- Sales and profit to be above top end of market forecasts
- Separation of businesses planned, US listing
- Timing of transactions subject to market conditions
Shares in specialist information, analytics, and ecommerce optimisation company Ascential (ASCL) jumped 25% after it gave investors the pleasant shock that 2022 sales and profit will be above top of the range analyst forecasts.
The company also announced the potential separation of its Digital Commerce business via a US share listing and the sale of its Product Design business with some of the proceeds going back to shareholders. The events business would retain its UK listing and be run independently.
WHY DID THE SHARES JUMP SO MUCH?
Analysts and investors had become too sceptical over near-term prospects. Over the last six months analysts have revised down their full year earnings estimates by around a third which has provided a headwind for the shares which were down by a similar magnitude.
Today the company said revenues to 31 December are expected to be £520 million, around 5% higher than consensus and 1% above the top of the expected range.
Meanwhile, EBITDA (earnings before interest, tax, depreciation, and amortisation) is expected to be ‘at least’ £118 million which is 8% ahead of consensus and 3% above the top of the range.
CEO Duncan Painter commented: ‘Ascential has had an excellent end to the year, with each of our segments delivering double-digit revenue growth over 2022.
‘Digital Commerce's performance in particular, given the challenging backdrop, illustrates the clear competitive advantage we provide to brands trading on the marketplaces, where there remains a rare and significant growth opportunity.’
WHAT IS ASCENTIAL TRYING TO ACHIEVE?
After a strategic review the board has concluded that it is in the best interests of shareholders, customers, and employees to proceed with a managed separation of its businesses.
Painter said, ‘Our plan of action will create the best structure for each distinct business to thrive.’
The company intends to return a ‘significant’ proportion of the sale proceeds from trend forecasting company WGSN (Worth Global Style Network) to shareholders with the rest providing growth capital for the remaining businesses. WGSN was bought in 2005 for £140 million.
The Digital Commerce division, predominantly a US business will look to conduct a ‘public offering of shares and/or a spin-off distributing shares on a pro-rata basis to shareholders’.
Duncan Painter and chair Scott Forbes will serve as CEO and chairman of the listed US business.
The remaining Events business comprising Money 20/20 and Cannes Lions will be run by Rita Clifton as chair (currently senior independent director) and Philip Thomas as CEO (currently CEO of Events and Ascential Intelligence). It will retain a UK lisiting.
The board said it will take ‘a disciplined approach’ to the timing of the proposed transactions which will need shareholder approvals.
