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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Centaur Media PLC | AQSE:CAU.GB | Aquis Stock Exchange | Ordinary Share | GB0034291418 | Ordinary Shares 10p |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 50.50 | 46.00 | 55.00 | 50.50 | 50.50 | 50.50 | 0.00 | 06:56:52 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2022 to Apr 2024
TIDMCAU
RNS Number : 9779S
Centaur Media PLC
15 March 2023
15 March 2023
Centaur Media Plc
Preliminary results for the year ended 31 December 2022
Robust growth in EBITDA and operating margins
despite challenging macroeconomic backdrop
Declaration of a further special dividend
On track to achieve Margin Acceleration Plan (MAP23)
Centaur Media Plc ("Centaur"), an international provider of business intelligence, learning and specialist consultancy, is pleased to present its preliminary results for the year ended 31 December 2022.
Financial Highlights
Hot Features
Premium
GBPm 2022 2021 Change
--------------------------------------- ----- ------ -------
Statutory revenue 41.6 39.1 +6%
Adjusted EBITDA (1) margin 20% 16% +4%pts
Adjusted EBITDA (1) 8.5 6.4 +33%
Adjusted (1) operating profit 5.3 3.2 +66%
Statutory operating profit 3.9 1.6 +144%
Group statutory profit after taxation 2.8 1.4 +100%
Interim ordinary dividend per share 0.5p 0.5p
Final ordinary dividend per share 0.6p 0.5p
Special dividend per share (paid
February 2023) 3.0p -
Special dividend per share (announced
today) 2.0p -
--------------------------------------- ----- ------ -------
Total dividends per share 6.1p 1.0p
--------------------------------------- ----- ------ -------
-- Revenue grew by 6% to GBP41.6m
-- Adjusted EBITDA (1) increased by 33% to GBP8.5m
-- Adjusted EBITDA (1) margin improved to over 20% from 16%
-- Net cash (2) of GBP16.0m reflecting robust performance and cash generative nature of Centaur
-- 77% of revenue from high value Premium Content, Training and Advisory and Marketing Services
recurring revenue streams (2021: 74%)
-- Final ordinary dividend of 0.6 pence per share proposed - total ordinary dividends for the
year of 1.1 pence per share
-- Second special dividend of 2.0 pence per share announced today - total special dividends of
5.0 pence per share
-- Total return to shareholders from ordinary and special dividends of GBP8.8m
Business Highlights
-- Flagship 4 brands drove positive momentum over last 12 months
-- Growth from successfully developing more customer-centric products and cross-selling
-- Festival of Marketing moved from two years of virtual events to a sold out in-person event
-- Focus on organic growth and operational management to reinforce the Group's resilience and
maintain its operational leverage
Over the course of 2022, Centaur continued to take further steps towards achieving the targets set out as part of its Margin Acceleration Plan (MAP23) - to generate GBP45m in revenue and an Adjusted EBITDA (1) margin of 23% by the end of 2023. In 2022, the second year of MAP23, Centaur built on its Flagship 4 strategy, the efficiency of its operating structure and the excellence of its people.
Centaur performed well despite the macroeconomic uncertainty seen in 2022. The Group reported revenue of GBP41.6m for the year (2021: GBP39.1m), and a Group Adjusted EBITDA (1) of GBP8.5m (2021: GBP6.4m). Adjusted EBITDA (1) margin for 2022 improved to over 20% (2021: 16%), resulting in the Group ending the year with a net cash (2) balance of GBP16.0m, up from GBP13.1m last year.
The Flagship 4 brands - Econsultancy, Influencer Intelligence, MW Mini MBA and The Lawyer - have driven this positive momentum over the past twelve months. The markets in which these brands operate, marketing across a range of industries and the legal sector, are characterised by change. They continue to be driven by technological advancement, structural change and globalisation. This provides Centaur with a clear opportunity to use its deep level of expertise to further grow in the marketing and legal sectors.
In 2022, Centaur continued to make significant progress in developing its Flagship 4 brands:
-- Econsultancy saw revenue increase by 8%, driven by double-digit growth in subscriptions and
a 38% increase in Training and Advisory revenue from large six-figure contracts with blue-chip
multinational companies;
-- Influencer Intelligence built momentum over the course of the year with double-digit revenue
growth due to renewal rates at 90%, the highest for five years;
-- MW Mini MBA , our largest brand by revenue, continued to go from strength to strength with
corporate multi-seat packages up 20% and price rises contributing to a 7% increase in revenue;
and
-- The Lawyer performed ahead of expectations, with a 22% increase in Premium Content revenue
due to corporate subscription renewal rates of 116% supported by Signal and Litigation Tracker,
its data-driven paid-for products. It also held its first in-person The Lawyer Awards since
2019, pushing events revenue up 87%.
Meanwhile, across the portfolio, Centaur was particularly encouraged by the Festival of Marketing moving forwards from two years of virtual events to a hybrid Festival in March and a sold out in-person Festival in October. However, marketing solutions were challenged across both business units due to changing customer behaviour arising from macroeconomic pressures.
The strategic objective across Centaur's suite of brands is to position them for continued growth by developing more customer-centric products and harnessing cross-selling opportunities, with the aim of enabling customers to deliver better corporate outcomes through building competitive advantage in their markets.
Alongside this strategic progress, Centaur has taken clear operational and financial steps to focus on organic growth and manage costs to reinforce the resilience and sustainability of the business. These steps will help maintain the Group's operational leverage and ensure that it is best positioned to withstand any continued macroeconomic uncertainty and achieve its ambitious MAP23 objectives.
Ordinary Dividend and Second Special Dividend
The Group's capital allocation policy is focused on retaining sufficient cash in the business to fund all organic investment, including technology and new products, while maintaining sufficient funding to cover unexpected working capital volatility. The Group will also consider complementary bolt-on acquisitions to supplement its growth strategy. Any cash surplus to the long-term requirements of the business will be returned to shareholders.
The success of the MAP23 strategy and the cash generative, capital light nature of the business has resulted in surplus cash, with net cash (2) levels of GBP16.0m as at 31 December 2022 (2021: GBP13.1m).
Therefore the Board was pleased to announce a special dividend of 3.0 pence per share, GBP4.3m, in January 2023 in addition to its normal dividend policy of distributing 40% of adjusted retained earnings, subject to a minimum dividend of 1.0 pence per share per annum.
The proposed final dividend of 0.6 pence per share results in total ordinary dividends for 2022 of 1.1 pence per share, above the minimum 1.0 pence per share for the first time since the policy was initiated in 2019.
Following the payment of the first special dividend and other planned creditor payments, net cash (2) at 10 March 2023 was GBP10.2m.
Given the strength of the balance sheet, Centaur is pleased to announce today a second special dividend of 2.0 pence per share, GBP2.9m. Together with the interim, final ordinary and first special dividends, total dividends are 6.1 pence per share, GBP8.8m.
Outlook
Centaur has undergone a significant transformation over recent years and this is set to continue in 2023. The Group will further develop its Flagship 4 and Core Brands to ensure it continues to lead from the front in delivering what customers need.
The Group's strategic priority over time is to shift towards an even more focused, customer-centric offering as it looks to gain a greater share of repeatable, high-value revenue streams from a higher proportion of blue-chip customers.
Centaur remains on track to meet its MAP23 objectives despite the uncertain macroeconomic outlook, and the Group's trading has started the year in line with the Board's expectations.
Swag Mukerji, Chief Executive Officer, commented:
"Centaur continued to perform well despite the macroeconomic uncertainty that characterised 2022 for our customers. Our focus on understanding and satisfying customer needs, together with our ability to continuously drive operational improvements, raised the quality and efficiency of our business.
"Looking ahead, we are determined to keep driving performance in line with our MAP23 objectives and beyond, by continuing to build the quality of our revenue streams and taking advantage of the operational leverage within our business units. I believe Centaur has the talent, strategy and financial discipline to achieve its longer-term ambitious objectives."
(1) Adjusted EBITDA is adjusted operating profit before depreciation, amortisation and impairment. Adjusted results exclude adjusting items as detailed in note 4 of the financial information.
(2) Net cash is the total of cash and cash equivalents and short-term deposits. There are no overdrafts or borrowings in the Group.
Enquiries
Centaur Media plc
Swag Mukerji, Chief Executive Officer 020 7970 4000
Simon Longfield, Chief Financial Officer
Teneo
Zoë Watt / Matthew Thomlinson / Oliver Bell 07713 157561 / 07785 528363 / 07917 221748
Note to editors
Centaur is an international provider of business intelligence, learning and specialist consultancy that inspires and enables people to excel at what they do, raising the standard for insight, interaction and impact.
Centaur's Flagship 4 brands are Econsultancy, enabling customers to achieve excellence in digital marketing and ecommerce; MW Mini MBA, taking marketing and brand skills to the next level; Influencer Intelligence, helping global brands find and engage with the right influencers; and The Lawyer, the most trusted brand for the legal profession, providing data-rich business intelligence and insight.
Advise. Inform. Connect.
Our vision
We will be the 'go to' company in the international Marketing and Legal sectors for:
-- Advising businesses on how to improve their performance and returns
on investment (ROI);
-- Providing business intelligence to customers using data, content
and insight;
-- Offering training, learning and advisory services through digital
learning initiatives and online programmes; and
-- Connecting specific communities through digital media and events.
We will build strong and lasting relationships with our customers by providing cutting-edge insight and analysis to deliver long-term sustainable returns for our shareholders.
Our business
Centaur is an international provider of business intelligence, learning and specialist consultancy that inspires and enables people to excel at what they do within the marketing and legal professions. Our Xeim and The Lawyer business units serve the marketing and legal sectors respectively and, across both, we offer a wide range of products and services targeted at helping our customers add value.
Our reputation is based on the trust and confidence arising from a deep understanding of these sectors providing innovative products and services and we have developed a strong track record for providing our customers with market-leading insight, content, data and training. Our key strengths are the expertise of our people, the quality of our brands and products, and our ability to harness technology to innovate continually and develop our customer offering. This enables us to help our customers raise their aspirations and deliver better performance.
Highlights of the year
Financial highlights
Revenue Adjusted EBITDA GBP41.6m GBP8.5m (20% margin) 2021: GBP39.1m 2021: GBP6.4m (16% margin) 2020: GBP32.4m 2020: GBP3.8m (12% margin) Net Cash (1) Adjusted diluted EPS GBP16.0m 2.6p 2021: GBP13.3m 2021: 1.9p 2020: GBP8.3m 2020: 0.3p (1) Net cash is the total of cash and cash equivalents and short-term deposits
Strategic and operational highlights
-- Strong performance despite macroeconomic uncertainty, with business
on track to deliver its MAP23 objectives
-- Clear operational and financial steps taken to focus on organic
growth and manage costs to reinforce the resilience of the business
-- Flagship 4 brands continue to deliver growth as the average customer
account value increases
-- New customer-centric products launched including Econsultancy's
LMS platform, MW Mini MBA's alumni membership, The Lawyer Briefing
Room and Litigation Tracker International
-- Return to in-person events with Festival of Marketing and The Lawyer
Awards being notable successes
-- Cash conversion remains strong at close to 100%
-- Return of capital to shareholders announced through special dividends
-- DICE, our employee engagement committee, continues to go from strength
to strength, with improvements in employee engagement and on climate-related
matters.
Performance: CEO Review
This is my fourth Annual Report as CEO of Centaur Media and, as we enter the third and final year of our ambitious MAP23 strategy, we are laying the foundations for the next step in Centaur's growth story.
2022 was another year marked by macroeconomic turbulence - and Centaur remains focused on growth. We are determined to keep driving performance in line with our MAP23 objectives, by continuing to build the quality of our revenue streams and taking advantage of the operational leverage within our business units.
As a reminder, the core objectives of MAP23 are to raise Group Adjusted EBITDA margins to 23% by the end of 2023, while increasing revenues to GBP45m in the same timeframe.
Financial performance
Over the course of 2022, Centaur continued to take positive steps towards our MAP23 goals, building on the structure and processes that were put in place through the previous year.
In 2022, Centaur reported revenues of GBP41.6m for the year (up from GBP39.1m 2021), and a Group Adjusted EBITDA of GBP8.5m (up from GBP6.4m in 2021). It was satisfying to see that Adjusted EBITDA margin for 2022 was over 20% (up from 16% in 2021) resulting in the Group ending the year with net cash of GBP16.0m, up from GBP13.1m last year. I am pleased with the contribution that all our brands have continued to make to this positive momentum over the past twelve months.
Clear operational and financial steps have been taken to focus on organic growth and manage costs to reinforce the resilience of the business. These include better understanding and satisfying the needs of our customers, focusing on increasing the size and scale of customers we target, conducting strong negotiation with suppliers and implementing flexible reward structures to retain and recruit top talent. Employee numbers have been kept under tight control, with only a slight increment on 2021, as increases in growth areas were balanced by reductions in less strategically important areas of the business. We have also maintained our central costs in line with 2021 and will be reducing our costs in 2023, along with our carbon footprint, by moving into a smaller London office as of 1 January 2023. These steps will maintain our operational leverage and ensure that the business is best positioned to withstand any wider macroeconomic uncertainty and achieve our MAP23 objectives.
Dividends
The Group has proposed a final dividend of 0.6 pence per ordinary share to take our total ordinary dividends for 2022 to 1.1 pence, above the minimum 1.0 pence per share that we have paid previously under our dividend policy. A special dividend of 3.0 pence per share, equivalent to GBP4.3m, was paid on 10 February 2023 and a further special dividend of 2.0 pence per share, to be paid on 31 March 2023, will bring the total dividends to shareholders in respect of 2022 to 6.1 pence per share (GBP8.8m).
Operational review
Centaur comprises two business units, Xeim and The Lawyer. Xeim forms 80% of our revenues and is focused on the marketing sector across a wide range of industries. The Lawyer is focused on the legal sector and drives the other 20%. Both sectors are undergoing significant change, driven by technological advancement, structural change and globalisation, giving Centaur a great opportunity to use its competitive advantage to further grow in these sectors.
Within these two business units, Centaur has four key brands - the Flagship 4 - which we consider our key growth drivers and where the business prioritises investment and resource allocation. The Lawyer is one of these brands, while the other three form part of the Xeim portfolio (Econsultancy, Influencer Intelligence and MW Mini MBA). The Flagship 4 is supported by our suite of Core Brands.
Over the course of 2022, we made significant progress in developing both our Flagship 4 and Core Brands. Our aim is to position each of these brands for further growth, developing cross-selling opportunities and enhancing their shared capabilities, with the ultimate aim of enabling our customers to deliver better corporate outcomes through building competitive advantage in their markets.
Econsultancy continued to win large six-figure contracts from blue-chip international companies including Unilever, Jacobs Douwe Egberts, Specsavers and Pepsico, seeing Training and Advisory revenues increase by 38%, while growing its core digital and training subscription services through improving renewal rates averaging 82% for the year. A restructuring in 2022 enabled the business to combine its consultancy and online subscription training, enhancing the offer to customers.
Influencer Intelligence grew in momentum over the course of the year, overcoming prior challenging market conditions, to end the year with an annual renewal rate of 90% - the highest rate for over five years. Our focus has been to gain a better insight as to what the needs of our customers are whilst retaining the level of detailed analytics conducted by our research and content team.
The MW Mini MBA continued to go from strength to strength, with corporate multi-seat packages up 20% and related delegates now representing 43% of the total for the year. A reduction in the volume of online sales resulted in total delegate numbers on the main courses increasing only 1% in the year. However this was achieved with an increase in yield of 10% from price rises and discount management resulting in an 11% increase in revenue on the main courses and 7% in total for the MW Mini MBA, including bespoke courses.
The Lawyer had another year of strong performance, with TheLawyer.com corporate subscriptions, supported by Horizon, performing ahead of expectations with renewal rates of 116%. The main corporate subscription product is complemented by data-driven products, including Signal and Litigation Tracker, which launched internationally in May with content from Hong Kong, Singapore and Dubai. The new data-driven subscription product, Signal, launched in 2021 has performed well, exceeding expectations on renewal rate by value and volume in its first year of renewals, and on the number of new customers. It was also recognised externally as an award-winning Market Intelligence subscription product.
In April we also launched Briefing Room bringing together all sides of the legal community to share thought leadership and latest content enabling networking with companies and individuals. The Lawyer's industry-leading conferences also returned to a fully live schedule in 2022, which was welcomed by both sponsors and delegates. This strong performance follows last year's similarly high renewal rates and user engagement, indicating how important The Lawyer is to leading law firms and their fee earners.
In our portfolio of Core Brands, we were particularly encouraged by the Festival of Marketing moving forwards from two years of virtual events to a hybrid Festival in March and an in-person Festival in October. This year's Festivals brought together a carefully curated group of top speakers from the marketing world and beyond, offering the insight, provocation and inspiration that will help those in the industry to do their job better.
People
A key part of our strategy is ensuring that we have the right people in the right positions to deliver our intended growth. Over the course of 2022, Centaur continued to strengthen its management team. We made several excellent new hires, including Lisa Taylor, who joined as Xeim Group Marketing Director and Agata Kreutzinger, who became our Group Data Director. We also identified and promoted people within the organisation to support the progression of our people, with Ian Baldwin joining our Executive Committee and taking on the role of Chief Technology Officer.
Looking to 2023
Centaur has undergone a significant transformation over recent years and in 2023, we will continue to develop our Flagship 4 and Core Brands to ensure we are leading from the front in delivering what our customers need. Our strategic priority is to shift towards a more focused, customer-centric offering. That means gaining a greater share of repeatable, high-value revenue streams from a higher proportion of blue-chip customers. We will be focusing on this across the Flagship 4 and Core Brands.
The Lawyer will accelerate its penetration of UK and European law firms with new content and will implement a customised website user experience, a law firm practice Signal channel and a UK law firm advisory service.
At Xeim, there will be more emphasis and focus on paid content and strategic information via corporate packages, subscriptions and partnerships. Our objective is to work with higher value companies as a regular partner. For this, we have Xeim Engage, a dedicated, experienced team, creating solutions for the top 200 marketing spend companies. Xeim's Flagship 4 brands will continue to be supported by the Core Brands, which together will enhance Xeim's focus on addressing the market demand for paid content and strategic information, via corporate packages, subscriptions and partnerships.
Summary
To conclude, I wanted to reflect on the past three years and reiterate my thanks to everyone at Centaur for their hard work and determination. As we look to 2023, Centaur remains focused on growth. Our strategy is clear and we are in the final stage of achieving our ambitious, but achievable targets. We want to provide the most advanced and competitive offering in the marketplace - to do that we will continue to build the quality of our employees, focus on our high value revenue streams and take advantage of our operational leverage.
Key Performance Indicators
The Group has set out the following core financial and non-financial metrics to measure the Group's performance. The KPIs are monitored by the Board and the focus on these measures will support the successful implementation of the MAP23 strategy. These indicators are discussed in more detail in the CEO and financial reviews.
KPI Commentary
Financial
Underlying 2022: 6%, The growth in total revenue adjusted, if applicable,
revenue growth(1) 2021: 21% to exclude the impact of event timing differences
and the revenue contribution arising from acquired
or disposed businesses.
See Chief Executive Officer's Statement and the
Financial Review for explanation of this year's
growth. The revenue growth in 2021 included the
recovery in revenue following the pandemic.
Adjusted EBITDA 2022: 20%, Adjusted EBITDA as a percentage of revenue where
margin(1) 2021: 16% Adjusted EBITDA is defined as Adjusted operating
profit before depreciation and impairment of tangible
assets and amortisation and impairment of intangible
assets other than those acquired through a business
combination.
