TIDMCAU
RNS Number : 5498T
Centaur Media PLC
21 July 2020
21 July 2020
Centaur Media Plc
Interim results for the 6 months ended 30 June 2020
Decisive action taken to mitigate the impact of COVID-19
Strong balance sheet with cash balance of over GBP8m and
substantial undrawn borrowing facilities
Centaur Media, an international provider of business
intelligence and specialist consultancy, is pleased to present its
interim results for the 6 months ended 30 June 2020.
Financial Highlights
GBPm HY 2020 HY 2019 % Change
------------------------------- -------- --------- ---------
Statutory revenue 17.7 24.1 (27)
Adjusted(1) EBITDA 1.0 1.2 (17)
Adjusted(1) operating loss (1.1) (1.3) 15
Group statutory profit/(loss)
after taxation (13.9) 6.0 -
------------------------------- -------- --------- ---------
-- Encouraging start to 2020 prior to onset of COVID-19
-- Reported revenues fell by 27% to GBP17.7m due to the impact of COVID-19 (decline of 18% on an underlying2 basis)
-- Group adjusted1 EBITDA decreased from GBP1.2m in HY 2019 to GBP1.0m
-- Lost margin from revenue fall substantially mitigated by savings from 2019 and further tightened cost control
-- Goodwill impairment of GBP11.0m relating to MarketMakers
-- Cash of GBP8.4m at 30 June 2020
-- Bank facility renegotiated to provide up to GBP10m of borrowings with waived covenant tests to 30 September 2021
Prior to the onset of COVID-19, Centaur performed well in the
initial months of 2020, building on the momentum from a strong Q4
2019, and was on track to achieve the revenue growth set out under
its Margin Acceleration Plan 2022 (MAP22) in addition to the
benefit of 2019 cost savings. As Centaur began to feel the impact
of the pandemic from March, we took immediate action to mitigate
the effects on our clients and our business, protect the health and
safety of our employees and customers, and ensure Centaur's
long-term financial security.
The lower revenue resulted in the reduction of GBP5.3m of gross
profit, mainly arising from MarketMakers (GBP2.4m), Econsultancy
(GBP1.1m), the closure in 2019 of Marketing Week Live (GBP0.5m) and
the loss of advertising and events at The Lawyer (GBP1.1m). These
losses were partially offset by an improved contribution from the
Mini-MBA of GBP0.4m, one of several examples of revenue generation
from creating new online offerings.
As previously reported, we made significant divisional and
central cost savings during 2019 and the benefit of these have
flowed through to the 2020 HY results. As the COVID-19 impact
deepened, we also moved decisively to tighten our cost control with
measures that included halting recruitment, furloughing
approximately 25% of our workforce, reducing Board and senior
management remuneration and decreasing marketing expenditure. These
steps, together with the previously announced 2019 overhead
reductions, mitigated almost all the margin impact from lost
revenue in H1 2020. In addition, and as expected, there was the
loss of GBP1.0m of other income (from transitional service
agreements relating to our 2019 disposals and rental income from
subletting floors in our previous office).
Centaur remains financially strong with GBP8.4m in cash as at 30
June 2020, and access to a further GBP10m of lending on which
leverage/interest cover covenant tests have been waived until
September 2021.
Strategic and operational highlights
We have been encouraged by the resilient performance of some of
our brands, demonstrating the benefit from Centaur's investment in
digital transformation in recent years. During the half, our teams
moved quickly to adapt some of our training and events to an online
format, allowing us to maintain relationships and sales of our
services.
However, the enforced closure of large parts of the UK economy,
had a severe impact on our Q2 revenues, particularly at
MarketMakers and in our recruitment advertising. On an
underlying(2) basis, revenue for the half year decreased by 20% in
Xeim to GBP15.0m and by 10% to GBP2.7m in The Lawyer. This
comparison adjusts for the sale of Venture Business Research, last
year's closure of Marketing Week Live and the postponement of legal
events to the second half of 2020.
At Xeim, Mini-MBA continues to perform well with year-on-year
revenue and delegate numbers more than doubling, reflecting strong
demand for its online courses, including new bespoke offerings.
Influencer Intelligence has reported flat revenues for the half
year which reflects a satisfactory performance in the context of
COVID-19. It achieved good revenue growth in Q1 which was offset by
a significant fall in Q2 renewals resulting from many of its
customers in the fashion and retail sectors struggling.
Thanks to the strength of our digital capabilities, we were able
to move many of our face-to-face training sessions online. We also
plan to hold online versions of several of our flagship events,
including The Festival of Marketing, The Lawyer Awards and The
Lawyer General Counsel Summit. However, the online format is
expected to lead to a significant reduction in event revenues as we
will not benefit from delegate or table sales.
MarketMakers experienced a sharp fall in revenue as several
major customers were hit by disruption in their own markets and
therefore cancelled their spending. In addition, a substantial
proportion of its SME telemarketing business has not renewed.
Management is restructuring MarketMakers to make it a smaller
business, focused upon the Really B2B marketing agency. This is
expected to lead to the loss of about 130 roles in July
(approximately half of the total employees) and it is likely that
further restructuring will be required. The reduced size and
profitability of the business, as well as the structural weakness
in the outbound telesales market, has required Centaur to make an
impairment charge of GBP11.0m against the value of its assets,
which represents the full goodwill on acquisition of
MarketMakers.
Econsultancy also felt the impact from reduced levels of
customer spend following the onset of the pandemic. In response,
the brand has embraced online training and continued to reduce
fixed costs.
The Lawyer continues to attract strong renewal income from
leading international law firms with the 2020 renewal season
largely complete and delivering a year-on-year renewal rate of
106%. It was recently named Business Information Product of the
Year at the PPA Awards, where the judges said The Lawyer was "an
innovative and commercially successful product with a very smart,
clear strategy". Litigation Tracker, launched in January 2019, has
also continued to perform robustly, and will introduce further
platform enhancements before the end of the year. The strength of
The Lawyer's subscription business, resulting in a 13% increase in
premium revenue, helped to partly offset a 36% fall in its
advertising revenues as the recruitment market shut down during the
pandemic.
In addition to the restructuring at MarketMakers, there have
been a small number of job losses at our London office. Together,
these measures have resulted in an exceptional restructuring charge
of GBP0.6m. This excludes any further restructuring costs that may
be required at MarketMakers.
Dividends
As previously announced, the Board is adopting a prudent
approach to shareholder distributions and will not declare an
interim dividend payment for the half year. The Board will
determine the timing for the resumption of dividends once the
broader market situation and the impact of COVID-19 on its business
and its cashflow becomes clearer.
Outlook
Due to the pandemic, Centaur is reviewing the targets for its
MAP22 plan and will provide an update when we have greater clarity
on future trading. At present, we have little visibility beyond Q3
and the full year outturn will depend on the performances of the
Festival of Marketing and The Lawyer Awards. With the short-term
outlook for face-to-face events remaining uncertain due to
government and client companies' restrictions on travel and
meetings, and concern for the safety of our employees, the new
online format for our second-half events makes forecasting
difficult. For our other business lines, the effect of COVID-19 is
likely to result in some customers delaying purchasing decisions as
the economic and business outlook remains uncertain.
We will provide guidance as soon as we have a clearer view of
trading over the balance of 2020. Over the medium and longer term,
we would expect the contraction of our cost base achieved in 2019,
together with further reductions undertaken in the context of
COVID-19, to result in a more streamlined and resilient business.
This will allow Centaur to capitalise on future opportunities and
deliver significantly improved margins.
Swag Mukerji, Chief Executive Officer, commented:
"We had a good start to the year and were on track with our
MAP22 plans. Following the onset of the pandemic, we took swift
action to restructure the business, reduce our cost base and obtain
bank covenant waivers so that we remain financially strong.
In the context of market conditions and the ongoing uncertainty,
we continue to be encouraged by the performance of a number of our
key brands where we adapted our offering as we went into lockdown.
The profit margin shortfall arising from the revenue reduction was
substantially mitigated by the flow through of 2019 cost reductions
as well as further cost savings we have implemented this year.
With that in mind, we are confident that Centaur will emerge
from 2020 a more resilient business well-positioned to take
advantage of future opportunities. I would like to thank our
customers and our employees for the tremendous energy and
flexibility they have shown in these difficult times."
(1) Adjusted EBITDA is adjusted operating profit before
depreciation and amortisation on a post-IFRS 16 basis. Adjusting
items are detailed in note 4 of this Interim Report.
(2) Underlying revenues exclude the impact of Venture Business
Research which was sold in the first half of 2019, Marketing Week
Live which was closed in the first half of 2019, and events in The
Lawyer which took place in H1 2019, but have been moved to H2 in
2020 due to the pandemic.
Enquiries
Centaur Media plc
Swag Mukerji, Chief Executive
Officer 020 7970 4000
Simon Longfield, Chief Financial
Officer
Teneo
Paul Durman / Matthew Thomlinson 07793 522824 / 07785 528363
Overview of Group Performance
The performance of the Group has been impacted by the COVID-19
pandemic, especially in relation to our live events and
MarketMakers businesses. We have postponed six events run by The
Lawyer into the second half of 2020 and MarketMakers has seen a
significant fall in revenue as several of its larger customers were
hit by disruption in their own markets.
Due to our strong digital capabilities, we have been able to
move many of our face-to-face training sessions online and plan to
hold online or hybrid versions of some of our flagship events
including The Festival of Marketing, The Lawyer Awards and The
Lawyer General Counsel Summit. This digital capability has, and
will, allow us to protect a proportion of these important revenue
streams for the duration of the pandemic.
The Mini-MBA has continued to perform strongly with year-on-year
revenue growth of 101%. Overall premium content revenues have held
up well across the Group with a renewal rate of 106% in The Lawyer.
Influencer Intelligence and Econsultancy subscriptions were showing
good year-on-year growth in billings prior to COVID-19 but have
since seen reduced demand leaving revenue flat for Influencer
Intelligence and down 17% for Econsultancy. As would be expected in
a downturn, Marketing and Advertising Solutions revenues have
fallen during the period, especially relating to recruitment
advertising.
The Group took decisive action at the start of the pandemic with
recruitment frozen, approximately 25% of employees put on the
government's furlough scheme, a reduction in board and senior
management remuneration and a reduction in discretionary spend. We
have also announced a significant restructuring of the MarketMakers
business. The Group's balance sheet remains strong with closing
cash of GBP8.4m. On the back of our strong balance sheet, the Group
has access to a further GBP10m of lending on which
leverage/interest cover covenant tests have been waived until
September 2021. This is a temporary reduction of the Group's limit
available under its GBP25m revolving credit facility signed in
2018. The Group has the right to re-instate the GBP25m limit with
applicable full covenant testing at any time.
