Ascential plc (LON:ASCL), the specialist information, data and analytics company, has today announced results in line with expectations for the year ended 31 December 2020.
Strategic and operational highlights
● Strong delivery against long-term strategic priorities in a transitional year:
o eCommerce: accelerated adoption driving strong growth in Digital Commerce.
o Product Design: revenue expansion through newer products including launch of Food and Drink.
o Events: despite significant in-year impact with revenues from events down £130m, our marquee events are positioned for a physical and virtual hybrid-based recovery.
o Streamlining: disposals and cost measures supporting investment and strong balance sheet.
● Segmental performance demonstrates resilience in a challenging backdrop:
o Digital Commerce: very strong growth; revenue up 25%; EBITDA almost doubled; now largest segment.
o Product Design: solid performance built on c.90% subscription base and expanding end market.
o Marketing: live events and advisory impacted by Covid-19 restrictions, but subscriptions performing well.
o Retail & Financial Services: focus on post pandemic relaunch of Money20/20 and enhanced service for retailer offering.
● Sale of non-core Built Environment & Policy business for £257.9m supports investment in organic growth and targeted acquisitions, while reinforcing the balance sheet. Treated as a Discontinued Operation.
● Acquisition of X Target in China and Intellibrand in Brazil further extends capabilities and geographic reach for Digital Commerce; ongoing investment in Hudson MX’s pioneering media-buying platform.
● Paul Harrison, our former Audit Chair and CFO of Just Eat plc and The Sage Group plc, appointed as Chief Operating Officer. New Audit Chair, and two other NEDs appointed to an experienced and diverse Board.
● Results in line with expectations.
● Revenue of £263.7m (2019: £380.3m) for continuing operations.
o Revenue of £301.1m (2019: £416.2m) including discontinued operations.
o Reported revenue reduction of 31%.
o Digital subscriptions and platforms revenues (79% of the total) up by 11% proforma driven by Digital Commerce.
● Adjusted EBITDA of £28.5m (2019: £109.0m) for continuing operations.
o EBITDA of £50.0m (2019: £128.5m) including discontinued operations.
o Reported reduction of 74% resulting in margin of 10.8% (2019: 28.7%).
● Resilience in pandemic underpinned by early and proactive reductions in cost base. Costs reduced by 13% year on year while maintaining capital investment in product and business systems.
● Reported operating loss of £166.5m (2019: profit of £1.8m) includes £97.6m (2019: £33.1m) for deferred consideration mainly in respect of Flywheel Digital following its extremely strong performance in 2020 and £28.4m impairment charge for goodwill and acquired intangibles in the Retail & Financial Services segment.
● Adjusted diluted EPS 1.9p (2019: 18.8p). Statutory loss per share of 34.0p (2019: EPS of 2.0p).
● Operating cash flow conversion of 90% (2019: 86%), resulting in closing net debt of £229.3m with available liquidity of £217m. Net debt of £140m proforma for post year-end M&A1.
● Having considered its capital allocation priorities and the uncertain economic environment, the Board has decided not to pay a dividend in respect of 2020. The Board will keep shareholder cash returns continually under review.
1 Proforma adjustments relating to cash flows in early 2021 are (a) Cash proceeds from the sale of the BEP businesses (b) Initial Consideration for the acquisitions of Intellibrand and X Target and (c) Deferred consideration payable in the first half of 2021.
Duncan Painter, Ascential Chief Executive Officer, commented:
“The last year has underlined the importance of our strategic focus: serving brands that operate in digital marketplaces. We were already operating in a highly digital world, and the fundamental shift towards online channels has only accelerated since the pandemic. This further drives demand for our data-driven insights in the three ways we support customers: creating the right products, maximising their marketing impact, and optimising their trading performance on eCommerce platforms.
Despite the significant financial impact of Covid-19 on our business, I have been delighted by the business’s response to the pandemic crisis. Our people and their dedication to ensuring we serve our customers, and their flexibility to ensure the Company has not missed a beat, has been remarkable. We reacted quickly and decisively with measures that saw a 13% year on year reduction in our cost base whilst ringfencing continuing strong levels of investment in our innovative digital services.
Digital Commerce is now our largest and fastest growing segment and is well placed to benefit from the structural gains arising from the acceleration in eCommerce adoption. While our two marquee events are ready for a recovery as conditions allow, the Covid-19 pandemic restrictions continue to influence the timing of a return to maximum participation at venues. The pace and effective delivery of vaccines will also be a critical factor. Nevertheless, the resilience and underlying momentum within the business model, combined with our strong balance sheet and strong trading in the first two months of the year, give us confidence of further good progress in the year ahead.”