Wilmington (LSE:WIL) — Interim Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the WILMINGTON PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time using the q and a tab situated on the right hand corner of your screen. Please

0:17 The company may not be in a position to answer every question received during the meeting itself. However, company can review your questions submitted today and will publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to CEO, Mark Milner. Good afternoon. Good afternoon. Thank you for the introduction, and good afternoon, or depending on where you are in the world. Good morning to those joining. My name is Mark Milner. I'm the CEO. Alongside me here, we have Guy Millward, is our CFO. Hi. And we're talking about the financial period for us, is the first half of our trading year, which runs for the period from July to December 2024. We'll refer to this throughout the presentation as h one f y twenty five. The reason for the date of the pack is this pack was released on on this Monday.

1:08 So if I can turn your attention, please, to slide two for the safe harbor statement and then onto page three for the agenda. We're gonna keep this relatively straightforward. I'll just do a a single slide about the headlines and cover those off. Then I hand over to Guy who'll run through more of the detail around the financials, and then it's back to me again for the operational review and outlook. And then as just as you've just heard, we'll be ready to take your questions. So if you are following in your impact, then we're gonna be on page five for the headlines. WILMINGTON has had another good period of growth with ongoing revenue growth of 16%. The quality of our revenues continues to improve with annual recurring revenue up 6% to 38%, and repeatable revenues are held at 72%.

2:00 Remaining on the quality of revenues theme, our ongoing operating margin is up to 28%, and ongoing adjusted PBT is 39%. We continue to be good guardians of our investors' capital with a robust balance sheet and net cash as of the 12/31/2024 of £31,300,000. The positivity shown in our numbers and the confidence in our strategy leads the board to offer an interim dividend of 3.0p. We have been successful with our m and a strategy, maintaining our discipline, and we attracted Phoenix Health and Safety to choose WILMINGTON as their preferred partner for the next phase of their growth. So in summary for this slide, we have delivered another strong set of results, and I'll pass the guy to give you the detail of the financials.

2:51 Thanks, Mark. Moving on in your packs to to slide seven to start with. We we are normal investor packs, which you might have seen on our website. This one's on the website if you haven't been able to get it any other way for today. Our normal investor packs have three financial slides, one that talks about divisional splits of revenue and and sometimes profitability. There's a full income statement on the next slide and then a cash flow on the third slide. So those are the the the slides I'm going to run through today. And I'm gonna start here on the slide headed operating review, which really talks about the revenue split in the way that we've been talking about it for the last year or so. You may have seen in the earlier slides, we used to split the revenues between training and intelligence. We then sold off most of the intelligence division. So that split was no longer valid.

3:40 And we and this is the split we use today. Starting with the the the revenue running down section by section. HSE is the new section for us. This these are is a section health, safety, and environment that holds the two acquisitions that we've done in the last fourteen months. Astutis was bought in November 2023, and Phoenix was bought in October 2024. Astutis, therefore, has one month of revenues in the prior period. Phoenix doesn't have any, and Phoenix only has two months of revenue in the current period. So the the the the numbers are obviously not comparable, and we're not going to say anything about a variance of a thousand percent between the numbers. But we are going to say that both those businesses are if you had the like for like numbers period on period, are growing in double digits.

4:33 Astute is the first acquisition is growing at about 15% per annum and has been doing since we've owned it in the fourteen months we've had it. And Phoenix is growing at about 25% currently for the three months we've had it and has actually been doing that for some time now and is expected to do that for the rest of this year. So we've bought higher growth businesses than we previously had in the group and and we've sold some lower growth businesses. I'll come on to the margins in a minute, but we've also basically replaced lower margin businesses with higher margin businesses, which is why we're seeing the margins that we get today. The legal sector on here includes two businesses that have been with the group for some time. One called Pendragon, which is in The UK pension sector.

5:19 That business and most of its customers are law firms, which is why we put it in the legal sector. That business grew at 4% in the period. It's largely a subscription based business and it has very high retention of clients. 99% is its usual number and it's 99% in the period that we've just had. The Bond Solon legal training business who again, whose customers are mainly law firms is also in the legal sector here. That revenue has gone backwards in the period, which is gives us the overall organic negative variance on here. That revenue has gone backwards by 10%. The prior period had a couple of contracts in it that haven't been repeated in the current period. However, those those contracts were not of a particularly high level of profit. And actually, the profits of bonds sold on in this period have gone up despite the fact their revenues have gone down. So so overall, the the the legal sector has had a very good profitability that has improved in in the time.

6:22 Those contracts that haven't been repeated may well come back. They just haven't come back in the in the six month period that we've had. They're more public sector biased and and therefore are more likely to happen after April than than this side of April. But but, nevertheless, that that business has got improved profitability. And if you look at its revenues excluding the two contracts, it's growing at about 11% per annum. So so generally, it's underlying trend is upwards and it's just got a difficult comparative in this period. Financial services insurance includes two businesses, called Axco, which is in the global insurance data market.

