REG - Ascential PLC - Half Year Results
01/08/2022 07:00
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RNS Number : 3499U Ascential PLC 01 August 2022
1 August 2022
Ascential plc
Half year results
Continued structural growth and events bounce-back
-Group results in line with expectations
-Organic revenue growth of 42% with double-digit revenue growth in all
segments
- Organic adjusted EBITDA growth of 38%
London: Ascential plc (LSE: ASCL.L), the specialist information, analytics and
eCommerce optimisation company, today announces Group results in line with
expectations for the six-month period to 30 June 2022.
Results highlights
● Double-digit revenue growth in all four segments, reflecting
continuing structural growth in attractive end markets boosted by a
bounce-back from major events.
● Digital Commerce delivered another period of strong revenue growth
(up 15% on an Organic basis and 19% on a Proforma basis, with Execution (72%
of revenue) up 19% on an Organic basis and 23% on a Proforma basis). The
business continued to successfully extend and expand its addressable market
with the acquisitions of Sellics (Germany, covering Amazon sellers) and
Intrepid (Southeast Asia, covering Shopee and Lazada). Integration of
acquisitions is fully underway.
● Product Design continued its acceleration (revenue up 14%), with
strong subscription billings driven by non-fashion products and record levels
of customer retention.
● Marketing saw significant growth (revenue up 88%), with the strong
return of the Cannes Lions Festival where revenue levels exceeded 2019.
● Retail & Financial Services also grew very strongly (revenue
up 74%), through the continued resurgence of Money20/20 Europe where revenue
was 30% up on 2019.
Financial highlights
● Group results in line with market expectations.
● Revenue of £260.7m (H1 2021: £154.3m).
○ Reported revenue growth of £106.4m or 69% (organic: 42%,
proforma: 40%)
○ Digital revenues (including awards) now over 70% of total revenue
mix (based on the last twelve months to June 2022).
● Adjusted EBITDA of £67.2m (H1 2021: £42.8m). Margin of 25.8% (H1
2021: 27.8%).
○ Reported growth of £24.4m or 57% (organic: 38%, proforma: 20%).
○ Digital Commerce Adjusted EBITDA of £1.8m (H1 2021: £10.8m) with
H1 margins suppressed as we invested ahead of revenue growth in delivery
capacity, product development and sales and marketing.
● Reported operating loss of £35.1m (H1 2021: £2.4m) stated after
Adjusting items of £89.7m (H1 2021: £36.2m) reflecting:
○ Amortisation of acquired intangibles (£17.5m) and share-based
payments (£7.6m).
○ Non-Trading items (£33.2m) for acquisition earnouts, transaction
and integration costs and the expensing of build costs for our new ERP and
Salesforce systems.
○ A non-cash charge of £31.4m for the impairment of the Edge
Digital Shelf intangibles with a strategic shift to refocus these foundational
services solely on the leading global marketplaces to enable greater future
profits.
● Adjusted diluted EPS profit from continuing operations of 8.0p (H1
2021: 5.7p).
● Operating cash flow conversion of 128% (H1 2021: 182%). Cash
consideration paid for the acquisitions of Sellics and Intrepid and settlement
of deferred consideration partly offset by strong operating cash generation,
with closing net debt at £172.7m, a leverage ratio of 1.6x EBITDA (December
2021: £73.8m and 0.9x EBITDA).
Duncan Painter, Chief Executive Officer, commented:
"Ascential has had an excellent first half of the year, with strong growth in
group revenue and profit in line with expectations. Each of our segments
delivered double digit revenue growth: all the more pleasing given the
challenging macro backdrop. We are making good progress with our mission to
make Digital Commerce the number one, global real-time platform that powers
eCommerce by enhancing our capabilities, expanding our partnerships with
leading eCommerce marketplaces and increasing our addressable market through
complementary acquisitions.
Despite the current macro-economic uncertainty, all our businesses are well
positioned to drive the success of Ascential now and in the long term, as we
continue to invest to extend our market leadership and maximise our future
profitable growth. Our ability to execute our strategy, combined with
structural growth in our end markets and the success of our Cannes Lions and
Money20/20 events - whose revenue exceeded 2019 levels - underpins the Board's
continued confidence."
Contacts
Ascential plc
Duncan Painter Chief Executive Officer +44 (0)20 7516 5000
Mandy Gradden Chief Financial Officer
Rory Elliott Investor Relations Director
Media enquiries
Matt Dixon FTI Consulting LLP +44 (0)20 3727 1000
Jamie Ricketts
Edward Bridges
Ascential will host a presentation for analysts and investors at 10.30am on
Monday 1 August 2022, at the offices of Numis, 45 Gresham St, London, EC2V
7BF.
This presentation will be webcast on (http://www.ascential.com/)
www.ascential.com (http://www.ascential.com/) and a recording will also be
available on-demand from our website in due course.
About Ascential
Ascential delivers specialist information, analytics and eCommerce
optimisation platforms to the world's leading consumer brands and their
ecosystems. Our world-class businesses improve performance and solve problems
for our customers by delivering immediately actionable information combined
with visionary longer-term thinking across Digital Commerce, Product Design,
Marketing and Retail & Financial Services.
With more than 3,000 employees across five continents, we combine local
expertise with a global footprint for clients in over 120 countries.
Ascential is listed on the London Stock Exchange.
Cautionary statement
Certain statements in this announcement constitute, or may be deemed to
constitute, forward-looking statements, projections and information (including
beliefs or opinions) with respect to the Company and its subsidiary
undertakings ("the Group"). An investor can identify these statements by the
fact that they do not relate strictly to historical or current facts. They
include, without limitation, statements regarding the Group's future
expectations, operations, financial performance, financial condition and
business. Such forward looking statements are based on current expectations
and are subject to a number of risks, uncertainties and assumptions that may
cause actual results to differ materially from any expected future results in
forward-looking statements. These risks and uncertainties include, among other
factors, changing economic, financial, business or other market conditions.
These and other factors could adversely affect the outcome and financial
effects of the plans and events described in this announcement.
Other than in accordance with its legal or regulatory obligations (including
under the Market Abuse Regulation, the UK Listing Rules, and the Disclosure
and Transparency Rules of the Financial Conduct Authority) no undertaking is
given by the Group to update any forward-looking statements contained in this
announcement, whether as a result of new information, future events or
otherwise. Accordingly, no assurance can be given that any particular
expectation will be met and investors are cautioned not to place undue
reliance on the forward-looking statements.
This announcement has been prepared for the Group as a whole and therefore
gives greater emphasis to those matters which are significant to the Group
when viewed as a whole.
Any forward-looking statements made by or on behalf of the Group speak only as
of the date they are made and are based upon the knowledge and information
available to the Directors on the date of this announcement.
Financial highlights - continuing operations
30 June Growth %
2022 2021(1) Reported Organic(2) Proforma(2)
£'m £'m
Revenue
Digital Commerce 95.1 59.7 59% 15% 19%
Intelligence & Events:
Product Design 51.2 44.3 16% 14% 14%
Marketing 80.8 43.1 87% 88% 88%
Retail & Financial Services 33.6 7.2 nm 74% 74%
Sub total 165.6 94.6 76% 55% 55%
260.7 154.3 69% 42% 40%
Adjusted EBITDA(2)
Digital Commerce 1.8 10.8 (83%) (58%) (84%)
Intelligence & Events:
Product Design 24.4 20.2 21% 17% 17%
Marketing 43.2 25.5 69% 70% 70%
Retail & Financial Services 8.8 (5.4) nm nm nm
Sub total 76.4 40.3 90% 65% 65%
Corporate Costs (11.0) (8.3) (32%) (23%) (23%)
67.2 42.8 57% 38% 20%
Margin (%) 25.8% 27.8%
Adjusted operating profit(2) 54.6 33.8
Operating loss (35.1) (2.4)
Loss before tax (41.6) (13.6)
Adjusted diluted earnings per share (pence)(2) 8.0p 5.7p
Adjusted cash generated from operations(2) 85.7 76.5
Operating cash flow conversion(2) (%) 128% 179%
June 22 Dec 21
Net debt(2) 172.7 73.8
Leverage ratio(2) (x) 1.6x 0.9x
(1) Restated to reflect discontinuance of MediaLink and the 2021 IFRIC
interpretation of IAS38.
(2) Refer to the glossary of Alternative Performance Measures below.
OPERATING REVIEW
The strong performance of all segments and, particularly, the rebound of our
two major events, Cannes Lions and Money20/20, has allowed for accelerated
investment in the capabilities and footprint of the fast-growing Digital
Commerce segment.
The Digital Commerce segment grew revenue by 19% in H1 (on a proforma basis*)
driven by a strong 23% growth in the Execution products. This continued strong
growth is particularly notable given the more suppressed performance levels of
the marketplaces themselves. With around 50% of its revenue variable and
linked to brands' trading patterns, the outperformance we have driven for our
own customers is clear. As previously indicated, we expect the growth rate
of this segment to be weighted towards the second half of the year. This is
due to several factors: the strong comparative trading on marketplaces in H1
last year as the pandemic lockdowns resumed, amplified by the move of Amazon
Prime Day from H1 to H2, and the impact in China of the Shanghai lockdowns in
H1 which are now easing. In the Measurement & Benchmarking products we
are focusing on future profitability by curtailing the collection of
information of retailer sites outside of the top global marketplaces for the
Edge Digital Shelf product and we have incurred a one-off, non-cash,
impairment charge for intangibles of £31.4m. H1 margins of the Digital
Commerce segment were suppressed as we invested ahead of revenue growth in
delivery capacity, product development and sales and marketing as well as
incurred additional bad debt charges.
The Product Design segment delivered revenue growth of 14% and profit growth
of 17% in H1, through a combination of its continuing strong growth in
subscriptions, particularly in non-fashion products, including record levels
of customer retention and also through the success of the specialist Mindset
advisory product. The fashion product returned to growth in the half.
The Marketing segment delivered revenue growth of 88% and profit growth of 70%
in H1, with Lions achieving revenue in excess of the levels recorded
pre-pandemic, in 2019. The physical return of Cannes Lions is supported by
continuing strong double-digit subscription growth from the WARC business
where we continue to innovate with new products addressing newer markets.
The Retail & Financial Services segment delivered revenue growth of 74% in
H1 and, after a Covid impacted comparable period, returned to profit. The
European edition of Money20/20 more than doubled its revenue compared to 2021
and grew by 30% on the pre-pandemic 2019 level.
We have continued our investment in Hudson MX. Hudson is an advertising
software business providing media buying and accounting solutions through a
cloud-based SaaS platform. It made good operational progress in the half.
Progress against our 2022 Priorities
1. Continuing our strong growth and expanding our global leadership
position in Digital Commerce.
Revenue growth of 19% in H1 (on a proforma* basis) represents continued strong
progress towards our medium-term targets, while the acquisitions of Sellics
and Intrepid further expand our leading market position.
*Including the like-for-like performance of the businesses acquired in the
past 12 months such as Sellics and Intrepid, and adjusted for the
discontinuation of elements of our Edge Digital Shelf business and of the
non-advertising business of Sellics. Refer to the Alternative Performance
Measures for a full definition.
2. Continuing to build and expand on our quality partnerships with the
eCommerce marketplaces.
The build of capability on the Shopee and Lazada platforms (through the
acquisition of Intrepid) is an important step in building out our marketplace
relationships in this fast-growing Southeast Asia region. DZ's multiple awards
from Alimama demonstrate the strength of its relationship with China's key
marketplaces. We have also been involved in 22 beta programmes and launches
with Amazon and other major marketplaces this half.
3. Accelerating the revenue growth of our Product Design business
while maintaining operating margins.
Product Design delivered record revenue growth of 14% in the first half,
building on the 7% delivered in 2021, while the EBITDA margin expanded
slightly to 48% (2021: 46%).
4. Maximising the opportunities from the return of our live event
products.
Both major events of the half performed extremely strongly, with Cannes Lions
meeting and Money20/20 Europe exceeding 2019, pre-pandemic, levels of revenue
and profit. Money20/20 USA, due to take place in October 2022, continues to
trade very well.
Capital Allocation
The Board continues to prioritise capital for investment and acquisitions to
support our growth strategy and has decided not to declare an interim dividend
at this time. The Board will keep capital allocation priorities, including
shareholder cash returns, continually under review.
Corporate and Social Responsibility
Supporting our people through the global economic and health challenges
remains a key priority for our CSR work. In the first half we supported
colleagues in China who were affected by the Covid lockdown, and in response
to the cost-of-living crisis in many countries we gave colleagues an
additional salary increase (focused on our lower-paid staff) and provided
access to interest free loans to help with rising fuel costs.
Providing the opportunity for colleagues to network and build supportive
communities remains a key element of our Diversity, Equity and Inclusion
work. We launched EmPower, a new Ascential women's network whose mission is
to unite and inspire, educate and trailblaze on issues which affect the
experience of women in the workplace.
As well as supporting our colleagues, we have continued to support our charity
partners. In March, Ascential's team were crowned overall winners of the 2021
Prince's Trust Million Makers fundraising challenge. Our team raised £420,000
over six months, building on our long association with the Trust.
The Cannes Lions Festival took place for the first time in person since 2019
and was the most sustainable event we have operated. A Cannes Lions Green
Guide was issued to all partners setting out our ambitions for reducing waste,
catering in a sustainable way and eliminating single use plastic. We have
also offset the emissions from our staff and jury flights and the carbon
footprint of the event is being measured comprehensively for the first time to
set the baseline for continued carbon reductions over the coming years. The
profits from both the Glass and Sustainable Development Goal Lions awards
category will again be donated to charity.
Outlook
Digital Commerce and Product Design remain set to deliver strong levels of
growth for the full year. For Marketing and Retail & Financial Services we
expect to see continued recovery as we navigate beyond the pandemic.
Despite the risks associated with the current economic environment, our
businesses remain well set for the year, underpinned by high levels of digital
and subscription revenues and multiple growth levers. Our ability to execute
our strategy, combined with structural growth in our end markets and the
success of our marquee events, underpins the Board's continued confidence in
our prospects for future success.
SEGMENTAL REVIEW
Digital Commerce Division
We provide a comprehensive, global set of technologies and services helping
brand manufacturer customers optimise and accelerate their digital commerce
performance.
Execution products (72% of revenue): Flywheel Digital, OneSpace, WhyteSpyder,
DZ and Intrepid provide managed execution services to global brands across the
world's leading marketplaces. Perpetua, Sellics and 4K Miles provide
self-service execution to challenger brands, while ASR provides content
optimisation services.
Measurement & Benchmarking products (28% of revenue): Edge and Yimian
primarily offer market share insight, with digital shelf optimisation, across
the key global marketplaces, while Intellibrand specialises in digital shelf
services in the fast-growing Latam region.
