Portfolio

Ascential pleased with organic growth as earnings takes a hit

By Josh White

Date: Monday 23 Jul 2018

Ascential pleased with organic growth as earnings takes a hit

(Sharecast News) - Specialist information company Ascential issued its interim results for the six-month period ended 30 June on Monday, reporting that they were in line with its own expectations.
The FTSE 250 firm said it saw another period of "good organic, constant currency" revenue growth, with revenue from continuing operations of £188.9m - up from £165.1m year-on-year.

Reported revenue growth was 14%, or 7% on a constant currency organic basis.

Ascential said its adjusted EBITDA was ahead 2% on an organic basis.

As its board had anticipated, the company's margin reduced to 32.0% from 36.8% a year ago, following the consolidation of Clavis, the launch of Money20/20 in Asia and China, and the Cannes Lions reset.

Adjusted EBITDA from continuing operations was £60.4m, down slightly from £60.8m, while reported operating profit from continuing operations was £28.7m, falling from £32.2m.

Adjusted, diluted earnings per share on continuing operations were 9.4p, an increase of 6%, and on total operations they were in line with last year at 13.4p.

Reported, diluted earnings per share on total operations were 6.1p, down from 7.1p.

The board said it saw "good operational cash generation", which funded continued investment in the business and £49.0m of mergers and acquisitions, with high operating cash flow conversion of 100%, down from 103%.

Closing net debt was £285.0m, prior to the receipt of proceeds from the disposal of exhibitions in July of about £284m after expected deductions, transaction expenses and separation-related costs.

The board declared an interim dividend of 1.9p per share, up 6% from the 1.8p paid a year ago.

On the operational front, Ascential said it saw traction for its new operating model organised by customer needs, with growth from new products and segment expansion in its product design segment, and "excellent" operating leverage.

In marketing, it reported "a year of transition" to drive long term growth, and in sales, it said "strong growth" in its digital e-commerce subscription products and integration was underway.

The company launched 'Money20/20 Asia' in Singapore, and successfully moved Money20/20 Europe to Amsterdam.

It also completed the successful re-set of the Cannes Lions, with a reported positive customer reaction and feedback for the new model outweighing in-year impact on revenues and profits.

The Cannes Lions extended its digital offering with the launch of 'The Work' followed by the acquisition of WARC, the digital subscription product on marketing effectiveness, in July.

Ascential's board said it was making capital allocation decisions to support its long term growth, with the conclusion of the exhibitions strategic review and sale to ITE occurring shortly after the period ended.

It said its ungeared balance sheet supported further strategic development through organic growth and acquisitions.

"In the last six months we have made considerable progress with our strategic vision: enabling our customers to succeed in the digital economy," said chief executive officer Duncan Painter.

"It is particularly pleasing that we have delivered strong organic growth from our products in both their live and digital formats."

Painter said that was supported by a number of "important strategic decisions", such as the disposal of Ascential Exhibitions, the Cannes Lions re-set and realignment of Cannes Lions' digital offering with the launch of The Work, the Digital Pass, and the acquisition of WARC.

"We were pleased with the initial steps taken to integrate our e-commerce analytics offerings, with One Click Retail traffic data now available on the Clavis platform, and the combined business delivering their first joint eCommerce Accelerator Summits in New York and London.

"The Money20/20 series also had a very successful first half with strong growth through the successful launch of Money20/20 into Asia combined with the smooth transfer of Money20/20 Europe into Amsterdam," Painter added.

"The group is trading in line with its expectations for the full year and the board remains confident in our overall 2018 performance and our prospects for continued success through the execution of our strategy."

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