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WIL Wilmington Plc

356.00
0.00 (0.00%)
Last Updated: 08:00:22
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Wilmington Plc LSE:WIL London Ordinary Share GB0009692319 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 356.00 336.00 358.00 0.00 08:00:22
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Information Retrieval Svcs 123.5M 20.2M 0.2269 15.69 316.79M

Wilmington PLC Interim Results (6095X)

23/02/2017 7:01am

UK Regulatory


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TIDMWIL

RNS Number : 6095X

Wilmington PLC

23 February 2017

23 February 2017

WILMINGTON PLC

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

Financial Results for the six months ended 31 December 2016

Wilmington plc, the provider of information, education and networking services in Risk & Compliance, Finance, Legal, and Insight knowledge areas, today announces its interim results for the six months ended 31 December 2016.

Financial Highlights

- Group revenues for the period up 11% at GBP54.8m (2015: GBP49.4m); up 6% in constant currency(1) terms

   -     Adjusted EBITA(2) increased 3% to GBP10.0m (2015: GBP9.7m) 
   -     Adjusted EBITA margins(3) at 18.3 % (2015: 19.7%) 
   -     Adjusted Profit before Tax(4) up 2% to GBP9.1m (2015: GBP8.9m) 
   -     Adjusted Earnings per Share(5) up 2% at 8.10p (2015: 7.93p) 
   -     Basic Earnings per Share up to 4.43p (2015: 3.94p) 
   -     Profit before tax at GBP5.0m (2015: GBP4.5m) 
   -     Deferred revenue is up 13% to GBP24.2m (2015: GBP21.3m) 
   -     Interim dividend increased 3% to 3.9p (2015: 3.8p), in line with progressive dividend policy 

Operational Highlights

- Strong growth from Risk & Compliance with revenue up 11% driven by Compliance (up 13% organic(6) )

   -     Finance revenue up 7% aided by maiden contribution from SWAT UK Ltd 
   -     Legal revenue down 7% but profits up reflecting the reorganisation in 2015/16 
   -     Insight delivered strong revenue growth up 26% driven by UK Healthcare (up 15% organic) 
   -     Subscription and repeatable information sales at 78% of total revenue (2015: 76%) 
   -     International revenues increased, representing 43% of total revenue (2015: 42%) 

- SWAT acquired July 2016 extends presence in accountancy training and adds scale to Finance Division

- Health Service Journal ("HSJ") acquired January 2017 strengthens client offerings and adds scale to Healthcare Division

Strategy Update

   -     First stage of Wilmington's transformation is complete 
   -     Second stage (") Sixth Gear' announced; 

o Focus the business further into three divisions: Risk & Compliance, Professional & Healthcare

o Maximise client relationships; and accelerate integration

o Planned exit from legal practice support markets

o Project Sixth Gear will focus business structure, helping to drive scale and efficiencies in core markets

Current Trading

   -     Strong revenue momentum from key growth areas (compliance, insurance and healthcare) 
   -     As in previous years Wilmington's trading performance remains second half weighted 
   -     Acquisitions of SWAT and HSJ each expected to be earnings enhancing in first full year 

- Expected profit growth partially offset by investment in Compliance Week and weaker performance from AMT

Pedro Ros, Chief Executive Officer, commented:

"Today we announce project Sixth Gear to drive Wilmington's transition to the next phase of our strategy. We will migrate to a structure comprising three divisions: Risk & Compliance, Professional and Healthcare. As our knowledge-based model evolves, we will focus on areas with the greatest potential for growth. Clients will remain at the centre of everything we do, and we will strive to maximise our client relationships and build a more integrated and international business.

As we move into the second half we are on target to deliver another good set of results for the full year. We believe project Sixth Gear will accelerate longer term growth and we look forward to updating the market on our progress."

(1) Constant currency - eliminating the effects of exchange rate fluctuations

(2) Adjusted EBITA - see note 5

(3) Adjusted EBITA margins - Adjusted EBITA divided by Revenue

(4) Adjusted Profit before Tax - see note 5

(5) Adjusted Earnings per Share - see note 11

(6) Organic - eliminating the effects of acquisitions in the year and exchange rate fluctuations

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement this inside information is now considered to be in the public domain.

For further information, please contact:

 
 
   Wilmington plc                          020 7422 6800 
 Pedro Ros, Chief Executive Officer 
  Anthony Foye, Chief Financial Officer 
 
   FTI Consulting                          020 3727 1000 
 Charles Palmer / Emma Appleton / Adam 
  Davidson 
 

Operating and Financial Review

Wilmington recorded strong revenue growth during the period from Risk & Compliance and Insight, supported by acquisition-led growth in Finance offset by the expected continued decline in our Legal division. Profit growth was constrained by the previously announced planned investments in our compliance businesses and from a generally weaker performance from AMT and our US operations which are being restructured in response. Recent acquisitions have performed well in both revenue and profit contribution terms and these results have also benefited from favourable currency exchange effects on revenue and to a limited extent on profits.

Overall revenue grew GBP5.4m (11%) to GBP54.8m (2015: GBP49.4m) and Adjusted EBITA grew GBP0.3m (3%) to GBP10.0m (2015: GBP9.7m). Foreign currency exchange rate movements benefited revenue by GBP2.4m and acquisitions contributed a further GBP3.8m. In underlying terms, adjusting for acquisitions and the impact of foreign currency exchange effects, organic revenue was down by 2%.

EBITA margins at 18.3% were down, largely as expected, compared to 2015 (19.7%) reflecting, inter alia, the planned investments of GBP0.3m in our compliance business combined with the previously reported impact of AMT business lost last year and the weaker US operations performance.

Finance costs, which include interest charges and associated costs, increased to GBP0.9m from GBP0.8m reflecting the higher average debt levels in this period compared to 2015. This higher level is due primarily to GBP9.3m of acquisition and related spend during 2016.

The growth in Adjusted EBITA was offset by increased finance costs translated into Adjusted Profit before Tax up 2% (GBP0.2m) to GBP9.1m (2015: GBP8.9m). Foreign currency translation impacts were only marginally beneficial to overall profits in the period due to the impact of foreign currency hedges taken out prior to Brexit.

Business Vision and Strategy

Our vision which acts as our guide and underpins our strategy is:

"To be the recognised knowledge leader and partner of choice for information, education and networking in Risk & Compliance, Finance and Legal as well as the Insight leader in a number of chosen industries"

The first stage in implementing our new strategy announced in January 2015 was to simplify the group structure, identifying gaps in our offerings and to provide greater clarity on the Group's capital allocation. We have made good progress in creating a more compelling offering through a knowledge-based model and customer focus. Through selective earnings enhancing acquisitions we have now reached a key milestone with information, education and networking capabilities for all four of our knowledge areas. We have also continued to strengthen our infrastructure, technology and resources to build a more integrated and international business to help support our growth strategy.

Project Sixth Gear: more focus, more scale

The next stage of our strategy is to simplify and integrate the business still further, maximising client relationships and providing the basis for further organic and acquisition-led growth and scale. To help achieve this, we have announced project Sixth Gear. This project will accelerate Wilmington's transition to an integrated global business with a more focused structure and an emphasis on maximising client relationships. The accelerated integration and pooling of resources will help capitalise on internal economies of scale.

More focused structure

To simplify Wilmington further we will reorganise our business into three divisions effective from this announcement: Risk & Compliance, Professional, and Healthcare. Our three divisions following the reorganisation will be of similar revenue size on a pro forma basis(7) . Following our recent acquisition of HSJ in January 2017 we are starting to build significant scale in our Healthcare division and we will be looking to do the same for each of our priority areas for investment: compliance, insurance (risk) and healthcare.

As a result of our decision to focus the business around these three knowledge areas we plan to exit legal practice support services. We will therefore be looking to dispose of our Ark business which contributed GBP3.1m to revenue and GBP0.7m to profits in 2015/16. A process to find a new home for the Ark business has already commenced.

New Reporting Structure

In order to operate in a more focused structure and to help us build more scale in our areas of strength, the Group will report on a divisional basis with effect from the results for the year to 30 June 2017 as follows:

Risk & Compliance division will concentrate on servicing the existing strong organic demand supported by selective earnings enhancing acquisitions in the areas of risk & compliance as well as investments in new products, data services and new territories. The emphasis will continue to be servicing the needs of risk managers and compliance officers globally.

Professional division will provide information, education and networking support to professionals in the accountancy, financial services, and legal markets. This business will focus on supporting the post-qualification needs of individual professionals and SMEs with an increasing emphasis on exploiting international opportunities, and an accelerated move to expand our online e-learning solutions; areas where we feel the revenue growth opportunities are greatest. The key brands will be maintained and we will seek to integrate common functions such as venue bookings, e-learning technology, marketing and support systems thereby generating economies of scale. To speed up the integration and exploitation of opportunities a new divisional MD will be appointed and the emphasis will be on organic rather than acquisition led growth.

Healthcare division will be the renamed Insight division recognising that well over 80% of its revenue following the HSJ acquisition will come from healthcare markets. We will look to replicate the UK strategy of having information (particularly insight data and analytics), education and networking capabilities on a country by country basis with emphasis on our existing market presence in France and the US either organically or by acquisition.

In line with our strategy all three divisions will offer information, networking and education capabilities servicing key defined communities, supported by best-in-class technology. The divisions will look to exploit international and digital opportunities using and replicating expertise from their existing market positions. Each division will also act as our specialist knowledge expert and centre of excellence providing expertise and R&D to support the two other divisions.

Pro forma financial information based on the new structure is included as an appendix to this statement.

(7) Revenue for the year ended 30 June 2016 with HSJ's revenue included for the same period

Maximising client relationships

Clients remain at the centre of everything we do at Wilmington. As we continue to focus on building a more integrated and international business to support our growth strategy, Sixth Gear will deliver clear synergistic benefits enhancing cross-divisional collaboration between all three divisions.

In order to maximise client relationships, we have launched our Key Account Program (KAP) to reinforce account-management capabilities prioritising the development of strategic corporate partnerships and to identify cross-market potential. This initiative will be supported by our group wide CRM platform (Salesforce) which we started to implement 3 years ago.

We have seen initial successes of this account-management initiative in our Insight division with traction from our healthcare and pharma clients and we expect that our KAP will be a driver of growth in the future.

These important planned changes will accelerate the central theme of more focus and more scale.

Accelerating integration

There are a number of simultaneous workflows under project Sixth Gear all with the common objective to bring our business closer, enhancing Wilmington's collaborative culture. We will exploit opportunities arising from the new structure and increase commonality in terms of shared services and resources. There are a number of workflows including the roll-out of common e-learning technology and programmes, flexible working technology, centralised marketing support, and centralisation of procurement. The main workflows centre on London property consolidation, enhancing our e-learning capability and the continued roll-out of common global systems.

We operate across three properties in London and have been actively reducing our office space requirements by implementing more flexible working practices and through the transfer of back office functions to lower cost locations which started last year and finished in October 2016. Our objective is to consolidate all London operations into one premises whilst retaining our purpose built training facility acquired with SWAT.

Wilmington, particularly through its AMTO (AMT Online) platform, has benefited from development of e-learning capabilities and intends to expand and upgrade this capability as part of Sixth Gear. We have, as previously reported, recruited a head of e-learning and support team to resource this exciting initiative.

