We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ascential Plc | LSE:ASCL | London | Ordinary Share | GB00BYM8GJ06 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.20 | -0.06% | 311.40 | 311.00 | 311.60 | 313.80 | 310.40 | 310.40 | 119,885 | 08:26:48 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Public Relations Services | 586.3M | -191.3M | -0.4345 | -7.17 | 1.37B |
From Apr 2019 to Apr 2024
TIDMASCL
RNS Number : 9329Q
Ascential PLC
25 February 2019
25 February 2019
Ascential plc
Audited results for the year ended 31 December 2018
Focus on digital economy driving strong growth
London: Ascential plc (LSE: ASCL.L), the global, specialist information company, today announces results for the year ended 31 December 2018 in line with expectations.
A year of significant strategic progress
-- Business model now in place to enable customers to navigate the digital economy.
- Clear strategic focus on the consumer value chain and high quality recurring revenue streams.
- Operating model reflects customer needs: Product Design, Marketing and Sales.
- Sale of Exhibitions and allocation of capital towards high-growth acquisitions.
-- Segments performing in line with expectations.
- Product Design: growth from recently launched products and segment expansion.
- Marketing: a year of transition, with successful re-set of Cannes Lions and MediaLink realigned to long term brand relationships.
- Sales: continued strong performances from Money20/20, Edge and Flywheel Digital.
-- Investment in brands to support long-term sustainable growth.
- Launches of Money20/20 Asia and China to establish leading global fintech platform.
- Formation of Edge: specialist ecommerce analytics and advisory offering.
Financial highlights
-- Strong revenue growth on continuing operations to GBP348.5m (2017: GBP292.9m).
- Reported growth of 19.0%.
- Growth of 6.3% on an Organic basis, 9.6% on a Proforma basis.
- Key drivers of Proforma growth were the Sales segment (30%) and Product Design segment (7%).
-- Solid Adjusted EBITDA growth to GBP101.8m (2017: GBP94.7m).
- Reported growth of 7.5%.
- Growth of 3.8% on an Organic basis, 12.5% on a Proforma basis.
- Margin at 29.2% (2017: 32.3%) with impact of higher growth acquired businesses in investment phase, partly offset by a net positive impact from operational leverage.
-- Reported operating profit from continuing operations of GBP40.2m (2017: GBP31.3m) up 28.4%.
-- Further strong growth in earnings per share with Adjusted diluted EPS on continuing operations of 15.3p up 12.5% (2017: 13.6p) and Reported diluted EPS on total operations of 51.4p (2017: 4.4p).
-- Continued focused capital allocation - disposal of Exhibitions and strong cash generation resulting in closing net debt leverage of 1.1x (2017: 2.3x) after continued investment in the business and M&A. Strong operating cash flow conversion on continuing operations of 105% (2017: 104%).
-- Recommended final dividend of 3.9p, making a total dividend of 5.8p for the year (2017: 5.6p) up 3.6%.
Duncan Painter, Chief Executive Officer, commented:
"2018 was an important year for Ascential. We delivered another year of strong growth, reflecting the value that customers place on our critical information. We are now at an advanced stage of our multi-year strategy to support global brands as they navigate fast-paced change in the digital commerce economy. Our evolution in 2018 was supported by three high-growth acquisitions, partially reallocating the proceeds of the Exhibitions business.
Our focus has now shifted to integrating and investing in our unique information services to continue to give our global customer base access to the critical information they need. We have taken action to return our Marketing segment to growth in 2019, following the successful re-set of Cannes Lions in 2018, and the realignment of MediaLink to focus on large brand reviews and projects. We remain well placed to enhance our market leadership in 2019 and to pursue our medium-term target of double-digit growth."
Contacts
Ascential plc Duncan Painter Chief Executive Officer +44 (0)20 7516 5000 Mandy Gradden Chief Financial Officer Media enquiries Edward Bridges FTI Consulting LLP +44 (0)20 3727 1000 Matt Dixon Jamie Ricketts
Ascential will host a presentation for analysts and investors at 9.00am on Monday 25 February 2019 at the offices of Numis Securities at The London Stock Exchange Building, 10 Paternoster Square, London EC4M 7LT. The presentation will also be webcast live at 9.00am from www.ascential.com, allowing the slides to be viewed. A recording of the webcast will also be available on-demand from our website in due course.
Financial highlights - continuing operations
Hot Features
Premium
31 December Growth
2018 2017 Reported Organic1 Proforma2
% % %
GBPm GBPm
Revenue
Product Design 77.8 73.6 6% 7% 7%
Marketing 116.3 110.6 5% (8%) (6%)
Sales 120.9 78.0 55% 25% 30%
Built Environment &
Policy 34.3 30.7 12% 12% 12%
Intercompany sales (0.8) -
------- ------- -------- -------- ---------
348.5 292.9 19.0% 6.3% 9.6%
------- ------- -------- -------- ---------
Adjusted EBITDA3
Product Design 28.1 22.5 25% 27% 27%
Marketing 38.9 48.1 (19%) (23%) (22%)
Sales 36.9 29.3 26% 19% 49%
Built Environment &
Policy 14.0 9.1 53% 53% 53%
Central costs (16.1) (14.3) (12%) (12%) (12%)
------- ------- -------- -------- ---------
101.8 94.7 7.5% 3.8% 12.5%
------- ------- -------- -------- ---------
Group Margin 29.2% 32.3%
Adjusted operating profit4 91.0 85.4 6.6%
Operating profit 40.2 31.3 28.4%
Profit before tax 28.9 19.9 41.7%
Adjusted diluted continuing
earnings per share 15.3p 13.6p 12.5%
Total dividend per share 5.8p 5.6p 3.6%
Operating cash flow5 107.2 98.1 9.3%
Operating cash flow
conversion 105% 104%
Net debt6 (109.8) (271.5)
Leverage 1.1x 2.3x
1 Organic growth is calculated to provide a more meaningful analysis of underlying performance than Reported growth. The following adjustments are made: (a) constant currency (restating FY17 at FY18 exchange rates), (b) event timing differences between periods (if any) (c) excluding the part-year impact of acquisitions and disposals. There were no event timing differences in 2017 or 2018. See the reconciliation in the Alternative Performance Measures section below.
2 Proforma growth is calculated in a similar way to Organic growth but the calculation assumes that all acquisitions and disposals in 2018 or 2017 took place on 1 January 2017. See the reconciliation in the Alternative Performance Measures section below.
3 Adjusted EBITDA is IFRS operating profit before expensing (a) depreciation of tangible fixed assets and amortisation of software, (b) exceptional items, (c) amortisation of acquired intangible assets, (d) impairment of tangible and intangible assets and (e) share-based payments.
4 Adjusted operating profit is IFRS operating profit before expensing (a) exceptional items, (b) amortisation of acquired intangible assets (c) impairment of and intangible assets and (d) share-based payments.
5 Operating cash flow is cash generated from Continuing operations before exceptional items. Operating cash flow conversion is this measure of cash flow divided by Adjusted EBITDA from Continuing Operations. See the reconciliation in the Alternative Performance Measures section below.
6 Leverage is Net debt divided by Adjusted EBITDA from both Continuing and Discontinued Operations.
Chief Executive's statement
Continued record of organic growth
Our strategy and focus on the digital economy has delivered another year of strong growth in 2018, further amplified by recent high growth acquisitions. Revenue from continuing operations was GBP348.5m (2017: GBP292.9m), a reported growth of 19.0% and an Organic growth of 6.3% or 9.6% on a Proforma basis. We have grown EBITDA by 3.8% on an Organic basis and by 12.5% on a Proforma basis and delivered an Adjusted EBITDA margin of 29.2% (2017: 32.3%), allowing for the acquisition of higher growth, lower margin businesses whilst continuing our planned investment to support our market leadership in our core markets.
Operating model based on customer needs
Following the completion of the disposal of the Exhibitions business in July 2018, we adopted a new operating model to align with our strategy of serving the needs of customers in Product Design, Marketing and Sales:
-- Product Design: global trend forecasting and insight (WGSN).
-- Marketing: global creative benchmark, effectiveness measurement and strategic advisory (Cannes Lions, WARC, MediaLink).
-- Sales: global ecommerce data, analytics and managed services, Fintech consumer payments and retail intelligence (Edge, Flywheel Digital, Money20/20, RWRC).
Ascential also powers political, construction and environment intelligence brands DeHavilland, Glenigan and Groundsure, which form a fourth operating segment, Built Environment & Policy.
The shape of our business going into 2019 has directly benefited from our transformation with a higher mix of subscription based revenue streams with faster growth levels.
A year of developing our critical capabilities
Our strategic goal is to be the specialised information provider that ensures our customers, who are primarily organisations who create and distribute consumer products, are able to win and thrive in the digital commerce economy.
We are confident that we now have the critical capabilities we need in our business to achieve our strategic goals. We have built a unique information set across the lifecycle of Product Design, Marketing and Sales to enable our customers to win in the digital commerce economy. We will continue to review how we build out our capabilities to better serve our customers in China, and although we believe we can develop our existing capabilities through organic investment, we continue to review potential acquisition opportunities to accelerate and provide further unique information as part of this expansion.
In 2017, we set out the critical functionality we needed to develop to position us as the most advanced and best positioned company in this space and we have made good progress in executing against this, particularly in the high growth Sales segment.
Customer Market leading products New product lines
capability
segment
Product
Design * WGSN trend forecasting - 16 categories * WGSN Insight - consumer trends
* WGSN Lifestyle & Interiors * WGSN Barometer - consumer insights
* WGSN Mindset * Coloro - colour system and tools
* WGSN Beauty - beauty trends
------------------------------------------------------------ ---------------------------------------------------------------
Marketing
* Cannes Lions - creativity benchmark * Cannes Lions - new segments (Sports and Creative
Strategy) launched
* The Work - digital platform on award winning creative
work * Cannes Lions Digital Pass - watch the Festival online
* WARC - digital platform for marketing effectiveness * WARC for Advertisers and Media Owners
* MediaLink - digital transformation and advisory for * CLX - next generation media marketing platform
media
------------------------------------------------------------ ---------------------------------------------------------------
Sales * Edge - total ecommerce
* Money20/20 - payments and fintech
* Edge - price & promotion
* Edge - retail insights
* Edge - market share
* Edge - digital shelf
* Flywheel Digital- managed retail services
* Flywheel Digital - Amazon Marketing Services
optimisation
------------------------------------------------------------ ---------------------------------------------------------------
Product Design
2018 was a successful year for our Product Design segment with Organic revenue growth accelerating to 7%. Over the last few years, we have launched a number of new products in our Product Design sector and are now the clear market leader in trend forecasting in all major product categories. This has provided us with a strong foundation for our business and we have continued to maintain high retention rates with our customers. Our newer products address lifestyle and interiors, broader consumer trends, a colour system, emerging market coverage and consumer insights. These, together with our new WGSN Beauty trends product for 2019, put us in a strong position for further growth in this segment.
Marketing
As previously announced, 2018 was a challenging year for our Marketing segment, with an Organic revenue decline of 8%. Our focus in the second half of the year has been to position our Cannes Lions and MediaLink brands to be able to return to growth in the full year of 2019. Since the acquisition of WARC and the launch of Cannes Lions' The Work and the Digital Pass, digital products today make up over 10% of this segment's revenues. We expect to see continued strong growth in these new digital product lines in 2019.
The event reset activity we undertook for the 2018 Cannes Lions festival saw a record Net Promoter Score and the major agency holding companies have all reconfirmed their support for the 2019 festival. MediaLink has continued its planned transition away from retainer contracts with small digital publishing and adtech organisations towards brand orientated work. A cost restructure was implemented in the second half of 2018 to align with this focus.
CLX is a new two-day summit for industry VIPs launched for Cannes Lions 2019. It is designed around immersive and interactive experiences with some of the world's most exciting media and entertainment creators. We see this joint development between Cannes Lions and Medialink as an enabler of 2019 growth.
Sales
2018 was a seminal year for building out our capabilities in the Sales segment and we now have market leadership in most of the key areas we identified as important for this segment.
Our Fintech consumer payments capability has been expanded through the launch of two new geographies for our market-leading platform Money20/20 in Asia and China. The overall platform has continued to perform strongly with Organic growth of 37% in 2018.
We now have a comprehensive set of capabilities to help our customers win in today's ecommerce-driven environments. During 2018 we launched Edge by Ascential, which delivers industry-leading ecommerce driven data, insights and advisory services for brands and retailers. Formerly BrandView, Clavis Insight, One Click Retail and Planet Retail RNG, Edge by Ascential delivers the industry's most accurate and actionable sales-driving data to support our customers through the cycle of market share assessment, digital shelf management, price & promotion optimisation and retail insights. With the recent acquisition of Flywheel Digital, we can now also provide our customers with a platform-driven total product management service for both retail management and marketing services promotion on the Amazon platform.
Built Environment and Policy
Our Built Environment and Policy segment continues to trade well with revenue growth of 12% and an expanded Adjusted EBITDA margin of 41%. There are no plans to proactively review any strategic decisions for this segment in the medium term.
Strong balance sheet and focussed capital allocation
We continued to apply a rigorous capital allocation framework to our business. This was evidenced through the recycling of capital from the disposal of the Exhibitions business which was completed in July 2018 for a total cash consideration (adjusted for cash disposed and working capital) of GBP296.4m into higher growth business investments and M&A.
The disposal allowed us to further focus on our strategic priority of enabling customers to win in the digital economy and has increased our capacity to invest in our target disciplines of Product Design, Marketing and Sales. We have allocated part of the capital released from the disposal of the Exhibitions business to the acquisitions of WARC, BrandView and Flywheel Digital. Apart from the potential to accelerate growth in China, and an ongoing interest in strengthening the depth and quality of the unique data we own, we are now focusing our efforts on the integration and engineering of our own new products and therefore expect M&A activity to be a less pronounced feature of the next stage of our development.
We ended 2018 with a robust balance sheet that provides flexibility and underpins our confidence for our prospects in 2019 and beyond.
A culture aligned to our future
We have a unique set of company beliefs and behaviours that are ingrained in our people and ways of working worldwide. We aim to think big and see the bigger picture to help our customers translate insight into advantage. We are thought-provoking and persuasive, always searching for a better way to help our customers win. We encourage our teams to be visionary and confident, so that we continue to define the way forward in these exciting new markets.
As part of the work to consistently embed these values and leadership beliefs across the group, we have continued to develop a "One Ascential" culture across all brands and geographies. For the first time, this year we ran a single unified employee engagement survey globally which both evidenced our progress in developing our people strategy, and enabled us to develop a clear plan to further improve across all engagement areas in 2019.
We continue to evolve our operating model to align more effectively with our strategy and we have adapted our reward model to reflect the structure of our income, incentivising our teams on long term sustainable value creation. We expect to continue evolving the operating model during 2019 to further streamline how we work.
Summary
2018 has been a critical year for our business. We have executed our priority divestments as well as ensuring that we have built up the critical capabilities we need to be successful going forward. We have developed a unique information set across the lifecycle of Product Design, Marketing and Sales and as we continue to join up our information, teams and capabilities, we identify more opportunities to help our customers. We can see a clear path to achieving double-digit growth as we continue to help our customers grow their business in the accelerating digital economy.
