TIDMCAU
RNS Number : 3702I
Centaur Media PLC
21 March 2018
Centaur Media Plc
Preliminary results for the year ended 31 December 2017
Significantly reshaped portfolio and stronger revenue mix
Centaur Media Plc ("Centaur"), a leading business to business
information, insight and events group, is today publishing its
preliminary results for the year ended 31 December 2017.
Financial highlights
-- Group revenue including the Home Interest segment maintained
at GBP72.6m; underlying[1] revenue fell 6%, made up of:
o Large events revenues +7%;
o Advertising revenues -19%;
o Digital premium content revenues +3%.
-- Adjusted operating profit[2] including the Homes Interest
segment was GBP6.6m (2016: GBP9.1m); adjusted operating margin[2]
9.1% (2016: 12.6%)
-- Statutory profit of GBP21.9m (2016: Loss of GBP5.4m) is
driven by a GBP23m gain on the disposal of the Home Interest
segment. A statutory operating loss of (GBP0.3m) (2016: GBP8.4m) is
a result of GBP4.4m of exceptional items (2016: GBP12.6m) relating
primarily to the amortisation of acquired intangibles and
transaction related costs.
-- Excluding the Home Interest segment, adjusted operating
profit[2] was GBP4.1m (2016: GBP4.2m) including the impact of
MarketMakers (GBP1.1m) and due to continued decline in advertising
revenues
-- Strong cash flow performance:
o Cash conversion[3] of 138% (2016: 133%) with adjusted
operating cash flow[4] of GBP14.1m (2016: GBP16.5m)
o Strong balance sheet with GBP4.1m of net cash at the end of
2017, with funds now available to pursue acquisitions in key
verticals
-- Adjusted diluted EPS[2] of 3.2 pence (2016: 4.5 pence).
Diluted EPS of 14.3 pence (2016: (3.8) pence)
-- Final dividend of 1.5p making total for the year of 3.0p, in line with last year
Strong operational progress
-- Moved to pure B2B business
o Sale and successful transfer of Home Interest
o Acquisition and successful integration of MarketMakers
o Creates a pure-play business information Group
-- Improved revenue mix
o Digital premium content and events revenue now account for 60%
of the Group
o Recurring revenue now 44% of the Group (2016: 36%)
-- Overheads savings of GBP1.8m achieved as business complexity was reduced
Andria Vidler, Chief Executive, said:
"Centaur has changed significantly since I joined and 2017 was
an important year in its transformation. We have successfully
reshaped the portfolio, improved the long-term quality of our
revenues and reduced our exposure to advertising. We are now a
business information group with a strategy that continues to
leverage our audience and increase our importance to customers. We
have had a good start to 2018, and aim to maintain this momentum
through further organic growth and strategic acquisitions"
Enquiries
Centaur Media Plc Andria Vidler, Chief Executive 0207 940
4000
Swag Mukerji, Chief Financial Officer
Tulchan Communications James Macey White 0207 353 4200
Elizabeth Snow
21(st) March 2018
[1] Underlying revenue growth rates adjust for the timing of the
Oystercatchers acquisition in 2016, the disposal of the Home
Interest Segment, the acquisition of MarketMakers, the closure of
Metalworking Production in 2016 and the biennial contribution from
The Advanced Manufacturing Show ('AMS'). See note 1(b) to the
financial statements
[2] Adjusted results exclude adjusting items, as detailed in
note 1(b) to the financial statements
[3] Cash conversion is calculated as adjusted operating cash
flow / adjusted operating profit excluding depreciation and
amortisation charges
[4] See note 1(b) to the financial statements for explanation
and reconciliation of adjusted operating cash flow.
([5]) Restated to reflect the Home Interest segment as a
discontinued operation
CEO Review
Overview of 2017
It has been an important year for Centaur Media as we continued
our transformation to becoming one of the UK's leading B2B business
information groups. We have invested in priority digital platforms,
identified operational improvements and efficiencies and reshaped
the portfolio through two strategically important transactions.
The quality of revenue continues to improve, with a further
increase in the percentage of recurring repeat revenues combined
with a further reduction of exposure to print advertising, which
remains in structural decline. This places Centaur Media on far
stronger foundations for long term growth and value generation.
Recurring revenues now represent 44% of total revenues with
underlying1 digital premium content and exhibition revenues 28% and
19% respectively. This healthily compares to 2014 when print and
total advertising represented 24% and 31% of Group revenue
respectively.
The improvement in revenue mix reflects the successful execution
of our business strategy with digital products and services that
advise, inform and connect business professionals through insight,
data and events.
We are particularly pleased to have delivered an improved
operational performance. This is reflected in adjusted operating
profit2 of GBP6.6m.
Overall, the underlying momentum of Centaur Media is
encouraging, and the Board is confident in the long-term prospects
of the Group.
Transformation of Centaur Media
Four years ago, Centaur set off on a strategy to create a Group
that could take advantage of the editorial expertise and
connections of its publishing brands and simultaneously move away
from reliance on tactical trade advertising. By focusing on
clients' needs and challenges, we invested in building valuable
content sources that our professional communities would be prepared
to buy and subscribe to, to improve their business
competitiveness.
Throughout this period of change, the structural decline in
print advertising has been well publicised, impacting our legacy
print businesses.
Against this background, we have maximised the contribution from
these highly profitable advertising revenues, reinvesting the
profits to both grow the reshaped Group and support the dividend
policy.
2017 proved the year we were able to start to take advantage of
the hard endeavours that began in 2014.
Key highlights include:
- Our task to transform the Home Interest portfolio into a
strong, competitive business was completed with the disposal of
this non-core B2C Home Interest portfolio for a total consideration
of GBP32.8m. This enabled us to focus purely on B2B and acquire
MarketMakers for an initial consideration of GBP13.3m excluding
working capital. MarketMakers is now integrated, significantly
enhancing our service to professional marketers.
- Our success in building digital content products such as The
Lawyer and events such as Festival of Marketing and Business Travel
Show allowed us to exit challenging weekly print schedules -
radically reducing the number of issues produced each year from
over 300 to less than 75 and reducing our ongoing total print
exposure to less than 10%. We are now in control of our print
business and what we want from it.
- We addressed a significant number of finance process issues as
the business changed ways of working. This materially strengthened
several aspects of the Group's financial management whilst
improving working capital and cash flow. Debtor days were reduced
from 77 to 52 and cash conversion4 in 2017 was 138% (2016:
133%).
- We created a less complicated, more focused business as a
result of strategic action taken in print, and the B2C disposal.
This has led to management identifying internal efficiencies which
are being realised. Central overheads were reduced by GBP1.7m in
2017. We have identified further efficiencies and operational
improvements for the mid-term.
In short, Centaur Media is now converting audiences to customers
and consolidating around its strongest brands. The investment into
new content sources is building new revenues of a higher quality
and replacing declining advertising revenues.
We have become a unique B2B group. We can offer our clients
end-to-end solutions that combine the strengths of our publishing
brands' deep market knowledge with best in class business
consultancy services. We have trusted brands and capabilities
providing effective solutions for clients searching for information
and insightful guidance.
The Group is well placed for growth, having strengthened
competitiveness, created products and services to meet customer
demand, and, built capabilities to unlock future growth.
In respect of our three market segments, 86% of Group revenues
are weighted towards the Marketing and Professional segment with
Financial Services accounting for the remainder.
Strengthened balance sheet
- Disposal of Home Interest
- Cash flow performance in the period
- Net cash position
- Current financing position
Dividend
In light of this performance, the Board is recommending a final
dividend of 1.5 pence per share, to give a total dividend for the
year of 3.0 pence per share and will continue to keep its dividend
policy under review.
Positive outlook
Although advertising market conditions remain challenging, they
represent a decreasing share of Group revenue.
The Group has made a positive start to 2018 and we remain
confident that our strategy to invest in digital products and
services which advise, inform and connect business professionals
through insight, data and events, will continue to deliver
long-term value for our clients and shareholders.
We intend to grow both organically and through acquisition.
Organic growth is forecast to come from improving customer lifetime
value, cross-selling and international scalability of digital
intelligence products. As well as improving profits from our
consultancy and advisory business, we anticipate further growth
following the acquisition of MarketMakers, which has already
started to positively impact our client offering and internal
capabilities.
Segment Review
Marketing
This segment includes all the Group's brands that serve
marketing and creative professionals including Econsultancy,
Marketing Week, Festival of Marketing, Celebrity Intelligence,
Fashion & Beauty Monitor, Design Week, Creative Review,
Oystercatchers, and, Centaur's most recent acquisition,
MarketMakers.
The portfolio now represents 56% of the Group's revenue. It is
the strongest example of our Group strategy to continue to deliver
long-term value for our clients and shareholders by investment in
digital products and services.
Marketing Week, alongside Creative Review and Design Week,
accelerated its move away from print-based revenues in 2017 with a
digital first, content-led strategy. Unlike 2016, these brands all
suffered from the double-digit decline in traditional advertising
revenue and recruitment streams as clients throughout the year
reduced their advertising spend.
The opportunity now exists for our teams to offer broader
horizontal client solutions - a key area of development for
Centaur's next phase of growth, helping us to further reduce
exposure to volatile advertising streams by building higher value,
longer term relationships with clients.
Our focus on fewer, larger events has worked well with growth in
profits for both Marketing Week Live and Festival of Marketing. The
Festival, staged in October 2017, received positive reviews from
delegates and commercial partners alike. Of particular note was the
37% growth in delegate revenues. With over 300 speakers and more
than 200 hours of content, it is clear that marketers value the
Festival's content and are attending in increasing numbers to learn
and network. Notable speakers included Stephen Fry, Mark Ritson and
Jo Malone. Customer satisfaction scores (NPS) have increased year
on year, firmly establishing the Festival as a leading global
event. We're delighted to see it continue to grow as the only
global event in the sector where brand marketers comprise over 60%
of its customer base compared with competitors such as Festival of
Media and Advertising Week with 10-15 percent.
Marketing Week's successful Mini MBA in Marketing underpinned
the development of a Centaur-wide online classroom platform which
successfully launched a series of modern-day micro learning modules
and online classrooms for Econsultancy, Celebrity Intelligence and
The Lawyer.
Recognising the loyal and highly valuable audiences drawn
together collectively through our three heritage publishing brands
Marketing Week, Creative Review and Design Week, we are beginning
to leverage their market influence as online digital -'windows'. It
is through these shop windows that we expect readers to access and
purchase additional branded content such as market reports and
training courses from Econsultancy and other affiliate partners.
This pilot will continue to be monitored throughout 2018.
2017 was a pivotal year for Oystercatchers as it integrated into
Centaur and built a fresh new proposition combining the best of two
worlds - Oystercatchers' unique pitch model, consultancy, training
and Club, alongside the expert content and events of Centaur brands
such as Econsultancy and Festival of Marketing.
The team had success in broadening its remit with clients such
as EY and Samsung. It onboarded exciting new clients including
Formula One and Centrica and brought new processes and
transformational change to the Post Office and Bwin.
As a result of client success, the Financial Times acknowledged
Oystercatchers as one of the UK's leading management consultancies
and awarded the brand four out of six stars in the marketing, brand
and pricing category alongside AT Kearney, Capgemini and LEK
Consulting.
Both Econsultancy and Oystercatchers suffered from a decline in
face to face training in the second half of the year. However,
given market demand for Elearning and growth potential,
Oystercatchers' training team has been consolidated within
Econsultancy creating a combined force to deliver digital
excellence. In tandem, this internal move allows Oystercatchers to
focus on its core consultancy services and help the wider Centaur
Group improve horizontality and deliver end-to-end valuable
solutions for clients.
Meanwhile, Econsultancy's sponsored research division recorded a
strong year-on-year performance with key projects completed with
global innovation and technology clients including Microsoft,
Google, Adobe and LinkedIn.
Having entered 2017 with challenging underlying business trends
for Econsultancy, Celebrity Intelligence and Fashion & Beauty
Monitor digital products, we exited the year with a positive
upswing.
The marketing tech and digital product landscape has become
increasingly competitive with many new entrants taking advantage of
new cloud technologies leading to lower barriers to entry for
learning and advisory products. As a result, driving our digital
product development upgrades became a key focus for 2017, and, will
remain important throughout 2018.
Along with Celebrity Intelligence and Fashion and Beauty
Monitor, Econsultancy's digital product offering will be upgraded
to provide a more competitive 'essential marketing learning tool'.
With the product scope now well defined, dedicated Product Managers
are building new customer-led product features and functionality,
which will be released throughout H2 2018.
In 2017, Fashion & Beauty Monitor and Celebrity Intelligence
benefitted from the first overhaul of technical product upgrades
and have introduced new social media analytics, market insight and
research reports to their product suite. The Profile Group's 2017
technology roadmap involved both customer facing front end
development and back end capability infrastructure.
The incorporation of machine learning and real-time data feeds
is enabling greater automation across digital subscription products
and will deliver further cost reduction. During 2018, an expanded
suite of e-learning products and advisory services, combined with
the technical content and UX upgrades, will re-establish our
competitive brand USPs and help to build yield and new
business.
MarketMakers, our latest acquisition, is a B2B new business
powerhouse. It offers creative services, data analytics, lead
generation, marketing automation and telemarketing. The acquisition
has enabled Centaur to deploy best practice telemarketing
capabilities at scale and better leverage data insight. It has also
created a base from which to exploit growing market demand for
integrated, automated marketing and intelligence services.
As we enter 2018, post earn-out, Centaur is trialling an
outsourcing of subscription new business sales to MarketMakers to
take advantage of its marketing automation technology and
efficient, operational telemarketing infrastructure.
We anticipate a good year's performance as remaining product
upgrades are completed and the enhanced commercial capability of
MarketMakers begins to connect.
Overall the Marketing segment continues to make progress. It is
developing a robust operational infrastructure for scalable and
sustainable growth coupled with deepening client relationships
allowing Centaur to advise, inform and connect business
professionals and sell multiple products across multiple
brands.
Operating Performance
Reported Underlying
2017 2016 growth growth(1)
GBPm GBPm % %
-------------------- ------- ------- --------- -----------
Revenue 36.3 29.8 22 (10)
Operating profit (1.9) (0.9) (110%)
Operating margin (5.2%) (3.0%)
Adjusted operating
profit(2) 1.7 2.5 (32%)
Adjusted operating
margin(2) 4.6% 8.4% (3.8)
-------------------- ------- ------- --------- -----------
There was positive momentum across both digital premium content
billings and live events revenues offset by a 26% decline in
advertising revenues. Around 35% of this segment's revenues are
derived from premium content, with 34% from live events, 18% from
capability services and 13% from advertising.
The decline in adjusted operating profits(2) and margin reflect
the impact of weaker advertising revenues and an increase in
centrally allocated overheads following the disposal of the Home
Interest segment. Reported operating profits were impacted by
earn-out charges relating to the Oystercatchers acquisition of
GBP0.6m (2016: GBP0.6m) and acquisition costs relating to
MarketMakers of GBP0.6m.
Outlook: this segment is expected to exhibit steady growth into
2018 driven by recurring digital premium content revenues and
integration with MarketMakers.
Professional services
The Professional segment includes two subsidiary markets: The
Lawyer and Exhibitions. Around 61% of revenue comes from live
events with a growing proportion from digital services.
Our exhibitions include Subcon, an exhibition that serves the
sub-contractor industry, Employee Benefits Live, Business Travel
Show and The Meetings Show.
2017 was a significant year for the portfolio as we reduced our
exposure to print revenue with the closure of the bi-monthly MWP in
the engineering space and the move from weekly to monthly editions
for The Lawyer and Employee Benefits which moved to digital only
distribution.
-- The Lawyer
The Lawyer is a multi-platform intelligence brand with digital
subscriptions, live event and digital advertising revenue
streams.
Its content strategy continued to progress successfully. Premium
content now represents 38% (including Clean Energy Pipeline) of
total revenue with over 160 large law firms taking up enterprise
subscription licenses.
As we move into 2018, a new website is being developed to allow
paying users to link seamlessly to The Lawyer's exclusive data
tables and deal information whilst providing access to market
insight reports. By linking news, analysis, data and insight in one
digital platform, The Lawyer is evolving as a market-leading
digital information service. It has successfully moved away from 30
years as a weekly print magazine to a monthly analytical and
features driven magazine with themed issues, reports and customer
interviews. In recognition of this strategy and successful
execution, The Lawyer landed the prestigious Periodical Publishers
Association's Media Brand of the Year Award in 2017.
The Lawyer Market Reports continued to deliver reliable revenue
streams with the UK 200 series generating 9% growth year-on-year.
Availability of all 17 reports on the new portal in 2018 should
enable additional opportunities for dedicated account management
teams to cross-sell subscriptions, data services and reports.
-- Exhibitions
Across the Professional segment, the broad revenue split is 60%
live events, 30% advertising and 10% premium content.
