Final Results

Donnerstag, 17.09.2009 08:05 von Hugin - Aufrufe: 63

17 September 2009
Centaur Media plc
 
Preliminary results for the year ended 30 June 2009
 
Centaur Media plc ("Centaur", "the Company" or "the Group"), the
specialist business publishing and information group, announces
results for the year ended 30 June 2009.
 
Highlights
 
+-------------------------------------------------------------------+
| | 30 June | 30 | |
| | 2009 | June | Movement |
| | | 2008 | |
|------------------------------+---------+--------+-----------------|
| | £m | £m | |
|------------------------------+---------+--------+-----------------|
| | | | |
|------------------------------+---------+--------+-----------------|
| Revenue | 66.3 | 90.4 | (27%) |
|------------------------------+---------+--------+-----------------|
| | | | |
|------------------------------+---------+--------+-----------------|
| Adjusted EBITDA[1] | 7.0 | 21.5 | (67%) |
|------------------------------+---------+--------+-----------------|
| Adjusted EBITDA margin | 11% | 24% | |
|------------------------------+---------+--------+-----------------|
| | | | |
|------------------------------+---------+--------+-----------------|
| Adjusted profit before | 4.4 | 19.2 | (77%) |
| tax[2] | | | |
|------------------------------+---------+--------+-----------------|
| Profit before tax | 1.7 | 14.5 | (88%) |
|------------------------------+---------+--------+-----------------|
| | | | |
|------------------------------+---------+--------+-----------------|
| Adjusted basic EPS | 2.1p | 9.2p | (77%) |
| (pence)[3] | | | |
|------------------------------+---------+--------+-----------------|
| Basic EPS (pence) | 0.6p | 6.7p | (91%) |
|------------------------------+---------+--------+-----------------|
| | | | |
|------------------------------+---------+--------+-----------------|
| Cash conversion rate[4] | 88% | 90% | |
|------------------------------+---------+--------+-----------------|
| Net cash | 0.6 | 7.7 | |
|------------------------------+---------+--------+-----------------|
| | | | |
|------------------------------+---------+--------+-----------------|
| Full year dividend per share | 1.5p | 4.2p | |
| (pence) | | | |
|------------------------------+---------+--------+-----------------|
| | | | |
|------------------------------+---------+--------+-----------------|
| | | | |
+-------------------------------------------------------------------+
 
Commenting on the preliminary results, Graham Sherren, Chairman of
Centaur said:
"Whilst this has been a difficult year for Centaur, I write this
statement with confidence that our competitive position as a business
has improved during the last year and as we go forward we will
prosper as the economy recovers.
 
The forward visibility of Group revenues remains generally low,
although we have seen a reduction in the rate of decline in the first
two months of the new financial year and there is evidence of some
stabilisation. Whilst progress may initially be slow I expect
revenues to return to their previous levels as we begin to take full
advantage of this recovery."
 
Enquiries:
 
Centaur Media plc Geoff Wilmot, CEO Tel: 020 7970 4000
Mike Lally, Group Finance
Director
Kreab Gavin Anderson Robert Speed Tel: 020 7074 1800
Anthony Hughes
 
www.centaur.co.uk
 
Notes:
[1.] One of Centaur's key measures of profit, which is used to
measure the relative performance of divisional units of the Group, is
earnings before interest, tax, depreciation and amortisation,
excluding exceptionals and other significant non-cash items including
share based payments (adjusted EBITDA) as shown in the income
statement.
[2.] Adjusted profit before tax is profit before tax, excluding
the impact of amortisation of acquired intangibles and of exceptional
items.
[3.] Adjusted EPS is based on the basic EPS but after making
adjustments for amortisation of acquired intangibles and exceptional
items. See note 4.
[4.] Cash conversion rate is free cash flow expressed as a
percentage of adjusted operating profit. Free cash flow is defined
as cash generated from operations, less capital expenditure on
property, plant and equipment and software. Adjusted operating
profit is operating profit excluding amortisation of acquired
intangibles and exceptional items.
 
Chairman's Statement
 
Whilst this has been a difficult year for Centaur, I write this
statement with confidence that our competitive position as a business
has improved during the last year and as we go forward we will
prosper as the economy recovers.
 
Current year financial performance
 
Following the global economic crisis that took hold in late 2008,
Group revenues fell to 73% of the level achieved in the previous
financial year while PBT of £1.7m compared to £14.5m in the prior
year, despite a 15% (£11.4 million) reduction in total expenditure,
reflecting the severity and speed of the revenue decline during the
year.
 
Dividend
 
An adjusted EPS for the year of 2.1p (FY2008: 9.2p) provides the
context for the Board's recommendation of a final dividend of 1.0p
per share, giving a full year dividend of 1.5p (FY2008: 4.2p). The
Directors decided to restrict dividend payments relative to prior
year to reflect the increased level of investment we have made in our
online businesses, which is expected to underpin significant growth
in the future
 
Cost reduction
 
The level of defensive cost reductions undertaken across the Group
during the year to June 2009 represented a swift and decisive
response to these difficult trading conditions. In implementing these
cost reduction initiatives, great care was taken to ensure no damage
was done to our core operating assets that would impair our
prospective recovery or growth potential and continued investment was
undertaken in existing and new products to maintain and strengthen
market leading positions.
 
Investment in the future
 
Organic growth has always been at the heart of Centaur's success and
our ability to maintain the rate of new product development over the
last twelve months is a reflection of the prudent stewardship of the
Group during the years of strong growth from 2004 to 2008. As a
result we started this current financial year with £7.7 million net
cash and although during the current year we made payments in respect
of dividends, taxation and capital expenditure amounting to £12.1
million, through the effective management of the Group's working
capital, we remained free of debt at 30 June 2009 with net cash of
£0.6 million.
 
I was therefore very pleased that this strong cash position allowed a
raised level of capital investment in the business over the course of
the year with a strong focus on developing our online businesses.
 
Group fundamentals unchanged
 
Our continued investment through the downturn has resulted in a
strengthening of many fundamental aspects of the Group which now
presents us with an exceptional opportunity for growth over the next
3 to 5 years.
 
These include:
 
* Market leading brands - we have increased the market share of our
major brands across our communities over the past year.
 
* Improved fixed cost base - on an annualised basis, Group
expenditure will be reduced by around £12 million, a large
proportion of which represents a reduction in the fixed cost base
of the business that will contribute strongly to rapid margin
improvement as revenues return.
 
* Strong organic growth record - new product development was
maintained through the downturn with a continuing strong pipeline
of new product initiatives including substantial investments in
our B2B online platform, workflow products at Perfect Information
and a number of new event launches.
 
* Strong balance sheet - we remain debt free at 30 June 2009 and
the Group is well positioned to take advantage of future
investment opportunities.
 
* Cyclical recovery - as in previous cycles the recovery will drive
strong revenue growth for the Group with a high level of marginal
profitability enhanced by the investments we have made in our
online businesses.
 
* Experienced management - the strength of our management team is
clearly illustrated throughout this report and remains a key
success criterion in driving organic growth and identifying
relevant acquisition opportunities.
 
Current trading and outlook
 
The forward visibility of Group revenues remains generally low,
although we have seen a reduction in the rate of decline in the first
two months of the new financial year and there is evidence of some
stabilisation. Whilst progress may initially be slow I expect
revenues to return to their previous levels as we begin to take full
advantage of this recovery.
 
Finally I would like to extend the Board's thanks to all our staff,
who through a difficult year have continued to work with dedication,
tenacity and enthusiasm to ensure the future success of the business.
We thank them for their continued commitment and hard work and look
forward to them sharing in the future success of the Group.
 