Our focus over the next 12 months will be on returning the Marketing segment to growth, consolidating and integrating the high growth acquisitions we have made, and leveraging the wider potential of the unique information we own across Product Design, Marketing and Sales.
Outlook
We are now at an advanced stage of our multi-year strategy to support global brands as they navigate fast-paced change in the digital commerce economy. Our evolution in 2018 was supported by three high-growth acquisitions, partially reallocating the proceeds of the Exhibitions business.
Our focus has now shifted to integrating our unique information services to continue to give our global customer base access to the information they need. We have taken action to return our Marketing segment to growth in 2019, following the successful re-set of Cannes Lions in 2018, and the realignment of MediaLink to focus on large brand reviews and projects. We remain well placed to enhance our market leadership in 2019 and to pursue our medium-term target of double-digit growth.
Duncan Painter
Chief Executive Officer
22 February 2019
Segmental Review
Product Design segment
Revenue grew organically by 7% to GBP77.8m (2017: GBP73.6m), with Adjusted EBITDA growing to GBP28.1m (2017: GBP22.5m) and margin improving to 36%, from 31% in 2017.
WGSN, the Company's largest brand, is the leading global supplier of trend forecasts, market intelligence and insight to the fashion industry and other businesses in design-orientated consumer markets. In 2018, it grew revenue by 7% on an Organic basis to GBP77.8m, while retention rates remained strong at 92%. WGSN continues to gain traction with products launched in recent years such as our digital shelf offering (now sold to financial services customers), the broader consumer trends product Insight (growing over 80% to GBP5m of billings), brand sentiment tool Barometer and new colour system Coloro. These not only provide new revenue opportunities with existing customers but also broaden WGSN's customer base beyond apparel - and a new initiative for 2019 is the launch of a specific trend product for the Beauty industry.
Marketing segment
Revenue of GBP116.3m (2017: GBP110.6m) represented an Organic decline of 8% (down 6% on Proforma basis) driven by Cannes Lions and MediaLink. As a result, the Adjusted EBITDA fell to GBP38.9m (2017:GBP48.1m), with margin reducing from 43% in 2017 to 33%.
Cannes Lions, is the world's largest and most widely recognised international benchmark and festival for creativity in the branded communications industry. Following extensive discussions last year with key stakeholders, the 2018 festival featured important changes, most notably a new awards structure that included the retirement of three Lion awards and a reduction of over 120 sub-categories. Additionally, the festival was focused into a five-day period (previously it was held over eight), a feature that makes participation more cost effective for our customers. In 2018, owing principally to the one-year withdrawal of Publicis and the refreshed awards structure, revenues declined by 8%. The overall revenue mix continued to move away from advertising agency holding companies, towards brands, media platforms and consultancies.
Cannes Lions has three main revenue streams: award entries, delegates, and partnerships and digital:
-- Award entries accounted for 37% of revenue. Volumes fell 21% driven both by the one-year Publicis withdrawal and the retirement of Lions awards and awards sub categories. Good levels of interest in the new Lions such as Social & Influencer and Brand Experience & Activation offset long established declines in Print and Outdoor Lions categories.
-- Delegate passes accounted for 38% of revenue. Delegate revenue declined in 2018 mainly as a result of reduced participation by agency holding companies, including Publicis, combined with the standardisation to a single five-day pass. A new initiative in 2018 was the "Cannes Curated" product for major brand groups.
-- Partnerships and digital revenues were 24% of Cannes Lions revenues and grew 27% compared to last year. The strong growth was driven by digital revenues and consultancy fees from the Creative Leadership programmes that Cannes Lions undertook with three major brands. The launch of The Work and Lions Digital Pass were important steps to broaden engagement with the creative community beyond the physical environment of Cannes. This, together with the acquisition of WARC, further develops Cannes Lions year-round digital revenue streams.
Overall, the changes to the Festival's format were extremely well received by participants, resulting in an NPS of score 53, the highest on record. This, together with development of the digital offering, the launch of two new awards categories in 2019 and the high level of stakeholder engagement evident during the Festival, position Cannes Lions well for growth.
MediaLink is a strategic advisory firm serving customers at the intersection of media, marketing, advertising and entertainment. There are four revenue streams - retainers, projects, executive search and events (bespoke content and hosted meeting programmes at events like Cannes Lions and The Consumer Electronics Show, CES). Revenue in 2018 declined 7% on the prior year (on a Proforma basis), driven by an ongoing strategic change to the business. The mix of clients has changed following a deliberate shift in focus towards more brand-led work, with a reduction in revenue from digital publishers and AdTech businesses.
WARC, acquired in July 2018, is a global digital subscription-based business that helps brands, agencies and media platforms assess marketing effectiveness across all channels. In the 2018 year (on a Proforma basis) it grew revenue by 8% while maintaining a retention rate of over 90%. Growth was subdued by the planned closure of certain print products and ongoing digital subscriptions revenue grew by 13%.
The launch of CLX (a media and entertainment summit to be held at Cannes Lions in 2019 in partnership with MediaLink) is expected to be a driver of future growth for the Marketing Segment.
Sales segment
Revenue grew by 25% on an Organic basis (30% on a Proforma basis) to GBP120.9m (2017: GBP78.0m), with Adjusted EBITDA growing to GBP36.9m (2017: GBP29.3m) and margin declining to 31% (2017: 38%). The revenue growth was led by strong growth from Money20/20 Europe, along with the two launches, in Singapore and China. Edge (18%) and Flywheel Digital (110%), on a Proforma basis, also contributed strongly to the growth. In terms of EBITDA, the acquisition of Clavis in December 2017 was the main factor in reducing margin.
Money20/20 is the leading congress in the Fintech consumer payments sector, focusing on the evolution of consumer payment and financial services through mobile, retail, marketing services, data and technology. 2018 revenues delivered an excellent Organic growth rate of 37%.
In the first half, Money20/20 Asia was launched successfully taking place in Singapore in March 2018. The event delivered revenues of GBP6.8m. Now in its third year, Money20/20 Europe relocated to its new home of Amsterdam in June 2018 and delivered revenues of GBP17.3m, an Organic revenue growth of 33% partially enabled by the enlarged exhibition space in Amsterdam.
In the second half, Money20/20 USA, the original and largest edition now in its seventh year, was held in October 2018 in Las Vegas. It reported revenue of GBP29.4m, an Organic growth of 4%. The final event of the year was the inaugural edition of Money20/20 in China which was held in November 2018 in Hangzhou and delivered revenues of GBP2.5m.
GBP'm 2018 2017 ----------------------------------------- ---- ---- Asia (Singapore, March) 6.8 - Europe (2018 Amsterdam, 2017 Copenhagen, June) 17.3 12.3 USA (Las Vegas, October) 29.4 28.2 China (Hangzhou, November) 2.5 - ----------------------------------------- ---- ---- Total Revenue 56.0 40.5 ----------------------------------------- ---- ----
Edge by Ascential, the recently integrated digital retail strategy and analytics business, comprises the businesses formerly known as One Click Retail, Clavis, BrandView and Planet Retail RNG. To date integration has prioritised the alignment of customer facing functions, while the consolidation of the underlying product, technology and business systems platforms is ongoing. Overall in 2018 Edge recorded (on a Proforma basis) revenue of GBP55.7m, an Organic and Proforma growth of 18%.
-- Edge Market Share (formerly One Click Retail), a leading provider of ecommerce sales and share measurement for product manufacturers, grew revenue by 40% in 2018. This was driven by the signing of 37 new customers and the expansion of 11 existing US customers into new geographies.
-- Edge Digital Shelf (formerly Clavis, acquired in December 2017), the leader in optimising manufacturers' product performance across hundreds of retailer websites, grew revenue (on a Proforma basis) by 22% in 2018. This was driven by the signing of 26 new customers and the expansion of several existing customers into new geographies (primarily APAC).
-- Edge Price & Promotion (formerly BrandView, acquired in September 2018) is a leading global information provider to retailers and manufacturers, allowing them to measure and manage pricing and promotion activity and drive sales across both off-line and on-line market places. Edge Price & Promotion grew revenue (on a Proforma basis) by 16%, driven by the signing of 40 new customers and the expansion of several existing European customers into the US.
-- Retail Insights (formerly Planet Retail RNG) a provider of information to consumer product companies, retailers and consultants on global retail trends saw revenues decline slightly mainly driven by reduced advisory revenues. The launch of a new platform, providing customers with more powerful data, analysis and visualisation tools is designed to improve customer retention and new business win rates in 2019.
Flywheel Digital, a provider of managed services to brands on Amazon, was acquired in November 2018. In 2018 (on a Proforma basis) it recorded revenue growth of 110% while it more than doubled its customer numbers (to over 70).
RWRC recorded revenue growth of 2%. World Retail Congress, which brings together the leaders of the Global retail industry, held its 2018 event in Madrid, which grew strongly. Retail Week an events and information services business covering the retail industry, refocused in 2018 to deliver fewer, but larger events. The highlight was Tech 18, which doubled revenue in its second year.
Built Environment & Policy segment
Revenue grew by 12% overall to GBP34.3m, with all three businesses contributing double-digit growth in the year. As a result, the EBITDA margin improved to 41%, from 30% in 2017.
Groundsure the market leading provider of environmental risk data, had another strong year, outperforming a subdued UK residential property market (down 2%), with revenue growth of 10%. This success was achieved through further product innovation in 2019, rolling out the new technologies that underpin its flagship Avista product across the full product range.
Glenigan, a provider of construction project sales leads, industry data, analysis, forecasting and company intelligence delivered a 15% revenue growth.
DeHavilland, a leading provider of political intelligence and monitoring services in the UK and EU, grew revenues by 10%.
Financial Review
Overview
The results for the year are set out in the consolidated profit and loss statement and summarised in the table below and show, for continuing operations, revenue of GBP348.5m (2017: GBP292.9m), a growth of 19.0% (or 6.3% on an Organic basis, and 9.6% on a Proforma basis), and operating profit of GBP40.2m up 28.4% (2017: GBP31.3m). Adjusted EBITDA was GBP101.8m (2017: GBP94.7m) an Organic growth of 3.8% or 12.5% growth on a Proforma basis. We also delivered strong cash flow in 2018 with free cash flow from continuing operations after tax and capex of GBP77.1m (2017: GBP80.1m) a free cash flow conversion of 76%. Operating cash flow conversion was 105%.
A core KPI and strategic goal of the Company is Organic revenue growth as 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 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 is an alternative performance measure and is discussed in more detail below. Proforma growth is measured in a similar way to Organic growth but assumes that the Company's acquisitions were all made on 1 January 2017 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 group 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 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.
Continuing operations
Reported Organic Proforma
growth growth growth
GBP'm 2018 2017 rate rate rate
----------------- ------ ------ --------- -------- ---------
Revenue 348.5 292.9 19.0% 6.3% 9.6%
Adjusted EBITDA 101.8 94.7 7.5% 3.8% 12.5%
Adjusted EBITDA
margin 29.2% 32.3%
----------------- ------ ------ --------- -------- ---------
Segmental results
Following the sale of the Exhibitions Business in July 2018, the Group changed from two to four reportable segments to align our operating model to the needs of the end customers we serve. The four reportable segments are Product Design, Marketing, Sales and Built Environment & Policy. Information regarding the results of each reportable segment is included below and restated for 2017 to enhance comparability.
Built
2018 Product Environment Corporate Continuing
GBP'm Design Marketing Sales & Policy Costs operations
Revenue 77.8 116.3 120.9 34.3 (0.8) 348.5
Organic revenue growth 7% (8%) 25% 12% 6.3%
Proforma growth 7% (6%) 30% 12% 9.6%
Adjusted EBITDA 28.1 38.9 36.9 14.0 (16.1) 101.8
Organic Adjusted EBITDA growth 27% (23%) 19% 53% 3.8%
Proforma growth 27% (22%) 49% 53% 12.5%
Adjusted EBITDA margin 36% 33% 31% 41% 29.2%
Depreciation and software
amortisation (1.8) (4.1) (2.1) (0.5) (2.3) (10.8)
------------------------------- ------- --------- ----- ------------ --------- -----------
Adjusted operating profit 26.3 34.8 34.8 13.5 (18.4) 91.0
------------------------------- ------- --------- ----- ------------ --------- -----------
2017 (restated)
GBP'm
Revenue 73.6 110.6 78.0 30.7 - 292.9
Adjusted EBITDA 22.5 48.1 29.3 9.1 (14.3) 94.7
Adjusted EBITDA margin 31% 43% 38% 30% - 32.3%
Depreciation and software
amortisation (2.3) (3.9) (1.0) (0.6) (1.5) (9.3)
------------------------------- ------- --------- ----- ------------ --------- -----------
Adjusted operating profit 20.2 44.2 28.3 8.5 (15.8) 85.4
------------------------------- ------- --------- ----- ------------ --------- -----------
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 have recurring characteristics and benefit from our focus on customer retention.
Revenues from continuing operations in 2018 grew to GBP348.5m (2017: GBP292.9m), an increase of GBP55.6m or 19.0%. Adjusting for currency impacts and recent acquisitions Organic growth was 6.3% driven by double digit growth of Money20/20 (37%), Edge Market Share (formerly One Click Retail) (40%) as well as the Built, Environment and Policy segment (12%) followed by the high single digit growth of the Product Design segment (7%). This was offset by an 8% decline in the Marketing Segment driven by Cannes Lions and MediaLink. Proforma revenue growth, which is a measure of how well the current portfolio of brands is growing, was 9.6%.
Adjusted EBITDA
Adjusted EBITDA increased by 7.5% to GBP101.8m (2017: GBP94.7m) representing a 3.8% Organic growth rate. Adjusted EBITDA margin reduced to 29.2% due to the acquisition of Clavis which was slightly loss making in the year overall despite achieving break-even in the final quarter, planned product investment in our Sales segment including two new launches for Money20/20, the acceleration of the Edge integration strategy and dilution of the margin in the Marketing Segment as a result of revenue reduction. We saw strong margin growth in the Product Design segment and in the Built Environment and Policy segment demonstrating the superior margin opportunities in scaled, mature, digital subscriptions businesses.
Reconciliation between Adjusted EBITDA and statutory operating profit
Adjusted EBITDA is reconciled to statutory operating profit as shown in the table below:
GBP'm 2018 2017 ---------------------------- ------- ------- Adjusted EBITDA 101.8 94.7 Depreciation and software amortisation (10.8) (9.3) ------------------------------ ------- ------- Adjusted operating profit 91.0 85.4 Amortisation (30.6) (17.8) Exceptional items (14.0) (32.5) Share based payments (6.2) (3.8) ------------------------------ ------- ------- Statutory operating profit 40.2 31.3 ------------------------------ ------- -------
Amortisation of acquired intangible assets
The amortisation charge of GBP30.6m (2017: GBP17.8m) on acquired intangible assets increased mainly due to full year charges for the acquired intangibles of MediaLink and Clavis as well as a proportional charge for the 2018 acquisitions of WARC, BrandView and Flywheel Digital offset by the impact of fully amortised assets. The Company undertakes a periodic review of the carrying value of its intangible assets of GBP786.0m (2017: GBP771.7m) which are supported by the value in use calculations and no impairment was identified in the current or prior year.
