TIDMCAU
RNS Number : 3701T
Centaur Media PLC
20 March 2019
20 March 2019
Centaur Media Plc
Preliminary results for the year ended 31 December 2018
Centaur Media Plc ("Centaur"), an international provider of
business information and specialist consultancy, is today
publishing its preliminary results for the year ended 31 December
2018.
Financial highlights
o Group revenue increased 9.0% to GBP70.5m; underlying revenue
decline of 1.6%
o Reflects a full-year of revenues from MarketMakers
o Increased revenues from brands including The Lawyer, Marketing
Week, MW Mini MBA, and The Meeting Show
o Non-advertising revenues now 82% of total revenues (2017:
79%)
o Recurring revenues have grown to 48% (2017: 44%)
o Underlying(1) adjusted(2) operating profits increased 18% to
GBP5.2 million
Segmental breakdown of adjusted(2) operating profit
o Marketing achieved GBP1.7m in a transitional year (2017:
GBP1.7m)
o Financial services strengthened to GBP1.2m (2017: GBP0.6m)
o Professional services, including The Lawyer increased by 28%
to GBP2.3m (2017: GBP1.8m)
Statutory operating loss of GBP14.0m (2017: loss of GBP0.3m),
and a statutory loss of GBP14.2m (2017: loss GBP0.7m) after
goodwill impairment of GBP13.1 million, primarily relating to the
strategic rationalisation of certain events and revenue streams to
be discontinued within the marketing portfolio.
The Group had net cash of GBP0.1m (2017: GBP4.1m) at 31 December
after making an earnout payment of GBP1.8m in respect of
MarketMakers and paying dividends of GBP4.3m.
Adjusted(2) diluted EPS of 2.6p (2017: 3.2p). Diluted loss per
share of 9.9p (2017: EPS 14.3p).
Final dividend of 1.5p, contributing to a total for the year of
3.0p, in line with previous year. The future distribution policy
will be subject to the progress of the simplification strategy.
Strategic progress
o Strategic review confirmed the need to focus on fewer sectors
to drive margin growth:
o Creation of XEIM to develop business information, intelligence
and consulting services, primarily in the marketing sector
o Initiated a process to explore the potential divestment of
non-core businesses
o Delivery of cost efficiencies associated with Group
simplification to create
a higher margin operating model
Outlook
This has been a year of good strategic progress at Centaur. The
changes we are making to our portfolio will allow us to focus on
the growth of XEIM, our largest business, and drive efficiencies
derived from a simpler group structure.
Board change
Neil Johnson is to stand down as Chairman in June 2019 to take
on a new role, and will be succeeded by Colin Jones, who joined the
Board last September and was previously CFO of Euromoney
Institutional Investor PLC.
Andria Vidler, Chief Executive, commented:
"We are pleased to have made good strategic progress this year,
to have increased adjusted(2) operating profits and to have
accelerated the simplification of the Group's structure. This will
create a more efficient and focused business with a higher
margin.
"XEIM, the new name for the Group's marketing businesses,
enables us to offer a more integrated and coordinated service to
help our clients improve their marketing performance."
Enquiries
Centaur Media Plc
Andria Vidler, Chief Executive
Officer 020 7970 4000
Swag Mukerji, Chief Financial
Officer
Teneo 020 7420 3144
Paul Durman/Rebecca Hislaire
Note to editors
Centaur is an international provider of business information and
specialist consultancy that inspires and enables people to excel at
what they do, raising the standard for insight, interaction and
impact.
Leading brands include: Econsultancy, Marketing Week, Festival
of Marketing, MarketMakers, Creative Review, Influencer
Intelligence, Fashion & Beauty Monitor, Money Marketing,
Platforum, The Lawyer, Employee Benefits, The Engineer, Subcon,
Oystercatchers, the Business Travel Show and The Meetings Show.
(1) Underlying growth rates adjust for the timing of the
disposal of Corporate Adviser and the acquisition of MarketMakers
in 2017, and the biennial contribution from the Advances
Manufacturing Show ('AMS').
(2) Adjusted results exclude adjusting items, as detailed in
note 1(b) of the financial information
(3) See note 1(b) of the financial information for explanation
and reconciliation of adjusted operating cash flow.
(4) Cash conversion is calculated as adjusted operating cash
flow / adjusted operating profit excluding depreciation and
amortisation charges.
(5) See note 1(b) of the financial information for explanation
of net debt and note 28 for a reconciliation to statutory
measures.
Performance - CEO Review
Overview of 2018
While the transformation of Centaur continues, in 2018 the Group
saw further benefits from the work, investment and repositioning
that has taken place over the past five years. Our strong focus on
the needs of our customers - increasingly large, international
enterprises - has inspired the development of new products and
services that are now delivering substantial revenues along with
the potential for future growth. This has continued Centaur's
transition from being a media publisher heavily dependent on
advertising and print to a more diverse and robust business,
providing a range of business information and specialist
consultancy services with more reliable and recurring revenue
streams.
In 2018, Centaur was able to increase adjusted(2) operating
profits by 18%(1) to GBP5.2 million, reflecting higher
contributions from across the Group and the benefit from the
reduction of overheads that followed the sale of our Home Interest
division in 2017. Notable profit uplifts were delivered by the
Festival of Marketing; by Marketing Week and its Mini MBA courses;
by The Lawyer; and by the Business Travel Show. It was also
encouraging that our financial services division strengthened its
profits as we focused on its core brands. Group turnover amounted
to GBP70.5m, the 9% growth from continuing operations reflecting
higher revenues from The Lawyer, the launch of new products and a
full year's contribution from MarketMakers. On an underlying(1)
basis revenues decreased by 1.6%.
The progress in reshaping our portfolio helped Centaur deliver a
further increase in the proportion of revenues that it receives
from repeatable and recurring sources, from 44% to 48%. Advertising
now represents only 18% of Group revenues. Centaur is now a more
resilient and focused business with good opportunities for
long-term growth and margin enhancement.
Nonetheless, this improved performance fell short of our
ambitions for 2018. Revenue growth was held back due to delays in
completing new technology platforms for our subscription products,
the cancellation of a small number of large US contracts and weaker
second-half trading at MarketMakers.
These factors led to Centaur to revise its guidance in a trading
update that we issued in October. The Board acted decisively,
changing the management oversight of Econsultancy, Influencer
Intelligence and MarketMakers and accelerating the creation of
XEIM, the new name for our marketing businesses. Since these
changes and the launch of the improved platforms, revenue and
billings have gained traction.
As Centaur moves to focus on those businesses where it has the
greatest opportunity, we have made a goodwill impairment of
GBP13.1m, primarily relating to events to be closed and other
businesses within the marketing portfolio. Together with a GBP2.8m
amortisation charge made against the value of acquired assets, this
resulted in a statutory loss for the year of GBP14.2m (loss of
GBP0.7m in 2017).
Below, I will discuss the divisional performance in greater
detail. First, I would like to explain the market context and set
out the strategic progress that Centaur has made this year.
Centaur's transformation
Five years ago, Centaur was still recognisable as a traditional
print publisher, heavily reliant on advertising and print and
vulnerable to newer digital business models that were disrupting
the B2B information services market. Centaur faced new competition
from online portals that were successfully attracting recruitment
and classified advertising, while battling a deluge of free
content.
Centaur responded with an ambitious strategy to shift its
business model away from advertisers seeking to reach readers, and
towards customers willing to pay for the information, insight and
skills they need to deliver success. We built on our heritage and
our reputation and track record for providing high quality,
essential and trusted content. This gave us the understanding and
insights necessary to develop new products and services for which
customers would be willing to pay.
We also reshaped our portfolio of businesses, selling the Home
Interest division of consumer titles in 2017 to focus the Group
entirely on B2B information services. We acquired Oystercatchers
(in 2016) and MarketMakers (in 2017) to strengthen our offering in
consultancy and training, and in lead generation and data
analytics.
We have developed and refined a new vision for Centaur,
recognising that our businesses are united by helping professionals
excel at what they do.
In 2018, we made further significant progress along this road as
we become an international provider of business information and
specialist consultancy.
Key highlights included:
-- Following a comprehensive strategic review, we decided to
accelerate the simplification of the Group's structure and explore
the divestment of our non-marketing businesses.
-- To increase management and investor focus on our largest
business, we have launched XEIM as the new name for our marketing
businesses, bringing together our brands including Marketing Week,
Econsultancy, Festival of Marketing, Influencer Intelligence,
MarketMakers, MW Mini MBA, Oystercatchers, Creative Review and
Design Week. We believe XEIM will enable us to sell our broad range
of marketing products and services in a more integrated and
coordinated manner.
-- We completed the integration of Oystercatchers, our
specialist management and marketing consultancy, within
Econsultancy.
-- We achieved a significant reduction in central overheads.
Improved processes across central and shared services, as well as
the sale of Home Interest, have enabled us to reduce complexity. As
we continue to simplify the portfolio we will see further
opportunities for cost savings.
Segment review
XEIM (Marketing)
The creation of XEIM continues the simplification of Centaur's
structure by uniting all our marketing brands under the same
divisional name
Marketing remains Centaur's largest and best-positioned
business, representing 60% of Group revenues. In 2018, it delivered
adjusted(2) operating profits of GBP1.7m, unchanged from the prior
year. While 2018 was a transitional year for the division, the
investments, management changes and product launches that we made
have created increased momentum, providing Centaur with the
opportunity to benefit from the operational leverage in our
marketing businesses.
Revenues and profits were held back by a delay in the migration
of Econsultancy to a new technology platform, which impacted
renewal income as well as a small number of significant enterprise
contracts that we had hoped to close before the year-end. Revenues
for the division were GBP42.7m, the increase from GBP36.0m in the
prior year primarily reflecting the inclusion of MarketMakers for a
full year.
Since relaunch, the new platform has enabled Econsultancy to
offer a dynamic new service that has generated improvements in page
views and engagement. We expect to build on this momentum as we
move through 2019.
Influencer Intelligence, a new tool for brands seeking to
harness the power of online marketers, also made its debut later
than intended. It has met an enthusiastic market reception and is
already achieving a good level of renewals and new sales.
The Marketing Week brand and its recent innovations had a strong
year, with double-digit revenue uplifts from Marketing Week,
Creative Review, the Festival of Marketing and its e-learning
courses. The Festival of Marketing had its best year yet,
attracting 4,000 attendees and more than doubling its profit
contribution. The Mini MBA, a joint venture with Marketing Week
columnist Mark Ritson, had another strong year as delegate numbers
more than doubled and revenues grew by 68%. Satisfaction scores
remain in excess of 90% and we anticipate further growth in
2019.
MarketMakers, the lead generation business acquired in 2017, and
its sister business Really, the B2B marketing agency, delivered a
3% increase in underlying(1) revenues despite a slower second half.
Really had an excellent year, increasing its standalone revenues by
17%. Really's strengths were recognised at the International B2B
Marketing Awards: it won gold for 'Best Use of Customer Insight',
bronze for 'Best SME-Targeted Campaign', and silver awards for
'Best Corporate Decision-Maker - Targeted Campaign' and 'Best
Multi-Channel Campaign'.
Oystercatchers had a stronger second half to deliver a
satisfactory result for the year. Oystercatchers' training business
has now been fully integrated within Econsultancy, and the combined
business ended the year well. Further Oystercatchers developments
have included the launch of the Modern Marketing Pitch, a new
content platform for the Oystercatchers Club Network, a Fellows
initiative and a new awards evening.
XEIM has a clear mission and defined purpose: "Advising,
informing and connecting the modern marketer to accelerate
performance." Steve Newbold, who previously headed Centaur's media
and events business, will lead XEIM as its group managing director.
Suki Thompson, founder and CEO of Oystercatchers, will be XEIM's
executive director.
Centaur's move to a more customer-focused approach has allowed
us to build deeper and lasting relationships with our most
important customers. As an illustration, XEIM's top 100 customers
increased their spend by 26% last year compared to 2017 and more
than three-quarters of the top 100 spent money with the business
for the third year running.
Professional services
The professional services division comprises The Lawyer and our
exhibitions business which jointly represent 28% of Group revenues.
It delivered adjusted(2) operating profits of GBP2.3m, up 28%, on
revenue of GBP19.7m (2017: GBP19.6m). Approximately 61% of the
division's revenue comes from live events, 23% from advertising and
16% from premium content.
The Lawyer is a leading provider of intelligence to the global
legal market that generates revenue from digital subscriptions,
live events and digital advertising revenue streams.
While The Lawyer continued to experience the expected erosion in
its recruitment advertising revenues, it maintained its growth
thanks to another strong increase in subscriptions. 73 of the top
ranked international law firms are subscribers, and we ended 2018
with 88 of the top 100 UK and US law firms as subscribers. A good
performance from digital display ads and higher revenues from The
Lawyer's award event also contributed.
2018 was a significant year for The Lawyer as we completed a
transition from weekly to monthly magazines and moved to a more
scalable digital platform. This new platform will allow us to
continue to drive consistent growth in digital usage from paying
subscribers while delivering a best-in-class user experience.
As part of our technology investment, we have developed an
interactive digital tool for tracking litigation that extends the
functionality of The Lawyer's current market insight products.
Launched in January 2019, this product has made a promising
start.
The Lawyer is strongly positioned for continued growth in an
attractive market. As Centaur disclosed in November, the company
has appointed Livingstone Partners to explore a possible divestment
of the business. Centaur is confident of The Lawyer's growth
trajectory which, it believes, merits a premium valuation.
Our exhibitions business includes the Business Travel Show, The
Meetings Show, Employee Benefits Live and Subcon. Publications and
websites linked to the events including well-established brands
such as The Engineer and Business Travel iQ. Exhibitions and events
are responsible for 61% of the division's revenue.
In 2018, the exhibitions management team refocused the brands on
driving profitable events, positioning the businesses for strong
future growth. This focus has enabled each of the brands to
continue to drive strong operating leverage, presenting a number of
opportunities for margin accretion as well as international and
regional expansion.
The standout performer was the Business Travel Show which
delivered double-digit revenue growth, reflecting higher exhibitor
numbers, and a strong profit performance. Employee Benefits Live
and EB Connect also turned in a good performance.
Despite slightly lower visitor numbers, The Meeting Show also
increased its revenues. By harnessing skills from within
MarketMakers, we were able to secure a big increase in forward
bookings which augurs well for 2019.
Subcon, an event for subcontract manufacturing professionals,
had a difficult year, reflecting wider market conditions in
engineering markets. However, Subcon's net promoter scores remain
significantly ahead of its competition.
Financial services
The financial services division owns well-positioned titles,
including Money Marketing, Mortgage Strategy, Platforum, Tax Briefs
and Headline Money, that serve valuable communities of finance
professionals. The division contributes 12% of Group revenues.
In 2018, financial services' adjusted(2) operating profits
strengthened to GBP1.2 million, up from GBP0.6m in 2017, on
revenues of GBP8.2m (2017: GBP8.8m). While the longer-term trends
in advertising remain unchanged, decisive management action has
brought about a strong margin recovery. This has been aided by a
focus on our strongest brands, Money Marketing and Mortgage
Strategy, and their strong digital advertising performance.
We achieved a good uplift in display advertising, helping Money
Marketing to deliver stable revenues. Mortgage Strategy grew its
business, supported by a strong performance from its awards
show.
As expected, Tax Briefs experienced a year of lower revenues as
the UK Government reverted to a single Budget announcement after
two in 2017. Revenues at Headline Money also softened, in line with
expectations.
People
The Executive Committee is committed to maintaining a culture
that supports our business ambitions, developing internal training
plans and systems in line with these objectives.
Our male to female ratio is well-balanced and we continue to
have a strong representation of women at a senior level. Three out
of five (60%) of our Executive Committee members are female and a
third of our senior leaders are female. Our family friendly
policies include enhanced maternity and paternity leave, and
flexible work options, and we have a high rate of maternity
returners (83%).
Our Development Board continues to support our internal culture,
leading our charity sponsorship activity and organising regular
fund-raising initiatives throughout the year. It also offers a
range of mental health, wellbeing and fitness sessions.
We continue to take a proactive approach to diversity through
policies and working practices. In 2018, we launched an LGBT+
Network, developed to provide support and advice and to ensure a
fully inclusive environment.
In 2018, we launched a formal mentoring scheme, providing
training to mentors and mentees, and delivered face-to-face
coaching to more than 100 junior staff.
