Interim Results
Centaur Media PLC
28 February 2008
Centaur Media plc results for the half year ended 31 December 2007
Highlights
Centaur Media plc ("Centaur", the "Company" or the "Group") announces its
results for the six months ended 31 December 2007.
6 months 6 months
ended ended
31 December 31 December Movement
2007 2006 (5)
-----------------------------------------------------------------------
£m £m
Revenue 39.1 37.0 6%
Adjusted EBITDA (1) 6.3 5.5 15%
Adjusted EBITDA margin 16% 15%
Adjusted profit before tax (2) 5.0 4.1 22%
Profit before tax 2.8 3.7 (24%)
Adjusted basic EPS (pence) (3) 2.1 2.1 -
Basic EPS (pence) 0.9 1.9 (53%)
Cash conversion rate (4) 118% 98%
Net cash 1.7 4.2
Interim dividend per share 1.2 1.0 20%
(pence)
• 6% revenue growth
• Adjusted EBITDA margin improved by 1 percentage point to 16%
• Adjusted profit before tax ahead by 22%
• Profit before tax reduced by 24% due to the impact of exceptional items
following the closure of Perfect Analysis
• Adjusted EPS of 2.1 pence and basic EPS of 0.9 pence
• Cash conversion ratio improved to 118%
• 6.85m shares purchased through an on-market share buy-back programme
• Interim dividend of 1.2 pence per share proposed
Commenting on the results Geoff Wilmot, Chief Executive Officer of Centaur Media
plc, said: "I am pleased that Centaur has again been able to report another
strong set of financial results for the half year to 31 December 2007. Group
revenues for the first half were ahead 6% year on year, whilst we were able to
secure a further percentage point increase in adjusted EBITDA margin to 16%.
Adjusted profit before tax was ahead 22% although on a statutory basis PBT was
reduced by 24%, as a result of the impact of exceptional items which largely
related to the previously announced discontinuation of Perfect Analysis.
"We remain focussed on strengthening Centaur's existing market leading positions
in its core business areas, principally through new product launches - most
notably in online and events - and I am particularly encouraged that online
revenues continue to grow rapidly. Our seasonally stronger second half has
started well, in line with market expectations."
Enquiries:
Centaur Media plc Geoff Wilmot, CEO Tel: 020 7970 4000
Mike Lally, GFD
Gavin Anderson & Company Robert Speed Tel: 020 7554 1400
Janine Brewis
www.centaur.co.uk
Notes:
(1) 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
exceptionals and other significant non-cash items including share based
payments (Adjusted EBITDA).
(2) Adjusted profit before tax is profit before tax, excluding the impact of
amortisation of acquired intangibles and of exceptional items.
(3) Adjusted EPS is based on the basic EPS but after making adjustments for
amortisation of acquired intangibles and exceptional items. See note
5.
(4) Cash conversion rate is free cash flow expressed as a percentage of
adjusted operating profit. Free cash flow is defined as cash generated
from operations (note 9 to the interim report), less capital
expenditure on property, plant and equipment and software. Adjusted
operating profit is operating profit excluding amortisation of acquired
intangibles and exceptional items.
(5) All income statement comparatives have been adjusted to take account of
the effect of discontinued operations.
Interim Results for the six months to 31 December 2007
Introduction
I am pleased to report that Centaur achieved further growth in both turnover and
adjusted profit before tax in the six months ended 31 December 2007. In what is
seasonally Centaur's weaker half of the year (due to the low levels of
publishing and event activity in August and December) revenue grew 6% to £39.1m
and adjusted profit before tax increased by 22% to £5.0m (H1 2007: £4.1m).
Reported profit before tax was £2.8m (H1 2007: £3.7m). The Company's results for
the six months ended 31 December 2007 included an exceptional administrative
cost of £1.7m relating principally to accelerated amortisation of computer
software following the discontinuation of Perfect Analysis (see below).
Taxation for the period of £1.5m represents an effective tax rate of 54% (H1
2007: 22%) and includes a deferred tax charge of £0.5m in relation to share
based payments (H1 2007: deferred tax credit £0.4m). A reconciliation of the
taxation assessed for the period to the standard rate of corporation tax is set
out in note 2 to the interim financial statements.
A share repurchase programme commenced in October 2007 and to date 6.85m shares,
representing 4.6% of issued share capital have been repurchased for a total
consideration of £7.4m (average price 107 pence per share). The authority to
purchase up to 10% of the Company's issued share capital each year was renewed
at the Annual General Meeting on 29 November 2007.
The share repurchase programme has been fully financed from free cash flow, with
a reported cash conversion ratio of 118% (H1 2007: 98%). At the end of the
period the Group held net cash balances of £1.7m (H1 2007: £4.2m).
As a result of this strong financial performance the Board has declared a 20%
increase in the interim dividend to 1.2 pence per share (H1 2007: 1.0 pence).
The interim dividend will be paid on 4 April 2008 to shareholders on the share
register as at 7 March 2008.
Business Overview
The results for the period demonstrate continued growth across the majority of
Centaur's vertical markets along with improved underlying profitability with
adjusted EBITDA margin increasing to 16% (H1 2007: 15%).
The Group remains focused on strengthening its existing market-leading positions
and the results for the period include a net £1.0m investment in products
launched during the last three years. In addition, further progress has been
achieved in expanding revenues across a broader range of media platforms with
total online sales in the period representing 22% of Group revenues (H1 2007:
20%).
