Centaur Regulatory News (CAU)

20 March 2019

Centaur Media Plc

Preliminary results for the year ended 31 December 2018

Centaur Media Plc ("Centaur"), an international provider of business information and specialist consultancy, is today publishing its preliminary results for the year ended 31 December 2018.

Financial highlights

o Group revenue increased 9.0% to £70.5m; underlying revenue decline of 1.6%

o Reflects a full-year of revenues from MarketMakers

o Increased revenues from brands including The Lawyer, Marketing Week, MW Mini MBA, and The Meeting Show

o Non-advertising revenues now 82% of total revenues (2017: 79%)

o Recurring revenues have grown to 48% (2017: 44%)

o Underlying1 adjusted2 operating profits increased 18% to £5.2 million

Segmental breakdown of adjusted2 operating profit

o Marketing achieved £1.7m in a transitional year (2017: £1.7m)

o Financial services strengthened to £1.2m (2017: £0.6m)

o Professional services, including The Lawyer increased by 28% to £2.3m (2017: £1.8m)

Statutory operating loss of £14.0m (2017: loss of £0.3m), and a statutory loss of £14.2m (2017: loss £0.7m) after goodwill impairment of £13.1 million, primarily relating to the strategic rationalisation of certain events and revenue streams to be discontinued within the marketing portfolio.

The Group had net cash of £0.1m (2017: £4.1m) at 31 December after making an earnout payment of £1.8m in respect of MarketMakers and paying dividends of £4.3m.

Adjusted2 diluted EPS of 2.6p (2017: 3.2p). Diluted loss per share of 9.9p (2017: EPS 14.3p). 

Final dividend of 1.5p, contributing to a total for the year of 3.0p, in line with previous year. The future distribution policy will be subject to the progress of the simplification strategy.

Strategic progress

o Strategic review confirmed the need to focus on fewer sectors to drive margin growth:

o Creation of XEIM to develop business information, intelligence and consulting services, primarily in the marketing sector

o Initiated a process to explore the potential divestment of non-core businesses

o Delivery of cost efficiencies associated with Group simplification to create

a higher margin operating model

Outlook

This has been a year of good strategic progress at Centaur. The changes we are making to our portfolio will allow us to focus on the growth of XEIM, our largest business, and drive efficiencies derived from a simpler group structure.

Board change

Neil Johnson is to stand down as Chairman in June 2019 to take on a new role, and will be succeeded by Colin Jones, who joined the Board last September and was previously CFO of Euromoney Institutional Investor PLC.

Andria Vidler, Chief Executive, commented:

"We are pleased to have made good strategic progress this year, to have increased adjusted2 operating profits and to have accelerated the simplification of the Group's structure. This will create a more efficient and focused business with a higher margin.

"XEIM, the new name for the Group's marketing businesses, enables us to offer a more integrated and coordinated service to help our clients improve their marketing performance."

Enquiries

Note to editors

Centaur is an international provider of business information and specialist consultancy that inspires and enables people to excel at what they do, raising the standard for insight, interaction and impact.

Leading brands include: Econsultancy, Marketing Week, Festival of Marketing, MarketMakers, Creative Review, Influencer Intelligence, Fashion & Beauty Monitor, Money Marketing, Platforum, The Lawyer, Employee Benefits, The Engineer, Subcon, Oystercatchers, the Business Travel Show and The Meetings Show.

1 Underlying growth rates adjust for the timing of the disposal of Corporate Adviser and the acquisition of MarketMakers in 2017, and the biennial contribution from the Advances Manufacturing Show ('AMS').

2 Adjusted results exclude adjusting items, as detailed in note 1(b) of the financial information

3 See note 1(b) of the financial information for explanation and reconciliation of adjusted operating cash flow.

4 Cash conversion is calculated as adjusted operating cash flow / adjusted operating profit excluding depreciation and amortisation charges.

5 See note 1(b) of the financial information for explanation of net debt and note 28 for a reconciliation to statutory measures.

Performance - CEO Review

Overview of 2018

While the transformation of Centaur continues, in 2018 the Group saw further benefits from the work, investment and repositioning that has taken place over the past five years. Our strong focus on the needs of our customers - increasingly large, international enterprises - has inspired the development of new products and services that are now delivering substantial revenues along with the potential for future growth. This has continued Centaur's transition from being a media publisher heavily dependent on advertising and print to a more diverse and robust business, providing a range of business information and specialist consultancy services with more reliable and recurring revenue streams.

In 2018, Centaur was able to increase adjusted2 operating profits by 18%1 to £5.2 million, reflecting higher contributions from across the Group and the benefit from the reduction of overheads that followed the sale of our Home Interest division in 2017. Notable profit uplifts were delivered by the Festival of Marketing; by Marketing Week and its Mini MBA courses; by The Lawyer; and by the Business Travel Show. It was also encouraging that our financial services division strengthened its profits as we focused on its core brands. Group turnover amounted to £70.5m, the 9% growth from continuing operations reflecting higher revenues from The Lawyer, the launch of new products and a full year's contribution from MarketMakers. On an underlying1 basis revenues decreased by 1.6%.

The progress in reshaping our portfolio helped Centaur deliver a further increase in the proportion of revenues that it receives from repeatable and recurring sources, from 44% to 48%. Advertising now represents only 18% of Group revenues. Centaur is now a more resilient and focused business with good opportunities for long-term growth and margin enhancement.

Nonetheless, this improved performance fell short of our ambitions for 2018. Revenue growth was held back due to delays in completing new technology platforms for our subscription products, the cancellation of a small number of large US contracts and weaker second-half trading at MarketMakers.

These factors led to Centaur to revise its guidance in a trading update that we issued in October. The Board acted decisively, changing the management oversight of Econsultancy, Influencer Intelligence and MarketMakers and accelerating the creation of XEIM, the new name for our marketing businesses. Since these changes and the launch of the improved platforms, revenue and billings have gained traction.

As Centaur moves to focus on those businesses where it has the greatest opportunity, we have made a goodwill impairment of £13.1m, primarily relating to events to be closed and other businesses within the marketing portfolio. Together with a £2.8m amortisation charge made against the value of acquired assets, this resulted in a statutory loss for the year of £14.2m (loss of £0.7m in 2017).

Below, I will discuss the divisional performance in greater detail. First, I would like to explain the market context and set out the strategic progress that Centaur has made this year.

Centaur's transformation

Five years ago, Centaur was still recognisable as a traditional print publisher, heavily reliant on advertising and print and vulnerable to newer digital business models that were disrupting the B2B information services market. Centaur faced new competition from online portals that were successfully attracting recruitment and classified advertising, while battling a deluge of free content.

Centaur responded with an ambitious strategy to shift its business model away from advertisers seeking to reach readers, and towards customers willing to pay for the information, insight and skills they need to deliver success. We built on our heritage and our reputation and track record for providing high quality, essential and trusted content. This gave us the understanding and insights necessary to develop new products and services for which customers would be willing to pay.

We also reshaped our portfolio of businesses, selling the Home Interest division of consumer titles in 2017 to focus the Group entirely on B2B information services. We acquired Oystercatchers (in 2016) and MarketMakers (in 2017) to strengthen our offering in consultancy and training, and in lead generation and data analytics.

We have developed and refined a new vision for Centaur, recognising that our businesses are united by helping professionals excel at what they do.

In 2018, we made further significant progress along this road as we become an international provider of business information and specialist consultancy.

Key highlights included:

· Following a comprehensive strategic review, we decided to accelerate the simplification of the Group's structure and explore the divestment of our non-marketing businesses.

· To increase management and investor focus on our largest business, we have launched XEIM as the new name for our marketing businesses, bringing together our brands including Marketing Week, Econsultancy, Festival of Marketing, Influencer Intelligence, MarketMakers, MW Mini MBA, Oystercatchers, Creative Review and Design Week. We believe XEIM will enable us to sell our broad range of marketing products and services in a more integrated and coordinated manner.

· We completed the integration of Oystercatchers, our specialist management and marketing consultancy, within Econsultancy.

· We achieved a significant reduction in central overheads. Improved processes across central and shared services, as well as the sale of Home Interest, have enabled us to reduce complexity. As we continue to simplify the portfolio we will see further opportunities for cost savings.

