21 March 2024
Ascential
plc
Unaudited full year results
2023
Ascential positioned as
premium, global, events-led business
Results of the Continuing
business ahead of market expectations: Revenue +13% and Adjusted
EBITDA +17%
£850m to be returned to
shareholders
Ascential plc (LSE: ASCL.L), the
specialist events, intelligence and advisory company, today
announces unaudited results for the year ended 31 December
2023.
POSITIONED AS A PREMIUM, GLOBAL, EVENTS-LED
BUSINESS
●
Long-term growth strategy: opportunities, both organically and via
acquisition, for growth and returns.
● Proven
track record through the cycle: +8% revenue CAGR over the last four
years.
● Diverse,
sustainable revenue streams: spanning live events, digital
subscriptions and advisory.
STRATEGIC ACTIONS TO CREATE VALUE FOR
SHAREHOLDERS
● Disposal
of Digital Commerce and WGSN completed post year-end: total cash
proceeds of £1.2bn.
● Plan to
return £850m to shareholders through a combination of tender offer,
special dividend and on-market buyback programmes.
● Hudson
MX sale: process underway and expected to conclude in Q2
2024.
REVENUES AND ADJUSTED EBITDA FOR CONTINUING OPERATIONS AHEAD
OF MARKET EXPECTATIONS
●
Strong organic growth:
Revenue up 13% to £206.4m (2022: £191.2m), Adjusted EBITDA up
17% to £56.4m (2022: £49.9m).
●
Strong growth in Marketing
segment, revenue up 22%:
○ Cannes
Lions revenue grew 30%, with growth in all areas, led by
sponsorship.
○
Subscription and advisory now 30% of the segment's
revenue.
●
Financial Technology segment
revenue up 1%:
○
Money20/20 Europe revenue grew strongly, up 19%.
○ As
previously announced, with headwinds in Fintech investment,
Money20/20 US revenue was 8% lower in 2023, compared to very strong
comparatives from an exceptional 60% growth in 2022. Revenue in
2023 was up 50% vs 2019 benchmark.
●
Delivering organic profit
growth:
○ Adjusted
EBITDA before central costs of £82.3m (2022: £71.7m).
○ Adjusted
EBITDA up 17% to £56.4m (2022: £49.9m), after £25.9m (2022: £21.8m)
of central costs.
○
Marketing segment Adjusted EBITDA up 37% to £55.6m.
○
Financial Technology segment Adjusted EBITDA 7% lower at £26.7m,
due to launch investment and lower US revenues.
●
Significant cost
reduction:
○ Ongoing
corporate costs from 2024 onwards are expected to be approximately
50% lower than 2023 at £13m p.a., following the resizing of the
central functions to match the continuing business.
●
Increase in EBITDA
margins:
○ Adjusted
EBITDA margin increased to 27.3% (2022: 26.1%), reflecting strong
revenue growth offset by continued investment to support long-term
growth.
●
Reported Operating profit
from continuing operations of £30.7m (2022: £27.2m) stated after
charging Adjusting items of £20.8m (2022: £18.1m).
●
Loss after tax for discontinued
operations of £195.5m (2022: £122.5m loss) after expensing
Adjusting items of £220.2m (2022: £148.9m) relating primarily to
the costs of the strategic review and the disposals as well as a
fair value loss upon the consolidation of Hudson of £116.7m. The
disposal and strategic review costs were recognised in 2023 ahead
of the disposals which subsequently generated a profit of
approximately £0.5 billion in 2024.
●
EPS for continuing
operations of 5.0p on an Adjusted diluted basis (2022: 7.2p)
and total EPS for continuing operations of 1.3p (2022: 3.8p) after
higher interest costs impacting 2023.
STRONG CASH FLOW PERFORMANCE AND ROBUST BALANCE
SHEET
● Strong
operational cash flows with operating cash flow conversion of 112%
(2022: 114%) and free cash flow conversion after tax and capex of
96% (2022: 107%).
● Closing
net debt of £318.1m as at 31 December 2023, after early payment of
earnouts and repayment of working capital facilities in preparation
for the Digital Commerce sale (31 December 2022: £216.7m). Debt
fully repaid in January 2024 following disposals. New £225m RCF
facility in place.
● Proforma
net debt of approximately £106m following the net cash flows from
the disposals, the return of value of £850m and the deferred
consideration payable for Hudson.
PROPOSED £850M RETURN OF VALUE
● Since
completing the disposals of Digital Commerce and WGSN in Q1 2024,
raising total cash proceeds of £1.2bn and undertaking significant
consultation with its shareholders, the Board has carefully
considered the most appropriate mechanism for returning £850m of
value to shareholders.
●
Ascential today announces that it intends to return £850m of value
to its shareholders by way of a £450m special dividend and a £400m
purchase of shares executed in the following way:
○ a tender
offer to acquire up to £300m of Ascential shares, with the price
range to be finalised at the time of the publication of the
shareholder circular but with the Board expecting the higher end of
this range to be no greater than 331p, representing a 10% premium
to the closing price of 301p on 20 March 2023. The final strike
price for the tender will be set via a Dutch auction pricing
mechanism;
○ a
special dividend of at least £450m, expected to be declared
following completion of the tender offer and accompanied by a share
consolidation; and
○
on-market share buyback programmes to acquire £100m of Ascential
shares, which will commence thereafter.
●
Shareholder approvals in relation to the above
will be sought at Ascential's upcoming AGM in May. Further details,
including timetable, will be published in the shareholder circular
and the AGM notice.
Philip Thomas, Chief Executive, commented:
"Following our strategic review, Ascential is now a focused
events-led business with a compelling strategic framework, built
around two of the world's leading event platforms.
The sales of
Digital Commerce and WGSN announced in October 2023 have given us
the opportunity to return to our shareholders a value equivalent to
almost 90% of Ascential's market capitalisation prior to the
announcement date, and our shareholders also now own a business
that has our world-leading events firmly at its heart and sole
focus.
"Our events, subscription businesses and advisory services
have a clear purpose. We help our customers succeed, grow, and
drive their industries forward. This clarity underpinned our
performance in 2023 - with revenues and profits ahead of
expectations - and the compound annual growth of 8% in revenue over
the last four years. Both event platforms are well ahead of their
2019 pre-Covid benchmark levels. We have sector-leading margins and
continue to invest in our brands to maintain their premium standing
in the marketplace and drive growth through product innovation and
investment, penetration of existing markets, and bolt-on
acquisitions.
"Looking ahead to 2024, we continue to see positive customer
engagement, with booking levels for our events tracking in line
with prior year indicators overall. Notwithstanding ongoing
disruption to the Fintech funding environment, we are excited by
the continued expansion of our end market and global footprint
through the launch of Money20/20 Asia. This continuing momentum,
following on from our strong post pandemic bounce-back, supports
our confidence in our medium-term growth targets and
ambitions.
"We are pleased that following the strategic review and sale
of the Digital Commerce and WGSN businesses we are now able to
return a substantial proportion of value to our shareholders.
After careful consideration of multiple factors we have concluded
that the proposed mechanism of return of value represents the
optimal solution taking account of the interests of all
shareholders, respecting the considerations of timeliness and
flexibility, while we manage the final part of our transition to a
focussed, events-led business.
I would like to thank all my Ascential colleagues, from WGSN,
Digital Commerce, our central teams and the ongoing brands, for all
their focus and hard work throughout our strategic review, and wish
future success to those who are leaving Ascential for new
careers."
-------------
Ascential will host a presentation
for analysts and investors at 9.00 am on 21 March 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 takes the world's
leading brands to the heart of what's next for their industries. We
do this through our events, intelligence products and advisory
services. Our 700 people serve a global customer base from more
than 100 countries in the large and growing Marketing and Financial
Technology sectors. Ascential plc is listed on the London Stock
Exchange (LON: ASCL).
Financial highlights - continuing
operations
|
31
December
|
|
|
2023
(unaudited)
|
20221
|
Reported
growth
|
Organic
2
growth
|
|
£'m
|
£'m
|
%
|
%
|
Revenue
|
|
|
|
|
Marketing
|
130.5
|
99.2
|
32%
|
22%
|
Financial Technology 3
|
75.9
|
92.0
|
(18%)
|
1%
|
|
206.4
|
191.2
|
8%
|
13%
|
Adjusted EBITDA 2
|
|
|
|
|
Marketing
|
55.6
|
40.1
|
39%
|
37%
|
Financial Technology 3
|
26.7
|
31.6
|
(15%)
|
(7%)
|
Adjusted EBITDA before Corporate Costs
|
82.3
|
71.7
|
15%
|
19%
|
Corporate Costs
|
(25.9)
|
(21.8)
|
(19%)
|
(23%)
|
|
56.4
|
49.9
|
13%
|
17%
|
|
|
|
|
|
Adjusted operating profit
2
|
51.5
|
45.3
|
|
|
Adjusting items
|
(20.8)
|
(18.1)
|
|
|
Operating profit
|
30.7
|
27.2
|
|
|
Net interest cost
|
(20.1)
|
(2.4)
|
|
|
Profit before tax
|
10.6
|
24.8
|
|
|
Diluted earnings per
share
|
1.3p
|
3.8p
|
|
|
Adjusted diluted earnings per share
2
|
5.0p
|
7.2p
|
|
|
Adjusted cash generated from
operations2
|
62.9
|
56.9
|
|
|
Operating cash flow
conversion2
|
112%
|
114%
|
|
|
Net debt2
|
318.1
|
216.7
|
|
|
Proforma net debt4
|
106.0
|
n/a
|
|
|
|
|
|
|
|
| |
1 Restated for discontinued operations.
2 Refer to the Glossary of Alternative Performance
Measures.
32022 included £7.4m of revenue and £0.1m of Adjusted EBITDA
loss from the disposed RWRC business and £4.6m of revenue and £nil
Adjusted EBITDA from the Acuity business transferred to the
Marketing segment in 2023.
4Proforma net debt reflects reported net debt adjusted for the
net cash flows from the disposals, the return of value of £850m and
the deferred consideration payable for Hudson.
Contacts
Ascential plc
Philip Thomas
Mandy Gradden
Rory Elliott
|
Chief Executive Officer
Chief Financial Officer
Investor Relations
Director
|
+44 (0)20 7516 5000
|
Media enquiries
Matt Dixon
Jamie Ricketts
Edward Bridges
|
FTI Consulting LLP
|
+44 (0)20 3727 1000
|
The person responsible for
arranging the release of this announcement on behalf of Ascential
is Naomi Howden, Company Secretary.
CAUTIONARY STATEMENT
This announcement contains
"forward-looking statements" which includes all statements other
than statements of historical fact, including, without limitation,
those regarding the Company's financial position, business
strategy, plans and objectives of management for future operations,
or any statements preceded by, followed by or that include the
words "targets", "believes", "expects", "aims", "intends", "will",
"may", "anticipates", "would, "could" or similar expressions or
negatives thereof. Such forward-looking statements involve known
and unknown risks, uncertainties and other important factors beyond
the Company's control that could cause the actual results,
performance or achievements of the Company to be materially
different from future results, performance or achievements
expressed or implied by such forward-looking statements. Such
forward-looking statements are based on numerous assumptions
regarding the Company's present and future business strategies and
the environment in which the Company will operate in the future.
These forward-looking statements speak only as at the date of this
announcement.
Neither the Company nor its
affiliates undertakes or is under any duty to update this
announcement or to correct any inaccuracies in any such information
which may become apparent or to provide you with any additional
information, other than any requirements that the Company may have
under applicable law or the Listing Rules, the Prospectus
Regulation Rules, the Disclosure Guidance and Transparency Rules or
the Market Abuse Regulation MAR (EU No. 596/2014) as it forms part
of domestic law by virtue of the European Union (Withdrawal) Act
2018. To the fullest extent permissible by law, such persons
disclaim all and any responsibility or liability, whether arising
in tort, contract or otherwise, which they might otherwise have in
respect of this announcement. The information in this announcement
is subject to change without notice.
Ascential is a public limited
company incorporated in England and Wales. Ascential shareholders
in the United States are advised that the shares are not listed on
a U.S. securities exchange and that Ascential is not currently
subject to the periodic reporting requirements of the U.S.
Securities Exchange Act of 1934, as amended (the "U.S. Exchange
Act"), and is not required to, and does not, file any reports with
the U.S. Securities and Exchange Commission (the "SEC") thereunder.
The proposed tender offer referred to in this announcement (the
"Tender Offer") will be made to Ascential shareholders in the
United States in compliance with the applicable U.S. tender offer
rules under the U.S. Exchange Act, including Section 14(e) and
Regulation 14E thereunder (subject to the exemption under Rule
14d-1(d) under the U.S. Exchange Act for a Tier II tender offer)
and otherwise in accordance with the requirements of English law
and the U.K. Listing Rules. Accordingly, the Tender Offer referred
to in this announcement will be subject to disclosure and other
procedural requirements, including with respect to withdrawal
rights, the offer timetable, settlement procedures and timing of
payments that are different from those applicable under U.S.
domestic tender offer law and practice. The financial information
relating to Ascential, will not have been prepared in accordance
with generally accepted accounting principles in the U.S. and thus
may not be comparable to financial information relating to U.S.
companies.
Ascential and their affiliates or
brokers (acting as agents for Ascential and its affiliates or
brokers, as applicable) may from time to time, and other than
pursuant to the Tender Offer referred to in this announcement,
directly or indirectly, purchase, or arrange to purchase, in each
case outside the United States, shares in Ascential or any
securities that are convertible into, exchangeable for or
exercisable for such shares before or during the period in which
the Tender Offer remains open for acceptance, to the extent
permitted by, and in compliance with, exemptive relief granted by
the SEC from Rule 14e-5 under the U.S. Exchange Act, and in
compliance with English law and the U.K. Listing Rules. These
purchases may occur either in the open market at prevailing prices
or in private transactions at negotiated prices. Information about
any such purchases or arrangements to purchase that is made public
in accordance with English law and practice will be available to
all investors (including in the United States) via the Regulatory
News Service on www.londonstockexchange.com.
