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Last close As at 09/06/2023
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Market capitalisation
GBP70m
Research: TMT
Centaur has posted good H122 figures, with revenues ahead by 8% on H121 and an uplift in EBITDA margin from 12% to 17%, well on the way to achieving the 23% targeted within management’s MAP23 objectives. The emphasis on driving higher-quality revenues from premium content, marketing services and training and advisory is giving the group a resilient earnings base. High subscription renewal levels indicate the utility to clients, with continued investment in content and products ensuring that these stay relevant and value-adding. The half-year balance sheet net cash was £14.2m and the valuation remains at a marked discount to peers.
Centaur Media |
Flagship 4 showing their strengths |
Half-year results |
Media |
20 July 2022 |
Share price performance
Business description
Next events
Analysts
Centaur Media is a research client of Edison Investment Research Limited |
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Centaur has posted good H122 figures, with revenues ahead by 8% on H121 and an uplift in EBITDA margin from 12% to 17%, well on the way to achieving the 23% targeted within management’s MAP23 objectives. The emphasis on driving higher-quality revenues from premium content, marketing services and training and advisory is giving the group a resilient earnings base. High subscription renewal levels indicate the utility to clients, with continued investment in content and products ensuring that these stay relevant and value-adding. The half-year balance sheet net cash was £14.2m and the valuation remains at a marked discount to peers.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
32.4 |
(0.3) |
0.2 |
0.5 |
225.0 |
1.1 |
12/21 |
39.1 |
3.0 |
1.9 |
1.0 |
24.3 |
2.2 |
12/22e |
43.5 |
4.5 |
2.4 |
1.0 |
18.9 |
2.2 |
12/23e |
47.0 |
7.0 |
3.4 |
1.4 |
13.2 |
3.1 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Strong renewals and subscription revenues
The Flagship 4 (Econsultancy, Influencer Intelligence, MW Mini MBA and The Lawyer) made up 68% of group H122 revenues, up from 66% in H121. Renewal rates at Econsultancy are improving and subscription revenues were up 27% on H121, lifting overall revenues for the brand by 13%. The MW Mini MBA continues to grow in reputation and demand for its courses. The group is winning more larger and strategic pieces of business, with blue-chip clients, and should be less exposed than the agency sector to any advertising spend weakness through H122 and FY23. The Lawyer would have grown its revenues by more than the 6% posted had its major awards dinner not been rescheduled to H222, postponed from June due to transport strikes. Moved to July, it was very successful, with 1,200 attendees.
Forecasts broadly unchanged
The outlook for the full year is unchanged, with a second half weighting to revenues and profits, as usual, with the additional H2 boost from The Lawyer Awards. We have made no major change to our group level forecasts for FY22 and FY23 (although we have made some adjustments to the internal composition). Management’s objectives for FY23, as set in MAP23, of revenue of at least £45m and an adjusted EBITDA margin of at least 23% remain obtainable. Cash at the half year was a little better than we expected at £14.2m, with cash conversion at 125%.
Valuation: Continues to be well below peers
In common with many peers, Centaur’s share price dropped back in Q122, having performed very strongly in FY21, and has since traded in a fairly narrow range. Despite the scale of the recovery in financial performance and good growth prospects, the shares continue to trade at a marked discount to quoted B2B media peers on EV/EBITDA (averaged over FY21–23). If this discount were to close, the shares would be 77.1p (March: 76p), 71% above the current level.
Premium content proving its worth
Looking in a bit more detail at the divisional and activity splits, the provision of premium content is clearly helping to retain and attract clients in both the XEIM and The Lawyer segments. Training and Advisory within XEIM (the over-arching brand for the group’s businesses serving the marketing industry) is also performing strongly, with revenues up 22%. The MW Mini MBA continues to grow delegate numbers (+2% to over 3,300 across courses delivered in H122) and is also lifting yields as it focuses its efforts on returning clients.
Influencer Intelligence, where revenues are in Premium Content, had a particularly difficult time during the worst of the COVID-19 pandemic, has been rebuilding well, with better renewal rates in H221 translating into revenues up 12% in H122. Renewal rates have now increased to 86%, from 84% for FY21. Influencer marketing is now more firmly establishing as a line item in marketing budgets as an effective way to reach audiences sidestepped by more traditional media.
Generally, sensible price increases are sticking across the board and costs have been kept under control. The new business environment is demanding, but there is plenty of scope in the strategy of focusing on selling more services and products into the existing client base. This includes many large blue-chip clients, with substantial budgets.
Marketing Solutions remains a more difficult market and recruitment advertising continues to be subdued in both segments. However, Events is benefiting from the resumption of in-person gatherings, with The Lawyer Awards in July now having taken place and H122 having seen the first in-person Festival of Marketing since lockdown in March.
The Lawyer’s corporate subscription renewal rates of 113% are clearly very positive, but it is particularly encouraging that Signal, the service it set up last year to deliver in-depth strategic insight and market benchmarking, is also now going through its anniversary renewals strongly at over 100%.