Exceptional items
The charge for exceptional items included in continuing operations in 2018 totalled GBP14.0m (2017: GBP34.3m) as set out in the table below and further explained in Note 5.
GBP'm 2018 2017 ------------------------------------------ ----- ----- Deferred contingent consideration 8.1 27.7 Expenses related to acquisition 5.9 4.6 IPO expenditure and other - 0.2 Exceptional items relating to continuing operations 14.0 32.5 ------------------------------------------ ----- -----
The charge for deferred contingent consideration mainly relates to acquisition-related contingent employment costs on the acquisitions of One Click Retail, MediaLink, Clavis and Flywheel Digital which, absent the link to continued employment, would have been treated as consideration. The reduced charge in 2018 of GBP13.3m (2017: GBP26.6m) is offset by a credit on revaluation of GBP5.2m (2017: GBP1.1m charge) mainly due to MediaLink's lower performance in the year.
Share-based payments
The charge for share-based payments of GBP6.2m (2017: GBP3.8m) incorporates the Share Incentive Plan, the SAYE and the Performance Share Plan.
-- The charge in 2016 represented 9 months' charge (of the 36-month service period) for the Company's inaugural grant of awards.
-- 2017's charge includes both a 12-month charge for the 2016 award and a 10-month charge for the 2017 award.
-- The 2018 charge includes the full annual charge for the 2016 and 2017 awards as well as a 10-month charge for the March 2018 award.
The 2019 charge will include full annual charges for the 2017 and 2018 awards as well as a 10-month charge for the expected grant in March 2019. The 2019 charge will also include the final 3-month charge for the 2016 award. The 2019 charge is therefore expected to be more representative of the share-based payment charge going forward.
Finance costs
The adjusted net finance costs for the year were GBP11.9m (2017: GBP11.7m) as set out in the table below.
Adjusted net finance costs (GBP'm) 2018 2017 ---------------------------------------------- ------- ------- Interest payable on external debt (7.1) (5.8) Interest receivable 0.6 0.2 Amortisation of loan arrangement fees (1.2) (1.3) Discount unwind on contingent and deferred consideration (3.6) (4.3) Net loss on foreign exchange and derivatives (0.6) (0.5) Adjusted net finance costs (11.9) (11.7) ---------------------------------------------- ------- -------
The interest expense on the Company's borrowings was GBP7.1m (2017: GBP5.8m) with the increase driven by the drawdown of the Revolving Credit Facility and slightly higher leverage during the first half, partially offset by interest income on the disposal proceeds which was deposited in money market funds. Other finance charges represent the unwind of the discount on deferred consideration and will increase in 2019 to include a full 12 months relating to Flywheel Digital.
Taxation
A tax charge of GBP17.8m (2017: GBP18.7m) was incurred on continuing adjusted profit before tax of GBP79.7m (2017: GBP74.0m) resulting in an adjusted effective tax rate for the year of 22% (2017: 25%). Adjusting items total GBP50.8m (2017: GBP54.1m) and a tax credit of GBP8.9m arises on these adjusting items (2017: GBP10.7m). This equates to a total tax charge of GBP8.9m (2017: GBP10.7m) and an effective tax rate of 31% on the continuing profit before tax of GBP28.9m.
The ongoing adjusted effective tax rate of the Group is expected to be approximately 24-25% next year as a result of increasing profits in the US which are taxed at 26% as compared to UK profits which are taxed at 19%.
Cash tax paid was GBP12.2m (2017: GBP7.9m) and the Group continued to benefit by GBP3.1m (2017: GBP6.7m) from the utilisation of historic tax losses in the UK and US which are expected to continue to benefit the Group's cash flow over the medium term.
The Group has a total recognised deferred tax asset of GBP42.8m (2017: GBP47.1m) relating to UK and US losses, accelerated capital allowances and US acquired intangibles and deferred consideration. The majority of this asset is expected to convert into cash savings over the next ten years. Meanwhile our deferred tax liability amounted to GBP24.8m (2017: GBP31.3m) and related to non-deductible acquired intangibles and is not expected to convert into cash.
Discontinued operations
Discontinued operations relate to the Exhibitions business for the first six months of the 2018 financial year and includes the 13 Heritage Brands which were sold at various dates in 2017 in the comparator. The overall result for discontinued operations is comprised as follows and was restated in 2017 to include the Exhibitions business:
2017
Discontinued operations (GBP'm) 2018 Restated*
------------------------------------------- ------ -----------
Revenue 54.6 105.8
Adjusted EBITDA 19.8 25.9
Depreciation and amortisation (0.3) (1.8)
Amortisation of acquired intangibles (3.1) (7.7)
Exceptional items including gain / (loss)
on disposal 176.5 (3.0)
Share based payments (0.3) (0.6)
Profit before tax 192.6 12.8
Taxation (3.4) (6.7)
------------------------------------------- ------ -----------
Profit after tax 189.2 6.1
------------------------------------------- ------ -----------
*Revenue and cost of sales in 2017 have been restated for IFRS15 (see Note 1). There is no impact on opening balance sheet, net profit or EPS. In addition, 2017 has been restated for the GBP1.8m loss on disposal of the Heritage Brands which had been treated as an exceptional item in continuing operations last year.
The exceptional item in discontinued operations includes the gain on disposal of GBP180.6m with no tax impact as a result of the application of the substantial shareholding exemption. This was offset by GBP3.6m of separation expenses, GBP0.3m revaluation of contingent consideration and GBP0.2m of items related to the disposal of the Heritage Brands in 2017.
Foreign currency translation impact
Ascential reports its results in Pounds Sterling and, following US acquisitions and the significance of Cannes Lions (primarily Euro) and Money20/20 (primarily US Dollar and Euro), reported performance is increasingly sensitive to movements in the Euro and US Dollar against Pounds Sterling.
For most of 2018, Sterling was in line with the 2017 average Euro exchange rates but weakened against the Euro at the year end. Sterling weakened slightly against the US Dollar in 2018, as can be seen in the table below:
Weighted average Year-end rate
--------------------- ---------------------
Currency 2018 2017 Change 2018 2017 Change
----------- ----- ----- ------- ----- ----- -------
Euro 1.14 1.14 0.1% 1.12 1.13 0.9%
US Dollar 1.32 1.30 (1.4%) 1.28 1.34 4.5%
----------- ----- ----- ------- ----- ----- -------
When comparing 2018 and 2017, changes in currency exchange rates had a net adverse impact of GBP3.0m on revenue and GBP0.2m on Adjusted EBITDA. On a segmental basis, the adverse impact of changes in foreign currency exchange rates was as follows:
-- Product Design: GBP1.6m impact on revenue and GBP0.3m impact on Adjusted EBITDA. -- Marketing: GBP1.1m impact on revenue and GBP0.1m impact on Adjusted EBITDA. -- Sales: GBP0.3m impact on revenue and GBP0.2m favourable impact on Adjusted EBITDA. -- Built Environment & Policy: no impact on revenue or Adjusted EBITDA.
For illustrative purposes, the table below provides details of the impact on revenue and Adjusted EBITDA if the actual reported results were restated for Sterling weakening by 1% against the USD and Euro rates in isolation.
2018 2017
2018 Adjusted 2017 Adjusted
GBP'm Revenue EBITDA Revenue EBITDA
------------------------------------- --------- ---------- --------- ----------
Increase in revenue/Adjusted EBITDA
if:
- Sterling weakens by 1% against
USD in isolation 1.5 0.7 1.2 0.6
- Sterling weakens by 1% against
EUR in isolation 1.0 0.7 1.1 0.9
------------------------------------- --------- ---------- --------- ----------
Furthermore, each 1% movement in the Euro to pounds Sterling exchange rate has a GBP1.5m (2017: GBP1.5m) impact on the carrying value of borrowings. Each 1% movement in the US Dollar has a circa GBP0.8m impact on the carrying value of borrowings (2017: GBP1.0m).
Earnings per share
Continuing adjusted diluted earnings per share of 15.3p per share is 12.5% ahead of the 13.6p per share recorded for 2017 and continuing diluted earnings per share of 4.8p per share is 71% ahead of the prior year figure of 2.8p.
Total diluted earnings per share were 51.4p (2017: 4.4p) driven in large part by the gain on disposal of the Exhibitions business.
Acquisitions and disposals
We regularly assess opportunities to acquire high-growth products and capabilities to serve our key end markets of Product Design, Marketing and Sales and, in 2018, incurred initial cash consideration of GBP97.7m for three bolt-on acquisitions.
WARC
In July 2018, we acquired WARC a global digital subscription business helping brands, agencies and media platforms assess marketing effectiveness across all channels. It is a global leader in providing information and insight to understand and measure multi-channel advertising effectiveness. The initial cash consideration was GBP19.9m with deferred consideration of GBP4.5m payable in 2019. WARC is growing well and delivered revenue of GBP11.5m (up 8% on the prior year).
BrandView - Edge by Ascential
In August 2018, we acquired a leading global provider of Price and Promotion analytics to retailers and manufactures for initial consideration of GBP29.8m plus a deferred consideration, expected to total GBP5.0m which is payable subject to the achievement of targets for subscription billings in 2018 and the first half of 2019. BrandView was merged into the Edge by Ascential brand in October. BrandView delivered GBP13.8m of revenue for the year (up 16% on the prior year).
Flywheel Digital
In October 2018, we acquired a leading US-based provider of managed services to consumer product companies trading on the Amazon platform for an initial consideration of $60m plus earn-out payments payable over three years. Earn out consideration is payable in cash based on revenue of the business for 2019, 2020 and 2021 and is expected to total between approximately US$47m and US$196m. A portion of the earn-out is subject to the founders remaining in employment with the company. The total potential consideration, including both the initial consideration and earn-out payments, is capped at US$400m. Flywheel Digital is growing rapidly (with revenue in 2018 up 110% on 2017).
Exhibitions Business
In July 2018, we successfully disposed of our Exhibitions Business for a total net cash consideration of GBP296.4m after adjusting for working capital and cash disposed. After transaction costs of GBP7.1m and the recycling of historic foreign exchange differences, a gain on disposal of GBP180.6m was recognised. Separation costs of GBP3.6m were recognised in exceptional items.
Deferred Consideration
The Company's preferred structure for M&A is to enter into long term earn out arrangements with the founders of acquired companies and to link the earn out to both the post-acquisition performance of the acquired company and the continuing employment of the founders. Accounting for the earn out is complex and requires considerable judgements to be made about the expected future performance of the acquired company at the point of acquisition - especially difficult in the type of high growth, early stage companies that Ascential acquires.
The earn out is accounted for in three ways:
1. A liability for Deferred Consideration is established on the balance sheet at the point of acquisition based on that element of the earn out which is not dependent on the continuing employment of the founders. This amounted to GBP96.7m at December 2018 (2017: GBP97.9m). Any change in estimate is recorded as an exceptional item. This amounted to a credit of GBP4.9m in 2018 (2017: charge GBP1.1m) driven by the 2018 performance of the MediaLink business.
2. This liability is discounted to present value using the Company's cost of capital with the reversal of this discount being recorded as Other Finance Costs within the interest charge. This amounted to a charge of GBP3.6m in 2018 (2017: GBP4.3m).
3. Finally, that element of the deferred consideration that is contingent on the continuing employment of the founders is charged to the income statement as an exceptional item over the service life of those founders (typically three years). This amounted to a charge of GBP13.3m in 2018 (2017: GBP26.6m) which was offset by a credit for the revaluation of the earn out of GBP5.2m (2017: GBP1.1m charge).
In total, the Company expects to payout Deferred Consideration of between GBP120m and GBP140m over the next three years for acquisitions to date. This is mainly contingent on the future performance of the acquired businesses which are estimated to grow their annual EBITDA by between approximately GBP23m and GBP33m between now and 2021.
Cash flow
Continuing operations
The Company generated Adjusted operating cash flow from continuing operations of GBP107.2m (2017: GBP98.1m) being a strong 105% operating cash flow conversion (2017: 104%). After increased investment in product development in our digital subscription products, internal productivity tools and the Company's datacentre, capex increased to GBP18.7m or 5.3% of revenues up from GBP11.8m or 4.0% of revenues in 2017. Tax paid on profits from continuing operations increased from GBP6.2m to GBP10.9m driven by an increase in profits as well as a change to UK tax rules that extends the period over which losses can be recovered. As a result, the Company generated free cash flow on continuing operations of GBP77.1m (2017: GBP80.1m), a decreased to 76% from 85%.
GBP'm 2018 2017 ------------------------------------------- ------- ------- Adjusted EBITDA 101.8 94.7 Working capital movements 4.9 3.4 ------------------------------------------- ------- ------- Adjusted cash generated from continuing operations 106.7 98.1 % operating cash flow conversion 105% 104% Capital expenditure (18.7) (11.8) Tax paid (10.9) (6.2) ------------------------------------------- ------- ------- Free cash flow from continuing operations 77.1 80.1 ------------------------------------------- ------- ------- % free cash flow conversion 76% 85%
Discontinued operations
The Company generated Adjusted operating cash flow from discontinued operations of GBP3.4m (2017: GBP23.8m). The significant decline arose from reduced profit as the Exhibitions business was only owned for the first six months of the year and the disposal occurring at a seasonally low point for deferred income. Both the Exhibitions business and, in the prior year the Heritage Brands, had minimal capital expenditure.
GBP'm 2018 2017 --------------------------------------------- ------- ------ Adjusted EBITDA 19.8 25.9 Working capital movements (16.4) (2.1) --------------------------------------------- ------- ------ Adjusted cash generated from discontinued operations 3.4 23.8 Capital expenditure - - Tax paid (1.3) (1.7) --------------------------------------------- ------- ------ Free cash flow from discontinued operations 2.1 22.1 --------------------------------------------- ------- ------
The consolidated cash flow statement (analysed between continuing and discontinued operations) and net debt position is summarised below and includes significant proceeds from the Company's business disposals totalling GBP290.0m (2017: GBP48.7m) as well as deferred and initial consideration paid on the Company's current and prior year acquisitions totalling GBP164.7m (2017: GBP164.7m).
GBP'm 2018 2017 --------------------------------------------- -------- -------- Free cash flow from continuing operations 77.1 80.1 Free cash flow from discontinued operations 2.1 22.1 Free cash flow from total operations 79.2 102.2 (Investment) / loan to joint venture (0.7) 0.2 Acquisition consideration paid (156.4) (156.5) Exceptional costs paid * Deferred consideration (8.3) (8.2) * Other (4.1) (6.7) Disposal proceeds received 290.0 48.7 --------------------------------------------- -------- -------- Cash flow before financing activities 199.7 (20.3) Net interest paid (6.9) (5.9) Dividends paid (22.8) (20.0) Proceeds of issue of shares net of expenses 0.4 0.1 Debt (repayment) / drawdown (33.6) 33.0 --------------------------------------------- -------- -------- Net cash flow 136.8 (13.1) Opening cash balance 45.8 61.9 FX movements (0.6) (3.0) --------------------------------------------- -------- -------- Closing cash balance 182.0 45.8 Borrowings (294.1) (320.7) Capitalised arrangement fees 2.3 3.3 Derivative financial instruments - 0.1 --------------------------------------------- -------- -------- Net debt (109.8) (271.5) --------------------------------------------- -------- --------
Returns to shareholders
The Board targets a dividend payout ratio of 30% of Adjusted profit after tax. Consequently, the Board is recommending a final dividend of 3.9p per share payable on 14 June 2019 to shareholders on the register on 17 May 2019 which, together with the Company's interim dividend of 1.9p paid in September 2018, makes a total dividend for the 2018 financial year of 5.8p (2017: 5.6p).
