TIDMASCL
RNS Number : 2893N
Ascential PLC
22 September 2023
22 September 2023
Ascential plc
Half year results
Strong growth in all four segments
Performance in line with expectations
London: Ascential plc (LSE: ASCL.L), the specialist information,
analytics, events and eCommerce optimisation company, today
announces results for the six-month period to 30 June 2023.
Highlights
-- Strong organic revenue growth in all segments, led by Events (up 25%).
-- Organic revenue growth of 16% with Adjusted EBITDA growing 17% - in line with expectations.
-- Strategic actions to maximise shareholder value and position
each business within the portfolio for long-term success are well
advanced. Market update expected before the end of the year.
Operational highlights
-- Events (comprising the Marketing and Retail & Financial Services segments) revenue up 25%.
-- Marketing segment up 28%.
-- Lions' revenue up 30%.
-- Continued double-digit growth from WARC's subscription business up 12%.
-- Retail & Financial Services segment up 17%.
-- Money20/20 Europe continued to grow very strongly (up 19%).
-- Digital Commerce segment revenue up 10%.
-- Strong revenue growth, outpacing a market impacted by the
continuing challenging retail environment, with continued key
client wins in the first half.
-- H1 investments in technology and marketing delivering and enabling:
-- September launch of Flywheel Commerce Cloud, the integrated
go-to-market operating platform which brings together our
best-in-class solutions and products.
-- Implementation of integration synergies now underway in H2 to
drive stronger second half and full year margins.
-- October launch of unitary, single-brand, Digital Commerce organisation structure.
-- Product Design segment revenue up 8%.
-- Subscription billings up 7% with continued strong retention.
-- Non-fashion products driving growth (up 13%) and now account
for just under 50% of subscriptions.
-- Fashion product growth continues at 2%.
Financial highlights
-- Group revenues of GBP307.4m (H122: GBP260.7m).
-- Reported revenue growth of GBP46.7m or 18% (organic: 16%, proforma: 16%).
-- Adjusted EBITDA of GBP78.6m (H122: GBP67.2m). Margin of 25.6% (H122: 25.8%).
-- Reported growth of GBP11.4m or 17% (organic: 17%, proforma: 18%).
-- Events Adjusted EBITDA up 26% to GBP64.6m.
-- Digital Commerce Adjusted EBITDA at break-even for the half -
prior to the H2 reorganisation synergies enabled by the launch of
Flywheel Commerce Cloud under a single go-to-market brand.
-- Product Design Adjusted EBITDA up 8% to GBP27.4m.
-- Reported Operating profit of GBP0.7m (H122: loss of GBP35.1m)
stated after charging Adjusting items of GBP63.5m (H122: GBP89.7m)
reflecting:
-- Amortisation and impairment of acquired intangibles of GBP29.0m (H122: GBP48.9m).
-- Non-trading items of GBP25.7m (H122: GBP33.2m).
-- Share-based payments of GBP8.8m (H122: GBP7.6m).
-- Adjusted diluted EPS of 7.7p (H122: 8.0p) and total EPS loss
of 3.8p (H122: EPS loss of 8.7p).
-- The Group continues to deliver strong operational cash flows
with operating cash flow conversion of 99% (H1 2022: 128%) and free
cash flow conversion after tax and capex of 72% (H1 2022: 107%).
Closing net debt at GBP205.6m was a leverage ratio of 1.6x EBITDA
(December 2022: GBP216.7m and 1.9x EBITDA).
Duncan Painter, Chief Executive Officer, commented:
"Our businesses have continued to trade strongly in the first
half of 2023. In particular, both Cannes Lions and Money20/20
enjoyed extremely successful editions in June and have progressed
even further ahead of their pre-pandemic benchmarks. Digital
Commerce has once again outperformed the underlying retail market
it serves and action taken in the first half to create an
integrated enterprise customer product and organisation have set
the Digital Commerce business up to deliver sustainable margins and
operating leverage going forward. Product Design continues to drive
growth by extending its world-class trend forecasting expertise to
a wider range of products and end markets.
The strategic actions to maximise shareholder value and position
each business within the portfolio for long-term success are well
advanced and we will look to update the market again by the end of
the year.
After our seasonally stronger first half, we have had a solid
start to the second half. Despite continued macro uncertainty
impacting the industries we serve and currency headwinds, our
businesses remain well set for the year, supported by multiple
growth levers. The structural long-term growth in our end markets,
and the success of our marquee events, underpins the Board's
confidence in the prospects of our businesses for the future."
Contacts
Ascential plc Chief Executive Officer
Duncan Painter Chief Financial Officer
Mandy Gradden Investor Relations
Rory Elliott Director +44 (0)20 7516 5000
Media enquiries
Matt Dixon
Jamie Ricketts
Edward Bridges FTI Consulting LLP +44 (0)20 3727 1000
Ascential will host a presentation for analysts and investors at
9.00 am on 22 September 2023, at the offices of Numis, 45 Gresham
St, London, EC2V 7BF. This presentation will be webcast on
www.ascential.com , and a recording will also be available
on-demand from our website in due course.
About Ascential
Ascential delivers specialist information, analytics, events,
and eCommerce optimisation to the world's leading consumer brands
and their ecosystems. Our world-class businesses improve
performance and solve customer problems by delivering immediately
actionable information combined with visionary longer-term thinking
across Digital Commerce, Product Design, Marketing and Retail &
Financial Services.
With more than 3,500 employees across six continents, we combine
local expertise with a global footprint for clients in over 120
countries. Ascential is listed on the London Stock Exchange.
Cautionary statement
Certain statements in this announcement constitute, or may be
deemed to constitute, forward-looking statements, projections and
information (including beliefs or opinions) with respect to the
Company and its subsidiary undertakings ("the Group"). An investor
can identify these statements by the fact that they do not relate
strictly to historical or current facts. They include, without
limitation, statements regarding the Group's future expectations,
operations, financial performance, financial condition and
business. Such forward looking statements are based on current
expectations and are subject to a number of risks, uncertainties
and assumptions that may cause actual results to differ materially
from any expected future results in forward-looking statements.
These risks, uncertainties include, among other factors, changing
economic, financial, business or other market conditions. These and
other factors could adversely affect the outcome and financial
effects of the plans and events described in this announcement.
Other than in accordance with its legal or regulatory
obligations (including under the Market Abuse Regulation, the UK
Listing Rules, Disclosure and Transparency Rules of the Financial
Conduct Authority) no undertaking is given by the Group to update
any forward-looking statements contained in this announcement,
whether as a result of new information, future events or otherwise.
Accordingly, no assurance can be given that any particular
expectation will be met and investors are cautioned not to place
undue reliance on the forward-looking statements.
This announcement has been prepared for the Group as a whole and
therefore gives greater emphasis to those matters which are
significant to the Group when viewed as a whole.
Any forward-looking statements made by or on behalf of the Group
speak only as of the date they are made and are based upon the
knowledge and information available to the Directors on the date of
this announcement.
Financial highlights - continuing operations
30 June Growth
2023 2022 Reported Organic(1) Proforma(1)
GBP'm GBP'm % % %
-------------------------------- ------- ------- -------- ---------- -----------
Revenue
Events:
Marketing 104.8 80.8 30% 28% 28%
Retail & Financial Services
(2) 31.3 33.6 (7%) 17% 17%
-------------------------------- ------- ------- -------- ---------- -----------
Sub total 136.1 114.4 19% 25% 25%
Digital Commerce 114.1 95.1 20% 10% 11%
Product Design 57.2 51.2 12% 8% 8%
-------------------------------- ------- ------- -------- ---------- -----------
307.4 260.7 18% 16% 16%
-------------------------------- ------- ------- -------- ---------- -----------
Adjusted EBITDA (1)
Events:
Marketing 55.7 43.2 29% 28% 28%
Retail & Financial Services
(2) 8.9 8.8 1% 15% 15%
-------------------------------- ------- ------- -------- ---------- -----------
Sub total 64.6 52.0 24% 26% 26%
------- ------- -------- ---------- -----------
Digital Commerce - 1.8 n.m. 0% 6%
Product Design 27.4 24.4 13% 8% 8%
Corporate Costs (13.4) (11.0) (22%) (29%) (29%)
-------------------------------- ------- ------- -------- ---------- -----------
78.6 67.2 17% 17% 18%
-------------------------------- ------- ------- -------- ---------- -----------
Adjusted EBITDA Margin (1) 25.6% 25.8%
Operating profit/(loss) 0.7 (35.1)
Adjusting items (63.5) (89.7)
Adjusted operating profit (1) 64.2 54.6
Loss before tax (11.8) (41.6)
Diluted loss per share (pence) (3.8p) (8.7p)
Adjusted diluted earnings per
share (pence) (1) 7.7p 8.0p
Adjusted cash generated from
operations (1) 77.8 85.7
Operating cash flow conversion
(1) (%) 99% 128%
June 23 Dec 22
Net debt (1) 205.6 216.7
Leverage ratio (1) (x) 1.6x 1.9x
(1) Refer to the glossary of Alternative Performance Measures
below.
(2) H122 included GBP5.6m of revenue and GBP0.8m of Adjusted
EBITDA from the disposed RWRC business.
OPERATING REVIEW
The first half of 2023 has seen continued strong performance
from all four business segments, following the record levels of
revenue achieved in 2022. Overall revenue grew by 16%, with EBITDA
growing by 17%, (both on an organic basis). After adjusting items,
we recorded an operating profit of GBP0.7m (H122 GBP35.1m loss)
The Events business enjoyed an excellent half, with the two
principal events in the period, the Cannes Lions Festival and
Money20/20 Europe, both growing strongly. This was especially
pleasing as the products had already exceeded their pre-Covid
levels of performance in the prior year. Overall, Events revenue
grew 25%, with EBITDA growing by 26%. Within Marketing, Lions grew
by 30%, led by further record levels of strong sponsorship
engagement, supported by growth from awards, delegates and
subscription revenue streams. For Retail & Financial Services,
Money20/20 delivered strongly, with revenue growth of 19% and
attendee numbers now reaching in excess of 8,500. Customer
engagement with the US show (in October 2023) remains good and
preparations for the launch of the Asian event in Bangkok (in April
2024) continue to progress well.
The Digital Commerce segment delivered a strong revenue
performance in the first half of 2023 against a backdrop of
continuing challenges in the global retail sector due to sustained
high inflation and the continuing volatility in consumer activity
that impacts our clients. Revenue grew by 10% on an organic basis
driven by the performance of our Enterprise customers. In the same
period, for example, the sales growth of Flywheel's customers
outstripped that of Amazon vendors overall by a factor of 5
highlighting the competitive edge that our services deliver for
brands trading on the major marketplaces. The strong progress of
the integration has enabled us to start to deliver material cost
synergies after the half year end that will drive higher margins in
H2 and in 2024.
Product Design delivered a strong performance in the period.
Revenue grew by 8%, while billings from subscription products grew
at 7%, driven by continuing high levels of retention. Growth
continues to be driven by non-fashion products, such as Insight,
which collectively accounted for almost half of the billings in the
period, growing at 13%, while Fashion also grew 2% in-line with
expectations, driven in part by the 2022 launch of our advanced,
AI-driven, trend forecasting service, TrendCurve+.
Finally, as previously announced, we were pleased that our
significant minority investment in Hudson MX, was strengthened by
fresh investment capital from a new majority investor to help the
Hudson business advance closer to sustainable success. Hudson made
good progress deploying its technology and with key customers in
the first half 2023.
Operating Responsibly
This year we have published a standalone Sustainability Report
for the first time, containing our key ESG information, enabling
stakeholders to understand our approach and commitments in this
area.
Carbon Emissions data capture and reporting has been a core
focus this half. We are embedding emissions measurements across the
business to be able to report on scope 3 emissions in our value
chain for 2023, along with the scope 1 and 2 emissions we already
report. Measuring the emissions associated with our events has also
been a focus. We have appointed Isla, a non-profit organisation
founded by event professionals and industry leaders focusing on a
sustainable future for events, to measure the carbon footprint of
our event operations. From this baseline will work to set reduction
targets and develop a sustainability charter that sets the standard
for sustainable event operations across all of our events.
Internally, our focus remains to attract, retain, develop and
engage a diverse workforce. Our Employee Networks are key to that
focus and this year have organised education and engagement
activities for colleagues globally around International Women's
Day, Pride and Juneteenth. Externally, the partnerships our Brands
continue to build are key to the impact we have in this area. These
include Lion's partnership with the Black Executive CMO Alliance,
which supported a group of young Black marketers to attend Cannes
Lions in June, and Flywheel Digital's partnership with Next One Up,
a long-term mentoring non-profit that transforms the lives of young
men in Baltimore city.
Progress against our 2023 Priorities
We have made good progress on the priorities we set for 2023 -
which can be summarised as follows:
Engage with our shareholders on the proposals resulting from the
strategic review and, subject to their approval, implement
them.
The preparations for the separation of the three businesses of
Ascential have progressed well and include branding, tax and legal
structuring, preparation of standalone cost bases and initial SEC
filings. We have engaged with shareholders throughout the period
since our announcement in January 2023 and have a good
understanding of their feedback and priorities. As it implements
its plans, the Board remains agile and focused on its primary
objective of maximising shareholder value and positioning each
business within the Group for long-term success.
Digital Commerce: Creation of an integrated operating platform,
bringing together our digital products, aligning them with our
customer base .
The Flywheel Commerce Cloud, our integrated operating platform,
initially for Enterprise customers has been developed and launched
with key early-stage customers already migrating. This is a key
enabler to release the economic and operational benefits of the
integration of the Digital Commerce business.
Product Design: Continue to drive growth in non-fashion
horizontal offerings, underpin fashion's growth and accelerate our
high value advisory services.
Non fashion products grew by 13% overall in the half, now
accounting for just under half of billings with Fashion products up
2% supported by the new TrendCurve+ product. Our smaller and more
economically sensitive Advisory services declined marginally in the
half.
Events: Double down on the successful return of live events
including preparations for Money20/20 Asia, growing digital
revenues, with targeted M&A delivering an enhanced offer for
customers.
Both Lions and Money20/20 grew very strongly in the half and
non-event dependent revenues, including digital, were up by 16%.
The post period acquisition of Contagious brings expertise in
creative trends insights to the Marketing segment.
Outlook
After a strong first half for the Group, our second half
operational focus is to build upon this performance. In terms of
Events, we look forward to delivering a successful edition of
Money20/20 USA and preparing for the launch of Money20/20 Asia in
2024. In WGSN we will continue to drive growth through our
non-Fashion products and, in Digital Commerce, complete the launch
and roll out of Flywheel Commerce Cloud, accompanied by integration
synergies to drive margins. As our results in H1 have demonstrated,
our business-facing teams remain fully focused on delivering for
customers.
After our seasonally stronger first half, we have had a solid
start to the second half. Despite continued macro uncertainty
impacting the industries we serve and currency headwinds, our
businesses remain well set for the year, supported by multiple
growth levers. The structural long-term growth in our end markets,
and the success of our marquee events, underpins the Board's
confidence in the prospects of our businesses for the future."
SEGMENTAL REVIEW
Events
This division comprises the Marketing and Retail & Financial
Services segments and the combined performance for the half year
was as follows:
Six months ended 30 Growth (%)
June (GBP'm)
2023 2022 Reported Organic Proforma
---------- ---------- --------- -------- ---------
Revenue 136.1 114.4 19% 25% 25%
---------- ---------- --------- -------- ---------
Adjusted EBITDA 64.6 52.0 24% 26% 26%
---------- ---------- --------- -------- ---------
Adjusted EBITDA
Margin 47% 45%
---------- ---------- --------- -------- ---------
In the six months ended 30 June 2023, the Events business held
two of its three main annual events: the Cannes Lions Festival and
Money20/20 Europe. Both of these events grew very strongly compared
to their editions in 2022. This performance, combined with
continued strong growth from WARC's subscription driven business,
delivered overall organic revenue growth of 25% and improved
margins compared to the six months ended June 2022 demonstrating
the strength of these market-leading products and the important
role they play for their customers.