Through the Apprenticeship Levy, we continue to support staff to
achieve professional qualifications in digital marketing, data
analysis and management and leadership.
Every year we recognise those who have delivered outstanding
performance, whether this is in sales, support or bringing to life
our values, at our Annual Centaur Awards Ceremony.
Summary
Over the last 12 months our year on year profit growth was
strong and whilst revenue was held back, I am pleased with the
product innovation and efficiency improvements that Centaur has
made. The benefits of the Group's strategic transformation are
becoming clearer and we have a sharper focus - both on our
customers and on the businesses where we have the greatest
competitive strengths.
Continuing change, and a commitment to innovation and new
product development, will be important to sustain the current
momentum in our business. We recognise this requires a great deal
of hard work from every Centaurion. The energy, ideas and expertise
of our people remains a source of strength for Centaur;
shareholders owe them our thanks.
The uncertainty about the impact of Brexit may make this a
challenging year, but Centaur's strategy to strengthen its
non-advertising revenues has improved the Company's resilience. The
recent launch of XEIM, and the further moves we are taking to
simplify and focus Centaur's business, give me encouragement for
the year ahead.
Performance - CFO Review
Overview
The results of the business are presented in accordance with
International Financial Reporting Standards ('IFRS').
2018 has seen an acceptable underlying(1) performance from the
business with pleasing growth in profits at Festival of Marketing,
The Lawyer, The Business Travel Show and Marketing Week's Mini MBA.
The underlying(1) performance of the financial services division
has strengthened from the previous year and tight control of
overheads drove further underlying(1) group profit growth. However,
this improved performance fell short of our ambitions for 2018 as
delays in completing Econsultancy's move to its new technology
platform meant the business was unable to secure a small number of
large contracts that had been expected to contribute to 2018
results. Additionally, weak second-half trading at MarketMakers
held back its growth for the year.
We revised our trading guidance in October and the Board took
decisive action as outlined in the CEO's report. These actions have
helped to deliver an improvement in trading.
In 2017, following the strategic decision to focus on business
information and specialist consultancies, we sold our Home Interest
segment and bought MarketMakers. Due to the disposal of the Home
Interest segment, we were required to disclose this as a
discontinued operation. Therefore, our adjusted(2) operating profit
reported in 2017 of GBP4.1m excluded profits generated by the Home
Interest segment and only included MarketMakers profits from the
date of acquisition. For 2018, we report adjusted(2) operated
profit of GBP5.2m for 2018, an increase of 27% against the reported
2017 result.
I am also pleased to report year on year adjusted(2) operating
profit growth of 18% on an underlying(1) and continuing basis.
Underlying(1) 2017 results include a full year of MarketMakers'
profits but exclude any profits generated by Corporate Advisor
which was disposed of in 2017 and the biennial AMS event.
Reported turnover of GBP70.5m represents an increase of 9.0% on
2017's reported turnover (1.6% decline on an underlying(1) basis).
Underlying(1) revenue is down slightly due to the delays arising
from moving Econsultancy to its new technology platform as detailed
in the CEO report. However, we are pleased that the quality of
revenue overall has improved as we continue to move to a higher
subscription, recurring-revenue base that is less dependent on
volatile advertising revenue.
Adjusted(2) operating profit margin is 7.4% (2017: 6.3%
excluding Home Interest) against 6.2% in 2017 on an underlying(1)
basis.
As we announced in October 2018 alongside a profits warning, we
have undertaken a strategic review and are now exploring the sale
of the professional services and financial services portfolios. At
the end of 2018, the actual sale of these portfolios was not
probable enough to recognise them as assets held for sale. They are
therefore reported as part of continuing operations in this
financial information.
Non-statutory measures
In these results we refer to 'adjusted' and 'statutory' results,
as well as other non-GAAP performance measures. Adjusted(2) 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. Adjusted(2) results exclude
adjusting items as set out in the statement of consolidated income
below, with further details given in notes 1(b) and 4 of the
financial information. In addition, the Group also measures and
presents performance in relation to various other non-GAAP
measures, such as underlying(1) revenue growth, adjusted(2)
operating profit, adjusted operating cash flow(3) , adjusted(2)
EBITDA and net debt(5) .
Adjusted(2) 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 information.
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 profit(2) as follows:
2018 2017
Note GBPm GBPm
------------------------------------------- ---- ------ -----
Statutory loss before tax (14.2) (0.7)
Adjusting items
Impairment of goodwill 10 13.1 -
Amortisation of acquired intangible assets 11 2.8 2.5
Share-based payments 25 0.8 0.5
Earn-out consideration 14 - 0.6
Acquisition related costs 14 - 0.6
Exceptional operating costs 4 2.5 0.2
------------------------------------------- ---- ------ -----
Adjusted(2) profit before tax 5.0 3.7
Adjusted(2) finance costs 6 0.2 0.4
------------------------------------------- ---- ------ -----
Adjusted(2) operating profit 5.2 4.1
------------------------------------------- ---- ------ -----
Summary
Detailed commentary on revenues and operating results is set out
within the CEO's Review.
MarketMakers continued to perform well in 2018, reporting
revenue growth of 3%, with particularly strong growth within its
Really B2B brand (17% growth). During 2018, our Group revenue mix
improved in terms of higher quality, more recurring revenues. 48%
of revenues are now recurring, up from 44% in 2017 and 36% in 2016.
This is driven by the strategic choice to reduce exposure to the
B2C arena, hence our Home Interest disposal in 2017, and the
decision to focus on non-advertising revenues, offset by growth in
marketing services and business analytics and training.
The Group continues to be cash positive with GBP0.1m of net cash
at the end of 2018 (2017: GBP4.1m).
Adjusted operating cash(3) generation was good in the year.
However, our reported cash conversion(4) rate fell to 85% (2017:
138%). This was due to a number of non-cash items that have been
reported in adjusted operating profit, primarily the recognition of
an expected rent rebate due to be paid to the Company in March
2020. When adjusting for these items, cash conversion is 99%. The
movement of the ratio towards 100% is as expected due to the Group
having completed the collection of old outstanding debts following
the well-documented cash collection issues of 2016. We have
maintained tight control over costs.
Following the work undertaken to prepare for the potential
divestment of our professional services and financial services
businesses, we have reviewed our goodwill across the Group and
consequently we have recognised a goodwill impairment of GBP13.1m
to which reference was made above. This primarily relates to events
to be closed and other businesses within the marketing
portfolio.
I am pleased to report the Group's working capital generation is
now at levels that would be considered normal following the billing
and related cash collection issues highlighted in our 2016 Annual
Report. Nonetheless, the overall level of cash has declined year on
year by GBP4.0m following the Group's failure to meet earlier
profit targets as outlined above. However, combined with the lower
than hoped for operating profit in the year, this means the Group
this year has not generated enough free cash. The dividend policy
will therefore be kept under review.
Revenues
Revenues in 2018 were GBP70.5m (2017: GBP64.7m). On an
underlying(1) operations basis, revenue is down 1.6% on 2017. The
underlying(1) operations basis excludes the biennial show, AMS,
Corporate Advisor, which was sold in 2017, and brings in a whole
year of revenue from MarketMakers as if acquired on 1 January 2017
rather than on 2 August 2017.
MarketMakers saw underlying(1) revenue growth of 3%, but as
already noted, Econsultancy failed to win some large contracts in
the US and suffered in the UK due to the delay in the rollout of
its new scalable technology platform.
Adjusted Operating Profit
Adjusted(2) operating profit for the year was GBP5.2m (2017:
GBP4.1m), a reported growth of 27%. On an underlying basis(1) , the
growth is 18%.
Net adjusted(2) operating expenses were GBP66.1m, (2017:
GBP61.3m) reflecting a full year of ownership of MarketMakers.
Adjusted(2) employee related expenses were GBP36.9m, (2017
GBP30.9m), again as a result of a full year's ownership of
MarketMakers, and the average number of permanent employees was 758
(2017: 589).
Reported operating losses of GBP14.0m (2017: GBP0.3m) were
impacted by the adjusting items detailed below.
Adjusting items
The Directors believe that adjusted(2) results and adjusted(2)
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 adjusted(2) basis internally.
Details of the Group's accounting policy in relation to adjusting
items are shown in note 1(b) of the financial information.
Adjusting items generated a loss before tax of GBP19.2m (2017:
GBP4.4m). The largest adjusting item of GBP13.1m primarily relates
to the impairment of goodwill primarily relating to events to be
closed and other businesses within the marketing portfolio.
Exceptional costs also included GBP0.7m relating to an internal
restructure to prepare the Group for the disposal of non-marketing
businesses and to focus on XEIM (Marketing). Some costs were also
incurred in closing our Singapore office. Our Singapore operations
are now supported locally by agents based in the country.
Other adjusting items include amortisation of acquired
intangible assets of GBP2.8m (2017: GBP2.5m) which has increased in
the year following the acquisition of MarketMakers in July 2017. A
share-based payment charge of GBP0.8m was also recognised (2017:
GBP0.5m).
Further analysis on these adjusting items is included in the
Basis of Preparation section of note 1(b) and note 4 of the
financial information.
Net finance costs
Net finance costs were GBP0.2m (2017: GBP0.4m). The reduction in
cost was a result of the Group having increased levels of cash
following the disposal of the Home Interest portfolio in 2017. A
significant portion of the remaining costs are a result of the
commitment fee payable for the revolving credit facility.
Taxation
A tax charge of GBP0.1m (2017: GBP0.4m) has been recognised on
continuing operations for the year. The adjusted(2) tax charge was
GBP1.0m (2017: GBP0.9m) giving an adjusted(2) effective tax rate
(compared to adjusted(2) profit before tax) of 20.0% (2017: 25.3%).
The Company's profits were taxed in the UK at a blended rate of
19.00% (2017: 19.25%). On a reported basis, the effective tax rate
of nil% (2017: 50.5%). See note 7 for a reconciliation between the
statutory and reported tax charge.
Share Based Payments
Share based payments in 2018 increased by GBP0.3m to GBP0.8m.
The total number of share options increased during 2018 compared to
2017 resulting in a higher share based payment charge for the year.
The increase in share options was due to a new issue during the
year and a high number of forfeited options in previous years as
people left the business and forfeited their options on schemes
that ran to the end of 2017.
(Losses)/Earnings per Share
The Group has delivered adjusted(2) diluted earnings per share
for the year of 2.6p (2017: 3.2p). Diluted (losses)/earnings per
share for the year were (9.2p) (2017: 14.3p). Full details of the
earnings per share calculations can be found in note 9 of the
financial information.
Dividend
An interim dividend of 1.5p per share was paid in respect of the
period January to June 2018 (January to June 2017: 1.5p). A final
dividend in respect of the period July to December 2018 of 1.5p per
share (July to December 2017: 1.5p) is proposed by the Directors,
giving a total dividend for the year ended 31 December 2018 of 3p
(2017: 3.0p), in line with 2017.
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 24 May 2019 to all ordinary shareholders
on the register at close of business on 10 May 2019.
Adjusted(2) dividend cover in the year was 1.2 times (2017: 1.2
times). The future dividend policy will be subject to the progress
of the simplification strategy.
Cash Flow
As set out below, the Group has remained cash positive with
closing net cash of GBP0.1m at the end of 2018 (2017: GBP4.1m). The
rate of cash conversion(4) has remained good at 85% (2017: 138%).
When taking into account and adjusting for a number of non-cash
items that have been reported in adjusted operating profit,
primarily the recognition of an expected rent rebate due to be paid
to the Company in March 2020, cash conversion is 99%.
Cash has fallen year-on-year following the relative
under-performance of the Group against the last year and initial
targets. Combined with a normal level of working capital
generation, the Group has not generated enough free cash this year
to deliver a sustainable dividend cover and The future dividend
policy will be subject to the progress of the simplification
strategy.
2018 2017
GBPm GBPm
------------------------------------------ ------ -------
Adjusted operating profit(2) 5.2 6.6
------ -------
Depreciation and amortisation 3.7 3.6
------ -------
Movement in working capital (1.3) 3.9
------ -------
Adjusted operating cash flow(3) 7.6 14.1
------ -------
Capital expenditure (2.8) (2.8)
------ -------
Cash impact of adjusting items (0.8) (0.2)
------ -------
Taxation (1.2) (1.6)
------ -------
Interest and finance leases (0.4) (0.3)
------ -------
Loan arrangement fees (0.2) -
------ -------
Other - (0.1)
------ -------
Free cash flow 2.2 9.1
------ -------
Repayment of loan notes - -
------ -------
Acquisitions (1.8) (14.4)
------ -------
Disposal of subsidiaries 0.3 27.9
------ -------
Share repurchases (0.4) (0.1)
------ -------
Dividends paid to Company's shareholders (4.3) (4.3)
------ -------
Increase/(decrease) in net
cash/(debt)(5) (4.0) 18.2
------ -------
Opening net cash/(debt)(5) 4.1 (14.1)
------ -------
Closing net cash/(debt)(5) 0.1 4.1
------------------------------------------ ------ -------
Adjusted operating cash flow(3) is not a measure defined by
IFRS. Centaur defines adjusted operating cashflow(3) 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 flow(3) is shown
in note 1(b) of the financial information. The cash impact of
adjusting items primarily relates to exceptional restructuring
costs in both years.
New accounting standards
IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from
contracts with customers' have been adopted for the current
reporting period.
The adoption of IFRS 15 has not materially impacted the value,
phasing, or recognition of revenue at a Group or segmental
level.
IFRS 9 predominantly impacts the way our provision for
impairment of trade receivables is calculated. The provision now
represents an 'expected credit loss' which is calculated based on
actual historic default rates. Under IFRS 9, 2017's expected credit
loss would have been GBP1.6m (actual under IAS 39 was GBP1.5m). In
2018 the expected credit loss is GBP1.2m. The reduction in the
provision is a reflection of longer history of consistently better
cash collection and not an impact from the adoption of IFRS 9.
Effective for the first time for the financial year beginning 1
January 2019, but not yet adopted by the Group, is IFRS 16
'Leases'. An impact assessment has been performed which indicated
the operating lease arrangements we currently hold regarding the
properties from which we operate will, from the effective date, be
treated as finance leases and an asset and liability will be
recognised in respect of these.
For further details of IFRS's 9, 15 and 16 please see Note 1 of
the financial information.
Acquisitions
A payment of GBP1.8m was made in the year relating to the
MarketMakers' earnout. Further details can be found in note 14 of
the financial information.
Financing and Bank Covenants
On 26 November 2018, the Group agreed an amendment and extension
of the existing revolving credit facility which had been signed in
2015. The initial period of the extension is three years until
November 2021 with the option to extend by two further single years
subject to bank approval.
The principal financial covenants under the facility are: the
ratio of net debt(5) to adjusted EBITDA(2) 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 during
the year and has currently not drawn down any of its GBP25m banking
facilities. We are pleased to report that, despite the key
financial covenants remaining the same, margins payable on any
borrowings were reduced significantly providing an on-going
financial benefit to the Group.
Disposal of the Home Interest Segment
A small gain of GBP100k was recognised in discontinued
operations in the year on the disposal of the Home Interest segment
in 2017, primarily due to the final agreement of working capital
adjustments with Future plc in April 2018.
Balance Sheet
A summary of the Group's balance sheet as at 31 December 2018
and 2017 is set out below:
2018 2017
GBPm GBPm
------- -------
Goodwill and other
intangible assets 78.1 94.2
------- -------
Property, plant and
equipment 1.3 1.7
------- -------
Deferred income (15.0) (14.6)
------- -------
Other current assets
and liabilities 1.9 0.2
------- -------
Deferred Taxation 0.3 (0.7)
------- -------
Net assets before
net cash 66.6 80.8
------- -------
Net cash 0.1 4.1
------- -------
Net assets 66.7 84.9
------- -------
The main movement in the Group's balance sheet relates to the
GBP16.1m decrease in goodwill and other intangible assets. This is
primarily a result of the specific goodwill impairments of GBP13.1m
referred to earlier in my report. It is also due to GBP2.8m of
amortisation of acquired intangibles.
Other current assets and liabilities have increased primarily
due to a decrease in provisions of GBP1.8m driven by the settlement
of deferred consideration for the acquisition of MarketMakers.
Further details of this can be found in note 23.
Net cash has remained positive despite investing cashflows of
GBP4.3m relating to system developments and earnout payments for
MarketMakers.
