Wilmington Regulatory News (WIL)

22 September 2022

Wilmington plc

Resilient organic growth strategy delivering

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 results for the year ended 30 June 2022.

Financial performance

Highlights

· 13% organic[4] revenue growth driven by successful digitalisation programme, new product investment and return to FTF[5] events. Organic revenue growth 5% excluding FTF events.

o  Training & Education division delivered 18% organic growth

o  Intelligence division delivered 10% organic growth

· Annual recurring revenues grew by 5%, now 37% of Group revenues

· Adjusted profit before tax up 38% to £20.7m (2021: £15.0m) reflecting continuing efficiencies of digital-first model

· Strategic sale of AMT for proceeds of £23.4m before completion adjustments

· Net cash at 30 June 2022 £20.5m (2021: net debt £17.2m) reflecting strong trading performance, effective cash management strategies and sale of subsidiaries and property

· Strong cash conversion[6] of trading profits of 114% (2021: 104%)

· Dividend up 37% in line with profits to 8.2p (2021: 6.0p)

· Investments driving strategic progress, future growth plans enhanced by development of single technology platforms in each division

· Further embedded cultural ambitions, bolstered by commitments to Race at Work Charter, Inclusive Employers and Disability Confident

· Committed Net-Zero Carbon Targets

Mark Milner, Chief Executive Officer, commented:

"These strong results demonstrate the success of our strategy with good organic revenue growth, profits up by 38% and substantial cash generation. Our new operating model is successfully embedded and has enhanced our position in the large, expanding and rapidly evolving Governance Risk and Compliance (GRC) market.

"The investments we have made in technology and data are accelerating our growth ambitions as we develop single technology platforms in each division. These investments are enhancing our position by creating a scalable portfolio of assets that are strongly aligned to the dynamic and growing GRC market.

"We have a resilient business model with increasing recurring revenues. We have seen good demand in all areas during the first quarter of the current financial year, generating revenues and profitability in line with our expectations."

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.

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

We have executed our strategy by growing our revenues and profits organically in the markets we focus on; investing further in our business and the technology it runs on; and by actively managing our portfolio of brands. The business has demonstrated notable resilience, reflected by the strong financial performance.

We have delivered organic revenue growth of 13% by growing all parts of our business - a result enhanced by a return to face-to-face events this year. Growth excluding events was 5% and reflects increased demand for our core offering in all product areas. We have also achieved a five-percentage point growth in recurring revenue[7], which now represents 37% of total revenue, driven by recent investments in sales and marketing capabilities.

The increased revenues and a continued focus on operational efficiency and cost management resulted in adjusted PBT growth of 37.8% to £20.7m (2021: £15.0m) and a corresponding improvement in adjusted PBT margin to 17.1% (2021: 13.3%). This resulted in adjusted basic earnings per share being up 37.0%. We also are proposing a final dividend of 5.8p (total of 8.2p). The Group moved into a net cash position (excluding lease liabilities) of £20.5m (2021: net debt £17.2m) after the sale of AMT and a strong year of converting profits to cash.

Strategy

Following a comprehensive review of our portfolio in 2021, our strategic focus has been centred on building upon our already strong presence in the large, growing and rapidly evolving GRC markets. 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 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. Our operating model mirrors this core purpose - our Intelligence division provides specialist data and analytics that give customers the detailed insight they need to understand the regulatory landscape, and our Training & Education division delivers specialist training that equips them to navigate it successfully.

As planned we sold AMT during the year and have now identified a buyer for our small Spanish insurance business. We expect this divestment to be concluded in the first half of the 2023 financial year.

Investment programme

Our investment approach across the Group continues to be to leverage our core competencies to embed the unique characteristics that define our competitive advantage into each of our brands. Our investment focus is on developing single technology platforms in each of our divisions, providing the foundation to accelerate our growth ambitions.

Our investment during this calendar year in the development of single technology platforms will further differentiate us by providing unique solutions to our customers. They will also enhance our growth potential as we retain the agility to respond to their ever changing needs in the rapidly evolving GRC markets. The implementation of single platforms in each division will also allow us to efficiently expand our offering by creating a scalable portfolio to enhance our growth potential.