Six months ended 30 June (£'m) Growth (%)
H1 2022 H1 2021 Reported Organic Proforma
Revenue 95.1 59.7 59% 15% 19%
Adjusted EBITDA 1.8 10.8 (83%) (58%) (84%)
Adjusted EBITDA Margin 2% 18%
In Digital Commerce, we have faced a challenging operating environment in the
first six months of the year attributable primarily to the macro economic
climate, the shifting of Amazon Prime day into July and, in particular the
further impacts of the Covid resurgence in China and resultant global supply
chain pressures. Furthermore, this half's comparison is against very strong,
lockdown-impacted comparative figures. Digital Commerce has nevertheless
continued to deliver strong Proforma* revenue growth of 19%. This strong
underlying performance continues to be driven by a mix of new enterprise
customers (more than 200 added in the half) and new challenger brand customers
(more than 1600 added in the half) along with net revenue retention for the
last 12 months of over 105% (2021: over 110%), as well as expanding coverage
across the major digital marketplaces, new geographies, and additional market
segments.
The strong revenue performance was achieved despite the impact of underlying
headwinds across the digital marketplaces themselves. With over half of
revenues in the segment driven by customer transaction levels and thus exposed
to these adverse conditions, the growth levels achieved by the business
clearly demonstrate the degree to which our services optimise our customers'
trading.
At the Adjusted EBITDA level, Digital Commerce delivered modest profits of
£1.8m. H1 margins of the Digital Commerce segment were suppressed as we
invested ahead of the expected acceleration of revenue growth in H2 revenue in
delivery capacity, product development and sales and marketing as well as
incurred certain one-off additional bad debt charges.
*Including the like-for-like performance of the businesses acquired in the
past 12 months such as Sellics and Intrepid and adjusted for the
discontinuation of elements of our Edge Digital Shelf business and of the
non-advertising business of Sellics. Refer to the Alternative Performance
Measures for a full definition.
The Digital Commerce business has also continued to expand its reach and build
its expertise around the globe with the acquisitions of Sellics and Intrepid
in the first half. Sellics brings a strong presence in the European
Challenger brand market to accelerate further the growth of Perpetua, while
Intrepid adds to the segment's global footprint with its strong presence and
expertise in the rapidly expanding Southeast Asian eCommerce market adding
important capabilities on the two major marketplaces, Shopee and Lazada. With
the acquisition of Intrepid, we now cover most of the world's major digital
commerce marketplaces.
New products launched in the half include chargeback recovery, Amazon brand
registry and content localisation services. A third-party logistics service
will be launched in H2, driving further vertical integration. Flywheel and
Perpetua also co-launched Amazon Marketing Stream in partnership with Amazon
at Cannes Lions, enhancing its real-time trading platform's automation.
Overall, we now automate bidding activities across six platforms with billions
of transactions per month, having recently extended our analytical
capabilities through retailer first-party data sets such as Amazon Marketing
Cloud, Stratum, ICIP, and Luminate.
Key to our growth has been the development of strong partnerships with the
marketplaces around the world. Illustrating this, we have continued to win
multiple awards with our partners, including, for DZ, Alimama's Super
Marketing Partners in Digital Intelligence and Strategic Management. On the
customer side, our close collaboration with the major global brands was
illustrated by the launch of the Digital Commerce Connect product with GSK
Consumer Healthcare, which prioritises key trading decisions at the C Suite
level.
Performance across the two pillars of our Digital Commerce business was as
follows:
Execution (72% of revenue in H1), delivered Proforma* revenue growth of 23% as
customers continued to realise benefits from our services and outperform the
underlying levels of brands' growth in marketplaces globally.
The half saw good initial cross-sell between established and newly acquired
brands, with multiple customers signing up for an additional service in the
period. A particular focus has been the execution of combined go-to-market
strategies, with ASR, 4K Miles and Perpetua (for Challenger brands), and
Flywheel, OneSpace and WhyteSpyder (for Enterprise brands) working together
closely to introduce joint processes to optimise both customer experience and
performance.
Measurement & Benchmarking (28% of revenue in H1) reported Proforma*
revenues that were up 6% year on year. We are curtailing significant
elements of the Edge Digital Shelf product where satisfactory levels of
profitability cannot be achieved and have commenced selective customer
contract exits.
One of our key objectives from 2021 was to streamline the company overall and,
as such, we have recently restructured the leadership of Digital Commerce. The
division will be led by Duncan Painter (who will also remain CEO of
Ascential), with the main focus on driving long-term, strong, profitable
growth, the integration of our products into a single core platform and the
further streamlining of our business into a unitary brand operation over the
next 18 months. Chip DiPaula and Patrick Miller will remain as key leaders,
working alongside Duncan and Paul Harrison, in managing and leading this
transition in the division. Paul will remain as the COO of Ascential, whilst
also assuming day-to-day financial leadership of Digital Commerce, a role for
which he has excellent credentials, having been the CFO of two FTSE 100
technology businesses.
Intelligence & Events Division
This division comprises the Product Design, Marketing and Retail &
Financial Services segments and the combined performance was as follows:
Six months ended 30 June (£'m) Growth (%)
H1 2022 H1 2021 Reported Organic Proforma
Revenue 165.6 94.6 76% 55% 55%
Adjusted EBITDA 76.4 40.3 90% 65% 65%
Adjusted EBITDA Margin 46% 43%
As mentioned above, one of our key objectives last year was to streamline the
company. As such, we have brought together the Product Design, Marketing and
Retail & Financial Services segments into a single division: Intelligence
& Events, with Phil Thomas appointed as the divisional CEO.
Product Design
WGSN, a leading global supplier of trend forecasts, market intelligence and
consumer insight, helps customers understand the future demands of consumers.
Information is delivered principally through digital subscriptions to over
6,400 customers in more than 90 countries. The Product Design segment also
includes trend products for SMEs in the fashion market (WGSN Start) and the
innovative colour system Coloro.
Six months ended 30 June (£'m) Growth (%)
H1 2022 H1 2021 Reported Organic Proforma
Revenue 51.2 44.3 16% 14% 14%
Adjusted EBITDA 24.4 20.2 21% 17% 17%
Adjusted EBITDA Margin 48% 46%
Product Design has seen its already strong levels of revenue growth accelerate
in the first half of the year, to 14%. This was driven by an excellent
performance from its subscription products, where billings grew 11%, in
addition to continued growth in the Mindset advisory business and expansion
from Coloro. Margins remained strong at 48%, with Adjusted EBITDA growing 17%.
The main driver of growth continues to be further market penetration and
take-up of non-fashion products (now 45% of subscription billings), such as
Insight, Beauty, Food & Drink and Consumer Tech, where combined billings
grew by 25% in the half. Pleasingly, fashion product billings (55% of
subscription billings) attained a level of stabilisation and returned to
growth of 2%.
Subscription renewal rates now comfortably exceed pre-pandemic levels at above
95%, with c.90% of revenue overall coming from subscriptions (and the balance
from advisory and Coloro). The business also continues to maintain its high
levels of customer satisfaction, demonstrating the value its information
delivers to customers and the enduring strength of the brand.
In terms of Advisory, the business continues to grow well, with revenue up 19%
in the half. Coloro grew well up 19% on prior year despite the impact of
local lockdowns on its production facility in Shanghai earlier in the half,
with normal operations having only recently resumed.
The first half of the year saw two "WGSN Live" virtual events: Beauty Live and
Consumer Tech Live, both attracting thousands of attendees (both current and
prospective clients) and showcasing WGSN's expertise in these two fast-growing
sectors. WGSN also launched its annual Future Consumer whitepaper, predicting
how consumers will think, feel and behave in two years' time, which has been
downloaded more than 10,000 times and presented at key events, including
Cannes Lions and the Gramado Summit in Brazil.
Product Design's strategy to build products to address adjacent markets
continues, building on the more recent launches bringing together
comprehensive quantitative data with its core trend forecasting solutions,
while continued investment in decision science capabilities and collaboration
with Digital Commerce underpins new offerings such as TrendCurve. The Beauty
product (launched in 2019) has now exceeded 550 customers growing first half
billings to above £2m. Food & Drink (launched in 2020) has now passed 200
customers, providing global trend insights for brands to develop the products
and services that consumers will eat, drink and experience in the future. The
Consumer Tech product (launched in 2021) which addresses the CMF (Colour,
Materials and Finish), design and consumer insight needs of this global
industry has already exceeded 150 customers and has delivered over £1m in
billings in H1 (well ahead of plan).
Marketing
The Marketing segment comprises Lions and WARC. Lions, through its awards
and its festival, as well as its subscription and advisory products, is the
global benchmark for creativity in the branded communications industry, while
WARC is the global authority on marketing effectiveness for brands, agencies
and media platforms.
Six months ended 30 June (£'m) Growth (%)
H1 2022 H1 2021 Reported Organic Proforma
Revenue 80.8 43.2 87% 88% 88%
Adjusted EBITDA 43.2 25.5 69% 70% 70%
Adjusted EBITDA Margin 54% 59%
Marketing's strong recovery continued into 2022. Following the return of the
Lions benchmark awards in 2021 in a purely digital format, the physical
festival returned to Cannes in June for the first time since 2019. High levels
of customer engagement, through physical sponsorship activations and delegate
participation throughout the week, saw revenue exceed 2019 levels.
In terms of Awards (36% of Lions H1 revenues), while entry volumes of 25,000
compared to 29,000 in 2021 (which covered two years of eligibility), revenue
was nevertheless robust. The engagement was particularly strong in the newly
launched Creative B2B category, drawing on creativity in new disciplines and
business areas, while the Creative Effectiveness Lions, the only global
benchmark of the measurable impact of creativity, continued to see a strong
increase in entries.
Delegate passes generated 38% of Lions H1 revenues. Total attendees were
down slightly compared to the attendees at the 2019 event although it should
be recognised that a portion of the world's population, particularly in Asia,
remain unable to travel outside their countries due to ongoing pandemic
restrictions.
Partnerships and digital revenues reached record levels for the festival,
accounting for 26% of Lions revenue and growing 8% compared to 2019. Demand
for onsite activations from major partners was particularly strong, including
substantial programmes run by eCommerce marketplaces for the first time. In
terms of its year-round revenue, the Lions subscription products (The Work and
Membership) performed robustly throughout the pandemic and in the first half.
Further expanding Marketing's digital subscription base, WARC saw strong
revenue growth of 23%, with renewal rates in the half in excess of 95%,
bolstered by the launch of the new Marketing Effectiveness Platform. June
saw the launch, at the Lions Festival, of the WARC Digital Commerce product,
including benchmarking tools, best practice and data points drawing on the
expertise of the Digital Commerce business.
Retail & Financial Services
Money20/20 is the world's leading platform where the global fintech
communities come together to do business. The Retail and Financial Services
segment also comprises Retail Week World Retail Congress ("RWRC") and the
retail customers for Price & Promotion and Retail Insights.
Six months ended 30 June (£'m) Growth (%)
H1 2022 H1 2021 Reported Organic Proforma
Revenue 33.6 7.2 nm 74% 74%
Adjusted EBITDA 8.8 (5.4) nm nm nm
Adjusted EBITDA Margin 26% nm
In June 2022 Money20/20 Europe, returning to its familiar slot in the
industry's calendar, attracted more than 7,500 attendees, from 2,300 companies
and 95 countries, to Amsterdam. Overall, the event more than doubled the
revenues achieved by the previous year's edition, held in September, and
comfortably exceeded the pre-pandemic level at 130% of 2019 revenues. The
European event saw over 14,500 customer meetings booked via the Money20/20
App, double that of the prior year, cementing Money20/20 as the place where
the industry comes together to do business. Investments made in the product,
technology and operations during the pandemic delivered good returns for the
business, while the strong customer engagement was illustrated by a high level
of onsite rebooking.
The fintech end market and the broader payments ecosystem which Money20/20
serves remained robust throughout the pandemic underlining that it continues
to represent a long-term global growth sector. Despite recent reductions in
funding and valuations of companies in certain sub-segments of the customer
base from 2021 highs, the long-term trend remains upward. The US edition of
Money20/20, to be held in Las Vegas in October, continues to trade very well
as we look forward again to welcoming a full range of participants and
partners to our flagship event.
Retail Week Live and Retail Week Awards, having previously both run in October
2021, returned to the first half of the year, while the global platform of
World Retail Congress (last held in 2019) also ran in Rome in April. Price
& Promotion and Retail Insights performed well with strong renewal
rates. Improvements were driven through new product development and shared
retailer relationships and expertise across the segment.
FINANCIAL REVIEW
Overview
The results are set out in the condensed consolidated statement of profit or
loss and show, for continuing operations, revenue of £260.7m (H121: £154.3m)
and an operating loss of £35.1m (H121: £2.4m). Adjusted EBITDA was £67.2m
(H121: £42.8m) driven in large part by the return of the in-person Cannes
Lions Festival and Money20/20 in the half year. We delivered excellent cash
flow performance in the first half with free cash flow from continuing
operations after tax and capex of £72.2m (H121: £64.2m), an operating cash
flow conversion of 128% and a free cash flow conversion of 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
(counting them only once they have been owned for 12 months) and disposals and
that element of growth which is driven by changes in foreign exchange rates.
It also eliminates the impact on growth rates of changes in timing of live
events (for example, the move of Money20/20 from September in 2021 back to
June in 2022 is adjusted in the 2022 first half growth rates) and of products
that are being curtailed (namely Sellics non-advertising products and certain
aspects of Edge Digital Shelf). It is an Alternative Performance Measure and
is discussed in more detail below. Proforma growth rate is measured in a
similar way to Organic growth rate but assumes that the Group's acquisitions
were all made on 1 January 2021 and is therefore a measure of the rate of
growth of the brands owned today.
Adjusted EBITDA is also an Alternative Performance Measure and is used in the
day-to-day management of the business to aid comparisons with peer companies,
manage banking covenants and provide a reference point for assessing our
operational cash generation. It eliminates items arising from portfolio
investment and divestment decisions, and from changes to capital structure.
Such items arise from non-trading activities, intermittent or non-recurring
events, and while they may generate substantial income statement amounts, do
not relate to the ongoing operational performance that underpins long-term
value generation.
Further details on Alternative Performance Measures are set out below.
Continuing operations
The results for the half year ended 30 June 2022 are summarised in the table
below.
£'m H122 H121* Growth rate
Reported Organic Proforma
Revenue 260.7 154.3 69% 42% 40%
Adjusted EBITDA 67.2 42.8 57% 38% 20%
Operating loss (35.1) (2.4) nm nm nm
* Restated for discontinued operations relating to MediaLink and the 2021
IFRIC agenda decision on cloud configuration and customisation costs (see
Notes 2 and 19).
Segmental results
The Group has four reportable segments. These are Digital Commerce, Product
Design, Marketing and Retail & Financial Services. Information regarding
the results of each is included below.
