REG - Centaur Media PLC - Preliminary results
16/03/2022 07:00
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RNS Number : 8908E Centaur Media PLC 16 March 2022
16 March 2022
Centaur Media Plc
Preliminary results for the year ended 31 December 2021
Strong year of progress with growth in revenues, EBITDA and EBITDA margin
On track for Margin Acceleration Plan (MAP23) objectives
Centaur Media, an international provider of business intelligence, training
and specialist consultancy, is pleased to present its preliminary results for
the year ended 31 December 2021.
Financial Highlights
£m 2021 2020
Statutory revenue 39.1 32.4
Adjusted EBITDA(( 1 )) 6.4 3.8
Adjusted profit/(loss) before tax 3.0 (0.3)
Statutory profit/(loss) before tax 1.4 (2.6)
Group statutory profit/(loss) after taxation 1.4 (14.4)
· Revenues increased 21% to £39.1m
· Adjusted EBITDA grew 68% to £6.4m with margin growing to 16% in line with
MAP23 strategy
· Group statutory profit of £1.4m
· Proposing a final dividend of 0.5p per share
· Net cash of £13.1m at year end, driven by EBITDA growth and cash
conversion(2) of 164%
· Revenue from outside UK grew to 37% of total - up from 31% in 2020
In early 2021 Centaur launched its Margin Acceleration Plan (MAP23) with the
objective of generating over £45m in revenue and an adjusted EBITDA margin of
23% by 2023. To support MAP23, Centaur has continued to focus investment and
resource allocation in its Flagship 4 brands - Econsultancy, Influencer
Intelligence, MW Mini MBA and The Lawyer - which it considers the key drivers
of organic revenue growth. These are supported by Xeim's wider portfolio of
Core Brands.
Over the course of 2021, despite the continued impact of the Covid pandemic,
the Group has performed ahead of consensus and remains on track to deliver on
its ambitious MAP23 goals. The year saw a 21% growth in revenue to £39.1m and
a sustained improvement in Adjusted EBITDA margin to 16% (2020: 12%), which
contributed to the further strengthening of Centaur's cash position to
£13.1m. Xeim and The Lawyer contributed to this result with increased
revenues, EBITDA and EBITDA margin.
Market and business knowledge provide an increasingly important competitive
advantage in the legal and marketing professions and the past two years have
accelerated the already rapid shift to high-quality digital content. In a
market characterised by change, Centaur is delivering targeted connectivity
together with deeper insight, learning and consultancy expertise.
The objective across Centaur's portfolio of brands is to position them for
continued growth by harnessing cross-selling opportunities, with the ultimate
aim of enabling customers to deliver better corporate outcomes through
building competitive advantage in their markets.
In 2021 Centaur's Flagship 4 brands benefitted from optimised pricing, strong
renewal rates and a recovery in events. Econsultancy had particular success
through providing blended learning solutions and continuing to penetrate the
top 200 companies by marketing spend, while Influencer Intelligence overcame
challenging market conditions in H1 to achieve H2 renewal rates of 95%. MW
Mini MBA had another outstanding year, with record corporate sales for
multi-seat packages and delegate numbers up 44%. The Lawyer saw excellent
client renewal rates at 116% and launched several new paid-for products.
Meanwhile, Centaur's Core Brands saw good revenue growth from marketing
solutions and successful hybrid events. The performance of the Festival of
Marketing was particularly encouraging, with above-target sponsorship and
delegate levels for its second consecutive virtual event.
Overall, the value of the content and networking capabilities of Centaur's
brands enabled the business to increase the number, size and quality of its
customers. Revenue of £28.8m, representing approximately three-quarters of
the Group's total, came from our valuable Premium Content, Marketing Services
and Training and Advisory recurring revenue streams. Centaur has also
successfully increased its international footprint, which now comprises 37% of
total revenues with two-thirds of the Group's revenue growth coming from
outside the UK.
Outlook
The excellent performance across the Group in 2021 provides a good platform
for further growth in 2022. Centaur will continue to invest in quality across
the Flagship 4 and Core Brands to take advantage of the trends in the market
and develop the Group's offering for its customers, increasing the emphasis on
cross-selling of products and building on their synergies.
Centaur has started the year well and trading for the first two months of 2022
is in line with the Board's expectations. Cash at 11 March 2022 was £12.1m.
The business is on track to meet its MAP23 objectives and will aim to achieve
this despite the market headwinds of inflation, competition for talent and the
current geopolitical backdrop. Centaur will look to manage its margin through
structured price rises in relation to its services to customers, strong
negotiation with suppliers and flexible reward structures to retain and
recruit top talent.
Dividend
Centaur's Board is proposing a final dividend of 0.5p per share, a total of 1p
per share for the 2021 financial year. This is in line with its dividend
policy to distribute 40% of adjusted earnings after taxation, subject to a
minimum of 1p per share.
Swag Mukerji, Chief Executive Officer, commented:
"After the challenges of 2020, Centaur entered 2021 as a strong and resilient
business. We launched our Margin Acceleration Plan - MAP23 - our strategy
designed to drive profitable revenue growth, and I am pleased that Centaur has
made strong progress in line with these objectives.
Over the course of 2021, it was particularly encouraging to see how the
business invested in the quality of the Flagship 4 and Core Brands,
positioning them for further growth and enhancing their opportunities to
cross-sell. We now have the talent, strategy and financial discipline to
realise the opportunities that lie ahead. And none of this would have been
possible without the hard work and resilience of our brilliant colleagues, who
are playing a pivotal role in making MAP23 a reality."
Enquiries
Centaur Media plc
Swag Mukerji, Chief Executive Officer 020 7970 4000
Simon Longfield, Chief Financial Officer
Teneo
Zoë Watt / Matthew Thomlinson 07713 157561 / 07785 528363
Note to editors
Centaur is an international provider of business information, training and
specialist consultancy that inspires and enables people to excel at what they
do, raising the standard for insight, interaction and impact.
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);
· Informing customers using data, content and insight with the provision of
business intelligence products;
· Offering training and advisory services through digital learning initiatives
and online programmes; and
· Connecting specific communities through 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 information, training 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 from continuing operations Adjusted EBITDA
£39.1m £6.4m (16% margin)
2020: £32.4m 2020: £3.8m (12% margin)
Cash Adjusted diluted EPS
£13.1m 1.9p
2020: £8.3m 2020: 0.3p
Strategic and operational highlights
· Resilient performance against the backdrop of the Covid pandemic and the
business remains on track to deliver on its MAP23 objectives
· Flagship 4 brands continued to deliver strong results, benefitting from
optimised pricing, strong renewal rates and the creation of hybrid events
· Developed the customer offering of our brands, including the introduction of a
campaign management tool for Influencer Intelligence, blended learning for
Econsultancy and further paid-for products at The Lawyer
· Record cross-marketing performance of Xeim Brands, supported by Xeim Engage
and Xeim Labs marketing solutions
· Hybrid events at The Lawyer continued to improve in content and networking
capability, leading to increased quality and size of customer
· Improved brand profile at Xeim following further investment in our marketing
teams and digital marketing capabilities
· Increased number of, and value generated from, large blue chip international
clients across Xeim
· DICE, our employee engagement committee, has worked closely with employees to
implement initiatives to help Centaur build a more diverse and inclusive
workplace
Performance: CEO Review
This has been another unique year for Centaur.
After the challenges of 2020, Centaur entered 2021 as a strong and resilient
business. During 2021, our people were brilliant and all showed great drive,
energy and tenacity in serving our customers while continuing to grow our
business in the uncertain economic environment. Their hard work supported 21%
revenue growth and 68% adjusted EBITDA growth while cash improved 58% compared
to 2020 all ahead of market consensus.
In January 2021, we launched MAP23, our new strategy designed to drive
profitable revenue growth. The core objectives of MAP23 are to raise Group
Adjusted EBITDA margins to 23% by 2023, while increasing revenues to more than
£45m in the same timeframe. We remain on track to deliver this.
Financial Performance
Over the course of the year, we took our first positive steps towards our
MAP23 goals, as well as putting in place an effective organisation structure
to deliver it.
In 2021, Centaur reported revenues of £39.1m for the year (up 21% from 2020),
and a Group Adjusted EBITDA margin of 16% (up 4 percentage points from 2020).
The Group ended the year with a cash balance of £13.1m, up from £8.3m last
year.
I am pleased with the contribution that all our brands have made to this
positive momentum over the past twelve months.
Dividends
The Group has proposed a final dividend for 2021 of 0.5p per ordinary share,
bringing the total dividends in respect of 2021 to 1.0p per ordinary share.
Operational review
Centaur comprises two business units, Xeim and The Lawyer. Xeim (or
"excellence in marketing") forms 82% of our revenues and is focused on the
marketing sector. The Lawyer is focused on the legal sector and drives the
other 18%. Both sectors are undergoing significant change, driven by
technological advancement, structural transformation and globalisation all of
which gives Centaur a great opportunity for growth.
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 2021, 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.
At Econsultancy, we had success with the sale of blended learning solutions
and continued to penetrate the top 200 marketing companies, winning contracts
from large blue chip international companies including Unilever, Bayer, UPS
and PZ Cussons. Econsultancy Live and the marketing solutions operation also
performed well with positive results and impressive revenue growth compared to
the prior year.
Influencer Intelligence grew in momentum as the year progressed, overcoming
the challenging market conditions from 2020 and in Q1 2021 to end the year
with renewal rates at 84%. This was supported by our new campaign management
tool which helped drive new business, 41% higher than 2020 levels. Our focus
on higher value clients supported margin growth and we are well positioned to
capitalise on attractive market dynamics in an industry worth $15bn.
MW Mini MBA had another excellent year, with record corporate sales for
multi-seat packages and online revenues for both the Marketing and Brand
courses. Delegate numbers rose 44% with many of our largest sales coming
directly from recurring corporate customers demonstrating the value they see
in the courses.
The Lawyer also performed well, with excellent corporate client renewal rates
of 116% and daily usage of Horizon, the 7am daily email. This was supported by
several new paid for products including Signal, which provides monthly
in-depth strategic insight, benchmark data on the markets and detailed reports
on the topics that matter most to law firms.
In our portfolio of Core Brands, we were particularly encouraged by the
performance of the Festival of Marketing. Last year's Festival, titled "The
Year Ahead", was held virtually for the second consecutive year. With more
than 80 speakers over the course of four days, and above-target sponsorship
and delegate levels, it is well-placed to return even stronger as a hybrid
event for 2022.
People
In August 2021 Jane Wilkinson joined the Group as the new Managing Director of
The Lawyer. Jane's experience in driving revenue and margin growth across
data, media, B2B and B2C businesses will ensure The Lawyer is best placed to
reach its MAP23 objectives and I am delighted to have her onboard. I would
also like to take this opportunity to thank Andy Baker for his significant
contribution to making The Lawyer a multi-faceted subscription-based
information provider with a strong digital presence and market-leading
retention rates.
We have also strengthened the senior management team in Centaur with the
appointment of Claire Rance as Managing Director of our Core Brands, Gill
Huber as Managing Partner of Oystercatchers and Juan Mejia as Marketing
Director of The Lawyer as well as the promotion of Zara Paes to the role of
Group Financial Controller.
Looking to 2022
In 2022 our objective is to continue to drive revenue and margin growth to
deliver our MAP23 strategy. To do this we will focus investment and resource
allocation on our Flagship 4 brands while continuing to develop our Core
Brands, increasing the emphasis on cross-selling our products and building on
their synergies. We aim to achieve this despite the market headwinds of
inflation and competition for talent and we will manage our margin through
robust negotiation with suppliers, flexible reward structures to retain and
recruit top talent and structured price rises in relation to our services to
customers.
We are confident in our MAP23 plan; the targets are ambitious and achievable
and, with our strong balance sheet and unique portfolio of brands, we are
well-placed to capitalise on future market opportunities.
Centaur will continue to invest across the Flagship 4 and Core Brands
portfolios to take advantage of these trends and to develop its offering for
our customers.
Summary
To conclude, I wanted to reflect on the past two years and reiterate my thanks
to everyone at Centaur for their tremendous effort and contribution to the
growth of our business.
As we enter 2022 Centaur is well-positioned for growth. We have a clear
strategy in place and I am confident in our ability to hit our targets. Next
year we will continue to advance our offering and capitalise on the many
market opportunities that lie ahead of us as we continue to invest in our
brands and provide the most advanced and competitive offering in the
marketplace.
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 Graph Commentary
Financial
Underlying revenue growth* 2021: 21%, 2020: (14)% The growth/(decline) in total revenue adjusted to exclude the impact of event
timing differences, as well as the revenue contribution arising from acquired
or disposed businesses.
Adjusted EBITDA margin* 2021: 16%, 2020: 12% Adjusted EBITDA as a percentage of revenue where 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.
Adjusted diluted EPS* 2021: 1.9p, 2020: 0.3p Diluted earnings per share calculated using the adjusted earnings, as set out
in note 9 to the financial information.
Cash conversion* 2021: 164%, 2020: 100% The percentage by which adjusted operating cash flow covers Adjusted EBITDA
(on continuing and discontinued operations) as set out in the financial
performance review.
Non-financial
Attendance at Festival of Marketing 2021: 6,786, 2020: 3,938 Number of unique delegates attending the Festival of Marketing
Delegates on Mini MBA course 2021: 6,951, 2020: 4,813 Number of delegates on Mini MBA and related eLearning courses in the year
Xeim customers >£50k 2021: 90 (£12.1m), Number and value of Xeim customers that have sales in the year of greater than
£50,000
2020: 77 (£10.4m)
Top 250 law firm customers 2021: 152 (61%), Number and percentage of top 200 UK law firms and top 50 US law firms
2020: 160 (64%)
*See definitions in Financial Review
Performance: Financial Review
Overview
2021 has been a year of organic growth recovery after the significant
challenges posed by the pandemic. The social and governmental restrictions
imposed in 2020 and the economic uncertainties faced by our customers were
unprecedented. The easing of these measures, together with the focused
strategic and operational actions taken by Centaur's management team, has
supported organic growth across most revenue streams, notably Training and
Advisory and Events both up by approximately 50% year-on-year. Premium content
was an exception to this trend, seeing revenues decline by 2% due to the
downturn in renewals and new business in 2020, which has had a knock-on impact
on revenues in the year.
After the divestments made in 2019 and the subsequent restructuring of the
business, combined with continued control over our costs, we started 2021 in a
good financial position. We are pleased with the 21% growth in revenue
compared to 2020, the sustained expansion in EBITDA margin and the increase in
our cash balance. All of this demonstrates that we are on track to meet our
MAP23 objectives.
Performance
Group
Statutory revenue rose by £6.7m to £39.1m in 2021 - an increase of 21%. Xeim
increased 23% and The Lawyer 9%. 37% (2020: 31%) of the revenue was generated
from outside the UK and this year-on-year increase represented two-thirds of
the total growth. We will not be renewing or taking on any new business with
Russian customers during 2022, the impact of which is negligible to our
results.
