Final Results

RNS Number : 7087D

Centaur Media PLC

18 September 2008

 



18 September 2008

Centaur Media plc

Preliminary results for the year ended 30 June 2008

Centaur Media plc ("Centaur", "the Company" or "the Group"), the specialist business publishing and information group, announces results for the year ended 30 June 2008.  

Centaur's premier brands include Marketing Week, Design Week, Creative Review, Money Marketing, The Lawyer, The Engineer, New Media Age, Homebuilding & Renovating, Business Travel and the online service Perfect Information.  

Highlights 

• Revenue £90.4m (2007: £90.3m); 4 year CAGR 8%

• Adjusted EBITDA (1) margin up 2 percentage points to 24%

• Adjusted PBT (2) up 14% to £19.2m (2007: £16.9m)

• PBT after exceptional cost £14.5m (2007: £16.9m)

• Adjusted basic EPS (3) up 12% to 9.2p (basic EPS 6.7p (2007: 8.2p))

• Net cash of £7.7m after share repurchase of £7.9m (Net cash at 30 June 2007: £9.0m)

• Full year dividend per share up 20% to 4.2p (2007: 3.5p) 
  

Commenting on the preliminary results, Graham Sherren, Chairman of Centaur said:  

"We are pleased that these results show yet another record year, despite the prevailing market conditions. Markets remain challenging in the new financial year, and we continue to develop new products to drive the business forward against this market backdrop with a particular focus on online and events. We continue to improve the efficiency of our operations and we are seeing some general improvement in our market shares, demonstrating a flight to quality during the downturn. Nevertheless, the outlook for trading in 2009 remains uncertain." 

Enquiries:

Centaur Media plc	Geoff Wilmot, CEO  Mike Lally, GFD	Tel: [phone]
Gavin Anderson & Company	Robert Speed Janine Brewis	Tel: [phone]

• One of Centaur's key measures of profit, which is used to measure the relative performance of divisional units of the Group, is earnings before interest, tax, depreciation and amortisation, excluding exceptional items and other significant non-cash items including share based payments (Adjusted EBITDA). 

• Adjusted PBT (PBTA) is profit before tax, excluding the impact of amortisation of acquired intangibles and of exceptional items and excluding the profit on disposal of associated undertakings. 

• Adjusted EPS is based on the basic EPS but after making adjustments for amortisation on acquired intangibles and exceptional items and excluding the profit on disposal of associated undertakings, as detailed in note 4.

Chairman's Statement

I am pleased to announce that Centaur is again reporting a record level of adjusted PBT in the 12 months to 30 June 2008, with results ahead of consensus market expectations, up 14% to £19.2 million (FY2007: £16.9 million), and adjusted basic earnings per share 12% up at 9.2p (FY2007: 8.2p).  Reported PBT fell to £14.5 million (FY2007: £16.9 million) as a result of an exceptional charge of £3.6 million which arose principally due to the closure of Perfect Analysis and the organisational changes within publishing operations.

Revenues were level with those of the previous financial year.  The result reflected the effects of a more challenging trading environment that developed during the second half of the financial year, in which the Company experienced a 4% decline in overall advertising revenues and an 8% decline in print revenues. This resulted in a 2% growth in advertising revenues for the year as a whole with a modest decline in print revenues offset by continued growth in online advertising revenues.  

Adjusted EBITDA increased by 9% to £21.5 million (FY2007: £19.7 million), delivering a further improvement in margin to 24% from 22% in the previous year representing further progress towards our target margin of 25%.  

In light of this performance, the Board is recommending a final dividend of 3.0p per share, giving a full year dividend of 4.2p; an increase of 20% over the prior year. The final dividend will be paid to shareholders on the register as at 24 October 2008. It is proposed that the dividend will be paid on 20 November 2008.  

The downturn in the cycle that we are now experiencing has adversely affected most of our served markets in the past few months, although this has partially offset by a general improvement in our market shares. The Legal and Financial Division has been particularly impacted by the weakness in the mortgage market, resulting in a 5% decline in revenues for the year as a whole. Marketing and Creative Division revenues were unchanged year on year, reflecting tougher second half conditions. Engineering and Construction revenues grew 6% in the year, with a strong performance by the engineering titles offsetting a relatively unchanged result from the construction portfolio. Perfect Information experienced a decline in revenues of 3%, resulting from the discontinuation of Perfect Analysis, a loss making division within this segment, which was announced in the first half of the financial year. General Business Services revenues grew 7% led by the successful launch of the Business Travel Show in Dubai. 

Adjusted EBITDA has also benefited from the actions we undertook to reduce costs during the year, which led to a two point improvement in margins.  