Other financial matters
Accounting developments
2018 was the first year of implementation of IFRS15, Revenue from Contracts with Customers and IFRS 9, Financial Instruments. As explained in last year's annual report there is no material impact on the Company from these new standards.
IFRS 16 is the new lease accounting standard and has been implemented on 1 January 2019. The most significant impacts of the new accounting standard are the recognition of operating lease liabilities on the balance sheet and the reclassification of the lease charge from EBITDA to depreciation and interest. The Group plans to adopt IFRS 16 using the full retrospective method. The impact on the profit before tax in the consolidated financial statements is insignificant. We estimate the increase in EBITDA to be in the range of GBP7.0m to GBP8.0m with a combined increase in depreciation and interest in a similar range. The impact of IFRS 16 for the year-ended 31 December 2018 will be finalised and presented as a restatement along with the results for the half year ending 30 June 2019. The current level of operating leases held by the Group is disclosed in Note 15.
Capital structure
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern 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 or contributed as equity to subsidiaries at market-based interest rates and on commercial terms and conditions.
The Company's sources of funding comprise operating cash flow and access to substantial committed bank facilities from a range of banks. The Company maintains a capital structure appropriate for current and prospective trading over the medium term and aims to operate net debt of 1.5 to 2.0 times EBITDA to allow a healthy mix of dividends and cash for investment in bolt-on acquisitions. Following the disposal of the Exhibitions business in July 2018 and the acquisitions of WARC, BrandView and Flywheel Digital in the second half of the year, the consolidated leverage ratio as at 31 December 2018 is 1.1x (2017: 2.3x) allowing flexibility to fund growth initiatives, future deferred consideration and bolt-on acquisitions.
Liquidity
On 12 February 2016 the Company entered into new term loan facilities of GBP66m, EUR171m and $96m as well as a revolving credit facility (RCF) of GBP95m. All mature in February 2021 and are currently subject to interest at 1.75% over LIBOR on the term loans and LIBOR plus 1.5% on the RCF. There is a leverage covenant limit of 4.0x (which drops to 3.5x in June 2019 until maturity) which is measured semi-annually.
As at 31 December 2018 and 2017, all of the term facilities, totalling GBP294.1m (2017: GBP288.9m) had been drawn. At 31 December 2018 none of the GBP95.0m of RCF had been drawn (2017: GBP31.8m). As a result of the Exhibitions disposal, GBP125.4m of cash is currently held in short-term deposits (2017: GBP18.4m). A refinancing is planned to take place in early 2020 ahead of the maturity of the facilities in February 2021.
Financial risk management
The Group is exposed to risks arising from the international nature of its operations and the financial instruments which fund them. These instruments include cash and borrowing and items such as trade receivables and trade payables which arise directly from operations. External borrowings are denominated 52% in Euros with the balance split between US Dollars (26%) and pounds Sterling (22%). The Company reviews and protects a proportion of its exposure to interest rate rises on the cost of borrowings through use of derivatives such as interest rate caps where appropriate. Principal risks (including strategic, operational, legal and other risks) are set out in the 2018 Annual Report.
Going concern
Ascential's business activities, performance and position, together with the factors likely to affect its future development, are set out in the 2018 Annual Report. The Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives. The processes in place for assessment, management and monitoring of risks, including the risks resulting from Brexit, are described in the 2018 Annual Report where details of the financial risk management objectives and policies are given.
The Directors believe that the Group is well placed to manage its business risks successfully. The Board's assessment of prospects and stress test scenarios, together with its review of principal risks and the effectiveness of risk management procedures, show that the Group has adequate resources to continue in operational existence for the foreseeable future. The Directors have assessed the Group's prospects and viability over a three-year period and the viability statement can be found in the 2018 Annual Report. Accordingly, the Directors continue to adopt the going concern basis for the preparation of the financial statements. In forming their view, the Directors have considered the Group's prospects for a period exceeding 12 months from the date when the financial statements are approved.
Mandy Gradden
Chief Financial Officer
22 February 2019
ALTERNATIVE PERFORMANCE MEASURES
The Company aims to maximise shareholder value by optimising 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, performance measures that distinguish between these different factors - these are also the measures that the Board uses 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 additional information.
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 businesses;
-- changes in exchange rates used to record the results of non-sterling businesses results in a lack of comparability between periods as equivalent local currency amounts are recorded at different sterling amounts in different periods; and
-- event timing differences between periods. The Group has no biennial events, but when annual events are held at different times of year this can affect the comparability of half-year results.
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;
-- prior year consolidated results are restated at current year exchange rates for non-sterling businesses; and
-- prior year results are adjusted such that comparative results of events that have been held at different times of year (if any) are included in the same period as the current year results.
Organic growth is calculated as follows:
2018 Built Environment Corporate Continuing GBP'm Product Design Marketing Sales & Policy Costs operations ----------------------- -------------- --------- ------ ----------------- --------- ----------- Revenue 2018 - reported 77.8 116.3 120.9 34.3 (0.8) 348.5 Exclude acquisitions (0.7) (16.0) (24.0) - - (40.7) ----------------------- -------------- --------- ------ ----------------- --------- ----------- 2018 - Organic basis 77.1 100.3 96.9 34.3 (0.8) 307.8 ----------------------- -------------- --------- ------ ----------------- --------- ----------- Organic revenue growth 7% (8%) 25% 12% - 6.3% 2017 - reported 73.6 110.6 78.0 30.7 - 292.9 Exclude acquisitions - - (0.3) - - (0.3) Currency adjustment (1.6) (1.1) (0.3) - - (3.0) ----------------------- -------------- --------- ------ ----------------- --------- ----------- 2017 - Organic basis 72.0 109.5 77.4 30.7 - 289.6 ----------------------- -------------- --------- ------ ----------------- --------- ----------- Adjusted EBITDA 2018 - reported 28.1 38.9 36.9 14.0 (16.1) 101.8 Exclude acquisitions 0.1 (2.1) (1.7) - - (3.7) ----------------------- -------------- --------- ------ ----------------- --------- ----------- 2018 - Organic basis 28.2 36.8 35.2 14.0 (16.1) 98.1 ----------------------- -------------- --------- ------ ----------------- --------- ----------- Organic EBITDA growth 27% (23%) 19% 53% (12%) 3.8% 2017 - reported 22.5 48.1 29.3 9.1 (14.3) 94.7
Exclude acquisitions - (0.1) 0.1 - - - Currency adjustment (0.3) (0.1) 0.2 - - (0.2) ----------------------- -------------- --------- ------ ----------------- --------- ----------- 2017 - Organic basis 22.2 47.9 29.6 9.1 (14.3) 94.5 ----------------------- -------------- --------- ------ ----------------- --------- -----------
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 therefore a measure of the rate of growth of the brands owned today. Proforma growth is calculated as follows:
2018 Built Environment Central Continuing GBP'm Product Design Marketing Sales & Policy Costs operations ------------------------ -------------- --------- ----- ----------------- ------- ----------- Revenue 2018 - reported 77.8 116.3 120.9 34.3 (0.8) 348.5 Include acquisitions - 5.6 22.3 - - 27.9 ------------------------ -------------- --------- ----- ----------------- ------- ----------- 2018 - Proforma basis 77.8 121.9 143.2 34.3 (0.8) 376.4 ------------------------ -------------- --------- ----- ----------------- ------- ----------- Proforma revenue growth 7% (6%) 30% 12% - 9.6% 2017 - reported 73.6 110.4 78.2 30.7 - 292.9 Include acquisitions 0.7 21.8 33.1 - - 55.6 Currency adjustment (1.6) (2.2) (1.2) - - (5.0) ------------------------ -------------- --------- ----- ----------------- ------- ----------- 2017 - Proforma basis 72.7 130.2 109.9 30.7 - 343.5 ------------------------ -------------- --------- ----- ----------------- ------- ----------- Adjusted EBITDA 2018 - reported 28.1 38.9 36.9 14.0 (16.1) 101.8 Include acquisitions - 0.8 5.9 - - 6.7 ------------------------ -------------- --------- ----- ----------------- ------- ----------- 2018 - Proforma basis 28.1 39.7 42.8 14.0 (16.1) 108.5 ------------------------ -------------- --------- ----- ----------------- ------- ----------- Proforma EBITDA growth 27% (22%) 49% 53% (12%) 12.5% 2017 - reported 22.5 48.1 29.3 9.1 (14.3) 94.7 Include acquisitions - 3.1 (1.2) - - 1.9 Currency adjustment (0.3) (0.4) 0.6 - - (0.1) ------------------------ -------------- --------- ----- ----------------- ------- ----------- 2017 - Proforma basis 22.2 50.8 28.7 9.1 (14.3) 96.5 ------------------------ -------------- --------- ----- ----------------- ------- -----------
Adjusted profit measures
Ascential uses Adjusted profit measures to assist readers in understanding underlying operational performance. These measures exclude income statement 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 income statement. In addition, the Company presents a non-GAAP profit measure, Adjusted EBITDA, in order to aid comparisons with peer group companies and provide a reference point for assessing operational cash generation. Adjusted EBITDA is defined as Adjusted Operating Profit before depreciation and amortisation. The Company measures operational profit margins with reference to Adjusted EBITDA.
Adjusting items
Adjusting items are not a defined term under IFRS, so may not be comparable to similar terminology used in other financial statements. Adjusting items include exceptional items, amortisation of acquired intangibles and share based payment charges. These items are defined and explained in more details as follows:
Exceptional items
Exceptional items are recorded in accordance with the policy set out in the annual report. They arise from both portfolio investment and divestment decisions and from changes to the Group's capital structure, and so do not reflect current operational performance. These items are presented within a separate column on the face of the income statement, but within their relevant income statement caption to assist in the understanding of the performance and financial as these types of cost do not form part of the underlying business.
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 several years, and so the associated amortisation does not reflect current operational performance.
Share-based payments
Following the IPO, a number of employee share schemes have been introduced, resulting in a lack of comparability between periods in respect of share scheme costs - particularly as the income statement charge builds up to a normalised level over a three-year period. As this arises from a change triggered by the IPO change in capital structure, these costs have been treated as Adjusting items.
Tax related to adjusting items
The elements of the overall Company tax charge relating to the above Adjusting items are also treated as Adjusting. These elements of the tax charge are calculated with reference to the specific tax treatment of each individual 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 Company uses Adjusted cash flow measures for the same purpose as Adjusted profit measures, to assist readers of the accounts in understanding the ongoing operational performance of the Group. The two measures used are Adjusted Cash Generated from Operations, and Free Cash Flow. These are reconciled to IFRS measures as follows:
GBP'm 2018 2017 ------------------------------------------ ------ ------ Cash generated from operations 76.7 107.0 Add back: acquisition-related contingent employment cash flow 21.0 8.2 Add back: other exceptional cash flow 12.4 6.7 ------------------------------------------ ------ ------ Adjusted cash generated from operations 110.1 121.9 ------------------------------------------ ------ ------ GBP'm 2018 2017 ------------------------------------------ ------- ------- Net cash from operating activities 64.5 99.1 Add back: acquisition-related contingent employment cash flow cash flow 21.0 8.2 Add back: other exceptional cash flow 12.4 6.7 Less: capital expenditure (18.7) (11.8) ------------------------------------------ ------- ------- Free cash flow 79.2 102.2 ------------------------------------------ ------- -------
The Company monitors its operational balance sheet efficiency with reference to operational cash conversion, defined as Free Cash Flow as a percentage of Adjusted EBITDA.
Glossary of alternative performance measures
Term Description
Adjusted EBITDA Adjusted operating profit excluding depreciation
and software amortisation
--------------------------------------------------
Adjusted EBITDA margin Adjusted EBITDA as a percentage of Revenue
--------------------------------------------------
Adjusted effective Adjusted tax charge expressed as a percentage
tax rate of Adjusted profit before tax
--------------------------------------------------
Adjusted EPS EPS calculated with reference to Adjusted
Profit for the period
--------------------------------------------------
Adjusted operating Operating profit excluding Adjusting Items
profit
--------------------------------------------------
Adjusted profit before Profit before tax excluding Adjusting Items
tax
--------------------------------------------------
Adjusted tax charge Tax charge excluding Adjusting Items
--------------------------------------------------
Cash conversion Free cash flow expressed as a percentage
of Adjusted EBITDA
--------------------------------------------------
Effective tax rate Tax charge expressed as a percentage of Profit
before tax
--------------------------------------------------
Exceptional items Items within Operating profit separately
identified in accordance with Company accounting
policies
--------------------------------------------------
Free cash flow Cash flows before exceptionals, portfolio
investments and divestments, and financing
--------------------------------------------------
Net debt leverage The ratio of Net debt to Adjusted EBITDA
--------------------------------------------------
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 Revenue growth on a like-for-like basis assuming
growth the Company's acquisitions were all made
on 1 January 2017
--------------------------------------------------
Proforma EBITDA growth Adjusted EBITDA growth on a like-for-like
basis assuming the Company's acquisitions
were all made on 1 January 2017
--------------------------------------------------
Cautionary statement
Certain statements in this announcement constitute, or may be deemed to constitute, forward-looking statements (including beliefs or opinions). Any statement in this announcement that is not a statement of historical fact including, without limitation those regarding the Company's future expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially. 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. As a result, you are cautioned not to place reliance on such forward-looking statements. Except as is required by the Listing Rules, Disclosure and Transparency Rules and applicable laws, no undertaking is given to update the forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise.
Nothing in this announcement should be construed as a profit forecast. This announcement has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Ascential plc and its subsidiary undertakings when viewed as a whole.
