Year end results

RNS Number : 7842N

Centaur Media PLC

12 September 2013

 



12 September 2013

Centaur Media plc

Year end results

Centaur Media plc (LSE: CAU), the business information, events and marketing services group, has published its full year results for the year to 30 June 2013.

Financial highlights

·      Adjusted EBITDA up 10% to £12.9m (2012: £11.7m)

·      Adjusted profit before tax up 8% to £8.6m (2012: £8.0m)

·      Reported loss before tax of £37.4m (2012: profit £2.7m) includes a non-cash impairment charge of £39.2m (2012: £nil)

·      Adjusted basic EPS up 7% to 4.5p (2012: 4.2p) with a proposed full year dividend of 2.4p (up 7%)

·      Cash conversion remains strong at 112% (2012: 120%)

Operational highlights

·      Revenue mix continues to improve

o  Digital contribution increased to 35%, paid-for content 28% and events 36%

o  Advertising revenues reduced as planned to 35% of total revenues

·      Refocus around market segments driving greater focus on delivery of revenue and cost synergies

·      Acquisition of Econsultancy completed in July 2012 and integration accelerating

	Year to 30		Year to 30		Reported		Underlying
	June 2013		June 2012		Growth		Growth 3
Revenue (£m)	72.0		65.6		10%		(3%)
Adjusted EBITDA (£m) 1	12.9		11.7		10%		(2%)
Adjusted EBITDA margin	18%		18%
Adjusted profit before tax (£m) 1	8.6		8.0		8%
(Loss)/profit before tax (£m) 4	(37.4)		2.7
Basic (LPS)/EPS (pence)	(27.3)		0.9
Adjusted basic EPS (pence) 1	4.5		4.2		7%
Dividend per share (pence)	2.4		2.25		7%
Operating cash flow	9.6		10.3		(7%)
Cash conversion 2	112%		120%

1.      Adjusted results exclude adjusting items as detailed in the Basis of Preparation section of the Statement of Accounting Policies.

2.      Cash conversion rate is operating cash flow expressed as a percentage of adjusted operating profit.  Adjusted operating profit is as calculated in the Basis of Preparation section of the Statement of Accounting Policies and operating cash flow is as calculated in the Financial Review.

3.      Underlying growth rates adjust for the impact of acquisitions, disposals and discontinued activities by excluding them from both the reported 2013 and 2012 results.

4.      Reported loss before tax of £37.4m (2012: profit of £2.7m) includes a non-cash impairment charge of £39.2m (2012: £nil).

Mark Kerswell, Interim Chief Executive, commented:

"We have continued to improve our revenue and earnings profile as well as accelerate the delivery of our strategic objectives.

"We now have a sharper focus on markets and customers and a strong pipeline of new digital platforms and event launches. We are better placed to exploit fully the numerous opportunities across the Group.

"Our digital, subscription and events businesses are growing well, whilst our print, advertising funded businesses are stable.  With deferred revenues up 27%, the outlook for 2014 is positive."

Contacts

Centaur Media plc	[phone]
Mark Kerswell, Interim Chief Executive Officer
Peter Harris, Interim Group Finance Director
College Hill	[phone]
Adrian Duffield / Kay Larsen

Overview

The Group reported results that show good profit growth, albeit at a slower rate than initially anticipated, in what have remained challenging economic conditions. Trading was stable in the last two months of the 2013 financial year. This reflects improved conditions across those markets that proved volatile for much of 2013, but also a sharper focus across the Group and with much greater emphasis on the speed of change and delivery of results.

Adjusted EBITDA increased by 10% to £12.9m (2012: £11.7m). Adjusted profit before tax increased by 8% to £8.6m (2011: £8.0m) with adjusted EPS up 7% to 4.5p (2012: 4.2p). The Board is recommending a final dividend of 1.575p per share, giving a full year dividend of 2.4p (2012: 2.25p). The 7% increase in the full year dividend reflects the Board's confidence in the future prospects of the Group.

While Centaur has made significant progress in re-engineering the business over the last two years, the management changes made in May 2013 reflect the need to accelerate the Group's delivery of the strategic objectives. These strategic objectives are to build market-leading positions in selected high growth markets, to improve the quality of the revenue streams by growing revenues from digital, paid-for content and events, and to leverage scale to deliver sustainable growth in adjusted EBITDA margins and cash flow.

The refocus around four market segments - Marketing, Professional, Financial and Consumer - will facilitate effective delivery and execution of revenue and cost synergies, strengthen further initiatives to increase the proportion of revenues generated from digital, paid-for content and events, and allow the business to exploit fully the opportunities presented by the five acquisitions completed since July 2011.

The Group has also further strengthened the efficiency and scalability of its central departments and made significant back office investment. This combined with a new focus on the Group's markets and customers will provide for an enhanced ability to realise synergistic opportunities on a more flexible cost base. 

The process to appoint a Chief Executive Officer is continuing and the Board anticipates making an announcement in due course.

Current trading and outlook

The trading momentum across the Group in the latter part of the 2013 financial year has continued into 2014. With a sharper focus on markets and customers, opportunities to scale the business more effectively, and a strong pipeline of new digital platforms and event launches, Centaur is better placed to exploit fully the numerous opportunities across the Group.

The Group ended the year with an improved revenue and earnings profile and with further opportunity to build a more scalable and flexible cost base.  The digital, subscription and events businesses are growing well, whilst the print, advertising funded businesses are stable.  With deferred revenues up 27%, the outlook for 2014 is positive.

The Board's primary focus is on leveraging Centaur's brands and refocused organisation, and accelerating organic and new product growth.

Strategic overview

Centaur is an integrated, multi-platform business media group, providing business information, events and marketing solutions to selected professional and commercial markets.

The Group's strategic objectives are:

·    To build market-leading positions in selected high growth markets, each underpinned by a deep and unrivalled understanding of the markets and customers that we serve.

·    To improve the quality of Group revenues and earnings by increasing the proportion of revenues generated from digital, paid-for content and events.

·    To leverage scale and to drive operational excellence across the Group to deliver sustainable growth in adjusted EBITDA margins and cash flow.

Financial targets

In October 2011, the Group announced headline target measures for the three financial years to 30 June 2014.  These were to double revenues, double the digital share of total revenues to at least 50% and double adjusted EBITDA margins to at least 25%.

In the year to 30 June 2013, digital revenues accounted for 35% of total revenues, EBITDA margins were 18% and revenues were 24% ahead of their 2011 underlying base. The progress in achieving the targets set out in 2011 has been primarily held back by weaker underlying revenue growth in the two financial years to 30 June 2013.

The Group remains focused on increasing its digital share of total revenues and adjusted EBITDA margins, but anticipates replacing in due course the underlying revenues objective with more appropriate targets.

Market and segment focus

To accelerate the delivery against its strategic objectives, Centaur has refocused its business around four market segments: Marketing, Professional, Financial and Consumer. By focusing on markets, customers and audiences the Group is:

·    Ensuring that Centaur is an essential part of the markets it operates in with a clearly defined value proposition that creates competitive advantage for customers and audiences.

·    Improving collaboration and integration across the business. As a result, the Group is:

o  Strengthening initiatives to increase the proportion of revenues generated from digital, paid-for content and events. Advertising revenues will see their relative importance diminish over time.

o  Facilitating greater focus on the delivery and execution of revenue and cost synergies and accelerating the pace of change across the Group, leveraging the asset base and skill set across the entire business.

o  Allowing the business to fully exploit the opportunities presented by the five acquisitions completed since July 2011.

Market segments

As announced in May 2013, the Group is now reporting its results across four market segments, which comprise the following activities and brands:

Marketing

·    The digital, print and events activities across the established B2B brands - Marketing Week, Creative Review, and Design Week.

·    Marketing Week Live, the flagship exhibition serving the European marketing community.

·    The Profile Group, a digital information business which provides forward planning and contact information to the marketing, media and PR communities.

·    Econsultancy, a digital information and events business which is building a leading position in the market for digital marketing and e-commerce.

Professional

·    The digital, print and events activities across the established B2B brands serving the legal, HR and Engineering communities - The Lawyer, Employee Benefits and The Engineer.

·    Perfect Information, a digital information and work flow business serving the global corporate advisory sector.

·    VB Research, a digital information business serving investment communities across the global renewable energy and security markets.

·    FEM, an information and events business serving HR professionals across the global mobility market.

·    A portfolio of B2B exhibitions serving the Meetings, Business Travel, Engineering and Humanitarian sectors - The Meetings Show, Business Travel Show, Subcon andAidex.

Financial

·    The digital, print and events activities across the established B2B brands serving the financial services industry - Money Marketing, Mortgage Strategy, Fund Strategy and Corporate Advisor.

·    Taxbriefs, a leading provider of specialist content to the financial services industry.

·    Headline Money, a digital information business serving journalists across the UK financial services sector.

·    The Platforum, a specialist information business in the retail financial services sector.

Consumer

·    The digital, print and events activities across the established UK focused self-build, renovation, home improvement and period homes markets - Homebuilding and Renovating, The National and Regional Home Building and Renovating exhibitions, Real Homes, Period Living and The National Home Improvement Show.

Alongside the refocus of the business around its markets and customers, the Group is also:

·    Building a stronger digital culture through investment in digital development capability across the Group as a whole rather than across individual divisions.