Marketing
The Marketing segment comprises Lions and WARC. Lions, through
its awards and festival, as well as its subscription and advisory
products, is the global benchmark for creativity in the branded
communications industry, while WARC is the global authority on
marketing effectiveness for brands, agencies and media platforms.
Shortly after the half year end, in August 2023, we acquired
Contagious, a provider of creative trends insights to brands and
agencies.
Six months ended 30 Growth (%)
June (GBP'm)
2023 2022 Reported Organic Proforma
----------- --------- --------- -------- ---------
Revenue 104.8 80.8 30% 28% 28%
----------- --------- --------- -------- ---------
Adjusted EBITDA 55.7 43.2 29% 28% 28%
----------- --------- --------- -------- ---------
Adjusted EBITDA
Margin 53% 54%
----------- --------- --------- -------- ---------
The Marketing segment performed very strongly in the first six
months of 2023. Its year over year organic growth of 28% in both
revenue and Adjusted EBITDA was especially pleasing considering
that Lions had already returned to pre-COVID levels of revenue in
the previous half year.
Lions provides opportunities to network, learn and do business
at the Cannes Lions International Festival of Creativity. The
festival celebrated its 70th edition in Cannes in June 2023, with
Lions growing by 30% on the prior year (or by 40% on pre-COVID
levels in 2019). The event enjoyed record levels of customer
engagement, through physical sponsorship activations, while revenue
from delegate participation was up 17% and award entries revenue
also grew well, up 11%.
In terms of Events revenues, attendees at Cannes Lions also saw
good growth, with a total of c.12,000 representing growth of 9% on
the 2022 event. Attendees from Asia Pacific saw growth of over 30%,
with delegates now able to travel outside their countries due to
the lifting of pandemic restrictions. In addition, sponsorship
revenue grew by 66%, as demand for onsite activations, particularly
with major media and technology partners, grew strongly even
compared to 2022's record levels.
In terms of the Lions benchmark awards, entry volumes of just
under 27,000 were received, up 6% on prior year. This included an
18% increase in submissions directly from brand customers, with
strong engagement in categories representing emerging channels such
as B2B, Gaming, Commerce and Businesses Transformation. This year
saw the launch of the Entertainment Lion for Gaming, where strong
participation highlighted the increased collaboration between
brands and this growing industry. Lions' regional awards (Dubai
Lynx and Spikes) also saw growth in award entries, demonstrating
the importance of the Middle East and Asian markets within the
industry.
Lions also provides year-round intelligence and consulting
services through its subscription and advisory products and this
now accounts for 10% of the last twelve months' revenues.
Subscription revenues from Lions membership and The Work, continued
to grow well, up 8%, with annual renewal rates for The Work
remaining strong, at over 90%. Advisory, which provides insights
using Lions' awards intelligence and respected creative excellence
training programmes, more than doubled vs H122, with projects for
major brands such as Colgate, Pepsi and Heineken.
Further expanding Marketing's digital subscription base, WARC
saw strong revenue growth of 12%, with renewal rates continuing to
exceed 95%, building on the launch of the Marketing Effectiveness
Platform last year. June also saw the launch, at the Lions
Festival, of the Lions & WARC Creative Impact track, a joint
content stream, examining what it takes to drive business
performance through commercial creativity in 2023.
Acquired in August, Contagious, a multi-format creative insights
business, brings to the Marketing segment deep expertise in the
analysis of creative trends. The business, which provides
forward-looking creative inspiration and trend analysis for agency
and brand customers, is highly complementary to the offerings of
Lions and WARC and further strengthens our product set across the
industry.
Retail & Financial Services
Money20/20 is the world's leading platform where the global
fintech communities come together to do business. The Retail and
Financial Services segment also comprises Acuity Pricing, our
Retail Price & Promotion data provider.
Six months ended 30 Growth (%)
June (GBP'm)
2023 2022* Reported Organic Proforma
---------- ---------- --------- -------- ---------
Revenue 31.3 33.6 (7%) 17% 17%
---------- ---------- --------- -------- ---------
Adjusted EBITDA 8.9 8.8 1% 15% 15%
---------- ---------- --------- -------- ---------
Adjusted EBITDA
Margin 28% 26%
---------- ----------
*Prior year results include GBP5.6m of revenue and GBP0.8m of
Adjusted EBITDA from Retail Week World Retail Congress which was
sold in December 2022.
The Retail & Financial Services segment performed very
strongly in the first six months of 2023. Its year over year
organic growth of 17% in revenue and 15% in Adjusted EBITDA was
especially pleasing considering that Money20/20 Europe had already
returned to significantly higher than pre-COVID levels of revenue
in the previous half year.
Money20/20 is the leading platform for the global fintech
community, driving progress, growth and success for customers, by
creating connections, enabling deals and generating fresh insights.
The brand's European event, held in Amsterdam in June 2023,
delivered growth of 19% compared to the 2022 edition (and over 50%
compared to 2019), driven by increases in both attendees (now over
8,500), where revenue grew 11% and sponsorship business where
revenue grew 23%. The event saw attendees from over 2,300 companies
attend, representing over 100 countries, with over 18,000 customer
meetings booked via the Money20/20 app (an increase of over 20%).
An increase in the Net Promoter Score illustrates continued strong
customer engagement.
Customer engagement ahead of the flagship US show, to be held in
Las Vegas, in October remains good. After delivering an exceptional
result in the prior year 2022 edition (where revenue was up 64% on
pre-pandemic levels), and in light of disruption to the funding
environment for the early-stage financial technology sector, in
particular payments, we are expecting 2023 revenues to be flat to
slightly down on a constant currency basis (noting that we also
expect a 14% US Dollar currency headwind compared to 2022).
Preparations for the launch of the Asian show, in Bangkok in
April 2024 are progressing well, with strong early engagement from
key regional players and an excellent regional line up of
content.
The Retail Price & Promotion business saw a slight decline
in revenue, although billings grew modestly, supported by product
enhancements and renewed marketing efforts including a re-brand in
H1 to "Acuity Pricing".
The fintech end market and the broader payments ecosystem which
Money20/20 serves remained robust throughout the pandemic
underlining that it continues to represent a long-term global
growth sector. Despite recent significant reductions in funding and
valuations of companies in certain sub-segments of the customer
base from their 2021 highs, the long-term trend is expected to be
positive.
Digital Commerce
Our Digital Commerce segment operates a leading cloud-based
platform enabling brand manufacturer customers to optimise their
sales, share, and profit across the world's major digital commerce
marketplaces.
Execution products (81% of revenue): Flywheel Digital, OneSpace,
WhyteSpyder, DZ, and Intrepid provide managed execution services to
global enterprise brands across the world's leading marketplaces.
Perpetua and 4K Miles provide self-service execution to challenger
brands, while ASR provides content optimisation services.
Measurement & Benchmarking products (19% of revenue): Edge
and Yimian primarily offer market share insight, with digital shelf
optimisation, across the key global marketplaces, while
Intellibrand specialises in digital shelf services in the Latam
region.
Six months ended 30 Growth (%)
June (GBP'm)
2023 2022 Reported Organic Proforma
----------- --------- --------- -------- ---------
Revenue 114.1 95.1 20% 10% 11%
----------- --------- --------- -------- ---------
Adjusted EBITDA - 1.8 n.m. 0% 6%
----------- --------- --------- -------- ---------
Adjusted EBITDA
Margin - 2%
----------- --------- --------- -------- ---------
Digital Commerce delivered a strong performance in the first
half of 2023 against a backdrop of continuing widespread economic
challenges. In the six months ended 30 June 2023, revenue grew by
10% on an organic basis (11% on a proforma basis). We were pleased
to see H1 growth ahead of that of the leading marketplace.
This growth was led by expansion of the Enterprise customer
offering, where revenue grew by 11% on an organic basis (13% on a
proforma basis) with our Challenger customer division growing at
10% on an organic basis (6% on a proforma basis). Growth in China
was subdued at 2% as the region recovers from the pandemic
disruption in the first quarter of the year. Our performance was
once again led by the growth of our Execution products which grew
by 14% proforma while Measurement & Benchmarking products
declined slightly.
This robust underlying revenue performance continues to be
driven by a mix of gross new customer additions and net revenue
retention*. We added over 1,150 new customers in H123 (over 150
Enterprise customers and over 1,000 Challenger customers) and
delivered net revenue retention for the last 6 months of over
100%.
Revenue continued to be weighted to the US with 62% of revenue
from the US, 23% from Asia and 15% from Europe and other. Revenue
from Digital Subscriptions and Platforms continued to make up the
vast majority of revenue with approximately 50% paid on a fixed
retainer or subscription and 50% variable with customer sales or
media spend.
As previously reported, we planned for our margins to be
weighted towards the second half of the year. Overall Adjusted
EBITDA margin for the half was breakeven (H122: 2%), including
GBP3.3m of losses from businesses newly acquired in 2022. We are
now approaching the completion of our multi-year investment
programme to reorganise and integrate the business and products,
including the launch of Flywheel Commerce Cloud. This enables us to
realise synergies from H2 2023 as part of the benefits of this
programme and we are targeting a high single digit margin in 2023
and a mid-teens margin in 2024.
Flywheel Commerce Cloud was a critical focus for the business in
the first half, enabling us to move to a unitary business
structure, with key clients already commencing migration to the new
integrated platform. This brings together the capabilities of our
Flywheel, OneSpace, WhyteSpyder and Edge products into a single
experience, all leveraging the same, aggregated, cross-marketplace
data. This integrated platform fully enables our Enterprise clients
to manage their end-to-end execution in real time across the
world's leading marketplaces utilising AI automation programmes as
well as new real-time retail optimisation utilities.
In addition to this critical launch of the first fully
integrated platform for Digital Commerce at this scale, we have
also been aggressively rolling out new capabilities with our
marketplace partners to maximise our ability to optimise our
clients' eCommerce trading on a real time basis. We have
successfully launched products leveraging Amazon Market Cloud,
Amazon Stream, Amazon DSP services, Walmart Quality Content
Programme as well as Target, Instacart, and Uber.
The creation of Flywheel Commerce Cloud has also enabled us to
create a unitary organisation structure with all elements of the
operation migrating to a single brand "Flywheel" in October. As
clients experience a fully integrated global platform, they will
also have a simplified engagement experience with us under a single
team.
* We calculate our net revenue retention rate on a constant
currency basis as of the end of a period by using (i) the revenue
from our clients during the twelve-month period ending one year
prior to such period as the denominator; and (ii) the revenue from
those same clients during the twelve months ending as of the end of
such period as the numerator.
Product Design
WGSN, a leading global supplier of trend forecasts, market
intelligence and consumer insight, helps customers understand the
future demands of consumers. Information is delivered principally
through digital subscriptions to over 6,500 customers in more than
90 countries. The Product Design segment also includes trend
products for SMEs in the fashion market (WGSN Start) and the
innovative colour system Coloro.
Six months ended 30 Growth (%)
June (GBP'm)
2023 2022 Reported Organic Proforma
---------- ---------- --------- -------- ---------
Revenue 57.2 51.2 12% 8% 8%
---------- ---------- --------- -------- ---------
Adjusted EBITDA 27.4 24.4 13% 8% 8%
---------- ---------- --------- -------- ---------
Adjusted EBITDA
Margin 48% 48%
---------- ---------- --------- -------- ---------
The WGSN Group delivered a good performance in the first half of
2023. In the six months ended 30 June 2023, revenue grew
organically by 8% compared to the six months ended 30 June 2022,
while billings from subscription products grew at 7%, driven by
continuing strong levels of retention, which continues to be at
rates of over 95%. Growth continues to be driven by non-fashion
products, such as Insight, which collectively accounted for almost
half of the billings in the period and grew at 13%. Fashion grew at
2% with good take up of our advanced, AI-driven, data-rich trend
forecasting service, TrendCurve+, launched in 2022. This product
combines inputs from WGSN's unique proprietary data sources,
applying deep machine-learning algorithms to generate trend
projections across thousands of key items, silhouettes and colours,
and is now being utilised by leading brands and retailers across
the globe to inform their buying decisions.
In the smaller, non-subscriptions part of the business, the more
economically sensitive Mindset advisory revenue declined by 13% in
H1, while there was an offsetting strong performance from the
Coloro business, which was up 60% compared to H122.
Signature white papers released this year include Future
Consumer 2025, which has already been downloaded more than 13,000
times and presented at key events such as Vidcon São Paulo, Outdoor
Retailer and Cannes Lions. WGSN's strategic use of AI to enhance
its products continued, with the launch of machine-translated
versions of its Food & Drink platform into Spanish and
Japanese, with future releases due later in 2023 of WGSN Fashion in
German and French.
WGSN's ongoing roadmap of innovation and platform upgrades
delivered an important update this July, addressing a key customer
need, with the WGSN interface now serving up personalised forecast
recommendations depending on a user's job role, industry and brand.
Finally, the business has also continued to maintain outstanding
levels of NPS in the last 2 years, underlining the value of the
information delivered to customers and the strength of its
brand.
FINANCIAL REVIEW
Overview
The results for the half are set out in the condensed
consolidated statement of profit or loss and show revenue of
GBP307.4m (H122: GBP260.7m) and an operating profit of GBP0.7m
(H122: GBP35.1m loss). Adjusted EBITDA was GBP78.6m (H122:
GBP67.2m) with the improvement driven mainly by Lions and WGSN. The
GBP0.7m operating profit (H122: GBP35.1m loss) for the half
includes adjusting items such as amortisation and impairment of
acquired intangibles, share-based payments and non-trading items as
set out in more detail below.
We delivered strong operating cash flow performance for the year
with free cash flow from operations after tax and capex of GBP56.9m
(H122: GBP72.2m), an operating cash flow conversion of 99% (H122:
128%) and a free cash flow conversion of 72% (H122: 107%) with the
reduction driven by a GBP12.0m unwind in drawings under the Digital
Commerce working capital financing and by higher capital
expenditure.
Alternative Performance Measures
A core KPI and strategic goal of the Company is Organic revenue
growth rate. We believe that this is the most efficient method of
growth, measures the underlying health of the business and is a key
driver of shareholder value creation. Organic revenue growth rate
eliminates the impact of acquisitions (counting them only once they
have been owned for 12 months) and disposals and that element of
growth which is driven by changes in foreign exchange rates. It
also eliminates the impact on growth rates of changes, if any, in
timing of live events and of products that are being curtailed.
Proforma growth rate is measured in a similar way to Organic growth
rate but assumes that the Group's acquisitions were all made on 1
January 2022 and is therefore a measure of the like-for-like rate
of growth of the brands owned today.
Adjusted EBITDA is also an Alternative Performance Measure and
is used in the day-to-day management of the business to aid
comparisons with peer companies, manage banking covenants and
provide a reference point for assessing our operational cash
generation. It eliminates items arising from portfolio investment
and divestment decisions, and from changes to capital structure.
Such items arise from non-trading activities, intermittent or
non-recurring events, and while they may generate substantial
income statement amounts, do not relate to the ongoing operational
performance that underpins long-term value generation.
Further details on Alternative Performance Measures are set out
at the end of this report.
Segmental results
The Group has four reportable segments. These are Marketing,
Retail & Financial Services, Digital Commerce and Product
Design. Information regarding the results of each is included
below.