7:07 That business has grown at 6% during the period and has again a lot of subscription revenue and has got a 99% retention rate just like Pendragon has. The other business in this sector is called FRA. It's in The US healthcare insurance market. That business has its revenues have gone backwards in the period. There's a lot of turbulence in its market. Mark is going to talk about that on a later slide in a lot more detail. But on for the finance slides, it's just gone backwards in the period. Financial services other includes our two biggest businesses. One is called Mercia in the accountancy training space. That business grew to 11% in the period.

7:52 And the other large business in here is called ICA. It's the largest business that we have. It trains in a number of financial services sectors, but primarily retail banking. And its revenues have grown at 8% in the period. So overall, our our larger businesses have grown very positively, and our new businesses have grown very positively, gives us an overall positive organic variance, albeit a couple of the businesses have had a more difficult period. That positive revenue experience in the period has helped our our profits as as well as things we're doing on our on our costs and our technology investment. And our margins are up in the period. You can see here the ongoing margin, which includes the businesses we've bought as well as the businesses we already had, has gone up to 28%.

8:44 And our organic margin which excludes the acquisitions is now up at 30% which has been a long term target for us. You can see because the organic the ongoing margin, sorry, is slightly lower than the organic margin that the businesses we've bought are are doing a slightly lower margin than the rest of the business. They're both trading at about 25% operating margin, but we expect that margin to improve as their revenues improve going forward. There's not a lot of extra cost that needs to be added into those businesses. And when they're moved on to our technology platform, they will get savings in costs that will come through and give us a higher overall level of profitability. So 30% is an expected ongoing margin for the group and is actually a margin we also think we can improve on over the next two or three years because of technology investments that we're making which are reducing our legacy technology cost which is still quite high within the group. We have been doing this for a couple of years and we've already achieved some of those savings, but we have more savings that we can get. And over the next two or three years as we move to a more single platform

9:56 rather than the different technology stacks we previously had in in various businesses. We're going to see that organic margin improve. A couple of other things further down the p and l to mention. One is that is the adjusting items number there because it's a very big number in this period. Those items are largely to do with M and A. And in fact, most of the number in there is is actually accruals for earn outs. So on the two acquisitions we've made, we have earn outs that require the sellers to remain as employees of the group for the period of the earn out. And because of that, the accounting standards require that those earn outs are put through the p and l as they are still cost of investment, but they're treated in the p and l essentially as employment costs.

10:47 And therefore, you you get a p and l charge for them here and and the cost of the acquisition doesn't go or the that part of it doesn't go on the balance sheet. But so that's something that's going to continue for the next two or three years as as those earn outs play out and and are decided. But you're going to see a charge below the line for those. It's a cash cost but it's not an operating cost. It's a capital cost of acquiring those businesses. And the other point I wanted to make on the P and L was our tax charge. Because of the adjusting items which are not deductible for tax, the tax charge as a percentage of total profit before tax is quite high. It's actually only 25% as an underlying rate.

11:34 We make most of our profits certainly in the first half of the year in The UK. So, we pay The UK corporation tax rate. You'll see that rate go up slightly for the second half and for the full year because our US business in the healthcare insurance market is profitable and actually has most of its revenues in the second half of the year. And therefore, we get a slightly higher tax rate because The US federal taxes are about 28% at the moment. So last year, had an underlying tax rate of 27% and that's the expectation for this year as a whole when we get to the end of the year. The dividends 3p for the period has been held while we see how how profits for the second half of the year come out. Over the last three or four years, we've been increasing the dividend in line with profits, we would generally expect to do that, and we will do probably do that at the year end. But at the moment, we we just want to see how The US health care business in particular comes through the second half.

12:37 Must say, Mark will talk about that in another slide in a minute. And then finally on to the final number slide for today, the group cash flow. This is a business that has generally converted all of its profits to cash. So we have a 100% plus conversion rate every year. That's split first half, second half. We get an outflow of working capital in the first half and an inflow in the second half and this year is no different. Due to payment timings, the cash conversion of profits in the first half is a little bit lower than last year, but it's going to all come back in the second half and indeed as we sit here in the middle of February or already has. The reason for that is that we do a lot of our subscription billing on a calendar basis. So it's done in January and we collect the cash in February and March and obviously that's in the second half of the year. And so a lot of our cash receipts from revenue come in the second half of the year. And and as to and as we sit here today, we're looking at a bank balance of almost £40,000,000.

13:40 So we're already nearly £10,000,000 ahead of the of the December number and that will improve as we collect more cash from now until the end of June. And so the the forecast numbers that are out there for us around 45 to 50,000,000 for the year end cash balance. Couple of other things to say on the cash flow. We don't spend very much on capital expenditure of any kind. You can see that the expenditure in the in the period was zero. In the previous period, it was actually an inflow, and that's because we sold a building. But but generally, our we we do spend quite a lot of money on technology, but it's all as an operating cost because the technology that we buy is off the shelf. We don't develop it ourselves.

