Preliminary results

16 March 2022

Centaur Media Plc

Preliminary results for the year ended 31 December 2021

Strong year of progress with growth in revenues, EBITDA and EBITDA margin

On track for Margin Acceleration Plan (MAP23) objectives

Centaur Media, an international provider of business intelligence, training and specialist consultancy, is pleased to present its preliminary results for the year ended 31 December 2021.

Financial Highlights

In early 2021 Centaur launched its Margin Acceleration Plan (MAP23) with the objective of generating over £45m in revenue and an adjusted EBITDA margin of 23% by 2023. To support MAP23, Centaur has continued to focus investment and resource allocation in its Flagship 4 brands - Econsultancy, Influencer Intelligence, MW Mini MBA and The Lawyer - which it considers the key drivers of organic revenue growth. These are supported by Xeim's wider portfolio of Core Brands.

Over the course of 2021, despite the continued impact of the Covid pandemic, the Group has performed ahead of consensus and remains on track to deliver on its ambitious MAP23 goals. The year saw a 21% growth in revenue to £39.1m and a sustained improvement in Adjusted EBITDA margin to 16% (2020: 12%), which contributed to the further strengthening of Centaur's cash position to £13.1m. Xeim and The Lawyer contributed to this result with increased revenues, EBITDA and EBITDA margin.

Market and business knowledge provide an increasingly important competitive advantage in the legal and marketing professions and the past two years have accelerated the already rapid shift to high-quality digital content. In a market characterised by change, Centaur is delivering targeted connectivity together with deeper insight, learning and consultancy expertise.

The objective across Centaur's portfolio of brands is to position them for continued growth by harnessing cross-selling opportunities, with the ultimate aim of enabling customers to deliver better corporate outcomes through building competitive advantage in their markets.

In 2021 Centaur's Flagship 4 brands benefitted from optimised pricing, strong renewal rates and a recovery in events. Econsultancy had particular success through providing blended learning solutions and continuing to penetrate the top 200 companies by marketing spend, while Influencer Intelligence overcame challenging market conditions in H1 to achieve H2 renewal rates of 95%. MW Mini MBA had another outstanding year, with record corporate sales for multi-seat packages and delegate numbers up 44%. The Lawyer saw excellent client renewal rates at 116% and launched several new paid-for products.

Meanwhile, Centaur's Core Brands saw good revenue growth from marketing solutions and successful hybrid events. The performance of the Festival of Marketing was particularly encouraging, with above-target sponsorship and delegate levels for its second consecutive virtual event.

Overall, the value of the content and networking capabilities of Centaur's brands enabled the business to increase the number, size and quality of its customers. Revenue of £28.8m, representing approximately three-quarters of the Group's total, came from our valuable Premium Content, Marketing Services and Training and Advisory recurring revenue streams. Centaur has also successfully increased its international footprint, which now comprises 37% of total revenues with two-thirds of the Group's revenue growth coming from outside the UK.

Outlook

The excellent performance across the Group in 2021 provides a good platform for further growth in 2022. Centaur will continue to invest in quality across the Flagship 4 and Core Brands to take advantage of the trends in the market and develop the Group's offering for its customers, increasing the emphasis on cross-selling of products and building on their synergies.

Centaur has started the year well and trading for the first two months of 2022 is in line with the Board's expectations. Cash at 11 March 2022 was £12.1m.

The business is on track to meet its MAP23 objectives and will aim to achieve this despite the market headwinds of inflation, competition for talent and the current geopolitical backdrop. Centaur will look to manage its margin through structured price rises in relation to its services to customers, strong negotiation with suppliers and flexible reward structures to retain and recruit top talent.

Dividend

Centaur's Board is proposing a final dividend of 0.5p per share, a total of 1p per share for the 2021 financial year. This is in line with its dividend policy to distribute 40% of adjusted earnings after taxation, subject to a minimum of 1p per share.

Swag Mukerji, Chief Executive Officer, commented:

"After the challenges of 2020, Centaur entered 2021 as a strong and resilient business. We launched our Margin Acceleration Plan - MAP23 - our strategy designed to drive profitable revenue growth, and I am pleased that Centaur has made strong progress in line with these objectives.

Over the course of 2021, it was particularly encouraging to see how the business invested in the quality of the Flagship 4 and Core Brands, positioning them for further growth and enhancing their opportunities to cross-sell. We now have the talent, strategy and financial discipline to realise the opportunities that lie ahead. And none of this would have been possible without the hard work and resilience of our brilliant colleagues, who are playing a pivotal role in making MAP23 a reality."

Note to editors

Centaur is an international provider of business information, training and specialist consultancy that inspires and enables people to excel at what they do, raising the standard for insight, interaction and impact.

Advise. Inform. Connect.

Our vision

We will be the 'go to' company in the international Marketing and Legal sectors for:

We will build strong and lasting relationships with our customers by providing cutting-edge insight and analysis to deliver long-term sustainable returns for our shareholders.

Our business

Centaur is an international provider of business information, training and specialist consultancy that inspires and enables people to excel at what they do within the marketing and legal professions. Our Xeim and The Lawyer business units serve the marketing and legal sectors respectively and, across both, we offer a wide range of products and services targeted at helping our customers add value.

Our reputation is based on the trust and confidence arising from a deep understanding of these sectors providing innovative products and services and we have developed a strong track record for providing our customers with market-leading insight, content, data and training. Our key strengths are the expertise of our people, the quality of our brands and products, and our ability to harness technology to innovate continually and develop our customer offering. This enables us to help our customers raise their aspirations and deliver better performance.

Highlights of the year

Financial highlights

Strategic and operational highlights

Performance: CEO Review

This has been another unique year for Centaur.

After the challenges of 2020, Centaur entered 2021 as a strong and resilient business. During 2021, our people were brilliant and all showed great drive, energy and tenacity in serving our customers while continuing to grow our business in the uncertain economic environment. Their hard work supported 21% revenue growth and 68% adjusted EBITDA growth while cash improved 58% compared to 2020 all ahead of market consensus.

In January 2021, we launched MAP23, our new strategy designed to drive profitable revenue growth. The core objectives of MAP23 are to raise Group Adjusted EBITDA margins to 23% by 2023, while increasing revenues to more than £45m in the same timeframe. We remain on track to deliver this.

Financial Performance

Over the course of the year, we took our first positive steps towards our MAP23 goals, as well as putting in place an effective organisation structure to deliver it.

In 2021, Centaur reported revenues of £39.1m for the year (up 21% from 2020), and a Group Adjusted EBITDA margin of 16% (up 4 percentage points from 2020). The Group ended the year with a cash balance of £13.1m, up from £8.3m last year.

I am pleased with the contribution that all our brands have made to this positive momentum over the past twelve months.

Dividends

The Group has proposed a final dividend for 2021 of 0.5p per ordinary share, bringing the total dividends in respect of 2021 to 1.0p per ordinary share.

Operational review

Centaur comprises two business units, Xeim and The Lawyer. Xeim (or "excellence in marketing") forms 82% of our revenues and is focused on the marketing sector. The Lawyer is focused on the legal sector and drives the other 18%. Both sectors are undergoing significant change, driven by technological advancement, structural transformation and globalisation all of which gives Centaur a great opportunity for growth.