Exhibit 1: Segmental performance H122
£m |
H122 revenue |
Underlying % change |
Adjusted EBITDA |
% change |
Central costs |
Total |
% change |
Adjusted EBITDA margin |
XEIM |
||||||||
Premium Content |
4.9 |
+15% |
||||||
Marketing Services |
1.6 |
-5% |
||||||
Training & Advisory |
6.7 |
+22% |
||||||
Events |
1.3 |
-14% |
||||||
Marketing Solutions |
1.4 |
-21% |
||||||
Recruitment advertising |
0.2 |
+84% |
||||||
Xeim Total |
16.1 |
9% |
3.9 |
+63% |
24% |
|||
The Lawyer |
||||||||
Premium Content |
2.3 |
+19% |
||||||
Events |
0.5 |
+17% |
||||||
Marketing Solutions |
0.3 |
-38% |
||||||
Recruitment advertising |
0.6 |
-8% |
||||||
The Lawyer Total |
3.7 |
+6% |
1.2 |
-8% |
32% |
|||
Group Total |
19.8 |
+8% |
5.1 |
+38% |
(1.7) |
3.4 |
+55% |
17% |
Source: Centaur Media
Costs under control
Operating costs at XEIM in the half year were £13.3m, £0.2m down on H121, helping lift segmental adjusted EBITDA margin to 24% from 16% in H121. Timing was unflattering to the margin at The Lawyer, with the slippage of the awards and some additional personnel resourcing ahead of revenues resulting in a dip in adjusted EBITDA margin from 37% to 32%. We would expect this decline to reverse in H222. Central costs of £1.7m were up £0.2m on prior period.
Our full year forecasts are essentially unchanged with just a minor adjustment to FY22e revenue from £43.9m to £43.5m and EBITDA, EPS etc unchanged on our previous published figures, with net cash notching up from £15.2m to £15.3m. FY23e remain as before, with anticipated revenue growth of 8% and EBITDA margin matching the MAP23 management target of 23%.
Balance sheet remains strongly cash positive
Net cash (the group has no bank debt) was £14.2m at the end of the first half, which is a better position than we had anticipated. This is attributed to an increase in deferred income as the business shifts further towards recurring and subscription revenues and good control of debtors. With more larger contracts in the mix, there are more substantial sums being paid in, and May and June were particularly strong in this respect.
Cash conversion in H122 was 125% and our year-end projection of £15.3m may prove overly conservative. Internal investment in improving the client offering will continue, with the emphasis firmly on pursuing organic growth opportunities.
Management has announced a dividend of 0.5p for the first half and we continue to expect 1.0p for the full year.
Exhibit 2: Financial summary
£m |
2019 |
2020 |
2021 |
2022e |
2023e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
39.6 |
32.4 |
39.1 |
43.5 |
47.0 |
Other operating income |
1.6 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Cost of Sales |
(9.4) |
(7.3) |
(10.9) |
(12.4) |
(12.4) |
||
Gross Profit |
30.2 |
25.1 |
28.3 |
31.1 |
34.6 |
||
EBITDA |
|
|
4.0 |
3.8 |
6.4 |
8.1 |
10.8 |
Operating profit (before amort. and excepts.) |
|
|
(1.2) |
0.0 |
3.2 |
4.7 |
7.2 |
Amortisation of acquired intangibles |
(2.5) |
(1.5) |
(1.1) |
(0.5) |
(0.1) |
||
Exceptionals |
(4.0) |
(0.3) |
0.0 |
0.0 |
0.0 |
||
Share-based payments |
(0.1) |
(0.5) |
(0.5) |
(0.7) |
(1.0) |
||
Reported operating profit/ loss |
(7.8) |
(2.3) |
1.6 |
3.5 |
6.1 |
||
Net Interest |
(0.3) |
(0.3) |
(0.3) |
(0.3) |
(0.2) |
||
Profit Before Tax (norm) |
|
|
(1.5) |
(0.3) |
3.0 |
4.5 |
7.0 |
Profit/ Loss Before Tax (reported) |
|
|
(8.1) |
(2.6) |
1.4 |
3.2 |
5.9 |
Reported tax |
0.6 |
0.9 |
0.1 |
(0.7) |
(1.5) |
||
Profit After Tax (norm) |
(2.0) |
0.3 |
2.8 |
3.6 |
5.3 |
||
Profit After Tax (reported) |
(7.5) |
(1.7) |
1.4 |
2.5 |
4.5 |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Discontinued operations |
9.4 |
(12.7) |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