The fastest pace of revenue growth was derived from online products, which, excluding the results of Perfect Information, grew by 22% over the prior year. This demonstrates the continuing success of our principal strategy in the past few years, which has been to extend our major print publishing brands across multiple media, but with a particular focus on online opportunities. Online now accounts for 19% of total revenues against 17% in FY2007.  

Centaur has developed most of its business organically and in FY2008 11% of revenues were generated by products launched within the previous three years (FY2007: 12%). We continued to maintain a steady pace of new product development during the year, with a number of new magazine, online and event launches. The key developments and initiatives in the year are outlined in the Business Review.

Cash and share capital reduction

The Board holds a mandate to purchase up to 10% of the Company's issued share capital and during the period, the Company acquired 7,550,000 of its own shares through open market purchases representing 5.05% of issued share capital at the start of the financial year. The total amount paid to acquire the shares was £7.9 million and this has been deducted from shareholders' equity.  

The ability to finance these share purchases from existing cash resources underpins the continued strength of the Group's balance sheet and if the consideration for the share purchase is excluded cash and cash equivalents increased by £5.6 million in the period after paying dividends of £5.4 million and after repaying £1.0 million to the holders of loan notes in Centaur Media plc. Excluding funds held in respect of these loan notes the cash available for use by the Group in its day to day operations was £7.7 million at 30 June 2008 (FY2007: £9.0 million).  

  Outlook for current financial year

Owing to the current economic climate, we anticipate that market conditions will remain challenging. As we reported in our Trading Statement on 14 July 2008, we expect a further decline in print revenues in our seasonally quieter half year to 31 December 2008. The outlook for trading conditions in 2009 remains uncertain. Meanwhile, we continue to achieve growth in our online products and in events; we are planning a number of new product initiatives in the course of this financial year and, in particular, we are taking further steps to improve the cost effectiveness of our print operations.

Centaur is above all an entrepreneurial Company. It depends for its success on the talent, commitment, energy and creativity of its staff, who have performed magnificently once again. My thanks and appreciation goes to all of them.

  Business Review

Legal & Financial

Legal & Financial remains our largest market segment reporting 32% of total Group revenues for 2008. (FY2007: 34%)

Despite a 5% reduction in revenues for the year, profitability improved following a number of cost efficiencies undertaken in response to the progressively more difficult trading conditions during the course of the year. These efficiencies resulted in a 23% reduction in year-on-year costs in the second half of the financial year and a 2 percentage point increase in adjusted EBITDA margin to 32%, for the full year.

Core products targeting the mortgage and secured lending sectors were affected by the volatility in credit markets that prevailed from the start of the financial year and this also resulted in some slowing of marketing activity in the broader retail financial sector during the second half of the year. In addition, the legal sector experienced some decline in the corporate transaction activity that underpins the sector. Despite this, online legal recruitment grew strongly with double digit growth in The Lawyer.com revenues for the full year following the 5% growth reported for the first half. 

The major magazine titles within this segment reported a 6% reduction in revenues, although most of this decrease related to the main mortgage title - Mortgage Strategy magazine - which in total represented around 12% of the segment's total print revenues. Excluding Mortgage Strategy, the rest of the print portfolio reported 4% full year revenue growth led by strong growth in core financial titles Fund Strategy and Money Marketing.

Event revenues reduced by 16% although this related primarily to the Mortgage Summit which was rescheduled for the new financial year. Excluding this, revenues from other financial summits grew by 42% in the year and sponsored meetings remained a particularly resilient event format as well as the focus of much new product development within the segment with seven new event launches in the year.

Elsewhere within the segment new product development included the launch of a new website - InsideMoneytalk.com - providing details of press releases relating to financial service product providers and new product releases, the publication of the first legal employee engagement benchmarking study in conjunction with YouGov plc, our joint venture research partner, and the publication of the Transatlantic Elite survey of New York based law firms following the establishment of a New York editorial office for The Lawyer magazine earlier this year.

Marketing & Creative

In total, Marketing and Creative revenues were flat although profit was strongly ahead with adjusted EBITDA increasing by 14% and adjusted EBITDA margin up 2 percentage points to 17%. The improvement in profitability partly reflected cost reductions achieved as part of the organisational changes announced in February 2008 and in total this resulted in a 7% reduction in costs in the second half of the financial year.

In overall terms, revenue growth was held back to some extent by weakness in the underlying advertising market particularly where revenues were derived from marketing services activity focused on more traditional above-the-line media and direct marketing. This resulted in the discontinuation of three events during the prior year including the DM Show (direct marketing) and Total Motivation Show (incentives) which further constrained revenue growth in the current financial year.

However these reductions were offset by continued double digit revenue growth from products targeting the online and interactive media sector, led principally by the magazine title - New Media Age - and two associated events the Online Marketing & Media Show and the Interactive Marketing Summit which both ran in the second half of the financial year. 