Trading Summary
Six months ended Six months ended Reported
30 June 2020 30 June 2019 movement
Unaudited Unaudited %
----------------------------------------------------------------- ----------------- ----------------- ---------
Revenue (GBPm) 17.7 24.1 (27)
----------------------------------------------------------------- ----------------- ----------------- ---------
Other operating income (GBPm) - 1.0 (100)
----------------------------------------------------------------- ----------------- ----------------- ---------
Adjusted (2) operating loss (GBPm) (1.1) (1.3) 15
----------------------------------------------------------------- ----------------- ----------------- ---------
Adjusted(2) loss before tax (GBPm) (1.3) (1.4) 7
----------------------------------------------------------------- ----------------- ----------------- ---------
Statutory operating loss (GBPm) (14.4) (4.6) (213)
----------------------------------------------------------------- ----------------- ----------------- ---------
(Loss)/profit for the period from discontinued operations (GBPm) (0.1) 2.2 -
----------------------------------------------------------------- ----------------- ----------------- ---------
Group statutory (loss)/profit after tax (GBPm) (13.9) 6.0 -
Adjusted(2) diluted EPS from continuing operations (pence) (0.6) (0.9) 33
----------------------------------------------------------------- ----------------- ----------------- ---------
Adjusted(2) diluted EPS from discontinued operations (pence) - 1.5 (100)
Ordinary dividend per share (pence) - 1.5 (100)
----------------------------------------------------------------- ----------------- ----------------- ---------
Special dividend per share (pence) - 2.0 (100)
----------------------------------------------------------------- ----------------- ----------------- ---------
Total dividend per share (pence) - 3.5 (100)
----------------------------------------------------------------- ----------------- ----------------- ---------
Adjusted operating cash flow(3) (GBPm) 3.2 2.6 23
----------------------------------------------------------------- ----------------- ----------------- ---------
Cash conversion(4) N/A 74%
----------------------------------------------------------------- ----------------- ----------------- ---------
The Group is unable to provide a calculated cash conversion
number for H1 2020 as Adjusted EBITDA excluding the impact of IFRS
16 is nil. Cash collection has remained strong and the Group has a
sizeable cash balance.
Reported revenue fell 27% year-on-year with Xeim reported
revenue falling (24%) and The Lawyer revenue falling (39%).
Underlying(1) group revenue fell 18% year-on-year with Xeim showing
decline of 20% and The Lawyer 10%.
Due to the COVID-19 pandemic, The Lawyer postponed a series of
events to the second half of 2020. In 2019 these events recorded
revenue of GBP1.3m. In H1 2019 the Group also disposed of Venture
Business Research ("VBR"). These events, and the revenues of VBR
have been excluded from the underlying (1) revenue calculations of
The Lawyer presented within this report. In Xeim, underlying (1)
revenue for 2019 excludes the impact of Marketing Week Live which
was closed in that year.
The adjusted(2) operating loss was GBP1.1m (2019: loss of
GBP1.3m) which, despite the impact of COVID-19, still represents a
year-on-year improvement due to the significantly lower cost base
of the business following the 2019 overhead reduction plan.
Following declines in revenue in its telemarketing business,
MarketMakers has been restructured and the Group has recognised the
full impairment of its goodwill of GBP11.0m. In addition to the
restructuring at MarketMakers, there have been a small number of
job losses at our London office. Together, these measures have
resulted in an exceptional restructuring charge of GBP0.6m.
Cash decreased from GBP9.3m at the end of 2019 to GBP8.4m at the
end of June. Cash performance was strong in the period and cash
collection has performed well. In the period, the Group generated
GBP3.2m (pre IFRS 16) of cash from operating activities and paid
out GBP3.4m pertaining to exceptional costs related to the 2019
disposal and redundancy programme that were accrued at the end of
2019.
Six months ended 30 June (unaudited)
2020 2019
GBPm GBPm
------------------------------------------- ------------------- ------------------
Adjusted (2) operating (loss)/profit (1.1) 1.6
Depreciation and amortisation pre IFRS 16 1.1 1.9
Movement in working capital pre IFRS 16 3.2 (0.9)
Adjusted operating cash flow(3) 3.2 2.6
Capital expenditure (0.6) (0.4)
Cash impact of exceptional items (3.4) (0.7)
Taxation - (0.3)
Interest and finance leases pre IFRS 16 - (0.1)
------------------------------------------- ------------------- ------------------
Free cash flow (0.8) 1.1
Acquisitions - (0.1)
Disposals (0.1) 16.0
Dividends - (2.1)
Share buybacks - (0.6)
------------------------------------------- ------------------- ------------------
(Decrease)/increase in net cash (0.9) 14.3
Opening net cash 9.3 0.1
------------------------------------------- ------------------- ------------------
Closing net cash 8.4 14.4
------------------------------------------- ------------------- ------------------
Adjusted(2) diluted EPS for the reporting period was (0.6)p. In
2019, we reported (0.9)p from continuing operations and 1.5p from
discontinued operations. Diluted EPS for the reporting period on a
statutory basis was (9.6)p. In 2019, we reported 3.9p with (2.9)p
from continuing operations and 6.8p from discontinued operations.
There was no impact from discontinued operations on EPS in
2020.
Segmental Review
Revenue and adjusted(2) operating loss for the six months ended
30 June, together with reported and underlying(1) growth rates
across each segment, are set out below.
Xeim The Lawyer Total Xeim The Total
Lawyer
2020 2020 2020 2019 2019 2019
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ------ ----------- ------ ------ -------- ------
Underlying revenue
Premium Content 5.1 1.8 6.9 5.5 1.6 7.1
Marketing Services 1.5 - 1.5 2.0 - 2.0
Training and Advisory 3.1 - 3.1 3.5 - 3.5
Events 0.3 - 0.3 0.4 - 0.4
Marketing and Advertising
Solutions 1.8 0.9 2.7 2.3 1.4 3.7
Telemarketing Services 3.2 - 3.2 5.0 - 5.0
--------------------------------- ------ ----------- ------ ------ -------- ------
Total underlying revenue 15.0 2.7 17.7 18.7 3.0 21.7
Underlying revenue decline
(%) (20) (10) (18)
Revenue from closed or deferred
events
and disposals - - - 1.0 1.4 2.4
Total statutory revenue 15.0 2.7 17.7 19.7 4.4 24.1
Statutory revenue decline
(%) (24) (39) (27)
--------------------------------- ------ ----------- ------ ------ -------- ------
The table below reconciles the adjusted operating profit/(loss)
for each segment to the adjusted EBITDA:
Xeim The Central Total Xeim The Central Total
Lawyer Lawyer
2020 2020 2020 2020 2019 2019 2019 2019
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- ------- -------- -------- ------- ------- -------- -------- -------
Revenue 15.0 2.7 - 17.7 19.7 4.4 - 24.1
Other income - - - - - - 1.0 1.0
Operating costs (14.3) (2.4) (2.1) (18.8) (18.2) (3.1) (5.1) (26.4)
---------------------------------- ------- -------- -------- ------- ------- -------- -------- -------
Adjusted operating profit/(loss) 0.7 0.3 (2.1) (1.1) 1.5 1.3 (4.1) (1.3)
Adjusted operating margin 5% 11% - - 8% 30% - -
Depreciation and amortisation 1.4 0.3 0.4 2.1 1.4 0.4 0.7 2.5
---------------------------------- ------- -------- -------- ------- ------- -------- -------- -------
Adjusted EBITDA (post-IFRS
16) 2.1 0.6 (1.7) 1.0 2.9 1.7 (3.4) 1.2
Adjusted EBITDA margin
(post-IFRS 16) 14% 22% - 6% 15% 39% - 5%
------- -------- -------- -------
Adjusted EBITDA (pre-IFRS
16) 1.4 0.5 (1.9) - 2.1 1.5 (3.4) 0.2
Adjusted EBITDA margin
(pre-IFRS 16) 9% 19% - - 11% 34% - 1%
---------------------------------- ------- -------- -------- ------- ------- -------- -------- -------
Xeim
Xeim reports a decrease in statutory and underlying revenue of
24% and 20% respectively. There are no adjustments to underlying
revenue for Xeim in 2020. Xeim's underlying revenue for 2019
excludes the impact of Marketing Week Live which ran for the last
time in 2019.
Strong performance in the Mini-MBA has been offset by falling
telemarketing revenues at MarketMakers, lower training revenues in
Econsultancy and declines in advertising revenue.
Adjusted EBITDA has fallen GBP0.8m to GBP2.1m. Despite a fall in
revenue of GBP4.7m, Xeim has managed its cost base such that the
impact on the bottom line has been limited.
Xeim contains four key brands - Marketing Week, Econsultancy,
MarketMakers and Influencer Intelligence.
Marketing Week reported strong revenue growth in H1 2020 on the
back of an excellent performance from the Mini-MBA which saw
delegate growth of 103% from 2019. Marketing Week also moved behind
a paywall in 2019 and we saw continued growth in subscription
numbers through the first half of 2020.
Econsultancy had a challenging period with training revenue down
significantly as corporates cut back on face-to-face training
programmes. We have moved quickly to introduce increased online
training capability and expect that this will mitigate against
further declines in training revenue. Premium content has also
fallen as corporates have cut back on discretionary marketing
related spend.
MarketMakers has been the hardest hit part of the Group with
telemarketing sales down 37% as several large clients have cut
spend significantly. A major restructuring of the business has
taken place with approximately 130 employees to leave the business
at the end of July and a revised focus on marketing services
through Really B2B. It is likely that further restructuring will be
required.
Influencer Intelligence has reported flat revenues for the half
year which reflects a satisfactory performance in the context of
COVID-19. Billings were above the prior year by 13% in the first
two months of 2020, although since the start of the COVID-19
pandemic renewals and new business have dropped.
Across Xeim as a whole marketing and advertising solutions
revenue fell 22% against 2019.
The Lawyer
The Lawyer's events business has been significantly impacted in
the first half of 2020 with six events being delayed into the
second half of 2020. Excluding the impact of timing of events and
the disposal of VBR in H1 2019, underlying revenue is down 10%. A
decline in marketing solutions and recruitment advertising revenue
of 36% is partially offset by good growth in premium content
revenue arising from a year-on-year renewal rate of 106% - all
magic circle law firms have renewed their subscriptions during the
period.
Adjusted EBITDA has fallen 65% from GBP1.7m to GBP0.6m. The
Lawyer has been impacted more than Xeim in a reduction in reported
revenue due to the deferral of events to the second half. Strong
cost control and reduction has, like Xeim, reduced the impact on
the bottom line.