Conclusion
Despite the disappointment of a profits warning in October, 2018
saw a satisfactory performance as we continue our journey to
advise, inform and connect business professionals and help them
accelerate their business performance. Although some of our digital
developments took longer than intended to launch in this
transitional year, our new digital platforms that were launched for
Econsultancy, Influencer Intelligence and The Lawyer are already
showing promising growth. The Group continues to reduce its
reliance on print and advertising as it replaces those revenue
sources with more reliable, repeatable revenue streams, including
subscription based digital solutions.
Having made the strategic decision to concentrate on our
marketing portfolio, XEIM, and explore the disposal of
non-marketing businesses, the next twelve months offer an exciting
time for the business as it becomes more streamlined and focused on
delivering client solutions and growing its premium, digital
products.
Risk Management
Risk management approach
The Board has overall responsibility for the effectiveness of
the Group's system of risk management and internal controls and
these are regularly monitored by the Audit Committee.
Details of the activities of the Audit Committee in this
financial year can be found in the Audit Committee Report on pages
47 to 52.
The Executive Committee is responsible for identifying, managing
and monitoring material and emerging risks in each area of the
business and for regularly reviewing and updating the risk
register, as well as reporting to the Audit Committee in relation
to risks, mitigations and controls. As the Group operates
principally from one office and with relatively short management
reporting lines, members of the Executive Committee are closely
involved in day-to-day matters and are able to identify areas of
increasing risk quickly and respond accordingly. The responsibility
for each risk identified is assigned to a member of the Executive
Committee. The Audit Committee considers risk management and
controls regularly and the Board formally considers risks to the
Group's strategy and plans as well as the risk management process
as part of its strategic review.
The risk register is the core element of the Group's risk
management process. The register is maintained by the Company
Secretary with input from the Executive Committee. The Executive
Committee initially identifies the material risks and emerging
risks facing the Group and then collectively assesses the severity
of each risk (by ranking both the likelihood its occurrence and its
potential impact on the business) and the related mitigating
controls.
As part of its risk management processes, the Board considers
both strategic and operational risks, as well as its risk appetite
in terms of the tolerance level it is willing to accept in relation
to each principal risk, which is recorded in the Company's risk
register. This approach recognises that risk cannot always be
eliminated at an acceptable cost and that there are some risks
which the Board will, after due and careful consideration, choose
to accept. The Group's risk register, its method of preparation and
the operation of the key controls in the Group's system of internal
control are regularly reviewed and overseen by the Audit Committee
with reference to the Group's strategic aims and its operating
environment. The register is also reviewed and considered by the
Board.
As part of the ongoing enhancement of the Group's risk
monitoring activities, we reviewed and updated the procedures by
which we evaluate principal risks and uncertainties during the
year.
Principal risks
The Group's risk register currently includes operational and
strategic risks. The principal risks faced by the Group in 2018,
taken from the register, together with the potential effects and
mitigating factors, are set out below. The Directors confirm that
they have undertaken a robust assessment of the principal risks
facing the Group. Financial risks are shown in note 28 to the
financial information.
rank risk description of risk and risk mitigation/control movement in risk
impact procedure
---- -------------------------- -------------------------- --------------------------- ---------------------------
1 Failure to manage change Centaur's success As the business continues The Board considers this
effectively exacerbates depends in large part to evolve we regularly risk to have increased
difficulties in recruiting on its ability to review measures aimed at since 2018.
and retaining recruit, motivate and improving our ability Risk increased
staff and leads to loss of retain highly to recruit and retain
key senior staff. This is experienced and employees and to track
relevant to London, New qualified employees in employee engagement.
York and Portsmouth. the face of often Monthly "check-ins"
intense competition facilitate more regular
Failure to implement the from other companies; discussion about personal
simplification programme. especially true of and career development
London and New York. opportunities between
Whilst failure to employees and line
manage change managers.
effectively is a Weekly "check-ins" via the
continuing risk, in Motivii app ensure we have
2019 it may be a weekly "mood" of the
exacerbated business and
by: an understanding of any key
a) the simplification risks or challenges.
programme; Key senior leaders have had
b) the formation of their reward packages
the XEIM group; and reviewed and, where
c) the reduction of appropriate, increased
overheads. notice periods and
Investment in restrictive covenants have
training, development been introduced.
and pay awards needs A talent review takes place
to be compelling. annually to ensure flight
Implementing a working risks and training needs
environment that are identified;
allows for agile and these too become the focus
remote delivery is for pay, reward and
necessary development areas (such as
to keep the how the Government
"millennial" workforce apprenticeship training
engaged. levy is used).
High staff churn (a All London based staff
challenge for all continue to be paid at or
media and events above the London Living
companies) affect Wage.
budget, productivity We have overhauled our
and continuity for recruitment process
customers. including exit interviews
Developing the 2022 for all leavers to resolve
business strategy and areas of concern.
changes required in
skill set and culture
are challenging
and costly.
---- -------------------------- -------------------------- --------------------------- ---------------------------
2 Fraudulent or accidental A serious occurrence of a Appropriate IT security is The Board considers this
breach of our security, or loss, theft or misuse of undertaken for all key risk to be broadly the same
ineffective operation of personal data or sensitive processes to keep the IT as the prior year.
IT and data management or confidential environment safe. Risk unchanged
systems leads to loss, information could result Websites are hosted by
theft or misuse of in reputational damage, a specialist third-party
personal data or breach of data protection providers who provide
confidential information requirements warranties relating to
or other or direct financial security standards.
breach of data protection impact. See The General All of our websites have
requirements. Data Protection Regulation been migrated onto a new
('GDPR') below. and more secure platform
Centaur collects and which is cloud
processes personal data hosted and databases have
and confidential been cleansed and upgraded
information from some of during 2018.
its External access to data is
customers, users and other protected and staff are
third parties. instructed to password
protect or encrypt
where appropriate.
The Director of Data and
Analytics ensures that
rigorous controls are in
place to ensure that
warehouse data can only be
downloaded by the data
team. Integration of the
warehouse with
current databases and data
captured and stored
elsewhere is ongoing.
Centaur has a business
continuity plan which
includes its IT systems and
there is daily, overnight
back-up of data, stored
off-site.
Please see below for
specifics relating to GDPR
compliance/data.
In the first half of 2018
Centaur implemented a
number of security
improvements to better
protect and monitor its
network, systems and data.
---- -------------------------- -------------------------- ---------------------------
3 Regulatory; GDPR. The General Data Wiggin LLP provided The Board considers this
Stricter requirements Protection Regulation legal advice on what risk to be broadly the same
regarding how Centaur ('GDPR'), which is the changes were required as the prior year.
handles personal data, data protection law that in order for Centaur to Risk unchanged
including that of came comply
customers into force in May 2018, with GDPR. The measures
and the risk of a fine involves much stricter taken included:
from the ICO, third party requirements for Centaur updating the marketing
claims (e.g. from regarding its handling permissions on our
customers) as well as of personal data. websites and event
reputational This includes: registration pages to
damage if we do not customers and employees ensure
comply. having greater rights on language is specific/
how we use their data unambiguous
Centaur having to provide updating our
specific information to unsubscribe process
our customers on how we improving our data
use their personal complaints procedures
data improving our
stricter rules around how procedures for removing
we conduct our direct individuals from
marketing activities databases where details
personal data being kept are inaccurate/
more securely; time and not needed
access updating our standard
new contracts put in place terms and conditions
between us and suppliers across all products
that handle our data updating our privacy
new rules about notifying and cookies policy and
the ICO in the event of a website terms and
breach of GDPR conditions
a shorter time period for amending our contract
responding to "subject with suppliers who
access requests "from provide us with
customers and employees personal data (i.e.
a requirement to lists) or who
demonstrate how we comply handle data on our
with GDPR, which means behalf.
more onerous internal In 2019 PECR's (Privacy
record-keeping and Electronic
obligations Communications
a requirement to carry out Regulations)
data impact assessments implementation will
for new types of personal increase
data processing audience and customer
undertaken compliance.
a requirement to keep
under review the need for
a Data Protection Officer
in the event of a serious
breach of the GDPR,
Centaur could be subject
to a significant fine
from the regulator (the
ICO) and claims from third
parties including
customers as well as
reputational damage.
the maximum fine for
breach of GDPR is much
higher than fines under
the old UK data protection
legislation.
---- -------------------------- -------------------------- --------------------------- ---------------------------
4 Serious systems failure Centaur relies on its IT Centaur has invested The Board considers this
(affecting core systems network to conduct its significantly in its IT risk to be broadly the same
and multiple products or operations. The IT network systems and several key as for the prior year.
functions) or breach is at risk of a IT system upgrades took Risk unchanged
of IT network security (as serious systems failure or place during 2017;
a result of a deliberate breach of its security the ongoing development
cyber-attack or controls. This could of CRM (PCI compliance)
unintentional event). result from deliberate and finance systems
cyber-attacks or introduced in 2015.
unintentional events and IT system improvements
may include third parties in 2017 and 2018,
gaining unauthorised following completion of
access an external audit of
to Centaur's IT network the
and systems resulting in security of our main IT
misappropriation of its infrastructure carried
financial assets, out by a specialist
proprietary or sensitive third party provider
information, corruption of i.e.
data, or operational Microsoft security
disruption, such against Ransomware
as unavailability of our attacks
websites and our digital where services are
products to users or outsourced to
unavailability of support suppliers, contingency
platforms. planning is carried out
If Centaur suffers serious to mitigate
cyber-attacks, whether by risk of supplier
a third party or insider, failure.
any operational Lockton's have advised
disruption may directly us in relation to
affect our revenues or additional cover that
collection activities. is appropriate to
Centaur may incur insure against
significant costs and a serious failure of IT
suffer other negative network security
consequences, such as controls.
remediation Migration of Econ to
costs (including liability our secure platform
for stolen assets or Wordpress in 2018 has
information, and repair of been completed.
any damage caused Our policies were
to Centaur's IT network upgraded in Q1 2018 to
infrastructure and further ensure our
systems). Centaur may also staff are clear and
suffer reputational accountable
damage and loss of for their IT
investor confidence compliance.
resulting from any In the first half of
operational disruption. 2018 Centaur also
implemented a number of
security improvements
to better
protect and monitor our
network, systems and
data.
---- -------------------------- -------------------------- --------------------------- ---------------------------
5 Trends in advertising and Print advertising revenues Our Business Plans take The Board considers this
direct sales of our print and direct sales of our into account the market risk to be broadly the same
products result in print products continued shrinkage and where as for the prior year.
declining revenues to decline during appropriate print products Risk unchanged
from these sources. 2018. The non-print media are being replaced. Our
sector has high levels of strategy includes
competition from a wider identifying the type of
group and low content our audiences want
barriers to entry. This and how they want to
leads to different consume the content,
pressures on audience and meaning that we are not
customer retention as simply putting print
well as pricing. products
This risk has remained online to try to replace
since the 2018 reporting diminishing print revenues
period due to volatility for traditional brands.
in advertising spend Centaur has been
across our print products. actively reducing the
The uncertainty following Company's exposure to print
the EU referendum result advertising and has
in specific significantly increased
markets including revenues from digital
financial services paid-for content.
continued throughout 2016, We continue to monitor the
2017 and 2018 and is decline in our print
expected products while at the same
until firm plans for the time investing
UK's exit from the EU are in developing our digital
established by the UK capability and ability to
Government. scale cross-media marketing
solutions.
In addition to a new,
flexible web platform we
are developing new revenue
streams from products,
such as the Marketing Week
Mini MBA, which are
exclusively digital and
derive no revenue from
print.
We support our product
innovation, by hiring
people with experiences and
skills in new areas
of the market where
appropriate. The role of
our Executive Committee
includes anticipating
future changes in the
market and ensuring that
our business reacts or
accelerates our plans
accordingly.
However spend cannot be
assumed to flow directly to
replacement products and
therefore volatility
on advertising in our core
sectors remain a risk
factor.
---- -------------------------- -------------------------- --------------------------- ---------------------------
Viability statement
In accordance with provision C.2.2 of the UK Corporate
Governance Code April 2016, the Directors have assessed the
viability of the Group over a three-year period to December 2021,
taking account of the Group's current position, the Group's
strategy, the Board's risk appetite and, as documented above, the
principal risks facing the Group and how these are managed. Based
on the results of this analysis, the Directors have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period to
December 2021.
The Board has determined that the three-year period to December
2021 is an appropriate period over which to provide its viability
statement because the Board's financial planning horizon covers a
three-year period. In making their assessment, the Directors have
taken account of the Group's existing financing arrangements to
2021 (which allows extensions to 2023 on similar terms), cash
flows, dividend cover and other key financial ratios over the
period. These metrics are subject to stress testing which involves
sensitising a number of the main assumptions underlying the
forecasts both individually and in unison. The assumptions
sensitised include forecasted EBITDA, cash conversion(4) and
capital expenditure. Where appropriate, this analysis is carried
out to evaluate the potential impact of the Group's principal risks
actually occurring, such as print and advertising revenues
continuing to shrink, staff attrition, UK economic conditions and
replication of products by competitors. Sensitising the model for
changes in the assumptions and risks affirmed that the Group would
remain viable over the three-year period to 2021.
Going concern basis of accounting
In accordance with provision C.1.3 of the UK Corporate
Governance Code April 2016, the Directors' statement as to whether
they consider it appropriate to adopt the going concern basis of
accounting in preparing the financial statements and their
identification of any material uncertainties to the Group's ability
to continue to do so over a period of at least twelve months from
the date of approval of the financial information and for the
foreseeable future can be found on page 41.
Statement of directors' responsibilities in respect of the
financial statements
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and company financial statements in accordance
with International Financial Reporting Standards (IFRSs) as adopted
by the European Union. Under company law the directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the group
and company and of the profit or loss of the group and company for
that period. In preparing the financial statements, the directors
are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable IFRSs as adopted by the European
Union have been followed for the group financial statements and
IFRSs as adopted by the European Union have been followed for the
company financial statements, subject to any material departures
disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and company
will continue in business.
The directors are also responsible for safeguarding the assets
of the group and company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group and
company's transactions and disclose with reasonable accuracy at any
time the financial position of the group and company and enable
them to ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006 and, as
regards the group financial statements, Article 4 of the IAS
Regulation.
The directors are responsible for the maintenance and integrity
of the company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors' confirmations
The directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the group and
company's position and performance, business model and
strategy.
Each of the directors, whose names and functions are listed in
the Board of Directors on pages 36 and 37 confirm that, to the best
of their knowledge:
-- the company financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
loss of the company;
-- the group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
loss of the group; and
-- the Directors' Report includes a fair review of the
development and performance of the business and the position of the
group and company, together with a description of the principal
risks and uncertainties that it faces.
In the case of each director in office at the date the
Directors' Report is approved:
-- so far as the director is aware, there is no relevant audit
information of which the group and company's auditors are unaware;
and
-- they have taken all the steps that they ought to have taken
as a director in order to make themselves aware of any relevant
audit information and to establish that the group and company's
auditors are aware of that information.
