m at a fixed rate of 5.23%. In November 2010, the Group entered into a further three hedging instruments. Firstly, a 5 year £15m interest rate swap fixed against 3 month LIBOR with a forward start of 21 November 2011 paying interest on £15m at a fixed rate of 2.68% was entered into. Secondly, a cap of 2% was put on a further £10m until November 2011. Finally, in November 2010, a 3 year £10m interest rate swap fixed against 3 month LIBOR with a forward start of 21 November 2011 paying interest on £10m at a fixed rate of 2.12% was entered into. These derivatives have been designated as a cash flow hedges in order to manage interest rate risk associated with the first £25m of the credit facility. Payments received under the swaps have been matched against interest paid quarterly during the period and the entire mark to market loss on the derivatives have been recognised in equity, following the Directors' assessment of the hedge's effectiveness.

The Group had net debt at 30 June 2011 of £40.0m (2010: £16.8m) and had a committed bank facility of £65m (2010: £70m), of which £40m was drawn down at 30 June 2011 (2010: £18m).

b) Liquidity risk

The Group's policy throughout the year up until 27 June 2011 has been to ensure continuity of funding by the use of a £5m overdraft facility, a £5m money market facility and a £60m revolving credit facility. On 27 June 2011 the Group concluded the refinancing of our bank facilities which were due to mature in March 2012, with a new £65m facility which is committed until February 2016. The facility is currently structured as a £5m overdraft facility and a £60m revolving credit facility.

c) Foreign currency risk

The Group has a substantial customer base overseas. The Group maintains bank accounts in foreign currency and converts this currency to Sterling at the appropriate times minimising the exposure to exchange fluctuations. On 26 January 2011 the Group sold forward US$0.5m to 2 December 2011 at a rate of 1.5881. On 22 June 2011 the Group sold forward US$0.5m to 2 December 2011 at a rate of 1.6188. These contracts were entered into in order to provide certainty in Sterling terms of the bulk of the net US$ income of the Matchett business. On 30 September 2010 the Group sold forward €1.0m to 4 October 2011 at a rate of 1.170. This contract was entered into to provide certainty in Sterling terms of the bulk of the net Euro income of APM. The gains/(losses) on these contracts are recognised in the Income Statement.

Key Financial and Operational Targets ("KPI's")

At a Group level we have five key financial and operational targets. In addition, each of the operating divisions monitors a number of key performance indicators. This year we delivered an improved performance against the majority of our financial and operational targets. By continuing to focus on these essential benchmarks we have been able to concentrate on mitigating the adverse effects of the global recession and produce what we consider to be creditable results whilst establishing a more resilient and efficient platform to support future growth.

1. Adjusted Profit before Tax

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

 In the year ended 30 June 2011 Adjusted Profit before Tax increased by 2.2% to £13.4m (2010: £13.1m).

2. Adjusted Earnings per Share

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

In the year ended 30 June 2011, Adjusted Earnings per Share increased by 11.3% to 11.79p per share (2010: 10.59p). The increase was partly due to the Group acquiring additional shares in two existing businesses and also reflects the slightly better overall performance achieved by wholly owned businesses. It also reflects the reduction in the effective tax rate described in "Taxation" above.

3. Cash flow

The quality of the operating profits is underpinned by the strong cash flow. The Group's business is strongly cash generative; operating cash flow for the year ended 30 June 2011 of £15.1m was 111% of operating profit before interest, amortisation (2010: £15.4m, 110%). Free cash flow, which is calculated after deduction from operating cash flow of capital expenditure, payment of corporation tax and payment of interest, was £7.1m (2010: £10.7m).

4. Consistent and Sustainable Revenue Streams

The disposal of non-core assets in recent years has allowed the Group to focus on a portfolio of assets based in key professional markets. This push towards more robust and sustainable revenue streams has resulted in a strong portfolio of offerings, which includes:

• data, information, magazines, intelligence and solution sales;

• professional training, events and services and

• professional accreditation and assessment.

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

This is reflected in the following split of revenue streams:

• Subscriptions and information sales 57% of revenue (2010: 52%);

• Professional education and events 35% of revenue (2010: 37%);

• Directory advertising 7% of revenue (2010: 9%);

• Magazine advertising 1% of revenue (2010: 2%).

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

5. Adjusted Operating Margin ("Return on Sales")

Adjusted Operating Margin or Return on Sales ("ROS") is defined as Adjusted EBITA (see note 4) expressed as a percentage of Revenue. During the year ended 30 June 2011 ROS was 17.8% compared to 18.4% in the prior year, reflecting the increased spend on new product development.

