Centaur Regulatory News (CAU)

14 Nov 2008 07:00



14 November 2008

Centaur Media plc

("Centaur" or "the Group")

INTERIM MANAGEMENT STATEMENT

Fundamental strengths of Group unchanged  

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Centaur Media plc, the specialist business publishing and information Group, today issues an interim management statement for the period from 30 June 2008 to the date of this announcement, incorporating a trading update for the four month period to 31 October 2008.

Overall trading performance

As indicated at the time of our preliminary results announcement in September, trading conditions in the first four months of this financial year have been challenging. The unprecedented level of uncertainty arising from recent events in the financial sector has led to significant reductions in advertising expenditure throughout our served markets during this period.

The year on year performance during this reporting period is adversely affected by the seasonally weaker trading months of July and August, as well as  relatively strong comparatives in the prior year where revenues increased by 6% year on year in the first half, but fell by 4% in the second half.

While market shares have generally strengthened across the portfolio during the period, total Group revenues in the first four months of the financial year were 16% lower than in the equivalent prior year period. Most of this reduction was experienced in the Legal & Financial Division, reflecting the particular exposure of products in this Division to the factors affecting the credit markets. 

A decline in revenues in the Group's high margin core magazines coupled with typically lower margins on new products has contributed to a softening of our EBITDA margin in the first four months of this financial year. Due to the seasonality of our business, the Group's first half margins are traditionally much lower than in the second half and as a result the impact of reduced revenues on margins is therefore proportionally greater in the first half.

In view of this we have already made significant cost reductions across the business during the past year and continue to manage our costs to reflect our lower revenue base whilst supporting our market leading positions.

Fundamental strengths of Group unchanged 

The current outlook for our served markets for the year ahead is uncertain.

However we are confident that, during this period of economic turbulence, the fundamental strengths of the Group remain unchanged and should provide a measure of resilience during any prolonged period of economic downturn as well ensuring  a foundation for strong growth as our served markets recover.

We believe the fundamental strengths of the Group are as follows:

Market leadership:

Centaur owns the leading publication brand in each of the vertical markets it serves. In a downturn we believe there is a flight to quality as clients allocate a greater share of their marketing budgets to premium brands. In the past year, we have seen widespread evidence of improvements in Centaur's market share across all verticals. By continuing to invest in our brands, we will reinforce the impact of that flight to quality and provide a stronger platform for rapid growth in the ensuing upturn.

Advanced web and event strategies:

Strong print brands remain central to market leadership and both online and event models continue to offer incremental growth opportunities with greater resilience during a period of reduced discretionary B2B marketing spend.

 Market diversification:

A broad spread of served vertical markets provides greater balance to Group revenues than in previous downturns although no sector is immune.

Organic growth culture:

Change always brings new opportunities and Centaur's culture strongly supports the development of new initiatives to take advantage of these opportunities. The principal focus of these new initiatives is to achieve or reinforce existing market leadership. By sustaining our investment in new product initiatives during the downturn, we will again strengthen our market positions and our opportunities for rapid growth when markets recover.

Strong cash flows and balance sheet:

As outlined above, an ability to invest in the business during the downturn will enhance our future competitive position. At present Centaur has no debt and is well positioned to take advantage of new investment opportunities, both organic and through acquisition.

Outlook 

In common with many others at the present time visibility of future market conditions is poor.

However, the Board is confident that the combination of its market leading brands, strong balance sheet and a creative and experienced team of people will provide the Group with a platform for strong growth when markets recover.

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