Two of our brands in the Training & Education division are already benefiting from our Digital Learning Platform, and we are on track to have the remaining brands within the division fully deployed to this common platform by December 2022.

Our Data Connect Platform, deploying Snowflake® technology has already been rolled out to three of our Intelligence division brands, and will also be used across the whole division by December 2022.

We continue to develop new products and identify clear organic growth opportunities, with the future potential for effective roll out of these greatly enhanced by our single platform approach. This strategy for maximising the value of our technology and data assets, combined with our streamlined operating model, provides the strong base to actively consider acquisition targets which complement and/or extend our capabilities.

Responsible business

As we continue to help our customers to do the right business in the right way, we are committed to investing in the initiatives that support our own responsible business culture. The work we have done to further develop our inclusive working environment has been bolstered by commitments to the Race at Work Charter, Inclusive Employers and the Disability Confident Scheme. We have also progressed our ambition to effectively monitor our performance in this area by collecting richer diversity data around what makes our people unique for the first time.

We have implemented the TCFD recommendations in full, concluding that we must continue to monitor the impacts of climate change on the Group's risk profile, but that the potential opportunities that may arise from the transition to a low-carbon economy are well aligned to our core offering. We have committed to Net Zero carbon targets, with an ambition of absolute zero in respect of scope 1&2 emissions by 2028, and net zero in respect of scope 3 emissions by 2045.

Current trading and outlook

The continued execution of our strategy over the past 12 months has positioned the Group well to expand its presence in the GRC markets, and to drive future growth.

We continue to manage the challenges caused by inflationary pressures, and the proven resilience of the Group provides reassurance that it is well placed to withstand the impact of ongoing macro-economic volatility and continue our organic growth.

Trading has been encouraging in the first quarter, with good demand in all areas generating revenues and profits in line with expectations.

Divisional review

Intelligence

Business model and markets

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 constitute 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.

Identity & Charities rebranded as MiExact in the year as part of the restructuring of its product set begun last year. The MiExact business consists of a portfolio of data products including charity fundraising information, and marketing data suppression tools. They include services that are used by organisations to help prevent identify fraud. Revenue is predominantly subscription based.

Trading performance

Overall Intelligence revenues grew 5%, 10% organically. All businesses within the division grew organically. Recurring subscription revenues grew four percentage points with strong retention rates.

Healthcare revenues grew 11% organically, helped by the return to face-to-face events in the UK. Subscription revenues grew 7% with UK revenues up 12% and French revenues up 4%. Competitive pressure continued to challenge growth of Data revenue in some areas, but overall demand for these products was good.

Financial Services revenues grew 10% organically with growth in Axco, Pendragon, Compliance Week and the held-for-sale Inese. Compliance Week and Inese benefitted from the return to face-to-face events while subscriptions grew well in Axco and Pendragon, where retention rates were above 99%.

MiExact revenues grew 1% after a slow first half was followed by a strong final quarter. Subscription revenues had a retention rate above 95%.

Intelligence divisional operating profit grew by 22%, helped by its revenue growth and continuing focus on its cost base. Operating margins improved to 19% from 16%.

Training & Education

Business model and markets

The Global business comprises two units 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. 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.

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.

The other Global business, CLTi, earns revenue from running professional development programmes for wealth managers. Wilmington has an international presence, with centres in the UK, Europe, and Asia Pacific and consistent investment in technology maintains the Group's competitive positioning. The AMT training business was sold in December 2021.

The North America business, FRA, is predominantly events based. It serves the US Healthcare and 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 addresses 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. Revenue from the US events is generated from both sponsorship and delegate sales.

The UK and Ireland business 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 small Irish reseller of training services (LaTouche) was sold in April 2022.

Mercia (accountancy) and Bond Solon (legal) 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 a network of independent tutors who are paid per course that they deliver.

The Law for Non-Lawyers market is strong, with good ongoing demand for existing products as well as successful launches of new training courses. Growth in the Accountancy market remains partially supressed due to the impact of Covid-19, which compounded the challenges caused by continued consolidation of smaller firms, some Brexit uncertainty and a relatively stable backdrop in terms of tax legislation and accounting standards. Whilst not yet reaching its pre-Covid size, the Accountancy market has returned to growth and demand is expected to benefit from upcoming legislative change in the UK.