In addition, Management use Return on Equity (''ROE'') as a measure to calculate the bonus for the Executive Directors.

Return on Equity ("ROE")

Return on Equity is defined as the Adjusted Profit before Tax (see note 4) expressed as a percentage of the average shareholders funds during the year. ROE was 25.7% for the year to 30 June 2011 compared to 25.0% in the prior year.

Principal risks

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 legal and regulatory uncertainties. Certain parts of our businesses are also affected by the (often positive) impact of changes in professional regulation and legislation and by the impact of the economic cycle on advertising and promotional spending. The economic environment also constitutes a risk factor, particularly in the legal and financial sectors, which has impacted on the Group's profitability. Key supplier and customer loss feature as a risk. However, we feel that our supplier and customer bases are both sufficiently diverse.

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 risks which affect the Group as a whole include the following:

1. Wilmington is a people based business; failure to attract or retain key employees could seriously impede future growth. To ensure staff retention the Group operates competitive remuneration packages for key individuals. Just as importantly, it operates a culture where each individual can maximise his or her potential. Wilmington is also committed to further develop staff and has launched a Management Development Programme for senior managers. It has recently begun a "Vision and Values" programme described under "Wilmington's People" below. The retention and motivation of key personnel is fundamental in the future success of Wilmington, as is the ability to recruit new personnel to support future growth.

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 Group is increasingly required to comply with strict privacy and data protection legislation. The need to comply with these regulations can restrict the Group's ability to create and utilise its databases. To ensure we are compliant with the relevant data protection legislation we are in the process of completing an extensive external audit of the Group's data management systems and we are adopting procedures to ensure compliance with best practice.

5. 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 acts of terrorism.

6. There is an element of reputational risk for Wilmington, particularly in areas where we have high profile products and services. Damage to reputation and/or brand could lead to an adverse impact on the Group. The success of the Group's businesses is in part dependent on the success of their branded publications and events. Wilmington is conscious of the need to ensure the careful management of products and services to reduce this risk.

7. The business operates in highly competitive markets that are constantly challenging the boundaries of technological advances, regulation and legislation and with new competitors entering the market space. Wilmington endeavours to invest resources to best respond to the competitive landscape.

8. Wilmington has a strong acquisition strategy to further grow the business and there is risk associated with making future acquisitions, in particular identifying targets, realising expected returns and integrating newly acquired businesses. Whilst Wilmington has a strong track record for completing and executing acquisitions efficiently, there is no certainty in the future of being able to derive all the anticipated benefits from acquisitions.

9. Wilmington is increasingly operating in an international environment. While this provides growth in new jurisdictions, it comes coupled with risks in terms of cultural and political conditions, foreign laws and legislations, tax changes, currency fluctuations, language barriers, differing regulatory requirements and protecting Wilmington IP.

10. Freely available information principally via the internet poses a potential risk for the Group. The information may be free to access or inexpensive and may compete directly with paid for, value added information supplied by the Group. The risk element is largely in the case of government agencies and other not for profit organisations that may make information publically available at no cost which could reduce demand for some product groups. Wilmington endeavours to respond by offering enriched data available in an easily accessible format.

In addition to the risks identified above, further information on additional risks are provided in the Annual Report and financial statements:

·; The Overview of the Group's Financial Performance covers the main risks arising from the Group's financial instruments which are interest rate risk, liquidity risk and foreign currency risk.

·; The Group's credit risk is discussed in the financial statements.

Wilmington's People

We are a professional business which aims to transform potential into performance. In ever changing and competitive markets the key to Wilmington's growth and success is the expertise, professionalism and commitment of our people. We are focused on ensuring that Wilmington remains a great place to work. Our goal is to have the best team by becoming an employer of choice and aspiration. To be seen as a clear leader in our markets our business demands the best talent, with a passion for their brands and who are committed to delivering professionalism and excellence. By developing the expertise of our people and attracting and retaining the best new talent we are well placed to achieve sustainable growth. We are committed to creating a culture which thrives on collaboration and entrepreneurial spirit and an environment in which everyone can realise their potential.

One of the key priorities during this year is the focus on employee engagement and communicating the Wilmington Vision and Values. Our aim is to encourage a Group culture based on creative collaboration, sharing best practice and professional expertise so that new initiatives can be realised effectively. We believe in sharing ideas and successes across the Group. By realising our potential we help our people maximise theirs. A Vision and Values Engagement Programme has been developed and launched across all Group companies during the summer. This is an opportunity to communicate the Wilmington Vision, create a sense of belonging and involve our people in bringing the Wilmington values to life. The programme will coincide with the Wilmington rebranding project.