The continued improvement in margin reflects the
increase in high-quality revenue streams together
with the impact of the Group's operational leverage.
Adjusted diluted 2022: 2.6 Diluted earnings per share calculated using the
EPS(1) pence, 2021: Adjusted earnings, as set out in note 8 to the
1.9 pence financial information.
The 37% increase in EPS reflects the increase in
post-tax profitability.
Cash conversion(1) 2022: 99%, The percentage by which Adjusted operating cash
2021: 164% flow covers Adjusted EBITDA as set out in the financial
performance review.
The cash conversion in 2022 has returned to a more
typical historical level after the level achieved
in 2021 which included unusually high working capital
movements.
Non-financial
=================== ============== =========================================================
Attendance 2022: 1,778, Number of unique delegates attending the Festival
at Festival 2021: 6,786 of Marketing.
of Marketing This year's events were in-person compared to virtual
attendees in 2021. The number of paid delegates
increased compared to the last in-person event
in 2019 coupled with a significant reduction in
complimentary tickets.
Delegates 2022: 6,490, Number of delegates on Mini MBA and related eLearning
on Mini MBA 2021: 6,951 courses in the year.
course There was an increase in the number of total delegates
on the two main courses as well as a higher yield
per delegate. 2021 included 515 delegates on a
customised course that was not repeated in 2022.
Xeim customers 2022: 88 Number and value of Xeim customers that have sales
>GBP50k (GBP13.9m), in the year of greater than GBP50,000.
2021: 90 The focus on higher value accounts continued in
(GBP12.1m) 2022 with a 17% increase in the average value of
these accounts.
Top 250 law 2022: 144 Number and value of top 200 UK law firms and top
firm customers (GBP3.2m), 50 US law firms.
2021: 152 The focus on higher value accounts continued in
(GBP2.7m) 2022 with a 24% increase in the average value of
these accounts.
=================== ============== =========================================================
(1) See definitions in Financial Review .
Performance: Financial Review
Overview
After the recovery in 2021 following the challenges posed by the pandemic, new economic uncertainties impacted Centaur's trading. Despite these uncertainties, Centaur continued to focus on organic revenue growth particularly through its higher value revenue streams of Premium Content and Training and Advisory which together grew 15%. This growth was enhanced by the return to a full schedule of in-person events, including The Lawyer Awards and the Festival of Marketing, pushing up revenue from events by 23%. These growth areas were offset by a reduction of 25% in total revenue from Marketing Solutions and Recruitment Advertising and a 14% reduction in Marketing Services.
Our continued focus on tight control of costs resulted in only a 1% increase in operating expenses demonstrating the operational leverage within Centaur and its ability to maintain its consistent improvement in profitability. All of this resulting in generation of free cash flow through good cash conversion.
Performance
Group
Statutory revenue rose by GBP2.5m to GBP41.6m in 2022, an increase of 6%. Xeim increased 4% and The Lawyer 19%. Revenue generated from outside the UK remained steady at 36% (2021: 37%) showing 9% growth across customers in the UK and Europe offset by a 3% decline in the rest of the world. Throughout 2022 we did not engage in any business with Russian customers, the impact of which is negligible compared to our results for 2021.
Adjusted EBITDA increased by 33% from GBP6.4m to GBP8.5m at a margin of 20% (2021: 16%), showing promising progress towards our MAP23 targets of a 23% margin in 2023. This improved margin was on increased revenues, demonstrating the increase in our high-quality revenue streams, resolute cost control and the operational leverage within the Group . Despite inflationary pressure, operating costs in the Central segment were flat in 2022 compared to 2021.
The Group posted an increase of 66% in Adjusted operating profit to GBP5.3m (2021: GBP3.2m) as a result of the increase in Adjusted EBITDA. The Group achieved an Adjusted profit after taxation of GBP3.9m (2021: GBP2.8m).
During 2022, we have increased our net cash (net cash is the total of cash and cash equivalents and short-term deposits) balances from GBP13.1m to GBP16.0m, mainly as a result of a focus on cash management, the increase in EBITDA and healthy cash collections from customers.
Xeim
Xeim's revenue for 2022 was GBP33.3m, an increase of 4% from GBP32.1m in 2021. Premium Content in 2022 rose 11% with growth in Flagship brands Econsultancy and Influencer Intelligence both of which had improved renewal rates compared to 2021 and despite a tougher year for new business.
Revenue from Training and Advisory also showed year-on-year growth of 15% as a result of a robust trading performance by Econsultancy, Oystercatchers and from MW Mini MBA's marketing and brand courses. Recruitment Advertising grew 5% with a strong performance in H1, partially offset by slowing demand in H2.
Conversely, it was a difficult year for Marketing Services and Marketing Solutions which saw year-on-year declines in revenue of 14% and 29% respectively, resulting from lower recurring revenues and new business generation. Events revenue was at a similar level to 2021 but was mainly driven by delegates and sponsorship revenues from the in-person Festival of Marketing compared to virtual events in the previous year.
Xeim posted an Adjusted EBITDA of GBP8.5m for the year, an increase of 29% from GBP6.6m in 2021. This was driven by a combination of increased revenue and a decrease in costs.
Xeim contains three of the Group's Flagship 4 brands - Econsultancy, Influencer Intelligence and MW Mini MBA.
After facing difficulties posed by the pandemic in previous years, Econsultancy has continued its momentum from 2021 and has grown both its Premium Content and Training and Advisory revenue streams in 2022. Including an offset from a reduction in Events and Marketing Solutions revenue, total Econsultancy revenue has increased by 8%.
Premium Content revenue benefitted from our continued investment in Econsultancy's blended multi-touch learning strategy resulting in an improved subscription renewal rate of 82% (2021: 70%). Econsultancy's Training and Advisory revenue had an excellent year with 38% growth on 2021, continuing to win large digital training and consultancy contracts with blue chip international companies.
Influencer Intelligence revenue increased 13% in the year, following the post-Covid recovery of the retail and fashion industries. Renewal rates improved significantly from Q2 2021 and continued throughout 2022, with the annual renewal rate of 90% in 2022 at the highest rate seen over the past five years. The success of renewals was partially offset by muted performance in winning new business during the year.
The MW Mini MBA's strong growth in recent years has slowed with delegate numbers on the main courses up only 1% year-on-year, but revenue on those courses up 11% driven by a 10% yield increase. MW Mini MBA retains an excellent Net Promoter Score of +74 and strong loyalty from recurring corporate customers.
Of our core Xeim brands, Fashion Monitor showed growth due to strong renewals up to 92% from 73% in the prior year, while Really B2B and Festival of Marketing both saw revenue fall by approximately 15%. Really B2B struggled with lack of new business contracts to drive renewal and upsell. Festival of Marketing fell short of delegate and sponsorship revenues for its March event, but held a successful and fully booked festival in October.
The Lawyer
Overall revenues for The Lawyer grew by 19%. Premium Content revenue showed strong growth of 22% primarily from TheLawyer.com corporate subscriptions performance with an impressive renewal rate of 116%, supported by Signal with a further year of significant new business and a notable first year of renewals at a 102% renewal rate. Events also had a particularly strong year with the first in-person The Lawyer Awards since 2019. The Lawyer retains a 90% penetration of the top 100 law firms demonstrating the value delivered to our customers.
This performance was partially offset with downsides in Marketing Solutions and Recruitment Advertising reducing 33% and 15% respectively.
This led to a rise in Adjusted EBITDA from GBP2.7m in 2021 to GBP3.1m in 2022 at a margin of 37%. The underlying business is performing strongly with resilient renewal rates and continued engagement by users indicating how important The Lawyer is to leading law firms and their fee earners.
Measurement and non-statutory adjustments
The statutory results of the Group are presented in accordance with UK-adopted International Accounting Standards (IFRS). The Group also uses alternative reporting and other non-GAAP measures as explained below and as defined in the table at the end of this section.
Adjusting items
Adjusted results are not intended to replace statutory results but are prepared to provide a better comparison of the Group's core business performance by removing the impact of certain items from the statutory results. The Directors believe that adjusted results and Adjusted earnings per share are the most appropriate way to measure the Group's operational performance because they are comparable to the prior year and consequently review the results of the Group on an adjusted basis internally.
Statutory operating profit for the year reconciles to Adjusted operating profit and Adjusted EBITDA as follows:
2022 2021
Note GBPm GBPm
---------------------------------------- ---- ----- -----
Statutory operating profit 3.9 1.6
Adjusting items:
Exceptional costs 4 0.1 -
Amortisation of acquired intangible
assets 10 0.5 1.1
Share-based payments 22 0.8 0.5
----- -----
1.4 1.6
---------------------------------------- ---- ----- -----
Adjusted operating profit 5.3 3.2
Depreciation, amortisation
and impairment 3 3.2 3.2
---------------------------------------- ---- ----- -----
Adjusted EBITDA 8.5 6.4
Adjusted EBITDA margin 20% 16%
---------------------------------------- ---- ----- -----
Adjusting items of GBP1.4m in the year (2021: GBP1.6m) are comprised as follows:
Adjusting Item Description
------------------------ ---------------------------------------------------------
Exceptional costs Exceptional costs of GBP0.1m (2021: GBPnil) relate
to the office lease termination fee less the gain on
remeasurement of the office lease.
Amortisation of acquired Amortisation of acquired intangible assets of GBP0.5m
intangible assets (2021: GBP1.1m) has fallen as certain assets have become
fully amortised.
Share-based payments Share-based payments of GBP0.8m have increased in the
year due to an additional year of LTIP issuance to
members of the Centaur Strategy Group (2021: GBP0.5m).
------------------------ ---------------------------------------------------------
Segment profit
Segmental profit is reported to improve clarity around performance and consists of the gross contribution for the Xeim and The Lawyer Business Units less specific overheads and allocations of the central support teams and overheads that are directly related to each Business Unit. Any costs not attributable to either Xeim or The Lawyer, remain as part of central costs.
The table below shows the statutory revenue, which is the same as the underlying revenue, for each Business Unit:
The The
Xeim Lawyer Total Xeim Lawyer Total
2022 2022 2022 2021 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----- ------- ----- ----- ------- -----
Revenue
Premium Content 10.0 4.7 14.7 9.0 3.9 12.9
Training and Advisory 14.4 - 14.4 12.6 - 12.6
Marketing Services 2.9 - 2.9 3.3 - 3.3
Events 2.7 2.0 4.7 2.7 1.1 3.8
Marketing Solutions 2.9 0.6 3.5 4.2 0.8 5.0
Recruitment Advertising 0.4 1.0 1.4 0.3 1.2 1.5
------------------------- ----- ------- ----- ----- ------- -----
Total statutory revenue 33.3 8.3 41.6 32.1 7.0 39.1
------------------------- ----- ------- ----- ----- ------- -----
Revenue growth 4% 19% 6% ------------------------- ----- ------- ----- ----- ------- -----
The table below reconciles the Adjusted operating profit/(loss) for each segment to the Adjusted EBITDA:
Xeim The Lawyer Central Total Xeim The Lawyer Central Total
2022 2022 2022 2022 2021 2021 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------ ---------- ------- ------ ------ ---------- ------- ------
Revenue 33.3 8.3 - 41.6 32.1 7.0 - 39.1
Adjusted operating
costs (27.1) (5.8) (3.4) (36.3) (27.6) (4.9) (3.4) (35.9)
--------------------------- ------ ---------- ------- ------ ------ ---------- ------- ------
Adjusted operating
profit/(loss) 6.2 2.5 (3.4) 5.3 4.5 2.1 (3.4) 3.2
Adjusted operating
margin 19% 30% 13% 14% 30% 8%
Depreciation, amortisation
and impairment 2.3 0.6 0.3 3.2 2.1 0.6 0.5 3.2
--------------------------- ------ ---------- ------- ------ ------ ---------- ------- ------
Adjusted EBITDA 8.5 3.1 (3.1) 8.5 6.6 2.7 (2.9) 6.4
Adjusted EBITDA margin 26% 37% 20% 21% 39% 16%
--------------------------- ------ ---------- ------- ------ ------ ---------- ------- ------
Net finance costs
Net finance costs were GBP0.1m (2021: GBP0.3m). The Group held positive cash balances throughout the year and therefore, in both 2022 and 2021, finance costs mainly relate to the commitment fee payable for the revolving credit facility as well as interest on lease payments for right-of-use assets. In 2022 this was offset by interest income of GBP0.1m.
Taxation
A tax charge of GBP1.0m (2021: credit of GBP0.1m) has been recognised for the year. The Adjusted tax charge was GBP1.3m (2021: charge of GBP0.1m). The Company's profits were taxed in the UK at a rate of 19.0% (2021: 19.0%), but the resulting tax charge is at an effective tax rate of 26% due mainly to the utilisation of tax losses for which the deferred tax asset had been recognised at a rate of 25%, being the future rate of tax in the UK from April 2023. See note 7 for a reconciliation between the statutory reported tax charge and the Adjusted tax charge.
Earnings/loss per share
The Group has delivered Adjusted diluted earnings per share for the year of 2.6 pence (2021: 1.9 pence). Diluted earnings per share for the year were 1.8 pence (2021: earnings of 0.9 pence). Full details of the earnings per share calculations can be found in note 8 to the financial information.
Dividends
Under the Group's dividend policy, Centaur targets a pay-out ratio of 40% of Adjusted retained earnings, subject to a minimum dividend of 1.0 pence per share per annum.
Therefore, the Group has proposed a final dividend of 0.6 pence per ordinary share in respect of 2022. This brings the total ordinary dividends relating to 2022 to 1.1 pence (2021: 1.0 pence) per ordinary share and is the first time, since the dividend policy was initiated, that we have paid above the 1.0 pence per share minimum due to the increasing profitability of the Group.
Given the continued robust performance of the Group in 2022 and the resulting year end cash balance of GBP16.0m, the Group announced in January 2023, and paid in February, a special dividend of 3.0 pence per share, equivalent to GBP4.3m. Looking forward and taking into account the cash needs of the Group, the Board has taken the decision to announce a second special dividend of 2.0 pence per share, equivalent to GBP2.9m, to be paid in March 2023 in order to return further cash to shareholders.
The final ordinary dividend is subject to shareholder approval at the Annual General Meeting and, if approved, will be paid on 26 May 2023 to all ordinary shareholders on the register at the close of business on 12 May 2023.
Cash flow
2022 2021
GBPm GBPm
------------------------------------------------ ----- -----
Adjusted operating profit 5.3 3.2
Depreciation, amortisation and impairment 3.2 3.2
Movement in working capital (0.1) 3.1
------------------------------------------------ ----- -----
Adjusted operating cash flow 8.4 9.5
Capital expenditure (1.4) (0.8)
Cash impact of adjusting items (0.2) -
Taxation - -
Repayment of lease obligations and net interest
paid (1.9) (2.2)
------------------------------------------------ ----- -----
Free cash flow 4.9 6.5
Purchase of own shares (0.6) (0.3)
Dividends paid to Company's shareholders (1.4) (1.4)
------------------------------------------------ ----- -----
Increase in net cash (1) 2.9 4.8
Opening net cash (1) 13.1 8.3
------------------------------------------------ ----- -----
Closing net cash (1) 16.0 13.1
------------------------------------------------ ----- -----
Cash conversion 99% 164%
------------------------------------------------ ----- -----
(1) Net cash is the total of cash and cash equivalents and short-term deposits.
Adjusted operating cash flow is not a measure defined by IFRS. Centaur defines Adjusted operating cash flow as cash flow from operations excluding the impact of adjusting items. The Directors use this measure to assess the performance of the Group as it excludes volatile items not related to the core trading of the Group and includes the Group's management of capital expenditure. A reconciliation between cash flow from operations and Adjusted operating cash flow is shown in note 1(b) to the financial information.
The cash conversion of 99% (2021: 164%) has been adjusted to exclude these one-off items. The cash conversion in 2022 has returned to a more normal level after the high conversion rate in 2021 resulting from positive working capital movements relating to increased bonuses and MW Mini MBA costs in 2021, both paid after the end of the year. Conversely 2022 cash conversion is impacted by lower bonuses but maintained close to 100% by an increase in deferred revenue from subscriptions.
MAP23
In January 2021 the Group announced its MAP23 strategy under which it will raise Adjusted EBITDA margins to 23% by 2023, while increasing revenues to GBP45m. The increase in revenue of 6% and Adjusted EBITDA margin from 12% in 2020 to 16% in 2021 to 20% in 2022 demonstrates clear progress towards these objectives. With current uncertainty over the economic environment going into 2023, the achievement of our MAP23 objectives will be demanding and will require an unwavering focus on our customer's needs and control over our costs, particularly given inflationary pressures.
The Group has made an encouraging start to 2023 and trading is in line with our expectations. We are expecting elongated sales contracting processes with our customers and pressure on our costs due to the wider economic situation in the UK and internationally. We will address this through a deep focus on our customer needs, structured pricing increases, robust negotiation with our suppliers to tighten control of our cost base and variable remuneration structures for our senior management team. We will also continue our work on the climate and social aspects of our ESG agenda as set out in our ESG report.
Financing and bank covenants
On 16 March 2021 the Group signed a revolving credit facility with NatWest which allows the Group to borrow up to GBP10m and has a three-year duration with the option of two further one-year periods. On 5 December 2022, management exercised the option to extend for one further one-year period. The Group has not drawn down any borrowings under the facility.
Balance sheet
2022 2021
GBPm GBPm
------------------------------------- ----- -----
Goodwill and other intangible assets 43.8 44.2
Property, plant and equipment 0.4 2.5
Deferred taxation 1.6 2.4
Deferred income (8.9) (7.8)
Other current assets and liabilities (4.1) (7.1)
Non-current assets and liabilities - (0.2)
------------------------------------- ----- -----
Net assets before cash 32.8 34.0
Net cash (1) 16.0 13.1
------------------------------------- ----- -----
Net assets 48.8 47.1
------------------------------------- ----- -----
(1) Net cash is the total of cash and cash equivalents and short-term deposits.
Goodwill and other intangibles have decreased by GBP0.5m as a result of the amortisation of intangible assets. Property, plant and equipment has fallen by GBP2.1m predominantly due to the cessation of the property lease meaning the right-of-use asset has been disposed of. A right-of-use asset for the new lease will be recognised on 1 January 2023, and is included in capital commitments at 31 December 2022, see note 27. Deferred income has increased by GBP1.0m mainly as a result of advance billings on subscriptions. Other net current assets and liabilities have increased by GBP3.0m due to a lower bonus accrual and a reduction of GBP1.9m in lease liabilities, offset by a reduction in trade receivables.
Going concern
After due consideration, as required under IAS 1 Presentation of Financial Statements, of the Group's forecasts for at least twelve months from the date of this report and the effectiveness of risk management processes, the Directors have concluded that it is appropriate to continue to adopt the going concern basis in the preparation of the consolidated financial information for the year ended 31 December 2022. As detailed under the Risk Management section, the Directors have assessed the viability of the Group over a three-year period to March 2026 and the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over that period.
Conclusion
Centaur is continuing to grow organically despite the macro-economic uncertainties and year on year is increasing the profit margin achieved. Together with the strength of our balance sheet, Centaur is in a good position to press on towards its ambitious MAP23 goals and longer-term vision.
Alternative performance measures
Measure Definition
-------------------- ----------------------------------------------------------------
Adjusted EBITDA Adjusted operating profit before depreciation and impairment
of tangible assets and amortisation and impairment of
intangible assets other than those acquired through a
business combination.
Adjusted EBITDA Adjusted EBITDA as a percentage of revenue.
margin
Adjusted EPS EPS calculated using Adjusted profit for the period.