In total, online revenues for the segment grew by 33% in the year. Much of this related to increased recruitment advertising in MarketingWeek.co.uk and designweek.co.uk where traffic continued to build strongly throughout the year and the potential for both sites was further enhanced by the repositioning of mad.co.uk as a composite job aggregator for the marketing, advertising and design verticals.

The Creative Handbook, acquired in March 2007 was published for the first time under Centaur ownership in December 2007 and this was followed in January 2008 by a re-launched and significantly enhanced online edition which has been well received by the industry.

Event revenues were flat year-on-year but, as mentioned above, three underperforming events were discontinued during the previous financial year. If these revenues were excluded Marketing and Creative events revenues grew by 9% in the year. This growth included a contribution from the newly launched Data Summit held in Jerez in June 2008 which successfully brought together leading data service providers with a number of key data industry decision makers. 

Construction & Engineering

Revenues in this segment grew by 6% although most of this growth related to the Engineering portfolio while, within the Construction sector, magazines and websites aimed at the self-build market continued to be affected by some weakening of market conditions. This was at least partly due to constraints on funding for new self build projects following a contraction in the range of specialist lenders to the UK mortgage market but also reflected a more general slowing of activity in the broader housing market during the year.  

While this affected both advertising and subscription sales in the core magazine titles - Homebuilding & Renovating Magazine, Move or Improve? and Period Living - events in this sector were more resilient with revenues from the National Homebuilding Show and five regional events ahead 5% on the prior year. This was despite one regional homebuilding event, held annually in Peterborough, missing a year pending a venue change, with the next show scheduled for May 2009.

The Engineering portfolio supported by a continued resurgence of the UK manufacturing sector reported strong growth across the product range. 

A 37% increase in recruitment advertising was split between The Engineer magazine and the engineer.co.uk while event revenues more than doubled year on year with the biennial Metal Working Production Awards held in April 2008.

In addition the Subcon Show, which was in the stronger of two alternate years in which it runs alongside a major trade association show, proved to be a great success. Attendees were made up principally of buyers from UK process and manufacturing companies and they were able to evaluate over 180 subcontracting suppliers from across the globe.

Perfect Information

A revenue decline for the year of 3% related principally to the discontinuation of Perfect Analysis in October 2007 and despite some slowdown in activity levels among the key investment banking community revenue from the Perfect Filings subscriber base was ahead by 2% for the year.

The discontinuation of Perfect Analysis followed a strategic review which recognised that the investment necessary to bring Perfect Analysis to satisfactory commercial success was better directed towards further development of the core Perfect Filings product and this investment continues with significant enhancements planned for the new financial year.

The underlying profitability of PI was significantly improved as a result of cost efficiencies achieved following the strategic review and in the second half of the year total costs were 23% below 2007 largely due to a reduction in headcount of around 40%, and as a result full year EBITDA margin improved significantly to 36%.

General Business Services

This segment comprises products serving a number of distinct business communities. The main verticals in this segment are Human Resources (HR), the Recruitment sector, Supply Chain and Logistics, Business Travel and the recently launched information services - Headline Property and Headline Auto.

In total, General Business Services revenues grew by 7% with most of the vertical sectors reporting strong growth, with the exception of HR where event revenues were reduced due to a change in the timing of the EB Summit with two events reported in the prior year compared to a single event in the current year.

Business Travel revenues increased by 15% due to a strong performance from the regional show held in Düsseldorf, first launched in September 2004, together with a newly launched regional show in Dubai.

The Dubai show, the first event from the joint venture with Dnata World of Events announced in February 2007, was successfully launched in October 2007, breaking even at contribution level in its first year and establishing an important presence for the Business Travel brand in this fast growing Middle East business hub.

The Recruitment vertical reported revenue growth of 16% primarily relating to increased event revenues through both the Recruiter Forum and industry awards. Revenues from Recruiter magazine were flat against the prior year although recruiter.co.uk continued to report rapid growth albeit from a comparatively small base.

A new magazine title "Resourcing" - aimed at senior HR managers, in house recruitment specialists and talent managers was launched in November 2007 and was published monthly with effect from February 2008.

The Logistics and Supply Chain products also reported strong revenue growth with recruitment advertising volumes building steadily through both Logistics Manager magazine and its associated website. 

Headline Property and Headline Auto were launched towards the end of FY2007 and while both have built some early stage revenues progress has been slower than anticipated partly due to the prevailing trading conditions in the underlying vertical sectors.

In total, General Business Services adjusted EBITDA reduced slightly to £1.4 million (FY2007: £1.5 million) for the year while adjusted EBITDA margin also reduced by 2 percentage points to 12%. The reduction in profitability reflects the investment in new product development within this segment including Business Travel Dubai and the two recent Headline product launches.