CHIEF EXECUTIVE'S REVIEW
This has been a pivotal year for
Ascential. In January 2023, we announced the conclusion of our
strategic review: our decision to separate the WGSN and Digital
Commerce businesses from Ascential, with the events-led business
remaining listed on the UK public market. It had become
very clear through the review that the three divisions each
had strong competitive positions and growing but distinct end
markets. Nevertheless, the Board concluded, and it was ultimately
proven, that the diverse nature of their operating models,
financial profiles and capital requirements had suppressed
shareholder value. The sales of Digital Commerce and WGSN announced
in October 2023 have given us the opportunity to return to our
shareholders a value equivalent to almost 90% of Ascential's market
capitalisation prior to the announcement date and our shareholders
now own a business that has our world-leading events firmly at its
heart and sole focus.
I am fortunate enough to
experience the energy of our global team every day, and as we start
this next chapter, I am happy to see our teams galvanised and
energised by our new streamlined focus as an events-led business. I
would like to take this opportunity to thank all our people for
working so hard during these last months that have been dominated
by change. I continue to be impressed by the focus and dedication
of our teams, in particular those who were directly involved in
delivering the outcome of the strategic review, and including some
who have now left or are shortly to leave the
business.
We are a business focused on
dynamic, growing, global markets where disruption creates clear
opportunities: Marketing and Financial Technology. Our events are
distinct, sitting at the heart of the industries they bring
together, and so attracting commercial participation from both
attendees and corporate partners across a wide range of revenue
channels. As we look ahead, we see clear opportunities for
growth, both through the proven organic levers that have driven
revenue successfully for many years, and through expansion deeper
into our existing markets, and into similarly disrupted,
multifaceted industries.
2023 performance
Our operational execution in the
year has been strong, with overall revenue growth of 13% and
Adjusted EBITDA growth of 17% (on a continuing, organic basis), as
our events continue to outstrip their 2019 pre-Covid benchmark
levels of performance.
Our Marketing segment grew revenue by 22%,
with the Cannes Lions Festival of Creativity, in particular,
growing strongly. This was a performance led by outstanding record
levels of sponsorship engagement from global businesses who clearly
see the value the event can deliver for them. There was good growth
across all other revenue lines, including the awards benchmark
(which saw the successful launch of the Entertainment Lion for
Gaming), delegate revenues (with attendees reaching c.12,000) and
from our subscription and advisory revenue streams. In August,
we acquired Contagious, a creative
insights business serving our Marketing customer set through event,
subscription and advisory revenues, for which integration and the
realisation of revenue synergies is progressing well.
Our Financial Technology segment grew
revenue by 1% overall. Money20/20 Europe saw very strong growth of
19%, driven by the expansion of both delegate and sponsorship
revenue streams. This was offset by an 8% drop in revenue from the
US event, following growth of over 60% in 2022, with delegate
numbers impacted by a steep decline of the early-stage funding
environment impacting our customers. Despite this decline,
Money20/20 US in 2023 was still 50% larger than its pre-Covid 2019
edition.
Throughout 2023 we owned the
Digital Commerce and
Product Design businesses
which, following their sales agreed in October 2023, have now been
treated as discontinued operations in these financial statements.
Furthermore, as part of the arrangements for the ongoing disposal
of Hudson MX, we acquired accounting control of that business and
consolidated their results from October 2023, with that business
also treated as a discontinued operation. Consolidated revenue and
Adjusted EBITDA from these discontinued operations was £380m and
£66m respectively with Digital Commerce delivering a 20% growth in
revenue and Product Design a 7% growth in revenue. In 2023 these
discontinued operations delivered a loss after tax of £195.5m
driven by the costs of the strategic review and the disposal
processes to optimise shareholder value (and driving of a net cash
inflow of £1.2 billion and a profit of approximately £0.5bn to be
recognised in 2024) as well as the revaluation of our investment in
Hudson.
Operating responsibly
The main focus for our ESG work in
2023 was environment and climate change resilience, with a
particular focus on carbon emissions data collection. I am pleased
to report that this year, for the first
time, we have measured our carbon footprint across our events
portfolio including data from all of the scope 1 - 3 categories,
and implemented a new carbon measurement tool and methodology for
Ascential's carbon emissions. We also
maintained our strong position across a range of ESG indexes and
developed a revised Sustainability Strategy for the restructured
business.
In line with our ambition to
become one of the industry's most sustainable events-led
businesses, we strive to mitigate any negative impact on the
environment, community and society in which we operate, and to
ensure the conditions in which our business can thrive. In my new
role as ESG Board Sponsor, I will oversee and champion this new
strategy, establishing governance and empowering the leadership
team to identify and manage ESG risks and
opportunities.
2024 priorities
In our first full year as a
standalone events-led business, we have three key
priorities:
●
Return of value
to shareholders: returning £850m to
shareholders through a combination of tender offer, special
dividend and on-market share buyback programmes.
●
Hudson MX
sale: concluding the sale process
which is underway.
●
Delivering our
medium-term growth targets and ambitions:
expanding our addressable market in Marketing and
Financial Technology - both of which benefit from long-term
structural growth drivers - as a focused, premium, events-led
business.
Outlook
This is an important and exciting
time for Ascential. As we look forward, we clearly see the
opportunities that our newly focussed business offers our customers
to further connect, learn and innovate, helping them succeed, shape
and lead their industries.
We have many opportunities to
strengthen the position of our global events - events which are
truly distinctive, and which play an important role in the
industries they serve. We have the opportunity to build on
the diversity of our revenue streams and continue to innovate and
grow our digital propositions, across both our divisions. Ascential
has events at its heart - but our digital products and advisory
services are what enable us to deepen our relationships with
customers and ultimately serve them better. That balance is crucial
for our success as a company.
In 2024, our focus in the early
part of the year is for a successful launch of Money20/20 Asia in
April, where preparations continue to go well. We continue to see
positive customer engagement, with booking levels for our events
tracking in line with prior year indicators overall.
Notwithstanding ongoing disruption to the Fintech funding
environment, we are excited by the continued expansion of our end
market and global footprint through the launch of Money20/20 Asia.
This continuing momentum, following on from our strong post
pandemic bounce-back, supports our confidence in our medium-term
growth targets and ambitions.
Philip Thomas
Chief Executive
21 March 2024
SEGMENTAL REVIEW
Marketing
The Marketing segment comprises
Lions, WARC, Contagious and Acuity. 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. WARC is the global authority on marketing effectiveness
for brands, agencies and media platforms. In August 2023, we
acquired Contagious, a provider of creative trends insights to
brands and agencies. The
Marketing segment now also includes Acuity which
was transferred from the Financial Technology segment in 2023. Our
Marketing segment empowers marketing professionals with the tools,
insights and data to advocate for prioritising capital allocation
towards marketing, especially creative marketing. We're confident
this approach fuels growth and provides our customers with a
measurable competitive advantage.
|
Year
ended 31 December (£'m)
|
Growth
(%)
|
|
2023
(unaudited)
|
2022
|
Reported
|
Organic
|
Revenue
|
130.5
|
99.2
|
32%
|
22%
|
Adjusted EBITDA
|
55.6
|
40.1
|
39%
|
37%
|
Adjusted EBITDA margin
|
43%
|
40%
|
|
|
The Marketing segment performed
very strongly in 2023. Organic revenue growth of 22% in the year
was especially notable given that Lions had already returned to
pre-COVID levels of revenue in 2022. We were also pleased to see
Adjusted EBITDA growth of 37% with margins growing to 43% despite
the increasing proportion of lower margin sponsorship
revenue.
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, growing very strongly compared to 2022. The
event enjoyed record levels of customer engagement, through
physical sponsorship activations, up 68%, as demand for onsite
activations, particularly with major media and technology partners,
grew strongly even compared to 2022's record levels. Overall, we
welcomed 110 sponsorship customers with an average order value of
£260,000.
The other major event revenue
stream, revenue from delegate participation, was up 17%. Attendee
volumes at Cannes Lions saw good growth, with more than 12,000
attendees representing growth of 9% on the 2022 event. Asia Pacific
attendees grew by over 30%, with delegates now able to travel
outside their countries due to the lifting of pandemic
restrictions.
In terms of the Lions benchmark
awards, entry volumes were just under 27,000, up 6% on the 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 Business
Transformation. This year also saw the launch of the Entertainment
Lion for Gaming, where strong participation highlighted the
increased collaboration between brands and this significant
industry. Lions' regional awards (Dubai Lynx, Spikes and Eurobest)
also saw overall growth in revenue, demonstrating the importance of
the Middle East and Asian markets within the industry.
Overall, subscriptions and
advisory services accounted for around 30% of Marketing's revenue
base in 2023. Subscriptions grew by 5%, as WARC, the largest
subscription product, saw good growth, 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. Lions
subscription products also continued to grow well, with annual
renewal rates for the latter remaining strong, at over
90%.
The Retail Price & Promotion
business, Acuity Pricing, was transferred to Marketing from the
Financial Technology segment in 2023. The subscription-based
business saw a slight decline in revenue, although billings grew
modestly, supported by product enhancements and renewed marketing
efforts including a rebranding to "Acuity".
Advisory services, which include
insights using Lions' awards intelligence and respected creative
excellence training programmes, grew by 36% vs 2022, with projects
for major brands such as Colgate, Pepsi, Heineken and
Instacart.
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. Contagious saw
good revenue growth of 6% in 2023.
Financial Technology
The payments ecosystem has grown
increasingly complex due to technology and regulation, challenging
organisations that move money globally at scale. Money20/20 helps
customers navigate this by offering access to a diverse ecosystem
where businesses can buy and sell products, form partnerships, and
showcase their brands on a unified platform. In 2023, as noted above, Acuity was transferred to the
Marketing segment.
|
Year
ended 31 December (£'m)
|
Growth
(%)
|
|
2023
(unaudited)
|
2022*
|
Reported
|
Organic
|
Revenue
|
75.9
|
92.0
|
(18%)
|
1%
|
Adjusted EBITDA
|
26.7
|
31.6
|
(15%)
|
(7%)
|
Adjusted EBITDA margin
|
35%
|
34%
|
|
|
*2022 results include £7.4m of revenue and a £0.1m EBITDA
loss from Retail Week World Retail Congress which was sold in
December 2022 and £4.6m of revenue (£nil profit) from Acuity, which
was transferred to the Marketing segment in 2023.
Organic revenue growth of 1% in
the year reflects the very strong performance of Money20/20 Europe,
with growth of 19%, combined with an 8% decline in revenue from the
larger, US event which faced significant headwinds from the
reduction in global Fintech spending (down 50% in 2023 to $39.2bn).
Adjusted EBITDA reduced by £4.9m, reflecting the investment in the
launch of Money20/20 Asia and TwentyFold, the strengthening of
Pounds Sterling versus the US Dollar relative to 2022 levels, and
the decline in the US edition.
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 55% 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.
The flagship US show, following
its exceptional growth in 2022 (where revenue was up over 60% vs
2019), saw the impact of disruption to the funding environment for
the early-stage financial technology sector, in particular payments
which impacted our customer behaviour. The 2023 edition, held in
Las Vegas in October, saw revenue decline by 8%, driven by lower
delegate volumes, with attendees of over 11,500 and more than 3,200
companies participating. As with the European edition, an
increase in the Net Promoter Score for the US edition illustrates
continued strong customer engagement, combined with sponsorship
average order value that grew by 20%, while revenue for the US
event, despite being lower than in 2022, nevertheless stood 50%
higher than the 2019 pre-Covid benchmark.
Preparations for the launch of the
Asian show, in Bangkok in April 2024, continue to progress well,
with good engagement from key regional players and a compelling
program of content. Over 200 speakers, representing banks, payment
companies and other industry leaders from across the region, will
explore how integration, regulation and technology are transforming
the Asian Fintech landscape.
In October 2023, we announced the
launch, in early 2024, of TwentyFold, a new digital intelligence
subscription product. This product helps Fintech professionals find
the ideal investment and partnership opportunities, through its
extensive set of market connections and data. The product is
available via annual subscription, designed to help members
optimise their deal and partnership sourcing, reducing the overall
cycle time and cost. This is a long-term investment for the
brand, and is not expected to deliver significant revenues in
2024.
Following a period of robust
growth, the Fintech industry, in common with all tech sectors,
currently operates within a challenging landscape shaped by higher
interest rates and inflation, and their impact on investment
decisions. Recently, this has seen some significant reductions in
funding and valuations of companies in certain sub-segments of the
customer base from their 2021 highs. Nevertheless, the ongoing
technological revolution continues to create additional avenues for
value creation in the sector, which, combined with some early
indications of renewed investor confidence, suggest that the
Fintech industry's growth is set to continue to outstrip that of
its traditional banking counterpart in the medium-term.
Corporate Costs
Corporate costs grew by 23%, to
£25.9m reflecting the higher level of resources required to
implement the strategic review and its conclusions, including the
separation and ultimate sales of the Digital Commerce and WGSN
businesses. We have carefully evaluated the appropriate size of the
Corporate function to efficiently support the continuing business,
and in 2023 initiated a restructuring of both the staff and
supplier cost base. As a result Corporate costs are expected to
reduce by a half to approximately £13m from 2024
onwards.
In addition, we will maintain a
Transition, TSA and Separation team for the first half of 2024 to
ensure that our obligations under the disposal agreements are
serviced and that all residual issues relating to the discontinued
operations are completed. The costs of this team, of approximately
£7m, will be recorded as a Non-trading item.
FINANCIAL REVIEW
Overview
Following the agreement to sell
the Digital Commerce and WGSN businesses during 2023 and the
expected sale of Hudson in the first half of 2024, our financial
results for 2023 and 2022 have been restated to classify these
three businesses as discontinued operations. The commentary within
this report is therefore mainly focused upon our continuing
operations.
Our consolidated statement of
profit or loss from continuing operations shows revenue of £206.4m
(2022: £191.2m) and an operating profit of £30.7m (2022: £27.2m
profit). Adjusted EBITDA from continuing operations was £56.4m
(2022: £49.9m) with the growth primarily driven by the very strong
performance of the Marketing segment in which the Cannes Lions
festival in particular grew revenue by 30% versus 2022 as a result
of across-the-board increases in delegates, sponsorship and
awards.