Dividends
On 27(th) May 2020, the Group announced that it was suspending
payment of the final 0.5p dividend relating to the 2019 financial
year in order to preserve cash during the COVID-19 pandemic. Due to
continued uncertainty from the pandemic the Board currently does
not believe it is prudent to declare an interim dividend for 2020.
The Board will keep the situation under review and determine the
timing for resumption of dividends once the longer-term impact on
the Group's cashflow has become clearer.
Balance Sheet
The balance sheet of the Group remains strong with good levels
of cash. Although days sales outstanding has increased marginally,
cash collection has remained healthy and we continue to closely
monitor the risk of exposure to bad debt.
Goodwill decreased by GBP11.0m in the period resulting from the
impairment to MarketMakers following its restructure as discussed
earlier in this report.
Outlook
Due to the pandemic, Centaur is reviewing the targets for its
MAP22 plan and will provide an update when we have greater clarity
on future trading. At present, we have little visibility beyond Q3
and, in particular, the new online format for Festival of Marketing
and our other second-half events makes forecasting difficult. We
will provide guidance as soon as we have a clearer view of trading
over the balance of 2020.
Principal Risks and Uncertainties
-- The world economy has been severely impacted by the COVID-19
pandemic and UK GDP fell 20.2% in April 2020 against March 2020.
This, combined with the end of the transition deal with the EU at
the end of 2020, has significantly increased the Group's
sensitivity to UK / sector economic conditions. The Board considers
this risk to have increased since December 2019.
-- Failure to deliver a high growth performance culture.
Centaur's success depends on growing the business and completing
the MAP22 strategy. In order to do this, it depends in large part
on its ability to recruit, motivate and retain highly experienced
and qualified employees in the face of often intense competition
from other companies, especially true in London. The Board
considers this risk to have remained the same since December
2019.
-- Fraudulent or accidental breach of our security, or
ineffective operation of IT and data management systems leads to
loss, theft or misuse of personal data or confidential information
or other breach of data protection requirements. The Board
considers this risk to be broadly the same as for the prior
year.
-- Regulatory: GDPR, PECR and other similar legislation involve
strict requirements regarding how Centaur handles personal data,
including that of customers and the risk of a fine from the ICO,
third-party claims (e.g. from customers) as well as reputational
damage if we do not comply. The Board considers this risk to be
broadly the same as for the prior year.
-- Serious systems failure (affecting core systems and multiple
products or functions) or breach of IT network security (either as
a result of a deliberate cyber-attack or unintentional event). The
Board considers this risk to be broadly the same as for the prior
year.
Forward Looking Statements
Certain statements in this interim report are forward looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to have been correct.
Because these statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by
these forward-looking statements. It undertakes no obligation to
update any forward-looking statements whether as a result of new
information, future events or otherwise.
Statement of Directors' Responsibilities
The Directors confirm that this consolidated interim financial
information has been prepared in accordance with IAS 34 as adopted
by the European Union, and that the interim management report
herein includes a fair review of the information required by DTR
4.2.7 and DTR 4.2.8, namely:
-- An indication of important events that have occurred during
the period and their impact on the condensed interim financial
statements, and a description of the principal risks and
uncertainties for the remaining period of the financial year;
and
-- Material related party transactions in the period and any
material changes in the related party transactions described in the
last annual report.
The Directors of Centaur Media Plc are listed in the Centaur
Media Plc Annual Report for the year ended 31 December 2019. On
5(th) February Carol Hosey joined the board as a non-executive
director, replacing Colin Jones as Chair of the Remuneration
Committee; Carole also sits on the Nomination and Audit Committees.
On 1(st) March, Leslie-Ann Reid joined the Board as a non-executive
director and replaced Robert Boyle as Chair of the Audit Committee
on 31(st) March 2020. Robert Boyle and Rebecca Miskin, members of
the Audit, Nomination and Remuneration committees, retired on
31(st) March.
A list of current directors is maintained on the Centaur Media
Plc website.
Going Concern
In assessing the going concern status, the Directors considered
the Group's activities, the financial position of the Group and
their identification of any material uncertainties including the
impact of the current COVID-19 pandemic and the principal risks to
the Group. The Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for at least 12 months from the date of this report and for this
reason, they continue to adopt the going concern basis in preparing
the interim financial statements. See the going concern section in
the accounting policies on pages 21 to 22 for further details.
Related Party Transactions
Besides the changes to the Board structure noted above, there
have been no further changes to the reported related parties or
nature of transactions with them as set out in the Annual Report
for the year ended 31 December 2019.
The interim report was approved by the Board of Directors and
authorised for issue on 20 July 2020 and signed on behalf of the
Board by:
Swag Mukerji, Chief Executive Officer
Notes:
(a) The maintenance and integrity of the Centaur Media plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim financial statements
since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of interim financial statements may differ from
legislation in other jurisdictions.
Footnotes:
(1) Underlying revenues exclude the impact of Venture Business
Research which was sold in the first half of 2019, Marketing Week
Live which was closed in 2019, and The Lawyer GC Summit, The Lawyer
In-House Financial Services Conference, The Lawyer 100, The
Marketing Leadership Summit and The European Lawyer Awards all of
which took place in H1 2019, but have been moved to H2 in 2020 due
to the COVID-19 pandemic.
(2) Adjusted results exclude adjusting items, as detailed in
note 4 of this Interim Report.
(3) For reconciliation of adjusted operating cashflow see page
24 of this Interim Report.
(4) Cash conversion is calculated as adjusted operating cashflow
/ adjusting operating profit excluding depreciation and
amortisation charges on a pre-IFRS 16 basis. The 2019 comparative
has also been restated to a pre-IFRS 16 basis
Independent review report to Centaur Media Plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Centaur Media Plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the Interim Report of Centaur Media Plc for the 6 month period
ended 30 June 2020. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the consolidated statement of financial position as at 30 June 2020;
-- the consolidated statement of comprehensive income for the period then ended;
-- the consolidated cash flow statement for the period then ended;
-- the consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the condensed consolidated interim
financial statements.
The interim financial statements included in the Interim Report
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim Report, including the interim financial statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the Interim Report in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim Report based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
20 July 2020
Consolidated Statement of Comprehensive Income for the six
months ended 30 June 2020
Six months ended 30 June (Unaudited)
------------------------------------------------------------------------------
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results(1) items(1) results results(1) items(1) results
2020 2020 2020 2019 2019 2019
Note GBPm GBPm GBPm GBPm GBPm GBPm
Continuing operations
Revenue 2 17.7 - 17.7 24.1 - 24.1
Other operating
income 2 - - - 1.0 - 1.0
Net operating
expenses 3 (18.8) (13.3) (32.1) (26.4) (3.3) (29.7)
Operating loss (1.1) (13.3) (14.4) (1.3) (3.3) (4.6)
Finance costs (0.2) - (0.2) (0.1) - (0.1)
Loss before tax (1.3) (13.3) (14.6) (1.4) (3.3) (4.7)
Taxation 5 0.5 0.3 0.8 0.2 0.3 0.5
Loss for the period
from continuing
operations (0.8) (13.0) (13.8) (1.2) (3.0) (4.2)
Discontinued
operations
(Loss) / profit
for the period
from discontinued
operations 6 (0.1) - (0.1) 2.2 8.0 10.2
(Loss) / profit
for the period
attributable
to owners of
the parent (0.9) (13.0) (13.9) 1.0 5.0 6.0
Total comprehensive
(loss) / income
attributable
to owners of
the parent (0.9) (13.0) (13.9) 1.0 5.0 6.0
(Loss) / earnings
per share attributable
to owners of
the parent 7
Basic from continuing
operations (0.6p) (9.0p) (9.6p) (0.9p) (2.0p) (2.9p)
Basic from discontinued
operations - - - 1.6p 5.5p 7.1p
-------------------------------- ------------- ---------- ---------- ------------ ----------- ----------
Total (0.6p) (9.0p) (9.6p) 0.7p 3.5p 4.2p
------------------------ ------ ------------- ---------- ---------- ------------ ----------- ----------
Fully diluted from
continuing operations (0.6p) (9.0p) (9.6p) (0.9p) (2.0p) (2.9p)
Fully diluted from
discontinued
operations - - - 1.5p 5.3p 6.8p
------------------------ ------ ------------- ---------- ---------- ------------ ----------- ----------
Total (0.6p) (9.0p) (9.6p) 0.6p 3.3p 3.9p
------------------------ ------ ------------- ---------- ---------- ------------ ----------- ----------
(1) Adjusting items are disclosed in note 4
Consolidated Statement of Changes in Equity for the six months
ended 30 June 2020
Reserve for Foreign
Share Own Share shares to Deferred currency Retained Total
capital shares premium be issued shares reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Unaudited
At 1 January 2019 15.1 (6.9) 1.1 1.8 0.1 - 55.5 66.7
Profit for the period and
total comprehensive income - - - - - - 6.0 6.0
Transactions with owners:
Dividends (note 13) - - - - - - (2.1) (2.1)
Acquisition of treasury shares (note 14) - (0.6) - - - - - (0.6)
Fair value of employee services - - - 0.3 - - - 0.3
------------------------------------------ ----- ------ ---- ---- ---- ------ ------
As at 30 June 2019 15.1 (7.5) 1.1 2.1 0.1 - 59.4 70.3
------------------------------------------ ----- ------ ---- ---- ---- ------ ------
Unaudited
At 1 January 2020 15.1 (7.2) 1.1 1.8 0.1 0.1 50.1 61.1
Profit for the period and
total comprehensive income - - - - - - (13.9) (13.9)
Transactions with owners:
Exercise of share awards (notes 14 & 15) - 0.8 - (0.6) - - (0.2) -
Fair value of employee services (note 15) - - - 0.5 - - - 0.5
Foreign currency on translation - - - - - (0.1) - (0.1)
------------------------------------------- ----- ------ ---- ------ ---- ------ ------- -------
As at 30 June 2020 15.1 (6.4) 1.1 1.7 0.1 - 36.0 47.6
------------------------------------------- ----- ------ ---- ------ ---- ------ ------- -------
Consolidated Statement of Financial Position as at 30 June
2020
Registered number 04948078
30 June Restated (2) 30 June 31 December 1 January
2020 2019 2019 2019
Unaudited Unaudited Audited Unaudited
Note GBPm GBPm GBPm GBPm
Non-current assets
Goodwill 8 41.2 52.2 52.2 62.6
Other intangible assets 9 7.1 10.9 9.0 15.5
Property, plant and equipment 5.2 2.6 4.3 3.6
Deferred income tax assets 2.3 0.8 1.4 0.8
55.8 66.5 66.9 82.5
------------------------------------------------ ----- ---------- --------------------- ------------ ------------
Current assets
Inventories - 0.2 - 1.4
Trade and other receivables 10 8.1 13.7 10.8 14.5
Cash and cash equivalents 8.4 14.4 9.3 0.1
Current tax asset - 0.4 0.1 0.2
16.5 28.7 20.2 16.2
------------------------------------------------ ----- ---------- --------------------- ------------ ------------
Total assets 72.3 95.2 87.1 98.7
------------------------------------------------ ----- ---------- --------------------- ------------ ------------
Current liabilities
Trade and other payables (8.8) (11.9) (12.5) (13.0)
Lease liabilities 11 (2.1) (1.2) (2.1) (2.3)
Deferred income (9.9) (10.5) (8.7) (15.0)
Provisions 12 (0.6) - - (0.1)
(21.4) (23.6) (23.3) (30.4)
------------------------------------------------ ----- ---------- --------------------- ------------ ------------
Net current (liabilities) / assets (4.9) 5.1 (3.1) (14.2)
------------------------------------------------ ----- ---------- --------------------- ------------ ------------
Non-current liabilities
Lease liabilities 11 (2.9) (0.9) (2.2) (1.0)
Provisions - (0.1) (0.1) (0.1)
Deferred tax liabilities (0.4) (0.3) (0.4) (0.5)
(3.3) (1.3) (2.7) (1.6)
------------------------------------------------ ----- ---------- --------------------- ------------ ------------
Net assets 47.6 70.3 61.1 66.7
------------------------------------------------ ----- ---------- --------------------- ------------ ------------
Capital and reserves attributable to owners of
the parent
Share capital 15.1 15.1 15.1 15.1
Own shares 14 (6.4) (7.5) (7.2) (6.9)
Share premium 1.1 1.1 1.1 1.1
Other reserves 1.8 2.2 1.9 1.9
Foreign currency reserve - - 0.1 -
Retained earnings 36.0 59.4 50.1 55.5
------------------------------------------------ ----- ---------- --------------------- ------------ ------------
Total equity 47.6 70.3 61.1 66.7
------------------------------------------------ ----- ---------- --------------------- ------------ ------------
(2) See note 1 for description of the prior period
restatement.