Acquisitions

We continually evaluate businesses with a view to supplementing organic growth. While revenue from acquisitions made in the current or preceding financial year represented only 1% of total Group revenue for the year to 30 June 2008  (FY2007: 9%) our acquisition strategy remains unchanged and will typically seek to identify targets that meet the following criteria:

a.  The business is operating in a market with high growth potential and high value,

b.  There is an identifiable high information need on which to base a range of products,

c.  The business is a market-leader in its respective sector or capable of achieving market leadership             quickly,

d.  Its key people fit comfortably into Centaur's culture.

Having identified suitable targets, we seek to apply the following financial criteria in assessing valuations:

e.  It should be earnings enhancing and deliver a minimum 10% post-tax ROI in its first full year of Centaur ownership,

f.  It should deliver a minimum post-tax IRR of 5 percentage points above Centaur's post-tax weighted average cost of capital (currently 10%).

The Board recognises that these financial criteria are demanding but considers them appropriate to the acquisition strategy detailed above and in total the results of the five acquisitions completed since 1 July 2005 have exceeded these financial performance targets.

Current Development Activity

Innovation is central to Centaur's culture and is an almost constant activity across the whole portfolio. In the new financial year, we are continuing to develop new products at a steady pace. Our current development initiatives include extending our established brands into new media and a continued enhancement of market positions achieved through acquisitions.  

In addition to the ongoing development and maturing of initiatives mentioned above, we are currently in the process of developing a number of new projects across the business. These include several new events including two exhibition launches and a number of new summit format events. In addition, the establishment of specialist research panels in a number of our vertical markets has progressed steadily and will provide opportunities for targeted research initiatives in the new financial year.

The further planned investment in the key elements of our current web operations (including the recruitment advertising platform and content management system) will improve the operation of a number of existing online products and also enhance the speed and efficiency of prospective online product development.

Analysis of results

	2008	2008	2007	2007
	£m	£m	£m	£m
By Segment	Revenue	Adjusted EBITDA	Revenue	Adjusted EBITDA
Legal and Financial	28.7	9.2	30.3	9.0
Marketing and Creative	23.6	4.1	23.6	3.6
Construction and Engineering	20.5	4.7	19.4	4.1
Perfect Information	5.8	2.1	6.0	1.5
General Business Services	11.8	1.4	11.0	1.5
Total	90.4	21.5	90.3	19.7
By Source
Recruitment advertising	15.6	-	15.0	-
Other advertising	34.6	-	34.3	-
Circulation revenue	6.1	-	6.3	-
Online subscriptions	7.0	-	7.3	-
Events	25.8	-	25.9	-
Other	1.3	-	1.5	-
Total	90.4	-	90.3	-
By Client type
Audiences	19.6	-	20.5	-
Marketers	70.8	-	69.8	-
Total	90.4	-	90.3	-
By Product type
Print	46.6	10.7	47.7	10.9
Events	25.8	6.7	25.9	5.9
Online products	17.6	4.1	15.8	2.9
Other	0.4	-	0.9	-
Total	90.4	21.5	90.3	19.7
Underlying
Underlying	89.7	21.4	82.5	18.1
Acquisitions1	0.7	0.1	7.8	1.6
Total	90.4	21.5	90.3	19.7
By Maturity
New 2	9.8	0.2	10.9	(0.3)
Existing and acquired	80.6	21.3	79.4	20.0
Total	90.4	21.5	90.3	19.7

Notes

• Acquisitions are defined as those made within the current or preceding financial year

• New products are defined as any product launched in the current or two preceding financial years

 Reconciliation of profit measures

The different measures of profit described above are summarised in the following table:

Continuing operations	2008	2007
	£m	£m
Revenue	90.4	90.3
Adjusted EBITDA	21.5	19.7
Depreciation of property, plant and equipment	(0.8)	(0.8)
Amortisation of software	(1.5)	(1.9)
Share based payments	(0.2)	(0.4)
Interest receivable	0.2	0.2
Share of post-tax profit from associate	-	0.1
Adjusted PBT	19.2	16.9
Amortisation of acquired intangibles	(1.1)	(0.7)
Exceptional administrative costs	(3.6)	-
Profit on sale of associate	-	0.7
Profit before taxation	14.5	16.9

Notes 

1.  One of Centaur's key measures of profit is earnings before interest, tax, depreciation and amortisation, excluding exceptionals and other significant non-cash items including share based payments (adjusted EBITDA). In addition, we report adjusted PBT(PBTA) which is profit before tax excluding the impact of amortisation of acquired intangibles and of exceptional items, and excluding the profit on disposal of associated undertakings

2.  Centaur's product portfolio currently comprises 7 weekly magazines, 3 fortnightly magazines, 14 monthly magazines, 5 magazines of a quarterly or bi-monthly frequency, 36 online products or services, around 35 awards or other sponsored events, 24 exhibitions and approximately 90 conferences.