Adjusting items in 2023 included
the amortisation of acquired intangibles, share-based payments and
other Non-trading items as set out in more detail below. The sale
of the Digital Commerce and WGSN businesses completed shortly after
the year end for total net cash proceeds of £1.2bn, delivering an
anticipated profit on disposal in the 2024 financial year of
approximately £500m subject to finalisation of customary completion
mechanics with the buyers.
We delivered strong operating cash
flow performance for the year in the continuing business with
Adjusted cash generated from operations of £62.9m (2022: £56.9m),
an operating cash flow conversion of 112% (2022: 114%) and a free
cash flow conversion of 96% (2022: 107%).
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
and disposals and that element of growth which is driven by changes
in foreign exchange rates.
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 below.
Continuing operations
The results for the year ended 31
December 2023 are summarised in the table below.
£'m
|
2023
|
20221
|
Growth
rate
|
|
(unaudited)
|
|
Reported
|
Organic
|
Revenue
|
206.4
|
191.2
|
8%
|
13%
|
Adjusted EBITDA
|
56.4
|
49.9
|
13%
|
17%
|
Operating profit
|
30.7
|
27.2
|
13%
|
21%
|
Adjusted operating profit
|
51.5
|
45.3
|
14%
|
18%
|
1 Restated for discontinued operations.
Segmental results
Following the announcement of the
sales of the Digital Commerce and WGSN businesses, and the
determination that these, along with Hudson, were discontinued and
held for sale, the Group has two continuing reportable segments.
These are Marketing and Financial Technology. Information regarding
the results, growth rates and margins of each is included
below.
£'m
|
Marketing
|
Financial Technology
|
Subtotal
|
Corporate
costs
|
Continuing
operations
|
2023 (unaudited)
|
|
|
|
|
|
Revenue
|
130.5
|
75.9
|
206.4
|
-
|
206.4
|
Organic growth
|
22%
|
1%
|
13%
|
-
|
13%
|
Adjusted EBITDA
|
55.6
|
26.7
|
82.3
|
(25.9)
|
56.4
|
Organic growth
|
37%
|
(7%)
|
19%
|
(23%)
|
17%
|
Adjusted EBITDA margin
|
43%
|
35%
|
40%
|
-
|
27%
|
Depreciation and software
amortisation
|
(2.8)
|
(0.1)
|
(2.9)
|
(2.0)
|
(4.9)
|
Adjusted operating profit
|
52.8
|
26.6
|
79.4
|
(27.9)
|
51.5
|
2022 1
|
|
|
|
|
|
Revenue
|
99.2
|
92.0
|
191.2
|
-
|
191.2
|
Adjusted EBITDA
|
40.1
|
31.6
|
71.7
|
(21.8)
|
49.9
|
Depreciation and software
amortisation
|
(2.6)
|
(0.9)
|
(3.5)
|
(1.1)
|
(4.6)
|
Adjusted operating profit
|
37.5
|
30.7
|
68.2
|
(22.9)
|
45.3
|
1 Restated for discontinued operations.
Revenue
The Company benefits from diverse
revenue streams across its two segments ranging from digital
subscriptions to live events to advisory. Most of these revenue
streams have recurring or repeat characteristics benefiting from
our focus on customer retention. 34% of revenue (2022: 34%) was
derived from non-events sources, namely our Benchmarking Awards,
Subscriptions and Advisory service lines.
£'m
|
|
|
2023
(unaudited)
|
2022
|
Events
|
|
|
136.0
|
125.7
|
Delegates
|
|
|
56.7
|
58.3
|
Sponsorship
|
|
|
79.3
|
67.4
|
Non-events
|
|
|
70.4
|
65.5
|
Benchmarking Awards
|
|
|
30.9
|
27.8
|
Subscriptions
|
|
|
30.2
|
30.2
|
Advisory
|
|
|
9.3
|
7.5
|
Revenue from continuing
operations
|
|
|
206.4
|
191.2
|
Revenue from continuing operations
grew to £206.4m (2022: £191.2m), a reported increase of £15.2m or
8%, driven by the performance of the Marketing segment. Adjusting
for currency impacts, the acquisition of Contagious in 2023 and the
disposal of RWRC at the end of 2022, revenue increased by 13% on an
Organic basis.
Adjusted EBITDA
Adjusted EBITDA from continuing
operations grew to £56.4m (2022: £49.9m), an increase of £6.5m or
13%. This represented growth of 17% on an Organic basis. Adjusted
EBITDA margin increased from the prior year to 27.3% (2022: 26.1%).
This reflected a combination of very strong revenue growth offset
by investment ahead of the launch of Money20/20 Asia in Bangkok, in
April 2024, and TwentyFold, together with an increase in Corporate
costs reflecting resource levels required to complete the
conclusions of the strategic review, separation and ultimate sales
of the Digital Commerce and WGSN businesses. In 2023, we initiated
the resizing of our corporate costs to match the continuing
business through staff and supplier cost base restructuring and
expect that corporate costs will reduce by a half to approximately
£13m going forward.
Reconciliation between Adjusted EBITDA and statutory
operating profit
Adjusted EBITDA from continuing
operations is reconciled to statutory operating profit as shown in
the table below.
£'m
|
2023
(unaudited)
|
20221
|
Adjusted EBITDA
|
56.4
|
49.9
|
Depreciation
|
(4.9)
|
(4.6)
|
Adjusted operating profit
|
51.5
|
45.3
|
Non-trading items
|
(4.4)
|
(3.6)
|
Amortisation of acquired
intangibles
|
(9.0)
|
(8.9)
|
Share-based payments
|
(7.4)
|
(5.6)
|
Statutory operating
profit
|
30.7
|
27.2
|
1 Restated for discontinued operations.
Non-trading items
In light of the level of corporate
activity, significant Non-trading items were incurred in 2023 -
especially in relation to the discontinued operations. These have
been treated on a basis consistent with our policy and with
previous years, as set out in the table below and further explained
in Note 5.
£'m
|
2023
(unaudited)
|
20221
|
Strategic review costs
|
(1.5)
|
-
|
Transaction and integration
costs
|
(0.7)
|
(0.7)
|
Profit/(loss) on disposal of
RWRC
|
(0.3)
|
1.0
|
Property impairments and
provisions
|
(1.9)
|
(3.9)
|
Non-trading items relating to
continuing operations
|
(4.4)
|
(3.6)
|
Strategic review costs
|
(83.5)
|
(15.0)
|
Transaction and integration
costs
|
(17.3)
|
(15.5)
|
Acquisition-related employment costs
and deferred consideration
|
1.8
|
(31.4)
|
ERP and Salesforce
implementation
|
(7.1)
|
(21.6)
|
Profit on disposal of
businesses
|
0.2
|
4.1
|
Non-trading items relating to
discontinued operations
|
(105.9)
|
(79.4)
|
Non-trading items relating to total
operations
|
(110.3)
|
(83.0)
|
1 Restated for discontinued operations.
Continuing Operations
Strategic review costs relate to
costs incurred to set up the continuing Events-led business as a
standalone business, as a result of the separation, such as
investor relations and rebranding costs. Transaction and
integration costs comprise legal and professional fees for the
acquisition and integration of Contagious. Property impairments and
provisions relate to a reassessment of the Group's property
requirements as part of the strategic review and the impact of
onerous lease obligations that remain with the continuing business
following the disposals.
Discontinued Operations
Strategic review costs of £83.5m
(2022: £15.0m) relate to the sales of the Digital Commerce and WGSN
businesses as part of our optimisation of shareholder value, as
well as the necessary restructuring and reduction of Ascential's
central corporate function as a result of the disposal of such a
large proportion of the Group. These costs related to resources and
professional fees for project management, tax and legal
structuring, activities relating to the aborted US listing, legal
and professional advisor support as well as severance and retention
incentives for key personnel impacted by the separation of the
Group. Fees also include success fees paid to the banks managing
the disposal processes. The vast majority of these costs have been
recognised in 2023 either as services have been provided or, for
contingent success fees, on shareholder approval of the disposals
which occurred in December 2023. The significant scale of
Non-trading items across both 2022 and 2023 should be viewed in the
context of the expected distribution to shareholders of £850m and
the 2024 preliminary pre-tax profit on disposal of approximately
£500m (subject to finalisation of completion accounts).
Transaction and integration costs
of £17.3m (2022: £15.5m) comprise professional fees for diligence
and legal costs for acquisitions and investments as well as the
costs of integrating acquisitions, such as the acquisitions of
Sellics and Intrepid by the Digital Commerce business in 2022 and
their subsequent integration. It also includes the execution of a
significant staff reduction in the second half of 2023 following
the product integration and launch of the Digital Commerce combined
product Flywheel Commerce Cloud.
Amortisation of acquired intangibles
The amortisation of acquired
intangibles of £9.0m (2022: £8.9m) primarily relates to brand and
trade names of Lions, WARC and Money20/20. We expect a step down in
amortisation over the next two years as certain assets are fully
written down.
Share-based payments
The charge for share-based
payments in continuing operations of £7.4m (2022: £5.6m) was higher
in 2023 than in 2022 due to the acceleration of vesting for good
leavers from the continuing business in the period. The charge for
discontinued operations likewise increased from £10.3m to
£16.4m.
Net finance costs
The total net finance costs for
the year ended December 2023 were £132.7m (2022: £18.7m) as set out
in the table below:
£'m
|
|
2023
(unaudited)
|
2022
|
Interest income on deposits and
investments
|
|
5.6
|
0.5
|
Interest payable on external
borrowings
|
|
(21.3)
|
(7.4)
|
Fair value (loss) / gain on
derivative financial instruments
|
|
(4.3)
|
4.3
|
Amortisation of arrangement
fees
|
|
(0.8)
|
(0.8)
|
Discount unwind on lease
liabilities and provisions
|
|
(0.2)
|
-
|
Foreign exchange gain
|
|
-
|
1.0
|
Adjusted net finance costs
relating to continuing operations
|
|
(21.0)
|
(2.4)
|
Remeasurement of trade investments
to fair value
|
|
0.9
|
-
|
Net finance costs relating to
continuing operations
|
|
(20.1)
|
(2.4)
|
Net finance costs relating to
discontinued operations
|
|
(112.6)
|
(16.3)
|
Net finance costs relating to
total operations
|
|
(132.7)
|
(18.7)
|
The Group's net finance costs from
continuing operations have increased from £2.4m in 2022 to £20.1m
in 2023 due mainly to the significantly higher interest expense
payable on external borrowings since the second half of 2022. This
reflects the higher underlying interest rates for both our USD and
Euro borrowings, combined with a higher average level of net debt
in 2023 compared to the prior year, particularly in the second half
as we funded Digital Commerce to accelerate the payment of deferred
consideration and the repayment of its factoring facility ahead of
its sale.
Net finance costs relating to
discontinued operations include fair value adjustments in respect
of Hudson of £116.7m arising following the decision in October 2023
to sell the business in order to complete the final elements of our
strategic review. The agreements we entered into with Hudson's
major shareholder relating to this resulted in a transition from
Hudson being an equity-accounted associate to a fully consolidated
subsidiary as described further below.
Profit before tax
Adjusted profit before tax on
continuing operations of £30.5m reduced compared to 2022's £42.9m.
This reflects the growth in net finance costs, which more than
offset the higher level of Adjusted EBITDA and operating profit.
Total profit before tax for the year of £10.6m, compared to the
profit in the prior year of £24.8m.
Taxation
A tax charge on continuing
operations of £4.8m (2022: £8.0m) was incurred on the reported
profit before tax of £10.6m (2022: £24.8m) due to lower levels of
tax deductibility of Adjusting items, such as disposal costs and
share-based payment costs in respect of non UK staff. A tax charge
of £8.1m (2022: £10.9m) was incurred on Adjusted profit before tax
of £30.5m (2022: £42.9m) resulting in an Adjusted effective tax
rate for the period of 27% (2022: 25%) broadly in line with the
underlying UK and US corporate tax rates.
The composition of the tax charge
on continuing operations is summarised in the table
below.
Analysis of tax charge
(£'m)
|
2023
(unaudited)
|
2022
|
Adjusted profit before
tax
|
30.5
|
42.9
|
Tax charge on Adjusted profit before
tax
|
(8.1)
|
(10.9)
|
Effective tax rate (%)
|
27%
|
25%
|
|
|
|
Adjusting items
|
(19.9)
|
(18.1)
|
Tax credit on Adjusting
items
|
3.3
|
2.9
|
Effective tax rate on Adjusting
items (%)
|
17%
|
16%
|
|
|
|
Reported profit before
tax
|
10.6
|
24.8
|
Tax charge on reported profit before
tax
|
(4.8)
|
(8.0)
|
Effective tax rate on reported
profit before tax (%)
|
46%
|
32%
|
The Group has a recognised net
deferred tax asset of £84.6m (2022: £51.7m) comprising a £7.6m
(2022: £8.6m) deferred tax liability on non-deductible intangibles
and an asset of £92.2m (2022: £60.3m) relating to UK and US losses,
accelerated capital allowances and US acquired
intangibles.
The vast majority of this net
deferred tax asset, amounting to approximately £91m, was utilised
shortly after the year end in January 2024 against gains arising on
the disposal of Digital Commerce and restructuring of the US
corporate structure. This 2024 restructuring also resulted in the
recognition of a new deferred tax asset relating to Money20/20 USA
and WARC USA of approximately £45m that will be realised in cash
over the next 15 years.