Graham Sherren
Chairman
 
Business Review
Analysis of results
 
2009 2009 2008 2008
£m £m £m £m
By Segment Revenue Adjusted Revenue Adjusted
EBITDA EBITDA
 
Legal and Financial 17.6 1.9 28.7 9.2
Marketing and Creative 17.3 0.8 23.6 4.1
Construction and Engineering 17.3 2.4 20.5 4.7
Perfect Information 5.2 2.0 5.8 2.1
General Business Services 8.9 (0.1) 11.8 1.4
 
Total 66.3 7.0 90.4 21.5
 
By Source
Recruitment advertising 8.1 - 15.6 -
Other advertising 24.9 - 34.6 -
Circulation revenue 5.2 - 6.1 -
Online subscriptions 6.9 - 7.0 -
Events 20.1 - 25.8 -
Other 1.1 - 1.3 -
 
Total 66.3 - 90.4 -
 
By Client type
Audiences 16.0 - 19.6 -
Marketers 50.3 - 70.8 -
 
Total 66.3 - 90.4 -
 
By Product type
Print 30.2 0.6 46.6 10.7
Events 20.1 2.8 25.8 6.7
Online products 15.5 3.6 17.6 4.1
Other 0.5 - 0.4 -
 
Total 66.3 7.0 90.4 21.5
 
Underlying
Underlying 65.3 7.1 89.7 21.4
Acquisitions[1] 1.0 (0.1) 0.7 0.1
 
Total 66.3 7.0 90.4 21.5
 
By Maturity
New [2] 6.5 (0.4) 9.8 0.2
Existing and acquired 59.8 7.4 80.6 21.3
 
Total 66.3 7.0 90.4 21.5
 
Notes
[1.] Acquisitions are defined as those made within the current
or preceding financial year
[2.] New products are defined as any product launched in the
current or two preceding financial years
 
Trading Review
 
The tightening of trading conditions reported a year ago turned
rapidly into a severe economic downturn resulting in extremely weak
trading conditions during the financial year to 30 June 2009 across
all our markets.
 
In total the Group reported a 27% reduction in revenues to £66.3
million (FY2008: £90.4 million) with a progressive deterioration in
the rate of decline experienced during the second half of the
financial year when revenues were 32% below last year (FY2009 H1: 19%
decline).
 
In total, advertising sales were 34% below last year led by a
reduction in magazine advertising including print recruitment
advertising where revenues were less than half the level of a year
ago. Online advertising sales proved to be slightly more resilient
and excluding web recruitment were only 7% below last year.
 
Within Events, although total revenues decreased by 22% for the
financial year, the reduction in trade exhibition sales was limited
to 7% partly due to new product launches with five new exhibition
launches during the year. Excluding new product launches revenue
from trade exhibitions decreased by 11% across the financial year.
 
Despite the progressive rate of revenue decline reported above prompt
and decisive action was taken during the financial year to reduce
costs in response to the extreme market weakness experienced during
the period.
 
As reported at the time of our interim results announcement in
February 2009 the extensive cost reduction programme implemented
during the year was balanced against a need to preserve the strength
of our major brands and to maintain new product development
capability to support future growth. While a key focus of these cost
reduction initiatives was the need to adjust the immediate cost base
of the business to reflect lower trading volumes, the programme also
included a degree of brand rationalisation including the
discontinuation of a number of under-performing print products and
the consolidation of smaller peripheral products within major brands.
In addition a number of organisational changes were undertaken to
position the Group for future growth and in particular the
implementation of integrated editorial and commercial print and web
operations in a number of areas of the business reflects Centaur's
online strategy. An exceptional cost of £1.7 million was reported for
the year to 30 June 2009 reflecting the cost of these initiatives.
The details of this exceptional cost are reported in note 2 to the
financial statements.
 
In total, cost savings in the current financial year amounted to £9.6
million (on an adjusted EBITDA basis as defined in the Financial
Review) with approximately half the total saving accruing as a result
of reduced staff numbers. Although the average monthly numbers of
persons employed during the year (note 3 to the financial statements)
has reduced by 12% the timing of these cost saving initiatives was
weighted into the second half of the financial year and the absolute
reduction in staff number across the Group at 30 June 2009 was 139
representing an 18% reduction. As a result the actions already
completed to reduce staff numbers, further cost savings of around £2
million will be achieved in the new financial year to 30 June 2010.
 
Despite the difficult trading conditions the Group continued a
programme of new product development during the year to 30 June 2009.
These initiatives are described in more detail below and in total
around 10% of group revenues derived from products launched in the
last three years (FY2008: 11%).
 
The Group held net cash balances of £0.6 million at 30 June 2009
(FY2008: £7.7 million) although free cash flow was reduced by a
raised level of capital expenditure for the year totalling £4.9
million (FY2008: £3.1 million) and reflecting continued investment in
web platform and property refurbishment. As a result the conversion
ratio of adjusted operating profit into free cash flow was 88%
compared to 90% last year.
 
In view of the ongoing market weakness, the Board has declared a
reduced final dividend of 1.0p per share (FY2008: 3.0p) in line with
its policy of seeking to maintain an appropriate level of earnings
cover. The final dividend will be paid on 12 January 2010 to
shareholders on the share register at 30 October 2009.
 
Legal & Financial
 
Legal & Financial reported a 39% reduction in revenues to £17.6
million for the year (FY2008: £28.7 million). This level of
reduction, which represents almost half of the year on year decrease
for Group, reflects the pronounced effect of changes in global
financial markets over the last twelve months on the professional
communities served by products in this division.
 
Adjusted EBITDA also reduced to £1.9 million (FY2008: £9.2 million)
which represented a margin of 11% compared to 32% a year ago although
the level of margin attrition was partly mitigated by a 19% reduction
in divisional costs.
 
Legal sector revenues, which account for 39% (FY2008: 37%) of the
total division, decreased by 34% for the full year, mainly reflecting
reduced recruitment activity as declining volumes of M&A activity
affected the principal London law firms. In total, legal sector
recruitment advertising through both The Lawyer magazine and
thelawyer.com accounted for around a third of the Group's recruitment
advertising revenue in the year and across both products reported a
54% decrease against last year. Event revenues in this sector proved
more resilient with legal conference revenues increasing by 28%
following the launch of a number of successful "hot topic" CPD
accredited events.
 
A part of the revenue reduction in this division relates to products
targeting intermediaries specialising in mortgages or secured
lending. Product advertising in this sector began to reduce in the
last financial year as soon as the availability of credit in the
primary markets started to contract in the autumn of 2007. However
the severity of the decline was much more pronounced during the year
to 30 June 2009 and as a result this portfolio saw revenues reduce by
78% during the year to 30 June 2009. Dependency on this sector has
diminished greatly and in total represented only 5% of divisional
revenues in the current financial year (FY2008: 14%). The product
range remains broadly unchanged, led by Mortgage Strategy magazine
which is the only remaining weekly title in this market. As a result
Centaur remains well positioned to provide access to essential
distribution channels for the remaining product providers in this
sector with our continuing product range expected to increase in
importance as the market slowly recovers.
 
Within the broader financial product range total revenues decreased
in the year by around 30% and in particular, product advertising
volumes in the two principal magazine titles - Money Marketing & Fund
Strategy reduced by 28%. Event revenues proved more resilient and
activity in the year included the launch of the Investment Summit
Dubai, bringing together the UK's most influential fund managers,
fund selectors and distributors. In addition new revenues were
derived from events for specialist financial intermediaries targeting
retirement planning and the corporate market with the Corporate
Adviser Summit, held in October 2008, reporting revenue around 40%
above the previous year.
 
Marketing & Creative
 
In total Marketing & Creative revenues decreased by 27% to £17.3
million (FY2008: £23.6 million) with print recruitment advertising
representing around 40% of this reduction. Adjusted EBITDA also
reduced to £0.8 million (FY2008: £4.1 million) which represented a
margin of 5% compared to 17% a year ago.
 
In total around 40% (FY2008: 27%) of divisional recruitment revenues
were achieved online principally through marketingweek.co.uk and
designweek.co.uk. In general these online revenues were more
resilient than their print counterparts with some growth reported in
the first half of the financial year and an overall reduction of 8%
for the full year compared to a decline of 33% for print products.
 
While the direct cost savings associated with falling print
recruitment advertising volumes are comparatively low, the completion
of the restructuring initiatives, which commenced in the last
financial year, led to a 15% reduction in divisional costs for the
year and this mitigated around half of the total revenue reduction.
 