3.  Centaur reports its results within 5 distinct segments, namely Legal and Financial, Marketing and Creative, Construction and Engineering, Perfect Information and General Business Services. The first 3 segments comprise principally the following vertical business communities in which Centaur publishes market-leading magazine titles: Marketing Services, Creative Services, New Media, Retail Financial Products, Legal Services, Construction and Engineering. Centaur also enjoys strong positions in a number of other specialist communities, namely HR, Recruitment, Supply Chain and Logistics and Business Travel.  

 Consolidated Income Statement for the year ended 30 June 2008

		2008	2007
	Note	£m	£m
Continuing operations
Revenue	1	90.4	90.3
Cost of sales		(44.8)	(45.7)
Gross profit		45.6	44.6
Distribution costs		(4.5)	(4.6)
Administrative expenses		(26.8)	(24.1)
Adjusted EBITDA	1	21.5	19.7
Depreciation of property, plant and equipment		(0.8)	(0.8)
Amortisation of software		(1.5)	(1.9)
Amortisation of acquired intangibles		(1.1)	(0.7)
Share based payments		(0.2)	(0.4)
Exceptional administrative cost	2	(3.6)	-
Operating profit from continuing operations		14.3	15.9
Interest receivable		0.2	0.2
Share of post-tax profit from associate		-	0.1
Profit on sale of associate		-	0.7
Profit from continuing operations before taxation		14.5	16.9
Taxation	3	(5.0)	(4.6)
Profit for the year from continuing operations		9.5	12.3
Discontinued operations
Profit for the year from discontinued operations		0.2	-
Profit for the year attributable to equity shareholders		9.7	12.3
Earnings per share from total operations	4
Basic		6.7p	8.2p
Fully diluted		6.7p	8.1p
Earnings per share from continuing operations	4
Basic		6.6p	8.2p
Fully diluted		6.6p	8.1p

   Consolidated Balance Sheet at 30 June 2008

		2008	2007
	Note	£m	£m
Non-current assets
Goodwill	5	140.3	140.1
Other intangible assets		15.9	16.5
Property, plant and equipment		2.0	2.1
Deferred tax assets		0.7	1.5
		158.9	160.2
Current assets
Inventories		1.2	1.1
Trade and other receivables		16.5	18.4
Cash and cash equivalents		7.8	10.1
		25.5	29.6
Assets held in disposal group for sale		-	0.4
Current liabilities
Financial liabilities - borrowings		0.1	1.1
Trade and other payables		11.0	11.4
Deferred income		8.7	9.6
Current tax liabilities		2.0	2.3
		21.8	24.4
Liabilities held in disposal group for sale		-	0.2
Net current assets		3.7	5.4
Non-current liabilities
Deferred tax liabilities		1.1	1.1
		1.1	1.1
Net assets		161.5	164.5
Capital and reserves
Share capital		15.0	15.0
Treasury shares		(8.9)	(1.0)
Share premium		0.7	0.3
Other reserves		3.1	2.8
Retained earnings		151.6	147.4
Total shareholders' equity		161.5	164.5

The financial statements were approved by the Board of Directors on 17 September 2008 and were signed on its behalf by:

MJ Lally

Group Finance Director

 Consolidated Cash Flow Statement for the year ended 30 June 2008

		2008	2007
		£m	£m
Cash flows from operating activities
Cash generated from operations		19.0	18.2
Tax paid		(4.6)	(4.9)
Cash flows from operating activities		14.4	13.3
Cash flows from investing activities
Interest received		0.1	0.2
Acquisition of subsidiaries (net of cash acquired)		(0.1)	0.1
Proceeds from the disposal of businesses		0.2	0.8
Proceeds from the disposal of subsidiary		0.4	-
Purchase of property, plant and equipment		(0.7)	(0.5)
Purchase of software		(2.4)	(2.1)
Purchase of other intangible assets		-	(3.0)
Cash flows from investing activities		(2.5)	(4.5)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		0.1	0.1
Treasury shares purchased		(7.9)	(1.0)
Repayment of loan notes		(1.0)	(0.5)
Dividends paid		(5.4)	(5.1)
Cash flows from financing activities		(14.2)	(6.5)
Net (decrease)/ increase in cash and cash equivalents		(2.3)	2.3
Cash and cash equivalents at 1 July 2007		10.1	7.8
Cash and cash equivalents 30 June 2008		7.8	10.1

              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) applicable at 30 June 2008 and with those parts of the Companies Act, 1985 applicable to companies reporting under IFRS. The financial statements have been prepared on the historical cost basis.  

These financial statements are presented in pounds sterling (GBP) as that is the currency of the primary economic environment in which the Group operates. 

The preparation of financial statements in conformity with generally accepted accounting principles 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 following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year ended 30 June 2008.