14:25 And and we therefore pay for it as we go as a user just in the same way as you would pay for a Microsoft license as a as a member of the public. We we buy our software on in in that way We don't spend therefore a lot of CapEx on it but we get good off off the shelf technology and we we put it together. Marcus got a slide on on this a bit later on but but generally you won't see any numbers for that in our cash flow going forward. And then the big outflow in the period, obviously, the acquisition. It's there shown net of cash received with the business and is the cost of the acquisition. They go through the adjusting line underneath that just as they do in the p and l. Final point to make is on the lease liability here. You can see it's a substantial reduction with some of the businesses that we disposed of. We no longer need a large London office. It was costing us about £2,500,000 a year. We've moved to a much smaller office for the businesses that we have that remain in London.

15:26 That that's given us an annual saving of about £2,000,000 in both cash and profit. And you can see the lease liabilities have gone down by two thirds because of that. And that's obviously going to come through in future lower cash flows, outflows that is, and in future lower rent in the p and l. So it's another positive impact of of the businesses that we've sold. Leaves us with a cash balance of just over 30,000,000 at the end of December, moving towards the 50 I mentioned at the at the year end. We also have access to bank facilities that we're not currently paying for those facilities, we we know we can go and borrow certainly up to two times EBITDA. So about 60,000,000 giving us more than a £100,000,000 available to spend on acquisitions if and when we find the right ones to buy. And we'll talk about what we would like to buy on a a later slide. But at the moment, the it's our intention to spend that cash on on further acquisitions.

16:29 And with that, Mark, I'll pass back to you. Okay. Thanks, Guy. We're gonna move on to then the operation review and outlook on to if you're following in your impacts, excuse me, slide 11. As Guy just showed you, overall as a group, we've had a really good first half to f y twenty five. And this is continuing what's become a consistent trend. I'm not sure how long some of you have been following us, but we've been looking to grow the group year on year. And this is our fifth consecutive period of reporting revenue and profit growth. In total, out of our portfolio businesses, seven out of the nine businesses grew year on year in the first half, and three of them achieved double digit growth, and one frustratingly short, just slightly off double digit growth. But we are, of course, not immune though to the external factors and influences which may change dynamics in our marketplaces. And I'll talk more about some of these in a few moments.

17:17 But overall, if you want the sort of the the larger picture, we've grown the portfolio both organically and at an ongoing level. I think this is an important point, not one to be glossed over. It's the strength of our portfolio means that when one of our businesses experiences an external disruption such as we've seen in The US health care sector, we've demonstrated that we have the capacity to cover the impact. And in addition, we can then layer on top of this inorganic growth onto what is now a very solid organic core. And we've done that through the acquired businesses, that we bought into the group. I've just mentioned our US events company that's called FRA. It's being impacted by US government regulatory change, and now there's a degree of post election activity as well. So we flagged the regulatory change, impact in September as this is actually a continuation of a challenge that we saw in the final quarter of our last trading year. I have a slide on this in in a few moments, so we'll return to it very shortly.

18:11 The other business which didn't grow year on year, as Guy's already told you, is in the legal space. It's called Bonsolom. It had a very successful f f y twenty four. It had those two contracts that Guy Guy referenced that didn't renew in this year. And it's think it is worth pointing out that if you take those two contracts out and you look at the underlying trend within bond so long, as Guy's already told you, we we delivered 11% underlying growth. And this business just has a tough comparator, but certainly, we're very pleased with the underlying picture. Within the seven growth businesses, I include our two acquisitions, they're Astutis and Phoenix. Astutis is delivering to the acquisition investment plan. It was acquired in November 2023, and it's achieving double digit growth, as is Phoenix. Phoenix is brand new to the group, acquired at the end of October. And we actually have three slides in this pack, and I'll just introduce the business to you and explain it to you. At the same time, though, realizing we may not have spoken to you in the past, I'll also just build the susis into that picture as well.

19:11 There's a little bit of information which you may not know about us, but I've been in my role for five and a half years. Guy around about 4.5 or so. And when I joined five and a half years ago, there were 15 businesses within our portfolio. And what we have done is a an exercise reviewing all of the businesses within the group, creating a central a central strategy, and then assessing the businesses against those strategy. Can just see some of the questions coming through. So as we've been reshaping, we've gone through a period of some some disposals and, obviously, as you already know, we have had the the two acquisitions. And f y twenty four was a, so last year, was a particularly busy year for us with regards to reshaping the group. There is one remaining business within the portfolio which is held for sale. It's called Compliance Week, and it's a publishing media company based in Boston in The US, and we are looking to sell that business.

20:01 We can say to you today that we've received good interest in that, and we are are confident that business will be leaving the group during the sec this second half of our financial year. At an operational level, we continue to invest in product development and technology, which I'll come back to later. And lastly, for this slide, we've advanced our AI activities. We normally do a slide in our investor briefings around, how we see AI. We haven't done on this presentation. If you would like me to cover it, please do put something in the in the in the q and a section. But broadly, what we're doing is we're taking external AI AI and then applying it to our products and services and using it to help us build products, but also looking for it in terms of internal efficiencies as well. So if we move on then in our decks onto the following slide onto slide 12, I just would like to take a few moments just to talk to you about our portfolio management activity. I've already referenced we had 15 businesses when I arrived in the group, and now we have, I think, of those retained with with with two additional businesses.