Adjusting items Items as set out in the statement of consolidated income
and notes 1(b) and 4 of the financial information including
exceptional items, amortisation of acquired intangible
assets, profit/(loss) on disposal of assets, share-based
payment expense, volatile items predominantly relating
to investment activities and other separately reported
items.
Adjusted operating Net operating costs excluding Adjusting items.
costs
Adjusted operating Operating profit excluding Adjusting items.
profit
Adjusted profit Profit before tax excluding Adjusting items.
before tax
Adjusted retained Profit for the year excluding Adjusting items.
earnings
Adjusted tax charge Tax charge excluding the tax charge on Adjusted items.
Cash conversion Adjusted operating cash flow (excluding any one-off significant
cash flows) / Adjusted EBITDA.
Exceptional items Items where the nature of the item, or its magnitude,
is material and likely to be non-recurring in nature as
shown in note 4.
Free cash flow Increase/decrease in cash for the year before the impact
of debt, acquisitions, disposals, dividends and share
repurchases.
Net cash The total of cash and cash equivalents and short-term
deposits.
Segment profit Adjusted operating profit of a segment after allocation
of central support teams and overheads that are directly
related to each segment or business unit.
Underlying revenue Statutory revenue adjusted to exclude the impact of revenue
arising from acquired businesses, disposed businesses
that do not meet the definition of discontinued operations
per IFRS 5, and closed business lines ("excluded revenue").
-------------------- ----------------------------------------------------------------
Risk Management
Risk management approach
The Board has overall responsibility for the effectiveness of the Group's system of risk management and internal controls, and these are regularly monitored by the Audit Committee.
The Executive Committee, Company Secretary and the Head of Legal are responsible for identifying, managing and monitoring material and emerging risks in each area of the business and for regularly reviewing and updating the risk register, as well as reporting to the Audit Committee in relation to risks, mitigations and controls. As the Group operates principally from one office and with relatively flat management reporting lines, members of the Executive Committee are closely involved in day-to-day matters and are able to identify areas of increasing risk quickly and respond accordingly.
The responsibility for each risk identified is assigned to a member of the Executive Committee. The Audit Committee considers risk management and controls regularly and the Board formally considers risks to the Group's strategy and plans as well as the risk management process as part of its strategic review.
The risk register is the core element of the Group's risk management process. The register is maintained by the Company Secretary with input from the Executive Committee and the Head of Legal. The Executive Committee initially identifies the material risks and emerging risks facing the Group and then collectively assesses the severity of each risk (by ranking both the likelihood of its occurrence and its potential impact on the business) and the related mitigating controls.
As part of its risk management processes, the Board considers both strategic and operational risks, as well as its risk appetite in terms of the tolerance level it is willing to accept in relation to each principal risk, which is recorded in the Company's risk register. This approach recognises that risk cannot always be eliminated at an acceptable cost and that there are some risks which the Board will, after due and careful consideration, choose to accept.
The Group's risk register, its method of preparation and the operation of the key controls in the Group's system of internal control are regularly reviewed and overseen by the Audit Committee with reference to the Group's strategic aims and its operating environment. The register is also reviewed and considered by the Board.
As part of the ongoing enhancement of the Group's risk monitoring activities, we reviewed and updated the procedures by which we evaluate principal risks and uncertainties during the year including the consideration of climate-related risks as described in the ESG report.
Principal risks
The Group's risk register currently includes operational and strategic risks. The principal risks faced by the Group in 2022, taken from the register, together with the potential effects and mitigating factors, are set out below. The Directors confirm that they have undertaken a robust assessment of the principal and emerging risks facing the Group. Financial risks are shown in note 25 to the financial information.
Rank Risk Description of risk Risk mitigation/control Movement in risk
and impact procedure
---- ------------------------- ----------------------------- ---------------------------- ------------------------
1 Sensitivity The world economy We will mitigate the The Board considers
to UK/sector has been severely risk relating to our this risk to have
economic impacted by the Covid customers by adapting increased since the
conditions. pandemic and the conflict content to help them prior year.
in Ukraine. The UK manage in the economic
is forecast to be environment, focus on
in recession and the adding value to our
inflation rate is subscription
over 10%. The Group and eLearning products
continues to have and improving user
sensitivity to UK/sector experience
volatility and economic and customer service
conditions. The impact to protect renewal rates
has been acute on and new business.
some of Centaur's Centaur continues to
target market segments increase international
including the fashion, organic growth to mitigate
retail and entertainment this risk. We are also
sectors and is also increasing our focus
having some impact on targeting larger scale
on in-person events. multinational businesses
The likelihood of which have a more
ongoing volatility diversified
in 2023 is expected risk profile.
to be high including Many of the Group's
high inflation rates products
and there are varying are market-leading in
views as to the timing their respective sectors
and extent of any and are an integral part
recovery. of our customers'
operational
processes, which mitigates
the risk of reduced demand
for our products.
The Group regularly
reviews
the political and economic
conditions and forecasts
for UK, including specific
risks such as inflation,
to assess whether changes
to its product offerings
or pricing structures
are necessary.
---- ------------------------- ----------------------------- ---------------------------- ------------------------
2 Failure to Centaur's success There has been a The Board considers
deliver and depends on growing significant this risk to be broadly
maintain the business and completing focus on employee the same as the prior
a high growth the MAP23 strategy. communication year.
performance In order to do this, this year including weekly
culture. it depends in large updates, local town hall
The risk part on its ability meetings, all company
that Centaur to recruit, motivate Q&A sessions and staff
is unable and retain highly welfare calls.
to attract, experienced and qualified We regularly review
develop and employees in the face measures
retain an of often intense competition aimed at improving our
appropriately from other companies, ability to recruit and
skilled, especially in London. retain employees. During
diverse and Investment in training, the year we have continued
responsible development and pay to focus on bringing
workforce awards needs to be in higher quality
and leadership compelling but will employees
team, and be challenging in to replace leavers or
maintain the current economic those in new roles in
a healthy and operating climate. order to enhance our
culture which Implementing a diverse strategy particularly
encourages and inclusive working in areas such as
and supports environment that allows marketing,
ethical high-performance for agile and remote digitalisation, technology
behaviours delivery is necessary and data analytics.
and decision to keep the workforce We track employee
making. engaged. It is also engagement
Difficulties required for a flexible through weekly "check-ins"
in recruiting hybrid working model. via our ENGAGE system
and retaining Higher staff churn to gauge colleague
staff could (a challenge for many sentiment
lead to loss companies in our sector) and gain an understanding
of key senior has been an important of any key risks or
staff. issue during the first challenges.
half of 2022 but we Our employee engagement
will need to keep committee, DICE, who
our policies and practices focus on Diversity,
under review. Inclusion,
Developing the MAP23 Culture and Engagement,
business strategy has helped to drive
and changes required forward
in skill set and culture initiatives relating
are challenging and to diversity and
costly. inclusion,
through communication
and social functions.
This is sponsored by
the CEO and a
Non-Executive
Director.
The CEO has held Kaizen
breakfasts with employees
during the year with
the objective of
generating
a continuous performance
improvement culture within
the Group.
An annual review ensures
flight risks and training
needs are identified
which become the focus
for pay, reward and
development
areas. All London based
staff continue to be
paid at or above the
London Living Wage.
Our HR team hold exit
interviews for all leavers
to identify and resolve
areas of concern.
---- ------------------------- ----------------------------- ---------------------------- ------------------------
3 Fraudulent Centaur relies on Appropriate IT security The Board considers
or accidental its IT network to and related controls this risk to be broadly
breach of conduct its operations. are in place for all the same as the prior
our IT network, The IT network is key processes to keep year.
major systems at risk of a serious the IT environment safe
failure or systems failure or and monitor our network
ineffective breach of its security systems and data.
operation controls due to a Centaur has invested
of IT and deliberate or fraudulent significantly in its
data management cyber-attack or IT systems and, where
systems leads unintentional services are outsourced
to loss, event and may include to suppliers, contingency
theft or third parties gaining planning is carried out
misuse of unauthorised access to mitigate risk of
financial to Centaur's IT network supplier
assets, proprietary and systems. failure.
or sensitive This could result Centaur continues to
information in misappropriation develop its CRM,
and/or inoperative of its financial assets, e-commerce
core products, proprietary or sensitive and finance systems and
services, information (including has removed a number
or business personal data or of legacy systems in
functions. confidential the last 3 years reducing
information), corruption the Group's cyber risk.
of data, or operational Centaur has a business
disruption, such as continuity plan which
unavailability of includes its IT systems
our websites and our and there is daily,
digital products to overnight
users, unavailability back-up of data, stored
of support platforms off-site.
and disruption to Websites are hosted by
our revenue collection specialist third-party
activities. providers who typically
Centaur could incur provide warranties
significant costs relating
and suffer other negative to security standards.
consequences as a All of our websites are
result of this, such hosted on a secure
as remediation costs platform
(including liability which is cloud hosted
for stolen assets and databases have been
or information and cleansed and updated.
repair of any damage The Group Head of Data
caused to Centaur's ensures that rigorous
IT network infrastructure controls are in place
and systems) as well to ensure warehouse data
as reputational damage can only be downloaded
and loss of investor by the data team.
confidence resulting Integration
from any operational of the warehouse with
disruption. current databases and
A serious occurrence data captured and stored
of a loss, theft or elsewhere is ongoing.
misuse of personal Please see risk 4:
data could also result Regulatory
in a breach of data compliance for specific
protection requirements mitigations relating
and the effects of to the security of
this. See risk 4: personal
Regulatory compliance. data and GDPR compliance.
---- ------------------------- ----------------------------- ---------------------------- ------------------------
4 Regulatory The UK General Data Centaur has taken a wide The Board considers
compliance Protection Regulation range of measures aimed this risk to be broadly
(GDPR, PECR ('GDPR'), the Data at complying with the the same as the prior
and other Protection Act 2018 key aspects of the GDPR, year.
similar legislation) ('DPA') and the Privacy DPA and PECR.
includes and Electronic The Data Compliance
strict requirements Communications Committee
regarding Regulations ('PECR') (overseen by the CFO)
how Centaur involve strict requirements monitors Centaur's ongoing
handles personal for Centaur regarding compliance with data
data, including its handling of personal protection laws.
that of customers. data. Centaur's obligations Staff are required to
There is under the GDPR are undertake online data
the risk complex meaning this protection awareness
of a fine area requires ongoing and data security awareness
from the focus. training annually.
ICO, third-party PECR includes specific In 2021, Centaur appointed
claims as obligations for businesses a DPO (Wiggin LLP) to
well as reputational like Centaur regarding oversee its compliance
damage if electronic marketing with data protection
we do not calls, emails, texts laws. Further, Centaur's
comply. and use of cookies in-house legal team keeps
and similar technologies, abreast of material
among other things. developments
In the event of a in data protection law
serious breach of and regulation and advice
the GDPR and/or PECR, from external law firms
Centaur could be subject is sought where
to a significant fine appropriate.
from the regulator, Given the increasingly
the ICO, and claims global nature of our
from third parties business and our customers,
including customers, Centaur's approach to
as well as reputational complying with data
damage. protection
The maximum fines laws in other jurisdictions
for breaches are GBP17.5 is kept under review.
million (GDPR) and
GBP500,000 (PECR)
respectively and directors
can have liability
for serious breaches
of PECR's marketing
rules.
Other countries and
jurisdictions worldwide
have their own laws
relating to data and
privacy. Where Centaur
is required to comply
with the laws in non-UK
jurisdictions there
is a risk that Centaur
may not be compliant
with all such laws
and could therefore
be subject to regulatory
action and fines from
the relevant regulators
and data subjects.
ICO guidance relating
to use of cookies,
and further changes
to the laws relating
to data privacy, ad
tech and electronic
marketing expected
in the future, will
further increase the
regulatory burden
for businesses like
Centaur and the requirements
in this regard will
need to be kept under
review.
---- ------------------------- ----------------------------- ---------------------------- ------------------------
Viability Statement
In accordance with provision 31 of the UK Corporate Governance Code 2018, the Directors have assessed the viability of the Group over a three-year period from signing of this Annual Report to March 2026, taking account of the Group's current position, the Group's strategy, the Board's risk appetite and, as documented above, the principal risks facing the Group and how these are managed. Based on the results of this analysis, the Directors have a reasonable expectation that the Group and the Company will be able to continue in operation and meet its liabilities as they fall due over the period to March 2026.
The Board has determined that the three-year period to March 2026 is an appropriate period over which to provide its viability statement because the Board's financial planning horizon covers a three-year period. In making their assessment, the Directors have taken account of the Group's GBP10m three-year revolving credit facility (which allows extensions to 2026 on similar terms), cash flows, dividend cover and other key financial ratios over the period.
The covenants of the facility require a minimum interest cover ratio of 4 and net leverage not exceeding 2.5 times. In the calculation of net leverage Adjusted EBITDA excludes the impact of IFRS 16. The Group is not expected to breach any of these covenants in any of the scenarios run for the viability statement and is not forecasting that the facility will be utilised during the viability period.
The base scenario uses a three-year forecast to December 2025, which assumes achievement of MAP23 targets, with the 2024 and 2025 forecast continuing that strategy. The three months to March 2026 are based directly off the respective forecast in 2025 with inflation applied. The MAP23 targets were built, bottom-up during 2020 once the impact of Covid had become clear. The strategy focuses on investment and resource allocation on the Flagship 4, the four brands we consider our key drivers for organic revenue growth. Further details of the MAP23 plan can be found in the Strategy section of this Annual Report.
The metrics in the base case are subject to stress testing which involves sensitising key assumptions underlying the forecasts both individually and in unison. The key sensitivity is on Adjusted EBITDA which is the primary driver of performance in the viability assessment. This sensitised scenario assumes that Adjusted EBITDA is lowered by 10% in every period that the viability statement covers.
In both the base case and sensitised scenarios, the Group would not be required to rely on the revolving credit facility in order to fund its daily operations. Sensitising the model for changes in the assumptions and risks affirmed that the Group and the Company would remain viable over the three-year period to March 2026.
Going concern basis of accounting
In accordance with provision 30 of the UK Corporate Governance Code 2018, the Directors' statement as to whether they consider it appropriate to adopt the going concern basis of accounting in preparing the financial information and their identification of any material uncertainties, including the principal risks outlined above, to the Group's ability to continue to do so over a period of at least twelve months from the date of approval of the financial information and for the foreseeable future, being the period as discussed in the viability statement above.
Statement of Directors' Responsibilities in respect of the financial information
The Directors are responsible for preparing the Annual Report and the financial information in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial information for each financial year. Therefore, the Directors have prepared the Group financial information in accordance with UK-adopted International Accounting Standards (IFRS) and Company financial information in accordance with IFRS. Under company law the Directors must not approve the financial information unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. In preparing the financial information, the Directors are required to:
-- Select suitable accounting policies and then apply them consistently;
-- State whether applicable IFRS have been followed for the Group financial information and applicable
IFRS have been followed for the Company financial information, subject to any material departures
disclosed and explained in the financial information;
-- Make judgements and accounting estimates that are reasonable and prudent; and
-- Prepare the financial information on the going concern basis unless it is inappropriate to
presume that the Group and Company will continue in business.
The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial information and the Directors' Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.
Directors' confirmations
The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Company's position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed in the Governance Report confirm that, to the best of their knowledge:
-- The Company financial information which have been prepared in accordance
with UK-adopted IASs give a true and fair view of the assets liabilities
financial position and result of the Company;
-- The Group financial information which have been prepared in accordance
with UK-adopted IASs give a true and fair view of the assets liabilities
financial position and profit of the Group; and
-- The Directors' Report includes a fair review of the development and
performance of the business and the position of the Group and Company
together with a description of the principal risks and uncertainties
that it faces.