·    Investing in core audience and customer data and technology platforms.

·    Investing in people to develop and align core skills and capabilities across the business, specifically related to digital development, sales and marketing.

·    Building a high performance culture with improved reward mechanisms that better align to stretching performance goals.

·    Accelerating opportunities to build paid-for content subscription solutions across those parts of the business that have traditionally been primarily advertising funded.

·    Applying more rigour around investment in new product development and the allocation of capital and management time across the Group as a whole, rather than across individual divisions.

·   Consolidating all London-based operations in one office. While this will not be complete until 2014, we have agreed to co-locate Econsultancy alongside other marketing portfolio assets based at Centaur's Wells Street offices by December 2013. This will allow the Group to exploit revenue synergies and shared capabilities more effectively across the Marketing portfolio.

·    Accelerating the integration of recent acquisitions to scale the business more effectively and to leverage the operational and technology capabilities and entrepreneurial flair inherited with many of these acquisitions.

Financial year end

The Board has considered carefully the impact of the material weighting of the Group's trading to the fourth quarter of its present financial year. Given the limited levels of visibility across some parts of the business, and the consequential impact on expectations around full year numbers, the Board has decided to align the Group's financial year end with the majority of its peers, and move the financial year end to December.

Operational review

The events and subscription-based businesses have delivered strong growth in 2013, and are well positioned to accelerate growth into 2014. The exhibitions portfolio has grown revenues by 11%, which is an excellent performance relative to its UK peers, and reflects the focus on optimising the existing portfolio and driving a healthy pipeline of new event launches.

The subscription-based businesses have also shown strong momentum, with Profile and Econsultancy both delivering growth in annualised invoiced subscription revenues in excess of 25%, which positions both businesses exceptionally well as we head into the new financial year.

The other recent acquisitions, FEM and The Platforum, have also had strong years and are well positioned to deliver good growth into 2014. VB Research is also growing well and the Group anticipates this accelerating into 2014, particularly as it starts to realise benefits from closer collaboration with other businesses operating in the same professional markets.

Underlying revenues did not, however, return to growth as had been anticipated in February 2013. The key factors impacting underlying and reported performance in the latter part of the year were the continued weakness in print advertising, most notably across the financial titles, further declines in recruitment revenues, and losses incurred across overseas operations.

While the impact of these factors has been partially offset by the effect of prior year cost savings and growth across other parts of the Group, this revenue weakness has had a material impact on full year earnings. Underlying digital revenues in 2013 were flat, reflecting expected weakness in Perfect Information and weaker digital advertising revenues, principally across the Financial portfolio.

A key focus across the Group is shifting the emphasis of its revenue mix in favour of digital, paid-for content and events. Print and advertising revenues still have an important role to play, but their relative importance across the Group is diminishing as planned.

Advertising revenues now account for 35% of total revenues (2012: 43%), with recruitment revenues accounting for only 8% of total revenues (2012: 11%). Paid-for content and events revenues now account for 29% and 36% respectively of total revenues (2012: 25% and 31%). Digital revenues accounted for 35% of total 2013 revenues (2012: 30%), with print revenues now accounting for only 28% of total revenues (2012: 38%).

The continued shift in revenue mix reflects the significant underlying drop in print advertising revenues across the established financial and marketing titles, but also the impact of recent acquisitions, all of which are focused predominantly on digital, paid-for content and events.

The Group has continued to manage its cost base rigorously, but the impact of the weaker print and advertising revenues means that EBITDA margins remain at 18%, with adjusted EBITDA of £12.9m (2012: £11.7m) growing by 10%. With greater focus on operational excellence across the Group as a whole, the Board believes that EBITDA margins in excess of 25% are achievable in the medium term.

As a result of the weakness in print advertising revenues across Centaur and a reduction in performance from overseas locations, the Group has recognised a non-cash impairment of £39.2m (2012: £nil) against goodwill.

Marketing

The Marketing division brings together all of the established and recently acquired businesses that serve the Marketing industry, including Marketing Week, Creative Review, Design Week, Profile and Econsultancy. The benefits of the recent refocus on the markets served are expected to be most keenly felt across this division.

The consolidation of these businesses, also under one roof, will create a far stronger proposition to the market, and create further opportunities to leverage the technology and business models across the combined portfolio.

The 59% increase in reported revenues reflects the impact of full year contributions from Profile and Econsultancy, acquired in February 2011 and July 2012 respectively. Underlying revenues declined by 11%, predominantly reflecting weakness in print advertising revenues across Marketing Week and Creative Review. Digital advertising revenues across these titles were flat year on year.

The division continues to generate revenues from digital, events and print in line with the Group strategy, with digital revenues increasing to 44% (2012: 35%), events increasing to 39% (2012: 33%) and print decreasing to 16% (2012: 33%) of divisional revenues. Advertising revenues across this division now account for 33% of divisional revenues (2012: 48%), with paid-for content revenues accounting for 28% (2012: 20%).

Events revenues include Marketing Week Live, the Marketing Week Engage Awards, The Digitals and Econsultancy's events portfolio and corporate training activities in the UK and overseas.

Econsultancy's 2013 results have been significantly impacted by losses incurred across their international offices, primarily related to the deferral of corporate training engagements. Action has already been taken to mitigate these losses in 2014, with the closure of the Australian office and headcount reductions across the New York and Singapore offices. Econsultancy's UK office has reported good growth in both revenues and adjusted EBITDA, and the invoiced subscription revenues across Econsultancy's digital subscription products have grown by 22% year on year.

Econsultancy is launching the Festival of Marketing in October 2013, effectively repositioning its existing UK events and leveraging the brand strength and relationships across all the Marketing division products. Forward bookings for this event are encouraging, with revenues at over 90% of target at the end of August 2013.

Profile has continued to report strong growth in its digital, subscription-based revenues. Invoiced subscription revenues at 30 June were 32% ahead of the same period last year, with renewal rates, yields and volumes all growing well. Profile has recently established a presence in North America and is launching its new Celebrity Intelligence product in September 2013. The growth prospects across the business are exciting, as are the opportunities to leverage the digital expertise within Profile across other parts of the Group.

Adjusted EBITDA margins across the Marketing segment fell from 19% to 15%, reflecting the impact of Econsultancy's overseas operations, investment in digital subscription products and weaker advertising revenues across the established B2B titles.

Deferred revenues across the Marketing segment are up 125% compared to the same period last year. Forward bookings across the print and digital B2B publications are also up 8% compared to last year, and the trends that the Group is seeing across these titles are encouraging.

The outlook for this division is increasingly positive - a sharper focus on customers and audience, and greater opportunity to leverage digital, paid-for content opportunities across the division, gives the Board greater confidence for the new financial year.

Professional

The Professional division consists of a range of brands, including strong traditional print titles, industry-leading exhibitions and recently acquired integrated digital solutions.  The exhibitions in this division, including The Business Travel Show, SubCon, Employee Benefits Live and Aidex, performed strongly with a 30% rise in revenues to £2.9m (2012: £2.2m).

Digital revenues have increased to 44% (2012: 42%), events have increased to 35% (2012: 29%) and print has decreased to 20% (2012: 27%) of divisional revenues. The division is less dependent on advertising revenues that now account for 33% of divisional revenues (2012: 41%), with paid-for content revenues accounting for 31% (2012: 28%).

The Lawyer has performed well with revenues decreasing by only 3% in 2013 despite a challenging sector-specific environment. There are significant opportunities to partner with the other professional community brands, Perfect Information and VBR. By leveraging these strong brands we believe the market share of existing products can be expanded more easily.  The Board also sees significant opportunities to build paid-for content revenues across The Lawyer.

The HR portfolio, consisting of Employee Benefits and FEM, performed well producing an 18% rise in revenues, with the Employee Benefits Live exhibition producing a 21% rise in revenues, and FEM growing its revenues by 50%, the latter benefiting from a strong position in the global HR mobility community.

Perfect Information has performed in line with expectations in 2013, and is now leveraging its quality product offerings on a global scale. To meet the needs of its large and diverse global audience of investment banks, corporate law firms and other corporate finance professionals, Perfect Information is launching a brand new product, Filings Expert, which gives subscribers access to 10 years' worth of content (c15 million documents) through an intuitive and easy-to-use interface.  Perfect Information is also now seeking to expand its content and customer base in Asia, and has recently established a presence in Hong Kong.

Also contributing to digital revenue growth was VB Research, acquired in 2011, which grew revenues by 96% to £0.7m.

Deferred revenues across the Professional division are up 12% compared to the same period last year, reflecting increases related to The Lawyer and The Meeting Show.

Financial

The Financial division comprises the leading brands, Money Marketing, Fund Strategy, Mortgage Strategy, Corporate Advisor, Tax Briefs and Headline Money, together with the recent acquisition, The Platforum, all closely serving the financial services community.

Advertising revenues across the print titles in this division fell by 33% in 2013, reflecting the uncertainty caused by the introduction of the Retail Distribution Review (RDR) in January 2013. This is the principal reason for the 15% reduction in underlying revenues across this division. Digital advertising revenues were also impacted by RDR and general market weakness, and fell by 9% in 2013. The Platforum has continued to grow well, with revenues 38% ahead of the prior year.