Consolidated statement of comprehensive income for the year
ended 31 December 2018
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
Results(2) Items(2) Results Results(2) Items(2) Results
2018 2018 2018 2017 2017 2017
Note GBPm GBPm GBPm GBPm GBPm GBPm
Continuing operations
Revenue (restated) 2 70.5 - 70.5 64.7 - 64.7
Other operating income 0.8 - 0.8 0.7 - 0.7
Net operating expenses 3 (66.1) (19.2) (85.3) (61.3) (4.4) (65.7)
----------- ---------- ----------
Operating profit
/ (loss) 5.2 (19.2) (14.0) 4.1 (4.4) (0.3)
Finance costs 6 (0.2) - (0.2) (0.4) - (0.4)
----------- ---------- ----------
Profit / (loss) before
tax 5.0 (19.2) (14.2) 3.7 (4.4) (0.7)
Taxation 7 (1.0) 0.9 (0.1) (0.9) 0.5 (0.4)
----------- ---------- ----------
Profit / (loss) for
the year from continuing
operations 9 4.0 (18.3) (14.3) 2.8 (3.9) (1.1)
Discontinued operations
Profit for the
year from discontinued
operations 8,15 - 0.1 0.1 2.1 20.9 23.0
Profit / (loss) for
the year attributable
to owners of the
parent after tax 4.0 (18.2) (14.2) 4.9 17.0 21.9
Total comprehensive
income / (loss) attributable
to owners of the
parent 4.0 (18.2) (14.2) 4.9 17.0 21.9
Earnings / (loss)
per
share attributable
to owners of the
parent 9
Basic from continuing
operations 2.8p (12.7p) (9.9p) 1.9p (2.7p) (0.8p)
Basic from discontinued
operations - - - 1.5p 14.5p 16.0p
--------------------------------------- ----------- ---------- ----------
Basic from profit
/ (loss) for the
year 2.8p (12.7p) (9.9p) 3.4p 11.8p 15.2p
-------------------------------- ----- ----------- ---------- ---------- ----------- ---------- ----------
Consolidated statement of changes in equity for the year ended
31 December 2018
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 2017 15.1 (6.4) 1.1 0.8 0.1 56.4 67.1
Profit for the year and total comprehensive
income - - - - - 21.9 21.9
Transactions with owners in their capacity
as owners:
Dividends (note 26) - - - - - (4.3) (4.3)
Acquisition of treasury shares
(note 24) - (0.1) - - - - (0.1)
Acquisition of business and assets (note 14) - - - (0.1) - - (0.1)
Fair value of employee services (note 25) - - - 0.4 - - 0.4
--------------------------------------------- -------- ------- -------- ----------- --------- --------- -------
As at 31 December 2017 15.1 (6.5) 1.1 1.1 0.1 74.0 84.9
--------------------------------------------- -------- ------- -------- ----------- --------- --------- -------
Loss for the year and total comprehensive
loss - - - - - (14.2) (14.2)
Transactions with owners in their capacity
as owners:
Dividends (note 26) - - - - - (4.3) (4.3)
Acquisition of treasury shares
(note 24) - (0.4) - - - - (0.4)
Fair value of employee services (note 25) - - - 0.7 - - 0.7
--------------------------------------------- -------- ------- -------- ----------- --------- --------- -------
As at 31 December 2018 15.1 (6.9) 1.1 1.8 0.1 55.5 66.7
--------------------------------------------- -------- ------- -------- ----------- --------- --------- -------
Company statement of changes in equity for the year ended 31
December 2018
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 2017 15.1 (6.2) 1.1 0.8 0.1 88.8 99.7
Loss for the year and total comprehensive
loss - - - - - (2.9) (2.9)
Transactions with owners in their capacity
as owners:
Dividends (note 26) - - - - - (4.3) (4.3)
Acquisition of treasury shares
(note 24) - (0.1) - - - - (0.1)
Acquisition of business and assets (note 14) - - - (0.1) - - (0.1)
Exercise of share awards - - - - - (0.2) (0.2)
Fair value of employee services (note 25) - - - 0.4 - - 0.4
--------------------------------------------- -------- ------- -------- ----------- --------- --------- -------
As at 31 December 2017 15.1 (6.3) 1.1 1.1 0.1 81.4 92.5
--------------------------------------------- -------- ------- -------- ----------- --------- --------- -------
Loss for the year and total comprehensive
loss - - - - - (13.7) (13.7)
Transactions with owners in their capacity
as owners:
Dividends (note 26) - - - - - (4.3) (4.3)
Fair value of employee services (note 25) - - - 0.7 - - 0.7
--------------------------------------------- -------- ------- -------- ----------- --------- --------- -------
As at 31 December 2018 15.1 (6.3) 1.1 1.8 0.1 63.4 75.2
--------------------------------------------- -------- ------- -------- ----------- --------- --------- -------
Consolidated statement of financial position as at 31 December
2018
Registered number 04948078
31 December 31 December
2018 2017
Note GBPm GBPm
Non-current assets
Goodwill 10 62.6 75.6
Other intangible assets 11 15.5 18.6
Property, plant and equipment 12 1.3 1.7
Deferred tax assets 16 0.8 0.7
80.2 96.6
--------------------------------------------- ----- ---------------- ------------
Current assets
Inventories 17 1.4 1.4
Trade and other receivables 18 12.9 11.6
Cash and cash equivalents 19 0.1 4.1
Current tax asset 22 0.2 -
14.6 17.1
--------------------------------------------- ----- ---------------- ------------
Total assets 94.8 113.7
--------------------------------------------- ----- ---------------- ------------
Current liabilities
Trade and other payables 20 (12.4) (10.9)
Deferred income 21 (15.0) (14.6)
Provisions 23 (0.1) (1.8)
(27.5) (27.3)
--------------------------------------------- ----- ---------------- ------------
Net current liabilities (12.9) (10.2)
--------------------------------------------- ----- ---------------- ------------
Non-current liabilities
Provisions 23 (0.1) (0.1)
Deferred tax liabilities 16 (0.5) (1.4)
(0.6) (1.5)
--------------------------------------------- ----- ---------------- ------------
Net assets 66.7 84.9
--------------------------------------------- ----- ---------------- ------------
Capital and reserves attributable to owners
of the parent
Share capital 24 15.1 15.1
Own shares (6.9) (6.5)
Share premium 1.1 1.1
Other reserves 1.9 1.2
Retained earnings 55.5 74.0
--------------------------------------------- ----- ---------------- ------------
Total equity 66.7 84.9
--------------------------------------------- ----- ---------------- ------------
Company statement of financial position as at 31 December
2018
Registered number 04948078
31 December 31 December
2018 2017
Note GBPm GBPm
Non-current assets
Investments 13 125.8 134.0
Deferred income tax assets 0.1 -
125.9 134.0
--------------------------------------------- ----- ------------ ------------
Current assets
Trade and other receivables 18 3.1 3.0
Cash and cash equivalents 19 - -
--------------------------------------------- ----- ------------ ------------
3.1 3.0
--------------------------------------------- ----- ------------ ------------
Total assets 129.0 137.0
--------------------------------------------- ----- ------------ ------------
Current liabilities
Trade and other payables 20 (53.8) (44.5)
(53.8) (44.5)
--------------------------------------------- ----- ------------ ------------
Net current liabilities (50.7) (41.5)
--------------------------------------------- ----- ------------ ------------
Non-current liabilities
- -
--------------------------------------------- ----- ------------ ------------
Net assets 75.2 92.5
--------------------------------------------- ----- ------------ ------------
Capital and reserves attributable to owners
of the parent
Share capital 24 15.1 15.1
Own shares (6.3) (6.3)
Share premium 1.1 1.1
Other reserves 1.9 1.2
Retained earnings 63.4 81.4
--------------------------------------------- ----- ------------ ------------
Total equity 75.2 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 movement in retained earnings is the Company's loss for the
year of GBP13.7m (2017: GBP2.9m) and dividends of GBP4.3m (2017:
GBP4.3m).
Consolidated cash flow statement for the year ended 31 December
2018
Year ended Year ended
31 December 31 December
2018 2017
Note GBPm GBPm
Cash flows from operating activities
Cash generated from operations 27 6.8 13.8
Tax paid (1.2) (1.6)
Net cash generated from operating activities 5.6 12.2
---------------------------------------------- ----- ------------- -------------
Cash flows from investing activities
Other acquisitions - settlement of deferred
consideration 23 - (1.5)
Disposal of subsidiary 15 0.3 27.9
Purchase of property, plant and equipment 12 (0.5) (0.2)
Purchase of intangible assets 11 (2.3) (2.6)
Acquisition of subsidiary 14 (1.8) (12.9)
Net cash flows (used in)/generated from
investing activities (4.3) 10.7
---------------------------------------------- ----- ------------- -------------
Cash flows from financing activities
Payment for shares bought back 24 (0.4) (0.1)
Loan arrangement fees 24 (0.2) -
Interest paid 6 (0.4) (0.3)
Dividends paid to Company's shareholders 26 (4.3) (4.3)
Proceeds from borrowings 28 4.5 5.5
Repayment of borrowings 28 (4.5) (23.0)
Net cash flows used in financing activities (5.3) (22.2)
---------------------------------------------- ----- ------------- -------------
Net (decrease)/increase in cash and cash
equivalents (4.0) 0.7
---------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at beginning
of the year 4.1 3.4
---------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at end of year 19 0.1 4.1
---------------------------------------------- ----- ------------- -------------
Company cash flow statement for the year ended 31 December
2018
Year ended Year ended
31 December 31 December
2018 2017
Note GBPm GBPm
Cash flows from operating activities
--------------------------------------------- ----- ------------- -------------
Cash generated from operating activities 27 4.7 22.2
--------------------------------------------- ----- ------------- -------------
Cash flows from investing activities
Net cash flows used in investing activities - -
--------------------------------------------- ----- ------------- -------------
Cash flows from financing activities
Interest paid 6 (0.4) (0.3)
Payment for shares bought back 24 - (0.1)
Dividends paid to Company's shareholders 26 (4.3) (4.3)
Proceeds from borrowings 28 4.5 5.5
Repayment of borrowings 28 (4.5) (23.0)
Net cash flows used in financing activities (4.7) (22.2)
--------------------------------------------- ----- ------------- -------------
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 19 - -
--------------------------------------------- ----- ------------- -------------
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of
this consolidated and Company financial information are set out
below. These policies have been consistently applied to all the
periods presented, unless otherwise stated. The financial
information is for the Group consisting of Centaur Media Plc and
its subsidiaries, and the Company, Centaur Media Plc. Centaur Media
Plc is a public company limited by shares and incorporated in
England and Wales.
(a) Basis of preparation
The consolidated and Company financial information has been
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 information has been prepared on the historical cost
basis.
Going concern
The financial information has 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
this financial information and for the foreseeable future.
Net cash (see reconciliation in note 27) at 31 December 2018
amounted to GBP0.1m (2017: net cash GBP4.1m). In November 2018, the
Group renewed its GBP25m multi-currency revolving credit facility
with the Royal Bank of Scotland and Lloyds, which runs to November
2021 with the option to extend for 2 periods of 1 year each. None
of this was drawn-down at 31 December 2018. Our reported cash
conversion(4) rate fell to 85% (2017: 138%). This was due to a
number of non-cash items that have been reported in adjusted
operating profit, primarily the recognition of an expected rent
rebate due to be paid to the Company in March 2020. When adjusting
for these items, cash conversion is 99%. The movement of the ratio
towards 100% is as expected due to the Group having completed the
collection of old outstanding debts following the well-documented
cash collection issues of 2016. We have maintained tight control
over costs.
The Group has net current liabilities at 31 December 2018
amounting to GBP12.9m (2017: GBP10.2m). These 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 year, and to meet the
financial covenants under the revolving credit facility. The
Company has net current liabilities at 31 December 2018 amounting
to GBP50.7m (2017: GBP41.5m). These almost entirely arise from
unsecured payables to subsidiaries which have no fixed date of
repayment.
The preparation of financial information 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 information 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 on page 31,
the Directors consider it appropriate to adopt the going concern
basis of accounting in preparing its consolidated financial
information.
Prior period restatement
Rental income for the sub-lease of properties under lease was
presented within revenue in prior years. As rental income does not
arise from the principal activities of the business it has been
restated and presented as other operating income. The impact is a
reduction in revenue and an increase in other operating income of
GBP0.7m in 2017. There was no overall impact on the total
comprehensive income for the year.
New and amended standards adopted by the Group
The following new standards that are mandatory for the first
time for the financial year commencing 1 January 2018 have been
adopted by the Group:
IFRS 9 'Financial instruments'
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
After review of the Group's financial assets and liabilities the
results indicate that only trade receivables are impacted by the
new standard.
The new impairment model for trade receivables requires the
recognition of impairment provisions based on expected credit
losses for 12 months and lifetime expected credit losses rather
than only incurred credit losses as is the case under IAS 39. We
consider 12 month and life time losses to be equal. The results of
the application of the new impairment model indicates that there is
not a material change to the loss allowance for trade receivables.
We define a default as failure of a debtor to repay an amount due
as this is the time at which our estimate of future cash flows from
the debtor is affected.
The new standard has also been applied to all other financial
assets and liabilities, including cash and cash equivalents,
however there is no impact to the value of these assets and
liabilities.
As outlined in the FY17 Annual Report and as permitted under the
transition requirements, the Group has not restated comparatives
for 2017 as it applied the new rules retrospectively from 1 January
2018 per the practical expedients permitted under the standard.
Disclosures
Disclosures have been made in line with IFRS 9 requirements. The
accounting policy for financial instruments is set out in note 1
(s), including trade receivables (note 1 (s) (ii)). Further
disclosures on financial instruments including trade receivables
can be found in note 28.
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 revenue and
other operating income generated in the 12 months to 31 December
2018 and the results indicate that the adoption of IFRS 15 has not
had a material impact on the timing or quantum of revenue or other
operating income recognition at a Group, Company, intercompany or
at an operating segment level. The impact assessment also indicated
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.
Other operating income is solely in relation to rental income
from sub-leases, which is recognised in the period to which it
relates, therefore there is no IFRS 15 impact.
As outlined in the FY17 Annual Report, given the insignificant
impact to revenues, including other operating income, comparatives
have not been restated for the impact of IFRS 15
Disclosures
Disclosures have been made in line with IFRS 15 requirements.
The accounting policy for revenue recognition is set out in note 1
(e). Disaggregation of revenue is presented in note 2 Segmental
Reporting. Revenue has been disaggregated by revenue stream
(premium content, live events, advertising, capability services,
and other) and by geographic location. The only assets and
liabilities held on the statement of financial position relating to
contracts with customers is accrued income and deferred income
respectively.
Other
No other new standards or 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 2018 affected any of the amounts recognised in the current
year or any prior year and is not likely to affect future
periods.
New standards and interpretations not yet adopted
The following new accounting standards and interpretations have
been published that are not mandatory for 31 December 2018
reporting periods and have not been early adopted by the Group:
IFRS 16 'Leases'
IFRS 16 sets out the requirements for lessee and lessor lease
accounting. The new standard replaces IAS 17, and eliminates the
classification of leases as either operating leases or finance
leases as required by IAS 17 and instead introduces a single
accounting model for leases which requires lessees to recognised
assets and liabilities for most leases.
Impact
The Group has performed an impact assessment on its existing and
any expected upcoming lease arrangements. The Group plans to take
advantage of the 'short term lease' and 'low value items'
exemptions. The Group also plans to apply the practical expedient
on transition where only contracts that were previously identified
as leases applying IAS 17 are assessed for the purposes of IFRS 16,
however the Group does not believe that any contracts other than
those falling in scope after the practical expedient is applied
would be deemed to contain a lease arrangement under IFRS 16.
The Group will elect to apply the modified retrospective
transition approach where comparative periods are not restated, but
the cumulative impact of applying IFRS 16 is reflected as an
adjustment to the opening balance sheet at 31 December 2019.
Arrangements already constituting finance leases are not impacted
by the transition to IFRS 16. There are 3 existing operating lease
arrangements that will become finance leases on transition and 1
upcoming lease arrangement commencing in 2019 that will constitute
a finance lease under IFRS 16. The results of the impact assessment
indicates that right-of-use assets of GBP3.6m and lease liabilities
of GBP3.6m will be recognised in the opening balance sheet at
January 2019. At commencement of the new lease arrangement in
October 2019 a GBP3.5m right-of-use asset and GBP3.2m lease
liability recognised. The value of the IFRS 16 impact to the
P&L is immaterial, however the expenses will now be classified
as depreciation expense on the right-of-use asset and interest
expense on the finance liability. The 2019 expense expected
relating to all 4 of these leases is GBP2.5m depreciation and
GBP0.1m interest. There is no impact to cash flow. All leases
discussed here are property leases.
Date of adoption by the Group
For the Group, transition to IFRS 16 has taken effect from 1
January 2019. The half year results for FY19 will be IFRS 16
compliant, with the first Annual Report published in accordance
with IFRS 16 being that for the year ending 31 December 2019.
As outlined above, the Group does not plan to adopt a fully
retrospective transition approach and so comparatives 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.
Discontinued operations
Discontinued operations in the prior and current year relate to
the disposal of the Home Interest segment on 1 August 2017. See
note 8 for more details.
(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 information 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 11.
-- 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.
Details of share-based payments are shown in note 25.
-- 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. Details of the goodwill impairment
analysis are shown in note 10.
-- 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 4 and 23.
-- 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 14.
-- 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 7 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 9.