In the case of each Director in office at the date the Directors' Report is approved:
-- So far as the Director is aware, there is no relevant audit information
of which the Group and Company's auditors are unaware; and
-- They have taken all the steps that they ought to have taken as a Director
in order to make themselves aware of any relevant audit information
and to establish that the Group and Company's auditors are aware of
that information.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2022
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
Results(1) Items(1) Results Results(1) Items(1) Results
2022 2022 2022 2021 2021 2021
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
Revenue 2 41,593 - 41,593 39,080 - 39,080
Net operating expenses 3 (36,296) (1,419) (37,715) (35,848) (1,611) (37,459)
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
Operating profit / (loss) 5,297 (1,419) 3,878 3,232 (1,611) 1,621
Finance income 6 85 - 85 1 - 1
Finance costs 6 (158) - (158) (261) - (261)
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
Net finance costs (73) - (73) (260) - (260)
Profit / (loss) before tax 5,224 (1,419) 3,805 2,972 (1,611) 1,361
Taxation 7 (1,275) 270 (1,005) (139) 195 56
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
Profit / (loss) for the
year
attributable to owners of
the
parent 3,949 (1,149) 2,800 2,833 (1,416) 1,417
Total comprehensive income
/
(loss) attributable to
owners
of the parent 3,949 (1,149) 2,800 2,833 (1,416) 1,417
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
Earnings / (loss) per share
attributable to owners of
the
parent 8
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
Basic 2.7p (0.8p) 1.9p 2.0p (1.0p) 1.0p
Fully diluted 2.6p (0.8p) 1.8p 1.9p (1.0p) 0.9p
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
(1) Adjusted results exclude adjusting items, as detailed in note 1(b).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2022
Attributable to owners of the Company
Reserve
for
shares
to Foreign
Share Own Share be Deferred currency Retained Total
capital shares premium issued shares reserve earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------ --------- --------- --------- --------- --------- ---------- ---------- ---------
At 1 January 2021 15,141 (5,902) 1,101 607 80 166 35,977 47,170
Profit for the year
and
total
comprehensive
income - - - - - - 1,417 1,417
Currency
translation
adjustment - - - - - (23) - (23)
Transactions with
owners
in their capacity
as
owners:
Dividends 23 - - - - - - (1,450) (1,450)
Purchase of own
shares 21 - (481) - - - - - (481)
Exercise of share
awards 21,22 - 912 - (493) - - (419) -
Fair value of
employee
services 22 - - - 357 - - - 357
Tax on share-based
payments 13 - - - - - - 118 118
-------------------- ------ --------- --------- --------- --------- --------- ---------- ---------- ---------
As at 31 December
2021 15,141 (5,471) 1,101 471 80 143 35,643 47,108
-------------------- ------ --------- --------- --------- --------- --------- ---------- ---------- ---------
Profit for the year
and
total
comprehensive
income - - - - - - 2,800 2,800
Currency
translation
adjustment - - - - - 1 - 1
Transactions with
owners
in their capacity
as
owners:
Dividends 23 - - - - - - (1,436) (1,436)
Purchase of own
shares 21 - (604) - - - - - (604)
Exercise of share
awards 21,22 - 212 - (54) - - (158) -
Lapsed share awards 22 - - - (14) - - 14 -
Fair value of
employee
services 22 - - - 724 - - - 724
Tax on share-based
payments 13 - - - - - - 233 233
As at 31 December
2022 15,141 (5,863) 1,101 1,127 80 144 37,096 48,826
-------------------- ------ --------- --------- --------- --------- --------- ---------- ---------- ---------
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2022
Attributable to owners of the Company
Reserve
for
shares
to
Share Own Share be Deferred Retained Total
capital shares premium issued shares earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ----- --------- --------- --------- --------- --------- ---------- ---------
At 1 January 2021 15,141 (4,135) 1,101 607 80 27,756 40,550
Loss for the year and total
comprehensive loss - - - - - (2,325) (2,325)
Transactions with owners in
their capacity
as owners:
Dividends 23 - - - - - (1,450) (1,450)
Exercise of share awards 22 - - - (493) - 80 (413)
Fair value of employee services 22 - - - 357 - - 357
Tax on share-based payments 13 - - - - - 88 88
--------------------------------- ----- --------- --------- --------- --------- --------- ---------- ---------
As at 31 December 2021 15,141 (4,135) 1,101 471 80 24,149 36,807
--------------------------------- ----- --------- --------- --------- --------- --------- ---------- ---------
Loss for the year and total
comprehensive loss - - - - - (4,619) (4,619)
Transactions with owners in
their capacity as owners:
Dividends 23 - - - - - (1,436) (1,436)
Exercise of share awards 22 - - - (54) - (27) (81)
Lapsed share awards 22 - - - (14) - 14 -
Fair value of employee services 22 - - - 724 - - 724
Tax on share-based payments 13 - - - - - 101 101
--------------------------------- ----- --------- --------- --------- --------- --------- ---------- ---------
As at 31 December 2022 15,141 (4,135) 1,101 1,127 80 18,182 31,496
--------------------------------- ----- --------- --------- --------- --------- --------- ---------- ---------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2022
Registered number 04948078
31 December 31 December
2022 2021
Note GBP'000 GBP'000
------------------------------------------------ ----- ------------ ------------
Non-current assets
Goodwill 9 41,162 41,162
Other intangible assets 10 2,611 3,102
Property, plant and equipment 11 387 2,484
Deferred tax assets 13 1,673 2,488
Other receivables 14 27 319
------------------------------------------------ ----- ------------ ------------
45,860 49,555
------------------------------------------------ ----- ------------ ------------
Current assets
Trade and other receivables 14 5,357 6,059
Cash and cash equivalents 15 7,501 13,065
Short-term deposits 16 8,500 -
Current tax assets 20 165 195
------------------------------------------------ ----- ------------ ------------
21,523 19,319
------------------------------------------------ ----- ------------ ------------
Total assets 67,383 68,874
------------------------------------------------ ----- ------------ ------------
Current liabilities
Trade and other payables 17 (9,652) (11,408)
Lease liabilities 18 - (1,884)
Deferred income 19 (8,885) (7,846)
(18,537) (21,138)
------------------------------------------------ ----- ------------ ------------
Net current assets / (liabilities) 2,986 (1,819)
------------------------------------------------ ----- ------------ ------------
Non-current liabilities
Lease liabilities 18 - (500)
Deferred tax liabilities 13 (20) (128)
------------------------------------------------ ----- ------------ ------------
(20) (628)
------------------------------------------------ ----- ------------ ------------
Net assets 48,826 47,108 ------------------------------------------------ ----- ------------ ------------ Capital and reserves attributable to owners of the Company Share capital 21 15,141 15,141 Own shares (5,863) (5,471) Share premium 1,101 1,101 Other reserves 1,207 551 Foreign currency reserve 144 143 Retained earnings 37,096 35,643 ------------------------------------------------ ----- ------------ ------------ Total equity 48,826 47,108 ------------------------------------------------ ----- ------------ ------------
COMPANY STATEMENT OF FINANCIAL POSITION
as at 31 December 2022
Registered number 04948078
31 December 31 December
2022 2021
Note GBP'000 GBP'000
------------------------------------------------ ----- ------------ ------------
Non-current assets
Investments 12 65,529 65,155
Deferred tax assets 13 375 190
Other receivables 14 1,225 1,197
------------------------------------------------ ----- ------------ ------------
67,129 66,542
------------------------------------------------ ----- ------------ ------------
Current assets
Trade and other receivables 14 136 161
136 161
------------------------------------------------ ----- ------------ ------------
Total assets 67,265 66,703
------------------------------------------------ ----- ------------ ------------
Current liabilities
Trade and other payables 17 (35,769) (29,896)
(35,769) (29,896)
------------------------------------------------ ----- ------------ ------------
Net current liabilities (35,633) (29,735)
------------------------------------------------ ----- ------------ ------------
Net assets 31,496 36,807
------------------------------------------------ ----- ------------ ------------
Capital and reserves attributable to owners of
the Company
Share capital 21 15,141 15,141
Own shares (4,135) (4,135)
Share premium 1,101 1,101
Other reserves 1,207 551
Retained earnings 18,182 24,149
------------------------------------------------ ----- ------------ ------------
Total equity 31,496 36,807
------------------------------------------------ ----- ------------ ------------
The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in this financial information. The Company's loss for the year was GBP4,619,000 (2021: loss of GBP2,325,000).
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2022
2022 2021
Note GBP'000 GBP'000
-------------------------------------------------------- ----- --------- ---------
Cash flows from operating activities
Cash generated from operations 24 8,402 9,521
Tax paid 7 (30) -
-------------------------------------------------------- ----- --------- ---------
Net cash generated from operating activities 8,372 9,521
-------------------------------------------------------- ----- --------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment 11 (284) (51)
Purchase of intangible assets 10 (1,073) (706)
Interest received 6 63 1
Investment in short-term deposits 16 (8,500) -
Net cash flows used in investing activities (9,794) (756)
-------------------------------------------------------- ----- --------- ---------
Cash flows from financing activities
Finance costs paid 6 (71) (88)
Repayment of obligations under lease 18 (1,921) (2,036)
Termination of lease 18 (243) -
Purchase of own shares 21 (604) (306)
Dividends paid to Company's shareholders 23 (1,436) (1,448)
Loan arrangement fees 24 - (107)
Net cash flows used in financing activities (4,275) (3,985)
-------------------------------------------------------- ----- --------- ---------
Net (decrease) / increase in cash and cash equivalents (5,697) 4,780
Cash and cash equivalents at beginning of the year 13,065 8,300
Effects of foreign currency exchange rate changes 133 (15)
-------------------------------------------------------- ----- --------- ---------
Cash and cash equivalents at end of year 15 7,501 13,065
-------------------------------------------------------- ----- --------- ---------
COMPANY CASH FLOW STATEMENT
for the year ended 31 December 2022
2022 2021
Note GBP'000 GBP'000
---------------------------------------------------- ----- --------- ---------
Cash flows from operating activities
Cash generated from operating activities 24 1,507 1,642
---------------------------------------------------- ----- --------- ---------
Cash flows from financing activities
Finance costs paid 6 (71) (87)
Dividends paid to Company's shareholders 23 (1,436) (1,448)
Loan arrangement fees 24 - (107)
Net cash flows used in financing activities (1,507) (1,642)
---------------------------------------------------- ----- --------- ---------
Net increase in cash and cash equivalents - -
Cash and cash equivalents at beginning of the year - -
---------------------------------------------------- ----- --------- ---------
Cash and cash equivalents at end of year 15 - -
---------------------------------------------------- ----- --------- ---------
NOTES TO THE FINANCIAL INFORMATION
1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated and Company financial information are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. The financial information are for the Group consisting of Centaur Media Plc and its subsidiaries, and the Company, Centaur Media Plc. Centaur Media Plc is a public company limited by shares and incorporated in England and Wales.
(a) Basis of preparation
The financial information in this preliminary announcement has been extracted from the audited Group Financial Statements for the year ended 31 December 2022 and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group Financial Statements for 2021 were delivered to the registrar of companies, and those for 2022 will be delivered in due course. The auditor's report on the Group Financial Statements for 2021 and 2022 were both unqualified and unmodified. The auditors' report was signed on 14 March 2023. The Group Financial Statements and this preliminary announcement were approved by the Board of Directors on 14 March 2023.
The consolidated and Company financial information have been prepared in accordance with UK-adopted International Accounting Standards (IFRS) and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The financial information has been prepared on a historical cost basis except where stated otherwise within the accounting policies.
In preparing the Group financial information management has considered the impact of climate change, taking into account the relevant disclosures in the Strategic Report, including those made in accordance with the recommendations of the Taskforce on Climate-related Financial Disclosures. This included an assessment of assets with indefinite and long lives as well as impairment assessments of CGU's (including forecasted cash flows), and how they could be impacted by measures taken to address global warming. Recognising that the environmental impact of the Group's operations, and the use of the Group's services, is relatively low, no issues were identified that would impact the carrying values of such assets or have any other impact on the financial information.
Going concern
The financial information has been prepared on a going concern basis. The Directors have carefully assessed the Group's ability to continue trading and have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for at least twelve months from the date of approval of this financial information and for the foreseeable future, being the period in the viability statement.
At 31 December 2022, the Group had cash and cash equivalents of GBP7,501,000 (2021: GBP13,065,000) and short-term deposits of GBP8,500,000 (2021: GBPnil). Since March 2021, the Group has had its multi-currency revolving credit facility with NatWest. The facility consists of a committed GBP10m facility and an additional uncommitted GBP15m accordion option, both of which can be used to cover the Group's working capital and general corporate needs. In December 2022, the Group took the option to extend the facility for one year and the facility now runs to March 2025, with the remaining option to extend for one further year. GBPnil of this was drawn down at 31 December 2022.
The Group has net current assets at 31 December 2022 amounting to GBP2,986,000 (2021: net current liabilities GBP1,819,000). In prior year, the net current liability position primarily arose from its normal high levels of deferred income relating to performance obligations to be delivered in the future rather than an inability to service its liabilities. At 31 December 2022, there are still normal high levels of deferred income, however the increase in net cash in 2022 of GBP2,936,000 (note 1(b)) and the termination of a property lease resulting in nil lease liabilities at the balance sheet date has resulted in achieving net current asset position. A lease agreement for new office space was signed during the year, with a commencement date of 1 January 2023, and has been included in this report as a capital commitment (note 27). An assessment of cash flows for the next three financial years, which has taken into account the factors described above, has indicated an expected level of cash generation which would be sufficient to allow the Group to fully satisfy its working capital requirements and the guarantee given in respect of its UK subsidiaries, to cover all principal areas of expenditure, including maintenance, capital expenditure and taxation during this year, and to meet the financial covenants under the revolving credit facility. The Company has net current liabilities at 31 December 2022 amounting to GBP35,633,000 (2021: GBP29,735,000). In both the current and prior year, these almost entirely arose from unsecured payables to subsidiaries which have no fixed date of repayment.
The preparation of financial information in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial information and the reported amounts of revenues and expenses during the year. Although these estimates are based on management's best knowledge of the amount, events or actions, the actual results may ultimately differ from those estimates.
Having assessed the principal risks and the other matters discussed in connection with the Viability Statement which considers the Group and Company's viability over a three-year period to March 2026, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing both the consolidated financial information of the Group and the financial information of the Company.
New and amended standards adopted by the Group
No new standards or amendments to standards that are mandatory for the first time for the financial year commencing 1 January 2022 affected any of the amounts recognised in the current year or any prior year and are not likely to affect future periods.
New standards and interpretations not yet adopted
'Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)' will be effective for financial periods beginning on or after 1 January 2023. This amendment has revised that an entity is now required to disclose its material accounting policy information instead of its significant accounting policies. This will therefore impact the detail and number of accounting policies disclosed from the subsequent financial year onwards.
There are no additional 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.
Comparative numbers
Prior year comparative numbers have been updated to reflect current year presentation and disclosures. The prior year share-based payments reported under key management compensation in note 5 have been re-presented to reflect the share-based payment expense attributable to key management personnel during the year. This was previously presented as the market value of shares exercised by key management personnel during the year. There is no impact on the face of the consolidated statement of comprehensive income.
(b) Presentation of non-statutory measures
In addition to IFRS statutory measures, the Directors use various non-GAAP key financial measures to evaluate the Group's performance and consider that presentation of these measures provides shareholders with an additional understanding of the core trading performance of the Group. The measures used are explained and reconciled to their IFRS statutory headings below.
Adjusted operating profit and adjusted earnings per share
The Directors believe that adjusted results and adjusted earnings per share, provide additional useful information on the core operational performance of the Group to shareholders, and review the results of the Group on an adjusted basis internally. The term 'adjusted' is not a defined term under IFRS and may not therefore be comparable with similarly titled profit measurements reported by other companies. It is not intended to be a substitute for, or superior to, IFRS measurements of profit.
Adjustments are made in respect of:
-- Exceptional costs - the Group considers items of income and expense
as exceptional and excludes them from the adjusted results where the
nature of the item, or its magnitude, is material and likely to be non-recurring
in nature so as to assist the user of the financial information to better
understand the results of the core operations of the Group.
-- Amortisation of acquired intangible assets - the amortisation charge
for those intangible assets recognised on business combinations is excluded
from the adjusted results of the Group since they are non-cash charges
arising from investment activities. As such, they are not considered
reflective of the core trading performance of the Group. Details of
amortisation of acquired intangible assets are shown in note 10.
-- Share-based payments - share-based payment expenses or credits are excluded
from the adjusted results of the Group as the Directors believe that
the volatility of these charges can distort the user's view of the core
trading performance of the Group. Details of share-based payments are
shown in note 22.
-- Other separately reported items - certain other items are excluded from
adjusted results where they are considered large or unusual enough to
distort the comparability of core trading results year-on-year. Details
of these separately disclosed items are shown in note 4.
The tax related to adjusting items is the tax effect of the items above that are allowable deductions for tax purposes, calculated using the standard rate of corporation tax. See note 7 for a reconciliation between reported and adjusted tax charges.
Further details of adjusting items are included in note 4. A reconciliation between adjusted and statutory earnings per share measures is shown in note 8.
Profit before tax reconciles to adjusted operating profit as follows:
2022 2021
Note GBP'000 GBP'000
--------------------------------------------- ------ --------- ---------
Profit before tax 3,805 1,361
Adjusting items
Amortisation of acquired intangible assets 10 521 1,091
Impairment of acquired intangible assets 10 - 25
Gain on remeasurement of lease 18 (151) -
Lease termination fee 11,18 243 -
Share-based payment expense 22 806 495
Adjusted profit before tax 5,224 2,972
Finance income 6 (85) (1)
Finance costs 6 158 261
---------------------------------------------- ------ --------- ---------
Adjusted operating profit 5,297 3,232
---------------------------------------------- ------ --------- ---------
Adjusted operating cash flow
Adjusted operating cash flow is not a measure defined by IFRS. It is defined as cash flow from operations excluding the impact of adjusting items, which are defined above, and including capital expenditure. The Directors use this measure to assess the performance of the Group as it excludes volatile items not related to the core trading of the Group and includes the Group's management of capital expenditure. Statutory cash flow from operations reconciles to adjusted operating cash as below:
2022 2021
Note GBP'000 GBP'000
---------------------------------------------- ----- --------- ---------
Reported cash flow from operating activities 24 8,402 9,521
Adjusted operating cash flow 8,402 9,521
Capital expenditure (1,357) (757)
----------------------------------------------- ----- --------- ---------
Post capital expenditure cash flow 7,045 8,764
----------------------------------------------- ----- --------- ---------
Our cash conversion rate for the year was 99% (2021: 164%).
Underlying revenue growth
The Directors review underlying revenue growth in order to allow a like-for-like comparison of revenues between years. Underlying revenues therefore exclude the impact of revenue contribution arising from acquired or disposed businesses and other revenue streams that are not expected to be ongoing in future years. There were no exclusions for underlying revenue in the current or prior year. Statutory revenue growth is equal to underlying revenue growth and is as follows:
Xeim The Lawyer Total
GBP'000 GBP'000 GBP'000
---------------------------------------- --------- ----------- ---------
Reported and underlying revenue 2021 32,108 6,972 39,080
Reported and underlying revenue 2022 33,292 8,301 41,593
---------------------------------------- --------- ----------- ---------
Reported and underlying revenue growth 4% 19% 6%
---------------------------------------- --------- ----------- ---------
Adjusted EBITDA
Adjusted EBITDA is not a measure defined by IFRS. It is defined as adjusted operating profit before depreciation and impairment of tangible assets and amortisation and impairment of intangible assets other than those acquired through a business combination. It is used by the Directors as a measure to review performance of the Group and forms the basis of some of the Group's financial covenants under its revolving credit facility. Adjusted EBITDA is calculated as follows:
2022 2021
Note GBP'000 GBP'000
----------------------------------------------- ----- --------- ----------
Adjusted operating profit (as above) 5,297 3,232
Depreciation of property, plant and equipment 3,11 2,028 1,808
Amortisation of computer software 3,10 1,136 1,335
Impairment of computer software 3,10 - 55
------------------------------------------------ ----- --------- ----------
Adjusted EBITDA 8,461 6,430
------------------------------------------------ ----- --------- ----------
Net cash
Net cash is not a measure defined by IFRS. Net cash is calculated as cash and cash equivalents, plus short-term deposits less overdrafts and bank borrowings under the Group's financing arrangements. The Directors consider the measure useful as it gives greater clarity over the Group's liquidity as a whole. Group net cash is calculated as follows:
2022 2021
Note GBP'000 GBP'000
--------------------------- ----- --------- ----------
Cash and cash equivalents 15 7,501 13,065
Short-term deposits 16 8,500 -
---------------------------- ----- --------- ----------
Net cash 16,001 13,065
---------------------------- ----- --------- ----------
(c) Principles of consolidation
The consolidated financial information incorporates the financial information of Centaur Media Plc and all of its subsidiaries after elimination of intercompany transactions and balances.
(i) Subsidiaries
Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group until the date that the Group ceases to control them.
On the disposal of a subsidiary, assets and liabilities of that subsidiary are de-recognised from the consolidated statement of financial position, earnings up to the date of loss of control are retained in the Group, and a profit/(loss) on disposal is recognised, measured as consideration received less the fair value of assets and liabilities disposed of.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. The accounting policies of subsidiaries are consistent with the policies adopted by the Group.
(ii) Employee Benefit Trust
The Centaur Employees' Benefit Trust ('Employee Benefit Trust') is a trust established by Trust deed in 2006 for the granting of shares to applicable employees. Its assets and liabilities are held separately from the Company and are fully consolidated in the consolidated statement of financial position. Holdings of Centaur Media Plc shares by the Employee Benefit Trust are shown within the 'own shares' reserve as a deduction from consolidated equity.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial information of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial information is presented in Pounds Sterling, which is the Group and Company's functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the consolidated statement of comprehensive income.
(iii) Group companies
The results and financial position of the Group entities that have a functional currency different from the presentation currency, as disclosed in note 12, are translated into the presentation currency as follows:
-- assets and liabilities for each statement of financial position presented
are translated at the closing rate at the reporting date;
-- income and expenses for each statement of comprehensive income are translated
at average exchange rates (unless this average is not a reasonable approximation
of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the rate
on the dates of the transactions); and
-- all resulting exchange differences are recognised in other comprehensive
income.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations and of borrowings are recognised in other comprehensive income. When a foreign operation is sold, exchange differences that were recorded in equity are recognised in the consolidated statement of comprehensive income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
(e) Revenue recognition
Revenue is measured at the transaction price, which is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to the customer. Judgement may arise in timing and allocation of transaction price when there are multiple performance obligations in one contract. However, an annual impact assessment is performed which has confirmed that the impact is immaterial in both the current year and comparative year. Revenue arises from the sales of premium content, training and advisory, marketing services, events, marketing solutions and recruitment advertising in the normal course of business, net of discounts and value added tax. Goods and services exchanged as part of a barter transaction are recognised in revenue at the fair value of the goods and services provided. Returns, refunds and other similar allowances, which have historically been low in volume and immaterial in magnitude, are accounted for as a reduction in revenue as they arise.
Where revenue is deferred it is held as a balance in deferred income on the consolidated statement of financial position. At any given reporting date, this deferred income is current in nature and is expected to be recognised wholly in revenue in the following financial year, with the exception of returns and credit notes, which have historically been low in volume and immaterial in magnitude.
The Group recognises revenue earned from contracts as individual performance obligations are met, on a stand-alone selling price basis. This is when value and control of the product or service has transferred, being when the product is delivered to the customer or the period in which the services are rendered as set out in more detail below.