It was recognised in previous annual reports that the adjusted EBITDA
margin was comparatively low in this division in the context of the
overall margin achieved by the Group. A number of initiatives have
now been completed that will contribute to margin improvement as
revenues return to this sector.
 
A much greater degree of integration between different strands of
marketing activity is an increasingly regular feature of UK corporate
marketing departments and this requires a much broader range of
skills to be deployed by the marketing professionals within those
departments. This requirement underpins many of the changes that have
been introduced during the year including the repositioning of brands
and changes to both editorial and commercial teams. These changes
combine areas of specialisation to provide a more responsive
publishing proposition with a much broader focus on the key
information requirements of our target audience.
 
The re-launch of Marketing Week lies at the heart of these changes
and the magazine, which represents the hub of the marketing
community, has been successfully repositioned as a broad based high
quality editorial product for marketing professionals. A number of
smaller brands which covered niche areas within the sector have been
discontinued as separate publications with a migration of targeted
editorial content to Marketing Week which continues to provide a very
effective and relevant route to market for advertisers within those
niche areas.
 
This principle was further extended by the launch of Marketing Week
Live in June 2009. The show is the largest single event of its kind
and unites a number of separate strands of marketing discipline under
the Marketing Week brand. The four component parts to the show
included three existing products - The Instore Show, The Online
Marketing show and Insight (aimed at research professionals) and a
newly launched Data management exhibition which specifically drew
direct marketing professionals to the Event. In total event revenues
were 24% below the previous year, partly reflecting some
discontinuation of events as a result of the repositioning of brands
referred to above and also a change in strategy in relation to
Marketing Conferences with a focus on a reduced number of events with
higher margin potential in this financial year.
 
Construction & Engineering
 
Revenues in this division reduced by 16% to £17.3 million (FY2008:
£20.5 million), while adjusted EBITDA at £2.4 million (FY2008: £4.7
million) represents a margin deterioration to 14% (FY2008: 23%).
 
Within Construction those magazines aimed at the general home
interest market (Period Living, Real Homes and Move or Improve?)
experienced continued softness in both advertising and circulation
sales during the year. The impetus to the sector provided during
times of high levels of activity in the housing market is currently
diminished and directly affected these magazines during the financial
year. However the prospects for these titles remain strong and this
underpinned the acquisition of Real Homes magazine from Hachette
Filipacchi (UK) Limited in December 2008. The title has been
refocused as a mainstream home improvement magazine, now
incorporating Move or Improve? magazine which is no longer published
as a separate title and has added a rich seam of quality to the
portfolio which has been well received by both advertisers and
readers in its first few issues under Centaur ownership.
 
The level of Self Build projects to some extent also follows the
pattern of activity in the broader construction sector and is
affected by any contraction in available specialist project finance.
Generally however these factors were partly offset by an increase in
the availability of building plots and by a general reduction in
input prices as the supply of building goods and services outstripped
demand. While in total, revenue from the Homebuilding shows decreased
by 8% compared to the last financial year these factors provided some
buoyancy to the portfolio which included the launch of two new
regional shows during the year.
 
The Engineering portfolio which accounts for around third of the
total revenues in this division reported revenues 21% down against
the previous year principally due to reduced recruitment advertising
in both The Engineer magazine and through theengineer.co.uk.
 
The online products in this division are the subject of ongoing new
product development during the coming year including the development
of a new standardised recruitment platform for The Engineer to be
launched in November 2009 and the further roll out of the sales lead
generation application through the Pro-Talk model.
 
Perfect Information
 
A revenue reduction for the year of 10% related principally to the
closure of Perfect Analysis in October 2007.
 
However cost savings arising partly from this discontinuation almost
completely mitigated the loss of revenue and adjusted EBITDA for the
year was broadly maintained at £2.0 million (FY2008: £2.1 million)
representing a two point margin improvement to 38%.
 
PI has adapted quickly and effectively to the changing circumstances
of the core customer base (principally law firms and investment
banks) over the last 12 months. Although document usage has
historically depended on corporate transactions, core revenues have
sustained very well and with some few notable exceptions (Lehman
Brothers and Bear Stearns) renewal rates have remained above 90%.
 
The strength of PI derives from its breadth of coverage in terms of
both number of documents, depth of indexing, areas of document
specialisation and international scope. The database lies at the
heart of the business and has been leveraged through a programme of
creative and well targeted new product developments including the
launch during this financial year of PI Navigator which delivers
significantly enhanced desk top delivery of personalised data sets to
precisely match professional users' document requirements.
 
General Business Services
 
This segment comprises products serving a number of distinct business
communities. The main verticals in this segment are Human Resources
(HR), the Recruitment sector, Supply Chain and Logistics and Business
Travel and the newly launched EnAble Show (described in more detail
below).
 
In total, General Business Services revenues decreased by 25% with
the reduction split evenly between magazines and events within this
division. Online revenues were flat year on year, although at 8% of
total divisional revenues (FY2008: 6%) are a comparatively small part
of the division.
 
In total an adjusted EBITDA loss of £0.1 million was reported for the
year (FY2008: profit £1.4 million) and while costs across all the
businesses reported in this division have reduced by 13%, the
movement into a small loss for the year reflects the very difficult
trading conditions experienced in the both the Recruitment and
Logistics /Supply chain verticals during the year and some new
product development including the launch of the EnAble Show in
November 2008. This show represents an entry into a new high value
vertical for the Group connects a broad range of people with
disabilities, who are aiming for an independent and active lifestyle,
with the vast array of suppliers of product and services that will
facilitate that aim. The initial show was launched with good
exhibitor support and a respectable visitor profile that promises
well for repeat events.
 
The traditional advertisers in the Recruiter magazine are recruitment
consultancies and the suppliers of goods and services to them, with
the consultancies traditionally operating in a low margin and crowded
market. With recruitment volumes falling as a result of rising
unemployment combined with recruitment freezes across a number of
sectors the industry has contracted sharply in the last 12 months and
as a result the Recruiter magazine and website have experienced a
significant reduction in both recruitment and display advertising
support during this financial year.
 
A re-launch of the Recruiter magazine planned for the first quarter
of the new financial year will re-focus both content and circulation
towards in-house recruiters whose scope and number has increased
recently as companies seek to find more cost effective and efficient
means of recruiting and retaining staff.
 
The principal products in the Logistics sector - Logistics Manager
and website - experienced a contraction in display advertising
support following a continued slump in the commercial property market
which represents a key strand of marketing support for these
products.
 
Trading conditions in the Business Travel sector were very
challenging across all three shows (London, Dusseldorf and Dubai) and
collectively revenues were 18% down against the previous year.
However although the main London show, held in February 2009, was a
third smaller than a year ago, a small yield improvement and visitor
numbers held at 90% of the previous years level, indicated the
importance of the show to key travel buyers and confirmed Centaur's
strong position in this market. This was further strengthened by the
launch of the Business Travel awards which ran concurrently with the
London show and proved a valuable addition to the brand especially as
a way to attract senior visitors to the main show.
 
In terms of financial product advertising, the corporate market
comprising the key Compensation and Benefit managers that make up the
circulation of Employee Benefits magazine was relatively buoyant
partly reflecting a focus by companies on cost effective benefit and
protection schemes even in the face of falling employee numbers.
 
Although advertising revenues still reduced year on year - Employee
Benefits reported a 9% reduction in display volume across the year -
this performance was materially better than the broader financial
product advertising reported elsewhere in the Group.
 
Financial Review
 
Summary of Group results
 
As reported in the Business Review, the Group experienced very
challenging trading conditions during the year to 30 June 2009. A 27%
reduction in revenues for the year reflected the effect of a slowing
UK economy on both recruitment activity and discretionary advertising
expenditure by customers in most of our served markets. This exposure
to the economy and dependency on advertising was included among the
principal risks and uncertainties facing the Group reported in
previous annual reports.
 