Consolidated Statement of Profit or Loss
For the year ended 31 December 2018
Restated*
-------------------------------
2018 2017
------------------------------------- ----- ------------------------------- -------------------------------
Adjusted Adjusting Adjusted Adjusting
(GBP million) Note results items Total results items Total
------------------------------------- ----- --------- ---------- -------- --------- ---------- --------
Continuing operations
Revenue 3 348.5 - 348.5 292.9 - 292.9
Cost of sales (125.2) - (125.2) (93.9) - (93.9)
Sales, marketing and administrative
expenses (132.3) (50.8) (183.1) (113.6) (54.1) (167.7)
------------------------------------- ----- --------- ---------- -------- --------- ---------- --------
Operating profit 3 91.0 (50.8) 40.2 85.4 (54.1) 31.3
------------------------------------- ----- --------- ---------- -------- --------- ---------- --------
Adjusted EBITDA 3 101.8 - 101.8 94.7 - 94.7
Depreciation and amortisation 3 (10.8) (30.6) (41.4) (9.3) (17.8) (27.1)
Exceptional items 4 - (14.0) (14.0) - (32.5) (32.5)
Share-based payments - (6.2) (6.2) - (3.8) (3.8)
------------------------------------- ----- --------- ---------- -------- --------- ---------- --------
Operating profit 3 91.0 (50.8) 40.2 85.4 (54.1) 31.3
------------------------------------- ----- --------- ---------- -------- --------- ---------- --------
Share of the profit of joint
ventures accounted for using
the equity method 0.6 - 0.6 0.3 - 0.3
Finance costs 5 (12.5) - (12.5) (12.2) - (12.2)
Finance income 5 0.6 - 0.6 0.5 - 0.5
------------------------------------- ----- --------- ---------- -------- --------- ---------- --------
Profit/(loss) before taxation 79.7 (50.8) 28.9 74.0 (54.1) 19.9
Taxation 6 (17.8) 8.9 (8.9) (18.7) 10.7 (8.0)
------------------------------------- ----- --------- ---------- -------- --------- ---------- --------
Profit from continuing operations 61.9 (41.9) 20.0 55.3 (43.4) 11.9
------------------------------------- ----- --------- ---------- -------- --------- ---------- --------
Discontinued operations
Profit/(loss) from discontinued
operations, net of tax 7 15.5 173.7 189.2 19.6 (13.5) 6.1
------------------------------------- ----- --------- ---------- -------- --------- ---------- --------
Profit for the year 77.4 131.8 209.2 74.9 (56.9) 18.0
------------------------------------- ----- --------- ---------- -------- --------- ---------- --------
Earnings per share (pence)
Continuing operations
- Basic 8 15.5 (10.5) 5.0 13.7 (10.8) 2.9
- Diluted 8 15.3 (10.5) 4.8 13.6 (10.8) 2.8
Continuing and discontinued
operations
- Basic 8 19.3 32.9 52.2 18.7 (14.2) 4.5
- Diluted 8 19.1 32.3 51.4 18.6 (14.2) 4.4
*Restated for discontinued operations (see note 7).
Adjusting items are detailed in Note 4.
Consolidated Statement of Other Comprehensive Income
For the year ended 31 December 2018
2018 2017
---------------------------------------- ----- ----------------------------- --------------------------------
Adjusted Adjusting Adjusted Adjusting
(GBP million) Note results items Total results items Total
---------------------------------------- ----- --------- ---------- ------ --------- ---------- -------
Profit for the year 77.4 131.8 209.2 74.9 (56.9) 18.0
---------------------------------------- ----- --------- ---------- ------ --------- ---------- -------
Other comprehensive income/(expense)
Items that may be reclassified
subsequently to profit or
loss:
Foreign exchange translation
differences recognised in
equity 8.5 - 8.5 (22.9) - (22.9)
Cumulative currency translation
differences on disposals 10 - 2.4 2.4 - 2.4 2.4
---------------------------------------- ----- --------- ---------- ------ --------- ---------- -------
Total other comprehensive
income/(expense), net of tax 8.5 2.4 10.9 (22.9) 2.4 (20.5)
Total comprehensive income/(expense)
for the year 85.9 134.2 220.1 52.0 (54.5) (2.5)
---------------------------------------- ----- --------- ---------- ------ --------- ---------- -------
Consolidated Statement of Financial Position
As at 31 December 2018
(GBP million) Note 2018 2017
--------------------------------------- ----- -------- ------
Assets
Non-current assets
Goodwill 505.1 489.1
Intangible assets 280.9 282.6
Property, plant and equipment 9.2 11.3
Investments 6.1 5.1
Other receivables - 0.3
Deferred tax assets 11 42.8 47.1
844.1 835.5
Current assets
Inventories 3.9 17.8
Trade and other receivables 114.4 88.2
Financial assets - 0.1
Cash and cash equivalents 13 182.0 45.8
--------------------------------------- ----- -------- ------
300.3 151.9
Total assets 1,144.4 987.4
--------------------------------------- ----- -------- ------
Liabilities
Current liabilities
Trade and other payables 81.1 57.7
Deferred income 90.6 118.6
Deferred and contingent consideration 12 32.3 47.5
Current tax liabilities 6.0 12.1
Provisions 2.8 3.2
--------------------------------------- ----- -------- ------
212.8 239.1
Non-current liabilities
Deferred income 0.6 3.6
Deferred and contingent consideration 12 64.4 50.4
External borrowings 13 291.8 317.4
Deferred tax liabilities 11 24.8 31.3
Provisions 3.2 2.6
--------------------------------------- ----- -------- ------
384.8 405.3
--------------------------------------- ----- -------- ------
Total liabilities 597.6 644.4
--------------------------------------- ----- -------- ------
Net assets 546.8 343.0
--------------------------------------- ----- -------- ------
Equity
Share capital 4.0 4.0
Share premium 0.5 0.1
Reserves 542.3 338.9
--------------------------------------- ----- -------- ------
Total equity 546.8 343.0
--------------------------------------- ----- -------- ------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
Reserves
--------------------------------------------------
Group Treasury
Share Share Merger restructure Translation share Retained Total
(GBP million) capital premium reserve reserve reserve reserve earnings equity
----------------------- --------- --------- --------- ------------- ------------ --------- ---------- --------
At 1 January 2017 4.0 - 9.2 157.9 (17.4) (0.1) 207.8 361.4
----------------------- --------- --------- --------- ------------- ------------ --------- ---------- --------
Profit for the year - - - - - - 18.0 18.0
Other comprehensive
expense - - - - (20.5) - - (20.5)
----------------------- --------- --------- --------- ------------- ------------ --------- ---------- --------
Total comprehensive
(expense)/ income - - - - (20.5) - 18.0 (2.5)
Issue of shares - 0.1 - - - - - 0.1
Share-based payments - - - - - - 3.6 3.6
Taxation on
share-based
payments - - - - - - 0.4 0.4
Dividends paid - - - - - - (20.0) (20.0)
----------------------- --------- --------- --------- ------------- ------------ --------- ---------- --------
At 31 December 2017 4.0 0.1 9.2 157.9 (37.9) (0.1) 209.8 343.0
----------------------- --------- --------- --------- ------------- ------------ --------- ---------- --------
Profit for the year - - - - - - 209.2 209.2
Other comprehensive
income - - - - 10.9 - - 10.9
----------------------- --------- --------- --------- ------------- ------------ --------- ---------- --------
Total comprehensive
income - - - - 10.9 - 209.2 220.1
Issue of shares - 0.4 - - - - - 0.4
Share-based payments - - - - - - 5.7 5.7
Taxation on
share-based
payments - - - - - - 0.4 0.4
Dividends paid - - - - - - (22.8) (22.8)
----------------------- --------- --------- --------- ------------- ------------ --------- ---------- --------
At 31 December 2018 4.0 0.5 9.2 157.9 (27.0) (0.1) 402.3 546.8
----------------------- --------- --------- --------- ------------- ------------ --------- ---------- --------
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
(GBP million) Note 2018 2017 ------------------------------------------------------ ----- -------- -------- Cash flow from operating activities Profit before taxation on continuing operations 28.9 19.9 Profit before taxation on discontinued operations 7 192.6 12.8 Adjustments for: Amortisation of acquired intangible assets 33.7 25.5 Amortisation of software intangible assets 7.6 6.1 Depreciation of property, plant and equipment 3.5 5.0 (Gain)/ loss on disposal of business operations and investments 10 (180.6) 0.9 Acquisition-related employment costs and revaluation of contingent consideration 4 8.1 27.7 Share-based payments 6.5 4.4 Share of the profit of joint ventures accounted for using the equity method (0.6) (0.3) Net finance costs 5 11.9 11.7 ------------------------------------------------------ ----- -------- -------- Cash generated from operations before changes in working capital and provisions 111.6 113.7 ------------------------------------------------------ ----- -------- -------- Changes in: Inventories 2.6 (1.1) Trade and other receivables (9.7) (15.1) Trade and other payables, net of interest payable (26.7) 7.5 Provisions (1.1) 2.0 ------------------------------------------------------ ----- -------- -------- Cash generated from operations 76.7 107.0 ------------------------------------------------------ ----- -------- -------- Cash generated from operations before exceptional operating items 110.1 121.9 Cash outflows for acquisition-related employment costs 12 (21.0) (8.2) Cash outflows for other exceptional operating items (12.4) (6.7) ------------------------------------------------------ ----- -------- -------- Cash generated from operations 76.7 107.0 ------------------------------------------------------ ----- -------- -------- Tax paid (12.2) (7.9) ------------------------------------------------------ ----- -------- -------- Net cash generated from operating activities 64.5 99.1 ------------------------------------------------------ ----- -------- -------- Cash flow from investing activities Acquisition of businesses net of cash acquired 9 (97.7) (140.9) Deferred and contingent consideration cash paid in the year 12 (37.7) (15.6) (Acquisition)/ reduction of investments (0.7) 0.2
Acquisition of software intangibles and property, plant and equipment (18.7) (11.8) Disposal of businesses net of cash disposed of 10 290.0 48.7 ------------------------------------------------------ ----- -------- -------- Net cash used in investing activities 135.2 (119.4) ------------------------------------------------------ ----- -------- -------- Cash flow from financing activities Proceeds from external borrowings 32.4 58.6 Repayment of external borrowings (66.0) (25.6) Proceeds from issue of shares 0.4 0.1 Interest paid (6.9) (5.9) Dividends paid to shareholders 14 (22.8) (20.0) ------------------------------------------------------ ----- -------- -------- Net cash used in financing activities (62.9) 7.2 ------------------------------------------------------ ----- -------- -------- Net increase in cash and cash equivalents 136.8 (13.1) Cash and cash equivalents at 1 January 45.8 61.9 Effect of exchange rate changes (0.6) (3.0) ------------------------------------------------------ ----- -------- -------- Cash and cash equivalents at 31 December 182.0 45.8 ------------------------------------------------------ ----- -------- --------
Notes to the Financial Statements
For the year ended 31 December 2018
1. Basis of preparation and accounting policies
Basis of preparation
The full year announcement for the year ended 31 December 2018, which is an abridged statement of the full Annual Report and Accounts, has been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and interpretations issued by the IFRS Interpretations Committee, as adopted by the EU, and the Companies Act 2006 applicable to companies reporting under IFRS.
Ascential plc (the "Company") is a public limited company, which is listed on the London Stock Exchange and incorporated in the United Kingdom. The registered office is located at The Prow, 1 Wilder Walk, London W1B 5AP.
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2018. Statutory accounts for 2017 have been delivered to the registrar of companies, and those for 2018 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The consolidated financial statements are presented in pounds sterling which is the Company's functional currency, and have been rounded to the nearest one decimal place except where otherwise indicated.
The Directors are confident that on the basis of current financial projections and facilities available, and after considering sensitivities, the Group has sufficient resources for its operational needs and will remain in compliance with the financial covenants in its bank facilities for the foreseeable future.
The Consolidated financial statements have been prepared using consistent accounting policies with those of the previous financial year, with new standards applied in the year as set out below.
The consolidated financial statements have been prepared on a going concern basis and under the historical cost convention, with the exception of items that are required by IFRS to be measured at fair value, principally certain financial instruments.
Accounting developments and changes
IFRS 15 and IFRS 9 have been applied from 1 January 2018. IFRS 16 has been issued and is effective from 1 January 2019. The impact is described below.
IFRS 15 "Revenue from Contracts with Customers"
IFRS 15 is based on the principle that revenue is recognised when control of goods or services is transferred to the customer and provides a single, principle based, five-step model to be applied to all sales contracts. It replaces the separate models for goods, services and construction contracts under current IFRS. It also provides further guidance on the measurement of sales on contracts which have discounts and rebates.
The Group has adopted IFRS 15 using "the retrospective method with practical expedients", meaning the cumulative effect of initially applying the standard is recognised as a restatement at the start of the earliest presented period, i.e. the opening comparative balance sheet at 1 January 2017. The practical expedient applied is that the new standard has only been applied to those contracts that are not considered completed at 1 January 2017. IFRS 15 has had no material impact on continuing operations, but an adjustment has been made to discontinued operations.
The result of our assessment on discontinued operations is a less than 0.2% impact on revenue and a less than 0.1% impact on retained earnings. For discontinued operations, the restatement resulted in a reduction to revenue and cost of sales of GBP0.9m for the year ended 31 December 2017, with no impact on profit before tax in either period. The effect of this has been reflected in note 7.
IFRS 9 "Financial Instruments"
IFRS 9 applies a forward-looking impairment model that replaces the current applicable incurred loss model. In contrast to the complex and rules based approach of IAS 39, the new hedge accounting requirements provide an improved link to risk management and treasury operations and will be simpler to apply. The adoption of IFRS 9 did not have a material impact on the Group's consolidated results or financial position and does not require a restatement of comparative figures.
The fair value of each category of the Group's financial instruments approximates to their carrying value. Where financial assets and liabilities are measured at fair values the measurement hierarchy, valuation techniques and inputs used are consistent with those used at 31 December 2017. There were no movements between different levels of the fair value hierarchy in the year.
IFRS 16 "Leases"
IFRS 16 is effective from 1 January 2019 and has been adopted from that date. It replaces all existing lease guidance and introduces a single on-balance sheet model for lessee accounting whereby a lessee recognises a right-of use of asset and a lease liability for the obligation to make lease payments. The standard excludes leases of low-value assets and short-term leases. Lessor accounting remains similar to the current IAS 17 guidance.
These changes will be implemented in the financial statements for 2019 with the actual impact of adopting the new standard at 1 January 2019 subject to change until the Group presents its first financial statements that include the date of initial application.
The Group has advanced its assessment of the potential impact on the consolidated financial statements resulting from the application of IFRS 16 and expects the impact not to be significant on profit before tax. The impact of IFRS 16 for the year-ended 31 December 2018 will be finalised and presented as a restatement along with the results for the half year ending 30 June 2019. The current level of operating leases held by the Group is disclosed in Note 15.
2. Critical accounting judgements and estimates
The preparation of these financial statements requires management to exercise judgement in applying the Group's accounting policies. It also requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. The actual future outcomes may differ from these estimates and give rise to material adjustments to the reported results and financial position of the Group.
Estimates and underlying assumptions are reviewed on an ongoing basis, with revisions recognised in the year in which the estimates are revised and in any future periods affected. The areas involving a higher degree of judgement or complexity and assumptions or estimation are set out below and in more detail in the related notes.
Critical accounting judgements
Alternative Performance Measures (Note 4)
The Group uses alternative performance measures which are not defined or specified under IFRS and removes adjusting items to present an adjusted result. Adjusting items include amortisation and impairment of acquired intangibles, share-based payments and exceptional items. The classification of exceptional items requires significant management judgement to determine the nature and presentation of such transactions. Exceptional items are those which are considered significant by virtue of their nature, size or incidence. These items are presented as a separate column on the face of the income statement but within their relevant income statement caption. The Board view this as a relevant analysis to assist the reader in their understanding of the underlying performance and financial results of the Group. Note 4 provides an analysis of exceptional items.