Segment review

XEIM (Marketing)

The creation of XEIM continues the simplification of Centaur's structure by uniting all our marketing brands under the same divisional name

Marketing remains Centaur's largest and best-positioned business, representing 60% of Group revenues. In 2018, it delivered adjusted2 operating profits of £1.7m, unchanged from the prior year. While 2018 was a transitional year for the division, the investments, management changes and product launches that we made have created increased momentum, providing Centaur with the opportunity to benefit from the operational leverage in our marketing businesses.

Revenues and profits were held back by a delay in the migration of Econsultancy to a new technology platform, which impacted renewal income as well as a small number of significant enterprise contracts that we had hoped to close before the year-end. Revenues for the division were £42.7m, the increase from £36.0m in the prior year primarily reflecting the inclusion of MarketMakers for a full year.

Since relaunch, the new platform has enabled Econsultancy to offer a dynamic new service that has generated improvements in page views and engagement. We expect to build on this momentum as we move through 2019.

Influencer Intelligence, a new tool for brands seeking to harness the power of online marketers, also made its debut later than intended. It has met an enthusiastic market reception and is already achieving a good level of renewals and new sales.

The Marketing Week brand and its recent innovations had a strong year, with double-digit revenue uplifts from Marketing Week, Creative Review, the Festival of Marketing and its e-learning courses. The Festival of Marketing had its best year yet, attracting 4,000 attendees and more than doubling its profit contribution. The Mini MBA, a joint venture with Marketing Week columnist Mark Ritson, had another strong year as delegate numbers more than doubled and revenues grew by 68%. Satisfaction scores remain in excess of 90% and we anticipate further growth in 2019.

MarketMakers, the lead generation business acquired in 2017, and its sister business Really, the B2B marketing agency, delivered a 3% increase in underlying1 revenues despite a slower second half. Really had an excellent year, increasing its standalone revenues by 17%. Really's strengths were recognised at the International B2B Marketing Awards: it won gold for 'Best Use of Customer Insight', bronze for 'Best SME-Targeted Campaign', and silver awards for 'Best Corporate Decision-Maker - Targeted Campaign' and 'Best Multi-Channel Campaign'.

Oystercatchers had a stronger second half to deliver a satisfactory result for the year. Oystercatchers' training business has now been fully integrated within Econsultancy, and the combined business ended the year well. Further Oystercatchers developments have included the launch of the Modern Marketing Pitch, a new content platform for the Oystercatchers Club Network, a Fellows initiative and a new awards evening.

XEIM has a clear mission and defined purpose: "Advising, informing and connecting the modern marketer to accelerate performance." Steve Newbold, who previously headed Centaur's media and events business, will lead XEIM as its group managing director. Suki Thompson, founder and CEO of Oystercatchers, will be XEIM's executive director.

Centaur's move to a more customer-focused approach has allowed us to build deeper and lasting relationships with our most important customers. As an illustration, XEIM's top 100 customers increased their spend by 26% last year compared to 2017 and more than three-quarters of the top 100 spent money with the business for the third year running.

Professional services

The professional services division comprises The Lawyer and our exhibitions business which jointly represent 28% of Group revenues. It delivered adjusted2 operating profits of £2.3m, up 28%, on revenue of £19.7m (2017: £19.6m). Approximately 61% of the division's revenue comes from live events, 23% from advertising and 16% from premium content.

The Lawyer is a leading provider of intelligence to the global legal market that generates revenue from digital subscriptions, live events and digital advertising revenue streams.

While The Lawyer continued to experience the expected erosion in its recruitment advertising revenues, it maintained its growth thanks to another strong increase in subscriptions. 73 of the top ranked international law firms are subscribers, and we ended 2018 with 88 of the top 100 UK and US law firms as subscribers. A good performance from digital display ads and higher revenues from The Lawyer's award event also contributed.

2018 was a significant year for The Lawyer as we completed a transition from weekly to monthly magazines and moved to a more scalable digital platform. This new platform will allow us to continue to drive consistent growth in digital usage from paying subscribers while delivering a best-in-class user experience. 

As part of our technology investment, we have developed an interactive digital tool for tracking litigation that extends the functionality of The Lawyer's current market insight products. Launched in January 2019, this product has made a promising start. 

The Lawyer is strongly positioned for continued growth in an attractive market. As Centaur disclosed in November, the company has appointed Livingstone Partners to explore a possible divestment of the business. Centaur is confident of The Lawyer's growth trajectory which, it believes, merits a premium valuation. 

Our exhibitions business includes the Business Travel Show, The Meetings Show, Employee Benefits Live and Subcon. Publications and websites linked to the events including well-established brands such as The Engineer and Business Travel iQ. Exhibitions and events are responsible for 61% of the division's revenue. 

In 2018, the exhibitions management team refocused the brands on driving profitable events, positioning the businesses for strong future growth. This focus has enabled each of the brands to continue to drive strong operating leverage, presenting a number of opportunities for margin accretion as well as international and regional expansion.

The standout performer was the Business Travel Show which delivered double-digit revenue growth, reflecting higher exhibitor numbers, and a strong profit performance. Employee Benefits Live and EB Connect also turned in a good performance. 

Despite slightly lower visitor numbers, The Meeting Show also increased its revenues. By harnessing skills from within MarketMakers, we were able to secure a big increase in forward bookings which augurs well for 2019.  

Subcon, an event for subcontract manufacturing professionals, had a difficult year, reflecting wider market conditions in engineering markets. However, Subcon's net promoter scores remain significantly ahead of its competition.

Financial services

The financial services division owns well-positioned titles, including Money Marketing, Mortgage Strategy, Platforum, Tax Briefs and Headline Money, that serve valuable communities of finance professionals. The division contributes 12% of Group revenues.

In 2018, financial services' adjusted2 operating profits strengthened to £1.2 million, up from £0.6m in 2017, on revenues of £8.2m (2017: £8.8m). While the longer-term trends in advertising remain unchanged, decisive management action has brought about a strong margin recovery. This has been aided by a focus on our strongest brands, Money Marketing and Mortgage Strategy, and their strong digital advertising performance.

We achieved a good uplift in display advertising, helping Money Marketing to deliver stable revenues. Mortgage Strategy grew its business, supported by a strong performance from its awards show.

As expected, Tax Briefs experienced a year of lower revenues as the UK Government reverted to a single Budget announcement after two in 2017. Revenues at Headline Money also softened, in line with expectations.

People

The Executive Committee is committed to maintaining a culture that supports our business ambitions, developing internal training plans and systems in line with these objectives.

Our male to female ratio is well-balanced and we continue to have a strong representation of women at a senior level. Three out of five (60%) of our Executive Committee members are female and a third of our senior leaders are female. Our family friendly policies include enhanced maternity and paternity leave, and flexible work options, and we have a high rate of maternity returners (83%).

Our Development Board continues to support our internal culture, leading our charity sponsorship activity and organising regular fund-raising initiatives throughout the year. It also offers a range of mental health, wellbeing and fitness sessions.

We continue to take a proactive approach to diversity through policies and working practices. In 2018, we launched an LGBT+ Network, developed to provide support and advice and to ensure a fully inclusive environment.

In 2018, we launched a formal mentoring scheme, providing training to mentors and mentees, and delivered face-to-face coaching to more than 100 junior staff.

Through the Apprenticeship Levy, we continue to support staff to achieve professional qualifications in digital marketing, data analysis and management and leadership.

Every year we recognise those who have delivered outstanding performance, whether this is in sales, support or bringing to life our values, at our Annual Centaur Awards Ceremony.

Summary

Over the last 12 months our year on year profit growth was strong and whilst revenue was held back, I am pleased with the product innovation and efficiency improvements that Centaur has made. The benefits of the Group's strategic transformation are becoming clearer and we have a sharper focus - both on our customers and on the businesses where we have the greatest competitive strengths.

Continuing change, and a commitment to innovation and new product development, will be important to sustain the current momentum in our business. We recognise this requires a great deal of hard work from every Centaurion. The energy, ideas and expertise of our people remains a source of strength for Centaur; shareholders owe them our thanks.