Adjusted EBITDA increased from £3.8m to £6.4m at a margin of 16% (2020:
12%), showing promising progress towards our MAP23 targets. This improved
margin was on increased revenues, demonstrating the commitment to continued
cost control and profitable revenue growth following the previously completed
cost savings programme. Central operating costs rose by only 3% in 2021.
The Group posted an adjusted operating profit of £3.2m in the year (2020:
£nil), showing an improved trading performance for the business year-on-year
as a result of the operational gearing on increased revenues. The Group
achieved an adjusted profit after taxation of £2.8m (2020: £0.4m).
During 2021, we have increased our cash balances from £8.3m to £13.1m,
mainly as a result of a focus on cash management, the increase in EBITDA,
healthy cash collections from customers and working capital improvements from
subscriptions growth and the timing of payments.
Xeim
Xeim's revenue for 2021 was £32.1m, an increase of 23% from £26.0m in 2020,
surpassing pre-Covid revenue levels of £31.4m in 2019. Premium content in
2021 fell 5% year-on-year, due mainly to the economic uncertainties posed by
the global pandemic in 2020 reducing both subscription renewal and new
business billings in that year. However, 2021 has seen a recovery in renewal
rates and new business across both Econsultancy and Influencer Intelligence,
which will lead to positive momentum on revenue in 2022.
Revenue from all other streams showed year-on-year growth, most significantly
in Training and Advisory and Events. Events revenue grew by 69% to £2.7m,
largely driven by the move from wholly virtual events to hybrid events as some
social distancing measures and restrictions were eased in the second half of
the year.
Training and Advisory revenue saw strong growth of 48% on the back of
continued excellent performance in eLearning revenues from the MW Mini MBA
marketing and brand courses, Econsultancy and Oystercatchers.
Xeim posted an Adjusted EBITDA of £6.6m for the year, an increase from £4.3m
in 2020. This was predominantly driven by the increase in revenue, offset by
an associated increase in cost.
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 the prior year,
Econsultancy grew all revenue streams in 2021, with an increase of 22% in the
year, resulting in revenues now exceeding pre-Covid levels. Our blended
learning strategy was the main driver of new business wins at more than three
times the level seen in 2020, resulting in premium content revenue from
Econsultancy growing 18%. Subscription renewal rates increased to 69% (2020:
64%) and we are aiming to improve this further in 2022.
Econsultancy's training and advisory revenue also returned to growth up 22% on
2020 and winning further large digital training and consultancy contracts with
blue chip international companies. Events revenue almost trebled year-on-year
from the Econsultancy Live conferences held in April and November, together
with Econsultancy revenue from Marketing Solutions also increasing by over
30%.
Influencer Intelligence revenue reduced 15% in the year. The impact of Covid
on the retail and fashion industries in 2020 and the first quarter of 2021 had
reduced billings due to cautious marketing investment from core
consumer-facing brand clients. However, renewal rates improved significantly
from Q2 of 2021 onwards and averaged close to the historically strong rates
last seen in 2019. New business also improved in 2021, up 41% on 2020. Both
these increases resulted in annualised book of business growth of 3% in the
year, after initially dropping by 6%; the revenue benefits will be seen in
2022.
The MW Mini MBA continues to go from strength to strength, with delegate
numbers up 44% year-on-year and Net Promoter Scores of +75. Revenue grew 66%
from the increase in delegates and a rise in the list price. Delegate
increases are being driven in particular by larger take up from recurring
corporate customers as well as an increase in online sales.
Of our core Xeim brands, Festival of Marketing has shown significant recovery
in 2021 through a series of three hybrid events resulting in a doubling of
revenue year-on-year. This is in contrast with the reduced revenue in 2020 due
to the move to virtual events. Really B2B and Oystercatchers saw growth in
revenue of approximately 20% and the growth in revenue from Marketing Week
exceeded 30%, driven by contracts for Marketing Solutions.
The Lawyer
Overall revenues for The Lawyer grew by 9%. Premium content revenue showed
modest growth of 5%, primarily from corporate subscriptions which grew 15%.
However, this was offset by a planned deferral of revenue relating to the move
from the transactional Market Reports product to the Signal product on a
subscription based revenue model. Without the impact of this deferral, premium
content revenues would have grown by over 10%.
High-margin recruitment advertising revenue grew 34%, demonstrating a partial
recovery from the reduction seen due to the economic uncertainty in 2020 which
saw law firms delay hiring. With a move to hybrid events as social distancing
measures eased, events revenue grew 22% year-on-year to £1.1m, albeit lower
than revenue in 2019 when all events were face-to-face.
This led to a rise in Adjusted EBITDA from £2.1m in 2020 to £2.7m in 2021.
The underlying business continues to perform strongly with strong renewal
rates and continued engagement by users indicating how important The Lawyer
has become to leading law firms and their fee earners.
Measurement and non-statutory adjustments
The statutory results of the Group are presented in accordance with
International Financial Reporting 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/(loss) from continuing operations reconciles to
adjusted operating profit and Adjusted EBITDA as follows:
Note 2021 2020
£m £m
Statutory operating profit/(loss) 1.6 (2.3)
Adjusting items:
Exceptional operating costs 4 - 0.2
Amortisation of acquired intangible assets 11 1.1 1.5
Share-based payments 23 0.5 0.5
Loss on disposal of assets and liabilities 11,12,18 - 0.1
1.6 2.3
Adjusted operating profit 3.2 -
Depreciation, amortisation and impairment 3 3.2 3.8
Adjusted EBITDA 6.4 3.8
Adjusted EBITDA margin 16% 12%
Adjusting items from continuing operations of £1.6m in the year (2020:
£2.3m) are comprised as follows:
Adjusting Item Description
Exceptional operating costs 2021 £nil. 2020 exceptional costs of £0.2m relate primarily to staff
restructuring costs following the onset of the pandemic.
Amortisation of acquired intangible assets Amortisation of acquired intangible assets of £1.1m (2020: £1.5m) has fallen
as certain assets have become fully amortised.
Share-based payments Share-based payments of £0.5m were at a similar level (2020: £0.5m).
Loss on disposal of assets and liabilities 2021 £nil. In 2020 £0.1m relates primarily to asset write-offs and
disposals.
Segment profit
Segmental profit is reported to improve clarity around our business units'
performance and consists of gross contribution for a business unit minus
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 for each business unit:
Xeim The Total Xeim The Total
Lawyer Lawyer
2021 2021 2021 2020 2020 2020
£m £m £m £m £m £m
Revenue
Premium Content 9.0 3.9 12.9 9.5 3.7 13.2
Marketing Services 3.3 - 3.3 2.9 - 2.9
Training and Advisory 12.6 - 12.6 8.5 - 8.5
Events 2.7 1.1 3.8 1.6 0.9 2.5
Marketing Solutions 4.2 0.8 5.0 3.3 0.9 4.2
Recruitment Advertising 0.3 1.2 1.5 0.2 0.9 1.1
Total statutory revenue 32.1 7.0 39.1 26.0 6.4 32.4
Revenue growth 23% 9% 21%
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
2021 2021 2021 2021 2020 2020 2020 2020
£m £m £m £m £m £m £m £m
Revenue 32.1 7.0 - 39.1 26.0 6.4 - 32.4
Operating costs (27.6) (4.9) (3.4) (35.9) (24.1) (5.0) (3.3) (32.4)
Adjusted operating profit/(loss) 4.5 2.1 (3.4) 3.2 1.9 1.4 (3.3) -
Adjusted operating margin 14% 30% 8% 7% 22% 0%
Depreciation, amortisation and impairment 2.1 0.6 0.5 3.2 2.4 0.7 0.7 3.8
Adjusted EBITDA 6.6 2.7 (2.9) 6.4 4.3 2.1 (2.6) 3.8
Adjusted EBITDA margin 21% 39% 16% 17% 33% 12%
Xeim's telemarketing business, MarketMakers, was closed in 2020 and its
results in the prior-year comparatives are not shown above but within
discontinued operations.
Net finance costs
Net finance costs were £0.3m (2020: £0.3m). The Group held positive cash
balances throughout the year and therefore, in both 2021 and 2020, the vast
majority of finance costs relate to the commitment fee payable for the
revolving credit facility as well as interest on lease payments for
right-of-use assets.
Taxation
A tax credit of £0.1m (2020: credit of £0.9m) has been recognised on
continuing operations for the year. The adjusted tax charge was £0.1m (2020:
credit of £0.6m). The Company's profits were taxed in the UK at a blended
rate of 19% (2020: 19.0%), but the resulting tax charge is more than offset by
a credit resulting from the effect of changes in the tax rate on deferred tax
balances. 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
1.9 pence (2020: 0.3 pence). Diluted earnings per share for the year were 0.9
pence (2020: loss of 10.0 pence). Full details of the earnings per share
calculations can be found in note 9 to the financial information.
Dividends
Under the Group's dividend policy, Centaur will target a pay-out ratio of 40%
of adjusted retained earnings, subject to a minimum dividend of 1.0p per share
per annum.
In light of this, the Group has proposed a final dividend in March 2022 of
0.5p per ordinary share in respect of 2021. This brings the total dividends
relating to 2021 to 1.0p (2020: 0.5p) per ordinary share.
This final dividend is subject to shareholder approval at the Annual General
Meeting and, if approved, will be paid on 27 May 2022 to all ordinary
shareholders on the register at the close of business on 13 May 2022.
Cash flow
2021 2020
£m £m
Adjusted operating profit 3.2 -
Depreciation, amortisation and impairment 3.2 4.0
Movement in working capital 3.1 2.5
Adjusted operating cash flow 9.5 6.5
Capital expenditure (0.8) (0.8)
Cash impact of adjusting items - (4.6)
Taxation - -
Repayment of lease obligations and interest (2.2) (2.1)
Free cash flow 6.5 (1.0)
Disposal of subsidiaries - (0.1)
Disposal of intangible assets - 0.1
Purchase of own shares (0.3) -
Dividends paid to Company's shareholders (1.4) -
Increase/(decrease) in net cash 4.8 (1.0)
Opening net cash 8.3 9.3
Closing net cash 13.1 8.3
Cash conversion 164% 100%
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 impact
of adjusting items in 2020 primarily related to exceptional restructuring
costs.
The movement in working capital in 2021 includes a repayment of £1.0m of VAT
deferred under the Government's Covid VAT payment deferral scheme (2020:
£1.0m deferral). 2020 also included the receipt of £1.5m relating to the
lease incentive on the Group's former office premise. The cash conversion of
164% (2020: 100%) has been adjusted to exclude these one-off items. The cash
conversion has increased significantly as a result of the positive working
capital movements relating to increased bonuses for 2021 and costs related to
the MW Mini MBA, both paid after the end of the year, and an increase in
deferred income mainly due to increased billings on subscriptions.
MAP23
In January 2021 the Group announced its MAP23 strategy, under which it will
raise Group Adjusted EBITDA margins to 23% (including the impact of IFRS 16)
by 2023, while increasing revenues to £45m. The increase in revenue of 21%
and EBITDA margin from 12% in 2020 to 16% in 2021 demonstrates clear progress
towards these objectives.
The Group has made an encouraging start to 2022 and trading is in line with
our expectations. We are expecting some pressure on our costs and on retention
of employees due to the wider economic situation in the UK and
internationally. We will address this through structured pricing increases to
our customers, robust negotiation with our suppliers, tight control of our
cost base, variable remuneration structures for our senior management team and
continued work on the 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 new revolving credit facility with NatWest
that replaces the £25m facility signed with NatWest and Lloyds in 2018. The
new facility allows the Group to borrow up to £10m and has a three-year
duration with the option of two further one-year periods. The covenants
regarding leverage and interest cover are identical to those of the facility
it replaces.
Balance sheet
2021 2020
£m £m
Goodwill and other intangible assets 44.2 46.1
Property, plant and equipment 2.5 3.3
Deferred taxation 2.4 2.2
Deferred income (7.8) (7.0)
Other current assets and liabilities (7.1) (4.8)
Non-current assets and liabilities (0.2) (0.9)
Net assets before cash 34.0 38.9
Net cash 13.1 8.3
Net assets 47.1 47.2
Goodwill and other intangibles have decreased by £1.9m as a result of the
amortisation of intangible assets. Property, plant and equipment has fallen by
£0.8m due to the difference between depreciation and capital expenditure.
Deferred income has increased by £0.8m mainly as a result of advance billings
on subscriptions. Other current assets and liabilities have been impacted by
an increase in bonus accruals and cost accruals related to the MW Mini MBA.
Going concern
After due consideration, as required under IAS 1 Presentation of Financial
Information, including consideration of the Group's net current liability
position, 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 2021. As detailed under the Risk Management section,
the Directors have assessed the viability of the Group over a three-year
period to March 2025 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 well-positioned for growth. The resilience of our brands during the
pandemic, the resultant organic revenue growth and the increase in
profitability delivered in 2021, together with the strength of our balance
sheet, provides persuasive evidence of the progress that Centaur is making
towards its 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 margin Adjusted EBITDA as a percentage of revenue.
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 profit Operating profit excluding Adjusting items.
Adjusted profit before tax Profit before tax excluding Adjusting items.
Cash conversion Adjusted operating cash flow (excluding any one-off significant cash flows) /
Adjusted EBITDA (including discontinued operations).
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.
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.
Principal risks
The Group's risk register currently includes operational and strategic risks.
The principal risks faced by the Group in 2021, 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 26 to the financial information.
Rank Risk Description of risk and impact Risk mitigation/control procedure Movement in risk
1 Failure to deliver and maintain a high growth performance culture. Centaur's success depends on growing the business and completing the MAP23 There has been a significant focus on employee communication this year, The Board considers this risk to have increased since the prior year.
strategy. In order to do this, it depends in large part on its ability to including, weekly updates, local town hall meetings, monthly all Company
The risk that Centaur is unable to attract, develop and retain an recruit, motivate and retain highly experienced and qualified employees in the Q&A sessions and staff welfare calls.
appropriately skilled, diverse and responsible workforce and leadership team, face of often intense competition from other companies, especially true in
and maintain a healthy culture which encourages and supports ethical London. We regularly review measures aimed at improving our ability to recruit and
high-performance behaviours and decision making.
retain employees. During the year we have focused on bringing in higher
Investment in training, development and pay awards needs to be compelling but quality employees to replace leavers or in new roles in order to enhance our
Difficulties in recruiting and retaining staff could lead to loss of key will be challenging in the current economic and operating climate. strategy particularly in areas such as digitalisation, technology and data
senior staff.
analytics.