Project Sixth Gear excluding the London property consolidation will cost in total GBP1.2m (including GBP0.6m of capital expenditure); of which GBP0.2m has been incurred to date. We expect the project to yield benefits in terms of enhanced performance and more focused operations but in any event to cover its costs within two years. Any material developments on the London property consolidation will be communicated as appropriate.

Acquisitions

On 19 July 2016, Wilmington acquired SWAT Group Limited ("SWAT"), a provider of training, and technical compliance support to accountancy firms in London and the South West of England. The consideration was settled by an initial cash payment of GBP2.4m with a deferred cash consideration payment in September 2018 subject to SWAT achieving challenging profit targets over the two financial years ending 30 June 2018. The acquisition provides Wilmington with a bigger presence in the London face-to-face accountancy training market, and extends Wilmington's business into the South West of England where it has been under-represented. The acquisition also provides a clear opportunity to sell technical and marketing services to SWAT's clients as well as providing access to the accountancy student training market.

On 31 January 2017, Wilmington announced the acquisition of HSJ, the UK's leading health information, insight and networking business, for and initial cash payment of GBP17m (GBP19m less a GBP2m working capital adjustment). HSJ will sit within Wilmington's Healthcare division and positions Wilmington as the leading provider of insight, analytics, networking and education in the UK healthcare market. Uniquely, Wilmington Healthcare will have a UK industry presence across both provider/payer and the private sector in Pharma and MedTech and other healthcare providers. Healthcare expenditure is inexorably rising and businesses need the solutions that Wilmington Healthcare provides to optimise their activities. The acquisition will enhance Wilmington's access to senior decision makers and to a wider group of healthcare stakeholders who will benefit from Wilmington's enhanced solutions. This move will open further cross-selling and network opportunities for Wilmington to provide even more powerful, market leading insight and lead generation opportunities to our clients.

Wilmington has been acquisitive in the past and we will continue to review opportunities to enhance growth and to add expertise through selective earnings enhancing acquisitions consistent with our strategy. Our priority areas for capital allocation remain compliance, insurance and healthcare as we focus on adding further scale to our existing market positions.

Our People

As an increasingly digital information, education and networking business, operating in dynamic and competitive markets, we are fundamentally reliant on the quality and professionalism of our people. We would once again like to express our own and our fellow Board members' appreciation of the hard work and dedication of all our people. We would also like to take the opportunity to welcome our new colleagues from HSJ to the Wilmington family.

Dividend

The Board's policy is to pay a progressive dividend reflecting our confidence in the vision and resilience of our business models. I am pleased to confirm that the interim dividend for this year will be 3.9p (2015: 3.8p) per share, an increase of 3% on last year. It is the Board's intention to maintain its progressive dividend policy whilst ensuring that a suitable dividend cover of at least two times adjusted earnings per share compared to the dividend per share is maintained.

The interim dividend of 3.9p per share will be paid on 11 April 2017 to shareholders on the share register as at 10 March 2016, with an associated ex-dividend date of 9 March 2017.

Outlook and Current Trading

The financial year, as previously communicated, has had a mixed start. Some of our businesses particularly in Healthcare, have performed well. Other areas including our compliance businesses have had significant planned investment which has held back their reported profit as expected, whilst other business have not performed and we have made appropriate changes.

We continue to see tighter regulatory control and more complex legislation implemented in many of our key markets which in turn continues to drive the demand for our products and services globally. The Board will continue to review opportunities to add additional growth and expertise through organic investment and selective earnings enhancing acquisitions consistent with our strategy with emphasis on compliance, insurance and healthcare.

The second half of the year tends to be more profitable for Wilmington and will be boosted by the expected positive impacts from the HSJ and SWAT acquisitions and strong momentum from our key growth drivers of compliance, insurance and healthcare. However, profit growth is expected to be partially offset by a weaker than planned performance from AMT and Compliance Week and due to lower initial revenue from our new US compliance investment.

As we move into the second half, we look forward to delivering another good set of results for the full year. We believe project Sixth Gear bodes well for the Group's prospects with a view to accelerating longer term growth and we will update the market in due course.

Business Review

Wilmington currently manages and reports its business by reference to four knowledge based divisions: Risk & Compliance, Finance, Legal and Insight. The results from the recent SWAT acquisition are included within the Finance division.

From and including 30 June 2017 we will be presenting information on the current structure and representing the same information on our new three divisional structure of Risk & Compliance, Professional and Healthcare.

Pro forma financial information based on the new structure is included as an appendix to this statement.

Risk and Compliance (36% of Group revenue, 48% of Group contribution)

This division provides in-depth regulatory and compliance accredited training and information, market intelligence, and analysis. It focuses on the international financial services and international insurance markets as well as the UK pensions industry. The main community that uses our offerings are risk and compliance officers globally.

 
                  2016    2015     Movement 
                 GBP'm   GBP'm   GBP'm    % 
 Revenue          19.5    17.6     1.9   11 
 Contribution      5.6     5.6     0.0 
 Margin 
  %                 29      32 
 

Divisional revenue grew GBP1.9m (11%) and by 6% on an organic basis.

Compliance

Our Compliance business, which accounts for just over 50% of the division's revenue, grew 20% compared to 2015 (13% organic growth in constant currency terms).

Wilmington provides accredited training programmes in anti-money laundering, compliance and financial crime. It has also developed compliance training programmes in the Banking, Oil & Gas, Pharmaceuticals, Betting, Legal, Accountancy and Gaming sectors. One of our objectives is to carefully expand our offerings across existing Wilmington market verticals and into new geographical territories whilst maintaining the strong business momentum derived from verticals where we are already embedded.

Within the compliance business, public and in-house courses grew by nearly 20% organic and our online training revenue grew by over 40%. Demand for our products and services continues to be strong in the Asia Pacific markets, serviced mainly through our new larger Singapore office which saw revenue grow by 20% (constant currency) in the period. This continued strong organic performance across our businesses reflects general demand for accredited compliance training and qualifications supplied globally both for individual professionals and as part of bespoke corporate assignments.

During the period as previously reported we have invested an additional GBP0.3m on two important initiatives. The first initiative was establishing a US office, with dedicated trainers, resources and localised programmes to access the US public and corporate compliance markets and to provide US qualifications and certificates. Our second initiative has been the launch of a new audit training business ("ICA Compass") to provide support to client financial enterprises which seek to achieve ISO 19600 (Compliance Management Systems).

As part of the initiative, we have successfully completed our first assignment for an international financial services client under ISO 19600. The US compliance training office which was set up earlier in this period will be formally launched in March 2017 starting with a public course open day. Initial forecast sales demand is a little weaker than we had hoped but we are confident of the medium term potential benefits of this initiative.

ICA, the global association for compliance professionals, has seen its paid membership more than double in the space of six months following from the significant expansion of networking events and professional support services. Momentum is strong and membership continues to climb strongly.

Compliance Week, our US governance, risk and compliance events and information business, saw revenue down by 8% (constant currency) largely due to a weaker than expected performance from our annual Compliance Conference in Brussels. We have invested and are continuing to invest in new content and people to reposition the business as a global governance, risk and compliance ('GRC') resource centre and events business collaborating with other parts of Wilmington.

Risk

The Risk part of the division contains our insurance businesses: Axco, ICP and Inese and our Pensions business Pendragon. Overall growth was 3% (flat in constant currency terms) with Axco, the industry leading provider of insurance market intelligence, regulation and compliance information, reporting a 6% (4% constant currency) revenue growth. In August 2016 we successfully opened a new insurance events and training office in Barcelona in response to increasing localised demand for our Insurance offerings.

Overall divisional contribution was flat at GBP5.6m (2015: GBP5.6m) and down GBP0.1m (3%) on a constant currency basis. Margins were down slightly, reflecting, inter alia, the GBP0.3m investment in compliance and the impact on Compliance Week profits which suffered from a revenue shortfall and increased investment costs.

Finance (22% of Group revenue, 16% of Group contribution)

This division includes Wilmington's financial training businesses of Mercia, SWAT and AMT and the financial services networking business of FRA. The Finance division provides expert and technical training, networking and support services to professionals in corporate finance, hedge funds, mutual funds, PE, and capital markets; and to qualified accountants in the UK in both the profession and industry. This division serves primarily tier 1 banks, the international financial services industry, and small to medium sized professional accountancy firms.

 
                  2016    2015       Movement 
                 GBP'm   GBP'm   GBP'm      % 
 Revenue          12.4    11.6     0.8      7 
 Contribution      1.9     2.4   (0.5)   (21) 
 Margin 
  %                 16      21 
 

Divisional revenue grew GBP0.8m (7%) and by 2% on a constant currency basis

As previously reported, AMT, which forms an important part of the division and delivers most of its revenue and contribution in the summer months, had a weak start. This was mainly due to the competition issues previously highlighted but also due to some softening of investment bank training assignments and margins in the Asia Pacific region. The impact of this reduced high margin AMT revenue has, as expected, had a material impact on the division's profits. The US and UK business has stabilised, however, we are closely monitoring our Asia Pacific operations and our local team has been strengthened including the appointment of a Managing Director for the Asia Pac region.

SWAT, acquired on 19 July 2016, contributed GBP2.2m to revenue and GBP0.3m to profits. Integration has gone well and the business is performing well and in line with plan.

Overall divisional contribution was down 21% (GBP0.5m) compared to last year at GBP1.9m (2015: GBP2.4m). Margins were down due to AMT and the impact of lower SWAT margins.

Legal (13% of Group revenue, 7% of Group contribution)

The Legal division provides a range of training, professional support services and information including Continuing Legal Education ("CLE"), expert witness training, databases and magazines to legal professionals. The business, which offers a wide range of services, is currently focusing on two basic offerings: providing education services to lawyers in the profession and industry ('Law for lawyers'); and training services for non-lawyers ('Law for non-lawyers').

 
                  2016    2015      Movement 
                 GBP'm   GBP'm   GBP'm     % 
 Revenue           7.1     7.6   (0.5)   (7) 
 Contribution      0.8     0.6     0.2    24 
 Margin 
  %                 11       8 
 

Divisional revenue reduced by GBP0.5m (7%) and reduced by 9% on a constant currency basis.

The revenue reduction reflects to a large extent the challenging market conditions previously reported surrounding reduced demand for face-to-face training connected to the changes to the Legal CLE rules which came into full effect in October 2016.

The law for lawyers business offers post qualification training aimed at SME law firms (through CLT) as well as legal practice support services (though Ark). As explained we are now refocusing on providing e-learning and face-to-face training to individual lawyers and SME firms whilst at the same time repositioning our course output making it more relevant for our client's changing demands. This renewed focus means we will be exiting some legal markets and disposing of the Ark business. Ark revenues in 2015/16 were GBP3.1m.

Law for non-lawyers, which accounts for around 50% of the division, saw a small reduction in revenue compared to a very strong 2015 comparator period.

Despite the ongoing challenging market conditions, the division managed to increase its contribution by GBP0.2m to GBP0.8m (2015: GBP0.6m) benefiting from its reorganisation last year. Margins in the Legal division increased from 8% in 2015 to 11% in the same 2016 period.