Loss before tax reconciles to adjusted operating profit as
follows:
2018 2017
Note GBPm GBPm
Loss before tax (14.2) (0.7)
Adjusting items
Impairment of goodwill 10 13.1 -
Amortisation of acquired intangible assets 11 2.8 2.5
Share-based payments 25 0.8 0.5
Earn-out consideration 4 - 0.6
Acquisition related costs 14 - 0.6
Exceptional operating costs 4 2.5 0.2
Adjusted profit before tax 5.0 3.7
Finance costs 6 0.2 0.4
Adjusted operating profit 5.2 4.1
-------------------------------------------------------- ----- ------- ------
Cash impact of adjusting items (2.5) (0.9)
-------------------------------------------------------- ----- ------- ------
Tax impact of adjusting items 7 0.9 0.5
-------------------------------------------------------- ----- ------- ------
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:
2018 2017
GBPm GBPm
Reported cash flow from operating activities 27 6.8 13.8
Cash impact of adjusting items (as above) 2.5 0.9
Working capital impact of adjusting items (1.7) (0.6)
----------------------------------------------- --- ------ ------
Adjusted operating cash flow 7.6 14.1
----------------------------------------------- --- ------ ------
Capital expenditure (2.8) (2.8)
----------------------------------------------- --- ------ ------
Post capital expenditure cash flow 4.8 11.3
----------------------------------------------- --- ------ ------
Underlying revenue growth
The Directors review underlying revenue growth in order to allow
a like for like comparison of revenues between years. 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 Professional Financial Services Total
GBPm
GBPm GBPm GBPm
Reported revenue 2017 36.0 19.9 8.8 64.7
Biennial events - AMS - (0.3) - (0.3)
Acquired business - MarketMakers 7.5 - - 7.5
Disposed business - Corporate Adviser - - (0.3) (0.3)
Underlying revenue 2017 43.5 19.6 8.5 71.6
--------------------------------------- ------------ ------------- ------------------- ------
Reported revenue 2018 42.7 19.6 8.2 70.5
Acquired business - MarketMakers - - - -
Underlying revenue 2018 42.7 19.6 8.2 70.5
--------------------------------------- ------------ ------------- ------------------- ------
Reported revenue growth 19% (2%) (7%) 9%
Underlying revenue growth (2%) - (4%) (2%)
--------------------------------------- ------------ ------------- ------------------- ------
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:
2018 2017
GBPm GBPm
Adjusted operating profit (as above) 5.2 4.1
Depreciation (note 12) 0.9 0.7
Amortisation of computer software (note
11) 2.8 2.9
------------------------------------------ ----- -----
Adjusted EBITDA 8.9 7.7
------------------------------------------ ----- -----
Net cash/(debt)
Net cash/(debt) is not a measure defined by IFRS. Net
cash/(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 27.
(c) Principles of consolidation
The consolidated financial information incorporate the financial
information of Centaur Media Plc and all of its subsidiaries after
elimination of intercompany transactions and balances.
(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.
(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 information 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 information is 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.
(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 transaction price, which is the
amount of consideration to which Centaur expects to be entitled in
exchange for transferring promised goods or services to the
customer. Revenue arises from the sales of premium content
(subscriptions and individual publications), live events,
advertising space, and capability services (project work and
consultancy) provided in the normal course of business, net of
discounts and value added tax. Revenue is reduced for customer
returns, rebates and other similar allowances.
The Group recognises revenue earned from contracts as individual
performance obligations are met, on a stand-alone selling price
basis. This is when value and control of the product or service has
transferred, being when the product is delivered to the customer or
the period in which the services are rendered as laid out
below.
Premium Content
Revenue from subscriptions is deferred and recognised on a
straight-line basis over the subscription period. Revenue from
individual publications is recognised in the year in which the
publication is provided to the customer.
Live events
Consideration received in advance for events is deferred and
revenue is recognised in the year in which the event takes
place.
Advertising
Sales of online advertising space are recognised over the period
during which the advertisements are placed. Sales of advertising
space in publications are recognised in the year in which the
publication occurs.
Capability Services
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 and
the value and benefit of the services rendered have been
transferred to the customer.
(f) Other operating income
Rental income for the sub-lease of properties under lease is
recognised on a straight-line basis over the lease term.
(g) Investments
In the Company's financial information, investments in
subsidiaries are stated at cost less provision for impairment in
value.
Investments 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 investments 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. Any impairment is recognised in the statement of
comprehensive income and not subsequently reversed.
(h) Income tax
The tax expense represents the sum of current and deferred
tax.
Current tax is based on the taxable profit for the year. 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 information 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 year 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.
(i) 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.
(j) 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.
(k) Inventories
Inventories are stated at the lower of cost and net realisable
value. Work in progress comprises costs incurred relating to
publications and exhibitions prior to the publication date or the
date of the event.
(l) 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 - 5 to 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 year with the
effect of any changes in estimate accounted for on a prospective
basis.
(m) 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.
(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 intangible 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
(n) 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.
(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 year, 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.
(o) 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.
(p) 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.
(q) Dividends
Dividends are recognised in the year 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.
(r) 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, Professional, and Financial
Services.
(s) Financial instruments
The Group has applied IFRS 9, Financial Instruments as outlined
below:
(i) Financial assets
The Group classifies and measures its financial assets in line
with one of the three measurement models under IFRS 9: at amortised
cost, fair value through profit or loss, and fair value through
other comprehensive income. Management determines the
classification of its financial assets based on the requirements of
IFRS 9 at initial recognition.
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
financial assets comprise trade and other receivables and cash and
cash equivalents in the statement of financial position. Please see
the following sections.
(ii) Trade receivables
Trade receivables are accounted for under IFRS 9 using the
expected credit loss model, recognised initially at fair value and
subsequently at amortised cost less any allowance for expected
credit losses.
The allowance for expected credit losses for trade receivables
is established by considering on a discounted basis the cash
shortfalls it would incur in various defaults scenarios for
prescribed future periods and multiplying the shortfalls by the
probability of each scenario occurring. The historical loss rates
are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of the customers to
settle the receivables. The allowance is the sum of these
probability weighted outcomes. The allowance and any changes to it
are recognised in the statement of comprehensive income within net
operating expenses. A provision matrix is used to calculate the
allowance for expected credit losses on trade receivables which is
based on historical default rates over the expected life of the
trade receivables and is adjusted for forward looking estimates.
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.
(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 information 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 information are as follows:
i) Carrying value of goodwill and other intangible assets estimate
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. A sensitivity
analysis has been performed on the value-in-calculations. Further
details of the assumptions and sensitivities in the discounted cash
flow model are included in note 10.
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 estimate
The allowance for expected credit losses for trade receivables
is calculated in line with IFRS 9. This is established by
considering on a discounted basis the cash shortfalls it would
incur in various defaults scenarios for prescribed future periods
and multiplying the shortfalls by the probability of each scenario
occurring. The historical loss rates are adjusted to reflect
current and forward-looking information on macroeconomic factors
affecting the ability of the customers to settle the receivables.
Further details about trade receivables are included in note 18 and
information about the credit risk and expected credit losses are
shown in note 28.
iii) Adjusting items judgement
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 estimate
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 4 and 23.
v) Share based payments estimate
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(n)(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(h).
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 notes 11 and 14).
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(m)(iv).
viii) Assets Held for sale
Any group of assets that are to be disposed of through sale
should be classified as held for sale where the criteria are
met.
As part of a plan to explore the divestment of selected
businesses on 25 October 2018, to accelerate the Group's activities
and structure an assessment of the held for sale criteria was
carried out at the year end.
Management have concluded that the held for sale criteria was
not met at year end as the sale of any assets was not highly
probable, assets were not being actively marketed or available for
immediate sale and the entity was not committed to a sale.
Due to the progression of the divestment plan subsequent to the
year end and before signing of the Annual Report, the held for sale
criteria were met and therefore this constitutes a non-adjusting
post balance sheet event which has been disclosed in the post
balance sheet note 33.
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. Segments derive
revenues from a combination of live events, premium content,
advertising and capability service 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.
Financial Continuing Discontinued
Marketing Professional Services operations operations Group
GBPm GBPm GBPm GBPm GBPm GBPm
2018
Revenue 42.7 19.6 8.2 70.5 - 70.5
Other operating income 0.4 0.3 0.1 0.8 - 0.8
------------------------ ------- ------------------- ----------------- ----------------- ----------------- ---------
Adjusted operating
profit (note 1 (b)) 1.7 2.3 1.2 5.2 - 5.2
Amortisation of
acquired intangibles
(note 11) (2.4) (0.2) (0.2) (2.8) - (2.8)
Goodwill impairment
(note 10) (12.8) - (0.3) (13.1) - (13.1)
Exceptional operating
costs (note 4) (0.5) (1.3) (0.7) (2.5) - (2.5)
Share-based payments
(note 25) (0.5) (0.2) (0.1) (0.8) - (0.8)
Profit on disposal of
subsidiary (note 15) - - - - 0.1 0.1
------------------------ ------- ------------------- ----------------- ----------------- ----------------- ---------
Operating (loss)/profit (14.5) 0.6 (0.1) (14.0) 0.1 (13.9)
Finance costs (note 6) (0.2) - (0.2)
------------------------ ------- ------------------- ----------------- ----------------- ----------------- ---------
(Loss) / profit before
tax (14.2) 0.1 (14.1)
Taxation (note 7) (0.1) - (0.1)
------------------------
(Loss) / profit for the
year (14.3) 0.1 (14.2)
------------------------ ------- ------------------- ----------------- ----------------- ----------------- ---------
Segment assets 57.8 28.0 7.6 93.4 - 93.4
Corporate assets 1.4
------------------------ ------- ------------------- ----------------- ----------------- ----------------- ---------
Consolidated total
assets 94.8
------------------------ ------- ------------------- ----------------- ----------------- ----------------- ---------
Segment liabilities (13.9) (10.5) (3.2) (27.6) - (27.6)
Corporate-liabilities (0.5)
Consolidated total
liabilities (28.1)
------------------------ ------- ------------------- ----------------- ----------------- ----------------- ---------
Other items
------------------------ ------- ------------------- ----------------- ----------------- ----------------- ---------
Capital expenditure
(tangible and
intangible assets) 2.3 0.6 0.1 3.0 - 3.0
------------------------ ------- ------------------- ----------------- ----------------- ----------------- ---------
Financial Continuing Discontinued
Marketing Professional Services operations operations Group
GBPm GBPm GBPm GBPm GBPm GBPm
2017
Revenue 36.0 19.9 8.8 64.7 7.2 71.9
Other operating income 0.3 0.3 0.1 0.7 - 0.7
-------------------------------- ---------- ------------- ---------- ------------ ------------- -------
Adjusted operating profit
(note 1 (b)) 1.7 1.8 0.6 4.1 2.5 6.6
Amortisation of acquired
intangibles (note 11) (2.0) (0.3) (0.2) (2.5) - (2.5)
Earn-out consideration
(note 4) (0.6) - - (0.6) - (0.6)
Costs relating to business
acquisition (note 4) (0.6) - - (0.6) - (0.6)
Exceptional operating
costs (note 4) (0.1) (0.1) - (0.2) - (0.2)
Share-based payments
(note 25) (0.3) (0.1) (0.1) (0.5) - (0.5)
Profit on disposal of
subsidiary (note 15) - - - - 20.9 20.9
-------------------------------- ---------- ------------- ---------- ------------ ------------- -------
Operating (loss)/profit (1.9) 1.3 0.3 (0.3) 23.4 23.1
Finance costs (note 6) (0.4) - (0.4)
-------------------------------- ---------- ------------- ---------- ------------ ------------- -------
(Loss) / profit before
tax (0.7) 23.4 22.7
Taxation (note 7) (0.4) (0.4) (0.8)
-------------------------------- ---------- ------------- ----------
(Loss) / profit for the
year (1.1) 23.0 21.9
-------------------------------- ---------- ------------- ---------- ------------ ------------- -------
Segment assets 71.4 28.6 8.8 108.8 - 108.8
Corporate assets 4.9
-------------------------------- ---------- ------------- ---------- ------------ ------------- -------
Consolidated total assets 113.7
-------------------------------- ---------- ------------- ---------- ------------ ------------- -------
Segment liabilities (15.3) (8.2) (2.2) (25.7) - (25.7)
Corporate-liabilities (3.1)
Consolidated total liabilities (28.8)
-------------------------------- ---------- ------------- ---------- ------------ ------------- -------
Other items
-------------------------------- ---------- ------------- ---------- ------------ ------------- -------
Capital expenditure (tangible
and intangible assets) 1.5 1.0 0.4 2.9 - 2.9
-------------------------------- ---------- ------------- ---------- ------------ ------------- -------
Supplemental Information - Revenue by Geographical Location
The Group's revenues from continuing operations from external
customers by geographical location are detailed below:
2018 2017
GBPm GBPm
United Kingdom 57.6 51.5
Europe (excluding United Kingdom) 3.7 3.5
North America 5.6 6.0
Rest of world 3.6 3.7
----------------------------------- ----- -----
70.5 64.7
----------------------------------- ----- -----
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:
2018 2017
GBPm GBPm
Sale of goods and services
Premium content 17.6 18.1
Live events 26.1 26.7
Advertising 12.6 13.5
Capability Services 14.1 6.1
Other 0.1 0.3
---------------------------- -----
70.5 64.7
---------------------------- ----- -----
3 NET OPERATING EXPENSES
Operating profit / (loss) is stated after charging:
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
Results Items Results Results Items Results
2018 2018 2018 2017 2017 2017
Note GBPm GBPm GBPm GBPm GBPm GBPm
Net foreign exchange
losses - - - 0.3 - 0.3
Employee benefits
expense 5 36.9 0.4 37.3 30.9 0.2 31.1
Depreciation of property,
plant and equipment 12 0.9 - 0.9 0.7 - 0.7
Amortisation of intangible
assets 11 2.8 2.8 5.6 2.8 2.5 5.3
Impairment of goodwill 10 - 13.1 13.1 - - -
Earn-out consideration 4 - - - - 0.6 0.6
Acquisition related
costs - - - - 0.6 0.6
Other exceptional
operating costs 4 - 2.1 2.1 - - -
Operating lease rentals 29 1.6 - 1.6 1.8 - 1.8
Repairs and maintenance
expenditure 0.1 - 0.1 0.2 - 0.2
Impairment of trade
receivables 28 0.3 - 0.3 0.5 - 0.5
Share-based payment
expense 25 - 0.8 0.8 - 0.5 0.5
Other operating expenses 23.5 - 23.5 24.1 - 24.1
------------------------------ ---- --------- ---------- ---------- --------- ---------- ----------
66.1 19.2 85.3 61.3 4.4 65.7
----------------------------- ---- --------- ---------- ---------- --------- ---------- ----------
Cost of sales 30.4 - 30.4 29.1 - 29.1
Distribution costs 0.5 - 0.5 0.5 - 0.5
Administrative expenses 35.2 19.2 54.4 31.7 4.4 36.1
------------------------------ ---- --------- ---------- ---------- --------- ---------- ----------
66.1 19.2 85.3 61.3 4.4 65.7
----------------------------- ---- --------- ---------- ---------- --------- ---------- ----------
See note 1(b) and 4 for details of adjusting items.
Services provided by the Company's auditors
2018 2017
GBP'000 GBP'000
Fees payable to the Company's auditors for
the audit of
Company and consolidated financial statements 214 210
Fees payable to the Company's auditors and
its associates for other services:
The audit of the Company's subsidiaries pursuant
to legislation 58 10
Total audit fees 272 220
------------------------------------------------------ -------- --------
Audit related assurance services 25 22
Other assurance services - 303
Total non-audit fees 25 325
------------------------------------------------------ -------- --------
Total fees 297 545
------------------------------------------------------ -------- --------
Fees payable to the Company's auditors for the audit of Company
and consolidated financial statements include non-recurring fees of
GBP34,000 (2017: GBP60,000).
Fees payable to the Company's auditor for the audit of the
Company's subsidiaries includes non-recurring fees of GBP23,000 in
relation to the Econ Asia Singapore audit.
In the prior year, other assurance services included covenant
compliance (GBP7,500), acquisition related costs (GBP100,000) and
disposal related costs (GBP195,000). There are no other assurance
services in the current year.