Trading performance

Training & Education revenues grew 9%, and 18% on an organic basis. All five of the businesses within the division grew organically and recurring subscription revenues grew 9%.

ICA revenues were up 3% as strong growth in the UK was offset by a drop in Singapore revenues after the exceptional growth there in FY21, but FY22 Singapore revenues were still nearly double their FY20 level. CLTi grew 4% and is focussed on increasing business in new territories in FY23. 

Bond Solon saw double-digit growth in FY22, driven by a strong increase in demand across the year. Mercia revenues grew 8% in the year, and despite still being short of its pre-Covid position the business is on track to recover the remaining shortfall.

In the US, FRA more than doubled revenues as events returned to being face-to-face. Organic growth of 122% brought the business back to larger revenues than the pre-Covid period (FY19) as demand from sponsors offset slightly lower delegate attendance than FY19.

Overall divisional operating profit increased strongly by 31%, mainly due to increased revenues and tight cost management. As a result, the operating profit margin rose to 26% from 22% in FY21.

Financial review

Adjusting items, measures and adjusted results

In this financial review reference is made to adjusted results as well as the equivalent statutory measures. The Directors make use of adjusted results, which are not considered to be a substitute for or superior to IFRS measures, to provide stakeholders with additional relevant information and enable an alternative comparison of performance over time. Adjusted results exclude amortisation of intangible assets (excluding computer software), impairments, other income (when material or of a significant nature), and other adjusting items.

Variances described as 'organic' are calculated by adjusting the revenue change achieved year-on-year to exclude the impact of changes in foreign currency exchange rates and also to exclude the impact of changes in the portfolio from acquisitions and disposals.

Revenue

Group revenue increased 7.1% overall and 13.4% on an organic basis, the overall increase reflecting £0.4m of foreign currency downside and the impact of disposals.

Operating expenses before amortisation of intangible assets (excluding computer software) and impairments

Operating expenses before amortisation of intangible assets (excluding computer software) and impairments were £99.4m (2021: £96.4m) up £3.0m or 3.1%.

Within operating expenses, staff costs marginally increased £0.5m to £55.2m (2021: £54.7m). This net increase reflects discretionary staff bonuses, £1.4m higher than the prior year as a result of the stronger trading performance in FY22. The increases were partly offset by salary cost savings generated from a reduction in headcount post disposal of businesses. Share based payment costs increased £0.6m due to an increased number of schemes due to vest.

Non-staff costs increased by £2.5m to £44.2m from £41.7m in the prior year, reflecting the increased revenue and the anticipated return of some face-to-face delivery costs including venue hire.

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, increased £0.2m year-on-year to £4.5m (2021: £4.3m).

Adjusted profit before tax ('adjusted PBT')

As a result of increased revenue and a continued focus on operational efficiency and cost management, adjusted profit before tax, which eliminates the impact of amortisation of intangible assets (excluding computer software), impairments, other income and other adjusting items, was up 37.8% to £20.7m (2021: £15.0m).

Adjusted profit margin (adjusted PBT expressed as a percentage of revenue) also increased to 17.1% (2021: 13.3%).

Amortisation excluding computer software, impairment charge and other income

Amortisation of intangible assets (excluding computer software) was £2.4m (2021: £3.4m). The decrease reflects certain historical assets being fully amortised part way through the prior year.

The non-cash impairment charge of £0.6m relates to the impairment of assets associated with an exercise performed to consolidate the Group's office space.

Other income represents the net gain of £16.3m from the disposal of AMT and La Touche Bond Solon Training Limited, the £1.3m gain on disposal of two buildings and their associated assets recognised as a result of the consolidation of the Group's office space and £0.8m of one-off financing activities associated with capital management.

Adjusting items within operating expenses

Adjusting items within operating expenses of £0.1m (2021: £3.0m) are those items that are one-off in nature and which do not represent the ongoing trading performance of the business.

Operating profit ('EBITA')

Operating profit was £37.0m (2021: loss £0.4m). The large increase is driven by the impact of the other income items detailed above and a non-cash impairment in 2021, along with strong revenue growth and effective cost management during the year.