The Financial division is the most print and advertising dependent part of the Group, with 53% (2012: 58%) of its revenues delivered in print format and 48% (2012; 54%) advertising-funded. Digital and events revenues accounted for 23% and 24% (2012: 20% and 22%) of total divisional revenues.

Events products include the Money Marketing Awards, Headline Money Awards and a series of summit events.

Adjusted EBITDA margins fell from 19% in 2012 to 17% in 2013, reflecting the fixed cost base associated with the reduction in print-based advertising revenues.

Forward bookings across the financial division are 31% up compared to the same period last year, and the declines in print advertising revenues seen throughout 2013 are showing greater signs of stability. In addition, deferred revenues are 10% ahead of the prior year with a strong contribution from The Platforum. While starting from a significantly lower base, the outlook for the 2014 financial year is encouraging.

Consumer

This division comprises exhibitions and publishing assets devoted to the consumer customer base.  Leading brands include the Homebuilding and Renovating portfolio and the National Home Improvement Show.

A strong performance in 2013 has seen growth in both revenues (5%) and adjusted EBITDA margin (15% to 16%), principally driven from growth in event and digital revenues. The publishing assets within this division delivered another resilient performance against difficult market conditions, with continued improvement in margin. 

Due to the significant events and print-based composition of this division (approximately 45% of division revenues arising from each in 2013 and 2012) there has been no significant movement in the revenue type or source.

Strategic plans and initial investment has been made in developing digital opportunities across the publishing assets, creating further routes to market and potential for greater market share. Digital advertising revenues have risen 29% in 2013 reflecting the initial impact of these projects in the latter half of the year, and providing for enhanced future prospects.

New product development

Recent launch activity across the Exhibitions portfolio includes Aidex, Hospitality Technology, Advanced Manufacturing Show and Live Marketing. The Group has an exciting pipeline of new digital and events-focused activity, with The Meetings Show running for the first time in July 2013 and the Festival of Marketing running in October 2013. Centaur is also about to launch new or refreshed digital subscription products, including Celebrity Intelligence (The Profile Group) and Filings Expert (Perfect Information).

Across Centaur's business information products, the Group has recently created a centre of excellence in digital product development in business information, which has conceived, designed and built a number of exciting new web-based products and is now looking to scale this capability to benefit other parts of the Group.

Acquisition

The Group completed the acquisition of Econsultancy in July 2012. Econsultancy is a digital information and events business which occupies a leading position in the global market for digital marketing and e-commerce.  It now forms an integral part of the Marketing portfolio where Centaur sees the opportunity for significant cross-selling and marketing synergies.  The business is also well positioned to deliver substantial revenues from paid-for content solutions in this fast growing international market.

2014 priorities

Looking ahead to 2014, the future business model and the accelerated delivery against the strategic objectives are dependent upon:

·    A deep engagement across the markets that the Group serves, its audiences and customers.

·    A rigorous focus on data and the insights and intelligence that Centaur can draw upon as a result of its market knowledge and experience.

·    Operational excellence - leveraging digital, technology and sales capability in a straightforward, disciplined and scalable fashion, and ensuring the business is operated as efficiently as possible.

·    Embedding a performance culture and developing the people capabilities for the future.

Financial Review

Highlights

In 2013 the Group increased its reported revenue by 10%. Adjusted EBITDA increased by 10% to £12.9m (2012: £11.7m), with adjusted EBITDA margins maintained at 18%. Adjusted profit before tax increased by 8% and adjusted earnings per share grew by 7%. The total proposed dividend for the year of 2.4p (2012: 2.25p) is up by 7%.

The Group has recently announced a refocusing of the business around its key customer-facing markets: Marketing, Professional, Financial, and Consumer, and the segmental results are presented accordingly.

Restructuring activities have continued into 2013, producing more efficient and scalable central departments.

Furthermore, strong attention to cash management has ensured the Group's target of a net debt to EBITDA ratio below 2 times has been maintained.

As a result of the weakness in print advertising revenues across the Group and a reduction in performance from overseas locations, the Group has recognised a non-cash impairment of £39.2m (2012: £nil).

Segmental reporting

Set out below is revenue and adjusted EBITDA by division, together with the respective reported and underlying growth rates.

	2013	2012	Reported Growth	Underlying Growth²
	£m	£m	%	%
Marketing
Revenue	23.8	15.0	59%	(11%)
Adjusted EBITDA¹	3.6	2.9	24%	(29%)
Adjusted EBITDA margin	15%	19%
Professional
Revenue	24.1	24.7	(2%)	5%
Adjusted EBITDA¹	5.4	4.3	26%	31%
Adjusted EBITDA margin	22%	17%
Financial
Revenue	13.3	15.6	(15%)	(15%)
Adjusted EBITDA¹	2.2	3.0	(27%)	(27%)
Adjusted EBITDA margin	17%	19%
Consumer
Revenue	10.8	10.3	5%	5%
Adjusted EBITDA¹	1.7	1.5	13%	13%
Adjusted EBITDA margin	16%	15%
Total
Revenue	72.0	65.6	10%	(3%)
Adjusted EBITDA¹	12.9	11.7	10%	(2%)
Adjusted EBITDA margin	18%	18%

1. Adjusted results exclude adjusting items as detailed in the Basis of Preparation section of the Statement of Accounting Policies.

2. Underlying growth rates adjust for the impact of acquisitions, disposals and discontinued activities by excluding them from both the reported 2012 and 2013 results.

Revenue

Total Group revenues grew by 10% to £72.0m (2012: £65.6m).

Underlying revenue declined by 3%, with print revenues declining by 14%, digital revenues flat and events revenues up 7%. The balance of reported revenues has improved in 2013 with digital revenues increasing to 35% (2012: 30%), events revenues increasing to 36% (2012: 31%) and print falling to 28% (2012: 38%) of total revenues.

By source, advertising revenues accounted for 35% of total revenues (2012: 43%) and paid-for content 28% (2012: 25%).

The Marketing division's revenues were £23.8m, 59% higher than the £15.0m reported in 2012. The acquisition of Econsultancy contributed £9.3m of revenue, offset by declines in other Marketing assets, including Marketing Week and Creative Review. Digital revenues in this division increased to 44% (2012: 35%) with print decreasing to 16% (2012: 33%). By source, advertising revenue accounted for 33% (2012: 48%) and paid-for content 28% (2012: 20%).

The Professional division reported revenues of £24.1m (2012: £24.7m), which was 5% up on an underlying basis. The exhibitions in this division, including SubCon and Aidex, performed strongly with a 30% (£0.7m) rise in revenues. VB Research, acquired in 2011, grew revenues by 96% to £0.7m.

The Financial division saw a 15% decline in revenues, on both a reported and underlying basis, to £13.3m (2012: £15.6m), principally as a result of declines in print and advertising revenues, which account for 53% (2012: 58%) and 48% (2012: 54%) of revenues respectively.  Digital revenues in this division were 23% of total revenues, up from 20% in 2012.

Consumer revenues of £10.8m were 5% up on a reported basis on 2012 (£10.3m), with growth arising from events, including the National Home Improvement Show and the National Homebuilding Shows and digital products. 

Revenue per employee has remained constant at £122,000 in 2013 compared to 2012. Whilst revenue has risen by 10%, the acquisition of Econsultancy has added incremental headcount and the effects of the restructuring activities have not yet been translated into average headcount reductions as these activities were completed during the year.

Adjusted EBITDA and adjusted operating profit

Adjusted EBITDA of £12.9m was 10% up on the £11.7m reported in 2012. Adjusted EBITDA margins remained flat at 18%.

Net adjusted operating expenses rose £5.2m to £62.2m (2012: £57.0m), reflecting the acquisition of Econsultancy (which contributed £8.3m of cost to the Group) offset by various restructuring initiatives to reduce costs. Total employment related costs, excluding redundancy costs, were £26.4m (2012: £25.2m), including Econsultancy costs of £3.8m. Adjusted for the impact of Econsultancy, average headcount across the Group has remained largely flat at 525 (2012: 537).

Operating loss of £34.9m decreased from the profit of £3.3m reported in 2012 as a result of a £39.2m impairment charge against goodwill (2012: £nil).

Reconciliation of adjusted EBITDA to (loss)/profit before tax

		Note	2013	2012
			£m	£m
Adjusted EBITDA			12.9	11.7
Depreciation & Amortisation		2	(2.9)	(2.8)
Share based payment			(0.2)	(0.3)
Adjusted operating profit			9.8	8.6
Finance costs		4	(1.2)	(0.6)
Adjusted profit before tax			8.6	8.0
Adjusting items	Exceptional costs	3	(42.4)	(4.5)
	Amortisation of acquired intangibles	2	(2.3)	(0.8)
	Exceptional finance costs	4	(1.3)	-
(Loss)/profit before tax			(37.4)	2.7

Adjusting items

The Group has reported adjusting items before tax of £46.0m (2012: £5.3m), including impairment of £39.2m (2012: £nil), restructuring costs of £3.1m (2012: £2.3m), acquisition-related costs of £0.7m (2012: £1.1m), onerous lease costs of £0.6m (2012: £0.3m), finance costs of £1.3m (2012: £nil) and amortisation on acquired intangibles (not included in exceptional costs) of £2.3m (2012: £0.8m).