4 ADJUSTING ITEMS
As discussed in note 1(b), certain items are presented as
adjusting. These are detailed below:
2018 2017
Continuing operations Note GBPm GBPm
Exceptional operating costs
Staff related restructuring costs 5 0.4 0.2
Costs relating to strategic corporate restructuring
activities 0.3 -
Divestment related costs 1.8 -
Exceptional operating costs 2.5 0.2
Impairment of goodwill 10 13.1 -
Amortisation of acquired intangible assets 11 2.8 2.5
Share-based payment expense 25 0.8 0.5
Earn-out consideration 4 - 0.6
Costs relating to business acquisition 14 - 0.6
-------------------------------------------------------------- ------ -------
Adjusting items to profit before tax 19.2 4.4
Tax relating to adjusting items 7 (0.9) (0.5)
-------------------------------------------------------------- ------ ------ -------
Total adjusting items after tax 18.3 3.9
-------------------------------------------------------------- ------ ------ -------
Discontinued operations
Profit on disposal of subsidiary 8/15 (0.1) (20.9)
Tax relating to adjusting items - -
------------------------------------------------------- --- ------ -------
Total adjusting items after
tax 18.2 (17.0)
------------------------------------------------------- --- ------ ------ -------
Exceptional costs
Staff related restructuring costs
During 2018 staff related restructuring costs of GBP0.2m related
to the closure of the E-consultancy Asia Pacific office, GBP0.1m
related to restructuring of the Marketing portfolio and GBP0.1m
related to the restructuring of the in-house production
function.
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.
Costs relating to strategic corporate restructuring
initiatives
In 2018 these relate to professional fees for the corporate
simplification programme to restructure the Group ahead of the
divestment programme announced in October 2018.
Divestment related costs
In 2018 these relate to various transaction related and
professional fees for the divestment programme announced in October
2018, accelerating the simplification of the Group's structure to
improve operational execution and to focus attention on the leading
brands within its Marketing division.
Other adjusting items
Other adjusting items relate to the amortisation of acquired
intangible assets (see note 11) and share-based payment costs (see
note 25) as well as the items discussed below:
Goodwill impairment
An impairment of GBP13.1m has been recognised against goodwill
primarily relating to events to be closed and other businesses
within the marketing portfolio. There were no impairments in the
prior year. See note 10 for further details.
Earn-out consideration
In 2017, a charge of GBP0.6m was recognised in relation to
acquisition earn-out consideration for Oystercatchers. See note 14
of the Group's Annual Report and Financial Statements for the year
ended 31 December 2017 for further details. There was no such
charge in 2018.
Costs relating to the acquisition of business
In 2017 these costs related to the acquisition of MarketMakers
Incorporated Limited ('MarketMakers') (see note 14). These costs
included 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. No such costs were
incurred in 2018.
Profit on disposal of subsidiary
During 2018, GBP0.1m additional profit on disposal arose in
relation to the Home Interest disposal following the agreement of
final completion accounts.
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 15 for more detail).
5 DIRECTORS AND EMPLOYEES
2018 2017 2018 2017
Group Group Company Company
GBPm GBPm GBPm GBPm
Wages and salaries 32.2 26.9 1.0 1.3
Social security costs 3.7 3.1 0.2 0.1
Other pension costs 1.0 0.9 0.1 0.1
------------------------------------------ ------ ------ -------- --------
Adjusted staff costs 36.9 30.9 1.3 1.5
Exceptional staff related restructuring
costs (note 4) 0.4 0.2 - -
Earn-out consideration (note
4) - 0.6 - -
Equity-settled share-based payments
(note 25) 0.8 0.5 0.8 0.2
------------------------------------------ ------ ------ -------- --------
Total staff costs 38.1 32.2 2.1 1.7
------------------------------------------ ------ ------ -------- --------
The average monthly number of employees employed during the
year, including Directors, was:
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2018 2017 2018 2017
Group Group Company Company
Number Number Number Number
Marketing 502 307 - -
Financial Services 41 43 - -
Professional 84 90 - -
Central 131 149 4 4
--------------------- ------------- ------------- ------------- -------------
758 589 4 4
-------------------- ------------- ------------- ------------- -------------
With the exception of MarketMakers, the Group's employees have
contracts of service with Centaur Communications Limited and are
paid by Chiron Communications Limited, both of which are Group
companies. As the employees provide services to the Company, their
costs are recharged and the relevant disclosures are made in the
financial statements. The MarketMakers' employees are employed and
paid by MarketMakers Incorporated Limited.
Key management compensation
Year ended Year ended
31 December 31 December
2018 2017
GBPm GBPm
Salaries and short-term employment benefits 1.8 2.5
Termination benefits 0.1 -
Post-employment benefits 0.1 0.1
Share-based payments 0.6 0.3
Earn-out consideration - 0.2
---------------------------------------------- ------------- -------------
2.6 3.1
--------------------------------------------- ------------- -------------
Key management is defined as the Executive Directors and
Executive Committee members.
Aggregate Directors' remuneration
2018 2017
GBPm GBPm
Salaries, fees, bonuses and benefits in kind 0.9 1.2
Charge under long term incentive schemes 0.3 0.2
Post-employment benefits 0.1 0.1
----------------------------------------------- ----- -----
1.3 1.5
---------------------------------------------- ----- -----
Highest paid Director's remuneration
2018 2017
GBPm GBPm
Salaries, fees, bonuses and benefits in kind 0.4 0.6
Charge under long term incentive schemes 0.2 0.1
----------------------------------------------- ----- -----
0.6 0.7
---------------------------------------------- ----- -----
No Directors exercised share options during the current or prior
year. No Directors were paid compensation in respect of loss of
office during either year. Further details of Directors'
remuneration are included in the Remuneration Committee Report.
6 FINANCE COSTS
2018 2017
GBPm GBPm
Interest payable on revolving credit
facility - 0.2
Commitment fees and amortisation of arrangement
fee in respect of revolving credit facility 0.2 0.2
Total finance costs 0.2 0.4
-------------------------------------------------- ----- -----
All finance costs are in relation to the GBP25m revolving credit
facility, none of which is drawn-down at 31 December 2018 (2017:
GBPnil). As indicated by the consolidated cash flow statement, all
draw-downs from this facility during the year were also repaid
within the year. Finance costs in relation to this facility
resulted in cash outflows by the Company and Group of GBP0.4m
during the year (2017: GBP0.3m).
7 TAXATION
2018 2017
Analysis of charge for the year GBPm GBPm
Current tax
UK Corporation Tax 0.8 1.2
Overseas tax 0.3 0.1
Adjustments in respect of prior years - 0.1
1.1 1.4
--------------------------------------- ------ ------
Deferred tax (note 16)
Current year (0.9) (0.6)
Adjustments in respect of prior years (0.1) -
(1.0) (0.6)
--------------------------------------- ------ ------
Taxation 0.1 0.8
---------------------------------------- ------ ------
The tax charge for the year can be reconciled to the (loss) /
profit in the statement of comprehensive income as follows:
2018 2017
GBPm GBPm
(Loss)/profit before tax (14.2) 22.7
Tax at the UK rate of corporation tax of
19.00% (2017: 19.25%) (2.7) 4.3
Effects of:
Expenses not deductible for tax purposes 2.7 0.4
Profit on disposal - (4.1)
Deferred tax not recognised 0.1 -
Adjustments in respect of prior years (0.1) 0.1
Different tax rates of subsidiaries in other
jurisdictions 0.1 0.1
Taxation 0.1 0.8
----------------------------------------------- ------- ------
The Finance Act 2015 included legislation to reduce the main
rate of corporation tax from 20% to 19% from 1 April 2017 and to
17% from 1 April 2020. This change had been substantively enacted
at the balance sheet date and, therefore, the Group's deferred tax
balances are recorded at 17%.
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:
2018 2017
GBPm GBPm
Reported tax expense 0.1 0.8
Effects of:
Amortisation of acquired intangible
assets 0.4 0.3
Share-based payments 0.1 0.1
Exceptional expenses 0.4 0.1
Adjusted tax expense 1.0 1.3
-------------------------------------- ----- -----
8 DISCONTINUED OPERATIONS
In the prior year, 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 were included
in the consolidated statement of comprehensive income and
consolidated cash flow statement, were as follows:
Year ended Year ended
31 December 2018 31 July 2017
Statement of comprehensive income GBPm GBPm
Revenue - 7.2
Expenses - (4.7)
Profit on disposal 0.1 20.9
---------------------------------------------------------- ----- --------------------- --------------
Profit before tax 0.1 23.4
Attributable tax expense - (0.4)
---------------------------------------------------------- ----- --------------------- --------------
Statutory profit after tax 0.1 23.0
Profit on disposal (0.1) (20.9)
Adjusted profit attributable to discontinued operations - 2.1
---------------------------------------------------------- ---------------------------- --------------
Year ended Period ended
31 December 2018 31 July 2017
Cash Flows GBPm GBPm
Operating cash flows - 0.7
Investing cash flows - -
Financing cash flows - -
----------------------------------------------------------------- --------------------- --------------
Total cash flows - 0.7
----------------------------------------------------------------- --------------------- --------------
During 2018, GBP0.1m additional profit on disposal arose in
relation to the Home Interest disposal following the agreement of
final completion accounts.
In 2017, 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.
9 (LOSS)/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. 857,991 (2017:
91,191) shares held in the employee benefit trust and 6,964,613
(2017: 6,964,613) 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 these measures are more reflective of the underlying
performance of the Group. These have been calculated as
follows:
2018 2018 2018 2017 2017 2017
(Losses) / Weighted (Loss) / (Losses) / Weighted average (Loss) /
Earnings average Earnings earnings number of shares Earnings
attributable number of per share attributable per share
to owners of shares to owners of
the parent the parent
GBPm millions Pence GBPm millions Pence
-------- --------------------------- ----------- ------------ ------------- ------------------ ------------
Basic
Continuing operations (14.3) 143.9 (9.9) (1.1) 144.4 (0.8)
Continuing and
discontinued
operations (14.2) 143.9 (9.9) 21.9 144.4 15.2
----------------------- ------------- ----------- ------------ ------------- ------------------ ------------
Effect of dilutive
securities
Options: Continuing
operations - - - - - -
Options: Continuing
and discontinued
operations - - - - 8.3 (0.9)
----------------------- ------------- ----------- ------------ ------------- ------------------ ------------
Diluted
Continuing operations (14.3) 143.9 (9.9) (1.1) 144.4 (0.8)
Continuing and
discontinued
operations (14.2) 143.9 (9.9) 21.9 152.7 14.3
----------------------- ------------- ----------- ------------ ------------- ------------------ ------------
2018 2018 2018 2017 2017 2017
(Losses) / Earnings Weighted average (Loss) / Earnings (Losses) / earnings Weighted average (Loss) / Earnings per
attributable to number of shares per share attributable to number of shares share
owners of the owners of the
parent parent
GBPm millions Pence GBPm millions Pence
Adjusted
Continuing
operations
Basic (14.3) 143.9 (9.9) (1.1) 144.4 (0.8)
Amortisation of
acquired
intangibles
(note 11) 2.8 1.9 2.4 1.7
Impairment of
trade
receivables - - - -
Earn-out
consideration
(note 4) - - 0.6 0.4
Other
exceptional
costs (note 4) 2.5 1.7 0.3 0.2
Share-based
payments (note
25) 0.8 0.6 0.5 0.3
Impairment of
goodwill (note
10) 13.1 9.1 - -
Acquisition
related costs
(note 14) - - 0.6 0.4
Tax effect of
above
adjustments (0.9) (0.6) (0.5) (0.3)
Discontinued
operations
Basic 0.1 143.9 - 23.0 144.4 16.0
Amortisation of
acquired
intangibles - - - -
Impairment of
trade
receivables - - - -
Profit on
disposal (note
15) (0.1) - (20.9) (14.5)
Tax effect of
above
adjustment - - - -
---------------- -------------------- ------------------ --------------------- -------------------- ------------------ ---------------------
Adjusted basic
Continuing
operations 4.0 143.9 2.8 2.8 144.4 1.9
Continuing and
discontinued
operations 4.0 143.9 2.8 4.9 144.4 3.4
Effect of
dilutive
securities
Options:
Continuing
operations - 10.8 (0.2) - 8.3 (0.1)
Options:
Continuing and
discontinued
operations - 10.8 (0.2) - 8.3 (0.2)
Adjusted
diluted
Continuing
operations 4.0 154.7 2.6 2.8 152.7 1.8
Continuing and
discontinued
operations 4.0 154.7 2.6 4.9 152.7 3.2
---------------- -------------------- ------------------ --------------------- -------------------- ------------------ ---------------------
Adjusted Results(1) Adjusted Items(1) Statutory Results(1) Adjusted Results(1) Adjusted Items(1) Statutory Results(1)
2018 2018 2018 2017 2017 2017
GBPm GBPm GBPm GBPm GBPm GBPm
Earnings per share attributable to owners of the parent
Fully diluted
from
continuing
operations 2.6p (12.7p) (9.9p) 1.8p (2.6p) (0.8p)
Fully diluted
from
discontinued
operations - - - 1.4p 13.7p 15.1p
Fully diluted
from profit /
(loss) for the
year 2.6p (12.7p) (9.9p) 3.2p 11.1p 14.3p
In 2018 there was no difference between the weighted average
number of shares used for the calculation of basic and the diluted
loss per share as the effect of all potentially dilutive shares
outstanding was anti-dilutive.
10 GOODWILL
Group
GBPm
Cost
At 1 January 2017 156.3
Additions in the year (note 14) 11.0
Disposal of subsidiary (note 15) (7.9)
----------------------------------- ------
At 31 December 2017 159.4
Additions in the year (note 14) 0.1
At 31 December 2018 159.5
----------------------------------- ------
Accumulated impairment
At 1 January 2017 84.2
Disposal of subsidiary (note 15) (0.4)
----------------------------------- ------
At 31 December 2017 83.8
Charge for the year 13.1
At 31 December 2018 96.9
Net book value
At 31 December 2018 62.6
At 31 December 2017 75.6
Additions and disposals in the prior year relate to the
acquisition of MarketMakers and disposal of the Home Interest
segment respectively.
Additions in the year relate to additional consideration paid on
the prior year acquisition of MarketMakers following the
finalisation of contingent consideration paid during the year. See
note 14 for further details.
The largest adjusting item of GBP12.8m relates to the impairment
of goodwill which primarily relates to events to be closed and
other businesses within the marketing portfolio. Following a review
of expected cashflows from the Financial Services portfolio, the
carrying value of its goodwill was impaired by GBP0.3m.
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 and in prior years has
been reviewed at the operating segment level for the purposes of
the annual impairment review as this is the level at which
management monitors goodwill. However, in light of our
simplification plan, the Professional segment has been considered
at a lower level and split into its sub-portfolios (Legal and Other
Professional) for the purposes of the impairment review. The
majority of the Group's goodwill arose on the acquisition of
Centaur Communications Group in 2004.
Goodwill is allocated to segments as follows:
Other
Marketing Financial Services Legal Professional Home Interest Total
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2017 37.9 5.1 16.0 5.6 7.5 72.1
Additions 11.0 - - - - 11.0
Impairment charge - - - - (7.5) (7.5)
At 31 December 2017 48.9 5.1 16.0 5.6 - 75.6
Additions 0.1 - - - - 0.1
Impairment charge (12.8) (0.3) - - - (13.1)
At 31 December 2018 36.2 4.8 16.0 5.6 - 62.6
Impairment testing of goodwill and acquired intangible
assets
During the year, 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 11.3% (2017: 11.4%). 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 2.5% (2017: 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 2018, before impairment testing, goodwill of
GBP48.9m, GBP21.6m and GBP5.1m was allocated to the Marketing,
Professional, and Financial Services segments respectively. Prior
to a full impairment test, the goodwill of each segment was
reviewed. This led to an impairment of GBP12.8m to be recognised in
the Marketing segment primarily relates to events to be closed and
other businesses within the marketing portfolio, and an impairment
of GBP0.3m in the Financial Services segment following a review of
expected cash flows. Considering these impairments, goodwill of
GBP36.2m, GBP21.6m and GBP4.8m was allocated to the Marketing,
Professional, and Financial Services segment respectively. It is
these goodwill carrying values of the segments that have been
compared with their recoverable amount in these impairment
tests.
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 11.3% to 13.3%.
No impairment would occur in any of the segments.
(iii) reduce the terminal value growth rate from 2.5% to 1.5%.
No impairment would occur in any of the segments.
