15th Sep 2005 07:03
Wilmington Group Plc15 September 2005 Embargoed until 0700 15 September 2005 WILMINGTON GROUP PLC ("Wilmington", "the Group" or "the Company") Preliminary Results for the year ended 30 June 2005 Wilmington Group plc, the professional information and training group, todayannounces its preliminary results for the year ended 30 June 2005. Highlights • The Group returned a strong result, benefiting from the successful restructuring last year - adjusted profit before tax (before amortisation and exceptional items) increased by 18% to £12.1m - adjusted EPS increased by 20% to 9.28p - total dividend for the year increased by 20% to 3.6p - excellent operating cashflow of £14.5m, representing 121% cash conversion • All core sectors of the business made good progress, increasing margin and profit • Particularly strong performance by the key Legal and Regulatory and Healthcare divisions, which increased trading profit by 13% and 51% respectively • The Board is confident of future good progress Charles Brady, Chief Executive of Wilmington, commented: "Last year I indicated that Wilmington intended to focus on key market sectorswhere we can develop complementary information and training assets, improve themanagement team, increase efficiency and grow our business through both organicdevelopment and acquisitions. It is clear that we are succeeding in ourobjectives. "Wilmington has in place an experienced and well-motivated management team ableto take advantage of the Group's strong cashflow and robust balance sheet todevelop the business. We have a strong reputation in areas that we want todevelop and are well-placed to uncover and exploit the exciting possibilitiesthat we believe the current market offers. "The Board is encouraged by the progress made in the year to 30 June 2005 andremains confident of further good progress this financial year." - ends - For further information, please contact: Wilmington Group Plc On the day: 020 7422 6800Charles Brady, Chief Executive Thereafter: 0121 355 0900Basil Brookes, Finance Director Weber Shandwick Square Mile 020 7067 0700Nick Oborne, Kirsty Raper or Yvonne Alexander Note 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 four principal sectors of Legal andRegulatory, Healthcare, Media and Entertainment and Design and Construction.Capitalised at approximately £135 million, Wilmington floated on the LondonStock Exchange in 1995. Chairman's Statement Results I am delighted to announce record results for the year to 30 June 2005. Allsectors of the business have made good progress and the improved quality of theGroup's portfolio of businesses reflects the successful restructuring last year. Turnover in the year to 30 June 2005 was £85.1m (2004: £82.7m). Profit beforetax, amortisation of goodwill and intangible assets and exceptional items("adjusted profit") increased by 18.4% to a record £12.1m (2004: £10.2m). Themodest increase in Group turnover reflects the disposal of the industrialmagazine portfolio towards the end of the prior financial year and the disposalof the software development business, Abacus Software Limited, in January 2005.The turnover of the Group's continuing businesses increased by 8.0%. Adjusted earnings per share increased by 20% to 9.28p (2004: 7.73p). Cashflow of£14.5m was generated from operating activities (2004: £12.0m), representing 121%of operating profit before amortisation of goodwill and intangible assets (2004:115%). Dividend The Board remains committed to increasing dividends progressively and thereforeis proposing a final dividend of 2.45p per share payable on 11 November 2005 toshareholders on the register on 7 October 2005. Taken together with the interimdividend of 1.15p per share, this will make a total dividend for the year of3.6p per share, an increase of 20% over the 3.0p paid last year. The dividend iscovered 2.6 times by adjusted earnings per share (2004 : 2.6 times). Strategy Wilmington's strategy is to generate sustainable and growing profits fromservicing the information and training requirements of selected professionalbusiness markets. We aim to develop strong positions in key market sectors byfocusing investment, both acquisitive and organic, on those markets and toexpand revenue streams by adding new products and delivery channels. In thesemarkets Wilmington provides researched and accurate information in a variety offormats. These range from professional magazines providing news and updates, tocomprehensive databases delivered either electronically or in hard copy format.Wilmington also provides comprehensive training and conference programmes and arange of educational and accreditation schemes. By understanding and working directly with our client base, Wilmington is ableto provide essential support and information which frequently requires regularupdating, thereby resulting in long-term and sustainable revenue sources. Wefocus on those market sectors where we have critical mass and where there is ademonstrable need for information and training. In many cases there aremandatory professional or regulatory requirements for clients to use theproducts we provide. Highlights of the Year The results for the year to 30 June 2005 reflect the significant progress madeacross the Group with each core division reporting increased profits andimproved profit margins. An analysis of the Group's performance by market sectoris set out in the Chief Executive's Operational Review. I would however like tohighlight:- The continuing growth in terms of profits and profit