Ascential Regulatory News (ASCL)

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26 February 2018

Ascential plc

Audited results for the year ended 31 December 2017

Another year of good growth. Strategic review of exhibitions business.

London: Ascential plc (LSE: ASCL.L), the global, specialist information company, today announces its results for the year ended 31 December 2017.

Operational highlights

· Another year of good organic growth underpinned by strong customer retention and product innovation (Groundsure Avista, Coloro, WGSN Barometer, WGSN Insight).

· Greater focus on higher growth brands through the acquisitions of both MediaLink and Clavis and the successful disposal of the Heritage Brands.

· Completion of the Cannes Lions consultation to make the festival ever more relevant to its participants, as well as measures to make it more affordable and accessible.

· Acceleration of the launch of Money20/20 in China to 2018.

· Continued focus on high growth brands that help customers succeed in the digital economy.

· Announcement of a strategic review of the exhibitions business (Spring and Autumn Fair, Bett, CWIEME, Pure, Glee and BVE).

Financial highlights

· Another year of good Organic revenue growth with revenue from continuing operations of £375.8m (2016: £299.6m) and reported growth of 25% (or 6.4% on a constant currency Organic basis).

· Solid Organic Adjusted EBITDA growth to £119.5m (2016: £95.9m)

· Reported growth of 25% (or 3.4% on a constant currency Organic basis)

· Margin at 31.8% (2016: 32.0%) with planned product investment in Information Services offset by foreign exchange benefit in Exhibitions & Festivals.

· Reported operating profit from continuing operations of £44.5m (2016: £32.1m): growth of 39%.

· Further strong growth in earnings per share with Adjusted diluted EPS on continuing operations of 18.3p up 36% (2016: 13.5p) and Reported diluted earnings per share on total operations of 4.4p (2016: 4.3p).

· Strong cash generation resulting in closing net debt leverage of 2.3x (2016: 2.1x) after continued investment in the business and M&A. Operating cash flow conversion of 101% (2016: 100%).

· Recommended final dividend of 3.8p, making a total dividend of 5.6p for the year (2016: 4.7p) up 19%.

Duncan Painter, Chief Executive Officer, commented:

"We have delivered another set of good results, growing both revenues and profits. The strategic actions we have taken in the last 18 months have increased our focus on our primary brands, enabling us to accelerate product innovation, grow our market leadership positions and further diversify our revenue internationally. The business continues to generate significant cash flows to fund investment, shareholder returns and acquisitions. The integration of MediaLink and One Click Retail has progressed to plan and they, together with Clavis, enhance our offering and provide new opportunities for growth.

As we look to 2018 and beyond we will build upon our reputation for enabling customers to succeed in the digital economy in the areas of Product Design, Marketing and Sales. We will continue to critically assess the potential of our brands to support these goals and where to allocate capital. The strategic review of our exhibitions business that we announce today is one such exercise.

While still early in 2018, we are encouraged by the current level of forward bookings. Our achievements in 2017 have positioned us well to increase our growth rate in revenue and profit in 2018 and the Board is confident about our prospects for continued success."

Contacts

Ascential will host a presentation for analysts and investors at 9.00am on Monday 26 February 2018 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.

References to non-GAAP alternative performance measures are explained further below.

Financial highlights

1 "Organic" growth is calculated to provide a more meaningful analysis of underlying performance. The following adjustments are made: (a) constant currency (restating FY16 at FY17 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 2016 or 2017. See the reconciliation in the Alternative Performance Measures section below.

2 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.

3 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.

4 Free cash flow is cash generated from operations before exceptional items, less capital expenditure and tax paid. Free cash flow conversion is this measure of free cash flow divided by Adjusted EBITDA from both Continuing and Discontinued Operations. See the reconciliation in the Alternative Performance Measures section below.

5Leverage is Net debt divided by Adjusted EBITDA from both Continuing and Discontinued Operations.

Segmental highlights

Exhibitions & Festivals

· Good Organic revenue growth of 5.7% to £196.9m.

· Adjusted EBITDA grew 5.1% on an Organic basis to £82.3m as we implemented planned strategic investments in the Cannes Lions product and in the launches of Money20/20 Asia and China.

· Adjusted EBITDA margin of 41.8% (2015: 40.8%) due to favourable currency impact despite continued product investment.

· Top brand performance:

· Cannes Lions revenue grew 7% on an Organic basis, driven by the strength of the digital product and commercial partnership revenues. The festival attracted over 40,000 award entries and welcomed around 10,000 delegates.