Implementing a diverse and inclusive working environment that allows for agile
and remote delivery is necessary to keep the workforce engaged. It is also We track employee engagement through weekly "check-ins" via our Engage system
required for the transition to a more flexible hybrid working model. to gauge colleague sentiment and gain an understanding of any key risks or
challenges.
Higher staff churn (a challenge for many companies in our sector) is likely to
be an important issue during 2022 and we will need to keep our policies and Our employee engagement team, "DICE", who focus on Diversity, Inclusion,
practices under review. Culture and Engagement have helped to drive forward initiatives relating to
diversity and inclusion, through communication and virtual social events. This
Developing the MAP23 business strategy and changes required in skill set and is sponsored by the CEO and a Non-Executive Director.
culture are challenging and costly.
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.
2 Sensitivity to UK/sector economic conditions. The world economy has been severely impacted by the Covid pandemic and UK GDP Most of the risk impacting Centaur relates to our customers. The Group has The Board considers this risk to be broadly the same as the prior year.
fell significantly in 2020.The UK also came to the end of the transition deal demonstrated that it can mitigate the risk by increased digitalisation,
with the EU at the end of 2020. Although the UK economy has improved during running hybrid events and offering eLearning services.
2021 the Group continues to have sensitivity to UK/sector volatility and
economic conditions. The impact was acute on some of Centaur's target market Centaur plans to increase international organic growth in the mid to longer
segments including the fashion, retail and entertainment sectors and could term, focusing on the US and Asia in particular, to mitigate this risk. We are
also have an impact on physical events. also increasing our focus on targeting larger scale multinational businesses
which have a more diversified risk profile.
The likelihood of ongoing volatility is expected to be high in 2022 including
higher inflation rates and there are varying views as to the timing and extent Many of the Group's products are market-leading in their respective sectors
of a recovery. and are an integral part 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 the UK, including specific risks such as inflation, to assess
whether changes to its product offerings or pricing structures are necessary.
3 Fraudulent or accidental breach of our IT network, major systems failure or Centaur relies on its IT network to conduct its operations. The IT network is Appropriate IT security and related controls are in place for all key The Board considers this risk to be broadly the same as the prior year.
ineffective operation of IT and data management systems leads to loss, theft at risk of a serious systems failure or breach of its security controls due to processes to keep the IT environment safe and monitor our network systems and
or misuse of financial assets, proprietary or sensitive information and/or a deliberate or fraudulent cyber-attack or unintentional event and may include data.
inoperative core products, services, or business functions. third-parties gaining unauthorised access to Centaur's IT network and systems.
Centaur has invested significantly in its IT systems and, where services are
This could result in misappropriation of its financial assets, proprietary or outsourced to suppliers, contingency planning is carried out to mitigate risk
sensitive information (including personal data or confidential information), of supplier failure.
corruption of data, or operational disruption, such as unavailability of our
websites and our digital products to users, unavailability of support Centaur continues to develop its CRM, e-commerce and finance systems and
platforms and disruption to our revenue collection activities. removed a number of legacy systems following the divestments in 2019 which has
reduced the Group's cyber risk.
Centaur could incur significant costs and suffer other negative consequences
as a result of this, such as remediation costs (including liability for stolen Centaur has a business continuity plan which includes its IT systems, subject
assets or information, and repair of any damage caused to Centaur's IT network to an annual failover test, and there is daily, overnight back-up of data,
infrastructure and systems) as well as reputational damage and loss of stored off-site.
investor confidence resulting from any operational disruption.
Websites are hosted by specialist third-party providers who typically provide
A serious occurrence of a loss, theft or misuse of personal data could also warranties relating to security standards. All of our websites are hosted on a
result in a breach of data protection requirements and the effects of this. secure platform which is cloud hosted and databases have been cleansed and
See risk 4: GDPR, PECR below. updated.
The Group Head of Data ensures that rigorous controls are in place to ensure
warehouse data can only be downloaded by the data team. Integration of the
warehouse with current databases and data captured and stored elsewhere is
ongoing.
Please see risk 4 below for specific mitigations relating to the security of
personal data and GDPR compliance.
4 Regulatory (GDPR, PECR and other similar legislation) involve strict The UK General Data Protection Regulation ('GDPR'), the Data Protection Act Centaur has taken a wide range of measures aimed at complying with the key The Board considers this risk to be broadly the same as the prior year.
requirements regarding how Centaur handles personal data, including that of 2018 ('DPA') and the Privacy and Electronic Communications Regulations aspects of the GDPR, DPA and PECR.
customers. There is the risk of a fine from the ICO, third-party claims as ('PECR') involve strict requirements for Centaur regarding its handling of
well as reputational damage if we do not comply. personal data. Centaur's obligations under the GDPR are complex meaning this In 2020, a Data Protection Compliance Committee was formed (overseen by the
area requires ongoing focus. CFO) in order to monitor Centaur's ongoing compliance with these data
protection laws.
PECR includes specific obligations for businesses like Centaur regarding
electronic marketing calls, emails, texts, and on their use of cookies and Staff are required to undertake online data protection awareness and data
similar technologies, among other things. security awareness training annually.
In the event of a serious breach of the GDPR and/or PECR, Centaur could be In Q4 2021, Centaur appointed a DPO (Wiggin LLP) to oversee its compliance
subject to a significant fine from the regulator, the ICO, and claims from with data protection laws. Further, Centaur's in-house lawyer keeps abreast of
third parties including customers as well as reputational damage. material developments in data protection law and regulation and advice from
external law firms is sought where appropriate.
The maximum fines for breaches are £17.5 million (GDPR) and £500,000 (PECR)
respectively and directors can have liability for serious breaches of PECR's Given the increasingly global nature of our business and our customers,
marketing rules. Centaur's approach to complying with data protection laws in other
jurisdictions should be kept under review. In 2020, Centaur implemented
Other countries and jurisdictions worldwide are reviewing and updating their various measures to mitigate against risk in respect of the CCPA, a new
own laws relating to data and privacy. Where Centaur is required to comply Californian privacy law, and also appointed an 'EU representative' under the
with the laws in non-UK jurisdictions there is a risk that Centaur may not be GDPR ahead of Brexit.
compliant with all such laws and could therefore be subject to regulatory
action and fines from the relevant regulators and data subjects.
The UK's departure from the EU will have implications for UK data protection
laws, the impact of which is not yet clear and is being kept under review.
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 2025, taking account of the
Group's current position, the Group's strategy, the Board's risk appetite and,
as documented above, the principal risks facing the Group and how these are
managed. Based on the results of this analysis, the Directors have a
reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period to March 2025.
The Board has determined that the three-year period to March 2025 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 £10m 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.
The base scenario uses a three-year forecast to December 2025, which assumes
achievement of MAP23 targets, with 2024 forecast continuing that strategy. The
three months to March 2025 are based directly off the respective forecast in
2024 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 the 2020 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 assume
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 would remain viable over the three-year period to
March 2025.
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. On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK-adopted International
Accounting Standards (IASs), with future changes being subject to endorsement
by the UK Endorsement Board. Therefore, the Directors have prepared the Group
financial information in accordance with UK-adopted IASs and Company financial
information in accordance with UK-adopted IASs. 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 UK-adopted IASs have been followed for the Group
financial information and UK-adopted IASs 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 has been prepared in accordance with
UK-adopted IASs, gives a true and fair view of the assets, liabilities,
financial position and result of the Company;
· the Group financial information, which has been prepared in accordance with
UK-adopted IASs, gives 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 2021
Note Adjusted Adjusting Statutory Adjusted Adjusting Statutory
Results(1) Items(1) Results Results(1) Items(1) Results
2021 2021 2021 2020 2020 2020
£'000 £'000 £'000 £'000 £'000 £'000
Continuing operations
Revenue 2 39,080 - 39,080 32,419 - 32,419
Other operating income - - - 2 - 2
Net operating expenses 3 (35,848) (1,611) (37,459) (32,411) (2,315) (34,726)
Operating profit / (loss) 3,232 (1,611) 1,621 10 (2,315) (2,305)
Finance income 1 - 1 6 - 6
Finance costs 6 (261) - (261) (315) - (315)
Profit / (loss) before tax 2,972 (1,611) 1,361 (299) (2,315) (2,614)
Taxation 7 (139) 195 56 559 336 895
Profit / (loss) for the year from continuing operations 2,833 (1,416) 1,417 260 (1,979) (1,719)
Discontinued operations
Profit / (loss) for the year from discontinued operations after tax 8 - - - 112 (12,821) (12,709)
Profit / (loss) for the year attributable to owners of the parent after tax 2,833 (1,416) 1,417 372 (14,800) (14,428)
Total comprehensive income / (loss) attributable to owners of the parent 2,833 (1,416) 1,417 372 (14,800) (14,428)
Earnings / (loss) per share attributable to owners of the parent 9
Basic from continuing operations 2.0p (1.0p) 1.0p 0.2p (1.4p) (1.2p)
Basic from discontinued operations - - - 0.1p (8.9p) (8.8p)
Basic from profit / (loss) for the year 2.0p (1.0p) 1.0p 0.3p (10.3p) (10.0p)
Fully diluted from continuing operations 1.9p (1.0p) 0.9p 0.2p (1.4p) (1.2p)
Fully diluted from discontinued operations - - - 0.1p (8.9p) (8.8p)
Fully diluted from profit / (loss) for the year 1.9p (1.0p) 0.9p 0.3p (10.3p) (10.0p)
(1)( )Adjusted results exclude adjusting items, as detailed in note 1(b)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Attributable to owners of the Company
Note Share Own Share Reserve Deferred Foreign currency reserve Retained Total
capital shares premium for shares shares £'000 earnings equity
£'000 £'000 £'000 to be £'000 £'000 £'000
issued
£'000
At 1 January 2020 15,141 (7,243) 1,101 1,770 80 127 50,040 61,016
Loss for the year and total comprehensive loss - - - - - - (14,428) (14,428)
Currency translation adjustment - - - - - 39 - 39
Transactions with owners in their capacity as owners:
Exercise of share awards 22,23 - 1,341 - (749) - - (592) -
Fair value of employee services 23 - - - 543 - - - 543
Lapsed share awards 22 - - - (957) - - 957 -
As at 31 December 2020 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 24 - - - - - - (1,450) (1,450)
Exercise of share awards 22,23 - 431 - (493) - - (419) (481)
Fair value of employee services 23 - - - 357 - - - 357
Tax on share-based payments 14 - - - - - - 118 118
As at 31 December 2021 15,141 (5,471) 1,101 471 80 143 35,643 47,108
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Attributable to owners of the Company
Note Share Own Share Reserve Deferred Retained Total
capital shares premium for shares shares earnings equity
£'000 £'000 £'000 to be £'000 £'000 £'000
issued
£'000
At 1 January 2020 15,141 (6,330) 1,101 1,770 80 15,972 27,734
Profit for the year and total comprehensive income - - - - - 12,172 12,172
Transactions with owners in their capacity
as owners:
Transfer of treasury shares 22 - 2,195 - - - (1,591) 604
Exercise of share awards 23 - - - (749) - 246 (503)
Fair value of employee services 23 - - - 543 - - 543
Lapsed share awards 22 - - - (957) - 957 -
As at 31 December 2020 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 24 - - - - - (1,450) (1,450)
Exercise of share awards 23 - - - (493) - 80 (413)
Fair value of employee services 23 - - - 357 - - 357
Tax on share-based payments 14 - - - - - 88 88
As at 31 December 2021 15,141 (4,135) 1,101 471 80 24,149 36,807
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2021
Registered number 04948078
Note 31 December 31 December
2021 2020
£'000 £'000
Non-current assets
Goodwill 10 41,162 41,162
Other intangible assets 11 3,102 4,911
Property, plant and equipment 12 2,484 3,258
Deferred tax assets 14 2,488 2,449
Other receivables 15 319 515
49,555 52,295
Current assets
Trade and other receivables 15 6,059 5,781
Cash and cash equivalents 16 13,065 8,300
Current tax assets 20 195 182
19,319 14,263
Total assets 68,874 66,558
Current liabilities
Trade and other payables 17 (11,405) (8,719)
Bank and other borrowings (3) (7)
Lease liabilities 18 (1,884) (1,969)
Deferred income 19 (7,846) (7,048)
(21,138) (17,743)
Net current liabilities (1,819) (3,480)
Non-current liabilities
Lease liabilities 18 (500) (1,406)
Provisions 21 - -
Deferred tax liabilities 14 (128) (239)
(628) (1,645)
Net assets 47,108 47,170
Capital and reserves attributable to owners of the Company
Share capital 22 15,141 15,141
Own shares (5,471) (5,902)
Share premium 1,101 1,101
Other reserves 551 687
Foreign currency reserve 143 166
Retained earnings 35,643 35,977
Total equity 47,108 47,170
COMPANY STATEMENT OF FINANCIAL POSITION
as at 31 December 2021
Registered number 04948078
Note 31 December 31 December
2021 2020
£'000 £'000
Non-current assets
Investments 13 65,155 64,992
Deferred tax assets 14 190 68
Other receivables 15 1,197 237
66,542 65,297
Current assets
Trade and other receivables 15 161 35,717
161 35,717
Total assets 66,703 101,014
Current liabilities
Trade and other payables 17 (29,893) (60,457)
Bank and other borrowings (3) (7)
(29,896) (60,464)
Net current liabilities (29,735) (24,747)
Net assets 36,807 40,550
Capital and reserves attributable to owners of the Company
Share capital 22 15,141 15,141
Own shares (4,135) (4,135)
Share premium 1,101 1,101
Other reserves 551 687
Retained earnings 24,149 27,756
Total equity 36,807 40,550
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 £2,325,000 (2020: profit of £12,172,000). Dividends of £1,450,000
were paid in the year (2020: £nil). The other movements in retained earnings
are shown in the Company's statement of changes in equity.
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2021
Note 2021 2020
£'000 £'000
Cash flows from operating activities
Cash generated from operations 25 9,521 2,065
Tax refund - (9)
Net cash generated from operating activities 9,521 2,056
Cash flows from investing activities
Directly attributable costs of disposal of subsidiaries - (85)
Proceeds from disposal of intangible assets 11 - 150
Purchase of property, plant and equipment 12 (51) (223)
Purchase of intangible assets 11 (706) (597)
Net cash flows used in investing activities (757) (755)
Cash flows from financing activities
Purchase of own shares 22 (306) -
Loan arrangement fees 25 (107) (25)
Interest paid 25 (87) (130)
Repayment of obligations under lease arrangements 18 (2,036) (1,925)
Termination of finance lease 18 - (200)
Dividends paid to Company's shareholders 24 (1,448) -
Net cash flows used in financing activities (3,984) (2,280)
Net increase / (decrease) in cash and cash equivalents 4,780 (979)
Cash and cash equivalents at beginning of the year 8,300 9,274
Effects of foreign currency exchange rate changes (15) 5
Cash and cash equivalents at end of year 16 13,065 8,300
COMPANY CASH FLOW STATEMENT
for the year ended 31 December 2021
Note 2021 2020
£'000 £'000
Cash flows from operating activities
Cash generated from operating activities 25 1,642 155
Cash flows from investing activities
Net cash flows used in investing activities - -
Cash flows from financing activities
Interest paid 25 (87) (130)
Loan arrangement fees 25 (107) (25)
Dividends paid to Company's shareholders 24 (1,448) -
Net cash flows used in financing activities (1,642) (155)
Net increase in cash and cash equivalents - -
Cash and cash equivalents at beginning of the year - -
Cash and cash equivalents at end of year 16 - -
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 is set out below. These
policies have been consistently applied to all the periods presented, unless
otherwise stated. The financial information is for the Group consisting of
Centaur Media Plc and its subsidiaries, and the Company, Centaur Media Plc.