margins of our Legal andRegulatory division which generated a trading profit of £10.9m (2004: £9.6m) ata profit margin of 25.3%. The Immigration & Asylum Accreditation scheme which has been a major projectrequiring the development and launch of an accreditation scheme for over 2,000Immigration and Asylum advisors. The Healthcare division which has seen profits grow by 51% to £1.9m in the yearto 30 June 2005. We continue to invest, both domestically and internationally,in the launch of new products from this division. I am also pleased to report that the Design and Construction division hasrecovered from a loss of £165,000 last year to a profit of £233,000 in the yearto 30 June 2005. As I reported in the Interim Report for the six months to 31 December 2004, wehave incurred exceptional costs of £917,000 in the year to 30 June 2005. Most ofthis expenditure related to termination and redundancy payments and also thecost of exiting leasehold premises. Many of the businesses which have moved arenow located in buildings owned by Wilmington. We anticipate cost savings in theregion of £800,000 per annum, of which approximately half was realised in theyear to 30 June 2005. The Group's businesses generate strong cashflows. Cash generated from operatingactivities, before exceptional items, was £15.4m and even after exceptionalitems amounted to £14.5m, an increase of 21.5% over the prior year. After theservicing of interest and dividends, payment of taxes and capital expenditure,there was a free cash flow of £6.0m (2004: £4.9m). During the year the Group'sinvestment activities resulted in expenditure of approximately £9m. Thisincluded the acquisition of minority interests in three businesses, theacquisition of Quorum Training, the payment of deferred consideration relatingto the acquisition of Bond Solon Training and the purchase of a freeholdproperty. As a result the net debt of the Group increased from £4.5m to a modest£8.2m. Board and Management Structure The Board regularly reviews the performance of the Group to ensure that thecorrect operating structure and people are in place to deliver growth andenhanced shareholder value. During the year to 30 June 2005 we made extensivechanges to our Board to create a more efficient structure and to reflect currentcorporate governance. First, we have reduced by two the number of executivedirectors on the main Board and created an executive management board whichreports directly to the Chief Executive. Second, we have strengthened ournon-executive capability and, in line with current best practice, now have anequal number of executive and non-executive directors in a board of six. International Financial Reporting Standards ("IFRS") We shall be adopting IFRS for the first time during the year ending 30 June2006. The comparative figures for the year ended 30 June 2005 will be restatedto reflect IFRS in those accounts. Our review of the IFRS treatment of goodwilland intangible assets has indicated that overall the carrying values in ourbalance sheet are substantially lower than the discounted cashflows that theyare expected to generate. However, we have provided in these UK GAAP accountsadditional amortisation of £1.1m in relation to assets in a number ofmiscellaneous markets which are included in the segmental analysis under thecategory 'Other'. Summary I would like to thank my fellow directors, senior managers and all of theGroup's employees who contributed to this year's successful results for theirinnovation, hard work and commitment. Wilmington has in place an experienced and well-motivated management team ableto take advantage of the Group's strong cashflow and robust balance sheet todevelop the business. We have a strong reputation in areas that we want todevelop and are well-placed to uncover and exploit the exciting possibilitiesboth for organic growth and bolt-on acquisitions that we believe the currentmarket offers. The Board is encouraged by the progress made in the year to 30 June 2005 andremains confident of further good progress this financial year. David SummersChairman Chief Executive's Operational Review Results Last year I indicated that Wilmington intended to focus on key market sectorswhere we can develop complementary information and training assets. To achievethis we needed to streamline and improve the management team, increaseefficiency and grow our business through both organic development andacquisitions. I outlined the Board's determination to take the action necessaryto improve the quality of the business whilst delivering consistent profitgrowth. With adjusted profit and earnings per share increasing by 18.4% and 20.1%, to£12.1m (2004: £10.2m) and 9.28p (2004: 7.73p) respectively, and marginsimproving across our operations, it is clear that there has been significantprogress in the Group's performance during the year and that we are succeedingin our objectives. Wilmington's People Wilmington's growth and success depends on the quality of the people it employsand we are fortunate to enjoy the entrepreneurship, professionalism andflexibility that provide the basis for a successful business. These characteristics have enabled us to make and sustain extensive changesduring the last couple of years. We have challenged the Wilmington team tochange working practices, develop new technologies, undergo additional training,move location and to take on greater responsibility while continuing to growprofitability and earnings per share. Wilmington employees have respondedpositively to these challenges, delivering