Centaur Media — Strong Q421 shows MAP23 progress

Centaur Media (LSE: CAU)

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Research: TMT

Centaur Media — Strong Q421 shows MAP23 progress

Centaur’s year-end trading update indicates the group had a good Q421 and FY21 results will show revenue and EBITDA margin ahead of consensus. We lift our FY21 revenue estimate by £1.0m to £38.5m, which represents 19% growth over FY20, and EBITDA by 5% to £5.9m (+55% y o y). Our increased FY22 projections reflect this higher base. Year-end cash of £13.1m (excluding lease liabilities) was also ahead of our previous forecast of £11.7m. We see management’s MAP23 targets as demanding but achievable, with the valuation overstating the execution risk.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

TMT

Centaur Media

Strong Q421 shows MAP23 progress

Trading update

Media

19 January 2022

Price

56p

Market cap

£82m

Cash (£m) at 31 December 2021

13.1

Shares in issue

146.9m

Free float

88.9%

Code

CAU

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

0.0

1.8

103.6

Rel (local)

(3.1)

(1.8)

81.4

52-week high/low

57p

28p

Business description

Centaur Media is an international provider of business information, training and a 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

FY21 final results

16 March 2022

Analyst

Fiona Orford-Williams

+44 (0)20 3077 5739

Max Hayes

+44 (0)20 3077 5700

Centaur Media is a research client of Edison Investment Research Limited

Centaur’s year-end trading update indicates the group had a good Q421 and FY21 results will show revenue and EBITDA margin ahead of consensus. We lift our FY21 revenue estimate by £1.0m to £38.5m, which represents 19% growth over FY20, and EBITDA by 5% to £5.9m (+55%
y-o-y). Our increased FY22 projections reflect this higher base. Year-end cash of £13.1m (excluding lease liabilities) was also ahead of our previous forecast of £11.7m. We see management’s MAP23 targets as demanding but achievable, with the valuation overstating the execution risk.

Year end

Revenue
(£m)

PBT*
(£m)

EPS*
(p)

P/E
(x)

EV/EBITDA
(x)

Yield
(%)

12/19

39.6

(1.5)

(1.4)

N/A

15.3

N/A

12/20

32.4

(0.3)

0.2

280.0

18.2

0.9

12/21e

38.5

2.3

1.1

52.6

11.8

1.8

12/22e

43.9

4.5

2.4

23.6

8.5

1.8

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

EBITDA margins moving ahead

Centaur’s MAP23 aims for group adjusted EBITDA margins of 23% by FY23, while increasing revenue to at least £45m. In October 2021, the group issued a trading update guiding to an FY21 adjusted EBITDA margin of c 15% (at H121 we expected 13.7%) and the new update points to this being exceeded, on revenues ahead of consensus. This indicates a more profitable mix of business coupled with good control of the cost base. Econsultancy, MW Mini MBA, The Lawyer and Marketing Week are all highlighted in the update as particularly strong performers (see our November update note for detailed business descriptions and videos).

Leveraging industry expertise

The underlying proposition behind Centaur’s business, of enabling its clients to deliver the best service to their own clients in the marketing and legal sectors, remains highly pertinent. The group’s brands are backed by industry expertise and extensive data resources, leveraged through digital, content-led platforms and events. Our estimates assume more of these events are delivered live or in hybrid form in FY22, with the Festival of Marketing scheduled for late March and The Lawyer Awards in June.

Valuation: Still overstating the execution risk

Centaur’s share price increased by 87% from 30p to 56p over FY21 as the benefits of the refocusing of the group (and careful management during the COVID-19 pandemic) became more apparent. This was reflected in raised estimates, particularly on adjusted EBITDA margin, where our forecast increased from 13.6% on initiation in January 2021 to our current figure of 15.2%. The shares nevertheless still trade at a discount to quoted B2B media peers on EV/EBITDA (averaged over FY21–22). If this discount were to close, the shares would be priced at 66p (November: 60p), 18% above the current level.

Exhibit 1: Financial summary

£m

2019

2020

2021e

2022e

31-December

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

39.6

32.4

38.5

43.9

Other operating income

1.6

0.0

0.0

0.0

Cost of Sales

(9.4)

(7.3)

(10.7)

(12.5)

Gross Profit

30.2

25.1

27.8

31.4

EBITDA

 

 

4.0

3.8

5.9

8.1

Operating profit (before amort. and excepts.)

