Portfolio

Ascential upbeat after 'satisfying' year

By Josh White

Date: Monday 24 Feb 2020

Ascential upbeat after 'satisfying' year

(Sharecast News) - Ascential reported an improvement in revenue to £416.2m in its final results on Monday, up from £348.5m, making for reported growth of 19.4%.

The FTSE 100 information, data and analytics company said it saw growth of 6.4% on an organic basis in the year ended 31 December, and 9.0% on a proforma basis.

Its adjusted EBITDA rose to £128.5m from £108.4m, making for reported growth of 18.5%, consisting of 6.2% organic growth and 8.5% growth on a proforma basis.

The firm's margin slipped to 30.9% from 31.1% for the 12 months.

Ascential's adjusted operating profit stood at £105.8m for the year, up from £92.2m, while its reported operating profit fell to £19.9m from £41.4m in 2018, which the board put down to a £36.9m charge for deferred consideration for Flywheel Digital, following its "exceptional" performance in 2019.

It saw strong growth in earnings per share, with adjusted diluted earnings per share rising 20.9% to 18.5p.

The company also reported good cash generation, with its operating cash flow conversion being 88%, compared to 106% in the prior year, which resulted in closing net debt leverage of 1.4x, compared to 1.1x year-on-year.

That allowed headroom for continued investment in organic growth, select acquisitions and shareholder returns.

The board recommended a final dividend of 4.0p, making a total dividend of 5.8p for the year, in line with 2018's distributions, with the prior year benefiting from earnings from discontinued operations.

Ascential successfully refinanced its facilities shortly after the year-end with an expanded £450m revolving credit facility replacing its term loans.

It also announced a share repurchase programme of up to £120m, set to begin "shortly".

On the operational front, the company reported good delivery against its four key priorities for 2019, reporting that for its focus on execution, it saw "exceptional" performances in Flywheel Digital and WGSN.

The firm made continued progress on the integration of Edge, which remained due to complete in the first half of 2020, with a "significant" Coca-Cola contract win and encouraging trading in early 2020.

Its board reported growth in the marketing segment, as well as the roll-out of Ascential's operating model.

The company saw organic growth across all of its segments, with organic revenue growth of 8% in product design, where it saw the successful launch of WGSN Beauty.

In marketing, organic revenue growth was 9%, and in sales, organic revenue growth stood at 3%, or 11% on a proforma basis, with "exceptional" growth in Flywheel Digital ahead of plan and modest growth in Edge and Money20/20.

The digital commerce sub-segment revenues were up 9% on an organic basis, and 21% on a proforma basis.

In its built environment and policy division, there was 5% organic revenue growth and expanded margins.

The company also noted the acquisition of e-commerce analytics business Yimian in China.

"2019 was a satisfying and successful year for Ascential," said chief executive officer Duncan Painter.

"We advanced our operating model to ensure our products further align with our customers' needs in fast paced growth markets and this was reflected in organic growth across all of our segments.

"We were particularly pleased with the strength of growth of the Marketing Segment and exceptional performances from WGSN and Flywheel Digital."

Painter said that looking forward, the company believed it was well positioned to continue to drive strong performance in its "scaled and structurally growing" markets.

"In 2020, we expect to deliver strong organic growth with Group revenue in the range of £425m to £455m, using current exchange rates, and adjusted EBITDA margins of between 30% and 32%."

At 0843 GMT, shares in Ascential were up 6.33% at 376.4p.

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