£'m Product Marketing Retail & Financial Services Corporate Continuing
Digital Design costs operations
Commerce
H122
Revenue 95.1 51.2 80.8 33.6 - 260.7
Organic growth 15% 14% 88% 74% - 42%
Proforma growth 19% 14% 88% 74% - 40%
Adjusted EBITDA 1.8 24.4 43.2 8.8 (11.0) 67.2
Organic growth (58%) 17% 70% nm (23%) 38%
Proforma growth (84%) 17% 70% nm (23%) 20%
Adjusted EBITDA margin 2% 48% 54% 26% - 25.8%
Depreciation and software amortisation (7.7) (2.2) (1.4) (0.2) (1.1) (12.6)
Adjusted operating profit / (loss) (5.9) 22.2 41.8 8.6 (12.1) 54.6
H121*
Revenue 59.7 44.3 43.1 7.2 - 154.3
Adjusted EBITDA 10.8 20.2 25.5 (5.4) (8.3) 42.8
Depreciation and software amortisation (4.2) (1.4) (2.2) (0.4) (0.8) (9.0)
Adjusted operating profit / (loss) 6.6 18.8 23.3 (5.8) (9.1) 33.8
* Restated for discontinued operations relating to MediaLink and the 2021
IFRIC agenda decision on cloud configuration and customisation costs (see
Notes 2 and 19).
Revenue
The Company benefits from diverse revenue streams across its segments ranging
from digital subscriptions to live events to advisory. Most of these revenue
streams are digital (68% including benchmarking awards) and have recurring or
repeat characteristics benefiting from our focus on customer retention.
(£'m) Timing of revenue recognition H122 Restated*
H121
Digital Subscriptions & Platforms Over time 150.6 108.8
Advisory Over time 14.7 13.3
Benchmarking Awards Point in time 25.7 27.2
Events Point in time 69.7 5.0
Revenue from continuing operations 260.7 154.3
* Restated for discontinued operations relating to MediaLink (see Notes 2
and 19 )
Revenue from continuing operations grew to £260.7m (H121: £154.3m), an
increase of £106.4m or 69%. Adjusting for currency impacts, acquisitions and
discontinued products, revenue increased by 42% and 40% on an Organic and
Proforma basis respectively. This was driven by the continued structural
growth of our Digital Commerce and Product Design segments and the return of
our live events in the Marketing and Retail & Financial Services segments.
Adjusted EBITDA
Adjusted EBITDA from continuing operations grew to £67.2m (H121: £42.8m) an
increase of £24.4m or 57%. This represented Organic growth of 38% or 20% on
a Proforma basis.
Adjusted EBITDA margin from continuing operations decreased slightly from the
prior year to 25.8% (H121: 27.8%). This reflects lower margins in our Digital
Commerce segment where we maintained the pace of investment ahead of revenue
growth and incurred a one-off bad debt charge of £2.6m in the half and, to a
lesser extent, by the return of physical event costs in our Marketing segment.
This is partially offset by the return to physical live events in Retail &
Financial Services and expanded margins in Product Design.
Reconciliation between Adjusted EBITDA and statutory operating loss
Adjusted EBITDA from continuing operations is reconciled to statutory
operating loss as shown in the table below:
£'m H122 Restated*
H121
Adjusted EBITDA 67.2 42.8
Depreciation and software amortisation (12.6) (9.0)
Adjusted operating profit 54.6 33.8
Amortisation of acquired intangibles (17.5) (14.7)
Non-Trading items (64.6) (18.8)
Share-based payments (7.6) (2.7)
Statutory operating loss (35.1) (2.4)
* Restated for discontinued operations relating to MediaLink and the 2021
IFRIC agenda decision on cloud configuration and customisation costs (see
Notes 2 and 19).
Amortisation and impairment of acquired intangible assets
The amortisation charge of £17.5m (H121: £14.7m) on acquired intangible
assets grew on the prior year as additional amortisation of newly acquired
intangibles offset the impact of fully amortised assets.
The Company undertakes a periodic review of the carrying value of its
intangible assets which totalled £977m at June 2022 (H121: £744m). Following
elevated losses in the first half, we have identified that certain intangible
assets associated with the Edge CGU are no longer generating sufficient value
to support the carrying value, even with the curtailment of elements of the
Digital Shelf product. We have consequently recorded an impairment charge of
£31.4m as a Non-Trading item. We have considered and concluded that there are
no other impairment triggers in the rest of the Group. See Note 11 for further
details. No impairments were identified in the comparative period of H121.
Non-Trading items
The charge for non-trading items from continuing operations totalled £64.6m
(H121: £18.8m) as set out in the table below and further explained in Note 5.
£'m H122 Restated*
H121
Impairment of intangible assets 31.4 -
Transaction and integration costs 12.8 2.7
Deferred contingent consideration 7.6 9.7
Salesforce implementation costs 6.9 2.5
ERP implementation costs 6.4 3.9
Reversal of property impairments and onerous contracts (0.5) -
Non-Trading items relating to continuing operations 64.6 18.8
* Restated for discontinued operations relating to MediaLink and the 2021
IFRIC agenda decision on cloud configuration and customisation costs (see
Notes 2 and 19).
The charge for deferred contingent consideration of £7.6m (H121: £9.7m)
predominantly relates to earnouts that are contingent on continuing employment
of the founders on the acquisitions of WhyteSpyder, OneSpace, 4K Miles, DZ and
Perpetua as well as revaluations of the earnouts.
Transaction and integration costs comprise professional fees and integration
costs for acquisitions. In the first half of 2022 they also include the
costs of the ongoing process evaluating the merits of a potential managed
separation of certain assets of the Group referred to in our announcement of
11 April 2022.
In 2021, the IFRIC published an agenda decision on the design and
implementation costs for business systems built upon software that is
contracted on a "software as a service" (SaaS) basis and hosted in a public
cloud. This resulted in an amendment to the treatment of costs incurred on
the Company's new ERP and Salesforce systems under IAS 38 "Intangible Assets".
In response to the IFRIC decision, the Group's accounting policy on
intangibles assets have been updated, resulting in the majority of
implementation costs on SaaS implementations incurred to date no longer being
capitalised but expensed as incurred. This change in accounting policy has
been applied retrospectively (see Note 2 for further details). The Group is
undertaking a multi-year programme to introduce a new ERP to replace the
current Oracle system introduced in 2007 and a new instance of Salesforce,
both of which are cloud-based. Costs relating to this significant and one-off
programme totalled £13.3m in H122 and £6.4m in H121 and, given the scale and
incidence of the investment, have been treated as non-trading items.
Share-based payments
The charge for share-based payments of £7.6m (H121: £2.7m) was higher in
H122 than in H121 due to the issuance of new awards in the second half of 2021
and also because the prior period was suppressed by certain Covid-driven
lapses of awards.
Finance costs
The Adjusted net finance cost from continuing operations for the half year was
£5.2m (H121: £9.5m) as set out in the table below:
£'m H122 Restated*
H121
Interest receivable 0.9 1.7
Interest payable on borrowings (3.1) (4.6)
Amortisation of loan arrangement fees (0.4) (0.4)
Foreign exchange 0.1 (0.2)
Derivative financial instruments 1.9 -
Discount unwind on contingent and deferred contingent consideration (4.1) (5.5)
Discount unwind of lease liability (0.5) (0.4)
Discount unwind of property provisions - (0.1)
Adjusted net finance costs from continuing operations (5.2) (9.5)
* Restated for discontinued operations relating to MediaLink (see Notes 2
and 19).
The interest payable on the Group's borrowings was £3.1m (H121: £4.6m) with
the decrease due to lower interest rate margins resulting from lower leverage.
Income from derivative financial instruments of £1.9m relates to the
revaluation of the USD and Euro interest rate caps we have in place and
reflects the steepening of the yield curve in 2022 due to increased
inflationary expectations and expected tightening of monetary policies by
central banks.
The unwind of the discount on deferred contingent consideration is similar to
the prior period totalling £4.1m (H121: £5.5.m) driven by new acquisitions
being offset by final settlement of older earnout agreements.
Taxation
A tax charge of £12.2m (H121: £nil) was incurred on Adjusted profit before
tax of £48.4m (H121: £23.4m) resulting in an Adjusted effective tax rate for
the half year of 25.3% (H121: 0.0%) which compares to the effective tax rate
of 8.5% on reported losses as can be seen in the table below.
Analysis of tax charge (£'m) H122 Restated*
H121
Adjusted profit before tax 48.4 23.4
Tax charge on Adjusted profit before tax (12.2) -
Effective tax rate (%) 25.3% -
Adjusting items (90.0) (37.0)
Tax credit on Adjusting items 15.8 2.6
Effective tax rate on Adjusting items (%) 17.5% 7.0%
Reported loss before tax (41.6) (13.6)
Tax credit on reported loss before tax 3.6 2.6
Effective tax rate on reported loss before tax (%) 8.5% 19.1%
* Restated for discontinued operations relating to MediaLink and the 2021
IFRIC agenda decision on cloud configuration and customisation costs (see
Notes 2 and 19).
The effective tax rate on Adjusted PBT has risen to 25.3% because the prior
period benefitted from discrete credits relating to the recognition of
additional US losses and the revaluation of a net deferred tax asset for the
forthcoming change in UK tax rates.
The Group has a total recognised net deferred tax asset of £49.1m (H121:
£49.6m) relating to UK and US losses, accelerated capital allowances, US
acquired intangibles, and deferred contingent consideration. This comprised a
gross asset of £84.6m offset by a deferred tax liability of £35.5m on
acquired intangibles. The gross asset is expected to be realised in cash
over the next 10 years with the majority recovered in the next four years.
The Group received a net tax refund in the half of £0.4m (H121: payment of
£3.5m) following a UK loss carry-back claim.
Discontinued operations
As part of its strategy to focus resources and investment on its strategic
priorities, the Group disposed of its non-core segment of Built Environment
& Policy, with Groundsure, DeHavilland and Glenigan each being sold in the
first half of 2021. The Group also disposed of MediaLink, a brand previously
within the Marketing segment, in December 2021. The loss on discontinued
operations for the first half of 2022 reflects settlement of the final
adjustments under the sale and purchase agreement on the disposal of
MediaLink.
Built Environment & Policy MediaLink Total
£'m H122 H121 H122 H121 H122 H121
Revenue - 4.8 - 20.8 - 25.6
Adjusted EBITDA - 2.4 - 5.6 - 8.0
Depreciation and amortisation - - - (1.5) - (1.5)
Share based payments - - - (0.3) - (0.3)
Profit on disposal of business - 226.1 (0.4) - (0.4) 226.1
Non-Trading items - (0.5) - (3.2) - (3.7)
Profit before tax - 228.0 (0.4) 0.6 (0.4) 228.6
Tax - (0.5) - (0.3) - (0.8)
Profit after tax - 227.5 (0.4) 0.3 (0.4) 227.8
Profit after tax
The Group recorded a total statutory loss after tax of £38.4m (H121: profit
of £216.8m) arising from a loss on continuing operations of £38.0m (H121:
loss of £11.0m) and a loss on discontinued operations of £0.4m (H121: profit
of £227.8m).
Foreign currency translation impact
The Group's reported performance is sensitive to movements in both the euro
and US dollar against pound sterling with significant acquisitions denominated
in US dollars and events revenues in euro and US dollars. While the euro /
sterling exchange rate has been very stable in the half, we have seen a 5%
strengthening of the US dollar which has benefitted our financial performance
as set out below.
Weighted average rate Period-end rate
Currency H122 H121 Change H122 H121 Change
Euro 1.17 1.17 (0.1%) 1.16 1.16 0.3%
US dollar 1.32 1.39 5.0% 1.22 1.38 11.9%
When comparing H122 and H121, changes in currency exchange rates had a
favourable impact on revenue and adjusted EBITDA of £3.0m and £0.7m. On a
segmental basis, the impact of changes in foreign currency exchange rates was
as follows:
· Digital Commerce: £2.6m impact on revenue and £1.0m impact on
Adjusted EBITDA
· Product Design: £0.5m impact on revenue and £0.5m impact on
Adjusted EBITDA.
· Marketing: (£0.1m) impact on revenue and a (£0.2m) impact on
Adjusted EBITDA.
· Retail & Financial Services: no net impact on revenue or
Adjusted EBITDA.
For illustrative purposes, the table below provides details of the impact on
revenue and Adjusted EBITDA if the results were restated for sterling
weakening by 1% against the US dollar and euro in isolation.
H122 H121
£'m Revenue Adjusted Revenue Adjusted
EBITDA EBITDA
Increase in revenue / Adjusted EBITDA if, in isolation, Sterling weakens by 1%
against the:
Euro 1.1 0.9 0.4 0.3
US dollar 1.0 0.3 0.7 0.3
Furthermore, each 1% movement in the euro to pound sterling exchange rate has
a £1.1m (H121: £1.3m) impact on the carrying value of borrowings. Each 1%
movement in the US Dollar has a circa £2.8m (H121: £2.7m) impact on the
carrying value of borrowings.
Earnings per share
Continuing Adjusted diluted earnings per share were 8.0p per share (H121:
5.7p).
Total diluted loss per share was 8.7p (H12021: earnings of 53.9p) with the
prior year benefitting from the significant profit realised on the disposal of
the Built Environment & Policy businesses.
Acquisitions
We regularly assess opportunities to acquire high-growth products and
capabilities to serve our key end markets and in particular Digital Commerce.
In the half year we completed the acquisition of two companies in the Digital
Commerce segment and paid initial cash consideration (net of cash acquired) of
£60.9m.
Sellics
In April 2022, the Group acquired 100% of Sellics Marketplace Analytics GmbH
("Sellics") for an initial cash consideration of £17.2m, plus estimated
earnout payments payable over four years resulting in an estimated total
consideration (including the initial consideration) of approximately £35m.
Sellics provides a mix of advertising spend optimisation, campaign automation
and profit analytics, through a suite of software solutions, to challenger
brands that trade on Amazon across the US and Europe. Sellics will be
integrated into challenger brand specialist Perpetua within Digital Commerce
and the non-advertising revenues curtailed.
Intrepid
In June 2022, the Group acquired 100% of Intrepid E-Commerce Services Pte.
Ltd. ("Intrepid") for an initial cash consideration of £46.9m, plus estimated
earnout payments payable over 4 years resulting in an estimated total
consideration (including the initial consideration) between £82.1m and
£161.8m. The maximum consideration payable, in the event that very stretching
targets are reached, is capped at £205.3m. Intrepid provides, primarily,
eCommerce execution, backed by proprietary software solutions to enterprise
brands that trade on major Southeast Asia platforms.
Investments
Hudson
The Group continues to hold a £74.6m equity investment in Hudson MX, an
advertising software business providing media buying and media accounting
solutions through a cloud-based SaaS platform. The investment is through a
combination of preference stock measured at fair value through profit and
loss, and common stock accounted for as an equity investment measured using
the equity method respectively.
In the six months to 30 June 2022, we made further equity investments
totalling £2.2m (H121: £28.3m) and recorded our share of the losses of the
businesses totalling £0.9m (H121: £0.6m). We also made loans totalling
£15.6m to Hudson which, together with loans made in 2021, are recorded as
Other Receivables.
There has been no change in the accounting of the investment from that
disclosed in the 2021 Annual Report and Accounts and the Group continues to
exercise significant influence over Hudson. Further details are given in
Note 10.
Deferred contingent consideration
The Company's preferred structure for acquisitions is to enter into long-term
earnout arrangements with the founders of acquired companies and to link this
to the post-acquisition performance of the acquired company and for certain
elements make this contingent on the continuing employment of the founders.