As we continue developing new initiatives our efforts are focused on transforming potential into performance. We are committed to developing our people to embrace new challenges and to realise their potential. A Performance Development Review Process has been designed to provide our people with the tools, feedback and coaching to develop new skills and fulfil their potential. Everyone will have a personal development plan, objectives and annual performance review meetings as an opportunity to discuss career development. We value our people and we continue to invest in their personal and career development. We encourage learning and career opportunities are possible across all Wilmington companies.

We have incorporated our Company values into our recruitment and induction programmes. An interactive induction programme for all new employees will include familiarisation with Wilmington's vision and values. We believe in investing our people and a Leadership Development programme will be introduced, its foundation will be the Company values, inspirational leadership and developing skills to lead the business to achieve growth. As well as management development we provide training and communication to ensure our people are professional and knowledgeable. We recently communicated updates in employment policies and we are rolling out training across the Company on compliance matters in particular the recent Bribery Act. A project to review and upgrade our HR systems to improve efficiencies and a review of our pension provisions in preparation for auto enrolment are also in progress.

The Board of Directors and the leadership team are committed to ensuring we remain a great place to work and become an employer of choice where people are rewarded and recognised for their contribution and have the opportunity for new challenges and professional growth. Attracting and retaining the best talent are fundamental to building our business.

Consolidated Income Statement

For the year ended 30 June 2011

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2011

Consolidated Balance Sheet

As at 30 June 2011

Consolidated Statement of Changes in Equity

Share capital comprises Share capital, Share premium account, Treasury shares and the obligation to issue shares.

Consolidated Cash Flow Statement

For the year ended 30 June 2011

.

Notes to the Financial Information

1. Nature of the financial information

The following financial information does not amount to full financial statements within the meaning of Section 434 of Companies Act 2006. The financial information has been extracted from the Group's Annual Report and financial statements for the year ended 30 June 2011 on which an unqualified report has been made by the Company's auditors.

Financial statements for the year ended 30 June 2010 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 498 of the Companies Act 2006. The 2011 statutory accounts will be delivered in due course.

Copies of the Annual Report and Accounts will be posted to shareholders shortly and will be available from the Company's registered office at 19-21 Christopher St, London, EC2A 2BS.

2. Accounting Policies 

The preliminary announcement for the year ended 30 June 2011 has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The accounting policies applied in this preliminary announcement are consistent with those reported in the Group's annual financial statements for the year ended 30 June 2010 along with new standards and interpretations which became mandatory for the financial year.

New standards and interpretations applied

The following new amendment to standards or interpretations is mandatory for the first time for the financial year beginning 1 July 2010,

§ IFRIC 19 (amendment), ''Extinguishing Financial Liabilities with Equity Instruments'' effective for accounting periods beginning on or after 1 July 2010. These Financial Statements have been prepared in accordance with this amendment.

3. Segmental information

Operating segments are reported in a manner consistent with the internal reporting provided to the Company's Board of Directors, which is considered to be the Group's chief operating decision maker.

The Board considers the business from both a geographic and product perspective. Geographically, management considers the performance of the group between the UK and overseas.

(a) Business segments

Year ended 30 June 2011

Year ended 30 June 2010

Unallocated central overheads represent head office costs that are not specifically allocated to segments.

 (b) Segmental information by geography

The geographical analysis of revenue by destination is as follows:

Non-recurring items:

The following items of an unusual nature, size or incidence have been charged to profit during the year and shown as non-recurring items.

6. Finance income and costs

7. Income tax expense

During the year, the UK corporation tax rate was reduced from 28% to 26% on 1 April 2011. The deferred tax balances have been remeasured at this rate, giving rise to a reduction in the net deferred tax liability of £578,000. In addition a number of further changes to the UK Corporation tax system were announced in the March 2011 UK Budget Statement. Legislation to reduce the main rate of corporation tax from 26% to 25% from 1 April 2012 was included in the Finance Act 2011. Further reductions to the main rate are proposed to reduce the rate by 1% per annum to 23% by 1 April 2014. These further changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements.

8. Dividends

Amounts recognised as distributions to Equity Shareholders in the year.

9. Earnings per share

Adjusted Earnings per Share has been calculated using an adjusted profit after taxation and non-controlling interests but before amortisation and impairment of intangible assets and goodwill, non-recurring items, share-based payments and the unwinding of the discount on the provision for the future purchase of non-controlling interests. There were no discontinued operations during the period or for the comparative period.