improved performance whilstmaintaining a professional and friendly outlook at work; I thank them for theirenthusiasm, hard work and support. The pace of change is evidenced by our property moves. We have recently acquirednew premises for APM in Paris, moved CLT (Scotland) to new offices and trainingcentre in Glasgow, purchased new freehold premises for Beechwood in Basildon,moved the design magazines and events from Chelmsford to Central London, movedthe Polygon business to Wilmington's existing premises at Foots Cray, Kent, andmoved our catering business, Dewberry Redpoint, into new office accommodation.We have also purchased and equipped a new production unit for Central LawTraining in Sutton Coldfield. In total approximately 265 people are now in newpremises and our businesses are operating from better quality accommodation,often occupying properties owned by the Group, and yielding substantial ongoingcost savings. At the same time there have been major changes to working practices andsignificant investment in new technology and equipment. These developments haverequired a lot of hard work and dedication from Wilmington's team, which hasplanned and implemented major changes in premises and working practices, butthey bode well for the future. During the year to 30 June 2005 the averagenumber of people employed by the Group has decreased from 1,084 to 975, areduction in excess of 10%. We do not anticipate any lessening in the pace of change. The propertyreorganisation is now largely complete but we foresee continuing technologicaldevelopment across the Group; in particular, the speed at which the Group isdeveloping Internet and e-technologies is increasing. Wilmington's Directors and executive management team believe that the only waythat we can achieve the intended high levels of growth is to retain and attractthe very best people. The Board and I are determined to ensure that Wilmingtonremains a great place to work where people have the opportunity to challengethemselves, to grow professionally and to benefit from high levels ofremuneration and incentives. Only by continuing to develop the skills of ourcurrent team and by recruiting the very best new talent can Wilmington continueto grow at the rate we wish. Acquisitions and Disposals In August 2004 we purchased the 45% minority shareholding in InternationalCompliance Training ("ICT"). ICT, which provides anti-money laundering andcompliance training programmes in a number of jurisdictions including the UK,has had a good year. We believe that there is considerable potential for furthergrowth in this area and will continue to invest in the recruitment of additionalstaff and the development of new products. In January 2005 we sold our 75% shareholding in Abacus Software for £760,000.Wilmington originally acquired Abacus to help with the development of ourInternet activities. We have gained significant insight into the development ofweb-based technologies and have benefited from the many applications developedfor us by Abacus. However, we no longer felt that it was necessary to own asoftware development business to achieve our e-technology objectives. We are experiencing increasing demands for information delivered electronicallyacross all aspects of our business. We continue to make extensive investment innew applications which either increase the efficiency of our products, in somecases creating new business models, or reducing the costs of operation.Development is either undertaken internally within the Group or outsourced to anumber of leading specialists. In May 2005 we acquired Quorum Training which provides training to finance andaccountancy professionals employed in commerce, industry, central and localgovernment. This is an area where there are increasing continuing professionaldevelopment regulations. Quorum has an excellent reputation for the quality ofits programmes and we believe it will provide a strong platform to substantiallydevelop the Group's activities in this area. During the year we also acquired the outstanding minority shareholdings inRedpoint Marketing (part of the Drinks and Catering division) and Polygon Media(part of the Design and Construction division). Since the year end we havecompleted the acquisition of the remaining minority interest in Bond SolonTraining (providers of witness training). We will also acquire the outstandingminority shareholdings in Pendragon Professional Information and HollisDirectories in the Autumn of 2005. All of these acquisitions will be earningsenhancing. In acquiring these outstanding minority interests we obtain greater managementflexibility and will benefit from further integration of our core businesses. I have previously indicated that there were parts of Wilmington's portfolio thatwere in markets the Group no longer intended to pursue, or did not have theprofit and growth characteristics that the Group sought. Subsequent to the yearend, we have disposed of a portfolio of assets servicing the drinks market. Theresults of this business for the year to 30 June 2005 are shown as'Discontinued'. The remainder of what was the Drinks and Catering division isnow included in the segmental analysis under the category 'Other'. Thiscontinues the process whereby, in recent years, Wilmington has effectivelymanaged a number of non-core activities with a view to exiting at an appropriatetime. Review of Operations All our key business divisions showed increased profits and improved profitmargins against the previous year, with particularly strong