· Money20/20 continued its expansion in 2017 with growth of 19%, with the second year in Europe yielding extremely strong growth of 43%, attracting more than 5,000 attendees and 200 exhibitors. Money20/20 US, in its sixth year, also grew strongly by 11%, welcoming approximately 11,500 attendees and 400 exhibitors to Las Vegas.

· As expected Spring and Autumn Fair revenue declined 2%. The events attracted approximately 85,000 visitors, and 4,000 exhibitors on a combined basis.

Information Services

· Pleasing Organic revenue growth of 7.4% to £178.9m.

· Adjusted EBITDA grew 0.2% on an Organic basis to £50.4m and Adjusted EBITDA margin reduced from 29.3% to 28.2% reflecting planned investments in new growth products.

· Top brand performance:

· WGSN grew 6% on an Organic basis, continuing to expand both its customer base and product offerings in 2017, launching Barometer and Coloro. Retention rates remained strong at 91%.

· Groundsure grew 13%, re-enforcing its market position and outperforming underlying property transaction volumes.

· Continued strategic acquisitions with high growth potential:

· One Click Retail (acquired August 2016) continued its rapid progress in the first full year of ownership and saw revenue growth of 58%, led by expansion in Europe, as it opened its UK office.

· MediaLink (acquired February 2017) achieved strong growth of 14% as it too opened a UK office.

· Clavis (acquired December 2017) a leading eCommerce analytics provider that offers a complementary product set to that of One Click Retail, saw strong growth of 29% in 2017.

· Continued evolution of the brand portfolio through disposal of the Heritage Brands.

Chief Executive's Review

The 2017 year was one of effective execution resulting in Organic revenue growth of 6.4% while maintaining strong Adjusted EBITDA margins of 31.8%. Revenue was £375.8m (2016: £299.6m), a reported growth of 25%.

All of our execution continues to centre on our stated strategy, which can be summarised in three goals:

· To be a leading, specialist, global information company that enables customers to excel in the digital economy in Product Design, Marketing and Sales.

· To accelerate the organic growth of our revenues and optimise margins and profits.

· Through the application of a tightly focussed capital allocation process, to achieve our goals and maximise value creation for our shareholders.

With these three goals as our guide, we have made a great deal of operational progress this year, sharpening our portfolio, enhancing our product offering and acquiring exciting, high-growth businesses that fit with our ambitions. Examples of that progress include the:

· sale of our heritage, largely print-based, brands;

· launch of three new products;

· acceleration in the growth of the products we launched in 2016;

· acquisitions of MediaLink and Clavis;

· evolution of Information Services into the major contributor to top line growth;

· completion of a successful, well received, Cannes Lions review;

· acceleration of the launch of Money 20/20 China; and

· build out of new capabilities designed to accelerate our future organic growth rates.

Each of these achievements has positioned us well to increase our growth rate in revenue and profit in 2018. We are pleased that our teams have been able to continue to deliver on the ambition we set out at the time of our IPO to become a more focussed, faster growing company, with a greater number of satisfied customers allowing us to generate higher levels of returns for our shareholders.

Our focus continues to drive our success

The majority of our customers are consumer product and services companies (or companies in their supply chain), who operate globally. We have built in recent years a reputation for enabling these customers to succeed in the digital economy. The rapid digitisation of commerce - and of business more generally - is one of the highest priorities for our customers and, in many cases, their greatest challenge. The information and capabilities we provide to customers in facing this challenge are increasingly valued, differentiated, trusted - and pivotal to our future growth. Furthermore, it is becoming increasingly apparent that we are at our best when providing information, intelligence and insight that helps our customers evolve their approach to Product Design, Marketing and Sales for success in this new digital context.

Our top 10 brands deliver over 80% of our revenue and 90% of our organic growth. By continuing to optimise both the focus of our teams and the allocation of capital to our most important brands, we have grown well in 2017. This growth allows us to continue to simplify and optimise our business model to serve both our customers' and shareholders' needs.

In 2017 we increased the number of companies we do business with, whilst also diversifying the number of products we provide to our most significant customers. Growing our customer volumes, the number of products they buy and therefore the amount they pay us, plus their willingness to expand their relationship more broadly across their companies gives us confidence that our strategy is working.

A culture focussed on constant product improvement and customer retention

Really listening to customers is one of the most important skills we ask our teams to employ and is a skill we continually hone. Retaining customers is at the centre of our growth model.

