Wilmington Regulatory News (WIL)

25 February 2014

WILMINGTON GROUP PLC

("Wilmington", "the Group" or "the Company")

Financial Results for the six months ended 31 December 2013

Wilmington Group plc, the provider of Information, Compliance and Education to professional markets today announces its interim results for the six months ended 31 December 2013.

Financial highlights

- Adjusted EBITA1 increased 15% to £8.2m (2012: £7.1m)

- Adjusted EBITA margin3 improved to 19.0% (2012: 17.4%)

- Adjusted Profit before Tax2 was up 18% to £7.1m (2012: £6.0m)

- Adjusted Earnings per Share4 were up 14% at 6.2p (2012: 5.5p)

- Group revenues for the period increased 5% to £43.1m (2012: £40.9m)

- Profit before tax at £3.7m (2012: £5.1m)

- Deferred revenue increased by 23% to £19.2m (2012: £15.6m)

- Resumption of progressive dividend policy; interim dividend increased from 3.5p to 3.6p

Operational highlights

- Acquisition of Compliance Week strengthens Wilmington's presence in the global governance, risk and compliance ("GRC") market and establishes a significant operational base in North America

- Growing international revenues; now 35% of consolidated revenue (2012: 29%)

- Subscriptions and repeatable revenue at 77% (2012:77%)

- Disposal of surplus freehold property for £700,000 in cash

- Strong momentum in Banking & Compliance and Pensions & Insurance

- Some challenging conditions in Healthcare and Legal markets

Current Trading

- Trading in line with management expectations, outlook for 2014 remains unchanged

Board Change

- As separately announced today, Charles Brady has informed the Board of his intention to retire as Group Chief Executive. Until the right successor is in place, Charles will remain as CEO and will work with the Board to ensure a smooth handover takes place.

Mark Asplin, Chairman, commented:

"Wilmington has had a good start to 2014. Recent acquisitions have been integrated and are contributing to Group performance. Our bigger businesses Banking & Compliance and Pensions & Insurance are performing well with each enjoying strong organic growth. As expected, Legal had a difficult end to the Legal CPD year and continues to face challenging market conditions. There have also been strong competitive pressures in our Healthcare division but our prognosis for the medium term is encouraging with new products and potentially new markets opening up for us.

Given our solid performance overall I am pleased to report that we have decided to reinstate our progressive dividend policy. In addition, cash flow is strong enabling us to invest in important internal systems which will provide the foundation for future growth, re-engineer the way we interact with our customers and transform the way we run our businesses.

The overall trading environment has not changed significantly since the full year 2013 results announcement. Wilmington is a well-balanced business which is increasingly international and, as we move into the second half, our financial performance is on track to support our current expectations for the full year."

Notes

1 Adjusted EBITA - see note 5 to the interim results

2 Adjusted Profit before Tax - see note 5 to the interim results

3 Adjusted EBITA margin - Adjusted EBITA divided by Revenue

4 Adjusted Earnings per Share - see note 11 to the interim results

5 Adjusted EBITDA - see note 5 to the interim results

Interim Financial Results

I am pleased to present my report on Wilmington's results for the six months ended 31 December 2013.

During the period, Wilmington has performed well and produced another solid performance with Adjusted EBITA1 up 15% to £8.2m from £7.1m in 2012. Adjusted Profit before Tax2 was up 18% to £7.1m (2012: £6.0m). Adjusted EBITA margins5 also increased to 19.0% up from 17.4% in the equivalent period in 2012.

Revenues were up 5% to £43.1m (2012: £40.9m), reflecting first time contributions from our three recent acquisitions, which were offset inter alia by some continued rationalisation and disposal of underperforming businesses.

Our biggest businesses continue to perform well in particular Pensions & Insurance and Banking & Compliance, and these are the areas where we are investing heavily for the Group's future growth. However, we are witnessing more challenging conditions in our Healthcare and Legal markets.