Accounting for the earnout is complex and requires considerable judgements to
be made about the expected future performance of the acquired company at the
both the point of acquisition and at each reporting date. This is especially
difficult in the type of high growth, early stage, companies that Ascential
acquires.
The earnout is accounted for in three ways:
1. A liability for deferred contingent consideration is established on
the balance sheet at the point of acquisition based on that element of the
earnout which is not dependent on the continuing employment of the founders.
Any subsequent change in estimate is recorded as a Non-Trading item and in the
six months to 30 June 2022 we recorded an income of £4.6m (H121: expense of
£2.4m). During the half year we made cash payments of £35.4m (H121: £86.7m)
in relation to this element of deferred contingent consideration.
2. The liability above is discounted to present value with the
reversal of this discount being recorded as a finance cost. This amounted to a
charge of £4.1m this half (H121: £5.5m).
3. Finally, that element of the deferred contingent consideration that
is also contingent on the continuing employment of the founders is charged to
the consolidated statement of profit or loss as a Non-Trading item over the
service life of those founders (typically three years). This amounted to a
charge of £12.2m (H121: £7.3m). During the half year we made cash payments
of £18.0m (H121: £34.4m) in relation to this element of deferred contingent
consideration.
The liability for deferred contingent consideration amounted to £80.6m at 30
June 2022 (H121: £64.4m). In total, when combining this liability with the
future income statement charges for discount unwind and for deferred
contingent consideration that is contingent on continuing employment of the
founders, the Company expects to pay out deferred contingent consideration of
approximately £150m over the next four years for acquisitions to date. £2.1m
is due in 2022 for performance to date with the balance expected to be paid
between 2023 and 2026 based on the performance of the acquired businesses in
the next three years.
Cash flow
Continuing operations
The Company generated Adjusted operating cash flow from continuing operations
of £85.7m (H121: £76.5m), being a 128% operating cash flow conversion
benefiting from strong forward bookings and collections particularly relating
to our events and Product Design.
A feature of our cash flow is the working capital required in Digital Commerce
for the purchasing of advertising media on behalf of customers where the
payment terms agreed with the marketplace can differ from those agreed with
customers. At 30 June 2022 we had £122.6m receivable from customers and
£116.4m payable to the marketplaces up from £76.2m and £84.8m respectively
at the June 2021 with the balances recorded in Other Debtors and Other
Creditors respectively. In order to reduce the impact of this working
capital dynamic on the Group, we have arranged a facility with a bank to sell
certain of the customer receivables for an attractive rate of interest that is
lower than our overall cost of borrowing. Drawings under this facility are
broadly unchanged and amounted to £29.0m (H121: £27.5m) at the period end.
The resultant net working capital position relating to such media
reimbursables of a net receivable of £6.2m (H121: a net payable of £8.6m) do
not have a significant overall impact on the Group's balance sheet.
Adjusting for the restatement of capitalised Salesforce and ERP implementation
costs of £6.4m in H121, the Group's capital spend increased by £5.1m from
the prior year to £13.9m (H121: £8.8m) driven by increased product
development in the Digital Commerce business.
Tax paid on profits benefitted from a refund of £2.6m in the current year to
give a net refund from continuing operations of £0.4m (H121: tax paid of
£3.5m). Tax liabilities continue to be sheltered by significant prior
period losses and tax-deductible acquisition consideration particularly in the
US.
As a result, the Company generated free cash flow from continuing operations
of £72.2m (H121: £64.2m) as shown in the table below:
£'m H122 Restated*
H121
Adjusted EBITDA 67.2 42.8
Working capital movements - media reimbursables 6.7 20.1
Working capital movements - other 11.8 13.6
Adjusted operating cash flow from continuing operations 85.7 76.5
Operating cash flow conversion (%) 128% 179%
Capital expenditure (13.9) (8.8)
Tax received / (paid) 0.4 (3.5)
Free cash flow from continuing operations 72.2 64.2
Free cash flow conversion (%) 107% 150%
* Restated for discontinued operations relating to MediaLink and the 2021
IFRIC agenda decision on cloud configuration and customisation costs (see
Notes 2 and 19).
Discontinued operations
The Company generated no free cash flow from discontinued operations (H121:
£9.5m).
Total operations
The cash flow statement and net debt position are summarised as follows.
£'m H122 Restated* H121
Free cash flow from continuing operations 72.2 64.2
Free cash flow from discontinued operations - 9.5
Free cash flow from total operations 72.2 73.7
Acquisition of businesses net of cash acquired (60.9) (51.4)
Deferred contingent consideration including contingent employment cost (53.4) (121.1)
Disposal proceeds net of cash disposed and disposal costs (0.4) 216.8
Acquisition of investments and loan to associate (18.5) (28.7)
Non-Trading costs paid (24.9) (9.0)
Cash flow before financing activities (85.9) 80.3
Net proceeds from / (repayment of) borrowings 91.8 (70.0)
Net interest paid (2.5) (4.8)
Net lease liabilities paid (3.0) (3.6)
Proceeds of issue or sale of shares net of expenses - 0.3
Dividends paid to non-controlling interest (1.2) (0.6)
Net cash flow (0.8) 1.6
Opening cash balance 84.1 80.2
FX movements 5.1 (0.7)
Closing cash balance 88.4 81.1
Borrowings (265.2) (236.6)
Capitalised arrangement fees 2.0 2.8
Derivative financial instruments 2.1 0.1
Net debt (172.7) (152.6)
* Restated for discontinued operations relating to MediaLink and the 2021
IFRIC agenda decision on cloud configuration and customisation costs (see
Notes 2 and 19).
Returns to shareholders
The Board has historically targeted a dividend payout ratio of 30% of Adjusted
profit after tax. Following the impact of Covid on the business, no dividends
were paid in 2020 and in 2021 cash flow was prioritised for acquisitions.
The Board continues to prioritise capital for investment and acquisitions to
support our growth strategy and has decided not to declare an interim 2022
dividend at this time. The Board will keep capital allocation priorities,
including shareholder cash returns, continually under review.
Strong balance sheet and access to liquidity
Ascential manages its capital to ensure that entities in the Group will be
able to continue as going concerns while maximising the return to shareholders
through the optimisation of the debt-to-equity balance. The capital structure
of the Group consists of debt, cash and cash equivalents and equity
attributable to equity holders of the parent comprising capital, reserves and
retained earnings. The Group's policy is to borrow centrally to meet
anticipated funding requirements. These borrowings, together with cash
generated from the operations, are on-lent at market-based interest rates and
on commercial terms and conditions or contributed as equity to subsidiaries.
In January 2020, the Group entered into a five-year multi-currency revolving
credit facility of £450m plus an accordion to raise further debt amounts, at
the option of the lenders, of up to the greater of £120m or 150% of EBITDA.
At 30 June 2022 the borrowings were subject to interest at a margin of 1.2%
over LIBOR.
The facility covenants include 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 are tested semi-annually. At 30 June 2022,
the Group is well within both its covenant limits with a published leverage
ratio of 1.6x (or 1.8x using covenant definitions) compared to the limit of
3.25x.
Going concern
The Board is required to assess going concern at each reporting period. After
considering the current financial projections and the bank facilities
available and then applying severe but plausible sensitivities, the Directors
of the Company are satisfied that the Group has sufficient resources for its
operational needs and to 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. Accordingly, the Directors continue to adopt the
going concern basis for the preparation of the financial statements.
The process and key judgements in coming to this conclusion are set out in
detail in Note 1. These assessments require judgement to determine the
potential impact of future economic conditions on the Group, including the
impact of any future Covid restrictions and of changes in economic conditions
in the countries in which we operate.
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. In addition,
the Group presents a non-GAAP profit measure, Adjusted EBITDA, in order to aid
comparisons with peer group companies and provide a reference point for
assessing the operational cash generation of the Group. Adjusted EBITDA is
defined as Adjusted Operating Profit before depreciation and amortisation. The
Group measures operational profit margins with reference to Adjusted EBITDA.
As Adjusted results include the benefits of portfolio investment and
divestment decisions but exclude significant costs (such as amortisation of
acquired intangibles and Non-Trading items), they should not be regarded as a
complete picture of the Group's financial performance, which is presented in
its Total results. The exclusion of other Adjusting items may result in
Adjusted results being materially higher or lower than Total results.
Adjusting items are not a defined term under IFRS, so may not be comparable to
similar terminology used in other companies' financial statements and should
not be viewed in isolation but as supplementary information. Details of the
charges and credits presented as Adjusting items are set out in Note 5 to the
financial statements. The basis for treating these items as Adjusting is as
follows:
Non-Trading items
Non-Trading items are recorded in accordance with the Group's policy set out
in Note 5 to the financial statements. They arise from portfolio investment
and divestment decisions, from changes to the Group's capital structure, as
well as material events that are expected to be outside the course of ordinary
operating activities, (e.g. deferred consideration, integration costs and
professional fees on acquisitions). They do not reflect underlying operational
performance.
Amortisation of intangible assets acquired through business combinations
Charges for amortisation of acquired intangibles arise from the purchase
consideration of a number of separate acquisitions. These acquisitions are
portfolio investment decisions that took place at different times over many
years, so the associated amortisation does not reflect current operational
performance.
Share-based payments
Ascential operates several employee share schemes. Income statement charges or
credits relating to such schemes are a significant non-cash charge or credit
and are driven by a valuation model which references the Ascential share price
and future performance expectations. The income statement charge or credit is
consequently subject to volatility and does not fully reflect current
operational performance.
Gains and losses on disposal
Gains and losses on disposal of businesses arise from divestment decisions
that are part of strategic portfolio management and do not reflect current
operational performance.
Finance costs
As part of the Group's early refinancing of its 2016 debt facility in 2020,
unamortised arrangement fees relating to the previous facility were written
off and fees for subsequent Covid-related covenant amendments were incurred.
These one-off items do not reflect the current operational performance of the
Group.
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:
H122 Restated*
£'m H121
Cash generated from operations 42.8 34.5
Less: cash generated from discontinued operations - (9.5)
Add back: acquisition-related contingent consideration cash flow 18.0 34.4
Add back: other non-trading cash flow 24.9 17.1
Adjusted cash generated from operations 85.7 76.5
Adjusted EBITDA 67.2 42.8
Operating cash conversion 128% 179%
Net cash generated from operating activities 43.2 31.0
Less: cash generated from discontinued operations - (9.5)
Less: capital expenditure (13.9) (8.8)
Add back: acquisition-related contingent consideration cash flow 18.0 34.4
Add back: other non-trading cash flow 24.9 17.1
Free cash flow 72.2 64.2
Adjusted EBITDA 67.2 42.8
Free cash flow conversion 107% 150%
* Restated for discontinued operations relating to MediaLink and the 2021
IFRIC agenda decision on cloud configuration and customisation costs (see
Notes 2 and 19).
Leverage
The ratio of net debt to last 12 months' EBITDA is calculated as follows:
£'m H122
Adjusted EBITDA H1 2022 67.2
Less: Rent expense (3.5)
Adjusted EBITDA (pre-IFRS16) 63.7
Adjusted EBITDA (pre-IFRS16) H2 2021 44.1
Pro-forma Adjusted EBITDA (pre-IFRS 16) 107.8
Net debt 172.7
Leverage ratio 1.6x
The Group also monitors leverage using definitions included in the Group's
banking covenants which are subject to proforma adjustments for acquisitions
including the pre-acquisition losses of both Sellics and Intrepid. Using
these covenant definitions, the leverage ratio at the end of June 2022 was
1.8x.
Organic growth measures
To assess whether the Company is achieving its strategic goal of driving
organic growth, it is helpful to compare like-for-like operational results
between periods. Income statement measures, both Adjusted and Reported, can be
significantly affected by the following factors which mask like-for-like
comparability:
● acquisitions and disposals of businesses lead to a lack of
comparability between periods due to consolidation of only part of a year's
results for these companies;
● discontinuation or curtailment of products or the move of event
products between different periods; and
● changes in exchange rates used to record the results of
non-sterling businesses result in a lack of comparability between periods as
equivalent local currency amounts are recorded at different sterling amounts
in different periods.
Ascential therefore defines Organic growth measures, which are calculated with
the following adjustments:
● results of acquired and disposed businesses are excluded where the
consolidated results include only part-year results in either current or prior
periods;
● results are normalised for events that move between H1 and H2 (for
example Money20/20 Europe which was held in June in 2022 and September in
2021);
● results of specific product lines are excluded if they 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:
H122 Digital Commerce Product Design Marketing Retail & Financial Services Corporate Costs Total - continuing operations
£'m
Revenue
H122 95.1 51.2 80.8 33.6 - 260.7
Acquisitions (25.6) - - - - (25.6)
Transfer (0.6) - - 0.6 - -
Other adjustments** (7.7) - - - - (7.7)
H122 - Organic basis 61.2 51.2 80.8 34.2 - 227.4
Organic revenue growth 15% 14% 88% 74% nm 42%
H121 - restated* 59.7 44.3 43.1 7.2 - 154.3
Event timing adjustments*** - - - 12.4 - 12.4
Other adjustments** (9.0) - - - - (9.0)
Currency adjustment 2.6 0.5 (0.1) - - 3.0
H121 - Organic basis 53.3 44.8 43.0 19.6 - 160.7
Adjusted EBITDA
H122 1.8 24.4 43.2 8.8 (11.0) 67.2
Acquisitions (0.2) - - - - (0.2)
Transfer 0.4 - - (0.4) - -
Other adjustments** 4.1 - - - - 4.1
H122 - Organic basis 6.1 24.4 43.2 8.4 (11.0) 71.1
Organic EBITDA growth (58%) 17% 70% nm (23%) 38%
H121 - restated* 10.8 20.2 25.5 (5.4) (8.3) 42.8
Event timing adjustments*** - - - 5.5 - 5.5
Other adjustments** 2.7 - - - - 2.7
Currency adjustment 1.0 0.5 (0.2) - (0.6) 0.7
H121 - Organic basis 14.5 20.7 25.3 0.1 (8.9) 51.7
* Restated for discontinued operations relating to MediaLink and the 2021
IFRIC agenda decision on cloud configuration and customisation costs (see
Notes 2 and 19).
** Other adjustments relate to the non-advertising business of Sellics and the
Edge Digital Shelf product where substantial elements are being curtailed.
*** Event timing differences relate to Money20/20 Europe, Retail Week Awards
and Retail Week Live which were all held in H2 in 2021 and H1 in 2022.