Retail
& Financial Digital Product Corporate
GBP'm Marketing Services Commerce Design costs Total
-------------------------- ---------- ------------- ---------- ------- --------- ------
H123
Revenue 104.8 31.3 114.1 57.2 - 307.4
Organic growth 28% 17% 10% 8% - 16%
Proforma growth 28% 17% 11% 8% - 16%
Adjusted EBITDA 55.7 8.9 - 27.4 (13.4) 78.6
Organic growth 28% 15% 0% 8% (29%) 17%
Proforma growth 28% 15% 6% 8% (29%) 18%
Adjusted EBITDA margin 53% 28% - 48% - 26%
Depreciation and software
amortisation (1.2) (0.2) (10.0) (1.5) (1.5) (14.4)
-------------------------- ---------- ------------- ---------- ------- --------- ------
Adjusted operating
profit / (loss) 54.5 8.7 (10.0) 25.9 (14.9) 64.2
-------------------------- ---------- ------------- ---------- ------- --------- ------
H122
Revenue 80.8 33.6 95.1 51.2 - 260.7
Adjusted EBITDA 43.2 8.8 1.8 24.4 (11.0) 67.2
Depreciation and software
amortisation (1.4) (0.2) (7.7) (2.2) (1.1) (12.6)
-------------------------- ---------- ------------- ---------- ------- --------- ------
Adjusted operating profit
/ (loss) 41.8 8.6 (5.9) 22.2 (12.1) 54.6
-------------------------- ---------- ------------- ---------- ------- --------- ------
Revenue
The Company benefits from diverse revenue streams across its
segments ranging from digital subscriptions to live events to
advisory. Most of these revenue streams are digital and have
recurring or repeat characteristics benefiting from our focus on
customer retention.
Total revenue grew to GBP307.4m (H122: GBP260.7m), an increase
of GBP46.7m or 18%. Adjusting for currency impacts, acquisitions,
disposals and discontinued products, revenue increased by 16% on
both an Organic basis and Proforma basis. This was driven by the
strong growth across all our segments.
Adjusted EBITDA
Adjusted EBITDA grew to GBP78.6m (H122: GBP67.2m) an increase of
GBP11.4m or 17%. This represented Organic growth of 17% slightly
ahead of the growth in revenue. Adjusted EBITDA margin was in line
with the prior year at 25.6% (H122: 25.8%). Adjusted EBITDA from
operations is reconciled to statutory operating profit/loss as
shown in the table below
Reconciliation between Adjusted EBITDA and statutory operating
profit/(loss)
GBP'm H123 H122
--------------------------------------- ------ ------
Adjusted EBITDA 78.6 67.2
Depreciation and software amortisation (14.4) (12.6)
--------------------------------------- ------ ------
Adjusted operating profit 64.2 54.6
Amortisation of acquired intangibles (17.3) (17.5)
Impairment of intangibles (11.7) (31.4)
Share-based payments (8.8) (7.6)
Non- trading items (25.7) (33.2)
Statutory operating profit/(loss) 0.7 (35.1)
--------------------------------------- ------ ------
Amortisation of acquired intangibles
The small reduction in amortisation of acquired intangibles from
GBP17.5m in H122 to GBP17.3m in H123 reflects the amortisation of
intangibles on assets acquired in 2022 (Sellics and Intrepid) less
the impact of fully amortised intangibles.
Impairment of acquired intangible assets
The Company undertakes a periodic review of the carrying value
of its goodwill and indefinite life intangible assets and, if there
is an indicator of impairment, its definite life intangible
assets.
In H123 we have impaired acquired intangibles by GBP11.7m. This
primarily relates to acquired brand intangibles within Digital
Commerce as result of the decision to move to a single brand
"Flywheel Digital" from the second half of 2023. An impairment was
identified in the comparative period of H122 when, as reported last
year, the decision was made to change the focus of the Edge Digital
Shelf offering to our clients within the Digital Commerce segment.
As a result of this change, certain intangible assets associated
with this product no longer generated sufficient value to support
the carrying value and an impairment charge of GBP31.4m was
recorded in the first half of 2022.
Non-Trading items
The Company has incurred significant Non-Trading items in H123
which have been treated on a basis consistent with our policy and
with previous years as set out below and further explained in Note
5.
GBP'm H123 H122
------------------------------------------------------ ------ -----
Deferred contingent consideration - charge contingent
on service 7.8 12.2
Deferred contingent consideration - revaluation
credit (17.1) (4.6)
------------------------------------------------------ ------ -----
Deferred contingent consideration (credit) / charge (9.3) 7.6
Strategic review 23.0 8.5
ERP and Salesforce implementation costs 3.9 13.3
Transaction and integration costs 6.5 4.3
Property impairments and onerous contracts 1.4 (0.5)
Loss on disposal of businesses 0.2 -
Non-Trading items relating to Continuing operations 25.7 33.2
Discontinued operations - 0.4
------------------------------------------------------ ------ -----
Non-Trading items 25.7 33.6
------------------------------------------------------ ------ -----
The charge for deferred contingent consideration of GBP7.8m
(H122: GBP12.2m) reflects the earnout that is contingent on the
continuing employment of the founders on the acquisitions of
Perpetua, WhyteSpyder, 4K Miles, and Intrepid. The credit for
deferred contingent consideration of GBP17.1m (H122: GBP4.6m)
reflects, primarily, the renegotiation of the Perpetua earnout to
facilitate integration with the Digital Commerce business.
The costs of implementing the strategic actions constitute a
significant non-trading item across both 2022 and 2023. These costs
relate to resources and professional fees for project management,
tax and legal structuring, US GAAP conversion and PCAOB audits for
2021 and 2022 and legal advice as well as severance and retention
incentives for key personnel impacted by the proposed separation of
the Group.
A 2021 IFRIC decision resulted in an amendment to the treatment
of costs incurred in respect of the Company's new ERP and, in prior
years, Salesforce systems, such that the majority of costs on
implementation of SaaS software are no longer capitalised but
expensed as incurred. Costs relating to this significant and
non-recurring programme in the period totalled GBP3.9m (H122:
GBP13.3m).
Transaction and integration costs comprise professional fees for
diligence and legal costs for acquisitions and investments as well
as the costs of integrating acquisitions, chiefly those of Sellics
and Intrepid and the integration of our operating platform within
Digital Commerce.
Net finance costs
The net finance cost for the period was GBP5.7m (H122: GBP5.2m)
as set out in the table below:
(GBP million) H123 H122
-------------------------------------------------- ------ ------
Interest payable on external borrowings (9.9) (3.1)
Interest income 8.0 0.9
Fair value (loss) / gain on derivative financial
instruments (2.0) 1.9
Amortisation of arrangement fees (0.4) (0.4)
Discount unwind on deferred consideration and
lease liabilities (3.2) (4.6)
Foreign exchange (loss) / gain (0.5) 0.1
Adjusted net finance costs (8.0) (5.2)
--------------------------------------------------- ------ ------
Foreign exchange on deferred consideration 2.3 -
Net finance costs (5.7) (5.2)
--------------------------------------------------- ------ ------
The Group's adjusted net finance costs have increased from
GBP5.2m in H122 to GBP8.0m in H123 driven mainly by the
significantly higher interest expense payable since the second half
of 2022 as interest rates have risen for both our USD and Euro
borrowings. The major items in interest income (GBP8.0m) relate to
interest receivable from Hudson MX of GBP5.3m (H122: GBP0.9m)
together with interest income on our interest rate caps amounting
to GBP1.6m (H122: nil). The unwind of the discount on deferred
consideration and lease liabilities is lower than the prior period,
totalling GBP3.2m (H122: GBP4.6m) due to the final settlement of
older earnout agreements.
Profit before tax
Adjusted profit before tax of GBP49.8m increased compared to the
prior period (H122: GBP48.4m). This reflects the growth in adjusted
EBITDA to GBP78.6m (H122: GBP67.2m), partly offset by higher levels
of depreciation and software amortisation and of net finance costs
(see above), together with an increase in losses relating to the
share of associates (to GBP6.4m, from GBP1.0m) as a result of an
increase in our ownership of Hudson which is currently loss making
(see below).
Total loss before tax for the half was GBP11.8m for the half
down from a total loss of GBP41.6m in the prior period. The
reduction in losses is driven by a GBP 28.4m reduction in Adjusting
items as set out above.
Taxation
A total tax charge of GBP5.0m (H122: GBP3.6m credit) was
incurred on the reported loss before tax of GBP11.8m (H122:
GBP41.6m) with the lower levels of tax deductibility of Adjusting
items (with an effective tax rate of 16.6% or 17.5% in the prior
period) driving this outcome.
A tax charge of GBP15. 2m (H122: GBP12.2m) was incurred on
Adjusted profit before tax of GBP49.8m (H122: GBP48.4m) resulting
in an Adjusted effective tax rate for the period of 31% (H122: 25%)
with the increase driven by the increased loss on Associates for
which no deferred tax asset has been recognised.
The composition of the tax charge is summarised in the table
below.
Analysis of tax charge (GBP'm) H123 H122
-------------------------------------------------- ------ ------
Adjusted profit before tax 49.8 48.4
Tax charge on Adjusted profit before tax (15.2) (12.2)
Effective tax rate (%) 30.5% 25.3%
Adjusting items (61.6) (90.0)
Tax credit on Adjusting items 10.2 15.8
Effective tax rate on Adjusting items (%) 16.6% 17.5%
Reported loss before tax (11.8) (41.6)
Tax (charge)/credit on reported loss before tax (5.0) 3.6
Effective tax rate on reported loss before tax
(%) n.m. 8.5%
-------------------------------------------------- ------ ------
The Group has a total recognised net deferred tax asset of
GBP47.5m (H122: GBP49.1m) comprising a GBP2 3.7m (H122: GBP35.5m)
deferred tax liability on non-deductible intangibles and an asset
of GBP71.2m (H122: GBP84.6m) relating to UK and US losses,
accelerated capital allowances and US acquired intangibles. The
gross asset is expected to be realised in cash over the next ten
years with the majority recovered in the next four years. When
considering the net deferred tax balance by entity this is
presented as a gross asset of GBP54.5m offset by a deferred tax
liability of GBP7.0m.
Foreign currency translation impact
The Group's reported performance is sensitive to movements in
both the Euro and US dollar against pounds sterling with
significant acquisitions denominated in US Dollars and events
revenues in Euro and US Dollars. In particular, the Dollar exchange
rate has benefited our reported financial performance in the first
half as set out below.
Weighted average rate Period-end rate
Currency H123 H122 Change H123 H122 Change
----------- ------- ------ --------- ----- ----- -------
Euro 1.17 1.17 0.3% 1.16 1.16 (0.1%)
US Dollar 1.23 1.32 6.5% 1.27 1.22 (4.3%)
----------- ------- ------ --------- ----- ----- -------
When comparing H123 and H122, changes in currency exchange rates
had a favourable impact on revenue and adjusted EBITDA of GBP6.9m
and GBP2.4m. On a segmental basis, the impact of changes in foreign
currency exchange rates was as follows:
-- Digital Commerce: GBP3.7m impact on revenue and GBP0.6m impact on Adjusted EBITDA
-- Product Design: GBP1.8m impact on revenue and GBP0.8m impact on Adjusted EBITDA
-- Marketing: GBP1.2m impact on revenue and GBP0.2m impact on Adjusted EBITDA
-- Retail & Financial Services: GBP0.2m impact on revenue and no impact on Adjusted EBITDA.
The second half of 2022 benefited from a very weak Sterling
exchange rate relative to the US Dollar and we are expecting
currency headwinds of 11% in the second half of 2023 overall as a
result.
For illustrative purposes, the table below provides details of
the impact on revenue and Adjusted EBITDA if the results were
restated for Sterling weakening by 1% against the Euro and US
Dollar in isolation.
H123 H122
Adjusted Adjusted
GBP'm Revenue EBITDA Revenue EBITDA
-------------- ------- -------- ------- --------
Euro 1.3 1.0 1.1 0.9
US Dollar 1.2 0.3 1.0 0.3
-------------- ------- -------- ------- --------
Furthermore, each 1% movement in the Euro to pounds Sterling
exchange rate has a GBP0.8m (H122: GBP1.1m) impact on the carrying
value of borrowings. Each 1% movement in the US Dollar has a circa
GBP2.2m (H122: GBP2.8m) impact on the carrying value of
borrowings.
Earnings per share
Adjusted diluted earnings per share were 7. 7p per share (H122:
8.0p). Total diluted loss per share was 3.8p (H122: loss of 8.7p)
with the prior period impacted by higher levels of Adjusting
Items.
Investments
The Group holds minority investments in several companies
including Shanghai Coloro Technology, Tracksuit, Infosum, Hashtag
Paid, Symbiosis and Hudson MX ("Hudson").
The largest investment, totalling GBP98.0m in equity and debt,
is in Hudson, an advertising software business providing media
buying and media accounting solutions through a cloud-based SaaS
platform. Hudson completed a financing round in February 2023
attracting fresh investment of $51.5m of which $30.0m was provided
by a new investor, MT II Holdings, LP ("MT II"), and $21.5m from
Ascential. As part of this refinancing Hudson's capital structure
was revised and MT II purchased part of Ascential's holding of
preference shares for GBP24.9m. Following the restructuring, MT II
holds 51% of Hudson's common stock, Ascential holds 36.5% and
Hudson's management team and pre-existing shareholders hold
12.5%.
Ascential continues to exert significant influence over Hudson
and now holds a GBP10.3m (December 2022: GBP73.8m) equity
investment consisting of ordinary shares measured using the equity
method. In H123, we therefore recorded our share of the losses of
the Hudson businesses totalling GBP6.8m (H122: GBP0.9m). Ascential
also holds debt instruments in Hudson totalling GBP87.7m (December
2022: GBP42.7m) including accrued interest. In H123, we recorded
interest receivable on these debt instruments totalling GBP 5.3m
(H122: GBP1.0m).
In addition, as part of the restructuring in February 2023
Ascential has agreed on arrangements that provide a potential path
to a majority stake in the future. These arrangements include
granting a put option to MT II, exercisable from 1 April 2024 to 31
December 2025 and subject to a maximum consideration payable by
Ascential of US$52m. If exercised, this put option would result in
Ascential holding a 79% common equity interest in Hudson with
Ascential then holding the right to call the remaining shares owned
by MT II in the two years following any exercise of their put
option. Finally, and looking further ahead, between February 2026
and December 2028, both the Group and Hudson's management team,
along with other existing investors, have agreed options with a
total consideration ceiling of US$40 million that would, if
executed, increase the Group's equity stake in Hudson to 49%.
Further details of the restructuring and the accounting for
Hudson can be found in Note 10.
Deferred contingent consideration
The Company's preferred structure for acquisitions is to enter
into long-term earnout arrangements with the founders of acquired
companies and to link this to the post-acquisition performance of
the acquired company and for certain elements make this contingent
on the continuing employment of the founders. Accounting for the
earnout is complex and requires considerable judgements to be made
about the expected future performance of the acquired company at
the both the point of acquisition and at each reporting date. This
is especially difficult in the type of high growth, early stage,
companies that Ascential acquires.
The earnout is accounted for in three ways:
1. A liability for deferred contingent consideration is
established on the balance sheet at the point of acquisition based
on that element of the earnout which is not dependent on the
continuing employment of the founders. Any subsequent change in
estimate is recorded as a Non-Trading item and in H123 we recorded
a revaluation credit of GBP17.1m (H122: GBP4.6m) primarily
attributable to the renegotiation of the earnout of Perpetua to
facilitate early integration of the business. During the period we
made cash payments of GBP14.3m (H122: GBP35.4m) in relation to this
element of deferred contingent consideration.
2. This liability is discounted to present value with the
reversal of this discount being recorded as a finance cost. This
amounted to a finance cost of GBP2.7m for the period (H122:
GBP4.1m).
3. Finally, that element of the deferred contingent
consideration that is also contingent on the continuing employment
of the founders is charged to the consolidated statement of profit
or loss as a Non-Trading item over the service life of those
founders (typically three years). This amounted to a charge of
GBP7.8m (H122: GBP12.2m). During the period we made cash payments
of GBP16.6m (H122: GBP18.0m) in relation to this element of
deferred contingent consideration.
The liability for deferred contingent consideration amounted to
GBP65.0m at 30 June 2023 (H122: GBP80.6m).
In total, when combining this liability with the future income
statement charges for discount unwind and for deferred contingent
consideration that is contingent on continuing employment of the
founders, the Company expects to pay out deferred contingent
consideration of up to GBP90m over the next three years for
acquisitions to date. GBP14m is due in the second half of 2023 with
the balance due in 2024, 2025 and 2026 contingent on the 2023, 2024
and 2025 performance of the relevant businesses.