On 15 August 2013 we acquired Compliance Week, the leading provider of governance, risk and compliance ("GRC") information and events for public companies and large enterprises primarily in the US. Compliance Week, contributed £1.2m to revenue and £0.2m to profits in the six months ended 31 December 2013.

Underlying adjusted EBITA growth was 3% and underlying revenues were marginally down, 1% lower than the same period in 2012.

Business Strategy

Wilmington's strategy is to increase shareholder value by delivering sustainable and growing profits from servicing the information, compliance and education requirements of professional businesses globally.

Our investment strategy is focused on developing existing businesses and acquiring new ones, with high repeat revenues and strong, cash generative income streams both in the UK and overseas. The result of implementing this strategy is a business with an increasing proportion of revenues derived from subscriptions to products which disseminate content-rich, high-value information digitally. Tighter regulatory control and more complex legislation in our key markets will continue to drive the demand for our products and services, both in the UK and overseas.

Operational Review

Pensions & Insurance (19% of Group revenue and 36% of Group contribution)

This division, which includes Axco, Pendragon, Inese and ICP, provides in-depth regulatory and compliance information, market intelligence, events, training, analysis and workflow tools for the international insurance market and the UK pensions industry.

Divisional revenue grew 27% (£1.8m) helped by the addition of Inese, a provider of Spanish language subscription based publications, events and online services (acquired March 2013), which recorded revenue of £1.2m in the period. Underlying revenue growth was 7% for the division. Axco, which has continued to benefit from significant investment since joining the Group, also reported 7% revenue growth. Axco sales were helped by increasing demand from emerging markets.

Pendragon, the leading electronic regulatory information service for the UK Pensions Industry, maintained its market leading position and recorded steady revenue growth of 4%. ICP, the leading provider of credit insurance reports for developing markets, has seen a continued increase in demand for its reports, particularly in the Middle East, and delivered revenue growth of 17%.

On top of the continued investment in new products and associated infrastructure, divisional contribution grew by 21% to £3.5m (2012: £2.9m), reflecting the operational leverage within the business and a contribution of £0.2m from Inese. Underlying contribution growth was 11%, reflecting a growth in underlying margins from 44% to 46% excluding Inese.

Banking & Compliance (25% of Group revenue and 28% of Group contribution)

The Banking & Compliance division provides corporate finance and capital markets training and accredited programmes in GRC, anti-money laundering, financial crime and trust management. This division primarily serves major banks, the international financial services industry and multi -national companies.

The division continued its strong revenue growth with an increase of 23% (£2.0m) compared to the same period in 2012. Adjusting for currency movements and the acquisition of Compliance Week the underlying revenue growth was 9%.

ICT (compliance training) has continued to secure major in-house training assignments and has a strong pipeline of projects into 2014. Growth drivers for this division include the provision of compliance and anti-money laundering programmes to international banks and major multinational companies. We continue to see opportunities in emerging markets with recent initiatives in Malaysia and Poland.

AMT, which delivers most of its revenue and contribution during the summer months, has reported revenue growth of 7%, with a particularly strong performance from its graduate programmes in New York.

Our recent acquisition, Compliance Week, has had a good start to the year and the integration has gone well. We have seen promising growth in subscriptions since our restructuring of the marketing and sales teams. Initial forward bookings for the flagship "Compliance Week Annual Conference" look very encouraging. Compliance Week contributed £1.2m to revenue and £0.2m to profits.

Contribution for the division was 30% ahead of the same period last year at £2.7m (2012: £2.1m) on top of continued investment in new programmes, materials and support systems which will help drive future growth. Underlying contribution growth was 20%.

Healthcare (16% of Group revenue and 16% of Group contribution)

This division includes Agence de Presse Médicale, our French language medical news agency, NHiS, our pharmaceutical business intelligence and data analysis business and Binley's, our UK healthcare information business.

Divisional revenue was up 13% (£0.8m) but, adjusting for currency movements and the acquisition of NHiS which recorded revenue of £1.1m and a contribution of £0.3m, the underlying revenue was down 7%. This underlying variance was within our Binley's business and related predominantly to a fall-off in lower margin mailing services and marketing list sales as well as competitive pressure on our subscription pharmaceutical CRM business. APM had another good trading period with revenue up 4%.

