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JIC Portfolio Trade - Third new position bought today

Updated: May 1

Wilmington (WIL.L.  Market capitalisation: £296m, 332p, 1.8% of JIC Portfolio. Medium Risk/High Reward = 2.5% initial target weight)


Wilmington plc is a United Kingdom-based company, which is engaged in providing data, information, education and training services in the global governance, risk and compliance (GRC), health, safety, and environmental markets. The Company's segments include Training & Education and Intelligence. It Training & Education division provides compliance training and technical support for customers across a range of industries, including financial services, accountancy and healthcare. It offers a range of products, including formal qualifications, continuing education and mandatory training, through instructor-led and self-guided formats. Its Intelligence division consists of businesses, which provide must-have, authoritative risk and compliance data to a range of industries globally, including insurance, pensions and healthcare. Its brands include APM International, Axco, Bond Solon, FRA and others.



Wilmington appears on my “proprietary” screen (which covers quality, cash flow, return on investment and valuation).


It has a Stockopedia StockRank of 93 (Quality 95, Value 46 and Momentum 93).


It passes the T Rowe Price Growth investing screen on Stockopedia.


It is valued at 14.7x June year-end 2024 consensus earnings forecasts with a yield of 3.3 per cent.


It is valued at 10.2x free cash flow.



Earnings per share have been upgraded over the last year:



The latest news (yesterday) was the sale of one of its businesses:


MiExact sold for £9.6 million


Wilmington plc (LSE: WIL, 'Wilmington', 'the Group'), the provider of data, information, education and training in the global Governance, Risk and Compliance markets, has sold its mortality data business, MiExact, for an enterprise value of £9.6 million, subject to working capital adjustments, to Information Services Bidco Limited. The business will continue to be run by the existing management team, led by Managing Director Polly Avgherinos, backed by Foundation Investment Partners.


The consideration consists of £6.6 million of cash on completion and £3 million of loan notes with a 7% coupon, deferred for up to three years.


For the year ended 30 June 2023, MiExact had gross assets of £20.5 million and reported a profit before tax of £1.1 million.


The proceeds of the sale will be used for general corporate purposes.


Mark Milner, Chief Executive Officer of Wilmington, said


"This sale reflects our continued and active management of our portfolio as we assess the potential of each business to exhibit the six common Wilmington characteristics that we recognise as key drivers of organic revenue growth and profitability improvement."



Half-year results up to 31 December are due on 19 February. On 25 September, the outlook was reasonably upbeat. Hopefully, 19th February will confirm it had a good H1.


On 25th September, Mark Milner, Chief Executive Officer, commented:


"Since the strategic review we have delivered two years of quarter-on-quarter profits growth, despite the challenging macro-economic backdrop. Last year's results were our strongest to date with continuing revenues up by 9% and profits up 30%. Other notable developments have been the growth in our recurring revenues and strong cash conversion of profits, further strengthening our balance sheet, which are a result of improvement in our overall operational performance.


"We help our customers to do the right business, in the right way. As Governments, Regulators, businesses and individuals respond to increasing Governance, Risk and Compliance requirements, they are globally becoming increasingly aware of the need to ensure the data they rely on for themselves and their customers is credible, accurate and current; and the training to ensure they are knowledgeable and meet current standards - all must be relevant, measurable and independently assessed.


"We now transact with over 8,000 customers and gather data from around 250 geographies.  We have increased our geographic presence and now operate in the UK, Ireland, USA, France, Singapore, Hong Kong, Malaysia, Indonesia, India, and the MENA region.  Our increasing global reach provides us with opportunities to develop and provide our services across a broader international customer base, whilst our single technology platforms will be instrumental in helping us scale in both existing markets and in new territories.


"The current financial year has started in line with our expectations with continued organic revenue growth and improved profits and cash."




Conclusion: The business seems to have good momentum. It generates a high return on capital and investment and lots of cash. (To June 2023, earnings per share of 20.5p converted to operating cash flow of 33p and free cash flow of 32p.) It is clearly focusing on improving returns further while also growing the top line. On 10.2x free cash flow, it looks like good value, given the returns on capital and equity it is achieving. If it gets through 360p, the share price would be at a fourteen-year high. I think it can, given its growth prospects and the possibility of a re-rating - in the past, it has traded on a PE ratio in the high teens to low 20s.


FWIW, reckons it is trading 56 per cent below fair value.



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