Collectively, exhibitions performed well with underlying(1)
revenue growth of 6% on a reported basis as a result of the
disposal of the Home Interest segment) driven largely by the
Business Travel Show at London's Olympia exhibition centre. In
2017, the event hosted over 375 exhibitors, 425 hosted buyers and
7,000 visitors. Meanwhile, The Meetings Show continued to develop
well with strong margin growth of 8% on revenue growth of 14%
year-on-year. The Subcon performed well too with 25% visitor growth
and strong underlying1 profit growth of 22%, helped by an increase
in international exhibitors, and new on-site content and learning
programmes.
The Engineer's focus has been to drive its online audience.
Monthly page views have grown, with unique visitors up 4% year on
year. Good progress was also made by developing brand-led events.
'Collaborate to Innovate', a unique awards/conference event in its
sector, launched well with Vince Cable as a keynote speaker.
Operating Performance
Reported Underlying
2017 2016 growth growth(1)
GBPm GBPm % %
-------------------- ----- ------- --------- -----------
Revenue 20.2 20.2 - 1
Operating profit
/ (loss) 1.3 (0.5) 260
Operating margin 6.4% (2.5%)
Adjusted operating
profit(2) 1.8 0.9 100
Adjusted operating
margin(2) 8.9% 4.5% 4.4
-------------------- ----- ------- --------- -----------
Legal revenues were 2% below last year, reflecting weaker
recruitment advertising which were partially offset by good growth
in premium content revenues. Deferred revenues in the Legal
portfolio were GBP1.1m at 31 December 2017, compared to GBP0.9m at
the same time last year. The adjusted2 operating margin has
increased from 4.5% to 8.9%. Outlook: The Lawyer and the exhibition
brands, particularly the Business Travel Show and Employee Benefits
Live are all expected to add to the Group's recurring revenue
streams through growing exhibition and digital subscription
revenues.
Financial services
This year saw a significant move away from traditional print
platforms with Mortgage Strategy moving from weekly to monthly,
Fund Strategy moving to digital only and the sale of Corporate
Adviser. Money Marketing remains in weekly print but with reduced
frequency during the year. The portfolio also includes subscription
services Platforum, Taxbriefs and Headline Money.
Platforum continued to build on its reputation as a key
reference point for asset managers, life companies and platforms on
retail investment distribution. It is now firmly established as a
subscription product with renewal rates of 85% by value and a
series of growing events.
Beyond Platforum, the Financial Services segment continues to
offer targeted events for all sectors of the financial services
community including large scale conferences, awards and exclusive
invitation-only summits for industry leaders. As a portfolio we are
deliberately selective in our events - opting to support, larger
scale, repeatable events across big brands. Commercial packages are
sold across the brands to enable cross-media solutions for sponsors
and clients.
Operating Performance
Reported Underlying
2017 2016 growth growth(1)
GBPm GBPm % %
-------------------- ----- -------- --------- -----------
Revenue 8.9 9.7 (8) (8)
Operating (loss)
/ profit 0.3 (7.0) 104
Operating margin 3.4% (72.2%)
Adjusted operating
profit(2) 0.6 0.8 (25)
Adjusted operating
margin(2) 6.7% 8.2% (1.5)
-------------------- ----- -------- --------- -----------
This segment's revenues remain reliant on advertising, at 39% of
the revenue mix, with 37% from premium content and 24% from live
events. Reflecting the wider economic environment, advertising
declined by 18% year on year, partly due to the move away from high
frequency print. The second half of 2017 saw performance improve
significantly. Supporting this is the move to digitally-led
creative solutions for clients which is gaining traction as we move
into 2018.
The operating loss of GBP7.0m in 2016 was driven by an
impairment of GBP7.2m. No impairment has been booked this year.
Outlook: despite the weakness reported in the first half of
2017, Financial Services has strong brands, premium content and an
increasingly agile digital delivery platform.
People
Changes to the senior management team in 2016 have settled well
and the diverse skills and experience that each Executive Committee
member brings has allowed the Group to deliver significant
operational success in 2017.
Whilst continuing to focus on immediate business delivery, the
Executive Committee is keen to develop a culture that works
horizontally together to deliver client solutions that advise,
inform and connect. Our internal training plans are being developed
to support this ambition.
Our approach to diversity continues to be pro-active through
policies and working practices. Our male to female ratio is well
balanced and we retain strong representation of women at a senior
level. Two out of six (33%) of our Board members are female, and
four out of six (66%) of our Executive Committee are female. Our
family friendly policies include enhanced maternity and paternity
leave, flexible work options, while our return rate of maternity
leavers is in excess of 90%. A high percentage of staff, both male
and female, work flexible/reduced hours including our COO, Company
Secretary, an Oystercatchers Managing Partner, Group Head of HR and
a Research Director. Two staff made use of shared parental leave
during 2017.
We're delighted to see our Development Board, comprising some of
our rising stars, continue to grow from strength to strength. The
Board's remit is "to change Centaur for good" and act as a
communications channel between our people and the senior
leadership. Sponsored last year by Suki Thompson, the Board now
leads our internal charity sponsorship activity and has planned and
delivered new initiatives including a recognition scheme, football
and softball teams, regular yoga, mindfulness and meditation
sessions, lunch and learns, and last but not least, a Bike Clinic
and Cycle Safety session to encourage people to cycle to work.
Through the Apprenticeship Levy we are supporting a number of
staff to achieve professional qualifications in Management and
Leadership, Digital Marketing and Data Analysis.
During the year we had many successes with The Lawyer winning
the blue ribbon PPA Business Media Brand of the Year, Econsultancy
winning Best technology partner for Marketing Week Mini MBA at the
AOP Awards and Marketing Week winning "Digital Brand of the
Year".
Summary
We will continue to enforce our customer focus, enhance our
products and simplify our operating structure.
Our investment into digital products and our improved overall
revenue mix will enhance performance going forward and we remain
confident that our strategy is building long-term value for our
shareholders.
These results and achievements would not have been possible
without the full commitment and energy of every Centaurion. I am
continuously impressed by the expertise of my colleagues across the
Group. The levels of passion and deep knowledge of our content
specialists and their commitment to innovate our products and
services have been critical to enable such radical product
transformations across the Group.
The ongoing success of Centaur relies on the ideas, the energy
and our determination to deliver valuable solutions for our
customers.
Thank you to every Centaurion, to our shareholders, our readers
and our customers. We look forward to continuing our work and
providing valuable solutions throughout 2018.
CFO Review
Overview
The results of the business presented in accordance with
accounting standards.
Due to the disposal of the Home Interest Segment in August 2017,
we are required to disclose the turnover and operating profit on a
continuing operations basis which includes MarketMakers post
acquisition and excludes the Home Interest Segment. The net result
of the Home Interest Segment is disclosed separately on the face of
the Income Statement as "Profit for the period from discontinued
operations". Revenue, net operating expenses, finance and taxation
costs reported on the face of the Income Statement therefore only
refer to that achieved by our Marketing, Professional and Financial
Services Segments.
On a continuing operations basis revenue was GBP65.4m (2016:
GBP59.7m) in the year. However, when considering Group performance,
we believe it more appropriate to consider total revenue and
adjusted operating profit2 generated over the year. Therefore, we
have chosen to focus on revenue including the Home Interest Segment
until disposal and MarketMakers from acquisition. On this basis
revenue was GBP72.6m (2016: GBP72.5m). Adjusted operating profit2
(including MarketMakers from acquisition) was GBP4.1m. The adjusted
operating profit2 for the period for Home Interest was GBP2.5m. On
the face of the income statement we report GBP2.1m of net operating
profit for Home Interest which includes GBP0.4m of tax. Therefore,
the adjusted operating profit(2) is GBP6.6m (2016: GBP9.1m);
adjusted(2) operating margin 9.1% (2016: 12.6%).
Non-statutory measures
In these results we refer to 'adjusted' and 'statutory' results,
as well as other non-GAAP performance measures. Adjusted2 results
are prepared to provide a more comparable indication of the Group's
core business performance by removing the impact of certain items
including exceptional items (material and non-recurring), and
volatile items predominantly relating to investment activities and
other separately reported items. Adjusted2 results exclude
adjusting items as set out in the statement of consolidated income
and below, with further details given in notes 1(b) and 4 of the
financial statements. In addition, the Group also measures and
presents performance in relation to various other non-GAAP
measures, such as underlying1 revenue growth, adjusted operating
cash flow3, adjusted2 EBITDA and net debt5.
Adjusted2 results are not intended to replace statutory results.
These have been presented to provide users with additional
information and analysis of the Group's performance, consistent
with how the Board monitors results. Further rationale for each of
the adjusting items used in these measures, as well as
reconciliations to their statutory equivalents, can be found in
note 1(b) to the financial statements.
The Group's activities are predominantly UK-based and therefore
currency movements do not have a material impact on the Group's
results.
Statutory loss before tax from continuing operations reconciles
to adjusted operating profit2 as follows:
2016 (Restated)
2017 6
Note GBPm GBPm
Statutory loss before tax (0.7) (8.9)
Adjusting items
Impairment of goodwill 9 - 7.2
Amortisation of acquired intangible assets 10 2.5 2.2
Share-based payments 0.5 (0.1)
Earn-out consideration 12 0.6 0.6
Additional impairment of trade receivables 23 - 1.5
Acquisition related costs 12 0.6
Exceptional operating costs 4 0.2 1.2
-------------------------------------------------------- ----- ------ ----------------
Adjusted2 profit before tax 3.7 3.7
Adjusted2 finance costs 5 0.4 0.5
Adjusted operating profit2 4.1 4.2
-------------------------------------------------------- ----- ------ ----------------
Prior year comparatives have been restated6 to reflect the
disposal of the Home Interest Segment in August 2017.
Summary
Commentary on revenues and operating results is set out within
the Chief Executive's Report.
2017 represented a year of significant change for Centaur with
the disposal of our Home Interest Segment completing our strategic
shift to a pure B2B player. We also completed the acquisition of
MarketMakers, which has significantly extended the business's lead
generation capability and will help further shift our revenue mix
to a more predictable cashflow than that offered by the Home
Interest Segment, whilst also going some way to reducing the
complexity of the business.
We are very pleased with the performance of MarketMakers since
its acquisition and we see it as a key vehicle to drive growth in
other parts of our business.
The key underlying trend within the business during the year was
the continued decline of advertising revenue (21% of total 2017
revenue, a reduction from 28% in 2016) with its high drop through
to profit. Combined with the acquisition of MarketMakers this has
assisted Centaur in increasing recurring revenue from 36% in 2016
to 44% in 2017.
The Group is pleased to report year end net cash of GBP4.1m
against a net debt5 position GBP14.1m at the end of December 2016.
The rate of cash conversion(4) was 138% (2016: 133%). The GBP18.2m
improvement in cash is driven not only by the net proceeds of the
Home Interest Segment disposal but also active working capital
management, including stringent controls over cash management and
its collection.
In 2016, reflecting a reduced growth outlook in the Financial
Services Segment, the Group recognised a non-cash impairment charge
of GBP7.2m against goodwill. An annual impairment review has been
carried out in 2017 and we are pleased to report a nil impairment
charge.
Revenues
Revenues in 2017 were GBP72.6m including the Home Interest
Segment (2016: GBP72.5m). On a continuing operations basis revenue
was GBP65.4m (2016: GBP59.7m). Underlying1 trends, adjusting for
the biennial show, AMS, the acquisitions of MarketMakers and
Oystercatchers, and the disposal of the Home Interest Segment, show
decline of 6% primarily due to the continued decline of
advertising. The acquisition of MarketMakers, which is excluded
from underlying1, recorded GBP13.9m of revenue in 2017 on a full
year basis. The Group's results for 2017 include five months'
consolidated MarketMakers' revenue (GBP6.1m). Further information
on the divisional revenue performance and the mix of revenues
across premium content, live events and advertising is included in
the Chief Executive's Report.
Operating profit
Adjusted operating profits(2) for the year were GBP6.6m (2016:
GBP9.1m) (which includes Home Interest and is not reported this way
on the face of the Income Statement) with an adjusted operating
profit margin(2) of 9.1% (2016: 12.6%). Excluding the Home Interest
Segment and as reported on the face of the Income Statement, the
adjusted operating profit2 was GBP4.1m (2016: GBP4.2m). Further
information on the divisional adjusted operating profit2
performance is included in the CEO's Review.
Net adjusted operating expenses were GBP61.3m (2016: GBP55.5m).
Adjusted(2) employee related expenses in the year were GBP30.9m
(2016: GBP27.4m), and the average number of permanent employees was
515 (2016: 493).
Reported operating losses of (GBP0.3m) (2016: (GBP8.4m)) were
impacted by the adjusting items detailed below.
Adjusting items
The Directors believe that adjusted2 results and adjusted2
earnings per share provide additional useful information on the
core operational performance of the Group to shareholders, and
review the results of the Group on an adjusted2 basis internally.
Details of the Group's accounting policy in relation to adjusting
items are shown in note 1(b) to the financial statements.
Adjusting items generated a loss before tax of (GBP4.4m) (2016:
(GBP12.6m)). In 2016, an impairment charge of GBP7.2m was
recognised in the Financial Services Segment.
Exceptional operating costs of GBP4.4m (2016: GBP12.6m) include
staff-related restructuring costs of GBP0.2m (2016: GBP0.9m) which
principally relate to the reorganisation of the business as the
Group reduces its exposure to print. Whilst similar costs have been
incurred previously whilst performing other restructuring actions,
such costs linked to the substantial reduction of print as part of
the Group's transformation programme are not expected to recur once
this is completed, and as such these are deemed to be exceptional
in nature.
In the year no separately reported charge for the impairment of
trade receivables has been made (2016: GBP1.5m). Cash collection
has performed strongly in the year following the improvements made
to front-end billing and credit control processes in 2017. At the
end of 2017, Group DSO stood at 52 days, a reduction of 25 days
from the end of 2016. This, in addition to the net cash receipts
from the disposal of the Home Interest Segment, has driven the
Group reporting a net cash position at the end of 2017 of GBP4.1m
(2016: net debt5 of GBP14.1m), an improvement of GBP18.2m.
Earn-out costs of GBP0.6m (2016: GBP0.6m) relate to the earn-out
arrangement on the acquisition of Oystercatchers, which are treated
as a remuneration expense through the statement of comprehensive
income until the end of the earn-out period.
Other adjusting items include amortisation of acquired
intangible assets of GBP2.5m (2016: GBP2.2m) and a share-based
payment charge of GBP0.5m (2016: credit of (GBP0.1m)).
Further analysis on these adjusting items is included in the
Basis of Preparation section of note 1(b) and note 4 to the
financial statements.
Net finance costs
Adjusted2 net finance costs were GBP0.4m (2016: GBP0.5m). The
reduction in finance costs reflects lower net debt(5) during 2017
compared to 2016.
Taxation
A tax charge of GBP0.4m (2016: GBP0.1m) has been recognised on
continuing operations for the year. The adjusted tax charge was
GBP0.9m (2016: GBP0.8m) giving an adjusted effective tax rate
(compared to adjusted(2) profit before tax) of 25.3% (2016: 21.9%).
The Company's profits were taxed in the UK at a blended rate of
19.25% (2016: 20%), with the fall in the main rate of UK
Corporation tax being offset by the impact of overseas earnings
taxed at higher rates. On a reported basis, the effective tax rate
of (50.5)% (2016: (1.4)%) is driven by a small loss relative to the
non-deductible acquisition costs in the year and other
non-deductible expenses. See note 6 for a reconciliation between
the statutory and reported tax charge.
Share-based payments
Share-based payments charges in 2017 approached their historical
level of GBP0.5m following a credit of GBP0.1m in 2016, as a result
of lapses in the LTIP schemes following changes in senior
management and performance under non-market performance
conditions.
Earnings per share
The Group has delivered adjusted(2) diluted earnings per share
for the year of 3.2p (2016: 4.5p). Losses per share for the year
were (14.3)p (2016: (3.8)p). Full details of the earnings per share
calculations can be found in note 8.
Dividend
An interim dividend of 1.5p per share was paid in respect of the
period January to June 2017 (January to June 2016: 1.5p). A final
dividend in respect of the period July to December 2017 of 1.5p per
share (July to December 2016: 1.5p) is proposed by the Directors,
giving a total dividend for the year ended 31 December 2017 of 3.0p
(2016: 3.0p), in line with 2016.
The final dividend in respect of the year is subject to
shareholder approval at the Annual General Meeting and, if
approved, will be paid on 25 May 2018 to all ordinary shareholders
on the register at close of business on 11 May 2018.
Adjusted dividend cover in the year was 1.2 times (2016: 1.6
times).
Cash flow
As set out below, the Group has now eliminated net debt(5) with
net cash of GBP4.1m at the end of 2017 compared to net debt5 of
GBP14.1m at the end of 2016. The rate of cash conversion(4) was
even stronger than 2016 at 138% (2016: 133%).