The uncertainty about the impact of Brexit may make this a challenging year, but Centaur's strategy to strengthen its non-advertising revenues has improved the Company's resilience. The recent launch of XEIM, and the further moves we are taking to simplify and focus Centaur's business, give me encouragement for the year ahead.

Performance - CFO Review

Overview

The results of the business are presented in accordance with International Financial Reporting Standards ('IFRS').

2018 has seen an acceptable underlying1 performance from the business with pleasing growth in profits at Festival of Marketing, The Lawyer, The Business Travel Show and Marketing Week's Mini MBA. The underlying1 performance of the financial services division has strengthened from the previous year and tight control of overheads drove further underlying1 group profit growth. However, this improved performance fell short of our ambitions for 2018 as delays in completing Econsultancy's move to its new technology platform meant the business was unable to secure a small number of large contracts that had been expected to contribute to 2018 results. Additionally, weak second-half trading at MarketMakers held back its growth for the year.

We revised our trading guidance in October and the Board took decisive action as outlined in the CEO's report. These actions have helped to deliver an improvement in trading.

In 2017, following the strategic decision to focus on business information and specialist consultancies, we sold our Home Interest segment and bought MarketMakers. Due to the disposal of the Home Interest segment, we were required to disclose this as a discontinued operation. Therefore, our adjusted2 operating profit reported in 2017 of £4.1m excluded profits generated by the Home Interest segment and only included MarketMakers profits from the date of acquisition. For 2018, we report adjusted2 operated profit of £5.2m for 2018, an increase of 27% against the reported 2017 result. 

I am also pleased to report year on year adjusted2 operating profit growth of 18% on an underlying1 and continuing basis. Underlying1 2017 results include a full year of MarketMakers' profits but exclude any profits generated by Corporate Advisor which was disposed of in 2017 and the biennial AMS event.

Reported turnover of £70.5m represents an increase of 9.0% on 2017's reported turnover (1.6% decline on an underlying1 basis). Underlying1 revenue is down slightly due to the delays arising from moving Econsultancy to its new technology platform as detailed in the CEO report. However, we are pleased that the quality of revenue overall has improved as we continue to move to a higher subscription, recurring-revenue base that is less dependent on volatile advertising revenue.

Adjusted2 operating profit margin is 7.4% (2017: 6.3% excluding Home Interest) against 6.2% in 2017 on an underlying1 basis.

As we announced in October 2018 alongside a profits warning, we have undertaken a strategic review and are now exploring the sale of the professional services and financial services portfolios. At the end of 2018, the actual sale of these portfolios was not probable enough to recognise them as assets held for sale. They are therefore reported as part of continuing operations in this financial information.

Non-statutory measures

In these results we refer to 'adjusted' and 'statutory' results, as well as other non-GAAP performance measures. Adjusted2 results are prepared to provide a more comparable indication of the Group's core business performance by removing the impact of certain items including exceptional items (material and non-recurring), and volatile items predominantly relating to investment activities and other separately reported items. Adjusted2 results exclude adjusting items as set out in the statement of consolidated income below, with further details given in notes 1(b) and 4 of the financial information. In addition, the Group also measures and presents performance in relation to various other non-GAAP measures, such as underlying1 revenue growth, adjusted2 operating profit, adjusted operating cash flow3, adjusted2 EBITDA and net debt5.

Adjusted2 results are not intended to replace statutory results. These have been presented to provide users with additional information and analysis of the Group's performance, consistent with how the Board monitors results. Further rationale for each of the adjusting items used in these measures, as well as reconciliations to their statutory equivalents, can be found in note 1(b) to the financial information.

The Group's activities are predominantly UK-based and therefore currency movements do not have a material impact on the Group's results.

Statutory loss before tax from continuing operations reconciles to adjusted operating profit2 as follows:

Summary

Detailed commentary on revenues and operating results is set out within the CEO's Review.

MarketMakers continued to perform well in 2018, reporting revenue growth of 3%, with particularly strong growth within its Really B2B brand (17% growth). During 2018, our Group revenue mix improved in terms of higher quality, more recurring revenues. 48% of revenues are now recurring, up from 44% in 2017 and 36% in 2016. This is driven by the strategic choice to reduce exposure to the B2C arena, hence our Home Interest disposal in 2017, and the decision to focus on non-advertising revenues, offset by growth in marketing services and business analytics and training.

The Group continues to be cash positive with £0.1m of net cash at the end of 2018 (2017: £4.1m).

Adjusted operating cash3 generation was good in the year. However, our reported cash conversion4 rate fell to 85% (2017: 138%). This was due to a number of non-cash items that have been reported in adjusted operating profit, primarily the recognition of an expected rent rebate due to be paid to the Company in March 2020. When adjusting for these items, cash conversion is 99%. The movement of the ratio towards 100% is as expected due to the Group having completed the collection of old outstanding debts following the well-documented cash collection issues of 2016. We have maintained tight control over costs.

Following the work undertaken to prepare for the potential divestment of our professional services and financial services businesses, we have reviewed our goodwill across the Group and consequently we have recognised a goodwill impairment of £13.1m to which reference was made above. This primarily relates to events to be closed and other businesses within the marketing portfolio.

I am pleased to report the Group's working capital generation is now at levels that would be considered normal following the billing and related cash collection issues highlighted in our 2016 Annual Report. Nonetheless, the overall level of cash has declined year on year by £4.0m following the Group's failure to meet earlier profit targets as outlined above. However, combined with the lower than hoped for operating profit in the year, this means the Group this year has not generated enough free cash. The dividend policy will therefore be kept under review.

Revenues

Revenues in 2018 were £70.5m (2017: £64.7m). On an underlying1 operations basis, revenue is down 1.6% on 2017. The underlying1 operations basis excludes the biennial show, AMS, Corporate Advisor, which was sold in 2017, and brings in a whole year of revenue from MarketMakers as if acquired on 1 January 2017 rather than on 2 August 2017.

MarketMakers saw underlying1 revenue growth of 3%, but as already noted, Econsultancy failed to win some large contracts in the US and suffered in the UK due to the delay in the rollout of its new scalable technology platform.

Adjusted Operating Profit

Adjusted2 operating profit for the year was £5.2m (2017: £4.1m), a reported growth of 27%. On an underlying basis1, the growth is 18%.

Net adjusted2 operating expenses were £66.1m, (2017: £61.3m) reflecting a full year of ownership of MarketMakers. Adjusted2 employee related expenses were £36.9m, (2017 £30.9m), again as a result of a full year's ownership of MarketMakers, and the average number of permanent employees was 758 (2017: 589).

Reported operating losses of £14.0m (2017: £0.3m) were impacted by the adjusting items detailed below.

Adjusting items

The Directors believe that adjusted2 results and adjusted2 earnings per share provide additional useful information on the core operational performance of the Group to shareholders and review the results of the Group on an adjusted2 basis internally. Details of the Group's accounting policy in relation to adjusting items are shown in note 1(b) of the financial information.

Adjusting items generated a loss before tax of £19.2m (2017: £4.4m). The largest adjusting item of £13.1m primarily relates to the impairment of goodwill primarily relating to events to be closed and other businesses within the marketing portfolio. Exceptional costs also included £0.7m relating to an internal restructure to prepare the Group for the disposal of non-marketing businesses and to focus on XEIM (Marketing). Some costs were also incurred in closing our Singapore office. Our Singapore operations are now supported locally by agents based in the country.

Other adjusting items include amortisation of acquired intangible assets of £2.8m (2017: £2.5m) which has increased in the year following the acquisition of MarketMakers in July 2017. A share-based payment charge of £0.8m was also recognised (2017: £0.5m).

Further analysis on these adjusting items is included in the Basis of Preparation section of note 1(b) and note 4 of the financial information.

Net finance costs

Net finance costs were £0.2m (2017: £0.4m). The reduction in cost was a result of the Group having increased levels of cash following the disposal of the Home Interest portfolio in 2017. A significant portion of the remaining costs are a result of the commitment fee payable for the revolving credit facility.