Within these two business units, Centaur has four key brands - the Flagship 4 - which we consider our key growth drivers and where the business prioritises investment and resource allocation. The Lawyer is one of these brands, while the other three form part of the Xeim portfolio (Econsultancy, Influencer Intelligence and MW Mini MBA). The Flagship 4 is supported by our suite of Core Brands.

Over the course of 2021, we made significant progress in developing both our Flagship 4 and Core Brands. Our aim is to position each of these brands for further growth, developing cross-selling opportunities and enhancing their shared capabilities, with the ultimate aim of enabling our customers to deliver better corporate outcomes through building competitive advantage in their markets.

At Econsultancy, we had success with the sale of blended learning solutions and continued to penetrate the top 200 marketing companies, winning contracts from large blue chip international companies including Unilever, Bayer, UPS and PZ Cussons. Econsultancy Live and the marketing solutions operation also performed well with positive results and impressive revenue growth compared to the prior year.

Influencer Intelligence grew in momentum as the year progressed, overcoming the challenging market conditions from 2020 and in Q1 2021 to end the year with renewal rates at 84%. This was supported by our new campaign management tool which helped drive new business, 41% higher than 2020 levels. Our focus on higher value clients supported margin growth and we are well positioned to capitalise on attractive market dynamics in an industry worth $15bn.

MW Mini MBA had another excellent year, with record corporate sales for multi-seat packages and online revenues for both the Marketing and Brand courses. Delegate numbers rose 44% with many of our largest sales coming directly from recurring corporate customers demonstrating the value they see in the courses.

The Lawyer also performed well, with excellent corporate client renewal rates of 116% and daily usage of Horizon, the 7am daily email. This was supported by several new paid for products including Signal, which provides monthly in-depth strategic insight, benchmark data on the markets and detailed reports on the topics that matter most to law firms.

In our portfolio of Core Brands, we were particularly encouraged by the performance of the Festival of Marketing. Last year's Festival, titled "The Year Ahead", was held virtually for the second consecutive year. With more than 80 speakers over the course of four days, and above-target sponsorship and delegate levels, it is well-placed to return even stronger as a hybrid event for 2022.

People

In August 2021 Jane Wilkinson joined the Group as the new Managing Director of The Lawyer. Jane's experience in driving revenue and margin growth across data, media, B2B and B2C businesses will ensure The Lawyer is best placed to reach its MAP23 objectives and I am delighted to have her onboard. I would also like to take this opportunity to thank Andy Baker for his significant contribution to making The Lawyer a multi-faceted subscription-based information provider with a strong digital presence and market-leading retention rates.

We have also strengthened the senior management team in Centaur with the appointment of Claire Rance as Managing Director of our Core Brands, Gill Huber as Managing Partner of Oystercatchers and Juan Mejia as Marketing Director of The Lawyer as well as the promotion of Zara Paes to the role of Group Financial Controller.

Looking to 2022

In 2022 our objective is to continue to drive revenue and margin growth to deliver our MAP23 strategy. To do this we will focus investment and resource allocation on our Flagship 4 brands while continuing to develop our Core Brands, increasing the emphasis on cross-selling our products and building on their synergies. We aim to achieve this despite the market headwinds of inflation and competition for talent and we will manage our margin through robust negotiation with suppliers, flexible reward structures to retain and recruit top talent and structured price rises in relation to our services to customers.

We are confident in our MAP23 plan; the targets are ambitious and achievable and, with our strong balance sheet and unique portfolio of brands, we are well-placed to capitalise on future market opportunities.

Centaur will continue to invest across the Flagship 4 and Core Brands portfolios to take advantage of these trends and to develop its offering for our customers.

Summary

To conclude, I wanted to reflect on the past two years and reiterate my thanks to everyone at Centaur for their tremendous effort and contribution to the growth of our business.

As we enter 2022 Centaur is well-positioned for growth. We have a clear strategy in place and I am confident in our ability to hit our targets. Next year we will continue to advance our offering and capitalise on the many market opportunities that lie ahead of us as we continue to invest in our brands and provide the most advanced and competitive offering in the marketplace.

Key Performance Indicators

The Group has set out the following core financial and non-financial metrics to measure the Group's performance. The KPIs are monitored by the Board and the focus on these measures will support the successful implementation of the MAP23 strategy. These indicators are discussed in more detail in the CEO and financial reviews.

*See definitions in Financial Review

Performance: Financial Review

Overview

2021 has been a year of organic growth recovery after the significant challenges posed by the pandemic. The social and governmental restrictions imposed in 2020 and the economic uncertainties faced by our customers were unprecedented. The easing of these measures, together with the focused strategic and operational actions taken by Centaur's management team, has supported organic growth across most revenue streams, notably Training and Advisory and Events both up by approximately 50% year-on-year. Premium content was an exception to this trend, seeing revenues decline by 2% due to the downturn in renewals and new business in 2020, which has had a knock-on impact on revenues in the year.

After the divestments made in 2019 and the subsequent restructuring of the business, combined with continued control over our costs, we started 2021 in a good financial position. We are pleased with the 21% growth in revenue compared to 2020, the sustained expansion in EBITDA margin and the increase in our cash balance. All of this demonstrates that we are on track to meet our MAP23 objectives.

Performance

Group

Statutory revenue rose by £6.7m to £39.1m in 2021 - an increase of 21%. Xeim increased 23% and The Lawyer 9%. 37% (2020: 31%) of the revenue was generated from outside the UK and this year-on-year increase represented two-thirds of the total growth. We will not be renewing or taking on any new business with Russian customers during 2022, the impact of which is negligible to our results.

Adjusted EBITDA increased from £3.8m to £6.4m at a margin of 16% (2020: 12%), showing promising progress towards our MAP23 targets. This improved margin was on increased revenues, demonstrating the commitment to continued cost control and profitable revenue growth following the previously completed cost savings programme. Central operating costs rose by only 3% in 2021.

The Group posted an adjusted operating profit of £3.2m in the year (2020: £nil), showing an improved trading performance for the business year-on-year as a result of the operational gearing on increased revenues. The Group achieved an adjusted profit after taxation of £2.8m (2020: £0.4m).

During 2021, we have increased our cash balances from £8.3m to £13.1m, mainly as a result of a focus on cash management, the increase in EBITDA, healthy cash collections from customers and working capital improvements from subscriptions growth and the timing of payments.

Xeim

Xeim's revenue for 2021 was £32.1m, an increase of 23% from £26.0m in 2020, surpassing pre-Covid revenue levels of £31.4m in 2019. Premium content in 2021 fell 5% year-on-year, due mainly to the economic uncertainties posed by the global pandemic in 2020 reducing both subscription renewal and new business billings in that year. However, 2021 has seen a recovery in renewal rates and new business across both Econsultancy and Influencer Intelligence, which will lead to positive momentum on revenue in 2022.

Revenue from all other streams showed year-on-year growth, most significantly in Training and Advisory and Events. Events revenue grew by 69% to £2.7m, largely driven by the move from wholly virtual events to hybrid events as some social distancing measures and restrictions were eased in the second half of the year.

Training and Advisory revenue saw strong growth of 48% on the back of continued excellent performance in eLearning revenues from the MW Mini MBA marketing and brand courses, Econsultancy and Oystercatchers.

