Ascential swings to small first-half operating profit

The FTSE 250 firm said organic revenue swelled across all sectors, with the events sector seeing a 25% upsurge.

It said overall organic revenue growth stood at 16%, with adjusted EBITDA growth hitting 17%, consistent with the firm's forecast.

The group reported revenues of £307.4m, an increase from the previous year's £260.7m, marking a reported revenue jump of 18%.

Adjusted EBITDA rose to £78.6m from the previous £67.2m with a margin of 25.6%.

Of that, the events sector's adjusted EBITDA was up 26% to £64.6m, while the digital commerce segment balanced out at break-even, following the anticipated second-half reorganisation synergies birthed by the Flywheel Commerce Cloud's introduction.

Meanwhile, product design's adjusted EBITDA climbed by 8% to stand at £27.4m.

The operating profit for the company was recorded at £0.7m, a stark contrast to last year's loss of £35.1m.

That profit was stated after considering charges like amortisation and impairment of acquired intangibles at £29.0m and non-trading items amounting to £25.7m.

Adjusted diluted earnings per share settled at 7.7p, while the total earnings per share showed a loss of 3.8p.

The group said it maintained a robust operational cash flow on the financial health front, with a closing net debt of £205.6m and a leverage ratio of 1.6x EBITDA.

Looking at operations, Ascential said revenue from the events sector, including the marketing and the retail and financial services segments, jumped by 25%.

Notably, the marketing segment grew by 28%, led by Lions' revenue upsurge of 30% and WARC's subscription business growing by 12%.

The digital commerce sector marked a 10% revenue increase despite challenging retail landscapes, with the board noting the September launch of the Flywheel Commerce Cloud.

It said the new integrated platform was expected to unify the company's top-tier solutions and products.

The product design sector saw an 8% revenue increase, driven by non-fashion products, which now constituted nearly 50% of subscriptions.

“Our businesses have continued to trade strongly in the first half of 2023. In particular, both Cannes Lions and Money20/20 enjoyed extremely successful editions in June and have progressed even further ahead of their pre-pandemic benchmarks,” said chief executive officer Duncan Painter.

“Digital commerce has once again outperformed the underlying retail market it serves, and action taken in the first half to create an integrated enterprise customer product and organisation has set the digital commerce business up to deliver sustainable margins and operating leverage going forward.

“Product design continues to drive growth by extending its world-class trend forecasting expertise to a wider range of products and end markets.”

Painter said the company’s strategic actions to maximise shareholder value and position each business within the portfolio for long-term success were well advanced, adding that it would update the market again by the end of the year.

“After our seasonally stronger first half, we have had a solid start to the second half.

“Despite continued macro uncertainty impacting the industries we serve and currency headwinds, our businesses remain well set for the year, supported by multiple growth levers.

“The structural long-term growth in our end markets and the success of our marquee events underpin the board's confidence in the prospects of our businesses for the future.”

At 0924 BST, shares in Ascential were up 8.04% at 205.6p.

Reporting by Josh White for Sharecast.com.