2017 2016
GBPm GBPm
------------------------------------------ ------- -------
Adjusted operating profit(2) 6.6 9.1
Depreciation and amortisation 3.6 3.3
Movement in working capital 3.9 4.1
Adjusted operating cash flow(3) 14.1 16.5
Capital expenditure (2.8) (2.6)
Cash impact of adjusting items (0.2) (1.3)
Interest and finance leases (0.3) (0.5)
Other (0.1) 0.1
------------------------------------------ ------- -------
Free cash flow 9.1 10.9
Repayment of loan notes - (1.1)
Acquisitions (14.4) (1.5)
Disposal of subsidiaries 27.9 -
Share repurchases (0.1) (0.2)
Dividends paid to Company's shareholders (4.3) (4.3)
------------------------------------------ ------- -------
Increase / (decrease) in net cash/(debt)
5 18.2 3.8
Opening net cash/(debt) 5 (14.1) (17.9)
------------------------------------------ ------- -------
Closing net cash/(debt) 5 4.1 (14.1)
------------------------------------------ ------- -------
Adjusted operating cash flow3 is not a measure defined by IFRS.
Centaur define adjusted operating cashflow3 as cash flow from
operations excluding the impact of adjusting items, which are
defined above. The Directors use this measure to assess the
performance of the Group as it excludes volatile items not related
to the core trading of the Group, and includes the Group's
management of capital expenditure. A reconciliation between cash
flow from operations and adjusted operating cash flow3 is shown in
note 1(b) to the financial statements. The cash impact of adjusting
items primarily relates to exceptional restructuring costs in both
years.
Acquisitions net of disposals generated a cash inflow of
GBP13.5m in the year (2016: cash outflow of GBP1.5m).
Financing and bank covenants
On 8 June 2015, the Group agreed a four year GBP25m
multi-currency revolving credit facility, provided by RBS and
Lloyds. This facility runs to 31 August 2019. The principal
financial covenants under the facility are: the ratio of net debt5
to adjusted EBITDA2 shall not exceed 2.5:1, and the ratio of EBITDA
to net finance charges shall not be less than 4:1. The Group
remained within its banking covenants and has currently not drawn
down any of its GBP25m banking facilities.
Disposal of the Home Interest Segment
On 1 August 2017, we successfully completed the disposal of the
Home Interest Segment for consideration of GBP32.8m allowing the
Group to strategically focus on B2B. This disposal has resulted in
a profit on disposal of GBP20.9m with the funds being partially
invested in the acquisition of MarketMakers.
Acquisition of MarketMakers
On 2 August 2017 the Group completed the acquisition of 100% of
the shares in MarketMakers for a total purchase price of GBP18.9m,
subject to meeting earnout targets. Initial net consideration was
GBP16.5m with a further balance due upon successful achievement of
earn-out targets. We are pleased that MarketMakers has performed
strongly in 2017 and significantly added value to the Group in
2017. We are actively investigating ways in which MarketMakers'
inherent competitive advantage in lead generation can drive future
growth across Centaur as a whole.
Balance sheet
A summary of the Group's balance sheet as at 31 December 2017
and 2016 is set out below:
2017 2016
GBPm GBPm
-------------------------------------- ------- -------
Goodwill and other intangible assets 94.2 88.8
Property, plant and equipment 1.7 2.0
Deferred income (14.6) (16.9)
Other current assets and liabilities 0.2 7.5
Deferred taxation (0.7) (0.2)
--------------------------------------
Net assets before net debt(5) 80.8 81.2
Net cash/(debt)(5) 4.1 (14.1)
--------------------------------------
Net assets 84.9 67.1
-------------------------------------- ------- -------
The main movements in the Group's balance sheet is an increase
of GBP5.4m in goodwill and other intangible assets, primarily
caused by the acquisition of MarketMakers and partially offset by
the disposal of Home Interest. Deferred income has fallen primarily
due to the Home Interest disposal. Other current assets and
liabilities have fallen due to the continual improvement in
collection of trade debtors during the year, combined with a 2017
provision for earnout payments due to MarketMakers. Net cash has
improved GBP18.2m due to improved working capital management
combined with the net proceeds of the Home Interest disposal less
monies reinvested into the MarketMakers acquisition. Further
details on these significant movements can be found throughout this
report.
Conclusion
2017 has been a transformative period in the Group as it moves
towards its goal of advising, informing and connecting. The
disposal of the Home Interest Segment has realised our strategic
goal of becoming a pureplay business information group whilst
reducing its complexity. The disposal of the Home Interest Segment
for a total consideration of GBP32.8m not only eliminated the
Group's net debt5 position but also funded the acquisition of
MarketMakers, an exciting driver of future growth. I am delighted
to see our revenue mix move towards higher recurring revenues and
replacing declining advertising revenues.
The Group remains cash generative and is in a strong position to
move quickly to make further strategic acquisitions with synergy
opportunities. I am delighted that our working capital position has
continued to improve during 2017 with DSO having improved by 25
days over the year. Although we will never become complacent, our
investors can be assured that debt collection and cash management
is now well controlled and timely.
We are now well placed to build upon the positive financial and
operational performance of 2017 and continue the transformation of
the business in the coming year.
Consolidated statement of comprehensive income for the year
ended 31 December 2017
Restated(5) Restated(5) Restated(5)
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
Results(2) Items(2) Results Results(2) Items(2) Results
2017 2017 2017 2016 2016 2016
Note GBPm GBPm GBPm GBPm GBPm GBPm
Continuing operations
Revenue 2 65.4 - 65.4 59.7 - 59.7
Net operating expenses 3 (61.3) (4.4) (65.7) (55.5) (12.6) (68.1)
Operating profit
/ (loss) 4.1 (4.4) (0.3) 4.2 (12.6) (8.4)
Finance costs 5 (0.4) - (0.4) (0.5) - (0.5)
Profit / (loss)
before tax 3.7 (4.4) (0.7) 3.7 (12.6) (8.9)
Taxation 6 (0.9) 0.5 (0.4) (0.8) 0.7 (0.1)
Profit / (loss)
for the period from
continuing operations 2.8 (3.9) (1.1) 2.9 (11.9) (9.0)
Discontinued operations
Profit for the
period from discontinued
operations 7,13 2.1 20.9 23.0 3.9 (0.3) 3.6
Profit / (loss)
for the period attributable
to owners of the
parent after tax 4.9 17.0 21.9 6.8 (12.2) (5.4)
Total comprehensive
income / (loss)
attributable to
owners of the parent 4.9 17.0 21.9 6.8 (12.2) (5.4)
Earnings / (loss)
per
share attributable
to owners of the
parent 8
Basic from continuing
operations 1.9p (2.7)p (0.8)p 2.0p (8.3)p (6.3)p
Basic from discontinued
operations 1.5p 14.5p 16.0p 2.7p (0.2)p 2.5p
--------------------------------------- ----------- ---------- ---------- ------------ ------------ ------------
Basic from profit
/ (loss) for the
year 3.4p 11.8p 15.2p 4.7p (8.5)p (3.8)p
---------------------------------- --- ----------- ---------- ---------- ------------ ------------ ------------
Fully diluted from
continuing operations 1.8p (2.6)p (0.8)p 1.9p (8.2)p (6.3)p
Fully diluted from
discontinued operations 1.4p 13.7p 15.1p 2.6p (0.1)p 2.5p
--------------------------------------- ----------- ---------- ---------- ------------ ------------ ------------
Fully diluted from
profit / (loss)
for the year 3.2p 11.1p 14.3p 4.5p (8.3)p (3.8)p
---------------------------------- --- ----------- ---------- ---------- ------------ ------------ ------------
(5) Restated to reflect Home Interest as a discontinued
operation, refer to note 7
(2) Alternative performance measure, refer to note 1(b)
Consolidated statement of changes in equity for the year ended
31 December 2017
Attributable to owners of the Company
Reserve
for shares
Share Own Share to be Deferred Retained Total
capital shares premium issued shares earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2016 15.0 (6.5) 0.7 0.9 0.1 66.2 76.4
Loss for the period
and total comprehensive
loss - - - - - (5.4) (5.4)
Transactions with owners:
Dividends (note 21) - - - - - (4.3) (4.3)
Acquisition of treasury
shares
(note 20) - (0.2) - - - - (0.2)
Acquisition of business
and assets (note 12) 0.1 - 0.4 - - - 0.5
Exercise of share awards - 0.3 - (0.2) - (0.1) -
Fair value of employee
services - - - 0.1 - - 0.1
----------------------------- -------- ------- -------- ----------- --------- --------- -------
As at 31 December 2016 15.1 (6.4) 1.1 0.8 0.1 56.4 67.1
----------------------------- -------- ------- -------- ----------- --------- --------- -------
Profit for the period
and total comprehensive
income - - - - - 21.9 21.9
Transactions with owners:
Dividends (note 21) - - - - - (4.3) (4.3)
Acquisition of treasury
shares
(note 20) - (0.1) - - - - (0.1)
Acquisition of business
and assets (note 12) - - - (0.1) - - (0.1)
Fair value of employee
services - - - 0.4 - - 0.4
----------------------------- -------- ------- -------- ----------- --------- --------- -------
As at 31 December 2017 15.1 (6.5) 1.1 1.1 0.1 74.0 84.9
----------------------------- -------- ------- -------- ----------- --------- --------- -------
Company statement of changes in equity for the year ended 31
December 2017
Attributable to owners of the Company
Reserve
for shares
Share Own Share to be Deferred Retained Total
capital shares premium issued shares earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2016 15.0 (6.0) 0.7 0.9 0.1 95.1 105.8
Loss for the period
and total comprehensive
loss - - - - - (2.2) (2.2)
Transactions with owners:
Dividends (note 21) - - - - - (4.3) (4.3)
Acquisition of treasury
shares
(note 20) - (0.2) - - - - (0.2)
Acquisition of business
and assets (note 12) 0.1 - 0.4 - - - 0.5
Exercise of share awards - - - (0.2) - 0.2 -
Fair value of employee
services - - - 0.1 - - 0.1
----------------------------- -------- ------- -------- ----------- --------- --------- -------
As at 31 December 2016 15.1 (6.2) 1.1 0.8 0.1 88.8 99.7
----------------------------- -------- ------- -------- ----------- --------- --------- -------
Loss for the period
and total comprehensive
loss - - - - - (2.9) (2.9)
Transactions with owners:
Dividends (note 21) - - - - - (4.3) (4.3)
Acquisition of treasury
shares
(note 20) - (0.1) - - - - (0.1)
Acquisition of business
and assets (note 12) - - - (0.1) - - (0.1)
Exercise of share awards - - - - - (0.2) (0.2)
Fair value of employee
services - - - 0.4 - - 0.4
----------------------------- -------- ------- -------- ----------- --------- --------- -------
As at 31 December 2017 15.1 (6.3) 1.1 1.1 0.1 81.4 92.5
----------------------------- -------- ------- -------- ----------- --------- --------- -------
The Company has taken advantage of the exemption available under
section 408 of the Companies Act 2006 and has not presented its own
statement of comprehensive income in these financial statements.
The Company's loss for the year amounted to GBP2.9m (2016: loss of
GBP2.2m).
Consolidated statement of financial position as at 31 December
2017
Registered number 04948078
31 December 31 December
2017 2016
Note GBPm GBPm
Non-current assets
Goodwill 9 75.6 72.1
Other intangible assets 10 18.6 16.7
Property, plant and equipment 11 1.7 2.0
Deferred tax assets 0.7 0.6
96.6 91.4
--------------------------------------------- ----- ------------ ------------
Current assets
Inventories 14 1.4 2.5
Trade and other receivables 15 11.6 15.7
Cash and cash equivalents 16 4.1 3.4
17.1 21.6
--------------------------------------------- ----- ------------ ------------
Total assets 113.7 113.0
--------------------------------------------- ----- ------------ ------------
Current liabilities
Trade and other payables 17 (10.9) (9.7)
Deferred income (14.6) (16.9)
Current tax liabilities - (0.7)
Provisions 18 (1.8) (0.4)
(27.3) (27.7)
--------------------------------------------- ----- ------------ ------------
Net current liabilities (10.2) (6.1)
--------------------------------------------- ----- ------------ ------------
Non-current liabilities
Borrowings 19 - (17.4)
Provisions 18 (0.1) -
Deferred tax liabilities (1.4) (0.8)
(1.5) (18.2)
--------------------------------------------- ----- ------------ ------------
Net assets 84.9 67.1
--------------------------------------------- ----- ------------ ------------
Capital and reserves attributable to owners
of the parent
Share capital 20 15.1 15.1
Own shares (6.5) (6.4)
Share premium 1.1 1.1
Other reserves 1.2 0.9
Retained earnings 74.0 56.4
--------------------------------------------- ----- ------------ ------------
Total equity 84.9 67.1
--------------------------------------------- ----- ------------ ------------
Company statement of financial position as at 31 December
2017
Registered number 04948078
31 December 31 December
2017 2016
Note GBPm GBPm
Non-current assets
Investments 134.0 134.0
134.0 134.0
--------------------------------------------- ----- ------------ ------------
Current assets
Trade and other receivables 15 3.0 2.1
Cash and cash equivalents 16 - -
--------------------------------------------- ----- ------------ ------------
3.0 2.1
--------------------------------------------- ----- ------------ ------------
Total assets 137.0 136.1
--------------------------------------------- ----- ------------ ------------
Current liabilities
Trade and other payables 17 (44.5) (19.0)
(44.5) (19.0)
--------------------------------------------- ----- ------------ ------------
Net current liabilities (41.5) (16.9)
--------------------------------------------- ----- ------------ ------------
Non-current liabilities
Borrowings 19 - (17.4)
- (17.4)
--------------------------------------------- ----- ------------ ------------
Net assets 92.5 99.7
--------------------------------------------- ----- ------------ ------------
Capital and reserves attributable to owners
of the parent
Share capital 20 15.1 15.1
Own shares (6.3) (6.2)
Share premium 1.1 1.1
Other reserves 1.2 0.9
Retained earnings 81.4 88.8
--------------------------------------------- ----- ------------ ------------
Total equity 92.5 99.7
--------------------------------------------- ----- ------------ ------------
The Company has taken advantage of the exemption available under
section 408 of the Companies Act 2006 and has not presented its own
statement of comprehensive income in these financial statements.
The movement in retained earnings is the Company's loss for the
year of GBP2.9m (2016: GBP2.2m) and dividends of GBP4.3m (2016:
GBP4.3m).
Consolidated cash flow statement for the year ended 31 December
2017
2017 2016
Note GBPm GBPm
Cash flows from operating activities
Cash generated from operations 22 13.8 15.3
Tax paid (1.6) (1.3)
Net cash generated from operating activities 12.2 14.0
---------------------------------------------- ----- ------- ------
Cash flows from investing activities
Other acquisitions - settlement of deferred
consideration 18 (1.5) -
Disposal of subsidiary 13 27.9 -
Purchase of property, plant and equipment 11 (0.2) (0.3)
Purchase of intangible assets 10 (2.6) (2.3)
Acquisition of business and assets 12 - (1.5)
Acquisition of subsidiary 12 (12.9) -
Net cash flows from / (used in) investing
activities 10.7 (4.1)
---------------------------------------------- ----- ------- ------
Cash flows from financing activities
Payment for shares bought back 20 (0.1) (0.2)
Interest paid (0.3) (0.5)
Dividends paid to Company's shareholders 21 (4.3) (4.3)
Proceeds from borrowings 22 5.5 1.5
Repayment of borrowings 22 (23.0) (5.0)
Repayment of loan notes 19 - (1.1)
Net cash flows used in financing activities (22.2) (9.6)
---------------------------------------------- ----- ------- ------
Net increase in cash and cash equivalents 0.7 0.3
---------------------------------------------- ----- ------- ------
Cash and cash equivalents at beginning
of the year 3.4 3.1
---------------------------------------------- ----- ------- ------
Cash and cash equivalents at end of year 16 4.1 3.4
---------------------------------------------- ----- ------- ------
Company cash flow statement for the year ended 31 December
2017
2017 2016
Note GBPm GBPm
Cash flows from operating activities
Cash generated from operating activities 22 22.2 8.5
--------------------------------------------- ----- ------- ------
Cash flows from financing activities
Interest paid (0.3) (0.5)
Payment for shares bought back 20 (0.1) (0.2)
Dividends paid to Company's shareholders 21 (4.3) (4.3)
Proceeds from borrowings 22 5.5 1.5
Repayment of borrowings 22 (23.0) (5.0)
Net cash flows used in financing activities (22.2) (8.5)
--------------------------------------------- ----- ------- ------
Net increase in cash and cash equivalents - -
--------------------------------------------- ----- ------- ------
Cash and cash equivalents at beginning
of the financial year - -
--------------------------------------------- ----- ------- ------
Cash and cash equivalents at end of
year 16 - -
--------------------------------------------- ----- ------- ------
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of
these consolidated and Company financial statements are set out
below, to the extent they have not already been disclosed in the
other notes below. These policies have been consistently applied to
all the periods presented, unless otherwise stated. The financial
statements are for the Group consisting of Centaur Media Plc and
its subsidiaries. Centaur Media Plc is a public company limited by
shares and incorporated in England and Wales.