Xeim posted an Adjusted EBITDA of £6.6m for the year, an increase from £4.3m in 2020. This was predominantly driven by the increase in revenue, offset by an associated increase in cost.

Xeim contains three of the Group's Flagship 4 brands - Econsultancy, Influencer Intelligence and MW Mini MBA.

After facing difficulties posed by the pandemic in the prior year, Econsultancy grew all revenue streams in 2021, with an increase of 22% in the year, resulting in revenues now exceeding pre-Covid levels. Our blended learning strategy was the main driver of new business wins at more than three times the level seen in 2020, resulting in premium content revenue from Econsultancy growing 18%. Subscription renewal rates increased to 69% (2020: 64%) and we are aiming to improve this further in 2022.

Econsultancy's training and advisory revenue also returned to growth up 22% on 2020 and winning further large digital training and consultancy contracts with blue chip international companies. Events revenue almost trebled year-on-year from the Econsultancy Live conferences held in April and November, together with Econsultancy revenue from Marketing Solutions also increasing by over 30%.

Influencer Intelligence revenue reduced 15% in the year. The impact of Covid on the retail and fashion industries in 2020 and the first quarter of 2021 had reduced billings due to cautious marketing investment from core consumer-facing brand clients. However, renewal rates improved significantly from Q2 of 2021 onwards and averaged close to the historically strong rates last seen in 2019. New business also improved in 2021, up 41% on 2020. Both these increases resulted in annualised book of business growth of 3% in the year, after initially dropping by 6%; the revenue benefits will be seen in 2022.

The MW Mini MBA continues to go from strength to strength, with delegate numbers up 44% year-on-year and Net Promoter Scores of +75. Revenue grew 66% from the increase in delegates and a rise in the list price. Delegate increases are being driven in particular by larger take up from recurring corporate customers as well as an increase in online sales.

Of our core Xeim brands, Festival of Marketing has shown significant recovery in 2021 through a series of three hybrid events resulting in a doubling of revenue year-on-year. This is in contrast with the reduced revenue in 2020 due to the move to virtual events. Really B2B and Oystercatchers saw growth in revenue of approximately 20% and the growth in revenue from Marketing Week exceeded 30%, driven by contracts for Marketing Solutions.

The Lawyer

Overall revenues for The Lawyer grew by 9%. Premium content revenue showed modest growth of 5%, primarily from corporate subscriptions which grew 15%. However, this was offset by a planned deferral of revenue relating to the move from the transactional Market Reports product to the Signal product on a subscription based revenue model. Without the impact of this deferral, premium content revenues would have grown by over 10%.

High-margin recruitment advertising revenue grew 34%, demonstrating a partial recovery from the reduction seen due to the economic uncertainty in 2020 which saw law firms delay hiring. With a move to hybrid events as social distancing measures eased, events revenue grew 22% year-on-year to £1.1m, albeit lower than revenue in 2019 when all events were face-to-face.

This led to a rise in Adjusted EBITDA from £2.1m in 2020 to £2.7m in 2021. The underlying business continues to perform strongly with strong renewal rates and continued engagement by users indicating how important The Lawyer has become to leading law firms and their fee earners.

Measurement and non-statutory adjustments

The statutory results of the Group are presented in accordance with International Financial Reporting Standards ("IFRS"). The Group also uses alternative reporting and other non-GAAP measures as explained below and as defined in the table at the end of this section.

Adjusting items

Adjusted results are not intended to replace statutory results but are prepared to provide a better comparison of the Group's core business performance by removing the impact of certain items from the statutory results. The Directors believe that adjusted results and adjusted earnings per share are the most appropriate way to measure the Group's operational performance because they are comparable to the prior year and consequently review the results of the Group on an adjusted basis internally.

Statutory operating profit/(loss) from continuing operations reconciles to adjusted operating profit and Adjusted EBITDA as follows:

Adjusting items from continuing operations of £1.6m in the year (2020: £2.3m) are comprised as follows:

Segment profit

Segmental profit is reported to improve clarity around our business units' performance and consists of gross contribution for a business unit minus specific overheads and allocations of the central support teams and overheads that are directly related to each business unit. Any costs not attributable to either Xeim or The Lawyer, remain as part of central costs.

The table below shows the statutory revenue for each business unit:

The table below reconciles the adjusted operating profit/(loss) for each segment to the Adjusted EBITDA:

Xeim's telemarketing business, MarketMakers, was closed in 2020 and its results in the prior-year comparatives are not shown above but within discontinued operations.

Net finance costs

Net finance costs were £0.3m (2020: £0.3m). The Group held positive cash balances throughout the year and therefore, in both 2021 and 2020, the vast majority of finance costs relate to the commitment fee payable for the revolving credit facility as well as interest on lease payments for right-of-use assets.

Taxation

A tax credit of £0.1m (2020: credit of £0.9m) has been recognised on continuing operations for the year. The adjusted tax charge was £0.1m (2020: credit of £0.6m). The Company's profits were taxed in the UK at a blended rate of 19% (2020: 19.0%), but the resulting tax charge is more than offset by a credit resulting from the effect of changes in the tax rate on deferred tax balances. See note 7 for a reconciliation between the statutory reported tax charge and the adjusted tax charge.

Earnings/loss per share

The Group has delivered adjusted diluted earnings per share for the year of 1.9 pence (2020: 0.3 pence). Diluted earnings per share for the year were 0.9 pence (2020: loss of 10.0 pence). Full details of the earnings per share calculations can be found in note 9 to the financial information.

Dividends

Under the Group's dividend policy, Centaur will target a pay-out ratio of 40% of adjusted retained earnings, subject to a minimum dividend of 1.0p per share per annum.

In light of this, the Group has proposed a final dividend in March 2022 of 0.5p per ordinary share in respect of 2021. This brings the total dividends relating to 2021 to 1.0p (2020: 0.5p) per ordinary share.

This final dividend is subject to shareholder approval at the Annual General Meeting and, if approved, will be paid on 27 May 2022 to all ordinary shareholders on the register at the close of business on 13 May 2022.

Cash flow

Adjusted operating cash flow is not a measure defined by IFRS. Centaur defines adjusted operating cash flow as cash flow from operations excluding the impact of adjusting items. The Directors use this measure to assess the performance of the Group as it excludes volatile items not related to the core trading of the Group and includes the Group's management of capital expenditure. A reconciliation between cash flow from operations and adjusted operating cash flow is shown in note 1(b) to the financial information. The cash impact of adjusting items in 2020 primarily related to exceptional restructuring costs.

The movement in working capital in 2021 includes a repayment of £1.0m of VAT deferred under the Government's Covid VAT payment deferral scheme (2020: £1.0m deferral). 2020 also included the receipt of £1.5m relating to the lease incentive on the Group's former office premise. The cash conversion of 164% (2020: 100%) has been adjusted to exclude these one-off items. The cash conversion has increased significantly as a result of the positive working capital movements relating to increased bonuses for 2021 and costs related to the MW Mini MBA, both paid after the end of the year, and an increase in deferred income mainly due to increased billings on subscriptions.

MAP23

In January 2021 the Group announced its MAP23 strategy, under which it will raise Group Adjusted EBITDA margins to 23% (including the impact of IFRS 16) by 2023, while increasing revenues to £45m. The increase in revenue of 21% and EBITDA margin from 12% in 2020 to 16% in 2021 demonstrates clear progress towards these objectives.