11 OTHER INTANGIBLE ASSETS
Computer Brands and publishing Customer Separately acquired
software* rights* relationships* websites and content* Total
GBPm GBPm GBPm GBPm GBPm
Cost
At 1 January 2017 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 14) 0.7 0.8 3.6 - 5.1
Disposal of subsidiary
(note 15) (0.5) (1.0) (0.7) - (2.2)
At 31 December 2017 16.1 5.6 15.4 4.7 41.8
Additions - separately
acquired 1.8 - - - 1.8
Additions - internally
generated 0.7 - - - 0.7
At 31 December 2018 18.6 5.6 15.4 4.7 44.3
Accumulated amortisation
At 1 January 2017 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
Disposals of subsidiary
(note 15) (0.3) (0.5) (0.8) - (1.6)
At 31 December 2017 9.5 1.9 7.2 4.6 23.2
Amortisation charge for
the year 2.9 0.4 2.2 0.1 5.6
At 31 December 2018 12.4 2.3 9.4 4.7 28.8
Net book value at 31
December 2018 6.2 3.3 6.0 0.0 15.5
Net book value at 31
December 2017 6.6 3.7 8.2 0.1 18.6
Net book value at 1
January 2017 6.3 3.7 6.2 0.5 16.7
* Amortisation of GBP2.8m (2017: GBP2.5m) 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
GBP2.8m includes GBP0.1m in computer software (2017: GBP0.1m).
The Company has no intangible assets (2017: GBPnil).
Amortisation of intangible assets is included in net operating
expenses in the statement of comprehensive income.
12 PROPERTY, PLANT AND EQUIPMENT
Leasehold Fixtures Computer
improvements and fittings equipment Total
GBPm GBPm GBPm GBPm
Cost
At 1 January 2017 2.2 0.7 1.0 3.9
Additions - separately acquired 0.1 - 0.1 0.2
Additions - business combination
(note 14) - - 0.2 0.2
Disposal of subsidiary (note
15) (0.1) (0.1) - (0.2)
----------
At 31 December 2017 2.2 0.6 1.3 4.1
----------
Additions - separately acquired - 0.1 0.4 0.5
At 31 December 2018 2.2 0.7 1.7 4.6
Accumulated depreciation
At 1 January 2017 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
15) (0.1) (0.1) - (0.2)
----------
At 31 December 2017 1.3 0.3 0.8 2.4
----------
Depreciation charge for the
year 0.3 0.2 0.4 0.9
At 31 December 2018 1.6 0.5 1.2 3.3
Net book value at 31 December
2018 0.6 0.2 0.5 1.3
----------
Net book value at 31 December
2017 0.9 0.3 0.5 1.7
Net book value at 1 January
2017 1.0 0.4 0.6 2.0
----------
The Company has no property, plant and equipment at 31 December
2018 (2017: GBPnil).
13 INVESTMENTS
Investments
in subsidiary
undertakings
GBPm
Company
Cost
At 1 January 2017, 31 December 2017 146.2
Transfer from amounts receivable from
subsidiaries 4.9
At 31 December 2018 151.1
Accumulated impairment
At 1 January 2017, 31 December 2017 12.2
Impairment charge for year 13.1
At 31 December 2018 25.3
Net book value
At 31 December 2018 125.8
At 1 January 2017, 31 December 2017 134.0
Following an internal corporate restructure in the year, GBP4.9m
of intercompany balances due from subsidiaries of Centaur Media plc
were capitalised.
The Company impaired its investment in the group during the year
following an impairment test which identified the value in use no
longer supported the carrying value of the investment. The
remaining balance is supported by the underlying trade of the
group.
There were no disposals in the current year. The Group disposed
of its interests in the following subsidiaries on 1 August
2017:
Proportion of
ordinary shares
and voting rights Country of
Name held (%) Principal activities incorporation
Digital and print
Ascent Publishing Limited 100 publishing United Kingdom
Centaur Consumer Exhibitions
Limited 100 Exhibitions United Kingdom
The gain on disposal of Ascent Publishing Limited and Centaur
Consumer Exhibitions Limited was GBP20.9m. A further gain on
disposal of GBP0.1m was recognised in 2018 following agreement of
final completion accounts. The gain on disposal is presented as an
Adjusting Item against net operating expenses on the statement of
comprehensive income.
Name Proportion Principal activities Country
of ordinary of incorporation
shares and
voting rights
held (%)
Centaur Communications Holding company and
Limited (1) 100 agency services United Kingdom
Centaur Engineering
Limited Other publishing
(2) 100 activities United Kingdom
Centaur Financial
Platforms Research data and
Limited (3) 100 analysis United Kingdom
Centaur Human Resources Events and information
Limited (4) 100 services United Kingdom
Centaur Media Travel and Other publishing
Meetings Limited (5) 100 activities United Kingdom
Digital information,
Centaur Media USA Inc.(6) 100 training and events United States
Centaur Newco 2018 Limited Media representation
(14) 100 services United Kingdom
Chiron Communications Digital information,
Limited 100 training and events United Kingdom
E-consultancy Asia Pacific
Pty Limited (7) 100 Dormant Singapore
E-consultancy Australia Digital information,
Pty Limited (8) 100 training and events Australia
Digital information,
E-consultancy LLC (9) 100 training and events United States
Digital information,
E-consultancy.com Limited 100 training and events United Kingdom
MarketMakers Incorporated Telemarketing and
Limited (10,11) 100 Research United Kingdom
Mayfield Publishing
Limited 100 Investment company United Kingdom
Pro-talk Ltd 100 Digital Publishing United Kingdom
Taxbriefs Holdings Limited 100 Holding company United Kingdom
Digital and print
Taxbriefs Limited 100 publishing United Kingdom
Publishing of consumer
Thelawyer.com Limited and business journals
(12) 100 and periodicals United Kingdom
Venture Business Research Research data and
Limited 100 analysis United Kingdom
Digital information
XEIM Limited (13) 100 services United Kingdom
Your Business Magazine
Limited 100 Investment company United Kingdom
(1) Directly owned by Centaur Media Plc
(2) Subsidiary incorporated on 14 September 2018. No previous interest
held.
(3) Subsidiary changed registered name from Investment Platforms
Limited on 24 October 2018.
(4) Subsidiary changed registered name from The Forum For Expatriate
Management Limited on 05 December 2018.
(5) Subsidiary incorporated on 14 November 2018. No previous interest
held.
(6) Registered address is 2711 Centerville Road, Suite 400 Wilmington,
DE19808, USA. Functional currency is USD.
(7) Registered address is 30 Cecil Street, #19-08 Prudential Tower,
Singapore 049712. Functional currency is USD.
(8) Registered address is Level 17, 383 Kent Street, Sydney, NSW,
2000, Australia. Functional currency is AUD.
(9) Registered address is 41 East, 11 Street, 11FI, New York, NY
10003, USA. Functional currency is USD.
(10) Registered address is 1000 Lakeside North Harbour Western
Road, Portsmouth, Hampshire, PO6 3EN
(11) Subsidiary acquired on 02 August 2017. No previous interest
held.
(12) Subsidiary incorporated on 31 July 2018. No previous interest
held.
(13) Subsidiary changed registered name from The Profile Group
(UK) Limited on 14 January 2019.
(14) Subsidiary incorporated on 13 December 2018. No previous interest
held.
The registered address of all subsidiary companies is 79 Wells
Street, London, W1T 3QN, United Kingdom, with the exception of
those identified above. The functional currency of all subsidiaries
is GBP except for those identified above. The consolidated
financial information incorporate the financial information of all
entities controlled by the Company at 31 December 2018.
14 BUSINESS COMBINATION
In the prior year 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. The results of MarketMakers are
included in the Marketing segment. The GBP7.9m net identifiable
assets of MarketMakers were acquired for total purchase
consideration of GBP18.9m, resulting in GBP11.0m of goodwill. The
consideration was wholly cash, including contingent consideration
of GBP1.7m and deferred consideration of GBP0.1m.
During 2018, an amount of GBP1.8m was settled in relation to
contingent consideration of GBP1.7m. The additional GBP0.1m paid
was due to MarketMakers achieving a higher EBITDA than expected. As
the settlement came within the measurement period the carrying
value of goodwill related to the acquisition of MarketMakers has
been increased by GBP0.1m. (Note 10). GBP0.1m of deferred
consideration is still outstanding at the year end. (Note 23).
Further details of this acquisition can be found in note 14 of
the Group's Annual Report and Financial Statements for the year
ended 31 December 2017.
There were no business combinations in 2018.
15 DISPOSAL OF SUBSIDIARY
In the prior year 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.
Net assets attributable to Shareholders of the Company were
disposed for a total consideration of GBP32.8m. This resulted in a
gain on disposal of GBP20.9m. GBP1.7m of costs were considered
directly attributable to the disposal.
During 2018 an additional amount of GBP0.1m was received
following the agreement of final completion accounts resulting in a
profit on disposal from discontinued operations during the
year.
Further details of this disposal can be found in note 15 of the
Group's Annual Report and Financial Statements for the year ended
31 December 2017.
There were no disposals in 2018.
16 DEFERRED TAX
The movement on the deferred tax account is shown below:
Accelerated Other
capital temporary Tax
allowances differences losses Total
GBPm GBPm GBPm GBPm
Net asset / (liability) at 1 January
2017 0.4 (0.8) 0.2 (0.2)
Recognised in the statement of
comprehensive income 0.2 0.4 - 0.6
Arising on business combination - (1.0) - (1.0)
Disposed (0.1) - - (0.1)
Net asset / (liability) at 31
December 2017 0.5 (1.4) 0.2 (0.7)
Adjustments in respect of prior
period 0.1 - - 0.1
Recognised in the statement of
comprehensive income 0.1 0.9 (0.1) 0.9
Net asset / (liability) at 31
December 2018 0.7 (0.5) 0.1 0.3
Deferred tax assets and liabilities are only offset where there
is a legally enforceable right of offset and there is an intention
to settle the balances net.
2018 2017
Group Group
GBPm GBPm
Deferred tax assets within one
year 0.8 0.7
Deferred tax liabilities within
one year (0.5) (1.4)
Total 0.3 (0.7)
At the statement of financial position date, the Group has
unused tax losses of GBP1.2m (2017: GBP1.4m) available for offset
against future profits. A deferred tax asset of GBP0.1m (2017:
GBP0.2m) has been recognised in respect of GBP0.6m (2017: GBP1.0m)
of such tax losses. No deferred tax has been recognised in respect
of the remaining GBP0.6m (2017: GBP0.4m) as it is not currently
considered probable that there will be future sufficient taxable
profits available. Unrecognised losses may be carried forward
indefinitely. Deferred tax assets and liabilities are expected to
be materially realised after 12 months.
17 INVENTORIES
2018 2017
Group Group
GBPm GBPm
Work in progress 1.4 1.4
The Company had no inventory at 31 December 2018 (2017:
GBPnil).
There are no provision amounts in respect of inventories (2017:
GBPnil) and there were no write-downs of inventory in the year
(2017: GBPnil).
18 TRADE AND OTHER RECEIVABLES
2018 2017 2018 2017
Group Group Company Company
GBPm GBPm GBPm GBPm
Amounts falling due within one
year
Trade receivables 10.2 10.5 - -
Less: expected credit loss (note
28) (1.2) (1.5) - -
Trade receivables - net 9.0 9.0 - -
Receivables from subsidiaries - - 2.0 2.7
Receivable from Employee Benefit
Trust - - 0.4 -
Other receivables 1.7 0.9 0.4 0.3
Prepayments 1.7 1.4 0.1 -
Accrued income 0.5 0.3 - -
Social security and other taxes - - 0.2 -
12.9 11.6 3.1 3.0
Receivables from subsidiaries are unsecured, have no fixed due
date and bear interest at an annual rate of 2.67% (2017:
2.39%).
In 2018, trade receivables are accounted for under IFRS 9 using
the expected credit loss model, recognised initially at fair value
and subsequently at amortised cost less any allowance for expected
credit losses. For further detail refer to note 1 (s)(ii).
19 CASH AND CASH EQUIVALENTS
2018 2017
Group Group
GBPm GBPm
Cash at bank and in hand 0.1 4.1
The Company had no cash and cash equivalents at 31 December 2018
(2017: GBPnil).
20 TRADE AND OTHER PAYABLES
2018 2017 2018 2017
Group Group Company Company
GBPm GBPm GBPm GBPm
Trade payables 2.7 2.6 - -
Payables to subsidiaries - - 53.3 43.9
Social security and other taxes 2.1 1.1 - -
Other payables 0.8 1.4 - -
Accruals 6.8 5.8 0.5 0.6
------
12.4 10.9 53.8 44.5
------
Payables to subsidiaries are unsecured, have no fixed date of
repayment and bear interest at an annual rate of 2.67% (2017:
2.39%).
The Directors consider that the carrying amount of the trade
payables approximates their fair value.
21 DEFERRED INCOME
2018 2017
Group Group
GBPm GBPm
Events 8.7 8.4
Subscriptions 6.3 6.2
15.0 14.6
22 CURRENT TAX ASSET
2018 2017
Group Group
GBPm GBPm
Corporation tax receivables 0.2 -
The Company had no corporation tax receivables or payables at
year end (2017: GBPnil).
23 PROVISIONS
Deferred
consideration Other Total
GBPm GBPm GBPm
Group
At 1 January 2017 0.4 - 0.4
Charged to statement of comprehensive income
during the year 0.5 - 0.5
Transferred from equity 0.3 - 0.3
Acquisition related (note 14) 1.8 0.1 1.9
Utilised in the year (1.2) - (1.2)
At 31 December 2017 1.8 0.1 1.9
Acquisition related (note 14) 0.1 - 0.1
Utilised in the year (1.8) - (1.8)
At 31 December 2018 0.1 0.1 0.2
Current 0.1 - 0.1
Non-current - 0.1 0.1
Total 0.1 0.1 0.2
Deferred consideration
Deferred consideration at 31 December 2017 related to the
acquisition of Market Makers Incorporated Limited ('MarketMakers').
An additional amount of GBP0.1m contingent consideration was
provided for during the year due to MarketMakers achieving a higher
EBITDA than expected. GBP1.8m was settled in cash during the
year.
The remaining balance of GBP0.1m was held as a current provision
at 31 December 2017 as it was expected to be settled during FY18.
However, the consideration remained unsettled at 31 December 2018
and therefore a current provision still exists for this at the year
end. The amount of GBP0.1m was settled in full in January 2019.
Other
The other provision relates to the dilapidation provision which
was acquired on the acquisition of MarketMakers in relation to the
building leased by the Company in Portsmouth.
All amounts represent the Directors' best estimate of the
balance to be paid at the statement of financial position date.
24 EQUITY
Nominal value Number of
Ordinary shares of 10p each GBPm shares
Authorised share capital - Group and Company
At 1 January 2017, 31 December 2017 and 31
December 2018 20.0 200,000,000
Issued and fully paid share capital - Group
and Company
At 1 January 2017, 31 December 2017 and 31
December 2018 15.1 151,410,226
Deferred shares reserve
The deferred shares reserve represents 800,000 (2017: 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
2018, 6,964,613 (2017: 6,964,613) 10p ordinary shares are held in
treasury and 857,991 (2017: 91,191) 10p ordinary shares are held in
an employee benefit trust.
During 2018, the employee benefit trust purchased 766,800 (2017:
nil) ordinary shares held in the employee benefit trust in order to
meet future obligations arising from share-based rewards to
employees. The shares were acquired at an average price of 45.9p
per share, with prices ranging from 36p to 52p. The total cost of
GBP0.4m (2017: GBP0.1m) has been recognised in other reserves in
the own shares reserve in equity.
In 2017 the Company purchased 94,176 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 per share, with prices ranging from 46p to
55p. The total cost of GBP0.1m was recognised in other reserves in
the own shares reserve in equity.
25 SHARE-BASED PAYMENTS
The Group's share-based payment expense for
the year by scheme:
2018 2017
GBPm GBPm
Equity-settled plans
LTIP 0.8 0.5
Total equity-settled incentive plans and
share based payment expense 0.8 0.5
---------------------------------------------
The Group's share-based payment schemes upon vesting are
equity-settled. In the prior year opening reserves in equity were
restated to account for historical share plan vests. See note 1(a)
for details.
The current year charge of GBP0.8m includes GBP0.1m in relation
to national insurance payable on equity settled share-based schemes
and is included in liabilities as it is to be settled in cash.