Taxation

A tax charge of £0.1m (2017: £0.4m) has been recognised on continuing operations for the year. The adjusted2 tax charge was £1.0m (2017: £0.9m) giving an adjusted2 effective tax rate (compared to adjusted2 profit before tax) of 20.0% (2017: 25.3%). The Company's profits were taxed in the UK at a blended rate of 19.00% (2017: 19.25%). On a reported basis, the effective tax rate of nil% (2017: 50.5%). See note 7 for a reconciliation between the statutory and reported tax charge.

Share Based Payments

Share based payments in 2018 increased by £0.3m to £0.8m. The total number of share options increased during 2018 compared to 2017 resulting in a higher share based payment charge for the year. The increase in share options was due to a new issue during the year and a high number of forfeited options in previous years as people left the business and forfeited their options on schemes that ran to the end of 2017.

(Losses)/Earnings per Share

The Group has delivered adjusted2 diluted earnings per share for the year of 2.6p (2017: 3.2p). Diluted (losses)/earnings per share for the year were (9.2p) (2017: 14.3p). Full details of the earnings per share calculations can be found in note 9 of the financial information.

Dividend

An interim dividend of 1.5p per share was paid in respect of the period January to June 2018 (January to June 2017: 1.5p). A final dividend in respect of the period July to December 2018 of 1.5p per share (July to December 2017: 1.5p) is proposed by the Directors, giving a total dividend for the year ended 31 December 2018 of 3p (2017: 3.0p), in line with 2017.

The final dividend in respect of the year is subject to shareholder approval at the Annual General Meeting and, if approved, will be paid on 24 May 2019 to all ordinary shareholders on the register at close of business on 10 May 2019.

Adjusted2 dividend cover in the year was 1.2 times (2017: 1.2 times). The future dividend policy will be subject to the progress of the simplification strategy.

Cash Flow

As set out below, the Group has remained cash positive with closing net cash of £0.1m at the end of 2018 (2017: £4.1m). The rate of cash conversion4 has remained good at 85% (2017: 138%). When taking into account and adjusting for a number of non-cash items that have been reported in adjusted operating profit, primarily the recognition of an expected rent rebate due to be paid to the Company in March 2020, cash conversion is 99%.

Cash has fallen year-on-year following the relative under-performance of the Group against the last year and initial targets. Combined with a normal level of working capital generation, the Group has not generated enough free cash this year to deliver a sustainable dividend cover and The future dividend policy will be subject to the progress of the simplification strategy.

Adjusted operating cash flow3 is not a measure defined by IFRS. Centaur defines adjusted operating cashflow3 as cash flow from operations excluding the impact of adjusting items, which are defined above. The Directors use this measure to assess the performance of the Group as it excludes volatile items not related to the core trading of the Group, and includes the Group's management of capital expenditure. A reconciliation between cash flow from operations and adjusted operating cash flow3 is shown in note 1(b) of the financial information. The cash impact of adjusting items primarily relates to exceptional restructuring costs in both years.

New accounting standards

IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from contracts with customers' have been adopted for the current reporting period.

The adoption of IFRS 15 has not materially impacted the value, phasing, or recognition of revenue at a Group or segmental level.

IFRS 9 predominantly impacts the way our provision for impairment of trade receivables is calculated. The provision now represents an 'expected credit loss' which is calculated based on actual historic default rates. Under IFRS 9, 2017's expected credit loss would have been £1.6m (actual under IAS 39 was £1.5m). In 2018 the expected credit loss is £1.2m. The reduction in the provision is a reflection of longer history of consistently better cash collection and not an impact from the adoption of IFRS 9.

Effective for the first time for the financial year beginning 1 January 2019, but not yet adopted by the Group, is IFRS 16 'Leases'. An impact assessment has been performed which indicated the operating lease arrangements we currently hold regarding the properties from which we operate will, from the effective date, be treated as finance leases and an asset and liability will be recognised in respect of these.

For further details of IFRS's 9, 15 and 16 please see Note 1 of the financial information.

Acquisitions

A payment of £1.8m was made in the year relating to the MarketMakers' earnout. Further details can be found in note 14 of the financial information.

Financing and Bank Covenants

On 26 November 2018, the Group agreed an amendment and extension of the existing revolving credit facility which had been signed in 2015. The initial period of the extension is three years until November 2021 with the option to extend by two further single years subject to bank approval.

The principal financial covenants under the facility are: the ratio of net debt5 to adjusted EBITDA2 shall not exceed 2.5:1, and the ratio of EBITDA to net finance charges shall not be less than 4:1. The Group remained within its banking covenants during the year and has currently not drawn down any of its £25m banking facilities. We are pleased to report that, despite the key financial covenants remaining the same, margins payable on any borrowings were reduced significantly providing an on-going financial benefit to the Group.

Disposal of the Home Interest Segment

A small gain of £100k was recognised in discontinued operations in the year on the disposal of the Home Interest segment in 2017, primarily due to the final agreement of working capital adjustments with Future plc in April 2018.

Balance Sheet

A summary of the Group's balance sheet as at 31 December 2018 and 2017 is set out below:

The main movement in the Group's balance sheet relates to the £16.1m decrease in goodwill and other intangible assets. This is primarily a result of the specific goodwill impairments of £13.1m referred to earlier in my report. It is also due to £2.8m of amortisation of acquired intangibles.

Other current assets and liabilities have increased primarily due to a decrease in provisions of £1.8m driven by the settlement of deferred consideration for the acquisition of MarketMakers. Further details of this can be found in note 23.

Net cash has remained positive despite investing cashflows of £4.3m relating to system developments and earnout payments for MarketMakers.

Conclusion

Despite the disappointment of a profits warning in October, 2018 saw a satisfactory performance as we continue our journey to advise, inform and connect business professionals and help them accelerate their business performance. Although some of our digital developments took longer than intended to launch in this transitional year, our new digital platforms that were launched for Econsultancy, Influencer Intelligence and The Lawyer are already showing promising growth. The Group continues to reduce its reliance on print and advertising as it replaces those revenue sources with more reliable, repeatable revenue streams, including subscription based digital solutions.

Having made the strategic decision to concentrate on our marketing portfolio, XEIM, and explore the disposal of non-marketing businesses, the next twelve months offer an exciting time for the business as it becomes more streamlined and focused on delivering client solutions and growing its premium, digital products.

Risk Management

Risk management approach

The Board has overall responsibility for the effectiveness of the Group's system of risk management and internal controls and these are regularly monitored by the Audit Committee.

Details of the activities of the Audit Committee in this financial year can be found in the Audit Committee Report on pages 47 to 52.

The Executive Committee is responsible for identifying, managing and monitoring material and emerging risks in each area of the business and for regularly reviewing and updating the risk register, as well as reporting to the Audit Committee in relation to risks, mitigations and controls. As the Group operates principally from one office and with relatively short management reporting lines, members of the Executive Committee are closely involved in day-to-day matters and are able to identify areas of increasing risk quickly and respond accordingly. The responsibility for each risk identified is assigned to a member of the Executive Committee. The Audit Committee considers risk management and controls regularly and the Board formally considers risks to the Group's strategy and plans as well as the risk management process as part of its strategic review.

The risk register is the core element of the Group's risk management process. The register is maintained by the Company Secretary with input from the Executive Committee. The Executive Committee initially identifies the material risks and emerging risks facing the Group and then collectively assesses the severity of each risk (by ranking both the likelihood its occurrence and its potential impact on the business) and the related mitigating controls.

As part of its risk management processes, the Board considers both strategic and operational risks, as well as its risk appetite in terms of the tolerance level it is willing to accept in relation to each principal risk, which is recorded in the Company's risk register. This approach recognises that risk cannot always be eliminated at an acceptable cost and that there are some risks which the Board will, after due and careful consideration, choose to accept. The Group's risk register, its method of preparation and the operation of the key controls in the Group's system of internal control are regularly reviewed and overseen by the Audit Committee with reference to the Group's strategic aims and its operating environment. The register is also reviewed and considered by the Board.

As part of the ongoing enhancement of the Group's risk monitoring activities, we reviewed and updated the procedures by which we evaluate principal risks and uncertainties during the year.