21:04 The portfolio management activity for us is all around strengthening the port portfolio and then improving the quality of the assets and realigning the portfolio around a singular focus, which for us is the government's risk and compliance space. Just to explain that, for us, a governance risk and compliance has multiple different definitions. For us, it is working with customers who themselves are directly impacted by regulation. It could be a number of different verticals, which I'm about to show you, but that direct influence, of a regulator with a customer and our relationship with that customer means that we can help them tackle those regulatory needs. And we do so by providing the services you see on this chart. On the left hand side are mainly data and intelligence subscription type services.

21:52 And on the right hand side, we group together some of our training activities, and we also run a series of events. And the training is split into two. There is the continuous continued professional development side of things, and then there's also accreditation. People study with us through certificate, advanced certificate, all the way up to master's level in some cases, to get really specialist qualifications in certain areas certain regulated areas. The way we we show the group is on the next slide, which is busy, but I I will talk you through it. This slide shows if if you read it from the top down, it is we're in the governance risk and compliance space. We're then in three verticals, which is the financial services, the legal, and the health and safety, and ESG space. And then the next line down in the markets we where we operate. This is where if we group our larger customer groups together, this is what it looks like. We're in insurance, we're banking and lending accountancy, and then you can read across the rest of that line.

22:48 You pause there and then go to the left hand side of the slide, you'll see what we what we do. We provide bespoke intelligence, subscription data services, right data intelligence alerts, and the other areas. And then what we do on this chart is plot on the logos of our of our brands and our businesses so you can see where they're positioned. Now we don't have the time on this call to meet to run through all nine businesses and explain what each one does, but this chart should hopefully answer some of your questions in terms of which sectors we're in and which brands are applicable. You will see the initial CW there, which that's the compliance

23:20 week business I just mentioned, is being held for sale. But then you can see where the other businesses across the group where where they fall. The color coding here is designed to show you where we have most activity. This is not a market share chart. This is where is our core focus and where is our most where is the most area of activity for us. The darker the color, effectively, the more active we have been historically. The mid color areas are areas we are moving into, and the very pale areas on this slide are areas where we will come to at some point in time. So there's a number of points to make about this chart. The first off, every business on this slide has a market share and share of wallet opportunity, bar one which has pretty high market share. But on on the whole, across the group, we can grow our revenues organically by effectively increasing our share of wallet. That is asking our customers to pay more for additional products and services and putting through price increases.

24:16 And secondly, we can go through market share where we can go and reach new customers in the existing markets we're in.

24:24 The other point to make on here, this this also acts as an m and a chart. So when we're looking at our inorganic activity, we can overlay into all of these areas additional businesses which we can bring into the group through our internal dedicated m and a team. It's a team of, 33 people who are focused with looking for opportunities we can bring in into the group. And the last area I wanted to point out is on the right hand side, which I've labeled area two. If you look at this chart, and we've used this chart for a few years now, if you look at it and go back a couple of years or certainly more than fourteen months, this new this health and safety area is is is brand new to WILMINGTON. We weren't in this market fourteen months ago, but we looked at regulated marketplaces. We looked at where data and training was being delivered to customers who themselves were were directly being regulated, and we found the health and safety ESG markets.

25:14 I managed to acquire Stutis in that space and, Phoenix most recently, and I'll explain Phoenix in a few slides. So where you see the plus sign on the right hand side, that's indicating that we are we are looking for further areas we can move into, more verticals where governance risk and compliance is very active and there is strong regulation in place, and we're looking to provide the services down the left hand side into new markets and, and new verticals.

25:39 So I I hope that explains the chart. I'm gonna bring you back to the left hand side of it where you'll see the number one and the and the sort of dotted line, and that's the business in The US health care space called FRA. It is you can see you can see from here, it's the training and events space, and it's based in the insurance market. And the next slide just helps me explain this business. Now you'll just to remind you of our nine businesses and seven of the businesses grew, the two that didn't, one of those was Bonsolin. It was on that chart, and that only didn't

26:10 grow because of this these contracts from last year, which didn't didn't renew into this year. And then the second business we mentioned was in The US health care space, and it's this business I'm about to talk about. I'm going to assume we're not all experts in The US healthcare system, and I don't intend to give you a tutorial on that, but I will explain to you the parts of the market that we're in, which is on the left hand side of this slide, and we are in what's called the Medicare space. Medicare is the, as you can read from the slide, is a federally provided insurance program for those people 65 or 65, with certain conditions such as a disability or or end stage renal disease. It made up of three parts, which you can see here labeled a, b, and d as shown on the slide, but the market also has a private company element labeled part c, which is called Medicare Advantage, which is an upgrade on the original Medicare plans.