• IFRIC 7, 'Applying the restatement approach under IAS 29'

• IFRIC 8, 'Scope of IFRS 2'

• IFRIC 11, 'IFRS 2 - Group and treasury share transactions'

• IFRIC 9, 'Reassessment of embedded derivatives'

• IFRIC 10, 'Interims and impairment', 

• IFRS 7, 'Financial instruments: Disclosures', and the complementary amendment to IAS 1, Presentation of financial statements - Capital disclosures'

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year ending 30 June 2008 and have not been early adopted:

• IFRIC 12, 'Service concession arrangements'

• IFRIC 13, 'Customer loyalty programmes' 

• IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction' 

• IFRIC 15 'Agreements for the construction of real estate'

• IFRIC 16 Hedges of a Net Investment in a Foreign Operation

• IFRS 8, 'Operating segments'

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.

Additional presentation within the consolidated income statement

The Group has presented separately on the face of the consolidated income statement an additional profit measure of adjusted EBITDA. Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation and excluding exceptional and other significant non-cash items. This presentation has been provided as the Directors believe that this measure reflects more clearly the ongoing operations of the Group. In 2008 and 2007, share based payment costs have been treated as a significant non-cash item. 

Exceptional items

The Group considers items of income and expenses as exceptional items and discloses them separately; 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.

Notes to the Financial Statements 

1.  Segmental reporting

Primary reporting format - business segments

The Group is currently organised into five main business segments. 

Corporate costs are allocated to business segments on an appropriate basis depending on the nature of the cost.  Costs that cannot be allocated to a business segment are shown as "unallocated". 

Segment assets consist primarily of property, plant and equipment, intangible assets including goodwill, inventories, trade receivables and cash and cash equivalents. 

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. 

Secondary reporting format - geographical segments

Substantially all of the Group's net assets are located and all revenue and profit are generated in the United Kingdom. Furthermore substantially all of the Group's customers are located in the United Kingdom.  The Directors consider that the Group operates in a single geographical segment, being the United Kingdom, and therefore secondary format segmental reporting is not required.

Year ended  30 June 2008	Legal and Financial	Marketing and Creative	Construction and Engineering	Perfect Information	General Business Services	Unallocated	Group
	£m	£m	£m	£m	£m	£m	£m
Continuing operations
Revenue	28.7	23.6	20.5	5.8	11.8	-	90.4
Adjusted EBITDA	9.2	4.1	4.7	2.1	1.4	-	21.5
Depreciation of property, plant and equipment	(0.2)	(0.2)	(0.2)	(0.1)	(0.1)	-	(0.8)
Amortisation of software	(0.2)	(0.3)	(0.2)	(0.6)	(0.2)	-	(1.5)
Amortisation of acquired intangibles	(0.1)	(0.1)	(0.4)	-	(0.5)	-	(1.1)
Share based payments	-	-	-	-	-	(0.2)	(0.2)
Exceptional administrative cost	-	(1.1)	(0.2)	(1.7)	(0.1)	(0.5)	(3.6)
Segment result	8.7	2.4	3.7	(0.3)	0.5	(0.7)	14.3
Interest receivable	-	-	-	-	-	0.2	0.2
Share of post tax profit of associates	-	-	-	-	-	-	-
Profit on sale of associate							-
Profit before tax	8.7	2.4	3.7	(0.3)	0.5	(0.5)	14.5
Taxation	-	-	-	-	-	(5.0)	(5.0)
Profit for the year from continuing operations	8.7	2.4	3.7	(0.3)	0.5	(5.5)	9.5
Discontinued operations
Revenue	-	-	-	-	-	-	-
Segment result	-	-	-	-	-	-	-
Profit on disposal of operation	-	-	-	-	0.2	-	0.2
Profit for the year from discontinued operations	-	-	-	-	0.2	-	0.2
Profit for the year attributable to equity shareholders	8.7	2.4	3.7	(0.3)	0.7	(5.5)	9.7
Segment assets	60.0	47.1	39.6	11.1	18.1	-	175.9
Corporate assets	-	-	-	-	-	8.5	8.5
Consolidated total assets	60.0	47.1	39.6	11.1	18.1	8.5	184.4
Segment liabilities	3.7	5.4	4.9	2.5	3.1	-	19.6
Corporate liabilities	-	-	-	-	-	3.3	3.3
Consolidated total liabilities	3.7	5.4	4.9	2.5	3.1	3.3	22.9
Other items:
Capital expenditure	0.7	0.9	0.9	1.0	0.4	-	3.9
Impairment of trade receivables	-	0.2	0.2	-	0.1	-	0.5