(a) Basis of preparation
The financial information set out in the announcement is based
upon the Consolidated Financial Statements which are then prepared
in accordance with International Financial Reporting Standards
('IFRS') as adopted by the European Union and IFRS Interpretations
Committee ('IFRS IC') and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS. The financial
statements have been prepared on the historical cost basis.
Going concern
The financial statements have been prepared on a going concern
basis. The Directors have carefully assessed the Group's ability to
continue trading, and have a reasonable expectation that the Group
and Company have adequate resources to continue in operational
existence for at least twelve months from the date of approval of
these financial statements and for the foreseeable future.
Net cash (see reconciliation in note 22) at 31 December 2017
amounted to GBP4.1m (2016: net debt GBP14.1m). In June 2015, the
Group agreed a four year GBP25m multi-currency revolving credit
facility with the Royal Bank of Scotland and Lloyds, which runs to
31 August 2019. Cash conversion(4) during 2017 has remained strong
and following the disposal of the Home Interest segment the Group
is currently in a strong cash positive position.
The Group has net current liabilities which mainly arise from
its normal high levels of deferred income relating to events in the
future rather than an inability to service its liabilities. An
assessment of cash flows for the next three financial years, which
has taken into account the factors described above, has indicated
an expected level of cash generation which would be sufficient to
allow the Group to fully satisfy its working capital requirements
and the guarantee given in respect of its UK subsidiaries, to cover
all principal areas of expenditure, including maintenance, capital
expenditure and taxation during this period, and to meet the
financial covenants under the revolving credit facility.
The preparation of financial statements in accordance with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the year. Although these estimates are based on
management's best knowledge of the amount, events or actions, the
actual results may ultimately differ from those estimates.
Having assessed the principal risks and the other matters
discussed in connection with the viability statement, the Directors
consider it appropriate to adopt the going concern basis of
accounting in preparing its consolidated financial statements.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Basis of preparation (continued)
New and amended standards adopted by the Group
None of the new standards and amendments to standards (including
the Annual Improvements (2015) to existing standards) that are
mandatory for the first time for the financial year commencing 1
January 2017 affected any of the amounts recognised in the current
period or any prior period, and is not likely to affect future
periods.
New standards and interpretations not yet adopted
No new standards, amendments or interpretations effective for
the first time for the financial year beginning on or after 1
January 2017 have had a material impact on the Group or the
Company.
The following new accounting standards and interpretations have
been published that are not mandatory for 31 December 2017
reporting periods and have not been early adopted by the Group:
IFRS 9
IFRS 9 addresses the classification, measurement and
derecognition of financial assets and financial liabilities,
introduces new rules for hedge accounting and a new impairment
model for financial assets.
Impact
The Group has reviewed its financial assets and liabilities and
is only expecting trade receivables to be impacted once the new
standard is adopted on 1 January 2018.
The new impairment model for trade receivables requires the
recognition of impairment provisions based on expected credit
losses (ECL) rather than only incurred credit losses as is the case
under IAS 39. The significant majority of the Group's debt
instruments relate to trade receivables and as such have been
tested using the new impairment model.
Based on the assessments undertaken to date, the Group does not
expect a material change to the loss allowance for trade
receivables. The Group has also reviewed all other financial assets
and liabilities, including cash and cash equivalents, and no
material impact is expected.
Date of adoption by the Group
Must be applied for financial years commencing on or after 1
January 2018. The Group will apply the new rules retrospectively
from 1 January 2018, with the practical expedients permitted under
the standard. Comparatives for 2017 will not be restated.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Basis of preparation (continued)
IFRS 15 'Revenue from contracts with customers'
IFRS 15 sets out the requirements for recognising revenue from
contracts with customers, replacing all existing revenue standards.
The standard requires entities to apportion revenue earned from
contracts to individual performance obligations, on a stand-alone
selling price basis, based on a five-step model framework.
Impact
The Group has performed an impact assessment on the FY17
revenue. The Group's reported revenue is generated through a high
volume of low value contracts and therefore a scoping exercise has
been performed to identify revenue streams with like commercial
terms and performance and delivery patterns. Revenue has been
reviewed at this level to determine the appropriate revenue
recognition under IFRS 15.
The results of the impact assessment indicate that there will
not be a material change to the timing or quantum of revenue
recognition at a Group level or an operating segment level. The
impact assessment also indicates that the Group rarely sells
products relating to different operating segments to the same
customer under the same contract. Consequently, a change to revenue
recognised in any given operating segment is almost wholly the
effect of timing differences under IFRS 15.
Date of adoption by the Group
For the Group, transition to IFRS 15 will take effect from 1
January 2018. The half year results for FY18 will be IFRS 15
compliant, with the first Annual Report published in accordance
with IFRS 15 being that for the year ended 31 December 2018.
As outlined above, given the insignificant change to FY17
reported revenues, the Group does not plan to adopt a fully
retrospective transition approach and so comparatives for the year
ended 31 December 2017 will not be restated.
Other
There are no other standards that are not yet effective and that
would be expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future
transactions.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Basis of preparation (continued)
Discontinued operations
In preparing the consolidated financial statements, the results
of the Home Interest segment have been reclassified as a
discontinued operation in both years following disposal of the
business on 1 August 2017.
(b) Presentation of non-statutory measures
In addition to statutory measures, the Directors use various
non-GAAP key financial measures to evaluate the Group's
performance, and consider that presentation of these measures
provides shareholders with an additional understanding of the core
trading performance of the Group. The measures used are explained
and reconciled to their equivalent statutory headings below.
Adjusted operating profit and adjusted earnings per share
The Directors believe that adjusted results and adjusted
earnings per share, split between continuing and discontinued
operations, provide additional useful information on the core
operational performance of the Group to shareholders, and review
the results of the Group on an adjusted basis internally. The term
'adjusted' is not a defined term under IFRS and may not therefore
be comparable with similarly titled profit measurements reported by
other companies. It is not intended to be a substitute for, or
superior to, IFRS measurements of profit.
Adjustments are made in respect of:
-- Exceptional items - the Group considers items of income and
expense as exceptional and excludes them from the adjusted results
where the nature of the item, or its magnitude, is material and
likely to be non-recurring in nature so as to assist the user of
the financial statements to better understand the results of the
core operations of the Group. Details of exceptional items are
shown in note 4.
-- Amortisation of acquired intangible assets - the amortisation
charge for those intangible assets recognised on business
combinations is excluded from the adjusted results of the group
since they are non-cash charges arising from investment activities.
As such, they are not considered reflective of the core trading
performance of the Group. Details of amortisation of intangible
assets are shown in note 10.
-- Share-based payments - share-based payment expenses or
credits are excluded from the adjusted results of the Group as the
Directors believe that the volatility of these charges can distort
the user's view of the core trading performance of the Group.
-- Impairment of goodwill - the Directors believe that non-cash
impairment charges in relation to goodwill are generally volatile
and material, and therefore exclude any such charges from the
adjusted results of the Group. Previous impairment charges were
presented as exceptional items. There has not been an impairment
charge in the current year. Details of the goodwill impairment
analysis are shown in note 9.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Presentation of non-statutory measures (continued)
-- Earn-out consideration - deferred or contingent consideration
in relation to business combinations recognised in the statement of
comprehensive income (as a result of being classified as
remuneration under IFRS 3) is not considered reflective of the core
trading of the Group since it results from investment activities
and is volatile in nature. As such, statement of comprehensive
income items relating to business combinations are removed from
adjusted results. See notes 12 and 18.
-- Acquisition related costs - expenses in relation to business
combinations recognised in the statement of comprehensive income is
not considered reflective of the core trading of the Group since it
results from investment activities and is volatile in nature. As
such, statement of comprehensive income items relating to business
combinations are removed from adjusted results. See note 12.
-- Profit or loss on disposal of assets or subsidiaries - profit
or loss on disposals of businesses are excluded from adjusted
results of the Group as they are unrelated to core trading, and can
distort a user's understanding of the performance of the Group due
to their infrequent and volatile nature. See note 4.
-- Other separately reported items - certain other items are
excluded from adjusted results where they are considered large or
unusual enough to distort the comparability of core trading results
year on year. Details of these separately disclosed items are shown
in note 4.
The tax related to adjusting items is the tax effect of the
items above that are allowable deductions for tax purposes
(primarily exceptional items), calculated using the standard rate
of corporation tax. See note 6 for a reconciliation between
reported and adjusted tax charges.
Further details of adjusting items are included in note 4. A
reconciliation between adjusted and statutory earnings per share
measures is shown in note 8.
Loss before tax reconciles to adjusted operating profit as
follows:
2017 2016
Note GBPm GBPm
Profit/(Loss) before tax (0.7) (8.9)
Adjusting items
Impairment of goodwill 9 - 7.2
Amortisation of acquired intangible assets 10 2.5 2.2
Share-based payments 0.5 (0.1)
Earn-out consideration 12 0.6 0.6
Additional impairment of trade receivables 4 - 1.5
Acquisition related costs 12 0.6 -
Exceptional operating costs 4 0.2 1.2
Adjusted profit before tax 3.7 3.7
Adjusted finance costs 5 0.4 0.5
Adjusted operating profit 4.1 4.2
-------------------------------------------------------- ----- ------ ------
Cash impact of adjusting items (0.9) (1.3)
-------------------------------------------------------- ----- ------ ------
Tax impact of adjusting items 0.5 0.7
-------------------------------------------------------- ----- ------ ------
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Presentation of non-statutory measures (continued)
Adjusted operating cash flow
Adjusted operating cash flow is not a measure defined by IFRS.
It is defined as cash flow from operations excluding the impact of
adjusting items, which are defined above, and including capital
expenditure. The Directors use this measure to assess the
performance of the Group as it excludes volatile items not related
to the core trading of the Group, and includes the Group's
management of capital expenditure. Statutory cash flow from
operations reconciles to adjusted operating cash as below:
2017 2016
GBPm GBPm
Reported cash flow from operations 13.8 15.3
Cash impact of adjusting items 0.9 1.3
Working capital impact of adjusting items (0.6) (0.1)
-------------------------------------------- ------ ------
Adjusted operating cash flow 14.1 16.5
Capital expenditure (2.8) (2.6)
-------------------------------------------- ------ ------
Post capital expenditure cash flow 11.3 13.9
-------------------------------------------- ------ ------
Underlying revenue growth
The Directors review underlying revenue growth in order to allow
a like for like comparison of revenues between periods. Underlying
revenues exclude the impact of event timing differences, as well as
the revenue contribution arising from acquired or disposed
businesses.
Statutory revenue growth reconciles to underlying revenue growth
as follows:
Marketing Financial Services Professional Total
GBPm GBPm GBPm GBPm
Reported revenue 2016 29.8 9.7 20.2 59.7
Underlying revenue 2016 29.8 9.7 20.2 59.7
------------------------------------ ---------- ------------------- ------------- ------
Reported revenue 2017 36.3 8.9 20.2 65.4
Biennial events - AMS - - (0.2) (0.2)
Acquired business - Oystercatchers (3.3) - - (3.3)
Acquired business - MarketMakers (6.1) - - (6.1)
------------------------------------ ---------- ------------------- ------------- ------
Underlying revenue 2017 26.9 8.9 20.0 55.8
------------------------------------ ---------- ------------------- ------------- ------
Reported revenue growth 22% (8)% - 10%
Underlying revenue growth (10)% (8)% (1)% (6)%
------------------------------------ ---------- ------------------- ------------- ------
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Presentation of non-statutory measures (continued)
Adjusted EBITDA
Adjusted EBITDA is not a measure defined by IFRS. It is defined
as adjusted operating profit before depreciation and amortisation
of intangible assets other than those acquired through a business
combination. It is used by the Directors as a measure to review
performance of the Group, and forms the basis of some of the
Group's financial covenants under its revolving credit facility.
Adjusted EBITDA is calculated as follows:
2017 2016
GBPm GBPm
Adjusted operating profit (as above) 4.1 4.9
Depreciation (note 11) 0.7 0.6
Amortisation of computer software (note
10) 2.9 2.7
Adjusted EBITDA 7.7 8.2
------------------------------------------ ----- -----
Net debt
Net debt is not a measure defined by IFRS. Net debt is
calculated as cash less overdrafts and bank borrowings under the
Group's financing arrangements. The Directors consider the measure
useful as it gives greater clarity over the Group's liquidity as a
whole. A reconciliation between net debt and statutory measures is
shown in note 22.
(c) Principles of consolidation
The consolidated financial statements incorporate the financial
statements of Centaur Media Plc and all of its subsidiaries after
elimination of intercompany transactions.
(i) Subsidiaries
Subsidiaries are all entities controlled by the Group. The Group
controls an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group until the
date that the Group ceases to control them. In the statement of
comprehensive income the results of subsidiaries for which control
has ceased are presented separately as discontinued operations in
the year in which they have been disposed of and in the comparative
year.
Intercompany transactions, balances and unrealised gains on
transactions between Group companies are eliminated. The accounting
policies of subsidiaries are consistent with the policies adopted
by the Group.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Principles of consolidation (continued)
(ii) Business Combinations
The acquisition method of accounting is used to account for all
business combinations. The consideration transferred for
acquisition of a subsidiary is measured at the aggregate of fair
values of assets transferred, liabilities incurred or assumed to
the former owners of the acquired business and equity interests
issued by the Group in exchange for control of the subsidiary.
Acquisition-related costs are expensed as incurred and included in
the consolidated statement of comprehensive income.
Any deferred consideration to be transferred by the acquirer is
recognised at fair value. If the conditions attached to the
consideration indicate that the payment forms part of the
acquisition, a provision is made for the future liability at the
acquisition date. Where the deferred consideration is contingent on
the continued employment of the vendors, such arrangements are
recognised in the consolidated statement of comprehensive income on
a straight line basis over the period over which the contingent
consideration is earned with an associated provision on the
consolidated statement of financial position. Subsequent changes to
the fair value of the contingent consideration are recognised in
accordance with IAS 39 through the consolidated statement of
comprehensive income.
The excess of the aggregate consideration transferred, amount of
any non-controlling interest in the acquired entity, and
acquisition date fair value of any previous equity interest in the
acquired entity over the fair value of the net assets acquired is
recorded as goodwill.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The consolidated financial statements are presented in
Pounds Sterling, which is the Group and Company's functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies at year end exchange
rates are recognised in the statement of comprehensive income.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Foreign currency translation (continued)
(iii) Group Companies
The results and financial position of the Group entities that
have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
-- Assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that statement of financial position;
-- Income and expenses for each statement of comprehensive
income are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the rate on the dates of the
transactions); and
-- All resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations and of
borrowings are recognised in other comprehensive income. When a
foreign operation is sold, exchange differences that were recorded
in equity are recognised in the statement of comprehensive income
as part of the gain or loss on sale. Goodwill and fair value
adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entity and
translated at the closing rate.
(e) Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts recoverable by the
Group for the sales of advertising space, subscriptions and
individual publications and revenue from events provided in the
normal course of business, net of discounts and value added
tax.
The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity and specific criteria have been met for
each of the Group's activities as described below.
Sales of advertising space are recognised in the period in which
publication occurs. Sales of publications are recognised in the
period in which the sale is made. Sales of online advertising are
recognised over the period during which the advertisements are
placed. Consideration received in advance for events is deferred
and revenue is recognised in the period in which the event takes
place.
Revenue from subscriptions to publications and digital services
is deferred and recognised on a straight-line basis over the
subscription period.
Revenue from project work and consultancy contracts is
recognised when the Group has obtained the right to consideration
in exchange for its performance, which is when a separately
identifiable phase (milestone) of a contract has been
completed.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) Investments
In the Company's financial statements, investments in
subsidiaries are stated at cost less provision for impairment in
value.
(g) Income tax
The tax expense represents the sum of current and deferred
tax.
Current tax is based on the taxable profit for the period.
Taxable profit differs from profit as reported in the statement of
comprehensive income because it excludes items of income or expense
that are taxable or deductible in other years, and it further
includes items that are never taxable or deductible. The Group and
Company's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the statement of
financial position date.
Deferred tax is provided in full, using the liability method, on
temporary differences between the carrying amounts of assets and
liabilities in the consolidated financial statements and the
corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
to utilise those temporary differences and losses. Such assets and
liabilities are not recognised if the temporary difference arises
from goodwill or the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the enacted or substantively
enacted tax rates that are expected to apply in the period when the
liability is settled or the asset is realised. Deferred tax is
charged or credited to the statement of comprehensive income,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is recognised in other
comprehensive income.
(h) Leases
Agreements under which payments are made to owners in return for
the right to use an asset for a period are accounted for as leases.
Leases that transfer substantially all of the risks and rewards of
ownership are recognised at the commencement of the lease term as
finance leases within property, plant and equipment and debt at the
fair value of the leased asset or, if lower, at the present value
of the minimum lease payments. Finance lease payments are
apportioned between interest expense and repayments of debt. All
other leases are classified as operating leases and the cost is
recognised in income on a straight-line basis.