performances by ourLegal and Regulatory and Healthcare businesses. During the year we incurred exceptional costs of £917,000. Most of thisexpenditure related to termination payments and the costs of exiting leaseholdpremises. The reorganisation has created a more robust management team andbusiness infrastructure which will be better able to develop the Group in thefuture. Legal and Regulatory Year ended Year ended 30 June 2005 30 June 2004 £'000 £'000Turnover 43,228 39,087Trading profit* 10,918 9,622Margin 25.3% 24.6% \* Trading profit is before unallocated central overheads, amortisation, interest,exceptional items and tax This is our largest division accounting for 50.8% of Group turnover andcontributing 75.8% of Group trading profit. Turnover has grown by 10.6%, tradingprofit increased by 13.5% and the operating margin grew to 25.3%. Our Legal andRegulatory division is a resilient and growing business, combining high quality"must have" information with a range of focused, market leading products andevents. Waterlow provides information, magazines and services to the legal, accountancy,surveying, pensions, finance and charity markets. Waterlow products, which dateback to 1844, are clear market leaders with high quality proprietary content andstrong customer renewal rates. 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 lawyers •ICP, a leading provider of financial information on companies worldwide, specialising in emerging markets •Charity Choice, the market leading products through which UK charities promote themselves to the legal profession and individual donors •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 (and winner of the law librarian's prestigious BIALL 'Legal Journal of the Year' award for 2005). All Waterlow's markets show common characteristics including large professionalclient bases with strong information needs, increasing regulatory requirementsand lack of cyclicality. These characteristics have provided a stable base uponwhich Waterlow has been able to develop a cash generative and growing businesswith excellent margins. The development of electronic publishing has been a major factor in thedevelopment of the business, with the proportion of revenues derived from highermargin products and services delivered electronically increasing last year toover 47%. 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. The development of our recent acquisitions has continued in an encouragingmanner. Solicitors Journal and Pendragon, two recent acquisitions, saw theircombined revenues and profits grow by over 15%. As a demonstration of the valuecreated by these acquisitions, our return on investment in both cases is inexcess of 40%. We remain confident of continued development in these businessesand are enthusiastically looking for other acquisitions where we can generatevalue for our shareholders. Our professional education and training activities continued to report goodturnover and profit growth. Central Law Training ("CLT"), which serves the legaland financial markets, is the market leader for the provision of mandatorypost-qualification training courses and accredited programmes for UK lawyers. Itdelivers more than 4,000 training courses per year. Our legal training business is founded on a growing subscription membership baseand excellent marketing capability. These strengths are aligned with the successof the CLT management team in establishing excellent working relationships withNational and Local Law Societies, major universities and professional bodiesincluding the Lawyer's Commerce & Industry Group, International Trust CompaniesAssociation, Society of Trust and Estate Practitioners and the British BankersAssociation. Over the past 12 months there has been substantial growth in the number of highlevel Law Society accredited programmes presented by CLT, including those foroverseas lawyers (QLTT) and for lawyers requiring accreditation in areas ofImmigration and Asylum, Criminal Practice and Higher Rights of Audience. Thisarea remains buoyant, with a number of new initiatives planned. The launch ofthe Commission for Legal Service's Immigration and Asylum Accreditation schemewas a success with the vast majority of advisers assessed during the year ended30 June 2005. We anticipate ongoing activity, albeit at a lower volume, from newentrants and Immigration and Asylum advisers seeking to upgrade theirqualifications. The major successes in the period have included the continuing growth of CLTScotland and the highly successful launch of CLT Ireland. This jurisdictionalexpansion of CLT's training programmes is also typified by the launch ofaccredited International Diplomas and Certified Programmes in Compliance andAnti-Money Laundering. These latter programmes have benefited from strongworking relationships which have been established with the Compliance Instituteand the International Compliance Association. At the start of the financial year we acquired the 45% minority shareholding inICT. ICT is still in its development phase, requiring ongoing investment.Nevertheless it has performed well during the year with good growth in tradingprofit. Bond Solon, the witness training company acquired by CLT in 2001, has hadanother excellent year with further growth in turnover and profit. Towards the end of the year we also successfully acquired Quorum Training. Itsacquisition provides us with immediate skills and market presence through whichwe can accelerate the development of training for finance professionals. Healthcare Year