27:05 And this is regulated by the Centers for Medicare and Medicaid Services or the CMS. If you want the details on the bottom left of the slide. And there's an additional influence from the Office of the Inspector General, called the OIG, and the US Department of Justice, which is the DOJ. I should mention that the CMS is part of the overall United States Department of Health and Human Services. So in order of that is the the department covering all health service across The US. So think of the CMS being a component part of of HHS. So I'm gonna move on to the right hand side of the slide. And towards the end of our last financial year, so f y twenty four, the CMS amended payment methodology inclusive of coding changes, which resulted in reduced payments to insurance plans.

27:51 Alongside this, the CMS and OIG were both very active in auditing plans and making claims for improper payments. Some of these reviews then resulted in a number of legal cases which were initiated by the Department of Justice, the DOJ.

28:05 So the cost of implementing these regulated changes impacted our customers' marketing budgets, which in turn has impacted the number of delegates they can send to our events. And this business is exclusively an events business in in The US and exclusively in The US. Now if you, saw our packs from, last September for our prelims, as of q four and f y twenty four, we'd seen the number of delegates on a booking group be lower than in the previous year. Now let me just explain that for a second. If you are a health plan and you are sending people to our events to hear from the regulators around the changes of regulations, to talk to suppliers and and consultants and your peer group to an extent around that change of regulation, You would normally do so by sending a team of people to that event.

28:53 But with your the impact of the change of the regulation and also the other cost impacts that I've already mentioned, what has happened in the end of f y twenty four and throughout f y twenty five so far is that our customers have

29:06 just sent less people in that group. So if the previous year, they sent 10 people, maybe this year, they sent nine, or they're sending eight people. We charge on a on two levels in this business. One is the sponsorship revenue we can generate, and secondly, the delegate revenue, and that delegate is a per person revenue. So, therefore, if the number of people slightly falls, then our delegate revenue slightly falls as well. Now what we've been doing here is to is to try to counteract that, and I'll talk about it in a second. In fact, now I'll cover it off now, which is that the sales team we have, which based in The US, therefore, have to then go make up that delegate list. So therefore, we've expanded our program, We've introduced many, many new companies to our products and our services, but we're not reaching the levels that we achieved in in the whole of f y twenty four.

29:53 So three points to make about this slide. The first is, in addition, this is the bottom right hand side of the slide, there's been a change in political administration in The US. So the new head of the overall US department of health and human services is Robert f Kenneth Robert Robert f Kennedy junior. And alongside the president, if I can refer to Robert f Kennedy junior as RFK junior, alongside the president has historically shown support for Medicare Advantage. Medicare is also, Medicare Advantage is also favorably mentioned in project twenty twenty five initiative. As Medicare Advantage is larger than the original Medicare, it forms a significant role in The US health care system. There are, 68,000,000 people in the enrollment, in the Medicare enrollment program, over half of them take up the Medicare Advantage, additional over overlayer.

30:44 If you look between 2023 and 2034 and you model through the demographic group coming through, there's a further 14,000,000 more adults entitled to enroll in Medicare, and over half of these are expected to find their way into Medicare Advantage. So it's very much a growing market.

31:02 And lastly, for this point, so our customer referencing has been very positive about the quality and the relevance of our events, which leads us to have confidence. So once stability returns to this market, for us offering, our offering, will become increasingly relevant. The second point to make is back to the the wider group. I'd like to remind you of the strength of our portfolio. Over enough time, if you run a wide enough portfolio, most businesses are likely to see a degree of short term disruption in the markets which

31:29 they operate. And I think it's a measure of our strength of the portfolio that we can absorb these changes across the group. So even with The UK Health disruption and the challenging comparison within Von Solon, we have still delivered overall growth, and I think this reflects the far improved strength of WILMINGTON group. And the last point or the third point here is with this improved organic call, we can now confidently layer on top revenues and profits from our new businesses such as Stutus and Phoenix. So I'll just move on and just talk a little bit about, about Phoenix, the latest acquisition. It operates in the health and safety training market. And just to pick a few points off this slide, it operates out of Cannock. And those of know, that's just north just, slightly north of Birmingham. The business was added in 2005, and you can read some of the stats across the top. It has 56 staff, and it trains a lot of people across a lot of a lot of countries. But dropping to the lower line, it has some really excellent long term client relationships. It achieves above industry pass rates, which is really very important in this space, And it has a high volume of customers and learners, and it gets those learners are giving them a a 4.9 star a trust pilot review. That's out of five in case you're interested, and there are more reviews now when there was this slide was put together.

32:45 I skipped over this because I'm gonna come back to a bit more detail on this slide. But if you wonder, if you wonder the sort of businesses that Phoenix is working with, here are just some of the logos, some of the brands that they work with, and then I'm gonna move on to the next slide. Now we have when we look at our own businesses, and there's a question here, I think this might answer it, around what do we look for in our businesses? What are the characteristics we look for in our business? And they are across the top here, number one to six. So GRC focus, attractive markets, differentiated offerings, so on and so forth. And we have run all of our businesses against that and said, is this business in the GRC space? Is it an attractive market? What is its differentiation and so on and so forth? And that's led to a little bit of the disposal campaign that we've been running and we're now coming to the end of, as we've looked to the businesses that WILMINGTON had acquired historically.

