20 September 2021

 

Wilmington plc

Digitisation drives profits up 27%

 

Wilmington plc, (LSE: WIL 'Wilmington', 'the Group') the provider of data, information, education and training in the global Governance, Risk and Compliance markets, today announces its full year results for the year ended 30 June 2021.

Financial highlights

 

-       Revenues flat at £113.0m (2020: £113.1m) despite full 12 months of Covid-19 restrictions

-       Organic¹ revenue growth 3% (2020: down 8%) demonstrating continued strong demand

-       Adjusted profit before tax² up 27% to £15.0m (2020: £11.9m) reflecting focus on costs and efficiencies realised through conversion to digital

-       Adjusted basic earnings per share³ up 27% to 13.62p (2020: 10.71p) 

-       Statutory loss before tax £2.0m (2020: profit £6.4m), basic loss per share of 5.18p (2020: earnings 5.33p) impacted by £14.8m non-cash impairment charges

-       Dividend reinstated in the year, final dividend at 3.9p (2020: nil); total dividend 6.0p (2020: nil)

-       Strong cash conversion⁴ of 104% (2020: 189%)

-       Significantly reduced Group net debt (excluding lease liabilities) at £17.2m (2020: £27.7m) reflecting strong trading, effective working capital management and small product disposal.

 

Operational highlights

 

-       Continued strong demand demonstrates success of digitisation strategy

-       Renewed strategic focus on large and growing Governance, Risk and Compliance (GRC) and Regulatory Compliance markets

-       Portfolio of Group businesses reorganised into two divisions: Information & Data and Training & Education, reflecting broad range of complementary GRC solutions

-       Operational focus on clearly defined pillars of growth: simplified structure, leadership and people, data and technology, product, and sales and marketing

-       Performed ESG materiality assessment in H2, developed roadmap for FY22 progress, and early adopted TCFD.

 

Mark Milner, Chief Executive Officer, commented:

 

"We have continued to refine and embed our digital capabilities across the business. This reflects our ambition to create a fully digital enterprise whilst retaining the flexibility to offer our customers face-to-face and hybrid solutions.

 

"These strong results with profitability up 27% demonstrate the continued and growing demand for our information and data products, despite the disruption caused by the pandemic.

 

"We are now at an inflexion point with a simplified portfolio and are well positioned to address large and growing markets which are increasingly online.

 

"The current financial year has started well, in line with our expectations."

 

¹ Organic - eliminating the effects of exchange rate fluctuations and the impact of acquisitions and disposals

² Adjusted profit before tax - see note 3

³ Adjusted earnings per share - see note 10

⁴ Cash conversion - see note 19

 

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   Mark Milner, Chief Executive Officer Guy Millward, Chief Financial Officer Meare Consulting Adrian Duffield

020 7422 6800       07990 858548

 

Notes to Editors

Wilmington plc is the recognised knowledge leader and partner of choice for data, information, education and training in the global Governance, Risk and Compliance (GRC) markets. Wilmington employs close to 1,000 people and sells to around 120 countries. Wilmington is listed on the main market of the London Stock Exchange.

 

Chairman's statement

 

I am pleased to present the results for the year ended 30 June 2021. We made good progress in the year, demonstrating the value of our diversified portfolio and digital-first strategy while we continue to adapt to the impact of Covid-19.

 

Despite a full 12 months of Covid-19 restrictions we traded strongly in FY21 and delivered revenues unchanged on FY20, despite four months of disruption at the beginning of the pandemic causing an 8% decline in revenues year-on-year. In FY21 organic revenue growth was achieved by our information and data products, and within our training products revenues only decreased in our face-to-face businesses.

 

Adjusted profits at all levels were up, reflecting a continuous focus on costs and improved margins achieved through the move to virtual solutions. Strong trading combined with a focus on working capital management, and a small product disposal, enabled us to greatly reduce our net debt position (excluding lease liabilities) to £17.2m as at 30 June 2021, £10.5m better than 30 June 2020. As a result, we honoured our commitment to reinstate the dividend and repaid all amounts received from the UK government's furlough scheme relating to this financial year.

 

In June 2021 we announced a new group structure and operating model to increasingly focus the business on the resilient and growing GRC and Regulatory Compliance markets. We report here for the first time our new divisions: Information & Data and Training & Education, which reflect the broad range of complementary products and solutions we offer to our customers. In last year's report, I outlined our key areas of strategic focus: organic revenue growth, investing in our business and managing our portfolio. Despite the pandemic, we made good progress in all these areas so that we continue to realise the benefit of recent investments.