Proforma growth measures
Proforma growth is measured in a similar way to Organic growth but assumes
that the Company's acquisitions or disposals were all made on the first day of
the comparative accounting period and is a measure of the rate of growth of
the brands owned today. Proforma growth is calculated as follows:
H122 Digital Commerce Product Design Marketing Retail & Financial Services Corporate Costs Total - Continuing Operations
£'m
Revenue
H122 95.1 51.2 80.8 33.6 - 260.7
Acquisitions 10.7 - - - - 10.7
Transfer (0.7) - - 0.7 - -
Other adjustments** (7.8) - - - - (7.8)
H122 - Proforma basis 97.3 51.2 80.8 34.3 - 263.6
Proforma revenue growth 19% 14% 88% 74% 100% 40%
H121 - as restated* 59.7 44.3 43.1 7.2 - 154.3
Acquisitions 28.1 - - - - 28.1
Event timing adjustments*** - - - 12.4 - 12.4
Other adjustments** (10.2) - - - - (10.2)
Currency adjustment 4.0 0.5 (0.1) - - 4.4
H121 - Proforma basis 81.6 44.8 43.0 19.6 - 189.0
Adjusted EBITDA
H122 1.8 24.4 43.2 8.8 (11.0) 67.2
Acquisitions (3.5) - - - - (3.5)
Transfer 0.4 - - (0.4) - -
Other adjustments** 4.3 - - - - 4.3
H122 - Proforma basis 3.0 24.4 43.2 8.4 (11.0) 68.0
Proforma EBITDA growth (84%) 17% 70% nm (23%) 20%
H121 - as restated* 10.8 20.2 25.5 (5.4) (8.3) 42.8
Acquisitions 5.1 - - - - 5.1
Event timing adjustments*** - - - 5.5 - 5.5
Other adjustments** 3.0 - - - - 3.0
Currency adjustment 0.8 0.5 (0.2) - (0.6) 0.5
H121 - Proforma basis 19.7 20.7 25.3 0.1 (8.9) 56.9
* Restated for discontinued operations relating to MediaLink and the 2021
IFRIC agenda decision on cloud configuration and customisation costs (see
Notes 2 and 19).
** Other adjustments relate to the non-advertising business of Sellics and the
Edge Digital Shelf product where substantial elements are being curtailed.
*** Event timing differences relate to Money20/20 Europe, Retail Week Awards
and Retail Week Live which were all held in H2 in 2021 and H1 in 2022.
Glossary of alternative performance measures
Term Description
Organic revenue growth Revenue growth on a like-for-like basis
Organic EBITDA growth Adjusted EBITDA growth on a like-for-like basis
Proforma revenue growth Revenue growth on a like-for-like basis assuming the Company's acquisitions or
disposals were all made on the first day of the comparative accounting period
Proforma EBITDA growth Adjusted EBITDA growth on a like-for-like basis assuming the Company's
acquisitions or disposals were all made on the first day of the comparative
accounting period
Non-Trading items Items within Operating profit / (loss) separately identified in accordance
with Group accounting policies
Adjusting items Non-Trading items (e.g. deferred consideration, integration and restructuring
costs), amortisation of intangible assets acquired through business
combinations, share-based payments, gains and losses on disposal, write-off of
unamortised arrangement fees on re-financing, 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 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 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
Condensed Consolidated Statement of Profit and Loss
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
(Unaudited) (Unaudited and restated*) (Audited)
(£ million) Note Adjusted Results Adjusting Items Total Adjusted Results Adjusting Items Total Adjusted Results Adjusting Items Total
Continuing operations
Revenue 4 260.7 - 260.7 154.3 - 154.3 349.3 - 349.3
Cost of sales (95.7) - (95.7) (52.9) - (52.9) (127.6) - (127.6)
Sales, marketing and administrative expenses (110.4) (89.7) (200.1) (67.6) (36.2) (103.8) (152.3) (96.1) (248.4)
Operating profit/(loss) 4 54.6 (89.7) (35.1) 33.8 (36.2) (2.4) 69.4 (96.1) (26.7)
Adjusted EBITDA 4 67.2 - 67.2 42.8 - 42.8 88.9 - 88.9
Depreciation and amortisation (12.6) (17.5) (30.1) (9.0) (14.7) (23.7) (19.5) (31.9) (51.4)
Non-trading items 5 - (64.6) (64.6) - (18.8) (18.8) - (55.8) (55.8)
Share-based payments - (7.6) (7.6) - (2.7) (2.7) - (8.4) (8.4)
Operating profit/(loss) 54.6 (89.7) (35.1) 33.8 (36.2) (2.4) 69.4 (96.1) (26.7)
Share of loss of associates (1.0) (0.3) (1.3) (0.9) - (0.9) (2.4) (0.1) (2.5)
Finance costs 6 (8.0) - (8.0) (11.2) (0.8) (12.0) (20.1) - (20.1)
Finance income 6 2.8 - 2.8 1.7 - 1.7 2.7 7.0 9.7
Profit/(loss) before taxation 48.4 (90.0) (41.6) 23.4 (37.0) (13.6) 49.6 (89.2) (39.6)
Taxation 7 (12.2) 15.8 3.6 - 2.6 2.6 (8.2) 9.8 1.6
Profit/(loss) from continuing operations 36.2 (74.2) (38.0) 23.4 (34.4) (11.0) 41.4 (79.4) (38.0)
Discontinued operations
(Loss)/profit from discontinued operations, net of tax - (0.4) (0.4) 5.8 222.0 227.8 11.5 250.4 261.9
Profit/(loss) for the period 36.2 (74.6) (38.4) 29.2 187.6 216.8 52.9 171.0 223.9
Profit/(loss) attributable to:
Owners of the company 35.3 (73.5) (38.2) 28.8 187.6 216.4 51.1 172.0 223.1
Non-controlling interest 0.9 (1.1) (0.2) 0.4 - 0.4 1.8 (1.0) 0.8
Earnings/(loss) per share (basic and diluted, pence)
Continuing operations 8.0 (16.6) (8.6) 5.7 (8.6) (2.9) 9.5 (18.8) (9.3)
Discontinued operations - (0.1) (0.1) 1.5 55.3 56.8 2.8 60.0 62.8
Total operations 9 8.0 (16.7) (8.7) 7.2 46.7 53.9 12.3 41.2 53.5
* Restated for discontinued operations and the IFRIC agenda decision on cloud
configuration and customisation costs in 2021 (See notes 2 and 19)
Condensed Consolidated Statement of Other Comprehensive Income
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
(Unaudited) (Unaudited and restated*) (Au
dit
ed)
(£ million) Adjusted Results Adjusting Items Total Adjusted Results Adjusting Items Total Adjusted Results Adjusting Items Total
Profit/(loss) for the period from continuing operations 36.2 (74.2) (38.0) 23.4 (34.4) (11.0) 41.4 (79.4) (38.0)
Profit/(loss) for the period from discontinued operations - (0.4) (0.4) 5.8 222.0 227.8 11.5 250.4 261.9
Profit/(loss) for the period 36.2 (74.6) (38.4) 29.2 187.6 216.8 52.9 171.0 223.9
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences:
- recognised in equity from continuing operations 52.7 - 52.7 5.0 - 5.0 18.5 - 18.5
- transferred from equity for disposed of entities - - - - - - 6.7 - 6.7
Other comprehensive income/(loss) net of tax 52.7 - 52.7 5.0 - 5.0 25.2 - 25.2
Total comprehensive income/(loss) for the period 88.9 (74.6) 14.3 34.2 187.6 221.8 78.1 171.0 249.1
Total comprehensive income/(loss) attributable to:
Owners of the company 85.4 (73.5) 11.9 33.8 187.6 221.4 76.3 172.0 248.3
Non-controlling interest 3.5 (1.1) 2.4 0.4 - 0.4 1.8 (1.0) 0.8
* Restated for discontinued operations and the IFRIC agenda decision on cloud
configuration and customisation costs in 2021 (See notes 2 and 19)
Condensed Consolidated Statement of Financial Position
(£ million) Note 30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited and restated*) (Audited)
Assets
Non-current assets
Goodwill 11, 12 682.4 522.9 603.6
Intangible assets 11 297.3 212.2 275.3
Property, plant and equipment 5.1 4.4 5.4
Right of use assets 22.3 13.3 21.8
Investments 10 92.8 59.1 82.2
Investment property 0.6 0.9 0.6
Deferred tax assets 7 63.2 59.0 57.7
Other investments, including derivatives 2.1 32.0 -
1,165.8 903.8 1046.6
Current assets
Inventories 3.5 1.5 1.9
Trade and other receivables 13 302.9 186.2 272.6
Current tax asset - 1.4 -
Cash and cash equivalents 16 88.4 81.1 84.1
394.8 270.2 358.6
Total assets 1,560.6 1,174.0 1,405.2
Liabilities
Current liabilities
Trade and other payables 14 218.9 142.9 198.4
Deferred income 121.0 106.0 100.3
Deferred contingent consideration 15 43.5 37.3 52.6
Lease liabilities 6.6 7.4 7.0
Current tax liabilities 5.9 - 3.6
Provisions 1.6 4.6 2.9
397.5 298.2 364.8
Non-current liabilities
Deferred income 0.9 0.5 0.7
Deferred contingent consideration 15 37.2 27.1 50.3
Lease liabilities 19.8 9.9 18.2
External borrowings 16 263.2 233.8 158.1
Deferred tax liabilities 7 14.1 7.0 6.5
Provisions 1.4 1.6 1.0
336.6 279.9 234.8
Total liabilities 734.1 578.1 599.6
Net assets 826.5 595.9 805.6
Equity
Share capital 4.4 4.0 4.4
Share premium 153.5 3.3 153.3
Other reserves 167.0 167.0 167.0
Translation reserve 32.2 (40.7) (20.5)
Retained earnings 440.8 461.2 471.7
Non-controlling interest 28.6 1.1 29.7
Total equity 826.5 595.9 805.6
* Restated for the IFRIC agenda decision on cloud configuration and
customisation costs in 2021 (See notes 2 and 19)
Condensed Consolidated Statement of Changes in Equity
Attributable to owners of the Company
(£ million) Share capital Share premium Translation reserve Other reserves Retained earnings* Non-controlling interest Total
Restated balance at 31 December 2020 (Audited) 4.0 3.0 (45.7) 167.0 241.6 1.3 371.2
Profit for the period* - - - - 216.4 0.4 216.8
Other comprehensive income - - 5.0 - - - 5.0
Total comprehensive income - - 5.0 - 216.4 0.4 221.8
Issue of shares - 0.3 - - - - 0.3
Share-based payments - - - - 2.5 - 2.5
Taxation on share-based payments - - - - 0.7 - 0.7
Dividends paid - - - - - (0.6) (0.6)
Balance at 30 June 2021 (Unaudited) 4.0 3.3 (40.7) 167.0 461.2 1.1 595.9
Profit for the period - - - - 6.7 0.4 7.1
Other comprehensive income - - 13.5 - - - 13.5
Transferred to the income statement - - 6.7 - - - 6.7
Total comprehensive income - - 20.2 - 6.7 0.4 27.3
Issue of shares 0.4 150.0 - - - - 150.4
Acquisition of subsidiary with non-controlling interest - - - - - 28.3 28.3
Foreign exchange movements - - - - - 0.7 0.7
Share-based payments - - - - 5.9 - 5.9
Taxation on share-based payments - - - - (2.1) - (2.1)
Dividends paid - - - - - (0.8) (0.8)
Balance at 31 December 2021 (Audited) 4.4 153.3 (20.5) 167.0 471.7 29.7 805.6
Loss for the period - - - - (38.2) (0.2) (38.4)
Other comprehensive income - - 52.7 - - - 52.7
Total comprehensive income - - 52.7 - (38.2) (0.2) 14.3
Issue of shares - 0.2 - - - 0.2
Share-based payments - - - - 8.2 - 8.2
Taxation on share-based payments - - - - (0.9) - (0.9)
Dividends paid - - - - - (0.9) (0.9)
Balance at 30 June 2022 (Unaudited) 4.4 153.5 32.2 167.0 440.8 28.6 826.5
* Restated for the IFRIC agenda decision on cloud configuration and
customisation costs in 2021 (See notes 2 and 19)
Condensed Consolidated Statement of Cash Flows
(£ million) Six months to 30 Six months to 30 Year to 31
June 2022 June 2021* December 2021
(Unaudited) (Unaudited) (Audited)
Cash flow from operating activities Note
Loss before taxation on continuing operations* (41.6) (13.6) (39.6)
(Loss)/profit before taxation on discontinued operations (0.4) 227.5 265.7
Adjustments for:
Impairment of intangible assets 31.4 - -
Depreciation and amortisation 30.1 25.3 54.4
Deferred contingent consideration costs 5 7.6 12.9 35.1
Gain on disposal of business operations - (226.1) (259.4)
Share-based payments 7.6 3.0 9.1
Share of loss in equity-accounted investees, net of tax 1.3 0.9 2.5
Net finance costs 6 5.2 10.3 10.4
Cash generated from operations before changes in working capital, provisions 41.2 40.2 78.2
and deferred and contingent consideration
Deferred contingent consideration paid (18.0) (34.4) (39.4)
Changes in:
Inventories 0.4 0.6 0.1
Trade and other receivables 16.4 20.3 (65.7)
Trade and other payables 3.7 10.6 65.5
Provisions (0.9) (2.8) (5.5)
Cash generated from operations 42.8 34.5 33.2
Cash generated from operations before non-trading operating items 85.7 76.5 84.0
Cash outflows for discontinued operations - 9.5 12.0
Cash outflows for acquisition-related contingent employment costs 15 (18.0) (34.4) (39.4)
Cash flows for other non-trading items (24.9) (17.1) (23.4)
Cash generated from operations 42.8 34.5 33.2
Tax received/(paid) 0.4 (3.5) (3.3)
Net cash generated from operating activities 43.2 31.0 29.9
Cash flow from investing activities
Acquisition of businesses, net of cash acquired 12 (60.9) (51.4) (195.3)
Deferred contingent consideration paid** 13 (35.4) (86.7) (87.6)
Acquisition of investments 10 (2.9) (28.7) (44.0)
Loan to associate (15.6) - (7.3)
Acquisition of software intangibles and property, plant and equipment (13.9) (8.8) (23.3)
Disposal of businesses, net of cash disposed of (0.4) 224.9 342.4
Net cash (used by)/generated from investing activities (129.1) 49.3 (15.1)
Cash flow from financing activities
Net proceeds/(repayments) from external borrowings 16 91.8 (70.0) (149.0)
Proceeds from issue of shares - 0.3 150.7
Interest and arrangement fees paid (2.5) (4.8) (6.4)
Lease liabilities paid (3.0) (3.6) (7.2)
Dividend paid to non-controlling interest (1.2) (0.6) (0.5)
Net cash generated/(used in) financing activities 85.1 (78.7) (12.4)
Net increase in cash and cash equivalents (0.8) 1.6 2.4
Cash and cash equivalents at the beginning of the period 84.1 80.2 80.2
Effect of exchange rate changes 5.1 (0.7) 1.5
Cash and cash equivalents at the end of the period 88.4 81.1 84.1
* Restated for discontinued operations and the IFRIC agenda decision on cloud
configuration and customisation costs in 2021 (See notes 2 and 19)
** Includes payments for both deferred and contingent consideration recognised
on initial acquisition as well as any subsequent remeasurements. Payments
linked to ongoing employment as well as business performance are shown within
cash generated from operations
Notes to the Condensed Consolidated Interim Financial Statements
1. Basis of preparation
Ascential plc (the "Company") is a public limited company, which is listed on
the London Stock Exchange and incorporated and domiciled in the United
Kingdom. These unaudited condensed consolidated interim financial statements
as at and for the six months to 30 June 2022 comprise the results and
financial position of the Company and its subsidiaries and were approved by
the Board of Directors on 1 August 2022. The condensed consolidated interim
financial statements have been prepared in accordance with the International
Accounting Standard 34 "Interim Financial Reporting" (IAS 34) as adopted for
use in the UK.