33:34 Equally, though, we use the same matrix when we're looking at businesses to acquire. And, there's a chart like this, looks very similar, in the results a year ago for Astutis. And and what we do with our investors is we show them how the business we have bought meets the characteristics that we've set out. So just to pick out a few, and I've put some in bold here just some of the key points rather than asking you to read an entire slide. If you go to column one, the business is clearly in the GRC space, helping customers demonstrate their regulatory compliance and meet their legal safety requirements. We do that by training. So a certification set by an external body called NEBOSH and IOSH and IEMA, they set the standard. They they do the exams. We train up to that level. And and and and businesses are increasingly required to show they are meeting those legal safety requirements.

34:25 Column two, it's a very attractive market in terms of size and a growing demand and requirement for services. Column three, Phoenix is similar to Astutis. Astutis also trains in the health and safety space, But they and they both share in common. They train to a very high quality, and they both have excellent excellent ratings. Column four, Phoenix delivers high margin double digit growth, has a diversified client base. In other words, we're not reliant on a single relationship with a single customer. As you can see from the from the this column, the top 20 customers account for only 15% of the f y twenty three revenue that is. If I move on to column five, the founder of the business who is very much staying with the business and is an expert in the sector, is extremely commercial, has a very clear view of the future.

35:12 And most recently, actually, in October of last year, was recognized from a reward from LDC as one of the company one of the country's top 50 most ambitious business leaders. And lastly, one of the things we look for in our in our businesses is their ability to compete in the digital space as well as, obviously, we do in this area, we do some face to face training. And you can see here that Phoenix is digitally very capable, meaning we say it's platform agnostic. That basically means that the the the consumer can choose how to use our product. If you want to turn up face to face, you can. If you want to do a virtual training, which is online with a with a training, you can. If you want to be completely online, then you can do that as well. But you can choose how you consume the products. Now we will, in time, move this business into our areas of technology that Guy mentioned earlier. I'm just gonna talk about that very briefly, on this page here.

36:03 What we've been doing is we've been bringing together all of our businesses, which were on individual technology stacks if you go back into, sort of, two or three years ago, and bringing them together onto a central technology platform. Now the important part of that platform, as Guy's already showed you, is we don't have a significant CapEx piece here because we're not building technology. Actually, what we're doing is we're plugging together technology. So for example, we don't need to be able to ecommerce solution. We can go and take one off the shelf, and that will serve as our ecommerce layer of our platform. Equally, when we're looking at websites, when we're looking at training management solutions, learning management solutions, the data layers, and elsewhere, we don't want to build that nine times across nine businesses. We want to have a central technology stack across our group, and we're gradually moving to that point.

36:51 And in the training space, this is called the digital hub. And the first business to move on there was one of our larger business called ICA. It trains compliance professionals predominantly in the retail retail banking space. Now it has over thirty thirty thousand learners on that platform. And we work really closely with our customers. So there's a retail banking customer we can't name, but they have adopted this platform as their centrally managed regulatory and financial crime compliance training platform, and they committed to do so over a three year contracts. And then we're doing we're then, of course, rolling this out onto other partners, and you can see tranches of five to 600 learners coming through. So that's the central technology hub, let's call it, within within the training area. And then we build additional products on top of that, and you can see here a red tech solution effectively looks at learners' behavior and then provides information back in the at the management layer into our clients who they can then use that for reporting of, for regulatory purposes, for example. And that's what we've been asked to do by our customers, and that's in beta deployments. That's a new product which we rolled out to our existing customers and to new customers sometime in this in this half year, so before the end of this financial year. And that's a product upsell opportunity, as I said, the sort of the share of wallet opportunity I referenced earlier. And in addition to that, we've got a new AI regulator alert solution.

38:09 This is this is scanning for changes of regulation internationally, not just in The UK, and then presenting to you a very much tailored results. And again, that information being pushed back through the digital hub. So we're quite effectively in creating our own platform and our own ecosystem. We could talk quite extensively about product development because we that that is a a major feature of Wilmington, but I just wanted to give you a couple of examples here just to give you a shape as the the the way in which we view the technology activities and new product development activities across Wilmington. So onto the final slide, and it's a summary, and it tells you things we've already covered. But, if I if I reflect on the first half of the year, it's been a very strong very strong first half of the year. We've got 16% ongoing revenue growth. Ongoing operating margin is up to 28%.

38:59 We've got 39% growth in ongoing adjusted profit before tax. The we have our m and a team are all the time working with normally talking to in the range of around 20 companies we've identified that we want to bring into the group, and then hopefully moving into a more detailed discussions with maybe four or five of those. And that's how we got involved in the Phoenix acquisition. It significantly strengthens the portfolio, it meets all of our characteristics. And we're very pleased with that business joining us as we are astute as the the year before. Our technology continues to improve, and the digital hub adoption continues to to be rolled out. And we've got the new product development I've just been talking about. And the strength of our portfolio positions us really well. And as we can sitting here today, we can tell you that our trading is in line with our expectations moving forwards.