The Group has made an encouraging start to 2022 and trading is in line with our expectations. We are expecting some pressure on our costs and on retention of employees due to the wider economic situation in the UK and internationally. We will address this through structured pricing increases to our customers, robust negotiation with our suppliers, tight control of our cost base, variable remuneration structures for our senior management team and continued work on the social aspects of our ESG agenda as set out in our ESG report.

Financing and bank covenants

On 16 March 2021 the Group signed a new revolving credit facility with NatWest that replaces the £25m facility signed with NatWest and Lloyds in 2018. The new facility allows the Group to borrow up to £10m and has a three-year duration with the option of two further one-year periods. The covenants regarding leverage and interest cover are identical to those of the facility it replaces.

Balance sheet

Goodwill and other intangibles have decreased by £1.9m as a result of the amortisation of intangible assets. Property, plant and equipment has fallen by £0.8m due to the difference between depreciation and capital expenditure. Deferred income has increased by £0.8m mainly as a result of advance billings on subscriptions. Other current assets and liabilities have been impacted by an increase in bonus accruals and cost accruals related to the MW Mini MBA.

Going concern

After due consideration, as required under IAS 1 Presentation of Financial Information, including consideration of the Group's net current liability position, the Group's forecasts for at least twelve months from the date of this report, and the effectiveness of risk management processes, the Directors have concluded that it is appropriate to continue to adopt the going concern basis in the preparation of the consolidated financial information for the year ended 31 December 2021. As detailed under the Risk Management section, the Directors have assessed the viability of the Group over a three-year period to March 2025 and the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over that period.

Conclusion

Centaur is well-positioned for growth. The resilience of our brands during the pandemic, the resultant organic revenue growth and the increase in profitability delivered in 2021, together with the strength of our balance sheet, provides persuasive evidence of the progress that Centaur is making towards its MAP23 goals and longer-term vision.

Alternative performance measures

Risk Management

Risk management approach

The Board has overall responsibility for the effectiveness of the Group's system of risk management and internal controls, and these are regularly monitored by the Audit Committee.

The Executive Committee, Company Secretary and the Head of Legal are responsible for identifying, managing and monitoring material and emerging risks in each area of the business and for regularly reviewing and updating the risk register, as well as reporting to the Audit Committee in relation to risks, mitigations and controls. As the Group operates principally from one office and with relatively flat management reporting lines, members of the Executive Committee are closely involved in day-to-day matters and are able to identify areas of increasing risk quickly and respond accordingly. The responsibility for each risk identified is assigned to a member of the Executive Committee. The Audit Committee considers risk management and controls regularly and the Board formally considers risks to the Group's strategy and plans as well as the risk management process as part of its strategic review.

The risk register is the core element of the Group's risk management process. The register is maintained by the Company Secretary with input from the Executive Committee and the Head of Legal. The Executive Committee initially identifies the material risks and emerging risks facing the Group and then collectively assesses the severity of each risk (by ranking both the likelihood of its occurrence and its potential impact on the business) and the related mitigating controls.

As part of its risk management processes, the Board considers both strategic and operational risks, as well as its risk appetite in terms of the tolerance level it is willing to accept in relation to each principal risk, which is recorded in the Company's risk register. This approach recognises that risk cannot always be eliminated at an acceptable cost and that there are some risks which the Board will, after due and careful consideration, choose to accept. The Group's risk register, its method of preparation and the operation of the key controls in the Group's system of internal control are regularly reviewed and overseen by the Audit Committee with reference to the Group's strategic aims and its operating environment. The register is also reviewed and considered by the Board.

As part of the ongoing enhancement of the Group's risk monitoring activities, we reviewed and updated the procedures by which we evaluate principal risks and uncertainties during the year.

Principal risks

The Group's risk register currently includes operational and strategic risks. The principal risks faced by the Group in 2021, taken from the register, together with the potential effects and mitigating factors, are set out below. The Directors confirm that they have undertaken a robust assessment of the principal and emerging risks facing the Group. Financial risks are shown in note 26 to the financial information.

Viability Statement

In accordance with provision 31 of the UK Corporate Governance Code 2018, the Directors have assessed the viability of the Group over a three-year period from signing of this Annual Report to March 2025, taking account of the Group's current position, the Group's strategy, the Board's risk appetite and, as documented above, the principal risks facing the Group and how these are managed. Based on the results of this analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to March 2025.

The Board has determined that the three-year period to March 2025 is an appropriate period over which to provide its viability statement because the Board's financial planning horizon covers a three-year period. In making their assessment, the Directors have taken account of the Group's £10m three-year revolving credit facility (which allows extensions to 2026 on similar terms), cash flows, dividend cover and other key financial ratios over the period.

The covenants of the facility require a minimum interest cover ratio of 4, and net leverage not exceeding 2.5 times. In the calculation of net leverage Adjusted EBITDA excludes the impact of IFRS 16. The Group is not expected to breach any of these covenants in any of the scenarios run for the viability statement.

The base scenario uses a three-year forecast to December 2025, which assumes achievement of MAP23 targets, with 2024 forecast continuing that strategy. The three months to March 2025 are based directly off the respective forecast in 2024 with inflation applied. The MAP23 targets were built, bottom-up during 2020 once the impact of Covid had become clear. The strategy focuses on investment and resource allocation on the Flagship 4, the four brands we consider our key drivers for organic revenue growth. Further details of the MAP23 plan can be found in the Strategy section of the 2020 Annual Report.

The metrics in the base case are subject to stress testing which involves sensitising key assumptions underlying the forecasts both individually and in unison. The key sensitivity is on Adjusted EBITDA which is the primary driver of performance in the viability assessment. This sensitised scenario assume that Adjusted EBITDA is lowered by 10% in every period that the viability statement covers.

In both the base case and sensitised scenarios, the Group would not be required to rely on the revolving credit facility in order to fund its daily operations. Sensitising the model for changes in the assumptions and risks affirmed that the Group would remain viable over the three-year period to March 2025.

Going concern basis of accounting

In accordance with provision 30 of the UK Corporate Governance Code 2018, the Directors' statement as to whether they consider it appropriate to adopt the going concern basis of accounting in preparing the financial information and their identification of any material uncertainties, including the principal risks outlined above, to the Group's ability to continue to do so over a period of at least twelve months from the date of approval of the financial information and for the foreseeable future, being the period as discussed in the viability statement above.

Statement of Directors' Responsibilities in respect of the financial information

The Directors are responsible for preparing the Annual Report and the financial information in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial information for each financial year. On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International Accounting Standards (IASs), with future changes being subject to endorsement by the UK Endorsement Board. Therefore, the Directors have prepared the Group financial information in accordance with UK-adopted IASs and Company financial information in accordance with UK-adopted IASs. Under company law the Directors must not approve the financial information unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. In preparing the financial information, the Directors are required to:

The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial information and the Directors' Remuneration Report comply with the Companies Act 2006.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

Directors' confirmations

The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Company's position and performance, business model and strategy.

