REG - Ascential PLC - Trading update and conclusion of strategic review

AscentialAnnouncement

25/01/2023 07:00

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RNS Number : 7501N  Ascential PLC  25 January 2023

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE
INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATIONS.

 

25 January 2023

 

For immediate release

 

Ascential plc

 

Trading update and conclusion of strategic review

 

- Revenue and EBITDA ahead of top end of range of market expectations for FY22

- Double-digit revenue growth in all segments

- Intention to split portfolio through series of interdependent transactions

 

Ascential plc (LSE: ASCL.L, "the Company"), the specialist information,
analytics and eCommerce optimisation company, provides an update on trading
and announces the conclusion of its review of strategic options for the
Company and its subsidiaries (together, "the Group"). Ascential will host a
webcast presentation for investors and analysts at 9.30am today, Wednesday 25
January 2023.  Further details are included at the end of this announcement.

 

Trading update

 

Ahead of the announcement of its 2022 results scheduled for the end of March
2023, Ascential provides the following trading update:

 

·     2022 saw double-digit revenue growth across all four segments.

·     Total revenue for the year ended 31 December 2022 is expected to be
at least £520m (2021: £349m), ahead of the top end of the current consensus
range(1).

·     Adjusted EBITDA for the year ended 31 December 2022 is expected to
be at least £118m (2021: £89m), also ahead of the top end of the current
consensus range(2).

·     Net debt at 31 December 2022 is expected to be approximately £218m,
a leverage ratio of less than 2x pre-IFRS16 EBITDA.

 

Turning to the performance of our four segments:

 

·     Digital Commerce, our fast-growing technologies and services helping
brands optimise and accelerate their digital commerce performance, saw another
year of strong revenue growth and is expected to show revenue growth of 15% on
a proforma basis and of 10% on an organic basis. As indicated at the half year
results, Digital Commerce is also expected to record an Adjusted EBITDA margin
of 13-15% in the second half of 2022 and 8-10% for the full year.

 

·     Product Design continued its excellent performance with double-digit
revenue growth, driven by record levels of customer retention and the
expansion of all product lines.

 

·     Continuing the trends reported in the first half of 2022, Marketing
saw significant growth with the strong return of the Cannes Lions
International Festival of Creativity to Cannes, where revenue exceeded
pre-pandemic levels supported by double-digit growth from WARC's subscription
business.

 

·     Retail & Financial Services also grew very strongly through the
continued resurgence of Money20/20, where both editions, Europe in H1 and the
US in H2, achieved record revenues and numbers of attendees with the US
edition more than 50% ahead of both 2021 and pre-pandemic levels. At the very
end of 2022 we also completed the sale of Retail Week and World Retail
Congress (RWRC) to William Reed, a privately-owned global data and events
business, which also runs other brands in the retail space.

 

Conclusion of review of strategic options

 

In April 2022, the Board confirmed that it was evaluating the optimal
organisational and capital structure for its businesses to successfully
deliver on their strategy and to maximise shareholder value, including an
assessment of the merits of a managed separation of certain assets comprising
the Group.

 

Ascential consists of a portfolio of excellent businesses, which have
benefited from significant investment and have strong growth prospects in
sizeable markets with excellent competitive positions. These businesses each
have attractive but distinct investment propositions, and their diverse
operating models mean they have a range of growth, margin and cash flow
profiles, as well as differing organisational and capital requirements.
Geographic concentrations of revenue and employees further differentiate our
segments. Notably, Digital Commerce revenues are predominantly in North
America.

 

Therefore, the Board today announces that it is proposing to undertake a
series of interdependent transactions which recognise and address these
distinctions, and better position each business to independently pursue and
achieve their growth ambitions, while also realising the best near and
long-term value for shareholders.  Subject to shareholder approvals, it is
the Board's intention to pursue both a separation of its world-wide Digital
Commerce assets into an independent, publicly traded company listed in the
United States as well as a process for the sale of WGSN, with our world-class
Events businesses continuing with a UK listing as Ascential plc.

 

In addition to its considerations around maximising shareholder value and
creating the optimal organisational structure for the Group's portfolio of
businesses, the Board believes that these combined actions will also: (i)
enable the return of a significant proportion of WGSN sale proceeds to
shareholders; (ii) provide growth capital for all of the Group's businesses;
(iii) better enable Digital Commerce to attract and retain talent, have its
own currency for M&A and ultimately open up incremental pools of capital;
and (iv) position a well-capitalised Events business, comprising some of the
best assets in the industry, being Money20/20 and Lions, including WARC, for
continued success as a high quality, independent UK-listed business.

 

The Company may achieve a public listing in the United States for its Digital
Commerce business by conducting a public offering of shares and/or a spin-off
distributing shares on a pro rata basis to its shareholders.  To this end,
the Company is undertaking preparations to complete the required financial
statements and disclosures that would be required for a public offering or
spin-off.  In addition to being subject to customary conditions, the
completion of a transaction to take Digital Commerce public in the United
States would also be subject to the U.S. Securities and Exchange Commission
filing and review process.

 

Leadership

Subject to shareholder approval (and others as and if necessary) and the
successful execution of the transactions described above, it is intended for
the Board and Executive Leadership teams to be comprised as follows:

 

Digital Commerce

Scott Forbes, currently Chair of Ascential plc and Duncan Painter, currently
Chief Executive Officer of Ascential plc will serve as Chair and Chief
Executive Officer, respectively, of the listed Digital Commerce business.

 

Ascential plc

Rita Clifton, currently Senior Independent Director of Ascential plc and
Philip Thomas, currently Chief Executive Officer of Ascential Intelligence and
Events will serve as Chair and Chief Executive Officer, respectively, of
Ascential plc.  Mandy Gradden, currently Chief Financial Officer of Ascential
plc will continue in her role.