Net finance costs

Net finance costs were £0.9m (2021: £1.6m), primarily related to the decrease in interest payable on bank loans and overdrafts following the repayment of the revolving credit facility. 

Profit before taxation

Profit before taxation was £36.1m (2021: loss £2.0m); a reconciliation of this to adjusted profit before tax can be found in note 3.

Taxation

The tax charge for the year was £3.3m (2021: £2.5m) reflecting an effective tax rate of 9.1% (2021: negative 125.0%). The substantial decrease in the effective tax rate year-on-year reflects the nature of other operating income and adjusting items, specifically the gain on disposal of businesses in 2022 which was not subject to corporation tax, and the impairment charge in 2021 which was not deductible for tax purposes.

The underlying tax rate which ignores the tax effects of adjusting items remained essentially unchanged at 21.0% (2021: 20.5%).

Earnings per share

Adjusted basic earnings per share increased by 37.0% to 18.66p (2021: 13.62p), due to the increase in adjusted profit before tax, a broadly flat underlying tax rate and an essentially unchanged number of issued ordinary shares (see below). Basic earnings per share was 37.46p (2021: basic loss per share of 5.18p) in the prior year, reflecting the increase in profit after tax.

Dividend

A final dividend of 5.8p per share (2021: 3.9p) will be proposed at the AGM. This will give a full year dividend up 37% to 8.2p (2021: 6.0p) and dividend cover of 2.3 times (2021: 2.3 times). If approved it will be paid on 28 November 2022 to shareholders on the register as at 28 October 2022 with an associated ex-dividend date of 27 October 2022.

Balance sheet

Non-current assets

Goodwill at 30 June 2022 was £61.1m (2021: £65.8m) which was primarily due to goodwill disposed of £6.2m for AMT. Additionally, a strengthening US Dollar led to an increase in the Sterling value of the US Dollar portion of the Group's goodwill.

Intangible assets decreased by £4.6m to £9.4m (2021: £14.0m) due to amortisation of £6.1m, partly offset by additions of £1.3m within computer software reflecting the Group's continued strategy to invest in the existing businesses to fuel organic growth. Additions reflect the continued investment in Wilmington's digital transformation.

Property, plant and equipment decreased by £2.4m to £6.9m (2021: £9.3m). The decrease in purchased property, plant and equipment was attributable to depreciation of £2.4m, £0.6m impairment mentioned above and assets transferred to held for sale of £0.3m relating to assets held by Inese (see disposal group held for sale below), partially offset by additions of £0.9m.

Deferred consideration receivable

The deferred consideration receivable balance of £1.7m (2021: £1.8m) relates to the disposal of ICP in July 2018 with £1.5m recognised within non-current assets and the remaining £0.2m recognised within current assets.

Disposal group held for sale

As at 30 June 2022, the disposal group classified as held for sale relates to Wilmington Inese SL. The assets of the disposal group held for sale are £1.5m, including £0.8m of cash and cash equivalents, and liabilities of the disposal group held for sale are £1.3m.

Trade and other receivables

Trade and other receivables were £27.1m (2021: £28.7m). This decrease was mainly due to the disposal of AMT and La Touche Bond Solon Training Limited, which collectively comprised £1.4m within trade receivables in the prior year.

Current tax asset

At 30 June 2022 the Group recognised an asset relating to current tax of £1.3m (2021: £0.3m). The net asset position reflects a net repayment position.

Trade and other payables

Trade and other payables decreased by £4.7m to £50.3m (2021: £55.0m). Within this, subscriptions and deferred revenue increased by £1.3m or 4.3% to £31.4m (2021: £30.1m) and trade and other payables decreased by £6.0m to £18.9m (2021: £24.8m).

This increase in subscriptions and deferred revenue was driven mostly by the growth of subscription services in the year and a year-on-year increase in June sales. The decrease in trade and other payables was primarily driven by the unwind of payroll tax payments and better payment practices for amounts owed to suppliers.

Provisions

Provisions were £1.5m (2021: £1.8m), relating wholly to future committed costs associated with the closed portion of the head office space.