A rapid and substantial reduction in Group expenditure partly
mitigated the effect of the revenue reduction, although profit before
taxation reduced to £1.7 million for the financial year (FY2008:
£14.5 million). Full details of cost reductions achieved during the
year are detailed below.
 
The strength of the Group's balance sheet, bolstered by the agreement
of a new banking facility with Royal Bank of Scotland, continued to
represent a very positive feature of the Group and this allowed
further new product development activity and increased capital
investment in both premises and online products during the year.
 
Full details of cash generation and capital investment are also
provided below.
 
Trading updates
 
The financial performance of the Group was monitored by the Board
each month during the financial year and although the Group's
principal revenue sources traditionally carry very low forward
visibility, the profile of results, described above, was the subject
of regular trading updates or interim management statements ("IMS")
made during the year as follows:
 
14 November 2008 (IMS),
9 January 2009 (pre-close trading update)
20 February 2009 (trading update)
27 February 2009 (Interim results announcement)
14 May 2009 (IMS)
 
Revenue
 
Total Group revenues for the year ended 30 June 2009 amounted to
£66.3 million, a reduction of 27% (£24.1 million) compared to last
year.
 
This reduction was led by a decrease in Group advertising revenues of
34% which divided into a 48% reduction in recruitment advertising and
a 28% reduction in all other advertising. Included within
non-recruitment advertising was a comparatively resilient online
element where the year on year decrease was limited to a 7%
reduction.
 
In total, at £33 million, advertising sales represented 50% of Group
revenues for the year (FY2008: 56%).
 
In total 23% of the Group's revenues were derived from online
products (FY2008: 19%) and while this increase in online
concentration partly reflects that reduction in print revenues during
the year it also reflects a greater degree of stability in online
revenues, a characteristic which underpins much of Centaur's future
growth strategy.
 
Total event revenues for the year decreased by 22% to £20.1 million
and represented 30% of Group revenues (FY2008: 29%).
 
While revenue from acquisitions made in the current or preceding
financial year represented less than 2% of the Group's revenue,
organic product launches in the last three financial years amounted
to 10% of Group revenues for the year to 30 June 2009.
 
Profit before taxation
 
Profit before taxation decreased by 88% to £1.7 million (FY2008:
£14.5 million). After adjusting for exceptional costs and
amortisation of acquired intangible assets, adjusted profit before
tax decreased by 77% to £4.4 million (FY2008: £19.2 million).
 
The exceptional costs incurred in the year amounted to £1.7 million
and these are described in more detail below and in note 2 to the
financial statements. To ensure the underlying performance of the
Group is presented in the income statement the Board considers the
Group's earnings before interest, tax, depreciation, amortisation,
exceptional costs and other significant non-cash items including
share based payments ("adjusted EBITDA") to be an important and
consistent measure of profitability and in addition the adjusted
EBITDA margin is one of the key performance indicators used by the
Board to monitor and manage the business.
 
Adjusted EBITDA for the year ended 30 June 2009 was £7.0 million
compared to £21.5 million in the year ended 30 June 2008. This
represents an adjusted EBITDA margin of 11% (FY2008: 24%).
 
An analysis of revenue and adjusted EBITDA from continuing operations
by segment, product type, underlying/acquired and maturity as well as
an analysis of revenue by source and client type is included in the
Business Review and the different measures of profit described above
are summarised in the following table:
 
Continuing operations 2009 2008
£m £m
 
Revenue 66.3 90.4
 
Adjusted EBITDA 7.0 21.5
 
Depreciation of property, plant and equipment (0.8) (0.8)
Amortisation of software (1.5) (1.5)
Share based payments (0.4) (0.2)
Interest receivable 0.1 0.2
 
Adjusted PBT 4.4 19.2
 
Amortisation of acquired intangibles (1.0) (1.1)
Exceptional costs (1.7) (3.6)
 
Profit before taxation 1.7 14.5
 
Group costs
 
In line with the definition of adjusted EBITDA above, total Group
costs are reported before interest, tax, depreciation, amortisation,
exceptional costs and other significant non-cash items including
share based payments.
 
Total Group costs for the financial year amounted to £59.3 million, a
reduction of £9.6 million compared to the previous year. These
savings were led by a reduction in employee numbers with the average
monthly number of persons employed during the year reducing by 12% to
695. (FY2008: 786) as reported in note 3. In total around £6 million
of these savings relate to this headcount reduction, of which around
£4 million represents a reduction in direct payroll costs during the
current year with the balance relating to temporary staff expenses
and other associated costs of employment such as staff expenses and
recruitment.
 
Although average employee numbers for the year has fallen by 12% the
actual headcount across the Group at 30 June 2009 amounted to 634
(FY2008: 773), a reduction of 139 employees (18%) compared to 30 June
2008 which reflects the second half weighting of many of the
initiatives that have led to this reduction. As a result there will
be further salary savings of around £2 million in the new financial
year.
 
Other cost reductions were also achieved through direct initiatives
to improve the efficiency of both publishing and event product
portfolios. This included a rationalisation of weaker or
underperforming products during the year and a number of adjustments
to reduce the direct costs of production and distribution in light of
lower advertising volumes, including format changes and adjustments
to circulation and print volumes. In total costs of printing, paper
and distribution across all magazine titles reduced by approximately
£2.5 million (23%) for the full year. Events costs were also reduced
in line with deceased space sales at exhibitions and reduced
attendance at conferences and awards and in total venue costs fell by
£1.1 million (14%) for the financial year.
 
Exceptional cost
 
Within administrative expenses for the year ended 30 June 2009 and in
accordance with the statement of accounting policies in relation to
exceptional costs, an amount of £1.7 million (FY2008: £3.6 million)
has been identified as exceptional for the purpose of calculating
both adjusted EBITDA and adjusted profit before tax.
 
The full £1.7 million of exceptional expenditure was represented by a
cash outflow during the year to 30 June 2009, together with £1.0m
which was provided for in FY2008 and settled in the current financial
year (see free cash flow reconciliation).
 
In total around £1.5 million of this expenditure relates to the
re-organisation of publishing operations that had commenced during
the previous financial year. Of this amount £1.0 million (FY2008:
£1.3 million) are redundancy costs associated with the reduction in
staff numbers detailed above while £0.5 million relates to post
closure costs relating to magazine titles that were discontinued
during the year.
 
A further £0.2 million exceptional cost is reported in relation to
empty office space arising from the restructuring of the business
during the year (£0.1m) and the discontinuation of Perfect Analysis
in the previous financial year (£0.1m).
 
Adjusted EBITDA margin
 
The adjusted EBITDA margin is one of a range of performance
indicators used by the Board to monitor progress towards the
achievement of the strategic objectives of the Group.
 
In the current year an adjusted EBITDA margin of 11% is reported
(FY2008: 24%) and while this represents a significant deterioration,
the severity of the decline reflects the very high operational
gearing in a number of the Group's business models, particularly
print advertising sales, combined with the highly cyclical nature of
revenues from this source.
 
Sustainable margin improvement therefore will be attained through a
return to revenue growth and a focus on scale and rebalancing of the
Group's revenues to reduce its dependence on display and recruitment
advertising revenues which represented 50% of total Group revenue in
the year to 30 June 2009. (FY2008 56%)
 
These initiatives underpin much of the new product development and
capital investment undertaken by the Group in this financial year and
while it is expected that advertising revenues, particularly
recruitment sales will grow strongly as our markets recover, the
continued development of our online proposition will allow expansion
into areas of more sustainable revenue growth including workflow
related data and information sales and subscription based sales lead
generation models.
 
The cost saving initiatives completed to date have provided
significant margin protection during this financial year and have
partly resulted in a permanent reduction in the Group's cost base
through organisational efficiencies and the discontinuation of
underperforming or loss making products. It is estimated that this
reduction in the fixed cost base of the business would add 3% to 4%
points to the adjusted EBITDA margin on the basis of a return to the
level of revenue and adjusted EBITDA reported for the year to 30 June
2008.
 