Key sources of estimation
Business combinations
Initial recognition of goodwill and intangible assets (Note 9)
Accounting for a business acquisition requires an assessment of the existence, fair value and expected useful economic lives of separable intangible assets such as brands, customer relationships and technology assets at the date of acquisition. The fair value of identifiable assets acquired and liabilities assumed on acquisition is based on a number of estimates, including estimates of future performance of related businesses, as is determining the expected useful economic life of assets acquired. The value attributed to these separable assets affects the amount of goodwill recognised and the value, together with the assessment of useful economic lives, determines future amortisation charges.
Acquired brands are valued using the relief-from-royalty method which requires estimation of future revenues and estimation of a royalty rate that an acquirer would pay in an arm's length licencing arrangement to secure access to the same rights. The theoretical royalty payments are discounted to obtain the cash flows to determine the asset value, which also requires estimation of an appropriate discount rate. A tax amortisation benefit is then applied.
Acquired customer relationships are valued using the multi-period excess earnings method ("MEEM approach") which starts with the total expected income streams for a business or group of assets as a whole and then deducts charges for all the other assets used to generate income. Residual income streams are discounted and a tax amortisation benefit is applied. The method requires estimation of future forecasts of the business and an appropriate discount rate.
Content and technology assets are valued using a depreciated replacement cost method, which requires an estimate of all the costs a typical market participant would incur to generate an exact replica of the intangibles asset in the context of the acquired business. The depreciated replacement cost method takes into account factors including economic and technological obsolescence.
In establishing the fair value and useful economic lives, the Group considers, for each acquisition and each asset or liability, the complexity of the calculations, the sources of estimation uncertainty and the risk of such estimations resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Details of those estimations that have a significant risk and the at-risk assets/ liabilities are disclosed as appropriate in note 9; the significance of the risk will depend on the size of the acquisition. Such sources of estimation uncertainty include estimation of future cash flows, the determined weighted average cost of capital and estimated useful lives.
Valuation of contingent consideration and acquisition-related employment costs (Note 12)
Where a business combination agreement provides for an adjustment to the consideration, contingent on future performance over the contractual earn-out period, the Group accrues the fair value, based of the estimated additional consideration payable as a liability at acquisition date. To the extent that deferred contingent consideration is payable as part of the acquisition cost and is payable after one year from the acquisition date, the deferred consideration is discounted at an appropriate discount rate and carried at net present value in the consolidated balance sheet. The liability is measured against the contractually agreed performance targets at each subsequent reporting date with any adjustments recognised in the consolidated income statement.
Acquisition-related employment costs are contingent on future performance of the acquired business and linked to continued employment of the founders over the contractual agreed period. They are treated as an expense and recognised as such in the consolidated income statement.
The estimation of the likely liability requires the Group to make judgements concerning the future performance of related business over both the deferred contingent consideration period and the period of employment.
Taxation (Note 11)
Deferred tax assets are recognised to the extent that their utilisation is probable. The utilisation of deferred tax assets will depend on the judgement whether it is more likely than not that the Group will generate sufficient and suitable taxable income of the correct type and jurisdiction in the future, taking into account any restrictions on the length of the loss-carry forward period. Various factors are used to assess the probability of the future utilisation of deferred tax assets, including past operating results, operational plans and loss-carry forward periods. In particular, utilisation of our US tax losses is subject to a limitation triggered by change of control rules in the US and this limitation is driven by the valuation of the US business at the point of change in control. This is a key judgement area which remains uncertain until it is agreed with the tax authorities.
3. Operating segments
Following the sale of the Exhibitions Business in July 2018, the Group changed from two to four reportable segments as the information presented to the Board (Chief Operating Decision Maker) on a monthly basis changed. End market risk and opportunities vary and capital allocation decisions are made on the basis of four reportable segments. The four reportable segments are Product Design, Marketing, Sales and Built Environment & Policy. The reportable segments offer different products and services, and are managed separately as a result of different capabilities, technology, marketing strategies and end market risks and opportunities. The following summary describes the operations in each of the Group's reportable segments:
-- Product Design: global trend forecasting and insight (WGSN)
-- Marketing: global creative benchmark, effectiveness measurement and strategic advisory (Cannes Lions, WARC, MediaLink)
-- Sales: global ecommerce data, analytics and managed services, Fintech and retail intelligence (Edge, Flywheel Digital, Money20/20, RWRC)
-- Built Environment & Policy: Political, construction and environment intelligence brands (Groundsure, Glenigan, DeHavilland)
-- Discontinued operations:
o In 2018 (with 2017 profit or loss comparatives restated): the Exhibitions business which was previously part of the Exhibitions & Festivals segment and which was identified as a separate cash generating unit following the announcement of its strategic review in February 2018. The Exhibitions business was sold on 17 July 2018 (see note 7).
o In 2017: the 13 Heritage brands which were all sold in 2017.
Information regarding the results of each reportable segment is included below and restated for prior periods to enhance comparability. Reportable segment profits are measured at an adjusted operating profit level, representing reportable segment Adjusted EBITDA, less depreciation costs and amortisation in respect of software intangibles, without allocation of Corporate costs as reported in the internal management reports that are reviewed by the Board. Reportable segment Adjusted EBITDA and reportable segment Adjusted operating profit are used to measure performance as management believes that such information is the most relevant in evaluating the results of the reportable segments relative to other comparable entities. Total assets and liabilities for each reportable segment are not disclosed because they are not provided to the Board on a regular basis. Total assets and liabilities are internally reviewed on a Group basis.
Year ended 31 December 2018
Built Continuing
Product Environment Corporate operations Discontinued
(GBP million) Design Marketing Sales & Policy costs* total operations Total
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
Revenue 77.8 116.3 120.9 34.3 (0.8) 348.5 54.6 403.1
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
Adjusted EBITDA 28.1 38.9 36.9 14.0 (16.1) 101.8 19.8 121.6
Depreciation
and software
amortisation (1.8) (4.1) (2.1) (0.5) (2.3) (10.8) (0.3) (11.1)
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
Adjusted operating
profit 26.3 34.8 34.8 13.5 (18.4) 91.0 19.5 110.5
Amortisation
of acquired
intangible assets (30.6) (3.1) (33.7)
Exceptional
items (14.0) 176.5 162.5
Share-based
payments (6.2) (0.3) (6.5)
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
Operating profit 40.2 192.6 232.8
Share of net
loss in
equity-accounted
investee 0.6 - 0.6
Finance costs (12.5) (12.5)
Finance income 0.6 - 0.6
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
Profit before
tax 28.9 192.6 221.5 ----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
*Corporate costs include a GBP0.8m elimination for intercompany trading.
Year ended 31 December 2017, Restated*
Built Continuing
Product Environment Corporate operations Discontinued
(GBP million) Design Marketing Sales & Policy costs total operations Total
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
Revenue 73.6 110.6 78.0 30.7 - 292.9 105.8 398.7
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
Adjusted EBITDA 22.5 48.1 29.3 9.1 (14.3) 94.7 25.9 120.6
Depreciation
and software
amortisation (2.3) (3.9) (1.0) (0.6) (1.5) (9.3) (1.8) (11.1)
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
Adjusted operating
profit 20.2 44.2 28.3 8.5 (15.8) 85.4 24.1 109.5
Amortisation
of acquired
intangible
assets (17.8) (7.7) (25.5)
Exceptional items (32.5) (3.0) (35.5)
Share-based payments (3.8) (0.6) (4.4)
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
Operating profit 31.3 12.8 44.1
Share of net
loss in
equity-accounted
investee 0.3 - 0.3
Finance costs (12.2) - (12.2)
Finance income 0.5 - 0.5
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
Profit before
tax 19.9 12.8 32.7
----------------------- -------- ---------- ------ ------------- ---------- ------------ ------------- -------
*Restated for new operating segments, and Discontinued operations (see note 7) and IFRS 15 (see note 1).
Exceptional items of GBP14.0 million (2017: GBP32.5 million) include GBP0.3 million (2017: GBP0.3 million), GBP1.3 million income (2017: GBP11.3 million), GBP14.7 million (2017: GBP20.3 million) and GBP0.3 million (2017: GBP0.6 million) which are attributable to Product Design, Marketing, Sales and Corporate costs respectively. Finance costs and finance income are not allocated to segments, as these types of activity are driven by the Group corporate function.
Revenue and non-current assets by location
Revenue from continuing operations is based on the location of customers. Non-current assets analysis (excluding deferred tax and financial instruments) is based on geographical location. The Group does not have any customers from whom revenue exceeds 10% of total revenue. Included in revenue is barter revenue arising from the exchange of goods or services of GBP0.9 million for the year ended 31 December 2018 (2017: GBP0.5 million).
Non-current assets
(excluding deferred
Revenue tax and financial instruments)
(GBP million) 2018 2017 2018 2017
-------------------------- ------ ------ ---------------- ----------------
United Kingdom 81.0 62.4 377.2 436.9
Other Europe 56.1 49.3 103.5 113.7
United States and Canada 149.0 126.3 313.4 227.0
Asia Pacific 40.1 30.0 5.3 4.8
Middle East and Africa 8.4 10.7 - -
Latin America 13.9 14.2 1.9 6.0
-------------------------- ------ ------ ---------------- ----------------
Total 348.5 292.9 801.3 788.4
-------------------------- ------ ------ ---------------- ----------------
Additional segmental information on revenue
The Group's revenue is derived from contracts with customers, and the nature and effect of initially applying IFRS 15 is disclosed in Note 1.
The following table shows revenue disaggregated by major service lines, and the timing of revenue recognition:
Timing of revenue
(GBP million) recognition 2018 2017
------------------- -------------------- ------- -------
Subscriptions Over time 72.9 69.6
Advisory Over time 4.6 3.7
Transactions Point in time 0.3 0.3
Product Design 77.8 73.6
----------------------------------------- ------- -------
Delegates Point in time 22.0 27.3
Stand Space Point in time 0.9 1.2
Sponsorship Point in time 9.0 8.2
Award entries Point in time 24.7 28.8
Subscriptions Over time 8.7 2.3
Advisory Over time 47.6 40.5
Other Point in time 3.4 2.3
------------------- -------------------- ------- -------
Marketing 116.3 110.6
----------------------------------------- ------- -------
Delegates Point in time 36.7 28.6
Stand Space Point in time 16.8 11.0
Sponsorship Point in time 11.3 9.0
Subscriptions Over time 44.6 23.6
Marketing Services Over time 2.7 2.7
Advisory Over time 4.3 2.7
Managed services Over time 4.1 -
Other Point in time 0.4 0.4
------------------- -------------------- ------- -------
Sales 120.9 78.0
----------------------------------------- ------- -------
Subscriptions Over time 14.3 12.9
Advisory Over time 1.0 0.3
Transactions Point in time 18.7 17.3
Other Point in time 0.3 0.2
------------------- -------------------- ------- -------
Built Environment and Policy 34.3 30.7
----------------------------------------- ------- -------
Intercompany sales (0.8) -
----------------------------------------- ------- -------
Revenue from continuing operations 348.5 292.9
----------------------------------------- ------- -------
Contract balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers:
(GBP million) 2018 2017 ------------------------------------------------------------------ ----- ------ Receivables, which are included in "Trade and other receivables" 64.2 67.6 Contract assets - accrued income 7.4 4.8 Contract liabilities - deferred income 91.5 122.2 ------------------------------------------------------------------ ----- ------
4. Exceptional items
Exceptional items included in operating profit from continuing operations
(GBP million) 2018 2017 ------------------------------------------------------ ----- ----- Acquisition-related expenses 8.1 27.7 Acquisition transaction and integration costs 5.9 4.6 IPO expenditure and other - 0.2 ------------------------------------------------------ ----- ----- Exceptional items included in profit from continuing operations 14.0 32.5 ------------------------------------------------------ ----- -----
Acquisition-related expenses include payments agreed as part of the acquisition but linked to ongoing employment
of GBP13.3 million (2017: GBP26.6 million) offset by revaluation of contingent consideration of GBP5.2 million (2017: GBP1.1 million charge).
Acquisition-related employment costs relate primarily to the acquisitions of One Click Retail, MediaLink, Clavis and Flywheel Digital, which, absent the link to continued employment, would have been treated as consideration. Under the sale and purchase agreements between 25% and 50% of deferred payments are contingent on both (i) the results of the business in the post-acquisition period and (ii) the continued employment of the founders.
As part of the overall strategy of managing the Group's portfolio, costs incurred as part of the acquisition and integration of acquired businesses are considered to be material. In 2018 integration costs relate mainly to Edge. Acquisitions transaction costs include directly linked transaction costs as well as stamp duty where applicable. Integration spend is in relation to transferring acquired businesses onto the Group's IT and revenue platforms., merging of products and rebranding.
5. Finance income and finance costs
(GBP million) 2018 2017 ---------------------------------------------------------- ------- ------- Interest on bank deposits 0.6 0.2 Foreign exchange gain on borrowings - 0.3 Finance income 0.6 0.5 ---------------------------------------------------------- ------- ------- Interest payable on external borrowings (7.1) (5.8) Amortisation of loan arrangement fees (1.2) (1.3) Foreign exchange loss on cash and cash equivalents (0.6) (0.8) Discount unwind on contingent and deferred consideration (3.6) (4.3) ---------------------------------------------------------- ------- ------- Finance costs (12.5) (12.2) ---------------------------------------------------------- ------- ------- Net finance costs from continuing operations (11.9) (11.7) ---------------------------------------------------------- ------- -------
6. Taxation
The tax charge for the year comprises:
(GBP million) 2018 2017 --------------------------------------------------------- ------ ------- Current tax UK current tax charge on income for the year at 19.0% (2017: 19.25%) 6.5 5.0 Overseas current tax charge on income for the year 2.2 2.9 Adjustments in respect of prior years (1.9) - --------------------------------------------------------- ------ ------- Total current tax charge 6.8 7.9 --------------------------------------------------------- ------ ------- Deferred tax Current year 1.2 (16.5) Adjustments in respect of prior years 0.9 (0.3) Impact of rate changes on opening deferred tax balances - 16.9 --------------------------------------------------------- ------ ------- Total deferred tax charge 2.1 0.1 --------------------------------------------------------- ------ ------- Total tax charge from continuing operations 8.9 8.0 --------------------------------------------------------- ------ -------
During 2018 a deferred tax credit of GBP0.4 million (2017: GBP0.4 million) was recognised in equity relating to share-based payments.
