Centaur releases interim results

The results, as reported by Centaur Media, are detailed below.

Financial highlights

• Centaur is focused on implementing its Build, Invest and Grow strategy (BIG27), a customer-centric roadmap to leverage the strength of its brands and deliver significant revenue growth in the mid-term
• Revenue in H1 reduced by 8% to £16.5m, driven by challenging trading conditions within certain Xeim brands and sector headwinds relating to non-strategic revenue
• 90% of Group revenue derived from strategically valuable revenue, with good performances from the Group’s future growth drivers, MW Mini MBA, Marketing Week subscriptions and The Lawyer
• Adjusted EBITDA decreased to £2.5m (H1 2023: £3.3m), delivering an adjusted EBITDA margin of 15% (H1 2023: 19%) reflecting the reduction in revenue and initial investment costs for BIG27
• Net cash3 of £8.9m (H1 2023: £8.8m) with strong cash conversion of 102%
• Centaur well-placed to invest in organic growth and M&A, with a £10m undrawn RCF
• Ordinary dividend of 0.6 pence per share (H1 2023: 0.6 pence per share) under new progressive dividend policy

Strategic and operational highlights

• Detailed roadmaps in place for BIG27 revenue growth and initial investments made to drive strategically valuable revenue in areas of the business with high growth potential
• The investments will gather pace in H2 2024 with accelerated product development rolling-out in The Lawyer, MW Mini MBA and Marketing Week, as well as implementing new capabilities for customer-centric product innovation across the Group
• Well-placed to invest for growth in the medium term, with strong balance sheet and reliable cash generation

Swag Mukerji, Chief Executive Officer, commented: “During the first half of 2024 we have focused on implementing the initial phase of our Build, Invest and Grow strategy (BIG27), which we announced in April.

“BIG27 supports the vision to be our customers’ partner of choice for business intelligence and learning through understanding and satisfying their needs. Embedding this at the core of our business will drive significant revenue growth in the medium term.

“I am pleased that our future growth drivers, MW Mini MBA, Marketing Week subscriptions and The Lawyer have performed well, although the Xeim H1 performance in some parts of Econsultancy and Oystercatchers has been negatively impacted by sector headwinds. This reinforces the importance of our investment in insight and learning expertise. With the greater weighting of revenue in H2, we expect to return to growth in the second half of 2024 and look forward to driving the delivery of our BIG27 strategy over the next four years.”

Financial performance

Over the first six months of 2024, Centaur has focused on strengthening its foundations and starting the investment required to drive growth as part of BIG27. Significant headwinds in the marketing sector and legal recruitment, together with wider macro-economic challenges and the initial cost of investment for BIG27 (£0.2m) negatively impacted the Group’s financial performance in the first half of the year.

First half reported revenue was £16.5m, down 8% (H1 2023: £17.9m). Growth from The Lawyer of 7% has been offset by weaker performance in some of the Xeim brands. Adjusted EBITDA declined 26% to £2.5m (H1 2023: £3.3m) and adjusted EBITDA margin decreased to 15% (H1 2023: 19%).

The Group has maintained resilient cash generation, despite the decline in revenue, and management has carefully managed the cost base to reinforce the efficiency of the business through the BIG27 transition period. Centaur has also continued to focus on its strategically valuable revenue streams, which account for 90% of Group sales.

The decrease in adjusted EBITDA has resulted in an adjusted operating profit of £1.4m (H1 2023: £2.3m) leading to an adjusted diluted EPS of 0.7 pence for H1 2024 (H1 2023: 1.6 pence).

Centaur has a robust cash position with a net cash balance of £8.9m at 30 June, after paying out £1.7m of ordinary dividends during the period, and strong cash conversion at 102%. This supports future investment in the growth of the business through the BIG27 strategy.

Business Unit performance

Following the launch of BIG27 in April, Centaur has focused investment and resource allocation on key drivers of growth, including new product development and marketing spend in the MW Mini MBA, Marketing Week and The Lawyer.

Xeim

Centaur has seen lower revenue across Xeim, as blue-chip companies and large clients responded to macro-economic challenges by cutting back on their budgets for the first half of the year in particular impacting new and repeat business at Econsultancy. Highlights during H1 2024 include:

• MW Mini MBA - the April courses registered a significant increase of 18% in delegates compared to September 2023, returning close to the levels recorded in April 2023 with revenue in H1 2024 in line with H1 2023;
• Marketing Week - revenue is 14% behind H1 2023 due to the expected decline in non-strategic revenue. However, subscription revenue has increased 8% year-on-year and we expect the BIG27 investment in premium content, which sits behind a paywall, to accelerate subscription growth and increase recurring revenue from H2 2024;
• Econsultancy - maintained strong renewal rates of 90% in H1 2024 (H1 2023: 86%) and launched the new Fast Track to Digital Marketing course, strengthening the brand’s exposure to customer demand for digital marketing training. However, ongoing macro-economic pressures impacted new business and customer budgets, resulting in a 17% year on year reduction in H1 revenue for the brand;
• The Influencer Group (comprising brands Influencer Intelligence, Fashion & Beauty Monitor and Foresight News) - revenue declined by 8% impacted by tightening budgets in the retail and fashion sector. New business held at 2023 levels, although renewal rates decreased to 78% (H1 2023: 84%); and
• Oystercatchers - sales were significantly impacted by a cyclical downturn in new business and reported a 55% decrease in revenue compared to the first half of 2023.

However, Xeim has strong foundations and management is confident that its suite of well-established brands is well placed to benefit from a strengthening economy, with targeted investment in growth areas under BIG27 to capture resurgent demand.

The Lawyer

The Lawyer continues to deliver good growth in Premium Content, with an 8% increase from the first half of 2023, driven by a combined 102% renewal rate from all of its subscription products and a more than doubling of new business. This resilient performance was further supported by a 15% increase in revenue from events due to the continuing success of the GC Summit and The Lawyer Awards, together with the introduction of the new Legal Transformation Summit in March.

The growth in Premium Content and Events was partially offset by 11% lower revenue from non-strategic Marketing Solutions and Recruitment Advertising.

Dividend

Centaur’s Board has approved an interim ordinary dividend for 2024 of 0.6p per share (H1 2023: 0.6p), in line with Centaur’s new progressive dividend policy to distribute the higher of the previous year’s dividend or 40% of adjusted earnings after taxation.

Outlook

Centaur’s profitability dipped in the first half of 2024, reflecting adverse trading conditions and the Group’s investment as part of its BIG27 strategy. In keeping with historical trends, we anticipate a greater weighting of revenue and profit in the second half of 2024, primarily due to the Festival of Marketing in October and a higher proportion of revenue in H2 from MW Mini MBA due to the timing of the courses. This seasonality will be further amplified with growth in revenue in H2 2024 from BIG27 investments.

Even with the uncertain macroeconomic conditions, the performance of The Lawyer and MW Mini MBA, together with the impact of BIG27 investment, leads us to expect a return to growth in H2.

The Board is confident in the successful delivery of Centaur’s BIG27 strategy with clear and detailed roadmaps to deliver accelerated revenue growth. The Group’s balance sheet strength will support continued investment in high growth areas of the business, as well as future plans for both organic growth and M&A.

To see the full report, click here.