Premium Content
Revenue from subscriptions is deferred and recognised on a straight-line basis over the subscription period, reflecting the continuous provision of paid content services over this time. Revenue from individual publication sales is recognised at the point at which the publication is delivered to the customer. In general, the Group bills customers for premium content at the start of the contract.
Training and Advisory
Revenue from training and advisory is deferred and recognised over the period of the training or when a separately identifiable milestone of a contract has been delivered to the customer. In general, the Group bills customers for training and advisory up front or on a milestone basis as the service is delivered.
Marketing Services
Revenue from campaign work and consultancy contracts is recognised when the Group has obtained the right to consideration in exchange for its performance, which is when a separately identifiable phase (milestone) of a contract has been completed and the value and benefit of the services rendered have been transferred to the customer. In general, the Group bills customers for marketing services up front on a milestone basis.
Events
Consideration received in advance for events is deferred and revenue is recognised at the point in time at which the event takes place. In general, the Group bills customers for events before the event date.
Marketing Solutions
Marketing solutions revenue from display and bespoke campaigns is recognised over the period that the service is provided. In general, the Group bills customers for marketing solutions on delivery.
Recruitment Advertising
Sales of online recruitment advertising space are recognised in revenue over the period during which the advertisements are placed. Sales of recruitment advertising space in publications are recognised at the point at which the publication occurs. In general, the Group bills customers for recruitment advertising on delivery.
(f) Finance income
Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.
(g) Finance costs
Finance costs are recognised in the consolidated statement of comprehensive income in the period in which they are incurred.
(h) Investments
In the Company's financial information, investments in subsidiaries are stated at cost less provision for impairment in value.
Investments are reviewed for impairment whenever events indicate that the carrying value may not be recoverable. An impairment loss is recognised to the extent that the carrying value exceeds the higher of the investments fair value less cost of disposal and its value-in-use. An asset's value-in-use is calculated by discounting an estimate of future cash flows by the pre-tax weighted average cost of capital. Any impairment is recognised in the statement of comprehensive income. If there has been a change in the estimates used to determine the investment's recoverable amount, impairment losses that have been recognised in prior periods may be reversed. This reversal is recognised in the statement of comprehensive income.
(i) Income tax
The tax expense represents the sum of current and deferred tax.
Current tax is based on the taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years, and it further includes items that are never taxable or deductible. The Group and Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is provided in full, using the liability method, on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial information and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available to utilise those temporary differences and losses. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the enacted or substantively enacted tax rates that are expected to apply in the year when the liability is settled, or the asset is realised. Deferred tax is charged or credited to the consolidated statement of comprehensive income, except when it relates to items charged or credited directly to equity or other comprehensive income, in which case the deferred tax is recognised in equity or other comprehensive income respectively.
The carrying amount of deferred tax assets is reviewed at each reporting date and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
(j) Leases
Lessee accounting
Under IFRS 16, leases are accounted for on a 'right-of-use model' reflecting that, at the commencement date, the Group as a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term. The financial obligation is recognised as a lease liability, and the right to use the underlying asset is recognised as a right-of-use ('ROU') asset. The ROU assets are recognised within property, plant and equipment on the face of the consolidated statement of financial position and are presented separately in note 11.
The lease liability is initially measured at the present value of the lease payments using the rate implicit in the lease or, where that cannot be readily determined, the incremental borrowing rate. The incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the Group estimates the lessee would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment. Subsequently, the lease liability is measured at amortised cost, with interest increasing the carrying amount and lease payments reducing the carrying amount. The carrying amount is remeasured to reflect any reassessment or lease modifications, or to reflect revised in-substance fixed lease payments.
The ROU asset is initially measured at cost which comprises:
-- the amount of the initial measurement of the lease liability;
-- any lease payments made at or before the commencement date, less
any lease incentives received;
-- any initial direct costs; and
-- an estimate of costs to be incurred at the end of the lease term.
Subsequently, the ROU asset is measured at cost less accumulated depreciation and impairment losses. Depreciation is calculated to write off the cost on a straight-line basis over the lease term.
Using the exemption available under IFRS 16, the Group elects not to apply the requirements above to:
-- Short-term leases; and
-- Leases for which the underlying asset is of a low value.
In these cases, the Group recognises the lease payments as an expense on a straight-line basis over the lease term, or another systematic basis if that basis is more representative of the agreement.
(k) Impairment of assets
Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events indicate that the carrying value may not be recoverable. An impairment loss is recognised to the extent that the carrying value exceeds the higher of the asset's fair value less cost of disposal and its value-in-use. An asset's value-in-use is calculated by discounting an estimate of future cash flows by the pre-tax weighted average cost of capital.
(l) Property, plant and equipment
See note 1(j) for right-of-use assets. All other property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. The historical cost of property, plant and equipment is the purchase cost together with any incidental direct costs of acquisition. Depreciation is calculated to write off the cost, less estimated residual value, of assets, on a straight-line basis over the expected useful economic lives to the Group over the following periods:
Fixtures and fittings - 5 to 10 years Computer equipment - 3 to 5 years Right-of-use assets - over the lease term
The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting year, with the effect of any changes in estimate accounted for on a prospective basis.
(m) Intangible assets
(i) Goodwill
Where the cost of a business acquisition exceeds the fair values attributable to the separable net assets acquired, the resulting goodwill is capitalised and allocated to the cash generating unit ('CGU') or groups of CGUs that are expected to benefit from the synergies of the business combination. Goodwill has an indefinite useful life and is tested for impairment annually on a Group level or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Each segment is deemed to be a CGU. Goodwill and acquired intangible assets are assessed for impairment in accordance with IAS 36 'Impairment of Assets'. In assessing whether a write-down of goodwill and acquired intangible assets is required, the carrying value of the segment is compared with its recoverable amount. Recoverable amount is measured as the higher of fair value less cost of disposal and value-in-use. Any impairment is recognised in the consolidated statement of comprehensive income (in net operating expenses) and is classified as an adjusting item. Impairment of goodwill is not subsequently reversed.
In undertaking the impairment testing at 31 December 2022 management considered its climate change risk and opportunity assessment, and after taking account of the materiality of the expected impact, did not view there to be any adjustment needed to the cash flow forecasts or long-term growth rates used in the testing.
On the disposal of a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
(ii) Brands and publishing rights and customer relationships
Separately acquired brands and publishing rights are shown at historical cost. Brands and publishing rights and customer relationships acquired in a business combination are recognised at fair value at the acquisition date. They have a finite useful life and are subsequently carried at cost less accumulated amortisation and impairment losses.
(iii) Software
Computer software that is not integral to the operation of the related hardware is carried at cost less accumulated amortisation. Costs associated with the development of identifiable and unique software products controlled by the Group that will generate probable future economic benefits in excess of costs are recognised as intangible assets when the criteria of IAS 38 'Intangible Assets' are met. They are carried at cost less accumulated amortisation and impairment losses.
(iv) Amortisation methods and periods
Amortisation is calculated to write off the cost or fair value of intangible assets on a straight-line basis over the expected useful economic lives to the Group over the following periods:
Computer software - 3 to 5 years
Brands and publishing rights - 5 to 20 years
Customer relationships - 3 to 10 years or over the term of any specified
contract
Separately acquired websites - 3 to 5 years
and content
(n) Employee benefits
(i) Post-employment obligations
The Group and Company contribute to a defined contribution pension scheme for the benefit of employees. The assets of the scheme are held separately from those of the Group in an independently administered fund. Contributions to defined contribution schemes are charged to the statement of comprehensive income in net operating expenses when employer contributions become payable.
(ii) Share-based payments
The Group operates several equity-settled share-based payment plans, under which the Group receives services from employees in consideration for equity instruments (share options and shares) of the Company. Information relating to these plans is set out in note 22.
Equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured using either a Monte Carlo simulation (stochastic) model or Black-Scholes option pricing model. The fair value of the employee services received in exchange for the grant of share awards and options is recognised as an expense on a straight-line basis over the vesting period, based on the Group's estimate of the number of options or shares that will eventually vest. Non-market-based performance or service vesting conditions (for example profitability and remaining as an employee of the entity over a specified time period) are included in assumptions about the number of share awards and options that are expected to vest. Market-based performance criteria is reflected in the measurement of fair value at the date of grant.
The impact of the revision to original estimates, if any, is recognised in the consolidated statement of comprehensive income, with a corresponding adjustment to equity, such that the cumulative expense reflects the revised estimate. The cumulative share-based payment expense held in reserves is recycled into retained earnings when the share awards or options lapse or are exercised. When options are exercised, shares are either transferred to the employee from the Employee Benefit Trust or by issuing new shares. The social security contributions payable in connection with the grant of share awards is treated as a cash-settled transaction.
The award by the Company of share-based payment awards over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution only if it is left unsettled. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.
A deferred tax asset is recognised on share options based on the intrinsic value of the options, which is calculated as the difference between the fair value of the shares under option at the reporting date and exercise price of the share options. The deferred tax asset is utilised when the share options are exercised or released when share options lapse. The accounting policy regarding deferred tax is set out above in note 1(i).
(o) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and the obligation can be reliably estimated.
(p) Equity
(i) Share capital and share premium
Ordinary and deferred shares are classified as equity. The excess of consideration received in respect of shares issued over the nominal value of those shares is recognised in the share premium account. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the Company's equity instruments, for example as the result of a share buyback or share-based payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the owners of the Company as treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the Company.
Shares held by the Employee Benefit Trust are disclosed as own shares and deducted from equity.
(ii) Own shares
Own shares consist of treasury shares and shares held within the Employee Benefit Trust.
Own shares are recognised at cost as a deduction from equity shareholders' funds. Subsequent consideration received for the sale of such shares is also recognised in equity, with any excess of consideration received between the sale proceeds and the original cost being recognised in share premium. No gain or loss is recognised in the financial information on transactions in treasury shares.
(q) Dividends
Dividends are recognised in the year in which they are paid or, in respect of the Company's final dividend for the year, approved by the shareholders in the Annual General Meeting.
(r) Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Executive Committee has been identified as the chief operating decision-maker, reviewing the Group's internal reporting on a monthly basis in order to assess performance and allocate resources. Refer to note 2 for the basis of segmentation.
(s) Financial instruments
The Group has applied IFRS 9 'Financial Instruments' as outlined below:
(i) Financial assets
The Group classifies and measures its financial assets in line with one of the three measurement models under IFRS 9: at amortised cost, fair value through profit or loss, and fair value through other comprehensive income. Management determines the classification of its financial assets based on the requirements of IFRS 9 at initial recognition.
They are included in current assets, except for maturities greater than 12 months after the reporting date. These are classified as non-current assets. The Group's financial assets comprise trade and other receivables, short-term deposits and cash and cash equivalents in the consolidated statement of financial position. Please see the following sections.
(ii) Trade receivables
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. As mandated by IFRS 9, the expected lifetime credit losses are calculated using the 'simplified' approach.
A provision matrix is used to calculate the allowance for expected lifetime credit losses on trade receivables which is based on historical default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. The allowance for expected lifetime credit losses is established by considering, on a discounted basis, the cash shortfalls it would incur in various default scenarios for prescribed future periods and multiplying those shortfalls by the probability of each scenario occurring. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The allowance is the sum of these probability weighted outcomes. The allowance and any changes to it are recognised in the consolidated statement of comprehensive income within net operating expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against net operating expenses in the consolidated statement of comprehensive income. The Group defines a default as failure of a debtor to repay an amount due as this is the time at which our estimate of future cash flows from the debtor is affected.
(iii) Short-term deposits
Short-term deposits include cash held on deposit for a term of greater than 90 days or not readily convertible to known amounts of cash.
(iv) Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand and deposits repayable on demand or maturing within three months from the date of acquisition.
(v) Financial liabilities
Debt and trade and other payables are recognised initially at fair value based on amounts exchanged, net of transaction costs, and subsequently at amortised cost.
Interest expense on debt is accounted for using the effective interest method and is recognised in finance costs.
(vi) Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
(vii) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred and carried subsequently at amortised cost. Costs of borrowings, including commitment fees on undrawn facilities, are recognised in the consolidated statement of comprehensive income as incurred or, where appropriate, across the term of the related borrowing.
(viii) Receivables from and payables to subsidiaries and the Employee Benefit Trust
The Company has amounts receivable from and payable to subsidiaries and the receivable from the Employee Benefit Trust which are recognised at fair value. Amounts receivable from subsidiaries and the Employee Benefit Trust are assessed annually for recoverability under the requirements of IFRS 9.
(t) Key accounting assumptions, estimates and judgements
The preparation of financial information under IFRS requires the use of certain key accounting assumptions and requires management to exercise its judgement and to make estimates. Those that have the most significant effect on the amounts recognised in the consolidated financial information or have the most risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Key sources of estimation uncertainty
(i) Carrying value of goodwill, other intangible assets and Company investment estimate
In assessing whether goodwill, other intangible assets and the Company's investment are impaired, the Group uses a discounted cash flow model which includes forecast cash flows and estimates of future growth. If the results of operations in future periods are lower than included in the cash flow model, impairments may be triggered. A sensitivity analysis has been performed on the value-in-use calculations. Further details of the assumptions and sensitivities in the discounted cash flow model are included in notes 9 and 12.
Critical accounting judgements
(ii) Adjusting items judgement
The term 'adjusted' is not a defined term under IFRS. Judgement is required to ensure that the classification and presentation of certain items as adjusting, including exceptional costs, is appropriate and consistent with the Group's accounting policy. Further details about the amounts classified as adjusting are included in notes 1(b) and 4.
Other areas of judgement and accounting estimates
The consolidated financial information includes other areas of judgement and accounting estimates. While these areas do not meet the definition under IAS 1 of significant accounting estimates or critical accounting judgements, the recognition and measurement of certain material assets and liabilities are based on assumptions and/or are subject to longer-term uncertainties. The other areas of judgement and accounting estimates are:
-- Deferred tax (estimation of forecasted future taxable profits)
refer to notes 1(i) and 13;
-- Lease liabilities (lease term judgement) refer to notes 1(j) and
18;
-- Lease liabilities (IBR rate estimate) refer to notes 1(j) and 18;
and
-- Share-based payment expense (estimation of fair value) refer to
notes 1(n)(ii) and 22.
2 Segmental reporting
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, training and advisory, marketing services, events, marketing solutions and recruitment advertising. 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 primarily 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, short-term deposits and lease liabilities.
Capital expenditure comprises purchases of additions to property, plant and equipment and intangible assets.
The
Xeim Lawyer Central Group
2022 Note GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------ --------- --------- --------- ---------
Revenue 33,292 8,301 - 41,593
Adjusted operating profit / (loss) 1(b) 6,198 2,474 (3,375) 5,297
Amortisation of acquired intangibles 10 (521) - - (521)
Gain on remeasurement of lease 18 118 27 6 151
Lease termination fee 11,18 (190) (43) (10) (243)
Share-based payment expense 22 (260) (72) (474) (806)
Operating profit / (loss) 5,345 2,386 (3,853) 3,878
Finance income 6 85
Finance costs 6 (158)
-------------------------------------- ------ --------- --------- --------- ---------
Profit before tax 3,805
Taxation 7 (1,005)
-------------------------------------- ------ --------- --------- --------- ---------
Profit for the year 2,800
-------------------------------------- ------ --------- --------- --------- ---------
Segment assets 34,343 17,391 - 51,734
Corporate assets 15,649 15,649
-------------------------------------- ------ --------- --------- --------- ---------
Consolidated total assets 67,383
-------------------------------------- ------ --------- --------- --------- ---------
Segment liabilities (11,139) (2,778) - (13,917)
Corporate liabilities (4,640) (4,640)
-------------------------------------- ------ --------- --------- --------- ---------
Consolidated total liabilities (18,557)
-------------------------------------- ------ --------- --------- --------- ---------
Other items
Capital expenditure (tangible and
intangible assets) 1,143 147 67 1,357
-------------------------------------- ------ --------- --------- --------- ---------
The
Xeim Lawyer Central Group
2021 Note GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ----- --------- --------- --------- ---------
Revenue 32,108 6,972 - 39,080
Adjusted operating profit / (loss) 1(b) 4,469 2,110 (3,347) 3,232
Amortisation of acquired intangibles 10 (1,091) - - (1,091) Impairment of acquired intangibles 10 (25) - - (25) Share-based payments 22 (113) (2) (380) (495) Operating profit / (loss) 3,240 2,108 (3,727) 1,621 Finance income 6 1 Finance costs 6 (261) -------------------------------------- ----- --------- --------- --------- --------- Profit before tax 1,361 Taxation 7 56 -------------------------------------- ----- --------- --------- --------- --------- Profit for the year 1,417 -------------------------------------- ----- --------- --------- --------- --------- Segment assets 38,167 18,216 - 56,383 Corporate assets 12,491 12,491 -------------------------------------- ----- --------- --------- --------- --------- Consolidated total assets 68,874 -------------------------------------- ----- --------- --------- --------- --------- Segment liabilities (13,251) (2,795) - (16,046) Corporate liabilities (5,720) (5,720) -------------------------------------- ----- --------- --------- --------- --------- Consolidated total liabilities (21,766) -------------------------------------- ----- --------- --------- --------- --------- Other items Capital expenditure (tangible and intangible assets) 401 188 168 757 -------------------------------------- ----- --------- --------- --------- ---------
Supplemental information
Revenues by geographical location
The Group's revenues from external customers by geographical location are detailed below:
Xeim The Lawyer Total Xeim The Lawyer Total
2022 2022 2022 2021 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- ----------- --------- --------- ----------- ---------
United Kingdom 19,573 6,882 26,455 19,057 5,662 24,719
Europe (excluding United
Kingdom) 5,726 609 6,335 4,567 675 5,242
North America 4,639 628 5,267 4,954 445 5,399
Rest of world 3,354 182 3,536 3,530 190 3,720
-------------------------- --------- ----------- --------- --------- ----------- ---------
33,292 8,301 41,593 32,108 6,972 39,080
-------------------------- --------- ----------- --------- --------- ----------- ---------
Substantially all of the Group's net assets are located in the United Kingdom. The Directors therefore consider that the Group currently operates in a single geographical segment, being the United Kingdom. Refer to note 12 for the location of the Group's subsidiaries.
Revenues by type
The Group's revenues by type are as follows:
Xeim The Lawyer Total Xeim The Lawyer Total
2022 2022 2022 2021 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ----------- --------- --------- ----------- ---------
Premium Content 9,980 4,748 14,728 9,006 3,882 12,888
Training and Advisory 14,431 - 14,431 12,542 18 12,560
Marketing Services 2,850 - 2,850 3,301 - 3,301
Events 2,703 1,998 4,701 2,751 1,071 3,822
Marketing Solutions 2,948 565 3,513 4,145 840 4,985
Recruitment Advertising 380 990 1,370 363 1,161 1,524
33,292 8,301 41,593 32,108 6,972 39,080
------------------------- --------- ----------- --------- --------- ----------- ---------
The accounting policies for each of these revenue streams is disclosed in note 1(e), including the timing of revenue recognition. There are some contracts for which revenue has not yet been recognised and is being held in deferred income, see note 19. This deferred income is all current and is expected to be recognised as revenue in 2023.