Insight (29% of Group revenue, 29% of Group contribution)

The Insight division increasingly provides analysis and clarity to customer-focused organisations, enabling them to better understand and connect with their markets. This division includes our UK healthcare information businesses, our French language medical news agency, the healthcare networking events of FRA and our data suppression and charity information businesses.

 
                  2016    2015     Movement 
                 GBP'm   GBP'm   GBP'm    % 
 Revenue          15.8    12.5     3.2   26 
 Contribution      3.4     2.8     0.6   22 
 Margin 
  %                 22      22 
 

Divisional revenue grew GBP3.2m (26%) and by 19% on a constant currency basis. Non-healthcare revenue was GBP3.6m (2015: GBP3.7m).

Wilmington Healthcare business, which following the HSJ acquisition will represent over 80% of the division by revenue on a pro forma basis, had a good overall start to the year with organic revenue from the UK businesses up 15%. The drivers of organic growth continue to be higher margin assignment led projects involving data analytics and expert market knowledge led by NHiS.

Overall organic growth for the division was 3% due to a weaker December quarter performance by FRA and underlying albeit low single digit downward revenue trends from the mature non-Healthcare businesses. Healthcare acquisitions contributed GBP1.7m to revenue growth.

Benefiting from a contribution of GBP0.6m from acquisitions, overall contribution increased by 22% (GBP0.6m) to GBP3.4m (2015: GBP2.8m). Contribution growth was 19% in constant currency terms.

Currency impact

All of our divisions are to varying degrees affected by translation impacts from foreign currency exchange rate movements. Risk & Compliance revenues are around 25% US dollars and Wilmington in the year to 30 June 2016 generated around 20% of its revenue in US $ and 10% in Euros. Prior to Brexit the Group entered into foreign currency contracts to sell $10m at an average rate of $1.46 and EUR3.5m at an average rate of EUR1.26 which was the expected net currency earnings for 2016/17.

Group Overheads

Group overheads, which include plc Board costs, head office salaries, as well as unallocated central overheads, were flat at GBP1.7m (2015: GBP1.7m).

Financial Review

 
                    2016    2015     Movement 
                   GBP'm   GBP'm   GBP'm    % 
 Revenue            54.8    49.4     5.4   11 
 Adjusted EBITA     10.0     9.7     0.3    3 
 Adjusted EBITA 
  %                 18.3    19.7 
 

Adjusted Results

Reference is occasionally made in this financial review to Adjusted Results. Adjusted Results in the opinion of the Directors provide a more comparable indication of the Group's underlying financial performance and exclude Adjusting Items set out in note 7.

Revenue

Revenue for the six months to 31 December 2016 increased by GBP5.4m to GBP54.8m (2015: GBP49.4m). Excluding the impact of acquisitions, foreign exchange and disposals, organic revenue was down 2%.

Net Operating Expenses

Net operating expenses, excluding adjusting items, were GBP44.8m (2014: GBP39.6m) up 13%.

Amortisation of Intangible Assets

Amortisation of intangible fixed assets (excluding computer software) at GBP2.8m (2015: GBP3.0m) reflecting six months of amortisation of intangible fixed assets arising on the acquisitions of Wellards and Evantage acquired in 2015/16 and six months' amortisation arising on the acquisitions of SWAT acquired in July 2016 offset by reductions from acquisitions now fully amortised.

Adjusting Items - included in Operating Expenses

Adjusting items of GBP0.9m (2015: GBP0.9m) includes GBP0.3m in respect of acquisitions, GBP0.2m in respect of an aborted property disposal and GBP0.4m of project Sixth Gear costs including the back office relocation started in May 2016.

Adjusting Items - included in Net Finance Costs

The 2015 comparator figure of GBP0.2m relates to the write-off of old capitalised loan arrangement fees and associated legal and professional costs attached to the extension of the loan facility on 1 July 2015 at more favourable rates.

Net Finance Costs

Net finance costs, which consist of interest payable and bank charges, were up GBP0.1m from GBP0.8m (excluding adjusting items) to GBP0.9m reflecting inter alia increased debt associated with GBP9.3m spent on acquisitions and related costs since 1 January 2016 offset by strong cash generation.

The Group typically sees lower cash conversion in the first half of its financial year although cash conversion in this period was relatively weaker at 79% compared to 85% last year. One main reason for the weaker cash conversion was the disruption associated with the move of back office functions including credit control from London to Basildon. The back office move is complete and functioning normally.

Share Based Payments

The share based payment expense was GBP0.3m (2015: GBP0.3m).

Taxation

Taxation increased by GBP0.2m to GBP1.2m from GBP1.0m. The increase in the tax expense is due to higher profits.

The underlying tax rate which ignores the tax effects of adjusting items was maintained at 22.6% (2015: 23.0%).

Operating Profit

Operating profit increased 7% to GBP5.9m from GBP5.6m. Adjusted EBITA was up 3% at GBP10.0m (2015: GBP9.7m) and Adjusted EBITA margins were down 140bps to 18.3% (2015: 19.7%) reflecting investment in Risk and Compliance and reduced profits from Compliance Week and AMT.

Profit before Taxation

Profit before taxation was up GBP0.5m (11%) at GBP5.0m (2015: GBP4.5m). Adjusted Profit before Tax increased by 2% (GBP0.2m) to GBP9.1m from GBP8.9m

Earnings per Share

Adjusted Basic Earnings per Share increased by 2% to 8.10p (2015: 7.93p). Basic earnings per share increased to 4.43p from 3.94p and diluted earnings per share increased to 4.39p from 3.90p.

Goodwill

Goodwill increased by GBP3.0m to GBP73.7m since 30 June 2016 resulting from the acquisition of SWAT in the year (GBP2.0m), and currency translation impacts.

Intangible Assets

Intangible assets increased since 30 June 2016 by GBP0.8m reflecting GBP3.2m of acquisitions and additions in the year and exchange rate movements of GBP0.9m offset by amortisation of GBP3.3m.

Property, Plant and Equipment

Property, plant and equipment increased since 30 June 2016 by GBP0.3m to GBP4.9m reflecting additions to tangible fixed assets of GBP0.2m from acquisitions and GBP0.6m of normal fixed asset additions offset by depreciation.

Trade and Other Receivables

Trade and other receivables increased by GBP6.2m compared to 31 December 2015 reflecting acquisitions of GBP1.1m and higher trading activity particularly in FRA in advance of the RISE event but also slower payment collection associated with the move of UK back office functions from London to Basildon.

Trade and Other Payables

Trade and other payables, which include deferred income, were up GBP5.1m compared to 31 December 2015 reflecting the increase in trade payables of GBP2.2m (GBP0.9m from acquisitions) and subscriptions and deferred income. Subscriptions and deferred income, which represents revenue received in advance increased by 13% from GBP21.3m in 2015 to GBP24.2m. Underlying growth was 8% (3% constant currency) and acquisitions contributed GBP1.1m to the increase. There was strong growth in deferred income balances for ICA membership (up 47%), Axco (up 12%), FRA (up 15% constant currency) offset by declines in Compliance Week, Finance and the Charities businesses within Insight.

Net Debt

Net debt, which includes cash and cash equivalents, bank loans and bank overdrafts, was GBP40.6m (2015: GBP36.6m), an increase of GBP4.0m. Net debt increased, inter alia, due to the acquisitions of SWAT, Wellards and Evantage for GBP9.3m net of cash offset by good operating cash flow. In support of the acquisition of HSJ the group increased its debt facility to GBP85 million from GBP65 million on 17 January 2017 under the accordion provision of the loan agreement.

Current Tax Liabilities

Current tax liabilities increased by GBP0.1m to GBP0.8m at 31 December 2016 reflecting higher profits across the Group.

Deferred Consideration

The liabilities of GBP0.2m and GBP2.3m relate to the deferred cash payments to the vendors of SWAT of GBP1.1m and to the vendors of Evantage of GBP1.4m.

Dividend

It is the Board's intention to pay a progressive dividend whilst ensuring a cover of at least two times the Group's adjusted earnings per share over the dividend per share in respect of the financial year. An interim dividend of 3.9p per share (December 2015: 3.8p) will be paid on 7 April 2016 to shareholders on the register as at 10 March 2017, with an associated ex-dividend date of 9 March 2017.

 
 Pedro Ros                  Anthony M Foye 
  Chief Executive Officer    Chief Financial Officer 
 

Officers

 
 Directors: 
 Mark Asplin 
  Non-Executive Chairman 
 Pedro Ros 
  Chief Executive Officer 
 Anthony Foye 
  Chief Financial Officer 
 
 Derek Carter 
  Senior Independent 
  Non-Executive Director 
 
  Nathalie Schwarz 
  Non-Executive Director 
 Paul Dollman 
  Non-Executive Director 
 
 Company Secretary: 
  Daniel Barton 
 
 
 
   Registered Office: 
 
   6-14 Underwood Street 
   London 
   N1 7JQ 
   Tel: +44 (0)20 7490 0049 
 
   Company Registration Number: 
   3015847 
 

Consolidated Income Statement

 
                                   Six months ended 31 December 2016               Six months ended 31 December 2015        Year ended 30 June 2016 
                                                         (unaudited)                                     (unaudited)                      (audited) 
                    Notes   Adjusted   Adjusting   Statutory results        Adjusted   Adjusting   Statutory results              Statutory results 
                             results       items                             results       items 
                                        (note 7)                                        (note 7) 
                             GBP'000     GBP'000             GBP'000         GBP'000     GBP'000             GBP'000                        GBP'000 
                           ---------  ----------  ------------------  ---  ---------  ----------  ------------------  ---  ------------------------ 
 Continuing 
 operations 
 Revenue              6       54,813           -              54,813          49,363           -              49,363                        105,724 
 Net operating 
  expenses                  (44,790)       (947)            (45,737)        (39,630)       (873)            (40,503)                       (85,471) 
 Amortisation                      -     (2,820)             (2,820)               -     (3,011)             (3,011)                        (5,545) 
 Share based 
  payments                         -       (310)               (310)               -       (278)               (278)                          (563) 
 Impairment of 
  goodwill                         -           -                   -               -           -                   -                       (15,659) 
                           ---------  ----------  ------------------       ---------  ----------  ------------------       ------------------------ 
 Operating 
  profit/(loss)               10,023     (4,077)               5,946           9,733     (4,162)               5,571                        (1,514) 
 Net finance 
  costs               8        (915)           -               (915)           (799)       (225)             (1,024)                        (1,920) 
                           ---------  ----------  ------------------       ---------  ----------  ------------------       ------------------------ 
 Profit/(loss) 
  before tax                   9,108     (4,077)               5,031           8,934     (4,387)               4,547                        (3,434) 
 Taxation             9                                      (1,160)                                         (1,046)                        (2,841) 
                                                  ------------------                              ------------------       ------------------------ 
 Profit/(loss) 
  for the period                                               3,871                                           3,501                        (6,275) 
                                                  ------------------                              ------------------       ------------------------ 
 Attributable to: 
 Owners of the 
  parent                                                       3,853                                           3,418                        (6,418) 
 Non-controlling 
  interests                                                       18                                              83                            143 
                                                  ------------------                              ------------------       ------------------------ 
                                                               3,871                                           3,501                        (6,275) 
                                                  ------------------                              ------------------       ------------------------ 
 Earnings per 
 share 
 attributable to 
 the owners of 
 the parent: 
                                                  ------------------                              ------------------       ------------------------ 
 Basic (p)           11                                         4.43                                            3.94                         (7.39) 
 Diluted (p)         11                                         4.39                                            3.90                         (7.39) 
                                                  ------------------                              ------------------       ------------------------ 
 Adjusted 
 earnings per 
 share 
 attributable to 
 the owners of 
 the parent: 
                           ---------                                       ---------                                       ------------------------ 
 Basic (p)           11         8.10                                            7.93                                                          18.69 
 Diluted (p)         11         8.04                                            7.85                                                          18.53 
                           ---------                                       ---------                                       ------------------------ 
 

The notes on pages 17 to 30 are an integral part of these consolidated financial statements.