Net cash, lease liabilities and cash flow

Net cash, which includes cash and cash equivalents, cash classified as held for sale, bank loans (excluding capitalised loan arrangement fees) and bank overdrafts, and lease liabilities was £13.0m (2021: net debt of £28.0m). This significant net cash position is driven by a strong trading performance delivering improved profits and effective cash management as well as a significant cash inflow associated with the other income items mentioned above.

Lease liabilities decreased to £7.5m (2021: £10.7m) 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 remained strong at 114% (2021: 104%).

Share capital

During the year 224,838 (2021: nil) new ordinary shares of £0.05 were issued to satisfy the Company's obligations under the SAYE Plan.

During the year the Wilmington Group plc Employee Share Ownership Trust ('ESOT') purchased 170,097 ordinary shares for the purpose of future settlement of employee share schemes. On 30 September 2021, 37,435 shares vested under its Performance Share Plan settled via the ESOT. In April 2022 3,552 shares were used to satisfy the Company's obligations under the SAYE Plan. At 30 June 2022, the ESOT held 403,782 shares (2021: 274,672).

Consolidated income statement

for the year ended 30 June 2022

Consolidated statement of comprehensive income

for the year ended 30 June 2022

Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income is disclosed in note 8.

Consolidated balance sheet

as at 30 June 2022

Consolidated statement of changes in equity

for the year ended 30 June 2022

Consolidated cash flow statement

for the year ended 30 June 2022

Notes to the financial statements

1. Nature of the Financial Statements

The following financial information does not amount to full financial statements within the meaning of Section 434 of Companies Act 2006. The financial information has been extracted from the Group's Annual Report and Financial Statements for the year ended 30 June 2022 on which an unqualified report has been made by the Company's auditors.

Financial statements for the year ended 30 June 2021 have been delivered to the Registrar of Companies; the report of the auditors on those accounts was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The 2022 statutory accounts will be delivered in due course.

Copies of the Annual Report and Financial Statements will be made available to shareholders shortly and printed copies will be available from the Company's registered office at 10 Whitechapel High Street, London, E1 8QS.

2. Statement of accounting policies

The preliminary announcement for the year ended 30 June 2022 has been prepared in accordance with UK adopted international accounting standards (UK adopted IAS). The accounting policies applied in this preliminary announcement are consistent with those reported in the Group's Annual Financial Statements for the year ended 30 June 2021. There was no material effect from the adoption of new standards or interpretations in the year ended 30 June 2022.

3. 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 (included in operating expenses);

• other income - gain on disposal of subsidiaries;

• other income - gain on disposal of business operations;

• other income - gain on disposal of property, plant and equipment;

• other income - net gain on financing activities; and

• net finance costs.

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

4. Segmental information

In accordance with IFRS 8 the Group's operating segments are based on the operating results reviewed by the Executive 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. During the year the Information & Data division was renamed to Intelligence. The two divisions (Training & Education and Intelligence) 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 central 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:

Included within North America is revenue of £21,304,000 generated within the USA.

c) Timing of revenue recognition

The timing of the Group's revenue recognition is as follows:

During the year the Group recognised £30,124,000 of revenue that was held in deferred revenue at 30 June 2021 (2021: £31,465,000 related to amounts held at 30 June 2020).

5. Profit/(loss) from continuing operations

a) Profit/(loss) for the year from continuing operations is stated after charging/(crediting):

The gain on sale of property, plant and equipment included in adjusting items relates to the gain on disposal of two buildings and their associated assets on 31 August 2021.

b) Adjusting items

The following items have been charged to the income statement during the year 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 during the year 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.

6. Operating expenses

7. Net finance costs

8. Taxation

Factors affecting the tax charge for the year:

The effective tax rate is lower (2021: higher) than the average rate of corporation tax in the UK of 19.0% (2021: 19.0%). The differences are explained below:

Deferred tax assets and liabilities are measured at the rates that are expected to apply in the periods of the reversal.

The Company's profits for this accounting year are taxed at an effective rate of 9.1% (2021: -125.0%).

Included in other comprehensive income are a tax charge of £nil (2021: £22,000) and a tax credit of £45,000 (2021: charge of £179,000) relating to the interest rate swaps and net investment hedges respectively.

The tax effect of adjusting items as disclosed in note 10 is a credit of £1,050,000 (2021: £558,000).