Total advertising revenues grew 9% in the period, with recruitment advertising
reporting the strongest growth (12%). Web based recruitment increased by 38%
year on year, and in total, 24% of the Group's recruitment advertising is now
placed online (H1 2007: 20%). Event revenues declined 4%, largely due to the
discontinuation of two underperforming Marketing events - The Total Motivation
Show and The Direct Marketing Show - which ran for the last time in the autumn
of 2007. The Event business remains a second half weighted activity for Centaur
and in the 2007 financial year less than a third of full year event revenues
were reported in the first half.
Centaur has a strong record of continued organic growth and more than 10% of
revenue relates to products launched since 1 July 2005. New product development
continued in the period with new events including two new summits in the secured
lending sector and the Business Travel show in Dubai.
Newly launched online products continued to grow strongly. The two new branded
websites launched a year ago - marketingweek.co.uk and designweek.co.uk -
reported further rapid revenue growth led principally by strong web-based
recruitment advertising with very little direct substitution of existing print
based recruitment advertising in these titles.
Magazines remain an important component of the product range and are deployed to
provide business critical information and effective routes to market for a
number of our high value communities. A new magazine title "Resourcing" - aimed
at senior HR managers, in house recruitment specialists and talent managers -
was launched in November 2007 and will initially adopt a quarterly publishing
frequency during calendar year 2008.
Review of Divisional Results
Our results are grouped into five major operating business segments - Legal &
Financial; Marketing & Creative; Construction & Engineering; Perfect Information
and General Business Services (which includes Business Travel, Human Resources/
Recruitment and Supply Chain and Logistics).
Legal & Financial
Revenues grew by 12% in the period to £13.0m (H1 2007: £11.6m) with adjusted
EBITDA of £3.4m (H1 2007: £3.2m).
The legal community, comprising the in-house counsel of major UK companies and
private practice law firms, reported 6% revenue growth. Despite some slowing of
the corporate transaction activity that underpins this sector, recruitment
advertising remained strong in both the Lawyer magazine and the Lawyer.com.
Revenues in core products targeting the mortgage and secured lending sectors
were affected by the market volatility that has prevailed since early in this
financial year. This has not impacted on the demand for high quality information
- demonstrated by further new event launches referred to above - but has
resulted in reduced advertising volumes for the sector, particularly in the
weekly magazine Mortgage Strategy. Nevertheless, the Directors are pleased to
report that Mortgage Strategy's market share has strengthened as advertisers
become more selective in deploying remaining marketing budgets.
Despite difficulties in the credit market, other products in the retail
financial sector were buoyant throughout the period and even after the
reductions in mortgage related advertising sales, the Group achieved double
digit revenue growth across the portfolio.
The overall reduction in adjusted EBITDA margin to 26% (H1 2007: 28%) reflects
the relatively high operational gearing associated with the revenue reductions
in Mortgage Strategy partly offset by a comparatively low margin in new summit
and magazine launches.
Marketing & Creative
Revenues increased by 4% to £10.6m (H1 2007: £10.2m) while adjusted EBITDA of
£1.0m (H1 2007: £0.9m) was 11% ahead year on year with margin unchanged at 9%.
The strongest growth in this segment was within online products where total
revenues were 50% ahead year on year led by the last year's website launches. In
both print and online products, recruitment advertising was a strong component
of the revenue growth. In total, recruitment advertising was 15% ahead.
The growing success of marketingweek.co.uk and designweek.co.uk, launched just
over a year ago, continues with traffic levels building steadily during the
period. These levels of traffic provide a much broader and deeper reach into
their respective communities and the revenues accruing through each of these new
sites are broadly incremental to their print counterparts. However, we have over
the same period experienced a reduction in recruitment advertising being placed
directly on mad.co.uk (the site first established 8 years ago to jointly serve
the marketing, advertising & design communities). As a result of the launches of
marketingweek.co.uk and designweek.co.uk, mad.co.uk has now been repositioned as
a composite job aggregator across the three separate verticals rather than a
primary job board offering.
Revenue growth in the period was constrained to some extent by the effect of
discontinued events. The two discontinued events - the Direct Marketing Show and
the Total Motivation Show -had struggled to achieve a satisfactory level of
profitability in weak and competitive segments of the market.
Online marketing, however, remains a key driver of growth in the period. Our
major product serving this key discipline - New Media Age - reported growth of
13% and 53% in magazine and online revenues respectively. The event activity in
this area is principally second half weighted with both the Interactive
Marketing Summit (January) and the Online Marketing and Media Show (June)
occurring in the second half. The comparatively low adjusted EBITDA margin at
the half year partly reflects this second half activity profile.
The existing product portfolio targeting the Creative sector (Creative Review
and Design Week) was significantly strengthened by the acquisition of the
Creative Handbook six months ago and this will be further consolidated as we
move into the second half by the re-launched online edition.
Engineering & Construction
Revenues for the period were flat at £8.3m while adjusted EBITDA at £1.2m (H1
2007: £1.4m) represents a margin deterioration of 3 points to 14%, although this
segment is again second half weighted and affected by changes in the timing of
event activity. Within construction, those magazines and websites aimed at the
self-build and renovation sectors (Homebuilding & Renovating, Move or Improve?)
experienced some softness in both advertising and circulation sales during the
period, partly reflecting a slowing of activity in the broader construction and
general housing market.
The two regional homebuilding shows held in the first half (London and Northern)
reported some growth. The year on year position was affected by a change in
timing of the Eastern regional show held in July a year ago but not scheduled
again until the autumn of 2008 following a venue change, as a result of which
total event revenues reduced by 9% in the period. Centaur's single most
substantial trade show - the National Homebuilding Show - is scheduled for April
2008 with space sales expected to be comfortably ahead year on year.