Discontinued operations
The results of the discontinued
Digital Commerce, WGSN and Hudson businesses are included as a
single line item within Profit After Tax but are set out in detail
in Note 7. They can be summarised as follows:
Total Discontinued Operations
£'m
|
2023
(unaudited)
|
2022
|
|
Adjusted
results
|
Adjusting items
|
Total
|
Adjusted
results
|
Adjusting items
|
Total
|
Revenue
|
379.9
|
-
|
379.9
|
333.2
|
-
|
333.2
|
Adjusted EBITDA
|
65.6
|
-
|
65.6
|
71.2
|
-
|
71.2
|
Depreciation, amortisation and
impairment
|
(17.3)
|
(30.3)
|
(47.6)
|
(21.1)
|
(82.7)
|
(103.8)
|
Non-trading items
|
-
|
(105.9)
|
(105.9)
|
-
|
(79.4)
|
(79.4)
|
Share-based payments
|
-
|
(16.4)
|
(16.4)
|
-
|
(10.3)
|
(10.3)
|
Operating profit / (loss)
|
48.3
|
(152.6)
|
(104.3)
|
50.1
|
(172.4)
|
(122.3)
|
Share of the loss of
associates
|
(12.4)
|
(0.9)
|
(13.3)
|
(2.6)
|
(0.6)
|
(3.2)
|
Net finance income /
(costs)
|
3.3
|
(115.9)
|
(112.6)
|
(11.0)
|
(5.3)
|
(16.3)
|
Profit / (loss) before
tax
|
39.2
|
(269.4)
|
(230.2)
|
36.5
|
(178.3)
|
(141.8)
|
Taxation (charge)/credit
|
(14.5)
|
49.2
|
34.7
|
(10.1)
|
29.4
|
19.3
|
Profit / (loss) after tax
|
24.7
|
(220.2)
|
(195.5)
|
26.4
|
(148.9)
|
(122.5)
|
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 events revenues in Euro and US
Dollars. As can be seen from the table below, Pounds Sterling was
particularly weak against the US Dollar in 2022, which has
negatively impacted the reported growth rates in our financial
performance in 2023.
|
Weighted average rate
|
Year-end rate
|
Currency
|
2023
(unaudited)
|
2022
|
Change
|
2023
(unaudited)
|
2022
|
Change
|
Euro
|
1.17
|
1.17
|
0.5%
|
1.15
|
1.13
|
(2.0%)
|
US Dollar
|
1.22
|
1.10
|
(10.8%)
|
1.27
|
1.21
|
(5.2%)
|
When comparing 2023 and 2022,
changes in currency exchange rates had an adverse impact on revenue
and EBITDA from continuing operations of £3.6m and £2.2m
respectively. On a segmental basis, the impact of changes in
foreign currency exchange rates was as follows:
●
Marketing: a £0.9m impact on revenue and a £0.2m
impact on Adjusted EBITDA;
●
Financial Technology: a (£4.5m) impact on revenue
and (£3.1m) on Adjusted EBITDA; and
●
Corporate costs: a £0.7m impact on Adjusted
EBITDA.
For illustrative purposes, the
table below provides details of the impact on revenue and Adjusted
EBITDA from continuing operations if the results were restated for
Pounds Sterling weakening by 1% against the US Dollar and Euro in
isolation.
|
2023
(unaudited)
|
2022
|
£'m
|
Revenue
|
Adjusted
EBITDA
|
Revenue
|
Adjusted
EBITDA
|
Euro
|
1.3
|
0.9
|
1.0
|
0.8
|
US Dollar
|
0.7
|
0.4
|
0.7
|
0.4
|
Earnings per share
Adjusted diluted earnings per
share for continuing operations were 5.0p per share (2022: 7.2p).
Total diluted loss per share for continuing operations was 1.3p
(2022: profit of 3.8p) with 2023 impacted by higher levels of
Adjusting items to effect the strategic review and consequent
disposals of Digital Commerce and WGSN.
Acquisition of Contagious
In August 2023, the Group acquired
100% of Steel River Media Limited ("Contagious") for a cash
consideration on a cash and debt free basis of £8.0m. Contagious is
a multi-format creative insights and trend analysis business,
serving agency and brand customers. The business delivers a mix of
subscription, advisory and events revenue streams and has been
integrated into the Marketing segment with synergies expected from
both Lions and WARC.
Disposal of Digital Commerce and WGSN
businesses
On 2 January 2024, the Group
completed the sale of its Digital Commerce business to Omnicom
Group Inc. and on 1 February 2024, the Group completed the sale of
the Product Design business, WGSN, to Wind UK Bidco 3
Limited (a newly formed company established by funds advised by
Apax Partners). Proceeds for both transactions totalled £1.2
billion and the pre-tax profit on disposal from the two
transactions arising in early 2024 is expected to be approximately
£500m (subject to customary closing adjustments) with a tax charge
of approximately £50m (£9m current cash tax and the balance from
using deferred tax assets such as brought forward losses) arising
on the disposals and associated corporate restructuring. The tax
charge has been reduced by the utilisation of £23m of capital
losses resulting from the revaluation and transfer of Hudson MX and
the recognition of £45m of deferred tax assets on the transfer of
Money20/20 LLC and WARC LLC as part of the corporate
restructuring.
Investments
The Group has a material
investment in Hudson MX ("Hudson"), an advertising software
business providing media buying and media accounting solutions
through a cloud-based software as a service ("SaaS") platform and
which was held for sale as of December 2023.
There were two material corporate
transactions that affected the accounting for Hudson during 2023.
Hudson completed a new financing and capital restructuring
resulting in MT II Holdings LLP ("MTII") becoming Hudson's majority
shareholder in February 2023. Ascential and MTII modified the
February 2023 financing and capital agreements in October 2023 as
part of the decision to initiate the ongoing process to sell
Hudson.
As part of the February 2023
financing and capital restructuring, new investor MTII provided
£24.9m of fresh investment to the Hudson business and purchased
part of Ascential's holding of preference shares for £24.9m while
Ascential agreed to provide a further £17.9m of funding to Hudson.
As a result, MTII held 51% of Hudson's common stock, Ascential held
36.5% and Hudson's management team and pre-existing shareholders
held 12.5%. Ascential also agreed arrangements to provide a
potential path to a majority stake in the future, including
granting a put option to MTII, exercisable from 1 April 2024 to 31
December 2025, which if exercised would result in Ascential holding
a 79% common equity interest in Hudson with Ascential then having
the right to call the remaining shares owned by MTII in the two
years following any exercise of their put option. Additionally,
both Ascential and Hudson's management team, along with other
existing investors, agreed on options exercisable between February
2026 and December 2028, with a total consideration ceiling of $40m
that would, if executed, increase the Group's equity stake in
Hudson to 49%.
In October 2023, following the
Board's decision that Hudson was not core to the ongoing business
of Ascential following the sale of Digital Commerce, Ascential
agreed with MTII to proceed with the sale of Hudson and entered
into new arrangements with MTII in order to ensure that MTII will
receive at least the same consideration for its stake in Hudson
when the business is sold as it would have done if: (i) the
existing put option and the call option with MTII had been
exercised in April 2024; and (ii) Hudson's debt obligations to MTII
on such exercise had been honoured.
The value of the consideration due
to MTII if the existing put option and the call option are
exercised is approximately $85.1m (£66.9m), being the
combined purchase price for the equity and debt instruments held by
MTII. Ascential will fund any shortfall between this amount and
proceeds received by MTII on the sale of Hudson. In the event that
the sale process for Hudson does not complete by 15 April 2024,
MTII's and Ascential's existing put and call options will be
automatically exercised and the full amount would be payable to
MTII by Ascential.
From October 2023, when Ascential
entered into these new arrangements with MTII, Ascential's ability
to take control (due to Ascential being able to exercise its call
option from that point) meant that the investment ceased to be
considered an equity-accounted associate and was consolidated on a
line-by-line basis with our investments eliminated and replaced
(subject to fair value adjustments and additional consideration)
with acquired intangibles and the assets of the business. The
announced intention of Ascential to sell the business and
likelihood of success means that the Hudson business is presented
as held for sale and as a discontinued operation.
In the 10 months to October 2023,
within discontinued operations we recorded our share of the losses
of Hudson totalling £13.2m (2022: £2.8m loss) and recognised
interest receivable of £10.2m (2022: £3.1m) relating to the
preference shares held. On the transition between classification as
associate and full consolidation, Finance costs of £116.7m were
expensed, representing a reduction in the value of our existing
investment including the valuation of the call and put options and
the amount payable for the assets acquired relative to the deemed
value of the business acquired. The valuation used was completed by
an independent expert from a general market participant standpoint
at the time and reflects the early-stage profile of the business,
with limited proof points from a peer group perspective or of the
expected future high growth of such a disruptive business. Due to
the sensitivity of valuation inputs, the sale process may conclude
with a materially different business valuation. For the two months
of consolidation in the year, we included revenue of £1.5m as well
as Adjusted EBITDA and Adjusted operating losses of £1.6m within
discontinued operations.
Cash flow
Continuing operations
The Company generated Adjusted
operating cash flow from continuing operations of £62.9m (2022:
£56.9m), being a 112% (2022: 114%) operating cash flow conversion
in the year. The Group's Adjusted EBITDA increased by £6.5m to
£56.4m but this was partially offset by a £4.2m increase in tax
payments. As a result, the Company generated free cash flow of
£54.2m (2022: £53.2m) as shown in the table below:
£'m
|
2023
(unaudited)
|
2022
|
Adjusted EBITDA
|
56.4
|
49.9
|
Working capital movements
|
6.5
|
7.0
|
Adjusted operating cash flow from
continuing operations
|
62.9
|
56.9
|
Operating cash flow conversion
(%)
|
112%
|
114%
|
Capital expenditure
|
(5.3)
|
(4.5)
|
Tax (paid)/refunded
|
(3.4)
|
0.8
|
Free cash flow from continuing
operations
|
54.2
|
53.2
|
Free cash flow conversion
(%)
|
96%
|
107%
|
Discontinued operations
The Company generated free cash
flow from discontinued operations of £5.3m (2022: £35.9m) with the
outflow from working capital movements primarily driven by the
£26.6m repayment of the Digital Commerce working capital factoring
facility in preparation for the disposal.
£'m
|
2023
(unaudited)
|
2022
|
Adjusted EBITDA
|
65.6
|
71.2
|
Working capital movements
|
(23.5)
|
(2.9)
|
Adjusted operating cash flow from
discontinued operations
|
42.1
|
68.3
|
Operating cash flow conversion
(%)
|
64%
|
96%
|
Capital expenditure
|
(35.9)
|
(31.4)
|
Tax paid
|
(0.9)
|
(1.0)
|
Free cash flow from discontinued
operations
|
5.3
|
35.9
|
Free cash flow conversion
(%)
|
8%
|
50%
|
Total operations
The cash flow statement and net
debt position are summarised as follows.
£'m
|
2023
(unaudited)
|
2022
|
Free cash flow from continuing
operations
|
54.2
|
53.2
|
Free cash flow from discontinued
operations
|
5.3
|
35.9
|
Free cash flow from total
operations
|
59.5
|
89.1
|
Acquisition of businesses net of
cash acquired
|
(6.8)
|
(60.8)
|
Deferred contingent consideration
including contingent employment cost
|
(69.6)
|
(57.4)
|
Acquisition of investments and loan
to associate
|
(23.1)
|
(34.6)
|
Proceeds from sale of
equity-accounted investments
|
24.9
|
5.9
|
Non-trading costs paid
|
(66.4)
|
(52.3)
|
Cash flow before financing
activities
|
(81.5)
|
(110.1)
|
Proceeds from external
borrowings
|
170.1
|
176.8
|
Repayment of external
borrowings
|
(47.5)
|
(53.8)
|
Net interest paid
|
(15.7)
|
(9.0)
|
Net lease liabilities
paid
|
(8.1)
|
(7.3)
|
Share purchases
|
(5.7)
|
(3.7)
|
Proceeds of issue or sale of shares
net of expenses
|
0.5
|
0.3
|
Dividends paid to non-controlling
interest
|
(2.2)
|
(2.8)
|
Net cash flow
|
9.9
|
(9.6)
|
Opening cash balance
|
80.0
|
84.1
|
FX movements
|
(3.4)
|
5.5
|
Closing cash balance
|
86.5
|
80.0
|
Borrowings
|
(412.4)
|
(302.8)
|
Capitalised arrangement
fees
|
0.8
|
1.6
|
Derivative financial
instruments
|
7.0
|
4.5
|
Net debt
|
(318.1)
|
(216.7)
|
Returns to shareholders
Following completion of the
disposals of Digital Commerce and WGSN and extensive consultation
with shareholders, we have announced our intention to return £850m
to shareholders by way of:
● a tender
offer to acquire up to £300m of Ascential shares;
● a
special dividend of at least £450m accompanied by a share
consolidation; and
●
on-market share buyback programmes to acquire £100m of Ascential
shares.
Going forward, the Company
intends to return to the policy of paying an
annual dividend.
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 operations, are
on-lent at market-based interest rates and on commercial terms and
conditions or contributed as equity to subsidiaries.
In December 2023, the Group signed
a new 4-year multi-currency revolving credit facility ("RCF") of
£225m with an accordion of up to a further £75m or 100% of EBITDA.
These facilities became effective on completion following the sale
of Digital Commerce in January 2024. The proceeds received as a
result of this sale were used in part to repay the net debt of the
Group of £318.1m at 31 December 2023. The balance of the Digital
Commerce sale proceeds, the proceeds from the sale of WGSN and the
new RCF will fund the proposed £850m return to shareholders with
the balance expected to provide ample future liquidity.
The more sensitive aspects of the
Company's financing are the application of certain covenant limit
tests to these facilities and the most sensitive covenant limit is
Net Debt Leverage (broadly, the ratio of Net Debt to Adjusted
pre-IFRS 16 EBITDA). The new facility covenants are tested
semi-annually and include (i) a maximum Net Debt leverage of 3.00x
and, (ii) a minimum interest cover of 3.00x. At 31 December 2023,
our leverage ratio was 2.7x compared to the old facility limit of
3.25x prior to the repayment of the facility from the proceeds of
the disposal of Digital Commerce in January 2024. Ascential aims to
operate with net leverage of between 1-2x Adjusted EBITDA, although
may operate above these levels temporarily following
acquisitions.
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.
Mandy Gradden
Chief Financial Officer
21 March 2024
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. 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. 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.