Cash flow
The Company generated Adjusted operating cash flow of GBP77.8m
(H122: GBP85.7m), being a 99% (H122: 128%) operating cash flow
conversion in the first half.
A feature of our cash flow is the working capital required in
the Digital Commerce segment for the purchasing of advertising
media on behalf of customers where the payment terms agreed with
the customer can differ from those agreed with the marketplace. At
30 June 2023 we had GBP182.5m of these media reimbursables
receivable from customers and GBP170.9m payable to the marketplaces
up from GBP122.6m and GBP116.4m respectively at 30 June 2022 with
the balances recorded in Other Debtors and Other Creditors
respectively. In order to reduce the impact of this working capital
dynamic on the Group, we have a facility with a bank to sell
certain of the customer receivables for an attractive rate of
interest that is lower than our overall cost of borrowing. Drawings
under this facility amounted to GBP18.3m (H122: GBP29.0m) at the
period end representing a cash outflow of GBP12.0m in the half. The
resultant net working capital position relating to such media
reimbursables of a net receivable of GBP11.6m (H122: GBP6.2m)
therefore does not have a significant overall impact on the Group's
balance sheet.
The Group's capital spend increased by GBP6.0m from the prior
year to GBP19.9m (H122: GBP13.9m) driven by increased product
development in the Digital Commerce business with the increase
primarily related to the creation of the single operating platform
as part of our integration activities. Tax paid on profits was
GBP1.0m in the current period (H122: GBP0.4m refund). Tax
liabilities continue to be sheltered by prior period losses and
tax-deductible acquisition consideration particularly in the
US.
As a result, the Company generated free cash flow of GBP56.9m
(H122: GBP72.2m) as shown in the table below:
GBP'm H123 H122
---------------------------------------- ------ ------
Adjusted EBITDA 78.6 67.2
Working capital movements (0 .8) 18.5
---------------------------------------- ------ ------
Adjusted cash generated from operations 77. 8 85.7
Operating cash flow conversion (%) 99% 128%
Capital expenditure (19.9) (13.9)
Tax (paid)/received (1.0) 0.4
---------------------------------------- ------ ------
Free cash flow from operations 56. 9 72.2
---------------------------------------- ------ ------
Free cash flow conversion (%) 7 2% 107%
The cash flow statement and net debt position are summarised as
follows.
GBP'm H123 H122
------------------------------------------------- ------- -------
Free cash flow from operations 56.9 72.2
Acquisition of businesses net of cash acquired - (60.9)
Deferred contingent consideration including
contingent employment cost (30.9) (53.4)
Disposal proceeds net of cash disposed and
disposal costs 24.9 (0.4)
Acquisition of investments and loan to associate (13.3) (18.5)
Non-Trading costs paid (19.0) (24.9)
Cash flow before financing activities 18.6 (85.9)
Net proceeds from borrowings 9.1 91.8
Net interest paid (7.1) (2.5)
Lease liabilities paid (4.1) (3.0)
Shares purchased (2.6) -
Dividends paid to non-controlling interests - (1.2)
Net cash flow 13.9 (0.8)
Opening cash balance 80.0 84.1
FX movements (4.3) 5.1
------------------------------------------------- ------- -------
Closing cash balance 89.6 88.4
Borrowings (299.6) (265.2)
Capitalised arrangement fees 1.2 2.0
Derivative financial instruments 3.2 2.1
------------------------------------------------- ------- -------
Net debt (205.6) (172.7)
------------------------------------------------- ------- -------
Returns to shareholders
Following the impact of Covid-19 on the business, no dividends
were paid in 2020 or 2021 and in 2022 cash flow was prioritised for
acquisitions. The Board continues to prioritise capital for
investment to support our growth strategy and also, in the context
of the ongoing strategic review, has decided not to declare an
interim 2023 dividend at this time.
Strong balance sheet and access to liquidity
Ascential manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to shareholders through the optimisation of the
debt-to-equity balance. The capital structure of the Group consists
of debt, cash and cash equivalents and equity attributable to
equity holders of the parent comprising capital, reserves and
retained earnings. The Group's policy is to borrow centrally to
meet anticipated funding requirements. These borrowings, together
with cash generated from the operations, are on-lent at
market-based interest rates and on commercial terms and conditions
or contributed as equity to subsidiaries.
Going concern
The Board is required to assess going concern at each reporting
period. These assessments require judgement to determine the impact
of future economic conditions on the Group, including the impact of
downward recessionary pressures. After considering the current
financial projections and the bank facilities available and then
applying a severe but plausible sensitivity, the Directors of the
Company are satisfied that the Group has sufficient resources for
its operational needs and will remain in compliance with the
financial covenants in its bank facilities for at least the next 12
months from the date of approving these financial statements.
The process and key judgements the Directors have considered in
reaching their conclusions on going concern relate to liquidity,
covenants and scenario planning and are set out in Note 1.
Condensed Consolidated Statement of Profit and Loss
Six months to Six months to 30 Year to 31 December
30 June 2023 June 2022 2022
(Unaudited) (Unaudited) (Audited)
---------------------------- ---------------------------- ----------------------------
Adjusted Adjusting Adjusted Adjusting Adjusted Adjusting
(GBP million) Note Results Items Total Results Items Total Results Items Total
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Continuing
operations
Revenue 4 307.4 - 307.4 260.7 - 260.7 524.4 - 524.4
Cost of sales (103.8) - (103.8) (95.7) - (95.7) (212.0) - (212.0)
Sales, marketing
and administrative
expenses (137.9) (63.5) (201.4) (106.2) (89.7) (195.9) (210.4) (189.6) (400.0)
Impairment loss
on trade
receivables
and contract
assets (1.5) - (1.5) (4.2) - (4.2) (6.6) - (6.6)
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Operating
profit/(loss) 4 64.2 (63.5) 0.7 54.6 (89.7) (35.1) 95.4 (189.6) (94.2)
Adjusted EBITDA 4 78.6 - 78.6 67.2 - 67.2 121.1 - 121.1
Depreciation,
amortisation
and impairment (14.4) (29.0) (43.4) (12.6) (48.9) (61.5) (25.7) (91.6) (117.3)
Non-trading
items 5 - (25.7) (25.7) - (33.2) (33.2) - (82.1) (82.1)
Share-based
payments - (8.8) (8.8) - (7.6) (7.6) - (15.9) (15.9)
-------- --------- ------- -------- --------- ------- -------- --------- -------
Operating
profit/(loss) 64.2 (63.5) 0.7 54.6 (89.7) (35.1) 95.4 (189.6) (94.2)
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Share of loss
of associates 10 (6.4) (0.4) (6.8) (1.0) (0.3) (1.3) (2.6) (0.6) (3.2)
Finance costs 6 (16.0) - (16.0) (8.0) - (8.0) (21.8) (5.3) (27.1)
Finance income 6 8.0 2.3 10.3 2.8 - 2.8 8.4 - 8.4
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Profit/(loss)
before taxation 49.8 (61.6) (11.8) 48.4 (90.0) (41.6) 79.4 (195.5) (116.1)
Taxation 7 (15.2) 10.2 (5.0) (12.2) 15.8 3.6 (21.0) 32.3 11.3
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Profit/(loss)
from continuing
operations 34.6 (51.4) (16.8) 36.2 (74.2) (38.0) 58.4 (163.2) (104.8)
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Discontinued
operations
Loss from
discontinued
operations,
net of tax - - - - (0.4) (0.4) - (0.9) (0.9)
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Profit/(loss)
for the period 34.6 (51.4) (16.8) 36.2 (74.6) (38.4) 58.4 (164.1) (105.7)
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Profit/(loss) attributable
to:
Owners of the
Company 33.9 (50.4) (16.5) 35.3 (73.5) (38.2) 56.6 (153.0) (96.4)
Non-controlling
interests 0.7 (1.0) (0.3) 0.9 (1.1) (0.2) 1.8 (11.1) (9.3)
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Earnings/(loss)
per share (basic
and diluted,
pence)
Continuing
operations 7.7 (11.5) (3.8) 8.0 (16.6) (8.6) 12.9 (34.6) (21.7)
Discontinued
operations - - - - (0.1) (0.1) - (0.2) (0.2)
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Total operations 8 7.7 (11.5) (3.8) 8.0 (16.7) (8.7) 12.9 (34.8) (21.9)
-------------------- ---- -------- --------- ------- -------- --------- ------- -------- --------- -------
Condensed Consolidated Statement of Other Comprehensive
Income
Six months to 30 Six months to 30 Year to 31 December
June 2023 June 2022 2022
----------------------------
(Unaudited) (Unaudited) (Audited)
---------------------------- --------------------------- --------------------------- ----------------------------
Adjusted Adjusting Adjusted Adjusting Adjusted Adjusting
(GBP million) Results Items Total Results Items Total Results Items Total
---------------------------- -------- --------- ------ -------- --------- ------ -------- --------- -------
Profit/(loss) for
the period 34.6 (51.4) (16.8) 36.2 (74.6) (38.4) 58.4 (164.1) (105.7)
Other comprehensive
income
Items that may be
reclassified subsequently
to profit or loss:
Foreign exchange translation
differences:
- recognised in equity
from continuing operations (28.4) - (28.4) 52.7 - 52.7 40.2 - 40.2
Other comprehensive
income/(loss) net of
tax (28.4) - (28.4) 52.7 - 52.7 40.2 - 40.2
---------------------------- -------- --------- ------ -------- --------- ------ -------- --------- -------
Total comprehensive
income/(loss) for the
period 6.2 (51.4) (45.2) 88.9 (74.6) 14.3 98.6 (164.1) (65.5)
Total comprehensive
income/(loss) attributable
to:
Owners of the company 5.5 (50.4) (44.9) 85.4 (73.5) 11.9 96.8 (153.0) (56.2)
Non-controlling interest 0.7 (1.0) (0.3) 3.5 (1.1) 2.4 1.8 (11.1) (9.3)
---------------------------- -------- --------- ------ -------- --------- ------ -------- --------- -------
Condensed Consolidated Statement of Financial Position
30 June 30 June 31 December
--------------------------------------- -----
2023 2022 2022
(GBP million) Note (Unaudited) (Unaudited) (Audited)
--------------------------------------- ----- ------------ ------------ ------------
Assets
Non-current assets
Goodwill 9 681.9 682.4 711.1
Intangible assets 9 213.9 297.3 242.4
Property, plant and equipment 6.2 5.1 5.7
Right of use assets 16.6 22.9 20.7
Investments 10 24.9 92.8 88.5
Other receivables 11 87.7 - 42.7
Deferred tax assets 7 54.5 63.2 60.3
Derivatives - 2.1 -
--------------------------------------- ----- ------------ ------------ ------------
1,085.7 1,165.8 1,171.4
--------------------------------------- ----- ------------ ------------ ------------
Current assets
Inventories 4.1 3.5 3.3
Trade and other receivables 11 317.1 302.9 344.9
Derivatives 3.3 - 4.5
Cash and cash equivalents 14 89.6 88.4 80.0
--------------------------------------- ----- ------------ ------------ ------------
414.1 394.8 432.7
--------------------------------------- ----- ------------ ------------ ------------
Total assets 1,499.8 1,560.6 1,604.1
--------------------------------------- ----- ------------ ------------ ------------
Liabilities
Current liabilities
Trade and other payables 12 269.9 218.9 277.6
Deferred income 114.8 121.0 116.3
Deferred and contingent consideration 13 42.3 43.5 43.2
Lease liabilities 6.8 6.6 7.3
Current tax liabilities 7.9 5.9 8.6
Provisions 1.5 1.6 2.0
--------------------------------------- ----- ------------ ------------ ------------
443.2 397.5 455.0
--------------------------------------- ----- ------------ ------------ ------------
Non-current liabilities
Deferred income 0.5 0.9 1.0
Deferred and contingent consideration 13 22.7 37.2 64.9
Lease liabilities 16.5 19.8 19.5
External borrowings 14 298.4 263.2 301.2
Deferred tax liabilities 7 7.0 14.1 8.6
Provisions 1.8 1.4 2.0
--------------------------------------- ----- ------------ ------------ ------------
346.9 336.6 397.2
--------------------------------------- ----- ------------ ------------ ------------
Total liabilities 790.1 734.1 852.2
--------------------------------------- ----- ------------ ------------ ------------
Net assets 709.7 826.5 751.9
--------------------------------------- ----- ------------ ------------ ------------
Equity
Share capital 4.4 4.4 4.4
Share premium 153.6 153.5 153.6
Other reserves 163.8 167.0 166.0
Translation reserve (8.7) 32.2 19.7
Retained earnings 376.9 440.8 386.5
--------------------------------------- ----- ------------ ------------ ------------
Shareholders' equity 690.0 797.9 730.2
--------------------------------------- ----- ------------ ------------ ------------
Non-controlling interests 19.7 28.6 21.7
--------------------------------------- ----- ------------ ------------ ------------
Total equity 709.7 826.5 751.9
--------------------------------------- ----- ------------ ------------ ------------
Total Liabilities and Equity 1,499.8 1,560.6 1,604.1
--------------------------------------- ----- ------------ ------------ ------------
Condensed Consolidated Statement of Changes in Equity
Attributable to owners of the
Company
-----------------------------------------------------
Share Share Translation Other Retained Non-controlling
(GBP million) capital premium reserve reserves earnings interest Total
Balance at 31 December
2021 (Audited) 4.4 153.3 (20.5) 167.0 471.7 29.7 805.6
Loss for the period - - - - (38.2) (0.2) (38.4)
Other comprehensive
income - - 52.7 - - - 52.7
------------------------- -------- -------- ----------- --------- --------- --------------- ------
Total comprehensive
income - - 52.7 - (38.2) (0.2) 14.3
Issue of shares - 0.2 - - - 0.2
Share-based payments - - - - 8.2 - 8.2
Taxation on share-based
payments - - - - (0.9) - (0.9)
Dividends paid - - - - - (0.9) (0.9)
------------------------- -------- -------- ----------- --------- --------- --------------- ------
Balance at 30 June
2022 (Unaudited) 4.4 153.5 32.2 167.0 440.8 28.6 826.5
------------------------- -------- -------- ----------- --------- --------- --------------- ------
Loss for the period - - - - (58.2) (9.1) (67.3)
Other comprehensive
income - - (12.5) - - - (12.5)
Total comprehensive
income - - (12.5) - (58.2) (9.1) (79.8)
Issue of shares - 0.1 - - - - 0.1
Share purchases - - - (3.7) - - (3.7)
Shares issued to
employees - - - 2.7 (2.7) - -
Foreign exchange
movements - - - - - 3.4 3.4
Share-based payments - - - - 8.5 - 8.5
Taxation on share-based
payments - - - - (1.9) - (1.9)
Dividends paid - - - - - (1.2) (1.2)
------------------------- -------- -------- ----------- --------- --------- --------------- ------
Balance at 31 December
2022 (Audited) 4.4 153.6 19.7 166.0 386.5 21.7 751.9
------------------------- -------- -------- ----------- --------- --------- --------------- ------
Loss for the period - - - - (16.5) (0.3) (16.8)
Other comprehensive
income - - (28.4) - - - (28.4)
------------------------- -------- -------- ----------- --------- --------- --------------- ------
Total comprehensive
income - - (28.4) - (16.5) (0.3) (45.2)
Share purchases (2.6) - - (2.6)
Shares issued to
employees - - - 0.4 (0.4) - -
Share-based payments - - - - 8.4 - 8.4
Foreign exchange
movements - - - - (1.7) (1.7)
Taxation on share-based
payments - - - - (1.1) - (1.1)
Balance at 30 June
2023 (Unaudited) 4.4 153.6 (8.7) 163.8 376.9 19.7 709.7
------------------------- -------- -------- ----------- --------- --------- --------------- ------
Condensed Consolidated Statement of Cash Flows
Six months
to 30 June
2023
Six months Year to
to 30 June 31 December
(GBP million) (Unaudited) 2022 (Unaudited) 2022 (Audited)
--------------------------------------------- ------ ------------- ----------------- ---------------
Cash flow from operating activities Note
Loss before taxation on continuing operations (11.8) (41.6) (116.1)
Loss before taxation on discontinued operations - (0.4) (0.9)
Adjustments for:
Impairment of assets 2.0 31.4 59.9
Depreciation and amortisation 41.4 30.1 60.3
Deferred and contingent consideration:
revaluation and contingent employment
costs 5,13 (9.3) 7.6 31.5
Loss/ (profit) on disposal of business 5 0.2 - (6.0)
Share-based payments 8.8 7.6 15.9
Share of loss on associates 6.8 1.3 3.2
Net finance costs 6 5.7 5.2 18.7
--------------------------------------------- ------
Cash generated from operations before
changes in working capital, provisions
and deferred and contingent consideration 43.8 41.2 66.5
--------------------------------------------- ------ ------------- ----------------- ---------------
Cash outflows for acquisition-related
contingent employment costs 13 (16.6) (18.0) (19.5)
Changes in:
Inventories (0.9) 0.4 (1.2)
Trade and other receivables 15.8 16.4 (50.7)
Trade and other payables 0.8 3.7 58.2
Provisions (0.7) (0.9) 0.1
--------------------------------------------- ------ ------------- ----------------- ---------------
Cash generated from operations 42.2 42.8 53.4
--------------------------------------------- ------ ------------- ----------------- ---------------
Adjusted cash generated from operations 77.8 85.7 126.1
Cash outflows for discontinued operations - - (0.9)
Cash outflows for acquisition-related
contingent employment costs 13 (16.6) (18.0) (19.5)
Cash outflows for other non-trading
items (19.0) (24.9) (52.3)
--------------------------------------------- ------ ------------- ----------------- ---------------
Cash generated from operations 42.2 42.8 53.4
--------------------------------------------- ------ ------------- ----------------- ---------------
Tax (paid)/received (1.0) 0.4 (0.2)
--------------------------------------------- ------ ------------- ----------------- ---------------
Net cash generated from operating activities 41.2 43.2 53.2
----------------------------------------------------- ------------- ----------------- ---------------
Cash flow from investing activities
Acquisition of businesses, net of
cash acquired - (60.9) (60.8)
Deferred contingent consideration
paid* 13 (14.3) (35.4) (37.9)
Acquisition of investments 10 (2.8) (2.9) (4.0)
Proceeds from sale of equity-accounted
investments 10 24.9 - 5.3
Loan to associate (10.5) (15.6) (30.6)
Acquisition of software intangibles and property,
plant and equipment (19.9) (13.9) (35.9)
Disposal of businesses, net of cash disposed - (0.4) 0.6
----------------------------------------------------- ------------- ----------------- ---------------
Net cash used by investing activities (22.6) (129.1) (163.3)
----------------------------------------------------- ------------- ----------------- ---------------
Cash flow from financing activities
Proceeds from external borrowings 14 57.1 115.6 176.8
Repayment of external borrowings 14 (48.0) (23.8) (53.8)
Proceeds from issue of shares - - 0.3
Share repurchase (2.6) - (3.7)
Net interest paid (7.1) (2.5) (9.0)
Net lease liabilities paid (4.1) (3.0) (7.3)
Dividend paid to non-controlling
interest - (1.2) (2.8)
--------------------------------------------- ------ ------------- ----------------- ---------------
Net cash (used in)/generated from
financing activities (4.7) 85.1 100.5
Net increase/(decrease) in cash and cash
equivalents 13.9 (0.8) (9.6)
----------------------------------------------------- ------------- ----------------- ---------------
Cash and cash equivalents at the beginning
of the period 80.0 84.1 84.1
Effect of exchange rate changes (4.3) 5.1 5.5
--------------------------------------------- ------ ------------- ----------------- ---------------
Cash and cash equivalents at the end of
the period 89.6 88.4 80.0
----------------------------------------------------- ------------- ----------------- ---------------
* Includes payments for both deferred and contingent
consideration recognised on initial acquisition as well as any
subsequent remeasurements. Payments linked to ongoing employment as
well as business performance are shown within cash generated from
operations
Notes to the Condensed Consolidated Interim Financial
Statements
1. Basis of preparation
Ascential plc (the "Company") is a public limited company, which
is listed on the London Stock Exchange and incorporated and
domiciled in the United Kingdom. These unaudited condensed
consolidated interim financial statements as at and for the six
months to 30 June 2023 comprise the results and financial position
of the Company and its subsidiaries and were approved by the Board
of Directors on 21 September 2023. The condensed consolidated
interim financial statements have been prepared in accordance with
the International Accounting Standard 34 "Interim Financial
Reporting" (IAS 34) as adopted for use in the UK.