ended Year ended 30 June 2005 30 June 2004 £'000 £'000Turnover 10,738 8,833Trading profit* 1,880 1,246Margin 17.5% 14.1% \* Trading profit is before unallocated central overheads, amortisation, interest,exceptional items and tax Healthcare accounted for 12.6 % of Group turnover and 13.1% of Group tradingprofit. Healthcare is a high value market where a combination of acceleratinguse of technology and rapid changes in information requirements are creatingmany opportunities for us. Binleys is a specialist data provider to healthcare and pharmaceuticalindustries. It continues to invest strongly in organic growth and as part of itsdevelopment programme released two new electronic products for thepharmaceutical market. These complement the existing online products and help toplan and manage sales of drugs to the healthcare market place. APM, our French Press Agency based in Paris, provided its first full yearcontribution to Group and we are extremely pleased with its progress. It is theleading provider of healthcare news to its home market and is building aEuropean brand as it develops a wider range of products. We are managing these businesses on an increasingly strategic basis with productsets from each being used to reinforce and enhance the offerings from the otherdivisions. This will continue at an accelerating pace as we invest in theEuropean healthcare and pharmaceutical markets. Media and Entertainment Year ended Year ended 30 June 2005 30 June 2004 £'000 £'000Turnover 7,001 6,647Trading profit* 1,031 947Margin 14.7% 14.2% \* Trading profit is before unallocated central overheads, amortisation, interest,exceptional items and tax Media and Entertainment, which accounts for 8.2% of Group turnover and 7.2% ofGroup trading profit, had a satisfactory year. The division provides information, data and services to the TV, music, publicrelations, sponsorship and marketing sectors. Operating through a number ofleading brands including Hollis, RED-Muze, PCR and onMusic (formerly TMSS), itprovides its information as electronic products, newsletters, directories andevents. This sector is increasingly delivering its information through theInternet. We are very satisfied with progress made by our joint venture RED-Muze, whichsupplies information on recorded music and video to both retailers ande-tailers. Our partners in the USA supply equivalent data to the American andAsian markets and we expect continued progress from this division as we developfurther into the main European markets. In January 2005 we disposed of Abacus, our specialist Internet softwaresubsidiary, and accordingly the results of Abacus have been excluded from thisdivision and are shown under Discontinued activities. Design and Construction Year ended Year ended 30 June 2005 30 June 2004 £'000 £'000Turnover 11,444 11,282Trading profit* 233 (165)Margin 2.0% (1.5%) \* Trading profit is before unallocated central overheads, amortisation, interest,exceptional items and tax Design and Construction, which accounts for 13.5% of Group turnover and 1.6% ofGroup trading profit, made good progress in the year under review and hasreturned to profit in the year. This division provides magazines, yearbooks, events and electronic products tothe construction industries. It has benefited from a management andorganisational restructuring which has streamlined the cost base whilst allowingus to improve revenues. We expect further progress across all its activities inthe current year. It is worth noting that display advertising in our leading products held up welland, while advertising tightened slightly in the final quarter, we weresatisfied with all revenue streams in this division. Other and Discontinued The remainder of our turnover falls into a number of miscellaneous markets orare revenues from discontinued businesses. Drinks and Catering, which in theyear ended 30 June 2005 accounted for 10.1% of Group turnover and 2.1% of Grouptrading profit, made modest progress in the year. Revenues were affected bycontinued depressed display advertising and also reflect the elimination ofnon-contributing products. Events made solid progress with both cateringconferences and the 'International Wine Challenge', generating good results. Summary and outlook Wilmington has developed a number of resilient profitable businesses with asolid record of performance. The Group is cash generative, with good profitmargins and substantial repeat revenues. We are building multi media businesses,with diversified revenue streams, in our core markets. This diversity creates arobust business model and allows a greater understanding and insight into thedynamics of the markets we serve. We are set to make further good progress this financial year, satisfying thegrowing requirement for high quality information and training amongst theprofessional business communities we serve. The current year has started in linewith our expectations and, as in the previous years, we expect that the Group'sperformance will be weighted to the second half of the year. Charles J Brady Chief Executive Consolidated Profit and Loss AccountFor the year ended 30 June 2005 Year Year Amortisation ended ended Existing Discontinued Sub- and 30 June 30 June Operations Acquisitions Operations Total Exceptionals 2005 2004 Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover - continuing operations 80,287 409 - 80,696 - 80,696 74,744 - discontinued operations - - 4,384 4,384 - 4,384 7,914 --------- --------- --------- ------- ---------- -------- ------- 1 and 2 80,287 409 