 

Derek Carter and Nathalie Schwarz stood down from the Board at the conclusion of the AGM on 4 November 2020 after completing their full nine-year terms as Independent Non‑Executive Directors. I would like to thank them for their outstanding contributions to Wilmington. Nathalie was replaced as Chair of the Remuneration Committee by Helen Sachdev. Paul Dollman, the current Chair of the Audit Committee, has assumed the role of Senior Independent Director. In February 2021 I was delighted to welcome William Macpherson to the Board as Non-Executive Director, the director responsible for worker representation and Chair of the Nominations Committee. William has a strong commercial background in the professional education sector and is providing valuable counsel to the Group.

 

Most importantly, I would like to thank all our employees for their continued commitment and resilience in these testing and difficult times. Throughout the crisis we have been, and will continue to be, guided first and foremost by the need to protect the health and wellbeing of our employees while remaining focussed on serving our customers to the highest standards.

 

 

 

Martin Morgan
Chairman

 

 

Chief Executive's review

 

Overview

Our diversified portfolio has continued to demonstrate agility and resilience in the face of ongoing disruption caused by the pandemic. The work done over the last 12 months, to refine our digital-first model and to focus the business on the GRC and Regulatory Compliance markets, reflects a period of positive change.

 

Following the rapid acceleration of our digitisation strategy in the year to June 2020, throughout FY21 we have concentrated on further refining and embedding our strong digital capabilities across the business. This work reflects our ambition to create a fully digital enterprise whilst retaining the flexibility to offer our customers face-to-face and hybrid solutions according to their needs.

 

Our financial performance demonstrates that demand for our products remains strong, and that our ability to respond to our customers' needs continues to cement our position as their trusted partner when navigating the complexity of the Regulatory Compliance landscape.

 

Reported Group revenue was flat, but up 3% on an organic basis. This result reflects solid uptake of our core information and data products, strong conversion of new sales opportunities in ICA Singapore, and high demand driving double-digit revenue growth in the legal sector businesses. Growth in these areas was partly offset by the anticipated reduction in face-to-face training and event revenues caused by Covid-19 related restrictions.

 

A continued focus on cost management and further efficiencies realised through the conversion to digital resulted in adjusted profit before tax (PBT) growth of 27% to £15.0m (2020: £11.9m) and a corresponding improvement in adjusted PBT margin to 13.3% (2020: 10.5%).

 

This resulted in adjusted basic earnings per share being up 27%. We also are proposing a final dividend of 3.9p (total of 6.0p). The Group's net debt (excluding lease liabilities) was sharply down at £17.2m (2020: £27.7m).

 

Strategy

We announced in June 2021 that our strategic focus will be centred on building upon our already strong presence in the large, growing and rapidly evolving GRC and Regulatory Compliance markets. These markets are the intent of and actions undertaken by organisations, entities and individuals to both understand and align their activities and ethics with the relevant legal, policy and regulatory frameworks within which they operate.

 

These markets are underpinned by strong macro drivers, particularly the increasing volume and enforcement of regulation, complex geopolitical landscape, increased importance of ESG and widespread adoption of technological and data-driven compliance solutions, all of which align strongly to Wilmington's core offering.

 

At the heart of this focus on GRC and Regulatory Compliance markets is our ambition to help our customers to do the right business in the right way, by providing a complementary range of information & data and training & education solutions.

 

We continue to develop new products, identify clear organic growth opportunities and consider acquisition targets which complement and/or extend our capabilities.

 

Current trading and outlook

We have strong foundations with our leading brands which have shown notable resilience during the pandemic whilst our large markets are seeing strong growth.

 

We have made the switch to a digital first business with the capability to offer face-to-face and hybrid solutions and have invested in our data capabilities and new product development. We also have a simplified structure and an operational focus on execution excellence.

 

Trading in the first two months of the year has been encouraging, with both revenue and profits in line with expectation.

 

Operational review

In order to execute our strategy, we reorganised our portfolio into two divisions: Information & Data and Training & Education. This simplified structure clusters our businesses to drive synergies and provides a scalable platform for acquisitions and strong integration capabilities. 

 

As previously announced, we are actively managing the portfolio by assessing the potential of each business to contribute to the delivery of our strategic objectives over the long term. Consequently, CLT England was closed down in August 2020 and the CLT Scotland business sold. Two product lines, one in the UK Healthcare business, and the other a pension fund product were withdrawn.