Revenues in the Engineering portfolio were 6% ahead year on year led by The
Engineer, where magazine and online revenues reported 25% and 54% growth
respectively, with strong growth in recruitment advertising through both
channels.
Perfect Information
Adjusted EBITDA for the period increased to £1.0m (H1 2007: £0.7m) on revenues
of £3.0m (H1 2007: £3.0m) representing a strong margin improvement to 33% (H1
2007: 23%). This margin improvement reflects reductions in the underlying cost
base of the business that have been achieved following the decision to
discontinue Perfect Analysis in October 2007. As previously reported, we had
conducted a strategic review which recognised that the investment necessary to
bring Perfect Analysis to satisfactory commercial success was better directed
towards further development for the core product, Perfect Filings.
The margin improvement is underpinned by a reduction in headcount in excess of
15% year on year and further improvements across the course of the full year are
expected.
General Business Services
Revenues for the period grew 8% to £4.2m (H1 2007: £3.9m) and adjusted EBITDA
losses reduced to £0.3m (FY 2007: £0.7m loss). In the prior year period, the
results of this segment included £0.3m of losses relating to Finance Week, the
online publication for the corporate accountancy community, which was outsourced
to Sift Media just over a year ago. The other vertical sectors in this segment
reported mixed revenue performance.
Employee Benefits magazine and website delivered strong revenue growth in the
period, although in total, revenues from the Human Resources portfolio were 5%
down year on year due to a change in the timing of the associated summit now
scheduled for the second half of the financial year.
The portfolio of products aimed at recruitment professionals includes The
Recruiter Magazine and website and associated events including The Recruiter
Forum. Total revenues grew by 19% in the period, underpinned by generally high
employment levels and a skills shortage driving increased activity among
specialist search and selection companies.
In the Business Travel sector, two regional travel shows were held in the first
half - the Business Travel Show Dusseldorf in September 2007 moved into profit
for the first time since launch - while the newly launched Business Travel Show
Dubai was a successful launch event. The main Business Travel show in London was
held in February 2008 together with the Travel Technology show and both shows
have performed well.
Finally, the Supply Chain and Logistics portfolio continued to grow steadily
with revenues for the period 33% ahead in total. Growth was spread evenly
between Logistics Manager (magazine and website) and Events - the Logistics Link
North show held in September 2007 and the industry awards held in October 2007.
The largest event in this sector, the Extended Supply Chain conference -
acquired last spring - is scheduled for March 2008.
Current Trading & Outlook
We have experienced further growth in most of our vertical markets in the first
two months of 2008 and we continue to look for new product opportunities in all
our markets. In particular the re-organisation of the Marketing & Creative
segment is expected to facilitate new product development activity and margin
improvement in that segment. Overall the current outlook for the business
remains positive and the Board expects results for the current financial year to
be in line with market expectations.
Analysis of results
Six months to Six months to
31 December 2007 31 December 2006
restated (1)
Turnover Adjusted Turnover Adjusted
EBITDA EBITDA
------------------------------------------------
£m £m £m £m
By Division
Legal and Financial 13.0 3.4 11.6 3.2
Marketing, Creative and New 10.6 1.0 10.2 0.9
Media
Construction and Engineering 8.3 1.2 8.3 1.4
Perfect Information 3.0 1.0 3.0 0.7
General Business Services 4.2 (0.3) 3.9 (0.7)
---------------------------------------------------------------------------------
39.1 6.3 37.0 5.5
---------------------------------------------------------------------------------
By Source
Recruitment advertising 7.4 - 6.6 -
Other advertising 16.5 - 15.3 -
Circulation revenue 3.1 - 3.0 -
Online subscriptions 3.7 - 3.7 -
Events 7.5 - 7.8 -
Other 0.9 - 0.6 -
---------------------------------------------------------------------------------
39.1 - 37.0 -
---------------------------------------------------------------------------------
By Client Type
Audiences 9.1 - 9.3 -
Marketers 30.0 - 27.7 -
---------------------------------------------------------------------------------
39.1 - 37.0 -
---------------------------------------------------------------------------------
By Product Type
Magazines 22.4 4.3 21.1 3.9
Events 7.5 0.3 7.8 0.8
Online products 8.5 1.6 7.3 0.9
Other 0.7 0.1 0.8 (0.1)
---------------------------------------------------------------------------------
39.1 6.3 37.0 5.5
---------------------------------------------------------------------------------
Underlying
Underlying 39.0 6.3 34.1 5.2
Acquisitions (2) 0.1 - 2.9 0.3
---------------------------------------------------------------------------------
Total 39.1 6.3 37.0 5.5
---------------------------------------------------------------------------------
By Maturity
New (3) 4.1 (1.0) 3.5 (1.0)
Existing and acquired 35.0 7.3 33.5 6.5
---------------------------------------------------------------------------------
Total 39.1 6.3 37.0 5.5
---------------------------------------------------------------------------------
(1) All comparatives have been adjusted to exclude discontinued operations.
(2) Acquisitions are defined as those made within the current or preceding
financial year.
(3) New products are defined as any product launched in the current and two
preceding financial years.