Throughout 2013 further restructuring activities have been completed, including management changes and the restructure of central departments and commercial teams. Total restructuring costs were £3.1m (2012: £2.3m), which includes redundancy costs of £2.8m (2012: £1.9m). Restructuring costs are included within exceptional items.

Acquisition-related costs include deferred contingent consideration arrangements with acquisition vendors and legal and professional fees and stamp duty. Impairment relates to the write down of goodwill in Marketing, Professional and Financial segments.

The tax effect of adjusting items is a credit of £1.2m (2012: credit £0.8m).

There were no sales or closures of assets and therefore no post closure costs in 2013 (2012: £0.3m).

Further information on exceptional items is presented in note 3 to the financial statements.

Net finance costs

Net finance costs were £2.5m (2012: £0.6m), consisting of £1.2m of charges reflecting a full year of the debt facilities put in place in 2012 and an exceptional finance cost of £1.3m in respect of the unwind of the discount of the Econsultancy deferred consideration. Finance costs also include the commitment fees in respect of undrawn amounts under the new bank facility and the amortisation of the arrangement fee. 

Profit before tax

Adjusted profit before tax of £8.6m was 8% up on the £8.0m reported in 2012. Reported loss before tax was £37.4m (2012: profit of £2.7m).

Taxation

A tax charge of £1.0m (2012: £1.4m) has been recognised. The adjusted tax charge was £2.2m (2012: £2.2m), giving an adjusted effective tax rate (compared to adjusted profit before tax) of 25.6% (2012: 27.5%).

Earnings per share

The Group's adjusted EPS increased by 7% to 4.5p (2012: 4.2p). Basic loss per share was 27.3p (2012: EPS of 0.9p). Full details of the EPS calculations are presented in note 6 to the financial statements.

Dividends

A final dividend of 1.575p per share is proposed, giving a total for the year of 2.4p (2012: 2.25p) up 7%. The final dividend is subject to shareholder approval at the annual general meeting and will be paid on 6 December 2013 to all ordinary shareholders on the register at close of business on 8 November 2013. 

The level of dividend cover against adjusted EPS at 1.9 times (2012: 1.9 times) remains slightly below the target level of 2 to 3 times. The Board's view is that this remains appropriate as the markets return to growth and Centaur continues to see the benefits from the restructuring and investment initiatives undertaken over the last two years.

Acquisitions and disposals

The Group completed the acquisition of Econsultancy in July 2012.

The acquisition of Econsultancy involves an earn-out payment which is not contingent on the continued employment of the vendors. Under the provisions of IFRS 3 (revised), a provision for such contingent consideration is recognised at the date of acquisition as part of the cost of acquisition.  Any subsequent amendments to the estimated future cost are recorded in the Statement of Comprehensive Income.  

During the year the estimation of EBITDA in calendar year 2015 has been revised from £4.0m to £3.0m resulting in a decrease in the provision for contingent consideration and a credit recorded in the Statement of Comprehensive Income of £5.4m - see note 10 for details.

Financing and bank covenants

In 2012, the Group agreed a £40.0m revolving credit facility, provided by RBS and Barclays. This is a four-year facility that amortises by £2.5m per annum. The principal financial covenants under the facility are: maximum net debt to EBITDA of 2.5 times, progressively dropping to 2.0 times in the final year of the facility; minimum interest cover of 5 times; and minimum cash flow to debt service of 1.1 times. All these covenants are tested on a quarterly basis. At 30 June 2013, all tests were passed.

While the maximum net debt to EBITDA covenant is 2.5 times, the Group has set out a target leverage ratio of below 2 times. At 30 June 2013, the ratio of net debt to EBITDA was 1.5 times. Adjusted to include a provision for deferred consideration as part of net debt, the ratio as at 30 June 2013 was 1.9 times.

Cash flow

A summary of cash flow is set out below. Operating cash flow of £9.6m (2012: £10.3m) was generated from adjusted EBITDA of £12.9m (2012: £11.7m).

		2013	2012
		£m	£m
Adjusted operating profit		9.8	8.6
Depreciation and software amortisation		2.9	2.8
Share based payments		0.2	0.3
Adjusted EBITDA		12.9	11.7
Movement in working capital		1.1	0.8
Capital expenditure		(4.4)	(2.2)
Operating cash flow		9.6	10.3
Cash impact of exceptional items		(4.7)	(4.2)
Taxation		(1.3)	-
Interest and finance leases		(1.4)	(1.2)
Financing arrangement fees
Free cash flow		2.2	4.9
Acquisitions net of disposals		(11.6)	(11.0)
Dividends		(3.3)	(2.9)
Share exercises/(purchases)		0.4	(0.2)
Net cash flow		(12.3)	(9.2)
Opening net (debt)/cash		(7.2)	2.0
Closing net debt		(19.5)	(7.2)

Cash conversion of 112% has been achieved (2012: 120%), reflecting increased capital expenditure and a more positive working capital movement. The reduction in working capital in 2013 of £1.1m (2012: £0.8m) excludes the impact of exceptional cost accruals and the effect of acquisitions and disposals.

Free cash flow of £2.2m (2012: £4.9m) is reported after exceptional related cash flows of £4.7m (2012: £4.2m). The cash impact of exceptional items principally includes payments related to redundancy costs incurred in 2012 and 2013, and the cash impact of acquisition-related expenses in 2013. Tax of £1.3m was paid in 2013 (2012: £nil) as the Group generated taxable profits in 2012. The Group spent a net amount of £11.6m on acquisitions and disposals in 2013, and further analysis on these investments is included in notes 7 and 11 to the financial statements.

Net debt at 30 June 2013 was £19.5m (2012: £7.2m).

Capital expenditure

Capital expenditure on software and property, plant and equipment amounted to £4.4m (2012: £2.2m) reflecting the continued development of digital platforms across the Group and the implementation of a new CRM system.

Balance sheet

Net assets at 30 June 2013 were £81.6m (2012: £122.6m). Deferred income at 30 June 2013 was £14.3m, a 27% increase on the £11.3m reported at 30 June 2012.

Goodwill at 30 June 2013 was £98.9m (2012: £121.3). Additions in the year of £16.8m were mainly due to the acquisition of Econsultancy. An impairment of £39.2m (2012: £nil) has been recognised as a result of weaknesses in print advertising and a reduction in performance from overseas locations.

Key performance indicators (KPIs)

The key strategic objectives of the Group are summarised in the Strategic Overview section.  The Board uses a range of performance indicators to monitor progress against these objectives and manage the business. The indicators which the Board considers to be important are as set out below:

		2013	2012
Underlying revenue growth / (decline) by revenue type 3
Print		-14%	-5%
Digital		-	7%
Events		7%	6%
Total		-3%	2%
Digital revenues as a percentage of total revenues		35%	30%
Adjusted EBITDA margin 1		18%	18%
Revenue per employee (£'000s)		122	122
Adjusted PBT (£m) 1		8.6	8.0
Adjusted EPS (pence) 1		4.5	4.2
Cash conversion rate 2		112%	120%

1. Adjusted results exclude adjusting items as detailed in the Basis of Preparation section of the Statement of Accounting Policies.

2. Cash conversion rate is operating cash flow expressed as a percentage of adjusted operating profit.  Adjusted operating profit is as calculated in the Basis of Preparation section of the Statement of Accounting Policies and operating cash flow is as calculated in the Financial Review

3. Underlying growth rates adjust for the impact of acquisitions, disposals and discontinued activities by excluding them from both the reported 2012 and 2013 results.

Financial year end

In considering the seasonality of the Group's results and the significant dependence on the trading performance in the April to June quarter, the Board has decided to move the financial year end from 30 June to 31 December.

The Group envisages providing the next audited report and financial statements to cover the 18 month period to 31 December 2014, following an interim period report for the six month period to 31 December 2013, and an additional interim period report for the six month period to 30 June 2014. Interim management statements will be provided at a similar frequency and timing to coincide with the new reporting periods.