 

Our Information & Data division is addressing the $1bn regulatory intelligence market. The key drivers are the increased importance of independent, authoritative and actionable intelligence; increased investment in technology to solve regulatory compliance challenges; and disruptive technologies that create opportunities and threats.

 

Our Training & Education division is addressing the $4bn compliance training market. The key drivers are the shift from insourced to outsourced training; the shift from face-to-face to digital and blended training; increased demand for continuous learning and micro-learning; and increased focus on ROI through personalised learning experiences and outcomes-based programmes.

 

Our strategy is executed via our clearly defined pillars of growth: our simplified structure and key drivers of operational excellence: Leadership and people, data and technology, product, and sales and marketing. We have made progress in all areas in the year.

 

Our work to embed a positive culture and high employee engagement reflected a focus on Learning and Development and Diversity and Inclusion, whilst we remained committed to enhancing employee experience by delivering a responsive portfolio of wellbeing resources and a broad range of personal development opportunities.

 

We delivered against our objective to roll out the first phase of the Wilmington Sales Academy and made significant progress enhancing the sales KPI analysis capabilities which are informing our future development in this area. We also started work to embed an improved approach to sales packaging and pricing, which is strongly aligned to our focus on developing consistent and sustainable revenue streams to support long term growth.

 

Our sales and marketing function has become de-centralised and so much closer to our end-user markets. We have instilled a KPI driven sales culture and as highlighted above have a focus on learning and development. We are also using technology more effectively and are optimising our product pricing and packaging.

 

The progress we made to drive excellence in product management reflects our commitment to embed a customer-led approach, and throughout the year we engaged closely with our customers as they adapted to changes brought about by the pandemic. This was complemented by our continued investment in strong digital and data capabilities to deliver a dynamic and innovative portfolio of solutions.

 

We launched the Wilmington Product Academy, specifically designed to build a strong and consistent skills base that will propel our success in this area. We retain a strong focus on development methodologies using minimum viable products (MVPs), iterative roll outs, and insights gained from data generated from our existing processes. The Product Academy also supports our plans to further leverage the success of recently launched products such as the digital learning hub, by informing the development of similar solutions in other parts of the businesses to generate synergistic value across the portfolio.

 

Responsible business

As we continue to help our customers to do the right business in the right way, we are also committed to holding ourselves accountable and demonstrating the highest standards of responsible business practice.

 

We have now implemented the actions outlined in the ESG roadmap set in February 2021, which included performing a materiality assessment and defining the agenda for the future. By assessing the key issues that impact our stakeholders, the materiality assessment process led to the refinement of our ESG strategy and concluded that four strategic pillars will drive our progress for the next phase of work. These four pillars, their core objectives and the way that they support our commitment to operational excellence, are outlined below.

 

Strategic pillar	Cultural positivity	Customer empowerment	Proactive assurance	Environmental responsibility
Core objective	Create equal opportunities and nurture talent in a safe and mindful environment.	Deliver products that are accessible, high value, up to date and move with industry trends.	Uphold high standards related to digital protection, regulatory requirements, ethics & production.	Reduce environmental impact by minimising carbon footprint and committing to responsible procurement.
Supporting operational excellence	Fostering a positive culture will enhance employee experience and allow our people to perform highly as they continue to drive progress against our strategic objectives.	Empowering our customers ensures our products are aligned to their needs, and that our sales and marketing strategies effectively convey high product value.	Responsible digitisation and ethical conduct are fundamental to our data and technology strategies as we innovate to deliver the best-in-class digital products.	Committing to environmental responsibility protects the future of our people and demonstrates to customers that we strive to deliver products with minimal environmental impact.

 

We have established a governance framework around our ESG initiatives, providing sponsorship for each pillar of the strategy from a member of the Executive Committee and oversight from the Board. The executive sponsors will support internal working groups as they implement improvement initiatives to ensure that continued and consistent progress is made to meet the core objectives. The work planned for FY22 includes a focus on refining our approach to data collection, to facilitate effective measurement of outputs and to ensure that we set sufficiently challenging targets to drive long term improvements.

 

In recognition of the rapidly evolving climate crisis, we have early adopted TCFD and have accelerated our own work to address climate change by committing to carbon neutrality in FY22, with a further commitment to establish a roadmap for action to subsequently become a net zero carbon business.

