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Research: TMT
Centaur’s year-end trading update indicates that the group has delivered a strong EBITDA margin for FY23, above 25% and well ahead of the level targeted in the MAP23 margin acceleration plan. This is despite it having been a difficult year in which to grow revenues, with clients slow to close out larger contracts, as broadly reported across the sector. We currently expect confidence to pick up in H224, after a relatively cautious start to the year. We have made provisional adjustments to our estimates on that basis, with the picture likely to be clearer by the March prelims.
Centaur Media |
Strong margin performance |
Trading update |
Media |
18 January 2024 |
Share price performance
Business description
Next events
Analysts
Centaur Media is a research client of Edison Investment Research Limited |
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Centaur’s year-end trading update indicates that the group has delivered a strong EBITDA margin for FY23, above 25% and well ahead of the level targeted in the MAP23 margin acceleration plan. This is despite it having been a difficult year in which to grow revenues, with clients slow to close out larger contracts, as broadly reported across the sector. We currently expect confidence to pick up in H224, after a relatively cautious start to the year. We have made provisional adjustments to our estimates on that basis, with the picture likely to be clearer by the March prelims.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/21** |
39.1 |
3.0 |
2.0 |
1.0 |
24.3 |
2.2 |
12/22** |
41.6 |
5.2 |
2.7 |
1.1 |
17.3 |
2.4 |
12/23e |
37.2 |
7.4 |
3.7 |
1.4 |
12.8 |
3.1 |
12/24e |
40.0 |
7.6 |
3.7 |
1.6 |
12.8 |
3.6 |
Note: DPS excludes special dividend. *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **FY21 and FY22 figures currently include businesses that are now discontinued.
Revisions show higher margins on trimmed revenue
Year-on-year comparison is complicated by the closure of two smaller businesses within XEIM (the group’s umbrella branding for its businesses addressing the professional marketing sector) in December. Pro-forma group FY22 revenues from continuing operations are indicated at £38.4m, with our revised FY23 estimate now £37.2m (guidance is for ‘slightly below’ prior year), rising to £40.0m in FY24e (previously £44.0m including discontinued business). We assume that the closed businesses made a contribution at a lower margin than other group activities, so their exclusion will contribute to the boost in EBITDA margin from the 20.4% reported for FY22 to the ‘over 25%’ now indicated for FY23. We would assume that this will settle back a little in FY24 as the group moves to invest to target higher levels of top-line growth. The group’s focus is now firmly on its activities in Premium Content, Training and Advisory and Events, selling into a blue-chip customer base.
Good cash resource maintained
The year-end net cash (Centaur has modest lease debt only) is outlined at £9.5m, giving the group plenty of financial resource to ride out the current market phase and invest in future growth. The reduction from end FY22 balance of £16m reflects that a total of £8.9m was returned to shareholders in ordinary and special dividends in FY23. Our modelling indicates a net cash inflow for FY24. We will publish our thoughts on FY25 after publication of the detailed figures, scheduled for 13 March.
Valuation: Remains below B2B media peers
Centaur’s shares continue to trade at a discount to the median rating of B2B media peers, although individual performances over 12 months have varied widely, from doubling to a fall of 41%. Were the discount, averaged across FY22–24, to close, Centaur’s shares would be valued at 64p, just above the 63p that a similar exercise implied in July 2023.