We have created a culture where our teams are passionate about how to improve the information quality and relevance we provide plus how we can make it easier to consume and action. At the heart of this is an environment where all teams are encouraged to discuss, share and take actions to first understand and then address why customers leave our services. Going through monthly reviews of lost customers, understanding the reasons in depth and being open about how we will improve our products and services is at the tough end of our success. It is also at the heart of it. Without learning from our most difficult customer situations, we could easily be focussing on the wrong priorities. Creating an environment where people recognise the importance of these conversations and are willing to actively engage and learn from the feedback is an essential foundation.

Of course, our people are very proud of the products and services we produce. However, by keeping a laser focus on retention, it ensures we remain grounded and recognise the need for continual improvement. Our success will only continue by constantly improving the information we deliver through digital subscriptions, live events and expert advice. In an increasingly complex, digitally driven world, these products must help clients digest what is important to their business and how to act on it now and in the future. Our markets move rapidly and in the digital age this is only accelerating. Our primary task is to continue to configure our business to keep ahead of this change.

A year of accelerated investment in capabilities to drive our future growth rates

In 2017, we made investments in capabilities and teams across our business to ensure we can keep ahead of the critical needs of our customers including:

· Expansion of our customer insight teams and digital analysis capabilities;

· Expansion of our digital product creation and development teams; and

· Upgrade of our digital marketing and customer engagement capabilities and our eCommerce teams.

We funded these investments by accepting we would deliver a lower organic EBITDA growth rate for one year of 3%. We have not made these investments lightly and have already seen, through the immediate gains and capabilities created, how they will enable improved growth rates for 2018 and beyond.

The best example of this is the launch of our new Avista product within Groundsure which grew revenues by 13% in a particularly tough market. This new product format, built by our newly-created digital product team, has step changed our results in Groundsure. Not only did the team deliver the product to a very high quality within five months, but the impact of its design and ease of use for our customers meant that we could drive market share while also improving our yield for this new, high value, product. The design approach taken means that we can gain further traction from this investment in 2018 by building the next generation of our volume product range, leveraging the efficiency of the Avista environment to drive revenue growth while also streamlining our own operation.

We are now applying more widely the skills of these high quality teams to improve the performance of our most important brands.

Goals for 2018

In 2018 we will continue to prioritise our market leading brands, while simplifying the way we work across the organisation to drive efficiency and synergies. Our key goals for 2018 are:

· To establish Money 20/20 as the leading financial technology payments event platform across the four biggest markets of the United States, China, Europe and South-East Asia;

· To create the leading enterprise insight platform for market planning, digital shelf, market share, promotion, content and trade research worldwide;

· To accelerate the growth of the WGSN products launched over the last 18 months, establishing leadership across the new segments of Insight and Coloro;

· To continue the evolution of the Cannes Lions platform to ensure the marketing industry has a consistent measure of creativity across all digital economies and new media formats, while accelerating our own digital propositions to further establish the global Cannes Lions benchmark;

· To maintain our market leading customer retention levels across our most important brands; and

· To optimise our capital allocation and balance sheet to enable us to achieve our goals and to continue to simplify the company.

Strategic review

We believe that to maximise returns for our shareholders, our focus as a business is best targeted at brands that support customer success in the digital economy. To ensure that our capital allocation is aligned to that opportunity we will be undertaking a strategic review of our exhibitions business (comprising the Spring and Autumn Fair, Bett, CWIEME, Pure, Glee and BVE brands which generated £78m of revenue in 2017). These brands are all number one in their markets and are of a size and scale that allows us to consider a variety of options to maximize their future value and enhance our overall organic growth rates.

Summary

The year ahead presents great opportunity for Ascential. Economic markets, particularly for our most important brands, remain strong, particularly with our focus on supporting customer success in the digital economy. Many of our clients currently achieve less than 20% of their total sales through digital channels. They themselves recognise the need to move faster to drive this critical transition and, with our developments in the last 18 months, we are now very well positioned to assist them to unlock this future.

As we focus on our strategic objectives, it will mean a further year of change for the company. We will continue to assess the balance of the brands and product types in our company and how we can optimise our capital allocation going forward and we will continue to take proactive moves to achieve this. We have achieved a significant transition of our business over the last five years, particularly since our IPO. Nevertheless, the urgency of continued and accelerated transition that our customers face to remain relevant remains just as critical for us.

I have great confidence in the capabilities and skills of the Ascential team, our valued relationships with our customers and the initiatives we have underway to continue to deliver strongly for our customers and our shareholders.

Outlook

While still early in 2018, we are encouraged by the current level of forward bookings. Our achievements in 2017 have positioned us well to increase our growth rate in revenue and profit in 2018 and the Board is confident about our prospects for continued success.