As required by the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority, this condensed set of financial
statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of the Company's
published consolidated financial statements for the year ended 31
December 2022 which were prepared in accordance with applicable law
and UK-adopted international accounting standards. These condensed
consolidated half-yearly financial statements do not comprise
statutory accounts within the meaning of Section 435 of the
Companies Act 2006 and should be read in conjunction with the
Annual Report and Accounts 2022. Those accounts were reported upon
by the Group's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified, did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
did not contain statements under Section 498 (2) or (3) of the
Companies Act 2006. The Annual Report and Accounts 2022 are
available upon request from the Company's registered office at 33
Kingsway, London, WC2B 6UF, United Kingdom or at www.ascential.com
.
The condensed consolidated financial statements have been
prepared on a going concern basis (see further details below) and
under the historical cost convention, with the exception of items
that are required by IFRS to be measured at fair value. We have
performed our assessment based on the Group as it is currently
constituted because, at the time of writing, the results of our
strategic review are not yet sufficiently certain. In any case,
these strategic actions would not be expected to have a detrimental
impact on the Group nor any impact on the assessment to prepare the
consolidated financial statements on a going concern basis.
Going concern
After considering the current financial projections and the bank
facilities available, and then applying a severe but plausible
sensitivity, the Directors of the Company are satisfied that the
Group has sufficient resources for its operational needs and will
remain in compliance with the financial covenants in its bank
facilities for at least the next 12 months from the date of
approving these financial statements. The process and key
judgements in coming to this conclusion are set out below.
The Board is required to assess going concern at each reporting
period. These assessments require judgement to determine the impact
of future economic conditions on the Group, including the impact of
any downward recessionary pressures. The Directors have considered
three main factors in reaching their conclusions on going concern -
liquidity, covenants and scenario planning - as set out below.
Liquidity
In January 2020, the Group entered into a 5-year multi-currency
revolving credit facility ("RCF") of GBP450m. The facility expires
in January 2025 and the Group expects to negotiate either an
extension of the existing facility or a replacement facility on
materially similar terms prior to that date. The RCF can be drawn
in tranches for each interest rate period. These tranches of debt
can be rolled over at the end of the interest period subject to
covenant compliance on the request date. The Group expects that it
will be able to continue to rollover its debt at the end of each
interest period over the remaining life of the facility. This
reflects that even in downside stress scenarios that it can take
mitigating actions to maintain compliance with these conditions. As
the Group has the ability and the intent to roll-over the drawn RCF
when due, it has classified these borrowings as a non-current
liability.
This facility provides ample liquidity when judged against the
net debt of the Company of GBP205.6m at 30 June 2023.
Covenants
The more sensitive aspects of the Company's financing are the
application of certain covenant limits and the most sensitive
covenant limit is Net Debt Leverage (broadly, the ratio of Net Debt
to Adjusted pre-IFRS 16 EBITDA). The facility covenants are tested
semi-annually and include (i) a maximum Net Debt Leverage of 3.25x
with the benefit of additional 0.5x leverage spikes for relevant
acquisitions and (ii) a minimum interest cover of 3.00x.
At 30 June 2023, our leverage ratio was 1.6x (or 1.7x on a
covenant basis) compared to the limit of 3.25x, and therefore well
within our banking covenants.
Scenario planning
In assessing going concern, the Directors considered the most
severe but plausible scenario that could impact the business to be
the cancellation of a major event at short notice. This scenario is
not a forecast of the Company and is designed to stress test
liquidity and covenant compliance. The key assumption is that Money
20/20 USA is cancelled in 2023 with minimal notice due to an
unforeseen event. This scenario results in a 0.7x increase and a
0.5x increase to our leverage ratio at the 31 December 2023 and 30
June 2024 testing points respectively.
In their review of the downside scenario, the Directors have
also considered a number of mitigations that would reduce the
leverage ratio further and are at their discretion, including, but
not limited to, the use of equity to meet deferred consideration
obligations, and further restructuring and cost cutting
measures.
In this downside scenario there is sufficient headroom against
all banking covenant tests.
We have performed our assessment based on the Group as it is
currently constituted and do not consider that any plausible
outcome from the Company's ongoing strategic review would result in
a more severe downside scenario.
Accordingly, the Directors continue to adopt the going concern
basis for the preparation of the financial statements.
2. Accounting policies, developments and changes
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those set
out in the Group's Annual Report and Accounts for the year ended 31
December 2022 and will be applied for the year ended 31 December
2023.
The amended standards and interpretations to IFRS effective
during the six months to 30 June 2023 have not had a significant
impact on the Group's accounting policies or reporting.
3. Critical accounting judgements and estimates
The preparation of these financial statements requires
management to exercise judgement in applying the Group's accounting
policies. It also requires the use of estimates and assumptions
that affect the reported amounts of assets, liabilities, income and
expenses. The actual future outcomes may differ from these
estimates and give rise to material adjustments to the reported
results and financial position of the Group. Estimates and
underlying assumptions are reviewed on an ongoing basis, with
revisions recognised in the year in which the estimates are revised
and in any future periods affected. The areas involving a higher
degree of judgement or complexity and assumptions or estimation are
set out below.
Critical accounting judgements
-- Recognition of associates (note 10)
Key sources of estimation uncertainty
-- Measurement of associates (note 10)
-- Valuation of contingent consideration and acquisition-related
employment costs (note 13)
4. Operating segments
The Group has four reportable segments that are used to present
information to the Board (Chief Operating Decision Maker) on a
monthly basis. End market risks and opportunities vary and capital
allocation decisions are made on the basis of four reportable
segments. The four reportable segments are Digital Commerce,
Product Design, Marketing, and Retail & Financial Services. The
reportable segments offer different products and services and are
managed separately as a result of different capabilities,
technology, marketing strategies and end market risks and
opportunities. The following summary describes the continuing
operations in each of the Group's reportable segments:
-- Digital Commerce: measurement, optimisation and execution for digital commerce growth
-- Product Design: consumer product trend forecasting, data and
insight to create world-class products and experiences
-- Marketing: services and tools to measure and optimise
marketing creativity, media and platform effectiveness and
efficiency
-- Retail & Financial Services: events, data and tools to
improve performance and drive innovation in retail and financial
services
Information regarding the results of each reportable segment is
included below.
Reportable segment profits are measured at an Adjusted operating
profit level, representing reportable segment Adjusted EBITDA, less
depreciation costs and amortisation in respect of software
intangibles, without allocation of Corporate costs as reported in
the internal management reports that are reviewed by the Board.
Reportable segment Adjusted EBITDA and reportable segment Adjusted
operating profit are used to measure performance as management
believes that such information is the most relevant in evaluating
the results of the reportable segments relative to other comparable
entities.
Total assets and liabilities for each reportable segment are not
disclosed because they are not provided to the Board on a regular
basis. Total assets and liabilities are internally reviewed on a
Group basis.
Six months to 30 June 2023 (Unaudited)
Retail Continuing
& Financial Digital Product Corporate operations Discontinued
(GBP million) Marketing services Commerce Design costs total operations Total
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ ------
Revenue 104.8 31.3 114.1 57.2 - 307.4 - 307.4
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ ------
Adjusted EBITDA 55.7 8.9 - 27.4 (13.4) 78.6 - 78.6
Depreciation and
software amortisation (1.2) (0.2) (10.0) (1.5) (1.5) (14.4) - (14.4)
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ ------
Adjusted operating
profit/(loss) 54.5 8.7 (10.0) 25.9 (14.9) 64.2 - 64.2
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ ------
Amortisation and
impairment of
acquired intangible
assets (29.0) - (29.0)
Non-trading items (25.7) - (25.7)
Share-based payments (8.8) - (8.8)
----------- ------------ ------
Operating profit/(loss) 0.7 - 0.7
----------- ------------ ------
Share of the loss
of associates (6.8) - (6.8)
Finance costs (16.0) - (16.0)
Finance income 10.3 - 10.3
----------- ------------ ------
Loss before tax (11.8) - (11.8)
----------- ------------ ------
Six months to 30 June 2022 (Unaudited)
Retail Continuing
& Financial Digital Product Corporate operations Discontinued
(GBP million) Marketing services Commerce Design costs total operations Total
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ ------
Revenue 80.8 33.6 95.1 51.2 - 260.7 - 260.7
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ ------
Adjusted EBITDA 43.2 8.8 1.8 24.4 (11.0) 67.2 - 67.2
Depreciation
and software
amortisation (1.4) (0.2) (7.7) (2.2) (1.1) (12.6) - (12.6)
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ ------
Adjusted operating
profit/(loss) 41.8 8.6 (5.9) 22.2 (12.1) 54.6 - 54.6
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ ------
Amortisation
and impairment
of acquired intangible
assets (48.9) - (48.9)
Non-trading items (33.2) - (33.2)
Disposal of business - (0.4) (0.4)
Share-based payments (7.6) - (7.6)
----------- ------------ ------
Operating loss (35.1) (0.4) (35.5)
----------- ------------ ------
Share of the
loss of associates (1.3) - (1.3)
Finance costs (8.0) - (8.0)
Finance income 2.8 - 2.8
----------- ------------ ------
Loss before
tax (41.6) (0.4) (42.0)
----------- ------------ ------
Year to 31 December 2022 (Audited)
Retail Continuing
& Financial Digital Product Corporate operations Discontinued
(GBP million) Marketing services Commerce Design costs total operations Total
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ -------
Revenue 99.2 92.0 226.1 107.1 - 524.4 - 524.4
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ -------
Adjusted EBITDA 40.1 31.6 21.2 49.1 (20.9) 121.1 - 121.1
Depreciation and
software amortisation (2.6) (0.9) (17.8) (3.3) (1.1) (25.7) - (25.7)
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ -------
Adjusted operating
profit/(loss) 37.5 30.7 3.4 45.8 (22.0) 95.4 - 95.4
------------------------ ---------- ------------- --------- ------- --------- ----------- ------------ -------
Amortisation and
impairment of acquired
intangible assets (91.6) - (91.6)
Non-trading items (88.1) (0.9) (89.0)
Disposal of business 6.0 - 6.0
Share-based payments (15.9) - (15.9)
----------- ------------ -------
Operating loss (94.2) (0.9) (95.1)
----------- ------------ -------
Share of the loss
of associates (3.2) - (3.2)
Finance costs (27.1) - (27.1)
Finance income 8.4 - 8.4
----------- ------------ -------
Loss before tax (116.1) (0.9) (117.0)
----------- ------------ -------
Non-trading items costs within continuing operations of GBP25.7m
(31 December 2022: GBP88.1m; 30 June 2022: GBP33.2m) include
Digital Commerce costs of GBP6.4m (31 December 2022: GBP51.1m; 30
June 2022: GBP10.6m), Product Design costs of GBP5.7m (31 December
2022: GBPnil; 30 June 2022: GBPnil), Marketing costs of GBP0.7m (31
December 2022: GBPnil; 30 June 2022: GBPnil), Retail &
Financial Services costs of GBP0.2m (31 December 2022: GBPnil; 30
June 2022: GBPnil) and Corporate costs of GBP12.7m (31 December
2022: GBP37.0m; 30 June 2022: GBP22.6m).
Finance costs, finance income, share of net profit in equity
accounted investees and share-based payments are not allocated to
segments, as these types of activity are driven by the Group
corporate function.
Additional segmental information on revenue
The Group's main revenue streams are those described in the
Annual Report for the year ended 31 December 2022. The Group's
revenue is derived from contracts with customers.