4,384 85,080 - 85,080 82,658Cost of Sales (27,346) (200) (925) (28,471) - (28,471) (27,473) --------- --------- --------- ------- ---------- -------- -------Gross profit 52,941 209 3,459 56,609 - 56,609 55,185Operating expenses 3 (40,069) (190) (3,379) (43,638) (7,055) (50,693) (49,616)--------------- ----- --------- --------- --------- ------- ---------- -------- -------Operating profit/(loss) - continuing operations 12,872 19 - 12,891 (6,913) 5,978 5,920 - discontinued operations - - 80 80 (142) (62) (351)--------------- ----- --------- --------- --------- ------- ---------- -------- ------- 4 12,872 19 80 12,971 (7,055) 5,916 5,569Non-operating exceptionals - discontinued operations 4 - - - - - - 251 --------- --------- --------- ------- ---------- -------- -------Profit before interest and taxation 12,872 19 80 12,971 (7,055) 5,916 5,820 --------- --------- --------- ------- ----------Interest receivable and similar income 16 15Interest payable and similar charges (908) (423) -------- -------Profit on ordinary activities before taxation 5,024 5,412 Taxation 5 (3,307) (2,695) -------- -------Profit onordinaryactivitiesafter taxation 1,717 2,717Minorityinterests (713) (658) -------- -------Profit for the financial period and attributable to shareholders 1,004 2,059Dividend paid or proposed (3,008) (2,501) -------- -------Retained loss for the period (2,004) (442) -------- -------Earnings per ordinary share 7 1.20p 2.47p -------- -------Diluted earnings per ordinary share 7 1.20p 2.46p -------- -------Adjusted earnings per ordinary share 7 9.28p 7.73p -------- ------- With the exception of exchange translation losses of £16,000 (2004: Nil) thereare no recognised gains and losses for the year other than those shown in theconsolidated profit and loss account. Balance Sheets Group Company 30 June 30 June 30 June 30 June 2005 2004 2005 2004 £'000 £'000 £'000 £'000 Fixed assetsGoodwill and intangible assets 65,728 64,453 - -Tangible assets 12,291 11,665 1,805 1,883Investments - - 42,626 48,552 -------- -------- -------- -------- 78,019 76,118 44,431 50,435 -------- -------- -------- -------- Current assetsStock and work in progress 1,557 1,874 - -Debtors 17,803 17,802 39,709 30,460Cash at bank and in hand 1,841 2,954 - 2,000 -------- -------- -------- -------- 21,201 22,630 39,709 32,460 Creditors: Amounts falling due within one year (31,094) (31,832) (9,789) (11,392) -------- -------- -------- --------Net current (liabilities)/assets (9,893) (9,202) 29,920 21,068 -------- -------- -------- --------Total assets less current liabilities 68,126 66,916 74,351 71,503Creditors: Amounts falling due after more than one year (10,000) (7,000) (10,000) (7,000)Provision for liabilities andcharges (528) (604) (45) (51) -------- -------- -------- --------Net assets 57,598 59,312 64,306 64,452 -------- -------- -------- -------- Capital and reservesCalled-up share capital 4,180 4,167 4,180 4,167Share premium account 42,658 42,363 42,658 42,363Other reserves 949 949 - -Profit and loss account 7,723 9,743 17,468 17,922 -------- -------- -------- --------Equity Shareholders' funds 55,510 57,222 64,306 64,452Minority interests 2,088 2,090 - - -------- -------- -------- -------- 57,598 59,312 64,306 64,452 -------- -------- -------- -------- Consolidated Cash Flow Statement Year Year Ended ended 30 June 30 June 2005 2004 Notes £'000 £'000 Net cash inflow from operating activities 8(a) 14,538 11,969 Returns on investments and servicing of finance ----------- -----------Interest received 16 15Interest and similar charges paid (913) (545)Dividends paid to minority shareholders in subsidiary undertakings (192) (256) ----------- ----------- Net cash outflow (1,089) (786) TaxationUK and foreign corporation tax paid (2,930) (2,970) Capital expenditure and financial investment ----------- -----------Purchase of goodwill and intangible fixed assets (270) (309)Purchase of tangible fixed assets (2,667) (3,854)Sale of tangible fixed assets 150 223 ----------- ----------- Net cash outflow (2,787) (3,940) Acquisitions and disposals ----------- -----------Purchase of subsidiary undertakings and minority interests (8,735) (12,954)Purchase of businesses - (493)Settlement of loan notes (1,000) -Sale of subsidiary undertakings 450 -Sale of businesses - 44 ----------- ----------- Net cash outflow (9,285) (13,403) Equity dividends paid (2,627) (2,247) ---------- ----------Cash outflow before financing (4,180) (11,377) Financing ----------- -----------Issue of shares 308 225New borrowings 3,000 7,000 ----------- ----------- Net cash inflow 3,308 7,225 ---------- ----------Increase in net debt in the year 8(b) (872) (4,152) ---------- ---------- Reconciliation of net cash flow to movement in 8(b) net debtIncrease in net debt in the year (872) (4,152)Cash arising on acquisitions and disposals 214 1,024New borrowings (3,000) (7,000)Net (debt)/cash brought forward (4,538) 5,590 ---------- ----------Net (debt) carried forward (8,196) (4,538) ---------- ---------- Notes to the Accounts 1. Segmental informationSet out below is the segmental information relating to the business by marketsector. Year ended Year ended 30 June 30 June 2005 2004 £'000 £'000Turnover:Legal and Regulatory 43,228 39,087Healthcare 10,738 8,833Media and Entertainment 7,001 6,647Design and Construction 11,444 11,282Other 8,285 8,895Discontinued 4,384 7,914 ---------- ---------- 85,080 82,658 ---------- ----------Profit before taxation: £'000 £'000 Legal and Regulatory 10,918 9,622Healthcare 1,880 1,246Media and Entertainment 