0.4 |
0.4 |
2.8 |
3.6 |
5.3 |
||
Net income (reported) |
1.9 |
(14.4) |
1.4 |
2.5 |
4.5 |
||
Average Number of Shares Outstanding (m) |
143 |
144 |
145 |
147 |
147 |
||
EPS - normalised (p) |
|
|
(1.4) |
0.2 |
2.0 |
2.5 |
3.6 |
EPS - normalised fully diluted (p) |
|
|
(1.4) |
0.2 |
1.9 |
2.4 |
3.4 |
EPS - basic reported, continuing (p) |
|
|
(5.3) |
(1.2) |
1.0 |
1.7 |
3.0 |
Dividend per share (p) |
1.5 |
0.5 |
1.0 |
1.0 |
1.4 |
||
Revenue growth (%) |
(2.5) |
(15.6) |
20.6 |
11.2 |
8.1 |
||
Gross Margin (%) |
76.3 |
77.5 |
72.2 |
71.4 |
73.6 |
||
EBITDA (IFRS) Margin (%) |
10.1 |
11.7 |
16.4 |
18.6 |
23.0 |
||
Normalised Operating Margin (%) |
(3.0) |
0.0 |
8.2 |
10.8 |
15.4 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
67.4 |
52.3 |
49.6 |
48.0 |
45.8 |
Intangible Assets |
61.2 |
46.1 |
44.3 |
43.3 |
42.9 |
||
Tangible Assets |
4.3 |
3.3 |
2.5 |
2.5 |
2.4 |
||
Deferred tax |
1.4 |
2.4 |
2.5 |
1.7 |
(0.1) |
||
Other receivables |
0.5 |
0.5 |
0.3 |
0.5 |
0.5 |
||
Current Assets |
|
|
19.7 |
14.3 |
19.3 |
21.9 |
25.9 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
10.3 |
5.8 |
6.1 |
6.4 |
6.4 |
||
Cash & cash equivalents |
9.3 |
8.3 |
13.1 |
15.3 |
19.3 |
||
Other |
0.1 |
0.2 |
0.2 |
0.2 |
0.2 |
||
Current Liabilities |
|
|
(23.3) |
(17.7) |
(21.1) |
(21.0) |
(22.0) |
Creditors |
(12.5) |
(8.7) |
(11.4) |
(9.7) |
(9.9) |
||
Tax and social security |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Short term borrowings |
0.0 |
0.0 |
(0.0) |
(0.0) |
(0.0) |
||
Other/ Lease liabilities |
(10.8) |
(9.0) |
(9.7) |
(11.3) |
(12.1) |
||
Long Term Liabilities |
|
|
(2.7) |
(1.6) |
(0.6) |
(0.6) |
(0.6) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other long term liabilities, including leases |
(2.7) |
(1.6) |
(0.6) |
(0.6) |
(0.6) |
||
Net Assets |
|
|
61.1 |
47.2 |
47.1 |
48.3 |
49.1 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
61.1 |
47.2 |
47.1 |
48.3 |
49.1 |
CASH FLOW |
|||||||
Op Cash Flow before WC and tax |
4.5 |
(0.0) |
6.4 |
8.1 |
10.8 |
||
Working capital |
2.1 |
(1.0) |
3.2 |
(0.5) |
1.0 |
||
Exceptional & other |
(2.0) |
3.1 |
(0.1) |
(0.4) |
(0.6) |
||
Tax |
0.1 |
0.0 |
0.0 |
0.0 |
(1.5) |
||
Operating Cash Flow |
|
|
4.7 |
2.1 |
9.5 |
7.2 |
9.7 |
Capex |
(1.6) |
(0.8) |
(0.8) |
(1.3) |
(1.5) |
||
Acquisitions/disposals |
16.3 |
0.1 |
0.0 |
0.0 |
0.0 |
||
Net interest |
(0.2) |
(0.1) |
(0.1) |
(0.3) |
(0.2) |
||
Equity financing |
(0.6) |
0.0 |
(0.3) |
(0.3) |
(0.3) |
||
Dividends |
(7.1) |
0.0 |
(1.4) |
(1.5) |
(2.1) |
||
Other |
(2.2) |
(2.2) |
(2.1) |
(1.7) |
(1.7) |
||
Net Cash Flow |
9.3 |
(1.0) |
4.8 |
2.2 |
4.0 |
||
Opening net debt/(cash) |
|
|
(0.1) |
(9.3) |
(8.3) |
(13.1) |
(15.3) |
FX |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
(0.1) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(9.3) |
(8.3) |
(13.1) |
(15.3) |
(19.3) |
Source: Company accounts, Edison Investment Research
|
|
Research: TMT
1Spatial has announced a sizeable contract with a major European aerospace company worth circa €3m over five years. Notably, the deal is the first major win for the company’s new 1Telecomms solution (together with 1Integrate) supporting a win in the aerospace industry, a new vertical for the business. We believe that this provides evidence that the company’s development of app solutions can broaden the company’s addressable market. We believe that the broader market for geospatial solutions is set to deliver sustained double-digit growth and that 1Spatial’s is carving out an increasingly strong position within the market. We believe that the company’s current valuation (FY23e EV/sales 1.8x) does not reflect 1Spatial’s potential.
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