Revenue per employee
 
Although Group revenues reduced by 27% in the year to 30 June 2009,
revenue per employee of £95,000 (FY2008: £115,000) represented only a
17% reduction against the previous financial year. This partial
mitigation of the Group revenue reduction reflected the 12% decrease
in average employee numbers for the year to 30 June 2009 compared to
the previous year.
 
Based on actual employee numbers at 30 June 2009 of 634 (FY2008: 773)
the revenue per employee for the year is £105,000 (FY2008 £117,000).
 
Free cash flow and capital expenditure
 
Free cash flow ("FCF") is defined as cash generated from operations
less capital expenditure required to maintain and develop the asset
base of the Group, (property, plant and equipment and computer
software) and after adjusting for any exceptional cash items.
 
The strength of FCF generation, representing the cash available for
the stakeholders of the Group, has been a strong feature of the
Group's financial performance in recent years (see five year FCF
summary), although this year's performance was affected by the
reduced level of revenue and profit reported for the year. In total
cash generated from operations (before cash expenditure in respect of
exceptional items) amounted to £8.7 million, with working capital
reducing from net working capital liabilities of £2.0 million at 30
June 2008 (including accrued exceptional costs of £1.0m) to £2.8
million at 30 June 2009. The achievement of this working capital
reduction represented a strong performance for the Group in the
context of the difficult trading conditions experienced during the
year. However the cash conversion ratio (FCF to adjusted operating
profit) was reduced to 88% for the year (FY2008: 90%) and was
constrained by an increased level of capital investment.
 
2009 2008 2007 2006 2005
Actual Actual Actual Actual Actual
£m £m £m £m £m
 
Cash generated from operations 6.0 19.0 18.2 14.4 9.6
Exceptional items - cash impact 2.7 1.2 - - 0.5
Capital expenditure (4.9) (3.1) (2.6) (3.0) (2.5)
 
Free cash flow 3.8 17.1 15.6 11.4 7.6
 
Operating profit 1.6 14.3 15.9 14.7 8.9
Amortisation of acquired 1.0 1.1 0.7 0.3 -
intangibles
Exceptional costs/(credit) 1.7 3.6 - (2.2) 0.6
 
Adjusted operating profit 4.3 19.0 16.6 12.8 9.4
 
Cash conversion rate 88% 90% 94% 89% 81%
 
In total capital expenditure amounted to £4.9 million (FY2008: £3.1
million) which reflected a continuation of the significant investment
in online businesses and property refurbishment that commenced in the
previous financial year.
 
In total £2.5 million (FY2008: £2.4 million) was expended on the
purchase of software in relation to online product developments.
These initiatives include the development of a standardised web
recruitment platform, an integrated magazine and web content
management system and an enhanced customer database that have
collectively positioned the Group very effectively to take advantage
of online sales opportunities as revenues derived from our core
markets recover.
 
A further £2.4 million (FY2008: £0.7 million) was expended during the
year on property, plant and equipment, of which £1.6 million was in
respect of leasehold improvements relating to the major
refurbishment of office accommodation in the Group's two main London
properties. The balance of £0.7 million includes replacement and
replenishment expenditure in relation to existing computer equipment
and fixtures and fittings in use across the Group.
 
Although the implementation of the online development described above
is ongoing, it is anticipated that total capital expenditure will
reduce substantially in the new financial year as the remaining
online initiatives are completed.
 
Banking facilities
 
The agreement of a new banking facility with The Royal Bank of
Scotland plc ("RBS") was completed during the financial year
following a review of the Group's expected working capital
requirements over the next three years.
 
Although the Group had an existing ongoing facility of up to £4
million with RBS, this was arranged on a one year rolling basis and
was due to expire in September 2009. The new terms, which provide a
revolving credit facility of up to £5 million maturing in May 2012,
are considered to provide adequate headroom for the Group's working
capital requirements over this period.
 
The financial covenants governing this facility include gross
leverage and interest cover ratios to be assessed on a twelve month
rolling basis at each quarter end, commencing on 30 June 2009. At
that date the Group reported net cash of £0.6 million (FY2008: £7.7
million) with no requirement to draw on the facility and all
covenants were fully satisfied.
 
Share capital reduction
 
The Board holds a mandate to purchase up to 10% of the Company's
issued share capital in each twelve month period. During this
financial year the Company acquired 1,776,467 (FY2008: 7,550,000) of
its own shares through open market purchases. The total amount paid
to acquire the shares was £0.9 million (FY2008 £7.9 million) and this
has been deducted from shareholders' equity. The shares are held as
treasury shares.
 
While this mandate remains available to the Board and continues to
represent an efficient mechanism through which excess cash may be
returned to shareholders, the focus of cash management over the next
twelve months will be to minimise cash borrowings through continued
effective working capital management and to maintain flexibility over
dividend policy.
 
Earnings per Share ("EPS")
 
Basic EPS for the year was 0.6p compared to 6.7p in the previous
financial year.
 
An alternative adjusted EPS, consistent with the calculation of
adjusted PBT described above, is reported for the same reason that
the Board considers this to represent a more accurate reflection of
the underlying performance of the Group. On an adjusted basis EPS
was 2.1p compared to 9.2p a year ago. Full details of the EPS
calculations are presented in note 4.
 
Taxation
 
Tax on profit on ordinary activities amounted to £0.8 million in the
year ended 30 June 2009 (FY2008: £5.0 million).
 
Taking into account the tax effect of adjustments to arrive at
adjusted PBT, this represents an effective tax rate of 34% (FY2008:
31%) of adjusted PBT.
 
The year on year increase in this effective tax rate, which exceeds
the standard rate of UK corporation tax rate (28%), partly reflects a
further reduction in the value of the deferred tax asset in respect
of outstanding share options. The value of this asset is based on the
expected deduction that will arise under Schedule 23 Finance Act 2003
when options are exercised and is calculated partly by reference to
current share price. At 30 June 2009 the market price was 39.0p
compared to 65.8p a year ago and the carrying value of the deferred
tax asset was adjusted accordingly. In addition, while expenditure
for the year considered to be disallowable for taxation purposes is
unchanged at £0.2 million, this creates a proportionately higher
impact on the effective tax rate as a result of a 77% reduction in
adjusted PBT for the year to £4.4 million (FY2008: £19.2 million).
 
Dividends
 
A final dividend of 1.0p per share is proposed, giving a total for
the year of 1.5p (FY2008: 4.2p). The final dividend is subject to
shareholder approval at the annual general meeting and will be paid
on 12 January 2010 to all ordinary shareholders on the register at
close of business on 11 December 2009. The Company has sufficient
reserves to cover the recommended dividend.
 
Treasury policy
 
Treasury is managed centrally and is principally concerned with
minimising bank borrowings through the efficient management of
working capital and seeking to maximise returns on available short
term cash deposits. Further details of the operation of the Group's
treasury functions and a description of the role that financial
instruments have had during the year in the management of the Group's
funding and liquidity risks and interest and foreign exchange rate
risks are contained in the "financial instruments" notes to the full
financial statements.
 
Principal risks and uncertainties
 
Specific business risks to which the Group is exposed are detailed
below and the Board has implemented a comprehensive risk management
process to identify, monitor and mitigate these risks.
 
Exposure to the economy
 
Centaur's products and markets are predominantly UK based and as a
result the Group's performance is broadly linked to the strength of
the UK economy and general economic factors such as inflation,
currency fluctuation, interest rates, supply and demand of capital
and industrial disruption therefore have the potential to affect the
Group's operations, business and profitability. While these macro
economic factors are beyond the control of the Group, specific
exposure to interest rate and currency risk is minimal and in
addition the range of markets served by Centaur's products together
with the continuing strategy of extending the reach of established
brands through the delivery of new products in a diverse range of
media formats provides some ability to spread this exposure.
 
Dependence on advertising
 
In total advertising revenues represented 50% of Group revenue in the
year ended 30 June 2009 (FY2008: 56%) and changes in advertising
trends, particularly away from traditional magazine formats could
have an impact on the Group's profitability. However the diversity of
served markets and strength of brands, which in most cases includes a
number of market leading positions together with continued brand
diversification into alternative media formats all serve to limit
this exposure. In addition, as described above, the continued
investment in online products provides further opportunities to build
more sustainable and less cyclical revenue streams that will help to
reduce the concentration of more traditional forms of advertising
within overall Group revenues.
 
