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Ascential aims for digital dominance

The group has planned a strategic review of its exhibitions business in order to ready itself for the disruptive forces of the digital age
February 26, 2018

To thrive in the digital economy requires sensible planning. That's the view of Ascential’s (ASCL) chief executive, Duncan Painter, who thinks the era is likely to be every bit as disruptive as the industrial revolution. That is why Mr Painter has launched a strategic review into his company’s exhibitions business. The six brands in the division will be sold and the capital reinvested unless they can be refocused on the digital needs of Ascential’s customers.

IC TIP: Buy at 394p

Business realignment made a big contribution to the 2017 financial results. Ascential sold its old print publications for £51m and invested £157m in acquisitions. This resulted in a net cash outflow of £13.1m, compared with an £8m inflow in 2016. The three new information services businesses – MediaLink, One Click retail and Clavis – contributed £52.1m of revenue, while investment in expanding the existing portfolio constrained adjusted cash profit margins to 31.8 per cent.

Still, on an underlying basis, this was a very strong set of results. Organic revenues ticked up 6.4 per cent, while free cash inflows rose 12 per cent to £102m, equivalent to 85 per cent of net profits. Earnings beat consensus broker expectations, which prompted Numis to upgrade its 2018 EPS forecasts to 19.5p from £103m of pre-tax profits (from £97m and 18.3p in 2017).

ASCENTIAL (ASCL)   
ORD PRICE:394pMARKET VALUE:£1.58bn
TOUCH:394-395p12-MONTH HIGH:400pLOW: 282p
DIVIDEND YIELD:1.4%PE RATIO:88
NET ASSET VALUE:85.6p*NET DEBT:79%
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2013271-9.3nana
2014313-5.4nana
2015257-43.6-32.4nil
2016300-1.83.94.7
201737633.14.55.6
% change+25-+15+19
Ex-div:17 May   
Payment:15 Jun   
*Includes intangible assets of £772m, or 193p a share