Consolidated Statement of Comprehensive Income for the year ended 30 June 2013

		Adjusted	Adjusting	Statutory	Adjusted	Adjusting	Statutory
		Results	Items	Results	Results	Items	Results
		2013	2013	2013	2012	2012	2012
	Notes	£m	£m	£m	£m	£m	£m
Revenue	1	72.0	-	72.0	65.6	-	65.6
Net operating expenses	2	(62.2)	(44.7)	(106.9)	(57.0)	(5.3)	(62.3)
Operating profit/(loss)		9.8	(44.7)	(34.9)	8.6	(5.3)	3.3
Finance costs	4	(1.2)	(1.3)	(2.5)	(0.6)	-	(0.6)
Profit/(loss) before tax		8.6	(46.0)	(37.4)	8.0	(5.3)	2.7
Taxation (charge)/credit	5	(2.2)	1.2	(1.0)	(2.2)	0.8	(1.4)
Profit/(loss) for the year attributable to owners of the parent		6.4	(44.8)	(38.4)	5.8	(4.5)	1.3
Total comprehensive income/(loss) attributable to owners of the parent		6.4	(44.8)	(38.4)	5.8	(4.5)	1.3
Earnings/(loss) per share attributable to owners of the parent	6
Basic		4.5p		(27.3p)	4.2p		0.9p
Fully diluted		4.5p		(26.8p)	4.1p		0.9p

Consolidated Balance Sheet as at 30 June 2013 

		2013	2012
	Note	£m	£m
Non-current assets
Goodwill	7	98.9	121.3
Other intangible assets	8	23.8	15.4
Property, plant and equipment		2.0	2.3
Deferred income tax assets		1.5	0.8
		126.2	139.8
Current assets
Inventories		2.0	1.1
Trade and other receivables		16.1	13.5
Cash and cash equivalents		3.3	5.3
		21.4	19.9
Total Assets		147.6	159.7
Current liabilities
Trade and other payables		(11.6)	(10.0)
Deferred income		(14.3)	(11.3)
Current income tax liabilities		(1.4)	(0.8)
Borrowings	9	-	-
Provisions	10	(3.1)	(0.3)
		(30.4)	(22.4)
Net current liabilities		(9.0)	(2.5)
Non-current liabilities
Borrowings	9	(22.7)	(12.5)
Provisions	10	(9.9)	(1.2)
Deferred income tax liabilities		(3.0)	(1.0)
		(35.6)	(14.7)
Net assets		81.6	122.6
Capital and reserves attributable to owners of the parent
Share capital		15.0	15.0
Own shares		(10.1)	(10.5)
Share premium		0.7	0.7
Other reserves		4.0	3.7
Retained earnings		72.0	113.7
Total equity		81.6	122.6

The financial statements were approved by the Board of Directors on 11 September 2013 and were signed on its behalf by:

M H Kerswell

Interim Chief Executive Officer

Consolidated Cash Flow Statement for the year ended 30 June 2013

		2013	2012
	Note	£m	£m
Cash flows from operating activities
Cash generated from operations		9.3	8.3
Tax paid		(1.3)	-
Net cash generated from operating activities		8.0	8.3
Cash flows from investing activities
Acquisition of subsidiary	11	(11.4)	(11.3)
Other acquisitions		(0.4)	(0.2)
Deferred consideration of disposal of subsidiary		0.2	0.5
Purchase of property, plant and equipment		(0.3)	(0.3)
Purchase of intangible assets		(4.1)	(1.9)
Net cash flows used in investing activities		(16.0)	(13.2)
Cash flows from financing activities
Purchase of own shares		-	(0.2)
Exercise of employee share options		0.4	-
Interest paid		(1.1)	(0.4)
Repayment of obligations under finance lease		(0.3)	(0.2)
Dividends paid		(3.3)	(2.9)
Proceeds of borrowings		10.3	12.5
Finance arrangement fees paid		-	(0.6)
Net cash flows generated from financing activities		6.0	8.2
Net (decrease)/increase in cash and cash equivalents		(2.0)	3.3
Cash and cash equivalents at 1 July		5.3	2.0
Cash and cash equivalents at 30 June		3.3	5.3

Statement of Accounting Policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

The consolidated and Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and International Financial Reporting Interpretations Committee (IFRIC) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared on the historical cost basis.  The consolidated financial statements have been prepared on a going concern basis. The functional currency of the Company is pounds sterling (GBP) as that is the currency of the primary economic environment in which the Group operates. These financial statements are presented in pounds sterling (GBP).

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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.

The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements.

(a) New and amended standards adopted by the group:

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 July 2012.

·    IAS 1, 'Financial statement presentation - regarding other comprehensive income' effective for annual periods commencing on or after 1 July 2012 (EU endorsed 5 June 2012). The amendment increases the required level of disclosure within the statement of comprehensive income. The application of the amendment does not have any significant impact on the Group.

(b)  New standards, amendments and interpretations that are potentially relevant to the Group issued but not effective for the financial year beginning 1 July 2012 (and in some cases not yet adopted by the EU) and not early adopted:

·    IAS 12, 'Income taxes - on deferred tax'.

·    IFRS 9, 'Financial instruments'.

·    IFRS 10, 'Consolidated financial statements'.

·    IFRS 12, 'Disclosures of interests in other entities'.

·    IFRS 13, 'Fair value measurement'.

·    IAS 27 (Revised 2011), 'Separate financial statements'.

·    IAS 28 (revised 2011), 'Investments in associates and joint ventures'.

·    Amendments to IAS 32, 'Financial instruments: Presentation - Offsetting Financial assets and financial liabilities'.

·    Amendments to IFRS 7, 'Financial instruments: Disclosure - Offsetting financial assets and financial liabilities'.

·    Annual improvements to IFRSs 2009-2011.

·    Transition guidance (amendments to IFRS 10, IFRS 11 and IFRS 12).

·    Recoverable amount disclosures for non-financial assets (Amendments to IAS 36).

·    IFRIC 21, 'Levies'.

The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group.

Presentation of non-statutory measures

The Directors believe that adjusted results and adjusted earnings per share provide additional useful information on the on-going operations of the Group to shareholders.  The term 'adjusted' is not a defined term under IFRS and may not therefore be comparable with similarly titled profit measurements reported by other companies.  It is not intended to be a substitute for, or superior to, IFRS measurements of profit.

The following charges were presented as adjusting items:

		2013	2012
	Notes	£m	£m
Exceptional costs	3	42.4	4.5
Amortisation of acquired intangibles	8	2.3	0.8
Exceptional finance cost	4	1.3	-
		46.0	5.3
Tax relating to adjusting items		(1.2)	(0.8)
Total adjusting items		44.8	4.5

The principal adjustments are made in respect of:

·      Exceptional costs - the Group considers items of income and expenses as exceptional items and excludes them from the adjusted results where the nature of the item, or its size, is likely to be material so as to assist the user of the financial statements to better understand the results of the operations of the Group.  Details of exceptional items are shown in note 3.

·      Amortisation of acquired intangibles - the Group amortises all intangible assets.  The amortisation charge for those intangible assets recognised on the acquisition of a subsidiary are excluded from the adjusted results of the Group so as to assist the user of the financial statements to better understand the results of the operations of the Group. The amortisation of intangible software assets acquired other than through the acquisition of a subsidiary is included in the adjusted results. Details of amortisation of intangibles are shown in note 8.

·      Exceptional finance costs - the Group discounts provisions to the net present value where the effects of such discounting are material. The discounting on provisions relating to acquisitions is excluded from adjusted results of the Group so as to assist the user of the financial statements to better understand the results of the operations of the Group. Details of the exceptional finance costs 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.

Reconciliation from operating (loss)/profit to Adjusted EBITDA:

	Notes	2013	2012
		£m	£m
Operating (loss)/profit		(34.9)	3.3
Adjusting items		44.7	5.3
Adjusted operating profit		9.8	8.6
Depreciation of property, plant and equipment		0.6	0.7
Amortisation of software	8	2.3	2.1
Share based payments		0.2	0.3
Adjusted EBITDA		12.9	11.7

1 SEGMENTAL REPORTING

The Operating Board of Directors has been identified as the chief operating decision-maker.  The Board reviews the Group's internal monthly reporting in order to assess performance and allocate resources. During the year the Group has refocused its business around four market-facing segments to better focus on the customers it serves and the business synergies from this.   Management has determined the operating segments based on these four segments, being Marketing, Professional, Financial, and Consumer, and the comparatives have been restated to reflect them.

The basis of measurement used for allocating overheads is the headcount or floor space for each division according to the relevant cost driver.

Corporate costs are allocated to business segments on an appropriate basis depending on the nature of the cost. Segment assets consist primarily of property, plant and equipment, intangible assets including goodwill, inventories and trade receivables. Segment liabilities comprise trade payables, accruals and deferred income.

Corporate assets and liabilities comprise current and deferred tax balances, cash and cash equivalents and borrowings. Capital expenditure comprises additions to property, plant and equipment, intangible assets and goodwill and includes additions resulting from acquisitions through business combinations.

All segments derive revenues from Digital, Print and Events products.

There are no major customers that provide revenue of over 10% of a reportable segment.