Principal risks

The Group's risk register currently includes operational and strategic risks. The principal risks faced by the Group in 2018, taken from the register, together with the potential effects and mitigating factors, are set out below. The Directors confirm that they have undertaken a robust assessment of the principal risks facing the Group. Financial risks are shown in note 28 to the financial information.

Viability statement

In accordance with provision C.2.2 of the UK Corporate Governance Code April 2016, the Directors have assessed the viability of the Group over a three-year period to December 2021, taking account of the Group's current position, the Group's strategy, the Board's risk appetite and, as documented above, the principal risks facing the Group and how these are managed. Based on the results of this analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to December 2021.

The Board has determined that the three-year period to December 2021 is an appropriate period over which to provide its viability statement because the Board's financial planning horizon covers a three-year period. In making their assessment, the Directors have taken account of the Group's existing financing arrangements to 2021 (which allows extensions to 2023 on similar terms), cash flows, dividend cover and other key financial ratios over the period. These metrics are subject to stress testing which involves sensitising a number of the main assumptions underlying the forecasts both individually and in unison. The assumptions sensitised include forecasted EBITDA, cash conversion4 and capital expenditure. Where appropriate, this analysis is carried out to evaluate the potential impact of the Group's principal risks actually occurring, such as print and advertising revenues continuing to shrink, staff attrition, UK economic conditions and replication of products by competitors. Sensitising the model for changes in the assumptions and risks affirmed that the Group would remain viable over the three-year period to 2021.

Going concern basis of accounting

In accordance with provision C.1.3 of the UK Corporate Governance Code April 2016, the Directors' statement as to whether they consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements and their identification of any material uncertainties to the Group's ability to continue to do so over a period of at least twelve months from the date of approval of the financial information and for the foreseeable future can be found on page 41.

Statement of directors' responsibilities in respect of the financial statements

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group and company for that period. In preparing the financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

· state whether applicable IFRSs as adopted by the European Union have been followed for the group financial statements and IFRSs as adopted by the European Union have been followed for the company financial statements, subject to any material departures disclosed and explained in the financial statements;

· make judgements and accounting estimates that are reasonable and prudent; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

The directors are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group and company's transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.

The directors are responsible for the maintenance and integrity of the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' confirmations

The directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group and company's position and performance, business model and strategy.

Each of the directors, whose names and functions are listed in the Board of Directors on pages 36 and 37 confirm that, to the best of their knowledge:

· the company financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the company;

· the group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the group; and

· the Directors' Report includes a fair review of the development and performance of the business and the position of the group and company, together with a description of the principal risks and uncertainties that it faces.

In the case of each director in office at the date the Directors' Report is approved:

· so far as the director is aware, there is no relevant audit information of which the group and company's auditors are unaware; and

· they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the group and company's auditors are aware of that information.

Consolidated statement of comprehensive income for the year ended 31 December 2018

Consolidated statement of changes in equity for the year ended 31 December 2018

Attributable to owners of the Company

Company statement of changes in equity for the year ended 31 December 2018

Attributable to owners of the Company

Consolidated statement of financial position as at 31 December 2018

Registered number 04948078

Company statement of financial position as at 31 December 2018

Registered number 04948078

The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements. The movement in retained earnings is the Company's loss for the year of £13.7m (2017: £2.9m) and dividends of £4.3m (2017: £4.3m).

Consolidated cash flow statement for the year ended 31 December 2018

Company cash flow statement for the year ended 31 December 2018

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of this consolidated and Company financial information are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. The financial information is for the Group consisting of Centaur Media Plc and its subsidiaries, and the Company, Centaur Media Plc. Centaur Media Plc is a public company limited by shares and incorporated in England and Wales.

(a) Basis of preparation

The consolidated and Company financial information has been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union and IFRS Interpretations Committee ('IFRS IC') and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial information has been prepared on the historical cost basis.

Going concern

The financial information has been prepared on a going concern basis. The Directors have carefully assessed the Group's ability to continue trading and have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for at least twelve months from the date of approval of this financial information and for the foreseeable future.

Net cash (see reconciliation in note 27) at 31 December 2018 amounted to £0.1m (2017: net cash £4.1m). In November 2018, the Group renewed its £25m multi-currency revolving credit facility with the Royal Bank of Scotland and Lloyds, which runs to November 2021 with the option to extend for 2 periods of 1 year each. None of this was drawn-down at 31 December 2018. Our reported cash conversion4 rate fell to 85% (2017: 138%). This was due to a number of non-cash items that have been reported in adjusted operating profit, primarily the recognition of an expected rent rebate due to be paid to the Company in March 2020. When adjusting for these items, cash conversion is 99%. The movement of the ratio towards 100% is as expected due to the Group having completed the collection of old outstanding debts following the well-documented cash collection issues of 2016. We have maintained tight control over costs.

The Group has net current liabilities at 31 December 2018 amounting to £12.9m (2017: £10.2m). These mainly arise from its normal high levels of deferred income relating to events in the future rather than an inability to service its liabilities. An assessment of cash flows for the next three financial years, which has taken into account the factors described above, has indicated an expected level of cash generation which would be sufficient to allow the Group to fully satisfy its working capital requirements and the guarantee given in respect of its UK subsidiaries, to cover all principal areas of expenditure, including maintenance, capital expenditure and taxation during this year, and to meet the financial covenants under the revolving credit facility. The Company has net current liabilities at 31 December 2018 amounting to £50.7m (2017: £41.5m). These almost entirely arise from unsecured payables to subsidiaries which have no fixed date of repayment.

The preparation of financial information in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial information and the reported amounts of revenues and expenses during the year. Although these estimates are based on management's best knowledge of the amount, events or actions, the actual results may ultimately differ from those estimates.

Having assessed the principal risks and the other matters discussed in connection with the viability statement on page 31, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing its consolidated financial information.

Prior period restatement

Rental income for the sub-lease of properties under lease was presented within revenue in prior years. As rental income does not arise from the principal activities of the business it has been restated and presented as other operating income. The impact is a reduction in revenue and an increase in other operating income of £0.7m in 2017. There was no overall impact on the total comprehensive income for the year.

New and amended standards adopted by the Group

The following new standards that are mandatory for the first time for the financial year commencing 1 January 2018 have been adopted by the Group:

IFRS 9 'Financial instruments'

IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.

Impact

After review of the Group's financial assets and liabilities the results indicate that only trade receivables are impacted by the new standard.

The new impairment model for trade receivables requires the recognition of impairment provisions based on expected credit losses for 12 months and lifetime expected credit losses rather than only incurred credit losses as is the case under IAS 39. We consider 12 month and life time losses to be equal. The results of the application of the new impairment model indicates that there is not a material change to the loss allowance for trade receivables. We define a default as failure of a debtor to repay an amount due as this is the time at which our estimate of future cash flows from the debtor is affected.

The new standard has also been applied to all other financial assets and liabilities, including cash and cash equivalents, however there is no impact to the value of these assets and liabilities.

As outlined in the FY17 Annual Report and as permitted under the transition requirements, the Group has not restated comparatives for 2017 as it applied the new rules retrospectively from 1 January 2018 per the practical expedients permitted under the standard.

Disclosures

Disclosures have been made in line with IFRS 9 requirements. The accounting policy for financial instruments is set out in note 1 (s), including trade receivables (note 1 (s) (ii)). Further disclosures on financial instruments including trade receivables can be found in note 28.

IFRS 15 'Revenue from contracts with customers'

IFRS 15 sets out the requirements for recognising revenue from contracts with customers, replacing all existing revenue standards. The standard requires entities to apportion revenue earned from contracts to individual performance obligations, on a stand-alone selling price basis, based on a five-step model framework.

Impact

The Group has performed an impact assessment on revenue and other operating income generated in the 12 months to 31 December 2018 and the results indicate that the adoption of IFRS 15 has not had a material impact on the timing or quantum of revenue or other operating income recognition at a Group, Company, intercompany or at an operating segment level. The impact assessment also indicated that the Group rarely sells products relating to different operating segments to the same customer under the same contract. Consequently, a change to revenue recognised in any given operating segment is almost wholly the effect of timing differences under IFRS 15.