Reconciliation of profit measures
The different measures of profit referred to above are summarised in the
following table:
Continuing operations 6 months 6 months
ended ended
31 31
December December
2007 2006
(restated)
£m £m
--------------------------------------------------------------------------
Revenue 39.1 37.0
--------------------------------------------------------------------------
Adjusted EBITDA 6.3 5.5
Depreciation of property, plant and equipment (0.4) (0.4)
Amortisation of software (0.8) (0.9)
Share based payments (0.2) (0.2)
Interest receivable 0.1 0.1
--------------------------------------------------------------------------
Adjusted PBT 5.0 4.1
Amortisation of acquired intangibles (0.5) (0.4)
Exceptional administrative costs (1.7) -
--------------------------------------------------------------------------
Profit before taxation 2.8 3.7
--------------------------------------------------------------------------
Principal Risks and Uncertainties
Each division considers strategic, operational and financial risks and
identifies actions to mitigate those risks. These risk profiles are updated at
least annually. The principal risks and uncertainties for the remaining six
months of the financial year are discussed below. Further details of the Group's
risk profile analysis can be found in our Annual Report.
The Group's performance is broadly linked to the strength of the UK economy, and
general economic factors such as inflation, currency fluctuation, interest
rates, supply and demand of capital and industrial disruption therefore have the
potential to affect the Group's operations, business and profitability. The
range of markets served by Centaur's products together with the continuing
strategy of extending the reach of established brands through the delivery of
new products in a diverse range of media formats provides some ability to spread
this exposure.
Changes in advertising trends could have an impact on the Group's profitability.
However the diversity of served markets and strength of brands together with
continued brand diversification into alternative media formats all serve to
limit this exposure.
It is essential that the Group successfully develops and markets new products
and integrates acquired businesses. The proven record of organic growth over the
past several years, and the successful integration of the businesses acquired in
the previous year clearly demonstrate the Group's ability to deliver this
strategy.
Domestic and international competitors market their products at the Group's
target audiences. New technology, changing commercial circumstances and new
entrants to the markets in which the Group operates may adversely affect the
Group's business. Through a deep understanding of the information needs of the
markets it serves and by maintaining the highest standards of editorial
integrity, the Group can continually adapt and develop existing products thus
protecting market leading positions and thereby limiting the opportunities for
competitors.
The Group's future success is substantially dependent on the continued services
and continuing contributions of its Directors, senior management and other key
personnel. The entrepreneurial culture of the Group and the incentive programmes
in place enable us to attract and retain the key management team.
Certain divisions of the Group are dependent on the efficient and uninterrupted
operation of their IT and computer systems and of services from third-party
providers. The Group has taken precautions to limit its exposure to the risk of
material disruption to systems.
Forward Looking Statements
Certain statements in this half-yearly report are forward-looking. Although the
group believes that the expectations reflected in these forward-looking
statements are reasonable, we can give no assurance that these expectations will
prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements. We undertake no obligation to
update any forward-looking statements whether as a result of new information,
future events or otherwise
Statement of Responsibilities
The directors confirm that this condensed set of financial statements has been
prepared in accordance with IAS 34 as adopted by the European Union, and that
the interim management report herein includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8.
The directors of Centaur Media plc are listed in the Centaur Media plc Annual
Report for 30 June 2007 with the exception of the following changes in the
period: Mr C Satterthwaite was appointed on 1 July 2007, Mr A F Irby resigned on
29 November 2007 and Mr G V Sherren moved from Executive Chairman to
Non-Executive Chairman on 6 December 2007. A list of current directors is
maintained on the Centaur Media plc website: www.centaur.co.uk
Geoff Wilmot, Chief Executive Officer
Mike Lally, Group Finance Director
27 February 2008
Independent Review Report to Centaur Media plc
Introduction
We been engaged by the company to review the condensed set of financial
statements in the interim report for the 6 months ended 31 December 2007, which
comprise the consolidated income statement, balance sheet, statement of changes
in equity, cash flow statement and related notes. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The interim report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the interim report in
accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in the notes, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this interim report has been
prepared in accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the interim report based on our review. This
report, including the conclusion, has been prepared for and only for the company
for the purpose of the Disclosure and Transparency Rules of the Financial
Services Authority and for no other purpose. We do not, in producing this
report, accept or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the interim report for the six
months ended 31 December 2007 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
London 27 February 2008
Notes:
(a) The maintenance and integrity of the Centaur Media plc web site is the
responsibility of the directors; the work carried out by the auditors does
not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the
interim report since it was initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
Consolidated Income Statement
for the 6 months ended 31 December 2007
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
31 December 31 December 30 June
2007 2006 2007
(restated)
-------------------------------------------------
Continuing operations Notes £m £m £m
Revenue 1 39.1 37.0 90.3
Cost of sales (20.0) (19.8) (45.7)
------------------------------------------------------------------------------------
Gross profit 19.1 17.2 44.6
Distribution costs (2.2) (2.2) (4.6)
Administrative expenses (14.2) (11.4) (24.1)
------------------------------------------------------------------------------------
Adjusted EBITDA 1 6.3 5.5 19.7
Depreciation of property, plant
and equipment (0.4) (0.4) (0.8)
Amortisation of software (0.8) (0.9) (1.9)
Amortisation of acquired
intangibles (0.5) (0.4) (0.7)
Share-based payments (0.2) (0.2) (0.4)