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:
£'m
|
2023
(unaudited)
|
2022
|
Cash (outflow) / generated from
total operations
|
(3.9)
|
53.4
|
Less: cash outflow from
discontinued operations
|
(42.1)
|
(68.3)
|
Add back: acquisition-related
contingent consideration cash flow
|
42.5
|
19.5
|
Add back: other non-trading cash
flow
|
66.4
|
52.3
|
Adjusted cash generated from
continuing operations
|
62.9
|
56.9
|
Adjusted EBITDA from continuing
operations
|
56.4
|
49.9
|
Operating cash flow conversion
from continuing operations
|
112%
|
114%
|
|
|
|
Net cash (outflow) / generated
from operating activities
|
(8.2)
|
53.2
|
Less: cash outflow from
discontinued operations
|
(42.1)
|
(68.3)
|
Less: capital expenditure from
continuing operations
|
(5.3)
|
(4.5)
|
Add back: tax paid by discontinued
operations
|
0.9
|
1.0
|
Add back: acquisition-related
contingent consideration cash flow
|
42.5
|
19.5
|
Add back: other non-trading cash
flow
|
66.4
|
52.3
|
Free cash flow from continuing
operations
|
54.2
|
53.2
|
Adjusted EBITDA from continuing
operations
|
56.4
|
49.9
|
Free cash flow conversion from
continuing operations
|
96%
|
107%
|
Leverage
The ratio of net debt to EBITDA is
calculated as follows:
£'m
|
2023
|
Adjusted EBITDA - Total
Operations
|
122.0
|
Less: Rent expense
|
(6.1)
|
Adjusted EBITDA (pre-IFRS
16)
|
115.9
|
Net debt
|
318.1
|
Leverage ratio
|
2.7x
|
Proforma net debt
Proforma net debt is calculated as
follows:
£'m
|
Proforma
for strategic actions and return of value
|
Net debt at December 2023 - as
reported
|
(318)
|
Net adjustment for:
|
1,062
|
Proceeds from sales of Digital
Commerce and WGSN
|
|
Costs of the sales and other
strategic review costs
|
|
Cash set aside to acquire
remaining stake in Hudson
|
|
Cash tax
|
|
Return of value
|
(850)
|
Net debt - proforma basis
|
(106)
|
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 of specific product lines are excluded if
are being 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:
2023 (unaudited)
£'m
|
Marketing
|
Financial Technology
|
Corporate Costs
|
Total -
continuing operations
|
Revenue
|
|
|
|
|
2023 - reported
|
130.5
|
75.9
|
-
|
206.4
|
Acquisition of Contagious
|
(2.5)
|
-
|
-
|
(2.5)
|
2023 - Organic basis
|
128.0
|
75.9
|
-
|
203.9
|
Organic revenue growth
|
22%
|
1%
|
-
|
13%
|
|
|
|
|
|
2022 - restated*
|
99.2
|
92.0
|
-
|
191.2
|
Disposal of RWRC
|
-
|
(7.4)
|
-
|
(7.4)
|
Transfer of Acuity
|
4.6
|
(4.6)
|
-
|
-
|
Currency adjustment
|
0.9
|
(4.5)
|
-
|
(3.6)
|
2022 - Organic basis
|
104.7
|
75.5
|
-
|
180.2
|
Adjusted EBITDA
|
|
|
|
|
2023 - restated*
|
55.6
|
26.7
|
(25.9)
|
56.4
|
Acquisition of
Contagious
|
(0.5)
|
-
|
-
|
(0.5)
|
2023 - Organic basis
|
55.1
|
26.7
|
(25.9)
|
55.9
|
Organic EBITDA growth
|
37%
|
(7%)
|
(23%)
|
17%
|
|
|
|
|
|
2022 - restated*
|
40.1
|
31.6
|
(21.8)
|
49.9
|
Disposal of RWRC
|
-
|
0.1
|
-
|
0.1
|
Transfer of Acuity
|
-
|
-
|
-
|
-
|
Currency adjustment
|
0.2
|
(3.1)
|
0.7
|
(2.2)
|
2022 - Organic basis
|
40.3
|
28.6
|
(21.1)
|
47.8
|
* Restated for discontinued
operations (refer to Note 7).
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
|
Non-trading items
|
Items within Operating profit /
(loss) separately identified in accordance with Group accounting
policies
|
Adjusting items
|
Non-trading items, Amortisation and
impairment of intangible assets acquired through business
combinations, Share-based payments, Gains and losses on
acquisitions and disposals, Write-off of unamortised arrangement
fees on refinancing, Covenant amendment fees and Tax related
thereto
|
Adjusted operating profit /
(loss)
|
Operating profit / (loss) excluding
Adjusting items
|
Adjusted EBITDA
|
Adjusted operating profit / (loss)
excluding depreciation and amortisation
|
Adjusted EBITDA margin
|
Adjusted EBITDA as a percentage of
Revenue
|
Adjusted profit / (loss) before
tax
|
Profit / (loss) before tax
excluding Adjusting items
|
Adjusted tax charge
|
Tax charge excluding Adjusting
items
|
Adjusted effective tax
rate
|
Adjusted tax charge expressed as a
percentage of Adjusted profit before tax
|
Adjusted EPS
|
EPS calculated with reference to
Adjusted Profit / (loss) for the year
|
Adjusted diluted EPS
|
Diluted EPS calculated with
reference to Adjusted Profit / (loss) for the year
|
Adjusted cash generated from
operations
|
Cash generated from operations with
cash generated from discontinued operations acquisition-related
contingent consideration and other non-trading cash flows
excluded
|
Operating cash flow
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
|
Proforma net debt
|
Net debt adjusted for (a) the
proceeds, net of cash disposed, from the 2024 disposals of Digital
Commerce and WGSN (b) the cash costs of the disposals and
associated strategic review actions (c) the cash payable to acquire
Hudson (d) the forthcoming £850m return of value to shareholders
and (e) cash taxes
|
Consolidated Statement of Profit or Loss
For the year ended 31 December 2023
(unaudited)
|
|
2023
(unaudited)
|
2022
(restated)*
|
(£
million)
|
Note
|
Adjusted
results
|
Adjusting
items
|
Total
|
Adjusted
results
|
Adjusting
items
|
Total
|
Continuing operations
|
|
|
|
|
|
|
|
Revenue
|
4
|
206.4
|
-
|
206.4
|
191.2
|
-
|
191.2
|
Cost of sales
|
|
(74.2)
|
-
|
(74.2)
|
(65.3)
|
-
|
(65.3)
|
Sales, marketing and administrative
expenses
|
|
(80.7)
|
(20.8)
|
(101.5)
|
(80.6)
|
(18.1)
|
(98.7)
|
Operating profit/(loss)
|
|
51.5
|
(20.8)
|
30.7
|
45.3
|
(18.1)
|
27.2
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
4
|
56.4
|
-
|
56.4
|
49.9
|
-
|
49.9
|
Depreciation, amortisation and
impairment
|
4
|
(4.9)
|
(9.0)
|
(13.9)
|
(4.6)
|
(8.9)
|
(13.5)
|
Non-trading items
|
5
|
-
|
(4.4)
|
(4.4)
|
-
|
(3.6)
|
(3.6)
|
Share-based payments
|
5
|
-
|
(7.4)
|
(7.4)
|
-
|
(5.6)
|
(5.6)
|
Operating profit/(loss)
|
|
51.5
|
(20.8)
|
30.7
|
45.3
|
(18.1)
|
27.2
|
|
|
|
|
|
|
|
|
Finance costs
|
6
|
(26.6)
|
-
|
(26.6)
|
(8.2)
|
-
|
(8.2)
|
Finance income
|
6
|
5.6
|
0.9
|
6.5
|
5.8
|
-
|
5.8
|
|
|
|
|
|
|
|
|
Profit/(loss) before taxation
|
|
30.5
|
(19.9)
|
10.6
|
42.9
|
(18.1)
|
24.8
|
Taxation (charge)/credit
|
|
(8.1)
|
3.3
|
(4.8)
|
(10.9)
|
2.9
|
(8.0)
|
Profit/(loss) from continuing operations
|
|
22.4
|
(16.6)
|
5.8
|
32.0
|
(15.2)
|
16.8
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
Profit/(loss) from discontinued
operations, net of tax
|
7
|
24.7
|
(220.2)
|
(195.5)
|
26.4
|
(148.9)
|
(122.5)
|
Profit/(loss) for the year
|
|
47.1
|
(236.8)
|
(189.7)
|
58.4
|
(164.1)
|
(105.7)
|
|
|
|
|
|
|
|
|
Profit/(loss) attributable to:
|
|
|
|
|
|
|
|
Owners of the Company
|
|
44.6
|
(235.9)
|
(191.3)
|
56.6
|
(153.0)
|
(96.4)
|
Non-controlling interests
(NCI)
|
|
2.5
|
(0.9)
|
1.6
|
1.8
|
(11.1)
|
(9.3)
|
|
|
|
|
|
|
|
|
Earnings/(loss) per share (Basic and Diluted,
pence)
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
- Basic EPS
|
|
5.1
|
(3.8)
|
1.3
|
7.3
|
(3.5)
|
3.8
|
- Diluted EPS
|
|
5.0
|
(3.7)
|
1.3
|
7.2
|
(3.4)
|
3.8
|
Continuing and discontinued operations
|
|
|
|
|
|
|
|
- Basic EPS
|
|
10.2
|
(53.8)
|
(43.6)
|
12.9
|
(34.8)
|
(21.9)
|
- Diluted EPS
|
|
10.0
|
(52.9)
|
(42.9)
|
12.7
|
(34.3)
|
(21.6)
|
*Restated for discontinued
operations, refer to Note 7 for further detail.
Consolidated Statement of Comprehensive
Income
For the year ended 31 December 2023
(unaudited)
|
|
2023
(unaudited)
|
2022
(restated)*
|
(£
million)
|
|
Adjusted
results
|
Adjusting
items
|
Total
|
Adjusted
results
|
Adjusting
items
|
Total
|
Profit/(loss) for the year
from:
|
|
|
|
|
|
|
|
Continuing operations
|
|
22.4
|
(16.6)
|
5.8
|
32.0
|
(15.2)
|
16.8
|
Discontinued operations
|
|
24.7
|
(220.2)
|
(195.5)
|
26.4
|
(148.9)
|
(122.5)
|
Profit/(loss) for the year
|
|
47.1
|
(236.8)
|
(189.7)
|
58.4
|
(164.1)
|
(105.7)
|
|
|
|
|
|
|
|
|
Other Comprehensive income
|
|
|
|
|
|
|
|
Items that have been or may be reclassified subsequently to
profit or loss (net of tax):
|
|
|
|
|
|
|
Exchange translation differences
recognised in equity on translation of foreign
operations
|
(28.8)
|
-
|
(28.8)
|
40.2
|
-
|
40.2
|
Gain on net investment
hedge
|
|
-
|
4.6
|
4.6
|
-
|
-
|
-
|
Other comprehensive income, net of tax
|
|
(28.8)
|
4.6
|
(24.2)
|
40.2
|
-
|
40.2
|
|
|
|
|
|
|
|
Total comprehensive income/(expense) for the year, net of
tax
|
18.3
|
(232.2)
|
(213.9)
|
98.6
|
(164.1)
|
(65.5)
|
Total comprehensive income/(expense) attributable
to:
|
|
|
|
|
|
|
Owners of the Company
|
|
15.8
|
(231.3)
|
(215.5)
|
96.8
|
(153.0)
|
(56.2)
|
Non-controlling
interests
|
|
2.5
|
(0.9)
|
1.6
|
1.8
|
(11.1)
|
(9.3)
|
*Restated for discontinued
operations, refer to Note 7 for further detail.