As required by the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority, this condensed set of financial statements has been
prepared applying the accounting policies and presentation that were applied
in the preparation of the company's published consolidated financial
statements for the year ended 31 December 2021 which were prepared in
accordance with applicable law and UK-adopted international accounting
standards. These condensed consolidated half-yearly financial statements do
not comprise statutory accounts within the meaning of Section 435 of the
Companies Act 2006 and should be read in conjunction with the Annual Report
and Accounts 2021. Those accounts were reported upon by the Group's auditors
and delivered to the Registrar of Companies. The report of the auditors was
unqualified, did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report and did not
contain statements under Section 498 (2) or (3) of the Companies Act 2006. The
Annual Report and Accounts 2021 are available upon request from the Company's
registered office at 33 Kingsway, London, WC2B 6UF, United Kingdom or at
www.ascential.com (http://www.ascential.com) .
Going concern
After considering the current financial projections and the bank facilities
available and then applying severe but plausible sensitivities, 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 interim financial statements. The process and key judgements
in coming to this conclusion are set out below.
The Board is required to assess going concern at each reporting period. These
assessments require judgement to determine the impact of future economic
conditions on the Group, including the impact of any future Covid-19
restrictions on the economies in which we operate and the impact of downward
recessionary pressures. The Directors have considered three main factors in
reaching their conclusions on going concern - liquidity, covenants and
scenario planning - as set out below.
Liquidity
In January 2020, the Group entered into a new 5-year multi-currency revolving
credit facility ("RCF") of £450m plus an accordion to raise further debt
amounts, at the option of the lenders, of up to the greater of £120m or 150%
of EBITDA. At 30 June 2022 the borrowings were subject to interest at a margin
of 1.2% over LIBOR. These facilities provide ample liquidity of £277.3m when
judged against the net debt of the Company of £172.7m at 30 June 2022.
Covenants
The more sensitive aspects of the Company's financing are the application of
covenant tests to these facilities and the most sensitive covenant is Net Debt
Leverage (broadly, the ratio of Net Debt to Adjusted pre-IFRS16 EBITDA). The
facility covenants include a maximum net leverage of 3.25x with the benefit of
additional 0.5x leverage spikes for relevant acquisitions, a minimum interest
cover of 3.00x and are tested semi-annually. To address the uncertain business
environment and ensure maximum flexibility in the medium term, across a broad
range of business planning scenarios, the Group has previously agreed covenant
amendments with its banking group but following the strong performance of live
events in 2021, this amendment was cancelled in December 2021.
At 30 June 2022, our leverage ratio was 1.6x or 1.8x on a covenant basis
compared to the limit of 3.25x), and therefore well within our banking
covenants. All other covenants were also in compliance.
Scenario planning
After two years of Covid impacts on our live events and following the
successful return of these events in the last 12 months, the Directors have
reassessed the most plausible severe downside case for assessing going
concern. The Directors concluded that the most severe but plausible scenario
that could affect the business was the impact of a recession in the major
markets in which the Group operates, driven by the economic uncertainty from
supply chain challenges and the increased inflationary pressures. This
scenario is not a forecast of the Company that the Directors believe will
eventuate, but is designed to stress test liquidity and covenant compliance.
The key assumption is that recessionary pressures will reduce the anticipated
revenue growth rates or result in revenue decline in some segments across our
different business sectors. This scenario results in our leverage ratios
increasing to between 1.7x to 1.9x at each of the three 6-monthly testing
points in between the date of this report and our assessment period up to 31
December 2023.
In their review of the downside scenario, the Directors have also considered a
number of mitigations that could reduce the leverage ratio further and are at
their discretion, including but not limited to: future dividend policy, the
use of equity to meet deferred consideration obligations, and further
restructuring and cost cutting measures. In this downside scenario there is
sufficient headroom against all banking covenant tests. Accordingly, the
Directors continue to adopt the going concern basis for the preparation of the
financial statements.
2. Accounting policies, developments and changes
The accounting policies applied by the Group in these condensed consolidated
interim financial statements are the same as those set out in the Group's
Annual Report and Accounts for the year ended 31 December 2021 and will be
applied for the year ended 31 December 2022.
New and amended accounting standards
The following amended standards and interpretations were effective in the six
months to 30 June 2022. The updates have had no impact on our condensed
consolidated financial statements.
- COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
- Annual Improvements to IFRS Standards 2018-2020
- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to
IAS 16)
- Reference to the Conceptual Framework (Amendments to IFRS 3)
Restatement of capitalisation of costs incurred in the implementation of
business systems built upon public cloud "software as a service" (SaaS)
In 2021, IFRIC issued an agenda decision on configuration and customisation
costs in a cloud computing arrangement relating to IAS 38 "Intangible Assets".
In response the Group's accounting policy on intangible assets has been
updated, specifically to expense costs incurred in the implementation of
business systems built upon software that is contracted on a "software as a
service" (SaaS) basis and hosted in a public cloud where these do not give
rise to an identifiable intangible asset that the Group control. In limited
circumstances, configuration and customisation costs may give rise to an
identifiable intangible asset, for example, where code is created that is
controlled by the entity. This change in accounting policy is applied
retrospectively. The Group is mid-way through the implementation of new
Salesforce and ERP systems which are significant, once-in-a-decade investments
and the impact of expensing such implementation costs in the year of spend is
material. As such, these costs, which form part of our continuing operations,
have been treated as a non-trading item. The impact on the Group's financial
statements for the six months to 30 June 2021 is summarised in note 19.
Restatement for disposal of MediaLink
As part of its growth strategy to focus resources and investment on its
strategic priorities, the Group disposed of MediaLink, a brand previously
within the Marketing segment, on 15 December 2021. The impact on the Group's
financial statements for the six months to 30 June 2021 is summarised in note
19.
3. Critical accounting judgements and estimates
The preparation of these financial statements requires management to exercise
judgement in applying the Group's accounting policies. It also requires the
use of estimates and assumptions that affect the reported amounts of assets,
liabilities, income and expenses. The actual future outcomes may differ from
these estimates and give rise to material adjustments to the reported results
and financial position of the Group. Estimates and underlying assumptions are
reviewed on an ongoing basis, with revisions recognised in the year in which
the estimates are revised and in any future periods affected. The areas
involving a higher degree of judgement or complexity and assumptions or
estimation remain consistent with those disclosed in the Group's consolidated
financial statements as at and for the year ended 31 December 2021 and are set
out below.
Critical accounting judgements
· Alternative performance measures (APMs)
· Recognition of associates (note 10)
Key sources of estimation
· Initial recognition of goodwill and intangible assets
in business combinations (notes 11 and 12)
· Valuation of contingent consideration and
acquisition-related employment costs (notes 15)
· Goodwill and acquired intangibles recoverable amount
(note 11)
4. Operating segments
The Group has four reportable segments that are used to present information to
the Board (Chief Operating Decision Maker) on a monthly basis. End market
risks and opportunities vary and capital allocation decisions are made on the
basis of four reportable segments. The four reportable segments are Digital
Commerce, Product Design, Marketing, and Retail & Financial Services. The
reportable segments offer different products and services and are managed
separately as a result of different capabilities, technology, marketing
strategies and end market risks and opportunities. The following summary
describes the continuing operations in each of the Group's reportable
segments:
· Digital Commerce: measurement, optimisation and execution
for digital commerce growth
· Product Design: consumer product trend forecasting, data
and insight to create world-class products and experiences
· Marketing: services and tools to measure and optimise
marketing creativity, media and platform effectiveness and efficiency
· Retail & Financial Services: events, data and tools
to improve performance and drive innovation in retail and financial services
Information regarding the results of each reportable segment is included
below. Reportable segment profits are measured at an Adjusted operating profit
level, representing reportable segment Adjusted EBITDA, less depreciation
costs and amortisation in respect of software intangibles, without allocation
of Corporate costs as reported in the internal management reports that are
reviewed by the Board. Reportable segment Adjusted EBITDA and reportable
segment Adjusted operating profit are used to measure performance as
management believes that such information is the most relevant in evaluating
the results of the reportable segments relative to other comparable entities.
Total assets and liabilities for each reportable segment are not disclosed
because they are not provided to the Board on a regular basis. Total assets
and liabilities are internally reviewed on a Group basis.
Six months to 30 June 2022 (Unaudited)
(£ million) Digital Commerce Product Design Marketing Retail & Financial services Corporate costs Continuing operations total Discontinued operations Total
Revenue 95.1 51.2 80.8 33.6 - 260.7 - 260.7
Adjusted EBITDA 1.8 24.4 43.2 8.8 (11.0) 67.2 - 67.2
Depreciation and software amortisation (7.7) (2.2) (1.4) (0.2) (1.1) (12.6) - (12.6)
Adjusted operating profit/(loss) (5.9) 22.2 41.8 8.6 (12.1) 54.6 - 54.6
Amortisation of acquired intangible assets (17.5) - (17.5)
Non-trading items (64.6) - (64.6)
Disposal of business - (0.4) (0.4)
Share-based payments (7.6) - (7.6)
Operating loss (35.1) (0.4) (35.5)
Share of net loss in equity-accounted investee (1.3) - (1.3)
Finance costs (8.0) - (8.0)
Finance income 2.8 - 2.8
Loss before tax (41.6) (0.4) (42.0)
Six months to 30 June 2021 (Unaudited and restated)
(£ million) Digital Commerce Product Design Marketing Retail & Financial services Corporate costs Continuing operations total Discontinued operations Total
Revenue 59.7 44.3 43.1 7.2 - 154.3 25.6 179.9
Adjusted EBITDA 10.8 20.2 25.5 (5.4) (8.3) 42.8 8.0 50.8
Depreciation and software amortisation (4.2) (1.4) (2.2) (0.4) (0.8) (9.0) (0.1) (9.1)
Adjusted operating profit/(loss) 6.6 18.8 23.3 (5.8) (9.1) 33.8 7.9 41.7
Amortisation of acquired intangible assets (14.7) (1.4) (16.1)
Non-trading items (18.8) 222.4 203.6
Share-based payments (2.7) (0.3) (3.0)
Operating loss (2.4) 228.6 226.2
Share of net loss in equity-accounted investee (0.9) - (0.9)
Finance costs (12.0) - (12.0)
Finance income 1.7 - 1.7
Loss before tax (13.6) 228.6 215.0
* Restated for discontinued operations and the IFRIC agenda decision on cloud
configuration and customisation costs in 2021 (See notes 2 and 19).
Year to 31 December 2021 (Audited)
(£ million) Digital Commerce Product Design Marketing Retail & Financial services Corporate costs Continuing operations total Discontinued operations Total
Revenue 147.3 91.3 56.5 54.2 - 349.3 49.3 398.6
Adjusted EBITDA 31.1 41.3 25.6 10.9 (20.0) 88.9 16.0 104.9
Depreciation and software amortisation (10.0) (2.9) (3.0) (1.8) (1.8) (19.5) (0.3) (19.8)
Adjusted operating profit/(loss) 21.1 38.4 22.6 9.1 (21.8) 69.4 15.7 85.1
Amortisation of acquired intangible assets (31.9) (2.7) (34.6)
Disposal of business - 259.4 259.4
Non-trading items (55.8) (6.0) (61.8)
Share-based payments (8.4) (0.7) (9.1)
Operating loss (26.7) 265.7 239.0
Share of net loss in equity-accounted investee (2.5) - (2.5)
Finance costs (20.1) - (20.1)
Finance income 9.7 - 9.7
Loss before tax (39.6) 265.7 226.1
Non-trading items within continuing operations of £64.6m (31 December 2021:
£55.8m; 30 June 2021: £18.8m) include £10.6m (31 December 2021: £36.6m; 30
June 2021: £11.6m), £nil (31 December 2021: £0.1m; 30 June 2021: £nil),
£nil (31 December 2021: £nil; 30 June 2021: £nil), £nil (31 December 2021:
£nil; 30 June 2021: £nil) and £54.0m (31 December 2021: £19.1m; 30 June
2021: £7.2m) which are attributable to Digital Commerce, Product Design,
Marketing, Retail & Financial Services and Corporate costs respectively.
Finance costs, finance income, share of net profit in equity accounted
investees and share-based payments are not allocated to segments, as these
types of activity are driven by the Group corporate function and are
considered to be non-trading items.
Additional segmental information on revenue
The Group's main revenue streams are those described in the Annual Report for
the year ended 31 December 2021. The Group's revenue is derived from contracts
with customers.
Disaggregation of revenue
The following table shows revenue disaggregated by major service lines, and
the timing of revenue recognition:
(£ million) Timing of revenue recognition Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
(Unaudited) (Unaudited and restated*) (Audited)
Digital Subscriptions & Platforms Over time 89.6 54.9 136.2
Advisory Over time 5.5 4.8 11.1
Digital Commerce 95.1 59.7 147.3
Digital Subscriptions & Platforms Over time 45.4 39.8 81.9
Advisory Over time 5.8 4.5 9.4
Product Design 51.2 44.3 91.3
Digital Subscriptions & Platforms Over time 11.1 8.4 18.2
Advisory Over time 1.9 2.9 3.7
Benchmarking Awards Point in time 25.7 27.2 29.3
Events Point in time 42.1 4.6 5.3
Marketing 80.8 43.1 56.5
Digital Subscriptions & Platforms Over time 4.5 5.7 10.8
Advisory Over time 1.5 1.1 2.7
Events Point in time 27.6 0.4 40.7
Retail & Financial Services 33.6 7.2 54.2
Revenue from continuing operations 260.7 154.3 349.3
* Restated for discontinued operations (see notes 2 and 19).
Seasonality of operations
The Group's results are impacted by seasonality. The majority of Ascential's
revenues come from robust digital subscriptions and platforms and high repeat
advisory revenue streams which contain little seasonal fluctuation. However,
the Company delivers a material amount of revenue from Benchmarking Awards and
Events which typically are more weighted to the first half of the year.
5. Adjusting items
Adjusting items are those which are considered significant by virtue of their
nature, size or incidence and are presented separately in the consolidated
statement of profit and loss to enable a full understanding of the Group's
financial performance. Adjusting items are not a defined term under IFRS and
include the share-based payment charge, amortisation of intangibles acquired
through business combinations and non-trading items such as costs incurred for
acquisitions and disposals, integration, non-recurring business restructuring,
intangible impairment and capital restructuring. The tax effect of Adjusting
items is also included within Adjusting items.