Segmental review

Information Services

WGSN (revenue £73.6m +6%) the global, leading, provider of intelligence, insight and trend forecasts, continued to expand both its customer base and product offerings in 2017. WGSN launched two new products: Barometer, which provides customers with insight into their brand's impact among a panel of 120,000 consumers and Coloro, a new venture with our Chinese partners CTIC, that offers an innovative and universal categorisation of the colour spectrum for design professionals and manufacturers. These launches, together with the continued roll-out of WGSN Insight (launched at the end of 2016) helped drive the proportion of customers taking multiple products to 21% (from 15%), while average renewal rates remained high at 91% and subscription billings grew by 5%.

Groundsure (revenue £17.4m +13%) a market leading provider of environmental risk data, had another strong year, reinforcing its leading position while outperforming the underlying UK residential property market (volumes down 2%) with a 13% revenue growth. This success was achieved through its continued product innovation, in particular the launch of Avista which provides a simple, comprehensive and accessible solution for customers previously faced with multiple reports.

Recent acquisitions

MediaLink (revenue £39.7m (full year £47.4m +14%)) a strategic advisory firm and business services provider to the Media, Marketing, Advertising, Technology and Entertainment industries, joined Ascential in February 2017. Strong growth was accompanied by several achievements. MediaLink expanded its European footprint in May when the London office was opened. Integration has progressed well with several MediaLink staff assuming pan-Ascential North America responsibilities in Technology and HR and the introduction of major clients to the opportunities available for business development provided by the Money20/20 platform.

One Click Retail (revenue £12.1m +58%), the leading eCommerce analytics provider for Amazon sales and share, continued its rapid progress in the first full year of ownership. Both revenue and customer volumes grew more than 50%, while annual billings growth was 57%. A European office was established in London and we launched One Click Retail's own live content forums for the eCommerce community with the first event taking place in Seattle in November.

Clavis (revenue £0.3m (full year £13.4m +29%)) was acquired in December 2017 and offers a complementary product set to One Click Retail's sales and share expertise, as well as the potential to reach beyond the Amazon platform and further into the European and Asian markets. We included just 9 days of revenue and EBITDA loss in our 2017 consolidated income statement.

Other Information Services (£35.8m revenue, +3%)

The other brands within Information Services are Glenigan, DeHavilland, Planet Retail RNG and Retail Week. We achieved double digit billings growth performances from Glenigan and DeHavilland and also launched the combined Planet Retail RNG product.

Exhibitions and Festivals

Cannes Lions (revenue £65.6m +7%) the creative community's largest global platform for networking, learning and inspiration, enjoyed another successful edition in June. Revenue grew 7%, driven by the strength of the digital product and commercial partnership revenues. The festival attracted over 40,000 award entries, welcomed around 10,000 paying delegates, and hosted over 600 speakers, including Dame Helen Mirren, Sheryl Sandberg and Juan Manuel Santos, President of Columbia and recipient of the 2016 Nobel peace prize.

In the second half of the year, we engaged with key customers and partners in a thorough consultation on the direction of the festival, with particular focus on the evolution of the creative industry that it serves. As a result, in November, we announced several key changes to make the 2018 festival even more relevant to its participants, as well as measures to make it more affordable and accessible. We were pleased with the positive reaction from the industry to these changes and look forward to seeing the impact of the new format in 2018.

Money20/20 (revenue £40.5m +19%) the world's leading event for the FinTech eco-system, continued to expand in 2017. The second year in Europe yielded extremely strong growth of 43%, attracting more than 5,000 attendees and 200 exhibitors. Such has been the popularity of the European edition that it will move from Copenhagen to Amsterdam's Rai convention centre in 2018, which offers significantly more capacity. Money20/20 USA also grew strongly by 11% in its sixth year and welcomed approximately 11,500 attendees and 400 exhibitors to Las Vegas.

In addition to the ongoing preparations for Money20/20 Asia which takes place in Singapore in March 2018, we were excited to announce that the brand is to debut in China in November 2018. An earlier launch than originally anticipated, Money20/20 China, in the city of Hangzhou, will address this country's uniquely fast growing and innovative payments eco-system.

Spring and Autumn Fair (revenue £33.6m -2%) the UK's No. 1 home and gift show for the retail industry and largest trade exhibition, hosted approximately 85,000 visitors, and 4,000 exhibitors, and, as expected, delivered a slight revenue decline of 2%. Innovations in 2017 included the launch of digital appointment planning for buyers while new in 2018's show is the Gift of the Year Awards and its gala dinner.