Consolidated Statement of Financial Position
As
at 31 December 2023 (unaudited)
(£
million)
|
Note
|
2023
(unaudited)
|
2022
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Goodwill
|
|
134.8
|
711.1
|
Intangible assets
|
|
69.6
|
242.4
|
Property, plant and
equipment
|
|
0.6
|
5.7
|
Right-of-use assets
|
|
5.9
|
20.7
|
Investments
|
|
1.7
|
88.5
|
Other receivables
|
|
-
|
42.7
|
Deferred tax assets
|
|
92.2
|
60.3
|
|
|
304.8
|
1,171.4
|
Current assets
|
|
|
|
Inventories
|
|
0.3
|
3.3
|
Trade and other
receivables
|
|
49.2
|
344.9
|
Derivatives
|
|
7.0
|
4.5
|
Cash and cash equivalents
|
|
39.4
|
80.0
|
Assets held for sale
|
7
|
1,205.6
|
-
|
|
|
1,301.5
|
432.7
|
Total assets
|
|
1,606.3
|
1,604.1
|
|
|
|
|
Liabilities
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
|
80.5
|
277.6
|
Deferred income
|
|
54.1
|
116.3
|
Deferred and contingent
consideration
|
|
65.7
|
43.2
|
Lease liabilities
|
|
2.0
|
7.3
|
Current tax liabilities
|
|
5.2
|
8.6
|
Provisions
|
|
5.4
|
2.0
|
Liabilities held for sale
|
7
|
413.9
|
-
|
|
|
626.8
|
455.0
|
Non-current liabilities
|
|
|
|
Deferred income
|
|
-
|
1.0
|
Deferred and contingent
consideration
|
|
-
|
64.9
|
Lease liabilities
|
|
8.9
|
19.5
|
External borrowings
|
8
|
411.6
|
301.2
|
Deferred tax liabilities
|
|
7.6
|
8.6
|
Provisions
|
|
1.9
|
2.0
|
|
|
430.0
|
397.2
|
Total liabilities
|
|
1,056.8
|
852.2
|
Net
assets
|
|
549.5
|
751.9
|
Equity
|
|
|
|
Share capital
|
|
4.4
|
4.4
|
Share premium
|
|
154.1
|
153.6
|
Translation reserve
|
|
(4.5)
|
19.7
|
Other reserves
|
|
165.8
|
166.0
|
Retained earnings
|
|
209.7
|
386.5
|
Shareholders' equity
|
|
529.5
|
730.2
|
Non-controlling interests
|
|
20.0
|
21.7
|
Total equity
|
|
549.5
|
751.9
|
|
|
|
|
Total liabilities and equity
|
|
1,606.3
|
1,604.1
|
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
(unaudited)
(£
million)
|
Note
|
2023
(unaudited)
|
2022
(restated)*
|
Cash flow from operating activities
|
|
|
|
Profit before taxation from
continuing operations
|
|
10.6
|
24.8
|
Loss before taxation from
discontinued operations
|
|
(230.2)
|
(141.8)
|
Loss before tax
|
|
(219.6)
|
(117.0)
|
Adjustments for:
|
|
|
|
Depreciation and
amortisation
|
|
49.8
|
60.3
|
Impairment of assets
|
|
12.8
|
59.9
|
Deferred contingent
consideration
|
|
(1.8)
|
31.5
|
Loss/(gain) on disposal of
businesses
|
|
0.1
|
(6.0)
|
Loss on disposal of intangible
assets and property, plant and equipment
|
|
0.6
|
-
|
Share-based payments
|
|
23.8
|
15.9
|
Share of the loss of
equity-accounted investees, net of tax
|
|
13.3
|
3.2
|
Net finance costs
|
|
132.7
|
18.7
|
Cash generated from operations before changes in working
capital, provisions and deferred and contingent
consideration
|
|
11.7
|
66.5
|
Deferred and contingent
consideration paid
|
|
(42.5)
|
(19.5)
|
Changes in:
|
|
|
|
Inventories
|
|
(4.5)
|
(1.2)
|
Trade and other
receivables
|
|
(67.5)
|
(50.7)
|
Trade and other payables
|
|
94.0
|
58.2
|
Provisions
|
|
4.9
|
0.1
|
Cash (used in) / generated from operations
|
|
(3.9)
|
53.4
|
Adjusted cash generated from
operations
|
|
62.9
|
56.9
|
Cash inflows for discontinued
operations
|
|
42.1
|
68.3
|
Cash outflows for
acquisition-related contingent employment costs**
|
|
(42.5)
|
(19.5)
|
Cash outflows for other Non-trading
items
|
|
(66.4)
|
(52.3)
|
Cash (used in) / generated from operations
|
|
(3.9)
|
53.4
|
Tax paid
|
|
(4.3)
|
(0.2)
|
Net cash (used in) / generated from operating
activities
|
|
(8.2)
|
53.2
|
Cash flow from investing activities
|
|
|
|
Acquisition of subsidiaries, net of
cash acquired
|
|
(6.8)
|
(60.8)
|
Deferred and contingent
consideration paid**
|
|
(27.1)
|
(37.9)
|
Acquisition of
investments
|
|
(3.6)
|
(4.0)
|
Proceeds from sale of
equity-accounted investments
|
9
|
24.9
|
5.3
|
Loan to associate
|
|
(19.5)
|
(30.6)
|
Acquisition of software intangibles
and property, plant and equipment
|
|
(41.2)
|
(35.9)
|
Disposal of businesses, net of cash
disposed
|
|
-
|
0.6
|
Net cash used in investing activities
|
|
(73.3)
|
(163.3)
|
Consolidated Statement of Cash Flows
(continued)
For the year ended 31 December 2023
(unaudited)
(£
million)
|
Note
|
2023
(unaudited)
|
2022
(restated)*
|
Cash flow from financing activities
|
|
|
|
Proceeds from external
borrowings
|
8
|
170.1
|
176.8
|
Repayment of external
borrowings
|
8
|
(47.5)
|
(53.8)
|
Proceeds from issue of
shares
|
|
0.5
|
0.3
|
Share repurchase
|
|
(5.7)
|
(3.7)
|
Net interest and arrangement fees
paid
|
|
(15.7)
|
(9.0)
|
Net lease liabilities
paid
|
|
(8.1)
|
(7.3)
|
Dividends paid to non-controlling
interests
|
|
(2.2)
|
(2.8)
|
Net cash generated from financing activities
|
|
91.4
|
100.5
|
Net increase/(decrease) in cash and cash
equivalents
|
|
9.9
|
(9.6)
|
Cash and cash equivalents at 1
January
|
|
80.0
|
84.1
|
Effect of exchange rate
changes
|
|
(3.4)
|
5.5
|
Cash and cash equivalents (including cash held in disposal
groups)
at
31 December
|
|
86.5
|
80.0
|
|
|
|
|
Cash and cash equivalents held in
disposal group presented as held for sale
at 31 December
|
|
47.1
|
-
|
Cash and cash equivalents at 31 December
|
|
39.4
|
80.0
|
*Restated for discontinued
operations, refer to Note 7 for further detail.
**Includes payments for both deferred
and contingent consideration recognised on initial acquisition as
well as any subsequent remeasurements. Payments linked to ongoing
employment in addition to business performance are shown within
cash generated from operations.
Notes to the Condensed Consolidated Financial
Statements
For
the year ended 31 December 2023 (unaudited)
1. Basis of
preparation
These condensed consolidated financial statements of
Ascential plc (the "Company") and its subsidiaries (the "Group")
have been prepared in accordance with Companies Act 2006 and
UK-adopted international accounting
standards ("UK-adopted IFRS").
Ascential plc is a public company,
which is listed on the London Stock Exchange, registered in England and Wales, incorporated and domiciled in the United Kingdom. The
registered office is located at 33 Kingsway, London, WC2B
6UF. The Company is principally engaged in the provision of
industry-specific events, intelligence and advisory
services. The principal activities in the year
were information services for digital commerce, product design, marketing, and retail & financial
services. Following the disposal of the
Digital Commerce and Product Design businesses in early 2024 (see
Note 7), the principal activities are events, intelligence and
advisory services for the Marketing and Financial Technology
industries.
The condensed consolidated
financial statements are presented in Pounds Sterling
("GBP"), which is the Company's functional currency, and have been
rounded to millions to the nearest one decimal place except where
otherwise indicated.
The condensed consolidated
financial statements have been prepared on a going concern basis
and under the historical cost convention, with the exception of
items that are required by IFRS to be measured at fair
value.
The financial information set out
above does not constitute the company's statutory accounts for the
year ended 31 December 2023 or 31 December 2022. The financial
information for the year ended 31 December 2022 is derived from the
statutory accounts for 2022 which have been delivered to the
registrar of companies. The auditor has reported on the 2022
accounts; their report was (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report and (iii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006. The statutory accounts for 2023 will be finalised on the
basis of the financial information presented by the directors in
this preliminary announcement and will be delivered to the
registrar of companies in due course.
2. Accounting
policies
The principal accounting policies
in the preparation of the condensed
consolidated financial statements have been
applied consistently to both periods presented.
3. Critical accounting
judgements and estimates
The preparation of these financial
statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses,
assets and liabilities, and the accompanying disclosures, and the
disclosure of contingent liabilities. 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 significant degree of judgement or estimation are set
out below and in more detail in the related notes.
Critical accounting judgements
In the process of applying the
Group's accounting policies, management has made the following
accounting judgements, which have the most significant effect on
the amounts recognised in the condensed consolidated financial
statements:
Hudson (Note 9)
Ascential has a significant
investment in Hudson MX, Inc. ("Hudson"), an advertising software
business providing media buying and media accounting solutions
through a cloud-based software as a service ("SaaS") platform.
Critical accounting judgements in respect of Hudson
include:
● Whether
we exercised significant influence or control over the relevant
activities of Hudson and therefore over what periods we should
equity account or consolidate Hudson into Ascential's financial
statements;
● The
treatment of options, common stock and preference share
investments, including whether the potential voting rights
conferred gave us significant influence or control and if they had
substance from an ability to exercise standpoint;
●
Classification of liabilities and equity, whether they are
extinguished on step accounting, classification and what value to
take as part of consideration or net assets acquired upon step
accounting between equity accounting and acquisition;
● Whether
Hudson should be treated as held for sale;
● Whether
Hudson should be treated as a discontinued operation.
Key
sources of estimation uncertainty
Hudson (Note 9)
We have been required to make a
number of significant estimates in respect to our investment in
Hudson, including:
● Upon our
assumption of control for accounting purposes, the values of
consideration and the identification and fair values of the assets
and liabilities acquired;
● The fair
value less costs to sell of assets classified as held for
sale.
4. Operating
Segments
The Group
has two continuing reportable segments
that are used to present information to the
Board (Chief Operating Decision Maker). End market risks and
opportunities vary, and capital allocation decisions are made on
the basis of those two reportable segments,
namely Marketing and Financial Technology.
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
operations in each of the Group's continuing reportable
segments:
●
Marketing: events, intelligence and advisory that champion creative
marketing that matters through improving creative impact and
marketing effectiveness.
●
Financial Technology: events and intelligence that improve
performance and drive innovation for the global money
ecosystem.
In 2023, Acuity was transferred
from the Financial Technology segment into the Marketing segment.
The 2022 comparatives have not been restated and so the Financial
Technology segment includes revenue of £4.6m and an Adjusted EBITDA
of £nil in relation to this business. Discontinued operations
consists of the Digital Commerce and
Product Design segments, disposed of subsequent to the year end,
and Hudson MX which is expected to be disposed of in 2024
(refer to Note 7 and
Note 9 for further
detail).
Information regarding the results
of each reportable segment is included below and prior periods are represented to reflect discontinued
operations to provide comparability. 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.
Year ended 31 December 2023 (unaudited)
(£
million)
|
Marketing
|
Financial
Technology
|
Corporate
costs
|
Continuing operations
total
|
Discontinued
operations
|
Total
|
|
|
Revenue
|
130.5
|
75.9
|
-
|
206.4
|
379.9
|
586.3
|
|
Adjusted EBITDA
|
55.6
|
26.7
|
(25.9)
|
56.4
|
65.6
|
122.0
|
|
Depreciation and software
amortisation
|
(2.8)
|
(0.1)
|
(2.0)
|
(4.9)
|
(17.3)
|
(22.2)
|
|
Adjusted operating profit/(loss)
|
52.8
|
26.6
|
(27.9)
|
51.5
|
48.3
|
99.8
|
|
Amortisation of acquired intangible
assets and impairment
|
|
|
|
(9.0)
|
(30.3)
|
(39.3)
|
|
Non-trading items
|
|
|
|
(4.4)
|
(105.9)
|
(110.3)
|
|
Share-based payments
|
|
|
|
(7.4)
|
(16.4)
|
(23.8)
|
|
Operating profit/(loss)
|
|
|
|
30.7
|
(104.3)
|
(73.6)
|
|
Share of net loss in
equity-accounted investee
|
|
|
|
-
|
(13.3)
|
(13.3)
|
|
Finance costs
|
|
|
|
(26.6)
|
(124.7)
|
(151.3)
|
|
Finance income
|
|
|
|
6.5
|
12.1
|
18.6
|
|
Profit/(loss) before tax
|
|
|
|
10.6
|
(230.2)
|
(219.6)
|
|
Year ended 31 December 2022 (restated)*
(£
million)
|
Marketing
|
Financial
Technology
|
Corporate
costs
|
Continuing operations
total
|
Discontinued
operations
|
Total
|
|
|
Revenue
|
99.2
|
92.0
|
-
|
191.2
|
333.2
|
524.4
|
|
Adjusted EBITDA
|
40.1
|
31.6
|
(21.8)
|
49.9
|
71.2
|
121.1
|
|
Depreciation and software
amortisation
|
(2.6)
|
(0.9)
|
(1.1)
|
(4.6)
|
(21.1)
|
(25.7)
|
|
Adjusted operating profit/(loss)
|
37.5
|
30.7
|
(22.9)
|
45.3
|
50.1
|
95.4
|
|
Amortisation of acquired intangible
assets and impairment
|
|
|
|
(8.9)
|
(82.7)
|
(91.6)
|
|
Non-trading items
|
|
|
|
(4.6)
|
(83.5)
|
(88.1)
|
|
Profit on disposal of
business
|
|
|
|
1.0
|
4.1
|
5.1
|
|
Share-based payments
|
|
|
|
(5.6)
|
(10.3)
|
(15.9)
|
|
Operating profit/(loss)
|
|
|
|
27.2
|
(122.3)
|
(95.1)
|
|
Share of net loss in
equity-accounted investee
|
|
|
|
-
|
(3.2)
|
(3.2)
|
|
Finance costs
|
|
|
|
(8.2)
|
(19.4)
|
(27.6)
|
|
Finance income
|
|
|
|
5.8
|
3.1
|
8.9
|
|
Profit/(loss) before tax
|
|
|
|
24.8
|
(141.8)
|
(117.0)
|
|
*Restated for discontinued operations
(refer to Note 7).
Non-trading items within continuing
operations of £4.4m (2022:
£4.6m) include costs attributable to
Marketing of £0.7m (2022:
£nil), Financial Technology of
£0.3m (2022: £nil)
and Corporate of £3.4m (2022:
£4.6m).
Additional segmental information on revenue
The following table shows revenue
disaggregated by major service lines, and the timing of revenue
recognition:
(£
million)
|
Timing of revenue recognition
|
2023
(unaudited)
|
2022
(restated)*
|
Delegates
|
Point in time
|
56.7
|
58.3
|
Sponsorship
|
Point in time
|
79.3
|
67.4
|
Events
|
|
136.0
|
125.7
|
Benchmarking awards
|
Point in time
|
30.9
|
27.8
|
Subscriptions
|
Over time
|
30.2
|
30.2
|
Advisory
|
Over time
|
9.3
|
7.5
|
Non-events
|
|
70.4
|
65.5
|
|
|
|
|
Revenue from continuing operations
|
|
206.4
|
191.2
|
*Restated for discontinued operations
(refer to Note 7).
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 provide a greater insight into the
Group's financial performance. 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. Adjusting items aim to
facilitate a comparative understanding of the Group's financial
performance from period to period by removing the effect of
share-based payment charges, amortisation of intangibles acquired
through business combinations, impairment and Non-trading items
such as costs incurred for acquisitions and disposals, integration,
non-recurring business restructuring and capital restructuring. The
tax effect of Adjusting items is also included within Adjusting
items.