3 Net operating expenses
Operating profit / (loss) is stated after charging:
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
Results(1) Items(1) Results Results(1) Items(1) Results
2022 2022 2022 2021 2021 2021
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
Employee benefits
expense 5 19,034 - 19,034 19,272 - 19,272
Depreciation of property,
plant and equipment 4,11 2,028 243 2,271 1,808 - 1,808
Amortisation of intangible
assets 4,10 1,136 521 1,657 1,335 1,091 2,426
Impairment of intangible
assets 10 - - - 55 25 80
Gain on remeasurement
of lease 4,18 - (151) (151) - - -
Share-based payment
expense 4,22 - 806 806 - 495 495
Net impairment of
trade receivables 25 (31) - (31) (39) - (39)
IT expenditure 2,645 - 2,645 2,563 - 2,563
Marketing expenditure 1,685 - 1,685 1,399 - 1,399
Other staff-related
costs 233 - 233 618 - 618
Other operating expenses 9,566 - 9,566 8,837 - 8,837
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
36,296 1,419 37,715 35,848 1,611 37,459
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
Cost of sales 15,434 - 15,434 15,082 - 15,082
Distribution costs 60 - 60 62 - 62
Administrative expenses 20,802 1,419 22,221 20,704 1,611 22,315
---------------------------- ------ ------------- ----------- ----------- ------------- ----------- -----------
36,296 1,419 37,715 35,848 1,611 37,459
----------------------------------- ------------- ----------- ----------- ------------- ----------- -----------
(1) Adjusted results exclude adjusting items, as detailed in note 1(b).
Services provided by the Company and Group's auditor
2022 2021
GBP'000 GBP'000
-------------------------------------------------------------- --------- ---------
Fees payable for the audit of Company and Group consolidated
financial information 120 109
Fees payable for the interim financial statement review 11 10
-------------------------------------------------------------- --------- ---------
Total fees paid to the Company and Group's auditor 131 119
-------------------------------------------------------------- --------- ---------
4 Adjusting items
As discussed in note 1(b), certain items are presented as adjusting. These are detailed below:
2022 2021
Note GBP'000 GBP'000
----------------------------------------------- ------ --------- ---------
Amortisation of acquired intangible assets 10 521 1,091
Impairment of acquired intangible assets 10 - 25
Gain on remeasurement of lease 18 (151) -
Lease termination fee 11,18 243 -
Share-based payment expense 22 806 495
Adjusting items to profit / (loss) before tax 1,419 1,611
Tax relating to adjusting items 7 (270) (195)
----------------------------------------------- ------ --------- ---------
Total adjusting items after tax 1,149 1,416
----------------------------------------------- ------ --------- ---------
Termination of lease
As a result of the termination of the London property lease, a net gain of GBP151,000 was recognised on remeasurement of the lease liability and respective proportionate adjustment to the ROU asset. The termination fee was included in the measurement of the ROU asset at the time of the remeasurement, therefore the GBP243,000 is recognised in depreciation. Refer to note 18 for further details.
Other adjusting items
Other adjusting items relate to the amortisation and impairment of acquired intangible assets (see note 10) and share-based payment costs (see note 22).
5 Directors and employees
2022 2021 2022 2021
Group Group Company Company
Note GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----- --------- --------- ---------- ---------
Wages and salaries 16,102 16,652 1,464 1,057
Social security costs 2,018 1,946 221 105
Other pension costs 914 674 50 42
----------------------------- ----- --------- --------- ---------- ---------
Employee benefits expense 19,034 19,272 1,735 1,204
Share-based payment expense 22 806 495 424 325
----------------------------- ----- --------- --------- ---------- ---------
19,840 19,767 2,159 1,529
----------------------------- ----- --------- --------- ---------- ---------
The average number of employees employed during the year, including Executive Directors, was:
2022 2021 2022 2021
Group Group Company Company
Number Number Number Number
------------ -------- -------- --------- ---------
Xeim 201 202 - -
The Lawyer 58 52 - -
Central 10 10 4 4
269 264 4 4
------------ -------- -------- --------- ---------
The Group's employees are employed and paid by Centaur Communications Limited, a Group company, with the exception of the Company's Directors and Company Secretary who are employed by the Company. As the employees provide services to other Group companies, their costs are recharged.
Key management compensation
Re-presented
(2)
2022 2021
GBP'000 GBP'000
--------------------------------------------- ---- ---------- --------------
Salaries and short-term employment benefits 1,583 1,736
Post-employment benefits 78 74
Share-based payment expense 590 401
2,251 2,211
-------------------------------------------------- ---------- --------------
(2) See note 1(a) for description of prior year re-presentation.
Key management is defined as the Executive Directors and Executive Committee members.
201,355 shares were exercised by Directors during the year at a share price of 40.0 pence. (2021: no Directors exercised share options during the year). Details of Directors' remuneration are included in the Remuneration Committee Report.
6 Finance income and costs
2022 2021
Note GBP'000 GBP'000
----------------------------------------------------- ------- --------- ---------
Finance income
Interest income from short-term deposits 16 68 -
Interest income from cash and cash equivalents 17 1
----------------------------------------------------- ------- --------- ---------
85 1
Finance costs
Commitment fees and amortisation of arrangement fee
in respect of revolving credit facility (105) (194)
Interest on lease 18 (51) (67)
Other finance costs (2) -
----------------------------------------------------- ------- --------- ---------
(158) (261)
----------------------------------------------------- ------- --------- ---------
Net finance costs (73) (260)
----------------------------------------------------- ------- --------- ---------
Interest income from short-term deposits
Interest income from short-term deposits is calculated using the effective interest method and is recognised in profit or loss. Finance income in relation to these short-term deposits resulted in cash inflows to the Group of GBP46,000 during the year (2021: GBPnil). Refer to note 16 for further details.
Fees on revolving credit facility
These finance costs are in relation to the GBP10m revolving credit facility, none of which was drawn down at 31 December 2022 (2021: GBPnil). As indicated by the consolidated cash flow statement, there were no drawdowns from this facility during the current and prior year. Finance costs in relation to this facility resulted in cash outflows by the Company and Group of GBP71,000 during the year (2021: GBP194,000).
Lease interest
A lease liability was recognised for the Group's property lease. GBP51,000 of interest on this lease was incurred during the year (2021: GBP67,000). Refer to notes 1(j) and 18 for further details.
7 Taxation
2022 2021
Note GBP'000 GBP'000
------------------------------------------------ ----- --------- ---------
Analysis of charge / (credit) for the year
Current tax 20
Overseas tax (3) 14
Adjustments in respect of prior years 68 (38)
65 (24)
------------------------------------------------ ----- --------- ---------
Deferred tax 13
Current period 913 (175)
Adjustments in respect of prior years 27 143
------------------------------------------------ --------------- ---------
940 (32)
------------------------------------------------ --------------- ---------
Taxation charge / (credit) 1,005 (56)
------------------------------------------------ --------------- ---------
The taxation charge / (credit) for the year can be reconciled to the profit in the consolidated statement of comprehensive income as follows:
'000 '000
2022 2021
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Profit before tax 3,805 1,361
Tax at the UK rate of corporation tax of 19.0%
(2021: 19.0%) 723 259
Effects of:
Expenses not deductible for tax purposes 18 69
Additional deduction for capital allowances (86) -
Share-based payments 2 47
Effects of changes in tax rate on deferred tax
balances 253 (538)
Different tax rates of subsidiaries in other
jurisdictions - 2
Adjustments in respect of prior years 95 105
------------------------------------------------ --------- ---------
Taxation charge / (credit) 1,005 (56)
------------------------------------------------ --------- ---------
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% (rather than remaining at 19%, as previously enacted). This new law was substantively enacted on 24 May 2021. Temporary differences are remeasured using the enacted tax rates that are expected to apply when the liability is settled or the asset realised.
In prior year, tax losses were remeasured using the enacted tax rate (25%). However, the Group has utilised GBP2,775,000 of tax losses this year at the current UK corporation tax rate of 19%, with the remaining GBP2,935,000 expected to be utilised in 2023 at the blended tax rate of 23.5%. In the current year, the remaining losses have been remeasured at this blended tax rate to reflect this.
A reconciliation between the reported tax charge / (credit) and the adjusted tax charge taking account of adjusting items as discussed in note 1(b) and 4 is shown below:
2022 2021
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Reported tax charge / (credit) 1,005 (56)
Effects of:
Amortisation of acquired intangible assets 108 112
Gain on remeasurement of lease (36) -
Share-based payments 198 83
Adjusted tax charge 1,275 139
-------------------------------------------- --------- ---------
8 Earnings / (loss) 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. 3,112,784 (2021: 2,064,185) shares held in the Employee Benefit Trust and 4,550,179 (2021: 4,550,179) shares held in treasury (see note 21) have been excluded in arriving at the weighted average number of shares.
For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all deferred shares and dilutive potential ordinary shares. This comprises share options and awards granted to Directors and employees under the Group's share-based payment plans where the exercise price is less than the average market price of the Company's ordinary shares during the year.
Basic and diluted earnings per share have also been presented on an adjusted basis, as the Directors believe that these measures are more reflective of the underlying performance of the Group. These have been calculated as follows:
2022 2022 2022 2021 2021 2021
Adjusted Adjusted Statutory Adjusted Adjusted Statutory
Results(1) Items(1) Results Results(1) Items(1) Results
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------------ ---------- ----------- ------------ ---------- -----------
Profit / (loss) per share
attributable to owners
Profit / (loss) for the year 3,949 (1,149) 2,800 2,833 (1,416) 1,417
------------------------------- ------------ ---------- ----------- ------------ ---------- -----------
Number of shares (thousands)
Basic weighted average number
of shares 143,813 143,813 143,813 144,927 144,927 144,927
Effect of dilutive securities
- options 7,638 - 7,638 7,947 - 7,947
Diluted weighted average
number of shares 151,451 143,813 151,451 152,874 144,927 152,874
------------------------------- ------------ ---------- ----------- ------------ ---------- -----------
Earnings / (loss) per share
(pence)
Basic earnings per share 2.7 (0.8) 1.9 2.0 (1.0) 1.0
Fully diluted earnings per
share 2.6 (0.8) 1.8 1.9 (1.0) 0.9
------------------------------- ------------ ---------- ----------- ------------ ---------- -----------
(1) Adjusted results exclude adjusting items, as detailed in notes 1(b) and 4.
9 Goodwill
Group
GBP'000
---------------------------------------------------------- ---------
Cost
At 1 January 2021, 31 December 2021 and 31 December 2022 81,109
----------------------------------------------------------- ---------
Accumulated impairment
At 1 January 2021, 31 December 2021 and 31 December 2022 39,947
----------------------------------------------------------- ---------
Net book value
---------------------------------------------------------- ---------
At 1 January 2021, 31 December 2021 and 31 December 2022 41,162
----------------------------------------------------------- ---------
At 31 December 2022 a full impairment assessment has been carried out. No impairment is required for the carrying value of goodwill. (2021: GBPnil).
Goodwill by segment
Each brand is deemed to be a cash generating unit ('CGU'), being the lowest level at which cash flows are separately identifiable. Goodwill is attributed to individual CGUs and has historically been reviewed at the operating segment level for the purposes of the annual impairment review as this is the level at which management monitors goodwill.
Xeim The Lawyer Total
GBP'000 GBP'000 GBP'000
------------------------------------- --------- ----------- ---------
At 1 January 2021, 31 December 2021
and 31 December 2022 25,188 15,974 41,162
-------------------------------------- --------- ----------- ---------
Impairment testing of goodwill and acquired intangible assets
At 31 December 2022, goodwill and acquired intangible assets (see note 10) were tested for impairment in accordance with IAS 36. In assessing whether an impairment of goodwill and acquired intangible assets is required, the carrying value of the segment is compared with its recoverable amount. Recoverable amounts are measured based on value-in-use ('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 9.9% (2021: 10.3%). The discount rate used is consistent with the Group's weighted average cost of capital and is used across all segments, which are all based predominantly in the UK and considered to have similar risks and rewards.
The key assumptions used in calculating VIU are revenue growth, margin, Adjusted EBITDA growth, discount rate and the terminal growth rate. These have been derived from a combination of experience and management's expectations of future growth rates in the business. The Group has used the three-year plan forecast to 2025 for the first three years of the calculation and applied a terminal growth rate of 2.5% (2021: 2.5%). This timescale and the terminal growth rate are both considered appropriate given the nature of the Group's revenues. The three-year plan forecast to 2025 has been prepared brand by brand on a bottom-up basis following a review of the business where management have identified the key growth and focus areas which will deliver the forecasted targets, and conversely which areas of the business will be de-prioritised over that period. Overall the three-year plan forecast to 2025 assumes continued profit growth reflecting top line expansion in flagship brands, while managing the impact of projected inflationary pressures.
The key assumptions and variables in this plan are sensitised in isolation and in combination. The main sensitivities applied to the key drivers are outlined below. As required by IAS 36, these sensitivities are applied in order to assess the effect of reasonably possible changes in the assumptions.
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 segments.
II. apply a 2 percentage point increase in discount rate from 9.9% to
11.9%. No impairment would occur in either of the segments.
III. reduce the terminal value growth rate from 2.5% to 1.5%. No impairment
would occur in either of the segments.
The results of the impairment assessment and sensitivities applied indicate that no impairment to the goodwill or acquired intangible assets of either CGU is required for the year ended 31 December 2022.
10 Other intangible assets
Separately
Brands acquired
Computer and publishing Customer websites
software rights relationships and content Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ----------- ----------------- ---------------- -------------- ---------
Cost
At 1 January 2021 18,983 1,558 11,321 3,216 35,078
Additions - separately acquired 396 - - - 396
Additions - internally generated 298 - - - 298
Disposals (48) (178) - - (226)
Exchange differences 2 - - - 2
----------------------------------- ----------- ----------------- ---------------- -------------- ---------
At 31 December 2021 19,631 1,380 11,321 3,216 35,548
Additions - separately acquired 763 - - - 763
Additions - internally generated 403 - - - 403
Disposals (197) - - - (197)
Exchange differences 21 - - - 21
At 31 December 2022 20,621 1,380 11,321 3,216 36,538
----------------------------------- ----------- ----------------- ---------------- -------------- ---------
Accumulated amortisation
At 1 January 2021 16,221 808 9,922 3,216 30,167
Amortisation charge for the year 1,335 114 977 - 2,426
Impairment charge for the year 55 25 - - 80
Disposals (48) (178) - - (226)
Exchange differences (1) - - - (1)
----------------------------------- ----------- ----------------- ---------------- -------------- ---------
At 31 December 2021 17,562 769 10,899 3,216 32,446
Amortisation charge for the year 1,136 99 422 - 1,657
Disposals (197) - - - (197)
Exchange differences 21 - - - 21
At 31 December 2022 18,522 868 11,321 3,216 33,927
----------------------------------- ----------- ----------------- ---------------- -------------- ---------
Net book value at 31 December
2022 2,099 512 - - 2,611
----------------------------------- ----------- ----------------- ---------------- -------------- ---------
Net book value at 31 December
2021 2,069 611 422 - 3,102
----------------------------------- ----------- ----------------- ---------------- -------------- ---------
Net book value at 1 January 2021 2,762 750 1,399 - 4,911
----------------------------------- ----------- ----------------- ---------------- -------------- ---------
Amortisation and impairment of intangible assets is included in net operating expenses in the consolidated statement of comprehensive income. The current year amortisation charge is GBP1,657,000 (2021: GBP2,426,000). Acquired intangible assets from business combinations represents the asset groups 'Brands and publishing rights', 'Customer relationships' and 'Separately acquired websites and content'. The amortisation on acquired intangible assets is GBP521,000 (2021: GBP1,091,000). This is presented as an adjusting item in note 4 (see note 1(b) for further information).
Other intangible assets are tested annually for impairment in accordance with IAS 36 at a segment level by comparing the carrying value with its recoverable amount. Refer note 9 for further details. During the prior year, the Group impaired intangible assets totalling a net book value of GBP80,000. The GBP80,000 impairment charge related to computer software and brand and publishing rights no longer in use by the business. There was no impairment of other intangibles incurred in the current year.
The Company has no intangible assets (2021: GBPnil).
11 Property, plant and equipment
Fixtures Computer ROU assets
and fittings equipment - property Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------------- ----------- ------------ ----------
Cost
At 1 January 2021 68 1,049 5,077 6,194
Additions - separately acquired 5 51 978 1,034
Disposals - (2) - (2)
Exchange differences - - 2 2
------------------------------------- -------------- ----------- ------------ ----------
At 31 December 2021 73 1,098 6,057 7,228
Additions - separately acquired 21 273 - 294
Remeasurement - - (120) (120)
Disposals - (21) (5,937) (5,958)
Exchange differences - 2 - 2
------------------------------------- -------------- ----------- ------------ ----------
At 31 December 2022 94 1,352 - 1,446
------------------------------------- -------------- ----------- ------------ ----------
Accumulated depreciation
At 1 January 2021 40 704 2,192 2,936
Depreciation charge for the year 21 138 1,649 1,808
Disposals - (2) - (2)
Exchange differences - - 2 2
------------------------------------- -------------- ----------- ------------ ----------
At 31 December 2021 61 840 3,843 4,744
Depreciation charge for the year 7 170 2,094 2,271
Disposals - (21) (5,937) (5,958)
Exchange differences - 2 - 2
------------------------------------- -------------- ----------- ------------ ----------
At 31 December 2022 68 991 - 1,059
------------------------------------- -------------- ----------- ------------ ----------
Net book value at 31 December 2022 26 361 - 387
------------------------------------- -------------- ----------- ------------ ----------
Net book value at 31 December 2021 12 258 2,214 2,484
------------------------------------- -------------- ----------- ------------ ----------
Net book value at 1 January 2021 28 345 2,885 3,258
------------------------------------- -------------- ----------- ------------ ----------
Depreciation of property, plant and equipment is included in net operating expenses in the consolidated statement of comprehensive income.
The current year depreciation charge is GBP2,271,000 (2021: GBP1,808,000). Depreciation of the ROU asset includes GBP243,000 termination fee which was included in the cost of the ROU asset in the remeasurement on the agreement of the lease termination (see note 18). This GBP243,000 is presented as an adjusting item in note 4 and the remaining depreciation charge of GBP2,028,000 is in Adjusted Results.
The Company has no property, plant and equipment at 31 December 2022 (2021: GBPnil).
12 Investments
Investments
in subsidiary
undertakings
Company GBP'000
---------------------------------------------------------- ---------------
Cost
At 1 January 2021 151,385
Additions 163
---------------------------------------------------------- ---------------
At 31 December 2021 151,548
Additions 374
---------------------------------------------------------- ---------------
At 31 December 2022 151,922
---------------------------------------------------------- ---------------
Accumulated impairment
---------------
At 1 January 2021, 31 December 2021 and 31 December 2022 86,393
---------------------------------------------------------- ---------------
Net book value at 31 December 2022 65,529
---------------------------------------------------------- ---------------
Net book value at 31 December 2021 65,155
---------------------------------------------------------- ---------------
Net book value at 1 January 2021 64,992
---------------------------------------------------------- ---------------
Impairment testing of the investment
The carrying value of the investment represents the Company's direct ownership of Centaur Communications Limited ('CCL'). At 31 December 2022, the investment was tested for impairment in accordance with IAS 36. In assessing whether an impairment of the investment is required, the carrying value of the investment is compared with its recoverable amount. The recoverable amount is measured based on value-in-use ('VIU'). Although the Company only has direct ownership of CCL, CCL in turn directly or indirectly controls the rest of the Group's subsidiaries. Therefore, the VIU of the Company's investment in CCL is supported by the operations of the entire Group.
In the prior year, the ongoing global pandemic and its impact on the economy and directly on the Group was identified as an indication of impairment of the Company's investment carrying value. Therefore, a full impairment assessment was performed. The results of the impairment assessment and sensitivities applied indicated that no impairment to the Company's investment in CCL was required for the year ended 31 December 2021 as the carrying value of the investment was supported by the underlying trade of the Group.
