Wilmington Regulatory News (WIL)

12 May 2016

Wilmington plc

Interim Management Statement

Wilmington plc ("Wilmington" or "the business"), the knowledge leader in Risk & Compliance, Finance, Legal, and Insight announces its Interim Management Statement for the nine month period to 31 March 2016 with comments reflecting trading to-date.

Trading Update

Group revenue was up 9% during the nine months ended 31 March 2016 accompanied by good profit growth. Overall, performance is in line with expectations, with good organic growth coming from the Finance division, supported by strong contributions from the acquisitions made during the period.

The Risk & Compliance division continues to grow overall driven by contributions from Axco, ICP and Compliance Week with public and on-line compliance training revenue growth balancing the reduction in one-off revenue assignments compared to 2014/15. As previously reported, the growth within these two divisions and the contribution from our acquisitions were offset to some extent by continued declines in revenue from Legal and to a lesser extent from Insight which is recovering from its mixed start. Like for like revenue growth, adjusting for the three acquisitions made in period and the disposal of the Media business, was 1%.

During the nine month period, Wilmington continued to see growth in reported operating profits, but consolidated operating margins were down slightly reflecting inter-alia, the ongoing investment in the compliance training business to support growth and reduced margins in Legal.

Operational Review

Wilmington Risk & Compliance 

Wilmington Risk & Compliance delivered revenue growth during the period measured against a strong prior year comparator. In support of this continued growth, as reported in the interim results we have invested in a number of senior appointments, trainers, sales and administrative support staff together with e-learning capability and compliance programs to expand our infrastructure. This investment will continue into 2016/17 with the continued expansion of the International Compliance Association (ICA) education and training programs into new geographies and industry sectors as well as investment in new ICA membership benefits including content library access. In support of this global initiative, further investment will also be made in Compliance Week to expand its geographical reach in terms of events and information coverage.

Wilmington Finance 

Finance has again reported good revenue growth continuing the trends experienced in 2014/15, albeit that growth has started to slow in AMT recently due to increased competition particularly from a team of former senior Wilmington staff which has resulted in the loss of two large assignments for the last quarter of 2015/16. As reported in its Interim results, Wilmington has commenced legal action to protect its position, including enforcing certain non-compete obligations and recovering compensation for breaches of contract. It is anticipated this legal action will cost up to £0.8m in this financial year and will continue to be shown as an adjusting item.

In Accountancy Training, which represents around 60 percent of the divisions revenue before the Financial Research Associates ("FRA") acquisition we have continued to see increased demand for technical and marketing support and have benefitted from the UK Government's additional July 2015 fiscal budget.

Wilmington Legal

The Law for Lawyers businesses which represent around half of the division's revenue experienced further reduced demand for face to face CLE information, education and conferences. In particular, there has been a larger than expected decline in legacy advertising revenues from some of our annual directories and reports which has necessitated further cost reduction measures. During the period, we restructured the publishing arm of the division, reduced the cost base and closed some peripheral legal titles, as well as the Waterlow cost drafting service.

CLT Scotland, which operates in a different CLE environment to the rest of the UK, has benefited from increased Scottish Legislation and increased paralegal training demand and saw some good revenue growth. In the Law for Non-Lawyers part of the division Bond Solon, which provides law services and training delivered excellent revenue growth of 12%.

Wilmington Insight 

As previously reported, Insight had a mixed start which has been offset to a degree by strong growth and continued momentum from NHiS which is enjoying increased demand for analyst-led insightful information. We have strengthened our offering with two acquisitions in online education and analyst support as we believe the Healthcare area offers excellent growth opportunities. The data suppression and charities businesses remained largely flat as expected.

Acquisitions

The FRA acquisition which has been fully integrated within the Insight and Finance divisions reported an excellent first nine months trading. This strong performance was aided by its flagship RISE Nashville event which enjoyed record sales and profits.

Wilmington's two further acquisitions in the Insight division during the period (Wellards and Evantage Consulting Limited) have both performed well with integration on track.

Cash Flow

Net debt as at 31 March 2016 was £34.5m (2015: £31.3m) reflecting strong cash generation offset by the £13.0m in cash paid for three acquisitions made during the year. This net debt compares to an overall borrowing facility of £65m.

Outlook

Wilmington continues 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 and will continue to invest in our Compliance business to provide the infrastructure and support for anticipated future growth. Despite the issues surrounding AMT and the continued uncertainty around the Legal CLE changes in law for lawyers, financial performance is in line with the Board's expectations and 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.

Wilmington Risk & Compliance: This division provides in-depth regulatory and compliance accredited training and information, market intelligence, and analysis. It focuses on the international financial services and international insurance markets as well as the UK pensions industry.

Wilmington Finance: This division provides corporate finance and capital markets training as well as training and support services for qualified accountants in the UK and Ireland in the profession and industry.

Wilmington Legal: The Legal division provides a range of training, professional support services and information including Continuing Legal Education (CLE), expert witness training, databases and magazines to legal professionals. Roughly half of the division's revenue comes from law for lawyers and law for non-lawyers.

Wilmington Insight: The Insight division provides analysis and clarity to customer-focused organisations, enabling them to better understand and connect with their markets.