Adjusting items included in
continuing operating profit/(loss) are:
(£
million)
|
Note
|
2023
(unaudited)
|
2022
(restated)*
|
Strategic review costs
|
|
(1.5)
|
-
|
Transaction and integration
costs
|
|
(0.7)
|
(0.7)
|
Profit/(loss) on disposal of
businesses
|
|
(0.3)
|
1.0
|
Property impairments and
provisions
|
|
(1.9)
|
(3.9)
|
Non-trading items
|
|
(4.4)
|
(3.6)
|
Amortisation of acquired intangible
assets
|
|
(9.0)
|
(8.9)
|
Share-based payments
|
|
(7.4)
|
(5.6)
|
Adjusting items included within operating
profit/(loss)
|
|
(20.8)
|
(18.1)
|
* Restated for discontinued
operations (refer to Note 7).
Strategic review costs totalling
£1.5m (2022: £nil) relate to costs incurred to set up the
continuing Events business, as a result of the separation, such as
investor relations and rebranding costs. The related net tax impact
is a credit of £0.3m.
Transaction and integration costs
totalling £0.7m (2022:
£0.7m) comprise professional fees for
diligence as well as the costs of integrating acquisitions
which in 2023 related to the acquisition of
Contagious. Transaction costs are generally
non-deductible for tax purposes, whilst integration costs of
£0.1m give rise to a tax credit of
£nil.
The loss on disposal of businesses
of £0.3m (2022: profit of £1.0m) within continuing operations
relates to the additional costs on disposal of Retail Week World
Retail Congress ("RWRC").
Costs in relation to property
impairments and provisions in 2023 of £1.9m (2022: £3.9m) 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.
The charge for share-based
payments of £7.4m (2022: £5.6m) incorporates the Share Incentive
Plan, the SAYE and the Performance Share Plan. As explained in the
Alternative Performance Measures section, the Group treats
share-based payments as an Adjusting item because they are a
significant non-cash charge driven by a valuation model that
references Ascential's share price and so is subject to volatility
rather than referencing operational activity. Share-based payment
expenses give rise to a tax credit of £1.1m to income statement net
of a £1.4m charge through equity.
6. Finance costs and finance
income
(£
million)
|
Note
|
2023
(unaudited)
|
|
2022
(restated)*
|
Interest on deposits and
derivatives
|
|
5.6
|
0.5
|
Fair value gain on derivative
financial instruments
|
|
-
|
4.3
|
Foreign exchange gain
|
|
-
|
1.0
|
Adjusted finance income
|
|
5.6
|
5.8
|
Remeasurement of trade investments
to fair value
|
|
0.9
|
-
|
Adjusting finance income
|
|
0.9
|
-
|
Total finance income
|
|
6.5
|
5.8
|
Interest payable on external
borrowings
|
|
(21.3)
|
(7.4)
|
Amortisation of arrangement
fees
|
8
|
(0.8)
|
(0.8)
|
Discount unwind of lease
liability
|
|
(0.1)
|
-
|
Discount unwind on
provisions
|
|
(0.1)
|
-
|
Fair value loss on derivative
financial instruments
|
|
(4.3)
|
-
|
Adjusted finance costs
|
|
(26.6)
|
(8.2)
|
Net finance costs from continuing operations
|
|
(20.1)
|
(2.4)
|
* Restated for discontinued
operations (refer to Note 7).
7. Discontinued
operations
On 30 October 2023, the
Group announced that it had entered into
agreements to sell its Digital Commerce and WGSN businesses.
Although these agreements were subject to shareholder
approval, which was obtained on 18 December 2023,
the Group believed that it was highly probable that the
transactions would complete within 12 months of the date of the
announcement and so were classified as disposal groups held for
sale and discontinued operations from that date. The Digital
Commerce transaction completed on 2 January 2024, the WGSN
transaction completed on 1 February 2024 and the Hudson transaction
is expected in the first half of 2024.
The results of Digital
Commerce, WGSN and
Hudson for the year are presented
below. For further details of the investment in Hudson see Note
9:
a. Digital Commerce:
(£
million)
|
2023
(unaudited)
|
2022
|
Adjusted
results
|
Adjusting
items
|
Total
|
Adjusted
results
|
Adjusting
items
|
Total
|
Revenue
|
263.5
|
-
|
263.5
|
226.1
|
-
|
226.1
|
Cost of sales
|
(158.4)
|
-
|
(158.4)
|
(126.1)
|
-
|
(126.1)
|
Sales, marketing and administrative
expenses
|
(105.9)
|
(112.9)
|
(218.8)
|
(94.6)
|
(166.2)
|
(260.8)
|
Impairment loss on trade
receivables and contract assets
|
(4.6)
|
-
|
(4.6)
|
(5.3)
|
-
|
(5.3)
|
Operating profit/(loss)
|
(5.4)
|
(112.9)
|
(118.3)
|
0.1
|
(166.2)
|
(166.1)
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
8.9
|
-
|
8.9
|
17.9
|
-
|
17.9
|
Depreciation, amortisation and
impairment
|
(14.3)
|
(30.1)
|
(44.4)
|
(17.8)
|
(82.5)
|
(100.3)
|
Non-trading items
|
-
|
(69.9)
|
(69.9)
|
-
|
(75.5)
|
(75.5)
|
Share-based payments
|
-
|
(12.9)
|
(12.9)
|
-
|
(8.2)
|
(8.2)
|
Operating profit/(loss)
|
(5.4)
|
(112.9)
|
(118.3)
|
0.1
|
(166.2)
|
(166.1)
|
Finance costs
|
(6.8)
|
-
|
(6.8)
|
(13.6)
|
(5.3)
|
(18.9)
|
Finance income
|
0.1
|
1.7
|
1.8
|
-
|
-
|
-
|
Loss before tax from discontinued operations
|
(12.1)
|
(111.2)
|
(123.3)
|
(13.5)
|
(171.5)
|
(185.0)
|
Tax credit/(charge)
|
(0.1)
|
22.1
|
22.0
|
1.1
|
28.9
|
30.0
|
Loss from discontinued operations, net of
tax
|
(12.2)
|
(89.1)
|
(101.3)
|
(12.4)
|
(142.6)
|
(155.0)
|
b. WGSN:
(£
million)
|
2023
(unaudited)
|
2022
|
Adjusted
results
|
Adjusting
items
|
Total
|
Adjusted
results
|
Adjusting
items
|
Total
|
Revenue
|
114.9
|
-
|
114.9
|
107.1
|
-
|
107.1
|
Cost of sales
|
(20.1)
|
-
|
(20.1)
|
(20.6)
|
-
|
(20.6)
|
Sales, marketing and administrative
expenses
|
(38.2)
|
(37.7)
|
(75.9)
|
(35.5)
|
(4.4)
|
(39.9)
|
Impairment loss on trade
receivables and contract assets
|
(1.3)
|
-
|
(1.3)
|
(1.2)
|
-
|
(1.2)
|
Operating profit/(loss)
|
55.3
|
(37.7)
|
17.6
|
49.8
|
(4.4)
|
45.4
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
58.3
|
-
|
58.3
|
53.1
|
-
|
53.1
|
Depreciation, amortisation and
impairment
|
(3.0)
|
(0.2)
|
(3.2)
|
(3.3)
|
(0.2)
|
(3.5)
|
Non-trading items
|
-
|
(34.0)
|
(34.0)
|
-
|
(2.1)
|
(2.1)
|
Share-based payments
|
-
|
(3.5)
|
(3.5)
|
-
|
(2.1)
|
(2.1)
|
Operating profit/(loss)
|
55.3
|
(37.7)
|
17.6
|
49.8
|
(4.4)
|
45.4
|
Share of the loss of
associates
|
(0.1)
|
-
|
(0.1)
|
(0.4)
|
-
|
(0.4)
|
Finance costs
|
(0.3)
|
-
|
(0.3)
|
(0.5)
|
-
|
(0.5)
|
Finance income
|
0.1
|
-
|
0.1
|
-
|
-
|
-
|
Profit/(loss) before tax from discontinued
operations
|
55.0
|
(37.7)
|
17.3
|
48.9
|
(4.4)
|
44.5
|
Tax credit/(charge)
|
(14.4)
|
4.0
|
(10.4)
|
(11.2)
|
0.5
|
(10.7)
|
Profit/(loss) from discontinued operations, net of
tax
|
40.6
|
(33.7)
|
6.9
|
37.7
|
(3.9)
|
33.8
|
c. Hudson:
(£
million)
|
2023
(unaudited)
|
2022
|
Adjusted
results
|
Adjusting
items
|
Total
|
Adjusted
results
|
Adjusting
items
|
Total
|
Revenue
|
1.5
|
-
|
1.5
|
-
|
-
|
-
|
Cost of sales
|
(1.8)
|
-
|
(1.8)
|
-
|
-
|
-
|
Sales, marketing and administrative
expenses
|
(1.3)
|
(2.0)
|
(3.3)
|
0.2
|
(0.9)
|
(0.7)
|
Operating profit/(loss)
|
(1.6)
|
(2.0)
|
(3.6)
|
0.2
|
(0.9)
|
(0.7)
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
(1.6)
|
-
|
(1.6)
|
0.2
|
-
|
0.2
|
Depreciation, amortisation and
impairment
|
-
|
-
|
-
|
-
|
-
|
-
|
Non-trading items
|
-
|
(2.0)
|
(2.0)
|
-
|
(0.9)
|
(0.9)
|
Operating profit/(loss)
|
(1.6)
|
(2.0)
|
(3.6)
|
0.2
|
(0.9)
|
(0.7)
|
Share of the loss of
associates
|
(12.3)
|
(0.9)
|
(13.2)
|
(2.2)
|
(0.6)
|
(2.8)
|
Finance costs
|
-
|
(117.6)
|
(117.6)
|
-
|
-
|
-
|
Finance income
|
10.2
|
-
|
10.2
|
3.1
|
-
|
3.1
|
Profit/(loss) before tax from discontinued
operations
|
(3.7)
|
(120.5)
|
(124.2)
|
1.1
|
(1.5)
|
(0.4)
|
Tax credit/(charge)
|
-
|
23.1
|
23.1
|
-
|
-
|
-
|
Profit/(loss) from discontinued operations, net of
tax
|
(3.7)
|
(97.4)
|
(101.1)
|
1.1
|
(1.5)
|
(0.4)
|
d. Total discontinued
operations
(£
million)
|
2023
(unaudited)
|
2022
|
Adjusted
results
|
Adjusting
items
|
Total
|
Adjusted
results
|
Adjusting
items
|
Total
|
Revenue
|
379.9
|
-
|
379.9
|
333.2
|
-
|
333.2
|
Cost of sales
|
(180.3)
|
-
|
(180.3)
|
(146.7)
|
-
|
(146.7)
|
Sales, marketing and administrative
expenses
|
(145.4)
|
(152.6)
|
(298.0)
|
(129.9)
|
(172.4)
|
(302.3)
|
Impairment loss on trade
receivables and contract assets
|
(5.9)
|
-
|
(5.9)
|
(6.5)
|
-
|
(6.5)
|
Operating profit/(loss)
|
48.3
|
(152.6)
|
(104.3)
|
50.1
|
(172.4)
|
(122.3)
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
65.6
|
-
|
65.6
|
71.2
|
-
|
71.2
|
Depreciation, amortisation and
impairment
|
(17.3)
|
(30.3)
|
(47.6)
|
(21.1)
|
(82.7)
|
(103.8)
|
Non-trading items
|
-
|
(105.9)
|
(105.9)
|
-
|
(79.4)
|
(79.4)
|
Share-based payments
|
-
|
(16.4)
|
(16.4)
|
-
|
(10.3)
|
(10.3)
|
Operating profit/(loss)
|
48.3
|
(152.6)
|
(104.3)
|
50.1
|
(172.4)
|
(122.3)
|
Share of the loss of
associates
|
(12.4)
|
(0.9)
|
(13.3)
|
(2.6)
|
(0.6)
|
(3.2)
|
Finance costs
|
(7.1)
|
(117.6)
|
(124.7)
|
(14.1)
|
(5.3)
|
(19.4)
|
Finance income
|
10.4
|
1.7
|
12.1
|
3.1
|
-
|
3.1
|
Loss before tax from discontinued operations
|
39.2
|
(269.4)
|
(230.2)
|
36.5
|
(178.3)
|
(141.8)
|
Tax credit/(charge)
|
(14.5)
|
49.2
|
34.7
|
(10.1)
|
29.4
|
19.3
|
Profit/(loss) from discontinued operations, net of
tax
|
24.7
|
(220.2)
|
(195.5)
|
26.4
|
(148.9)
|
(122.5)
|
e. Adjusting items:
Adjusting items included within
discontinued operations include Non-trading items as
follows:
(£
million)
|
|
2023
(unaudited)
|
2022
(restated)*
|
Strategic review costs
|
|
(83.5)
|
(15.0)
|
Transaction and integration
costs
|
|
(17.3)
|
(15.5)
|
ERP and Salesforce
implementation
|
|
(7.1)
|
(21.6)
|
Profit on disposal of
businesses
|
|
0.2
|
4.1
|
Acquisition-related employment
costs and earn out revaluations
|
|
1.8
|
(31.4)
|
Non-trading items
|
|
(105.9)
|
(79.4)
|
Strategic review costs of £83.5m
(2022: £15.0m) related to resources and professional fees incurred
specifically in respect of the sales of the Digital Commerce and
WGSN businesses, as well as the necessary restructuring and
reduction of Ascential's central corporate function as a result of
the disposal of such a large proportion of the Group. These costs
related to resources and professional fees for project management,
tax and legal structuring, activities relating to the aborted US
listing, legal and professional advisor support as well as
severance and retention incentives for key personnel impacted by
the separation of the Group. Fees also include success fees paid to
the banks managing the disposal processes. The vast majority of
these costs have been recognised in 2023 either as services have
been provided or, for contingent success fees, on shareholder
approval of the disposals which occurred in December 2023. These
costs generate a tax credit of £11.5m (2022: £0.9m).