The notes are an integral part of these condensed consolidated
interim financial statements. The condensed consolidated interim
financial statements were approved by the Board of Directors on 20
July 2020 and were signed on its behalf by:
Simon Longfield
Chief Financial Officer
Consolidated Cash Flow Statement for the six months ended 30
June 2020
Six months ended 30 June (unaudited)
---------------------------------------
2020 2019
Note GBPm GBPm
Cash flows from operating activities
Cash generated from operations 16 0.9 3.1
Tax paid - (0.3)
Net cash generated from operating activities 0.9 2.8
---------------------------------------------------------------------- --- ------------------ -------------------
Cash flows from investing activities
Cash consideration received on disposal of subsidiaries less cash and
cash equivalents disposed
of 6 - 16.5
Directly attributable costs of disposal of subsidiaries (0.1) (0.5)
Purchase of property, plant and equipment (0.2) -
Purchase of intangible assets 9 (0.4) (0.4)
Acquisition of subsidiary - settlement of deferred consideration - (0.1)
Net cash flows (used in) / generated from investing activities (0.7) 15.5
---------------------------------------------------------------------- --- ------------------ -------------------
Cash flows from financing activities
Payment for shares bought back - (0.6)
Interest paid - (0.1)
Payment of obligations under finance lease 11 (1.1) (1.2)
Dividends paid to company's shareholders 13 - (2.1)
Proceeds of borrowings - 2.8
Repayment of borrowings - (2.8)
Net cash flows used in financing activities (1.1) (4.0)
---------------------------------------------------------------------- --- ------------------ -------------------
Net (decrease) / increase in cash and cash equivalents (0.9) 14.3
---------------------------------------------------------------------- --- ------------------ -------------------
Cash and cash equivalents at beginning of period 9.3 0.1
---------------------------------------------------------------------- --- ------------------ -------------------
Cash and cash equivalents at end of period 8.4 14.4
---------------------------------------------------------------------- --- ------------------ -------------------
Reconciliation of net cash:
Cash and cash equivalents 8.4 14.4
Borrowings - -
---------------------------------------------------------------------- --- ------------------ -------------------
8.4 14.4
---------------------------------------------------------------------- --- ------------------ -------------------
Notes to the condensed consolidated interim financial
statements
1 Summary of significant accounting policies
General information
Centaur Media Plc ('the Company') is a public company limited by
shares and incorporated and domiciled in England and Wales. The
address of the Company's registered office is Floor M, 10 York
Road, London, SE1 7ND, United Kingdom. The Company is listed on the
London Stock Exchange.
These condensed consolidated interim financial statements were
approved for issue on 20 July 2020.
These condensed consolidated interim financial statements are
unaudited and do not constitute the statutory accounts within the
meaning of Section 434 of the Companies Act 2006. The Group's most
recent statutory financial statements, which comprise the Annual
Report and audited Financial Statements for the year ended 31
December 2019 were approved by the Board of Directors on 17 March
2020 and delivered to the Registrar of Companies. The report of the
auditors on those financial statements was not qualified, did not
contain an emphasis of matter paragraph and did not contain any
statement under Section 498 of the Companies Act 2006.
The consolidated financial statements of the Group as at, and
for the year ended 31 December 2019, are available upon request
from the Company's registered office or at www.centaurmedia.com
.
Accounting policies and estimates
The accounting policies adopted by the Group in the condensed
consolidated interim financial statements are consistent with those
applied by the Group in its consolidated financial statements for
the year ended 31 December 2019, except as described below:
-- Taxes on income in the interim periods are accrued using the
tax rate that would be applicable to the expected total annual
profit or loss.
The following accounting policy has been adopted by the Group in
the condensed consolidated interim financial statements from 1
January 2020:
-- Government grants
Grants from the government are recognised at their fair value
where there is a reasonable assurance that the grant will be
received, and the Group will comply with all attached conditions.
Government grants are recognised in the profit or loss and deducted
from the related expense within net operating expenses in the
consolidated statement of comprehensive income. Note 3 provides
further information on how the Group accounts for government
grants.
The preparation of the condensed consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements as at and for the year ended 31
December 2019.
Management note that there is an increased level of uncertainty
in relation to key accounting assumptions, estimates and judgements
regarding the going concern assumption, the carrying value of
goodwill and intangible assets and expected credit loss. These
estimates use forecasts and discounted forecast cash flows, which
are exposed to an increased level of uncertainty in light of
COVID-19. To mitigate the risk this increased level of uncertainty
poses, the forecasts used have had increased levels of sensitivity
applied in assessments. Please refer to the going concern section
below, note 8 and note 10.
New standards and interpretations not yet adopted
There are no 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.
Prior period restatement
i) Correction of prior period accounting errors
Where indicated, restatements have been made to prior period
comparatives for right-of-use ('ROU') assets, other receivables and
accruals (presented in property, plant and equipment, trade and
other receivables and trade and other payables respectively on the
face of the consolidated statement of financial position). The
restatement is in respect of an error in the measurement of ROU
assets on the adoption of IFRS 16 on 1 January 2019. Initial
measurement of the ROU asset is calculated as the NPV of the lease
liability, adjusted for a) any rental accrual or prepayment on the
balance sheet on 31 December 2018 relating to the asset that arose
under the previous accounting standard IAS 17 and b) an additional
adjustment in relation to a lease incentive receivable on the exit
of a London property. At 30 June 2019, this restatement has
resulted in lowering the net book value of ROU assets by GBP0.7m,
increasing other receivables by GBP0.5m and reducing accruals by
GBP0.2m. For the six months ended 30 June 2019, the restatement has
resulted in a decrease in depreciation on ROU assets by GBP0.3m and
an increase in other operating expenses by GBP0.3m, both of which
are presented in net operating expenses on the consolidated
statement of comprehensive income. Therefore, there is no net
impact to the consolidated statement of comprehensive income,
whilst there is a decrease of GBP0.3m on EBITDA. There is no tax
impact of the restatement.
This was identified after the authorisation of the 2019 Interim
Report, and therefore the balances are being retrospectively
restated. This restatement has impacted the balances on the
consolidated statement of financial position and notes 3, 10, 11
and 16. This restatement has no impact to periods prior to 2019.
The 2019 Annual Report and financial statements were adjusted for
these items and so there is no further restatement in the 2020
financial statements.
Comparative numbers
Certain prior period comparatives have been updated to reflect
current period disclosures. Refer to notes 2 and 4 for further
details.
Basis of preparation
The condensed consolidated interim financial statements for the
six-month period ended 30 June 2020 have been prepared in
accordance with the Disclosure and Transparency rules of the
Financial Conduct Authority and with International Financial
Reporting Standards ('IFRSs') and IAS 34, 'Interim financial
reporting', as adopted by the European Union. The condensed
consolidated financial statements should be read in conjunction
with the Annual Report and Financial Statements for the year ended
31 December 2019, which have been prepared in accordance with IFRSs
as adopted by the European Union.
Going concern
The Group has net current liabilities at 30 June 2020 of GBP4.9m
(2019: net current assets GBP5.1m). In the current period net
current liabilities are primarily arising from the Group's normal
high levels of deferred income relating to events in the future
rather than an inability to service its liabilities, as deferred
income will not result in a cash outflow. In the prior period net
current assets resulted from the normal high levels of deferred
income, offset by larger current asset balances, including a higher
cash and cash equivalents of GBP14.4m driven by the sale of
subsidiaries.
In assessing the going concern status, the Directors considered
the Group's activities, the financial position of the Group and
their identification of any material uncertainties including the
impact of the current COVID-19 pandemic and the principal risks to
the Group. The Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for at least 12 months from the date of this report and for this
reason, they continue to adopt the going concern basis in preparing
the interim financial statements.
The Board has paid special attention to the going concern status
of the Group given the COVID-19 pandemic. The Group's revenue, and
hence profitability, has been impacted in the first half of 2020
primarily in our telemarketing and events businesses. The Group's
increased reliance on premium subscription revenue and strong
growth in our Mini-MBA e-learning course and reduced reliance on
advertising and events revenue, combined with the benefits of the
2019 overhead cost reduction programme, has significantly
strengthened the Group's ability to continue operations during a
severe downturn.
The Group remains exposed to the events business and reported
underlying events revenue of GBP5.3m in 2019. Action has been taken
to move as many of these events online as possible in order to
maintain a proportion of these revenue streams. As announced on 10
July, the Festival of Marketing is going digital, delivering a
week-long global event in October.