Exhibit 1: Financial summary
£m |
2021 |
2022 |
2023e |
2024e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||
Revenue |
|
|
39.1 |
41.6 |
37.2 |
40.0 |
Other operating income |
0.0 |
0.0 |
0.0 |
0.0 |
||
Cost of Sales |
(10.9) |
(11.2) |
(9.6) |
(10.4) |
||
Gross Profit |
28.3 |
30.4 |
27.6 |
29.5 |
||
EBITDA |
|
|
6.4 |
8.5 |
9.7 |
10.1 |
Operating profit (before amort. and excepts.) |
|
|
3.2 |
5.3 |
7.3 |
7.5 |
Amortisation of acquired intangibles |
(1.1) |
(0.5) |
(0.1) |
(0.1) |
||
Exceptionals |
(0.0) |
(0.1) |
0.0 |
0.0 |
||
Share-based payments |
(0.5) |
(0.8) |
(1.2) |
(1.2) |
||
Reported operating profit/ loss |
1.6 |
3.9 |
6.0 |
6.2 |
||
Net Interest |
(0.3) |
(0.1) |
0.1 |
0.1 |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
3.0 |
5.2 |
7.4 |
7.6 |
Profit/ Loss Before Tax (reported) |
|
|
1.4 |
3.8 |
6.1 |
6.3 |
Reported tax |
0.1 |
(1.0) |
(1.5) |
(1.7) |
||
Profit After Tax (norm) |
2.8 |
3.9 |
5.5 |
5.4 |
||
Profit After Tax (reported) |
1.4 |
2.8 |
4.6 |
4.6 |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
||
Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
2.8 |
3.9 |
5.5 |
5.4 |
||
Net income (reported) |
1.4 |
2.8 |
4.6 |
4.6 |
||
Average Number of Shares Outstanding (m) |
145 |
144 |
147 |
147 |
||
EPS - normalised (p) |
|
|
2.0 |
2.7 |
3.7 |
3.7 |
EPS - normalised fully diluted (p) |
|
|
1.9 |
2.6 |
3.5 |
3.5 |
EPS - basic reported, continuing (p) |
|
|
1.0 |
1.9 |
3.1 |
3.1 |
Ordinary dividend per share (p) |
1.0 |
1.1 |
1.4 |
1.6 |
||
Revenue growth (%) |
19.5 |
6.4 |
(10.7) |
7.4 |
||
Gross Margin (%) |
72.2 |
73.1 |
74.3 |
73.9 |
||
EBITDA (IFRS) Margin (%) |
16.4 |
20.4 |
26.1 |
25.4 |
||
Normalised Operating Margin (%) |
8.3 |
12.7 |
19.6 |
18.9 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
49.6 |
45.9 |
48.8 |
49.1 |
Intangible Assets |
44.3 |
43.8 |
44.0 |
44.3 |
||
Tangible Assets |
2.5 |
0.4 |
2.5 |
3.7 |
||
Deferred tax |
2.5 |
1.7 |
1.9 |
0.7 |
||
Other receivables |
0.3 |
0.0 |
0.5 |
0.5 |
||
Current Assets |
|
|
19.3 |
21.5 |
14.2 |
19.2 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
6.1 |
5.4 |
4.6 |
4.9 |
||
Cash & cash equivalents |
13.1 |
16.0 |
9.5 |
14.2 |
||
Other |
0.2 |
0.2 |
0.1 |
0.1 |
||
Current Liabilities |
|
|
(21.1) |
(18.5) |
(18.5) |
(20.2) |
Creditors |
(11.4) |
(9.7) |
(8.7) |
(9.6) |
||
Tax and social security |
0.0 |
0.0 |
0.0 |
0.0 |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other/ Lease liabilities |
(9.7) |
(8.9) |
(9.8) |
(10.7) |
||
Long Term Liabilities |
|
|
(0.6) |
(0.0) |
(1.6) |
(1.6) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other long term liabilities, including leases |
(0.6) |
(0.0) |
(1.6) |
(1.6) |
||
Net Assets |
|
|
47.1 |
48.8 |
42.9 |
46.6 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
47.1 |
48.8 |
42.9 |
46.6 |
CASH FLOW |
|
|||||
Operating Cash Flow |
6.4 |
8.5 |
9.4 |
9.6 |
||
Working capital |
3.2 |
0.1 |
(0.2) |
1.4 |
||
Exceptional & other |
(0.1) |
(0.2) |
(0.2) |
0.0 |
||
Tax |
0.0 |
(0.0) |
(1.5) |
(0.5) |
||
Operating Cash Flow |
|
|
9.5 |
8.4 |
7.5 |
10.5 |
Capex |
(0.8) |
(1.4) |
(1.6) |
(1.7) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net interest |
(0.1) |
(0.0) |
0.1 |
0.1 |
||
Equity financing |
(0.3) |
(0.6) |
(0.6) |
(0.6) |
||
Dividends |
(1.4) |
(1.4) |
(8.9) |
(2.2) |
||
Other |
(2.1) |
(2.2) |
(3.1) |
(1.1) |
||
Net Cash Flow |
4.8 |
2.8 |
(6.6) |
5.0 |
||
Opening net debt/(cash) |
|
|
(8.3) |
(13.1) |
(16.0) |
(9.5) |
FX |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
0.1 |
0.1 |
0.1 |
||
Closing net debt/(cash) |
|
|
(13.1) |
(16.0) |
(9.5) |
(14.6) |
Source: Company accounts, Edison Investment Research
|
|
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