Long-Term Incentive Plan
The Group operates a Long-Term Incentive Plan ('LTIP') for
Executive Directors and selected senior management. This is an
existing incentive policy and was approved by shareholders at the
2016 AGM. The share awards are valued at date of grant and the
consolidated statement of comprehensive income is charged over the
vesting period, taking into account the number of shares expected
to vest. Full details of how the scheme operates are included in
the Remuneration Report.
These awards were priced using the following models and
inputs:
Long term incentive plan
LTIP 2018 LTIP 2018 LTIP 2016 LTIP 2016 LTIP 2016 LTIP 2016 LTIP 2006 LTIP 2006 LTIP 2006 LTIP 2006
Grant date 06.04.18 06.04.18 24.04.17 07.04.17 04.10.16 22.09.16 30.03.16 27.10.15 10.08.15 26.03.15
Share price
at grant
date 50.20 50.20 45.75 40.75 44.00 41.00 49.00 78.25 80.5 69.5
Fair value 28.65 25.10 24.46 21.08 18.04 16.81 20.92 47.42 48.22 42.43
06.04.20
Exercise and
date 06.04.21 06.04.21 24.04.20 07.04.20 04.10.19 22.09.19 30.03.19 28.10.18 10.08.18 23.03.18
Exercise
price (p) GBPnil GBPnil GBPnil GBPnil GBPnil GBPnil GBPnil GBPnil GBPnil GBPnil
Number of
awards
Balance at 1
January
2018 - - 1,351,528 3,589,405 573,395 366,667 2,059,390 143,036 108,556 842,992
Granted
during the
year 1,246,879 2,145,375 - - - - - - - -
Forfeited
during the
year - (40,485) - (630,619) - - (75,901) - - -
Exercised
during the
year - - - - - - - - - -
Lapsed
during the
year - - - - - - - (143,036) (108,556) (842,992)
Balance at
31 December
2018 1,246,879 2,104,890 1,351,528 2,958,786 573,395 366,667 1,983,489 - - -
Exercisable
at 31
December
2018 - - - - - - - - - -
Average
share price
at date of
exercise (p) - - - - - - - - - -
Balance at 1
January
2017 - - - - 573,395 366,667 2,514,797 143,036 108,556 1,115,439
Granted
during the
year - - 1,351,528 3,758,228 - - - - - -
Forfeited
during the
year - - - (168,823) - - (455,407) - - (272,447)
Exercised
during the
year - - - - - - - - - -
Lapsed
during the
year - - - - - - - - - -
Balance at
31 December
2017 1,351,528 3,589,405 573,395 366,667 2,059,390 143,036 108,556 842,992
Exercisable
at 31
December
2017 - - - - - - - - - -
Average
share price
at date of
exercise
(p) - - - - - - - - - -
The shares outstanding at 31 December 2018 had a weighted
average exercise price of GBPnil (2017: GBPnil) and a weighted
remaining life of 1.4 years (2017: 1.7 years).
LTIP 2018 LTIP 2018 LTIP 2016 LTIP 2016 LTIP 2016 LTIP 2016 LTIP 2006 LTIP 2006 LTIP 2006 LTIP 2006
06.04.20 and
Grant date 06.04.21 06.04.21 24.04.17 07.04.17 04.10.16 22.09.16 30.03.16 27.10.15 10.08.15 26.03.15
Expected
volatility
(%) 43.5 43.5 45.4 45.4 43.8 43.8 31.8 28.1 36.8 39.4
Expected
dividend
yield (%) - - - - - - - - - -
Risk free
interest
rate (%) 0.86 0.86 0.12 0.12 0.06 0.06 0.48 0.69 1.02 0.58
Valuation
of model
used Stochastic Black-Scholes Stochastic Stochastic Stochastic Stochastic Stochastic Stochastic Stochastic Stochastic
25 SHARE-BASED PAYMENTS (continued)
Senior Executive Long-Term Incentive Plan ('SELTIP')
The Centaur Media Plc 2010 Senior Executive Long-Term Incentive
Plan (the 'SELTIP') was introduced during 2011 and was approved by
shareholders at the 2010 AGM. This is not an HMRC approved scheme
and vests over a three-year period with service and performance
conditions. Awards were granted under this scheme in 2011 for no
consideration and no exercise price. This scheme has closed to new
awards.
Awards of bonus units were made in 2013 as summarised in the
following table:
Number of
shares awarded
Financial Threshold PBTA achieved Profit growth SELTIP Total bonus Bonus pool in total**
year profit contribution pool allocated*
2013 GBP8.0m GBP8.6m GBP0.6m 30% GBP0.1m GBP0.1m 118,851
*The Remuneration Committee did not allocate the entire bonus
pool in 2013.
** Awards were only made to participants with continuing
employment.
Senior Executive Long-Term Incentive Plan
These awards were priced using the following models and
inputs:
SELTIP 2013
Grant date 15.09.11
Share price at grant date 33.88
Fair value 23.76
Exercise date 17.09.14
Exercise price (p) GBPnil
Number of awards
Balance at 1 January 2018 6,862
Granted during the year -
Forfeited during the year -
Exercised during the year -
Balance at 31 December 2018 6,862
Exercisable at 31 December 2018 6,862
Average share price at date of exercise (p) -
Balance at 1 January 2017 6,862
Granted during the year -
Forfeited during the year -
Exercised during the year -
Balance at 31 December 2017 6,862
Exercisable at 31 December 2017 6,862
Average share price at date of exercise (p) -
The shares outstanding at 31 December 2018 had a weighted
average exercise price of GBPnil (2017: GBPnil) and a weighted
remaining life of 3.7 years (2017: 4.7 years).
These awards were priced using the following models and
inputs:
SELTIP 2013
Grant date 15.09.11
Expected volatility (%) 54.0
Expected dividend yield (%) 5.26
Risk free interest rate (%) 0.57
Model of valuation used Black-Scholes
Share Incentive Plan
The Group has a Share Incentive Plan, which is a HRMC approved
Tax-Advantaged plan, which provides employees with the opportunity
to purchase shares in the Company. This plan is open to all
employees who have been employed by the Group for more than 12
months. Employees may invest up to GBP1,800 per annum (or 10% of
their salary if less) in ordinary shares in the Company, which are
held in trust. The shares are purchased in open market and are held
in trust for each employee. The shares can be withdrawn with tax
paid at any time, or tax-free after five years. The Group matches
the contribution with a ratio of one share for every two purchased.
Other than continuing employment, there are no other performance
conditions attached to the plan.
The Executive Directors are eligible to participate in the Share
Incentive Plan, as are all employees of the Group.
2018 2017
Group Group
Number of outstanding matching shares 57,298 57,532
26 DIVIDS
2018 2017
GBPm GBPm
Equity dividends
Final dividend for 2016: 1.5p per 10p ordinary
share - 2.2
Interim dividend for 2017: 1.5p per 10p ordinary
share - 2.1
Final dividend for 2017: 1.5p per 10p ordinary
share 2.2 -
Interim dividend for 2018: 1.5p per 10p ordinary
share 2.1 -
4.3 4.3
A final dividend for the year ended 31 December 2018 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 to
all shareholders on the Register of Members on 24 May 2019.
27 NOTES TO THE CASH FLOW STATEMENT
Reconciliation of (loss)/profit for the year to net cash inflow
from operating activities:
2018 2017 2018 2017
Group Group Company Company
Note GBPm GBPm GBPm GBPm
(Loss)/profit for the year (14.2) 21.9 (13.7) (2.9)
Adjustments for:
Tax 7 0.1 0.8 (3.2) (0.7)
Interest expense 6 0.2 0.4 1.6 1.4
Depreciation 12 0.9 0.7 - -
Amortisation of intangible
assets 11 5.6 5.3 - -
Impairment of Goodwill 10 13.1 - - -
Gain on disposal of subsidiary 15 (0.1) (20.9) - -
Loss on impairment of investment 13 - - 13.1 -
Earn-out costs 4 - 0.6 - -
Share-based payment charge 25 0.8 0.5 0.3 0.2
Unrealised foreign exchange
difference - 0.1 - -
Other - 0.1 - -
Changes in working capital
(excluding effects of
acquisitions and disposals
of subsidiaries):
Increase in inventories - 0.6 - -
(Increase) / decrease in trade
and other receivables (1.3) 5.1 (2.3) (1.0)
Increase / (decrease) in trade
and other payables 1.4 (1.4) 8.9 25.2
Increase in deferred income 0.3 - - -
Cash generated from operating
activities 6.8 13.8 4.7 22.2
Analysis of changes in net cash/(debt)
Net
At 31 December cash At 31 December
Group 2017 flow 2018
Note GBPm GBPm GBPm
Cash and cash equivalents 19 4.1 (4.0) 0.1
Net cash 4.1 (4.0) 0.1
Net
Company At 31 December 2017 cash flow At 31 December 2018
Note GBPm GBPm GBPm
Cash and cash equivalents 19 - - -
Net (debt) / cash - - -
28 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.
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(s). All
financial assets and liabilities are measured at amortised
cost.
2018 2017
Note GBPm GBPm
Financial assets
Cash and bank balances 19 0.1 4.1
Trade receivables - net 18 9.0 9.0
Other receivables 18 1.7 0.9
Total financial assets 10.8 14.0
Financial liabilities
Trade payables 20 2.7 2.6
Accruals 20 6.8 5.8
Provisions 23 0.2 1.9
Other payables 20 0.8 1.4
Total financial liabilities 10.5 11.7
Credit risk
The Group's principal financial assets are trade and other
receivables (note 18). 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 information, 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.
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 an allowance for expected credit loss on its trade
receivables balances. This approach is in line with requirements of
IFRS 9 and the new impairment model for trade receivables which
requires the recognition of impairment provisions based on expected
credit losses, rather than only incurred ones as was the case under
IAS 39. All balances past due are reviewed, with those greater than
90 days past due considered to carry a higher level of credit risk.
Refer to note 1 (s) for further details on the approach to
allowance for expected credit losses on trade receivables.
The allowance for expected credit losses, and changes to it, 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:
2018 2018 2017 2017
Gross Provision Gross Provision
GBPm GBPm GBPm GBPm
Not due 5.3 (0.1) 5.2 -
0-30 days past due 2.3 - 2.4 -
31-60 days past due 0.8 (0.1) 1.0 -
61-90 days past due 0.4 - 0.3 -
Over 90 days past due 1.4 (1.0) 1.6 (1.5)
------ ----------
10.2 (1.2) 10.5 (1.5)
------
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 2018, there are debtors greater than 90 days past due
with a carrying value of GBP0.4m (2017: GBP0.1m) 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.
The movement in the allowance for expected credit losses on
trade receivables is detailed below:
2018 2017
Group Group
GBPm GBPm
Balance at 1 January 1.5 2.7
Utilised (0.6) (1.2)
Disposal of subsidiaries - (0.5)
Additional allowance charged to the statement
of comprehensive income:
Recorded in adjusted operating profit 0.3 0.5
-----
Balance at 31 December 1.2 1.5
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. The Group manages
liquidity risk by maintaining adequate reserves and working capital
credit facilities, and by continuously monitoring forecast and
actual cash flows. In November 2018 the Group renewed its GBP25m
multi-currency revolving credit facility with the Royal Bank of
Scotland and Lloyds which runs to November 2021 with the option to
extend for 2 periods of 1 year each. As at 31 December 2018, the
Group had cash of GBP0.1m (2017: GBP4.1m) with a full undrawn loan
facility of GBP25.0m (2017: full undrawn loan facility of
GBP25.0m).
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 2018
Financial liabilities
Non-interest bearing 10.5 10.5 10.5 -
10.5 10.5 10.5 -
At 31 December 2017
Financial liabilities
Non-interest bearing 11.7 11.7 11.7 -
------ ----------
11.7 11.7 11.7 -
---------------------- ----------
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 2018, 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 GBP0.0m (2017: GBP0.0m).
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 cash and cash equivalents (note 19), and equity
attributable to the owners of the parent, comprising issued share
capital (note 24), 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 November 2018), 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 November 2021 with an
option to extend for a further 2 periods of 1 year each, 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
2018 and throughout 2018 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.
29 OPERATING LEASE COMMITMENTS - MINIMUM LEASE PAYMENTS
At 31 December 2018, the Group had committed to the following
payments in respect of operating leases on land and buildings.
2018 2017
Commitments payable under non-cancellable
operating leases GBPm GBPm
Within one year 2.5 2.1
Later than one year and less than
five years 4.8 3.8
7.3 5.9
On 27 July 2018, the Group signed a new property Lease with
WeWork for its London head office in Waterloo commencing on 1
October 2019 for 24 months to September 2021.
At 31 December 2018, the Group had contracted with tenants to
receive payments in respect of operating leases on land and
buildings.
2018 2017
Commitments receivable under non-cancellable
subleases GBPm GBPm
Within one year 0.5 0.7
Later than one year and less than
five years - 0.5
0.5 1.2
The Company does not have any operating lease commitments.
30 PENSION SCHEMES
The Group contributes to individual and collective money
purchase pension schemes in respect of Directors and employees once
they have completed the requisite period of service. The charge for
the year in respect of these defined contribution schemes is shown
in note 5. Included within other payables is an amount of GBP0.1m
(2017: GBP0.1m) payable in respect of the money purchase pension
schemes.
31 CAPITAL COMMITMENTS
At 31 December 2018, the Group had capital commitments totaling
GBP0.1m in relation to fit-out costs for the new WeWork property
lease (31 December 2017: GBPnil).
32 RELATED PARTY TRANSACTIONS
Group
Key management compensation is disclosed in note 5. There were
no other material related party transactions for the Group in the
current or prior year.
Company
During the year, interest was recharged from subsidiary
companies as follows:
2018 2017
GBPm GBPm
Interest payable 1.3 1.0
There were no borrowings at the year end.
The balances outstanding with subsidiary companies are disclosed
in notes 18 and 20.
There were no other material related party transactions for the
Company in the current or prior year.
Audit exemption
For the year ended 31 December 2018 the Company has provided a
guarantee pursuant to sections 479A-C of Companies Act 2006 over
the liabilities of the following subsidiaries and, as such, they
are exempt from the requirements of the Act relating to the audit
of individual financial statements, or preparation of individual
financial statements, as appropriate, for this financial year.
Name Company Number Outstanding liabilities
GBPm
Centaur Communications Limited 01595235 13.5
Centaur Engineering Limited 011569365 0.3
Centaur Financial Platforms Limited 06439194 1.9
Centaur Human Resources Limited 06776955 0.3
Centaur Media Travel and Meetings Limited 011676745 -
Centaur Newco 2018 Limited 011725322 -
Chiron Communications Limited 01081808 69.6
Econsultancy.com Limited 04047149 0.8
Mayfield Publishing Limited 02034820 -
Pro-Talk Limited 03939119 0.2
Taxbriefs Holdings Limited 03572069 -
Taxbriefs Limited 01247331 0.5
Thelawyer.com Limited 011491880 0.9
Venture Business Research Limited 05663936 1.3
XEIM Limited 05243851 3.6
Your Business Magazine Limited 01707331 0.3
See note 13 in regard to new subsidiaries and changes of
registered names.
Newly acquired business, MarketMakers Incorporated Limited will
have its statutory audit for the year ended 31 December 2018
performed by PWC.
33 POST BALANCE SHEET EVENTS
On 25 October 2018, following a strategic review Centaur
announced a plan to accelerate the simplification of the Group's
activities and structure by exploring the divestment of a number of
businesses.
At the year end management performed a review to assess if these
businesses met the criteria as held for sale under IFRS 5. It was
concluded that the held for sale criteria was not met as the sale
was not highly probable, assets were not being actively marketed or
available for immediate sale and the entity was not committed to a
sale.
Subsequent to the year end and before signing of annual report
the held for sale criteria was met and has been disclosed below as
a non-adjusting post balance sheet event.
The businesses under review as part of this plan are:
- Financial Services, which provides research, analysis and content information to financial intermediaries;
- The Lawyer, which operates a digital platform to provide
intelligence and analysis to the global legal market;
- Travel & Meetings, which includes the Business Travel Show and The Meetings Show;
- Human Resources, including Employee Benefits Live; and
- Engineering, including Subcon, an exhibition that serves the sub-contractor industry.
At the time of signing the Annual Report, negotiations for the
sale of these businesses were ongoing and are anticipated to be
agreed within half one 2019.
The financial effect cannot be reliably estimated at the time of
signing the Annual Report.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR JLMBTMBABTFL
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