Adjusting items included in profit/(loss) before tax are:
Six months to Six months to Year to
30 June 2022 30 June 2021 31 December 2021
(£ million)
(Unaudited) (Unaudited and restated*) (Audited)
Revaluation of contingent consideration (4.6) 2.4 5.2
Acquisition-related employment costs accrued in the period 12.2 7.3 24.7
Total deferred contingent consideration costs 7.6 9.7 29.9
Impairment in Edge CGU 31.4 - -
Implementation of new ERP instance 6.4 3.9 10.1
Implementation of new Salesforce instance 6.9 2.5 6.8
Transaction and integration costs 12.8 2.7 9.0
Property impairments and provisions (0.5) - -
Non-Trading items 64.6 18.8 55.8
Amortisation of acquired intangible assets 17.5 14.7 31.9
Share-based payments 7.6 2.7 8.4
Adjusting items included within operating profit/(loss) 89.7 36.2 96.1
Finance costs/(income) - 0.8 (7.0)
Share of the loss of associates 0.3 - 0.1
Adjusting items included with profit/(loss) before tax from continuing 90.0 37.0 89.2
operations
* Restated for discontinued operations and the IFRIC agenda decision on cloud
configuration and customisation costs in 2021 (see notes 2 and 19).
An impairment charge of £31.4m (31 December 2021: £nil; 30 June 2021: £nil)
has been recognised in the Edge CGU driven by the decline in profitability of
the Digital Shelf offering (see note 11).
Acquisition-related employment costs incurred in the period relate primarily
to that element of the purchase consideration for the acquisitions of
WhyteSpyder, OneSpace, 4K Miles, Perpetua and DZ, which, absent the link to
continued employment, would have been treated as consideration. Under the sale
and purchase agreements, between 25% and 100% of deferred payments are
contingent on not only the results of the business in the post-acquisition
period but also the continued employment of the founders.
The Group is undertaking a multi-year programme to introduce a new ERP to
replace the current Oracle system introduced in 2007 and a new instance of
Salesforce, both of which are cloud-based and the implementation costs are
subject to the recent IFRIC agenda decision relating to IAS 38 and accordingly
are now required to be expensed. Costs relating to this programme totalling
£13.3m (31 December 2021: £16.9m; 30 June 2021: £6.4m) have been expensed,
and given the materiality and incidence, have been recorded as a non-trading
item.
As part of the overall strategy of managing the Group's portfolio, we consider
the costs incurred as part of the acquisition and integration of acquired
businesses to be Adjusting items. Acquisition transaction costs include
directly linked transaction costs such as legal and diligence fees as well as
stamp duty where applicable. Integration spend includes the costs of
transferring acquired businesses onto the Group's processes, IT and revenue
platforms, merging of products and rebranding. In 2022, and as previously
announced, we have also incurred costs in evaluating the merits of a managed
separation of the Digital Commerce assets from the rest of the Group, the
costs of which are included in the Transaction and integration costs line
item.
The share-based payments charge of £7.6m incorporates the Share Incentive
Plan, the SAYE and the Performance Share Plan. As explained in the Alternative
Performance Measures section, we treat 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.
6. Finance costs and finance income
Six months to Six months to Year to
30 June 2022 30 June 2021 31 December 2021
(£ million)
(Unaudited) (Unaudited) (Audited)
Interest on deposits and investments 0.9 1.7 2.5
Fair value gain on derivative financial instruments 1.9 - 0.2
Finance income 2.8 1.7 2.7
Interest payable on external borrowings (3.1) (4.6) (8.6)
Amortisation of arrangement fees (0.4) (0.4) (0.9)
Discount unwind on deferred and contingent consideration (4.1) (5.5) (9.0)
Discount unwind of lease liability (0.5) (0.4) (1.0)
Discount unwind of property provisions - (0.1) -
Foreign exchange gain/(loss) on cash and cash equivalents 0.1 (0.2) (0.6)
Adjusted finance costs (8.0) (11.2) (20.1)
Covenant amendment costs - (0.8) (0.8)
Remeasurement of trade investments to fair value - - 7.8
Adjusting finance (costs)/income (8.0) (12.0) (13.1)
Net finance costs from continuing operations (5.2) (10.3) (10.4)
7. Tax on profit on ordinary activities
The total tax credit for the period is £3.6m (30 June 2021: credit of £2.6m)
which comprises a tax charge of £12.2m on Adjusted profits and a tax credit
of £15.8m on Adjusting items (being the amortisation of acquired intangible
assets, share-based payments and non-trading items).
The tax credit on Adjusted profits for the period has been calculated by
applying the expected full year rate of 25.3% (30 June 2021: 20.7%) to the
results for the six months ended 30 June 2022. In the prior year, there were
also a number of discrete items reducing the final effective tax rate on
Adjusted profits to nil.
A tax credit of £15.8m is recorded in relation to Adjusting items for the six
months ended 30 June 2022 (30 June 2021: £2.6m; 31 December 2021: £9.8m). A
deferred tax charge of £0.9m (30 June 2021: credit of £0.7m; 31 December
2021: £1.4m charge) is recognised in equity relating to share-based payments.
The total tax credit for the period comprises:
Restated*
(£ million) Six months to 30 Six months to 30 Year to 31
June 2022 June 2021 December 2021
(Unaudited) (Unaudited) (Audited)
Current tax
UK tax credit on income for the period - - (0.2)
Overseas tax charge on income for the period 1.2 - 2.8
Adjustments in respect of prior years - - 1.2
Total current tax charge/(credit) 1.2 - 3.8
Deferred tax
Current period credit (5.0) (3.3) (2.3)
Adjustments in respect of prior years 0.2 - (3.3)
Impact of rate changes on opening balances - 0.7 0.2
Total deferred tax credit (4.8) (2.6) (5.4)
Total tax credit (3.6) (2.6) (1.6)
Total effective tax rate 8.5% 17.8% 4.0%
*Restated for discontinued operations (see note 19)
The deferred tax balances shown in the consolidated statement of financial
position are analysed as follows.
30 June 2022 30 June 2021 31 December 2021
(£ million) (Unaudited) (Unaudited) (Audited)
Deferred tax assets 63.2 56.6 57.7
Deferred tax liabilities (14.1) (7.0) (6.5)
Total 49.1 49.6 51.2
The £2.1m net movement in deferred tax in the period largely results from a
deferred tax liability recognised on new acquisitions in the period, along
with a reduction in deferred tax assets utilised in the period, net of a
credit arising as a result of the impairment of tangible and intangible assets
related to the Edge business (see note 11 for details). In addition, the
Group benefited from a credit arising on foreign exchange movements of £2.4m
on deferred tax assets held in US dollar.
At 30 June 2022, the Group had utilisable losses in the US and UK with a
future tax impact of £38.8m (31 December 2021: £33.5m). The movement from
the year end arises due to recognition of a deferred tax asset on losses
arising on acquisitions net of utilisation of losses against profits in the
period. Our ability to utilise losses in future years is primarily driven by
the level of taxable profits arising in the US and UK and we expect our
deferred tax assets to convert into cash savings over the next ten years with
the majority being recovered over the next four years.
8. Dividends
The Board has decided to prioritise the preservation of capital for potential
acquisitions rather than paying an interim dividend. The Board will keep
capital allocation priorities including shareholder cash returns continually
under review.
9. Earnings per share
The calculations of basic and diluted EPS are based on the profit attributable
to ordinary shareholders and a weighted average number of shares outstanding
during the related period.
The weighted average number of ordinary shares in issue during the period,
excluding those held by Employee Benefit Trusts, was 439.0 million (30 June
2021: 401.7 million and 31 December 2021: 417.3 million). There is no dilutive
impact from potential ordinary shares as potential ordinary shares can only be
considered dilutive when their inclusion would decrease earnings or increase
loss per share.
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
(Unaudited)
(Audited)
(Unaudited)
Adjusted Results Adjusting Items Total Adjusted Results Adjusting Items Total Adjusted Results Adjusting Items Total
Profit/(loss) attributable to owners of the Company (£ million)
Profit/(loss) for the year- continuing operations 35.3 (73.1) (37.8) 23.0 (34.4) (11.4) 39.6 (78.4) (38.8)
Profit/(loss) for the year - discontinued operations - (0.4) (0.4) 5.8 222.0 227.8 11.5 250.4 261.9
Profit/(loss) for the year 35.3 (73.5) (38.2) 28.8 187.6 216.4 51.1 172.0 223.1
Share number (million)
Basic weighted average number of shares 439.0 439.0 439.0 401.7 401.7 401.7 417.3 417.3 417.3
Diluted weighted average number of shares 439.0 439.0 439.0 401.7 401.7 401.7 417.3 417.3 417.3
Earnings/(loss) per share (basic and diluted, pence)
Continuing operations 8.0 (16.6) (8.6) 5.7 (8.6) (2.9) 9.5 (18.8) (9.3)
Discontinued operations - (0.1) (0.1) 1.5 55.3 56.8 2.8 60.0 62.8
Total operations 8.0 (16.7) (8.7) 7.2 46.7 53.9 12.3 41.2 53.5
10. Investments in associates
(£ million) Total
At 1 January 2022 82.2
Acquisition of investments 2.9
Share of the loss of joint ventures and associates (1.3)
Movements in exchange rates 9.0
At 30 June 2022 92.8
Investments as at 30 June 2022 were made up as follows:
(£ million) Total
Trade investments and preference shares measured at fair value through profit 89.2
or loss
Associates and joint ventures accounted for using the equity method 3.6
Hudson MX
Included within the above balances, the Group continues to hold a £74.6m (31
December 2021: £65.9m) investment in Hudson MX, an advertising software
business providing media buying and accounting solutions through a cloud-based
SaaS platform. This investment is made up of ordinary stock and preference
stock.
In addition, we have invested £18.1m in unsecured promissory notes (31
December 2021: £8.2m) and £7.1m in secured debt (31 December 2021: nil) in
Hudson MX at 30 June 2022. These are included in Other Receivables, see note
13.
Classification of Investment
There has been no change in the accounting for the investment from that
disclosed in Note 3 "Critical Accounting Judgements - Recognition of
Associates" and Note 18 "Investments" of the 2021 Annual Report and Accounts.
As more fully disclosed in that Annual Report, we continue to conclude that
Ascential has significant influence and not control over Hudson MX, and
therefore account for the investment as an associate. The primary factors
considered by the Directors in making this judgement include: i) Ascential
voting rights are capped at 19.9% and ii) Ascential does not have an ability
to appoint Hudson MX directors, with the only rights in this respect being
able to have two passive Board observer seats with protective rights only. In
addition, an option to acquire Hudson MX that existed at 31 December 2021,
which was deemed to not confer substantive rights at that point in time,
lapsed on 31 January 2022.
Both the common stock and preference stock investment form part of the
long-term investment in Hudson MX.
The common stock we hold is accounted for by applying equity accounting under
IAS 28 ("Investments in Associates and Joint Ventures"), including recording
our share of the results of Hudson MX in proportion to our common stock
holding. The carrying value of our equity-accounted balance has been reduced
to nil (31 December 2021: £0.5m) as a result of our 8% share of Hudson MX
losses in the 6 months to 30 June 2022, totalling £0.9m (H121: £0.6m). All
further losses over and above those taken to reduce the carrying value of the
common stock portion to nil will be recorded against the value of preference
stock.
The attributes of the preference stock we hold meet the attributes of a
financial instrument measured at fair value through profit and loss under IFRS
9 ("Financial Instruments"). The fair value is assessed at each reporting
date, with any revaluation recorded through the consolidated income statement.
This preference stock forms part of the long-term investment in Hudson MX and
total £74.6m (31 December 2021: £65.4m). In the 6 months to 30 June 2022, we
completed the final tranche of preference stock investments of £2.2m (H121:
£28.3m) and we recorded no change in the fair value of the equity investments
in the period (H121: nil).
No dividends were received from Hudson MX in the 6 months to 30 June 2022.
Summarised financial information for the Hudson MX entity for the 6 months to
30 June 2022 is as follows: The balance sheet includes current assets of
£4.1m, non-current assets of £63.2m and current liabilities of £8.1m.
Included in these amounts are cash and cash equivalents of £3.1m and current
financial liabilities of £25.2m. The income statement includes a loss from
operations (all continuing) of £10.9m resulting in an Other Comprehensive
Expense of £10.9m. Included in these amounts are depreciation and
amortisation of £3.1m and interest expense of £0.8m. Hudson recognises
£87.5m of preference stock as equity.
Investment Valuation
The valuation of our equity investments at 30 June 2022 is informed by
valuation data associated with Hudson MX's ongoing financing round, external
market evidence, viability of Hudson MX's future and the internal assessment
we performed for the 31 December 2021 Annual Report and Accounts all of which
allow the Directors to estimate the enterprise value of the investment with a
greater degree of certainty. This supports the carrying value of our total
investment of £74.6m and total debt receivable of £25.2m and we consider
that this is a reasonable approximation of fair value.
An assessment of the sensitivity of the valuation has been performed and a 5%
increase / 5% decrease in the enterprise valuation of Hudson MX would not
materially affect the value of our investment.
11. Goodwill and acquired intangibles
At 30 June 2022, the Group had £979.7m of goodwill and intangibles acquired
through acquisitions (31 December 2021: £878.9m), with the increase of
£100.8m reflecting £72.2m of acquisitions and £59.8m of favourable foreign
exchange movements, offset by an impairment charge of £31.4m.
The goodwill and acquired intangibles attributed to each of the Group's cash
generating units (CGUs) and group of CGUs are assessed for impairment each
year or where there are indicators of impairment. If such indicators exist, an
estimate of the CGU's recoverable amount is determined. The recoverable amount
is the higher of value in use and fair value less costs of disposal. As at 30
June 2022 we have identified an impairment trigger in our Edge CGU driven by
the decline in profitability of the Digital Shelf offering. No indicators of
impairment have been identified in the other CGUs or Group of CGUs for the six
months ended 30 June 2022.
Impairment of Edge
The Group has reassessed its profit and cash flow projections for Edge based
on the current economic environment considering its strategic direction. As a
result, the Group has updated its impairment review for Edge in June 2022
based on these revised assumptions.
When testing for impairment, the recoverable amounts have been measured at
their value-in-use by discounting the future expected cash flows from the
assets in the Edge CGU. The key assumptions and estimates used for
value-in-use calculations are as follows:
a) Future expected cash flows
Cash flow forecasts over a five-year horizon have been prepared after
considering the current economic environment in the relevant markets. In
calculating the terminal value, cash flows beyond the five-year period are
extrapolated using a long-term growth rate of 3% (31 December 2021: 3%),
representing our best estimate of cash flow growth beyond the reassessed
period.
b) Discount rates
Inputs include risk-adjusted, pre-tax discount rates, calculated by reference
to the weighted average cost of capital for each CGU, weighted to the country,
or countries, which the CGU operates in. Movements in the pre-tax discount
rates for CGUs since the year ended 31 December 2021 are driven by changes in
market-based inputs and the Company specific risk which is assessed based on
economic outlook. The pre-tax discount rate applied to the risk-adjusted cash
flow forecasts for Edge was 11.1%. £32.1m of acquired intangible assets and
£16.5m of other assets are allocated to Edge at 30 June 2022 testing point.
Impairment losses of £31.4m have been recognised for the Edge CGU for the
half year ended 30 June 2022 (December 2021: £nil). The impairment charge has
been recognised against intangible assets of £31.2m and tangible fixed assets
of £0.2m, both predominantly related to Digital Shelf.