Each of the Directors, whose names and functions are listed in the Governance Report confirm that, to the best of their knowledge:

In the case of each Director in office at the date the Directors' Report is approved:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2021

1 Adjusted results exclude adjusting items, as detailed in note 1(b)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2021

Attributable to owners of the Company

COMPANY STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2021

Attributable to owners of the Company

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2021

Registered number 04948078

COMPANY STATEMENT OF FINANCIAL POSITION

as at 31 December 2021

Registered number 04948078

The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in this financial information. The Company's loss for the year was £2,325,000 (2020: profit of £12,172,000). Dividends of £1,450,000 were paid in the year (2020: £nil). The other movements in retained earnings are shown in the Company's statement of changes in equity.

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 December 2021

COMPANY CASH FLOW STATEMENT

for the year ended 31 December 2021

NOTES TO THE FINANCIAL INFORMATION

1 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these consolidated and Company financial information is set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. The financial information is for the Group consisting of Centaur Media Plc and its subsidiaries, and the Company, Centaur Media Plc. Centaur Media Plc is a public company limited by shares and incorporated in England and Wales.

(a) Basis of preparation

The financial information in this preliminary announcement has been extracted from the audited Group Financial Statements for the year ended 31 December 2021 and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group Financial Statements for 2020 were delivered to the registrar of companies, and those for 2021 will be delivered in due course. The auditor's report on the Group Financial Statements for 2020 and 2021 were both unqualified and unmodified. The auditors' report was signed on 15 March 2022. The Group Financial Statements and this preliminary announcement were approved by the Board of Directors on 15 March 2022.

On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. Centaur Media Plc transitioned to UK-adopted International Accounting Standards in its consolidated and Company financial information on 1 January 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the year reported as a result of the change in framework. The consolidated and Company financial information has been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The financial information has been prepared on a historical cost basis except where stated otherwise within the accounting policies.

Going concern

The financial information has been prepared on a going concern basis. The Directors have carefully assessed the Group's ability to continue trading and have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for at least twelve months from the date of approval of this financial information and for the foreseeable future, being the period in the viability statement.

Net cash (see note 1(b)) at 31 December 2021 amounted to £13,065,000 (2020: £8,300,000). On 16 March 2021, the Group signed a new multi-currency revolving credit facility with NatWest. The new revolving credit facility consists of a committed £10m facility and an additional uncommitted £15m accordion option, both of which can be used to cover the Group's working capital and general corporate needs. The facility runs to March 2024 with the option to extend for two periods of one year each. None of this was drawn down at 31 December 2021. The covenants regarding leverage and interest cover are identical to those of the facility it replaces.

The Group has net current liabilities at 31 December 2021 amounting to £1,819,000 (2020: £3,480,000). In both the current and prior year these primarily arose from its normal high levels of deferred income relating to performance obligations to be delivered in the future rather than an inability to service its liabilities, as deferred income will not result in a cash outflow. An assessment of cash flows for the next three financial years, which has taken into account the factors described above, has indicated an expected level of cash generation which would be sufficient to allow the Group to fully satisfy its working capital requirements and the guarantee given in respect of its UK subsidiaries, to cover all principal areas of expenditure, including maintenance, capital expenditure and taxation during this year, and to meet the financial covenants under the revolving credit facility. The Company has net current liabilities at 31 December 2021 amounting to £29,735,000 (2020: £24,747,000). In both the current and prior year, these almost entirely arose from unsecured payables to subsidiaries which have no fixed date of repayment.

The preparation of financial information in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial information and the reported amounts of revenues and expenses during the year. Although these estimates are based on management's best knowledge of the amount, events or actions, the actual results may ultimately differ from those estimates.

Having assessed the principal risks and the other matters discussed in connection with the Viability Statement which considers the Group's viability over a three-year period to March 2025, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing its consolidated financial information.

New and amended standards adopted by the Group

No new standards or amendments to standards that are mandatory for the first time for the financial year commencing 1 January 2021 affected any of the amounts recognised in the current year or any prior year and is not likely to affect future periods.

New standards and interpretations not yet adopted

There are no standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

Prior year re-presentation

The financial information has been presented in £'000. This is a change from the prior year financial information which was presented in £m rounded to one decimal place. Prior year comparatives have been re-presented in £'000. Certain prior year comparatives have been updated following this change.

Comparative numbers

Prior year comparative numbers have been updated to reflect current year presentation and disclosures. A portion of costs previously presented as administrative expenses have now been allocated to cost of sales, an update to reflect the same allocation basis as the current year. The allocation basis has been refined to reflect the nature of the costs. These reallocations increased cost of sales by £1,946,000 and decreased administrative expenses by £1,946,000 for the Group, refer to note 3. There is no impact on the face of the consolidated statement of comprehensive income.

(b) Presentation of non-statutory measures

In addition to IFRS statutory measures, the Directors use various non-GAAP key financial measures to evaluate the Group's performance and consider that presentation of these measures provides shareholders with an additional understanding of the core trading performance of the Group. The measures used are explained and reconciled to their IFRS statutory headings below.

Adjusted operating profit and adjusted earnings per share

The Directors believe that adjusted results and adjusted earnings per share, split between continuing and discontinued operations, provide additional useful information on the core operational performance of the Group to shareholders, and review the results of the Group on an adjusted basis internally. The term 'adjusted' is not a defined term under IFRS and may not therefore be comparable with similarly titled profit measurements reported by other companies. It is not intended to be a substitute for, or superior to, IFRS measurements of profit.

Adjustments are made in respect of:

The tax related to adjusting items is the tax effect of the items above that are allowable deductions for tax purposes, calculated using the standard rate of corporation tax. See note 7 for a reconciliation between reported and adjusted tax charges.

Further details of adjusting items are included in note 4. A reconciliation between adjusted and statutory earnings per share measures is shown in note 9.

Profit / (loss) before tax reconciles to adjusted operating profit as follows:

Adjusted operating cash flow

Adjusted operating cash flow is not a measure defined by IFRS. It is defined as cash flow from operations excluding the impact of adjusting items, which are defined above, and including capital expenditure. The Directors use this measure to assess the performance of the Group as it excludes volatile items not related to the core trading of the Group and includes the Group's management of capital expenditure. Statutory cash flow from operations reconciles to adjusted operating cash as below:

Our cash conversion rate for the year was 164% (2020: 100%).

Underlying revenue growth

The Directors review underlying revenue growth in order to allow a like-for-like comparison of revenues between years. Underlying revenues therefore exclude the impact of revenue contribution arising from acquired or disposed businesses and other revenue streams that are not expected to be ongoing in future years. Statutory revenue growth reconciles to underlying revenue growth as follows:

Adjusted EBITDA

Adjusted EBITDA is not a measure defined by IFRS. It is defined as adjusted operating profit before depreciation and impairment of tangible assets and amortisation and impairment of intangible assets other than those acquired through a business combination. It is used by the Directors as a measure to review performance of the Group and forms the basis of some of the Group's financial covenants under its revolving credit facility. Adjusted EBITDA is calculated as follows:

Net cash / (debt)

Net cash/(debt) is not a measure defined by IFRS. Net cash/(debt) is calculated as cash less overdrafts and bank borrowings under the Group's financing arrangements. The Directors consider the measure useful as it gives greater clarity over the Group's liquidity as a whole. Net cash is £13,062,000 as at 31 December 2021 (2020: £8,293,000).