NHiS, a provider of business intelligence, data analysis, workflow tools and other services to pharmaceutical companies in the UK, which was acquired in February 2013, had a strong finish to the period, and this is reflected in good deferred income balances at 31 December 2013. We have been investing in the next generation of data interrogation products as well as exploring some exciting international opportunities where the NHiS technology and processes are very relevant.

Contribution for the Healthcare division was up by 20% to £1.6m (2012: £1.3m). Adjusting for currency movements and the acquisition of NHiS underlying contribution was down 10%.

Legal (19% of Group revenue and 6% of Group contribution)

The Legal division provides a range of training, professional support services and information including Legal Continuing Professional Development (CPD), expert witness training, databases and magazines.

During the half year, revenue in this division reduced by 12% (£1.1m) with an underlying decline of 9%. This reduction reflects adverse trading conditions experienced during our peak period for public courses and a necessary resultant reduction in our prices. We have responded by decreasing our associated cost base by further rationalisation.

There were, however, positive improvements in our other legal markets in particular our Bond Solon expert witness familiarisation business which saw a 5% increase in revenues.

Despite the reduction of £1.1m in revenue the division's contribution reduced by only £0.1m to £0.6m (2012: £0.7m) mitigated by good cost control.

Business Intelligence (10% of Group revenue and 8% of Group contribution)

This division includes our Data Suppression and Fraud Prevention services as well as our Charities, Fund Management and Film & TV information services.

The division is undergoing the most significant transformation of all our businesses, as it continues to exit businesses dependent upon third party IPR and transitions from print-based information to digital services, subscription information products and workflow tools. Digital services now represent 69% of divisional revenues (2012: 68%).

Overall divisional revenue was down 19% (£1.0m) compared to the same period in the prior year, of which £0.9m was from exiting third party business, including a low margin email list brokerage service operated by Millennium. We saw traditional print related revenues drop £0.1m in the period. Underlying revenue decline adjusting for the brokerage business was 8%.

Contribution dropped by 23% to £0.8m (2012: £1.0m), reflecting the relatively fixed overhead base of the business with revenue reduction only partially offset by cost savings.

Accountancy (11% of Group revenue and 7% of Group contribution)

The Accountancy division is the leading provider of training, technical support and marketing services to accountancy firms in the UK.

The first half of the year saw a slight reduction in face to face training demand caused by a lack of regulatory changes. These were partially offset by growth in our technical and marketing support business which represents about one third of our divisions business. Overall, divisional revenues declined by £0.2m (3%) and due to the relatively fixed overhead base, divisional contribution declined by £0.05m (6%) compared to the same period in the prior year.

Group Overheads

Group overheads, which include Board and head office salaries and associated costs, as well as unallocated central overheads, were flat at £1.5m.

Property Disposal

As indicated in the 2013 financial report we disposed of our surplus freehold property for £700,000 in October 2013. The profit on disposal net of associated costs was £32,000.

Financial Performance

Revenue for the six months to 31 December 2013 was up 5% (£2.2m) at £43.1m (2012: £40.9m). On a like-for-like basis (excluding the impact of acquisitions, foreign exchange and disposals) revenue was marginally down by 1% (£0.5m). Adjusted EBITA1 was up 15% at £8.2m (2012: £7.1m).

Adjusted Profit before Tax2 increased by 18% to £7.1m (2012: £6.0m). This reflects an increase in revenue in businesses operating with higher adjusted EBITA margins together with a flat interest cost of £1.1m (2012: £1.1m).

Profit before tax decreased to £3.7m from £5.1m, reflecting inter alia reduced exceptional costs this year and the net profit of £3.3m from the disposal of Paulton House in 2012.

Adjusted Earnings per Share4 increased by 14% to 6.22p (2012: 5.47p). Basic earnings per share decreased to 3.07p from 5.67p and diluted earnings per share decreased to 2.98p from 5.49p.

