Centaur Media — Strong margin performance

Centaur Media (LSE: CAU)

Last close As at 17/07/2024

GBP0.39

0.00 (0.00%)

Market capitalisation

GBP58m

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Research: TMT

Centaur Media — Strong margin performance

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.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

Centaur Media_resized

TMT

Centaur Media

Strong margin performance

Trading update

Media

18 January 2024

Price

45p

Market cap

£65m

Estimated net cash (£m) at end December 2023

9.5

Shares in issue (excluding 4.55m held in treasury)

146.86m

Free float

90.84%

Code

CAU

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

6.0

16.5

(10.1)

Rel (local)

6.2

15.8

(6.4)

52-week high/low

54.5p

37.5p

Business description

Centaur Media is an international provider of business intelligence, learning and specialist consultancy for the marketing and legal professions. Its Xeim and The Lawyer business units serve the marketing and legal sectors respectively and, across both, offer customers a wide range of products and services targeted at helping them add value.

Next events

Final results

13 March 2024

Analysts

Fiona Orford-Williams

+44 (0) 20 3077 5739

Milo Bussell

+44 (0) 20 3077 5700

Centaur Media is a research client of Edison Investment Research Limited

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*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

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

General disclaimer and copyright

This report has been commissioned by Centaur Media and prepared and issued by Edison, in consideration of a fee payable by Centaur Media. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

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Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

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London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Centaur Media and prepared and issued by Edison, in consideration of a fee payable by Centaur Media. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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