 

Following a transition period of active participation in the execution of the
plans, Paul Harrison, currently Chief Operating Officer of Ascential plc, has
informed the Board that he intends to accept the offer of a role outside
Ascential and leave the Company in due course.  The Company is grateful for
Paul's seven years in both executive and non-executive capacities and his
continued support of the strategic plan for a transition period.  Further
details will be announced in due course.

 

Further appointments will be announced in due course.

 

 

The Board believes that the successful execution of these interdependent
transactions is in the best interest of our shareholders, customers and people
and is committed to open and transparent engagement with all of its
stakeholders.  The Board will take a disciplined approach to the timing of
these transactions, having regard to market conditions and the successful
achievement of its objectives.  The transactions will be subject to
shareholder approval and the Company looks forward to engaging closely with
its investors following today's announcement and to updating the market on
progress as appropriate.

 

 

Commenting on the trading update and review of strategic options, Duncan
Painter said,

 

"Ascential has had an excellent end to the year, with each of our segments
delivering double-digit revenue growth over 2022. Digital Commerce's
performance in particular, given the challenging backdrop, illustrates the
clear competitive advantage we provide to brands trading on the marketplaces,
where there remains a rare and significant growth opportunity. Product Design
delivered another strong performance where its record rate of customer
retention is testament to the value it delivers to its customers.  While the
economic outlook for 2023 remains unclear, our events businesses have
demonstrated extremely high levels of customer engagement in 2022, reinforcing
their industry leadership and which has translated into strong levels of
rebooking for 2023.

 

These performances highlight the high-quality businesses within the Group and
provide clear evidence that each has an attractive, focused investment
proposition to deliver significant value for shareholders and customers.  Our
plan of action will create the best structure for each distinct business to
thrive.  As the clear world-leader in product design trends and insights,
WGSN is an outstanding and highly attractive business and well positioned for
new, long-term owners to take it through its next chapter of growth.
Potential sale proceeds are earmarked for both near-term returns to
shareholders and fortifying stand-alone Events and Digital Commerce listed
companies in the UK and US, respectively."

 

 

Notes

 

(1) The Board believes current market forecasts for revenue in 2022 to be in
the range (Note 3) of £479m to £516m with consensus (Note 4) of £494m.

 

(2) The Board believes current market forecasts for Adjusted EBITDA in 2022 to
be in the range (Note 3) of £91m to £115m with consensus (Note 4) of £109m.

 

(3) The range of market forecasts comprises forecasts that have been provided
to Ascential plc by registered investment analysts and which have been updated
since the release of interim results on 1 August 2022.

 

(4) The consensus figure is a simple arithmetic average of the forecasts that
have been provided to Ascential plc by registered investment analysts and
which have been updated since the release of interim results on 1 August 2022.
The consensus does not give differential weight to any individual forecast.

 

 

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 9.30am on
Wednesday 25 January 2023.  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.

 

Conference Call Dial-in Details:

 

 United Kingdom          0800 640 6441
 United Kingdom (Local)  020 3936 2999
 United States           1 855 9796 654
 United States (Local)   1 646 664 1960
 All other locations     +44 20 3936 2999

 Access code: 044819

 

 

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

 

Forward-looking statements

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 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 of the Company on the date of this announcement.

 

Consensus figures

The consensus figures provided in this announcement represent an aggregation
of underlying, publicly available, forecasts made by contributing registered
investment analysts and is not, in any way, based on the Company's own
forecasts.

 

The underlying forecasts made by contributing analysts are the responsibility,
and constitute the judgement, of each individual contributing analyst alone.
The Company has not commented on or verified any individual forecast nor does
it intend to do so in the future. The contributing analysts have not been
granted access to the Company's budgets, forecasts or information which is not
generally available.

 

The Company cannot and does not offer investment advice as it is not
authorised by the Financial Conduct Authority to do so. Nothing contained in
the consensus figures: (i) is intended to be or should be taken to be a
"financial promotion" within the meaning of section 21 of the Financial
Services and Markets Act 2000, or (ii) should be taken as an invitation,
inducement or recommendation to engage in investment activity. These consensus
figures are being provided for informational purposes only and are not
intended to, nor do they, constitute investment advice or any solicitation to
buy, hold or sell securities or other financial instruments. None of the
Company, its affiliates, subsidiaries or their respective directors, officers
and employees shall accept any liability whatsoever for the consequences of
any reliance upon or actions taken based on any of the information in the
consensus figures, and/or the associated calculations, nor for any errors or
omissions in their content.

 

The consensus figures do not represent nor are they based on the Company's own
opinions, estimates or forecasts. By presenting the consensus figures, the
Company does not endorse or concur with such information. The Company has not
verified any of the forecasts received, nor does it intend to do so in the
future, and none of the Company, its affiliates, subsidiaries or their
respective directors, officers and employees make any representation or
warranty, express or implied, as to, endorse, concur with, or accept any
responsibility for, the accuracy or completeness of the consensus information,
the reasonableness of any assumptions or projections or the likelihood of
achieving the consensus figures.

 

Forecasts are, by definition, forward-looking. Forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ
materially from those projected or implied in any forward-looking statement.
These risks and uncertainties include, among other factors, changing economic,
financial, business or other market conditions. These and other factors could
adversely affect the eventual results.  See above for further information
relating to forward-looking statements.

 

The Company may at any time be in possession of information that may affect
the analysts' forecasts and has not commented upon, reviewed or updated, and
is under no obligation to comment upon, review or update any analysts'
forecasts.

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