Consolidated Statement of Comprehensive Income

 
                                                                                                                Year 
                                                                                                               ended 
                                                                    Six months ended    Six months ended     30 June 
                                                                    31 December 2016    31 December 2015        2016 
                                                                         (unaudited)         (unaudited)   (audited) 
                                                                             GBP'000             GBP'000     GBP'000 
 Profit/(loss) for the period                                                  3,871               3,501     (6,275) 
 
 Other comprehensive income/(expense): 
 Items that may be reclassified subsequently to the Income 
 Statement 
                                                                  ------------------  ------------------  ---------- 
 
 Fair value movements on interest rate swap (net of tax)                         336               (118)       (622) 
 Currency translation differences                                              1,703                 853       2,966 
 Net investment hedges (net of tax)                                          (1,034)               (622)     (1,474) 
 
   Other comprehensive income for the period, net of tax                       1,005                 113         870 
                                                                  ------------------  ------------------  ---------- 
 
 Total comprehensive income/(expense) for the period                           4,876               3,614     (5,405) 
                                                                  ------------------  ------------------  ---------- 
 
 Total comprehensive income/(expense) for the period 
 attributable to: 
 Owners of the parent                                                          4,858               3,531     (5,548) 
 Non-controlling interests                                                        18                  83         143 
                                                                  ------------------  ------------------  ---------- 
 
                                                                               4,876               3,614     (5,405) 
                                                                  ------------------  ------------------  ---------- 
 

Items in the statement above are disclosed net of tax. The notes on pages 17 to 30 are an integral part of these financial statements.

Consolidated Balance Sheet

 
                                                  31 December   31 December     30 June 
                                                         2016          2015        2016 
                                                  (unaudited)   (unaudited)   (audited) 
                                          Notes       GBP'000       GBP'000     GBP'000 
 Non-current assets 
 Goodwill                                  13          73,737        82,467      70,763 
 Intangible assets                         13          29,879        25,680      29,038 
 Property, plant and equipment             13           4,899         4,682       4,628 
 Deferred tax assets                                      703           459         942 
                                                 ------------  ------------  ---------- 
                                                      109,218       113,288     105,371 
                                                 ------------  ------------  ---------- 
 Current assets 
 Trade and other receivables               14          29,881        23,632      26,121 
 Cash and cash equivalents                             17,233        11,928      14,642 
                                                 ------------  ------------  ---------- 
                                                       47,114        35,560      40,763 
                                                 ------------  ------------  ---------- 
 Total assets                                         156,332       148,848     146,134 
                                                 ------------  ------------  ---------- 
 
 Current liabilities 
 Trade and other payables                  15        (44,914)      (39,857)    (43,896) 
 Current tax liabilities                                (787)         (662)     (1,553) 
 Deferred consideration - cash settled                  (177)         (844)     (1,272) 
 Derivative financial instruments                     (1,474)         (404)     (1,013) 
 Borrowings                                16         (1,237)       (2,151)     (2,204) 
                                                     (48,589)      (43,918)    (49,938) 
 
 Non-current liabilities 
 Borrowings                                16        (56,220)      (45,882)    (46,697) 
 Deferred consideration - cash settled                (2,252)             -     (1,370) 
 Derivative financial instruments                       (769)         (264)     (1,037) 
 Deferred tax liabilities                             (4,154)       (3,295)     (3,989) 
 Provision for future purchase of 
  non-controlling interests                             (100)         (100)       (100) 
                                                 ------------  ------------  ---------- 
                                                     (63,495)      (49,541)    (53,193) 
                                                 ------------  ------------  ---------- 
 Total liabilities                                  (112,084)      (93,459)   (103,131) 
                                                 ------------  ------------  ---------- 
 Net assets                                            44,248        55,389      43,003 
                                                 ------------  ------------  ---------- 
 
 Equity 
 Share capital                             17           4,362         4,349       4,349 
 Share premium                             17          45,225        45,225      45,225 
 Treasury shares                           17            (96)          (96)        (96) 
 Share based payments reserve                             683           649         886 
 Translation reserve                                    4,305           489       2,602 
 Retained earnings                                   (10,297)         4,680    (10,116) 
                                                 ------------  ------------  ---------- 
 Equity attributable to owners of 
  the parent                                           44,182        55,296      42,850 
 Non-controlling interests                                 66            93         153 
                                                 ------------  ------------  ---------- 
 Total equity                                          44,248        55,389      43,003 
                                                 ------------  ------------  ---------- 
 

The notes on pages 17 to 30 are an integral part of these consolidated financial statements.

Consolidated Statement of Changes in Equity

 
                     Equity attributable to shareholders 
                      of the parent 
 
                        Share 
                     capital, 
                        share 
                      premium 
                          and 
                     treasury       Share 
                       shares       based                   Accumulated(losses)/                     Non- 
                        (note    payments    Translation                retained              controlling      Total 
                          17)     reserve        reserve                earnings      Total     interests     equity 
                      GBP'000     GBP'000        GBP'000                 GBP'000    GBP'000       GBP'000    GBP'000 
 
 At 30 June 2015 
  (audited)            49,454       1,052          (364)                   4,780     54,922           277     55,199 
 Profit for the 
  period                    -           -              -                   3,418      3,418            83      3,501 
 Other 
  comprehensive 
  income for the 
  period                    -           -            853                   (740)        113             -        113 
                       49,454       1,052            489                   7,458     58,453           360     58,813 
 Dividends                  -           -              -                 (3,478)    (3,478)         (141)    (3,619) 
 Issue of share 
  capital                  24       (636)              -                     612          -             -          - 
 Share based 
  payments                  -         233              -                       -        233             -        233 
 Tax on share 
  based payments            -           -              -                      88         88             -         88 
 Movement in 
  non-controlling 
  interests                 -           -              -                       -          -         (126)      (126) 
 At 31 December 
  2015 
  (unaudited)          49,478         649            489                   4,680     55,296            93     55,389 
 (Loss)/profit 
  for the 
  period                    -           -              -                 (9,836)    (9,836)            60    (9,776) 
 Other 
  comprehensive 
  income for the 
  period                    -           -          2,113                 (1,356)        757             -        757 
                       49,478         649          2,602                 (6,512)     46,217           153     46,370 
 Dividends                  -           -              -                 (3,304)    (3,304)             -    (3,304) 
 Share based 
  payments                  -         237              -                       -        237             -        237 
 Tax on share 
  based payments            -           -              -                    (92)       (92)             -       (92) 
 Movements in 
  non-controlling 
  interests                 -           -              -                   (208)      (208)             -      (208) 
 At 30 June 2016 
  (audited)            49,478         886          2,602                (10,116)     42,850           153     43,003 
 Profit for the 
  period                    -           -              -                   3,853      3,853            18      3,871 
 Other 
  comprehensive 
  income for the 
  period                    -           -          1,703                   (698)      1,005             -      1,005 
                       49,478         886          4,305                 (6,961)     47,708           171     47,879 
 Dividends                  -           -              -                 (3,749)    (3,749)         (105)    (3,854) 
 Issue of share 
  capital                  13       (466)              -                     453          -             -          - 
 Share based 
  payments                  -         263              -                       -        263             -        263 
 Tax on share 
  based payments            -           -              -                    (40)       (40)             -       (40) 
 At 31 December 
  2016 
  (unaudited)          49,491         683          4,305                (10,297)     44,182            66     44,248 
                   ----------  ----------  -------------  ----------------------  ---------  ------------  --------- 
 

The notes on pages 17 to 30 are an integral part of these consolidated financial statements.

Consolidated Cash Flow Statement

 
                                              Six months ended 31          Six months ended 31     Year ended 30 
                                                    December 2016                December 2015         June 2016 
                                                      (unaudited)                  (unaudited)         (audited) 
                               Notes                      GBP'000                      GBP'000           GBP'000 
 
 Cash flows from operating 
 activities 
 Cash generated from 
  operations before 
  adjusting items               18                          7,962                        8,249            23,872 
 Cash flows for adjusting 
  items - operating 
  activities                                              (1,073)                            -             (186) 
 Cash flows for adjusting 
  items - share based 
  payments                                                   (87)                        (180)             (180) 
                                      ---------------------------  ---------------------------  ---------------- 
 Cash generated from 
  operations                                                6,802                        8,069            23,506 
 Interest paid                                              (880)                        (658)           (1,502) 
 Tax paid                                                 (1,996)                      (1,431)           (3,197) 
                                      ---------------------------  ---------------------------  ---------------- 
 Net cash generated from 
  operating activities                                      3,926                        5,980            18,807 
                                      ---------------------------  ---------------------------  ---------------- 
 
 Cash flows from investing 
 activities 
 Purchase of businesses net 
  of cash acquired                                        (2,122)                      (8,469)          (13,912) 
 Proceeds from disposal 
  group held for sale                                           -                          343               343 
 Deferred consideration paid                              (1,295)                            -             (330) 
 Purchase of non-controlling 
  interests                                                     -                        (333)             (334) 
 Cash flows for adjusting 
  items - investing 
  activities                                                (116)                        (198)             (540) 
 Purchase of property, plant 
  and equipment                                             (579)                        (290)             (641) 
 Proceeds from disposal of 
  property, plant and 
  equipment                                                    21                           11                11 
 Purchase of intangible 
  assets                                                    (888)                        (472)             (870) 
                                      ---------------------------  ---------------------------  ---------------- 
 Net cash used in investing 
  activities                                              (4,979)                      (9,408)          (16,273) 
                                      ---------------------------  ---------------------------  ---------------- 
 
 Cash flows from financing 
 activities 
 Dividends paid to owners of 
  the parent                                              (3,749)                      (3,478)           (6,782) 
 Dividends paid to 
  non-controlling interests                                 (105)                        (141)             (141) 
 Share issuance costs                                         (5)                          (5)               (5) 
 Cash flows for adjusting 
  items - financing 
  activities                                                    -                        (631)             (631) 
 Increase in bank loans                                     8,104                        8,404             7,696 
 Net cash generated from 
  financing activities                                      4,245                        4,149               137 
                                      ---------------------------  ---------------------------  ---------------- 
 
 Net increase in cash and 
  cash equivalents, net of 
  bank overdrafts                                           3,192                          721             2,671 
 Cash and cash equivalents, 
  net of bank overdrafts, at 
  beginning of the period                                  12,438                        8,698             8,698 
 Exchange gains on cash and 
  cash equivalents                                            366                          358             1,069 
                                      ---------------------------  ---------------------------  ---------------- 
 Cash and cash equivalents, 
  net of bank overdrafts at 
  end of the period                                        15,996                        9,777            12,438 
                                      ---------------------------  ---------------------------  ---------------- 
 