In the current year, the UK's economic uncertainty throughout 2022 has been identified as an indication of impairment of the Company's investment carrying value. Therefore, a full impairment assessment has been performed.
The Group estimates the VIU 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 9.9% (2021: 10.3%). The discount rate used is consistent with the Group's weighted average cost of capital.
The key assumptions used in calculating VIU are revenue growth, margin, Adjusted EBITDA growth, discount rate and the terminal growth rate. These have been derived from a combination of experience and management's expectations of future growth rates in the business. The Group has used the three-year plan forecast to 2025 for the first three years of the calculation and applied a terminal growth rate of 2.5% (2021: 2.5%). This timescale and the terminal growth rate are both considered appropriate given the nature of the Group's revenues. The three-year plan forecast to 2025 has been prepared brand by brand on a bottom-up basis following a review of the business where management have identified the key growth and focus areas which will deliver the forecasted targets, and conversely which areas of the business will be de-prioritised over that period. Overall the three-year plan forecast to 2025 assumes continued profit growth reflecting top line expansion in flagship brands, while managing the impact of projected inflationary pressures.
Sensitivities are applied to each of the key assumptions and variables in isolation and in combination, in line with those sensitivities applied for goodwill impairment testing as outlined in note 9. As required by IAS 36, these sensitivities are applied in order to assess the effect of reasonably possible changes in the assumptions.
The results of the impairment assessment and sensitivities applied indicate that no impairment to the Company's investment in CCL is required for the year ended 31 December 2022.
Additions of GBP374,000 (2021: GBP163,000) related to capital contributions for share-based payments recharged to the Company's subsidiaries.
In order to simplify the Group structure, the process to close dormant companies commenced during the prior year.
The Group dissolved the following subsidiaries during the current year:
Proportion
of ordinary
shares and
voting rights Principal Country of
Name held (%) activities incorporation Date of closure
------------------ --------------- ------------ --------------- ----------------
Pro-Talk Ltd 100 Dormant United Kingdom 20 December
2022
Taxbriefs Limited 100 Dormant United Kingdom 20 December
2022
------------------ --------------- ------------ --------------- ----------------
At 31 December 2022, the Group has control over the following subsidiaries:
Proportion
of ordinary
shares and
voting rights Country of
Name held (%) Principal activities incorporation
--------------------------- --------------- ------------------------------ ---------------
Centaur Communications 100 Holding company and agency United Kingdom
Limited (1) services
Centaur Media USA Inc. 100 Digital information services United States
(2)
Chiron Communications 100 In liquidation United Kingdom
Limited (3)
E-consultancy LLC (2) 100 Holding company United States
E-consultancy.com Limited 100 Digital information services United Kingdom
Market Makers Incorporated 100 In liquidation United Kingdom
Limited
Taxbriefs Holdings Limited 100 Holding company United Kingdom
(4)
TheLawyer.com Limited 100 Digital information services United Kingdom
Xeim Limited 100 Digital information services United Kingdom
--------------------------- --------------- ------------------------------ ---------------
(1) Directly owned by Centaur Media Plc.
(2) Registered address is 244 Fifth Avenue, Suite 1297, New York, NY 10001, USA. Functional currency is USD.
(3) Chiron Communications Limited was liquidated on 11 January 2023. (4) The process to strike off Taxbriefs Holdings Limited commenced in January 2023.
The registered address of all subsidiary companies, except for those identified above, is 10 York Road, London, SE1 7ND, United Kingdom. The functional currency of all subsidiaries is GBP except for those identified above. The consolidated financial information incorporates the financial information of all entities controlled by the Company at 31 December 2022.
13 Deferred tax
The movement on the deferred tax account for the Group is shown below:
Accelerated Other
capital temporary Tax
allowances differences losses Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------------ ------------- --------- ---------
Net asset / (liability) at 1 January 2021 683 (14) 1,541 2,210
Adjustments in respect of prior periods (42) (55) (46) (143)
Recognised in the consolidated statement
of comprehensive income 69 110 (4) 175
Recognised in the consolidated statement
of changes in equity - 118 - 118
------------------------------------------- ------------ ------------- --------- ---------
Net asset at 31 December 2021 710 159 1,491 2,360
Adjustments in respect of prior periods 13 23 (63) (27)
Recognised in the consolidated statement
of comprehensive income (443) 268 (738) (913)
Recognised in the consolidated statement
of changes in equity - 233 - 233
Net asset at 31 December 2022 280 683 690 1,653
------------------------------------------- ------------ ------------- --------- ---------
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the balances net.
2022 2021
GBP'000 GBP'000
Deferred tax assets 1,673 2,488
Deferred tax liabilities (20) (128)
-------------------------- --------- ---------
1,653 2,360
-------------------------- --------- ---------
At the year end, the Group has unused tax losses of GBP2,935,000 (2021: GBP5,961,000) available for offset against future profits. A deferred tax asset of GBP690,000 (2021: GBP1,491,000) has been recognised in respect of GBP2,935,000 (2021: GBP5,961,000) of such tax losses.
Following the Group's disposals in previous years, the transformed Group is now more focused and streamlined in order to deliver higher margins and profits and this is reflected in the current year results and continuation of this profitable position is reflected in the Group's three-year plan forecast to 2025. The Group has concluded that the deferred tax asset will be recoverable using the estimated future taxable profit based on the three-year plan forecast to 2025. This forecast was used in the impairment assessments performed for goodwill and investments. Refer to notes 9 and 12 for further details. The Group generated taxable profits in 2022 and is expected to generate taxable profits from 2023 onwards. The losses can be carried forward indefinitely and have no expiry date as long as the companies that have the losses continue to trade.
The Company had deferred tax assets on share options under long-term incentive plans of GBP375,000 at 31 December 2022 (2021: GBP190,000).
Deferred tax assets and liabilities are expected to be materially utilised after 12 months.
14 Trade and other receivables
2022 2021 2022 2021
Group Group Company Company
Note GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------------- --------- --------- --------- ---------
Amounts falling due within one year
Trade receivables 25 4,348 5,475 - -
Less: expected credit loss 25 (537) (564) - -
------------------------------------- ------------- --------- --------- --------- ---------
Trade receivables - net 3,811 4,911 - -
Other receivables 430 92 34 34
Prepayments 916 981 102 127
Accrued income 200 75 - -
5,357 6,059 136 161
------------------------------------- ------------- --------- --------- --------- ---------
2022 2021 2022 2021
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- --------- --------- --------- ---------
Amounts falling due after one year
Other receivables 27 319 27 41
Receivable from Employee Benefit Trust - - 1,198 1,156
27 319 1,225 1,197
---------------------------------------- --------- --------- --------- ---------
The receivable from Employee Benefit Trust is unsecured, has no fixed due date and does not bear interest.
Other receivables falling due within one year include GBP278,000 (2021: GBP278,000 amount falling due after one year) in relation to a deposit on the London property lease which is fully refundable at the end of the lease term. The current London property lease ended on 31 December 2022. From 1 January, the Group will be fully refunded for this deposit. The Group has signed a new lease agreement commencing 1 January 2023, for which a deposit of GBP162,000 will be recognised in other receivables falling due after one year. The new lease deposit will be fully refundable at the end of the lease term. Refer to note 18 and 27 for further detail.
15 Cash and cash equivalents
2022 2021
Group Group
GBP'000 GBP'000
-------------------------- --------- ---------
Cash at bank and in hand 7,501 13,065
-------------------------- --------- ---------
The Company had no cash and cash equivalents at 31 December 2022 (2021: GBPnil).
16 Short-term deposits
2022 2021
Group Group
GBP'000 GBP'000
-------------------- --------- ---------
Short-term deposits 8,500 -
-------------------- --------- ---------
In October 2022, GBP3,500,000 was placed in a short-term deposit for a four-month fixed term, accruing interest at a fixed annual rate of 2.50%. In December 2022 a further GBP5,000,000 was placed in a short-term deposit for a five-month fixed term, accruing interest at a fixed annual rate of 2.85%. Interest for both short-term deposits is to be paid on maturity (2021: GBPnil). These amounts remain in deposit at year end. Refer to note 6 for further detail.
17 Trade and other payables
2022 2021 2022 2021
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- --------- ---------
Trade payables 727 1,070 - -
Payables to subsidiaries - - 34,744 29,397
Accruals 7,590 8,112 1,002 496
Social security and other taxes 577 886 - -
Other payables 758 1,340 23 3
9,652 11,408 35,769 29,896
--------------------------------- --------- --------- --------- ---------
Payables to subsidiaries are unsecured, have no fixed date of repayment and bear interest at an annual rate of 5.68 % (2021: 3.45%).
The Directors consider that the carrying amount of the trade payables approximates their fair value.
18 Lease liabilities
The lease liability reflected below relates to a property lease, for which a corresponding right-of-use ('ROU') asset is held on the consolidated statement of financial position within property, plant and equipment and detailed in note 11.
2022 2021
Group Group
GBP'000 GBP'000
---------------------------------- --------- ---------
At 1 January 2,384 3,375
Remeasurement of lease liability (271) 978
Interest expense 51 67
Cash outflow - lease payments (1,921) (2,036)
Cash outflow - termination fee (243) -
At 31 December - 2,384
---------------------------------- --------- ---------
Current - 1,884
Non-current - 500
---------------------------------- --------- ---------
At 31 December - 2,384
---------------------------------- --------- ---------
The Group had one lease agreement in place during the year. In June an option to extend the lease was exercised, resulting in an increase to the lease liability and a corresponding increase to the ROU asset. Subsequently, in October, an agreement to terminate the lease was signed, bringing the end date forward to 31 December 2022. This changed the lease term judgement previously made, and the lease liability was therefore remeasured. These two remeasurements resulted in the net decrease in lease liability of GBP271,000. The remeasurement upon agreement to terminate resulted in a proportionate adjustment to the ROU asset and lease liability based on the carrying values at the effective date, resulting in a gain on remeasurement of GBP151,000. In exiting the lease, the Group incurred a GBP243,000 termination fee. These are both recognised as adjusting items in the consolidated statement of comprehensive income. Refer to note 1(b) and 4 for further details.
A new lease agreement has been entered into with a commencement date of 1 January 2023, and therefore a lease liability and corresponding ROU asset will be recognised on 1 January 2023. This lease has a term of three years until 31 December 2025, with lease payments/cash outflows of GBP972,000 for the first year of the lease term, increasing by 3.5% annually thereafter. Refer to note 27 for further details.
During the prior year, the lease liability for the Group's property in London was remeasured upon reassessment of the lease term, resulting in an increase of GBP978,000. The amount of the remeasurement of the lease liability was recognised as an adjustment to the ROU asset.
19 Deferred income
2022 2021
Group Group
GBP'000 GBP'000
----------------- --------- ---------
Deferred income 8,885 7,846
----------------- --------- ---------
Deferred income arises on contracts with customers where revenue recognition criteria has not yet been met. See note 1(e) for further details. During the year ended 31 December 2022, GBP7,831,000 (2021: GBP7,023,000) of the deferred income balance of GBP7,846,000 at 31 December 2021 (GBP7,048,000 at 31 December 2020) was recognised as revenue in the consolidated statement of comprehensive income.
20 Current tax assets
2022 2021
Group Group
GBP'000 GBP'000
----------------------------- --------- ---------
Corporation tax receivables 165 195
----------------------------- --------- ---------
The Company had no corporation tax receivables or payables at 31 December 2022 (2021: GBPnil).
21 Equity
Nominal
value Number
Ordinary shares of 10 pence each GBP'000 of shares
---------------------------------------------------------- --------- ------------
Authorised share capital - Group and Company
At 1 January 2021, 31 December 2021 and 31 December 2022 20,000 200,000,000
---------------------------------------------------------- --------- ------------
Issued and fully paid share capital - Group and Company
At 1 January 2021, 31 December 2021 and 31 December 2022 15,141 151,410,226
---------------------------------------------------------- --------- ------------
Deferred shares reserve
The deferred shares reserve represents 800,000 (2021: 800,000) deferred shares of 10 pence each, which carry restricted voting rights and have no right to receive a dividend payment in respect of any financial year.
Reserve for shares to be issued
The reserve for shares to be issued is in respect of equity-settled share-based payment plans. The movements in the reserve for shares to be issued represent the total charges for the year relating to equity-settled share-based payment transactions with employees as accounted for under IFRS 2 less transfers from this reserve to retained earnings for shares exercised or lapsed during the year.
Own shares reserve
The own shares reserve represents the value of shares held as treasury shares and in the Employee Benefit Trust. At 31 December 2022, 4,550,179 (2021: 4,550,179) 10 pence ordinary shares are held in treasury and 3,112,784 (2021: 2,064,185) 10 pence ordinary shares are held in the Employee Benefit Trust.
The Employee Benefit Trust issued 201,355 (2021: 981,783) shares to meet obligations arising from share-based rewards to employees that had vested and were exercised in the current year (2021: vested and exercised in 2021). The shares were issued at a historical weighted average cost of 105.3 pence (2021: 92.9 pence) per share. The total cost of GBP212,000 (2021: GBP912,000) has been recognised as a reduction in the own shares reserve in other reserves in equity.
During 2022, the Employee Benefit Trust purchased 1,249,954 (2021: 1,097,476) ordinary shares in order to meet future obligations arising from share-based rewards to employees. The shares were acquired at an average price of 48.3 pence per share, with prices ranging from 47.7 pence to 49.4 pence. The total cost of GBP604,000 (2021: GBP481,000) has been recognised in the own shares reserve in equity.
22 Share-based payments
The Group's share-based payment expense for the year by plan:
2022 2021
GBP'000 GBP'000
Share-based payment expense 806 495
----------------------------- --------- ---------
The share-based payment expense is presented as an adjusting item in note 4 (see note 1(b) for further information) and is included in net operating expenses in the consolidated statement of comprehensive income .
The Group's share-based payment plans upon vesting are equity-settled.
The share-based payment expense includes social security contributions which are settled in cash upon exercise. GBP75,000 (2021: GBP132,000) was charged to the consolidated statement of comprehensive income in relation to employers NI on share-based payment plans and included in accruals on the consolidated statement of financial position.
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. Full details on how the plan operates are included in the Remuneration Report.
During the year LTIP awards were granted to Executive Directors and selected senior management. Details of the performance conditions of these awards are disclosed in the Remuneration Report.
A reconciliation of the movements in LTIP awards is shown below.
2022 2021
---------------------------------------------------------- ------------ ------------
Number of awards
At 1 January 7,664,075 7,503,258
Granted 2,870,942 2,985,565
Exercised (201,355) (981,776)
Forfeited (166,057) (596,093)
Lapsed (2,832,868) (1,246,879)
At 31 December 7,334,737 7,664,075
---------------------------------------------------------- ------------ ------------
Exercisable at 31 December - -
---------------------------------------------------------- ------------ ------------
Weighted average share price at date of exercise (pence) 40.00 42.01
---------------------------------------------------------- ------------ ------------
The awards granted during the year were priced using the following models and inputs:
Grant date 24.03.2022 ----------------------------------- ----------- Share price at grant date (pence) 48.00 Fair value (pence) 29.44 Vesting date 24.03.2025 Exercise price (pence) GBPnil ----------------------------------- ----------- Expected volatility (%) 42.76 Expected dividend yield (%) 2.08 Risk free interest rate (%) 1.36 Valuation of model used Stochastic ------------------------------------ -----------
Options exercised during the year related to the proportion of the 2019 LTIP awards that vested during the year (2021: 2018 LTIP awards).
Options forfeited during the year were due to the participants leaving before the vesting date of the options. Options that lapsed in the year did not meet the performance conditions and related to the 2019 LTIP awards (2021: 2018 LTIP awards). No options expired during the year (2021: nil).
The share awards outstanding at 31 December 2022 had a weighted average exercise price of GBPnil (2021: GBPnil) and a weighted remaining life of 1.4 years (2021: 1.3 years).
Deferred Share Bonus Plan
The Deferred Share Bonus Plan ('DSBP') was approved by the Board in May 2022 and applies to Executive Directors. Under the plan, the portion of the annual bonus greater than 75% of basic salary is deferred in accordance with the Group's remuneration policy into awards in Centaur Media Plc shares. Awards under the DSBP are not subject to further performance conditions and vest after three years, subject to continued employment. Dividend equivalents may be awarded in respect of the DSBP awards on vesting. Further details on how the plan operates is included in the Remuneration Report.
A reconciliation of the movements in DSBP awards is shown below.
2022
---------------------------------------------------------- -------
Number of awards
At 1 January -
Granted 60,593
At 31 December 60,593
----------------------------------------------------------- -------
Exercisable at 31 December -
----------------------------------------------------------- -------
Weighted average share price at date of exercise (pence) -
----------------------------------------------------------- -------
In May 2022, 60,593 shares were awarded to Executive Directors under the DSBP, representing the portion of the 2021 bonus to Executive Directors greater than 75% of their basic salary.
The awards granted during the year were priced using the following models and inputs:
Grant date 12.05.2022 -------------------------------------------------- ----------- Share price at grant date and fair value (pence) 47.00 Vesting date 24.03.2025 Exercise price (pence) GBPnil --------------------------------------------------- -----------
No options were exercised, forfeited or expired during the year.
The share awards outstanding at 31 December 2022 had a weighted average exercise price of GBPnil and a weighted remaining life of 2.2 years.
Senior Executive Long-Term Incentive Plan
The Centaur Media Plc 2010 Senior Executive Long-Term Incentive Plan (the 'SELTIP') was introduced during 2011 and was approved by shareholders at the 2010 AGM. This is not an HMRC approved plan and vests over a three-year period with service and performance conditions. Awards were granted under this plan in 2011 for no consideration and no exercise price. This plan is closed to new awards.
2022 2021
---------------------------------------------------------- -------- ------
Number of awards
At 1 January 6,862 6,862
Expired (6,862) -
----------------------------------------------------------- -------- ------
At 31 December - 6,862
----------------------------------------------------------- -------- ------
Exercisable at 31 December - 6,862
----------------------------------------------------------- -------- ------
Weighted average share price at date of exercise (pence) - -
----------------------------------------------------------- -------- ------
There were no grants, exercises or forfeitures during the current and prior year.
All options expired during the current year (2021: no options expired). The shares outstanding at 31 December 2021 had a weighted average exercise price of GBPnil and a weighted remaining life of 0.7 years.
Share Incentive Plan
The Centaur Media Plc Share Incentive Plan (the 'SIP') is an HMRC approved Tax-Advantaged plan, which provides employees with the opportunity to purchase shares in the Company. This plan is open to all employees who have been employed by the Group for more than three months. Employees may invest up to GBP1,800 per annum (or 10% of their salary if less) in ordinary shares in the Company, which are held in trust. The shares are purchased in open market and are held in trust for each employee. The shares can be withdrawn with tax paid at any time, or tax-free after five years. The Group matches the contribution with a ratio of one share for every two purchased. Other than continuing employment, there are no other performance conditions attached to the plan.
The Executive Directors are eligible to participate in the Share Incentive Plan, as are all employees of the Group.
2022 2021
------------------------------------------------------- ------- --------
Number of matching shares
Outstanding at 1 January 57,495 58,117
Awarded 18,413 15,498
Transferred to participants - (8,144)
Forfeited - (7,976)
-------------------------------------------------------- ------- --------
Outstanding at 31 December 75,908 57,495
-------------------------------------------------------- ------- --------
23 Dividends
2022 2021
GBP'000 GBP'000
------------------------------------------------------------ -------- --------
Equity dividends
Final dividend for 2020: 0.5 pence per 10 pence ordinary
share - 726
Interim dividend for 2021: 0.5 pence per 10 pence ordinary
share - 724
Final dividend for 2021: 0.5 pence per 10 pence ordinary 718 -
share
Interim dividend for 2022: 0.5 pence per 10 pence ordinary 718 -
share
------------------------------------------------------------ -------- --------
1,436 1,450
------------------------------------------------------------ -------- --------
A final dividend for the year ended 31 December 2022 of GBP862,000 (0.6 pence per share) is proposed by the Directors and, subject to shareholder approval at the Annual General Meeting, will be paid on 26 May 2023 to all ordinary shareholders on the register at the close of business on 12 May 2023.