9. Dividends

Amounts recognised as distributions to owners of the parent in the year:

10. Earnings/(loss) per share

Adjusted earnings per share has been calculated using adjusted earnings calculated as profit after taxation attributable to owners of the parent but before:

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

• amortisation of intangible assets excluding computer software;

• adjusting items (included in operating expenses);

• other income - gain on disposal of subsidiaries;

• other income - gain on disposal of business operations;

• other income - gain on disposal of property, plant and equipment; and

• other income - net gain on financing activities.

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

For the year ended 30 June 2021, potentially dilutive share options were only considered in relation to adjusted earnings per share as the Group made a basic loss per share.

11. Disposals

In the year ended 30 June 2022 the Group disposed of the following subsidiary companies:

The disposals were executed in line with the Group's strategy to simplify its structure and to focus attention on businesses that operate in the GRC and Regulatory Compliance markets. The subsidiary businesses were classified as continuing operations until their respective disposal dates. In total the Group recognised a gain on disposal of £16,329,000 presented within adjusting items.

a) Disposal of subsidiary companies - Adkins & Matchett (UK) Limited, Adkins, Matchett & Toy Limited and Adkins, Matchett & Toy (Hong Kong) Limited, together referred to as 'AMT'

On 24 December 2021 Wilmington plc disposed of AMT for a net cash consideration of £22,631,000 and recognised a gain on disposal of £16,224,000. The disposal was executed by way of the sale of 100% of the equity shares and as at the disposal date, the net assets of AMT were as follows:

b) Disposal of subsidiary company - La Touche Bond Solon Training Limited

On 22 April 2022 Wilmington plc disposed of La Touche Bond Solon Training Limited for a net cash consideration of £161,000 and recognised a gain on disposal of £105,000. The disposal was executed by way of the sale of 100% of the equity shares. As at the disposal date, the net assets of La Touche Bond Solon Training Limited were as follows:

12. Goodwill

Goodwill arising on business combinations is not amortised but reviewed for impairment on an annual basis, or more frequently if there are indications that goodwill may be impaired. Determining whether the carrying value of acquired goodwill is recoverable is a significant judgment given the material nature of the goodwill balance and the significant assumptions underpinning management's impairment assessment of the Group's cash generating units ('CGUs'). The Group identifies its CGUs on a business operation and geographic level. This is consistent with the way the chief operating decision maker reviews performance.

Disposal

During the year AMT and La Touche Bond Solon Training Limited was disposed of, which resulted in the disposal of the carrying value of goodwill associated with both entities. At the date of disposal the carrying value of this goodwill was £6,237,000.

Annual impairment review

The recoverable amount for each CGU has been determined using value in use calculations. These calculations use the pre-tax future cash flow forecasts covering a three year period based on Board approved budgets. Cash flow projections in these budgets have been based on growth assumptions that reflect anticipated market trends in the range of industries served by the brands within each CGU. Overall these projections assume stable profit margins reflecting market presence expansion, whilst managing the impact of projected inflationary and recessionary pressures. Pre-tax cash flows beyond the three year period are then extrapolated using an estimated long term growth rate of 2.0% (2021: 2.0%), providing a 'base case' scenario for the purpose of the impairment review. Key assumptions for the value in use calculations are those regarding discount rates, three year cash flow forecasts and long term growth rates.

Discount rates

Management has applied pre-tax discount rates as follows:

Pre-tax discount rates are calculated on a company specific participant basis; movements in the pre-tax discount rates for CGUs since the prior year are driven by changes in company specific market-based inputs. Management considers the pre-tax discount rates to be calculated using appropriate methodology. The rates are in in line with its peers, and the Board views the rates as accurately reflecting the return expected by a market participant.

Sensitivity to changes in assumptions

The Group has performed sensitivity testing to assess the impact of changes in assumptions on the value in use of each CGUs. The sensitivity analysis performed assessed the impact of pessimistic but reasonably possible changes to future cash flows, long term growth rates and pre-tax discount rates. All CGUs retained significant headroom in these sensitised calculations, leading to the conclusion that there is no realistic change of assumption that would result in carrying value to exceed its recoverable amount.

Cash generating units

The following table details the net book value of goodwill allocated to each CGU:

13. Intangible assets