Balance Sheet

Net assets were maintained at £51.7m compared to 30 June 2013.

Goodwill and Intangible fixed assets increased by £4.2m due principally to the acquisition of Compliance Week offset by normal amortisation. Property, plant and equipment decreased by £0.2m to £5.7m, reflecting normal depreciation.

Trade receivables were up £1.0m, however adjusting for Compliance Week underlying trade receivables were down £0.1m compared to 30 June 2013, reflecting inter alia good credit control.

Trade and other payables were down £1.5m compared to 30 June 2013. Within this category, subscriptions and deferred income were up £0.7m compared to 30 June 2013 and up £3.6m (23%) compared to 31 December 2012. Of this increase of £3.6m, £2.7m relates to acquisitions made since 31 December 2012; an underlying increase of 6%.

Operating cash flows increased by £1.0m to £6.2m (2012: £5.2m). Overall, debt was up to £40.3m representing a net debt to EBITDA on a rolling 12 month basis of 2 times. This increase was due largely to our acquisition of Compliance Week for £7.3m ($11.2m). Cash flow conversion, which is seasonally low in the first six months, was 71% compared to 72% in the same period in 2012.

Capital Investment

The Group is increasingly evolving its online capabilities, products and services as well as its international footprint necessitating investment in global, future proof systems. Over the next two years in addition to ongoing product and systems development, the Group will be investing in new CRM, process management and CMS infrastructure including Salesforce.com. These exciting investments will provide the foundation for future growth, re-engineer the way we interact with our customers and transform the way we run our businesses.

Dividend

The Board is pleased to announce that given the improved financial performance of the business it will resume its progressive dividend policy and the interim dividend will increase from 3.5p per share to 3.6p per share, an increase of 3%. It is the Board's intention to grow the dividend each year whilst ensuring a suitable dividend cover is maintained. The interim dividend of 3.6p per share (2012: interim 3.5p) will be paid on 10 April 2014 to shareholders on the share register as at 14 March 2014.

Outlook

We have had a solid start to 2014 and the financial performance is on track to support our expectations for the full year. The overall trading environment has not changed significantly since the full year 2013 results announcement. Our bigger businesses Banking & Compliance and Pensions & Insurance are performing well with each enjoying strong organic growth. As expected, Legal had a difficult end to the Legal CPD year and continues to face challenging market conditions. There have also been strong competitive pressures in our Healthcare division but our prognosis for the medium term is encouraging with new products and potentially new markets opening up for us. As we move into the second half, cash flow is strong and will provide resources for further investment, a growing dividend and, in the absence of acquisitions, a reduction in our debt.

Mark Asplin

Chairman

1 Adjusted EBITA - see note 5 to the interim financial results

2 Adjusted Profit before Tax - see note 5 to the interim financial results

3 Group Contribution - see note 6 to the interim financial results

4 Adjusted Earnings per Share - see note 11 to the interim financial results

5 Adjusted EBITA margin - Adjusted EBITA divided by Revenue

Consolidated Income Statement

The above Consolidated Income Statement should be read in conjunction with the accompanying notes.

All items in the current and comparative periods relate to continuing activities.

Consolidated Statement of Comprehensive Income

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

Consolidated Balance Sheet

The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Consolidated Cash Flow Statement

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

Notes to the Financial Results

1. General information

The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 6-14 Underwood Street, London N1 7JQ.

The Company has its primary listing on the London Stock Exchange.

This condensed consolidated interim financial information (''Interim Information'') was approved for issue on 25 February 2014.

The Interim Information is unaudited 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 2013 were approved by the Board of Directors on 18 September 2013. 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.

2. Basis of preparation

This Interim Information for the six months ended 31 December 2013 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'' as adopted by the European Union. The Interim information should be read in conjunction with the Annual Financial Statements for the year ended 30 June 2013 which have been prepared in accordance with IFRSs as adopted by the European Union, and are available on the Group's website www.wilmington.co.uk.