Disaggregation of revenue
The following table shows revenue disaggregated by major service
lines, and the timing of revenue recognition:
Six months Six months Year to 31
to 30 June to 30 June December
2023 2022 2022
Timing of
(GBP million) revenue recognition (Unaudited) (Unaudited) (Audited)
------------------------ --------------------------- --------------------- -------------------- ------------------
Digital Subscriptions
& Platforms Over time 12.6 11.1 23.9
Advisory Over time 4.4 1.9 5.2
Benchmarking Awards Point in time 28.9 25.7 27.8
Events Point in time 58.9 42.1 42.3
Marketing 104.8 80.8 99.2
Digital Subscriptions
& Platforms Over time 2.4 4.5 6.3
Advisory Over time - 1.5 2.3
Events Point in time 28.9 27.6 83.4
Retail & Financial Services 31.3 33.6 92.0
Digital Subscriptions
& Platforms Over time 107.2 89.6 213.9
Advisory Over time 6.9 5.5 12.2
Digital Commerce 114.1 95.1 226.1
----------------------------------------------------- --------------------- -------------------- ------------------
Digital Subscriptions
& Platforms Over time 51.3 45.4 95.9
Advisory Over time 5.9 5.8 11.2
Product Design 57.2 51.2 107.1
----------------------------------------------------- --------------------- -------------------- ------------------
Revenue from continuing
operations 307.4 260.7 524.4
----------------------------------------------------- --------------------- -------------------- ------------------
Seasonality of operations
The Group's results are impacted by seasonality. The majority of
Ascential's revenues come from robust digital subscriptions and
platforms and high repeat advisory revenue streams which contain
little material seasonal fluctuation. However, the Company delivers
a material amount of revenue from Benchmarking Awards and Events
which typically are more weighted to the first half of the
year.
5. Adjusting items
Adjusting items are those which are considered significant by
virtue of their nature, size or incidence and are presented
separately in the consolidated statement of profit and loss to
enable a full understanding of the Group's financial performance.
Adjusting items are not a defined term under IFRS and include the
share-based payment charge, amortisation of intangibles acquired
through business combinations and non-trading items such as costs
incurred for acquisitions and disposals, integration, non-recurring
business restructuring, intangible impairment and capital
restructuring. The tax effect of Adjusting items is also included
within Adjusting items.
Adjusting items included in profit/loss before tax are:
Six months
to Six months Year to
30 June to 31 December
2023 30 June 2022 2022
------------------------------------------
(GBP million) (Unaudited) (Unaudited) (Audited)
------------------------------------------ ----------- ------------- ------------
Revaluation of contingent consideration 17.1 4.6 (1.0)
Acquisition-related employment costs
accrued in the period (7.8) (12.2) (30.4)
------------------------------------------ ----------- ------------- ------------
Total deferred contingent consideration
costs 9.3 (7.6) (31.4)
ERP and Salesforce implementation costs (3.9) (13.3) (21.6)
Strategic review costs (23.0) (8.5) (15.0)
Transaction and integration costs (6.5) (4.3) (16.2)
Profit/(loss) on disposal of businesses (0.2) - 6.0
Property provisions (1.4) 0.5 (3.9)
------------------------------------------ ----------- ------------- ------------
Non-Trading items (25.7) (33.2) (82.1)
Amortisation of acquired intangible
assets (17.3) (17.5) (34.6)
Impairment of acquired intangibles (11.7) (31.4) (57.0)
Share-based payments (8.8) (7.6) (15.9)
------------------------------------------ ----------- ------------- ------------
Adjusting items included within operating
profit/loss (63.5) (89.7) (189.6)
------------------------------------------ ----------- ------------- ------------
The revaluation of contingent consideration in the period
includes a credit relating to the renegotiation of the Perpetua
earnout to facilitate integration with Sellics, removing the link
to future performance. The remainder of the revaluation of deferred
contingent consideration in the period relates to updates to actual
or expected performance for all acquisitions with outstanding
deferred consideration. Acquisition-related employment costs
incurred in the period relate primarily to that element of the
purchase consideration for the acquisitions of Perpetua,
WhyteSpyder, 4K Miles and Intrepid. The related net tax impact is a
charge of GBP6.3m at June 2023.
The Group is concluding a multi-year programme to introduce a
new ERP system and a new instance of Salesforce, both of which are
cloud-based and totalled GBP3.9m (H122: GBP13.3m). These expenses
are deductible for tax purposes and generate a net tax credit of
GBP1.0m. The programme is anticipated to be completed this year.
The cash impact of these costs is an outflow of GBP3.7m.
A significant non-trading item was the costs of the strategic
review totalling GBP23.0m (31 December 2022: GBP15.0m; 30 June
2022: GBP8.5m). The costs relate to resources and professional fees
for project management, tax and legal structuring, US GAAP
conversion and audit, and legal advice as well as severance and
retention incentives for key personnel impacted by the proposed
separation of the Group. The related net tax impact is a credit of
GBP1.8m. The cash impact of these costs is an outflow of
GBP9.8m.
Transaction and integration costs totalling GBP6.5m (31 December
2022: GBP16.2m; 30 June 2022: GBP4.3m) comprise professional fees
for diligence and legal costs; as well as the DC integration costs
which include the costs of integrating acquisitions and GBP1.0m of
costs relating to the creation of an integrated Enterprise Product
bringing together digital platforms. Transaction costs are
generally non-deductible for tax purposes, whilst integration costs
give rise to a tax credit of GBP1.8m. The cash impact of these
costs is an outflow of GBP5.4m.
The loss on disposal of businesses of GBP0.2m represents
additional costs relating to the 2022 sale of Retail Week World
Retail Congress, ("RWRC").
Costs in relation to property impairments and provisions of
GBP1.4m (31 December 2022: GBP3.9m; 30 June 2022: credit of GBP0.5)
reflect impairments of right of use assets and leasehold
improvements and the creation of provisions for operating expenses
that were onerous following a reassessment of the Group's property
requirements. These costs are non-deductible for tax accounting
purposes and had no cash impact on the Group in 2023.
6. Finance costs and finance income
Six months to Six months to Year to
30 June 2023 30 June 2022 31 December 2022
---------------------------------------------------------
(GBP million) (Unaudited) (Unaudited) (Audited)
--------------------------------------------------------- -------------- -------------- ------------------
Interest on deposits, investments and debt securities 8.0 0.9 3.6
Fair value gain on derivative financial instruments - 1.9 4.3
Foreign exchange gain on cash and cash equivalents - 0.1 0.5
--------------------------------------------------------- -------------- -------------- ------------------
Adjusted finance income 8.0 2.9 8.4
Foreign exchange on deferred consideration 2.3 - -
--------------------------------------------------------- -------------- -------------- ------------------
Adjusting finance income 2.3 - -
--------------------------------------------------------- -------------- -------------- ------------------
Total finance income from continuing operations 10.3 2.9 8.4
--------------------------------------------------------- -------------- -------------- ------------------
Interest payable on external borrowings (9.9) (3.1) (9.6)
Amortisation of arrangement fees (0.4) (0.4) (0.8)
Fair value loss on derivative financial instruments (2.0) - -
Discount unwind on deferred and contingent consideration (2.7) (4.1) (10.3)
Discount unwind of lease liability (0.5) (0.5) (1.1)
Foreign exchange loss on cash and cash equivalents (0.5) - -
--------------------------------------------------------- -------------- -------------- ------------------
Adjusted finance costs (16.0) (8.1) (21.8)
Foreign exchange on deferred consideration - - (1.3)
Remeasurement of trade investments to fair value - - (4.0)
--------------------------------------------------------- -------------- -------------- ------------------
Adjusting finance costs - - (5.3)
--------------------------------------------------------- -------------- -------------- ------------------
Total finance costs from continuing operations (16.0) (8.1) (27.1)
--------------------------------------------------------- -------------- -------------- ------------------
Net finance costs from continuing operations (5.7) (5.2) (18.7)
--------------------------------------------------------- -------------- -------------- ------------------
7. Tax on profit on ordinary activities
The total tax charge for the period is GBP5.0m (30 June 2022:
credit of GBP3.6m) which comprises a tax charge of GBP15.2m on
Adjusted profits and a tax credit of GBP10.2m on Adjusting
items.
The tax charge on Adjusted profits for the period has been
calculated by applying the expected full year rate of 30.5% (30
June 2022: 25.3%) to the results for the six months ended 30 June
2023.
A tax credit of GBP10.2m is recorded in relation to Adjusting
items for the six months ended 30 June 2023 (30 June 2022:
GBP15.8m; 31 December 2021: GBP32.3m). A deferred tax charge of
GBP1.1m (30 June 2022: GBP0.9m; 31 December 2022: GBP2.8) is
recognised in equity relating to share-based payments.
The total tax charge for the period comprises:
Six months to 30 June 2023 Six months to 30 June 2022 Year to 31 December 2022
(GBP million) (Unaudited) (Unaudited) (Audited)
----------------------------- ---------------------------- --------------------------- -------------------------
Current tax
UK tax (charge)/credit on
income for the period (1.6) - 7.8
Overseas tax charge on income
for the period - (1.2) (3.0)
Adjustments in respect of
prior years - - (0.3)
----------------------------- ---------------------------- --------------------------- -------------------------
Total current tax
(charge)/credit (1.6) (1.2) 4.5
----------------------------- ---------------------------- --------------------------- -------------------------
Deferred tax
Current period
(charge)/credit (3.4) 5.0 5.9
Adjustments in respect of
prior years - (0.2) 0.7
Impact of rate changes on
opening balances - - 0.2
----------------------------- ---------------------------- --------------------------- -------------------------
Total deferred tax
(charge)/credit (3.4) 4.8 6.8
----------------------------- ---------------------------- --------------------------- -------------------------
Total tax (charge)/credit (5.0) 3.6 11.3
----------------------------- ---------------------------- --------------------------- -------------------------
Total effective tax rate nm* 8.5% 10.0%
----------------------------- ---------------------------- --------------------------- -------------------------
*Tax charge on loss results in an effective tax rate that is not
meaningful.
The deferred tax balances shown in the consolidated statement of
financial position are analysed as follows.
30 June 31 December
2023 30 June 2022 2022
(GBP million) (Unaudited) (Unaudited) (Audited)
------------------------- ------------ ------------- ------------
Deferred tax assets 54.5 63.2 60.3
Deferred tax liabilities (7.0) (14.1) (8.6)
------------------------- ------------ ------------- ------------
Total 47.5 49.1 51.7
------------------------- ------------ ------------- ------------
The GBP4.2m net movement in deferred tax from 31 December 2022
comprises;
-- a charge of GBP9.9m arising on utilisation of tax assets
related to US acquisition intangibles and losses,
-- a credit of GBP6.4m which relates largely to the unwinding of
the deferred tax liability on consolidated intangibles as a result
of amortisation in the period and share-based payments; and
-- a charge arising on foreign exchange movements of GBP0.7m on
deferred tax assets, net of liabilities held in US dollar.
At 30 June 2023, within the GBP47.5m net deferred tax asset, the
Group had utilisable losses in the US and UK with a future tax
impact of GBP26.2m (31 December 2022: GBP30.5m). The movement from
the year end arises due to the utilisation of tax losses in the UK.
Our ability to utilise losses in future years is primarily driven
by the level of taxable profits arising in the US and UK and we
expect our deferred tax assets to convert into cash savings over
the next ten years with the majority being recovered over the next
four years.
8. Earnings per share
The calculations of basic and diluted EPS are based on the
profit attributable to ordinary shareholders and a weighted average
number of shares outstanding during the related period.
The weighted average number of ordinary shares in issue during
the period, excluding those held by Employee Benefit Trusts, was
440.2million (30 June 2022: 439.0 million and 31 December 2022:
440.0 million). There is no dilutive impact from potential ordinary
shares as potential ordinary shares can only be considered dilutive
when their inclusion would decrease earnings or increase loss per
share.
Six months to Six months to 30 Year to 31 December
30 June 2023 June 2022 2022
(Unaudited) (Unaudited) (Audited)
---------------------------- --------------------------- --------------------------- ---------------------------
Adjusted Adjusting Adjusted Adjusting Adjusted Adjusting
Results Items Total Results Items Total Results Items Total
---------------------------- -------- --------- ------ -------- --------- ------ -------- --------- ------
Profit/(loss) attributable
to owners of the Company
(GBP million)
Profit/(loss) for the
year- continuing
operations 33.9 (50.4) (16.5) 35.3 (73.1) (37.8) 56.6 (152.1) (95.5)
Profit/(loss) for the
year - discontinued
operations - - - - (0.4) (0.4) - (0.9) (0.9)
---------------------------- -------- --------- ------ -------- --------- ------ -------- --------- ------
Profit/(loss) for
the year 33.9 (50.4) (16.5) 35.3 (73.5) (38.2) 56.6 (153.0) (96.4)
Share number (million)
Basic and diluted weighted
average number of shares 440.2 440.2 440.2 439.0 439.0 439.0 440.0 440.0 440.0
---------------------------- -------- --------- ------ -------- --------- ------ -------- --------- ------
Earnings/(loss) per
share (basic and diluted,
pence)
Continuing operations 7.7 (11.5) (3.8) 8.0 (16.6) (8.6) 12.9 (34.6) (21.7)
Discontinued operations - - - - (0.1) (0.1) - (0.2) (0.2)
---------------------------- -------- --------- ------ -------- --------- ------ -------- --------- ------
Total operations 7.7 (11.5) (3.8) 8.0 (16.7) (8.7) 12.9 (34.8) (21.9)
---------------------------- -------- --------- ------ -------- --------- ------ -------- --------- ------
9. Goodwill and intangibles
At 30 June 2023, the Group had GBP849.2m of goodwill and
acquired intangibles and GBP46.6m of software (31 December 2022:
GBP912.1m and GBP41.4m; 30 June 2022: GBP937.2m and GBP42.5m).
Movements in goodwill and acquired intangibles included a decrease
of GBP33.9m from unfavourable foreign exchange movements,
amortisation charge of GBP17.3m and impairment charge of GBP11.7m
which was primarily driven by the impairment of acquired brand
intangible assets within the Digital Commerce segment, following
the decision to rebrand Digital Commerce entities under the
Flywheel brand.
The goodwill attributed to each of the Group's cash generating
units (CGUs) and group of CGUs are assessed for impairment at least
annually. Regardless of whether goodwill has been allocated to a
CGU, CGUs may be assessed for impairment more frequently than
annually where there are indicators of impairment. If such
indicators exist, an estimate of the CGU's recoverable amount is
determined. The recoverable amount is the higher of value in use
and fair value less costs of disposal.
10. Investments in associates
(GBP million) Total
At 1 January 2023 88.5
Acquisition of investments 2.8
Share of the loss of associates (6.8)
Disposal and conversion of investment in associates (58.1)
Movements in exchange rates (1.5)
At 30 June 2023 24.9
------------------------------------------------------ -------
Investments as at 30 June 2023 were made up as follows:
(GBP million) Total
-------------------------------------------------------- ------
Trade investments measured at fair value through profit
or loss 11.6
Associates accounted for using the equity method 13.3
--------------------------------------------------------- ------
Investments as at 30 June 2023 24.9
--------------------------------------------------------- ------
Our investments in associates include investments in Hudson MX
Holdings, Inc ('Hudson'), Shanghai Coloro Technology Co and several
trade investments, with Cognitive Logic Inc. ("Infosum") being the
most significant among them.
Ascential has a GBP10.3m investment in Hudson in addition to
preference shares receivables of GBP87.7m included in note 11 (31
December 2022: GBP73.8m investment in addition to GBP42.7m of
secured and unsecured debt), an advertising software business
providing media buying and accounting solutions through a
cloud-based SaaS platform. This investment of GBP10.3m consists of
ordinary shares net of equity-accounted share of the profit or
loss.