 

Review of divisional performance

 

Information & Data

 

	2021	2020	Absolute variance	Organic variance
	£'m	£'m	%	%
Revenue
Healthcare	28.9	27.9	4%	3%
Financial Services & Other	21.3	21.7	-2%	0%
Identity & Charities	6.6	7.0	-6%	-5%
Total Revenue	56.8	56.6	1%	1%
Operating Profit	9.3	11.1	-16%	-13%
Margin %	16%	20%

 

 

Business model and market

Wilmington offers a wide range of products and services through its Healthcare businesses predominantly around the provision of market and customer intelligence. The core of the data supplied comes primarily from publicly available sources. The value generated by our services is based around its collation, verification, combination with other complementary data sources and then its ease of presentation and usage. In some areas we provide proprietary analysis of the data and editorial comment which constitutes our own intellectual property.

 

Wilmington's Healthcare businesses operate mainly in the UK and France and provide deep insight information on practitioners, facilities and treatments in the UK and French health sector markets that enable suppliers into those markets, including pharmaceutical companies, to understand and connect better with their customers. Revenue is mainly earned through sales of discrete packages of data or through subscription services for the ongoing provision of information. Additionally, in the UK we publish the Health Service Journal ('HSJ'), the leading online publication in the UK for healthcare leaders, with revenue generated through providing subscriptions to NHS foundation trusts, Clinical Commissioning Groups and suppliers to the NHS.

 

The Financial Services/Other businesses operate in the Insurance, Pensions and Compliance markets. These businesses provide a broad range of information products and services with revenues generated primarily through subscription but also sponsorship, lead generation and event attendance.

 

The Identity & Charities business consists of a portfolio of data products including charity fund-raising information, and marketing data suppression tools. They include services that are used by organisations to help prevent identify fraud. Revenue is predominantly subscription based. We sold a pension fund product line in this part of the business during the year.

 

Trading performance

Overall Information & Data revenues grew 1% in the year, although this overall rate masks some more significant movements in the underlying businesses.

 

Healthcare revenues grew 3% organically in the year despite a significant drop in UK events revenues because no face-to-face events took place. Non-events revenues grew 7% in the period with UK revenues up 10% and French revenues up 7%. We closed a product line during the year (that sold a suite of online learning courses that familiarise UK industry participants with the complexities of the National Health Service) as it was loss-making and we outsourced part of the UK operations to improve future profits.

 

Financial Services revenues were flat organically (removing the effect of currency) with growth in Axco, Pendragon and Compliance Week offset by a decline in Inese revenues due to the lack of face-to-face events in Spain. We announced last year that we were seeking buyers for the Inese business but this process was delayed due to Covid-19 restrictions and we will resume the process in coming months.

 

Identity & Charities revenues were down 6%. We have restructured this set of products just before the year end, selling one product line and closing two others to focus the business on areas we believe can grow in the future and to reduce its cost base. The slimmed-down business will now focus on identity revenues and a small line of revenue in the charity sector.

 

Information & Data divisional operating profit was down on the previous year despite the flat revenue performance as we took restructuring measures (closing product lines and outsourcing some costs) to improve revenues and profits going forward. The cost of these changes has been taken as part of normal operations.

 

 

Training & Education

 

	2021	2020	Absolute variance	Organic variance
	£'m	£'m	%	%
Revenue
Global	29.2	25.8	13%	16%
UK & Ireland	22.1	24.6	-10%	0%
North America	4.9	6.1	-20%	-15%
Total Revenue	56.2	56.5	-1%	6%
Operating Profit	12.2	7.9	54%	65%
Margin %	22%	14%

 

Business model and market

The Global division comprises three businesses that operate in compliance markets. The largest business, which was developed organically within Wilmington, is the International Compliance Association ('ICA'). It is an industry body and training business that we created in 2002 which offers professional development and support to compliance officers predominantly in the financial services sector. It has offices in the UK, Singapore, Malaysia and Dubai.

 

Revenue earned by ICA is primarily training income complemented by subscriptions paid by the professional members for their ICA accreditations. The courses ICA run usually extend over several weeks or even months. They traditionally mix distance learning with face-to-face sessions. The distance learning element has transitioned to online and digital variants, and virtual programmes have been offered in place of face-to-face sessions. To support the move to virtual training in ICA a new digital learning platform ('hub') is being built - it was launched at the start of 2021 and further developments are due for release in the coming months.