		Marketing	Professional	Financial	Consumer	Group
		£m	£m	£m	£m	£m
Year ended 30 June 2013
Revenue		23.8	24.1	13.3	10.8	72.0
Adjusted EBITDA		3.6	5.4	2.2	1.7	12.9
Depreciation of property, plant and equipment		(0.3)	(0.1)	(0.1)	(0.1)	(0.6)
Amortisation of software		(0.7)	(1.4)	(0.1)	(0.1)	(2.3)
Amortisation of acquired intangibles		(1.7)	(0.3)	(0.2)	(0.1)	(2.3)
Impairment of goodwill		(20.8)	(4.2)	(14.2)	-	(39.2)
Exceptional costs		3.9	(6.0)	(0.6)	(0.5)	(3.2)
Segment result		(16.0)	(6.6)	(13.0)	0.9	(34.7)
Share based payments						(0.2)
Operating loss						(34.9)
Finance costs						(2.5)
Loss before tax						(37.4)
Taxation						(1.0)
Loss for the year						(38.4)
Segment assets		50.7	60.0	18.9	13.2	142.8
Corporate assets						4.8
Consolidated total assets						147.6
Segment liabilities		(17.3)	(14.7)	(3.5)	(3.7)	(39.2)
Corporate liabilities						(26.8)
Consolidated total liabilities						(66.0)
Other items
Capital expenditure		10.6	2.1	0.6	0.2	13.5

	Marketing	Professional	Financial	Consumer	Group
	(restated)	(restated)	(restated)	(restated)
	£m	£m	£m	£m	£m
Year ended 30 June 2012
Revenue	15.0	24.7	15.6	10.3	65.6
Adjusted EBITDA	2.9	4.3	3.0	1.5	11.7
Depreciation of property, plant and equipment	(0.1)	(0.3)	(0.2)	(0.1)	(0.7)
Amortisation of software	(0.3)	(1.3)	(0.2)	(0.3)	(2.1)
Amortisation of acquired intangibles	(0.2)	(0.3)	(0.2)	(0.1)	(0.8)
Exceptional costs	(1.4)	(2.5)	(0.4)	(0.2)	(4.5)
Segment result	0.9	(0.1)	2.0	0.8	3.6
Share based payments					(0.3)
Operating profit					3.3
Finance costs					(0.6)
Profit before tax					2.7
Taxation					(1.4)
Profit for the year from continuing operations					1.3
Segment assets	45.6	62.6	33.0	12.4	153.6
Corporate assets					6.1
Consolidated total assets					159.7
Segment liabilities	(5.1)	(10.6)	(3.8)	(3.9)	(23.4)
Corporate liabilities					(13.7)
Consolidated total liabilities					(37.1)
Other items
Capital expenditure	5.3	2.0	1.3	0.5	9.1

Revenue by Geographical Location

The Group's revenues from external customers by geographical location are detailed below.

					2013	2012
					£m	£m
United Kingdom					64.3	60.4
Europe (excl. UK)					3.2	2.6
North America					2.8	1.3
Rest of World					1.7	1.3
					72.0	65.6

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.

An analysis of the Group's revenue by type is as followings:

					2013	2012
					£m	£m
Sale of goods:
Digital					24.9	19.5
Print					20.4	25.1
Events					26.2	20.5
Other					0.5	0.5
					72.0	65.6

2 NET OPERATING EXPENSES

Operating profit is stated after charging/(crediting):

		Adjusted	Adjusting	Statutory	Adjusted	Adjusting	Statutory
		Results	Items	Results	Results	Items	Results
		2013	2013	2013	2012	2012	2012
	Notes	£m	£m	£m	£m	£m	£m
Employee benefit expense		26.4	-	26.4	25.2	-	25.2
Depreciation of property, plant and equipment		0.6	-	0.6	0.7	-	0.7
Amortisation of intangibles	8	2.3	2.3	4.6	2.1	0.8	2.9
Impairment of goodwill	7	-	39.2	39.2
Exceptional costs	3	-	3.2	3.2	-	4.5	4.5
Operating lease rentals     Minimum lease payments		2.7	-	2.7	2.4	-	2.4
Repairs and maintenance expenditure on property, plant and equipment		0.1	-	0.1	-	-	-
Trade receivables impairment		-	-	-	0.1	-	0.1
Other operating expenses		30.1	-	30.1	27.0	-	27.0
		62.2	44.7	106.9	57.0	5.3	62.3
Cost of Sales		36.7	-	36.7	35.0	-	35.0
Distribution costs		2.0	-	2.0	2.5	-	2.5
Administrative expenses		23.5	44.7	68.2	19.5	5.3	24.8
		62.2	44.7	106.9	57.0	5.3	62.3

Services provided by the Company's auditors

	2013	2012
	£'000	£'000
Audit fees:
Fees payable to the Company's auditor for the audit of parent company
and consolidated financial statements	30	30
Fees payable to the Company's auditor and its associates for other services:
The audit of the Company's subsidiaries pursuant to legislation	119	117
Total audit fees	149	147
Audit related assurance services	26	25
Taxation compliance services	43	-
Other taxation advisory services	15	-
Other assurance services	47	47
Corporate finance services	-	201
Other services	-	18
Total non-audit fees	131	291
	280	438

3 EXCEPTIONAL ITEMS

	2013	2012
	£m	£m
Restructuring costs
Redundancies	2.8	1.9
Accelerated amortisation of software	0.2	0.1
Accelerated share based payment charge	0.1	-
Post closure costs	-	0.3
	3.1	2.3
Acquisition related costs	0.7	1.1
Deferred contingent consideration	4.3	1.1
Deferred contingent consideration adjustment	(5.4)	-
Onerous lease provision	0.6	0.3
Profit on disposal	-	(0.3)
Other	(0.1)	-
Exceptional costs (before goodwill impairment)	3.2	4.5
Goodwill impairment	39.2	-
Total	42.4	4.5

Restructuring costs in 2013 comprise redundancy costs of £2.8m and associated costs as a result of on-going restructuring activities as well as accelerated amortisation of software of £0.2m and an accelerated share based payments charge on resignation of a director and an Operating Board member during the year. Costs in 2012 comprised redundancy costs, accelerated amortisation of software and product closure costs on discontinued products.

Acquisition related costs in 2013 comprise the legal and professional fees associated with the acquisition of E-consultancy.com Limited ("Econsultancy"). Acquisition related costs in 2012 comprise the legal and professional fees associated with the acquisition of Investment Platforms Limited ("IPL") in August 2011 (£0.1m), Venture Business Research Limited ("VB Research") in December 2011 (£0.2m) and The Profile Group ("Profile") in February 2012 (£0.2m), plus non-contingent legal and professional fees incurred associated with the acquisition of Econsultancy (£0.5m) and legal and professional fees associated with the refinancing of the Group's banking facilities in February 2012 (£0.1m).

The deferred contingent consideration charged in the year relates to contingent consideration associated with the acquisition of The Forum for Expatriate Management Limited ("FEM") (£3.0m) and of IPL (£0.8m) and VB Research (£0.5m). As these payments are contingent on continued employment, IFRS 3(R) requires that they be recorded through the period from the date of acquisition to the end of the performance period on which the consideration is measured.  The amounts charged in 2013 represent the current year portion of the expected total payment, plus an adjustment to earlier periods where the latest information available indicates that the consideration ultimately payable will differ from that which was initially expected.

The deferred contingent consideration adjustment relates to reassessment of the consideration payable for Econsultancy as a result of a downgrade in expected earnings (note 10).

During 2013 Perfect Information relocated to Centaur's offices, resulting in an onerous lease provision of £0.6m being made for the remaining cost of their existing lease (note 10). Costs in 2012 related to the vacation of the Taxbriefs premises.

Impairment of goodwill relates to the write down during the year of goodwill in the Marketing, Professional and Financial segments (note 7).

Other exceptional costs (£0.1m) relate to the unwinding of the discount of the deferred consideration receivable on disposed trading assets.

The profit on disposal during 2012 relates to the disposal of certain Logistics, Supply Chain and Corporate Services products. The gain of £0.3m recognised in relation to these disposals represents the net present value of the consideration receivable from the sales (£1.1m), less the net book value of intangible assets disposed (£0.6m - disclosed as held for sale in 2011) and legal, professional and other costs of disposal (£0.2m).

4 FINANCE COSTS

	2013	2012
	£m	£m
Interest payable on revolving credit facility	0.8	0.3
Commitment fees and amortisation of arrangement fee in respect of revolving credit facility	0.3	0.2
Finance lease interest	0.1	0.1
Total interest expense	1.2	0.6
Unwinding of discount on provisions (included in adjusting items)	1.3	-
	2.5	0.6

5 TAXATION

	2013	2012
	£m	£m
Analysis of charge in year
Current tax
Current year	1.3	1.3
Adjustment in respect of prior year	0.4	0.4
	1.7	1.7
Deferred tax
Origination and reversal of temporary differences	(0.5)	0.1
Adjustment in respect of prior year	(0.2)	(0.4)
	(0.7)	(0.3)
Taxation	1.0	1.4

The tax charge for the year can be reconciled to the (loss)/profit in the statement of comprehensive income as follows:

	2013	2012
	£m	£m
(Loss)/profit before tax	(37.4)	2.7
Tax at the UK rate of corporation tax of 23.75% (2012: 25.5%)	(8.9)	0.7
Effects of:
Expenses not deductible for tax purposes	0.4	1.0
Goodwill impairment not deductible	9.3	-
Effects of changes in tax rate on deferred tax balances	-	(0.3)
Utilisation of tax losses brought forward	-	(0.1)
Adjustments in respect of prior year	0.2	-
Deferred tax charge on share based payments taken to the statement of comprehensive income	-	0.1
	1.0	1.4

The Finance Act 2012 included legislation to reduce the main rate of corporation tax from 24% to 23% from 1 April 2013. Accordingly the company's profits for this accounting period are taxed at a rate of 23.75%.

In addition, legislation to reduce the main rate of corporation tax from 23% to 21% from 1 April 2014 and from 21% to 20% from 1 April 2015 was included in the Finance Act 2013.  These further changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements.

There will be no material effect on the deferred tax liability or the tax charge resulting from the changes to be enacted in the Finance Act 2013.

6 EARNINGS PER SHARE

Basic (loss)/earnings per share (LPS/EPS) is calculated by dividing the (loss)/earnings attributable to ordinary shareholders by the weighted average number of shares in issue during the year.  1,693,673 (2012: 1,813,762) shares held in the employee benefit trust and 7,318,291 (2012: 8,964,507) shares held in treasury have been excluded in arriving at the weighted average number of shares.