The calculation of value in use is most sensitive to the discount rates and
long-term growth rates used. The Group has performed sensitivity analyses on
the CGUs tested, using reasonably possible changes in the long-term growth
rates and pre-tax discount rates arising from reasonably possible trading and
economic scenarios. The sensitivity analysis showed that there will still be
an impairment charge from these changes for Edge. This analysis showed that in
isolation, a 1.0% decrease in the discount rate would still result in an
impairment of £25.5m and a 1% increase in the long-term growth rate would
still result in an impairment of £27.0m.
12. Business combinations
2022 acquisitions
In April 2022, the Group acquired 100% of Sellics Marketplace Analytics GmbH
("Sellics"). Sellics provides a mix of advertising spend optimisation,
campaign automation and profit analytics, through a suite of software
solutions, to challenger brands that trade on Amazon across the US and Europe.
Sellics will be merged into challenger brand specialist Perpetua within
Digital Commerce.
In June 2022, the Group acquired 100% of Intrepid E-Commerce Services Pte.
Ltd. ("Intrepid") for an initial cash consideration of £46.9m, plus estimated
earnout payments payable over 4 years resulting in an estimated total
consideration (including the initial consideration) between £82.1m and
£161.8m. The maximum consideration payable, in the event that very stretching
targets are reached, is capped at £205.3m. Intrepid provides eCommerce
execution, backed by proprietary software solutions to enterprise brands that
trade on major Southeast Asia platforms.
The provisional fair values of the identifiable assets purchased and
liabilities assumed as at the date of acquisition are detailed below. The fair
values are provisional due to insufficient time since the completion dates to
be finalised and may materially change once the purchase price allocation has
been finalised.
(£'m) Total
Customer relationships 14.7
Brands 4.3
Software & Technology 22.4
Property, plant and equipment 0.3
Net working capital 3.0
Total identifiable net assets at fair value 44.7
Initial cash consideration 64.1
Contingent consideration payable in 2022 - 2025 12.9
Total consideration 77.0
Goodwill on acquisition 32.3
Acquisition of businesses (net of cash acquired) 60.9
The goodwill of £32.3m arising on acquisitions comprises earnings
attributable to new service offerings, growth through new customer
relationships and the assembled workforces. Of the £32.3m goodwill acquired
during the period, no goodwill is expected to be deductible for tax purposes.
From the date of acquisition, Sellics and Intrepid contributed £1.3m revenue
and an adjusted EBITDA loss of £0.5m. If the acquisitions had occurred at the
beginning of the year, the acquired companies would have contributed an
additional £10.7m of revenue and adjusted EBITDA loss of £3.5m.
2021 acquisitions
In 2021, the Group acquired Shenzhen 4KMiles Technologies, Ltd. ("4K Miles"),
OneSpace ("Onespace"), and ASR Group Holdings LLC ("ASR"). Given the proximity
of the acquisition to year end, the purchase price allocation exercise was
ongoing and draft figures were disclosed based on the accumulated knowledge of
prior acquisitions. The updated fair values of the identifiable assets
purchased and liabilities assumed as at the date of acquisition are detailed
below.
(£'m) Total
Customer relationships 54.9
Brands 1.6
Software & Technology 7.8
Property, plant and equipment 0.2
Trade and other receivables 15.1
Cash 3.6
Investment 0.2
Trade and other payables (14.4)
Deferred tax liability (3.1)
Total identifiable net assets at fair value 65.9
Initial cash consideration 123.9
Non-controlling interest 28.1
Contingent consideration payable in 2022 - 2025 6.5
Total consideration 158.5
Goodwill on acquisition 92.6
Acquisition of businesses (net of cash acquired) 120.3
13. Trade and other receivables
(£ million) 30 June 2022 30 June 2021 31 December 2021
(Unaudited) (Unaudited) (Audited)
Trade receivables, net of the allowance for doubtful debts 100.2 73.9 91.2
Prepayments 24.0 14.7 10.7
Contract assets - accrued income 21.4 14.7 17.4
Other receivables 157.3 82.9 153.3
Total 302.9 186.2 272.6
Other receivables include amounts due from customers for pass-through costs of
£122.6m (31 December 2021: £137.4m) principally in relation to the purchase
of media on their behalf. These costs comprise amounts paid to external
suppliers which are charged directly to clients. The amounts due to external
suppliers in these relationships are recognised in other payables (see note
14).
14. Trade and other payables
(£ million) 30 June 2022 30 June 2021 31 December 2021
(Unaudited) (Unaudited) (Audited)
Trade payables 12.9 12.5 12.7
Other payables 134.3 90.6 136.6
Accruals 59.2 29.9 39.5
Derivatives - - 0.2
Interest accruals 0.6 0.8 0.5
Taxes and social security costs 11.9 9.1 8.9
Total trade and other payables 218.9 142.9 198.4
Other payables include amounts due to external suppliers in relation to
pass-through costs of £116.4m (31 December 2021: £124.1m). Pass-through
costs comprise amounts paid to external media suppliers which are charged
directly to clients. The amounts due from customers in these relationships are
recognised in other receivables (see note 13).
15. Deferred contingent consideration
The Group has liabilities in respect of deferred contingent consideration
payments under various business acquisition contracts as set out below.
(£ million) Note Total
At 31 December 2021 (Audited) 102.9
Additions 12.9
Acquisition-related employment costs accrued in the period 5 12.2
Revaluation of contingent deferred consideration recognised in the 5 (4.6)
consolidated statement of profit and loss
Revaluation of contingent deferred consideration recognised on acquisition (1.0)
goodwill
Discount unwind on contingent deferred consideration 6 4.2
Acquisition-related employment cost paid in the period (18.0)
Deferred consideration paid in the period (35.4)
Effect of movements in exchange rates 7.5
At 30 June 2022 (Unaudited) 80.6
At 30 June 2022, £54.4m of deferred contingent consideration was categorised
as level 3 in the fair value hierarchy of financial instruments (31 December
2021: £72.0m). Covid-19 and uncertainty in the economic environment has
increased the level of uncertainty in the Group's projections with a
consequent impact on the potential range of these level 3 valuations. The
resurgence of pandemic-related lockdowns in China and resultant global supply
chain pressures has provided challenges to our Digital Commerce businesses
which form the majority of this balance. The balance is also impacted by
economic uncertainty in the markets we operate. It is therefore possible that
this uncertainty could result in the recognition of materially additional or
lower contingent consideration.
Both contingent consideration and acquisition-related employment costs are
based on the future performance of the acquired business to which they relate.
Performance is assessed using forecast profits and the five-year plan which is
updated annually. Forecasts are inherently a source of management estimation,
resulting in a range of outcomes. A 10% increase in the results of all
acquired businesses subject to deferred contingent consideration in all
remaining years would result in an additional payment of around £48m over
2023 to 2025. A 10% reduction in the revenue of all acquired businesses
subject to deferred contingent consideration in all remaining years would
result in a lower payment of around £42m over 2023 to 2025.
16. Borrowings
Details of the Company's borrowing facilities are set out in note 1.
Reconciliation of movement in net debt
(£ million) Cash Cash in transit Short-term deposits Interest rate cap External Borrowings Net debt*
At 31 December 2021 (Audited) 55.7 0.4 28.0 0.2 (158.1) (73.8)
Exchange differences 5.1 - - - (12.9) (7.8)
External debt repayment - - - - - -
External debt cash flow drawdown - - - - (91.8) (91.8)
Acquisition of subsidiary 4.5 - - - - 4.5
Fair value movement - - - 1.9 - 1.9
Amortisation of debt arrangement fees - - - - (0.4) (0.4)
Net cash movement 3.5 0.6 (9.4) - - (5.3)
At 30 June 2022 (Unaudited) 68.8 1.0 18.6 2.1 (263.2) (172.7)
* Refer to the Glossary of Alternative Performance Measures for the definition
of Net Debt.
Borrowings are shown net of unamortised issue costs of £2.0m (31 December
2021: £2.4m). The carrying amounts of borrowings approximate their fair
value. The Group's borrowings at 30 June 2022 were $227m and €92m (31
December 2021: $92m and €110m).
17. Related parties
Other than as described elsewhere in these financial statements, there are no
material related party transactions requiring disclosure under IAS 24 "Related
Party Disclosures" other than compensation of key management personnel, which
will be disclosed in the Group's Annual Report for the year ended 31 December
2022.
18. Principal risks and uncertainties
We have no direct operations in Russia, Ukraine or Belarus and had minimal
revenue generated from those territories in 2021. We have made the decision
to suspend business activities with Russia and Belarus and will continue to
comply with sanctions imposed by the UN, the EU, and the UK and US
governments.
The geopolitical and macro-economic environment has become more challenging
since December 2021 with the likelihood of global recession increasing,
continuing global supply chain issues and increasing inflationary pressures.
We continue to manage these risks through our operational risk framework as
explained in the 2021 Annual Report.
We recognise that our success with executing against our strategy by enhancing
our capabilities and increasing addressable market through the acquisitions of
Sellics in Germany and Intrepid in Southeast Asia in the first half of 2022,
increases the complexity of our integration activities and adds to the work to
be done to bring the systems of control in these small and developing
businesses to the standards required of a listed Company.
We note the increasingly competitive recruitment market and the impact of
inflationary pressures on our people. We continue to monitor our reward and
retention policies, as well as the wider factors that impact our people, to
ensure that Ascential can continue to attract and retain the talent that is a
critical contribution to our success.
The Board and management are mindful that risk trends may change quickly and
continue to monitor the risk landscape and the Company's mitigation
strategies. However, a number of these risks and uncertainties could have a
material impact on the Group's performance over the remaining six months of
the financial year and could cause actual results to differ from expected and
historical results.
19. Restatement of results for the six months to 30 June 2021
Consolidated statement of profit or loss for the six months to 30 June 2021 Reported IFRIC agenda decision Restated
Discontinued operations
(£ million) Adjusted results Adjusting items Total Adjusted results Adjusting items Total Adjusted results Adjusting items Total Adjusted results Adjusting items Total
Revenue 175.1 - 175.1 (20.8) - (20.8) - - - 154.3 - 154.3
Cost of sales (63.1) - (63.1) 9.9 - 9.9 0.3 - 0.3 (52.9) - (52.9)
Sales, marketing and administrative expenses* (73.8) (34.7) (108.5) 5.4 4.9 10.3 0.8 (6.4) (5.6) (67.6) (36.2) (103.8)
Operating profit/(loss) 38.2 (34.7) 3.5 (5.5) 4.9 (0.6) 1.1 (6.4) (5.3) 33.8 (36.2) (2.4)
Adjusted EBITDA 47.7 - 47.7 (5.6) - (5.6) 0.7 - 0.7 42.8 - 42.8
Depreciation and amortisation (9.5) (16.1) (25.6) 0.1 1.4 1.5 0.4 - 0.4 (9.0) (14.7) (23.7)
Exceptional items - (15.6) (15.6) - 3.2 3.2 - (6.4) (6.4) - (18.8) (18.8)
Share-based payments - (3.0) (3.0) - 0.3 0.3 - - - - (2.7) (2.7)
Operating profit/(loss) 38.2 (34.7) 3.5 (5.5) 4.9 (0.6) 1.1 (6.4) (5.3) 33.8 (36.2) (2.4)
Profit/(loss) before taxation 27.8 (35.5) (7.7) (5.5) 4.9 (0.6) 1.1 (6.4) (5.3) 23.4 (37.0) (13.6)
Taxation (1.5) 2.7 1.2 1.6 (1.3) 0.3 (1.6) 2.5 0.9 (1.6) 3.9 2.3
Profit/(loss) from continuing operations 26.3 (32.8) (6.5) (3.9) 3.6 (0.3) (0.5) (3.9) (4.4) 21.8 (33.1) (11.3)
Profit/(loss) from discontinued operations 1.9 225.6 227.5 3.9 (3.6) 0.3 - - - 5.8 222.0 227.8
Basic & diluted EPS (total) 6.9 48.0 54.9 - - - (0.1) (1.0) (1.1) 6.8 47.0 53.8
* The impact of the restatement due to the IFRIC agenda decision was £8m on
total adjusted EBITDA, a £0.4m reduction of total depreciation and
amortisation, and an increase of £6.4m of total non-trading items for the six
months ended 30 June 2021
Consolidated statement of financial position and Consolidated statement of
changes in equity
(£ million) Reported IFRIC agenda decision Restated
June 2021
Intangible assets 226.6 (14.4) 212.2
Deferred tax assets 55.4 3.6 59.0
Retained earnings 472.0 (10.8) 461.2
* Reported is after adjusting for the restatement for discontinued operations
(see notes 2 and 19)
Consolidated statement of cash flows
(£ million) Reported Discontinued operations IFRIC agenda decision Restated
Six months to 30 June 2021
Loss before taxation on continuing operations (7.7) (0.6) (5.3) (13.6)
Profit before taxation on discontinued operations 227.5 0.3 - 227.8
Depreciation and amortisation 25.6 - (0.4) 25.2
Cash generated from operations 40.9 (0.3) (5.7) 34.9
Cash generated from operations before exceptional operating items 81.7 (6.0) 0.8 76.5
Cash flows from acquisition-related contingent employment costs 4.3 5.2 - 9.5
Cash flows from other exceptional operating items (10.7) - (6.4) (17.1)
Cash generated from operations 40.9 (0.8) (5.6) 34.5
Acquisition of software intangibles and property, plant and equipment (15.2) - 6.4 (8.8)
Cash flow from investing activities 42.9 - 6.4 49.3
* Reported is after adjusting for the restatement for discontinued operations
(see notes 2 and 19)
Responsibility statement
We confirm that to the best of our knowledge:
a. The Condensed set of Consolidated Financial Statements has been
prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted
for use in the UK;
b. The interim management report includes the following information as
required by Disclosure Guidance and Transparency Rule ("DTR") 4.2.7R:
i. An indication of important events that have occurred during the first
six months of the financial year, and their impact on the Condensed set of
Consolidated Financial Statements; and
ii. A description of the principal risks and uncertainties for the
remaining six months of the year.
c. The interim management report includes the following information as
required by DTR 4.2.8R:
i. Related party transactions that have taken place in the first six
months of the current financial year and that have materially affected the
financial position or performance of the Group in that period; and
ii. Any changes in the related party transactions described in the 2021
Annual Report that could have material effect on the financial position or
performance of the Group in the current period.
By order of the Board
Duncan Painter Mandy Gradden
Chief Executive Officer Chief Financial Officer
1 August 2022
INDEPENDENT REVIEW REPORT TO ASCENTIAL PLC
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2022 which comprises the Condensed Consolidated Statement of Financial
Position of Ascential plc ('the Company') as at 30 June 2022, and the related
Condensed Consolidated Statement of Profit and Loss, Condensed Consolidated
Statement of Other Comprehensive Income, Condensed Consolidated Statement of
Changes in Equity and Condensed Consolidated Statement of Cash Flows for the
six month period then ended, and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2022 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted for use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the
UK. A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other
information contained in the half-yearly financial report and consider whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Christopher Hearn
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 SGL
1 August 2022
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