 

ICA primarily serves the financial services industry. The material for ICA courses is developed by our own internal R&D team, and external specialists, and we own the associated intellectual property.

 

The other Global businesses earn revenue from running professional development programmes for wealth managers and training for professionals joining the investment banking industry. Wilmington has an international presence, with centres in UK, Europe, North America and Asia Pacific and consistent investment in technology maintains the Group's competitive positioning.

 

The North America business is predominantly events based. They serve the US healthcare/ health insurance markets and, to a lesser extent, the US financial and legal service communities. The prime brand is the RISE series of events that address the Medicare and Medicaid markets and is attended by health plans, physician groups and solution partners. The flagship event is RISE National which normally takes place in Nashville in March each year, although it ran online in FY21. Revenue from the US events is generated from both sponsorship and delegate sales.

 

The UK and Ireland division predominantly provides training for accountants in practice and in business and individuals involved in the legal system, including lawyers. It runs a mix of face to face, online and blended learning for these communities. It provides training at various levels including providing continuing professional development for existing qualified accountants and, in the case of the legal profession, helping them train their clients for interaction with the legal system. Additionally, it provides technical support to accountancy firms which enables them to keep abreast of technical developments and changes to regulation, as well as supporting them to promote the services they then offer to their clients.

 

The Accountancy and Legal businesses are predominantly UK and Ireland based, reflecting the country specific laws and accounting standards that govern their profession. Revenue in the unit is earned through clients subscribing for ongoing training support and other related activities over a period of time (usually twelve months), with the rest through one-off course attendance fees. Courses are typically single or half day events, and content is a mix of owned and third-party intellectual property. Courses are delivered either by in-house experts or by a network of independent tutors who are paid per course that they deliver.

 

Before the impact of Covid-19, the Accountancy market was growing, although this was somewhat offset by the continued consolidation of smaller firms, some Brexit uncertainty and a relatively stable backdrop in terms of tax legislation and accounting standards. In contrast the Law for Non-Lawyers market was strong with good demand for existing products as well as successful launches of new training courses. Wilmington exited the CPD training market for lawyers in FY21 when it sold its Central Law Training (CLT) business in Scotland and closed the CLT business in England.

 

Trading performance

Training & Education revenues grew organically by 6% in the year, representing a significant improvement in the second half as revenues were down 12% in the first half of the year. 

 

ICA revenues were 21% up on FY20 due mainly to very strong growth in Singapore where government funding for compliance training, the rapid adaptation of our services to ensure compliance with government requirements, and a restructuring of our operations, led to a doubling of revenues. AMT saw strong growth in FY21 of 19%, with all its courses being delivered virtually and benefitting from strong demand from its blue-chip customer base. CLTi had a slower year as demand for its international courses dropped during the pandemic.

 

The legal sector businesses in the UK and Ireland (Bond Solon and LaTouche) saw double-digit growth in FY21, driven by a strong return of demand particularly in the last quarter of the year. Accountancy revenues also had a strong second half and reduced the deficit on FY20 seen in H1 to end the year 9% down on FY20. CLT revenues were £0.6m in the year (2020: £2.9m) up to the closure of CLT England in August 2020 and the sale of CLT Scotland in December 2020.

 

In the US, FRA revenues ended the year 15% down on FY20. They were more than 50% down at the half year but a strong digital performance in H2 as well as a return to face-to-face and hybrid events in June 2021 gives the business a strong platform to return to growth provided that face-to-face events continue in the US in FY22.

 

Overall divisional operating profit increased strongly by 54% on FY20, mainly due to cost efficiencies realised through the lack of face-to-face training (lower venue hire, external tutor and travel costs). The increase also reflects the impact of the closure of CLT, which was loss making in the prior year. As a result, the operating profit margin rose to 22% from 14% in FY20.

 

Financial review

 

Overview

The Group performed well during the year, achieving organic revenue growth of 3% (2020: down 8%). Revenue growth was supported by strong cost control and efficiencies realised through conversion to digital, driving increased profitability and a corresponding improvement in adjusted operating margin at 14.7% (2020: 12.4%). This resulted in strong cash generation, reflected in a significantly reduced net debt position (including lease liabilities) at 30 June 2021 of £28.0m (2020: £40.8m).