Centaur Media Plc is a public company limited by shares and incorporated in
England and Wales.
(a) Basis of preparation
The financial information in this preliminary announcement has been extracted
from the audited Group Financial Statements for the year ended 31 December
2021 and does not constitute statutory accounts within the meaning of section
434 of the Companies Act 2006. The Group Financial Statements for 2020 were
delivered to the registrar of companies, and those for 2021 will be delivered
in due course. The auditor's report on the Group Financial Statements for 2020
and 2021 were both unqualified and unmodified. The auditors' report was signed
on 15 March 2022. The Group Financial Statements and this preliminary
announcement were approved by the Board of Directors on 15 March 2022.
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subject to endorsement by the UK Endorsement Board.
Centaur Media Plc transitioned to UK-adopted International Accounting
Standards in its consolidated and Company financial information on 1 January
2021. This change constitutes a change in accounting framework. However, there
is no impact on recognition, measurement or disclosure in the year reported as
a result of the change in framework. The consolidated and Company financial
information has been prepared in accordance with UK-adopted International
Accounting Standards 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.
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.
Net cash (see note 1(b)) at 31 December 2021 amounted to £13,065,000 (2020:
£8,300,000). On 16 March 2021, the Group signed a new multi-currency
revolving credit facility with NatWest. The new revolving credit facility
consists of a committed £10m facility and an additional uncommitted £15m
accordion option, both of which can be used to cover the Group's working
capital and general corporate needs. The facility runs to March 2024 with the
option to extend for two periods of one year each. None of this was drawn down
at 31 December 2021. The covenants regarding leverage and interest cover are
identical to those of the facility it replaces.
The Group has net current liabilities at 31 December 2021 amounting to
£1,819,000 (2020: £3,480,000). In both the current and prior year these
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, as deferred income will not result in a cash
outflow. 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 2021 amounting to £29,735,000 (2020:
£24,747,000). 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's viability
over a three-year period to March 2025, the Directors consider it appropriate
to adopt the going concern basis of accounting in preparing its consolidated
financial information.
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 2021 affected any of the
amounts recognised in the current year or any prior year and is not likely to
affect future periods.
New standards and interpretations not yet adopted
There are no standards that are not yet effective and that would be expected
to have a material impact on the entity in the current or future reporting
periods and on foreseeable future transactions.
Prior year re-presentation
The financial information has been presented in £'000. This is a change from
the prior year financial information which was presented in £m rounded to one
decimal place. Prior year comparatives have been re-presented in £'000.
Certain prior year comparatives have been updated following this change.
Comparative numbers
Prior year comparative numbers have been updated to reflect current year
presentation and disclosures. A portion of costs previously presented as
administrative expenses have now been allocated to cost of sales, an update to
reflect the same allocation basis as the current year. The allocation basis
has been refined to reflect the nature of the costs. These reallocations
increased cost of sales by £1,946,000 and decreased administrative expenses
by £1,946,000 for the Group, refer to note 3. 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,
split between continuing and discontinued operations, provide additional
useful information on the core operational performance of the Group to
shareholders, and review the results of the Group on an adjusted basis
internally. The term 'adjusted' is not a defined term under IFRS and may not
therefore be comparable with similarly titled profit measurements reported by
other companies. It is not intended to be a substitute for, or superior to,
IFRS measurements of profit.
Adjustments are made in respect of:
· Exceptional items - the Group considers items of income and expense as
exceptional and excludes them from the adjusted results where the nature of
the item, or its magnitude, is material and likely to be non-recurring in
nature so as to assist the user of the financial information to better
understand the results of the core operations of the Group. Details of
exceptional items are shown in note 4.
· Amortisation of acquired intangible assets - the amortisation charge for those
intangible assets recognised on business combinations is excluded from the
adjusted results of the Group since they are non-cash charges arising from
investment activities. As such, they are not considered reflective of the core
trading performance of the Group. Details of amortisation of acquired
intangible assets are shown in note 11.
· Share-based payments - share-based payment expenses or credits are excluded
from the adjusted results of the Group as the Directors believe that the
volatility of these charges can distort the user's view of the core trading
performance of the Group. Details of share-based payments are shown in note
23.
· Impairment of goodwill - the Directors believe that non-cash impairment
charges in relation to goodwill are triggered by factors external to the core
trading of the business, and therefore exclude any such charges from the
adjusted results of the Group. Details of the goodwill impairment analysis are
shown in note 10.
· Profit or loss on disposal of assets or subsidiaries - profit or loss on
disposals of businesses are excluded from adjusted results of the Group as
they are unrelated to core trading and can distort a user's understanding of
the performance of the Group due to their infrequent and volatile nature. See
note 4.
· Other separately reported items - certain other items are excluded from
adjusted results where they are considered large or unusual enough to distort
the comparability of core trading results year-on-year. Details of these
separately disclosed items are shown in note 4.
The tax related to adjusting items is the tax effect of the items above that
are allowable deductions for tax purposes, calculated using the standard rate
of corporation tax. See note 7 for a reconciliation between reported and
adjusted tax charges.
Further details of adjusting items are included in note 4. A reconciliation
between adjusted and statutory earnings per share measures is shown in note 9.
Profit / (loss) before tax reconciles to adjusted operating profit as follows:
Note 2021 2020
£'000 £'000
Profit / (loss) before tax 1,361 (2,614)
Adjusting items
Exceptional operating costs 4 - 238
Amortisation of acquired intangible assets 11 1,091 1,464
Impairment of acquired intangible assets 11 25 -
Share-based payment expense 23 495 541
Loss on disposal assets and liabilities 11,12,18 - 72
Adjusted profit / (loss) before tax 2,972 (299)
Finance income (1) (6)
Finance costs 6 261 315
Adjusted operating profit 3,232 10
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:
Note 2021 2020
£'000 £'000
Reported cash flow from operating activities 25 9,521 2,065
Adjusting items from operations - 1,063
Working capital impact of adjusting items from operations - 3,450
Adjusted operating cash flow 9,521 6,578
Capital expenditure (757) (820)
Post capital expenditure cash flow 8,764 5,758
Our cash conversion rate for the year was 164% (2020: 100%).
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. Statutory revenue growth reconciles to underlying
revenue growth as follows:
Xeim The Lawyer Total
£'000 £'000 £'000
Reported revenue 2020 26,053 6,366 32,419
Underlying revenue 2020 26,053 6,366 32,419
Reported revenue 2021 32,108 6,972 39,080
Underlying revenue 2021 32,108 6,972 39,080
Reported revenue growth 23% 9% 21%
Underlying revenue growth 23% 9% 21%
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:
Note 2021
£'000 2020
£'000
Adjusted operating profit (as above) 3,232 10
Depreciation of property, plant and equipment 12 1,808 1,992
Amortisation of computer software 11 1,335 1,816
Impairment of computer software 11 55 -
Adjusted EBITDA 6,430 3,818
Net cash / (debt)
Net cash/(debt) is not a measure defined by IFRS. Net cash/(debt) is
calculated as cash less overdrafts and bank borrowings under the Group's
financing arrangements. The Directors consider the measure useful as it gives
greater clarity over the Group's liquidity as a whole. Net cash is
£13,062,000 as at 31 December 2021 (2020: £8,293,000).
(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. In the consolidated
statement of comprehensive income, the results of subsidiaries for which
control has ceased are presented separately as discontinued operations in the
year in which they have been disposed of and in the comparative year.
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 are presented in Pounds Sterling, which is the Group and Company's
functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are recognised in the 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 13, 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, marketing services, training and advisory, events, marketing
solutions, recruitment advertising, and telemarketing services 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.
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.
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.
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.
Telemarketing Services
Revenue from telemarketing services was deferred and recognised over the
period that the service was delivered, generally according to the number of
hours expended as a proportion of the total hours contracted. In general, the
Group billed customers for telemarketing services in advance. All revenue from
telemarketing services ceased during the prior year following the closure of
the MarketMakers' telemarketing business in August 2020 and is therefore
presented within discontinued operations in the prior year.
(f) Government grants
Grants from the government are recognised at their fair value where there is a
reasonable assurance that the grant will be received, and the Group will
comply with all attached conditions. Government grants are recognised in the
profit or loss and deducted from the related expense within net operating
expenses in the consolidated statement of comprehensive income. Note 3
provides further information on how the Group accounts for government grants.
(g) Investments
In the Company's financial information, investments in subsidiaries are stated
at cost less provision for impairment in value.
Investments are reviewed for impairment whenever events indicate that the
carrying value may not be recoverable. An impairment loss is recognised to the
extent that the carrying value exceeds the higher of the investments fair
value less cost of disposal and its value-in-use. An asset's value-in-use is
calculated by discounting an estimate of future cash flows by the pre-tax
weighted average cost of capital. Any impairment is recognised in the
statement of comprehensive income. 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.
(h) Income tax
The tax expense represents the sum of current and deferred tax.
Current tax is based on the taxable profit for the year. Taxable profit
differs from profit as reported in the 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.
(i) 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 12.
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. 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.
Lessor accounting
The Group had contracts for the sub-lease of areas of its former office
property lease. These arrangements were exempt from the requirements of IFRS
16 under the short-term lease exemption as they all had a lease term of under
twelve months from the date of transition. As such, the income derived from
these sub-leasing arrangements was recognised on a straight-line basis and was
presented in the consolidated statement of comprehensive income in 'other
operating income'. All arrangements in which the Group acted as a lessor
ceased during the prior year.
(j) Impairment of assets
Assets that are subject to depreciation or amortisation are reviewed for
impairment whenever events indicate that the carrying value may not be
recoverable. An impairment loss is recognised to the extent that the carrying
value exceeds the higher of the asset's fair value less cost of disposal and
its value-in-use. An asset's value-in-use is calculated by discounting an
estimate of future cash flows by the pre-tax weighted average cost of capital.
(k) Inventories
Inventories are stated at the lower of cost and net realisable value. Work in
progress comprises costs incurred relating to publications and exhibitions
prior to the publication date or the date of the event. Cost is measured as
all costs of purchase and other costs incurred in bringing the inventories to
their present location and condition.
(l) Property, plant and equipment
See note 1(i) 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:
Leasehold improvements - 10 years or the expected length of the lease if shorter
Fixtures and fittings - 5 to 10 years
Computer equipment - 3 to 5 years
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.
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 and content - 3 to 5 years
(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 a number of equity-settled share-based compensation plans
for its employees. The fair value of the share-based compensation expense is
estimated using either a Monte Carlo (stochastic model) or Black-Scholes
option pricing model and is recognised in the consolidated statement of
comprehensive income over the vesting period with a corresponding increase in
equity. The total amount to be expensed is determined by reference to the fair
value of the awards granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance vesting
conditions (for example, profitability, sales growth targets, cash flow
performance and remaining an employee of the entity over a specified time
period); and
· including the impact of any non-vesting conditions (for example, the
requirement for employees to save).
The total expense is recognised over the vesting period, which is the period
over which all of the specified vesting conditions are to be satisfied. At the
end of each reporting year, the Group revises its estimates of the number of
options that are expected to vest based on the non-market vesting and service
conditions. It recognises the impact of the revision to original estimates, if
any, in the consolidated statement of comprehensive income, with a
corresponding adjustment to equity. The Company issues new shares or transfers
shares from treasury shares to settle share-based compensation awards.
The award by the Company of share-based compensation awards over its equity
instruments to the employees of subsidiary undertakings in the Group is
treated as a capital contribution only if it is left unsettled. The fair value
of employee services received, measured by reference to the grant date fair
value, is recognised over the vesting period as an increase to investment in
subsidiary undertakings, with a corresponding credit to equity.
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(h).
(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 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) Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits repayable on
demand or maturing within three months from the date of acquisition.
(iv) Financial liabilities
Debt and trade payables are recognised initially at fair value based on
amounts exchanged, net of transaction costs, and subsequently at amortised
cost.
Interest expense on debt is accounted for using the effective interest method
and is recognised in finance costs.
(v) Trade payables
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method.
(vi) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs
incurred and carried subsequently at amortised cost. Costs of borrowings,
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.
(vii) 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. The areas where assumptions and estimates are
significant to the consolidated financial information are as follows:
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 10 and
13.
(ii) Recoverability of trade receivables estimate
The allowance for expected lifetime credit losses for trade receivables is
calculated in line with IFRS 9. This is established by considering on a
discounted basis the cash shortfalls it would incur in various default
scenarios for prescribed future periods and multiplying the shortfalls by the
probability of each scenario occurring. The historical loss rates are adjusted
to reflect current and forward-looking information on macroeconomic factors
affecting the ability of the customers to settle the receivables. Further
details about trade receivables are included in note 15 and information about
the credit risk and expected lifetime credit losses are shown in note 26.
(iii) Share-based payments estimate
The fair value of the share-based compensation expense recognised in the
consolidated statement of comprehensive income requires the use of estimates.
Details regarding the determination of fair value of these costs are set out
in note 1(n)(ii).
(iv) Deferred tax judgement and estimate
The calculation of deferred tax assets and liabilities requires judgement.
Where the ultimate tax treatment is uncertain, the Group recognises deferred
tax assets and liabilities based on an estimate of future taxable income and
recoverability. Where a change in circumstances occurs, or the final tax
outcome is different from the amounts that were initially recorded, such
differences will impact the income tax and deferred tax balances in the year
in which that change, or outcome, is known. The accounting policy regarding
deferred tax is set out above in note 1(h).
Critical accounting judgements
(v) Adjusting items judgement
The term 'adjusted' is not a defined term under IFRS. Judgement is required to
ensure that the classification and presentation of certain items as adjusting,
including exceptional items, is appropriate and consistent with the Group's
accounting policy. Further details about the amounts classified as adjusting
are included in notes 1(b) and 4.
(vi) IFRS 16 reassessment of lease term judgement
Leases are required to be recognised at the present value of the lease
payments not yet paid for the duration of the lease term. The lease term is
defined by IFRS 16 as the non-cancellable period of the lease, and any period
covered by an option to extend or terminate that the lessee is reasonably
certain to exercise. The assessment of the lease term requires judgement when
considering the option to extend or terminate in a contract.