As part of the Board's considerations, management has considered
a variety of revenue and profit downside scenarios including
significantly lower revenue from major events such as the Festival
of Marketing and The Lawyer Awards combined with large revenue
falls across other major revenue streams including MarketMakers. It
is felt this scenario is unlikely given the preparation already
undertaken for these events to take place digitally.
In these downside scenarios, there could be a period of time in
which the Group has a negative rolling 12-month adjusted EBITDA and
therefore unable to draw on its revolving credit facility of
GBP25m. The Group has therefore negotiated access to GBP10m of
lending on which leverage/interest cover covenant tests have been
waived until September 2021. This is a temporary reduction of the
Group's limit available under its GBP25m revolving credit facility
signed in 2018. The Group has the right to re-instate the GBP25m
limit with applicable full covenant testing at any time. These
downside scenarios indicate the Group has sufficient headroom to
remain a going concern.
This waiver is subject to a minimum liquidity test of GBP3m
combining the GBP10m revolving credit facility limit and the
Group's GBP1.7m overdraft facility.
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 assist
shareholders in understanding its core trading performance. The
basis of the principal adjustments is comparable with that
presented in the consolidated financial statements for the year
ended 31 December 2019, and as described in those financial
statements. The measures used are explained and reconciled to their
equivalent statutory headings below.
The Directors believe that adjusted results and adjusted
earnings per share provide additional useful information on the
ongoing operations of the Group to shareholders. 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 size, is likely to be material
and non-recurring in nature so as to assist the user of the
financial statements to better understand the results of the core
operations of the Group. Details of exceptional items are shown in
note 4.
-- 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. Details of the goodwill impairment
analysis are shown in note 8.
-- 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 non-trading 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 9.
-- Share-based payments - share-based payment expenses 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.
-- 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 the 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.
Further details of adjusting items are included in note 4. A
reconciliation between adjusted and statutory earnings per share
measures is shown in note 7.
The following charges / (credits) were presented as adjusting
items:
Six months ended 30 June (unaudited)
---------------------------------------
2020 2019
GBPm GBPm
Continuing operations
Loss before tax (14.6) (4.7)
Exceptional operating costs 0.6 1.4
Impairment of goodwill 11.0 -
Amortisation of acquired intangibles 1.2 1.2
Share-based payments 0.5 0.4
Loss on disposal of subsidiary - 0.3
--------------------------------------- ------------------- ------------------
Adjusted loss before tax (1.3) (1.4)
Finance costs 0.2 0.1
Adjusted operating loss (1.1) (1.3)
--------------------------------------- ------------------- ------------------
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. 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.
Statutory cash flow from operations reconciles to adjusted
operating cash as below:
Six months ended 30 June (unaudited)
---------------------------------------
2020 2019
GBPm GBPm
Reported cash flow from operating activities 0.9 3.1
Cash impact of adjusting items - 1.4
Working capital impact of adjusting items 3.4 (0.7)
Cash impact of IFRS 16 (1.1) (1.2)
----------------------------------------------- ------------------- ------------------
Adjusted operating cash flow pre IFRS 16 3.2 2.6
----------------------------------------------- ------------------- ------------------
Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk, credit risk and liquidity risk. The condensed
consolidated interim financial statements do not include all
financial risk management information and disclosures required in
the annual consolidated financial statements; they should be read
in conjunction with the Group's annual consolidated financial
statements for the year ended 31 December 2019.
Market risk has increased significantly as a result of the
COVID-19 pandemic as can be seen by the decline in revenues caused
in our telemarketing and advertising businesses. The Group's
diversified revenue streams, with a strong subscription base
revenue stream and growth in e-Learning from our Mini-MBA course,
combined with the cost reduction programme seen in 2019, has helped
the Group mitigate against the decline in the wider market. The
COVID-19 pandemic has increased the credit risk to the Group as the
average time for our debtors to pay has increased since the
beginning of lockdown in March. This slowdown is reflected in the
increased provision held by the Group as a percentage of gross
trade debtors when compared to December 2019. We are pleased to
note that cash collection times improved in June and days sales
outstanding are only marginally higher than they were in 2019. We
continue to closely monitor cash collection. The Group has not
noticed a significant change in liquidity risk over the period as
it still holds a significant cash balance and has successfully
amended the Group's revolving credit facility in the period as
outlined in this report.
There have been no changes in risk management processes or
policies since the year end.
Seasonality
In the Group's annual report for 2019, it was noted that
following the disposal programme in 2019, an increased percentage
of revenue and profits would be derived in the second half of each
financial year.
As a result of the current COVID-19 pandemic, events that
achieved GBP1.4m of revenue in 2019 have been deferred to the
second half of 2020. This means that a larger percentage of the
Group's annual revenue and profit will now be derived in the second
half of 2020.
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 two reportable market-facing
segments: Xeim and The Lawyer. These two segments derive revenues
from a combination of premium content, marketing services, training
and advisory, events, marketing and advertising solutions and
telemarketing services. Overhead costs are allocated to these
segments on an appropriate basis, depending on the nature of the
costs, including in proportion to revenues or headcount. Corporate
income and costs have been presented separately as "Central". The
Group believes this is the most appropriate presentation of
segmental reporting for the user to understand the core operations
of the Group. There is no inter-segmental revenue.
Segment assets consist primarily of property, plant and
equipment, intangible assets including goodwill and trade
receivables. Segment liabilities comprise trade payables, accruals
and deferred income.
Corporate assets and liabilities primarily comprise property,
plant and equipment, intangible assets, current and deferred tax
balances, cash and cash equivalents, borrowings and lease
liabilities.
Capital expenditure comprises additions to property, plant and
equipment (excluding ROU assets - see note 11), intangible assets
and includes additions resulting from acquisitions through business
combinations.
Prior period comparative numbers have been updated to reflect
current period presentation and disclosures. A portion of overhead
costs, and assets and liabilities that were previously presented as
Central have now been allocated to Xeim and The Lawyer, an update
to reflect the same allocation basis as the current period. These
reallocations have resulted in changing overhead costs, assets and
liabilities between segments in the prior period. Xeim and The
Lawyer now have an additional GBP3.5m and GBP1.0m of overhead costs
respectively, GBP14.1m and GBP1.9m assets respectively, and GBP5.6m
and GBP0.9m liabilities respectively, that were previously
presented in Central.
Additionally, The Lawyer now has a loss on disposal of
subsidiary of GBP0.3m that was previously presented in Central
which is the segment that the operational results of Venture
Business Research Limited ('VBR') up to the date of disposal were
presented in. See note 4 for details.
Continuing Discon-tinued
Xeim The Lawyer Core operations Central operations operations Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Six months ended
30 June 2020
Unaudited
Revenue 15.0 2.7 17.7 - 17.7 - 17.7
Adjusted
operating profit
/ (loss) 0.7 0.3 1.0 (2.1) (1.1) - (1.1)
Exceptional
operating costs (0.6) - (0.6) - (0.6) - (0.6)
Impairment of
goodwill (11.0) - (11.0) - (11.0) - (11.0)
Amortisation of
acquired
intangibles (1.2) - (1.2) - (1.2) - (1.2)
Share-based
payments (0.2) - (0.2) (0.3) (0.5) - (0.5)
Operating (loss)
/ profit (12.3) 0.3 (12.0) (2.4) (14.4) - (14.4)
Finance costs (0.2) - (0.2)
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
(Loss) / profit
before tax (14.6) - (14.6)
Taxation 0.8 (0.1) 0.7
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
(Loss) / profit
for the period (13.8) (0.1) (13.9)
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
Segment assets 45.4 19.7 65.1 - 65.1 - 65.1
Corporate assets 7.2 7.2 - 7.2
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
Consolidated
total assets 72.3 - 72.3
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
Segment
liabilities (14.2) (4.6) (18.8) - (18.8) - (18.8)
Corporate
liabilities (5.8) (5.8) - (5.8)
Consolidated
total
liabilities (24.6) - (24.6)
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
Other items
Capital
expenditure
(tangibles and
intangibles) 0.3 - 0.3 0.2 0.5 - 0.5
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
Continuing Discon-tinued
Xeim The Lawyer Core operations Central operations operations Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Six months ended
30 June 2019
Unaudited
Revenue 19.7 4.4 24.1 - 24.1 7.0 31.1
Other operating
income - - - 1.0 1.0 - 1.0
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
Adjusted
operating profit
/ (loss) 1.5 1.3 2.8 (4.1) (1.3) 2.9 1.6
Exceptional
operating costs - (0.9) (0.9) (0.5) (1.4) (0.1) (1.5)
Loss on disposal
of subsidiary - (0.3) (0.3) - (0.3) - (0.3)
Profit on
disposal of
subsidiaries - - - - - 8.2 8.2
Amortisation of
acquired
intangibles (1.2) - (1.2) - (1.2) (0.1) (1.3)
Share-based
payments (0.1) - (0.1) (0.3) (0.4) - (0.4)
Operating profit
/ (loss) 0.2 0.1 0.3 (4.9) (4.6) 10.9 6.3
Finance costs (0.1) - (0.1)
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
(Loss) / profit
before tax (4.7) 10.9 6.2
Taxation 0.5 (0.7) (0.2)
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
(Loss) / profit
for the period (4.2) 10.2 6.0
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
Segment assets
(restated (2) ) 69.5 22.9 92.4 - 92.4 - 92.4
Corporate assets
(restated (2) ) 2.8 2.8 - 2.8
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
Consolidated
total assets
(restated (2) ) 95.2 - 95.2
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
Segment
liabilities
(restated (2) ) (19.2) (4.1) (23.3) - (23.3) - (23.3)
Corporate
liabilities
(restated (2) ) (1.6) (1.6) - (1.6)
Consolidated
total
liabilities
(restated (2) ) (24.9) - (24.9)
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
Other items
Capital
expenditure
(tangibles and
intangibles) 0.4 - 0.4 0.3 0.7 - 0.7
------------------ ------- ----------- ---------------- ---------- ------------------ ----------------- -------
(2) See note 1 for description of the prior period
restatement.
Supplemental information
Revenue by geographical location
The Group's revenues from continuing operations from external
customers by geographical location are detailed below:
Six months ended 30 June (unaudited)
-----------------------------------------------------
Xeim The Lawyer Total Xeim The Lawyer Total
2020 2020 2020 2019 2019 2019
GBPm GBPm GBPm GBPm GBPm GBPm
United Kingdom 11.8 2.1 13.9 16.1 3.5 19.6
Europe (excluding United Kingdom) 0.8 0.3 1.1 1.1 0.5 1.6
North America 1.9 0.2 2.1 2.0 0.3 2.3
Rest of world 0.5 0.1 0.6 0.5 0.1 0.6
---------------------------------- ----- ---------- ----- ------ ------------ -----
15.0 2.7 17.7 19.7 4.4 24.1
---------------------------------- ----- ---------- ----- ------ ------------ -----
Substantially all 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.