(c) Principles of consolidation

The consolidated financial information incorporates the financial information of Centaur Media Plc and all of its subsidiaries after elimination of intercompany transactions and balances.

(i) Subsidiaries

Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group until the date that the Group ceases to control them. In the consolidated statement of comprehensive income, the results of subsidiaries for which control has ceased are presented separately as discontinued operations in the year in which they have been disposed of and in the comparative year.

On the disposal of a subsidiary, assets and liabilities of that subsidiary are de-recognised from the consolidated statement of financial position, earnings up to the date of loss of control are retained in the Group, and a profit/(loss) on disposal is recognised, measured as consideration received less the fair value of assets and liabilities disposed of.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. The accounting policies of subsidiaries are consistent with the policies adopted by the Group.

(ii) Employee Benefit Trust

The Centaur Employees' Benefit Trust ('Employee Benefit Trust') is a trust established by Trust deed in 2006 for the granting of shares to applicable employees. Its assets and liabilities are held separately from the Company and are fully consolidated in the consolidated statement of financial position. Holdings of Centaur Media Plc shares by the Employee Benefit Trust are shown within the 'own shares' reserve as a deduction from consolidated equity.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial information of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial information are presented in Pounds Sterling, which is the Group and Company's functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the consolidated statement of comprehensive income.

(iii) Group companies

The results and financial position of the Group entities that have a functional currency different from the presentation currency, as disclosed in note 13, are translated into the presentation currency as follows:

On consolidation, exchange differences arising from the translation of the net investment in foreign operations and of borrowings are recognised in other comprehensive income. When a foreign operation is sold, exchange differences that were recorded in equity are recognised in the consolidated statement of comprehensive income as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

(e) Revenue recognition

Revenue is measured at the transaction price, which is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to the customer. Judgement may arise in timing and allocation of transaction price when there are multiple performance obligations in one contract. However, an annual impact assessment is performed which has confirmed that the impact is immaterial in both the current year and comparative year. Revenue arises from the sales of premium content, marketing services, training and advisory, events, marketing solutions, recruitment advertising, and telemarketing services in the normal course of business, net of discounts and value added tax. Goods and services exchanged as part of a barter transaction are recognised in revenue at the fair value of the goods and services provided. Returns, refunds and other similar allowances, which have historically been low in volume and immaterial in magnitude, are accounted for as a reduction in revenue as they arise.

Where revenue is deferred it is held as a balance in deferred income on the consolidated statement of financial position. At any given reporting date, this deferred income is current in nature and is expected to be recognised wholly in revenue in the following financial year, with the exception of returns and credit notes, which have historically been low in volume and immaterial in magnitude.

The Group recognises revenue earned from contracts as individual performance obligations are met, on a stand-alone selling price basis. This is when value and control of the product or service has transferred, being when the product is delivered to the customer or the period in which the services are rendered as set out in more detail below.

Premium Content

Revenue from subscriptions is deferred and recognised on a straight-line basis over the subscription period, reflecting the continuous provision of paid content services over this time. Revenue from individual publication sales is recognised at the point at which the publication is delivered to the customer. In general, the Group bills customers for premium content at the start of the contract.

Marketing Services

Revenue from campaign work and consultancy contracts is recognised when the Group has obtained the right to consideration in exchange for its performance, which is when a separately identifiable phase (milestone) of a contract has been completed and the value and benefit of the services rendered have been transferred to the customer. In general, the Group bills customers for marketing services up front on a milestone basis.

Training and Advisory

Revenue from training and advisory is deferred and recognised over the period of the training or when a separately identifiable milestone of a contract has been delivered to the customer. In general, the Group bills customers for training and advisory up front or on a milestone basis as the service is delivered.

Events

Consideration received in advance for events is deferred and revenue is recognised at the point in time at which the event takes place. In general, the Group bills customers for events before the event date.

Marketing Solutions

Marketing solutions revenue from display and bespoke campaigns is recognised over the period that the service is provided. In general, the Group bills customers for marketing solutions on delivery.

Recruitment Advertising

Sales of online recruitment advertising space are recognised in revenue over the period during which the advertisements are placed. Sales of recruitment advertising space in publications are recognised at the point at which the publication occurs. In general, the Group bills customers for recruitment advertising on delivery.

Telemarketing Services

Revenue from telemarketing services was deferred and recognised over the period that the service was delivered, generally according to the number of hours expended as a proportion of the total hours contracted. In general, the Group billed customers for telemarketing services in advance. All revenue from telemarketing services ceased during the prior year following the closure of the MarketMakers' telemarketing business in August 2020 and is therefore presented within discontinued operations in the prior year.

(f) Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received, and the Group will comply with all attached conditions. Government grants are recognised in the profit or loss and deducted from the related expense within net operating expenses in the consolidated statement of comprehensive income. Note 3 provides further information on how the Group accounts for government grants.

(g) Investments

In the Company's financial information, investments in subsidiaries are stated at cost less provision for impairment in value.

Investments are reviewed for impairment whenever events indicate that the carrying value may not be recoverable. An impairment loss is recognised to the extent that the carrying value exceeds the higher of the investments fair value less cost of disposal and its value-in-use. An asset's value-in-use is calculated by discounting an estimate of future cash flows by the pre-tax weighted average cost of capital. Any impairment is recognised in the statement of comprehensive income. If there has been a change in the estimates used to determine the investment's recoverable amount, impairment losses that have been recognised in prior periods may be reversed. This reversal is recognised in the statement of comprehensive income.

(h) Income tax

The tax expense represents the sum of current and deferred tax.

Current tax is based on the taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years, and it further includes items that are never taxable or deductible. The Group and Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is provided in full, using the liability method, on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial information and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available to utilise those temporary differences and losses. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax is calculated at the enacted or substantively enacted tax rates that are expected to apply in the year when the liability is settled, or the asset is realised. Deferred tax is charged or credited to the consolidated statement of comprehensive income, except when it relates to items charged or credited directly to equity or other comprehensive income, in which case the deferred tax is recognised in equity or other comprehensive income respectively.

The carrying amount of deferred tax assets is reviewed at each reporting date and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

(i) Leases

Lessee accounting

Under IFRS 16, leases are accounted for on a 'right-of-use model' reflecting that, at the commencement date, the Group as a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term. The financial obligation is recognised as a lease liability, and the right to use the underlying asset is recognised as a right-of-use ('ROU') asset. The ROU assets are recognised within property, plant and equipment on the face of the consolidated statement of financial position and are presented separately in note 12.

The lease liability is initially measured at the present value of the lease payments using the rate implicit in the lease or, where that cannot be readily determined, the incremental borrowing rate. Subsequently, the lease liability is measured at amortised cost, with interest increasing the carrying amount and lease payments reducing the carrying amount. The carrying amount is remeasured to reflect any reassessment or lease modifications, or to reflect revised in-substance fixed lease payments.

The ROU asset is initially measured at cost which comprises:

Subsequently, the ROU asset is measured at cost less accumulated depreciation and impairment losses. Depreciation is calculated to write off the cost on a straight-line basis over the lease term.

Using the exemption available under IFRS 16, the Group elects not to apply the requirements above to:

In these cases, the Group recognises the lease payments as an expense on a straight-line basis over the lease term, or another systematic basis if that basis is more representative of the agreement.