Going Concern

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. The Directors have therefore adopted a going concern basis in preparing the Interim Information.

3. Accounting policies

The accounting policies applied are consistent with those of the Annual Financial Statements for the year ended 30 June 2013, as described in those Annual Financial Statements.

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 July 2013 but are either not relevant to the Group or do not have a significant impact: 

· IFRS 10 "Consolidated Financial Statements'':

IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements.

· IFRS 11 "Joint arrangements'':

IFRS 11 provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. The Group has no such arrangements.

· IFRS 12 "Disclosure of interests in other entities'':

IFRS 12 includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off-balance-sheet vehicles. The Group has no interests in such other entities.

· IFRS 13 "Fair value measurement'':

IFRS 13 seeks to increase consistency and comparability in fair value measurements and related disclosures. It defines fair value, sets out a framework for measuring fair value, and requires disclosures about fair value measurements. It applies when another IFRS requires or permits fair value measurements or disclosures about fair value measurements. The fair value disclosures in the Annual Financial Statements will be reassessed in the context of IFRS 13, but this new standard is not anticipated to have a significant impact on the Group.

· ''Annual Improvements to IFRSs 2009-2011 Cycle'':

Amendments include an amendment to IAS 1 "Presentation of Financial Statements'' to clarify the requirements for providing comparative information, and an amendment to IAS 32 "Financial Instruments: Presentation'' to clarify the income tax consequences of distributions to holders of an equity instrument. The amendments are not anticipated to have a significant impact on the Group.

· IAS 19 "Employee benefits'':

These amendments eliminate the corridor approach and calculate finance costs on a net funding basis. The

 Group does not operate a defined benefit pension scheme.

· IAS 27 "Separate Financial Statements'':

This standard includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10.

· IAS 28 "Investments in associates and joint ventures'':

This standard includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11. The Group has no investments in associates and joint ventures.

· Amendment to IFRS 1 "First time adoption on government loans'':

This amendment addresses how a first-time adopter would account for a government loan with a below-market rate of interest when transitioning to IFRS. It also adds an exception to the retrospective application of IFRS, which provides the same relief to first-time adopters granted to existing preparers of IFRS financial statements when the requirement was incorporated into IAS 20 in 2008. The Group receives no government loans.

· Amendment to IFRS 7 "Financial instruments asset and liability offsetting'':

This amendment reflects the joint IASB and FASB requirements to enhance current offsetting disclosures. These new disclosures are intended to facilitate comparison between those entities that prepare IFRS financial statements and those that prepare US GAAP financial statements. The Group reports under IFRS only.

The following new standards and amendments to standards have been issued but are not yet effective for the purposes of the Interim Report and have not been early adopted:

· IFRS 9 "Financial instruments'' - effective date: periods beginning on or after 1 January 2015.

· Amendments to IFRS 9 ''Financial instruments, regarding general hedge accounting'' - effective date: not yet specified.

· IFRS10 "Consolidated financial statements', IFRS 12 and IAS 27 for investment entities'' - effective date: periods beginning on or after 1 January 2014.

· Amendments to IAS 19 "Defined benefit plans'' - effective date: periods beginning on or after 1 July 2014.

· Amendments to IAS 32 "Financial Instruments: Presentation'' on offsetting financial assets and financial liabilities - effective date: periods beginning on or after 1 January 2014.

· Amendments to IAS 36 "Impairment of assets'' - effective date: periods beginning on or after 1 January 2014.

· Amendments to IAS 39 "Financial Instruments: Recognition and measurement'' on novation of derivatives and hedge accounting - effective date: periods beginning on or after 1 January 2014.

4. Principal risks and uncertainties

The principal business risks that affect the Group are as stated on pages 20 and 21 of the Business Review in the Annual Report and Financial Statements for the year ended 30 June 2013.