During the year, the Group's property lease has been remeasured upon
reassessment of the lease term, where a judgement has been taken that an
option to extend will be exercised. The remeasurement of the lease, and the
corresponding adjustment to the ROU asset are presented in notes 18 and 12
respectively.
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, marketing services, training and advisory, 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
comprise trade payables, accruals and deferred income.
Corporate assets and liabilities primarily comprise property, plant and
equipment, intangible assets, current and deferred tax balances, cash and cash
equivalents, borrowings and lease liabilities.
Capital expenditure comprises additions to property, plant and equipment and
intangible assets.
2021 Note Xeim The Lawyer Central Group
£'000 £'000 £'000 £'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 11 (1,091) - - (1,091)
Impairment of acquired intangibles 11 (25) - - (25)
Share-based payments 23 (113) (2) (380) (495)
Operating profit / (loss) 3,240 2,108 (3,727) 1,621
Finance income 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) 401 188 162 751
2020 Note Xeim The Lawyer Central Continuing operations Discontinued operations Group
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 26,053 6,366 - 32,419 3,604 36,023
Other operating income - - 2 2 - 2
Adjusted operating profit / (loss) 1(b) 1,923 1,408 (3,321) 10 41 51
Exceptional operating costs 4 (283) (50) 95 (238) (911) (1,149)
Amortisation of acquired intangibles 11 (1,464) - - (1,464) (485) (1,949)
Share-based payments 23 (304) (39) (198) (541) - (541)
Loss on disposal of assets and liabilities 11,12,18 - - (72) (72) (659) (731)
Impairment of goodwill 10 - - - - (11,009) (11,009)
Operating (loss) / profit (128) 1,319 (3,496) (2,305) (13,023) (15,328)
Finance income 6 1 7
Finance costs 6 (315) (24) (339)
Loss before tax (2,614) (13,046) (15,660)
Taxation 7 895 337 1,232
Loss for the year (1,719) (12,709) (14,428)
Segment assets 40,618 17,734 - 58,352 - 58,352
Corporate assets 8,206 8,206 - 8,206
Consolidated total assets 66,558 - 66,558
Segment liabilities (13,816) (3,103) - (16,919) (285) (17,204)
Corporate liabilities (2,184) (2,184) - (2,184)
Consolidated total liabilities (19,103) (285) (19,388)
Other items
Capital expenditure (tangible and intangible assets) 253 39 461 753 91 844
Supplemental Information
Revenue by Geographical Location
The Group's revenues from continuing operations from external customers by
geographical location are detailed below:
Xeim The Lawyer Total Xeim The Lawyer Total
2021 2021 2021 2020 2020 2020
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 19,057 5,662 24,719 17,175 5,168 22,343
Europe (excluding United Kingdom) 4,567 675 5,242 2,503 636 3,139
North America 4,954 445 5,399 4,069 385 4,454
Rest of world 3,530 190 3,720 2,306 177 2,483
32,108 6,972 39,080 26,053 6,366 32,419
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 13 for the
location of the Group's subsidiaries.
Revenue by type
The Group's revenue from continuing operations by type is as follows:
Xeim The Lawyer Total Xeim The Lawyer Total
2021 2021 2021 2020 2020 2020
£'000 £'000 £'000 £'000 £'000 £'000
Premium Content 9,006 3,882 12,888 9,527 3,689 13,216
Marketing Services 3,301 - 3,301 2,889 - 2,889
Training and Advisory 12,542 18 12,560 8,497 36 8,533
Events 2,751 1,071 3,822 1,595 865 2,460
Marketing Solutions 4,145 840 4,985 3,291 915 4,206
Recruitment Advertising 363 1,161 1,524 254 861 1,115
32,108 6,972 39,080 26,053 6,366 32,419
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 2022.
3 Net operating expenses
Continuing operating profit / (loss) is stated after charging:
Note Adjusted Adjusting Statutory Adjusting Re-presented(2)
Results(1) Items(1) Results Re-presented(2) Items(1) Statutory
2021 2021 2021 Adjusted 2020 Results
£'000 £'000 £'000 Results(1) £'000 2020
2020 £'000
£'000
Employee benefits expense 5 19,272 - 19,272 17,282 238 17,520
Government grants - - - (290) - (290)
Net employee benefits expense 19,272 - 19,272 16,992 238 17,230
Depreciation of property, plant and equipment 12 1,808 - 1,808 1,992 - 1,992
Loss on disposal of assets and liabilities 11,12,18 - - - - 72 72
Amortisation of intangible assets 11 1,335 1,091 2,426 1,816 1,464 3,280
Impairment of intangible assets 11 55 25 80 - - -
Impairment of trade receivables 26 (39) - (39) 255 - 255
Share-based payment expense 23 - 495 495 - 541 541
IT expenditure 2,563 - 2,563 2,548 - 2,548
Marketing expenditure 1,399 - 1,399 719 - 719
Other staff related costs 618 - 618 715 - 715
Other operating expenses 8,837 - 8,837 7,374 - 7,374
35,848 1,611 37,459 32,411 2,315 34,726
Cost of sales 15,082 - 15,082 12,604 - 12,604
Distribution costs 62 - 62 98 - 98
Administrative expenses 20,704 1,611 22,315 19,709 2,315 22,024
35,848 1,611 37,459 32,411 2,315 34,726
(1)( )Adjusted results exclude adjusting items, as detailed in note 1(b)
(2)( )See note 1(a) for description of the prior year re-presentation
Government grants
In prior year, the Group applied for government grants of £835,000 for
furloughed employees based at both the London and Portsmouth offices. This was
received in full during the prior year. Government grants were deducted from
the related employee benefit expenses and presented within net operating
expenses in the consolidated statement of comprehensive income.
The government grants in continuing operations was £290,000 and in
discontinued operations was £545,000.
No government grants were applied for in the current year.
Services provided by the Company's auditors
2021 2020
£'000 £'000
Fees payable to the Company's auditor for the audit of the Company and 109 105
consolidated financial information
Fees payable to the Company's predecessor auditor for the audit of the Company - 31
and consolidated financial information
Total audit fees 109 136
Audit related assurance services 10 50
Total non-audit fees 10 50
Total fees 119 186
4 Adjusting items
As discussed in note 1(b), certain items are presented as adjusting. These are
detailed below:
Note 2021 2020
£'000 £'000
Continuing operations
Exceptional operating costs
Staff related restructuring costs (including external employment advice 5 - 238
costs)
Exceptional operating costs - 238
Amortisation of acquired intangible assets 11 1,091 1,464
Impairment of acquired intangible assets 11 25 -
Share-based payment expense 23 495 541
Loss on disposal of assets and liabilities 11,12,18 - 72
Adjusting items to profit / (loss) before tax 1,611 2,315
Tax relating to adjusting items 7 (195) (336)
Total adjusting items after tax for continuing operations 1,416 1,979
Discontinued operations
Exceptional costs 8,21 - 911
Impairment of goodwill 10 - 11,009
Amortisation of acquired intangible assets 11 - 485
Loss on disposal of assets and liabilities 11,12,18 - 659
Tax relating to adjusting items 7 - (243)
Total adjusting items after tax for discontinued operations - 12,821
Total adjusting items after tax 1,416 14,800
Exceptional costs
Staff related restructuring costs (including external employment advice costs)
In the prior year staff related restructuring costs of £793,000 in
discontinued operations related to restructuring of the MarketMakers business
and £238,000 in continuing operations related to restructuring parts of the
wider Centaur Group due to the adverse impact of Covid. Refer to note 21 for
further details.
Other exceptional costs
In the prior year, £118,000 in discontinued operations related to the exit of
the Portsmouth lease upon cessation of MarketMakers' telemarketing business.
Other adjusting items
Other adjusting items relate to the amortisation and impairment of acquired
intangible assets (see note 11) and share-based payment costs (see note 23) as
well as the items discussed below:
Goodwill impairment
An impairment of £11,009,000 against goodwill relating to the MarketMakers
business was recognised in the prior year. There were no impairments
recognised in the current year. See note 10 for further details.
Loss on disposal of assets and liabilities
In the prior year the loss on disposal of assets and liabilities in continuing
operations of £72,000 consisted of a loss on disposal of software assets of
£60,000 (see note 11), a loss on disposal of computer equipment of £53,000
(see note 12), a loss on disposal of the MarketMakers ROU asset of £124,000
(see note 12) which represented the proportion of the asset attributable to
the continuing Really B2B business, offset by a £165,000 gain on disposal of
the corresponding lease liability (see note 18).
The loss on disposal of assets and liabilities in discontinued operations of
£659,000 consisted of the disposal of intangible assets totalling a net book
value of £830,000 (see note 11), with proceeds on disposal of £150,000
creating a loss on disposal of £680,000 (see note 11). Additionally, there
was a loss on disposal of computer equipment of £68,000, fixtures and
fittings of £65,000, and the MarketMakers ROU asset of £469,000 (see note
12) which represented the proportion of the asset attributable to the
discontinued telemarketing business. This was offset by a £623,000 gain on
disposal of the corresponding lease liability (see note 18).
In the current year, disposals of assets were at net book value, resulting in
no gain or loss on disposal.
5 Directors and employees
Note 2020 2021
Continuing Total 2020
Group Company Total
£'000 2020 2020 £'000 Company
2021 Discontinued Total £'000
Group Group Group
£'000 £'000 £'000
Wages and salaries 16,652 15,014 3,055 18,069 1,057 989
Social security costs 1,946 1,609 251 1,860 105 92
Other pension costs 674 659 57 716 42 34
Adjusted staff costs 19,272 17,282 3,363 20,645 1,204 1,115
Government grants 3 - (290) (545) (835) - -
Exceptional staff related restructuring costs 4 - 238 793 1,031 - -
Equity-settled share-based payments 23 495 541 - 541 325 (15)
19,767 17,771 3,611 21,382 1,529 1,100
The average monthly number of employees employed during the year, including
Executive Directors, was:
2021 2020 2021 2020
Group Group Company Company
Number Number Number Number
Xeim 202 216 - -
The Lawyer 52 56 - -
Central 10 10 4 4
Discontinued - 134 - -
264 416 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 who are
employed by the Company. As the employees provide services to other Group
companies, their costs are recharged, and the relevant disclosures are made in
the financial information. The employees relating to discontinued operations
were employed and paid by Market Makers Incorporated Limited.
Key management compensation
2021 2020
£'000 £'000
Salaries and short-term employment benefits 1,736 1,216
Post-employment benefits 74 57
Share-based payments 64 40
1,874 1,313
Key management is defined as the Executive Directors and Executive Committee
members.
Aggregate Directors' remuneration
2021 2020
£'000 £'000
Salaries, fees, bonuses and benefits in kind 1,150 753
Post-employment benefits 46 29
1,196 782
Highest paid Director's remuneration
2021 2020
£'000 £'000
Salaries, fees, bonuses and benefits in kind 592 386
Post-employment benefits 37 20
629 406
No directors exercised share options during the year (2020: one director and
one former director exercised share options). Further details of Directors'
remuneration are included in the Remuneration Committee Report.
6 Finance costs
2021 2020 2020 2020
Group Continuing Discontinued Total
Note £'000 £'000 £'000 £'000
Commitment fees and amortisation of arrangement fee in respect of revolving 194 215 - 215
credit facility
Lease interest 18 67 100 24 124
261 315 24 339
Interest and fees on revolving credit facility
These finance costs are in relation to the £25m revolving credit facility,
none of which was drawn down at 31 December 2021 (2020: £nil). 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 £194,000
during the year (2020: £155,000).
Lease interest
Lease liabilities are recognised for the Group's property lease arrangements.
£67,000 of interest on these leases was incurred during the year (2020:
£124,000). Please refer to notes 1(i) and 18 for further details.
7 Taxation
Note 2021 2020 2020 2020
Group Continuing Discontinued Total
£'000 £'000 £'000 £'000
Analysis of (credit) / charge for the year
Current tax 20
UK Corporation Tax - 105 (105) -
Overseas tax 14 24 - 24
Adjustments in respect of prior years (38) (20) - (20)
(24) 109 (105) 4
Deferred tax 14
Current period (175) (731) (232) (963)
Adjustments in respect of prior years 143 (273) - (273)
(32) (1,004) (232) (1,236)
Taxation credit (56) (895) (337) (1,232)
The tax credit for the year can be reconciled to the profit / (loss) in the
consolidated statement of comprehensive income as follows:
'000 '000 '000 '000
2021 2020 2020 2020
Group Continuing Discontinued Total
£'000 £'000 £'000 £'000
Profit / (loss) before tax 1,361 (2,614) (13,046) (15,660)
Tax at the UK rate of corporation tax of 19.0% (2020: 19.0%) 259 (497) (2,479) (2,976)
Effects of:
Expenses not deductible for tax purposes 69 62 2,119 2,181
Share-based payments 47 - - -
Effects of changes in tax rate on deferred tax balances (538) (170) 23 (147)
Different tax rates of subsidiaries in other jurisdictions 2 3 - 3
Adjustments in respect of prior years 105 (293) - (293)
Taxation credit (56) (895) (337) (1,232)
The Finance Act 2021 included provisions to increase the main rate of
corporation tax to 25% from 1 April 2023. This change had been substantively
enacted at the reporting date.
A reconciliation between the reported tax expense and the adjusted tax expense
taking account of adjusting items as discussed in note 1(b) and 4 is shown
below:
2021 2020 2020 2020
Group Continuing Discontinued Total
£'000 £'000 £'000 £'000
Reported tax credit (56) (895) (337) (1,232)
Effects of:
Amortisation of acquired intangible assets 112 233 92 325
Exceptional costs - - 151 151
Share-based payments 83 103 - 103
Adjusted tax charge / (credit) 139 (559) (94) (653)
8 Discontinued operations
A significant restructuring of the MarketMakers' business was executed during
the prior year following an adverse impact on the performance of the
telemarketing business following the onset of Covid. This led to the closure
of the MarketMakers' telemarketing business in August 2020. MarketMakers'
Really B2B brand continues to operate and its performance is reported as part
of continuing operations.
A loss on disposal of £659,000 arose on the disposal of assets relating to
the MarketMakers' telemarketing business being the difference between the
proceeds of disposal and the carrying amount of the net assets. Details of the
disposal can be found in note 4.