For diluted (loss)/earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.  This comprises share options (including those granted under the Sharesave plan) granted to Directors and employees where the exercise price is less than the average market price of the Company's ordinary shares during the year.

An alternative measure of adjusted earnings per share has been provided as the Directors believe that this measure is more reflective of the on-going trading of the Group.

	2013	2013	2013	2012	2012	2012
	(Loss)/earnings	Weighted		(Loss)/earnings	Weighted
	attributable	average		attributable	average
	to owners	number	Earnings	to owners	number	Earnings
	of the parent	of shares	per share	of the parent	of shares	per share
	£m	millions	Pence	£m	millions	Pence
Basic	(38.4)	140.9	(27.3)	1.3	139.3	0.9
Effect of dilutive securities
Options	-	2.3	-	-	2.2	-
Diluted	(38.4)	143.2	(26.8)	1.3	141.5	0.9
Adjusted
Basic	(38.4)	140.9	(27.3)	1.3	139.3	0.9
Amortisation of acquired intangibles (excluding software) (note 8)	2.3	-	1.6	0.8	-	0.6
Exceptional finance costs (note 4)	1.3	-	0.9	-	-	-
Exceptional costs (note 3)	42.4	-	30.2	4.5	-	3.2
Tax effect of above adjustments	(1.2)	-	(0.9)	(0.8)	-	(0.5)
Adjusted	6.4	140.9	4.5	5.8	139.3	4.2
Effect of dilutive securities
Options	-	2.3	-	-	2.2	-
Diluted adjusted	6.4	143.2	4.5	5.8	141.5	4.1

7 GOODWILL

	Note	£m
Cost
At 1 July 2011		142.0
Additions - acquisition of subsidiaries		5.8
Additions - other acquisitions		0.2
FEM adjustment		(0.8)
At 1 July 2012		147.2
Additions - acquisition of subsidiaries	11	16.7
Additions - other		0.1
At 30 June 2013		164.0
Accumulated impairment
At 1 July 2011 and 2012		25.9
Charge for the year		39.2
At 30 June 2013		65.1
Net book amount
At 30 June 2013		98.9
At 30 June 2012		121.3
At  1 July 2011		116.1

Additions to goodwill arose on the acquisition of Econsultancy in July 2012 (Note 11). Additions from other acquisitions in 2013 arose from the purchase of an additional 0.71% of the share capital of Perfect Information for £0.1m in November 2012.

Additions in 2012 arose from the acquisitions made during the year (Note 11). Other acquisitions related to the purchase of 0.71% of additional share capital in Perfect Information. The FEM adjustment related to an adjustment to acquisition accounting on the 2011 acquisition to recognise the deferred consideration as post acquisition remuneration consistent with IFRS 3 (R).

Goodwill by segment

Each brand, comprising individual magazines, digital titles and events, is deemed to be a Cash Generating Unit (CGU), being the lowest level for which cash flows are separately identifiable.  Goodwill is attributed to individual CGUs but is reviewed at the segment level for the purposes of the annual impairment review as this is the level that management monitor goodwill. The majority of the Group's goodwill arose on the acquisition of the Centaur Communications Group in 2004.

Goodwill is allocated to segments as follows:

	Marketing	Professional	Financial	Consumer	Total
	£m	£m	£m	£m	£m
At 30 June 2013	36.7	42.4	12.3	7.5	98.9
At 30 June 2012 (as restated)*	40.9	46.5	26.4	7.5	121.3

*refer to note 1

Impairment testing of goodwill and acquired intangible assets

During the year goodwill was tested for impairment in accordance with IAS 36.  In assessing whether a write-down of goodwill and acquired intangible assets is required, the carrying value of the segment is compared with its recoverable amount. Recoverable amount is measured based on value-in-use.

The Group estimates the value-in-use of its CGUs using a discounted cash flow model, which adjusts the cash flows for risks associated with the assets and discounts these using a pre-tax rate of 12.6% (2012: 11.9%).  The discount rate used is consistent with the Group's weighted average cost of capital and is used across all segments.

The key assumptions used in calculating value-in-use are revenue growth, margin, adjusted EBITDA, discount rate and the terminal growth rate.  The Group has used formally approved forecasts for the first three years of the value-in-use calculation, and applied a terminal growth rate of 2.25% (2012: 2.25%).  This timescale and the terminal growth rate are both considered appropriate given the cyclical nature of the Group's revenues.

The assumptions used in the calculations of value-in-use for each segment have been derived based on a combination of past experience, current orders and opportunities and management's expectations of future growth rates in the industry.

At 30 June 2013, before impairment testing, goodwill of £57.5m, £46.6m and £26.4m was allocated to the Marketing, Professional and Financial segments respectively. These segments have been affected during the year by the weakness in print advertising sales and also the reduction in expectations for overseas operations and as a result the Group has revised its cash flow forecasts for these groups of CGUs. The Marketing, Professional and Financial segments have therefore been reduced to their respective recoverable amount through recognition of an impairment loss against goodwill of £20.9m, £4.2m and £14.1m respectively.

For the remaining segment, Consumer, the value-in-use calculations comfortably exceed the carrying values in the sensitivity scenarios.

Following the impairments recorded, a 0.5% increase in WACC would result in further impairment of £1.9m, £0.6m, and £2.5m in Marketing, Professional and Financial respectively. No impairment would occur in Consumer. A 5% decrease in the EBITDA assumption used in the model in years 1-5 would result in further impairment of £2.2m, £0.9m and £2.9m across Marketing, Professional and Financial respectively. No impairment would occur in Consumer.

8 OTHER INTANGIBLE ASSETS

		Brands and		Website
	Computer	publishing	Customer	and	Non-compete
	software	rights	relationships	content	arrangements	Total
	£m	£m	£m	£m	£m	£m
Cost
At 1 July 2011	13.0	9.9	4.2	0.4	0.5	28.0
Additions - business combinations	-	1.0	4.4	1.1	-	6.5
Additions - separately acquired	1.7	0.1	-	-	-	1.8
Additions - internally generated	0.3	-	-	-	-	0.3
Disposals	(0.2)	(5.4)	(2.6)	-	-	(8.2)
At 30 June 2012	14.8	5.6	6.0	1.5	0.5	28.4
Additions - business combinations	0.3	-	5.6	3.2	-	9.1
Additions - separately acquired	3.5	-	-	-	-	3.5
Additions - internally generated	0.6	-	-		-	0.6
At 30 June 2013	19.2	5.6	11.6	4.7	0.5	41.6

Accumulated amortisation
At 1 July 2011	8.1	6.0	3.2	0.4	0.5	18.2
Amortisation charge for the year	2.1	0.2	0.5	0.1	-	2.9
Accelerated amortisation (note 3)	0.1	-	-	-	-	0.1
Disposals	(0.2)	(5.4)	(2.6)	-	-	(8.2)
At 30 June 2012	10.1	0.8	1.1	0.5	0.5	13.0
Accelerated amortisation (note 3)	0.2	-	-	-	-	0.2
Amortisation charge for the year	2.3	0.3	1.2	0.8	-	4.6
At 30 June 2013	12.6	1.1	2.3	1.3	0.5	17.8
Net Book value at 30 June 2013	6.6	4.5	9.3	3.4	-	23.8
Net Book value at 30 June 2012	4.7	4.8	4.9	1.0	-	15.4
Net book value at 1 July 2011	4.9	3.9	1.0	-	-	9.8

Computer software capitalised in 2013 and 2012 principally relates to the development of software used in websites and digital products, and also to the development of new products in various segments.

The additions to customer relationships and websites and content in 2013 relate to the acquisition of Econsultancy (see note 11). 

The Company has no intangible assets (2012: £nil).    

9 BORROWINGS

	2013	2012	2013	2012
	Group	Group	Company	Company
	£m	£m	£m	£m
Current liabilities
Finance lease payables	0.2	0.2	-	-
Arrangement fee in respect of revolving credit facility	(0.2)	(0.2)	(0.2)	(0.2)
	-	-	(0.2)	(0.2)
Non-current liabilities
Finance lease payables	0.1	0.3	-	-
Arrangement fee in respect of revolving credit facility	(0.2)	(0.3)	(0.2)	(0.3)
Revolving credit facility	22.8	12.5	22.8	12.5
	22.7	12.5	22.6	12.2

Further details about the Group's borrowings are provided in note 12.

Finance lease payables

Lease payables are secured as the rights to the leased assets revert to the lessor in the event of default.

	2013	2012
	£m	£m
Gross finance lease liabilities - minimum lease payments
No later than 1 year	0.2	0.3
Later than 1 year and no later than 5 years	0.1	0.3
	0.3	0.6
Future finance charges on finance leases	-	(0.1)
Present value of finance lease liabilities	0.3	0.5

The present value of finance lease liabilities is as follows:

	2013	2012
	£m	£m
No later than 1 year	0.2	0.2
Later than 1 year and no later than 5 years	0.1	0.3
Present value of finance lease liabilities	0.3	0.5

The finance lease relates to office equipment purchased in 2010.

