21 February 2022

Wilmington plc

Strong organic revenue and profit growth

Wilmington plc, (LSE: WIL, 'Wilmington' or 'the Group') the provider of data, information, education and training services in the global Governance, Risk and Compliance (GRC) markets, today announces its half year results for the six months ended 31 December 2021 (H1 FY22).

Financial performance

Highlights

-       Organic³ revenue growth 12% driven by the acceleration of digitalisation programme and return of face-to-face events to pre-pandemic levels

o Information & Data delivered 10% organic growth; Training & Education delivered 15% organic growth

o Excluding face-to-face events, organic revenue growth of 6%

-       H1 FY22 revenue exceeded pre-Covid H1 FY20 and H1 FY19 for retained businesses with profits materially ahead

-       H1 FY22 Group adjusted profit margins improved to 16% (H1 FY21: 13%)

-       Strategic sale of AMT in December 21 for £23.4m

-       Robust balance sheet position with Group net cash⁴ at 31 Dec 21 of £11.0m (31 Dec 20: net debt: £23.2m; 30 Jun 21: net debt: £17.2m)

-       Significant progress made in establishing single technology platforms for each division

-       Increasingly strong outlook  

Mark Milner, Chief Executive Officer, commented:

"We continue to deliver on our strategy and are now seeing the results of the Group's repositioning and redirection, the acceleration of our digitalisation programme and investment in new products over the last two years.

"This has led to double-digit organic revenue growth, significant profitability improvement and strong cash conversion.  Both divisions and our teams are performing strongly. Revenues and profits are now ahead of the pre-Covid periods.

"As we stated on 27 January 2022, trading in the current financial year is ahead of our earlier expectations.  If the major face-to-face events happen in March as expected, we anticipate our profitability to improve still further."

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.

1 Adjusted profit before tax - see note 4

2 Adjusted basic earnings per share - see note 6

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

⁴ Net cash includes cash and cash equivalents, bank loans (excluding capitalised loan arrangement fees) and bank overdrafts but excludes lease liabilities

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.

Results and dividend

Our strong performance in H1 FY22 demonstrates the value of our diversified portfolio and focus on the GRC and Regulatory Compliance markets, with growth driven by our agile teams and the resilience that this diversity and business model has brought over the past two years. Demand for our products remains strong with our customers continuing to rely on us to help them operate successfully.

Revenue of £58.9m was up 7%.  Organic revenue growth was 12%, adjusted for the closure and disposal of discontinued businesses and the minor impact of currency movements.  Excluding face-to-face events, we saw organic revenue growth of 6%.

This growth was driven by the acceleration of our digitalisation programme, the investment in new products over the last two years and the return to face-to-face events. 

The Information & Data division achieved 10% organic revenue growth (5% total revenue growth) with the Training & Education division achieving organic revenue growth of 15% (10% total revenue growth). All our businesses grew organically in the first half.

14% of our ongoing revenues are in US dollars, 12% in Euros and 3% in Singapore Dollars, no other currency other than Sterling is material.

H1 FY22 revenue exceeded both pre-Covid periods H1 FY20 and H1 FY19 on a like-for-like basis with profits being materially ahead. 

Adjusted profit before tax of £9.5m (H1 FY21: £7.0m) was up 35% and up 42% organically.  Costs have increased due to the anticipated increase in staff costs and the return of some face-to-face delivery costs, mainly venue hire and some increased travel.  Despite the expected cost increases, adjusted pre-tax profit margins improved to 16% (H1 FY21: 13%).   

Operating cash conversion remained strong at 113%, with net cash of £11.0m (30 June 2021: net debt £17.2m) following proceeds from the sale of the AMT financial training business in December for £23.4m. Net cash including lease liabilities was £1.0m.  Remaining debt was repaid in early January 2022.

The interim dividend is being increased by 14% to 2.4p (H1 FY21: 2.1p) and will be paid on 6 April 2022 to shareholders on the share register as at 4 March 2022, with an associated ex-dividend date of 3 March 2022. 

Strategic and operational progress

Our strategy is to grow revenues and profits organically in the large, growing and rapidly evolving GRC and Regulatory Compliance markets by investing in our business and actively managing our portfolio of businesses. 

Our investment focus is on establishing single technology platforms for each division.  This supports our digital-first approach and will enable the Group to grow organically and by acquisition more efficiently which will ensure we continue to maintain high margin levels.

In the Training & Education division we have established the Digital Hub in ICA, rolled out the solution to Bond Solon and are now moving the Accountancy training business onto the platform over the next 12 months.  In the Information & Data division, we have begun to establish a single data platform for all our lines of business based around Snowflake^® technology and expect this project to roll out over the next two years. 