Transaction and integration costs
of £17.3m (2022: £15.5m) comprise professional fees for diligence
and legal costs for acquisitions and investments as well as the
costs of integrating acquisitions, such as the acquisitions of
Sellics and Intrepid by the Digital Commerce business in 2022 and
their subsequent integration. It also includes the execution of a
significant staff reduction in the second half of 2023 following
the product integration and launch of the Digital Commerce combined
product Flywheel Commerce Cloud. These costs generate a tax credit
of £4.4m (2022: £2.3m).
Acquisition-related employment
costs and revaluations of £1.8m credit (2022: £31.4m debit) relates
to the revaluation of deferred contingent consideration as a result
of updates to actual or expected performance along with costs
associated with the element of purchase consideration connected
directly not only with the performance of the acquiree, but on the
continuing employment of the founder. These costs generate a tax
credit of £2.7m (2022: £5.8m).
The ERP and Salesforce
implementation fees of £7.1m (2022: £21.6m) are in respect of the
final year of a multi-year programme to implement a new ERP in
Digital Commerce to replace the Oracle system introduced in 2007
and a new instance of Salesforce, both of which are cloud-based.
The implementation costs are subject to the IFRIC agenda decision
relating to IAS 38 taken after initiation of the project and
accordingly were required to be expensed. Given the materiality and
once-in-a-decade nature, these costs were recorded as Non-trading
items. These costs generate a tax credit of £1.7m (2022:
£4.1m).
2022 includes a £5.0m profit on
the sale of our trade investment Analytic Index which was
previously accounted for as an associate.
Depreciation, amortisation and
impairment included in Adjusting items within discontinued
operations for the year of £30.3m (2022: £82.7m) include a £11.7m
impairment in respect to Flywheel brand intangibles within Digital
Commerce as a result of the decision to move to a single brand
"Flywheel Digital". 2022 includes £57.0m impairment in respect to
ASR (£25.6m) and Edge (£31.4m) brand assets.
Finance costs include fair value
adjustments relating to the transition of Hudson between an
equity-accounted associate and full consolidation in the period of
£116.7m (2022: £nil) (see Note 9 for further details). We recognise
a deferred tax asset of £23.1m (2022: £nil) in respect of these
fair value adjustments.
Exchange translation differences
recognised between the date of classification as held for sale and
31 December 2023 are reflected in other comprehensive
income.
The major classes of assets and
liabilities classified as held for sale as at 31 December are, as
follows:
|
Digital
Commerce
|
WGSN
|
Total
|
(£
million)
|
2023
(unaudited)
|
2023
(unaudited)
|
2023
(unaudited)
|
Assets
|
|
|
|
Goodwill
|
398.1
|
154.4
|
552.5
|
Intangible assets
|
145.8
|
5.0
|
150.8
|
Property, plant and
equipment
|
5.7
|
0.4
|
6.1
|
Right-of-use assets
|
8.3
|
0.5
|
8.8
|
Investments
|
11.6
|
3.6
|
15.2
|
Inventories
|
6.4
|
1.0
|
7.4
|
Trade and other
receivables
|
323.5
|
27.7
|
351.2
|
Cash and cash
equivalents
|
33.8
|
11.8
|
45.6
|
Deferred tax assets
|
-
|
5.5
|
5.5
|
Assets held for sale
|
933.2
|
209.9
|
1,143.1
|
Assets held for sale relating to
subsidiary acquired exclusively with a view to resale
|
|
|
62.5
|
Total assets held for sale
|
|
|
1,205.6
|
|
|
|
|
Liabilities
|
|
|
|
Trade and other payables
|
280.2
|
9.7
|
289.9
|
Deferred income
|
12.5
|
55.7
|
68.2
|
Deferred and contingent
consideration
|
36.0
|
-
|
36.0
|
Lease liabilities
|
8.7
|
0.4
|
9.1
|
Deferred tax liabilities
|
5.6
|
-
|
5.6
|
Provisions
|
1.7
|
0.1
|
1.8
|
Liabilities held for sale
|
344.7
|
65.9
|
410.6
|
Liabilities held for sale relating
to subsidiary acquired exclusively with a view to resale
|
|
|
3.3
|
Total liabilities held for sale
|
|
|
413.9
|
|
|
|
|
Net assets directly associated with disposal
group
|
|
|
791.7
|
Amounts included in reserves directly associated with disposal
group
|
|
|
|
Non-controlling interest
|
|
|
20.0
|
Translation reserve
|
|
|
28.0
|
Reserve of disposal group classified as held for
sale
|
|
|
48.0
|
The net cash flows
generated/(incurred) by
discontinued operations were as
follows:
(£
million)
|
2023
(unaudited)
|
2022
|
Operating
|
(63.5)
|
5.4
|
Investing
|
(60.4)
|
(159.4)
|
Financing
|
139.6
|
154.6
|
Net cash inflow/(outflow)
|
15.7
|
0.6
|
8. Borrowings
During the year, the Group had a
multi-currency revolving credit facility ('RCF') of £450m with a
syndicate of lenders, plus an accordion to raise further debt
amounts, at the options of the lenders, of up to the greater of
£120m or 150% of EBITDA. This facility was available until January
2025 and the RCF could be drawn in tranches for each interest rate
period. These tranches of debt could be rolled over at the end of
the interest period subject to covenant compliance on the request
date. The Group was in compliance with covenants throughout the
year.
At 31 December 2023, the
borrowings were subject to interest at a margin of 1.60% over the
relevant currency interest rate benchmarks. The facility covenants
included a maximum net leverage of 3.25x with the benefit of
additional 0.5x leverage spikes for relevant acquisitions and a
minimum interest cover of 3.00x and were tested
semi-annually.
At 31 December 2023, the maturity
profile of the Group's borrowings, which consisted entirely of the
RCF, was as follows:
(£
million)
|
2023
(unaudited)
|
2022
|
Non-current
|
|
|
One to two years
|
411.6
|
-
|
Two to five years
|
-
|
301.2
|
Total borrowings
|
411.6
|
301.2
|
Borrowings are shown net of
unamortised issue costs of £0.8m (2022: £1.6m). The carrying
amounts of borrowings approximate their fair value. The Group's
borrowings at 31 December 2023 were denominated in Pounds Sterling,
US Dollars and Euros amounting to £77.0m, $311.0m and €105.0m
respectively (2022: $233.0m and €124.5m).
On 19 December 2023, the Group
signed a new 4 year multi-currency revolving credit facility
("RCF") of £225.0m with an accordion of up to a further £75.0m or
100% of EBITDA. The Group can request a further one year extension
to the facility at the option of individual lenders. The RCF became
effective on 8 January 2024 following the repayment of the previous
RCF Facility and the disposal of the Digital Commerce business on 2
January 2024. The new RCF is subject to interest of between 2.05%
and 3.25% per annum over SONIA, EURIBOR or US Dollar SOFR. The
margin increases over a range of 1.00x to 3.00x net debt to EBITDA.
The facility covenants include a maximum net leverage of 3.00x and
a minimum interest cover of 3.00x and are tested semi-annually.
Upon completion of the new agreement, capitalised arrangement fees
of £0.8m relating to the previous facility will be written off in
2024 as an Adjusting finance cost. We expect fees of £2.9m to be
capitalised as part of the new arrangements and these shall be
amortised over the expected life of the facility.
Reconciliation of movement in Net Debt
(£
million)
|
Cash**
|
Cash in
transit
|
Short-term
deposits
|
Derivatives
|
Borrowings
|
Net debt*
|
At
1 January 2022
|
55.7
|
0.4
|
28.0
|
0.2
|
(158.1)
|
(73.8)
|
Exchange differences
|
5.5
|
-
|
-
|
-
|
(19.3)
|
(13.8)
|
Proceeds from external
borrowings
|
-
|
-
|
-
|
-
|
(176.8)
|
(176.8)
|
Repayment of external
borrowings
|
-
|
-
|
-
|
-
|
53.8
|
53.8
|
Fair value movement
|
-
|
-
|
-
|
4.3
|
-
|
4.3
|
Amortisation of debt arrangement
fees
|
-
|
-
|
-
|
-
|
(0.8)
|
(0.8)
|
Net cash movement
|
(2.2)
|
0.5
|
(7.9)
|
-
|
-
|
(9.6)
|
At
1 January 2023
|
59.0
|
0.9
|
20.1
|
4.5
|
(301.2)
|
(216.7)
|
Exchange differences
|
(2.6)
|
-
|
-
|
-
|
13.0
|
10.4
|
Proceeds from external
borrowings
|
-
|
-
|
-
|
-
|
(170.1)
|
(170.1)
|
Repayment of external
borrowings
|
-
|
-
|
-
|
-
|
47.5
|
47.5
|
Fair value movement
|
-
|
-
|
-
|
1.5
|
-
|
1.5
|
Net interest accrued
|
-
|
-
|
-
|
4.0
|
-
|
4.0
|
Amortisation of debt arrangement
fees
|
-
|
-
|
-
|
-
|
(0.8)
|
(0.8)
|
Net cash movement
|
16.1
|
(0.3)
|
(6.7)
|
(3.0)
|
-
|
6.1
|
At
31 December 2023 (unaudited)
|
72.5
|
0.6
|
13.4
|
7.0
|
(411.6)
|
(318.1)
|
* Refer to the Glossary of
Alternative Performance Measures for the definition of Net Debt
** Includes £47.1m of cash classified as held for sale (including
restricted cash) as at 31 December 2023
Cash and cash equivalents at 31
December 2023 of £86.5m (2022: £80.0m) relate to bank balances,
including short‑term deposits with an original maturity date of
less than three months, and cash in transit.
9. Hudson
Ascential has a significant
investment in Hudson MX, Inc. ("Hudson").
A. Critical accounting
judgements
Assessment of control
We have considered whether the
nature of the relationship with Hudson, including rights under the
terms of the common and preference stock investments and any other
agreements, gave Ascential significant influence or control over
the activities of Hudson. Control exists when an investor is
exposed to variable returns from their involvement with an investee
and has the ability to affect those returns through their power
over that investee.
As a result of the February 2023
financing and capital restructuring, we assessed Ascential could
not 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 did not give it majority power.
We judged that our customary protective veto rights over
significant changes to Hudson, including actions which could change
the credit risk of the business, were protective in nature and
related to fundamental changes to Hudson that only apply in
exceptional circumstances. We further concluded that while
Ascential may acquire control of Hudson in the future if a put
option held by MTII were exercised, this was not within the control
of Ascential and therefore did not indicate control. Ascential had
two call options neither of which would result in it holding a
majority of the voting rights of Hudson and neither were considered
to be substantive at that date because neither were exercisable
until a later date. We therefore determined that we continued to
have significant influence over Hudson and accounted for our
investment using the equity method under IAS 28 "Investments in
Associates and Joint Ventures".
The 30 October 2023 agreement gave
Ascential potential voting rights in Hudson that could be currently
exercised by introducing the Early Call option that allows
Ascential to acquire majority voting rights immediately and until 1
April 2024. With no significant financial or other encumbrances to
prevent exercise from October 2023, from an accounting perspective,
the potential voting rights granted by the new Early Call option
give Ascential power over the operational decisions of Hudson at
any time from 30 October 2023. In making this determination, we
have considered that the new Early Call option is substantive given
the agreement to purchase MTII's common stock by 15 April
2024.
We have therefore concluded that
the Group exercised control over Hudson from 30 October 2023
onwards and have ceased equity accounting for our investment and
consolidated Hudson into Ascential's financial statements from that
point.
Classification of Hudson as held for
sale and as a discontinued operation
On 30 October 2023, MTII and
Ascential agreed to the initiation of the sale process for Hudson.
Hudson is available for immediate sale, is being actively marketed
and can be sold in its current condition. We believe that the sale
is highly probable and will complete within 12 months. Accordingly,
Hudson was classified as a disposal group held for sale and
discontinued operation from that date as it has been acquired
exclusively with a view to resale. The fair value loss, which is
disclosed below, has been shown within discontinued operations in
order to provide a more relevant picture of continuing
operations.
B. Key sources of estimation
uncertainty - Acquisition of subsidiary
Following the acquisition of
control, we derecognised our existing investments in common stock
and preference shares and, adjusting these to fair value, these
formed part of our acquisition consideration. Consideration also
included the fair value of liabilities payable of £67.9m,
representing both the deferred payment to MTII for acquiring their
51% common stock holding in Hudson, which will become due on 16
April 2024 at the latest, and the fair value of preference shares
held by MTII. In addition, the consideration included the fair
value of the put and call options held over MTII's common stock.
Under the anticipated-acquisition method, the Group accounted for
the non-controlling interests of MTII and certain other minority
shareholders as if the put and call options had been exercised
already.
The valuation of consideration and
the resultant net held for sale assets of £59.2m have been
supported by an external valuation conducted by an independent
expert who relied primarily on a discounted cash flow methodology
based on management forecasts.
C. Fair value loss
We recognised finance costs of
£116.7m, or £93.6m post tax, to reflect the loss in value of our
preference shares and common stock, the fair value movement of the
MTII put and call options, and future deferred consideration of
£65.7m. This aligns with a valuation by an independent external
expert representing fair value less costs to sell. This fair value
loss reflected the change in both internal and external factors
around the time of the strategic decision in October 2023. A future
acquirer may have a number of factors specific to them that may
value Hudson differently from a general market participant, a
different cost of capital or synergies. The sale process may
therefore conclude with a materially different business
valuation.
10. Events after the reporting
date
Disposals of Digital Commerce and Product Design
businesses
On 2 January 2024 the Group
completed the sale of its Digital Commerce business to Omnicom
Group Inc and on 1 February 2024 the Group announced the completion
of the sale of its Product Design business to Wind UK Bidco 3
Limited (a newly formed company established by funds advised by
Apax Partners). The consideration for both transactions totalled
£1.2 billion. The provisional pre-tax profit on disposal of these
businesses is expected to be approximately £0.5 billion with a tax
charge of approximately £50m. These profits are subject to the
finalisation of the completion balance sheets with the buyers in
2024.