The results of the discontinued operations, which were included in the
consolidated statement of comprehensive income and consolidated cash flow
statement, were as follows:
2020
Statement of comprehensive income £'000
Revenue 3,604
Expenses (15,991)
Loss on disposal (659)
Loss before tax (13,046)
Attributable tax credit 337
Statutory loss after tax (12,709)
Add back adjusting items(1):
Exceptional costs 911
Impairment of goodwill 11,009
Amortisation of acquired intangible assets 485
Loss on disposal 659
Tax relating to adjusting items(1) (243)
Total adjusting items(1) 12,821
Adjusted profit(1) attributable to discontinued operations after tax 112
(1 )Adjusted results exclude adjusting items, as detailed in note 1(b)
The attributable tax credit stated in the table above is derived from the loss
from discontinued operations. No income tax credit arose on the loss on
disposal.
2020
Cash flows £'000
Operating cash flows 280
Investing cash flows 102
Financing cash flows (382)
Total cash flows -
There were no discontinued operations for the year ended 31 December 2021.
9 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. 2,064,185 (2020: 1,948,492) shares held in the
Employee Benefit Trust and 4,550,179 (2020: 4,550,179) shares held in treasury
(see note 22) have been excluded in arriving at the weighted average number of
shares.
For diluted earnings per share the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potentially dilutive ordinary
shares. This comprises share options and awards 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
continuing and discontinued basis, as the Directors believe that these
measures are more reflective of the underlying performance of the Group. These
have been calculated as follows:
Note 2021 Earnings / (loss) attributable to owners of the parent 2021 2021 2020 Earnings / (loss) attributable to owners of the parent 2020 2020
£'000 Weighted average number of shares Earnings / (loss) per share £'000 Weighted average number of shares Earnings / (loss) per share
thousands pence thousands pence
Basic
Continuing operations 1,417 144,927 1.0 (1,719) 144,267 (1.2)
Continuing and discontinued operations 1,417 144,927 1.0 (14,428) 144,267 (10.0)
Effect of dilutive securities
Options: Continuing operations - 7,947 (0.1) - - -
Options: Continuing and discontinued operations - 7,947 (0.1) - - -
Diluted
Continuing operations 1,417 152,874 0.9 (1,719) 144,267 (1.2)
Continuing and discontinued operations 1,417 152,874 0.9 (14,428) 144,267 (10.0)
Adjusted(1)
Continuing operations
Basic 1,417 144,927 1.0 (1,719) 144,267 (1.2)
Other exceptional costs 4 - - - 238 - 0.2
Amortisation of acquired intangibles 11 1,091 - 0.8 1,464 - 1.0
Impairment of acquired intangibles 11 25 - - - - -
Share-based payments 23 495 - 0.3 541 - 0.4
Loss on disposal of assets and liabilities 11,12,18 - - - 72 - -
Tax effect of above adjustments 7 (195) - (0.1) (336) - (0.2)
Discontinued operations
Basic - 144,927 - (12,709) 144,267 (8.8)
Other exceptional costs 4 - - - 911 - 0.6
Impairment of goodwill 10 - - - 11,009 - 7.6
Amortisation of acquired intangibles 11 - - - 485 - 0.3
Loss on disposal of assets and liabilities 11,12,18 - - - 659 - 0.5
Tax effect of above adjustment 7 - - - (243) - (0.1)
Adjusted(1) basic
Continuing operations 2,833 144,927 2.0 260 144,267 0.2
Continuing and discontinued operations 2,833 144,927 2.0 372 144,267 0.3
Effect of dilutive securities
Options: Continuing operations - 7,947 (0.1) - 7,319 -
Options: Continuing and discontinued operations - 7,947 (0.1) - 7,319 -
Adjusted(1) diluted
Continuing operations 2,833 152,874 1.9 260 151,586 0.2
Continuing and discontinued operations 2,833 152,874 1.9 372 151,586 0.3
(1)( )Adjusted results exclude adjusting items, as detailed in note 1(b)
Adjusted Results(1) Adjusted Items(1) Statutory Results Adjusted Results(1) Adjusted Items(1) Statutory Results
2021 2021 2021 2020 2020 2020
£'000 £'000 £'000 £'000 £'000 £'000
Earnings / (loss) per share attributable to owners
of the parent
Fully diluted from continuing operations 1.9p (1.0p) 0.9p 0.2p (1.4p) (1.2p)
Fully diluted from discontinued operations - - - 0.1p (8.9p) (8.8p)
Fully diluted from continuing and discontinued 1.9p (1.0p) 0.9p 0.3p (10.3p) (10.0p)
(1)( )Adjusted results exclude adjusting items, as detailed in note 1(b)
10 Goodwill
Note Group
£'000
Cost
At 1 January 2020 111,113
Closure of business 8 (11,009)
Elimination of goodwill (18,995)
At 31 December 2020 and 31 December 2021 81,109
Accumulated impairment
At 1 January 2020 58,942
Impairment 8 11,009
Elimination of goodwill (30,004)
At 31 December 2020 and 31 December 2021 39,947
Net book value
At 31 December 2020 and 31 December 2021 41,162
In the prior year, an impairment of £11,009,000 was recognised in the Xeim
CGU, entirely related to the MarketMakers ('MM') business within that CGU. The
MM telemarketing business ceased operations, and the goodwill cost and
accumulated impairment was eliminated as at 31 December 2020. The impairment
was included within discontinued operations as disclosed in note 8.
In addition to the impairment and subsequent elimination of goodwill relating
to MM, the Group also eliminated £18,995,000 of goodwill in prior year that
had been fully impaired in previous financial years relating to legacy brands
and businesses that the Group no longer operated.
At 31 December 2021 a full impairment assessment has been carried out. No
impairment is required for the carrying value of goodwill.
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
£'000 £'000 £'000
Note
At 1 January 2020 36,197 15,974 52,171
Impairment charge 8 (11,009) - (11,009)
At 31 December 2020 and 31 December 2021 25,188 15,974 41,162
Impairment testing of goodwill and acquired intangible assets
At 31 December 2021, goodwill and acquired intangible assets (see note 11)
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 10.3% (2020: 12.8%). 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. The Group
has used the three-year plan forecast to 2024 for the first three years of the
calculation and applied a terminal growth rate of 2.5% (2020: 2.5%). This
timescale and the terminal growth rate are both considered appropriate given
the nature of the Group's revenues. The Group's current year results have
performed in line with the MAP23 strategy and hence this strategy has not been
revised from the prior year. The three-year forecast to 2024 assumes
achievement of MAP23 targets, with the forecast for 2024 continuing that
strategy. 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 the 2020 Annual Report.
The key assumptions used in the calculations of VIU for each segment have been
derived from a combination of experience and management's expectations of
future growth rates in the business. The forecasts have been prepared
following a review of the business where management has identified the key
growth and focus areas which will deliver the targets, and conversely which
areas of the business will be de-prioritised over that period. The forecasts
reflect the transformed Group which is more focused and streamlined in order
to deliver higher margins and profits.
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 4 percentage point increase in discount rate from 10.3% to 14.3%. 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 of either CGU is required for the year
ended 31 December 2021.
11 Other intangible assets
Computer software Brands and publishing rights Customer relationships Separately acquired websites and content Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2020 19,248 2,072 13,030 3,216 37,566
Additions - separately acquired 292 - - - 292
Additions - internally generated 318 - - - 318
Disposals (870) (514) (1,709) - (3,093)
Exchange differences (5) - - - (5)
At 31 December 2020 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
Accumulated amortisation
At 1 January 2020 14,817 846 9,716 3,216 28,595
Amortisation charge for the year 1,944 165 1,671 - 3,780
Disposals (535) (203) (1,465) - (2,203)
Exchange differences (5) - - - (5)
At 31 December 2020 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
Net book value at 31 December 2021 2,069 611 422 - 3,102
Net book value at 31 December 2020 2,762 750 1,399 - 4,911
Net book value at 1 January 2020 4,431 1,226 3,314 - 8,971
In the current year, the Group disposed of intangible assets totalling a net
book value of £nil.
During the prior year, the Group disposed of intangible assets totalling a net
book value of £890,000. £60,000 of this was recognised in the consolidated
statement of comprehensive income in continuing operations. The £60,000 loss
on disposal of intangible assets in continuing operations related to software
assets that were no longer in use by the business.
The remaining £830,000 of assets disposed were recognised in discontinued
operations, along with proceeds of disposal of £150,000, resulting in a loss
on disposal of £680,000 in discontinued operations. The £680,000 loss on
disposal of intangible assets in discontinued operations resulted from the
disposal relating to the MarketMakers ('MM') business. On 24 August 2020, the
Group disposed of the MM branding and website with a net book value of
£311,000 for proceeds of £150,000, resulting in a loss of £161,000.
Customer relationships recognised on the acquisition of the MM business in
2017 with a net book value of £244,000 were disposed resulting in a loss of
£244,000. MM software assets were disposed at a net book value of £275,000
resulting in a loss of £275,000. These disposals were effected in line with
the closure of the MM telemarketing business following an adverse impact on
trading performance caused by Covid.
Amortisation and impairment of intangible assets is included in net operating
expenses in the consolidated statement of comprehensive income. The
amortisation charge in continuing operations is £2,426,000 (2020:
£3,280,000) and in discontinued operations is £nil (2020: £500,000).
Amortisation on acquired intangible assets from business combinations is
presented as an adjusting item in note 4 (see note 1(b) for further
information). Total amortisation of £1,091,000 (2020: £1,949,000) on such
assets is all amortisation on assets in the asset groups 'Brands and
publishing rights', 'Customer relationships' and 'Separately acquired websites
and content' of £1,091,000 (2020: £1,836,000) in addition to £nil (2020:
£113,000) of amortisation on acquired intangible assets in the asset group
'Computer software'. These total amounts relate to continuing operations
£1,091,000 (2020: £1,464,000) and discontinued operations £nil (2020:
£485,000) as shown in note 4.
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. Please see note 10 for further details. During the current year, the
Group impaired intangible assets totalling a net book value of £80,000. The
£80,000 impairment charge relates to computer software and brand and
publishing rights no longer in use by the business.
The Company has no intangible assets (2020: £nil).
12 Property, plant and equipment
Leasehold Fixtures Computer ROU assets - property
improvements and fittings equipment £'000 Total
£'000 £'000 £'000 £'000
Cost
At 1 January 2020 2,112 618 1,902 5,501 10,133
Additions - separately acquired - 14 209 1,704 1,927
Disposals (2,112) (564) (1,061) (2,122) (5,859)
Exchange differences - - (1) (6) (7)
At 31 December 2020 - 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
Accumulated depreciation
At 1 January 2020 2,112 484 1,405 1,817 5,818
Depreciation charge for the year - 55 240 1,912 2,207
Disposals (2,112) (499) (940) (1,529) (5,080)
Exchange differences - - (1) (8) (9)
At 31 December 2020 - 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
Net book value at 31 December 2021 - 12 258 2,214 2,484
Net book value at 31 December 2020 - 28 345 2,885 3,258
Net book value at 1 January 2020 - 134 497 3,684 4,315
In the current year, the Group disposed of tangible assets totalling a net
book value of £nil.
During the prior year the Group disposed of tangible assets totalling a net
book value of £779,000, which resulted in a loss on disposal of tangible
assets of £779,000 (£177,000 in continuing operations and £602,000 in
discontinued operations, see note 4).
In prior year, the £177,000 loss on disposal of tangible assets in continuing
operations related to computer equipment assets that were no longer in use by
the business (£53,000), and a proportion of the disposal of the MarketMakers'
ROU asset that related to the continuing Really B2B business (£124,000).
In prior year, the £602,000 loss on disposal of tangible assets in
discontinued operations related to disposal of computer equipment (£68,000),
fixtures and fittings (£65,000) and a proportion of the disposal of the
MarketMakers' ROU asset that related to the discontinued telemarketing
business (£469,000). These disposals were effected in line with the closure
of the MM telemarketing business following an adverse impact on trading
performance caused by Covid.
Depreciation and impairment of property, plant and equipment is included in
net operating expenses in the consolidated statement of comprehensive income.
The depreciation charge in continuing operations is £1,808,000 (2020:
£1,992,000) and in discontinued operations is £nil (2020: £215,000).
The Company has no property, plant and equipment at 31 December 2021 (2020:
£nil).
13 Investments
Investments
in subsidiary
undertakings
Company £'000
Cost
At 1 January 2020 151,134
Additions 251
At 31 December 2020 151,385
Additions 163
At 31 December 2021 151,548
Accumulated impairment
At 1 January 2020 61,000
Impairment charge for the year 25,393
At 31 December 2020 86,393
Impairment charge for the year -
At 31 December 2021 86,393
Net book value at 31 December 2021 65,155
Net book value at 31 December 2020 64,992
Net book value at 1 January 2020 90,134
Impairment testing of the investment
As outlined in the tables below, the carrying value of the investment
represents the Company's direct ownership of Centaur Communications Limited
('CCL'). At 31 December 2021, 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, particularly following the closure of the
MarketMakers ('MM') telemarketing business. Therefore, a full impairment
assessment was performed. An impairment of £25,393,000 was identified and
recognised in the Company's statement of comprehensive income. After this
impairment at 31 December 2020, the carrying value of the investment was
supported by the underlying trade of the continuing Group.
In the current 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
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 10.3% (2020: 12.8%). 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. The Group
has used its three-year plan forecast to 2024 for the first three years of the
calculation and applied a terminal growth rate of 2.5% (2020: 2.5%). This
timescale and the terminal growth rate are both considered appropriate given
the nature of the Group's revenues. The Group's current year results have
performed in line with the MAP23 strategy and hence this strategy has not been
revised from the prior year. The three-year forecast to 2024 assumes
achievement of MAP23 targets, with the forecast for 2024 continuing that
strategy. 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 the 2020 Annual Report.
The assumptions used in the calculations of VIU have been derived based on a
combination of experience and management's expectations of future growth rates
in the business. The forecasts have been prepared following a review of the
business where management has identified the key growth and focus areas which
will deliver the targets, and conversely which areas of the business will be
de-prioritised over that period. The forecasts reflect the transformed Group
which is more focused and streamlined in order to deliver higher margins and
profits.
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 10. 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 2021.
Additions of £163,000 (2020: £251,000) 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 year.
The Group closed the following subsidiaries during the year:
Name Proportion of ordinary shares and voting rights held (%) Principal activities Country of incorporation Date of closure
E-consultancy Asia Pacific Pte Limited 100 Dormant Singapore 6 June 2021
E-consultancy Australia Pty Limited 100 Dormant Australia 5 April 2021
Mayfield Publishing Limited 100 Dormant United Kingdom 21 December 2021
Your Business Magazine Limited 100 Dormant United Kingdom 20 April 2021
Centaur Newco 2018 Limited was dissolved during the prior year. The company did not trade since incorporation.