Other Exhibitions and Festivals (£57.2m revenue)

The RWM exhibition which delivered £3.9m of revenue in 2017 (down 19%) was sold on 29 December 2017 to a specialist events organiser with existing assets in the environmental sector. The other brands within Exhibitions and Festivals are Bett, CWIEME, Pure, Glee, BVE, WRC and the Lions Regional Festivals. The segment also includes the strategic event partnership services provided to DTI and other Government agencies. The performance of the largest brands was as follows:

· Bett (revenue £17.9m +11%) the leading educational technology series, enjoyed a year of strong growth. This was led by the success of the UK edition, which attracted over 34,000 visitors and 600 exhibitors while engagement with the most senior levels of educational institutions continued to grow.

· CWIEME (revenue £10.5m, +4%) which serves the automotive, consumer electronics and power generations sectors across its four shows in Berlin, Shanghai, Chicago and, in 2017, Istanbul, saw overall good growth in the year. The largest show, in Berlin, attracted over 5,500 visitors and 500 exhibitors, with the show's relevance for electric motors and vehicles driving particular interest. In 2018 we have launched the EV Momentum Summit a brand new event dedicated to addressing the challenges and opportunities of the fast-growing electro-mobility ecosystem.

· Pure (revenue £9.1m, -3%) the UK's leading fashion trade show, welcomed over 18,000 visitors and over 1,000 exhibitors across its two editions. In 2018 we have launched the Pure Origins platform to unite global fashion manufacturers and buyers.

Financial Review

Overview

In addition to a strong growth performance, we have made good progress on executing our strategy with greater focus on higher growth brands through the acquisitions of MediaLink and Clavis as well as the successful disposal of the 13 Heritage Brands classified as held for sale at the end of last year.

The results for the year are set out in the consolidated profit and loss statement and show, for continuing operations, revenue of £375.8m (2016: £299.6m), an Organic growth of 6.4%, and reported operating profit of £44.5m (2016: £32.1m). Adjusted EBITDA was £119.5m (2016: £95.9m) an Organic growth of 3.4%. We also delivered strong cash flow in 2017 with free cash flow after tax and capex of £102.2m (2016: £90.9m) a conversion of 85% in line with last year.

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 distorting impact of acquisitions 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 in the Alternative Performance Measures section below.

Adjusted EBITDA is also an alternative performance measure. It 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

Segmental results

The Company has two reportable segments "Exhibition & Festivals" (with the main brands being Cannes Lions, Money20/20, Spring and Autumn Fair, Bett, CWIEME and Pure) and "Information Services" (with the main brands being WGSN, MediaLink, Groundsure, One Click Retail and Clavis). Following the acquisition of MediaLink and One Click Retail, the split of revenues between Exhibitions & Festivals (52%) and Information Services (48%) has become more balanced during the last 12 months.

A summary of the performance of the Company's segments is set out below:

Revenue

The Company benefits from diverse revenue streams across its brands 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 2017 grew to £375.8m (2016: £299.6m), an increase of £76.2m or 25%. Adjusting for currency impacts and recent acquisitions organic growth was 6.4% driven by double digit growth of Money20/20 (19%), Groundsure (13%), One Click Retail (56%) as well as Bett (11%) followed by the high single digit growth of Cannes Lions (7%) and WGSN (6%). This was slightly offset by a 2% decline in Spring and Autumn Fair.

Adjusted EBITDA

Adjusted EBITDA increased by 25% to £119.5m (2016: £95.9m) representing a 3.4% Organic growth rate. Adjusted EBITDA margin dropped slightly to 31.8% due to planned product investment in Information Services largely offset by favourable foreign exchange movements. 

Reconciliation between Adjusted EBITDA and statutory operating profit

Adjusted EBITDA is reconciled to statutory operating profit as shown in the table below:

Amortisation of acquired intangible assets

The amortisation charge of £25.5m (2016: £28.8m) on acquired intangible assets relates mainly to US acquired intangibles with the addition of MediaLink and a full year of One Click Retail offset by the impact of fully amortised assets. The Company undertakes a periodic review of the carrying value of its intangible assets of £771.7m (2016: £651.6m) 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 2017 totalled £34.3m (2016: £20.7m) as set out in the table below and further explained in Note 4.

The charge for deferred consideration relates to acquisition-related contingent employment costs on the acquisition of Money20/20, One Click Retail and MediaLink which, absent the link to continued employment, would have been treated as consideration as well as, in 2016, adjustments to deferred consideration recognised in prior years on Money20/20.

Share-based payments

The charge for share-based payments of £4.1m (2016: £1.4m) 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 will include 12-month charge for the 2016 and 2017 awards as well as an expected 10-month charge for the grant in March 2018.

Finance costs

The adjusted net finance costs for the year were £11.7m (2016: £17.8m) as set out in the table below.

