Ascential (ASCL) is starting to deliver on its digital strategy by pulling away from its ageing events division and piling cash into information services. After extracting the £55m contribution from the seven events sold to peer ITE (ITE) on 17 July, the latter business made up 62 per cent of revenues in the first six months of 2018, compared with 38 per cent in the same period last year. Even its 64-year-old Cannes Lions event – which attracts business luminaries to the south of France to discuss all things marketing – is beginning to make more money from fast-paced digital conglomerates, including Amazon and Alibaba, than creaking ad agencies such as WPP and Publicis.
Half-year numbers demonstrate the sense in that strategic shift. Revenues were up 7 per cent on a like-for-like basis thanks to growth in the information services division and the launch of an Asia-focused version of the group’s economics event, Money2020. This more than offset a 9 per cent fall in revenue from Cannes – a decline that would historically have had a marked detrimental effect on overall numbers.
But overhauling the strategy of a £2bn entity doesn’t come cheap. In the exhibitions business, adjusted cash profit margins fell by nearly 6 percentage points to 49.7 per cent owing to the investment in the two new versions of Money2020 – the second, in China, will launch in the second half of the year. Meanwhile, the Information Services business remains in the midst of a sizeable integration task. The purchase of lossmaking analytics business Clavis at the end of 2017 sent adjusted cash profit margins down from 29 per cent to 25 per cent.
Clavis is expected to be profitable by the second half of next year and Mr Painter is confident that the margins in the information services business will start to reflect those in the events division. That, and the impact of recent acquisitions, is expected to boost profits in 2019. But it’s worth noting that integration may constrain margins in the medium term. In the year to December 2018, broker Numis expects pre-tax profit and EPS of £79.1m and 15p, respectively, down from £97m and 18.3p in the previous year.
| ASCENTIAL (ASCL) | ||||
| ORD PRICE: | 459p | MARKET VALUE: | £1.84bn | |
| TOUCH: | 459.2-459.4p | 12-MONTH HIGH / LOW: | 469p | 324p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 115 | |
| NET ASSET VALUE: | 90p* | NET DEBT: | 79% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 165 | 26.8 | 4.5 | 1.8 |
| 2018 | 189 | 23.1 | 4.0 | 1.9 |
| % change | +14 | -14 | -11 | +6 |
| Ex-div: | 30 Aug | |||
| Payment: | 28 Sep | |||
| *Includes intangible assets of £693m, or 173p a share | ||||