A special dividend of GBP4,312,000 (3.0 pence per share) was announced by the Directors and was paid on 10 February 2023 to all ordinary shareholders on the register at the close of business on 27 January 2023.
A further special dividend of GBP2,875,000 (2.0 pence per share) is announced by the Directors to be paid on 31 March 2023 to all ordinary shareholders on the register at the close of business on 17 March 2023.
The interim, special and final dividends together result in a total dividend pertaining to 2022 of GBP8,767,000.
The final dividend for the year end 2021 of 0.5 pence per share was proposed by the Directors to all ordinary shareholders on the register at the close of business 13 May 2022. This was estimated to be GBP725,000 in the 2021 Annual Report. The actual dividend payment in respect of this in May 2022 was GBP718,000.
24 Notes to the cash flow statement
Reconciliation of profit / (loss) for the year to cash generated from operating activities:
'000 '000 '000 '000
2022 2021 2022 2021
Group Group Company Company
Note GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ ------ --------- --------- --------- ---------
Profit / (loss) for the year 2,800 1,417 (4,619) (2,325)
Adjustments for:
Taxation charge / (credit) 7 1,005 (56) (1,106) (512)
Finance income 6 (85) (1) - -
Finance costs 6 158 261 2,001 1,182
Depreciation of property, plant
and equipment 11 2,271 1,808 - -
Amortisation of intangible assets 10 1,657 2,426 - -
Impairment of intangible assets 10 - 80 - -
Gain on remeasurement of lease 18 (151) - - -
Share-based payment expense 22 806 495 424 325
Dividends waived - 2 - 2
Unrealised foreign exchange differences (145) (65) - -
Changes in working capital:
Decrease / (increase) in trade and
other receivables 1,002 (259) (17) 34,359
(Decrease) / increase in trade and
other payables (1,955) 2,615 4,824 (31,389)
Increase in deferred income 1,039 798 - -
------------------------------------------ ------ --------- --------- --------- ---------
Cash generated from operating activities 8,402 9,521 1,507 1,642
------------------------------------------ ------ --------- --------- --------- ---------
Reconciliation of movements of liabilities and associated assets to cash flows arising from financing activities:
Group Group
and Company Lease
Net borrowings liability
Note GBP'000 GBP'000
----------------------------------------------- ----- ---------------- -----------
At 1 January 2021 72 (3,375)
Changes from financing cash flows:
Loan arrangement fee 107 -
Finance costs paid 6 87 -
Repayment of obligations under finance leases 18 - 2,036
194 2,036
Other changes:
Finance costs 6 (194) (67)
Remeasurement of lease liability 18 - (978)
----------------------------------------------- ----- ---------------- -----------
(194) (1,045)
----------------------------------------------- ----- ---------------- -----------
Balance at 31 December 2021 72 (2,384)
Changes from financing cash flows:
Finance costs paid 6 71 -
Repayment of obligations under finance leases 18 - 1,921
Termination of lease 18 - 243
71 2,164
Other changes:
Finance costs 6 (105) (51)
Remeasurement of lease liability 18 - 271
Extension fee on revolving credit facility 25 20 -
----------------------------------------------- ----- ---------------- -----------
(85) 220
----------------------------------------------- ----- ---------------- -----------
Balance at 31 December 2022 58 -
----------------------------------------------- ----- ---------------- -----------
Net borrowings is comprised of a loan arrangement fee debtor of GBP61,000 (2021: GBP75,000) presented within other receivables and a commitment fee creditor of GBP3,000 presented within other payables (2021: GBP3,000). The movements of this asset and liability together give rise to cash flows from financing activities relating to the GBP10m revolving credit facility.
25 Financial instruments and financial risk management
Financial risk management
The Board has overall responsibility for the determination of the Group's risk management policies. The Board receives monthly reports from the Chief Financial Officer through which it reviews the effectiveness of policies and processes put in place to manage risk. The Board sets policies that reduce risk as far as possible without unduly affecting the operating effectiveness of the Group.
The Group's activities expose it to a variety of financial risks, including interest rate risk, credit risk, liquidity risk, capital risk and currency risk. Of these, credit risk and liquidity risk are considered the most significant. This note presents information about the Group's exposure to each of the above risks.
Categories of financial instruments
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1(s). All financial assets and liabilities are measured at amortised cost.
2022 2021
Note GBP'000 GBP'000
--------------------------- ----- --------- ---------
Financial assets
Cash and cash equivalents 15 7,501 13,065
Short-term deposits 16 8,500 -
Trade receivables - net 14 3,811 4,911
Other receivables 14 457 411
--------------------------- ----- --------- ---------
20,269 18,387
--------------------------- ----- --------- ---------
Financial liabilities
Lease liability 18 - 2,384
Trade payables 17 727 1,070
Accruals 17 7,590 8,112
Other payables 17 758 1,340
--------------------------- ----- --------- ---------
9,075 12,906
--------------------------- ----- --------- ---------
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The carrying amount of financial assets recorded in the financial information, which is net of impairment losses, represents the Group's maximum exposure to credit risk in relation to financial assets. Credit risk is managed on a Group basis. The Group does not consider that it is subject to any significant concentrations of credit risk.
Trade receivables
Trade receivables consist of a large number of customers, of varying sizes and spread across diverse industries and geographies. The Group does not have significant exposure to credit risk in relation to any single counterparty or group of counterparties having similar characteristics. The Group's exposure to credit risk is influenced predominantly by the circumstances of individual customers as opposed to industry or geographic trends.
The business assesses the credit quality of customers based on their financial position, past experience and other qualitative and quantitative factors. The Group's policy requires customers to pay in accordance with agreed payment terms, which are generally 30 days from the date of invoice. Under normal trading conditions, the Group is exposed to relatively low levels of risk and potential losses are mitigated as a result of a diversified customer base and the requirement for events and certain premium content subscription invoices to be paid in advance of service delivery.
The credit control function within the Group's finance department monitors the outstanding debts of the Group and trade receivable balances are analysed by the age and value of outstanding balances.
Any trade receivable balance which is objectively determined to be uncollectible is written off the ledger, with a charge taken through the consolidated statement of comprehensive income. The Group also records an allowance for the lifetime expected credit loss on its trade receivables balances under the simplified approach as mandated by IFRS 9. The impairment model for trade receivables, under IFSR 9, requires the recognition of impairment provisions based on expected lifetime credit losses rather than only incurred ones. All balances are reviewed with those greater than 90 days past due considered to carry a higher level of credit risk. Refer to note 1(s)(ii) for further details on the approach to allowance for expected credit losses on trade receivables.
The allowance for expected lifetime credit losses, and changes to it, are taken through administrative expenses in the consolidated statement of comprehensive income.
The ageing of trade receivables according to their original due date is detailed below:
2022 2022 2021 2021
Gross Provision Gross Provision
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- ----------- --------- -----------
Not due 2,971 (45) 3,488 (43)
0-30 days past due 488 (15) 972 (25)
31-60 days past due 141 (9) 161 (9)
61-90 days past due 74 (9) 146 (16)
Over 90 days past due 674 (459) 708 (471)
----------------------- --------- ----------- --------- -----------
4,348 (537) 5,475 (564)
----------------------- --------- ----------- --------- -----------
In making the assessment that unprovided trade receivables are not impaired, the Directors have considered the quantum of gross trade receivables which relate to amounts not yet included in income, including amounts in deferred income and amounts relating to VAT. The credit quality of trade receivables not impaired has been assessed as acceptable.
The movement in the allowance for expected credit losses on trade receivables is detailed below:
2022 2021
Total Total
GBP'000 GBP'000
------------------------ --------- ---------
Balance at 1 January 564 993
Utilised (18) (390)
Release (31) (39)
Exchange differences 22 -
Balance at 31 December 537 564
------------------------ --------- ---------
The Group's policy requires customers to pay in accordance with agreed payment terms which are generally 30 days from the date of invoice or in the case of live events related revenue no less than 30 days before the event. All credit and recovery risk associated with trade receivables has been provided for in the consolidated statement of financial position. The Group's policy for recognising an impairment loss is given in note 1(s)(ii). Impairment losses are taken through administrative expenses in the consolidated statement of comprehensive income.
The Directors consider the carrying value of trade and other receivables approximates to their fair value.
Cash and cash equivalents and short-term deposits
Banks and financial institutions are independently rated by credit rating agencies. We choose only to deal with those with a minimum 'A' rating. We determine the credit quality for cash and cash equivalents and short-term deposits to be strong.
Other receivables
Other receivables are neither past due nor impaired. These are primarily made up of sundry receivables, including employee-related debtors and receivables in respect of distribution arrangements.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by maintaining adequate reserves and working capital credit facilities, and by continuously monitoring forecast and actual cash flows. Since March 2021, the Group has had its multi-currency revolving credit facility with NatWest. The facility consists of a committed GBP10m facility and an additional uncommitted GBP15m accordion option, both of which can be used to cover the Group's working capital and general corporate needs. In December 2022, the Group took the option to extend the facility for one year and the facility now runs to March 2025, with the remaining option to extend for one further year. As at 31 December 2022, the Group had cash of GBP7,501,000 (2021: GBP13,065,000) and short-term deposits of GBP8,500,000 (2021: GBPnil) with a full undrawn loan facility of GBP25,000,000 (2021: full undrawn loan facility of GBP25,000,000).
The following tables detail the financial maturity for the Group's financial liabilities:
Less
Book Fair than
value value 1 year 2-5 years
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- --------- --------- --------- ------------
At 31 December 2022
Financial liabilities
Non-interest bearing 9,075 9,075 9,075 -
---------------------------------------- --------- --------- --------- ------------
9,075 9,075 9,075 -
---------------------------------------- --------- --------- --------- ------------
At 31 December 2021
Financial liabilities
Interest bearing 2,384 2,384 1,884 500
Non-interest bearing 10,522 10,522 10,522 -
---------------------------------------- --------- --------- --------- ------------
12,906 12,906 12,406 500
---------------------------------------- --------- --------- --------- ------------
The Directors consider that book value is materially equal to fair value.
The book value of primary financial instruments approximates to fair value where the instrument is on a short maturity or where they bear interest at rates that approximate to the market.
The following table details the level of fair value hierarchy for the Group's financial assets and liabilities:
Financial Assets Financial Liabilities
-------------------------- ----------------------
Level 1 Level 3
Cash and cash equivalents Lease liabilities
Short-term deposits Trade payables
Level 3 Accruals
Trade receivables - net Provisions
Other receivables Other payables
Borrowings*
*Borrowings are purely in relation to the Group's revolving credit facility which is discussed above. The amount drawn down from this facility at 31 December 2022 was GBPnil (2021: GBPnil).
All trade and other payables are due for payment in one year or less, or on demand.
Interest rate risk
The Group's financial assets are not significant interest-bearing assets. The Group is exposed to interest rate risk when it borrows funds at floating interest rates through its revolving credit facility. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group evaluates its risk appetite towards interest rate risks regularly to manage interest rate risk in relation to its revolving credit facility if deemed necessary.
The Group did not enter any hedging transactions during the current or prior year and as at 31 December 2022 the only floating rate to which the Group was exposed was SONIA. The Group's exposure to interest rates on financial assets and financial liabilities is detailed in the liquidity risk section of this note.
Interest rate sensitivity
The Group has not drawn down from its revolving credit facility in the current year or prior year therefore a sensitivity analysis has not been performed.
Capital risk
The Group manages its capital to ensure that all entities in the Group will be able to continue as a going concern while maximising return to shareholders, as well as sustaining the future development of the business.
The capital structure of the Group consists of net cash, which includes cash and cash equivalents (note 15), short-term deposits (note 16) and equity attributable to the owners of the parent, comprising issued share capital (note 21), other reserves and retained earnings. The Board also considers the levels of own shares held for employee share plans and the ability to issue new shares for acquisitions, in managing capital risk in the business.
Since March 2021, the Group has benefited from its banking facility with NatWest, which featured a committed GBP10m facility and an additional uncommitted GBP15m accordion option, both of which can be used to cover the Group's working capital and general corporate needs. In December 2022, the Group took the option to extend the facility for one year and the facility now runs to March 2025, with the remaining option to extend for one further year. Interest is calculated on SONIA plus a margin dependent on the Group's net leverage position, which is re-measured quarterly in line with covenant testing. The Group's borrowings are subject to financial covenants tested quarterly. The principal financial covenants under the facility are that the ratio of net debt to EBITDA shall not exceed 2.5:1 and the ratio of EBITDA to net finance charges shall not be less than 4:1. At no point during the current year or prior year did the Group breach its covenants.
Currency risk
Substantially all the Group's net assets are in the United Kingdom. Most of the revenue and profits are generated in the United Kingdom and consequently foreign exchange risk is limited. The Group continues to monitor its exposure to currency risk, particularly as the business expands into overseas territories such as North America, however the results of the Group are not currently considered to be sensitive to movements in currency rates.
26 Pension schemes
The Group contributes to individual and collective money purchase pension schemes in respect of Directors and employees once they have completed the requisite period of service. The charge for the year in respect of these defined contribution schemes is shown in note 5. Included within other payables is an amount of GBP92,000 (2021: GBP76,000) payable in respect of the money purchase pension schemes.
27 Capital commitments
At 31 December 2022, the Group had signed a lease agreement for a London property with a commencement date of 1 January 2023. This lease has a term of three years until 31 December 2025, with lease payments/cash outflows of GBP972,000 for the first year of the lease term, increasing by 3.5% annually thereafter. There is a deposit for the new London property lease which will be payable from the commencement date of 1 January 2023 of GBP162,000. This is fully refundable at the end of the lease term.
No additional capital commitments as at 31 December 2022 (2021: GBPnil).
28 Related party transactions
Group
Key management compensation is disclosed in note 5. There were no other material related party transactions for the Group in the current or prior year.
Company
The Company had the following transactions with subsidiaries and related parties during the year.
i) Interest
During the year, interest was recharged from subsidiary companies as follows:
2022 2021
GBP'000 GBP'000
---------------------- -------- --------
Net interest payable 1,896 988
---------------------- -------- --------
There were no borrowings at the end of the year (2021: GBPnil).
The balances outstanding with subsidiary companies are disclosed in note 17.
ii) Dividends
During both the current and prior year, the Company did not receive any dividends from its subsidiaries.
iii) Employee Benefit Trust
The assets and liabilities of the Employee Benefit Trust are comprised in the consolidated statement of financial position. Transactions between the Employee Benefit Trust and the Parent are detailed in notes 21 and 22. Details of the Company's receivable from the Employee Benefit Trust is in note 14.
There were no other material related party transactions for the Company in the current or prior year.
Audit exemption
For the year ended 31 December 2022, the Company has provided a guarantee pursuant to sections 479A-C of Companies Act 2006 over the liabilities of the following subsidiaries and, as such, they are exempt from the requirements of the Act relating to the audit of individual financial information, or preparation of individual financial information, as appropriate, for this financial year.
Outstanding
Company liabilities
Name number GBP'000
------------------------------------ --------- -------------
Centaur Communications Limited 01595235 16,013
Chiron Communications Limited(1) 01081808 -
Econsultancy.com Limited 04047149 2
Market Makers Incorporated Limited 05063707 -
Taxbriefs Holdings Limited(2) 03572069 -
TheLawyer.com Limited 11491880 2,581
Xeim Limited 05243851 10,077
------------------------------------ --------- -------------
(1) Chiron Communications Limited was liquidated on 11 January 2023.
(2) The process to strike off Taxbriefs Holdings Limited commenced in January 2023.
See note 12 for changes to subsidiary holdings during the year.
29 Events after the reporting date
No material events have occurred after the reporting date except the commencement of the new office lease from 1 January 2023 as disclosed in notes 18 and 27.
FIVE YEAR RECORD (UNAUDITED)
2018* 2019 2020 2021 2022
------------------------------------- ------- ------- ------- ------ -----
Revenue (GBPm) 50.3 39.6 32.4 39.1 41.6
Operating (loss) / profit (GBPm) (20.3) (7.8) (2.3) 1.6 3.9
Adjusted operating (loss) / profit
(GBPm) (2.2) (1.2) - 3.2 5.3
Adjusted operating (loss) / profit
margin (4%) (3%) - 8% 13%
(Loss) / profit before tax (GBPm) (20.5) (8.1) (2.6) 1.4 3.8
Adjusted (loss) / profit before
tax (GBPm) (2.4) (1.5) (0.3) 3.0 5.2
Adjusted diluted EPS (pence) (1.4) 0.3 0.3 1.9 2.6
Ordinary dividend per share (pence) 3.0 1.5 0.5 1.0 1.1
Special dividend per share (pence) - 2.0 - - 5.0
Net operating cash flow (GBPm) 5.6 4.7 2.1 9.5 8.4
Average permanent headcount (FTE) 758 317 282 264 269
Revenue per head (GBP'000) 66 125 115 148 155
------------------------------------- ------- ------- ------- ------ -----
Revenue from continuing operations 2018* 2019 2020 2021 2022
by type GBPm GBPm GBPm GBPm GBPm
------------------------------------ ------ ------ ------ ------ ------
Premium Content 14.4 14.4 13.2 12.9 14.7
Training and Advisory 8.0 7.6 8.5 12.6 14.4
Marketing Services 4.5 4.3 2.9 3.3 2.9
Events 6.5 6.4 2.5 3.8 4.7
Marketing Solutions 4.6 4.6 4.2 5.0 3.5
Recruitment Advertising 2.7 2.3 1.1 1.5 1.4
Telemarketing Services 9.6 - - - -
------------------------------------ ------ ------ ------ ------ ------
50.3 39.6 32.4 39.1 41.6
------------------------------------ ------ ------ ------ ------ ------
2018* 2019 2020 2021 2022
Other GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ------- ------ ------- -------- --------
Goodwill and other intangible assets 78.1 61.2 46.1 44.2 43.8
Other assets and liabilities (11.5) (9.4) (7.2) (10.2) (11.0)
-------------------------------------- ------- ------ ------- -------- --------
Net assets before net cash 66.6 51.8 38.9 34.0 32.8
Net cash 0.1 9.3 8.3 13.1 16.0
-------------------------------------- ------- ------ ------- -------- --------
Total equity 66.7 61.1 47.2 47.1 48.8
-------------------------------------- ------- ------ ------- -------- --------
* 2018 has not been re-presented with regards to discontinued operations relating to the cessation of the MarketMakers telemarketing business in 2020.
DIRECTORS, ADVISERS AND OTHER CORPORATE INFORMATION
Company registration number
04948078
Incorporated / domiciled in
England and Wales
Registered office
10 York Road
London
SE1 7ND
United Kingdom
Directors
Colin Jones (Chair)
Swagatam Mukerji (Chief Executive Officer)
Simon Longfield (Chief Financial Officer)
William Eccleshare
Carol Hosey
Leslie-Ann Reed
Richard Staveley
Company Secretary
Helen Silver
Independent Auditor
Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
Registrars
Share Registrars Limited
3 The Millennium Centre
Crosby Way
Farnham
Surrey
GU9 7XX
External Lawyers
Dechert LLP
160 Queen Victoria Street
London
EC4V 4QQ
Brokers
Investec Bank plc
Singer Capital Markets
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