Year ended  30 June 2007	Legal and Financial	Marketing and Creative	Construction and Engineering	Perfect Information	General Business Services	Unallocated	Group
	£m	£m	£m	£m	£m	£m	£m
Continuing operations
Revenue	30.3	23.6	19.4	6.0	11.0	-	90.3
Adjusted EBITDA	9.0	3.6	4.1	1.5	1.5	-	19.7
Depreciation of property, plant and equipment	(0.2)	(0.2)	(0.1)	(0.1)	(0.2)	-	(0.8)
Amortisation of software	(0.3)	(0.3)	(0.2)	(1.0)	(0.1)		(1.9)
Amortisation of acquired intangibles	(0.1)	-	(0.4)	-	(0.2)	-	(0.7)
Share based payments	-	-	-	-	-	(0.4)	(0.4)
Exceptional administrative cost	-	-	-	-	-	-	-
Segment result	8.4	3.1	3.4	0.4	1.0	(0.4)	15.9
Interest receivable	-	-	-	-	-	0.2	0.2
Share of post tax profit of associates	0.1	-	-	-	-	-	0.1
Profit on sale of associate	0.7	-	-	-	-	-	0.7
Profit before tax	9.2	3.1	3.4	0.4	1.0	(0.2)	16.9
Taxation	-	-	-	-	-	(4.6)	(4.6)
Profit for the year from continuing operations	9.2	3.1	3.4	0.4	1.0	(4.8)	12.3
Discontinued operations
Revenue	-	-	-	-	1.1	-	1.1
Segment result	-	-	-	-	(0.1)	-	(0.1)
Profit on disposal of operation	-	-	-	-	0.1	-	0.1
Profit for the year from discontinued operations	-	-	-	-	-	-	-
Profit for the year attributable to equity shareholders	9.2	3.1	3.4	0.4	1.0	(4.8)	12.3
Segment assets	60.4	47.4	39.7	12.0	18.7	-	178.2
Corporate assets	-	-	-	-	-	12.0	12.0
Consolidated total assets	60.4	47.4	39.7	12.0	18.7	12.0	190.2
Segment liabilities	4.2	5.3	5.5	2.9	2.5	-	20.4
Corporate liabilities	-	-	-	-	-	5.3	5.3
Consolidated total liabilities	4.2	5.3	5.5	2.9	2.5	5.3	25.7
Other items:
Capital expenditure	0.3	1.0	0.2	1.0	4.7	-	7.2
Impairment of trade receivables	0.1	0.2	0.2	(0.1)	0.2	-	0.6

2.  Exceptional administrative cost

	2008	2007
	£m	£m
Closure of Perfect Analysis		-
Accelerated amortisation of assets	1.2	-
Redundancies	0.2	-
Post closure losses	0.3	-
	1.7
Reorganisation of publishing operations
Redundancies	1.3	-
Share based payment	0.1	-
	1.4	-
Onerous lease provision	0.5	-
Total	3.6	-

During the period, the Directors decided to discontinue Perfect Analysis, the equity research service developed by Synergy Software Solutions Limited, a subsidiary company. The costs of closure totalling £1.7m have been reported as an exceptional item and include £1.2m of accelerated amortisation of computer software.

Also during the year, following a strategic review of its publishing operations, certain organisational changes have been implemented in order to facilitate a more consistent multi-media strategy across all sectors in the Group and to drive growth in new product development. This resulted in redundancies within publishing operations with a total cost to the Group of £1.4m.

In addition the exceptional costs include £0.5m reflecting the onerous element of an additional short term property rental commitment at 30 June 2008 that has been entered into to facilitate the changes to the Group's main London premises that have arisen following the restructuring of the business during the year.

3.  Taxation

(a) Analysis of charge in year

	2008	2007
	£m	£m
Current tax
- Current year	4.3	4.6
	4.3	4.6
Deferred tax
- Current year	0.7	(0.1)
- Adjustment in respect of prior year	-	0.1
	0.7	-
Taxation	5.0	4.6
(b) Tax on items charged to equity
Deferred tax charge on share based payments	0.1	0.1
(c) Factors affecting tax charge for the year
The tax assessed for the year is higher (2007: lower) than the standard rate of corporation tax in the UK (29.5%). The differences are explained below:
	2008	2007
	£m	£m
Profit before tax	14.5	16.9
Profit before tax multiplied by standard rate of corporation tax in the UK of 29.5% (2007: 30%)	4.3	5.1
Effects of:
Expenses not deductible for tax purposes	0.2	0.2
Non-taxable gain on sale of associate	-	(0.2)
Current tax deduction on share options exercised	-	(0.2)
Deferred tax charge/(credit) on share based payments taken to income statement	0.5	(0.5)
Losses not recognised	0.1	0.1
Capital losses utilised	(0.1)	-
Adjustments to tax charge in respect of previous years	-	0.1
Total taxation	5.0	4.6

The standard tax rate for the year has reduced from 30% to 29.5% as a result of the reduction in the UK corporation tax rate from 30% to 28% from 1 April 2008 onwards. 