(i) Impairment of assets
Assets that are subject to depreciation or amortisation are
reviewed for impairment whenever events indicate that the carrying
value may not be recoverable. An impairment loss is recognised to
the extent that the carrying value exceeds the higher of the
asset's fair value less cost of disposal and its value-in-use. An
asset's value in use is calculated by discounting an estimate of
future cash flows by the pre-tax weighted average cost of
capital.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Inventories
Inventories are stated at the lower of cost and net realisable
value. Work in progress comprises of costs incurred relating to
publications and exhibitions prior to the publication date or the
date of the event.
(k) Property, plant and equipment
Property, plant and equipment is stated at historical cost less
accumulated depreciation and impairment losses. The historical cost
of property, plant and equipment is the purchase cost together with
any incidental direct costs of acquisition. Depreciation is
calculated to write off the cost, less estimated residual value, of
assets, on a straight line-basis over the expected useful economic
lives to the Group over the following periods:
Leasehold improvements - 10 years or the expected length
of the lease if shorter
Fixtures and fittings - 10 years
Computer equipment - 3 to 5 years
The estimated useful lives, residual values and depreciation
methods are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective
basis.
(l) Intangible assets
(i) Goodwill
Where the cost of a business acquisition exceeds the fair values
attributable to the separable net assets acquired, the resulting
goodwill is capitalised and allocated to the cash-generating unit
('CGU') or groups of CGUs that are expected to benefit from the
synergies of the business combination. Goodwill has an indefinite
useful life and is tested for impairment annually on a Group level
or whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
Each segment is deemed to be a CGU. Goodwill and acquired
intangible assets are assessed for impairment in accordance with
IAS 36. In assessing whether a write-down of goodwill and acquired
intangible assets is required, the carrying value of the segment is
compared with its recoverable amount. Recoverable amount is
measured as the higher of fair value less cost of disposal and
value-in-use. Any impairment is recognised in the statement of
comprehensive income (in net operating expenses) and is classified
as an adjusting item. Impairment of goodwill is not subsequently
reversed.
On the disposal of a CGU, the attributable amount of goodwill is
included in the determination of the profit or loss on
disposal.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l) Intangible assets (continued)
(ii) Brands and publishing rights, customer relationships and
non-compete arrangements
Separately acquired brands and publishing rights are shown at
historical cost. Brands and publishing rights, customer
relationships and non-compete arrangements acquired in a business
combination are recognised at fair value at the acquisition date.
They have a finite useful life and are subsequently carried at cost
less accumulated amortisation and impairment losses.
(iii) Software
Computer software that is not integral to the operation of the
related hardware is carried at cost less accumulated amortisation.
Costs associated with the development of identifiable and unique
software products controlled by the Group that will generate
probable future economic benefits in excess of costs are recognised
as intangible assets when the criteria of IAS 38 'Intangible
Assets' are met. They are carried at cost less accumulated
amortisation and impairment losses.
(iv) Amortisation methods and periods
Amortisation is calculated to write off the cost or fair value
of assets on a straight-line basis over the expected useful
economic lives to the Group over the following periods:
Computer software - 3 to 5 years
Brands and publishing rights - 5 to 20 years
Customer relationships - 3 to 10 years or over the term of
any specified contract
Separately acquired websites - 3 to 5 years
and content
Non-compete arrangements - Over the term of the arrangement
(m) Employee benefits
(i) Post-employment obligations
The Group and Company contribute to a defined contribution
pension scheme for the benefit of employees. The assets of the
scheme are held separately from those of the Group in an
independently administered fund. Contributions to defined
contribution schemes are charged to the statement of comprehensive
income when employer contributions become payable.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Employee benefits (continued)
(ii) Share-based payments
The Group operates a number of equity-settled share-based
compensation plans for its employees. The fair value of the
share-based compensation expense is estimated using either a Monte
Carlo or Black-Scholes option pricing model and is recognised in
the statement of comprehensive income over the vesting period with
a corresponding increase in equity. The total amount to be expensed
is determined by reference to the fair value of the awards
granted:
-- Including any market performance conditions;
-- Excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets, cash flow performance and remaining an employee of
the entity over a specified time period); and
-- Including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
The total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each reporting period, the Group
revises its estimates of the number of options that are expected to
vest based on the non-market vesting and service conditions. It
recognises the impact of the revision to original estimates, if
any, in the statement of comprehensive income, with a corresponding
adjustment to equity. The Company issues new shares or transfers
shares from treasury shares to settle share-based compensation
awards.
The award by the Company of share-based compensation awards over
its equity instruments to the employees of subsidiary undertakings
in the Group is treated as a capital contribution, only if it is
left unsettled. The fair value of employee services received,
measured by reference to the grant date fair value, is recognised
over the vesting period as an increase to investment in subsidiary
undertakings, with a corresponding credit to equity.
(n) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources will be required to settle
the obligation and the obligation can be reliably estimated.
Provisions for deferred contingent consideration are measured at
fair value. Where the deferred consideration is contingent on the
continued employment of the vendors, such arrangements are
recognised in the consolidated statement of comprehensive income on
a straight line basis over the period of the arrangement.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o) Share capital and share premium
Ordinary and deferred shares are classified as equity. The
excess of consideration received in respect of shares issued over
the nominal value of those shares is recognised in the share
premium account. Incremental costs directly attributable to the
issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Where any Group company purchases the Company's equity
instruments, for example as the result of a share buyback or
share-based payment plan, the consideration paid, including any
directly attributable incremental costs (net of income taxes) is
deducted from equity attributable to the owners of the Company as
treasury shares until the shares are cancelled or reissued. Where
such ordinary shares are subsequently reissued, any consideration
received, net of any directly attributable incremental transaction
costs and the related income tax effects, is included in equity
attributable to the owners of the Company.
Shares held by the Centaur Employees' Benefit Trust are
disclosed as treasury shares and deducted from contributed equity.
The Company also holds a non-distributable reserve representing the
fair value of unvested share-based compensations plans.
(p) Dividends
Dividends are recognised in the period in which they are paid
or, in respect of the Company's final dividend for the year,
approved by the shareholders in the Annual General Meeting.
(q) Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The Executive Committee has been identified as the chief operating
decision-maker, responsible for allocating resources and assessing
performance of the operating segments. The Group operates in three
market-facing divisions: Marketing, Financial Services and
Professional.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r) Financial instruments
The Group has applied IFRS 7, Financial Instruments:
Disclosures, and IAS 39, Financial Instruments: Recognition and
Measurement, as outlined below:
(i) Financial assets
The Group classifies its financial assets in the following
categories where relevant: at fair value through profit or loss;
loans and receivables; and available-for-sale. The classification
depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial
assets at initial recognition.
All of the Group's financial assets have been classified as
loans and receivables. Loans and receivables are non-derivative
financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets,
except for maturities greater than 12 months after the statement of
financial position date. These are classified as non-current
assets. The Group's loans and receivables comprise trade and other
receivables and cash and cash equivalents in the statement of
financial position. Loans and receivables are carried at amortised
cost using the effective interest method.
(ii) Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
A provision for impairment of trade receivables is established
when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 90
days overdue) are considered indicators that the trade receivable
is impaired. The amount of the provision is the difference between
the asset's carrying amount and the present value of estimated
future cash flows, discounted at the original effective interest
rate. The carrying amount of the asset is reduced through the use
of an allowance account, and the amount of the loss is recognised
in the statement of comprehensive income within net operating
expenses. When a trade receivable is uncollectible, it is written
off against the allowance account for trade receivables. Subsequent
recoveries of amounts previously written off are credited against
net operating expenses in the statement of comprehensive
income.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r) Financial instruments (continued)
(iii) Cash and cash equivalents
Cash and cash equivalents includes cash in hand and deposits
repayable on demand or maturing within three months of the
statement of financial position date.
(iv) Financial liabilities
Debt and trade payables are recognised initially at fair value
based on amounts exchanged, net of transaction costs, and
subsequently at amortised cost.
Interest expense on debt is accounted for using the effective
interest method and is recognised in income.
(v) Trade payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
(vi) Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred and carried subsequently at amortised
cost. Costs of borrowings are recognised in the statement of
comprehensive income as incurred or, where appropriate, across the
term of the related borrowing.
(vii) Derivative financial instruments
The Group does not hold derivative financial instruments either
for trading purposes or designated as hedges.
(s) Key accounting assumptions, estimates and judgements
The preparation of financial statements under IFRS requires the
use of certain key accounting assumptions and requires management
to exercise its judgement and to make estimates. The areas where
assumptions and estimates are significant to the consolidated
financial statements are as follows:
i) Carrying value of goodwill and other intangible assets
In assessing whether goodwill and other intangible fixed assets
are impaired, the Group uses a discounted cash flow model which
includes forecast cash flows and estimates of future growth. If the
results of operations in future periods are lower than included in
the cash flow model, impairments may be triggered. Further details
of the assumptions and sensitivities in the discounted cash flow
model are included in note 9.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(s) Key accounting assumptions, estimates and judgements (continued)
Intangible assets arising on business combinations are
identified based on the Group's understanding of the acquired
business and previous experience of similar businesses. Consistent
methods of valuation for similar types of intangible asset are
applied where possible and appropriate, using information reviewed
at Board level where available. Discount rates applied in
calculating the values of intangible assets arising on the
acquisition of subsidiaries are calculated specifically for each
acquisition, and adjusted to reflect the respective risk profile of
each individual asset based on the Group's past experience of
similar assets.
ii) Recoverability of trade receivables
The recoverability of trade receivables requires judgement. The
Group uses all available evidence to determine the appropriate
level of provision for impairment of trade receivables, including
known disputes, historical trends in write-offs, collections post
year end and the ageing of the receivables. Further details about
trade receivables are included in note 15 and information about the
credit risk and impairment of receivables are shown in note 23.
iii) Adjusting items
The term 'adjusted' is not a defined term under IFRS. Judgement
is required to ensure that the classification and presentation of
certain items as adjusting, including exceptional items, is
appropriate and consistent with the Group's accounting policy.
Further details about the amounts classified as adjusting are
included in notes 1(b) and 4.
iv) Contingent consideration
The valuation of contingent consideration arising from business
combinations ('earn-out' consideration) requires judgement,
including the assessing the probability and quantum of the expected
payment. The Group uses all available information, including
current and forecasted performance under earn-out arrangements to
assess the required level of provision. Items relating to earn-out
consideration are treated as an adjusting item under the Group's
accounting policy. Further details about the classification of
earn-out consideration are included in notes 1(b) and 4, and
details of current and prior year earn-out arrangements and
provisions are shown in notes 12 and 18.
v) Share based payments
The fair value of the share-based compensation expense
recognised in the statement of comprehensive income requires the
use of estimates. Details regarding the determination of fair value
of these costs are set out in note 1(m)(ii).
vi) Deferred tax
The calculation of deferred tax assets and liabilities requires
judgement. Where the ultimate tax treatment is uncertain, the Group
recognises deferred tax assets and liabilities based on estimate of
future taxable income and recoverability. Where a change in
circumstances occurs, or the final tax outcome is different from
the amounts that were initially recorded, such differences will
impact the income tax and deferred tax balances in the year in
which that change or outcome is known. The accounting policy
regarding deferred tax is set out above in note 1(g).
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(s) Key accounting assumptions, estimates and judgements (continued)
vii) Valuation of intangibles
Intangibles assets acquired in a business combination are
required to be recognised separately from goodwill and amortised
over their useful life. The Group has separately recognised
computer software, brands and customer relationships in the
acquisitions made (see note 12).
The fair value of these acquired intangibles is based on
valuation techniques that require inputs based on assumptions about
the future and estimates related to current market conditions.
The Group also makes assumptions about the useful life of the
acquired intangibles as outlined in note 1(l)(iv).
2 SEGMENTAL REPORTING
The Executive Committee has been identified as the chief
operating decision-maker, reviewing the Group's internal reporting
on a monthly basis in order to assess performance and allocate
resources.
The Group is organised around three reportable market-facing
segments: Marketing, Financial Services and Professional. The
Professional segment aggregates the Legal, Human Resources,
Engineering and Travel & Meetings portfolios, which are deemed
to have similar profiles of risk and return. All segments derive
revenues from a combination of live events, premium content and
advertising revenues. Corporate income and costs are allocated to
these segments on an appropriate basis, depending on the nature of
the costs, including in proportion to revenues or headcount. There
is no inter-segmental revenue.
Segment assets consist primarily of property, plant and
equipment, intangible assets including goodwill, inventories and
trade receivables. Segment liabilities comprise trade payables,
accruals and deferred income.
Corporate assets and liabilities comprise current and deferred
tax balances, cash and cash equivalents and borrowings.
Capital expenditure comprises additions to property, plant and
equipment, intangible assets and includes additions resulting from
acquisitions through business combinations.
2 SEGMENTAL REPORTING (continued)
Financial Continuing Discontinued
Marketing Services Professional operations operations Group
GBPm GBPm GBPm GBPm GBPm GBPm
2017
Revenue 36.3 8.9 20.2 65.4 7.2 72.6
-------------------------------- ---------- ---------- ------------- ------------ ------------- -------
Adjusted operating profit 1.7 0.6 1.8 4.1 2.5 6.6
Amortisation of acquired
intangibles (2.0) (0.2) (0.3) (2.5) - (2.5)
Earn-out consideration (0.6) - - (0.6) - (0.6)
Costs relating to business
acquisition (0.6) - - (0.6) - (0.6)
Exceptional operating
costs (0.1) - (0.1) (0.2) - (0.2)
Share-based payments (0.3) (0.1) (0.1) (0.5) - (0.5)
Profit on disposal of
subsidiary - - - - 20.9 20.9
-------------------------------- ---------- ---------- ------------- ------------ ------------- -------
Operating (loss)/profit (1.9) 0.3 1.3 (0.3) 23.4 23.1
Finance costs (0.4) - (0.4)
-------------------------------- ---------- ---------- ------------- ------------ ------------- -------
(Loss) / profit before
tax (0.7) 23.4 22.7
Taxation (0.4) (0.4) (0.8)
-------------------------------- ---------- ---------- ------------- ------------ ------------- -------
(Loss) / profit for
the year (1.1) 23.0 21.9
-------------------------------- ---------- ---------- ------------- ------------ ------------- -------
Segment assets 71.4 8.8 28.6 108.8 - 108.8
Corporate assets 4.9
-------------------------------- ---------- ---------- ------------- ------------ ------------- -------
Consolidated total assets 113.7
-------------------------------- ---------- ---------- ------------- ------------ ------------- -------
Segment liabilities (15.3) (2.2) (8.2) (25.7) - (25.7)
Corporate liabilities (3.1)
Consolidated total liabilities (28.8)
-------------------------------- ---------- ---------- ------------- ------------ ------------- -------
Other items
Capital expenditure
(tangible and intangible
assets) 1.5 0.4 1.0 2.9 - 2.9
-------------------------------- ---------- ---------- ------------- ------------ ------------- -------
2 SEGMENTAL REPORTING (continued)
Financial Continuing Discontinued
Marketing Services Professional operations operations Group
GBPm GBPm GBPm GBPm GBPm GBPm
Restated(5) 2016
Revenue 29.8 9.7 20.2 59.7 12.8 72.5
--------------------------- ---------- ---------- ------------- ------------ ------------- -------
Adjusted operating
profit 2.5 0.8 0.9 4.2 4.9 9.1
Amortisation of acquired
intangibles (1.6) (0.2) (0.4) (2.2) (0.1) (2.3)
Impairment of goodwill - (7.2) - (7.2) - (7.2)
Earn-out consideration (0.6) - - (0.6) - (0.6)
Additional impairment
of trade receivables (0.8) (0.2) (0.5) (1.5) (0.3) (1.8)
Exceptional operating
costs (0.5) (0.2) (0.5) (1.2) - (1.2)
Share-based payments 0.1 - - 0.1 - 0.1
--------------------------- ---------- ---------- ------------- ------------ ------------- -------
Operating loss (0.9) (7.0) (0.5) (8.4) 4.5 (3.9)
Finance costs (0.5) - (0.5)
--------------------------- ---------- ---------- ------------- ------------ ------------- -------
Loss before tax (8.9) 4.5 (4.4)
Taxation (0.1) (0.9) (1.0)
--------------------------- ---------- ---------- ------------- ------------ ------------- -------
Loss for the year (9.0) 3.6 (5.4)
--------------------------- ---------- ---------- ------------- ------------ ------------- -------
Segment assets 56.1 9.3 29.5 94.9 13.2 108.1
Corporate assets 4.9
--------------------------- ---------- ---------- ------------- ------------ ------------- -------
Consolidated total
assets 113.0
--------------------------- ---------- ---------- ------------- ------------ ------------- -------
Segment liabilities (11.6) (2.0) (7.2) (20.8) (4.5) (25.3)
Corporate liabilities (20.6)
Consolidated total
liabilities (45.9)
--------------------------- ---------- ---------- ------------- ------------ ------------- -------
Other items
Capital expenditure
(tangible and intangible
assets) 1.1 0.3 0.7 2.1 0.5 2.6
--------------------------- ---------- ---------- ------------- ------------ ------------- -------
(5) Restated to reflect Home Interest as a discontinued
operation, refer to note 7
2 SEGMENTAL REPORTING (continued)
Supplemental Information - Revenue by Geographical Location
The Group's revenues from continuing operations from external
customers by geographical location are detailed below:
Restated(5)
2017 2016
GBPm GBPm
United Kingdom 52.2 46.9
Europe (excluding United Kingdom) 3.5 3.8
North America 6.0 6.2
Rest of world 3.7 2.8
----------------------------------- ----- ------------
65.4 59.7
----------------------------------- ----- ------------
Substantially all of the Group's net assets are located in the
United Kingdom. The Directors therefore consider that the Group
currently operates in a single geographical segment, being the
United Kingdom.