The interest expense on the Company's borrowings was £5.8m (2015: £10.1m) with the reduction driven by the reduction in leverage and the consequent reduced rate of interest payable. Other finance charges represent the unwind of the discount on deferred consideration and increased during the year due to the acquisition of MediaLink at the start of the year.

Taxation

A tax charge of £23.2m (2016: £10.9m) was incurred on adjusted profit before tax of £97.0m (2016: £65.1m) resulting in an adjusted effective tax rate for the year of 24% (2016: 17%). This tax charge arises on profits before adjusting items that total £63.9m (2016: £66.9m). A tax credit of £12.2m arises on these adjusting items (2016: £24.3m). This equates to a total tax charge of £11.0 million (2016: credit of £13.4 million) and an effective tax rate of 33% on the continuing profit before tax of £33.1 million.

Two major factors impacted the tax charge in 2017:

· The implementation of US tax reform in December 2017, and in particular the reduction in the US Federal tax rate from 35% to 21%. This resulted in the downwards revaluation of deferred tax assets and liabilities on losses and intangibles resulting in a charge of £10.4m and £6.8m to the adjusted tax charge and adjusting items respectively.

· The recognition of additional historic US net operating losses following a reassessment of the restriction on utilisation of the losses. This was occasioned by the 2017 acquisition of MediaLink which gave further certainty on the sufficiency of future taxable US profits and by the receipt of a third party valuation of the US sub-group at the time of the post-IPO change of control. The impact on the adjusted tax charge was a credit of £12.7m.

The ongoing adjusted effective tax rate of the Group is expected to be approximately 23-24% next year.

Cash tax paid was £7.9m (2016: £3.5m) as the Group continued to benefit by £6.7m (2016: £8.1m) from the utilisation of historic tax losses in the UK and US which are expected to benefit the Group's cash flow over the medium term.

The Group has a total recognised deferred tax asset of £47.1m (2016: £54.9m) 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 10 years. The recognition of deferred tax assets on US losses in particular requires considerable judgements to be made including future trading performance of the US Group in the period up to the loss expiration, assessment of future earn-outs payable for US acquisitions and the valuation of the US Group at the point of post-IPO change of control. In total a net deferred tax asset of £13.8m (2016: £17.4m) has been recognised in respect of US taxes leaving £127.1m of unrecognised US tax losses with a tax value of £26.7m.

Our deferred tax liability amounted to £31.3m (2016: £30.3m) and related to non-deductible acquired intangibles and is not expected to convert into cash.

Discontinued operations

Discontinued operations relate to the 13 Heritage Brands which were sold at various dates in 2017. The overall result for discontinued operations is comprised as follows:

The exceptional item in discontinued operations includes a gain on disposal of £0.9m offset by £2.1m of costs separating the Heritage Brands including IT separation costs.

Foreign currency translation impact

Ascential reports its results in pounds sterling and following its acquisition strategy and the growth of Cannes Lions and Money20/20, reported performance is increasingly sensitive to movements in both the Euro and US dollar against pounds sterling. 

For most of 2017, sterling was in line with the 2016 US dollar average exchange rates but strengthened against the dollar at the year-end - a trend that has continued in 2018 to date. Sterling continued to weaken against the Euro in 2017, as can be seen in the table below:

When comparing 2017 and 2016, changes in currency exchange rates had a net favourable impact of £10.6m on revenue and £6.0m on Adjusted EBITDA. On a segmental basis, the favourable impact of changes in foreign currency exchange rates was as follows:

• Exhibitions & Festivals: £7.0m impact on revenue and £4.7m impact on Adjusted EBITDA.

• Information Services: £3.6m impact on revenue and £1.2m impact on 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.

Furthermore, each 1% movement in the Euro to pounds sterling exchange rate has a circa £1.5 million impact on the carrying value of borrowings and each 1% movement in the US dollar has a circa £1.0 million impact.

Earnings per share

Adjusted diluted Proforma earning per share of 18.6p per share is 20% ahead of the 15.5p per share recorded for 2016 and total diluted Proforma earnings per share of 4.4p per share is 13% ahead of the prior year figure of 3.9p. Total diluted earnings per share were 4.4p (2016: 4.3p).

Acquisitions and disposals and capital expenditure

We regularly assess opportunities to acquire high-growth products operating in sectors with the potential for scale and incurred initial cash consideration of £156.5m for two acquisitions of higher growth brands.