In February 2023 Hudson completed a new financing round and
executed a capital restructuring. It resulted in MT II Holdings, LP
("MT II") becoming the majority shareholder in Hudson, holding
51.0% of the fully diluted common equity and Ascential holding a
36.5% interest. The remaining 12.5% is held by Hudson's management
team and existing shareholders and does not carry voting rights. As
part of this, Ascential received GBP24.9m in cash from MT II for a
portion of its preference stock investment (which MT II then
converted into common stock) and converted the remaining GBP51.0m
of the preference stock investment into debt-like instruments, as
disclosed in note 11 (GBP33.2m), and into common stock (GBP17.8m) .
At the same time, the promissory notes that were previously held
were also converted into the se debt-like preference shares .
The Group has agreed arrangements that provide a potential path
to a majority stake in the future. These arrangements include
providing MT II with a put option over 42.5% of their 51.0%
stockholding, exercisable by MT II from 1 April 2024 to 31 December
2025 and, if executed, subject to a maximum consideration payable
by Ascential of US$52m and minimum consideration of between US$38m
and US$52m depending on the time period the option is held for. The
Group has assessed the value of this derivative liability to be not
significant at the transaction date and reporting date and will
continue to assess the value at each future reporting date until
the option is exercised or lapses. In making this assessment, the
Directors evaluated various potential plausible outcomes, including
less favourable scenarios, and found that this did not lead to a
significant change in the value of the derivative liability. If
exercised, this put option would result in Ascential holding a 79%
common equity interest in Hudson, at which point it is expected
Ascential would control Hudson and would then be required to
consolidate its results. If the put option is exercised then
Ascential will be able to call the remaining 8.5% equity shares
held by MT II at any time in the subsequent two years.
Separately, Ascential has established put and call options to
acquire the remaining management and external investors'
shareholdings, totalling 12.5%, which are exercisable between
February 2026 and December 2028, subject to a maximum consideration
of US$40m. Full execution of these options would result in the
Group holding a 49% equity stake in Hudson. The Group has
considered the value of these options to be not significant at the
transaction date and reporting date and will continue to assess
their values at each future reporting date until the options are
exercised or lapse.
Both MT II and the Group have committed to funds of up to an
aggregate value of US$51.5m into Hudson through non-voting
preference stock, proportionate to their common equity holdings.
The Group's commitment in this respect is GBP17.9m (equivalent of
$21.5m) of which GBP8.0m had been drawn at the period end.
Subsequent to 30 June 2023 a further GBP9.9m has been provided.
Summarised financial information for the Hudson entity for the 6
months to 30 June 2023 is as follows. The balance sheet includes
current assets of GBP6.8m, non-current assets of GBP111.7m, current
liabilities of GBP9.2m and non-current financial liabilities of
GBP113.1m. These figures include cash and cash equivalents of
GBP6.0m. The income statement includes a loss from operations of
GBP22.2m. Included in these amounts are depreciation and
amortisation of GBP6.8m and interest expense of GBP6.7m.
Critical accounting judgement: Recognition of associates
The assessment of whether the Group has control or significant
influence over Hudson is considered a critical accounting judgement
which, following the Hudson's refinancing in February 2023 has been
reassessed. The assessment of the position prior to February 2023
is described on page 161 of the Ascential plc Annual Report
2022.
Assessment of Control
We have considered whether the nature of the relationship with
Hudson, rights under the terms of the common stock investments or
any other factors would indicate that Ascential has control over
Hudson. We have considered the requirements under IFRS 10
"Consolidated Financial Statements" to assess if the Group
exercises control over Hudson during the reporting period and at
the reporting date as follows:
-- Power over the investee
We have assessed that Ascential cannot exercise power over
Hudson due to the lack of ability to direct the relevant activities
of Hudson because its entitlement to two board seats and 41.1%
voting rights does not give it majority power.
We have assessed that our customary protective veto rights over
significant changes to Hudson, including actions which could change
the credit risk of the business such as changes to capital
structure, asset disposals, dividend declaration and attraction of
external funding, are protective in nature and relate to
fundamental changes to Hudson that only apply in exceptional
circumstances.
While Ascential may acquire control of Hudson in the future if a
put option held by MT II Holdings LLP is exercised, this is not
within the control of Ascential and therefore does not indicate
control. Ascential has two call options neither of which would
result in it holding a majority of the voting rights of Hudson and
neither are considered to be substantive at the reporting date.
In 2023 as part of Hudson's refinancing, we increased our
funding to Hudson. The funding was provided in a form of investment
in preference shares on an arm's length basis, without conversion
or equity rights, repayable by maturity date and at a market rate
of interest. The increase in funding does not change our
determination of control under IFRS 10 as the terms are comparable
to those that Hudson would be able to obtain from an institutional
lender given the risk profile and life cycle of the business. Our
continued funding in 2023 to Hudson has helped protect the
underlying investment in the business.
-- Exposure or rights to variable returns from its involvement with the investee
We have assessed that the Group is exposed to variable returns,
primarily through the common stock equity instruments held during
the reporting period.
-- The ability to use its power over the investee to affect the
amount of the investor's returns
We have concluded that although the Group has exposure to the
variable returns from the investment, it does not have actual or
potential rights to direct the relevant activities of Hudson and
therefore the Group does not have power over the investment.
We have therefore concluded that Ascential's investment in
Hudson does not meet the definition of control as at 30 June
2023.
Assessment of Significant Influence
Following our consideration of control, we then considered the
requirements of IAS 28 "Investments in Associates and Joint
Ventures" to determine whether Hudson should be treated as an
equity-accounted associate or as a trade investment. This decision
is determined by our assessment of ability (or otherwise) to
participate in the financial and operating policy decisions of
Hudson.
Following the restructuring of our investment in Hudson in
February 2023, Ascential holds 36.5% of the common stock and 41.1%
of the voting rights in Hudson, together with two of the five board
positions. The Group has therefore determined that it has
significant influence over Hudson and accounts for its investment
using the equity method under IAS28.
Critical accounting estimate: Measurement of associates
Following its refinancing in February 2023 the Group's
investment in Hudson comprises common and preference stock.
The common stock we own is accounted for by applying equity
accounting under IAS 28 "Investments in Associates and Joint
Ventures", including recording our share of the results of Hudson
in proportion to our common stockholding. The equity investment
amounts to GBP10.3m at the reporting date (31 December 2022:
GBP73.8m) after accounting for our share of Hudson's losses
amounting to GBP6.8m (30 June 2022: GBP0.9m).
We have determined that the preference stock we own is treated
as a debt instrument held at amortised cost under IFRS9 "Financial
Instruments", rather than an equity instrument. This is because the
contractual terms give rise to cash flows on specified dates that
are solely payments of principal and interest on the principal
amount outstanding and that the cash flows are consistent with
normal lending arrangements for an early-stage investment. The debt
investment amounts to GBP87.7m at the reporting date (31 December
2022: GBP42.7m of secured and unsecured debt) and is disclosed as a
non-current other receivable (see note 11).
The valuation of the investment in and options over Hudson
shares is subject to estimation and is informed by unobservable
data points, including external market evidence and Hudson's
refinancing that took place in February 2023 on an arm's length
basis with a market participant. An assessment of the sensitivity
of the valuation of the investment indicated that a 5% increase /
decrease in the equity valuation of Hudson would not materially
affect the value of our investment on 30 June 2023.
11. Trade and other receivables
30 June 30 June 31 December
2023 2022 2022
(GBP million) (Unaudited) (Unaudited) (Audited)
------------------------------------- -------------- ------------- ------------
Other receivables 87.7 - 42.7
------------------------------------- -------------- ------------- ------------
Total non-current other receivables 87.7 - 42.7
------------------------------------- -------------- ------------- ------------
30 June 30 June 31 December
2023 2022 2022
(GBP million) (Unaudited) (Unaudited) (Audited)
------------------------------------------- -------------- ------------- ------------
Trade receivables, net of the allowance
for doubtful debts 78.6 94.9 112.1
Prepayments 18.9 24.0 9.6
Contract assets - accrued income 25.6 21.4 18.4
Other receivables 194.0 162.6 204.8
------------------------------------------- -------------- ------------- ------------
Total current trade and other receivables 317.1 302.9 344.9
------------------------------------------- -------------- ------------- ------------
Non-current receivables represent the investment in Hudson
preference shares (2022: secured and unsecured debt). Refer to note
10 for further detail.
Other receivables principally include amounts due from customers
for pass-through costs of GBP182.5m (31 December 2022: GBP194.6m)
in relation to the purchase of media on their behalf. These costs
comprise amounts payable to external suppliers which are charged
directly to clients. The amounts due to external suppliers in these
relationships are recognised in other payables (see note 12).
12. Trade and other payables
30 June 30 June 31 December
2023 2022 2022
(GBP million) (Unaudited) (Unaudited) (Audited)
--------------------------------- -------------- ------------- ------------
Trade payables 11.2 12.9 18.0
Other payables 182.8 134.3 203.5
Accruals 68.5 59.2 48.1
Interest accruals 0.8 0.6 0.9
Taxes and social security costs 6.6 11.9 7.1
--------------------------------- -------------- ------------- ------------
Total trade and other payables 269.9 218.9 277.6
--------------------------------- -------------- ------------- ------------
Other payables include amounts due to external suppliers in
relation to pass-through costs of GBP170.9m (31 December 2022:
GBP193.7m). Pass-through costs comprise amounts payable to external
media suppliers which are charged directly to clients. The amounts
due from customers in these relationships are recognised in other
receivables (see note 11).
13. Deferred contingent consideration
The Group has liabilities in respect of deferred contingent
consideration payments under various business acquisition contracts
as set out below.
(GBP million) Note Total
------------------------------------------------------ ----- -------
At 31 December 2022 (Audited) 108.1
Acquisition-related employment costs accrued
in the period 5 7.8
Revaluation of contingent deferred consideration
recognised in the consolidated statement of
profit and loss 5 (17.1)
Discount unwind on contingent deferred consideration 6 2.7
Acquisition-related employment cost paid in
the period (16.6)
Deferred consideration paid in the period (14.3)
Effect of movements in exchange rates (5.6)
------------------------------------------------------ ----- -------
At 30 June 2023 (Unaudited) 65.0
------------------------------------------------------ ----- -------
At 30 June 2023, GBP34.9m of deferred contingent consideration
was categorised as level 3 in the fair value hierarchy of financial
instruments (31 December 2022: GBP66.8m). Uncertainty in the
economic environment has increased the level of uncertainty in the
Group's projections with a consequent impact on the potential range
of these level 3 valuations. The balance is also impacted by
economic uncertainty in the markets we operate. It is therefore
possible that this uncertainty could result in the recognition of
materially higher or lower contingent consideration.
Both contingent consideration and acquisition-related employment
costs are based on the future performance of the acquired business
to which they relate. Performance is assessed using forecast
revenues and the five-year plan which is updated annually.
Forecasts are inherently a source of management estimation,
resulting in a range of outcomes. During the period, the Perpetua
earnout, which is one of the largest payments, was renegotiated to
remove the link to future performance, which reduces the
uncertainty considerably; a link to employment for a portion of the
earnout remains. The majority of the remaining balance relates to
the 4K Miles and WhyteSpyder earnouts. A 10% increase in the
results of these businesses in all remaining years would result in
an additional payment of around GBP8.9m over 2024 to 2025. A 10%
reduction in the revenue of these businesses in all remaining years
would result in a lower payment of around GBP7.9m over 2024 to
2025.
14. Borrowings
Details of the Company's borrowing facilities are set out in
note 1.
Reconciliation of movement in net debt
Short-term External
(GBP million) Cash Cash in transit deposits Interest rate caps Borrowings Net debt*
------------------- ------ ---------------- ------------------ ------------------- ------------------ ----------
At 31 December
2022 (Audited) 59.0 0.9 20.1 4.5 (301.2) (216.7)
Exchange
differences (4.3) - - - 12.3 8.0
Repayment of
external
borrowings - - - - 48.0 48.0
Proceeds from
external
borrowings - - - - (57.1) (57.1)
Fair value
movement - - - (2.0) - (2.0)
Net interest
accrued - - - 1.6 - 1.6
Amortisation of
debt arrangement
fees - - - - (0.4) (0.4)
Net cash movement 0.4 (0.3) 13.8 (0.9) - 13.0
------------------- ------ ---------------- ------------------ ------------------- ------------------ ----------
At 30 June 2023
(Unaudited) 55.1 0.6 33.9 3.2 (298.4) (205.6)
------------------- ------ ---------------- ------------------ ------------------- ------------------ ----------
* Refer to the Glossary of Alternative Performance Measures for
the definition of Net Debt.
Borrowings are shown net of unamortised issue costs of GBP1.2m
(31 December 2022: GBP1.6m). The carrying amounts of borrowings
approximate their fair value. The Group's borrowings at 30 June
2023 were $279.0m and EUR93.0m (31 December 2022: $233.0m and
EUR124.5m).
15. Related parties
Other than as described elsewhere in these financial statements,
there are no material related party transactions requiring
disclosure under IAS 24 "Related Party Disclosures" other than
compensation of key management personnel, which will be disclosed
in the Group's Annual Report for the year ended 31 December
2023.
16. Principal risks and uncertainties
The principal risks and uncertainties that affect the Group are
described in detail on pages 51 to 55 of the 2022 Annual Report and
the Board considers that these risks and uncertainties continue to
be the most relevant risks and uncertainties faced by the
Company.
Economic and geopolitical risk continues to be assessed as high
given persistent inflationary pressure and risk of economic
downturn or recession to varying degrees depending on the geography
where Ascential has clients and conducts business. Recession
modelling and scenario planning is a key part of the Budget process
and is kept under review as economic conditions change. The impact
of recession is distributed across Ascential brands with some
brands' propositions more attractive in a recessionary
environment.
We also note the inevitable pressures on certain employees from
uncertainty arising from the January 2023 announcement about the
Board's strategic review process. We mitigate the impact of this on
our people by limiting the number of colleagues directly involved
in the process and active awareness of employee health and
well-being. Details of the support we provide are included in the
"Our People" section of the 2022 Annual Report.
We consider that the Acquisitions and Disposals risk has
increased since 31 December 2022 as we execute our strategic
actions, in particular the disposal of WGSN and separation of our
Digital Commerce business. We are pleased with progress to date and
continue to actively manage the process to mitigate execution risk
with the support of our financial and legal advisors.
The Board and management are mindful that factors that increase
and decrease risk assessments and related mitigation may change
quickly. We continue to monitor the risk landscape and the
Company's mitigation strategies. The Company is aware that a number
of risks and uncertainties could have a material impact on the
Group's performance over the remaining months of the financial year
and could cause actual results to differ from expected and
historical results.
17. Events after the reporting period
Investment in Contagious Communications
On 31 July 2023 the Group acquired Contagious Communications and
its holding company Steel River Media Limited. Contagious is a
multi-format creative insights business that provides
forward-looking creative inspiration and trend analysis for their
agency and brand customers and will form part of the Marketing
segment.
The consideration for the acquisition was GBP8m net of cash
acquired, subject to adjustment based on the working capital to be
determined upon the finalisation of completion accounts for the
acquired entities. Owing to the acquisition's proximity to the
issuance date of the interim condensed consolidated financial
statements, the Group has yet to conclude the purchase price
accounting pertaining to this acquisition.
ALTERNATIVE PERFORMANCE MEASURES
Ascential aims to maximise shareholder value by optimising the
potential for return on capital through strategic investment and
divestment, by ensuring the Company's capital structure is managed
to support both strategic and operational requirements, and by
delivering returns through a focus on organic growth and
operational discipline. The Board considers it helpful to provide,
where practicable, additional performance measures that distinguish
between these different factors - these are also the measures that
the Board uses itself to assess the performance of the Company, on
which the strategic planning process is founded and on which
management incentives are based. Accordingly, this report presents
the following non-GAAP measures alongside standard accounting terms
as prescribed by IFRS and the Companies Act, in order to provide
this useful and additional information.
Adjusted profit measures
The Group uses Adjusted profit measures to assist readers in
understanding underlying operational performance. These measures
exclude income statement items relating to items arising from
portfolio investment and divestment decisions, and from changes to
capital structure. Such items arise from events which are
non-recurring or intermittent, and while they may generate
substantial income statement amounts, do not relate to the ongoing
operational performance that underpins long-term value generation.