The main financial risks that affect the Group are:

(a) Liquidity and capital risk

The Group has an unsecured committed bank facility of £65m (2012: £65m) to February 2016. The facility currently comprises a revolving credit facility of £60m (2012: £60m) and an overdraft facility of £5m (2012: £5m). At 31 December 2013, £48m (2012: £38m) of the revolving credit facility was drawn down. The bank overdrafts are the subject of a Group set-off arrangement.

The Group met the requirements of the bank facility financial covenants throughout the period.

(b) Interest rate risk

The Group financing arrangements include external debt that is subject to a variable interest rate. The Group is consequently exposed to cash flow volatility arising from fluctuations in market interest rates applicable to that external finance. In particular, interest is charged on the £48m (2012: £38m) amountdrawn down on the revolving credit facility at a rate of between 2.00 and 2.75 per cent above LIBOR depending upon leverage. Cash flow volatility therefore arises from movements in the LIBOR interest rates.

The Group finances its operations through a mixture of retained profits, operational cash flow and bank borrowings. Historically the Group has expanded its operations both organically and by acquisition, which has led on occasions to the need for external finance.

 In November 2010, the Group entered into two hedging instruments. Firstly, a 5 year £15m interest rate swap fixed against 3 month LIBOR with a forward start of 21 November 2011 paying interest on £15m at a fixed rate of 2.68% was entered into. Secondly, in November 2010, a 3 year £10m interest rate swap fixed against 3 month LIBOR with a forward start of 21 November 2011 paying interest on £10m at a fixed rate of 2.12% was entered into. These derivatives have been designated as a cash flow hedges in order to manage interest rate risk associated with the first £25m of the credit facility. Payments received under the swaps have been matched against interest paid quarterly during the period and the entire mark to market loss on the derivatives have been recognised in equity, following the Directors' assessment of the hedge's effectiveness.

The fair value of the interest rate swap derivatives at 31 December 2013 was £0.8m (2012: £1.5m).

(c) Foreign currency risk

The Group has significant Euro and US dollar cash flows arising from international trading and overseas operations. The Group is consequently exposed to cash flow volatility arising from fluctuations in the applicable exchange rates for converting Euros and US dollars to Sterling.

The Group policy is to fix the exchange rate in relation to a periodically reassessed set percentage of expected Euro and US dollar net cash inflows arising from international trading by entering into foreign currency contracts to sell a specified amount of Euros or US dollars on a specified future date at a specified exchange rate. Details of the forward currency contracts in the financial year are as follows:

· On 22 April 2013, the Group sold forward $1.0m to 10 December 2013 at a rate of 1.5248. On 20 June 2013, the Group sold forward $2.0m to 31 October 2013 at a rate of 1.545, $1.0m to 28 February 2014 at a rate of 1.5419, and $2.5m to 31 March 2014 at a rate of 1.5417. These contracts were entered into in order to provide certainty in Sterling terms of 80% of the Group's net US dollar income.

· On 28 June 2013, the Group sold forward €0.5m to 30 September 2013 at a rate of 1.1673, €1.5m to 30 September 2013 at a rate of 1.1673, €1.0m to 29 November 2013 at a rate of 1.1664, and €0.5m to 28 February 2014 at a rate of 1.1655. These contracts were entered into in order to provide certainty in Sterling terms of 80% of the Group's net Euro income.

The Group policy is to finance investment in overseas operations from borrowings in the local currency of the relevant operation, so as to achieve a natural hedge of the foreign currency translation risk.

In March 2013, the Group purchased the business and assets of Inese, an operation in Spain. This was financed using a €1.5m drawdown on the Group's multi-currency revolving loan facility.

The Group also purchased, on 15 August 2013, the business and assets of Compliance Week, an operation in America. The Group financed this acquisition via a $12m drawdown on the Group's multi-currency revolving loan facility.

These debts have been designated as a currency hedge of a net investment in a foreign operation for accounting purposes and are translated into sterling at each reporting date giving rise to a gain or loss, the entire amount of which is recognised in equity following the Directors' assessment of the hedge's effectiveness.