The Group's revenue from continuing operations by type is as
follows:
Restated(5)
2017 2016
GBPm GBPm
Sale of goods and services
Premium content 18.1 18.4
Live events 26.7 24.3
Advertising 13.5 16.2
Capability Services 6.1 -
Other 1.0 0.8
---------------------------- ----- ------------
65.4 59.7
---------------------------- ----- ------------
(5) Restated to reflect Home Interest as a discontinued
operation, refer to note 7
3 NET OPERATING EXPENSES
Operating profit / (loss) is stated after charging /
(crediting):
Restated(5) Restated(5) Restated(5)
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
Results Items Results Results Items Results
2017 2017 2017 2016 2016 2016
Note GBPm GBPm GBPm GBPm GBPm GBPm
Net foreign exchange
(gains)/losses 0.3 - 0.3 0.3 - 0.3
Employee benefits
expense 30.9 0.2 31.1 27.4 0.9 28.3
Depreciation of property,
plant and equipment 11 0.7 - 0.7 0.5 - 0.5
Amortisation of intangible
assets 10 2.8 2.5 5.3 2.7 2.2 4.9
Impairment of goodwill 9 - - - - 7.2 7.2
Earn-out consideration 12 - 0.6 0.6 - 0.6 0.6
Acquisition related
costs - 0.6 0.6 - - -
Other exceptional
operating costs 4 - - - - 0.3 0.3
Operating lease rentals 1.8 - 1.8 1.7 - 1.7
Repairs and maintenance
expenditure 0.2 - 0.2 0.3 - 0.3
Impairment of trade
receivables 23 0.5 - 0.5 0.4 1.5 1.9
Share-based payment
expense / (credit) - 0.5 0.5 - (0.1) (0.1)
Other operating expenses 24.1 - 24.1 22.2 - 22.2
--------------------------------- ------ --------- ---------- ---------- ------------ ------------ ------------
61.3 4.4 65.7 55.5 12.6 68.1
---------------------------- ------ --------- ---------- ---------- ------------ ------------ ------------
Cost of sales 29.1 - 29.1 27.8 - 27.8
Distribution costs 0.5 - 0.5 0.9 - 0.9
Administrative expenses 31.7 4.4 36.1 26.8 12.6 39.4
--------------------------------- ------ --------- ---------- ---------- ------------ ------------ ------------
61.3 4.4 65.7 55.5 12.6 68.1
---------------------------- ------ --------- ---------- ---------- ------------ ------------ ------------
(5) Restated to reflect Home Interest as a discontinued
operation, refer to note 7
Rental income for the sub-lease of properties under leases
totalled GBP0.7m (2016: GBP0.7m).
See note 1(b) and 4 for details of adjusting items.
3 NET OPERATING EXPENSES (continued)
Services provided by the Company's auditor
2017 2016
GBP'000 GBP'000
Fees payable to the Company's auditors for
the audit of
Company and consolidated financial statements 210 150
Additional audit fees relating to prior year - 55
Fees payable to the Company's auditors and its associates
for other services:
The audit of the Company's subsidiaries pursuant
to legislation 10 10
Total audit fees 220 215
------------------------------------------------------ -------- --------
Audit related assurance services 22 28
Taxation compliance services - 17
Other taxation advisory services - 66
Other assurance services 303 29
Total non-audit fees 325 140
------------------------------------------------------ -------- --------
Total fees 545 355
------------------------------------------------------ -------- --------
Fees payable to the Company's auditor for the audit of Company
and consolidated financial statements include non-recurring fees of
GBP60,000 (2016: GBPnil).
Other assurance related services include covenant compliance
GBP7,500, acquisition related costs GBP100,000 and disposal related
costs GBP195,000. In 2016 other assurance services of GBP29,000 are
immaterial.
4 ADJUSTING ITEMS
As discussed in note 1(b), certain items are presented as
adjusting. These are detailed below:
2017 2016
Continuing operations Note GBPm GBPm
Exceptional operating costs
Staff related restructuring costs 0.2 0.9
Costs relating to strategic corporate restructuring
initiatives - 0.3
Exceptional operating costs 0.2 1.2
Impairment of goodwill 9 - 7.2
Amortisation of acquired intangible assets 10 2.5 2.2
Additional impairment of trade receivables 23 - 1.5
Share-based payment expense/(credit) 0.5 (0.1)
Earn-out consideration 12 0.6 0.6
Costs relating to business acquisition 12 0.6 -
---------------------------------------------------------------------- ----- ------- ----------
Adjusting items to profit before tax 4.4 12.6
Tax relating to adjusting items 6 (0.5) (0.7)
---------------------------------------------------------------------- ----- ------- ----------
Total adjusting items after tax 3.9 11.9
---------------------------------------------------------------------- ----- ------- ----------
Discontinued operations
Profit on disposal of subsidiary (20.9) -
Amortisation of acquired intangible
assets - 0.1
Additional impairment of trade
receivables - 0.3
Tax relating to adjusting items - (0.1)
---------------------------------------------- -------------------- ----- ------- ----------
Total adjusting items after
tax (17.0) 12.2
---------------------------------------------- -------------------- ----- ------- ----------
Exceptional costs
Staff related restructuring costs
During 2017, exceptional restructuring costs of GBP0.2m were
incurred as a result of the reorganisation of the Human Resources
function and the exit from print. Whilst similar costs have been
incurred previously, such costs linked to the Group's
transformation programme are not expected to recur once this is
completed, and as such these costs are deemed to be exceptional in
nature.
In 2016 exceptional restructuring costs of GBP0.9m were
recognised as a result of restructuring activities and cost saving
initiatives.
Costs relating to strategic corporate restructuring
initiatives
In the prior year these costs related to professional fees for
strategic corporate restructuring initiatives of GBP0.2m and
non-trading costs arising on prior disposals of GBP0.1m.
4 ADJUSTING ITEMS (continued)
Other adjusting items
Other adjusting items relate to the amortisation of acquired
intangible assets (see note 10) and share-based payment costs as
well as the items discussed below:
Earn-out consideration
In 2017, a charge of GBP0.6m has been recognised in relation to
acquisition earn-out consideration for Oystercatchers, see note 12
for further details.
The charge in 2016 of GBP0.6m also related to the Oystercatchers
acquisition earn-out.
Costs relating to the acquisition of business
These costs relate to the acquisition of MarketMakers
Incorporated Limited ('MarketMakers') (see note 12). These costs
include stamp duty of GBP0.1m, sponsors' fees of GBP0.1m, legal
fees of GBP0.1m, due diligence and planning fees of GBP0.1m and
various other professional fees of GBP0.2m.
Profit on disposal of subsidiary
On 1 August 2017, the Group sold its business-to-consumer
division, the Home Interest segment, recognising a profit on
disposal of GBP20.9m (see note 13 for more detail).
Additional impairment of trade receivables
In the prior year an additional, separately reported charge was
recognised in relation to impairment of trade receivables of
GBP1.8m (GBP1.5m from continuing operations, GBP0.3m from
discontinued operations). As a result of disruption during the
second half of 2015 into the early part of 2016, arising from a new
accounting system implementation in 2015, an amount of legacy and
older debt remained unpaid at 31 December 2016, which was
significantly in excess of levels historically experienced by the
Group. A detailed review and risk assessment to ascertain the
recoverability of this debt was undertaken. This review, together
with the fact that there was further extended ageing despite active
pursuit of the amounts in 2016 meant the Group considered it
necessary to provide against potentially uncollectible aged debt at
levels in excess of those which would be required under normal
trading conditions. The quantum of this additional provision arises
from unique circumstances following an accounting system
implementation, therefore the charge of GBP1.8m was separately
reported in adjusting items. In addition, an ordinary charge of
GBP0.5m was recorded in adjusted operating profit, which was not
separately reported.
In 2017 no such additional charge is required.
Impairment of goodwill
During 2017, there was no impairment charge in relation to
goodwill (2016: GBP7.2m impairment charge in relation to goodwill
in the Financial Services segment).
5 FINANCE COSTS
2017 2016
GBPm GBPm
Interest payable on revolving credit
facility 0.2 0.4
Commitment fees and amortisation
of arrangement fee
in respect of revolving credit
facility 0.2 0.1
----------------------------------------- ----- -----
Total finance costs 0.4 0.5
----------------------------------------- ----- -----
6 TAXATION
2017 2016
GBPm GBPm
Analysis of charge for the year
Current tax
UK Corporation Tax 1.2 1.2
Overseas tax 0.1 0.1
Adjustments in respect of prior years 0.1 (0.2)
1.4 1.1
--------------------------------------- ------ ------
Deferred tax
Current period (0.6) (0.3)
Adjustments in respect of prior years - 0.2
(0.6) (0.1)
--------------------------------------- ------ ------
Taxation 0.8 1.0
---------------------------------------- ------ ------
The tax charge for the year can be reconciled to the profit /
(loss) in the statement of comprehensive income as follows:
2017 2016
GBPm GBPm
Profit/(loss) before tax 22.7 (4.4)
Tax at the UK rate of corporation tax of
19.25% (2016: 20.0%) 4.3 (0.9)
Effects of:
Expenses not deductible for tax purposes 0.4 0.5
Goodwill impairment not deductible - 1.4
Profit on disposal (4.1) -
Adjustments in respect of prior years 0.1 -
Different tax rates of subsidiaries in other 0.1 -
jurisdictions
0.8 1.0
---------------------------------------------- ------ ------
6 TAXATION (continued)
The tax charge for the year is based on the Group profit before
tax from both continuing and discontinued operations. It is
comprised of GBP0.4m relating to continuing operations, as per the
statement of comprehensive income, and GBP0.4m relating to
discontinued operations.
The Finance (No 2) Act 2015, which provides for reductions in
the main rate of corporation tax from 20% to 19% effective from 1
April 2017 and to 18% effective from 1 April 2020, was
substantively enacted on 26 October 2015. These rate reductions
have been reflected in the calculation of deferred tax at the
statement of financial position date.
The Finance Act 2016, which provides for reductions in the main
rate of corporation tax to 17% effective from 1 April 2020, was
substantively enacted on 15 September 2016.
A reconciliation between the reported tax expense and the
adjusted tax expense, taking account of adjusting items as
discussed in note 1(b) and 4 is shown below:
2017 2016
GBPm GBPm
Reported tax expense 0.8 1.0
Effects of:
Amortisation of acquired intangible
assets 0.3 0.3
Additional impairment of trade receivables - 0.4
Share-based payments 0.1 (0.1)
Exceptional expenses 0.1 0.1
Earn-out consideration - 0.1
Adjusted tax expense 1.3 1.8
--------------------------------------------- ----- ------
7 DISCONTINUED OPERATIONS
On 1 August 2017 the Group disposed of its Home Interest
segment, comprised of Centaur Consumer Exhibitions Limited and
Ascent Publishing Limited. The disposal was effected in line with
the Group's strategy to become a pure business-to-business ('B2B')
business.
The results of the discontinued operations, which have been
included in the consolidated statement of comprehensive income and
consolidated cash flow statement, were as follows:
Period ended Year ended 31
31 July 2017 December 2016
Statement of comprehensive income GBPm GBPm
Revenue 7.2 12.8
Expenses (4.7) (8.3)
Profit on disposal 20.9 -
--------------------------------------------------------------- ---- ------ ------------- --------------
Profit before tax 23.4 4.5
Attributable tax expense (0.4) (0.9)
--------------------------------------------------------------- ------ ------------- --------------
Statutory profit after tax 23.0 3.6
Profit on disposal (20.9) -
Amortisation of acquired intangible assets - 0.1
Additional impairment of trade receivables - 0.3
Attributable tax expense - (0.1)
--------------------------------------------------------------- ------ ------------- --------------
Adjusted profit attributable to discontinued operations 2.1 3.9
--------------------------------------------------------------- ------------ ------------- --------------
Period ended Year ended 31
31July 2017 December 2016
Cash Flows GBPm GBPm
Operating cash flows 0.7 0.1
Investing cash flows - -
Financing cash flows - -
--------------------------------------------------------------------- ------------- --------------
Total cash flows 0.7 0.1
--------------------------------------------------------------------- ----- ------------- --------------
A profit of GBP20.9m arose on the disposal of the Home Interest
segment, being the difference between proceeds of disposal and the
carrying amount of the subsidiaries' net assets and attributable
goodwill, less GBP1.9m of transaction costs.
8 EARNINGS PER SHARE
Basic earnings per share ('EPS') is calculated by dividing the
earnings attributable to ordinary shareholders by the weighted
average number of shares in issue during the year. 91,191 (2016:
91,191) shares held in the employee benefit trust and 6,964,613
(2016: 6,870,437) shares held in treasury have been excluded in
arriving at the weighted average number of shares.
For diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
potentially dilutive ordinary shares. This comprises share options
and awards (including those granted under the share save plan)
granted to Directors and employees where the exercise price is less
than the average market price of the Company's ordinary shares
during the year.
Basic and diluted earnings per share have also been presented on
an adjusted continuing and discontinued basis, as the Directors
believe that this measure is more reflective of the underlying
performance of the Group. These have been calculated as
follows:
8 EARNINGS PER SHARE (continued)
2017 2017 2017 2016 2016 2016
Earnings attributable to owners of the parent Weighted average Earnings Earnings attributable to Weighted average Earnings
number of shares per share owners of the parent number of shares per share
GBPm millions Pence GBPm millions Pence
Basic
Continuing operations (1.1) 144.4 (0.8) (9.0) 143.6 (6.3)
Continuing and discontinued operations 21.9 144.4 15.2 (5.4) 143.6 (3.8)
Effect of dilutive securities
Options: Continuing operations - - - - - -
Options: Continuing and discontinued operations - 8.3 (0.9) - - -
Diluted
Continuing operations (1.1) 144.4 (0.8) (9.0) 143.6 (6.3)
Continuing and discontinued operations 21.9 152.7 14.3 (5.4) 143.6 (3.8)
-------------------------------------------- -------------------------------------- -------------------- ----------- ------------------------- -------------------- -----------
Adjusted
Continuing operations
Basic (1.1) 144.4 (0.8) (9.0) 143.6 (6.3)
Amortisation of acquired intangibles (note 10) 2.4 1.7 2.2 1.5
Impairment of trade
receivables - - 1.5 1.1
Earn-out consideration 0.6 0.4 0.6 0.4
Other exceptional costs (note
4) 0.3 0.2 1.2 0.8
Share-based payments 0.5 0.3 (0.1) (0.1)
Impairment of goodwill (note
9) - - 7.2 5.0
Acquisition related costs
(note 12) 0.6 0.4 - -
Tax effect of above
adjustments (0.5) (0.3) (0.7) (0.4)
Discontinued operations
Basic 23.0 144.4 16.0 3.6 143.6 2.5
Amortisation of acquired
intangibles - - 0.1 0.1
Impairment of trade
receivables - - 0.3 0.2
Profit on disposal (note 13) (20.9) (14.5) - -
Tax effect of above adjustment - - (0.1) (0.1)
------------------------------- --------------------------------------------------- -------------------- ----------- ------------------------- -------------------- -----------
Adjusted basic
Continuing operations 2.8 144.4 1.9 2.9 143.6 2.0
Continuing and discontinued operations 4.9 144.4 3.4 6.8 143.6 4.7
Effect of dilutive securities
Options: Continuing operations - 8.3 (0.1) - 6.2 (0.1)
Options: Continuing and discontinued operations - 8.3 (0.2) - 6.2 (0.2)
Adjusted diluted
Continuing operations 2.8 152.7 1.8 2.9 149.8 1.9
Continuing and discontinued
operations 4.9 152.7 3.2 6.8 149.8 4.5
------------------------------- --------------------------------------------------- -------------------- ----------- ------------------------- -------------------- -----------
9 GOODWILL
Group
GBPm
Cost
At 1 January 2016 155.1
Additions in the year 1.2
----------------------------------- ------
At 31 December 2016 156.3
Additions in the year (note 12) 11.0
Disposal of subsidiary (note 13) (7.9)
----------------------------------- ------
At 31 December 2017 159.4
----------------------------------- ------
Accumulated impairment
At 1 January 2016 77.0
Charge for the year 7.2
----------------------------------- ------
At 31 December 2016 84.2
Charge for the year -
Disposal of subsidiary (note 13) (0.4)
----------------------------------- ------
At 31 December 2017 83.8
----------------------------------- ------
Net book value
At 31 December 2017 75.6
----------------------------------- ------
At 31 December 2016 72.1
----------------------------------- ------
Additions in the year relate to the acquisition of MarketMakers.