There was no tax arising on discontinued operations during the current or previous year.

4.  Earnings per share

Basic earnings per share (EPS) is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares in issue during the year. Shares held in the employee benefit trust and shares held in treasury have been excluded in arriving at the weighted average number of shares.

For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Company has two classes of dilutive potential ordinary shares: 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; and the contingently issuable shares under the Company's long-term incentive plan to the extent that the conditions are met at the reporting date. 

	2008			2007
	Earnings	Weighted average number of shares	Per share amount	Earnings	Weighted average number of shares	Per share amount
Total operations	£m	millions	Pence	£m	millions	Pence
Basic EPS	9.7	144.3	6.7	12.3	149.1	8.2
Effect of dilutive securities
Options	-	0.3	-	-	1.8	-
Contingently issuable shares	-	-	-	-	0.4	-
Diluted basic EPS	9.7	144.6	6.7	12.3	151.3	8.1

Continuing operations
Basic EPS	9.5	144.3	6.6	12.3	149.1	8.2
Effect of dilutive securities
Options	-	0.3	-	-	1.8	-
Contingently issuable shares	-	-	-	-	0.4	-
Diluted basic EPS	9.5	144.6	6.6	12.3	151.3	8.1

An alternative measure of Adjusted earnings per share has been provided as the Directors believe that this measure is more reflective of the ongoing trading of the Group.

	2008			2007
	Earnings	Weighted average number of shares	Per share amount	Earnings	Weighted average number of shares	Per share amount
	£m	millions	Pence	£m	millions	Pence
Adjusted EPS
Earnings attributable to ordinary shareholders from continuing operations	9.5	144.3	6.6	12.3	149.1	8.2
Amortisation of acquired intangibles	1.1	-	0.7	0.7	-	0.5
Profit on disposal of associated undertakings	-	-	-	(0.7)	-	(0.5)
Exceptional administrative cost (note 2)	3.6	-	2.5	-	-	-
Tax effect of above adjustments	(0.9)	-	(0.6)	(0.1)
Adjusted EPS	13.3	144.3	9.2	12.2	149.1	8.2
Effect of dilutive securities
Options	-	0.3	-	-	1.8	-
Contingently issuable shares	-	-	-	-	0.4	-
Diluted adjusted EPS	13.3	144.6	9.2	12.2	151.3	8.1

5.  Goodwill

Goodwill by segment

Each individual magazine and online title is deemed to be a Cash Generating Unit (CGU) as each title generates profits and cash flows that are largely independent from other communities.  Goodwill is attributed to individual CGUs but is grouped together at segmental level for the purposes of the annual impairment review of goodwill, being the lowest level that management monitors goodwill.

The following table shows the allocation of goodwill to segments at 30 June 2008:

	Legal and Financial	Marketing and Creative	Construction and Engineering	Perfect Information	General Business Services	Total
	£m	£m	£m	£m	£m	£m
At 30 June 2007	53.2	40.5	30.1	8.6	7.7	140.1
Additions	-	-	-	0.1	-	0.1
Fair value adjustment	-	-	-	-	0.1	0.1
At 30 June 2008	53.2	40.5	30.1	8.7	7.8	140.3

Impairment testing of goodwill

During the year goodwill was tested for impairment in accordance with IAS 36. In assessing whether a write-down of goodwill is required in the carrying value of the related asset, the carrying value of the CGU or group of CGUs is compared with its recoverable amount. The recoverable amount for each CGU and collectively for groups of CGUs that make up the segments of the Group's business has been measured based on value in use. 

The Group estimates the value in use of its CGUs using a discounted cash flow model (DCF) which adjusts the cash flows for risks associated with the assets and discounts these using a pre-tax rate of 14.4% (2007: 14.4%). The discount rate used is consistent with the Group's weighted average cost of capital and is used across all segments.

No impairment was noted following the annual impairment review.

The key assumptions used in calculating value in-use are sales growth, EBITDA, working capital movements and capital expenditure. The Group has used formally approved budgets for the first year of the value in use calculation, and estimated revenue growth rates of between 2% and 9% and EBITDA margins of between 10% and 35% for years 2 to 5. Terminal values assuming growth rates of 3% have been calculated from estimated year 5 cash flows.

The assumptions used in the calculations of value-in-use for each segment have been derived from past experience.  Management believe that no reasonably possible change in assumptions would cause the carrying amount of goodwill to exceed its recoverable amount. 

6.  Nature of the financial information

.

The foregoing financial information does not amount to full accounts within the meaning of Section 240 of

Companies Act 1985. The financial information has been extracted from the Group's Annual Report and

Accounts for the year ended 30 June 2008 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 50 Poland Street, London, W1F 7AX.

 

END

 

 

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