Our first virtual classroom went live in March 2021 and is helping us continue to achieve high levels of innovative digital delivery in training and education products.

Further investments in sales and product management academy roll outs have started to deliver returns in revenue growth as has an increased focus on pricing and packaging.  We have successfully increased the number of multi-year subscription contracts in the first half as a result of this.

We remain focussed on actively managing our portfolio by assessing the potential of each business to exhibit the six common Wilmington characteristics that we recognise as key drivers of organic revenue growth and profitability improvement.

In December 2021, we sold AMT Training to Train The Street, LLC for an enterprise value of £23.4m, subject to customary working capital adjustments.  The cash received leaves us with a net cash position.  As previously announced, we continue to seek a buyer for our Spanish insurance business, Inese. 

We intend to use our cash resources and our £65m bank facility to acquire suitable GRC businesses to add further growth and profitability to the Group. We will continue to apply high levels of scrutiny in respect of target identification and multiples paid. We are clear in our ambition but also clear in the characteristics we will seek in any business we look to acquire. The ability to drive value and growth for Wilmington shareholders will always be a key priority.

Current trading and outlook

We continue to derive considerable benefits from our diversified portfolio as well as the investment we have made in product development and digitalisation over the past two years. In addition to driving organic growth, we have continued to improve margins.

Provided we can continue to run events face-to-face, we expect an additional boost to profitability in H2 FY22.  If not, we still expect profits and revenues to be higher than last year despite the sale of AMT.

ESG

The delivery of our strategy is supported by our ongoing commitment to responsible business practice, which echoes our commitment to help customers to do the right business in the right way.

A core component of our ESG strategy is to promote an open and inclusive culture in which employee feedback guides our decisions. During the period we responded to key issues raised by our colleagues and had a 91% participation rate in the recently completed annual engagement survey.

We continued to enhance our well-established employee wellbeing programmes and formalised our Diversity & Inclusion strategy with a clear roadmap for action. We also used our latest engagement survey to capture richer data that will help us to demonstrate progress against our diversity, wellbeing and employee development ambitions.

In September 2021, we committed to becoming carbon neutral in FY22.  We have achieved this goal already. We have supported high quality certified carbon reduction and storage programmes to offset almost double the scope 1, 2 and 3 emissions reported in respect of FY21.

In H1 FY22, we have completed a more detailed scope 3 emissions inventory, which will facilitate our work in the second half to set net zero targets in line with a 1.5-degree trajectory. We are currently implementing the strategic element of the TCFD recommendations as an integral component of our annual business planning process.

Divisional and Financial Review

Information & Data

Revenues in the Information & Data division were up 10% on an organic basis.   

This strong performance was driven by Healthcare which benefitted from the return to face-to-face events and good growth in HSJ subscriptions.  Financial Services achieved solid organic growth, again from subscriptions.  Identity & Charities achieved growth despite restructuring initiatives impacting the first half. 

Profitability in the division materially improved, particularly in Healthcare where revenue growth and cost reductions will combine in H2 to drive towards a margin target in excess of 20%.

Training & Education

Revenues grew 15% organically, led by a strong performance in North America where the return to face-to-face events has boosted revenues by 81%. 

UK and Ireland also had a strong six months with both Accountancy and Legal seeing double-digit growth due to increased customer demand.  Accountancy revenues are still recovering to pre-pandemic levels and so the comparative was weak but Legal is now a much bigger business than it was pre-pandemic. 

Global is now mostly ICA following the sale of AMT.  UK growth offsets a decline in Singapore following a very strong FY21. 

The increase in the division's revenue was accompanied by an increase in costs as face-to-face events brought a return of venue hire and travel costs.  However, we have maintained a much higher proportion of digital training delivery volumes compared to the pre-pandemic period, resulting in higher margins. 

Amortisation excluding computer software, impairment charge and other income

Amortisation of intangible assets (excluding computer software) was £1.2m (H1 FY21: £1.7m), the fall driven by some historic assets becoming fully amortised.  The impairment charge of £0.6m relates to a long leasehold building in Sutton Coldfield we have been unable to sell since vacating it two years ago.  Other income represents the net gain of £16.1m from the sale of AMT Training and £0.8m from the sale of buildings in Basildon linked to our office consolidation programme.

Finance costs

Net finance costs fell to £0.6m (H1 FY21: £0.8m) driven primarily by lower net debt levels. Non-utilisation fees on the banking facility will mean smaller finance costs will persist in the second half of the financial year. 