 Reconciliation of net debt 
                                      ---------------------------  ---------------------------  -------------- 
 Cash and cash equivalents 
  at beginning of the period                               14,642                        9,194           9,194 
 Bank overdrafts at 
  beginning of the period       16                        (2,204)                        (496)           (496) 
 Bank loans at beginning of 
  the period                    16                       (47,126)                     (37,306)        (37,306) 
                                      ---------------------------  ---------------------------  -------------- 
 Net debt at beginning of 
  the period                                             (34,688)                     (28,608)        (28,608) 
 Net increase in cash and 
  cash equivalents (net of 
  bank overdrafts)                                          3,558                        1,079           3,740 
 Net drawdown in bank loans                               (8,104)                      (8,404)         (7,696) 
 Exchange loss on bank loans                              (1,376)                        (665)         (2,124) 
                                      ---------------------------  ---------------------------  -------------- 
 Cash and cash equivalents 
  at end of the period                                     17,233                       11,928          14,642 
 Bank overdrafts at end of 
  the period                    16                        (1,237)                      (2,151)         (2,204) 
 Bank loans at end of the 
  period                        16                       (56,606)                     (46,375)        (47,126) 
                                      ---------------------------  ---------------------------  -------------- 
 Net debt at end of the 
  period                                                 (40,610)                     (36,598)        (34,688) 
                                      ---------------------------  ---------------------------  -------------- 
 
 

The notes on pages 17 to 30 are an integral part of these consolidated financial statements.

Notes to the Financial Results

General information

The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 6-14 Underwood Street, London, N1 7JQ.

The Company is listed on the main market on the London Stock Exchange. The Company is a provider of information, education and networking to the professional markets.

This condensed consolidated interim financial information ('Interim Information') was approved for issue on

22 February 2017.

The Interim Information is neither reviewed nor audited and does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2016 were approved by the Board of Directors on 13 September 2016. The report of the Auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

   1.   Basis of preparation 

This Interim Information for the six months ended 31 December 2016 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and in accordance with IAS 34 'Interim financial reporting' as adopted by the European Union. The Interim information should be read in conjunction with the Annual Financial Statements for the year ended 30 June 2016 which have been prepared in accordance with IFRSs as adopted by the European Union, and are available on the Group's website: wilmingtonplc.com.

The Group's forecast and projections, taking account of reasonably possible changes in trading performance, show that the Group will be able to operate well within the level of its current banking facilities. The Directors have therefore adopted a going concern basis in preparing the Interim Information.

   2.    Accounting policies 

The accounting policies applied are consistent with those of the Annual Financial Statements for the year ended 30 June 2016, as described in those Annual Financial Statements. The following new standards, amendments and interpretations have been adopted in the current year:

   --      EU Account Directive (SI 2015/980) 

The adoption of this interpretation has not led to any changes to the Group's accounting policies or had any other material impact on the financial position or performance of the Group. Other amendments to IFRSs effective for the year ending 30 June 2016 have no impact on the Group.

The following new standards and amendments to standards have been issued but are not yet effective for the purposes of the Interim Report and have not been early adopted:

   -- FRS 9: Financial Instruments - endorsed by EU 
 
   -- IAS Amendments to IAS 7:  Statement of cash flows on disclosure initiative - not yet EU endorsed 
 
   -- Amendments to IAS 12: Income taxes - not yet EU endorsed 
 
   -- Amendments to IFRS 2: Share based payments - not yet EU endorsed 
 
   -- IFRS 15: Revenue from Contracts with Customers - endorsed by EU 
 
   -- IFRS 16: Leases - not yet EU endorsed 
 
   -- IFRIC 22: Foreign currency transactions and advance consideration - not yet EU endorsed 
 
   -- Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception - not yet EU 
      endorsed 
 
   -- Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint 
      Venture - not yet EU endorsed 
 
   -- Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations - endorsed by EU 
 
   -- Amendments to IAS 1: Disclosure Initiative - endorsed by EU 
 
   -- Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation - endorsed 
      by EU 
 
   -- Amendments to IAS 27: Equity Method in Separate Financial Statements - endorsed by EU 
 
   -- Annual improvements to IFRSs 2012-2014 cycle - endorsed by EU 
   3.     Principal risks and uncertainties 

The principal risks and uncertainties that affect the Group are as stated on pages 25 to 28 of the Strategic Report in the Annual Report and Financial Statements for the year ended 30 June 2016. The main financial risks that affect the Group are:

(a) Interest rate risk

Risk

The Group financing arrangements include external debt that is subject to a variable interest rate. The Group is consequently exposed to cash flow volatility arising from fluctuations in market interest rates applicable to that external finance. In particular, interest is charged on the GBP57m (2015: GBP46m) amount drawn down on the revolving credit facility at a rate of between 1.50 and 2.25 per cent above LIBOR depending upon leverage. Cash flow volatility therefore arises from movements in the LIBOR interest rates.

Group policy

The Group policy is to enter into interest rate swap contracts to maintain the ratio of fixed to variable rate debt at a level that achieves a reasonable cost of debt whilst reducing the exposure to cash flow volatility arising from fluctuations in market interest rates.

Risk management arrangements

The Group's interest rate swap contracts offset part of its variable interest payments and replace them with fixed payments. In particular, the Group has hedged its exposure to the LIBOR part of the interest rate via interest rate swaps, as follows:

   -- A 5 year GBP15.0m interest rate swap commencing on 21 November 2011, whereby the Group receives interest on 
      GBP15m based on the LIBOR rate and pays interest on GBP15m at a fixed rate of 2.68%. This contract expired in the 
      period. 
 
   -- A $7.5m interest rate swap commencing on 13 July 2015 and ending on 1 July 2020, whereby the Group receives 
      interest on $7.5m based on the USD LIBOR rate and pays interest on $7.5m at a fixed rate of 1.79%. 
 
   -- A GBP15.0m interest rate swap commencing on 22 November 2016 and ending on 1 July 2020, whereby the Group 
      receives interest on GBP15m based on LIBOR rate and pays interest on GBP15m at a fixed rate of 2.00%. 

These derivatives have been designated as a cash flow hedge for accounting purposes. The net settlement of interest on the interest rate swap, which comprises a variable rate interest receipt and a fixed rate interest payment, is recorded in net finance costs in the income statement and so is matched against the corresponding variable rate interest payment on the revolving credit facility. The derivatives are remeasured at fair value at each reporting date. This gives rise to a gain or loss, the entire amount of which is recognised in Other Comprehensive Income ('OCI') following the Directors' assessment of hedge effectiveness.

(b) Foreign currency risk

Risk

The currency of the primary economic environment in which the Group operates is Sterling, and this is also the currency in which the Group presents its financial statements. However, the Group has significant Euro and US dollar cash flows arising from international trading and overseas operations. The Group is consequently exposed to cash flow volatility arising from fluctuations in the applicable exchange rates for converting Euros and US dollars to Sterling.

Group policy

The Group policy is to fix the exchange rate in relation to a periodically reassessed set percentage of expected Euro and US dollar net cash inflows arising from international trading, by entering into foreign currency contracts to sell a specified amount of Euros or US dollars on a specified future date at a specified exchange rate. This set percentage is approved by the Board as part of the budgeting process and upon the acquisition of foreign operations.

The Group policy is to finance investment in overseas operations from borrowings in the local currency of the relevant operation, so as to achieve a natural hedge of the foreign currency translation risk. This natural hedge is designated as a net investment hedge for accounting purposes. Debt of $18.2m (2015: $18.2m) has been designated as a net investment hedge relating to the Group's interest in Compliance Week and FRA.

3. Principal risks and uncertainties (continued)

Risk management arrangements

The following forward contracts were entered into in order to provide certainty in Sterling terms of circa 80% of the Group's expected net US dollar and Euro income:

   -- On 13 May 2016, the Group sold EUR1.2m to 24 February 2017 at a rate of 1.2609 
 
   -- On 13 May 2016, the Group sold EUR1.2m to 3 March 2017 at a rate of 1.2606 
 
   -- On 13 May 2016, the Group sold EUR1.1m to 10 March 2017 at a rate of 1.2601 
 
   -- On 20 May 2016, the Group sold $3.5m to 28 April 2017 at a rate of 1.4622 
 
   -- On 20 May 2016, the Group sold $3.5m to 26 May 2017 at a rate of 1.4637 
 
   -- On 20 May 2016, the Group sold $3.0m to 28 June 2017 at a rate of 1.4657 

The above derivatives are remeasured at fair value at each reporting date. This gives rise to a gain or loss, the entire amount of which is recognised in the Income Statement.

(c) Liquidity and capital risk

Risk

The Group has historically expanded its operations both organically and via acquisition, financed partly by retained profits but also via external finance. As well as financing cash outflows, the Group's activities give rise to working capital obligations and other operational cash outflows. The Group is consequently exposed to the risk that it cannot meet its obligations as they fall due, or can only meet them at an uneconomic price.

Group policy

The Group policy is to preserve a strong capital base in order to maintain investor, creditor and market confidence and to safeguard the future development of the business, but also to balance these objectives with the efficient use of capital. The Group has, in previous years, made purchases of its own shares whilst taking into account the availability of credit.

Risk management arrangements

The Group ensures its liquidity is maintained by entering into short, medium and long-term financial instruments to support operational and other funding requirements. The Group determines its liquidity requirements by the use of short and long-term cash forecasts.

The Group has an unsecured committed bank facility of GBP65.0m to 1 July 2020. The facility comprised of a revolving credit facility of GBP60.0m and an overdraft facility across the Group of GBP5.0m. In addition, the extended facility also provides for an accordion option whereby the unsecured committed bank facility may be increased by up to GBP35m to a total commitment of GBP100m if required subject to majority lending bank consent. Interest is charged on the amount drawn down at between 1.50 and 2.25 (the 'Margin') per cent above LIBOR depending upon leverage, and drawdowns are made for periods of up to six months in duration. Interest is charged on the drawn element of the overdraft facility at 1.50% and 2.25% per cent above the Barclays bank base rate depending upon leverage. The Group also pays a fee of 40% of the applicable Margin on the undrawn element of the credit facility and the undrawn overdraft.

On 31 January 2017 Wilmington acquired HSJ the UK's leading health information, insight and networking business for GBP19.0m less a GBP2.0m working capital adjustment. To fund this investment GBP20.0m of the accordion facility was triggered giving a total unsecured bank facility of GBP85.0m.

3. Principal risks and uncertainties (continued)

(d) Credit Risk

Risk

The Group's principal financial assets are receivables and bank balances. The Group is consequently exposed to the risk that its customers or the credit facility providers cannot meet their obligations as they fall due.

Group policy

The Group policy is that the lines of business assess the creditworthiness and financial strength of customers at inception and on an ongoing basis. The Group also reviews the credit rating of the bank.