Other operating income is solely in relation to rental income from sub-leases, which is recognised in the period to which it relates, therefore there is no IFRS 15 impact.

As outlined in the FY17 Annual Report, given the insignificant impact to revenues, including other operating income, comparatives have not been restated for the impact of IFRS 15

Disclosures

Disclosures have been made in line with IFRS 15 requirements. The accounting policy for revenue recognition is set out in note 1 (e). Disaggregation of revenue is presented in note 2 Segmental Reporting. Revenue has been disaggregated by revenue stream (premium content, live events, advertising, capability services, and other) and by geographic location. The only assets and liabilities held on the statement of financial position relating to contracts with customers is accrued income and deferred income respectively.

Other

No other new standards or amendments to standards (including the Annual Improvements (2015) to existing standards) that are mandatory for the first time for the financial year commencing 1 January 2018 affected any of the amounts recognised in the current year or any prior year and is not likely to affect future periods.

New standards and interpretations not yet adopted

The following new accounting standards and interpretations have been published that are not mandatory for 31 December 2018 reporting periods and have not been early adopted by the Group:

IFRS 16 'Leases'

IFRS 16 sets out the requirements for lessee and lessor lease accounting. The new standard replaces IAS 17, and eliminates the classification of leases as either operating leases or finance leases as required by IAS 17 and instead introduces a single accounting model for leases which requires lessees to recognised assets and liabilities for most leases.

Impact

The Group has performed an impact assessment on its existing and any expected upcoming lease arrangements. The Group plans to take advantage of the 'short term lease' and 'low value items' exemptions. The Group also plans to apply the practical expedient on transition where only contracts that were previously identified as leases applying IAS 17 are assessed for the purposes of IFRS 16, however the Group does not believe that any contracts other than those falling in scope after the practical expedient is applied would be deemed to contain a lease arrangement under IFRS 16.

The Group will elect to apply the modified retrospective transition approach where comparative periods are not restated, but the cumulative impact of applying IFRS 16 is reflected as an adjustment to the opening balance sheet at 31 December 2019. Arrangements already constituting finance leases are not impacted by the transition to IFRS 16. There are 3 existing operating lease arrangements that will become finance leases on transition and 1 upcoming lease arrangement commencing in 2019 that will constitute a finance lease under IFRS 16. The results of the impact assessment indicates that right-of-use assets of £3.6m and lease liabilities of £3.6m will be recognised in the opening balance sheet at January 2019. At commencement of the new lease arrangement in October 2019 a £3.5m right-of-use asset and £3.2m lease liability recognised. The value of the IFRS 16 impact to the P&L is immaterial, however the expenses will now be classified as depreciation expense on the right-of-use asset and interest expense on the finance liability. The 2019 expense expected relating to all 4 of these leases is £2.5m depreciation and £0.1m interest. There is no impact to cash flow. All leases discussed here are property leases.

Date of adoption by the Group

For the Group, transition to IFRS 16 has taken effect from 1 January 2019. The half year results for FY19 will be IFRS 16 compliant, with the first Annual Report published in accordance with IFRS 16 being that for the year ending 31 December 2019.

As outlined above, the Group does not plan to adopt a fully retrospective transition approach and so comparatives will not be restated.

Other

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

Discontinued operations

Discontinued operations in the prior and current year relate to the disposal of the Home Interest segment on 1 August 2017. See note 8 for more details.

(b) Presentation of non-statutory measures

In addition to statutory measures, the Directors use various non-GAAP key financial measures to evaluate the Group's performance and consider that presentation of these measures provides shareholders with an additional understanding of the core trading performance of the Group. The measures used are explained and reconciled to their equivalent statutory headings below.

Adjusted operating profit and adjusted earnings per share

The Directors believe that adjusted results and adjusted earnings per share, split between continuing and discontinued operations, provide additional useful information on the core operational performance of the Group to shareholders, and review the results of the Group on an adjusted basis internally. The term 'adjusted' is not a defined term under IFRS and may not therefore be comparable with similarly titled profit measurements reported by other companies. It is not intended to be a substitute for, or superior to, IFRS measurements of profit.

Adjustments are made in respect of:

· Exceptional items - the Group considers items of income and expense as exceptional and excludes them from the adjusted results where the nature of the item, or its magnitude, is material and likely to be non-recurring in nature so as to assist the user of the financial information to better understand the results of the core operations of the Group. Details of exceptional items are shown in note 4.

· Amortisation of acquired intangible assets - the amortisation charge for those intangible assets recognised on business combinations is excluded from the adjusted results of the Group since they are non-cash charges arising from investment activities. As such, they are not considered reflective of the core trading performance of the Group. Details of amortisation of intangible assets are shown in note 11.

· Share-based payments - share-based payment expenses or credits are excluded from the adjusted results of the Group as the Directors believe that the volatility of these charges can distort the user's view of the core trading performance of the Group. Details of share-based payments are shown in note 25.

· Impairment of goodwill - the Directors believe that non-cash impairment charges in relation to goodwill are generally volatile and material, and therefore exclude any such charges from the adjusted results of the Group. Previous impairment charges were presented as exceptional items. Details of the goodwill impairment analysis are shown in note 10.

· Earn-out consideration - deferred or contingent consideration in relation to business combinations recognised in the statement of comprehensive income (as a result of being classified as remuneration under IFRS 3) is not considered reflective of the core trading of the Group since it results from investment activities and is volatile in nature. As such, statement of comprehensive income items relating to business combinations are removed from adjusted results. See notes 4 and 23.

· Acquisition related costs - expenses in relation to business combinations recognised in the statement of comprehensive income is not considered reflective of the core trading of the Group since it results from investment activities and is volatile in nature. As such, statement of comprehensive income items relating to business combinations are removed from adjusted results. See note 14.

· Profit or loss on disposal of assets or subsidiaries - profit or loss on disposals of businesses are excluded from adjusted results of the Group as they are unrelated to core trading and can distort a user's understanding of the performance of the Group due to their infrequent and volatile nature. See note 4.

· Other separately reported items - certain other items are excluded from adjusted results where they are considered large or unusual enough to distort the comparability of core trading results year on year. Details of these separately disclosed items are shown in note 4.

The tax related to adjusting items is the tax effect of the items above that are allowable deductions for tax purposes (primarily exceptional items), calculated using the standard rate of corporation tax. See note 7 for a reconciliation between reported and adjusted tax charges.

Further details of adjusting items are included in note 4. A reconciliation between adjusted and statutory earnings per share measures is shown in note 9.

Loss before tax reconciles to adjusted operating profit as follows:

Adjusted operating cash flow

Adjusted operating cash flow is not a measure defined by IFRS. It is defined as cash flow from operations excluding the impact of adjusting items, which are defined above, and including capital expenditure. The Directors use this measure to assess the performance of the Group as it excludes volatile items not related to the core trading of the Group and includes the Group's management of capital expenditure. Statutory cash flow from operations reconciles to adjusted operating cash as below:

Underlying revenue growth

The Directors review underlying revenue growth in order to allow a like for like comparison of revenues between years. Underlying revenues exclude the impact of event timing differences, as well as the revenue contribution arising from acquired or disposed businesses.

Statutory revenue growth reconciles to underlying revenue growth as follows:

Adjusted EBITDA

Adjusted EBITDA is not a measure defined by IFRS. It is defined as adjusted operating profit before depreciation and amortisation of intangible assets other than those acquired through a business combination. It is used by the Directors as a measure to review performance of the Group and forms the basis of some of the Group's financial covenants under its revolving credit facility. Adjusted EBITDA is calculated as follows:

Net cash/(debt)

Net cash/(debt) is not a measure defined by IFRS. Net cash/(debt) is calculated as cash less overdrafts and bank borrowings under the Group's financing arrangements. The Directors consider the measure useful as it gives greater clarity over the Group's liquidity as a whole. A reconciliation between net debt and statutory measures is shown in note 27.

(c) Principles of consolidation

The consolidated financial information incorporate the financial information of Centaur Media Plc and all of its subsidiaries after elimination of intercompany transactions and balances.