The income statement items that are excluded from Adjusted profit
measures are referred to as Adjusting items. Both Adjusted profit
measures and Adjusting items are presented together with statutory
measures on the face of the profit and loss statement.
The Group presents a non-GAAP profit measure, Adjusted EBITDA,
in order to aid, where possible, comparisons with peer group
companies and provide a reference point for assessing the
operational cash generation of the Group. Adjusted EBITDA is
defined as Adjusted Operating Profit before depreciation and
amortisation. The Group measures operational profit margins with
reference to Adjusted EBITDA. As Adjusted results include the
benefits of portfolio investment and divestment decisions but
exclude significant costs (such as amortisation of acquired
intangibles and Non-Trading items), they should not be regarded as
a complete picture of the Group's financial performance, which is
presented in its Total results. The exclusion of other Adjusting
items may result in Adjusted results being materially higher or
lower than Total results.
Adjusting items are not a defined term under IFRS, so may not be
comparable to similar terminology used in other companies'
financial statements and should not be viewed in isolation but as
supplementary information. Details of the charges and credits
presented as Adjusting items are set out in Note 5 to the financial
statements. The basis for treating these items as Adjusting is as
follows:
Non-Trading items
Non-Trading items are recorded in accordance with the Group's
policy set out in Note 5 to the financial statements. They arise
from portfolio investment and divestment decisions, from changes to
the Group's capital structure, as well as material events that are
expected to be outside the course of ordinary operating activities,
(e.g. deferred consideration, integration costs and professional
fees on acquisitions). They do not reflect underlying operational
performance.
Amortisation of intangible assets acquired through business
combinations
Charges for amortisation of acquired intangibles arise from the
purchase consideration of a number of separate acquisitions. These
acquisitions are portfolio investment decisions that took place at
different times over many years, so the associated amortisation
does not reflect current performance.
Share-based payments
Ascential operates several employee share schemes. Income
statement charges or credits relating to such schemes are a
significant non-cash charge or credit and are driven by a valuation
model which references the Ascential share price and future
performance expectations. The income statement charge or credit is
consequently subject to volatility and does not fully reflect
current operational performance.
Gains and losses on disposal
Gains and losses on disposal of businesses arise from divestment
decisions that are part of strategic portfolio management and do
not reflect current operational performance.
Finance costs
As part of the Group's early refinancing of its 2016 debt
facility in 2020, unamortised arrangement fees relating to the
previous facility were written off and fees for subsequent
Covid-related covenant amendments were also incurred. These one-off
items do not reflect the current operational performance of the
Group. In addition, the foreign exchange gains and losses on
deferred consideration liabilities are treated as adjusting items
in line with other income statement items relating to revaluation
of deferred consideration.
Tax related to Adjusting items
The elements of the overall Group tax charge relating to the
Adjusting items are also, for consistency, treated as Adjusting.
These elements of the tax charge are calculated with reference to
the specific tax treatment of each Adjusting item, taking into
account its tax deductibility, the tax jurisdiction concerned, and
any previously recognised tax assets or liabilities.
Adjusted cash flow measures
The Group uses Adjusted cash flow measures for the same purpose
as Adjusted profit measures. The two measures used are Adjusted
Cash Generated from operations, and Free Cash Flow. The Group
monitors its operational efficiency with reference to operational
cash conversion. These are reconciled to IFRS measures as
follows:
GBP'm H123 H122
-------------------------------------------------------- ------- -------
Cash generated from operations 42.2 42.8
Add back: acquisition-related contingent consideration
cash flow 16.6 18.0
Add back: other non-trading cash flow 19.0 24.9
-------------------------------------------------------- ------- -------
Adjusted cash generated from operations 77.8 85.7
-------------------------------------------------------- ------- -------
Adjusted EBITDA 78.6 67.2
Operating cash conversion 99% 128%
Net cash generated from operating activities 41.2 43.2
Less: capital expenditure (19.9) (13.9)
Add back: acquisition-related contingent consideration
cash flow 16.6 18.0
Add back: other non-trading cash flow 19.0 24.9
Free cash flow 56.9 72.2
Adjusted EBITDA 78.6 67.2
-------------------------------------------------------- ------- -------
Free cash flow conversion 72% 107%
-------------------------------------------------------- ------- -------
Net Debt
Net Debt is calculated as follows:
GBP'm H123 2022 H122
----------------------------------- ------ ------- ------
Borrowings 299.6 302.8 265.2
Capitalised arrangement fees (1.2) (1.6) (2.0)
Derivative financial instruments (3.2) (4.5) (2.1)
Cash (89.6) (80.0) (88.4)
----------------------------------- ------ ------- ------
Net debt 205.6 216.7 172.7
----------------------------------- ------ ------- ------
Leverage
The ratio of net debt to EBITDA is calculated as follows:
GBP'm H123 2022 H122
---------------------------------------- ------ ------ ------
Adjusted EBITDA 78.6 121.1 67.2
Less: Rent expense (3.4) (7.0) (3.5)
---------------------------------------- ------ ------ ------
Adjusted EBITDA (pre-IFRS16) 75.2 114.1 63.7
Adjusted EBITDA (pre-IFRS16) H2 2022 /
2021 50.4 - 44.1
---------------------------------------- ------ ------ ------
Adjusted EBITDA (pre-IFRS16) for last
12 months 125.6 114.1 107.8
Net debt 205.6 216.7 172.7
---------------------------------------- ------ ------ ------
Leverage ratio 1.6x 1.9x 1.6x
---------------------------------------- ------ ------ ------
The Group also monitors leverage using definitions included in
the Group's banking covenants which are subject to proforma
adjustments for acquisitions. Using these covenant definitions, the
leverage ratio at the end of June 2023 was 1.7x.
Organic growth measures
To assess whether the Company is achieving its strategic goal of
driving organic growth, it is helpful to compare like-for-like
operational results between periods. Income statement measures,
both Adjusted and Reported, can be significantly affected by the
following factors which mask like-for-like comparability:
-- acquisitions and disposals of businesses lead to a lack of
comparability between periods due to consolidation of only part of
a year's results for these companies;
-- discontinuation or curtailment of products or the move of
event products between different periods; and
-- changes in exchange rates used to record the results of
non-sterling businesses result in a lack of comparability between
periods as equivalent local currency amounts are recorded at
different sterling amounts in different periods.
Ascential therefore defines Organic growth measures, which are
calculated with the following adjustments:
-- results of acquired and disposed businesses are excluded
where the consolidated results include only part-year results in
either current or prior periods;
-- results are normalised for events that move between H1 and H2, if applicable;
-- results of specific product lines are excluded if wholly or partly discontinued; and
-- prior year and current year consolidated results are restated
at constant currency for non-sterling businesses.
Organic growth is calculated as follows:
Marketing Retail Digital Product Corporate Total
H123 & Financial Commerce Design Costs
GBP'm Services
--------------------- ---------- ------------- ---------- -------- ---------- -------
Revenue
H123 - reported 104.8 31.3 114.1 57.2 - 307.4
Acquisitions - - (11.4) - - (11.4)
Other adjustments* - - (1.3) - - (1.3)
H123 - Organic
basis 104.8 31.3 101.4 57.2 - 294.7
--------------------- ---------- ------------- ---------- -------- ---------- -------
Organic revenue
growth 28% 17% 10% 8% - 16%
H122 - reported 80.8 33.6 95.1 51.2 - 260.7
Disposals - (5.6) - - - (5.6)
Other adjustments* - - (7.7) - - (7.7)
Transfers** - (1.4) 1.4 - - -
Currency adjustment 1.2 0.2 3.7 1.8 6.9
H122 - Organic
basis 82.0 26.8 92.5 53.0 - 254.3
--------------------- ---------- ------------- ---------- -------- ---------- -------
Adjusted EBITDA
H123 - reported 55.7 8.9 - 27.4 (13.4) 78.6
Acquisitions - - 3.3 - - 3.3
Other adjustments* - - 4.0 - - 4.0
H123 - Organic
basis 55.7 8.9 7.3 27.4 (13.4) 85.9
--------------------- ---------- ------------- ---------- -------- ---------- -------
Organic EBITDA
growth 28% 15% 0% 8% (29%) 17%
H122 - reported 43.2 8.8 1.8 24.4 (11.0) 67.2
Disposals - (0.8) - - - (0.8)
Other adjustments* - - 4.6 - - 4.6
Transfers** - (0.2) 0.2 0.2 (0.2) -
Currency adjustment 0.2 - 0.6 0.8 0.8 2.4
--------------------- ---------- ------------- ---------- -------- ---------- -------
H122 - Organic
basis 43.4 7.8 7.2 25.4 (10.4) 73.4
--------------------- ---------- ------------- ---------- -------- ---------- -------
* Other adjustments relate to Edge Digital Shelf and Sellics
Non-Advertising discontinued products.
** Transfers relate to moving Retail Insight into Digital
Commerce from RFS and the transfer of lease property costs from
Product Design to the Corporate segment.
Proforma growth measures
Proforma growth is measured in a similar way to Organic growth
but assumes that the Company's acquisitions or disposals were all
made on the first day of the comparative accounting period and is a
measure of the rate of growth of the brands owned today. Proforma
growth is calculated as follows:
Marketing Retail Product Total
H123 & Financial Digital Design Corporate
GBP'm Services Commerce Costs
--------------------- ---------- ------------- ---------- -------- ---------- ------
Revenue
H123 - reported 104.8 31.3 114.1 57.2 - 307.4
Other adjustments* - - (1.3) - - (1.3)
H123 - Proforma
basis 104.8 31.3 112.8 57.2 - 306.1
--------------------- ---------- ------------- ---------- -------- ---------- ------
Proforma revenue
growth 28% 17% 11% 8% - 16%
H122 - reported 80.8 33.6 95.1 51.2 - 260.7
Acquisitions - - 8.8 - - 8.8
Disposals - (5.6) - - - (5.6)
Other adjustments* - - (7.8) - - (7.8)
Transfers** - (1.4) 1.4 - - -
Currency adjustment 1.2 0.2 4.4 1.8 - 7.6
H122 - Proforma
basis 82.0 26.8 101.9 53.0 - 263.7
--------------------- ---------- ------------- ---------- -------- ---------- ------
Adjusted EBITDA
H123 - reported 55.7 8.9 - 27.4 (13.4) 78.6
Other adjustments* - - 4.0 - - 4.0
H123 - Proforma
basis 55.7 8.9 4.0 27.4 (13.4) 82.6
--------------------- ---------- ------------- ---------- -------- ---------- ------
Proforma EBITDA
growth 28% 15% 6% 8% (29%) 18%
H122 - reported 43.2 8.8 1.8 24.4 (11.0) 67.2
Acquisitions - - (3.5) - - (3.5)
Disposals - (0.8) - - - (0.8)
Other adjustments* - - 4.8 - - 4.8
Transfers** - (0.2) 0.2 0.2 (0.2) -
Currency adjustment 0.2 - 0.4 0.8 0.8 2.2
H122 - Proforma
basis 43.4 7.8 3.7 25.4 (10.4) 69.9
--------------------- ---------- ------------- ---------- -------- ---------- ------
* Other adjustments relate to Edge Digital Shelf and Sellics
Non-Advertising discontinued products.
** Transfers relate to moving Retail Insight into Digital
Commerce from RFS and the transfer of lease property costs from
Product Design to the Corporate segment.
Glossary of alternative performance measures
Term Description
Organic revenue growth Revenue growth on a like-for-like basis
----------------------------------------------------
Organic EBITDA growth Adjusted EBITDA growth on a like-for-like
basis
----------------------------------------------------
Proforma revenue growth Revenue growth on a like-for-like basis assuming
the Company's acquisitions or disposals were
all made on the first day of the comparative
accounting period
----------------------------------------------------
Proforma EBITDA growth Adjusted EBITDA growth on a like-for-like
basis assuming the Company's acquisitions
or disposals were all made on the first day
of the comparative accounting period
----------------------------------------------------
Non-Trading items Items within Operating profit / (loss) separately
identified in accordance with Group accounting
policies
----------------------------------------------------
Adjusting items Non-trading items (e.g. deferred consideration,
integration and restructuring costs), Amortisation
of intangible assets acquired through business
combinations, Share-based payments, Gains
and losses on disposal, Write-off of unamortised
arrangement fees on refinancing, Covenant
amendment fees and Tax related thereto
----------------------------------------------------
Adjusted operating profit Operating profit / (loss) excluding Adjusting
/ (loss) items
----------------------------------------------------
Adjusted EBITDA Adjusted operating profit / (loss) excluding
depreciation and amortisation
----------------------------------------------------
Adjusted EBITDA margin Adjusted EBITDA as a percentage of Revenue
----------------------------------------------------
Adjusted profit / (loss) Profit / (loss) before tax excluding Adjusting
before tax items
----------------------------------------------------
Adjusted tax charge Tax charge excluding Adjusting items
----------------------------------------------------
Adjusted effective tax Adjusted tax charge expressed as a percentage
rate of Adjusted profit before tax
----------------------------------------------------
Adjusted EPS EPS calculated with reference to Adjusted
Profit / (loss) for the year
----------------------------------------------------
Adjusted cash generated Cash generated from operations with cash generated
from operations from discontinued operations acquisition related
contingent consideration and other non-trading
cash flows excluded
----------------------------------------------------
Operating cash conversion Adjusted cash generated from operations expressed
as a percentage of Adjusted EBITDA
----------------------------------------------------
Free cash flow Net cash generated from operating activities
including capital expenditure. Net cash generated
from discontinued operations, acquisition-related
contingent consideration and other non-trading
cash flow are excluded
----------------------------------------------------
Leverage The ratio of Net debt to Adjusted EBITDA before,
in both cases, accounting for the impact of
IFRS 16
----------------------------------------------------
Net debt Net debt comprises external borrowings net
of arrangement fees, cash and cash equivalents
and derivative financial instruments. Net
debt excludes lease liabilities in line with
how net debt is considered for the Group's
banking covenants
----------------------------------------------------
Responsibility statement
We confirm that to the best of our knowledge:
a. The Condensed set of Consolidated Financial Statements has
been prepared in accordance with IAS 34 "Interim Financial
Reporting" as adopted for use in the UK;
b. The interim management report includes the following
information as required by Disclosure Guidance and Transparency
Rule ("DTR") 4.2.7R:
i. An indication of important events that have occurred during
the first six months of the financial year, and their impact on the
Condensed set of Consolidated Financial Statements; and
ii. A description of the principal risks and uncertainties for
the remaining six months of the year.
c. The interim management report includes the following information as required by DTR 4.2.8R:
i. Related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the Group in that
period; and
ii. Any changes in the related party transactions described in
the 2022 Annual Report that could have material effect on the
financial position or performance of the Group in the current
period.
By order of the Board
Duncan Painter Mandy Gradden
Chief Executive Officer Chief Financial Officer
22 September 2023
INDEPENDENT REVIEW REPORT TO ASCENTIAL PLC
Conclusion
We have been engaged by Ascential plc ("the Company") to review
the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 which
comprises the Condensed Consolidated Statement of Profit and Loss,
Condensed Consolidated Statement of Other Comprehensive Income,
Condensed Consolidated Statement of Financial Position, Condensed
Consolidated Statement of Changes in Equity, Condensed Consolidated
Statement of Cash Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the
UK and the Disclosure Guidance and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the half-yearly financial
report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the directors have
inappropriately adopted the going concern basis of accounting, or
that the directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the Group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with UK-adopted international
accounting standards.
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report
in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the
directors are responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Christopher Hearn
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
22 September 2023
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR LBMBTMTITTJJ
(END) Dow Jones Newswires
September 22, 2023 02:00 ET (06:00 GMT)
Ascential (LSE:ASCL)
Historical Stock Chart
From Oct 2024 to Nov 2024
Ascential (LSE:ASCL)
Historical Stock Chart
From Nov 2023 to Nov 2024