Risk management arrangements

The Group's credit risk is primarily attributable to its trade receivables. However, the Group has no significant exposure to credit risk because its trading is spread over a large number of customers. The payment terms offered to customers take into account the assessment of their creditworthiness and financial strength, and they are set in accordance with industry standards. The creditworthiness of customers is considered before trading commences. Most of the Group's customers are large and well established institutions that pay on time and in accordance with the Group's standard terms of business.

The amounts presented in the Balance Sheet are net of allowances for bad and doubtful receivables estimated by management based on prior experience and their assessment of the current economic value.

4. Financial instruments and risk management

The methods and assumptions used to estimate the fair values of financial assets and liabilities are as follows:

-- The carrying amount of trade receivables and payables approximates to fair value due to the short maturity of the amounts receivable and payable.

-- The fair value of the Group's borrowings is estimated on the basis of the discounted value of future cash flows using approximate discount rates in effect at the balance sheet date.

-- The fair value of the Group's outstanding interest rate swaps, foreign exchange contracts and put option for non-controlling interest are estimated using discounted cash flow models and market rates of interest and foreign exchange at the balance sheet date.

Financial instruments are measured at fair value via a valuation method. The different levels have been defined as:

-- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

-- Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

-- Level 3: Inputs for the assets or liabilities that are not based on observable market data (that is, unobservable inputs).

The group has recognised a level 2 financial liability of GBP1,474,217 (2015: GBP105,311) for foreign exchange trading derivatives at fair value through income or expense. In addition the group has recognised a level 2 financial liability of GBP769,278 (2015: GBP562,451) for three interest rate swap contracts at fair value through other comprehensive income or expense. The group has no recognised level 1 or level 3 assets or liabilities.

5. Measures of profit

To provide shareholders with a better understanding of the trading performance of the Group, Adjusted EBITA has been calculated as Profit before Tax after adding back:

-- amortisation of intangible assets - publishing rights, titles and benefits;

-- impairment of goodwill;

-- share based payments;

-- adjusting items; and

-- net finance costs.

Adjusted EBITA and Adjusted EBITDA reconcile to profit on continuing activities before tax as follows:

 
                                                     Six months     Six months 
                                                          ended          ended         Year 
                                                    31 December    31 December     ended 30 
                                                           2016           2015    June 2016 
                                                    (unaudited)    (unaudited)    (audited) 
                                                        GBP'000        GBP'000      GBP'000 
                                                  -------------  -------------  ----------- 
 Profit/(loss) before tax                                 5,031          4,547      (3,434) 
 Amortisation of intangible assets - publishing 
  rights, titles and benefits                             2,820          3,011        5,545 
 Impairment of goodwill                                       -              -       15,659 
 Share based payments (including social 
  security costs)                                           310            278          563 
 Adjusting items (included in operating 
  expenses)                                                 947            873        2,352 
 Net finance costs                                          915          1,024        1,920 
                                                  -------------  -------------  ----------- 
 Adjusted operating profit ('Adjusted EBITA')            10,023          9,733       22,605 
 Depreciation of property, plant and equipment              493            447          911 
 Amortisation of intangible assets - computer 
  software                                                  455            512        1,050 
                                                  -------------  -------------  ----------- 
 Adjusted EBITA before depreciation ('Adjusted 
  EBITDA')                                               10,971         10,692       24,566 
                                                  -------------  -------------  ----------- 
 

Adjusted profit before tax reconciles to profit on continuing activities before tax as follows:

 
                                                     Six months     Six months 
                                                          ended          ended         Year 
                                                    31 December    31 December     ended 30 
                                                           2016           2015    June 2016 
                                                    (unaudited)    (unaudited)    (audited) 
                                                        GBP'000        GBP'000      GBP'000 
                                                  -------------  -------------  ----------- 
 Profit/(loss) before tax                                 5,031          4,547      (3,434) 
 Amortisation of intangible assets - publishing 
  rights, titles and benefits                             2,820          3,011        5,545 
 Impairment of goodwill                                       -              -       15,659 
 Share based payments (including social 
  security costs)                                           310            278          563 
 Adjusting items (included in operating 
  expenses)                                                 947            873        2,352 
 Adjusting items (included in net finance 
  costs)                                                      -            225          225 
                                                  -------------  -------------  ----------- 
 Adjusted profit before tax                               9,108          8,934       20,910 
                                                  -------------  -------------  ----------- 
 

6. Segmental information

In accordance with IFRS 8 the Group's operating segments are based on the operating results reviewed by the Board, which represents the chief operating decision maker. The Group reports its results in four operating segments as this accurately reflects the way the Group is managed.

The Group's organisational structure reflects the main communities to which it provides information, education and networking. The four divisions (Risk & Compliance, Finance, Legal; and Insight) are the Group's segments and generate all of the Group's revenue.

The Board considers the business from both a geographic and product perspective. Geographically, management considers the performance of the Group between the UK, North America, the rest of Europe and the rest of the World.

(a) Business segments

 
                                                                                                                                   Year ended 30 
                                                                                                                                       June 2016 
                           Six months ended 31 December 2016 (unaudited)    Six months ended 31 December 2015 (unaudited)              (audited) 
                         -----------------------------------------------  -----------------------------------------------  --------------------- 
                             Revenue                     Contribution(8)       Revenue                       Contribution  Revenue  Contribution 
                             GBP'000                             GBP'000       GBP'000                            GBP'000  GBP'000       GBP'000 
                         -----------  ----------------------------------  ------------  ---------------------------------  -------  ------------ 
Risk & Compliance             19,535                               5,630        17,593                              5,595   38,802        12,678 
Finance                       12,388                               1,929        11,595                              2,435   21,219         4,473 
Legal                          7,118                                 797         7,638                                643   15,524         1,686 
Insight                       15,772                               3,413        12,537                              2,790   30,179         7,316 
                         -----------  ----------------------------------  ------------  ---------------------------------  -------  ------------ 
                              54,813                              11,769        49,363                             11,463  105,724        26,153 
Unallocated central 
 overheads                         -                             (1,746)             -                            (1,730)        -       (3,548) 
                              54,813                              10,023        49,363                              9,733  105,724        22,605 
Amortisation of 
 intangible assets - 
 publishing rights, 
 titles and benefits                                             (2,820)                                          (3,011)                (5,545) 
Impairment of goodwill                                                 -                                                -               (15,659) 
Share based payments                                               (310)                                            (278)                  (563) 
Adjusting items 
 (included in operating 
 expenses)                                                         (947)                                            (873)                (2,352) 
Net finance costs                                                  (915)                                          (1,024)                (1,920) 
Profit/(loss) before 
 tax                                                               5,031                                            4,547                (3,434) 
Taxation                                                         (1,160)                                          (1,046)                (2,841) 
                                      ----------------------------------                ---------------------------------           ------------ 
Profit/(loss) for the 
 financial year                                                    3,871                                            3,501                (6,275) 
                                      ----------------------------------                ---------------------------------           ------------ 
 

There are no intra-segmental revenues which are material for disclosure. Unallocated central overheads represent head office costs that are not specifically allocated to segments. Total assets and liabilities for each reportable segment are not presented, as such information is not provided to the Board.

(8) Contribution is defined as Adjusted EBITA excluding unallocated central overheads.

6. Segmental information (continued)

(b) Segmental information by geography

The UK is the Group's country of domicile and the Group generates the majority of its revenue from external customers in the UK. The geographical analysis of revenue is on the basis of the country of origin in which the customer is invoiced:

 
                               Six months    Six months        Year 
                                 ended 31      ended 31       ended 
                                 December      December     30 June 
                                     2016          2015        2016 
                              (unaudited)   (unaudited)   (audited) 
                                  GBP'000       GBP'000     GBP'000 
                             ------------  ------------  ---------- 
 UK                                31,275        28,714      61,321 
 Europe (excluding the UK)          9,310         7,207      15,859 
 North America                      9,191         8,846      19,030 
 Rest of the World                  5,037         4,596       9,514 
                             ------------  ------------  ---------- 
 Total revenue                     54,813        49,363     105,724 
                             ------------  ------------  ---------- 
 

7. Adjusting items

The following items have been charged/(credited) to the income statement during the year but are of an unusual nature, size or incidence and so are shown separately:

 
                                                                       Six months ended                     Year ended 
                                                                            31 December   Six months ended     30 June 
                                                                                   2016        31 December        2016 
                                                                            (unaudited)   2015 (unaudited)   (audited) 
                                                                                GBP'000            GBP'000     GBP'000 
                                                                       ----------------  -----------------  ---------- 
Build-up of the liability for deferred consideration contingent on 
 continued employment                                                                 -                531       1,019 
Increase in the liability for deferred consideration not contingent 
 on continued employment                                                              -                 20          63 
Costs relating to successful and aborted acquisitions and integration               328                172         585 
Aborted leasehold property sale                                                     217                  -           - 
Legal claim costs (net of settlement received)                                        -                150          73 
Restructuring and rationalisation costs                                             402                  -         612 
Other adjusting items (included in operating expenses)                              947                873       2,352 
Costs relating to the extension of the loan facility                                  -                225         225 
Amortisation of intangible assets - publishing rights, titles and 
 benefits                                                                         2,820              3,011       5,545 
Share based payments                                                                310                278         563 
Impairment of goodwill                                                                -                  -      15,659 
                                                                       ----------------  -----------------  ---------- 
Total adjusting items (classified in profit before tax)                           4,077              4,387      24,344 
                                                                       ----------------  -----------------  ---------- 
 

Successful and aborted acquisitions relate to the acquisition and integration of SWAT.

During 2016 we actively sought and had received a number of cash offers for our Underwood Street long leasehold offices of up to GBP10m; however for various reasons including Brexit none of these offers were concluded. Aborted leasehold property costs comprise of professional fees related to this and costs for a potential new London location.

Restructuring and rationalisation costs comprise GBP267,000 of redundancy and property costs following the Group's decision to relocate part of the finance and HR function from its head offices in central London to our existing freehold premises in Basildon, Essex. It also includes GBP135,000 of costs relating to the implementation of project Sixth Gear, the reorganisation of our business into three segments, see the Interim Results page 2 for further details.