(i) Subsidiaries

Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group until the date that the Group ceases to control them. In the statement of comprehensive income the results of subsidiaries for which control has ceased are presented separately as discontinued operations in the year in which they have been disposed of and in the comparative year.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. The accounting policies of subsidiaries are consistent with the policies adopted by the Group.

(ii) Business Combinations

The acquisition method of accounting is used to account for all business combinations. The consideration transferred for acquisition of a subsidiary is measured at the aggregate of fair values of assets transferred, liabilities incurred or assumed to the former owners of the acquired business and equity interests issued by the Group in exchange for control of the subsidiary. Acquisition-related costs are expensed as incurred and included in the consolidated statement of comprehensive income.

Any deferred consideration to be transferred by the acquirer is recognised at fair value. If the conditions attached to the consideration indicate that the payment forms part of the acquisition, a provision is made for the future liability at the acquisition date. Where the deferred consideration is contingent on the continued employment of the vendors, such arrangements are recognised in the consolidated statement of comprehensive income on a straight-line basis over the period over which the contingent consideration is earned with an associated provision on the consolidated statement of financial position. Subsequent changes to the fair value of the contingent consideration are recognised in accordance with IAS 39 through the consolidated statement of comprehensive income.

The excess of the aggregate consideration transferred, amount of any non-controlling interest in the acquired entity, and acquisition date fair value of any previous equity interest in the acquired entity over the fair value of the net assets acquired is recorded as goodwill.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial information of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial information is presented in Pounds Sterling, which is the Group and Company's functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the statement of comprehensive income.

(iii) Group Companies

The results and financial position of the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

· Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

· Income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

· All resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations and of borrowings are recognised in other comprehensive income. When a foreign operation is sold, exchange differences that were recorded in equity are recognised in the statement of comprehensive income as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

(e) Revenue recognition

Revenue is measured at the transaction price, which is the amount of consideration to which Centaur expects to be entitled in exchange for transferring promised goods or services to the customer. Revenue arises from the sales of premium content (subscriptions and individual publications), live events, advertising space, and capability services (project work and consultancy) provided in the normal course of business, net of discounts and value added tax. Revenue is reduced for customer returns, rebates and other similar allowances.

The Group recognises revenue earned from contracts as individual performance obligations are met, on a stand-alone selling price basis. This is when value and control of the product or service has transferred, being when the product is delivered to the customer or the period in which the services are rendered as laid out below.

Premium Content

Revenue from subscriptions is deferred and recognised on a straight-line basis over the subscription period. Revenue from individual publications is recognised in the year in which the publication is provided to the customer.

Live events

Consideration received in advance for events is deferred and revenue is recognised in the year in which the event takes place.

Advertising

Sales of online advertising space are recognised over the period during which the advertisements are placed. Sales of advertising space in publications are recognised in the year in which the publication occurs.

Capability Services

Revenue from project work and consultancy contracts is recognised when the Group has obtained the right to consideration in exchange for its performance, which is when a separately identifiable phase (milestone) of a contract has been completed and the value and benefit of the services rendered have been transferred to the customer.

(f) Other operating income

Rental income for the sub-lease of properties under lease is recognised on a straight-line basis over the lease term.

(g) Investments

In the Company's financial information, investments in subsidiaries are stated at cost less provision for impairment in value.

Investments are reviewed for impairment whenever events indicate that the carrying value may not be recoverable. An impairment loss is recognised to the extent that the carrying value exceeds the higher of the investments fair value less cost of disposal and its value-in-use. An asset's value in use is calculated by discounting an estimate of future cash flows by the pre-tax weighted average cost of capital. Any impairment is recognised in the statement of comprehensive income and not subsequently reversed.

(h) Income tax

The tax expense represents the sum of current and deferred tax.

Current tax is based on the taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years, and it further includes items that are never taxable or deductible. The Group and Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax is provided in full, using the liability method, on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial information and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available to utilise those temporary differences and losses. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax is calculated at the enacted or substantively enacted tax rates that are expected to apply in the year when the liability is settled or the asset is realised. Deferred tax is charged or credited to the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is recognised in other comprehensive income.

(i) Leases

Agreements under which payments are made to owners in return for the right to use an asset for a period are accounted for as leases. Leases that transfer substantially all of the risks and rewards of ownership are recognised at the commencement of the lease term as finance leases within property, plant and equipment and debt at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Finance lease payments are apportioned between interest expense and repayments of debt. All other leases are classified as operating leases and the cost is recognised in income on a straight-line basis.

(j) Impairment of assets

Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events indicate that the carrying value may not be recoverable. An impairment loss is recognised to the extent that the carrying value exceeds the higher of the asset's fair value less cost of disposal and its value-in-use. An asset's value in use is calculated by discounting an estimate of future cash flows by the pre-tax weighted average cost of capital.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Work in progress comprises costs incurred relating to publications and exhibitions prior to the publication date or the date of the event.

(l) Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. The historical cost of property, plant and equipment is the purchase cost together with any incidental direct costs of acquisition. Depreciation is calculated to write off the cost, less estimated residual value, of assets, on a straight line-basis over the expected useful economic lives to the Group over the following periods:

The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting year with the effect of any changes in estimate accounted for on a prospective basis.

(m) Intangible assets

(i) Goodwill

Where the cost of a business acquisition exceeds the fair values attributable to the separable net assets acquired, the resulting goodwill is capitalised and allocated to the cash-generating unit ('CGU') or groups of CGUs that are expected to benefit from the synergies of the business combination. Goodwill has an indefinite useful life and is tested for impairment annually on a Group level or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Each segment is deemed to be a CGU. Goodwill and acquired intangible assets are assessed for impairment in accordance with IAS 36. In assessing whether a write-down of goodwill and acquired intangible assets is required, the carrying value of the segment is compared with its recoverable amount. Recoverable amount is measured as the higher of fair value less cost of disposal and value-in-use. Any impairment is recognised in the statement of comprehensive income (in net operating expenses) and is classified as an adjusting item. Impairment of goodwill is not subsequently reversed.

On the disposal of a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

(ii) Brands and publishing rights, customer relationships and non-compete arrangements

Separately acquired brands and publishing rights are shown at historical cost. Brands and publishing rights, customer relationships and non-compete arrangements acquired in a business combination are recognised at fair value at the acquisition date. They have a finite useful life and are subsequently carried at cost less accumulated amortisation and impairment losses.

(iii) Software

Computer software that is not integral to the operation of the related hardware is carried at cost less accumulated amortisation. Costs associated with the development of identifiable and unique software products controlled by the Group that will generate probable future economic benefits in excess of costs are recognised as intangible assets when the criteria of IAS 38 'Intangible Assets' are met. They are carried at cost less accumulated amortisation and impairment losses.

(iv) Amortisation methods and periods

Amortisation is calculated to write off the cost or fair value of intangible assets on a straight-line basis over the expected useful economic lives to the Group over the following periods:

(n) Employee benefits

(i) Post-employment obligations

The Group and Company contribute to a defined contribution pension scheme for the benefit of employees. The assets of the scheme are held separately from those of the Group in an independently administered fund. Contributions to defined contribution schemes are charged to the statement of comprehensive income when employer contributions become payable.

(ii) Share-based payments

The Group operates a number of equity-settled share-based compensation plans for its employees. The fair value of the share-based compensation expense is estimated using either a Monte Carlo or Black-Scholes option pricing model and is recognised in the statement of comprehensive income over the vesting period with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the awards granted:

· Including any market performance conditions;

· Excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets, cash flow performance and remaining an employee of the entity over a specified time period); and

· Including the impact of any non-vesting conditions (for example, the requirement for employees to save).

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting year, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity. The Company issues new shares or transfers shares from treasury shares to settle share-based compensation awards.

The award by the Company of share-based compensation awards over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution, only if it is left unsettled. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

(o) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and the obligation can be reliably estimated.

Provisions for deferred contingent consideration are measured at fair value. Where the deferred consideration is contingent on the continued employment of the vendors, such arrangements are recognised in the consolidated statement of comprehensive income on a straight line basis over the period of the arrangement.