The difference between the tax as credited in the consolidated income statement for the continuing operations and tax at the UK standard rate is reconciled below:
2018 2017
----------------------------------------- -------------------------------------
Total
profit Total profit
Adjusted Loss on / tax Adjusted Loss on / tax from
profit/ Adjusting from continuing profit/ Adjusting continuing
(GBP million) tax items/tax operations* tax items/tax operations*
------------------------------- --------- ----------- ----------------- --------- ----------- -------------
Profit before tax 79.7 (50.8) 28.9 74.0 (54.1) 19.9
Expected tax charge/(credit)
at the UK standard rate
of 19.0% (2017: 19.25%) 15.1 (9.7) 5.4 14.2 (10.4) 3.8
------------------------------- --------- ----------- ----------------- --------- ----------- -------------
Principal differences
due to:
Impact of rate changes - - - 10.8 6.8 17.6
Impact of higher/(lower)
overseas tax rates 3.3 (1.6) 1.7 7.4 (8.3) (0.9)
Trading losses not recognised
for deferred tax purposes 1.1 - 1.1 - - -
Recognition of previously
unrecognised trading
losses (1.5) - (1.5) (12.7) - (12.7)
Recognition of previously
unrecognised capital
losses - - - - 0.1 0.1
Non-deductible legal,
professional and M&A
costs 0.8 1.4 2.2 - 0.6 0.6
Non-deductible share
based payments expense - 0.4 0.4 - 0.5 0.5
Other non-deductible
items 0.6 - 0.6 0.1 - 0.1
Non-taxable/deductible
exchange (gains)/losses - - - (0.4) - (0.4)
Non-taxable/deductible
disposal (gains)/losses - - - (0.4) - (0.4)
Adjustments in respect
of prior years (1.6) 0.6 (1.0) (0.3) - (0.3)
------------------------------- --------- ----------- ----------------- --------- ----------- -------------
Total tax charge/(credit)
for the year 17.8 (8.9) 8.9 18.7 (10.7) 8.0
------------------------------- --------- ----------- ----------------- --------- ----------- -------------
Effective tax rate 22% 18% 31% 25% 20% 40%
------------------------------- --------- ----------- ----------------- --------- ----------- -------------
* Tax on discontinued operations is set out in Note 7
The Group's effective tax rate is higher than the UK's statutory tax rate mainly due to its mix of profits with increased profits coming from the US.
The impact of rate changes in the prior year arose from the enactment of US tax reform on 22 December 2017 and the continuing reduction of the UK tax rate. The tax rate change included GBP17.2 million in respect of the US and GBP0.4 million for the UK.
The Group is subject to many different forms of taxation including, but not limited to, income and corporation tax, withholding tax and value added and sales taxes. The Group has operations in 15 countries and multiple states in the US and sells its products and services into more than 100 countries. Furthermore, the Group renders and receives cross-border supplies and services in respect of affiliated entities which exposes the Group to tax risk due to transfer pricing rules that apply in many jurisdictions.
Tax law and administration is complex and often requires subjective determinations. In addition, tax audits by their nature, can take a significant period of time to be agreed with the tax authorities. Therefore, management is required to apply judgement to determine the level of provisions required in respect of its tax liabilities. The Directors' estimates of the level of risk arising from tax audit may change in the next year as a result of changes in legislation or tax authority practice or correspondence with tax authorities during specific tax audits. It is not possible to quantify the impact that such future developments may have on the Group's tax positions. Actual outcomes and settlements may differ from the estimates recorded in these consolidated financial statements. The Group currently anticipates that the outcome of these uncertainties will only be resolved after more than one year. However even where uncertainties may not be resolved within one year, material adjustments may arise as a result of a reappraisal of the assets or liabilities within the next year.
7. Discontinued operations
Ascential's Exhibitions business was previously part of the Exhibitions & Festivals segment and was classified as a discontinued operation in accordance with IFRS 5 "Non-current assets held for sale and discontinued operations" following the announcement of the strategic review in February 2018. The Exhibitions business was sold on 17 July 2018. The prior period also includes the results of the 13 Heritage brands which were discontinued and sold in 2017.
The results of the discontinued operations which have been included in the consolidated statement of profit and loss are as follows:
Restated*
2018 2017
------------------------------------- ----- ------------------------------ ------------------------------
Adjusted Adjusting Adjusted Adjusting
(GBP million) Note results items Total results items Total
------------------------------------- ----- --------- ---------- ------- --------- ---------- -------
Revenue 54.6 - 54.6 105.8 - 105.8
Cost of sales (21.4) - (21.4) (42.2) - (42.2)
Sales, marketing and administrative
expenses (13.7) 169.3 155.6 (39.5) (11.3) (50.8)
------------------------------------- ----- --------- ---------- -------
Operating profit/(loss) 19.5 169.3 188.8 24.1 (11.3) 12.8
------------------------------------- ----- --------- ---------- ------- --------- ---------- -------
Adjusted EBITDA 19.8 - 19.8 25.9 - 25.9
Depreciation and amortisation (0.3) (3.1) (3.4) (1.8) (7.7) (9.5)
Exceptional items - 176.5 176.5 - (3.0) (3.0)
Share-based payments - (0.3) (0.3) - (0.6) (0.6)
------------------------------------- ----- --------- ---------- ------- --------- ---------- -------
Operating profit/(loss) 19.5 173.1 192.6 24.1 (11.3) 12.8
------------------------------------- ----- --------- ---------- ------- --------- ---------- -------
Taxation (4.0) 0.6 (3.4) (4.5) (2.2) (6.7)
------------------------------------- ----- --------- ---------- -------
Profit/(loss) from discontinued
operations, net of tax 15.5 173.7 189.2 19.6 (13.5) 6.1
------------------------------------- ----- --------- ---------- ------- --------- ---------- -------
Earnings per share (pence)
* Basic 8 3.8 43.4 47.2 5.0 (3.4) 1.6
* Diluted 8 3.8 42.8 46.6 5.0 (3.4) 1.6
------------------------------------- ----- --------- ---------- ------- --------- ---------- -------
* Revenue and cost of sales have been restated for IFRS 15 (see note 1). There is no impact on opening balance sheet, net profit, or basic or diluted EPS.
Exceptional items in discontinued operations of GBP176.5 million includes the gain on disposal of the Exhibitions business of GBP180.6 million offset by GBP3.6 million of separation expenses related the Exhibitions disposal, GBP0.3m revaluation of contingent consideration on discontinued operations and GBP0.2 million of other items related to the disposal of Heritage Brands in the prior year. The prior year includes a restatement for the GBP1.8 million loss on disposal, which was reported as continuing exceptional items in the prior year.
During the year discontinued operations generated cash of GBP2.0 million (2017: GBP4.1 million) in respect of operating activities and generated GBPnil (2017: GBPnil) in respect of investing activities.
8. Earnings per share
Basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.
Earnings per share have been calculated with respect to the net profit for the year for the Group, the continuing operations and the discontinued operations (Note 7).
2018 2017
------------------------------------ ----------------------------- -----------------------------
Adjusted Adjusting Adjusted Adjusting
results items Total results items Total
------------------------------------ --------- ---------- ------ --------- ---------- ------
Profit attributable to equity
shareholders of the Company (GBP
million)
Profit for the year - continuing
operations 61.9 (41.9) 20.0 55.3 (43.4) 11.9
Profit for the year - discontinued
operations 15.5 173.7 189.2 19.6 (13.5) 6.1
------------------------------------ --------- ---------- ------ --------- ---------- ------
Profit for the year 77.4 131.8 209.2 74.9 (56.9) 18.0
------------------------------------ --------- ---------- ------ --------- ---------- ------
Share number (million)
Basic weighted average number
of shares 400.3 400.3 400.3 400.1 400.1 400.1
Dilutive potential ordinary shares 5.2 5.2 5.2 2.2 2.2 2.2
------------------------------------ --------- ---------- ------ --------- ---------- ------
Diluted weighted average number
of shares 405.5 405.5 405.5 402.3 402.3 402.3
------------------------------------ --------- ---------- ------ --------- ---------- ------
Earnings per share (pence)
Basic earnings per share 19.3 32.9 52.2 18.7 (14.2) 4.5
Diluted earnings per share 19.1 32.3 51.4 18.6 (14.2) 4.4
Continuing operations
Basic earnings per share 15.5 (10.5) 5.0 13.7 (10.8) 2.9
Diluted earnings per share 15.3 (10.5) 4.8 13.6 (10.8) 2.8
Discontinued operations
Basic earnings per share 3.8 43.4 47.2 5.0 (3.4) 1.6
Diluted earnings per share 3.8 42.8 46.6 5.0 (3.4) 1.6
------------------------------------ --------- ---------- ------ --------- ---------- ------
9. Business combinations
The Group acquired the following businesses during the years ended 31 December 2018 and 2017:
Name Date of acquisition Country Shares/ % acquired Acquisition-related
of incorporation asset costs
deal (GBP'm)
---------------------------- --------------------- ------------------- --------- ----------- --------------------
Marketing
28 February
Media Link, LLC* 2017 USA Shares 100% 0.9
18 September
Siberia LLC* 2017 USA Shares 100% 0.1
WARC Limited ("WARC") 2 July 2018 UK Shares 100% 0.8
Product design
Sistema UseFashion Comercio 29 November
de Informacoes Ltda* 2017 Brazil Shares 100% 0.3
Sales
Clavis Technology Limited 22 December
("Clavis")* 2017 Ireland Shares 100% 2.3
ePossibilities Global
Holdings 31 August
Limited ("BrandView") 2018 UK Shares 100% 0.8
Peloton Holdings, LLC
("Flywheel 31 October
Digital") 2018 USA Shares 100% 1.0
---------------------------- --------------------- ------------------- --------- ----------- --------------------
*The details of the prior year acquisitions are set out in the 2017 annual report. In the current year a GBP0.9 million completion statement receipt was received in relation to the prior year Clavis acquisition, which resulted in a GBP0.9 million increase in Goodwill in Edge.
2018 acquisitions
The following table sets out the key information relating to the businesses acquired in 2018:
WARC BrandView Flywheel Digital
----------------------------- ----------------------- -------------------- ---------------------
Primary Activity Digital subscription Price and Promotion Managed services
business on marketing analytics to to consumer product
effectiveness. retailers and companies trading
manufacturers. on Amazon.
Segment Marketing Sales Sales
i) Deferred, contingent
consideration:
Contingent on results - 2019 2019-2021
in financial years:
Payable in: - 2019 2020-2022
Estimated undiscounted - GBP5.0 million GBP43.2/$55.3
amount million
Estimated discounted - GBP5.0 million GBP34.6/$44.2
amount* million
Deferred consideration 2019 - -
payable in:
Estimated undiscounted GBP4.5 million - -
amount
Estimated discounted GBP4.5 million - -
amount*
ii) Acquisition related
employment payments:
Contingent on results - - 2019-2021
in financial years:
Payable in: - - 2020-2022
Estimated undiscounted - - GBP14.3/$18.4
amount million
Exceptional cost related - - GBP1.5 million
to acquisition related
employment cost in 2018**
Maximum total consideration GBP29.5 million GBP38.0 million GBP310/$400 million
payable***
Anticipated total discounted GBP4.5 million GBP5.0 million GBP36.1 million
consideration (i and
ii)
*Consideration payable within one year is not discounted as explained under note 1.
**The acquisition-related employment cost is accrued over the period in which the related services are received, recorded as exceptional costs.
***Includes i) Deferred, contingent consideration; ii) Acquisition related employment payments; and iii) initial consideration per the goodwill calculation table below
To determine the estimated contingent consideration and the acquisition-related employment cost figures quoted above, the Directors are required to make an estimate regarding the future results. Any subsequent revaluations to contingent consideration as a result of changes in such estimations are recognised in the consolidated income statement and disclosed in Note 12.
From the date of acquisition, the businesses acquired in 2018 contributed GBP14.6m revenue and GBP4.3m EBITDA. If the acquisitions had taken place at the beginning of 2018, the business would have contributed GBP42.3m revenue and GBP11.0m EBITDA.
The fair values of the identifiable assets purchased and liabilities assumed of the acquired companies as at the date of acquisition were as follows:
Clavis
purchase
price
allocation Flywheel
GBP million WARC BrandView finalisation Digital* Total
--------------------------------------- ------- ---------- -------------- ---------- -------
Brands 1.8 0.2 - 6.2 8.2
Customer relationships 8.9 10.4 - 25.6 44.9
Content 9.4 - - 5.2 14.6
Technology 1.1 6.8 - 1.4 9.3
Property, plant and equipment 0.6 0.4 - 0.6 1.6
Trade and other receivables 2.8 2.9 (3.2) 30.0 32.5
Cash 5.1 0.6 - 2.2 7.9
Trade and other payables (1.1) (1.6) 0.5 (23.0) (25.2)
Provisions (0.3) (0.1) (0.5) - (0.9)
Deferred income (6.0) (3.4) 1.4 (0.9) (8.9)
Deferred tax liability (3.6) (3.0) - - (6.6)
---------------------------------------- ------- ---------- -------------- ---------- -------
Total identifiable net assets
at fair value 18.7 13.2 (1.8) 47.3 77.4
---------------------------------------- ------- ---------- -------------- ---------- -------
Initial cash consideration relating
to business combination 25.0 29.8 - 51.7 106.5
Completion statement cash receipt - - (0.9) - (0.9)
Working capital adjustment payable/
(receivable) in 2019 (0.2) - 1.2 1.0
Contingent consideration payable
in 2019 - 5.0 - - 5.0
Deferred consideration payable
in 2019 4.5 - - - 4.5
Deferred and contingent consideration
payable in 2020-2022 - - 33.8 33.8
Total consideration 29.3 34.8 (0.9) 86.7 149.9
---------------------------------------- ------- ---------- -------------- ---------- -------
Goodwill on acquisition 10.6 21.6 0.9 39.4 72.5
---------------------------------------- ------- ---------- -------------- ---------- -------
Cash flow
Acquisition of businesses (net
of cash acquired) 19.9 29.2 (0.9) 49.5 97.7
---------------------------------------- ------- ---------- -------------- ---------- -------
*The fair values provided for Flywheel Digital are provisional figures, being the best estimates currently available due to the proximity of the acquisition date to year-end. A review of the closing balance sheet is currently being undertaken and adjustments may be necessary.
The goodwill of GBP72.5 million arising on acquisitions is attributable to workforce in place and the acquisition of new customers, know-how within the business and with specific regard to WARC the buyer specific synergies on accessing capabilities and insight on the current marketing proposition by combining existing creative excellence insights with deep expertise of measuring marketing effectiveness. The combining of the creative insight and the measuring of marketing effectiveness strengthens the already available digital offering in the form of a combined subscription product. With specific regard to Flywheel Digital, the know how relates to the knowledge within the workforce on how to use the technology and the content to good effect. In BrandView, the goodwill is attributable to workforce in place and the acquisition of new customers. Goodwill amounting to GBP39.4 million (207: GBP62.1 million) is expected to be deductible for tax purposes.
10. Disposal of business operations
On 17(th) July 2018 the Group disposed of the Exhibitions Business. The Group recognised a total gain on disposal of GBP180.6 million presented as an exceptional item within discontinued operations.
Exceptional items in discontinued operations (note 7) of GBP176.5 million includes the gain on disposal of the Exhibitions business of GBP180.6 million offset by GBP3.6 million of separation expenses related the Exhibitions disposal, GBP0.3m revaluation of contingent consideration on discontinued operations and GBP0.2 million of other items related to the disposal of Heritage Brands in the prior year.