MediaLink

In February 2017, we acquired US-based media advisory business MediaLink for initial cash consideration of £55.3m plus future earnouts expected to total between $42m and $62m payable in cash or, for certain elements, shares at Ascential's option. A portion of the earn-out payments is subject to founders remaining in employment with the company. MediaLink is growing rapidly and delivered revenue of £47.4m and adjusted EBITDA of £12.0m in 2017 up from £39.4m and £10.4m respectively in the prior year.

Clavis

In December 2017, we acquired the eCommerce analytics business Clavis for initial consideration of £88.9m plus future earn-out expected to total between $25m and $50m payable in cash.  A portion of the earn-out payments is subject to founders remaining in employment with the company. Clavis is growing rapidly and, in the 2017 year generated unaudited revenue of £13.4m and an EBITDA loss of £4.2m up from £9.9m and £6.0m respectively in the prior year. Clavis is expected to break even in 2018.

Heritage Brands

We disposed of the 13 Heritage Brands held for sale at December 2016 in three transactions in January, May and December 2017. Total consideration received was £51.2m and the sale generated a gain on disposal of £0.9m.

The Group spent a further £11.8m of capital expenditure (2016: £13.1m). This investment was primarily for new product development and enhancements to business applications to support future organic growth.

Cash flow

The consolidated cash flow statement and net debt position can be summarised as follows:

£'m

The Company generated Adjusted operating cash flow of £121.9m (2016: £107.5m), an increase of 13%, due to the strong operational performance of the business. Capex was slightly behind 2016 at £11.8m (2016: £13.1m) reflecting the prior year's fit out of the Paddington office to accommodate the entire Exhibitions & Festivals business. The Company generated free cash flow of £102.2m (2016: £90.9m), also an increase of 13%, which was used to fund interest payments, M&A and exceptional items.

A major feature of cash flow in 2016 was the IPO, which generated proceeds of £200.0m or £188.5m net of expenses, which was used to reduce indebtedness.

Returns to shareholders

The Board targets a dividend payout ratio of 30% of Adjusted profit after tax. Consequently, the Board is recommending a final dividendof 3.8p per share payable on 15 June 2018 to shareholders on the register on 18 May 2018 which, together with the Company's interim

dividend of 1.8p paid in September 2017, makes a total dividend for the 2017 financial year of 5.6p.

Other financial matters

Capital structure

The Company 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 acquisition of Clavis at the end of the year, the consolidated leverage ratio as at 31 December 2017 is 2.3x (31 December 2016: 2.1x).

Liquidity

On 12 February 2016 the Company entered into new term loan facilities of £66m, €171m and $96m as well as a revolving credit facility (RCF) of £95m. All mature in February 2021 and are currently subject to interest at 1.5% over LIBOR on the term loans and LIBOR plus 1.25% on the RCF. There is a leverage covenant limit of 4.0x (which drops to 3.5x in 2019) which is measured semi-annually. As at 31 December 2017 £320.7m of the facilities had been drawn (2016: £290.3m) including £31.8m of the RCF (2016: £nil).

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 47% in Euros with the balance split between US dollars (32%) and pounds sterling (21%). The Company reviews and protects a proportion of its exposure to interest rate rises on the cost of borrowings through use of derivatives where appropriate. Principal risks (including strategic, operational, legal and other risks) are set out in the 2017 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 Strategic 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 are described in the 2017 Annual Report. Details of the financial risk management objectives and policies are given in the 2017 Annual Report.

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 2017 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.

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 are included in the same period as the current year results.

Organic growth is calculated as follows:

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.

Finance costs

In 2016, certain elements of finance costs were incurred as a result of debt refinancing and are therefore a result of changes to the Company's capital structure. In addition, part of the pre-IPO Shareholder debt was converted to equity, and as a result there is a lack of comparability between periods in respect of the interest previously incurred on this Shareholder debt. 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, in order 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:

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.

Proforma EPS

Changes to the Group's capital structure affecting the number of shares in issue will affect the comparability of earnings per share between periods. In order to present a consistent measure of earnings between periods, Ascential presents Proforma measures of EPS in which major changes to the number of shares in issue are presented as if they had occurred on the first day of the comparative period. In presenting the 2016 financial statements, the IPO which completed on 12 February 2016 is treated as such a major change, and so accordingly Proforma EPS is calculated using a weighted average number of shares as if the IPO had occurred at the beginning of the 2016 financial year. Details are set out in Note 8.

Glossary of alternative performance measures

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 Income Statement

For the year ended 31 December

Consolidated Statement of Other Comprehensive Income

For the year ended 31 December

Consolidated Balance Sheet

As at 31 December

Consolidated Statement of Changes in Equity

For the year ended 31 December

(1) On 8 March 2016 shares were issued to employees under the Share Incentive Scheme held by the Employee Benefit Trust.