8. Net finance costs

 
                                                   Six months    Six months        Year 
                                                     ended 31      ended 31    ended 30 
                                                     December      December        June 
                                                         2016          2015        2016 
                                                  (unaudited)   (unaudited)   (audited) 
                                                      GBP'000       GBP'000     GBP'000 
 Finance costs comprise: 
 Interest payable on bank loans and overdrafts          (849)         (733)     (1,564) 
 Amortisation of capitalised loan arrangement 
  fees                                                   (66)          (66)       (131) 
 Adjusting item - extension of loan facility 
  costs                                                     -         (225)       (225) 
                                                 ------------  ------------  ---------- 
                                                        (915)       (1,024)     (1,920) 
                                                 ------------  ------------  ---------- 
 

9. Taxation

 
                                                      Six months     Six months        Year 
                                                           ended          ended       ended 
                                                     31 December    31 December     30 June 
                                                            2016           2015        2016 
                                                     (unaudited)    (unaudited)   (audited) 
                                                         GBP'000        GBP'000     GBP'000 
 
 Current tax: 
 Current tax on profits for the period                     1,463          1,465       3,792 
 Adjustments in respect of previous years                      -             83         198 
                                                   -------------  -------------  ---------- 
 
 Total current tax                                         1,463          1,548       3,990 
 
   Deferred tax: 
   Deferred tax credit                                     (312)          (432)       (971) 
 Effect on deferred tax of change in corporation 
  tax rate                                                     9           (70)       (178) 
                                                   -------------  -------------  ---------- 
 
 Total deferred tax                                        (303)          (502)     (1,149) 
                                                   -------------  -------------  ---------- 
 
 Taxation                                                  1,160          1,046       2,841 
                                                   -------------  -------------  ---------- 
 

10. Dividends

Distributions to owners of the parent in the period:

 
                                         Six           Six                        Six           Six 
                                      months        months                     months        months   Year months 
                                    ended 31      ended 31   Year ended      ended 31      ended 31         ended 
                                    December      December      30 June      December      December       30 June 
                                        2016          2015         2016          2016          2015          2016 
                                   pence per     pence per        pence 
                                       share         share    per share       GBP'000       GBP'000       GBP'000 
                                 (unaudited)   (unaudited)    (audited)   (unaudited)   (unaudited)     (audited) 
 Final dividends recognised 
  as distributions in 
  the year                               4.3           4.0          4.0         3,749         3,478         3,478 
 Interim dividends recognised 
  as distributions in 
  the year                                 -             -          3.8             -             -         3,304 
                                ------------  ------------  -----------  ------------  ------------  ------------ 
 Total dividends paid 
  in the period                                                                 3,749         3,478         6,782 
                                ------------  ------------  -----------  ------------  ------------  ------------ 
 
 Interim/final dividend 
  proposed                               3.9           3.8          4.3         3,401         3,304         3,738 
                                ------------  ------------  -----------  ------------  ------------  ------------ 
 

11. Earnings per Share

Adjusted earnings per share has been calculated using adjusted earnings calculated as profit/(loss) after taxation and non-controlling interests but before:

   -- amortisation of intangible assets - publishing rights, titles and benefits; 
 
   -- impairment of goodwill; 
 
   -- share based payments; 
 
   -- adjusting items included in operating expenses; and 
 
   -- adjusting items included in net finance costs. 

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

 
                                                  Six months    Six months 
                                                    ended 31      ended 31   Year ended 
                                                    December      December      30 June 
                                                        2016          2015         2016 
                                                 (unaudited)   (unaudited)    (audited) 
                                                     GBP'000       GBP'000      GBP'000 
 
 Earnings/(loss) from continuing operations 
  for the purpose of basic earnings per 
  share                                                3,853         3,418      (6,418) 
 
 Add/(remove): 
 Amortisation of intangible assets - 
  publishing rights, titles and benefits 
  (net of non-controlling interests)                   2,820         3,011        5,545 
 Impairment of goodwill                                    -             -       15,659 
 Adjusting items (included in operating 
  expenses)                                              947           873        2,352 
 Adjusting items (included in net finance 
  costs)                                                   -           225          225 
 Share based payments                                    310           278          563 
 Tax effect of adjustments above                       (881)         (926)      (1,691) 
 Adjusted earnings for the purposes 
  of adjusted earnings per share                       7,049         6,879       16,235 
                                                ------------  ------------  ----------- 
 
                                                      Number        Number       Number 
 Weighted average number of ordinary 
  shares for the purpose of basic and 
  adjusted earnings per share                     87,062,219    86,706,740   86,846,236 
 
 Effect of dilutive potential ordinary 
  shares: 
 Future exercise of share awards and 
  options                                            610,495       906,717      772,980 
 Weighted average number of ordinary 
  shares for the purposes of diluted 
  earnings per share                              87,672,714    87,613,457   87,619,216 
                                                ------------  ------------  ----------- 
 
 Basic earnings per share                              4.43p         3.94p      (7.39p) 
 Diluted earnings per share                            4.39p         3.90p      (7.39p) 
 Adjusted basic earnings per share ('Adjusted 
  Earnings Per Share')                                 8.10p         7.93p       18.69p 
 Adjusted diluted Earnings per Share                   8.04p         7.85p       18.53p 
                                                ------------  ------------  ----------- 
 

12. Acquisitions and disposals

Acquisition - SWAT Group Limited - July 2016

On 19 July 2016 Mercia Group Limited acquired the entire issued share capital of SWAT Group Limited ('SWAT'), a provider of training and technical compliance support to accountancy firms in London and the South West of England.

SWAT was acquired for initial consideration of GBP2,870,000, of which GBP500,000 was withheld in relation to the Net Asset adjustment. Subsequently, this initial consideration was reduced by GBP387,538 in relation to the final Net Asset adjustment.

Deferred consideration of up to GBP3,000,000 is payable contingent on SWAT's future performance for the years ended 30 June 2017 and 2018 and will be paid in cash in one instalment. Management has estimated the expected value of these future payments to be GBP1,082,000 which has been recognised in the total consideration. Any future movements of this contingent consideration will be charged to the income statement as an adjusting item.

Acquisition related costs of GBP278,000 have been expensed as an adjusting item in the income statement (see note 7).

Details of the fair value of the purchase consideration, the net assets acquired and goodwill for the acquisition are as follows:

 
                                          GBP'000 
 Purchase consideration: 
 Initial consideration                      2,870 
 Net asset adjustment                       (388) 
 Deferred consideration - cash settled      1,082 
 Total consideration                        3,564 
 

The provisional fair values of assets and liabilities recognised as a result of this acquisition are as follows:

 
                                                    GBP'000 
 Intangible assets - Customer relationships           2,337 
 Total intangible assets (see note 13)                2,337 
 Property, plant & equipment                            196 
 Trade and other receivables (net of allowances)        365 
 Cash and cash equivalents                              360 
 Trade and other payables                             (598) 
 Deferred revenue                                     (579) 
 Current tax liabilities                              (137) 
 Deferred tax liabilities                             (444) 
                                                   -------- 
 Net identifiable assets acquired                     1,500 
 Goodwill (see note 13)                               2,064 
                                                   -------- 
 Net assets acquired                                  3,564 
 

The estimated useful economic life of the intangibles is as follows:

 
 Intangible assets - Customer Relationships   10 years 
 

The acquired business contributed revenues of GBP2,242,659 and contribution of GBP309,599 to the Group for the period from the date of acquisition to 31 December 2016. Had SWAT been consolidated from 1 June 2016 the group consolidated Income Statement would include pro forma revenue of GBP2,463,660 and contribution of GBP309,899.

13. Goodwill, Intangible assets and Property, plant and equipment

 
                                                          Goodwill   Intangible assets   Property, plant and equipment 
                                                           GBP'000             GBP'000                         GBP'000 
 
 Closing net book amount as at 30 June 2015 (audited)       77,063              23,636                           4,841 
 Acquisitions                                                4,935               4,718                               - 
 Additions                                                       -                 472                             290 
 Disposals                                                       -                   -                             (7) 
 Exchange translation differences                              469                 377                               5 
 Depreciation of property, plant and equipment                   -                   -                           (447) 
 Amortisation of publishing rights, titles and benefits          -             (3,011)                               - 
 Amortisation of computer software                               -               (512)                               - 
 Closing net book amount as at 31 December 2015 
  (unaudited)                                               82,467              25,680                           4,682 
 Additions                                                   3,023                 398                             351 
 Acquisitions                                                    -               5,088                              42 
 Disposals                                                       -                   -                             (9) 
 Exchange translation differences                              932                 944                              26 
 Impairment                                               (15,659) 
 Depreciation of property, plant and equipment                   -                   -                           (464) 
 Amortisation of publishing rights, titles and benefits          -             (2,534)                               - 
 Amortisation of computer software                               -               (538)                               - 
 Closing net book amount as at 30 June 2016 (audited)       70,763              29,038                           4,628 
 Acquisitions (provisional)                                  2,064               2,350                             183 
 Additions                                                       -                 888                             579 
 Disposals                                                       -                   -                            (13) 
 Exchange translation differences                              910                 878                              15 
 Depreciation of property, plant and equipment                   -                   -                           (493) 
 Amortisation of publishing rights, titles and benefits          -             (2,820)                               - 
 Amortisation of computer software                               -               (455)                               - 
                                                         ---------  ------------------  ------------------------------ 
 Closing net book amount as at 31 December 2016 
  (unaudited)                                               73,737              29,879                           4,899 
                                                         ---------  ------------------  ------------------------------ 
 

Acquisitions (provisional) in goodwill and intangibles relate to the acquisition of SWAT (see note 12).

14. Trade and other receivables

 
                                                                            30 June 
                                                           31 December 
                                                                  2015         2016 
                                                           (unaudited)    (audited) 
                                            31 December 
                                       2016 (unaudited) 
                                                GBP'000        GBP'000      GBP'000 
 
 Trade receivables                               25,371         20,151       21,993 
 Prepayments and other receivables                4,510          3,481        4,128 
                                     ------------------  -------------  ----------- 
                                                 29,881         23,632       26,121 
                                     ------------------  -------------  ----------- 
 

15. Trade and other payables

 
                                                                             30 June 
                                                            31 December 
                                                                   2015         2016 
                                                            (unaudited)    (audited) 
                                             31 December 
                                        2016 (unaudited) 
                                                 GBP'000        GBP'000      GBP'000 
 
 Trade and other payables                         20,748         18,560       21,591 
 Subscriptions and deferred revenue               24,166         21,297       22,305 
                                      ------------------  -------------  ----------- 
                                                  44,914         39,857       43,896 
                                      ------------------  -------------  ----------- 
 

16. Borrowings

 
                                      31 December 2016   31 December 2015   30 June 2016 
                                               GBP'000            GBP'000        GBP'000 
                                           (unaudited)        (unaudited)      (audited) 
 Current liability 
 Bank overdrafts                                 1,237              2,151          2,204 
                                                 1,237              2,151          2,204 
                                     -----------------  -----------------  ------------- 
 
   Non-current liability 
   Bank loans                                   56,606             46,375         47,126 
 Capitalised loan arrangement fees               (386)              (493)          (429) 
                                     -----------------  -----------------  ------------- 
 Bank loans net of facility fees                56,220             45,882         46,697 
                                     -----------------  -----------------  ------------- 
 

On 31 January 2017 Wilmington acquired HSJ the UK's leading health information, insight and networking business for GBP19.0m less a GBP2.0m working capital adjustment. To fund this investment GBP20.0m of the accordion facility was triggered giving a total unsecured bank facility of GBP85.0m.

17. Share capital

 
                             Number of ordinary 
                                         shares   Ordinary shares   Share premium account   Treasury shares      Total 
                                     of 5p each           GBP'000                 GBP'000           GBP'000    GBP'000 
 
 At 1 July 2015 
  (audited)                          86,507,461             4,325                  45,225              (96)     49,454 
 Shares issued                          478,270                24                       -                 -         24 
 At 31 December 2015 
  (unaudited) and 30 
  June 2016 (audited)                86,985,731             4,349                  45,225              (96)     49,478 
 Shares issued                          262,243                13                       -                 -         13 
 
 At 31 December 2016 
  (unaudited)                        87,247,974             4,362                  45,225              (96)     49,491 
                         ----------------------  ----------------  ----------------------  ----------------  --------- 
 

On 19 September, 2016 262,243 ordinary shares were issued in respect of the vesting of the 2013 PSP Share Awards to employees (including Directors).