2017 results have been restated to report the loss on disposal of GBP1.8 million within discontinued operations (note 7).
(GBP million) 2018 ----------------------------------------------- -------- Gross proceeds 297.8 Working capital adjustment 2.6 Cash and cash equivalents disposed of (4.0) ----------------------------------------------- -------- Total proceeds 296.4 ----------------------------------------------- -------- Net assets disposed of (106.3) Disposal costs (7.1) Recycling of deferred foreign exchange gains (2.4) Gain on disposal from discontinued operations 180.6 ----------------------------------------------- --------
Assets and liabilities disposed of:
(GBP million) 2018 ------------------------------------------------ ------- Goodwill* 67.3 Investments 0.2 Brands, customer relationships and databases 59.2 Tangible fixed assets including software 2.9 Deferred tax asset 0.8 Trade and other receivables 28.4 Trade and other payables (41.9) Provisions (0.5) Deferred tax liability on disposed intangibles (10.1) ------------------------------------------------ ------- Net assets and liabilities disposed 106.3 ------------------------------------------------ -------
* As a result of the disposal of the Exhibitions Business, the Exhibitions & Festivals segment was split up and required historical goodwill to be allocated between Cannes Lions and Exhibitions. In line with IAS 36, the Group determined that the most appropriate allocation method was the relative valuation of each business. For the Exhibitions Business this was the consideration received of GBP297.8 million and for Cannes Lions the most recent value-in-use calculation for the annual impairment review was used and an external valuation specialist reviewed the assumptions used in the value-in use calculation.
The net inflow/(outflow) of cash in respect of the disposal of businesses is as follows:
(GBP million) 2018 ----------------------------------------------------------- ------ Cash proceeds received for current year disposals (net of cash disposed of) 296.4 Disposal costs paid (6.4) Net cash inflow 290.0 ----------------------------------------------------------- ------ 11. Deferred tax assets and liabilities
The deferred tax balances shown in the consolidated balance sheet are analysed as follows:
(GBP million) 2018 2017 -------------------------- ------- ------- Deferred tax assets 42.8 47.1 Deferred tax liabilities (24.8) (31.3) Total 18.0 15.8 -------------------------- ------- -------
The major deferred tax assets and liabilities recognised by the Group, and the movements in the period, are set out below:
Non-deductible US deductible Property,
intangible intangible Share-based plant
(GBP million) assets assets payments and equipment Tax losses Other Total
------------------------ --------------- -------------- ------------ --------------- ----------- ------ -------
At 1 January 2017 (30.3) 12.5 0.2 9.9 32.2 0.1 24.6
Credit/(charge) to the
consolidated income
statement for the year 2.9 9.7 0.3 (0.9) 2.6 - 14.6
Credit to equity - - 0.4 - - - 0.4
Adjustments in respect
of prior years - - - 0.1 0.3 - 0.4
Impact of rate changes 0.6 (7.4) - - (10.1) - (16.9)
Acquisitions (5.3) - - - - - (5.3)
Disposals 0.8 - - (0.1) - - 0.7
Foreign exchange
movements - (1.2) - - (1.5) - (2.7)
------------------------ --------------- -------------- ------------ --------------- ----------- ------ -------
At 31 December 2017 (31.3) 13.6 0.9 9.0 23.5 0.1 15.8
------------------------ --------------- -------------- ------------ --------------- ----------- ------ -------
Credit/(charge) to the
consolidated income
statement for the
year* 3.6 (2.8) 0.8 (0.9) (1.6) - (0.9)
Credit to equity - - 0.4 - - - 0.4
Adjustments in respect
of prior years (0.6) - 0.1 (0.2) (1.3) 1.0 (1.0)
Acquisitions (6.8) - - - - - (6.8)
Disposals 10.1 - (0.1) (0.7) - - 9.3
Foreign exchange
movements 0.2 0.2 - - 0.8 - 1.2
------------------------ --------------- -------------- ------------ --------------- ----------- ------ -------
At 31 December 2018 (24.8) 11.0 2.1 7.2 21.4 1.1 18.0
------------------------ --------------- -------------- ------------ --------------- ----------- ------ -------
* The above charge to the consolidated income statement for the year includes a credit of GBP0.3 million in respect of discontinued operations.
The above deferred tax balances are expected to reverse:
Non-deductible US deductible Property
intangible intangible Share-based plant
(GBP million) assets assets payments and equipment Tax losses Other Total
------------------ --------------- -------------- ------------ --------------- ----------- ------ ------
Within 12 months (3.1) 3.7 0.7 0.7 6.2 - 8.2
After 12 months (21.7) 7.3 1.4 6.5 15.2 1.1 9.8
------------------ --------------- -------------- ------------ --------------- ----------- ------ ------
Total (24.8) 11.0 2.1 7.2 21.4 1.1 18.0
------------------ --------------- -------------- ------------ --------------- ----------- ------ ------
In presenting its deferred tax balances, the Group does not offset assets and liabilities as the Group has no legally enforceable right to set off the arising current tax liabilities and assets when those deferred tax balances reverse.
No deferred tax liability has been recognised in respect of temporary differences associated with investments in subsidiaries and joint ventures as the Group is in a position to control the timing of their reversal and it is probable that such differences will not reverse in the foreseeable future.
The prior year movement includes the impact of the US tax rate change from 35% to 21% with effect for periods beginning after 31 December 2017. This resulted in a revaluation of US deferred tax assets and liabilities and an overall reduction of GBP16.6m in the prior year. For the current year, the US deferred tax assets and liabilities remained valued using the Federal rate of 21% and where applicable the effective State tax rate of 5%.
US deductible intangible assets represents the value of deferred tax assets on US tax deductible intangibles and deferred consideration. These deferred tax assets are recognised at a blended US Federal and State tax rate of 26%.
Non-deductible intangibles represent the value of the deferred tax liability which arises on the fair value of acquired intangibles which are not deductible for tax purposes. The liability is valued at the tax rate applicable to the jurisdiction where the intangibles are located.
Deferred tax assets have been recognised on the basis that sufficient taxable profits are forecast to be available in the future to enable them to be utilised.
At 31 December 2018, the Group has the following tax losses:
Recognised Recognised Unrecognised Unrecognised Total Total
(GBP million) 2018 2017 2018 2017 2018 2017
---------------------------- ----------- ----------- ------------- ------------- ------ ------
US net operating losses 71.3 66.0 127.0 127.1 198.3 193.1
UK non-trading losses 36.3 54.1 - - 36.3 54.1
Irish trading losses - - 18.3 16.4 18.3 16.4
UK capital losses - - 114.9 115.1 114.9 115.1
Other Rest of World losses - - 3.9 - 3.9 -
---------------------------- ----------- ----------- ------------- ------------- ------ ------
Total 107.6 120.1 264.1 258.6 371.7 378.7
---------------------------- ----------- ----------- ------------- ------------- ------ ------
The above losses represent the following value at tax rates applicable at the balance sheet date:
Recognised Recognised Unrecognised Unrecognised Total Total
(GBP million) 2018 2017 2018 2017 2018 2017
---------------------------- ----------- ----------- ------------- ------------- ------ ------
US net operating losses 15.0 13.8 26.7 26.7 41.7 40.5
UK non-trading losses 6.4 9.7 - - 6.4 9.7
Irish trading losses - - 2.3 2.1 2.3 2.1
UK capital losses - - 19.5 19.6 19.5 19.6
Other Rest of World losses - - 1.1 - 1.1 -
---------------------------- ----------- ----------- ------------- ------------- ------ ------
Total 21.4 23.5 49.6 48.4 71.0 71.9
---------------------------- ----------- ----------- ------------- ------------- ------ ------
The Group has tax losses in the US totalling GBP198.3 million carried forward at 31 December 2018 (2017: GBP193.1 million). It has been agreed with the US tax authorities that these losses are available to offset against taxable profits subject to a restriction following the change of ownership that was deemed to have occurred upon the listing of Ascential plc in 2016. In line with the US tax rules, the restriction of losses is, to a large extent, based on the valuation of the US tax group at the change of control date and this will be agreed with the US tax authorities in due course. The valuation of the US tax group is therefore a source of estimation and an external valuation was commissioned in 2017 to support the Group's position. The recognised deferred tax asset is sensitive to a change in this valuation. The Board expects the deferred tax asset to be recovered over a number of years and considers it to be unlikely that there will be a consequential change in the estimates made that would lead to a material movement in the asset in the next 12 months.
12. Deferred and contingent consideration
The Group has liabilities in respect of deferred and contingent consideration payments under various business acquisition contracts.
Product Level
(GBP million) Note Sales Marketing design Total 3
At 1 January 2017 66.8 - 4.0 70.8 51.0
----------------------------------------- ----- ------- ---------- -------- ------- -------
Additions 11.4 14.2 0.8 26.4 21.2
Acquisition-related employment costs
accrued in the year 4 17.2 9.4 - 26.6 -
Revaluation of contingent consideration
recognised in the consolidated income
statement 4 0.4 0.7 - 1.1 1.1
Discount unwind on contingent and
deferred consideration 5 3.3 1.0 - 4.3 4.3
Acquisition-related employment cash
paid in year (8.2) - - (8.2) -
Deferred and contingent consideration
cash paid in the year (12.1) - (3.5) (15.6) (13.1)
Effect of movements in exchange rates (5.7) (1.6) (0.2) (7.5) (5.1)
----------------------------------------- ----- ------- ---------- -------- ------- -------
At 31 December 2017 73.1 23.7 1.1 97.9 59.4
----------------------------------------- ----- ------- ---------- -------- ------- -------
Additions 38.8 4.5 0.1 43.4 33.8
Acquisition-related employment costs
accrued in the year 4 11.7 1.6 - 13.3 -
Revaluation of contingent consideration
recognised in the consolidated income
statement 4 (1.2) (4.0) 0.3 (4.9) (4.9)
Discount unwind on contingent and
deferred consideration 5 2.8 0.8 - 3.6 3.6
Acquisition-related employment cash
paid in year (16.4) (4.6) - (21.0) -
Deferred and contingent consideration
cash paid in the year (32.4) (4.6) (0.7) (37.7) (33.4)
Effect of movements in exchange rates 1.8 0.7 (0.2) 2.3 1.4
Disposal of business - - (0.2) (0.2) (0.2)
----------------------------------------- ----- ------- ---------- -------- ------- -------
At 31 December 2018 78.2 18.1 0.4 96.7 59.7
----------------------------------------- ----- ------- ---------- -------- ------- -------
(GBP million) 2018 2017
--------------- ----- -----
Current 32.3 47.5
Non-current 64.4 50.4
Total 96.7 97.9
--------------- ----- -----
The total deferred and contingent consideration balance of GBP96.7 million (2017: GBP97.9 million) includes GBP59.7 million (2017: GBP59.4 million) which is categorised as Level 3 in the fair value hierarchy. The significant unobservable inputs used in the fair value measurements are the determined weighted average cost of capital and the forecast future profits, billings or revenue of the acquired businesses. The Group three-year plan used to forecast future profits is approved by the board and assessed against market consensus on a regular basis. For details of deferred and contingent consideration on current and comparative year acquisitions refer to Note 9.
The Directors consider that the carrying amount of deferred and contingent consideration of GBP96.7 million (2017: GBP97.9 million) approximate their fair value.
13. Borrowings
The maturity profile of the Group's borrowings, all of which are secured loans, was as follows:
(GBP million) 2018 2017 ------------------- ------ ------ Non-current Two to five years 291.8 317.4 Total borrowings 291.8 317.4 ------------------- ------ ------
Borrowings are shown net of unamortised issue costs of GBP2.3 million (2017: GBP3.3 million). The carrying amounts of borrowings approximate their fair value.
Reconciliation of movement in net debt
Interest
Cash Short-term rate
(GBP million) Cash in transit deposits cap Borrowings Net debt
------------------------- ------- ------------ ----------- --------- ----------- ---------
At 1 January 2017 39.1 4.4 18.4 0.4 (286.0) (223.7)
------------------------- ------- ------------ ----------- --------- ----------- ---------
Exchange differences (2.0) - (0.8) - 2.7 (0.1)
External debt drawdown - - - - (58.6) (58.6)
External debt repayment - - - - 25.6 25.6
Non-cash movements - - - (0.3) (1.1) (1.4)
Net cash movement (10.4) (2.0) (0.9) - - (13.3)
------------------------- ------- ------------ ----------- --------- ----------- ---------
At 31 December 2017 26.7 2.4 16.7 0.1 (317.4) (271.5)
------------------------- ------- ------------ ----------- --------- ----------- ---------
Exchange differences (0.4) - (0.2) - (6.9) (7.5)
External debt repayment - - - - 66.0 66.0
External debt drawdown - - - - (32.4) (32.4)
Non-cash movements - - - (0.1) (1.1) (1.2)
Net cash movement 23.1 4.8 108.9 - - 136.8
At 31 December 2018 49.4 7.2 125.4 - (291.8) (109.8)
------------------------- ------- ------------ ----------- --------- ----------- ---------
14. Dividends
Amounts recognised and paid as distributions to ordinary shareholders in the year comprise:
2018 2017
------------------------ -------------------------
Pence per Pence
GBP million share GBP million per share
----------------------- ------------ ---------- ------------ -----------
2016 Final dividend - - 12.8 3.2
2017 Interim dividend - - 7.2 1.8
2017 Final dividend 15.2 3.8 - -
2018 Interim dividend 7.6 1.9
----------------------- ------------ ---------- ------------ -----------
Dividends paid 22.8 5.7 20.0 5.0
----------------------- ------------ ---------- ------------ -----------
After the reporting date, the Board proposed a final dividend of 3.9p per ordinary share from distributable reserves, resulting in a total dividend of 5.8p per ordinary share for the year ended 31 December 2018. The final dividend is subject to approval by shareholders at the Annual General Meeting and is therefore not included in the consolidated balance sheet as a liability at 31 December 2018.
15. Operating leases
The Group had total future minimum lease payments under non-cancellable operating leases as set out below:
2018 2017
-------------------------- --------------------------
Land and Land and
(GBP million) buildings Other assets buildings Other assets
---------------------------- ----------- ------------- ----------- -------------
Within one year 10.5 - 8.8 0.2
Two to five years 18.6 0.1 21.8 -
After more than five years 4.3 - 6.6 -
Total 33.4 0.1 37.2 0.2
---------------------------- ----------- ------------- ----------- -------------
The Group leases various offices under non-cancellable operating lease agreements. The leases have various terms, escalation clauses and renewal rights. The Group also leases other equipment under non-cancellable operating lease agreements. The Group does not have any finance leases. These non-cancellable operating leases will be brought onto the balance sheet in 2019 when IFRS 16 Leases comes into effect. See note 1 for the estimated impact of adopting the new standard.
The Group sub-lets certain of its offices. The minimum lessee receipts total GBP3.3 million (2017: GBP4.1 million), receivable over the next four years.
16. Events after the reporting date
There were no reportable events since the year end of 31 December 2018.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR BDGDDUBDBGCS
(END) Dow Jones Newswires
February 25, 2019 02:00 ET (07:00 GMT)
1 Year Ascential Chart |
1 Month Ascential Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