1,031 947Design and Construction 233 (165)Other 254 405Discontinued 80 (209) ---------- ----------Trading profit 14,396 11,846 Less: unallocated central overheads (1,425) (1,233) ---------- ----------Operating profit before interest, exceptional itemsand amortisation and impairment 12,971 10,613 Less: interest (892) (408) ---------- ----------Profit before taxation, amortisation and impairmentand exceptional items ("adjusted profit") 12,079 10,205 Exceptional items - operating (917) (250) - non-operating - 251 ---------- ----------Profit before amortisation and taxation 11,162 10,206Less: amortisation and impairment - recurring (5,005) (4,794) - non-recurring (1,133) - ---------- ----------Profit before taxation 5,024 5,412 ---------- ---------- The amortisation charge is split between Legal and Regulatory - £2,993,000(2004: £3,124,000), Healthcare - £558,000 (2004: £364,000), Media andEntertainment - £578,000 (2004: £617,000), Design and Construction £488,000(2004: £385,000), Other £1,379,000 (2004: £162,000) and Discontinued - £142,000(2004: £142,000). £13,000 of the Legal and Regulatory amortisation charge and £20,000 of theHealthcare amortisation charge relate to acquisitions made during the year to 30June 2005. 30 June 30 June 2005 2004 £'000 £'000Net assets:Legal and Regulatory 40,955 39,148Healthcare 9,469 8,755Media and Entertainment 7,884 7,389Design and Construction 6,094 6,250Other 3,174 3,469Discontinued 1,958 3,001 ---------- ---------- 69,534 68,012Unallocated central net liabilities (11,936) (8,700) ---------- ---------- 57,598 59,312 ---------- ---------- 2. Turnover The geographical analysis of turnover is as follows: Year ended Year ended 30 June 30 June 2005 2004 £'000 £'000 United Kingdom 69,408 68,743Overseas 15,672 13,915 ---------- ---------- 85,080 82,658 ---------- ---------- 3. Operating expenses Year ended Year ended 30 June 30 June 2005 2004 £'000 £'000 Distribution and selling costs 21,460 23,183Administrative expenses 22,178 21,389Exceptional item - restructuring costs (2004: abortive transaction costs) 917 250 ---------- ---------- 44,555 44,822Amortisation and impairment of goodwill and intangible assets 6,138 4,794 ---------- ----------Total operating expenses 50,693 49,616 ---------- ---------- Included in operating expenses are £2,147,000 (2004: £3,890,000) of distributionand selling costs and £1,232,000 (2004: £2,264,000) of administrative expensesin respect of discontinued operations. Cost of sales in respect of discontinuedoperations were £925,000 (2004: £1,969,000). Also included in operating expensesare £32,000 of distribution and selling costs and £158,000 of administrationexpenses relating to acquisitions made during the year ended 30 June 2005. Totaladministration expenses for the year ended 30 June 2005 were £29,233,000 (2004:£26,433,000). The exceptional item of £917,000 of restructuring costs comprises mainlyexpenditure related to termination/redundancy payments and also the cost ofexiting leasehold premises. A tax credit of £279,000 arises on this exceptionalitem. 4. Operating profit and exceptional items Operating profit is stated after charging/(crediting) Year ended Year ended 30 June 30 June 2005 2004 £'000 £'000 Depreciation of owned tangible fixed assets 1,794 1,766Amortisation and impairment of goodwill and intangible assets 6,138 4,794Loss / (profit) on sale of fixed assets 36 (4) Rentals under operating leases:Machinery 8 16Other operating leases 316 470Auditors' remuneration:Audit fees 196 166Other services 35 30Exceptional items - restructuring costs 917 -Exceptional items - abortive transaction costs - 250 ---------- ---------- Non-operating exceptional items comprise Profit on sale of businesses - 251 ---------- ---------- 5. Taxation Year ended Year ended 30 June 30 June 2005 2004 £'000 £'000The tax charge comprises:UK corporation tax at current rates 3,313 2,965Adjustment to previous years (17) (93) ---------- ---------- 3,296 2,872Foreign tax 366 176Tax on exceptional items (279) (279) ---------- ----------Total current tax 3,383 2,769Deferred tax credit (76) (74) ---------- ---------- 3,307 2,695 ---------- ----------The deferred tax credit has been discounted by £34,000 (2004:£38,000) Factors affecting the tax charge for the yearThe tax charge for the year is greater than the standard rate of corporation taxin the UK of 30%. The differences are explained below: Reconciliation of tax charge:Profit on ordinary activities before tax 5,024 5,412 ---------- ----------Profit on ordinary activities multiplied by the standard rate of corporation tax in the year of 30% (2004: 30%) 1,507 1,624Effect of:Goodwill and intangible asset amortisation and impairment not deductible for tax purposes 1,751 1,373Other expenses not deductible for tax purposes 63 81Capital allowances for the year less than/(in excess of) depreciation 40 (37)Foreign tax rate differences 39 25Adjustment to tax charge in respect of previous years (17) (93)Gain on sale of business not taxable - (204) ---------- ----------Current tax charge for year 3,383 2,769 ---------- ---------- The tax charge in future years will continue to be greater than the standardrate of corporation tax in the UK of 30% due to the goodwill and intangibleasset amortisation and impairment not deductible for tax purposes. 