Growth strategy
 
The Group seeks to launch or acquire new titles, conferences,
exhibitions and other brand extensions. It is essential that the
Group successfully develops and markets these products and integrates
acquired businesses. The proven record of organic growth over the
past several years, and the successful integration of several
businesses acquired over the same time period clearly demonstrate the
Group's ability to deliver this strategy.
 
Competitor activity
 
A number of products exist that compete directly or indirectly with
those of the Groups resulting in a highly competitive market.
Domestic and international competitors market their products to the
Group's target audiences. New technology, changing commercial
circumstances and new entrants to the markets in which the Group
operates, may adversely affect the Group's business. A key element
of the Group's strategy is to develop and maintain a deep
understanding of the information needs of the markets it serves and
by maintaining the highest standards of editorial integrity it aims
to ensure that the provision of information remains commercially
aligned with and relevant to the markets it serves. Through these
means the Group can continually adapt and develop existing products
thus protecting market leading positions and thereby limiting the
opportunities for competitors to secure an advantage.
 
Dependence on key personnel
 
The Group's future success is substantially dependent on the
continued services and continuing contributions of its Directors,
senior management and other key personnel. The loss of the services
of any of the Group's executive officers or other key employees could
have a material adverse effect on the Group's business. The
entrepreneurial culture of the Group and the incentive programmes in
place enable the Group to attract and retain the key management team.
 
Reliance on information systems
 
Certain divisions of the Group are dependent on the efficient and
uninterrupted operation of their IT and computer systems and of
services from third-party providers. The Group has taken precautions
to limit its exposure to the risk of material disruption to systems.
 
Financial Review (continued)
 
Key performance indicators (KPIs)
 
The key strategic objectives of the Group are summarised below:
 
* To achieve critical mass in high value growth markets
* To maintain long term double digit revenue growth
* To balance portfolio revenues across print, online and events
* To expand audience share of revenues
* To increase adjusted EBITDA margins to 25%
 
The Board uses a range of performance indicators to monitor progress
against these objectives and manage the business. The indicators
which the Board considers to be important are as follows:
 
* Revenue growth by revenue type
* Share of revenues from audiences
* Adjusted EBITDA margin
* Revenue per employee
* Adjusted PBT
* Adjusted EPS
* Cash conversion rate.
 
In addition to monitoring progress against stated strategic
objectives this range of measures provides the Group's stakeholders
an opportunity to assess progress made within each reporting period
towards a number of commercial and financial objectives and in
addition, by adopting measures that are commonly reported by other
members of Centaur's peer group, to facilitate a comparison of
performance against other similar companies in the sector. Other
specific aims of the adopted performance measures are as follows:
 
* To indicate the spread and breadth of Centaur's operating
business models and their relative importance in each reporting
period
* To remove the impact of non-recurring exceptional credits or
expenditure (and any related tax effect of those exceptional
items) thus ensuring the indicators are closely aligned with the
underlying, continuing aspects of the Group's trading performance
* To indicate the strong cash generative nature of the Group
* To remove the impact of non-cash credits or expenditure from the
measures of earnings to ensure the indicators are closely aligned
to the cash generative nature of the Group's assets
* To indicate the strong operational gearing associated with the
Group's revenue growth.
 
Financial Review (continued)
 
Key performance indicators (KPIs) (continued)
 
2009 2008
Revenue (decline)/growth by revenue type % %
Print (35%) (2%)
Events (22%) 0%
Online products (12%) 11%
Other 25% (56%)
Total (27%) 0%
 
Revenue share by client type % %
Audiences 24% 22%
Marketers 76% 78%
Total 100% 100%
% %
Adjusted EBITDA margin[1] 11% 24%
£000 £000
Revenue per employee - continuing operations 95 115
£m £m
Adjusted PBT[2] 4.4 19.2
Pence Pence
Adjusted EPS[3] 2.1 9.2
% %
Cash conversion rate[4] 88% 90%
 
Notes:
[1]. One of Centaur's key measures of profit, which is used to
measure the relative performance of divisional units of the Group, is
earnings before interest, tax, depreciation and amortisation,
excluding exceptional items and other significant non-cash items
including share based payments (Adjusted EBITDA).
[2.] Adjusted PBT (PBTA) is profit before tax, excluding the
impact of amortisation of acquired intangibles and of exceptional
items.
[3.] Adjusted EPS is based on the basic EPS but after making
adjustments for amortisation on acquired intangibles and exceptional
items as detailed in note 4.
[4.] Cash conversion rate is free cash flow expressed as a
percentage of adjusted operating profit. Free cash flow is defined
as cash generated from operations, less capital expenditure on
property, plant and equipment and software, and excluding the cash
impact of exceptional items. Adjusted operating profit is operating
profit after making adjustments for amortisation on acquired
intangibles and exceptional items.
 
Consolidated Income Statement for the year ended 30 June 2009
 
2009 2008
Note £m £m
Continuing operations
 
Revenue 1 66.3 90.4
 
Cost of sales (37.4) (44.8)
 
Gross profit 28.9 45.6
 
Distribution costs (3.6) (4.5)
Administrative expenses (23.7) (26.8)
 
Adjusted EBITDA 1 7.0 21.5
 
Depreciation of property, plant and equipment (0.8) (0.8)
Amortisation of software (1.5) (1.5)
Amortisation of acquired intangibles (1.0) (1.1)
Share based payments (0.4) (0.2)
Exceptional cost 2 (1.7) (3.6)
 
Operating profit from continuing operations 1.6 14.3
 
Interest receivable 0.1 0.2
 
Profit from continuing operations before taxation 1.7 14.5
 
Taxation (0.8) (5.0)
 
Profit for the year from continuing operations 0.9 9.5
 
Discontinued operations
Profit for the year from discontinued operations - 0.2
 
Profit for the year attributable to equity 0.9 9.7
shareholders
 
Earnings per share from total operations 4
Basic 0.6p 6.7p
Fully diluted 0.6p 6.7p
 
Earnings per share from continuing operations 4
Basic 0.6p 6.6p
Fully diluted 0.6p 6.6p
 
Consolidated Balance Sheet at 30 June 2009
 
2009 2008
Note £m £m
Non-current assets
Goodwill 5 140.3 140.3
Other intangible assets 16.1 15.9
Property, plant and equipment 3.6 2.0
Deferred tax assets 0.3 0.7
160.3 158.9
 
Current assets
Inventories 1.0 1.2
Trade and other receivables 11.0 16.5
Cash and cash equivalents 0.7 7.8
12.7 25.5
 
Current liabilities
Financial liabilities - borrowings 0.1 0.1
Trade and other payables 8.3 11.0
Deferred income 6.5 8.7
Current tax liabilities - 2.0
14.9 21.8
 
Net current (liabilities) / assets (2.2) 3.7
 
Non-current liabilities
Deferred tax liabilities 1.1 1.1
1.1 1.1
 
Net assets 157.0 161.5
 
Capital and reserves
Share capital 15.0 15.0
Treasury shares (9.8) (8.9)
Share premium 0.7 0.7
Other reserves 3.5 3.1
Retained earnings 147.6 151.6
 
Total shareholders' equity 157.0 161.5
 
The financial statements were approved by the Board of Directors on
16 September 2009 and were signed on its behalf by:
 
MJ Lally
Group Finance Director
 
Consolidated Cash Flow Statement for the year ended 30 June 2009
 
2009 2008
Note £m £m
 
Cash flows from operating activities
Cash generated from operations 6.0 19.0
Tax paid (2.3) (4.6)
Cash flows from operating activities 3.7 14.4
 
Cash flows from investing activities
Interest received 0.1 0.1
Acquisition of subsidiaries (net of cash acquired) - (0.1)
Proceeds from the disposal of businesses 0.1 0.2
Proceeds from the disposal of subsidiary - 0.4
Purchase of property, plant and equipment (2.4) (0.7)
Purchase of software (2.5) (2.4)
Purchase of other intangible assets (0.2) -
Cash flows from investing activities (4.9) (2.5)
 
Cash flows from financing activities
Net proceeds from issue of ordinary share capital - 0.1
Treasury shares purchased (0.9) (7.9)
Repayment of loan notes - (1.0)
Interest paid (0.1) -
Dividends paid (4.9) (5.4)
Cash flows from financing activities (5.9) (14.2)
 
Net decrease in cash and cash equivalents (7.1) (2.3)
 
Cash and cash equivalents at 1 July 2008 7.8 10.1
 
Cash and cash equivalents 30 June 2009 0.7 7.8
 
Statement of Accounting Policies
 
The principal accounting policies adopted in the preparation of these
financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise
stated.
 