Exceptional administrative costs 7 (1.7) - -
------------------------------------------------------------------------------------
Operating profit 2.7 3.6 15.9
Interest receivable 0.1 0.1 0.2
Share of post tax profit from
associate - - 0.1
Profit on sale of associate - - 0.7
------------------------------------------------------------------------------------
Profit before tax 2.8 3.7 16.9
Taxation 2 (1.5) (0.8) (4.6)
------------------------------------------------------------------------------------
Profit from continuing operations 1.3 2.9 12.3
------------------------------------------------------------------------------------
Discontinued operations
Profit from discontinued
operations 6 0.2 0.1 -
------------------------------------------------------------------------------------
Profit attributable to equity
shareholders 1.5 3.0 12.3
------------------------------------------------------------------------------------
Earnings per share
Continuing operations
- Basic 5 0.9p 1.9p 8.2p
- Fully diluted 5 0.9p 1.9p 8.1p
-----------------------------------------------------------------------------------
Total operations
- Basic 5 1.0p 2.0p 8.2p
- Fully diluted 5 1.0p 2.0p 8.1p
-----------------------------------------------------------------------------------
Consolidated Balance Sheet at 31 December 2007
Unaudited Unaudited Audited
31 December 31 December 30 June
2007 2006 2007
-----------------------------------------
Notes £m £m £m
Assets
Non-current assets
Goodwill 140.2 142.0 140.1
Other intangible assets 4 14.7 12.6 16.5
Property, plant and equipment 2.0 2.5 2.1
Investments accounted for using
equity method - 0.3 -
Deferred tax assets 0.9 1.6 1.5
----------------------------------------------------------------------------
157.8 159.0 160.2
----------------------------------------------------------------------------
Current assets
Inventories 1.9 2.7 1.1
Trade and other receivables 17.0 17.5 18.4
Cash and cash equivalents 1.9 5.4 10.1
----------------------------------------------------------------------------
20.8 25.6 29.6
----------------------------------------------------------------------------
Assets held in disposal group for
sale - - 0.4
Liabilities
Current liabilities
Financial liabilities - borrowings 0.2 1.2 1.1
Trade and other payables 8.6 8.8 11.4
Deferred income 12.3 13.5 9.6
Current tax liabilities 0.9 0.9 2.3
----------------------------------------------------------------------------
22.0 24.4 24.4
----------------------------------------------------------------------------
Liabilities held in disposal group
for sale - - 0.2
----------------------------------------------------------------------------
Net current (liabilities) / assets (1.2) 1.2 5.4
----------------------------------------------------------------------------
Non-current liabilities
Deferred tax liabilities 1.1 1.1 1.1
Provisions - 1.9 -
----------------------------------------------------------------------------
1.1 3.0 1.1
----------------------------------------------------------------------------
Net assets 155.5 157.2 164.5
----------------------------------------------------------------------------
Shareholders' equity
Ordinary shares 15.0 14.5 15.0
Treasury shares 8 (8.4) - (1.0)
Share premium 0.7 0.3 0.3
Other reserves 3.0 2.7 2.8
Retained earnings 145.2 139.7 147.4
----------------------------------------------------------------------------
Total shareholders' equity 8 155.5 157.2 164.5
----------------------------------------------------------------------------
The condensed set of financial statements were approved by the Board of
Directors on 27 February 2008 and were signed on its behalf by
MJ Lally
Group Finance Director
Consolidated Cash Flow Statement
for the 6 months ended 31 December 2007
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
31 December 31 December 30 June
2007 2006 2007
-------------------------------------------------------
Continuing operations Notes £m £m £m
Cash flows from operating
activities
Cash generated from operations 9 6.8 5.2 18.2
Tax paid (2.4) (2.6) (4.9)
-------------------------------------------------------------------------------------------
Net cash flows from operating
activities 4.4 2.6 13.3
-------------------------------------------------------------------------------------------
Cash flows from investing
activities
Interest received 0.1 0.1 0.2
Acquisition of subsidiaries (net of
cash acquired) - 0.9 0.1
Proceeds from the sale of
businesses 0.2 - 0.8
Purchase of property, plant and
equipment (0.3) (0.4) (0.5)
Purchase of software (0.7) (0.9) (2.1)
Purchase of other intangible assets - (0.3) (3.0)
-------------------------------------------------------------------------------------------
Net cash flows from investing
activities (0.7) (0.6) (4.5)
-------------------------------------------------------------------------------------------
Cash flows from financing
activities
Net proceeds from issue of ordinary
share capital - - 0.1
Treasury shares (7.4) (0.4) (1.0)
Repayment of loan notes (0.9) (0.4) (0.5)
Dividends paid to shareholders (3.6) (3.6) (5.1)
-------------------------------------------------------------------------------------------
Net cash flows from financing
activities (11.9) (4.4) (6.5)
-------------------------------------------------------------------------------------------
Net (decrease) / increase in cash
and cash equivalents (8.2) (2.4) 2.3
Cash and cash equivalents at 1 July 10.1 7.8 7.8
-------------------------------------------------------------------------------------------
Cash and cash equivalents 1.9 5.4 10.1
-------------------------------------------------------------------------------------------
Interim Report for the 6 months ended 31 December 2007
Basis of preparation
This condensed consolidated six monthly financial information for the period
ended 31 December 2007 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim
financial reporting' as adopted by the European Union. The six monthly condensed
consolidated financial report should be read in conjunction with the annual
financial statements for the year ended 30 June 2007, which have been prepared
in accordance with IFRSs as adopted by the European Union.
Accounting policies
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 30 June 2007, as described in those
annual financial statements. The following new standards, amendments to
standards or interpretations are mandatory for the first time for the financial
year ending 30 June 2008.
- IFRIC 7, 'Applying the restatement approach under IAS 29', effective
for annual periods beginning on or after 1 March 2006. This interpretation
is not relevant for the group.
- IFRIC 8, 'Scope of IFRS 2', effective for annual periods beginning on
or after 1 May 2006. This interpretation has not had any impact on the
recognition of share-based payments in the group.
- IFRIC 9, 'Reassessment of embedded derivatives', effective for annual
periods beginning on or after 1 June 2006. This interpretation has not had a
significant impact on the reassessment of embedded derivatives as the group
already assessed if embedded derivatives should be separated using
principles consistent with IFRIC 9.