At 31 December 2021, the Group has control over the following subsidiaries:
Name Proportion of ordinary shares and voting rights held (%) Principal activities Country of incorporation
Centaur Communications Limited (1) 100 Holding company and agency services United Kingdom
Centaur Media USA Inc.(2) 100 Digital information, training and events United States
Chiron Communications Limited 100 In liquidation United Kingdom
E-consultancy LLC (2) 100 Digital information, training and events United States
E-consultancy.com Limited 100 Digital information, training and events United Kingdom
Market Makers Incorporated Limited 100 In liquidation United Kingdom
Pro-Talk Ltd 100 In liquidation United Kingdom
Taxbriefs Holdings Limited 100 Holding company United Kingdom
Taxbriefs Limited 100 In liquidation United Kingdom
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 251 Little Falls Drive, Wilmington, DE19808,
USA. Functional currency is USD
The registered address of all subsidiary companies, except for those
identified above, is Floor M, 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 2021.
14 Deferred tax
The movement on the deferred tax account for the Group is shown below:
Accelerated Other Tax Total
capital temporary losses £'000
allowances differences £'000
£'000 £'000
Net asset / (liability) at 1 January 2020 626 (368) 716 974
Adjustments in respect of prior periods 66 174 33 273
Recognised in the statement of comprehensive income (9) 180 792 963
Net asset / (liability) at 31 December 2020 683 (14) 1,541 2,210
Adjustments in respect of prior periods (42) (55) (46) (143)
Recognised in the statement of comprehensive income 69 110 (4) 175
Recognised in the statement of changes in equity - 118 - 118
Net asset at 31 December 2021 710 159 1,491 2,360
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.
2021 2020
Group Group
£'000 £'000
Deferred tax assets 2,488 2,449
Deferred tax liabilities (128) (239)
2,360 2,210
At the year end, the Group has unused tax losses of £5,961,000 (2020:
£8,104,000) available for offset against future profits. A deferred tax asset
of £1,491,000 (2020: £1,541,000) has been recognised in respect of
£5,961,000 (2020: £8,104,000) of such tax losses. The Group has concluded
that the deferred tax asset will be recoverable using the estimated future
taxable profit based on the FY22-24 3YP forecast. The Group is expected to
generate taxable profits from 2022 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 £190,000 at 31 December 2021 (2020: £68,000).
Deferred tax assets and liabilities are expected to be materially utilised
after 12 months.
15 Trade and other receivables
Note 2021 2020 2021 2020
Group Group Company Company
£'000 £'000 £'000 £'000
Amounts falling due within one year
Trade receivables 5,475 5,211 - -
Less: expected credit loss 26 (564) (993) - -
Trade receivables - net 4,911 4,218 - -
Receivables from subsidiaries - - - 34,973
Receivable from Employee Benefit Trust - - - 560
Other receivables 92 162 34 77
Prepayments 981 1,240 127 107
Accrued income 75 161 - -
6,059 5,781 161 35,717
2021 2020 2020
Group Group 2021 Company
£'000 £'000 Company £'000
£'000
Amounts falling due after one year
Other receivables 319 515 41 237
Receivable from Employee Benefit Trust - - 1,156 -
319 515 1,197 237
Trade receivables included £114,000 and the expected credit loss included
£114,000 in relation to discontinued operations as at 31 December 2020. No
amounts relate to discontinued operations as at 31 December 2021.
Receivables from subsidiaries are unsecured, have no fixed due date and bear
interest at an annual rate of 3.45% (2020: 2.49%). In preparation for
liquidation of certain Group subsidiaries (see note 13) the Company settled
receivables and payables with these subsidiaries during the year.
The receivable from Employee Benefit Trust is unsecured, has no fixed due date
and does not bear interest.
Other receivables due after one year include £278,000 (2020: £278,000) in
relation to a deposit on the London property lease which is fully refundable
at the end of the lease term.
16 Cash and cash equivalents
2021 2020
Group Group
£'000 £'000
Cash at bank and in hand 13,065 8,300
The Company had no cash and cash equivalents at 31 December 2021 (2020:
£nil).
17 Trade and other payables
2021 2020 2021 2020
Group Group Company Company
£'000 £'000 £'000 £'000
Trade payables 1,070 219 - -
Payables to subsidiaries - - 29,397 60,044
Accruals 8,112 5,652 496 406
Social security and other taxes 886 1,274 - -
Other payables 1,337 1,574 - 7
11,405 8,719 29,893 60,457
Payables to subsidiaries are unsecured, have no fixed date of repayment and
bear interest at an annual rate of 3.45% (2020: 2.49%). In preparation for
liquidation of certain Group subsidiaries (see note 13) the Company settled
receivables and payables with these subsidiaries during the year.
In response to Covid the Government allowed payments of VAT between 20 March
2020 and 30 June 2020 to be deferred. Under this scheme, in prior year, the
Group deferred a total of £1,000,000 VAT payments, which is included in
social security and other taxes above. The Group re-paid the full amount in
instalment payments from March to November 2021.
At 31 December 2020, trade payables and other payables included £61,000 and
£244,000 respectively, relating to discontinued operations. No amounts relate
to discontinued operations as at 31 December 2021.
The Directors consider that the carrying amount of the trade payables
approximates their fair value.
18 Lease liabilities
The lease liability currently held by the Group 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 12.
2021 2020
Group Group
£'000 £'000
At 1 January 3,375 4,260
Remeasurement of lease liabilities 978 1,704
Interest expense 67 124
Cash outflow (2,036) (1,925)
Disposal on exit of lease - (788)
At 31 December 2,384 3,375
Current 1,884 1,969
Non-current 500 1,406
At 31 December 2,384 3,375
The lease liability for the Group's property in London was remeasured during
the year upon reassessment of the lease term, resulting in an increase of
£978,000. The amount of the remeasurement of the lease liability was
recognised as an adjustment to the ROU asset.
During the prior year, the lease liability for the Group's property in London
was remeasured upon reassessment of the lease term and renegotiation of
payment terms due to Covid, resulting in an increase of £1,704,000. The
amount of the remeasurement of the lease liability was recognised as an
adjustment to the ROU asset.
The lease liability for the Group's property in Portsmouth, which was the
office for the MarketMakers' business, was fully released during prior year
upon the cessation of the MarketMakers' telemarketing business.
The gain on disposal of the lease liability was recognised in the consolidated
statement of comprehensive income in the prior year, with £165,000 recognised
in continuing operations for the proportion of the liability related to the
continuing Really B2B business, and £623,000 recognised in discontinued
operations related to the proportion of the liability that related to the
discontinued telemarketing business. The corresponding ROU asset was also
disposed of (see note 12), with the resulting net gain on disposal of
£195,000 being materially offset by the exit penalty incurred.
19 Deferred income
2021 2020
Group Group
£'000 £'000
Deferred income 7,846 7,048
Deferred income arises on contracts with customers where revenue recognition
criteria has not yet been met. See note 1(e) for further details.
20 Current tax assets
2021 2020
Group Group
£'000 £'000
Corporation tax receivables 195 182
The Company had no corporation tax receivables or payables at 31 December 2021
(2020: £nil).
21 Provisions
Group Restructuring Other Total
£'000 £'000 £'000
At 1 January 2020 - 50 50
Additions 1,031 - 1,031
Utilised in the year (1,031) (50) (1,081)
At 31 December 2020 and 31 December 2021 - - -
Restructuring
During the prior year, a restructuring provision of £793,000 was recognised
in relation to restructuring the MarketMakers business following a sharp fall
in revenue as several major customers were hit by disruption in their own
markets. A further £238,000 was provided in relation to restructuring other
parts of the wider Centaur group due to the adverse impact of Covid. The
provision was fully utilised in the second half of 2020. The associated
expense was recognised within exceptional costs and presented as adjusting
items as disclosed within note 4. In 2020, the staff related restructuring
costs in continuing operations was £238,000 and in discontinued operations
was £793,000.
Other
The other provision in the prior year related to the dilapidation provision
which was acquired on the acquisition of MarketMakers in relation to the
building leased by the company in Portsmouth. This provision was utilised
during the prior year as part of the exit of the Portsmouth lease upon
cessation of MarketMakers' telemarketing business. The associated expense was
recognised within discontinued exceptional costs and presented as adjusting
items as disclosed within note 4.
There were no provisions as at 31 December 2021.
22 Equity
Ordinary shares of 10p each Nominal value Number of shares
£'000
Authorised share capital - Group and Company
At 1 January 2020, 31 December 2020 and 31 December 2021 20,000 200,000,000
Issued and fully paid share capital - Group and Company
At 1 January 2020, 31 December 2020 and 31 December 2021 15,141 151,410,226
Deferred shares reserve
The deferred shares reserve represents 800,000 (2020: 800,000) deferred shares
of 10p each, which carry restricted voting rights and have no right to receive
a dividend payment in respect of any financial year.
Reserve for shares to be issued
The reserve for shares to be issued is in respect of equity-settled
share-based compensation plans. The 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.
During the prior year a transfer of £957,000 was made from the reserve to
retained earnings for lapsed share awards relating to the TSR performance
condition of long-term incentive plans.
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 2021, 4,550,179 (2020:
4,550,179) 10p ordinary shares are held in treasury and 2,064,185 (2020:
1,948,492) 10p ordinary shares are held in the Employee Benefit Trust.
The Employee Benefit Trust issued 981,783 (2020: 2,038,736) shares to meet
obligations arising from share-based rewards to employees that had vested and
were exercised in the current year (2020: vested in 2020 and 2019 and were
exercised in 2020). The shares were issued at a historical weighted average
cost of 92.9p (2020: 61.3p) per share. The total cost of £912,000 (2020:
£1,341,000) has been recognised as a reduction in the own shares reserve in
other reserves in equity.
During 2021, the Employee Benefit Trust purchased 1,097,476 (2020: nil)
ordinary shares in order to meet future obligations arising from share-based
rewards to employees. The shares were acquired at an average price of 43.8p
per share, with prices ranging from 39.9p to 50.8p. The total cost of
£481,000 (2020: £nil) has been recognised in the own shares reserve in
equity.
During 2020, 2,414,434 shares were transferred out of treasury to the Employee
Benefit Trust in order to meet future obligations arising from share-based
rewards to employees. The shares were transferred from treasury at the
historical weighted average cost of £2,195,000 (90.9p per share) and acquired
by the Employee Benefit Trust at the market value of £604,000 (25.0p per
share). The difference between the historical weighted average cost and the
market value of £1,591,000 has been eliminated on consolidation.
23 Share-based payments
The Group's share-based payment expense for the year by plan:
2021 2020
£'000 £'000
Long-Term Incentive Plan ('LTIP') 488 537
Share Incentive Plan ('SIP') 7 4
Share-based payment expense 495 541
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 costs which are
settled in cash upon exercise.
Long-Term Incentive Plan
The Group operates a Long-Term Incentive Plan ('LTIP') for Executive Directors
and selected senior management. This is an existing incentive policy and was
approved by shareholders at the 2016 AGM. The share awards are valued at
date of grant and the consolidated statement of comprehensive income is
charged over the vesting period, taking into account the number of shares
expected to vest. Full details 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.
LTIP 2016 LTIP 2016 LTIP 2016 LTIP 2016 LTIP 2016
Grant date 29.04.2021 25.03.2021 30.06.2020 03.10.2019 25.10.2019
Number of awards
Balance at 1 January 2021 - - 2,074,782 995,259 48,050
Granted during the year 1,187,076 1,798,489 - - -
Forfeited during the year (82,025) (161,198) (187,272) - -
Exercised during the year - - - - -
Lapsed during the year - - - - -
Balance at 31 December 2021 1,105,051 1,637,291 1,887,510 995,259 48,050
Exercisable at 31 December 2021 - - - - -
Weighted average share price at date of exercise (p) - - - - -
Balance at 1 January 2020 - - - 995,259 128,133
Granted during the year - - 2,074,782 - -
Forfeited during the year - - - - (80,083)
Exercised during the year - - - - -
Lapsed during the year - - - - -
Balance at 31 December 2020 - - 2,074,782 995,259 48,050
Exercisable at 31 December 2020 - - - - -
Weighted average share price at date of exercise (p) - - - - -
No options expired during the year (2020: nil).
These awards were priced using the following models and inputs:
Grant date 29.04.2021 25.03.2021 30.06.2020 03.10.2019 25.10.2019
Share price at grant date 39.78 39.50 24.00 41.50 32.50
Fair value 29.09 30.10 14.80 22.77 16.25
Vesting date 29.04.2024 25.03.2024 29.06.2023 02.10.2022 05.04.2022
Exercise price (p) £nil £nil £nil £nil £nil
Expected volatility (%) 48.9 48.0 47.0 40.0 -
Expected dividend yield (%) 1.29 1.30 - - -
Risk free interest rate (%) (0.12) (0.07) (0.09) 0.34 -
Valuation of model used Stochastic Stochastic Stochastic Stochastic *
LTIP 2016 LTIP 2016 LTIP 2016 LTIP 2016 LTIP 2016
Grant date 25.07.2019 06.04.2018 06.04.2018 24.04.2017 07.04.2017
Number of awards
Balance at 1 January 2021 2,156,512 1,246,879 981,776 - -
Granted during the year - - - - -
Forfeited during the year (165,598) - - - -
Exercised during the year - - (981,776) - -
Lapsed during the year - (1,246,879) - - -
Balance at 31 December 2021 1,990,914 - - - -
Exercisable at 31 December 2021 - - - - -
Weighted average share price at date of exercise (p) - - 42.01 - -
Balance at 1 January 2020 2,236,640 1,246,879 1,963,191 675,764 381,557
Granted during the year - - - - -
Forfeited during the year (80,128) - - - -
Exercised during the year - - (981,415) (675,764) (381,557)
Lapsed during the year - - - - -
Balance at 31 December 2020 2,156,512 1,246,879 981,776 - -
Exercisable at 31 December 2020 - - - - -
Weighted average share price at date of exercise (p) - - 24.19 25.50 26.65
No options expired during the year (2020: nil).
These awards were priced using the following models and inputs:
Grant date 25.07.2019 6.04.2018 6.04.2018 24.04.2017 07.04.2017
Share price at grant date 46.00 50.20 50.20 45.75 40.75
Fair value 23.00 28.65 25.10 24.46 21.08
Vesting date 05.04.2022 06.04.2021 06.04.2021 24.04.2020 07.04.2020
Exercise price (p) £nil £nil £nil £nil £nil
Expected volatility (%) - 43.5 43.5 45.4 45.4
Expected dividend yield (%) - - 6.47 - -
Risk free interest rate (%) - 0.86 0.86 0.12 0.12
Valuation of model used * Stochastic Black-Scholes Stochastic Stochastic
*Shares granted on 25 October 2019 and 25 July 2019 were nil-cost options with
non-market-based performance conditions. These plans were valued based on the
estimated vesting value of the non-market-based conditions and expected
forfeiture rates
The plans above also include non-market based performance conditions. These
elements of the plans were valued based on the estimated vesting value of the
non-market based conditions and expected forfeiture rates.
The share awards outstanding at 31 December 2021 had a weighted average
exercise price of £nil (2020: £nil) and a weighted remaining life of 1.3
years (2020: 1.3 years).