Revenue by type
The Group's revenue from continuing operations by type is as
follows:
Six months ended 30 June (unaudited)
-----------------------------------------------------
Xeim The Lawyer Total Xeim The Lawyer Total
2020 2020 2020 2019 2019 2019
GBPm GBPm GBPm GBPm GBPm GBPm
Premium Content 5.1 1.8 6.9 5.5 1.6 7.1
Marketing Services 1.5 - 1.5 2.0 - 2.0
Training & Advisory 3.1 - 3.1 3.5 - 3.5
Events 0.3 - 0.3 1.4 1.4 2.8
Marketing and Advertising Solutions 1.8 0.9 2.7 2.3 1.4 3.7
Telemarketing Services 3.2 - 3.2 5.0 - 5.0
------------------------------------ ----- ---------- ----- ------ ------------ -----
15.0 2.7 17.7 19.7 4.4 24.1
------------------------------------ ----- ---------- ----- ------ ------------ -----
Other operating income
The Group's other operating income from continuing operations by
type is as follows:
Six months ended 30 June (unaudited)
----------------------------------------
2020 2019
GBPm GBPm
Rental income - 0.4
Transitional service agreement income - 0.6
---------------------------------------- --------------- -----------------------
- 1.0
---------------------------------------- --------------- -----------------------
Rental income in the prior period related to the sublease of
part of the Group's rented property in London. This property was
vacated in December 2019.
Transitional services agreement income in the prior period
related to services provided to the buyers of the subsidiaries
disposed of during 2019. All transitional services agreements
ceased in 2019.
3 Net operating expenses
Operating profit is stated after charging/(crediting):
Continuing operations
Six months ended 30 June (unaudited)
------------------------------------------------------------------------
Restated Restated
(2) (2)
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results(1) items(1) results results(1) items(1) results
2020 2020 2020 2019 2019 2019
Note GBPm GBPm GBPm GBPm GBPm GBPm
Employee benefits expense 11.9 0.6 12.5 15.0 - 15.0
Government grants (0.6) - (0.6) - - -
----------------------------------- --- ----------- ---------- ---------- ----------- ---------- ----------
Net employee benefits
expense 11.3 0.6 11.9 15.0 - 15.0
Net foreign exchange (0.1) - (0.1) - - -
Depreciation of property,
plant and
equipment(3) 1.1 - 1.1 1.1 - 1.1
Amortisation of intangible
assets 9 1.0 1.2 2.2 1.4 1.2 2.6
Impairment of goodwill 8 - 11.0 11.0 - - -
Loss on disposal of
subsidiary - - - - 0.3 0.3
Other exceptional operating
costs 4 - - - - 1.4 1.4
Repairs and maintenance
expenditure - - - 0.1 - 0.1
Impairment of trade
receivables 10 0.2 - 0.2 0.1 - 0.1
Share-based payment
expense 15 - 0.5 0.5 - 0.4 0.4
Other operating expenses 5.3 - 5.3 8.7 - 8.7
----------------------------------- --- ----------- ---------- ---------- ----------- ---------- ----------
18.8 13.3 32.1 26.4 3.3 29.7
---------------------------------- --- ----------- ---------- ---------- ----------- ---------- ----------
Cost of sales 6.6 - 6.6 11.9 - 11.9
Distribution costs 0.1 - 0.1 0.1 - 0.1
Administrative expenses 12.1 13.3 25.4 14.4 3.3 17.7
18.8 13.3 32.1 26.4 3.3 29.7
---------------------------------- --- ----------- ---------- ---------- ----------- ---------- ----------
(1) Adjusting items are disclosed in note 4
(2) See note 1 for description of the prior period
restatement.
(3) In the current period depreciation of GBP1.0m (2019
restated: GBP0.6m) relates to right-of-use assets recognised on the
adoption of IFRS 16 on 1 January 2019. See note 11 for further
details.
Government grants
The Group applied for government grants of GBP0.6m relating to
the period for furloughed employees based at both the London and
Portsmouth offices (2019: GBPnil). GBP0.4m of this was received
during the period and GBP0.2m is held as a receivable on the
consolidated statement of financial position at 30 June
2020. This GBP0.2m government grant was received in full in July
2020. Government grants have been deducted from the related
employee benefit expenses and presented within net operating
expenses in the consolidated statement of comprehensive income.
4 Adjusting items
Certain items are presented as adjusting. These are detailed
below.
Six months ended 30 June (unaudited)
---------------------------------------
2020 2019
GBPm GBPm
Continuing operations
Exceptional operating costs
Staff restructuring costs (including external employment advice costs) 0.6 0.3
Divestment programme related costs - 1.1
Exceptional operating costs 0.6 1.4
Impairment of goodwill 11.0 -
Amortisation of acquired intangible assets 1.2 1.2
Share-based payments 0.5 0.4
Loss on disposal of subsidiary - 0.3
Adjusting items to profit before tax 13.3 3.3
Tax relating to adjusting items (0.3) (0.3)
----------------------------------------------------------------------------- ------------------- ------------------
Total adjusting items after tax 13.0 3.0
Discontinued operations
Profit on disposal of subsidiaries - (8.2)
Exceptional costs - 0.1
Amortisation of acquired intangibles - 0.1
Tax relating to adjusting items - -
----------------------------------------------------------------------------- ------------------- ------------------
Total adjusting items after tax 13.0 (5.0)
----------------------------------------------------------------------------- ------------------- ------------------
Exceptional costs
Staff related restructuring costs (including external employment
advice costs)
During the current period, staff related restructuring costs of
GBP0.5m related to restructuring the MarketMakers business and
GBP0.1m related to restructuring other parts of the wider Centaur
Group due to the adverse impact of the COVID-19 pandemic. Refer to
further details in note 12.
In the prior period staff related restructuring costs of GBP0.1m
related to the Group's cost reduction plan following the completion
of the divestment programme in 2019 and GBP0.2m of related external
employment advice. The p rior period comparative amount includes
GBP0.2m of external employment advice costs previously presented as
a separate line item within exceptional operating costs in the 2019
interim financial statements.
Divestment programme related costs
The divestment programme related costs in the prior period are
professional fees incurred relating to the sales process for The
Lawyer.
Impairment of goodwill
An impairment of GBP11.0m against goodwill relating to the
MarketMakers business was recognised in the current period. There
were no impairments recognised in the prior period. See note 8 for
further details.
Loss on disposal of subsidiary
This GBP0.3m loss in the prior period relates to the disposal of
the subsidiary Venture Business Research Limited ('VBR') on 13 May
2019 to an employee of VBR . The loss on disposal was updated to
GBP0.1m in the consolidated financial statements for the year ended
31 December 2019 as a result of completion adjustments in the
second half of 2019. The loss on disposal, as well as the
operational results up to the date of disposal of this entity are
included in continuing operations rather than discontinued
operations as it does not represent a separate major line of
business of the Group.
Other adjusting items
Other adjusting items relate to the amortisation of acquired
intangibles and share-based payment costs
Discontinued operations
For further details on profit on disposal of subsidiaries in the
prior period please see note 6.
Exceptional costs of GBP0.1m during the prior period are staff
related costs in association with the Group's divestment programme
completed in 2019.
Amortisation of acquired intangibles of GBP0.1m in the prior
period related to disposed entities.
5 Taxation
Six months ended 30 June (unaudited)
---------------------------------------
2020 2019
GBPm GBPm
Analysis of charge/(credit) for the period
Current tax 0.2 0.4
Deferred tax (0.9) (0.2)
--------------------------------------------- ------------------- ------------------
(0.7) 0.2
--------------------------------------------- ------------------- ------------------
The tax charge is based on the estimated effective tax rate for
the year ending 31 December 2020 of 21.0% (2019: 21.1%).
The current year tax credit of (GBP0.7m) is split between a
(GBP0.8m) tax credit relating to continuing operations and a
GBP0.1m tax charge as a result of a prior period tax adjustment
arising on 2019 disposals in discontinued operations.
The prior year tax charge of GBP0.2m is split between a
(GBP0.5m) tax credit relating to continuing operations and a
GBP0.7m tax charge relating to discontinued operations.
6 Discontinued operations
In the prior year the Group disposed of the following
subsidiaries that met the definition of discontinued
operations:
- Centaur Financial Platforms Limited ('FIN') on 31 March
2019;
- Centaur Media Travel and Meetings Limited ('T&M') on 30
April 2019;
- Centaur Human Resources Limited ('HR') on 30 April 2019;
and
- Centaur Engineering Limited ('ENG') on 31 May 2019.
The disposals were effected in line with the Group's strategy to
simplify its structure, to improve operational execution and to
focus attention on leading brands.
A profit of GBP8.2m arose on the disposal of these subsidiaries
being the difference between the proceeds of disposals and the
carrying amount of the subsidiaries' net assets and attributable
goodwill, less transaction costs. Details of these disposals were
as follows:
FIN T&M HR ENG Total
31 March 30 April 30 April 31 May 30 June
2019 2019 2019 2019 2019
GBPm GBPm GBPm GBPm GBPm
Net assets disposed attributable to
Shareholders of the Company 6.6 6.6 1.3 (0.3) 14.2
Directly attributable costs of disposal 0.6 0.4 0.5 0.4 1.9
(Loss) / profit on disposal (0.7) 3.2 3.9 1.8 8.2
----------------------------------------- --------- --------- --------- ------- --------
Fair value of consideration 6.5 10.2 5.7 1.9 24.3
----------------------------------------- --------- --------- --------- ------- --------
The statutory loss from discontinued operations of GBP0.1m
presented in the consolidated statement of comprehensive income in
the current period relates to a tax adjustment arising on disposals
in the prior year.
The statutory profit from discontinued operations of GBP10.2m
presented in the consolidated statement of comprehensive income in
the prior period consisted of GBP2.2m profit after tax representing
the operational results of the subsidiaries up to the date of
disposal, and adjusting items of GBP8.2m profit on disposal offset
by GBP0.2m of other exceptional costs as disclosed in note 4.