 

Adjusting items, measures and adjusted results

In this financial review reference is made to adjusted results as well as the equivalent statutory measures. Adjusted results, in the opinion of the Directors, provide additional relevant information on our future or past performance where equivalent information cannot be presented using financial measures under IFRS. Adjusted results exclude adjusting items, gain on disposal of subsidiaries and business operations, impairment and amortisation of intangible assets (excluding computer software). 

 

	2021	2020	Absolute variance		Organic variance
	£'m	£'m	£'m	%	%
Revenue	113.0	113.1	(0.1)	(0.0%)	3.3%
Adjusted profit before tax	15.0	11.9	3.1	26.6%	27.9%
Margin %	13.3	10.5

 

Variances described as 'organic' are calculated using constant currencies and exclude the impact of the closure and disposal of CLT England and CLT Scotland respectively, as well as the disposal of a pension fund product line within the Information & Data division.

Revenue

Group revenue was flat overall and increased 3% on an organic basis.

Operating expenses before adjusting items, amortisation and impairment

Operating expenses before adjusting items, amortisation of intangible assets (excluding computer software) and impairment, were £96.4m (2020: £99.0m) down £2.6m or 2.6%.

 

Within operating expenses, staff costs increased £1.4m to £54.7m (2020: £53.3m). This net increase was driven by the full year effect of investments in new roles that have been key to our strategic progress. Discretionary staff bonuses and sales commission payments were also £1.7m higher than the prior year supported by a stronger trading performance in FY21. The increases described above were offset by salary cost savings generated from a reduction in the average monthly headcount during the year to 952 from 982 in the prior year. This decrease in headcount was primarily driven by the closure of CLT England as well as the sale of CLS Scotland and AP Pensions. There was also a small saving in share based payment costs of £0.2m due to revised vesting assumptions during the year.

 

Non-staff costs decreased by £4.0m to £41.7m from £45.7m in the prior year. Direct costs made up £3.7m of this decrease, demonstrating cost savings from a full 12-month period of running virtual events and training as opposed to traditional, more costly face-to-face variants. A further £1.6m cost saving was driven by the closure and sale of CLT England and CLT Scotland, respectively. These, and other cost decreases, were partly offset by an increase in direct costs of £2.3m to support organic revenue growth primarily in the Group's Compliance and Global Training businesses.

 

Unallocated central overheads

Unallocated central overheads, representing Board costs and head office salaries as well as other centrally incurred costs not recharged to the businesses, were flat year-on-year at £4.3m (2020: £4.3m).

 

Adjusted profit before tax ('adjusted PBT')

As a result of these changes in revenue, operating expenses and finance costs, adjusted profit before tax, which eliminates the impact of adjusting items, amortisation of intangible assets excluding computer software, other income (when it is material or of a significant nature), and impairment of goodwill, intangible assets and property, plant and equipment, was up 26.6% to £15.0m (2020: £11.9m).

 

Adjusted profit margin (adjusted PBT expressed as a percentage of revenue) also increased to 13.3% (2020: 10.5%).

 

 

 

 

 

Amortisation excluding computer software

Amortisation of intangible assets (excluding computer software) was £3.4m, compared to £4.8m in the previous year. The decrease reflects certain historic assets being fully amortised part way through the prior year.

Impairment of goodwill, intangible assets and property, plant and equipment

An impairment charge of £3.0m was recognised in relation to the goodwill and intangible assets attributable to a loss-making product line in the Healthcare sub-division that was discontinued during the year. £1.5m of this impairment charge was allocated against goodwill, with the remaining £1.5m allocated to intangible assets.

 

The Group's annual impairment review concluded that the carrying value of the UK Healthcare CGU exceeded its recoverable amount. This reflects the ongoing uncertainty around the anticipated timeline for a return to pre-pandemic growth within the UK Healthcare business following Covid-19 related disruption to the healthcare industry. Consequently, an impairment charge of £8.4m has been recognised to reduce the carrying value of the CGU, and has been allocated entirely to the associated goodwill.

 

The right-of-use asset and associated property, plant and equipment relating to the Group's head office premises were impaired during the year following a decision to consolidate office space to reflect a future of flexible working arrangements. Management took the decision to permanently close a portion of the head office and seek a tenant to sublease the closed portion. This resulted in a £3.4m impairment charge, £2.8m of which was allocated to the head office, with the remaining £0.6m allocated to the associated property, plant and equipment.

 

This resulted in a total impairment charge of £14.8m which was recognised within adjusting items for the year ended 30 June 2021.