- IFRIC 10, 'Interims and impairment', effective for annual periods
beginning on or after 1 November 2006. This interpretation has not had any
impact on the timing or recognition of impairment losses as the group
already accounted for such amounts using principles consistent with
IFRIC 10.
- IFRS 7, 'Financial instruments: Disclosures', effective for annual
periods beginning on or after 1 January 2007. IAS 1, 'Amendments to capital
disclosures', effective for annual periods beginning on or after 1 January
2007. IFRS 4, 'Insurance contracts', revised implementation guidance,
effective when an entity adopts IFRS 7. As this interim report contains
only condensed financial statements, and as there are no material financial
instrument related transactions in the period, full IFRS 7 disclosures are
not required at this stage. The full IFRS 7 disclosures, including the
sensitivity analysis to market risk and capital disclosures required by the
amendment of IAS 1 will be given in the annual financial statements.
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 11, 'IFRS 2 - Group and treasury share transactions', effective
for annual periods beginning on or after 1 March 2007. The directors do not
foresee any significant impact as a result of this interpretation.
- IFRIC 12, 'Service concession arrangements', effective for annual
periods beginning on or after 1 January 2008. The directors do not expect
this interpretation to be relevant for the group.
- IFRS 8, 'Operating segments', effective for annual periods beginning
on or after 1 January 2009, subject to EU endorsement. The directors do not
currently foresee any changes to the group's business segments
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
exceptionals 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. Share based payment costs have been treated as
a significant non-cash item.
General Information
The company is a limited liability company incorporated and domiciled in the UK.
The address of its registered office is St Giles House, 50 Poland Street,
London, W1F 7AX. The Company has its primary listing on the London Stock
Exchange.
The condensed consolidated six monthly financial information was approved for
issue on 27 February 2008.
These interim financial statements are unaudited and do not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. Statutory
accounts for the year ended 30 June 2007 were approved by the Board of Directors
on 20 September 2007 and delivered to the Registrar of Companies. The report of
the auditors on those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under Section 237 of the
Companies Act 1985.
Notes to the condensed set of financial statements
for the 6 months ended 31 December 2007
1. Segmental reporting
Primary reporting format - business segments
The group is organised into five main business segments.
Marketing, Construction General
Legal and Creative and Perfect Business
Six months ended 31 Financial and New Media Engineering Information Services Unallocated Group
December 2007 £m £m £m £m £m £m £m
----------------------------------------------------------------------------------------------------------------------
Continuing
operations
Revenue 13.0 10.6 8.3 3.0 4.2 - 39.1
----------------------------------------------------------------------------------------------------------------------
Adjusted EBITDA 3.4 1.0 1.2 1.0 (0.3) - 6.3
Depreciation of
property, plant and
equipment (0.1) (0.1) (0.1) - (0.1) - (0.4)
Amortisation of
software (0.1) (0.1) (0.1) (0.4) (0.1) - (0.8)
Amortisation of
acquired
intangibles - - (0.2) - (0.3) - (0.5)
Share based
payments - - - - - (0.2) (0.2)
Exceptional
administrative
costs - - - (1.7) - - (1.7)
----------------------------------------------------------------------------------------------------------------------
Operating profit 3.2 0.8 0.8 (1.1) (0.8) (0.2) 2.7
Interest receivable - - - - - 0.1 0.1
----------------------------------------------------------------------------------------------------------------------
Profit before tax 3.2 0.8 0.8 (1.1) (0.8) (0.1) 2.8
Taxation - - - - - (1.5) (1.5)
----------------------------------------------------------------------------------------------------------------------
Profit for the
period from
continuing
operations 3.2 0.8 0.8 (1.1) (0.8) (1.6) 1.3
-----------------------------------------------------------------------------------------------------------------------
Discontinued
operations
Revenue - - - - - - -
Segment result - - - - - - -
Profit on disposal
of operation - - - - 0.2 - 0.2
-----------------------------------------------------------------------------------------------------------------------
Profit for the
period from
discontinued
operations - - - - 0.2 - 0.2
-----------------------------------------------------------------------------------------------------------------------
Marketing, Construction General
Legal and Creative and Perfect Business
Six months ended 31 Financial and New Media Engineering Information Services Unallocated Group
December 2007 £m £m £m £m £m £m £m
----------------------------------------------------------------------------------------------------------------------
Continuing
operations
Revenue 11.6 10.2 8.3 3.0 3.9 - 37.0
----------------------------------------------------------------------------------------------------------------------
Adjusted EBITDA 3.2 0.9 1.4 0.7 (0.7) - 5.5
Depreciation of
property, plant and
equipment (0.1) (0.1) (0.1) (0.1) - - (0.4)
Amortisation of
software (0.1) (0.1) (0.1) (0.4) (0.2) - (0.9)
Amortisation of
acquired
intangibles (0.1) - (0.2) (0.1) - - (0.4)
Share based
payments - - - - - (0.2) (0.2)
----------------------------------------------------------------------------------------------------------------------
Operating profit 2.9 0.7 1.0 0.1 (0.9) (0.2) 3.6