Basis of preparation
 
The consolidated and Company financial statements have been prepared
in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union and International Financial
Reporting Interpretations Committee (IFRIC) applicable at 30 June
2009 and with those parts of the Companies Act, 2006 applicable to
companies reporting under IFRS. The financial statements have been
prepared on the historical cost basis.
 
These financial statements are presented in pounds sterling (GBP) as
that is the currency of the primary economic environment in which the
Group operates.
 
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Although these estimates are based on management's best knowledge of
the amount, events or actions, the actual results may ultimately
differ from those estimates.
 
The Company has taken advantage of the exemption available under
section 408 of the Companies Act 2006 and has not presented its own
income statement in these financial statements.
 
The following new standards, amendments to standards or
interpretations are mandatory for the first time for the financial
year ending 30 June 2009.
 
* IFRIC 12, 'Service concession arrangements', effective for annual
periods beginning on or after 1 January 2008. This interpretation
is not relevant for the Group.
* IFRIC 13, 'Customer loyalty programmes' (effective from 1 July
2008). This interpretation is not relevant for the Group.
* IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum
funding requirements and their interaction' (effective from 1
January 2008). This interpretation is not relevant for the Group.
* Amendment to IAS 39, 'Financial instruments: Recognition and
measurement', and IFRS 7, 'Financial instruments: Disclosures',
on the 'Reclassification of financial assets' (November version)
(effective 1 July 2008). The adoption of these amendments has no
material impact on the financial statements of the Group.
 
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial year ending 30 June 2009 and have not been early adopted:
 
* Amendment to IFRS 2, 'Share based payments' on 'Vesting
conditions and cancellations' (effective 1 January 2009)
* IFRS 8, 'Operating segments', effective for annual periods
beginning on or after 1 January 2009, subject to EU endorsement.
* IFRIC 15 'Agreements for the construction of real estate'
effective from 1 January 2009.
* IFRIC 16 'Hedges of a Net Investment in a Foreign Operation',
effective for annual periods beginning on or after 1 January
2009.
 
The Directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on the
financial statements of the Group.
 
Additional presentation within the consolidated income statement
 
The Group has presented separately on the face of the consolidated
income statement an additional profit measure of adjusted EBITDA.
Adjusted EBITDA is earnings before interest, tax, depreciation,
amortisation and excluding exceptional and other significant non-cash
items. This presentation has been provided as the Directors believe
that this measure reflects more clearly the ongoing operations of the
Group. In 2009 and 2008, share based payment costs have been treated
as a significant non-cash item.
 
Exceptional items
 
The Group considers items of income and expenses as exceptional items
and discloses them separately; where the nature of the item, or its
size, is likely to be material so as to assist the user of the
financial statements to better understand the results of the
operations of the Group.
 
Notes to the Financial Statements
 
1 Segmental reporting
 
Primary reporting format - business segments
 
The Group is currently organised into five main business segments.
 
Corporate costs are allocated to business segments on an appropriate
basis depending on the nature of the cost. Costs that cannot be
allocated to a business segment are shown as "unallocated".
 
Segment assets consist primarily of property, plant and equipment,
intangible assets including goodwill, inventories, trade receivables
and cash and cash equivalents.
 
Segment liabilities comprise trade payables, accruals and deferred
income.
 
Corporate assets and liabilities comprise current and deferred tax
balances, cash and cash equivalents and borrowings.
 
Capital expenditure comprises additions to property, plant and
equipment, intangible assets and goodwill and includes additions
resulting from acquisitions through business combinations.
 
Secondary reporting format - geographical segments
 
Substantially all of the Group's net assets are located and all
revenue and profit are generated in the United Kingdom. Furthermore
substantially all of the Group's customers are located in the United
Kingdom. The Directors consider that the Group operates in a single
geographical segment, being the United Kingdom, and therefore
secondary format segmental reporting is not required.
 
1 Segmental reporting (continued)
 
Year ended Marketing Construction General
30 June 2009 Legal and and and Perfect Business
Financial Creative Engineering Information Services Unallocated Group
£m £m £m £m £m £m £m
Continuing
operations
 
Revenue 17.6 17.3 17.3 5.2 8.9 - 66.3
 
Adjusted
EBITDA 1.9 0.8 2.4 2.0 (0.1) - 7.0
Depreciation
of property,
plant and
equipment (0.2) (0.2) (0.2) (0.1) (0.1) - (0.8)
Amortisation
of software (0.2) (0.3) (0.3) (0.5) (0.2) (1.5)
Amortisation
of acquired
intangibles (0.1) - (0.4) - (0.5) - (1.0)
Share based
payments - - - - - (0.4) (0.4)
Exceptional
cost (0.4) (0.7) (0.3) (0.1) (0.2) - (1.7)
 
Segment
result 1.0 (0.4) 1.2 1.3 (1.1) (0.4) 1.6
 
Interest
receivable - - - - - 0.1 0.1
Profit/
(loss)
before tax 1.0 (0.4) 1.2 1.3 (1.1) (0.3) 1.7
Taxation - - - - - (0.8) (0.8)
Profit/
(loss) for
the year
from
continuing
operations 1.0 (0.4) 1.2 1.3 (1.1) (1.1) 0.9
 
Profit/
(loss) for
the year
attributable
to equity
shareholders 1.0 (0.4) 1.2 1.3 (1.1) (1.1) 0.9
 
Segment
assets 59.3 45.7 38.3 11.8 16.9 - 172.0
Corporate
assets - - - - - 1.0 1.0
Consolidated
total assets 59.3 45.7 38.3 11.8 16.9 1.0 173.0
Segment
liabilities 2.9 3.8 3.8 2.5 1.8 - 14.8
Corporate
liabilities - - - - - 1.2 1.2
Consolidated
total
liabilities 2.9 3.8 3.8 2.5 1.8 1.2 16.0
 
Other items:
Capital
expenditure 1.5 1.3 1.1 0.9 0.5 - 5.3
Impairment
of trade
receivables 0.1 0.2 0.2 - 0.1 - 0.6
 
1 Segmental reporting (continued)
 
Year ended Marketing Construction General
30 June 2008 Legal and and and Perfect Business
Financial Creative Engineering Information Services Unallocated Group
£m £m £m £m £m £m £m
Continuing
operations
 
Revenue 28.7 23.6 20.5 5.8 11.8 - 90.4
 
Adjusted
EBITDA 9.2 4.1 4.7 2.1 1.4 - 21.5
Depreciation
of property,
plant and
equipment (0.2) (0.2) (0.2) (0.1) (0.1) - (0.8)
Amortisation
of software (0.2) (0.3) (0.2) (0.6) (0.2) - (1.5)
Amortisation
of acquired
intangibles (0.1) (0.1) (0.4) - (0.5) - (1.1)
Share based
payments - - - - - (0.2) (0.2)
Exceptional
cost - (1.1) (0.2) (1.7) (0.1) (0.5) (3.6)
 
Segment
result 8.7 2.4 3.7 (0.3) 0.5 (0.7) 14.3
 
Interest
receivable - - - - - 0.2 0.2
Profit/
(loss)
before tax 8.7 2.4 3.7 (0.3) 0.5 (0.5) 14.5
Taxation - - - - - (5.0) (5.0)
Profit/
(loss) for
the year
from
continuing
operations 8.7 2.4 3.7 (0.3) 0.5 (5.5) 9.5
 