See note 12 for further details.
Disposal in the year relates to the disposal of the Home
Interest segment. See note 13 for further details.
Goodwill by segment
Each brand is deemed to be a Cash Generating Unit ('CGU'), being
the lowest level at which cash flows are separately identifiable.
Goodwill is attributed to individual CGUs but is reviewed at the
segment level for the purposes of the annual impairment review as
this is the level at which management monitors goodwill. The
majority of the Group's goodwill arose on the acquisition of
Centaur Communications Group in 2004.
9 GOODWILL (continued)
Goodwill is allocated to segments as follows:
Marketing Financial Services Professional Home Interest Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2016 36.7 12.3 21.6 7.5 78.1
Additions 1.2 - - - 1.2
Charge - (7.2) - - (7.2)
---------------------- ---------- ------------------- ------------- -------------- ------
At 31 December 2016 37.9 5.1 21.6 7.5 72.1
Additions 11.0 - - - 11.0
Disposal - - - (7.5) (7.5)
---------------------- ---------- ------------------- ------------- -------------- ------
At 31 December 2017 48.9 5.1 21.6 - 75.6
---------------------- ---------- ------------------- ------------- -------------- ------
Impairment testing of goodwill and acquired intangible
assets
During the period, goodwill and acquired intangible assets were
tested for impairment in accordance with IAS 36. In assessing
whether a write-down of goodwill and acquired intangible assets is
required, the carrying value of the segment is compared with its
recoverable amount. Recoverable amounts are measured based on
value-in-use.
The Group estimates the value-in-use of its CGUs using a
discounted cash flow model, which adjusts the cash flows for risks
associated with the assets and discounts these using a pre-tax rate
of 11.4% (2016: 12.6%). The discount rate used is consistent with
the Group's weighted average cost of capital and is used across all
segments, which are all based predominantly in the UK and
considered to have similar risks and rewards.
The key assumptions used in calculating value-in-use are revenue
growth, margin, adjusted EBITDA, discount rate and the terminal
growth rate. The Group has used formally approved forecasts for the
first three years of the calculation and applied a terminal growth
rate of 2.0% (2016: 2.0%). This timescale and the terminal growth
rate are both considered appropriate given the cyclical nature of
the Group's revenues.
The assumptions used in the calculations of value-in-use for
each segment have been derived based on a combination of past
experience and management's expectations of future growth rates in
the business.
At 31 December 2017, before impairment testing, goodwill of
GBP48.9m, GBP5.1m and GBP21.6m was allocated to the Marketing,
Financial Services, and Professional segments respectively. In a
"base case" scenario, and in the sensitised scenarios outlined
below, the value-in-use calculations exceed the carrying values and
therefore no impairment to goodwill is indicated for any of the
three segments.
Sensitivity analysis has been performed on the
value-in-calculations, holding all other variables constant,
to:
(i) apply a 10% reduction to forecast adjusted EBITDA in each
year of the modelled cash flows. No impairment would occur in any
the segments.
(ii) apply a 2.0% increase in discount rate from 11.4% to 13.4%.
No impairment would occur in any of the segments.
(iii) reduce the terminal value growth rate from 2.0% to 1.0%.
No impairment would occur in any of the segments.
10 OTHER INTANGIBLE ASSETS
Brands Separately
and acquired
Computer publishing Customer websites Non-compete
software* rights* relationships* and content* arrangements* Total
GBPm GBPm GBPm GBPm GBPm GBPm
Cost
At 1 January 2016 10.9 5.6 11.6 4.7 0.5 33.3
Additions - separately
acquired 1.3 - - - - 1.3
Additions - internally
generated 1.0 - - - - 1.0
Additions - business
combination (note
12) - 0.2 0.9 - - 1.1
Disposals or expiry - - - - (0.5) (0.5)
-------------------------------- ------ --------------- ---------------- --------------- ---------------- ------
At 31 December 2016 13.2 5.8 12.5 4.7 - 36.2
Additions - separately
acquired 1.5 - - - - 1.5
Additions - internally
generated 1.2 - - - - 1.2
Additions - business
combination (note
12) 0.7 0.8 3.6 - - 5.1
Disposal of subsidiary
(note 13) (0.5) (1.0) (0.7) - - (2.2)
At 31 December 2017 16.1 5.6 15.4 4.7 - 41.8
-------------------------------- ------ --------------- ---------------- --------------- ---------------- ------
Accumulated amortisation
At 1 January 2016 4.2 1.7 5.2 3.4 0.5 15.0
Amortisation charge
for the year 2.7 0.4 1.1 0.8 - 5.0
Disposals or expiry - - - - (0.5) (0.5)
-------------------------------- ------ --------------- ---------------- --------------- ---------------- ------
At 31 December 2016 6.9 2.1 6.3 4.2 - 19.5
-------------------------------- ------ --------------- ---------------- --------------- ---------------- ------
Amortisation charge
for the year 2.9 0.3 1.7 0.4 - 5.3
Disposal of subsidiary
(note 13) (0.3) (0.5) (0.8) - - (1.6)
At 31 December 2017 9.5 1.9 7.2 4.6 - 23.2
-------------------------------- ------ --------------- ---------------- --------------- ---------------- ------
Net book value at
31 December 2017 6.6 3.7 8.2 0.1 - 18.6
-------------------------------- ------ --------------- ---------------- --------------- ---------------- ------
Net book value at
31 December 2016 6.3 3.7 6.2 0.5 - 16.7
-------------------------------- ------ --------------- ---------------- --------------- ---------------- ------
Net book value at
1 January 2016 6.7 3.9 6.4 1.3 - 18.3
-------------------------------- ------ --------------- ---------------- --------------- ---------------- ------
* Amortisation of GBP2.5m (2016: GBP2.3m) of acquired intangible
assets from business combinations is presented as an adjusting item
(see note 1(b) for further information). The current year charge of
GBP2.5m includes GBP0.1m in computer software (2016: GBPnil).
The Company has no intangible assets (2016: GBPnil).
Amortisation of intangible assets is included in net operating
expenses in the statement of comprehensive income.
11 PROPERTY, PLANT AND EQUIPMENT
Leasehold Fixtures Computer
improvements and fittings equipment Total
GBPm GBPm GBPm GBPm
Cost
At 1 January 2016 2.1 0.6 0.9 3.6
Additions - separately acquired 0.1 - 0.1 0.2
Additions - business combination
(note 12) - 0.1 - 0.1
At 31 December 2016 2.2 0.7 1.0 3.9
Additions - separately acquired 0.1 - 0.1 0.2
Additions - business combination
(note 12) - - 0.2 0.2
Disposal of subsidiary (note
13) (0.1) (0.1) - (0.2)
At 31 December 2017 2.2 0.6 1.3 4.1
----------------------------------- ------------- ------------- ---------- ------
Accumulated depreciation
At 1 January 2016 1.0 0.2 0.1 1.3
Depreciation charge for the
period 0.2 0.1 0.3 0.6
----------------------------------- ------------- ------------- ---------- ------
At 31 December 2016 1.2 0.3 0.4 1.9
Depreciation charge for the
year 0.2 0.1 0.4 0.7
Disposal of subsidiary (note
13) (0.1) (0.1) - (0.2)
At 31 December 2017 1.3 0.3 0.8 2.4
----------------------------------- ------------- ------------- ---------- ------
Net book value at 31 December
2017 0.9 0.3 0.5 1.7
----------------------------------- ------------- ------------- ---------- ------
Net book value at 31 December
2016 1.0 0.4 0.6 2.0
----------------------------------- ------------- ------------- ---------- ------
Net book value at 1 January
2015 1.1 0.4 0.8 2.3
----------------------------------- ------------- ------------- ---------- ------
The Company has no property, plant and equipment at 31 December
2017 (2016: GBPnil).
12 BUSINESS COMBINATION
On 2 August 2017, Centaur Communications Limited, a Group
company, acquired 100% of the issued share capital of MarketMakers
Incorporated Limited ('MarketMakers'), a business-to-business
('B2B') telemarketing agency. This acquisition forms a significant
aspect of Centaur's transformation into a pure B2B-focused
business. MarketMakers will provide a range of higher value-added
products and services, and will allow Centaur to offer end-to-end
lead generation management. The results of MarketMakers are
included in the Marketing segment. Details of the purchase
consideration, the net assets acquired and goodwill are as
follows:
2017
GBPm
---------------------------------- ------
Purchase consideration:
Cash paid 17.1
Deferred cash consideration 0.1
Contingent cash consideration 1.7
---------------------------------- ------
Total purchase consideration 18.9
---------------------------------- ------
The assets and liabilities recognised as a result of the
acquisition are as follows:
2 August 2017
Fair value
GBPm
Intangible assets: Brands 0.8
Intangible assets: Customer contracts and relationships 3.6
Intangible assets: ERP platform 0.7
----------------------------------------------------------- --------------------
Total identified intangible assets (see note
10) 5.1
Deferred tax liabilities on identified intangible
assets (1.0)
----------------------------------------------------------
4.1
Property plant and equipment 0.2
Trade receivables 2.3
Prepayments and other debtors 0.3
Current income tax assets 0.2
Accrued income 0.3
Cash 4.2
Trade payables (0.2)
Accruals (1.2)
Deferred income (1.4)
Social security and other taxes (0.9)
-----------------------------------------------------------
Net identifiable assets acquired 7.9
Goodwill (see note 9) 11.0
-----------------------------------------------------------
Total purchase consideration 18.9
----------------------------------------------------------- --------------------
Certain intangible assets have been separately identified on
acquisition including brands of GBP0.8m, customer relationships of
GBP3.6m, and the ERP platform of GBP0.7m. The fair value of the
brands has been estimated using a relief from royalty approach, and
the customer relationships and ERP platform have been valued using
an excess earnings approach.
12 BUSINESS COMBINATION (continued)
The useful economic life of the intangibles is as follows:
Intangibles assets - Brands - 8 years
Intangible assets - Customer contracts and relationships - 3 to
4 years
Intangible assets - ERP platform - 5 years
The goodwill is comprised of the deferred tax liability on the
identified intangible assets, the acquired workforce and, in
particular, the ability of the business to generate new customer
relationships.
Deferred consideration
GBP0.1m of deferred consideration is payable in cash upon
completion of the Company tax return related to the year ended 31
December 2017, subject to any claims made under the purchase
agreement. GBP0.1m has been recognised in other liabilities in
respect of this deferred consideration.
Contingent consideration
In the event that certain pre-determined EBITDA levels are
achieved by MarketMakers for the year ended 31 December 2017,
additional consideration of up to GBP3.6m may be payable in cash
during the first quarter of 2018.
The potential undiscounted amount payable under the agreement is
between GBPnil for EBITDA below GBP2.0m and GBP3.6m for EBITDA
above GBP2.5m. The fair value of the contingent consideration is
undiscounted as the payment is due in less than one year from the
acquisition date.
Acquired receivables
The fair value of acquired trade receivables is GBP2.3m. The
gross contractual amount for trade receivables due is GBP2.3m, all
of which is expected to be collectible.
Revenue and profit contribution
MarketMakers contributed revenues of GBP6.1m and net profit of
GBP1.1m to the Group for the period from 2 August 2017 to 31
December 2017. If the acquisition had occurred on 1 January 2017,
MarketMakers pro-forma revenue and operating profit for the year
ended 31 December 2017 would have been GBP13.9m and GBP2.1m
respectively.
Acquisition costs
Costs relating to the acquisition of MarketMakers amounted to
GBP0.6m (see note 4). These costs include stamp duty of GBP0.1m,
sponsors' fees of GBP0.1m, legal fees of GBP0.1m, due diligence and
planning fees of GBP0.1m and various other professional fees of
GBP0.2m.
12 BUSINESS COMBINATIONS (continued)
Prior year business combination
In the prior year Centaur Communications Limited, a Group
company, acquired the business and assets of The Oystercatchers LLP
('Oystercatchers'), a specialist marketing consultancy. The results
of Oystercatchers are included in the Marketing segment. The
GBP1.1m net identifiable assets of Oystercatchers were acquired for
total purchase consideration of GBP2.3m, resulting in the
recognition of GBP1.2m of goodwill. The consideration comprised a
mixture of cash and shares, including deferred consideration of
GBP0.2m that has been fully settled in cash in the current
year.
At 31 December 2016 and under the sales purchase agreement,
there was contingent consideration (earn-out consideration) of
GBP1.2m to be settled in cash 75% and shares 25%. In the prior
year, an expense and a provision of GBP0.4m was recognised under
IAS 19 (for the cash element) and an expense and credit to equity
of GBP0.2m was recognised under IFRS 2 (for the share-based payment
element). During the period a further expense and provision of
GBP0.4m was recognised under IAS 19 (for the cash element) and an
expense and credit to equity of GBP0.2m under IFRS 2 (for the
share-based payment element). The total amount of GBP1.2m was
settled wholly in cash during the year and therefore an adjustment
of GBP0.4m (GBP0.2m current year and GBP0.2m prior year) was made
to reverse the share-based payment element under IFRS 2 and account
for the whole transaction under IAS 19 appropriately.
Further details of this acquisition can be found in note 13 of
the Group's Annual Report and Financial Statements for the year
ended 31 December 2016.
13 DISPOSAL OF SUBSIDIARY
On 1 August 2017, the Group disposed of its interest in its Home
Interest segment, by way of sale of 100% of the equity shares of
Ascent Publishing Limited and Centaur Consumer Exhibitions
Limited.
The net assets of the Home Interest segment at the date of
disposal were as follows:
31 July 2017
GBPm
Goodwill 7.5
Other intangible assets 0.6
Inventories 0.6
Trade and other receivables 2.5
Intercompany 2.6
Cash and cash equivalents 0.9
Trade and other payables (0.6)
Deferred income (3.5)
Current tax liability (0.4)
Net assets disposed attributable to shareholders of the Company 10.2
Directly attributable costs of disposal 1.7
----------------------------------------------------------------- -------------
Gain on disposal 20.9
----------------------------------------------------------------- -------------
Fair value of consideration 32.8
----------------------------------------------------------------- -------------
Satisfied by:
Cash and cash equivalents 30.2
Settlement of intercompany balances 2.6
32.8
----------------------------------------------------------------- -------------
Net cash inflow arising on disposal:
Consideration received in cash and cash equivalents 30.2
Less: directly attributable costs of disposal (1.4)
Less: cash and cash equivalents disposed of (0.9)
----------------------------------------------------------------- -------------
27.9
----------------------------------------------------------------- -------------
Proceeds of GBP32.8m comprised cash of GBP30.2m and settlement
of amounts owed by the continuing Group to the Home Interest
segment of GBP2.6m. The gain on disposal of GBP20.9m is included in
the profit for the year from discontinued operations (see note
7).
There were no disposals of subsidiaries during 2016.
14 INVENTORIES
2017 2016
Group Group
GBPm GBPm
Work in progress 1.4 2.5
-------------------
The Company had no inventory at 31 December 2017 (2016:
GBPnil).
There are no provision amounts in respect of inventories (2016:
GBPnil)
15 TRADE AND OTHER RECEIVABLES
2017 2016 2017 2016
Group Group Company Company
GBPm GBPm GBPm GBPm
Amounts falling due within one
year
Trade receivables 10.5 15.8 - -
Less: provision for impairment
of receivables (note 23) (1.5) (2.7) - -
Trade receivables - net 9.0 13.1 - -
Receivables from subsidiaries - - 2.7 1.6
Receivable from Employee Benefit
Trust - - - 0.2
Other receivables 0.9 0.8 0.3 0.3
Prepayments 1.4 1.2 - -
Accrued income 0.3 0.6 - -
11.6 15.7 3.0 2.1
Receivables from subsidiaries are unsecured, have no fixed due
date and bear interest at an annual rate of 2.39% (2016:
2.43%).
16 CASH AND CASH EQUIVALENTS
2017 2016 2017 2016
Group Group Company Company
GBPm GBPm GBPm GBPm
Cash at bank and in hand 4.1 3.4 - -
17 TRADE AND OTHER PAYABLES
2017 2016 2017 2016
Group Group Company Company
GBPm GBPm GBPm GBPm
Trade payables 2.6 3.7 - -
Payables to subsidiaries - - 43.9 18.9
Social security and other taxes 1.1 0.8 - -
Other payables 1.4 1.3 - -
Accruals 5.8 3.9 0.6 0.1
10.9 9.7 44.5 19.0
Payables to subsidiaries are unsecured, have no fixed date of
repayment and bear interest at an annual rate of 2.39% (2016:
2.43%).
The Directors consider that the carrying amount of the trade
payables approximates their fair value.