Lessor accounting

The Group had contracts for the sub-lease of areas of its former office property lease. These arrangements were exempt from the requirements of IFRS 16 under the short-term lease exemption as they all had a lease term of under twelve months from the date of transition. As such, the income derived from these sub-leasing arrangements was recognised on a straight-line basis and was presented in the consolidated statement of comprehensive income in 'other operating income'. All arrangements in which the Group acted as a lessor ceased during the prior year.

(j) Impairment of assets

Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events indicate that the carrying value may not be recoverable. An impairment loss is recognised to the extent that the carrying value exceeds the higher of the asset's fair value less cost of disposal and its value-in-use. An asset's value-in-use is calculated by discounting an estimate of future cash flows by the pre-tax weighted average cost of capital.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Work in progress comprises costs incurred relating to publications and exhibitions prior to the publication date or the date of the event. Cost is measured as all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.

(l) Property, plant and equipment

See note 1(i) for right-of-use assets. All other property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. The historical cost of property, plant and equipment is the purchase cost together with any incidental direct costs of acquisition. Depreciation is calculated to write off the cost, less estimated residual value, of assets, on a straight-line basis over the expected useful economic lives to the Group over the following periods:

The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting year, with the effect of any changes in estimate accounted for on a prospective basis.

(m) Intangible assets

(i) Goodwill

Where the cost of a business acquisition exceeds the fair values attributable to the separable net assets acquired, the resulting goodwill is capitalised and allocated to the cash generating unit ('CGU') or groups of CGUs that are expected to benefit from the synergies of the business combination. Goodwill has an indefinite useful life and is tested for impairment annually on a Group level or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Each segment is deemed to be a CGU. Goodwill and acquired intangible assets are assessed for impairment in accordance with IAS 36 'Impairment of Assets'. In assessing whether a write-down of goodwill and acquired intangible assets is required, the carrying value of the segment is compared with its recoverable amount. Recoverable amount is measured as the higher of fair value less cost of disposal and value-in-use. Any impairment is recognised in the consolidated statement of comprehensive income (in net operating expenses) and is classified as an adjusting item. Impairment of goodwill is not subsequently reversed.

On the disposal of a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

(ii) Brands and publishing rights and customer relationships

Separately acquired brands and publishing rights are shown at historical cost. Brands and publishing rights and customer relationships acquired in a business combination are recognised at fair value at the acquisition date. They have a finite useful life and are subsequently carried at cost less accumulated amortisation and impairment losses.

(iii) Software

Computer software that is not integral to the operation of the related hardware is carried at cost less accumulated amortisation. Costs associated with the development of identifiable and unique software products controlled by the Group that will generate probable future economic benefits in excess of costs are recognised as intangible assets when the criteria of IAS 38 'Intangible Assets' are met. They are carried at cost less accumulated amortisation and impairment losses.

(iv) Amortisation methods and periods

Amortisation is calculated to write off the cost or fair value of intangible assets on a straight-line basis over the expected useful economic lives to the Group over the following periods:

(n) Employee benefits

(i) Post-employment obligations

The Group and Company contribute to a defined contribution pension scheme for the benefit of employees. The assets of the scheme are held separately from those of the Group in an independently administered fund. Contributions to defined contribution schemes are charged to the statement of comprehensive income in net operating expenses when employer contributions become payable.

(ii) Share-based payments

The Group operates a number of equity-settled share-based compensation plans for its employees. The fair value of the share-based compensation expense is estimated using either a Monte Carlo (stochastic model) or Black-Scholes option pricing model and is recognised in the consolidated statement of comprehensive income over the vesting period with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the awards granted:

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting year, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the consolidated statement of comprehensive income, with a corresponding adjustment to equity. The Company issues new shares or transfers shares from treasury shares to settle share-based compensation awards.

The award by the Company of share-based compensation awards over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution only if it is left unsettled. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

A deferred tax asset is recognised on share options based on the intrinsic value of the options, which is calculated as the difference between the fair value of the shares under option at the reporting date and exercise price of the share options. The deferred tax asset is utilised when the share options are exercised or released when share options lapse. The accounting policy regarding deferred tax is set out above in note 1(h).

(o) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and the obligation can be reliably estimated.

(p) Equity

(i) Share capital and share premium

Ordinary and deferred shares are classified as equity. The excess of consideration received in respect of shares issued over the nominal value of those shares is recognised in the share premium account. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company's equity instruments, for example as the result of a share buyback or share-based payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the owners of the Company as treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the Company.

Shares held by the Employee Benefit Trust are disclosed as own shares and deducted from equity.

(ii) Own shares

Own shares consist of treasury shares and shares held within the Employee Benefit Trust.

Own shares are recognised at cost as a deduction from equity shareholders' funds. Subsequent consideration received for the sale of such shares is also recognised in equity, with any excess of consideration received between the sale proceeds and the original cost being recognised in share premium. No gain or loss is recognised in the financial information on transactions in treasury shares.

(q) Dividends

Dividends are recognised in the year in which they are paid or, in respect of the Company's final dividend for the year, approved by the shareholders in the Annual General Meeting.

(r) Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Executive Committee has been identified as the chief operating decision-maker, reviewing the Group's internal reporting on a monthly basis in order to assess performance and allocate resources. Refer to note 2 for the basis of segmentation.

(s) Financial instruments

The Group has applied IFRS 9 'Financial Instruments' as outlined below:

(i) Financial assets

The Group classifies and measures its financial assets in line with one of the three measurement models under IFRS 9: at amortised cost, fair value through profit or loss, and fair value through other comprehensive income. Management determines the classification of its financial assets based on the requirements of IFRS 9 at initial recognition.

They are included in current assets, except for maturities greater than 12 months after the reporting date. These are classified as non-current assets. The Group's financial assets comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Please see the following sections.

(ii) Trade receivables

Trade receivables are accounted for under IFRS 9, being recognised initially at fair value and subsequently at amortised cost less any allowance for expected lifetime credit losses under the 'expected credit loss' model. As mandated by IFRS 9, the expected lifetime credit losses are calculated using the 'simplified' approach.

A provision matrix is used to calculate the allowance for expected lifetime credit losses on trade receivables which is based on historical default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. The allowance for expected lifetime credit losses is established by considering, on a discounted basis, the cash shortfalls it would incur in various default scenarios for prescribed future periods and multiplying those shortfalls by the probability of each scenario occurring. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The allowance is the sum of these probability weighted outcomes. The allowance and any changes to it are recognised in the consolidated statement of comprehensive income within net operating expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against net operating expenses in the consolidated statement of comprehensive income. The Group defines a default as failure of a debtor to repay an amount due as this is the time at which our estimate of future cash flows from the debtor is affected.

(iii) Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits repayable on demand or maturing within three months from the date of acquisition.

(iv) Financial liabilities

Debt and trade payables are recognised initially at fair value based on amounts exchanged, net of transaction costs, and subsequently at amortised cost.

Interest expense on debt is accounted for using the effective interest method and is recognised in finance costs.

(v) Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(vi) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred and carried subsequently at amortised cost. Costs of borrowings, including commitment fees on undrawn facilities, are recognised in the consolidated statement of comprehensive income as incurred or, where appropriate, across the term of the related borrowing.