10 PROVISIONS

	Deferred	Onerous
	consideration	lease	Total
	£m	£m	£m
At 1 July 2012	1.2	0.3	1.5
Utilised during the year	(0.2)	(0.6)	(0.8)
Charged to statement of comprehensive income during the year	4.3	0.6	4.9
Released during the year	(5.4)	(0.1)	(5.5)
Unwinding of discount	1.3	-	1.3
Arising on acquisitions (note 11)	11.6	-	11.6
At 30 June 2013	12.8	0.2	13.0
Current	3.0	0.1	3.1
Non-current	9.8	0.1	9.9
Total	12.8	0.2	13.0

Deferred Consideration

Deferred consideration relates to amounts payable for the acquisitions of FEM, IPL, VBR and Econsultancy.

The amount of deferred contingent consideration payable with respect to the acquisition of FEM was based on the profits generated by FEM in FY13 (the performance period). £0.2m (2012: £nil) was advanced during the year. The balance is payable during FY14.  The amount of deferred contingent consideration payable with respect to the acquisition of IPL is dependent on the profits generated by IPL in FY14 (the performance period), subject to a maximum earn out payment of £4.2m.  The amount of deferred contingent consideration payable with respect to the acquisition of VBR is dependent on the profits generated by VBR in FY15 (the performance period), subject to a maximum earn out payment of £5.0m.  In all cases, the amount provided is dependent on continued employment of the former owners of the business and is treated as post-acquisition remuneration accruing over the period post-acquisition to the end of the performance period. All amounts represent the Directors' best estimate of the amount to be paid at the balance sheet date.

Amounts arising on acquisition relate to deferred consideration payable with respect to the acquisition of Econsultancy. The amount payable is dependent on the profits generated by Econsultancy in the 12 months ended 31 December 2015 (the performance period), subject to a maximum of £38.0m. The forecast amount has been discounted to its present value. During the year the directors best estimate of the deferred consideration payable was revised downwards and the excess provision of £5.4m released to the statement of comprehensive income.

Onerous Lease

The onerous lease provision relates to premises that are no longer occupied following the transfer of staff to existing group premises. The leases are due to expire during the years ended 2014 and 2015.

11 ACQUISITIONS

Subsidiaries acquired

		Proportion of
	Date of	voting equity
	acquisition	interest acquired
Year-ended 30 June 2013
E-consultancy.com Limited	11.07.2012	100%
Year-ended 30 June 2012
Investment Platform Limited (IPL)	19.08.2011	100%
Venture Business Research Limited (VBR)	08.12.2011	100%
The Profile Group (UK) Limited (Profile)	20.02.2012	100%

On 11 July 2012, the Group acquired the entire issued share capital of E-consultancy.com Limited ("Econsultancy") a business which provides information, training and events to digital marketing businesses in the UK, USA, Middle East and Far East and will complement the Group's Marketing division.  Initial cash consideration of £11.9m was paid on completion of the acquisition, net of a working capital adjustment of £0.1m.  Deferred consideration is payable based on 7.5 times the Econsultancy's EBITDA for the year ending December 2015, subject to a maximum total consideration (including the initial cash consideration) of £50.0m.  Initial forecasts indicated that the deferred consideration payment would be approximately £18.0m which, after discounting, was initially recognised at a fair value of £11.6m. As a result of post-acquisition trading, this was downgraded to an expected deferred consideration payment of £10.5m, discounted to £7.6m. The change in provision has been recognised in the Statement of Comprehensive Income in accordance with IFRS 3 (R).

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below. The provisional fair values disclosed in the Group's half year results have been amended to reflect a £2.0m deferred tax liability in relation to the intangible assets. This has resulted in a corresponding increase to goodwill.

	2013
	£m
Identifiable intangible fixed assets	9.1
Cash and cash equivalents	0.5
Trade and other receivables	2.0
Trade and other payables	(2.8)
Deferred tax liability	(2.0)
Total identifiable net assets	6.8
Goodwill	16.7
Total consideration	23.5
Satisfied by:
Cash consideration	11.9
Contingent consideration	11.6
Total consideration transferred	23.5
Net cash outflow arising on acquisition
Cash consideration	11.9
Less: cash and cash equivalents acquired	(0.5)
	11.4

Acquisition-related costs amounting to £0.7m have been excluded from the consideration and recognised as an expense in the current year as an exceptional cost within the net operating expenses line item on the consolidated statement of comprehensive income. 

Goodwill arose on the acquisition in relation to the benefit of the assembled workforce and expected operating synergies.  These benefits are not recognised separately from goodwill as they do not meet the recognition criteria for identifiable assets.

The goodwill arising on the acquisition has been allocated to the Marketing segment, as that segment is expected to benefit from the synergies of the business combination.

Econsultancy contributed £9.3m to revenue and £1.0m to the Group's profit for the period between the acquisition and the balance sheet date.

The business combination was effective from 11 July 2012, therefore the Group revenue of £72.0m and EBITDA of £12.9m would not be materially different had the combination taken place at 1 July 2012.      

During the year-ended 30 June 2012 the Group acquired the entire issued share capital of Investment Platform Limited (IPL), Venture Business Research Limited (VBR) and The Profile Group (UK) Limited (Profile). There have been no changes to the fair values recognised the financial statements for the year then ended.

12 FINANCIAL INSTRUMENTS

Categories of financial instruments
	2013	2012
	£m	£m
Financial assets
Cash and bank balances	3.3	5.3
Loans and receivables	12.7	10.7
	16.0	16.0
Financial liabilities
Amortised cost	31.8	20.2

The Group's activities expose it to a variety of financial risks: currency risk, interest rate risk, credit risk, liquidity risk and capital risk.  The following note describes the role that financial instruments have had during the year ended 30 June 2013 in the management of the Group's financial risks.

Currency risk

Substantially all the Group's net assets are located and substantially all revenue and adjusted EBITDA is generated in the United Kingdom and consequently foreign exchange risk is limited.  The results of the Group are not currently sensitive to movements in currency rates.

Interest rate risk

The Group has no significant interest-bearing assets but is exposed to interest rate risk as it borrows funds at floating interest rates.  In accordance with Group policy, this risk may be managed by the use of interest rate swap contracts as cash flow hedges.  Hedging activities are evaluated regularly to align interest rate views and risk appetite with the hedging requirements of the Group's revolving credit facility. The Group did not enter into any hedging transactions during the year (2012: none) and, as at 30 June 2013, the only floating rate to which the Group is exposed was LIBOR.

The Group's exposure to interest rates on financial assets and financial liabilities is detailed in the liquidity risk section of this note.

Credit risk

Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, and credit exposures to customers including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted. For customers, the Group's risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. The directors consider the maximum credit risk to which the Group is exposed is the sum of cash and cash equivalents and the receivables balance. The Group does not consider it is subject to any significant concentrations of credit risk.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.  Throughout the year-ended 30 June 2013, and for the foreseeable future, the Group is expected to be in a net borrowings position.  The Group manages liquidity risk by maintaining adequate reserves and working capital credit facilities, and by continuously monitoring forecast and actual cash flows.  A summary of the undrawn facilities the Group has at its disposal to further reduce liquidity risk is shown below. The total facility available reduces by £2.5m each year until it reaches £30.0m during the year to 30 June 2016.

	2013	2012
	£m	£m
Expiring later than one year and less than 5 years
Loan Facility	14.1	27.5

The following tables detail the Group's remaining financial maturity for its financial liabilities

			Less than
	Book value	Fair value	1 year	2-5 years
	£m	£m	£m	£m
At 30 June 2013
Financial liabilities
Variable interest rate instruments	22.8	22.8	-	22.8
Fixed interest rate instruments	0.3	0.3	0.2	0.1
	23.1	23.1	0.2	22.9
At 30 June 2012
Financial liabilities
Variable interest rate instruments	12.5	12.5	-	12.5
Fixed interest rate instruments	0.5	0.5	0.2	0.3
	13.0	13.0	0.2	12.8

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 approximate to the market.

All trade and other payables are due in one year or less, or on demand. 

Capital risk 

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising return to stakeholders as well as sustaining the future development of the business. 

The capital structure of the Group consists of net debt, which includes borrowings (note 9) and cash and cash equivalents, and equity attributable to owners of the parent, comprising issued share capital, other reserves and retained earnings.

The Group continues to benefit from its banking facilities agreed during 2012 which features both a working capital facility, to assist in managing the Group's liquidity risk, and an acquisition facility, to support the Group's acquisition strategy.  The facility, available for a period of 4 years, allows for a maximum drawdown of £40.0m, £30.0m of which can be utilised for funding acquisition activity and £10.0m of which can be utilised for working capital purposes.  Interest is calculated on LIBOR plus a margin dependent on the level of outstanding drawdowns, which is re-measured quarterly in line with covenant testing. 

The Group's borrowings are subject to financial covenants tested quarterly.  At 30 June 2013 all of these covenants were achieved.

13 NATURE OF THE FINANCIAL INFORMATION

The foregoing financial information does not amount to full accounts within the meaning of Section 434 of Companies Act 2006. The financial information has been extracted from the Group's Annual Report and Accounts for the year ended 30 June 2013 on which the auditors have expressed an unqualified opinion.

Copies of the Annual Report and Accounts will be posted to shareholders shortly and will be available from the Company's registered office at Wells Point, 79 Wells Street, London, W1T 3QN.

 

END

 

 

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