18 PROVISIONS
Deferred
consideration Other Total
GBPm GBPm GBPm
Group
At 1 January 2016 - - -
Charged to statement of comprehensive income
during the period 0.4 - 0.4
At 31 December 2016 0.4 - 0.4
Charged to statement of comprehensive income
during the period 0.5 - 0.5
Transferred from equity 0.3 - 0.3
Acquisition related (note 12) 1.8 0.1 1.9
Utilised in the period (1.2) - (1.2)
At 31 December 2017 1.8 0.1 1.9
Current 1.8 - 1.8
Non-current - 0.1 0.1
Total 1.8 0.1 1.9
18 PROVISIONS (continued)
Deferred consideration
Deferred consideration at 31 December 2016 related to the
acquisition of Oystercatchers. Under the sales purchase agreement,
the contingent consideration was to be settled in cash 75% and
shares 25%. In the prior
year, an expense and a provision of GBP0.4m was recognised under
IAS 19 (for the cash element) and an expense and credit to equity
of GBP0.2m was recognised under IFRS 2 (for the share-based payment
element).
During the year a further expense and provision of GBP0.4m was
recognised under IAS 19 (for the cash element) and an expense and
credit to equity of GBP0.2m under IFRS 2 (for the share-based
payment element).
Per agreement with the former Oystercatchers shareholders, the
total amount of GBP1.2m was wholly settled in cash during the year
and therefore an adjustment of GBP0.2m was made to reverse the
share-based payment element recognised in the year under IFRS 2 and
account for the charge under IAS 19 appropriately resulting in a
total charge of GBP0.6m. A transfer was made for the total share
based payment amount of GBP0.3m held in non-distributable reserves
in equity to provisions netting off against the payment made to
settle the liability.
Deferred consideration at 31 December 2017 relates to the
acquisition of Market Makers Incorporated Limited ('MarketMakers')
and is payable within 1 year (see note 12). The amount payable is
dependent on achieving pre-determined EBITDA levels and has been
treated as contingent consideration. All amounts represent the
Directors' best estimate of the balance to be paid at the statement
of financial position date, based on information available at the
acquisition date.
Other
A dilapidation provision was acquired on the acquisition of
MarketMakers in relation to the building leased by the Company in
Portsmouth. The lease expires in December 2022 and therefore the
provision is classified as a non-current liability.
19 BORROWINGS
31 December 31 December 31 December 31 December
2017 2016 2017 2016
Group Group Company Company
GBPm GBPm GBPm GBPm
Non-current liabilities
Arrangement fee in respect of revolving
credit facility - (0.1) - (0.1)
Revolving credit facility - 17.5 - 17.5
- 17.4 - 17.4
All borrowings were classified as non-current at 31 December
2016. At 31 December 2017, there were no drawdowns on the revolving
credit facility. Further details about the Group's borrowings are
provided in note 23.
20 EQUITY
Nominal value Number of
Ordinary shares of 10p each GBPm shares
Authorised share capital - Group and Company
At 1 January 2016, 31 December 2016 and 31
December 2017 20.0 200,000,000
Issued and fully paid share capital - Group
and Company
At 1 January 2016, 31 December 2016 and 31
December 2017 15.1 151,410,266
Deferred shares reserve
The deferred shares reserve represents 800,000 (2016: 800,000)
deferred shares of 10p each, which carry restricted voting rights
and have no right to receive a dividend payment in respect of any
financial year.
Reserve for shares to be issued
The reserve for shares to be issued is in respect of
equity-settled share-based compensation plans. The changes to the
reserve for shares to be issued represent the total charges for the
year relating to equity-settled share-based payment transactions
with employees as accounted for under IFRS 2.
Own shares reserve
The own shares reserve represents the value of shares held as
treasury shares and in an employee benefit trust. At 31 December
2017, 6,964,613 (2016: 6,870,437) 10p ordinary shares are held in
treasury and 91,191 (2016: 91,191) 10p ordinary shares are held in
an employee benefit trust.
During 2017, the Company purchased 97,176 (2016: 397,447)
ordinary shares to be held in treasury in order to meet future
obligations arising from share-based rewards to employees. The
buyback programme was approved by shareholders at the Annual
General Meeting held on 9 May 2017 up to a value of GBP1.0m. The
shares were acquired at an average price of 53.58p (2016: 42.75p)
per share, with prices ranging from 46p to 55p. The total cost of
GBP0.1m (2016: GBP0.2m) has been recognised in other reserves in
the own shares reserve in equity.
21 DIVIDS
2017 2016
GBPm GBPm
Equity dividends
Final dividend for 2015: 1.5p per 10p ordinary
share - 2.2
Interim dividend for 2016: 1.5p per 10p ordinary
share - 2.1
Final dividend for 2016: 1.5p per 10p ordinary
share 2.2 -
Interim dividend for 2017: 1.5p per 10p ordinary
share 2.1 -
4.3 4.3
A final dividend for the year ended 31 December 2017 of GBP2.2m
(1.5p per share) is proposed by the Directors and, subject to
shareholder approval at the Annual General Meeting, will be paid on
25 May 2018.
22 NOTES TO THE CASH FLOW STATEMENT
Reconciliation of profit / (loss) for the year to net cash
inflow from operating activities:
2017 2016 2017 2016
Group Group Company Company
GBPm GBPm GBPm GBPm
Profit/(loss) for the period 21.9 (5.4) (2.9) (2.2)
Adjustments for:
Tax 0.8 1.0 (0.7) (0.5)
Interest expense 0.4 0.5 1.4 1.0
Depreciation 0.7 0.6 - -
Amortisation of intangible assets 5.3 5.0 - -
Impairment of goodwill - 7.2 - -
Earn-out costs 0.6 0.6 - -
Share-based payment charge / (credit) 0.5 (0.1) 0.2 -
Gain on disposal of subsidiary (20.9) - - -
Unrealised foreign exchange difference 0.1 - - -
Other 0.1 (0.1) - -
Changes in working capital (excluding
effects of
acquisitions and disposals of subsidiaries):
Decrease / (increase) in inventories 0.6 (0.5) - -
Decrease / (increase) in trade
and other receivables 5.1 9.2 (1.0) -
(Decrease) / increase in trade
and other payables (1.4) (2.6) 25.2 10.2
Increase / (decrease) in deferred
income - (0.1) - -
Cash generated from operating activities 13.8 15.3 22.2 8.5
-------
22 NOTES TO THE CASH FLOW STATEMENT (continued)
Analysis of changes in net debt
Net
At 31 December cash At 31 December
Group 2016 flow 2017
Note GBPm GBPm GBPm
Cash and cash equivalents 16 3.4 0.7 4.1
Revolving credit facility 19 (17.5) 17.5 -
Net (debt) / cash (14.1) 18.2 4.1
Net
Company At 31 December 2016 cash flow At 31 December 2017
Note GBPm GBPm GBPm
Cash and cash equivalents 16 - - -
Revolving credit facility 19 (17.5) 17.5 -
Net (debt) / cash (17.5) 17.5 -
23 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Financial risk management
The Board has overall responsibility for the determination of
the Group's risk management policies. The Board receives monthly
reports from the Chief Financial Officer through which it reviews
the effectiveness of policies and processes put in place to manage
risk. The Board sets policies that reduce risk as far as possible
without unduly affecting the operating effectiveness of the
Group.
The Group's activities expose it to a variety of financial
risks, including interest rate risk, credit risk, liquidity risk,
capital risk and currency risk. Of these, credit risk and liquidity
risk are considered the most significant. This note presents
information about the Group's exposure to each of the above
risks.
23 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
(continued)
Categories of financial instruments
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised in respect of each class of financial asset, financial
liability and equity instrument are disclosed in note 1(r). All
financial assets and liabilities are measured at amortised
cost.
2017 2016
Note GBPm GBPm
Financial assets
Cash and bank balances 16 4.1 3.4
Trade receivables - net 15 9.0 13.1
Other receivables 15 0.9 0.8
Total financial assets 14.0 17.3
Financial liabilities
Bank borrowings 19 - 17.5
Loan notes 19 - -
Finance lease payables - -
Trade payables 17 2.6 3.7
Accruals 17 5.8 3.9
Provisions 18 1.9 0.4
Other payables 17 1.4 1.3
Total financial liabilities 11.7 26.8
Credit risk
The Group's principal financial assets are trade and other
receivables (note 15) and cash and cash equivalents. Credit risk
refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group.
The carrying amount of financial assets recorded in the financial
statements, which is net of impairment losses, represents the
Group's maximum exposure to credit risk in relation to financial
assets. Credit risk is managed on a Group basis. The Group does not
consider that it is subject to any significant concentrations of
credit risk.
Trade receivables
Trade receivables consist of a large number of customers, of
varying sizes and spread across diverse industries and geographies.
The Group does not have significant exposure to credit risk in
relation to any single counterparty or group of counterparties
having similar characteristics. The Group's exposure to credit risk
is influenced predominantly by the circumstances of individual
customers as opposed to industry or geographic trends.
23 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
(continued)
The business assesses the credit quality of customers based on
their financial position, past experience and other qualitative and
quantitative factors. The Group's policy requires customers to pay
in accordance with agreed payment terms, which are generally 30
days from the date of invoice. Under normal trading conditions, the
Group is exposed to relatively low levels of risk, and potential
losses are mitigated as a result of a diversified customer base and
the requirement for events and certain premium content subscription
invoices to be paid in advance of service delivery.
The credit control function within the Group's finance
department monitors the outstanding debts of the Group, and trade
receivables balances are analysed by the age and value of
outstanding balances.
Any trade receivable balance which is objectively determined to
be uncollectible is written off the ledger, with a charge taken
through the statement of comprehensive income. The Group also
records a provision for estimated impairment losses on its trade
receivables balances. All balances past due are reviewed, with
those greater than 90 days past due considered to carry a higher
level of credit risk. Specific provision is made against customer
balances with known credit issues or where debt has been referred
to a collection agency. The remaining past due balances are then
analysed, with balances relating to revenue recognised in advance,
customers on payment plans and non-payment resulting from
administrative queries considered to be of lower risk. A judgement
is applied to the net balance based on historic experience on a
percentage basis taking into account both the age and the reason
items remain unpaid.
Impairment losses are taken through administrative expenses in
the statement of comprehensive income.
The ageing of trade receivables according to their original due
date is detailed below:
2017 2017 2016 2016
Gross Provision Gross Provision
GBPm GBPm GBPm GBPm
Not due 5.2 - 6.4 -
0-30 days past due 2.4 - 3.2 -
31-60 days past due 1.0 - 1.2 (0.1)
61-90 days past due 0.3 - 0.9 (0.1)
Over 90 days past due 1.6 (1.5) 4.1 (2.5)
10.5 (1.5) 15.8 (2.7)
Trade receivables that are less than 3 months past due are
generally not considered to be impaired, except where specific
credit issues or delinquency in payments have been identified. At
31 December 2017, there are debtors greater than 90 days past due
with a carrying value of GBP0.1m (2016: GBP1.6m) which have not
been provided against. In making the assessment that these amounts
are not impaired, the Directors have considered the quantum of
amounts included in gross trade receivables which relate to amounts
not yet included in income, including pre-event debt included in
deferred income and amounts relating to VAT. The credit quality of
trade receivables not yet due nor impaired has been assessed as
acceptable.
23 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
(continued)
The movement in the provision for impairment of receivables is
detailed below:
2017 2016
Group Group
GBPm GBPm
Balance at 1 January 2.7 0.9
Utilised (1.2) (0.5)
Disposal of subsidiaries (0.5) -
Additional provision charged to the statement
of comprehensive income:
Recorded in adjusted operating profit 0.5 0.5
Adjusting item in operating loss - 1.8
Balance at 31 December 1.5 2.7
The Group's policy requires customers to pay in accordance with
agreed payment terms, which are generally 30 days from the date of
invoice or, in the case of live events related revenue, no less
than 30 days before the event. All credit and recovery risk
associated with trade receivables has been provided for in the
statement of financial position. The Group's policy for recognising
an impairment loss is given in note 1. Impairment losses are taken
through administrative expenses in the statement of comprehensive
income.
The Directors consider the carrying value of trade and other
receivables approximates to their fair value.
Cash and cash equivalents
Banks and financial institutions are independently rated by
credit rating agencies. We choose only to deal with those with a
minimum 'A' rating. We determine the credit quality for cash and
cash equivalents to be strong.
Other receivables
Other receivables are neither past due nor impaired. These are
primarily made up of sundry receivables, including employee-related
debtors and receivables in respect of distribution
arrangements.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. During the year,
the Group was in a net borrowings position until the end of July
from which time through to 31 December 2017 the Group maintained a
net cash position. The Group manages liquidity risk by maintaining
adequate reserves and working capital credit facilities, and by
continuously monitoring forecast and actual cash flows. The total
facility available to the Group is GBP25.0m and is available
through to August 2019. As at 31 December 2017, the Group had cash
of GBP4.1m (2016: GBP3.4m) with a full undrawn loan facility of
GBP25.0m (2016: undrawn loan facilities of GBP7.5m).
23 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
(continued)
The following tables detail the financial maturity for the
Group's financial liabilities:
Less
than
Book value Fair value 1 year 2-5 years
GBPm GBPm GBPm GBPm
At 31 December 2017
Financial liabilities
Variable interest rate instruments - - - -
Non-interest bearing 11.7 11.7 11.7 -
11.7 11.7 11.7 -
At 31 December 2016
Financial liabilities
Variable interest rate instruments 17.5 17.5 - 17.5
Non-interest bearing 9.3 9.3 9.3 -
26.8 26.8 9.3 17.5
The Directors consider that book value is materially equal to
fair value.
The book value of primary financial instruments approximates to
fair value where the instrument is on a short maturity or where
they bear interest at rates that approximate to the market.
All trade and other payables are due in one year or less, or on
demand.
Interest rate risk
The Group has no significant interest-bearing assets but is
exposed to interest rate risk when it borrows funds at floating
interest rates through its revolving credit facility. Borrowings
issued at variable rates expose the Group to cash flow interest
rate risk. The Group evaluates its risk appetite towards interest
rate risks regularly, and may undertake hedging activities,
including interest rate swap contracts, to manage interest rate
risk in relation to its revolving credit facility if deemed
necessary.
The Group did not enter into any hedging transactions during the
current or prior year and, as at 31 December 2017, the only
floating rate to which the Group is exposed was LIBOR. The Group's
exposure to interest rates on financial assets and financial
liabilities is detailed in the liquidity risk section of this
note.
Interest rate sensitivity
The Group has exposure to interest rate risk, and sensitivity
analysis has been performed based on exposure to variable interest
rates at the reporting date.
If interest rates had been 50 basis points higher or lower and
all other variables were held constant, the Group's net profit
after tax would increase / decrease by an insignificant amount.
23 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
(continued)
Capital risk
The Group manages its capital to ensure that all entities in the
Group will be able to continue as a going concern while maximising
return to stakeholders, as well as sustaining the future
development of the business.
The capital structure of the Group consists of net debt/cash,
which includes borrowings (note 19) and cash and cash equivalents
(note 16), and equity attributable to the owners of the parent,
comprising issued share capital (note 20), other reserves and
retained earnings. The Board also considers the levels of own
shares held for employee share schemes, and the ability to issue
new shares for acquisitions, in managing capital risk in the
business.
The Group continues to benefit from its banking facilities (as
renewed during June 2015), which features both a working capital
facility, to assist in managing the Group's liquidity risk, and an
acquisition facility to support the Group's acquisition strategy.
The facility, available until August 2019, allows for a maximum
drawdown of GBP25m.
Interest is calculated on LIBOR plus a margin dependent on the
Group's net leverage position, which is re-measured quarterly in
line with covenant testing. The Group's borrowings are subject to
financial covenants tested quarterly. The principal financial
covenants under the facility are that the ratio of net debt to
adjusted EBITDA (see note 1(b) for explanation and reconciliation
of adjusted EBITDA) shall not exceed 2.5:1 and the ratio of EBITDA
to net finance charges shall not be less than 4:1. At 31 December
2017 and throughout 2017 all of these covenants were achieved.
Currency risk
Substantially all of the Group's net assets are located in the
United Kingdom. The majority of revenue and profits is generated in
the United Kingdom and consequently foreign exchange risk is
limited. The Group continues to monitor its exposure to currency
risk, particularly as the business expands into overseas
territories such as North America, however the results of the Group
are not currently considered to be sensitive to movements in
currency rates.
24 POST BALANCE SHEET EVENTS
No material events have occurred after the reporting period.
25 NATURE OF FINANCIAL INFORMATION
The foregoing financial information does not amount to full
accounts within the meaning of Section 434 of the Companies Act
2006. The financial information has been extracted from the Group's
annual report and financial statements for the year ended 31
December 2016 on which the auditors have expressed an unqualified
opinion.
Copies of the annual report and financial statements will be
posted to shareholders shortly and will be available from the
Company's registered office at Wells Point, 79 Wells Street,
London, W1T 3QN.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JBMMTMBITMRP
(END) Dow Jones Newswires
March 21, 2018 03:01 ET (07:01 GMT)
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