5. Adjusted Profit

To provide shareholders with a better understanding of the trading performance of the Group, Adjusted Profit has been calculated as profit before tax after adding back:

· amortisation of publishing rights, titles and benefits;

· impairment of goodwill;

· unwinding of the discount on deferred consideration;

· unwinding of the discount on the provision for the future purchase of non-controlling interests;

· share-based payments; and

· non-recurring items (including net gain on disposal of property).

Adjusted Profit reconciles to profit before tax as follows:

Adjusted Profit before Tax is calculated as follows:

6. Segmental information

The Group's operating segments are reported in a manner consistent with the internal financial information provided to the Board, which represents the chief operating decision maker.

The Group's organisational structure reflects the different professional markets to which it provides information, compliance and education. The six professional divisions (Pensions & Insurance, Banking & Compliance, Healthcare, Legal, Business Intelligence and Accountancy) are the Group's reportable 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 and overseas.

(a) Business segments

Six months ended 31 December 2013 (unaudited)

Six months ended 31 December 2012 (unaudited)

Twelve months ended 30 June 2013 (audited)

(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:

7. Non-recurring items

The following items have been charged/(credited) to profit or loss during the year but are of an unusual nature, size or incidence and so are shown as non-recurring items:

8. Finance income and costs

9. Taxation

10. Dividends

Distributions to owners of the parent in the period:

11. Earnings per share

Adjusted Earnings per Share has been calculated using adjusted earnings calculated as profit after tax and non-controlling interests but before:

· amortisation of publishing rights, titles and benefits;

· impairment of goodwill;

· unwinding of the discount on deferred consideration;

· unwinding of the discount on the provision for the future purchase of non-controlling interests;

· share-based payments; and

· non-recurring items (including net gain on disposal of property).

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

12. Business combinations

The Group acquired the trading assets and certain liabilities of Compliance Week ("Compliance Week"), the leading provider of governance, risk and compliance ("GRC") information and events for public companies and large enterprises primarily in the US on 15 August 2013. Compliance Week was acquired for a net consideration of $11.215m (£7.411m) in cash. Subsequently, $0.196m (£0.129m) was repaid to the Group in respect of the net current asset adjustment. Further contingent consideration of up to $3m is potentially payable in cash subject to Compliance Week achieving challenging profit growth targets in the financial year ended 30 June 2015.

IFRS 3 (revised) was applied to the acquisition of Compliance Week. At present, the fair valuation of the assets and liabilities acquired has not been completed and the values below for intangible assets and goodwill are provisional. The final results of this fair valuation exercise will be reflected in the Financial Statements for the year ended 30 June 2014. An estimate of any contingent consideration due will also be included in the Financial Statements for the year ended 30 June 2014 and would result in a corresponding increase in the value of goodwill.

Acquisition-related costs of £173,000 have been recognised as part of the costs written off relating to both successful and abortive acquisitions of £200,000 shown as non-recurring items in the Income Statement (see note 7).

The acquisition of Compliance Week is consistent with the Group's strategy of acquiring businesses with high repeat revenues and strong, cash generative income streams in the Group's key markets. The Business forms part of Banking & Compliance Division and works closely with other Group companies, providing them with closer access to their North American customers and markets as well as opportunities for developing new revenue streams.

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

The goodwill is attributable to Compliance Week's strong position and profitability in trading in the international compliance and regulatory information market, the new product development potential and synergies expected to arise after the Company's acquisition of the new subsidiary.

The acquired businesses contributed revenues of £1,173,000 and profit before divisional overheads, tax and amortisation, of £214,000 to the Group for the period from their date of acquisition to 31 December 2013. If the acquisitions had occurred on 1 July 2013, consolidated revenue and consolidated operating profit before amortisation, impairment, share based payments and non-recurring items for the six months ended 31 December 2013 would have been £43,509,000 and £8,267,000 respectively.

A further £60,000 was incurred as a net asset adjustment relating to NHiS Limited, a company acquired in February 2013. Further details of this acquisition are disclosed in note 12 of the Financial Statements for the year ended 30 June 2013.

13. Goodwill, Intangible assets and Property, plant and equipment