39:46 So that brings to a close the the sort of the presentation part of this session. It's time for us now to to have a look at your questions and and see how we can answer some of those. That's great. Guy and Mark, thank you very much indeed for your presentation, ladies and gentlemen. Please do continue to submit your questions, which is in the q and a tab situated on the right hand corner of the screen. But just while we give Mark and Guy a few moments just to review your questions submitted already. I'd just like to remind you, we're recording this presentation along with a copy of the slides and the published Q and A will be available on the IMC platform. Mark, Guy, as you can see, you've had a number of questions from investors throughout your presentation. Firstly, thank you for your engagement this afternoon. If I may, guys, just hand back to you just to take us through the q and a. If I could ask you to read out the questions, and then I'll pick up from you at the end. Will do. Okay, Guy. I'll take the lead, and then I'll I'll take questions on and I'll allocate to you.

40:37 So, Ben, thank you for a couple of questions, actually. The questions are how do we plan to accelerate the organic growth and what's expected contribution from acquisitions in the coming periods? I'll do the this is the first question. I'll do the first part of that guy. Yep. Leave the second half second part to yourself. Sure. I think if I go back to and, hopefully, people can still see the slides. Is that correct? Mark, is that correct? Yes. I'm thinking it is. I'm gonna make Sorry. I do apologize. Yes. Yes. It is. Great. Thank you. So I'm gonna take you back to this slide and just show you the show you the the sort of the heat map type slide and just remind you of what I said about about about the market share and share of share of wallet opportunity. All these businesses are working to three year plans. They each have where you see a brand with exception of ICA and CLTI who work together, there are there are managing directors of each of these businesses, and their teams are focused on a, not just the short term picture of this month's activity, but a three year plan activity.

41:36 And therefore, we can say with confidence that, we then as a group invest in those plans and then very much help those businesses achieve them, and that's what's driving the organic core and the organic growth across our group. So, yes, we have a very clear line of sight about our ambitions over the next sort of one to three years or so. But the delivery of those plans is undertaken by the specialist teams in each of these in each of these Kai, over to you for the acquisition part of the question. Sure. So the two acquisitions, if you annualize their revenues and profits, they're they're about 20,000,000 at the moment. Phoenix, eleven is due to about nine and a 25% operating margin on that 20,000,000.

42:21 So about 5,000,000 of profit is the expectation when we have a full year of both of them. So that's the contribution going forward. And then they're growing those numbers particularly the revenue. So if we can get a combined growth rate of certainly high teens or maybe 20% then you can see that number going up by that each year. Okay. Thanks, Kai. And then coming to the next question, Ben, thank you for this one as well. Also, the interim dividend remained at $3.03 pence despite strong profit What factors influence this and were and will there be an increase on the final dividend? I think we covered that, I just just wanna do a quick refresh from my view of Sure. Yeah. So so so they I take the point about strong profit growth sort of up somewhere up the p and l operating profit adjusted PBT.

43:15 Actually, profits after tax, I. E. The amount you actually have to hand out as a dividend went down. And and the act and the and the EPS available to hand out is is less than the dividend. So 2.88p against the three p dividend that's been announced. That's that's part of the consideration but we we we mainly wanted to take our time in considering what the the total year dividend should be. Once we'd seen how the FRA business goes in the rest of this this period in in the in the next four months, its biggest revenue months are March to June. And March, in particular, is its biggest revenue month. And so if it gets through that no more scathe than it currently has been, then we should be we should have plenty of profit growth to pay an increased dividend at the year end. But at the moment, we were just hanging on that uncertainty and delaying the decision till we get to the year end.

44:17 Okay. Thank you. Richard, thank you for your question. Are there any underperforming assets that you are considered divesting? Excuse me a second. I wouldn't use the word underperforming only because what we've gone through is looking at the strategic fit of businesses into WILMINGTON with a relatively new focus for us. As you say, this focus on GRC has only really been in the group sort of four, five years or so. A reminder, I've been here sort of five and a half years. Previously, if I go back to the foundation of the company, we were a media company. We were a media business with a series of media entities. And therefore there, we had a composition, quite a mixed composition in terms of the types of businesses. And we have some media entities within the group, and we decided we would move away from that space, move far more into the intelligence and data and training and education area, but but entirely focused on GRC. And once where that strategy piece have been worked on, tested, and then and then approved through through our board, and then put kinda communicate to investors, we've systematically gone through looking at each individual business.

45:26 So the disposal process has been one of saying, does the business meet the strategy, the new strategy or not? And some of those businesses were performing very strongly, but you have to you have to align a group like ours around a central strategy. And if the businesses didn't fit, even if they are good performers, then we have then moved moved those on. And that's been very much the active process in terms of our disposal campaign. And compliance week four is part of that. It is a media entity. It publishes content around the, probably, US, but increasingly international, so compliance market. But it is a media business. It sells advertising and so on and so forth. And we're moving away from that into, as you can see, a very different direction of travel. So so that is the case. There are no other media entities within our portfolio. Compliance Week was the last one. We did have, I think, three previously.