Profit before taxation and Earnings per Share

The increase in revenue, improved profit margins and the large gain on the sale of AMT have resulted in a profit before tax of £24.6m (H1 FY21: £5.5m).  Earnings per share measures improved for the same reasons.

Taxation

The tax charge is £1.7m (H1 FY21: £1.1m) with an overall effective tax rate⁵ of 7% compared to 20% in the prior period. The fall in effective tax rate was due to the gain on sale of AMT not being subject to corporation tax. The underlying tax rate⁶ which ignores the tax effects of adjusting items remained flat at 20% (H1 FY21: 20%).

Balance sheet and cashflow

Balance sheet movements are explained by the sale of AMT and trading in the period, as well as the sale of buildings in Basildon and the impairment of a long leasehold property in Sutton Coldfield.  Cash generation improved on the prior period due to the improved trading performance despite the return of dividend payments.

5 The effective tax rate is calculated as the total tax charge divided by profit before tax

6 The underlying tax rate is calculated as one minus the adjusted profit after tax divided by the adjusted profit before tax - the tax rate excluding the tax impact of adjusting items 

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Items in the statement above are disclosed net of tax.

Consolidated Balance Sheet 

Consolidated Statement of Changes in Equity 

Consolidated Cash Flow Statement

Notes to the Financial Results

General information

The Company is a public limited company incorporated and domiciled in the UK. The address of the Company's registered office is 10 Whitechapel High Street, London, E1 8QS.

The Company is listed on the Main Market on the London Stock Exchange. The Company is a provider of data information, training and education to the professional markets.

This condensed consolidated interim financial information ('Interim Information') was approved for issue by the Board of Directors on 18 February 2022.

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 2021 were approved by the Board of Directors on 17 September 2021 and subsequently filed with the Registrar. 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 2021 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'. The Interim Information should be read in conjunction with the Annual Financial Statements for the year ended 30 June 2021 which have been prepared in accordance with IFRSs applicable to companies reporting under IFRS, adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and international accounting standards in conformity with the requirements of the Companies Act 2006, 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, further supported by the net cash position. The Directors have therefore adopted a going concern basis in preparing the Interim Information.

2.     Accounting policies

The accounting policies, significant judgements and key sources of estimation adopted in the preparation of this Interim Report are consistent with those applied by the Group in its consolidated financial statements for the year ended 30 June 2021.

There has been no material impact on the financial statements of adopting new standards or amendments.

Amended standards and interpretations not yet effective are not expected to have a significant impact on the Group's consolidated financial statements.

3.     Principal risks and uncertainties

The principal risks and uncertainties that affect the Group remain unchanged from those stated on pages 31 to 37 of the strategic report in the Annual Report and Financial Statements for the year ended 30 June 2021.

4.     Measures of profit

Reconciliation to profit on continuing activities before tax.

To provide shareholders with additional understanding of the trading performance of the Group, adjusted EBITA has been calculated as profit before tax after adding back:

·      impairment of goodwill, intangible assets and property, plant and equipment;

·      amortisation of intangible assets excluding computer software;

·      adjusting items;

·      other income - net gain on office consolidation;

·      other income - gain on disposal of business operations;

·      other income - gain on disposal of subsidiary; and

·      net finance costs.

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

The net gain on office consolidation included in adjusting items is in respect of the exercise performed to consolidate the Group's office space. Included in this amount is the gain on disposal of two buildings and their associated assets on 31 August 2021.

The following adjusting items have been charged to the Income Statement during the period but are considered to be adjusting so are shown separately:

The impairment of goodwill, intangible assets and property, plant and equipment relates to:

The impairment in the period relates to the impairment of assets associated with an office property, recognised as a result of an exercise performed to consolidate the Group's office space.

5.     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's dynamic portfolio provides customers with a range of information, data, training and education solutions. The two divisions (Training & Education and Information & Data) 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, Europe (excluding the UK), North America and the Rest of the World.

 (a) Business segments

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.

(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:

6.     Earnings/(loss) per share

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

·      impairment of goodwill, intangible assets and property, plant and equipment;

·      amortisation of intangible assets excluding computer software;

·      adjusting items;

·      other income - net gain on office consolidation;

·      other income - gain on disposal of business operations; and

·      other income - gain on disposal of subsidiary.

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

7.     Disposal of subsidiary

On 24 December 2021 the Group disposed of its financial training business, AMT with subsidiary companies in the UK, US and Hong Kong for a consideration of £23.4m. A gain of £16.1m arose on disposal after taking into account £0.4m costs of disposal. As at the disposal date, the net assets of the AMT companies were £6.9m.

8.     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. 

There were no (H1 FY21: £55,625) transactions with related parties of key management personnel in the period.

9.     Cash generated from operations

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