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

10. Acquisitions and disposals

Business combinations

On 21 September 2010, Wilmington Group Plc's wholly owned subsidiary Wilmington Publishing & Information Limited acquired 100% of the issued share capital of Axco Insurance Information Services Limited (''Axco''), the leading provider of international compliance and regulatory information for the global insurance industry, for an initial consideration of £21,325,000. Deferred consideration which, under the acquisition agreement, was capped at £675,000 did not become payable. Instead, a repayment of £31,000 has been received from the vendors. This was calculated by reference to the net current assets of Axco at 30 September 2010.

IFRS 3 (revised) was applied to the acquisition of Axco on 21 September 2010.

Acquisition-related costs of £282,000 have been recognised as part of the non-recurring items in the Income Statement (see note 5). These would previously have been included in the consideration for the business combination.

The acquisition improves the quality of the Group's earnings by increasing the proportion of revenues derived from subscriptions and the extent to which the revenue is derived from ''must have'' intelligence. The acquisition is expected to increase the Group's presence in legal and regulatory information and training.

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

The goodwill is attributable to Axco's strong position and profitability in trading in the international compliance and regulatory information market, the new product development potential and synergies expected to arise after the Company's acquisition of the new subsidiary. None of the goodwill is expected to be deductible for tax purposes.

(a) Acquired receivables

The fair value of trade and other receivables is £910,000 and includes trade receivables with a fair value of £857,000. The gross contractual amount for trade receivables due is £858,000, of which £1,000 is expected to be uncollectible.

(b) Revenue and profit contribution

The acquired business contributed revenues of £4,903,000 and profit after finance costs, but before divisional overheads, tax and amortisation of £1,148,000 to the Group for the period from 30 September 2010 to 30 June 2011. If the acquisition had occurred on 1 July 2010, consolidated revenue and consolidated adjusted profit before tax and amortisation for the twelve months ended 30 June 2011 would have been £85,331,000 and £12,156,000 respectively.

Other acquisitions

On 10 June 2011, Wilmington Group Plc's wholly owned subsidiary Wilmington Publishing & Information Limited acquired the asset "Kemps" from Reed Business Information Limited. All consideration is deferred and is capped at £1,500,000. The anticipated consideration payable has been discounted to reflect the estimated cost of money.

IFRS 3 (revised) was applied to the acquisition of Kemps.

Acquisition-related costs of £45,000 have been recognised as part of the non-recurring items in the Income Statement (see note 5). These would previously have been included in the consideration for the business combination.

The acquisition was made to complement the Groups' existing position in the film and TV information market. It is envisaged that the combined business will benefit from a wider geographic coverage of the market.

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

The goodwill is attributable to Kemp's position in the international market for film & TV also to the synergies expected with the integration within the Media division.

(a) Acquired receivables

The fair value of trade and other receivables is £119,000 which comprises of trade receivables only.

(b) Revenue and profit contribution

The acquired business contributed revenues of £42,000 and profit before divisional overheads, tax and amortisation of £9,000 to the Group for the period from 10 June 2011 to 30 June 2011. If the acquisition had occurred on 1 July 2010, consolidated revenue and consolidated adjusted profit before tax and amortisation for the twelve months ended 30 June 2011 (including the full year effect of Axco) would have been £86,043,000 and £12,400,000 respectively.

Non-controlling interests acquired

In November 2010 the Group purchased an additional 5% shareholding in Beechwood House Publishing Limited ('Beechwood') for £1.2m, taking the Group's holding to 90%. The Group also acquired the remaining 17.3% of Mercia Group Limited for £2.6m thus making it a wholly owned subsidiary.

Disposals

There were no disposals of subsidiary undertakings during the year.

11. Goodwill

Goodwill of £52,607,000 (2010: £51,256,000) relates to the Group's Training & Events Division. The remaining goodwill of £22,074,000 (2010: £12,021,000) relates to the Group's Publishing & Information Division. The major constituents of the Training & Events Division are £32,696,000 (2010: £32,696,000) in respect of the Central Law Training cash generating unit, £6,577,000 (2010: £6,084,000) in respect of The Matchett Group and £6,830,000 (2010: £6,830,000) in respect of Bond Solon. The major constituent of the Publishing & Information Division's goodwill is £7,123,000 (2010: £6,691,000) in respect of Waterlow Professional Publishing cash generating unit and £10,392,000 (2010: Nil) in respect of Axco.

The Group tests goodwill annually for impairment. The recoverable amount of the goodwill is determined from value in use calculations for each cash generating unit ("CGU"). These calculations use pre-tax cash flow projections based on financial budgets and forecasts approved by management covering a three year period. Cash flows beyond the three year period are extrapolated using estimated long term growth rates.