The profit on disposal was updated to GBP7.8m in the
consolidated financial statements for the year ended 31 December
2019 as a result of completion adjustments in the second half of
2019. Refer to the 2019 Annual Report for further details
7 (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. 2,272,372 (2019:
2,105,196) shares held in the employee benefit trust and 4,550,179
(2019: 6,964,613) shares held in treasury have been excluded in
arriving at the weighted average number of shares. The calculations
of earnings per share are based on the following profits and number
of shares:
Six months ended 30 June (unaudited)
-------------------------------------------------------------------------------------------------
2020 2020 2020 2019 2019 2019
Earnings Weighted Earnings Weighted
attributable to average (Loss) / attributable average (Loss) /
owners of the number of earnings per to owners of number of earnings per
parent shares share the parent shares share
GBPm millions Pence GBPm millions Pence
Basic
Continuing
operations (13.8) 143.8 (9.6) (4.2) 142.9 (2.9)
Continuing and
discontinued
operations (13.9) 143.8 (9.6) 6.0 142.9 4.2
Effect of dilutive securities
Continuing
operations - - - - - -
Continuing and
discontinued
operations - - - - 10.5 (0.3)
Diluted
Continuing
operations (13.8) 143.8 (9.6) (4.2) 142.9 (2.9)
Continuing and
discontinued
operations (13.9) 143.8 (9.6) 6.0 153.4 3.9
----------------- ----------------- -------------- -------------- -------------- -------------- --------------
Adjusted
Continuing
operations
Basic (13.8) 143.8 (9.6) (4.2) 142.9 (2.9)
Exceptional
operating costs 0.6 0.4 1.4 1.0
Amortisation of
acquired
intangibles 1.2 0.8 1.2 0.8
Impairment of
goodwill 11.0 7.6 - -
Share-based
payments 0.5 0.3 0.4 0.2
Loss on disposal
of subsidiary - - 0.3 0.2
Tax effect of
above
adjustments (0.3) (0.1) (0.3) (0.2)
Discontinued
operations
Basic (0.1) 143.8 - 10.2 142.9 7.1
Exceptional
operating costs - - 0.1 0.1
Amortisation of
acquired
intangibles - - 0.1 0.1
Profit on
disposal of
subsidiary - - (8.2) (5.7)
Tax effect of
above
adjustments - - - -
----------------- ----------------- -------------- -------------- -------------- -------------- --------------
Adjusted basic
Continuing
operations (0.8) 143.8 (0.6) (1.2) 142.9 (0.9)
Continuing and
discontinued
operations (0.9) 143.8 (0.6) 1.0 142.9 0.7
----------------- ----------------- -------------- -------------- -------------- -------------- --------------
Effect of dilutive securities
Options
Continuing
operations - - - - - -
Continuing and
discontinued
operations - - - - 10.5 (0.1)
----------------- -------------- -------------- -------------- -------------- --------------
Adjusted diluted
Continuing
operations (0.8) 143.8 (0.6) (1.2) 142.9 (0.9)
Continuing and
discontinued
operations (0.9) 143.8 (0.6) 1.0 153.4 0.6
----------------- ----------------- -------------- -------------- -------------- -------------- --------------
Six months ended 30 June (unaudited)
---------------------------------------------------------------------------------------------
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results(1) items(1) results results(1) items(1) results
2020 2020 2020 2019 2019 2019
GBPm GBPm GBPm GBPm GBPm GBPm
Fully diluted
from continuing
operations (0.6p) (9.0p) (9.6p) (0.9p) (2.0p) (2.9p)
Fully diluted
from
discontinued
operations - - - 1.5p 5.3p 6.8p
----------------- --- ------------- ------------- ------------- ------------- ------------- -------------
Total (0.6p) (9.0p) (9.6p) 0.6p 3.3p 3.9p
--------------- ----- ------------- ------------- ------------- ------------- ------------- -------------
There was no difference between the weighted average number of
shares used for the calculation of the basic and the diluted loss
per share for continuing operations as the effect of all
potentially dilutive shares outstanding was anti-dilutive.
8 Goodwill
GBPm
Cost
------------------------------------- ------------------
At 1 January 2020 and 30 June 2020 111.1
------------------------------------- ------------------
Accumulated impairment
At 1 January 2020 58.9
Impairment 11.0
------------------------------------- ------------------
At 30 June 2020 69.9
------------------------------------- ------------------
Net book value
At 1 January 2020 52.2
------------------------------------- ------------------
At 30 June 2020 (unaudited) 41.2
------------------------------------- ------------------
Cost
At 1 January 2019 159.5
Disposal of subsidiaries (note 6) (48.4)
------------------------------------- ------------------
At 30 June 2019 111.1
------------------------------------- ------------------
Accumulated impairment
At 1 January 2019 96.9
Disposal of subsidiaries (note 6) (38.0)
------------------------------------- ------------------
At 30 June 2019 58.9
------------------------------------- ------------------
Net book value
At 1 January 2019 62.6
------------------------------------- ------------------
At 30 June 2019 (unaudited) 52.2
------------------------------------- ------------------
Disposals in the prior period relate to the disposal of Centaur
Financial Platforms Limited (net book value GBP4.8m), Centaur Media
Travel and Meetings Limited (net book value GBP5.6m), Centaur Human
Resources Limited (net book value GBPnil) and Centaur Engineering
Limited (net book value GBPnil). See note 6 for further
details.
At 30 June 2020, goodwill and acquired intangible assets (see
note 9) were tested for impairment in accordance with IAS 36. In
assessing whether a write-down is required, the carrying value of
the cash-generating unit ('CGU') is compared with its recoverable
amount. The Group's CGUs are aligned with its two reportable
segments Xeim and The Lawyer. Recoverable amounts are measured
based on value-in-use ('VIU').
The Group estimates the VIU 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 12.8% (31
December 2019: 12.8%). The discount rate used is consistent with
the Group's weighted average cost of capital and is used across all
CGUs., which are all based predominantly in the UK and considered
to have similar risks and rewards.
The key assumptions used in calculating VIU are revenue growth,
margin, adjusted EBITDA growth, discount rate and terminal growth
rate. The Group has produced a cash flow outlook up to 31 December
2023 and has then applied a terminal growth rate of 2.5% (31
December 2019: 2.5%). This timescale and the terminal growth rate
are considered appropriate given the cyclical nature of the Group's
operational results.
The assumptions used in the calculations of VIU for each CGU
have been derived based on a combination of past expectations and
management's expectations of future business growth. The forecasts
take into consideration the impact that coronavirus may have on the
operational results of the business.
The key assumptions and variables in the forecast are sensitised
in isolation and in combination. The main sensitivities applied to
the key drivers are outlined below.
Sensitivity analysis has been performed on the VIU 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
either of the CGUs.
(ii) apply a 2.0% increase in discount rate from 12.8% to 14.8%.
No impairment would occur in either of the CGUs.
(iii) reduce the terminal value growth rate from 2.5% to 2.0%.
No impairment would occur in either of the CGUs.
Management have performed further sensitivities to the VIU
calculations considering the impact that COVID-19 has had on the
operations of the Group, especially the MarketMakers business which
has seen a significant negative impact on its results.
In the current climate, the two key risk areas to the model are
EBITDA growth and terminal value growth rate. Therefore, a further
downside scenario has been considered applying an extensive but
reasonably possible combination of reduction in EBITDA and terminal
value growth rate.
EBITDA growth is driven by the revenue growth and the related
costs to generating this revenue. The impact of halving revenue
growth per year, while achieving some mitigation through cost
savings, would result in a 33% reduction in EBITDA in the terminal
year of the forecast.
Based on this, a sensitivity has been run where a 33% reduction
to forecast adjusted EBITDA in each year of the modelled cash flows
is applied, combined with a reduction in the terminal value growth
rate from 2.5% to 2.0%. Through this further and more extensive
sensitivity, management has recognised an impairment charge of
GBP11.0m in the Xeim CGU, entirely related to the MarketMakers
business within that CGU. This further sensitivity that has been
performed does not indicate an impairment within any other part of
the Xeim business or The Lawyer CGU.
A key sensitivity is EBITDA growth in both Xeim and The Lawyer,
which is driven by a combination of segment profit growth and the
Group's overhead cost savings. As the Group has already achieved
the reduction in run-rate for overhead cost savings, further
sensitivities have been performed only over the profitable revenue
growth from Xeim and The Lawyer.
-- Xeim - in the base case the CAGR of profitable revenue growth
for the forecast period of 2020 to 2023 is 23% and VIU exceeds the
carrying amount by GBP14.3m. In the sensitivity applied to derive
the VIU which has resulted in the impairment of GBP11.0m
recognised, CAGR was reduced by 7% to 16% and after the recognition
of the impairment, VIU is in line with carrying value. If the CAGR
were to fall by a further 5% to 11% then the additional impairment
indicated would be GBP11.2m.
-- The Lawyer - in the base case CAGR of profitable revenue
growth for the forecast period of 2020 to 2023 is 25% and VIU
exceeds the carrying amount by GBP14.6m. CAGR would have to fall by
14% to 11% for the VIU to equal the carrying amount.
9 Other intangible assets
Brands and publishing
Computer software rights* Customer relationships* Total
Net book value GBPm GBPm GBPm GBPm
At 1 January 2020 4.4 1.2 3.4 9.0
Additions
Separately acquired 0.1 - - 0.1
Internally generated 0.2 - - 0.2
Amortisation for the
period (1.0) (0.1) (1.1) (2.2)
At 30 June 2020
(unaudited) 3.7 1.1 2.3 7.1
-------------------------- ------------------- ------------------------- ------------------------- -------------
At 1 January 2019 6.2 3.3 6.0 15.5
Additions
Separately acquired 0.3 - - 0.3
Internally generated 0.2 - - 0.2
Amortisation for the
period (1.5) (0.1) (1.1) (2.7)
Disposal of subsidiaries
(note 6) (0.1) (1.8) (0.5) (2.4)
-------------------------- ------------------- ------------------------- ------------------------- -------------
At 30 June 2019
(unaudited) 5.1 1.4 4.4 10.9
-------------------------- ------------------- ------------------------- ------------------------- -------------
* Amortisation of acquired intangibles is presented as an
adjusting item.
10 Trade and other receivables
Restated (2)
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
GBPm GBPm GBPm
Amounts falling due within one year
Trade receivables 6.2 8.8 7.9
Less: expected credit loss (1.3) (1.2) (1.1)
-------------------------------------- ---------- ------------- ------------
Trade receivables - net 4.9 7.6 6.8
Other receivables 1.3 3.3 2.3
Prepayments 1.3 2.2 1.3
Accrued income 0.6 0.6 0.4
-------------------------------------- ---------- ------------- ------------
8.1 13.7 10.8
------------------------------------- ---------- ------------- ------------
(2) See note 1 for description of the prior period
restatement.