Consolidated Cash Flow Statement

For the year ended 31 December

Notes to the Financial Statements

For the year ended 31 December 2017

1. Basis of preparation and accounting policies

Basis of preparation

The full year announcement for the year ended 31 December 2017, 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 2017. Statutory accounts for 2016 have been delivered to the registrar of companies, and those for 2017 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 Company was admitted to unconditional trading on the London Stock Exchange and to the premium listing segment of the Official List of the Financial Conduct authority on 12 February 2016 following a restructuring of the Group. The restructuring resulted in the principles of reverse acquisition accounting under IFRS 3 "Business Combinations" being applied.

The consolidated financial statements are presented in pounds sterling ("GBP"), 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. No new accounting pronouncement or revisions to adopted IFRS that became effective in 2017 had a material impact on the Group's results or financial position.

Accounting developments and changes

At the date of this report a number of accounting standards were issued, but not yet effective.

IFRS 15 "Revenue from Contracts with Customers"

Endorsed by the EU- effective 1 January 2018

Revenue from contracts with customers 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.

During the year the group carried out a detailed review of the current recognition criteria for revenue against the requirements of IFRS 15. This review examined subscription, exhibition, sponsorship, delegate and advisory revenue as well as the related costs to obtain and fulfil any of these contracts. The expected impact of these changes on the 2017 consolidated income statement is immaterial at less than 0.2% of total revenue and less than 0.1% of retained earnings. The estimated impact of the adoption of this new standard is based on the assessments undertaken to date. The actual impact of adopting the standard at 1 January 2018 may differ as the new accounting policies are subject to change until the Group presents its first financial statements that include the date of initial application.

IFRS 9 "Financial Instruments"

Endorsed by the EU- effective 1 January 2018

The Group is required to adopt IFRS 9 "Financial Instruments" from 1 January 2018. IFRS 9 applies a forward-looking impairment model that will replace the currently applicable incurred loss model. In contrast to the complex and rules based approach of IAS 39, the new hedge accounting requirements will provide an improved link to risk management and treasury operations and will be simpler to apply. Based on the assessment carried out the group believes that IFRS 9 will not have a material impact on its consolidated results or financial position and will not require a restatement of comparative figures in the 2018 Annual Report.

IFRS 16 "Leases"

Endorsed by the EU- effective 1 January 2019

IFRS 16 replaces the existing accounting requirements in IAS 17 "Leases". A single model for lessees will be required, eliminating off balance sheet accounting for non-exempt operating leases. Related lease assets and liabilities will therefore come onto the balance sheet with interest charged on the lease liabilities. The interest and the assets' depreciation will replace the rental cost previously recognised in the income statement causing a change in the presentation and timing of income and expense recognition in the income statement. The Group has commenced its initial assessment of the potential impact on the consolidated financial statements resulting from the application of IFRS 16 and it is not practicable to provide a reasonable estimate of the effect of IFRS 16 until the detailed review has been completed although the impact is not expected to be material.

2. Alternative Performance Measures

The Group uses alternative performance measures which are not defined or specified under IFRS and comprises adjusting items. 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. For detailed definitions on Alternative Performance Measures please refer to the Alternative Performance Measures section above.

3. Operating segments

The Group has three reportable segments under IFRS 8 "Operating Segments". In addition, there is a Group corporate function providing central services including finance, management and IT services to the Group's reportable segments. The reportable segments offer different products and services, and are managed separately because they require different capabilities, technology and marketing strategies. For each of the reportable segments, the Board (the chief operating decision maker) reviews internal monthly management reports. The following summary describes the operations in each of the Group's reportable segments:

· Exhibitions & Festivals: organiser of market-leading exhibitions, congresses and festivals.

· Information Services: produces intelligence, analysis and forecasting tools, subscription content including real-time online resources, live events and awards as well as advisory services. The products are served across several industry sectors including fashion, retail, property, construction and politics. The advisory and business services are targeted at media platforms and brands to drive growth through better marketing.

· Discontinued operations: the disposal group of 13 Heritage Brands previously formed part of the Information Services segment before it was separately classified as held for sale and a discontinued operation on 31 December 2016. Refer to Note 7 for further details on discontinued operations. As at 31 December 2017 all discontinued operations have successfully been disposed of.

Information regarding the results of each reportable segment is included below. Reportable segment profits are measured at an Adjusted operating profit level, defined as reportable segment Adjusted EBITDA, less depreciation costs and amortisation in respect of software intangibles, without allocation of central Group costs. This is the measure included 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 2017

Year ended 31 December 2016