 

Adjusting items within operating expenses

Adjusting items in operating expenses are those items that in the opinion of the Directors are one-off in nature and which do not represent the ongoing trading performance of the business. In the year adjusting items within operating expenses were £3.0m (2020: £0.6m). These items are mainly £1.9m (2020: £nil) representing an onerous provision for costs associated with the closed portion of the head office and £1.1m (2020: £0.6m) relating to strategic activities. Costs associated with strategic activities relate to strategic reviews of two of the Group's businesses, Central Law Training Limited and Wilmington Inese SL in addition to costs associated with the disposal of business operations.

Operating loss ('EBITA')

Operating profit decreased from £8.6m in the prior year to an operating loss of £0.4m for the year ended 30 June 2021. The decrease is driven primarily by the impact of the adjusting items and the £14.8m impairment charge detailed above, offset in part by the profit on disposal of CLT Scotland and a pension fund product line within the Information & Data division.

Net finance costs

Net finance costs decreased by £0.6m to £1.6m (2020: £2.2m), within which interest payable on bank loans and overdrafts fell £0.2m due to lower average debt balances across the year. In addition to this, the prior year expense includes fees in respect of the renegotiation of the Group's financing arrangements during the year ended 30 June 2020.

Result before taxation

Loss before taxation was £2.0m compared to a profit before tax in the prior year of £6.4m, a reconciliation of this to adjusted profit before tax can be found in note 3.

 

Taxation

The tax charge for the year was £2.5m compared to £1.8m in the prior year. Despite a significant reduction in profit before taxation from £6.4m in the prior year to a loss before taxation of £2.0m during the year, the main driver of this profit reduction was the impairment charge detailed above which was not deductible for tax purposes.

The underlying tax rate which ignores the tax effects of adjusting items remained essentially unchanged at 20.5% (2020: 20.9%).

Earnings per share

Adjusted basic earnings per share increased by 27.2% to 13.62p (2020: 10.71p), owing to the increase in adjusted profit before tax, a broadly flat underlying tax rate and an essentially unchanged number of issued ordinary shares. Basic loss per share was 5.18p compared to a basic earnings per share of 5.33p in the prior year, wholly reflecting the decrease in profit after tax.

Dividend

A final dividend of 3.9p per share (2020: nil) will be proposed at the AGM. If approved it will be paid on 12 November 2021 to shareholders on the register as at 15 October 2021 with an associated ex-dividend date of 14 October 2021. This will give a full year dividend of 6.0p (2020: nil) and dividend cover of 2.3 times (2020: nil).

Balance sheet

Non-current assets

Goodwill decreased by £12.1m from £77.9m to £65.8m which was primarily due to the £8.4m impairment of goodwill relating to the UK Healthcare CGU, as well as the £1.5m impairment relating to a discontinued loss-making product line as described above. Additionally, a weakening US Dollar led to a decrease in the Sterling value of the US Dollar portion of the Group's goodwill.

Intangible assets decreased by £5.7m from £19.7m to £14.0m due to amortisation of £5.8m and an impairment of £1.5m as described above. These decreases were partly offset by additions of £2.0m within computer software reflecting the Group's continued strategy to invest in the existing businesses to fuel organic growth. Additions during the year reflect the installation of the new virtual classroom facility in the Birmingham UK office, as well as continued investment in Wilmington's Digital Hub. Internally generated assets accounted for £0.5m of additions (2020: £0.8m).

Property, plant and equipment decreased by £7.6m from £16.9m in the prior year to £9.3m in the year ended 30 June 2021. Of this decrease, £5.2m was attributable to right-of-use assets.

The £2.4m decrease in purchased property, plant and equipment was attributable to depreciation of £1.2m and impairment of £0.6m, partly offset by £1.0m of additions during the year. Furthermore, the carrying value of £1.6m relating to a building marketed for sale at 30 June 2021, as part of the exercise to consolidate our office space, was transferred from property, plant and equipment to assets held for sale.

As detailed above, right-of-use assets decreased by £5.2m to £6.6m (2020: £11.8m) during the year. This decrease is primarily due to the £2.8m impairment of the Group's head office detailed above as well as depreciation of £2.2m during the year.

Deferred consideration receivable

The deferred consideration receivable balance relates to the disposal of ICP in July 2018. At 30 June 2021 the Group recognised a total of £1.8m (2020: £2.2m) of deferred consideration receivable, with £1.6m recognised within non-current assets and the remaining £0.2m recognised within current assets. During the year, a £0.1m unwind of the discount was offset by an increase of £0.5m reflecting an agreed adjustment to the phasing of the settlement plan.