6. Acquisitions and Disposals Subsidiaries acquiredIn May 2005 a wholly owned subsidiary of the Company acquired 100 per cent. ofQuorum Training Limited. Assets and liabilities of subsidiary undertakingacquired: Fair value Book value Adjustments Fair value £'000 £'000 £'000 Tangible fixed assets 86 (59) 27Debtors 453 (151) 302Cash 214 - 214Creditors due within one year (574) - (574)Deferred tax (10) 10 -Goodwill and intangible assets - - - ---------- ---------- ---------- 169 (200) (31) ---------- ----------Goodwill arising on consolidation 1,610 ----------Consideration 1,579 ----------Satisfied by cash 1,579 ---------- Fair value adjustments have been made to reflect the Group's accounting policiesfor depreciation of tangible fixed assets, deferred tax and the writing off ofmarketing expenditure as incurred. Quorum Training Limited made a profit after taxation in the twelve months priorto acquisition of £63,000 on turnover of £1,794,000. Other acquisitionsDuring the year the company acquired an additional title, Institute ofHealthcare Management Yearbook, for a total cash consideration of £235,000 plusassociated costs. The Group also paid in April 2005 deferred consideration of £3,884,000 inrespect of the acquisition of Bond Solon Training Limited. Minority interests acquiredDuring the year the Company indirectly acquired the remaining 25 per cent. ofPolygon Media Limited for a total cash consideration of £1,442,000 giving riseto an increase in goodwill and intangible assets of £1,334,000. During the yearthe Company also indirectly acquired the remaining 25 per cent. of RedpointMarketing Limited for a total cash consideration of £804,000 giving rise to anincrease in goodwill and intangible assets of £679,000. During the year theCompany also indirectly acquired the remaining 45 per cent. of InternationalCompliance Training Limited for a total cash consideration of £993,000 givingrise to an increase in goodwill and intangible assets of £942,000. Since theyear end the Company indirectly completed the acquisition of the remaining 25per cent. of Bond Solon Training Limited for a total cash consideration of£2,500,000 giving rise to an increase in goodwill and intangible assets of£2,467,000. This consideration was paid in July 2005 and is included inCreditors; amounts falling due within one year in these accounts. DisposalsIn January 2005 the company sold its interest in Abacus Software Limited for atotal consideration of £760,000. The net profit arising on this disposal has notbeen treated as a non-operating exceptional item as the gain involved is notmaterial to the Group's results. 7. Earnings per ordinary share Year ended Year ended 30 June 30 June 2005 2004 The calculation of earnings per ordinary share is based on profit after taxation and minority interests of £1,004,000 £2,059,000 ----------- -----------and an adjusted profit being profit after taxation and minority interests of 1,004,000 2,059,000and after adding back amortisation and impairment of goodwill and intangible assets (net of minority interest effect) 6,097,000 4,660,000exceptional items after tax 638,000 (280,000) ----------- -----------Adjusted profit £7,739,000 £6,439,000 ----------- -----------and on the average number of ordinary shares in issue during the year of 83,394,158 83,292,467 ----------- -----------and, after adjusting for 387,373 outstanding shareoptions (2004: 274,502), on the diluted average number of ordinary shares during the year of 83,781,531 83,566,969 ----------- -----------Earnings per ordinary share 1.20p 2.47p ----------- -----------Diluted earnings per ordinary share 1.20p 2.46p ----------- -----------Adjusted earnings per ordinary share 9.28p 7.73p ----------- ----------- To 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 amortisationand impairment of goodwill and intangible assets and post taxation exceptionalitems of £7,739,000 (2004: £6,439,000). 8. Notes to the consolidated cash flow statement (a) Reconciliation of operating profit to net cash inflow from operatingactivities: Year Year ended ended 30 June 30 June 2005 2004 £'000 £'000 Operating profit 5,916 5,569Depreciation of tangible fixed assets 1,794 1,766Amortisation and impairment of goodwill and intangible fixed assets 6,138 4,794Profit/(loss) on sale of tangible fixed assets 36 (4) Exchange translation differences (16) - Decrease in stock and work in progress 251 136(Increase)/decrease in debtors (189) 372Decrease/(increase) in creditors 608 (664) --------- ---------Net cash inflow from operating activities 14,538 11,969 --------- --------- Included above is a net cash inflow of £136,000 in respect of the operatingactivities of the Group's acquisitions. Acquisitions also accounted for £Nil ofthe tax paid by the Group in the twelve months to 30 June 2005.Included above is a net cash outflow of £35,000 in respect of operatingactivities of the Group's disposal of Abacus Software Limited. This disposalalso accounted for £Nil of the tax paid by the Group in the twelve months to 30June 2005. No figures can be disclosed for the other discontinued operations as they arenot separately identifiable. (b) Analysis of movement in net cash/(debt) Arising on At 1 July acquisitions At 30 June 2004 Cash flow and disposals 2005 £'000 £'000 £'000 £'000 Cash at bank and in hand 2,954 (1,327) 214 1,841Bank overdraft (492) 455 - (37) --------- --------- --------- --------- 2,462 (872) 214 1,804Bank loan (7,000) (3,000) - (10,000) --------- --------- --------- --------- (4,538) (3,872) 214 (8,196) --------- --------- --------- --------- 9. Nature of the financial information The 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 June2005 on which the auditors have given an unqualified report. 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