(vii) Receivables from and payables to subsidiaries and the Employee Benefit Trust

The Company has amounts receivable from and payable to subsidiaries and the receivable from the Employee Benefit Trust which are recognised at fair value. Amounts receivable from subsidiaries and the Employee Benefit Trust are assessed annually for recoverability under the requirements of IFRS 9.

(t) Key accounting assumptions, estimates and judgements

The preparation of financial information under IFRS requires the use of certain key accounting assumptions and requires management to exercise its judgement and to make estimates. The areas where assumptions and estimates are significant to the consolidated financial information are as follows:

Key sources of estimation uncertainty

(i) Carrying value of goodwill, other intangible assets and Company investment estimate

In assessing whether goodwill, other intangible assets and the Company's investment are impaired, the Group uses a discounted cash flow model which includes forecast cash flows and estimates of future growth. If the results of operations in future periods are lower than included in the cash flow model, impairments may be triggered. A sensitivity analysis has been performed on the value-in-use calculations. Further details of the assumptions and sensitivities in the discounted cash flow model are included in notes 10 and 13.

(ii) Recoverability of trade receivables estimate

The allowance for expected lifetime credit losses for trade receivables is calculated in line with IFRS 9. This is established by considering on a discounted basis the cash shortfalls it would incur in various default scenarios for prescribed future periods and multiplying the shortfalls by the probability of each scenario occurring. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. Further details about trade receivables are included in note 15 and information about the credit risk and expected lifetime credit losses are shown in note 26.

(iii) Share-based payments estimate

The fair value of the share-based compensation expense recognised in the consolidated statement of comprehensive income requires the use of estimates. Details regarding the determination of fair value of these costs are set out in note 1(n)(ii).

(iv) Deferred tax judgement and estimate

The calculation of deferred tax assets and liabilities requires judgement. Where the ultimate tax treatment is uncertain, the Group recognises deferred tax assets and liabilities based on an estimate of future taxable income and recoverability. Where a change in circumstances occurs, or the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax balances in the year in which that change, or outcome, is known. The accounting policy regarding deferred tax is set out above in note 1(h).

Critical accounting judgements

(v) Adjusting items judgement

The term 'adjusted' is not a defined term under IFRS. Judgement is required to ensure that the classification and presentation of certain items as adjusting, including exceptional items, is appropriate and consistent with the Group's accounting policy. Further details about the amounts classified as adjusting are included in notes 1(b) and 4.

(vi) IFRS 16 reassessment of lease term judgement

Leases are required to be recognised at the present value of the lease payments not yet paid for the duration of the lease term. The lease term is defined by IFRS 16 as the non-cancellable period of the lease, and any period covered by an option to extend or terminate that the lessee is reasonably certain to exercise. The assessment of the lease term requires judgement when considering the option to extend or terminate in a contract.

During the year, the Group's property lease has been remeasured upon reassessment of the lease term, where a judgement has been taken that an option to extend will be exercised. The remeasurement of the lease, and the corresponding adjustment to the ROU asset are presented in notes 18 and 12 respectively.

2 Segmental reporting

The Group is organised around two reportable market-facing segments: Xeim and The Lawyer. These two segments derive revenues from a combination of premium content, marketing services, training and advisory, events, marketing solutions and recruitment advertising. Overhead costs are allocated to these segments on an appropriate basis, depending on the nature of the costs, including in proportion to revenues or headcount. Corporate income and costs have been presented separately as 'Central'. The Group believes this is the most appropriate presentation of segmental reporting for the user to understand the core operations of the Group. There is no inter-segmental revenue.

Segment assets consist primarily of property, plant and equipment, intangible assets (including goodwill) and trade receivables. Segment liabilities comprise trade payables, accruals and deferred income.

Corporate assets and liabilities primarily comprise property, plant and equipment, intangible assets, current and deferred tax balances, cash and cash equivalents, borrowings and lease liabilities.

Capital expenditure comprises additions to property, plant and equipment and intangible assets.

Supplemental Information

Revenue by Geographical Location

The Group's revenues from continuing operations from external customers by geographical location are detailed below:

Substantially all of the Group's net assets are located in the United Kingdom. The Directors therefore consider that the Group currently operates in a single geographical segment, being the United Kingdom. Refer to note 13 for the location of the Group's subsidiaries.

Revenue by type

The Group's revenue from continuing operations by type is as follows:

The accounting policies for each of these revenue streams is disclosed in note 1(e), including the timing of revenue recognition. There are some contracts for which revenue has not yet been recognised and is being held in deferred income, see note 19. This deferred income is all current and is expected to be recognised as revenue in 2022.

3 Net operating expenses

Continuing operating profit / (loss) is stated after charging:

1 Adjusted results exclude adjusting items, as detailed in note 1(b)

2 See note 1(a) for description of the prior year re-presentation

Government grants

In prior year, the Group applied for government grants of £835,000 for furloughed employees based at both the London and Portsmouth offices. This was received in full during the prior year. Government grants were deducted from the related employee benefit expenses and presented within net operating expenses in the consolidated statement of comprehensive income.

The government grants in continuing operations was £290,000 and in discontinued operations was £545,000.

No government grants were applied for in the current year.

Services provided by the Company's auditors

4 Adjusting items

As discussed in note 1(b), certain items are presented as adjusting. These are detailed below:

Exceptional costs

Staff related restructuring costs (including external employment advice costs)

In the prior year staff related restructuring costs of £793,000 in discontinued operations related to restructuring of the MarketMakers business and £238,000 in continuing operations related to restructuring parts of the wider Centaur Group due to the adverse impact of Covid. Refer to note 21 for further details.

Other exceptional costs

In the prior year, £118,000 in discontinued operations related to the exit of the Portsmouth lease upon cessation of MarketMakers' telemarketing business.

Other adjusting items

Other adjusting items relate to the amortisation and impairment of acquired intangible assets (see note 11) and share-based payment costs (see note 23) as well as the items discussed below:

Goodwill impairment

An impairment of £11,009,000 against goodwill relating to the MarketMakers business was recognised in the prior year. There were no impairments recognised in the current year. See note 10 for further details.

Loss on disposal of assets and liabilities

In the prior year the loss on disposal of assets and liabilities in continuing operations of £72,000 consisted of a loss on disposal of software assets of £60,000 (see note 11), a loss on disposal of computer equipment of £53,000 (see note 12), a loss on disposal of the MarketMakers ROU asset of £124,000 (see note 12) which represented the proportion of the asset attributable to the continuing Really B2B business, offset by a £165,000 gain on disposal of the corresponding lease liability (see note 18).

The loss on disposal of assets and liabilities in discontinued operations of £659,000 consisted of the disposal of intangible assets totalling a net book value of £830,000 (see note 11), with proceeds on disposal of £150,000 creating a loss on disposal of £680,000 (see note 11). Additionally, there was a loss on disposal of computer equipment of £68,000, fixtures and fittings of £65,000, and the MarketMakers ROU asset of £469,000 (see note 12) which represented the proportion of the asset attributable to the discontinued telemarketing business. This was offset by a £623,000 gain on disposal of the corresponding lease liability (see note 18).

In the current year, disposals of assets were at net book value, resulting in no gain or loss on disposal.

5 Directors and employees