At 31 December 2016, 46,584 shares (2015: 46,584) were held in Treasury, which represents 0.1% (2015: 0.1%) of the called up share capital of the Company.

18. Cash generated from operations

 
                                                     Six months    Six months 
                                                       ended 31      ended 31   Year ended 
                                                       December      December      30 June 
                                                           2016          2015         2016 
                                                    (unaudited)   (unaudited)    (audited) 
                                                        GBP'000       GBP'000      GBP'000 
 
 Profit/(loss) from continuing operations 
  before income tax                                       5,031         4,547      (3,434) 
 Other adjusting items (included in operating 
  expenses)                                                 947           873        2,352 
 Depreciation of property, plant and equipment              493           447          911 
 Amortisation of intangible assets                        3,275         3,523        6,595 
 Impairment of goodwill                                       -             -       15,659 
 Profit/(loss) on disposal of property, 
  plant and equipment                                         8           (4)          (4) 
 Share based payments (including social 
  security costs)                                           310           278          563 
 Net finance costs                                          915         1,024        1,920 
                                                   ------------  ------------  ----------- 
 Operating cash flows before movements in 
  working capital                                        10,979        10,688       24,562 
 Increase in trade and other receivables                (3,614)       (1,583)      (2,434) 
 Increase/(decrease) in trade and other 
  payables                                                  597         (856)        1,744 
                                                   ------------  ------------  ----------- 
 Cash generated from operations before adjusting 
  items                                                   7,962         8,249       23,872 
                                                   ------------  ------------  ----------- 
 

Cash conversion is calculated as a percentage of cash generated by operations to Adjusted EBITA as follows:

 
                                                    Six months     Six months 
                                                      ended 31       ended 31   Year ended 
                                                      December       December      30 June 
                                                          2016           2015         2016 
                                                   (unaudited)    (unaudited)    (audited) 
                                                       GBP'000        GBP'000      GBP'000 
 Funds from operations before adjusting 
  items: 
 Adjusted EBITA                                         10,023          9,733       22,605 
 Amortisation of intangible assets - computer 
  software                                                 455            512        1,050 
 Depreciation of property, plant and equipment             493            447          911 
 Profit/(loss) on disposal of property, 
  plant and equipment                                        8            (4)          (4) 
                                                 -------------  -------------  ----------- 
 Operating cash flows before movements in 
  working capital                                       10,979         10,688       24,562 
 Net working capital movement                          (3,017)        (2,439)        (690) 
                                                 -------------  -------------  ----------- 
 Funds from operations before adjusting 
  items                                                  7,962          8,249       23,872 
                                                 -------------  -------------  ----------- 
 Cash conversion                                           79%            85%         106% 
                                                 -------------  -------------  ----------- 
 
 Free cash flows: 
 Operating cash flows before movement in 
  working capital                                       10,979         10,688       24,562 
 Profit/(loss) on disposal of property, 
  plant and equipment                                       21            (4)          (4) 
 Net working capital movement                          (3,017)        (2,439)        (690) 
 Interest paid                                           (880)          (658)      (1,502) 
 Tax paid                                              (1,996)        (1,431)      (3,197) 
 Purchase of property, plant and equipment               (579)          (290)        (641) 
 Purchase of intangible assets                           (888)          (472)        (870) 
                                                 -------------  -------------  ----------- 
 Free cash flows                                         3,640          5,394       17,658 
                                                 -------------  -------------  ----------- 
 

19. Related party transactions

The Company and its wholly owned subsidiary undertakings offer certain Group-wide purchasing facilities to the Company's other subsidiary undertakings whereby the actual costs are recharged.

The Chief Executive Officer, Pedro Ros, owns a minority shareholding in SMARP OY (a company incorporated in Finland), which provides social media services to the Group, the subsidiary paid GBPnil (2015: GBP11,160) during the year to SMARP UK Limited, a subsidiary of SMARP OY.

Close family members of key management personnel provided photography services for the group during the period. The total invoiced for these services was GBP120 (2015: nil).

20. Seasonality

The Group has traditionally generated the majority of its revenues and profits during the second half of the financial year. This has historically resulted from two factors. Firstly, most of the Group's businesses (the notable exception being AMT) produce seasonally low sales in July, August and December which include holiday periods for many of the Group's clients. Secondly, Inese, Compliance Week and FRA, have major annual events in the second half of the year. The acquisition of HSJ on 31 January 2017 should also benefit reported revenue and earnings in the second half of the year.

21. Events after the reporting period

   a)   Acquisition - Health Service Journal 

On 31 January 2017 the Group acquired the trading assets and the assumption of certain liabilities of Health Service Journal ('HSJ') the UK's leading health information, insight and networking business, from Ascential plc for GBP19m less an adjustment for working capital. The consideration will be financed out of the Group's GBP85m revolving multi-currency credit facility following the activation of the accordion. The process of fair valuing HSJ has not been completed at the date of these financial statements. Subject to this process to fair value, the group acquired intangible assets comprising the HSJ brand and customer relationships together with certain net liabilities (including deferred revenue). The excess consideration above the fair value of these acquired net liabilities and deferred revenue will be recognised as goodwill and intangible asset following completion of the exercise to fair value. All amounts are disclosed as provisional.

   b)   Asset held for sale - Ark Group Limited 

In line with the Group's strategy to focus the business around three new knowledge areas going forward, the decision was made to exit the legal practice support services market that Ark Group Limited ('Ark'), which is currently presented in the 'Legal' segment, operates in. Since the balance sheet date the business has been actively marketed at a reasonable sale price and on 16 February 2017 the Board approved the disposal of Ark. The completion date of the transaction is expected to be within twelve months.

As a result after the balance sheet date the assets and liabilities related to Ark Group Limited meet the criteria of an asset held for sale under IFRS 5.

Statement of Directors' Responsibilities

The Directors confirm that, to the best of their knowledge, the Interim Information has been prepared in accordance with International Accounting Standard 34 Interim financial reporting as adopted by the European Union. The Interim Management Report includes a fair review of the Interim Information and, as required by DTR 4.2.7R and DTR 4.2.8R, the following information:

   -- an indication of important events that have occurred during the first six months of the financial year, and their 
      impact on the condensed set of financial statements, and a description of the principal risks and uncertainties 
      for the remaining six months of the financial year; and 
   -- disclosure of material related party transactions that have taken place in the first six months of the current 
      financial year and of any material changes in the related party transactions described in the last Annual Report 
      and Financial Statements. 

A list of current Directors is maintained on the Wilmington plc website: wilmingtonplc.com.

By order of the Board

Anthony Foye

Chief Financial Officer

22 February 2017

Appendix 1 - New operating segments (unaudited)

Wilmington currently manages and reports its business by reference to four knowledge based divisions; Risk & Compliance, Finance, Legal and Insight. The results from the recent SWAT acquisition are included within the Finance division.

From and including 30 June 2017 we will be presenting information on the current structure and representing the same information on our new three divisional structure of Risk & Compliance, Professional and Healthcare.

Wilmington restates below its historical performance to reflect the new structure.

 
                                     Revenue                             Adjusted EBITA 
                      -------------------------------------  ------------------------------------- 
                       Six months   Six months   Year ended   Six months   Six months   Year ended 
                         ended 31     ended 31      30 June     ended 31     ended 31      30 June 
                         December     December         2016     December     December         2016 
                             2016         2015                      2016         2015 
                          GBP'000      GBP'000      GBP'000      GBP'000      GBP'000      GBP'000 
 Risk & Compliance         19,535       17,593       38,802        5,630        5,595       12,678 
 Professional              19,506       19,233       36,743        2,726        3,078        6,159 
 Healthcare                15,772       12,537       30,179        3,413        2,790        7,316 
 Unallocated 
  central overheads                                              (1,746)      (1,730)      (3,548) 
                      -----------  -----------  -----------  -----------  -----------  ----------- 
                           54,813       49,363      105,724       11,769       11,463       26,153 
 
 
 Reconciliation December 2016 
                                       Revenue   Risk & Compliance   Professional   Healthcare 
                                       GBP'000             GBP'000        GBP'000      GBP'000 
 Risk & Compliance                      19,535              19,535 
 Finance                                12,388                             12,388 
 Legal                                   7,118                              7,118 
 Insight                                15,772                                          15,772 
                                  ------------  ------------------  -------------  ----------- 
 Revenue                                54,813              19,535         19,506       15,772 
 As % of revenue                                               36%            36%          29% 
 
 
 
                                  Adjusted 
                                     EBITA   Risk & Compliance   Professional   Healthcare 
                                   GBP'000             GBP'000        GBP'000      GBP'000 
 Risk & Compliance                   5,630               5,630 
 Finance                             1,929                              1,929 
 Legal                                 797                                797 
 Insight                             3,413                                           3,413 
                                 ---------  ------------------  -------------  ----------- 
 Contribution                       11,769               5,630          2,726        3,413 
 As % of contribution                                      48%            23%          29% 
 Unallocated central overheads     (1,746) 
 Adjusted EBITA                     10,023 
 
 
 Reconciliation December 2015 
                                       Revenue   Risk & Compliance   Professional   Healthcare 
                                       GBP'000             GBP'000        GBP'000      GBP'000 
 Risk & Compliance                      17,593              17,593 
 Finance                                11,595                             11,595 
 Legal                                   7,638                              7,638 
 Insight                                12,537                                          12,537 
                                  ------------  ------------------  -------------  ----------- 
 Revenue                                49,363              17,593         19,233       12,537 
 As % of revenue                                               36%            39%          25% 
 
 
 
                                  Adjusted 
                                     EBITA   Risk & Compliance   Professional   Healthcare 
                                   GBP'000             GBP'000        GBP'000      GBP'000 
 Risk & Compliance                   5,595               5,595 
 Finance                             2,435                              2,435 
 Legal                                 643                                643 
 Insight                             2,790                                           2,790 
                                 ---------  ------------------  -------------  ----------- 
 Contribution                       11,463               5,595          3,078        2,790 
 As % of contribution                                      49%            27%          24% 
 Unallocated central overheads     (1,730) 
 Adjusted EBITA                      9,733 
 
 
 Reconciliation June 2016 
                                   Revenue   Risk & Compliance   Professional   Healthcare 
                                   GBP'000             GBP'000        GBP'000      GBP'000 
 Risk & Compliance                  38,802              38,802 
 Finance                            21,219                             21,219 
 Legal                              15,524                             15,524 
 Insight                            30,179                                          30,179 
                              ------------  ------------------  -------------  ----------- 
 Revenue                           105,724              38,802         36,743       30,179 
 As % of revenue                                           37%            35%          29% 
 
 
 
                                  Adjusted 
                                     EBITA   Risk & Compliance   Professional   Healthcare 
                                   GBP'000             GBP'000        GBP'000      GBP'000 
 Risk & Compliance                  12,678              12,678 
 Finance                             4,473                              4,473 
 Legal                               1,686                              1,686 
 Insight                             7,316                                           7,316 
                                 ---------  ------------------  -------------  ----------- 
 Contribution                       26,153              12,678          6,159        7,316 
 As % of contribution                                      48%            24%          28% 
 Unallocated central overheads     (3,548) 
 Adjusted EBITA                     22,605 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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