Interest receivable - - - - - 0.1 0.1
----------------------------------------------------------------------------------------------------------------------
Profit before tax 2.9 0.7 1.0 0.1 (0.9) (0.1) 3.7
Taxation - - - - - (0.8) (0.8)
----------------------------------------------------------------------------------------------------------------------
Profit for the
period from
continuing
operations 2.9 0.7 1.0 0.1 (0.9) (0.9) 2.9
----------------------------------------------------------------------------------------------------------------------
Discontinued
operations
Revenue - - - - 0.7 - 0.7
Segment result - - - - 0.1 - 0.1
Profit on disposal
of operation - - - - - - -
----------------------------------------------------------------------------------------------------------------------
Profit for the
period from
discontinued
operations - - - - 0.1 - 0.1
----------------------------------------------------------------------------------------------------------------------
2. Taxation
Income tax expense is recognised based on management's best estimate of
the weighted average annual income tax rate expected for the year. The tax
assessed for the period is higher (6 months ended 31 December 2006: lower)
than the standard rate of corporation tax in the UK of 29.5% (6 months
ended 31 December 2006: 30%). The differences are explained below:
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
Continuing operations 2007 2007 2006
-------------------------------------
£m £m £m
Profit before tax 2.8 3.7 16.9
Profit before tax multiplied by
standard rate of corporation tax in the
UK of 29.5% (6 months ended 31 December 0.8 1.1 5.1
2006 and year ended 30 June 2007: 30%)
Effects of:
Expenses not deductible for tax
purposes 0.1 0.1 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 (0.4) (0.5)
Losses not recognised 0.1 - 0.1
Adjustments to tax charge in respect of
previous periods - - 0.1
-------------------------------------------------------------------------------
Total taxation 1.5 0.8 4.6
-------------------------------------------------------------------------------
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
Discontinued operations 2007 2007 2006
-------------------------------------
£m £m £m
Profit before tax 0.2 0.1 -
Profit before tax multiplied by 0.1 - -
standard rate of corporation tax in the
UK of 29.5% (6 months ended 31 December
2006 and year ended 30 June 2007: 30%)
Effects of:
Non-taxable gain on sale of subsidiary (0.1) - -
-------------------------------------------------------------------------------
Total taxation - - -
-------------------------------------------------------------------------------
3. Dividends
An interim dividend of 1.2 pence (2006: 1.0 pence) per 10p ordinary share
is proposed. This amounts to £1,720,296 (2006: £1,491,045) and will be
paid on 4 April 2008 to all shareholders on the register as at 7 March
2008.
4. Other intangible assets
Brands and Websites
2007 Computer publishing Customer and
software rights relationships content Non-compete Total
------------------------------------------------------------------------------
£m £m £m £m £m £m
Cost
At 1 July 2007 10.8 9.2 3.7 0.4 0.5 24.6
Additions - external 0.5 - - - - 0.5
Additions -
internally generated 0.2 - - - - 0.2
--------------------------------------------------------------------------------------------------------
At 31 December 2007 11.5 9.2 3.7 0.4 0.5 25.3
--------------------------------------------------------------------------------------------------------
Amortisation
At 1 July 2007 7.1 0.5 0.4 0.1 - 8.1
Charge for the period 0.8 0.2 0.2 - 0.1 1.3
Write down of assets 1.2 - - - - 1.2
--------------------------------------------------------------------------------------------------------
At 31 December 2007 9.1 0.7 0.6 0.1 0.1 10.6
--------------------------------------------------------------------------------------------------------
Net book amount
At 31 December 2007 2.4 8.5 3.1 0.3 0.4 14.7
--------------------------------------------------------------------------------------------------------
Brands and Websites
2006 Computer publishing Customer and
software rights relationships content Non-compete Total
------------------------------------------------------------------------------
£m £m £m £m £m £m
Cost
At 1 July 2006 10.3 6.4 3.0 0.4 - 20.1
Additions - external 0.5 - - - - 0.5
Additions -
internally generated 0.4 - - - - 0.4
Fair value adjustment - (0.1) - - - (0.1)
--------------------------------------------------------------------------------------------------------
At 31 December 2006 11.2 6.3 3.0 0.4 - 20.9
--------------------------------------------------------------------------------------------------------
Amortisation
At 1 July 2006 6.7 0.3 - - - 7.0
Charge for the period 0.9 0.1 0.2 0.1 - 1.3
--------------------------------------------------------------------------------------------------------
At 31 December 2006 7.6 0.4 0.2 0.1 - 8.3
--------------------------------------------------------------------------------------------------------
Net book amount
At 31 December 2006 3.6 5.9 2.8 0.3 - 12.6
---------------------------------------------------------------------------------------------------------
Amortisation charges in the period and the previous period have been charged to
administrative expenses. During the period, the Directors decided to discontinue
Perfect Analysis, the equity research service developed by Synergy Software
Solutions Limited, a subsidiary company. As a result the associated computer
software net book value of £1.2m has been written down.
Computer software capitalised in 2006 and 2007 principally relates to the
development of software used in websites and online products, and also to the
development of new products in the Perfect Information segment.