 

 

(1.2)

0.0

2.7

4.8

Amortisation of acquired intangibles

(2.5)

(1.5)

(1.1)

(0.5)

Exceptionals

(4.0)

(0.3)

0.0

0.0

Share-based payments

(0.1)

(0.5)

(0.5)

(0.5)

Reported operating profit/ loss

(7.8)

(2.3)

1.1

3.7

Net Interest

(0.3)

(0.3)

(0.3)

(0.3)

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)

 

 

(1.5)

(0.3)

2.3

4.5

Profit/ Loss Before Tax (reported)

 

 

(8.1)

(2.6)

0.7

3.4

Reported tax

0.6

0.9

(0.7)

(0.7)

Profit After Tax (norm)

(2.0)

0.3

1.6

3.7

Profit After Tax (reported)

(7.5)

(1.7)

0.0

2.7

Minority interests

0.0

0.0

0.0

0.0

Discontinued operations

9.4

(12.7)

(0.0)

0.0

Net income (normalised)

0.4

0.4

1.6

3.7

Net income (reported)

1.9

(14.4)

0.0

2.7

Average Number of Shares Outstanding (m)

143

144

145

147

EPS - normalised (p)

 

 

(1.4)

0.2

1.1

2.5

EPS - normalised fully diluted (p)

 

 

(1.4)

0.2

1.1

2.4

EPS - basic reported, continuing (p)

 

 

(5.3)

(1.2)

0.0

1.8

Dividend per share (p)

1.5

0.5

1.0

1.0

Revenue growth (%)

(2.5)

(15.6)

18.6

14.2

Gross Margin (%)

76.3

77.5

72.2

71.5

EBITDA (IFRS) Margin (%)

10.1

11.7

15.2

18.5

Normalised Operating Margin (%)

(3.0)

0.0

6.9

10.8

BALANCE SHEET

Fixed Assets

 

 

67.4

52.3

50.6

49.2

Intangible Assets

61.2

46.1

45.1

44.5

Tangible Assets

4.3

3.3

3.3

3.3

Deferred tax

1.4

2.4

1.7

0.9

Other receivables

0.5

0.5

0.5

0.5

Current Assets

 

 

19.7

14.3

18.0

21.8

Stocks

0.0

0.0

0.0

0.0

Debtors

10.3

5.8

4.7

5.4

Cash & cash equivalents

9.3

8.3

13.1

16.2

Other

0.1

0.2

0.2

0.2

Current Liabilities

 

 

(23.3)

(17.8)

(20.3)

(20.8)

Creditors

(12.5)

(8.8)

(10.3)

(9.8)

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

(10.8)

(9.0)

(10.0)

(11.0)

Long Term Liabilities

 

 

(2.7)

(1.6)

(0.7)

(0.7)

Long term borrowings

0.0

0.0

0.0

0.0

Other long term liabilities, including leases

(2.7)

(1.6)

(0.7)

(0.7)

Net Assets

 

 

61.1

47.2

47.6

49.5

Minority interests

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

61.1

47.2

47.6

49.5

CASH FLOW

Op Cash Flow before WC and tax

4.5

(0.0)

5.9

8.1

Working capital

2.1

(1.0)

3.6

(0.1)

Exceptional & other

(2.0)

3.1

0.0

0.0

Tax

0.1

0.0

0.0

0.0

Operating Cash Flow

 

 

4.7

2.1

9.5

8.0

Capex

(1.6)

(0.8)

(0.9)

(1.1)

Acquisitions/disposals

16.3

0.0

0.0

0.0

Net interest

(0.2)

(0.2)

(0.3)

(0.3)

Equity financing

(0.6)

0.0

(0.4)

(0.3)

Dividends

(7.1)

0.0

(1.5)

(1.5)

Other

(2.2)

(2.1)

(1.6)

(1.7)

Net Cash Flow

9.3

(1.0)

4.8

3.2

Opening net debt/(cash)

 

 

(0.1)

(9.3)

(8.3)

(13.1)

FX

0.0

0.0

0.0

0.0

Other non-cash movements

(0.1)

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(9.3)

(8.3)

(13.1)

(16.2)

Source: Company accounts, Edison Investment Research


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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 2022 Edison Investment Research Limited (Edison).

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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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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 2022 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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