Senior Executive Long-Term Incentive Plan ('SELTIP')
The Centaur Media Plc 2010 Senior Executive Long-Term Incentive Plan (the
'SELTIP') was introduced during 2011 and was approved by shareholders at the
2010 AGM. This is not an HMRC approved scheme and vests over a three-year
period with service and performance conditions. Awards were granted under this
plan in 2011 for no consideration and no exercise price. This plan is closed
to new awards.
Awards of bonus units were made in 2013 as summarised in the following table:
Financial Threshold PBTA Profit Bonus pool allocated* Number
of shares awarded in
year profit achieved growth SELTIP contribution Total
total**
bonus pool
2013 £8.0m £8.6m £0.6m 30% £0.1m £0.1m 118,851
* The Remuneration Committee did not allocate the entire bonus pool in
2013.
** Awards were only made to participants with continuing employment.
These awards were priced using the following models and inputs:
SELTIP 2013
Grant date 15.09.11
Share price at grant date 33.88
Fair value 23.76
Vesting date 17.09.14
Exercise price (p) £nil
Number of awards
Balance at 1 January 2020, 31 December 2020 and 31 December 2021 6,862
Exercisable at 31 December 2020 and 31 December 2021 6,862
Average share price at date of exercise (p) -
There were no grants, forfeitures, exercises, lapses, or expired options
during the current and prior years.
The share awards outstanding at 31 December 2021 had a weighted average
exercise price of £nil (2020: £nil) and a weighted remaining life of 0.7
years (2020: 1.7 years).
Share Incentive Plan
The Group has a Share Incentive Plan, which 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 3 months. Employees may invest up to £1,800 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.
2021 2020
Number of outstanding matching shares 57,495 58,117
24 Dividends
2021 2020
£'000 £'000
Equity dividends
Final dividend for 2020: 0.5p per 10p ordinary share 726 -
Interim dividend for 2021: 0.5p per 10p ordinary share 724 -
1,450 -
The total dividend pertaining to 2020 was the final dividend for the year
ended 31 December 2020 of £726,000 (0.5p share). This dividend was paid
on 28 May 2021.
An interim dividend for the six months ended 30 June 2021 of £724,000 (0.5p
per ordinary share) was paid on 22 October 2021 to all ordinary shareholders
on the register as at close of business on 8 October 2021.
A final dividend for the year ended 31 December 2021 of £725,000 (0.5p
share) is proposed by the Directors and subject to shareholder approval at the
Annual General Meeting, will be paid on 27 May 2022 to all ordinary
shareholders on the register at the close of business on 13 May 2022.
During the prior year, the Company received a dividend of £40,000,000 from
Centaur Communications Limited. No dividends were received in the current
year.
25 Notes to the cash flow statement
Reconciliation of profit / (loss) for the year to cash generated from
operating activities:
Note 2021 2020 2021 2020
Group Group Company Company
£'000 £'000 £'000 £'000
Profit / (loss) for the year 1,417 (14,428) (2,325) (27,828)
Adjustments for:
Tax 7 (56) (1,232) (512) (433)
Net interest expense 2,6 260 332 1,182 838
Depreciation 12 1,808 2,207 - -
Impairment of property, plant and equipment 12 - - - -
Amortisation of intangible assets 11 2,426 3,780 - -
Impairment of intangible assets 11 80 - - -
Impairment of goodwill 10 - 11,009 - -
Loss on disposal of assets and liabilities 11,12,18 - 731 - -
Loss on impairment of investment 13 - - - 25,393
Share-based payment charge 5,23 495 541 325 (15)
Dividends waived 2 - 2 -
Dividends received from subsidiaries 24 - - - 40,000
Unrealised foreign exchange differences (65) 83 - -
Changes in working capital:
(Increase) / decrease in trade and other receivables (259) 4,445 34,359 (34,050)
Increase / (decrease) in trade and other payables 2,615 (3,732) (31,389) (3,750)
Increase / (decrease) in deferred income 798 (1,671) - -
Cash generated from operating activities 9,521 2,065 1,642 155
Reconciliation of movements of liabilities and associated assets to cash flows arising from financing activities:
Note Group and Company Group
Net borrowings Lease liabilities
£'000 £'000
At 1 January 2020 (132) 4,260
Changes from financing cash flows:
Loan arrangement fee (25) -
Interest paid (130) -
Repayment of obligations under finance leases 18 - (1,925)
(155) (1,925)
Other changes:
Interest expense 6 215 124
Remeasurement of lease liabilities 18 - 1,704
Disposal on exit of lease 18 - (788)
215 1,040
Balance at 31 December 2020 (72) 3,375
Changes from financing cash flows:
Loan arrangement fees (107) -
Interest paid (87) -
Repayment of obligations under finance leases 18 - (2,036)
(194) (2,036)
Other changes:
Interest expense 6 194 67
Remeasurement of lease liabilities 18 - 978
194 1,045
Balance at 31 December 2021 (72) 2,384
Net borrowings is comprised of a loan arrangement fee debtor of £75,000
(2020: £79,000) presented within other receivables on the statement of
financial position and a commitment fee creditor of £3,000 presented as bank
and other borrowings on the statement of financial position (2020: £7,000).
The movements of this asset and liability together give rise to cash flows
from financing activities relating to the £25m revolving credit facility.
26 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.
Note 2021 2020
£'000 £'000
Financial assets
Cash and bank balances 16 13,065 8,300
Trade receivables - net 15 4,911 4,218
Other receivables 15 411 677
18,387 13,195
Financial liabilities
Lease liabilities 18 2,384 3,375
Trade payables 17 1,070 219
Accruals 17 8,112 5,652
Provisions 21 - -
Other payables 17 1,337 1,574
12,903 10,820
Credit risk
The Group's principal financial assets are trade and other receivables (note 15). 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 past due are reviewed with those greater than
90 days past due considered to carry a higher level of credit risk. Refer to
note 1(s) for further details on the approach to allowance for expected credit
losses on trade receivables.
The allowance for expected 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:
2021 2021 2020 2020
Gross Provision Gross Provision
£'000 £'000 £'000 £'000
Not due 3,488 (43) 3,265 (76)
0-30 days past due 972 (25) 598 (26)
31-60 days past due 161 (9) 140 (10)
61-90 days past due 146 (16) 167 (39)
Over 90 days past due 708 (471) 1,041 (842)
5,475 (564) 5,211 (993)
Trade receivables that are less than 3 months past due are generally not
considered to be impaired, except where specific credit issues or delinquency
in payments have been identified. 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 yet due nor impaired has been assessed as
acceptable.
The movement in the allowance for expected credit losses on trade receivables
is detailed below:
2021 2021 2021 2020 2020 2020
Continuing Discontinued Total Continuing Discontinued Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 879 114 993 729 378 1,107
Utilised (276) (114) (390) (134) (24) (158)
Additional provision charged to the statement of comprehensive income - - - 255 - 255
Release (39) - (39) - (241) (241)
Written back - - - 29 1 30
Balance at 31 December 564 - 564 879 114 993
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 remaining provision in prior year of £114,000 for discontinued operations
related to MarketMakers trade debtors which was fully provided for as at 31
December 2020. This was fully utilised in the current year.
The Directors consider the carrying value of trade and other receivables
approximates to their fair value.
Cash and cash equivalents
Banks and financial institutions are independently rated by credit rating
agencies. We choose only to deal with those with a minimum 'A' rating. We
determine the credit quality for cash and cash equivalents to be strong.
Other receivables
Other receivables are neither past due nor impaired. These are primarily made
up of sundry receivables, including employee-related debtors and receivables
in respect of distribution arrangements.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group manages liquidity risk by
maintaining adequate reserves and working capital credit facilities, and by
continuously monitoring forecast and actual cash flows. In March 2021, the
Group terminated its existing £25m multi-currency revolving credit facility
with NatWest and Lloyds which was due to run to November 2021. It has been
replaced by a new multi-currency revolving credit facility with NatWest which
runs to March 2024 with the option to extend for two periods of one year each.
The new facility consists of a £10m committed facility and an additional
£15m uncommitted accordion option, both of which can be used to cover the
Group's working capital and general corporate needs. As at 31 December 2021,
the Group had cash of £13,065,000 (2020: £8,300,000) with a full undrawn
loan facility of £25m (2020: full undrawn loan facility of £25m).
The following tables detail the financial maturity for the Group's financial
liabilities:
Book value Fair value Less than 2-5 years
£'000 £'000 1 year £'000
£'000
At 31 December 2021
Financial liabilities
Interest bearing 2,384 2,384 1,884 500
Non-interest bearing 10,519 10,519 10,519 -
12,903 12,903 12,403 500
At 31 December 2020
Financial liabilities
Interest bearing 3,375 3,375 1,969 1,406
Non-interest bearing 7,445 7,445 7,445 -
10,820 10,820 9,414 1,406
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 bank balances Lease liabilities
Level 3 Trade payables
Trade receivables - net Accruals
Other receivables Provisions
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 2021 was £nil (2020: £nil).
All trade and other payables are due for payment in one year or less, or on
demand.
Interest rate risk
The Group has no significant interest-bearing assets but is exposed to interest rate risk when it borrows funds at floating interest rates through its revolving credit facility. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group evaluates its risk appetite towards interest rate risks regularly 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 2021 the only floating rate to which the Group was exposed was LIBOR. The Group's exposure to interest rates on financial assets and financial liabilities is detailed in the liquidity risk section of this note.
Interest rate sensitivity
The Group has 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 stakeholders,
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 16), and equity attributable to the owners of the
parent, comprising issued share capital (note 22), 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.
For the whole of 2020, the Group benefited from its banking facilities,
renewed in November 2019 which ran until November 2021 with an option to
extend for a further two periods of one year each. Interest was calculated on
LIBOR plus a margin dependent on the Group's net leverage position, which was
re-measured quarterly in line with covenant testing. The Group's borrowings
were subject to financial covenants tested quarterly. The principal financial
covenants under the facility were the ratio of net debt to Adjusted EBITDA
(see note 1(b) for explanation and reconciliation of Adjusted EBITDA) would
not exceed 2.5:1 and the ratio of EBITDA to net finance charges would not be
less than 4:1. In July 2020, the Group agreed with the banks to waive leverage
and interest cover covenants up to, and including, the testing periods to 30
September 2021. This was subject to minimum liquidity tests which were
reported monthly. At no point during the prior year did the Group breach its
covenants or its minimum liquidity tests.
From March 2021, the Group benefited from a new banking facility with NatWest,
which featured a committed £10m facility and an additional uncommitted £15m
accordion option, both of which can be used to cover the Group's working
capital and general corporate needs. The facility is available until March
2024 with an option to extend for a further two periods of one year each.
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 Adjusted EBITDA (see note 1(b) for explanation and
reconciliation of Adjusted EBITDA) shall not exceed 2.5:1 and the ratio of
EBITDA to net finance charges shall not be less than 4:1. At no point during
the 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.
27 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 £76,000 (2020: £77,000) payable in respect of the
money purchase pension schemes.
28 Capital commitments
At 31 December 2021, the Group had no capital commitments (2020: £nil).
29 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 during the year.
i) Interest
During the year, interest was recharged from subsidiary companies as follows:
2021 2020
£'000 £'000
Net interest payable 988 623
There were no borrowings at the year end.
The balances outstanding with subsidiary companies are disclosed in notes 15
and 17.
ii) Dividends
During the prior year, the Company received a dividend of £40,000,000 from
its subsidiary, Centaur Communications Limited. No dividends were received in
the current year.
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 2021, 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.
Name Company number Outstanding liabilities
£'000
Centaur Communications Limited 01595235 21,530
Chiron Communications Limited 01081808 -
E-consultancy.com Limited 04047149 2
Market Makers Incorporated Limited 05063707 -
Pro-Talk Limited 03939119 -
Taxbriefs Holdings Limited 03572069 -
Taxbriefs Limited 01247331 -
TheLawyer.com Limited 11491880 2,101
Xeim Limited 05243851 11,117
See note 13 for changes to subsidiary holdings during the year.
30 Events after the reporting date
No material events have occurred after the reporting date.
FIVE YEAR RECORD (UNAUDITED)
2017* 2018* 2020 2021
2019
Revenue (£m) 64.7 50.3 39.6 32.4 39.1
Operating (loss) / profit (£m) (0.3) (20.3) (7.8) (2.3) 1.6
Adjusted operating profit / (loss) (£m) 4.1 (2.2) (1.2) - 3.2
Adjusted operating profit / (loss) margin 6% (4%) (3%) - 8%
(Loss) / profit before tax (£m) (0.7) (20.5) (8.1) (2.6) 1.4
Adjusted profit / (loss) before tax (£m) 3.7 (2.4) (1.5) (0.3) 3.0
Adjusted diluted EPS (pence) 1.8 (1.4) 0.3 0.3 1.9
Ordinary dividend per share (pence) 3.0 3.0 1.5 0.5 1.0
Net operating cash flow (£m) 12.1 5.6 4.7 2.1 9.5
Average permanent headcount (FTE) 589 758 317 282 264
Revenue per head (£'000) 110 66 125 115 148
Revenue by type 2017* 2018* 2019 2020 2021
£m £m £m £m £m
Premium Content 19.1 14.4 14.4 13.2 12.9
Marketing Services 1.9 4.5 4.3 2.9 3.3
Training and Advisory 8.0 8.0 7.6 8.5 12.6
Events 18.7 6.5 6.4 2.5 3.8
Marketing Solutions 9.3 4.6 4.6 4.2 5.0
Recruitment Advertising 3.5 2.7 2.3 1.1 1.5
Telemarketing Services 4.2 9.6 - - -
64.7 50.3 39.6 32.4 39.1
Other 2017* 2018* 2019 2020 2021
£m £m £m £m £m
Goodwill and other intangible assets 94.2 78.1 61.2 46.1 44.2
Other assets and liabilities (13.4) (11.5) (9.4) (7.2) (10.2)
Net assets before net cash 80.8 66.6 51.8 38.9 34.0
Net cash 4.1 0.1 9.3 8.3 13.1
Total equity 84.9 66.7 61.1 47.2 47.1
* 2017-2018 have not been re-presented with regards to discontinued operations
relating to the cessation of the MarketMakers telemarketing business in 2020.
Marketing and Advertising Solutions revenue was split into Marketing Solutions
and Recruitment Advertising in the prior year.
Directors, Advisers and Other Corporate Information
Company registration number
04948078
Incorporated / domiciled in
England and Wales
Registered office
Floor M
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
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
1 Adjusted EBITDA is adjusted operating profit before depreciation and
amortisation. Adjusted results exclude adjusting items detailed in note 4 of
the financial information.
(2) Cash conversion is adjusted operating cash flows (excluding one-off
significant cash flows) divided by adjusted EBITDA.
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