46:16 And and we so as we move away, we now focus on a different view of our our portfolio, which is now performance based. And then we start to look at those three year plans and look at their opportunity to grow and the realistic opportunity for them to grow over that over that, three year period. So that's very much how we now manage the portfolio. Very different strategy to previously where we were sourcing and organizing and focusing on a single, strand of GRC. We're now looking at to build back up again through our m and a piece, but also ensure that our existing organic businesses continue to grow. I hope that answers your question. Tom, thank you for your question. Given the strength of the balance sheet, no dividend increase, are there plans, to buy shares back? Guy, I'm gonna pass that one to you. It it's something we we always have in the in the capital allocation considerations.

47:08 We have a, you know, a large cash balance at the moment. And it it will depend to a degree, I think, on on whether some of the acquisition opportunities come quickly or not. But we we have seen quite a lot of volatility in the share price in recent times that if a buyback program had been in place, it might have helped. We you get small amounts of shares on a regular basis that are that are offered for sale and there isn't an immediate buyer so the price goes down and it and it's nothing to do with the, you know, the the results of the company or or what the company's doing. It's just the the trading in the market and we we are a particularly illiquid share and and that doesn't help sometimes. So buybacks are are always something we're going to consider and, yeah, I think we would say at this point, we'll keep you posted. But they're they're definitely on the agenda.

48:03 Okay. Thank you. And then the last question I can see on here is from a piece of would you say you are more focused on US expansion or acquisitions? I can give you the really short answer. That is no, but I need to explain it a little bit more. If I go back to the slide I was just showing you about the markets we're in, which was this slide here, which, hopefully, you're now seeing, A lot of these businesses, if you look up the Mercia business, it trains accountants, and they are in The UK. So that has a limited international expansion opportunity given the the very detailed nature that we're working in in The UK. But if you go to Axco on the left hand side who sells data into the insurance area, predominantly into the in the underwriting area, that's covering a 160 different geographic markets in detail and probably 200 in total.

48:49 So that's very much more of a global business. So our composition at the moment is is is quite interesting. We have businesses who have a big domestic market opportunity, and we have businesses who have domestic plus an international opportunity as well. So when we're looking at our m and a, we tend to look at it from a market specifics, and so we tend to look at where there is strong regulation in place. And where there is strong regulation in place, therefore, there is a requirement for customers to consume training and data or intelligence information sort of packages, then that's where we feel comfortable operating because that's the that's the core of the strategy I've been outlining to you today. And therefore, we tend to focus on those markets, those geographic markets where that regulation is stronger, enforceable, and so on and so forth. And that's what very much leads our international view.

49:36 So that makes it very focused and very targeted. So we wouldn't specifically focus on The US to your question. The US will be in our mix of of of areas we will look at. But if you looked at ICA, for example, we are specialists in the training around anti money laundering into the financial services area, and ever into the compliance teams in those areas. So we would look at where the regulations around that are really, really held, then we would try and sell our products and services into those marketplaces. And in the process of doing that, we may discover, some inorganic opportunities in terms of, m and a m and a opportunities. Okay, Douglas. Thank you. I just posted a message. Guys, this is coming your way. How much growth can you add before central costs go up, both organic and acquisitions?

50:25 We don't think we need to add any central cost to to add quite a lot of acquisitions. We we've got the we've got the core team that we need to do, you know, one or two acquisitions a year for the foreseeable future, certainly three years out, and we wouldn't need to add any cost to do that. So I I we don't see the the central cost changing in that time period. So if we can add revenues and profits, then obviously, the overall profitability of the group will go up a lot because that central cost will become less of a drag on the on a bigger number. Okay. Great. And I think that brings to a close our session for today. It does indeed, Mark. Thank you very much, Guy. Thank you also for taking the time to address all those questions, and thank you once again to everybody for your engagement. Mark, Guy, I know investor feedback will be particularly important to you both.

51:19 I'll shortly redirect those on the call to give you their thoughts and perhaps expectations. But before doing so, if I may just ask you for a couple of closing comments. Yes. I I'm not going to no more slides from us. I will make actually, sorry. That's not true. There is a slide at the end which we haven't covered and and is an important slide, which is on slide 24. If you are interested in our positioning when it comes to the activities we undertake in terms of our ESG, activities and and other areas. There is a slide here. We normally build it into the pack. A lot of progress, a lot of activity there, which is, well worth reading this slide. And if you would like more detail on this slide, we would like to refer you to our annual report where there are extensive coverage of all of these areas within the annual report we published last year. But then just bringing you back to the sort of the overall picture, I just rather than recapping on all the slides, I'd just like to thank you all for joining us today, and thank you for your interest in Wilmington.

52:13 That's great. Mark Guy, thank you once again for updating investors. Can I please ask investors not to close this session as we'll now automatically redirect you of the opportunity to provide your feedback in order that the company can better understand your views and expectations? It'll take a couple of moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of WILMINGTON PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.