Trade receivables are accounted for under IFRS 9 being
recognised initially at fair value and subsequently at amortised
cost less any allowance for expected lifetime credit losses under
the "expected credit loss" model. For further details refer to note
1(s)(ii) in the Group Annual Report for the year end 31 December
2019.
Other receivables at 30 June 2020 include a GBP0.3m deposit on
the Waterloo property lease which is fully refundable at the end of
the lease term and GBP0.2m in relation to government grants.
Other receivables at 31 December 2019 also included GBP1.5m
(June 2019: GBP1.0m) in relation to the lease incentive receivable
on the exit of the Wells Street property in 2019 which was received
in the current period.
Other receivables at 30 June 2019 also included GBP0.8m for a
completion adjustment in relation to a disposal and a prior period
restatement of GBP0.5m in relation to the lease incentive
receivable on the exit of a London property. Refer to note 1 for
further details.
Six months ended 30 June (unaudited)
---------------------------------------
2020 2019
GBPm GBPm
Analysis of expected credit loss for the period
Balance at start of period 1.1 1.2
Additional provision charged to the statement of comprehensive income 0.2 0.1
Disposal of subsidiaries (note 6) - (0.1)
----------------------------------------------------------------------- ----------------- --------------------
1.3 1.2
----------------------------------------------------------------------- ----------------- --------------------
As a result of COVID-19 the expected credit loss has increased
in the current period as a result of an increased ageing of our
trade debtors' balances. Cash collection has remained strong and
days sales outstanding are not significantly above levels seen in
2019. The Group has considered economic forecasts expected as a
result of COVID-19 and exercised its professional judgment in
assessing that the provision for credit loss is appropriate.
11 Leases
All lease liabilities currently held by the Group relate to
property leases, for which corresponding right-of-use ('ROU')
assets are held on the consolidated statement of financial
positions within property, plant and equipment.
Lease liabilities
GBPm
Recognised on adoption of IFRS 16 at 1 January
2019 3.3
Interest expense -
Cash outflow (1.2)
------------------------------------------------ ------
At 30 June 2019 2.1
------------------------------------------------ ------
At 1 January 2020 4.3
Interest expense -
Cash outflow (1.1)
Addition on remeasurement of lease liability 1.8
------------------------------------------------ ------
At 30 June 2020 5.0
------------------------------------------------ ------
Current 2.1
Non-current 2.9
------------------------------------------------ ------
At 30 June 2020 5.0
------------------------------------------------ ------
ROU assets
Net book value GBPm
Cost recognised on adoption of IFRS 16 at 1 January
2019 (restated (2) ) 2.3
Charge for the period (restated (2) ) (0.6)
----------------------------------------------------- ------
At 30 June 2019 (restated (2) ) 1.7
----------------------------------------------------- ------
At 1 January 2020 3.7
Charge for the period (1.0)
Addition on remeasurement of ROU asset 1.8
----------------------------------------------------- ------
At 30 June 2020 4.5
----------------------------------------------------- ------
(2) See note 1 for description of the prior period
restatement.
The lease liability for one of the Group's property leases was
remeasured at 30 June 2020 upon reassessment of the lease term. The
amount of the remeasurement of the lease liability has been
recognized as an adjustment to the ROU asset.
12 Provisions
Restructuring
GBPm
At 1 January 2020 -
Additions 0.6
------------------- --------------
At 30 June 2020 0.6
------------------- --------------
During the current period, a restructuring provision of GBP0.5m
was recognised in relation to restructuring the MarketMakers
business following a sharp fall in revenue as several major
customers were hit by disruption in their own markets. A further
GBP0.1m was provided in relation to restructuring other parts of
the wider Centaur Group due to the adverse impact of the COVID-19
pandemic. The provision is current and is expected to be fully
utilised in the second half of 2020. The associated expense has
been recognised within exceptional costs and presented as adjusting
items as disclosed within note 4.
13 Dividends
Six months ended 30 June (unaudited)
---------------------------------------
2020 2019
GBPm GBPm
Equity dividends
Final dividend for 2018: 1.5p per 10p ordinary share - 2.1
Final dividend for 2019: 0.0p per 10p ordinary share - -
- 2.1
At the time of the 2019 results announcement on 18 March 2020, a
final dividend relating to 2019 at 0.5p per share was proposed. Due
to the uncertainty posed by the COVID -19 outbreak, the Board
believes it is prudent not to pay this final dividend payment of
GBP0.7m.
The Board will keep the situation under review and will
determine the timing for resumption of dividends once the market
situation and the effect of COVID -19 on Centaur's business and its
cashflow have become clearer. Therefore, an interim dividend for
the six months ended 30 June 2020 is not proposed at this time.
The interim dividend proposed at 30 June 2019 of GBP5.0m,
comprising a GBP2.1m ordinary dividend at 1.5p per share and a
GBP2.9m special dividend at 2.0p per share, was paid in October
2019.
14 Own shares reserves
The own shares reserve represents the value of shares held as
treasury shares and in an employee benefit trust. At 30 June 2020,
4,550,179 (31 December 2019: 6,964,613) 10p ordinary shares are
held in treasury and 2,272,372 (31 December 2019: 1,573,134) 10p
ordinary shares are held in an employee benefit trust.
During 2020, 2,414,434 shares were transferred out of treasury
to the employee benefit trust in order to meet future obligations
arising from share-based rewards to employees. The shares were
transferred from treasury at the historical weighted average
cost of GBP2.2m (90.88p per share) and acquired by the employee
benefit trust at the market value of GBP0.6m (25p per share). The
difference between the historical weighted average cost and the
market value of GBP1.6m has been eliminated on consolidation.
The employee benefit trust also issued 1,715,196 shares to meet
obligations arising from share-based rewards to employees that had
vested in both the current and prior year and were exercised in the
year. The shares were issued at a historical weighted average cost
of 48.25p per share. The total cost of GBP0.8m has been recognised
as a reduction in the own shares reserve in other reserves in
equity.
In the prior year, the employee benefit trust purchased
1,247,205 ordinary shares in order to future obligations arising
from share-based rewards to employees. The shares were quired at an
average price of 51.7p per share, with prices ranging from 45.6p to
54p. The total cost of GBP0.6m was recognised in other reserves in
the own shares reserves in equity.
15 Share based payments
Six months ended 30 June (unaudited)
2020 2019
GBPm GBPm
Equity-settled plans
LTIP 0.5 0.4
Total equity settled incentive plan 0.5 0.4
The Group's share-based payment schemes upon vesting are
equity-settled.
The current period charge of GBP0.5m includes an additional
charge of GBP0.3m recognised on truing up the expense for one
million share options that vested during the period. There is an
immaterial amount of national insurance payable on equity settled
share-based schemes in the current period (2019: GBP0.1m) 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.
On 6 April 2020 50% of the LTIP granted on 6 April 2018 vested
upon meeting the performance condition of two years continued
employment. Of the 981,586 share options that vested, 657,888 were
exercised by 30 June 2020. Additionally, a further 1,057,321 share
options were exercised in relation to LTIPs that vested in
2019.
On 30 June 2020 LTIPs were granted to Executive Directors and
selected senior management. This grant was made at 75% of the
normal award allowed for under the Remuneration Policy to reflect
the current low level of the share price as a result of COVID -19.
Performance conditions will be set within six months once the
impact of COVID -19 on the business is clearer.
Full details of the movements in these awards are shown below.
There were no movements in any other scheme therefore they have not
been disclosed. See note 25 in the Group Annual Report for the year
end 31 December 2019 for full details of all schemes.
LTIP 2016 LTIP 2016 LTIP 2016 LTIP 2016
Grant date 30.06.2020 6.04.2018 24.04.17 07.04.17
Share price at grant date (p) 24.00 50.20 45.75 40.75
Fair value (p) 24.00 25.10 4.46 21.08
Exercise date 29.06.2023 6.04.21 24.04.20 07.04.20
Exercise price (p) GBPnil GBPnil GBPnil GBPnil
Number of awards
Balance at 1 January 2020 - 1,963,191 675,764 381,557
Granted during the year 2,074,782 - - -
Forfeited during the year - - - -
Exercised during the year - (657,888) (675,764) (381,557)
Lapsed during the year - - - -
Balance at 30 June 2020 2,074,782 1,305,303 - -
Exercisable at 30 June 2020 - 323,888 - -
Average share price at date of exercise (p) - 25.17 25.50 26.65
Balance at 1 January 2019 2,104,890 1,351,528 2,958,786
Forfeited during the year (80,971) - (92,035)
Exercised during the year - - - -
Lapsed during the year - - - -
Balance at 30 June 2019 - 2,023,919 1,351,528 2,866,751
Exercisable at 30 June 2019 - - - -
Average share price at date of exercise (p) - - - -
LTIP 2016 LTIP 2016 LTIP 2016 LTIP 2016
Grant date 30.06.2020 6.04.2018 24.04.17 07.04.17
Expected volatility (%) - 43.5 45.4 45.4
Expected dividend yield (%) - - - -
Risk free interest rate (%) - 0.86 0.12 0.12
Valuation of model used - Black-Scholes Stochastic Stochastic
Performance conditions have not yet been set for the scheme
granted on 30 June 2020 therefore the scheme was valued based on
the share price at the grant date and expected forfeiture
rates.
The shares outstanding and exercisable at the end of the period
had an expiry date of 6 October 2020.
16 Cash flow generated from operating activities
Restated (2)
Six months ended 30 June (unaudited)
2020 2019
Note GBPm GBPm
(Loss)/profit for the period (13.9) 6.0
Adjustments for:
Tax 5 (0.7) 0.2
Interest expense 0.2 0.1
Depreciation of property, plant and equipment 1.1 1.1
Amortisation of intangible assets 9 2.2 2.7
Impairment of goodwill 8 11.0 -
Share-based payments 15 0.5 0.4
Loss on disposal of subsidiary 4 - 0.3
Gain on disposal of subsidiaries 6 - (8.2)
Changes in working capital:
(Increase) in inventories - (0.5)
Decrease/(increase) in trade and other receivables 10 2.8 (1.9)
(Decrease)/increase in trade and other payables (4.0) 0.9
Increase in deferred income 1.1 2.0
Increase in provisions 12 0.6 -
Cash generated from operating activities 0.9 3.1
(2) See note 1 for description of the prior period
restatement.
17 Related party transactions
Transactions between Group Companies, which are related parties,
have been eliminated on consolidation and therefore do not require
disclosure. The Group has not entered into any other related party
transactions in the period which require disclosure in these
interim statements.
18 Post balance date events
No material events have occurred after the reporting date.
This information is provided by RNS, the news service of the
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Authority to act as a Primary Information Provider in the United
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END
IR ZZGZNLGMGGZM
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