5. Earnings per share
The calculations of earnings per share are based on the following profits and
numbers of shares:
6 months ended 31 December 2007 6 months ended 31 December 2006
Weighted Weighted
average average
no. of Per-share no. of Per-share
Continuing operations Earnings shares amount Earnings shares amount
--------------------------------------------------------------------------
£m millions Pence £m millions Pence
Basic EPS
Earnings attributable to
ordinary shareholders 1.3 146.5 0.9 2.9 149.1 1.9
Effect of dilutive
securities
Options - 1.0 - - 1.7 -
Contingent shares - - - - 0.4 -
--------------------------------------------------------------------------------------------------------
Fully diluted basic EPS 1.3 147.5 0.9 2.9 151.2 1.9
Adjusted EPS
Earnings attributable to
ordinary shareholders 1.3 146.5 0.9 2.9 149.1 1.9
Amortisation of acquired
intangibles 0.5 - 0.3 0.4 - 0.3
Exceptional
administrative costs 1.7 - 1.2 - - -
Tax effect (0.5) - (0.3) (0.1) - (0.1)
--------------------------------------------------------------------------------------------------------
Adjusted profit for the
period 3.0 146.5 2.1 3.2 149.1 2.1
Effect of dilutive
securities
Options - 1.0 - - 1.7 -
Contingent shares - - - - 0.4 -
--------------------------------------------------------------------------------------------------------
Fully diluted adjusted
EPS 3.0 147.5 2.0 3.2 151.2 2.1
--------------------------------------------------------------------------------------------------------
6 months ended 31 December 2007 6 months ended 31 December 2006
Weighted Weighted
average average
no. of Per-share no. of Per-share
Discontinued operations Earnings shares amount Earnings shares amount
--------------------------------------------------------------------------
£m millions Pence £m millions Pence
Basic EPS
Earnings attributable to
ordinary shareholders 0.2 146.5 0.1 0.1 149.1 0.1
Effect of dilutive
securities
Options - 1.0 - - 1.7 -
Contingent shares - - - - 0.4 -
----------------------------------------------------------------------------------------------------------
Fully diluted basic EPS 0.2 147.5 0.1 0.1 151.2 0.1
----------------------------------------------------------------------------------------------------------
725,000 shares held in an employee benefit trust and 6,850,000 shares held in
treasury have been excluded in arriving at the weighted average number of
shares.
6. Discontinued operations and disposal group held for sale
During the year to 30 June 2007, the trade, assets and liabilities
relating to the Televisual magazine were sold to Televisual Media UK
Limited, a new company set up by its former publisher, for a consideration
of £0.1m.
In July 2007 Hali Publications Limited, a subsidiary of the Group, was
sold to its former publisher. As at 30 June 2007 final negotiations for
the sale were in progress and therefore the activity was classified as a
disposal group held for sale. The sale was completed on 20 July 2007 for
total consideration of £0.4m resulting in a profit of £0.2m.
The results of the discontinued operations are presented below:
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2007 2006 2007
----------------------------------------
£m £m £m
Revenue - 0.7 1.1
Operating profit - - (0.1)
Gain on disposal of discontinued
operation 0.2 0.1 0.1
-----------------------------------------------------------------------------
Profit for the period from
discontinued operations 0.2 0.1 -
-----------------------------------------------------------------------------
The major classes of assets and liabilities of Hali Publications Limited were as
follows:
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2007 2006 2007
----------------------------------------
£m £m £m
Assets
Property, plant and equipment - - 0.1
Receivables - - 0.3
------------------------------------------------------------------------------
Assets classified as held for
resale - - 0.4
------------------------------------------------------------------------------
Liabilities
Payables - - 0.2
------------------------------------------------------------------------------
Liabilities classified as held for
resale - - 0.2
------------------------------------------------------------------------------
The net cash flows after tax of the discontinued operations are as follows:
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2007 2006 2007
----------------------------------------
£m £m £m
Net cash flows from operating
activities - - -
Net cash flows from investing
activities
Proceeds from sale of subsidiary - - 0.1
Purchase of property, plant and
equipment - - (0.1)
Net cash flows from financing
activities - - -
------------------------------------------------------------------------------
Net cash flow - - -
------------------------------------------------------------------------------
7. Exceptional administrative costs
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 as reported in note 4.
8. Statement of changes in shareholders' equity
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2007 2006 2007
----------------------------------------
£m £m £m
At 1 July 164.5 157.9 157.9
Treasury shares purchased (7.4) (0.4) (1.0)
Proceeds receivable from shares
allotted under the share option
scheme 0.4 - 0.1
Share options - value of employee
services 0.2 0.2 0.4
Deferred tax taken directly to
equity (0.1) 0.1 (0.1)
Profit for the period / year 1.5 3.0 12.3
Dividends (3.6) (3.6) (5.1)
------------------------------------------------------------------------------
At 31 December / 30 June 155.5 157.2 164.5
------------------------------------------------------------------------------
During the period, the Company acquired 6,850,000 of its own shares through open
market purchases. The total amount paid to acquire the shares was £7.4m and this
has been deducted from shareholders' equity. The shares are held as treasury
shares.
9. Cash flow from operating activities
Cash generated from continuing operations
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2007 2006 2007
----------------------------------------
£m £m £m
Profit for the period / year 1.3 2.9 12.3
Adjustments for:
Tax 1.5 0.8 4.6
Depreciation of property, plant and
equipment 0.4 0.4 0.8
Loss on disposal of property, plant
and equipment 1.2 - -
Amortisation of intangibles 1.3 1.3 2.6
Interest income (0.1) (0.1) (0.2)
Share of associate's profit - - (0.8)
Share option charge 0.2 0.2 0.4
Changes in working capital
(excluding effects of acquisitions
and disposals of subsidiaries)
(Increase) / decrease in inventories (0.8) (1.1) 0.6
Decrease / (increase) in trade and
other receivables 1.6 0.1 (0.8)
Increase / (decrease) in trade and
other payables 0.2 0.7 (1.3)
------------------------------------------------------------------------------
Cash generated from continuing
operations 6.8 5.2 18.2
------------------------------------------------------------------------------
Cash generated from discontinued operations
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2007 2006 2007
----------------------------------------
£m £m £m
Profit for the period 0.2 0.1 -
Adjustments for:
Profit on disposal of business (0.2) - (0.1)
Decrease in trade and other
receivables - - 0.1
Increase in trade and other payables - (0.1) -
------------------------------------------------------------------------------
Cash generated from discontinued
operations - - -
------------------------------------------------------------------------------
Cash generated from operations 6.8 5.2 18.2
------------------------------------------------------------------------------
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