Trade and other receivables

Trade and other receivables were up £3.2m at £28.7m (2020: £25.5m). This increase was due in large to increased billings compared to the prior year. The increase was partly offset by the closure and disposal of CLT England and CLT Scotland respectively, which collectively comprised £0.3m within trade receivables in the prior year.

Current tax asset

At 30 June 2021 the Group recognised an asset relating to current tax of £0.3m (2020: £1.3m). The net asset position reflects a claim to carry back US losses against prior year returns resulting in a net repayment position.

Trade and other payables

Trade and other payables decreased by £3.5m from £58.5m to £55.0m. Within this, subscriptions and deferred revenue decreased £1.4m or 4.3% to £30.1m (2020: £31.5m) and trade and other payables decreased £2.2m to £24.8m (2020: £27.0m).

This decrease in subscriptions and deferred revenue was driven in large by the delayed RISE Nashville event which has resulted in fewer prepayments from event sponsors or delegates being held than in the prior year. In addition to this, subscriptions and deferred revenue in the prior year included £0.6m of deferred revenue in respect of CLT England which was £nil for the year ended 30 June 2021 following its closure.

The decrease in trade and other payables was primarily driven by the unwind of deferred VAT and payroll tax payments which were on the balance sheet in the prior year in response to the Covid-19 pandemic. A further driver of the decrease was less spend on venues and related costs during the year following the transition to virtual of many of the Group's training and events.

Provisions

At 30 June 2021 a provision of £1.8m has been recognised in respect of future committed cost associated with the closed portion of the head office space.

Net debt, lease liabilities and cash flow

Net debt, which includes cash and cash equivalents, bank loans (excluding capitalised loan arrangement fees) and bank overdrafts, and lease liabilities was £28.0m (2020: £40.8m). This significant decrease in net debt is driven by a strong trading performance delivering improved profits, deployment of effective cash management strategies as well as a small product disposal during the year which has enabled the business to reduce the level of drawdown debt.

Lease liabilities decreased during the year by £2.4m to £10.7m (2020: £13.1m) which represents cash payments in relation to contractual lease obligations, offset in part by £0.3m of notional interest on lease liabilities reported within net finance costs.

Cash conversion for the year ended 30 June 2021 was 104% (2020: 189%), although year-on-year comparison of the percentages has been impacted by the unusual movement in working capital, driven by delayed 2020 payments of UK VAT and payroll tax of £5.7m in the prior year.

 

Derivative financial instruments

The Group is exposed to foreign exchange risks, liquidity and capital risks and credit risks. The Group has policies that mitigate these risks which include the use of derivative products such as forwards and swaps subject to Board approval. The Group uses interest rate swap contracts to mitigate part of the interest rate volatility risk. These swaps have resulted in an asset of £0.1m (2020: £0.1m liability) at 30 June 2021.

On 1 July 2021 the Group entered into a number of foreign currency transactions to mitigate possible exchange rate fluctuations on its FY22 financial results. $8.5m USD were sold forward to mature during the 2021/2022 financial year at an average rate of $1.38.

 

 

 

 

 

Share capital

During the year nil (2020: 64,350) new ordinary shares of £0.05 were issued. Shares which vested during the year under the Group's Performance Share Plan were settled via the Wilmington Group plc Employee Share Ownership Trust.

In the year the Wilmington Group plc Employee Share Ownership Trust purchased 129,903 ordinary shares for the purpose of future settlement of employee share schemes. At 30 June 2021 it held 329,903 shares (2020: 200,000).

 

Statement of Directors' responsibilities in respect of the financial statements

The statement of directors' responsibilities below has been prepared in connection with the Group's full Annual Report for the year ended 30 June 2021. Certain parts of the Annual Report have not been included in this announcement as set out in note 1 of the financial information.

We confirm to the best of our knowledge that:

·      the consolidated financial statements, which have been prepared in accordance with IFRSs as adopted by the United Kingdom, give a true and fair view of the assets, liabilities, financial position and profit of the Group;

·      the management report represented by the report of the Directors, and material incorporated by reference, includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that they face; and

·      the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to access the company's performance, business model and strategy.

 

This responsibility statement was approved by the board of Directors on 17 September 2021 and is signed on its behalf by

 

 

 

Guy Millward
Chief Financial Officer