Discontinued
operations
Revenue - - - - - - -
Segment
result - - - - - - -
Profit on
disposal of
operation - - - - 0.2 - 0.2
Profit for
the year
from
discontinued
operations - - - - 0.2 - 0.2
 
Profit/
(loss) for
the year
attributable
to equity
shareholders 8.7 2.4 3.7 (0.3) 0.7 (5.5) 9.7
 
Segment
assets 60.0 47.1 39.6 11.1 18.1 - 175.9
Corporate
assets - - - - - 8.5 8.5
Consolidated
total assets 60.0 47.1 39.6 11.1 18.1 8.5 184.4
Segment
liabilities 3.7 5.4 4.9 2.5 3.1 - 19.6
Corporate
liabilities - - - - - 3.3 3.3
Consolidated
total
liabilities 3.7 5.4 4.9 2.5 3.1 3.3 22.9
 
Other items:
Capital
expenditure 0.7 0.9 0.9 1.0 0.4 - 3.9
Impairment
of trade
receivables - 0.2 0.2 - 0.1 - 0.5
 
2 Exceptional cost
 
2009 2008
£m £m
 
Closure of Perfect Analysis
Accelerated amortisation of assets - 1.2
Redundancies - 0.2
Post closure costs 0.1 0.3
0.1 1.7
 
Reorganisation of publishing operations
Redundancies 1.0 1.3
Share based payment - 0.1
Post closure costs 0.5 -
1.5 1.4
 
Onerous lease provision 0.1 0.5
 
Total 1.7 3.6
 
A number of restructuring initiatives that commenced during the
previous year were completed in the year ending 30 June 2009. The
total cost of these initiatives was £2.9m, of which £1.4m was
reported in FY2008 and £1.5m in FY2009. Of this amount £1.0 million
(FY2008: £1.3 million) are redundancy costs while £0.5 million
relates to post closure costs relating to magazine titles that were
discontinued during the year.
 
During the previous year, the Directors decided to discontinue
Perfect Analysis, the equity research service developed by Synergy
Software Solutions Limited, a subsidiary company. The costs of
closure totalled £1.8m of which £1.7m was reported in the previous
financial year. This included £1.2m of accelerated amortisation of
computer software.
 
In addition the exceptional costs for FY2008 included £0.5m
reflecting the onerous element of an additional short term property
rental commitment at 30 June 2008 that was entered into to facilitate
the changes to the Group's main London premises that arose following
the restructuring of the business. A further £0.1m is reported in
relation to this property during the current financial year.
 
3 Directors and employees
 
Group Group Company Company
2009 2008 2009 2008
£m £m £m £m
 
Wages and salaries 25.9 29.4 1.0 1.1
Social security costs 3.0 3.3 0.1 0.1
Other pension costs 0.6 0.8 0.1 0.1
Equity settled share-based payments (note 0.4 0.3 0.1 0.1
22)
 
29.9 33.8 1.3 1.4
 
The average monthly number of persons employed during the year,
including Executive Directors, was:
 
Group Group Company Company
2009 2008 2009 2008
Number Number Number Number
Editorial 171 186 - -
Production 40 53 - -
Sales 155 178 - -
Product management and support 165 202 - -
Central services 164 167 9 8
 
695 786 9 8
 
All employees are based in the UK.
 
4 Earnings per share
 
Basic earnings per share (EPS) is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number
of shares in issue during the year. Shares held in the employee
benefit trust and shares held in treasury have been excluded in
arriving at the weighted average number of shares.
 
For diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. The Company has two classes of
dilutive potential ordinary shares: share options (including those
granted under the Sharesave plan) granted to Directors and employees
where the exercise price is less than the average market price of the
Company's ordinary shares during the year; and the contingently
issuable shares under the Company's long-term incentive plan to the
extent that the conditions are met at the reporting date.
 
4 Earnings per share (continued)
 
2009 2008
Weighted Weighted
average Per average Per
number of share number of share
Earnings shares amount Earnings shares amount
Total operations £m millions Pence £m millions Pence
 
Basic EPS 0.9 140.6 0.6 9.7 144.3 6.7
 
Effect of
dilutive
securities
Options - 0.5 - - 0.3 -
 
Diluted basic EPS 0.9 141.1 0.6 9.7 144.6 6.7
 
Continuing
operations
 
Basic EPS 0.9 140.6 0.6 9.5 144.3 6.6
 
Effect of
dilutive
securities
Options - 0.5 - - 0.3 -
 
Diluted basic EPS 0.9 141.1 0.6 9.5 144.6 6.6
 
An alternative measure of adjusted earnings per share has been
provided as the Directors believe that this measure is more
reflective of the ongoing trading of the Group.
 
2009 2008
Weighted Weighted
average Per average Per
number of share number of share
Earnings shares amount Earnings shares amount
£m millions Pence £m millions Pence
 
Adjusted EPS
Earnings
attributable to
ordinary
shareholders from
continuing
operations 0.9 140.6 0.6 9.5 144.3 6.6
 
Amortisation of
acquired
intangibles 1.0 - 0.7 1.1 - 0.7
Exceptional cost
(note 2) 1.7 - 1.2 3.6 - 2.5
Tax effect of
above adjustments (0.7) - (0.5) (0.9) - (0.6)
 
Adjusted EPS 2.9 140.6 2.1 13.3 144.3 9.2
 
Effect of
dilutive
securities
Options - 0.5 - - 0.3 -
Contingently
issuable shares - - - - - -
 
Diluted adjusted
EPS 2.9 141.1 2.1 13.3 144.6 9.2
 
5 Goodwill
 
Total
£m
Cost
At 1 July 2008 and 30 June 2009 140.3
 
Net book amount
At 30 June 2008 and 30 June 2009 140.3
 
The majority of the Group's goodwill arose from the acquisition of
the Centaur Communications Group in 2004.
 
Goodwill by segment
Each individual magazine and online title is deemed to be a Cash
Generating Unit (CGU). Goodwill is attributed to individual CGUs but
is grouped together at segmental level for the purposes of the annual
impairment review of goodwill, being the lowest level for which there
are separately identifiable cash flows. The following table shows the
allocation of goodwill to segments at 30 June 2009:
 
Construction General
Legal and Marketing and Perfect Business
Financial and Creative Engineering Information Services Total
£m £m £m £m £m £m
 
At 30 June 2008 and 30
June 2009 53.2 40.5 30.1 8.7 7.8 140.3
 
Impairment testing of goodwill
During the year goodwill was tested for impairment in accordance with
IAS 36. In assessing whether a write-down of goodwill is required in
the carrying value of the related asset, the carrying value of the
group of CGUs is compared with its recoverable amount. The
recoverable amount for each group of CGUs that make up the segments
of the Group's business has been measured based on value in use.
 
The key assumptions used in calculating value in-use are sales
growth, EBITDA, working capital movements and capital expenditure.
The Group has used formally approved budgets for the first year of
the value in use calculation, and estimated revenue growth rates of
between 7% and 20% and EBITDA margins of between 5% and 40% for years
2 to 6. Terminal values assuming growth rates of 3% have been
calculated from estimated year 6 cash flows and this timescale and
terminal growth rate are both considered appropriate given the
cyclical nature of Group revenues.
 
The assumptions used in the calculations of value-in-use for each
segment have been derived from past experience. Management believe
that no reasonably possible change in assumptions would cause the
carrying amount of goodwill to exceed its recoverable amount.
 
6 Nature of the financial information
 
The foregoing financial information does not amount to full accounts
within the meaning of Section 434 of Companies Act 2006. The
financial information has been extracted from the Group's Annual
Report and Accounts for the year ended 30 June 2009 on which the
auditors have expressed an unqualified opinion.
 
Copies of the Annual Report and Accounts will be posted to
shareholders shortly and will be available from the Company's
registered office at 50 Poland Street, London, W1F 7AX.
 
---END OF MESSAGE---
 
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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