(p) Share capital and share premium

Ordinary and deferred shares are classified as equity. The excess of consideration received in respect of shares issued over the nominal value of those shares is recognised in the share premium account. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company's equity instruments, for example as the result of a share buyback or share-based payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the owners of the Company as treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the Company.

Shares held by the Centaur Employees' Benefit Trust are disclosed as treasury shares and deducted from contributed equity. The Company also holds a non-distributable reserve representing the fair value of unvested share-based compensations plans.

(q) Dividends

Dividends are recognised in the year in which they are paid or, in respect of the Company's final dividend for the year, approved by the shareholders in the Annual General Meeting.

(r) Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Executive Committee has been identified as the chief operating decision-maker, responsible for allocating resources and assessing performance of the operating segments. The Group operates in three market-facing divisions: Marketing, Professional, and Financial Services.

(s) Financial instruments

The Group has applied IFRS 9, Financial Instruments as outlined below:

 (i) Financial assets

The Group classifies and measures its financial assets in line with one of the three measurement models under IFRS 9: at amortised cost, fair value through profit or loss, and fair value through other comprehensive income. Management determines the classification of its financial assets based on the requirements of IFRS 9 at initial recognition.

They are included in current assets, except for maturities greater than 12 months after the statement of financial position date. These are classified as non-current assets. The Group's financial assets comprise trade and other receivables and cash and cash equivalents in the statement of financial position. Please see the following sections.

(ii) Trade receivables

Trade receivables are accounted for under IFRS 9 using the expected credit loss model, recognised initially at fair value and subsequently at amortised cost less any allowance for expected credit losses.

The allowance for expected credit losses for trade receivables is established by considering on a discounted basis the cash shortfalls it would incur in various defaults scenarios for prescribed future periods and multiplying the shortfalls by the probability of each scenario occurring. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The allowance is the sum of these probability weighted outcomes. The allowance and any changes to it are recognised in the statement of comprehensive income within net operating expenses. A provision matrix is used to calculate the allowance for expected credit losses on trade receivables which is based on historical default rates over the expected life of the trade receivables and is adjusted for forward looking estimates. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against net operating expenses in the statement of comprehensive income. 

(iii) Cash and cash equivalents

Cash and cash equivalents includes cash in hand and deposits repayable on demand or maturing within three months of the statement of financial position date.

(iv) Financial liabilities

Debt and trade payables are recognised initially at fair value based on amounts exchanged, net of transaction costs, and subsequently at amortised cost.

Interest expense on debt is accounted for using the effective interest method and is recognised in income.

(v) Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(vi) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred and carried subsequently at amortised cost. Costs of borrowings are recognised in the statement of comprehensive income as incurred or, where appropriate, across the term of the related borrowing.

(vii) Derivative financial instruments

The Group does not hold derivative financial instruments either for trading purposes or designated as hedges.

(s) Key accounting assumptions, estimates and judgements

The preparation of financial information under IFRS requires the use of certain key accounting assumptions and requires management to exercise its judgement and to make estimates. The areas where assumptions and estimates are significant to the consolidated financial information are as follows:

i) Carrying value of goodwill and other intangible assets estimate

In assessing whether goodwill and other intangible fixed assets are impaired, the Group uses a discounted cash flow model which includes forecast cash flows and estimates of future growth. If the results of operations in future periods are lower than included in the cash flow model, impairments may be triggered. A sensitivity analysis has been performed on the value-in-calculations. Further details of the assumptions and sensitivities in the discounted cash flow model are included in note 10.

Intangible assets arising on business combinations are identified based on the Group's understanding of the acquired business and previous experience of similar businesses. Consistent methods of valuation for similar types of intangible asset are applied where possible and appropriate, using information reviewed at Board level where available. Discount rates applied in calculating the values of intangible assets arising on the acquisition of subsidiaries are calculated specifically for each acquisition and adjusted to reflect the respective risk profile of each individual asset based on the Group's past experience of similar assets.

ii) Recoverability of trade receivables estimate

The allowance for expected credit losses for trade receivables is calculated in line with IFRS 9. This is established by considering on a discounted basis the cash shortfalls it would incur in various defaults scenarios for prescribed future periods and multiplying the shortfalls by the probability of each scenario occurring. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. Further details about trade receivables are included in note 18 and information about the credit risk and expected credit losses are shown in note 28.

iii) Adjusting items judgement

The term 'adjusted' is not a defined term under IFRS. Judgement is required to ensure that the classification and presentation of certain items as adjusting, including exceptional items, is appropriate and consistent with the Group's accounting policy. Further details about the amounts classified as adjusting are included in notes 1(b) and 4.

iv) Contingent consideration estimate

The valuation of contingent consideration arising from business combinations ('earn-out' consideration) requires judgement, including the assessing the probability and quantum of the expected payment. The Group uses all available information, including current and forecasted performance under earn-out arrangements to assess the required level of provision. Items relating to earn-out consideration are treated as an adjusting item under the Group's accounting policy. Further details about the classification of earn-out consideration are included in notes 1(b) and 4, and details of current and prior year earn-out arrangements and provisions are shown in notes 4 and 23.

v) Share based payments estimate

The fair value of the share-based compensation expense recognised in the statement of comprehensive income requires the use of estimates. Details regarding the determination of fair value of these costs are set out in note 1(n)(ii).

vi) Deferred tax

The calculation of deferred tax assets and liabilities requires judgement. Where the ultimate tax treatment is uncertain, the Group recognises deferred tax assets and liabilities based on estimate of future taxable income and recoverability. Where a change in circumstances occurs, or the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax balances in the year in which that change or outcome is known. The accounting policy regarding deferred tax is set out above in note 1(h).

vii) Valuation of intangibles

Intangibles assets acquired in a business combination are required to be recognised separately from goodwill and amortised over their useful life. The Group has separately recognised computer software, brands and customer relationships in the acquisitions made (see notes 11 and 14).

The fair value of these acquired intangibles is based on valuation techniques that require inputs based on assumptions about the future and estimates related to current market conditions.

The Group also makes assumptions about the useful life of the acquired intangibles as outlined in note 1(m)(iv).

viii) Assets Held for sale

Any group of assets that are to be disposed of through sale should be classified as held for sale where the criteria are met.

As part of a plan to explore the divestment of selected businesses on 25 October 2018, to accelerate the Group's activities and structure an assessment of the held for sale criteria was carried out at the year end.

Management have concluded that the held for sale criteria was not met at year end as the sale of any assets was not highly probable, assets were not being actively marketed or available for immediate sale and the entity was not committed to a sale.

Due to the progression of the divestment plan subsequent to the year end and before signing of the Annual Report, the held for sale criteria were met and therefore this constitutes a non-adjusting post balance sheet event which has been disclosed in the post balance sheet note 33.

2 SEGMENTAL REPORTING

The Executive Committee has been identified as the chief operating decision-maker, reviewing the Group's internal reporting on a monthly basis in order to assess performance and allocate resources.

The Group is organised around three reportable market-facing segments: Marketing, Financial Services and Professional. The Professional segment aggregates the Legal, Human Resources, Engineering and Travel & Meetings portfolios, which are deemed to have similar profiles of risk and return. Segments derive revenues from a combination of live events, premium content, advertising and capability service revenues. Corporate income and costs are allocated to these segments on an appropriate basis, depending on the nature of the costs, including in proportion to revenues or headcount. There is no inter-segmental revenue.

Segment assets consist primarily of property, plant and equipment, intangible assets including goodwill, inventories and trade receivables. Segment liabilities comprise trade payables, accruals and deferred income.

Corporate assets and liabilities comprise current and deferred tax balances, cash and cash equivalents and borrowings.

Capital expenditure comprises additions to property, plant and equipment, intangible assets and includes additions resulting from acquisitions through business combinations.

Supplemental Information - Revenue by Geographical Location

The Group's revenues from continuing operations from external customers by geographical location are detailed below:

Substantially all of the Group's net assets are located in the United Kingdom. The Directors therefore consider that the Group currently operates in a single geographical segment, being the United Kingdom.

The Group's revenue from continuing operations by type is as follows:

3 NET OPERATING EXPENSES

 Operating profit / (loss) is stated after charging:

See note 1(b) and 4 for details of adjusting items.

Services provided by the Company's auditors