Key assumptions for the value in use calculations are those regarding discount rates and long term growth rates. Management has used a pre-tax discount rate of 11.1% (2010: 11.1%) that reflects current market assessments for the time value of money and the risks associated with the cash generating units as the Group manages its treasury function on a Group wide basis. The same discount rate has been used for all CGU's as the Directors believe that the risks are the same for each CGU. The long term growth rates used are based on management's expectations of future changes in the markets for each cash generating unit and fall within the range of a negative 5% to a positive 1.25%.

Management has performed sensitivity analyses on all the impairment calculations by reducing the growth rates by 1% and by increasing the pre-tax discount rate to 12.1%. No impairment charge would be required.

12. Intangible assets

13. Inventories

14. Trade and other receivables

15. Derivative financial instruments

16. Trade and other payables

17. Bank loans and overdrafts

The Group has an unsecured committed bank facility of £65m (2010: £70m) to February 2016. The facility currently comprises a revolving credit facility of £60m (2010: £60m) and an overdraft facility of £5m (2010: £5m together with a £5m money market line). At 30 June 2011, £40m of the revolving credit facility was drawn down (2010: £18m). Interest is charged on the amount drawn down at 2.00 to 2.75 percent above LIBOR depending upon leverage. Under the facility, drawdown is made for interest fixture periods of up to six months in duration.

The bank overdrafts are the subject of a Group set-off arrangement. Interest is charged on the overdraft at 2.25%over Barclays bank base rate.

18. Provisions for future purchase of non-controlling interests

Provisions represent the estimated future cost (discounted to reflect the time value of money) required to settle put options held by non-controlling shareholders over non-controlling interest shares, should said put options be exercised.

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

The Group purchased an additional 5% shareholding in Beechwood House Publishing Limited ("Beechwood") for £1.2m, taking the Group's holding to 90%. The Group also acquired the remaining 17.3% of Mercia Group Limited for £2.6m thus making it a wholly owned subsidiary.

19. Non-controlling interests

20. Related party transactions

On 7 September 2000, when Wilmington Business Information Limited ("WBI"), a subsidiary of the Company, acquired 75 per cent. of the issued share capital of Beechwood House Publishing Limited ("Beechwood") from Walter and Aimee Brinzer (the "Optionholders"), it entered into a put and call option agreement with the Optionholders for the acquisition of the remaining 25 per cent. non-controlling interest in Beechwood held by the Optionholders (the "Option Shares"). Under the agreement, WBI could acquire, or be required to acquire, the Option Shares for a cash consideration based on Beechwood's profitability using a predetermined formula.

The agreement was varied on 7 February 2007 to reflect the following principal changes:

a) an extension of the expiry date of the period during which the put options could be exercised by the Optionholders from 30 June 2007 to 30 September 2012;

b) a requirement that the put options over the be exercised in four tranches over a period of at least four years instead of all being exercised in one tranche;

c) an increase in the cap on the total amount payable for the Option Shares from £4.5m to £5.0m.

On 16 March 2011, following the completion of the exercise of the first three tranches of put options, and the notification to WBI of the exercise of the final tranche of the put options over the remaining Option Shares (amounting to 10 per cent. of the issued share capital of Beechwood), the Optionholders, WBI and the Company entered into a novation agreement under which the obligation to complete, and pay for, the acquisition of the remaining Option Shares pursuant to the exercise of the final tranche of the put options was transferred to the Company and it was agreed that the consideration for the remaining Option Shares would be satisfied by the issue by the Company to the Optionholders of up to 1,289,156 ordinary shares of 5 pence each in the Company credited as fully paid instead of cash or 1,160,240 ordinary shares of 5 pence each in the Company credited as fully paid instead of cash in the event that the option holders ceased to be employees of Beechwood..

Each of the Optionholders was at the time of both the variation of the put and call option agreement in February 2007, and the subsequent novation of the obligation to complete the acquisition of the remaining Option Shares to the Company in March 2011, related parties for the purpose of Listing Rule 11. The FSA was informed before the variation of the put and call option agreement in February 2007, and the novation of the obligation to complete the acquisition of the remaining Option Shares to the Company in March 2011, of the proposed arrangements and in each case it confirmed that the proposed arrangements constituted a smaller related party transaction under Listing Rule 11.1.10. This disclosure is being made in accordance with the Company's obligation under Listing Rule 11.1.10(2)(c).

This transaction has resulted in the extinguishment of a provision for future purchase of non-controlling interests of £1,746,000 with the issue of 1,160,240 ordinary shares being recognised within equity as an obligation to issue shares. (See note 18)

21. Net cash flow from operating activities

There were no discontinued operations during the year (2010: Nil).

Cash conversion is calculated as a percentage of cash generated by operations to operating profit before amortisation and impairment as follows: