Wilmington Regulatory News (WIL)

3 November 2016

Wilmington plc

AGM and Q1 Trading update

Wilmington plc ("Wilmington" or "the business"), the knowledge leader in Risk & Compliance, Finance, Legal, and Insight announces its trading update for the three month period to 30 September 2016 with comments reflecting trading to-date. This statement is also being made at the Group's Annual General Meeting being held today.

Trading Update

As we reported, Wilmington has had a mixed start with good growth from Risk & Compliance and the Insight division but that was offset by a weaker performance from Legal and Finance.

Revenue was up 8.5% (4% constant currency) compared to the first three months of 2015/16 helped by translation gains from our non-sterling revenue and from contributions from acquisitions. Profits were down compared to last year due to a combination of timing with the movement of one large compliance program and due to the slow start for AMT previously reported as well as planned investments.

As previously highlighted, significant investments are being made in people and in establishing new offices in Singapore, Barcelona and in the US. In particular we have accelerated investments in our Compliance, Insurance and Healthcare businesses. Whilst the benefits of these investments are expected to be seen in the second half of this financial year it will result in adjusted profits for the first six months being maintained at around the levels seen last year.

Acquisitions made in 2015/16 and our latest acquisition, SWAT, continue to perform well and we expect SWAT to be earnings enhancing in this current financial year.

Overall, Wilmington is on track to deliver against expectations for the full year.

Operational Review

Wilmington Risk & Compliance: 

Risk & Compliance delivered strong revenue growth in the period. The compliance business continues to enjoy significant demand for its accredited face to face training in both public events and bespoke in-house assignments. Growth would have been even stronger but we decided to delay a large training program worth over £0.5m by two months to capture additional demand. To strengthen our infrastructure and to support the expected continued growth in revenue from compliance, we have

set up our US operation and have recruited a number of senior positions over the last three months. At the same time we have made initial exploratory investments in the next generation of Axco products and services. Compliance Week had a disappointing start to the year and we have seen weaker than expected demand for our Annual European Compliance event.

Wilmington Finance: 

Finance revenue was marginally down overall compared to a very strong 2015 comparator period, benefitting from currency gains and from the acquisition of SWAT offsetting the one off benefit in 2015 of the additional UK fiscal budget and the impact of the weakness in AMT. As previously reported AMT had a weak start mainly due to the competition issues previously highlighted but also due to some softening of investment bank training assignments in the Asia Pacific region. The impact of this reduced high margin AMT revenue has had a material impact on the division's profits.

Wilmington Legal:

Challenging market conditions remain in the Law for Lawyers part of the Legal division and the Legal division overall experienced a weaker than expected first quarter. This was a result largely of continued reduced demand for face to face CLE training and conferences. The overall revenue decline was offset by the lower cost base implemented last year and we saw a welcome overall improvement in contribution from the division.

Wilmington Insight: 

The division has had a good start with revenue up on last year overall and up on an underlying basis. Healthcare has enjoyed good growth driven by the higher margin multi product analytical assignments from NHiS and Evantage. The trends seen last year in non-healthcare data suppression and the charities businesses have continued as expected.

SWAT

SWAT was acquired on 19 July 2016 and had an excellent first quarter recording a profit contribution on revenue of £1.0m.

Cash Flow

Net debt as at 30 September 2016 was £38.7m (2015: £36.3m) reflecting the acquisition of SWAT for £1.9m, the deferred consideration for FRA of £1.1m paid in July 2016 and the effects of retranslating US dollar debt into Sterling of £0.5m.

Unrealised exchange loss

As previously reported, Wilmington has entered into a number of currency sale agreements to sell surplus US Dollars and Euros for Sterling in line with its stated treasury policy. The average rate of these contracts is $1.46 for $10.0m and €1.26 for €3.5m for settlement in the second half of 2016/17.

As required under IFRS accounting standards these contracts will be revalued at 31 December 2016 and the resultant unrealised non-cash difference between the value at 30 June 2016 and 31 December 2016 will be charged to the Income statement for the six months to 31 December 2016. Depending on exchange rates this non-cash unrealised charge could be material.

Outlook

The overall trading outlook has not changed since the full year 2016 results announcement although we may see a material unrealised non cash exchange loss reported at the end of December 2016. This exchange loss should reverse to some extent in the second half of the year when those currency contracts are fulfilled.

We continue to see the trends of tighter regulatory control and more complex legislation being implemented in most of our key markets, which in turn is driving demand for many of our products and services. We have also continued to invest heavily as planned in our Compliance business which is providing the infrastructure and support for anticipated future growth and are looking to develop new products and markets for Axco. These investments have been accelerated and will impact the first six months profits but are necessary to capture expected longer term revenue generating opportunities. Overall, Wilmington is on track to deliver against expectations for the full year.

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Notes to Editors

Wilmington plc is 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. Capitalised at approximately £230 million, Wilmington floated on the London Stock Exchange in 1995.