Annual Report 2019
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DRIVING
GROWTH
IN THE DIGITAL COMMERCE ECONOMY
Strategic report /
Introduction
Ascential at a glance
Our investment case
Our stakeholders
Chief Executive’s statement
Market review
Business model
Our strategy
Key performance indicators
Segmental review
– Product design
– Marketing
– Sales
– Built environment & policy
Financial review
Alternative performance
measures
Risk management
Principal risks
Our people
Corporate and social
responsibility report
1
2
4
6
12
16
18
20
22
24
26
33
38
40
46
48
Governance /
58
Chairman’s introduction
60
Board of Directors
62
Governance framework
Audit Committee report
67
Nomination Committee Report 75
Directors’ Remuneration Report 77
Directors’ Remuneration Policy 82
Annual Report on Remuneration 91
Directors’ Report
98
Independent Auditor’s Report 102
112
113
114
Financial statements /
Consolidated statement
of profit or loss
Consolidated statement of
other comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated statement
of cash flows
Notes to the financial
statements
117
Parent Company balance sheet 155
Parent Company statement
of changes in equity
Notes to the Company
financial statements
157
116
115
156
Financial highlights
REVENUE (£M)
ORGANIC REVENUE GROWTH
£416.2m
6.4%
ADJUSTED EBITDA1
ADJUSTED EBITDA MARGIN1
£128.5m
30.9%
ADJUSTED DILUTED
EARNINGS PER SHARE1
18.5p
NET DEBT
LEVERAGE1
1.4x
Operational highlights
• Good delivery against our four key priorities for 2019:
— Focus on execution: Exceptional performances in Flywheel Digital and WGSN.
— Edge: Continuing progress on the integration of Edge due to complete in H1
2020, significant Coca-Cola contract win and encouraging trading in early 2020.
— Marketing segment growth.
— Ascential operating model rolled out.
• Organic growth across all segments.
• Acquisition of eCommerce analytics business Yimian in China.
“2019 was a satisfying and successful year for Ascential. We advanced our operating
model to ensure our products further align with our customers’ needs in fast paced
growth markets and this was reflected in organic growth across all of our segments.
We were particularly pleased with the strength of growth of the Marketing segment
and exceptional performances from WGSN and Flywheel Digital.”
Duncan Painter, Chief Executive Officer
More information online:
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1 Refer to glossary of Alternative Performance Measures on page 33
Introduction
Ascential is a specialist information data and analytics company
that helps the world’s most ambitious businesses win in the
digital economy.
Our information optimises our customers’ offering on the journey
from product design through to marketing and sales.
The digital economy offers opportunity at a scale we haven’t
experienced before. We understand that our customers – the
world’s top consumer product and services companies – need
the right information to help seize that opportunity.
We exist to help our customers win in the digital economy,
unlocking the information, insights, connections, data and
digital tools our customers need to understand the demands
of tomorrow’s consumer and make the decisions that will
enable their business to grow and thrive.
Ascential also powers political, construction and environmental
intelligence product brands DeHavilland, Glenigan and
Groundsure – together comprising the Built Environment
& Policy segment.
Ascential plc Annual Report 2019 / 1
Strategic reportGovernance reportFinancial statements Ascential at a glance
COMPANY
OVERVIEW
Who we are
Ascential is a specialist information, data and
analytics company.
We work with the world’s best consumer
brands and their ecosystems, connecting them
with their customers throughout the purchase
journey. This helps them deliver superior
products, marketing and sales, at the right
time and place, with the right message.
We provide business critical information to two
thirds of the world’s 100 most valuable brands*.
* WPP Kantar's Top Global Brands 2019
Our mission
To be the number one specialist information
company enabling companies to win in
the digital economy, particularly within the
digital marketplaces, at product design,
marketing and sales.
Our values
Forward thinking: We think big and see
the bigger picture – helping our customers
translate insight into advantage.
Challenging: We are thought-provoking
and persuasive – always searching for
a better way to get things done.
Transformative: We are visionary and
confident – making changes happen.
NUMBER OF OFFICES
39
We serve customers in over 140 countries,
leveraging local knowledge and connections
for our global audience.
NUMBER OF EMPLOYEES
1,997
We have an experienced and dedicated global
workforce which we recognise as a key asset
of our business.
Our growing presence
Key
Ascential
Offices
2 / Ascential plc Annual Report 2019
Revenue by
geography
UNITED KINGDOM
22%
OTHER EUROPE
15%
UNITED STATES
AND CANADA
46%
ASIA PACIFIC
11%
MIDDLE EAST
AND AFRICA
2%
LATIN AMERICA
4%
What we do
We enable smart decision-making for the world’s most ambitious businesses. In an increasingly
complex, digitally-driven world, we help the world’s top consumer product and service
companies understand what’s important and how to act on it – today, and in the future.
Product Design
We deliver trend forecasting
and insights, enabling
customers to design for
tomorrow's consumers.
Marketing
We enable customers to
create, execute and measure
the effectiveness of marketing
campaigns, leveraging creativity
to create a world-class brand
experience.
Sales
We deliver data, analytics and
industry-specific intelligence
to maximise our customers,
digital commerce, optimising
distribution strategy, product
portfolio, pricing, search and
payments strategy.
Built Environment
& Policy
We provide market-leading,
environmental, construction
and political intelligence,
enabling informed and
accurate decisions.
Revenue
Revenue
Revenue
Revenue
£86m
£136m
£158m
£36m
Combines high-end technology
and data science with human
ingenuity, identifying the future
consumers, the influencers
and communities and optimal
product and packaging
design trends essential to
brands’ success.
The global benchmark for
creativity. Our awards celebrate
the industry’s best ideas, whilst
our digital offerings enable
inspiration and measurement
around campaign effectiveness.
Delivers some of the industry’s
most accurate and actionable
sales-driving data, insights and
advisory solutions for global
brands and retailers looking
to win in today’s eCommerce-
driven world.
Leading advisory firm, sitting
at the intersection of media,
marketing, advertising,
entertainment, technology,
and finance. Enables
businesses to drive vigorous
and sustainable growth, while
optimising media strategy.
The global authority on
advertising and media
effectiveness, offering
advertising best practice,
evidence and insights from
the world’s leading brands.
Provides location intelligence,
enabling property professionals
to make decisions based on
environmental risks such as
land contamination, flooding
and ground stability.
Partner to construction
companies, material
suppliers and organisations,
delivering construction
project sales leads, industry
data, analysis, forecasting
and company intelligence.
Helps its customers,
predominantly multi-national
CPGs, optimise their sales on
eCommerce platforms.
Offers customers Amazon-
specific software, tools and
expertise to drive sales and
brand performance across
Amazon platforms by directly
actioning solutions for clients.
Allows public affairs
professionals to deliver critical
information, through political
monitoring, campaigning tools,
and research services across
the UK and Europe.
Money20/20 offers global
events enabling payments
and financial services
innovation for connected
commerce at the intersection of
mobile, retail, marketing
services, data and technology.
Segmental review
Page 24
Segmental review
Page 24
Segmental review
Page 24
Segmental review
Page 24
Ascential plc Annual Report 2019 / 3
Strategic reportGovernance reportFinancial statements
Our investment case
THE ASCENTIAL
DIFFERENCE
We are the global market leader in delivering specialist
information that enables our customers to win in the
digital commerce economy.
CLEAR
LONG-TERM
VISION
Helping leading global brands
connect with their customers
in a data-driven world.
Laser focus
We support consumer brands and their ecosystems,
enabling them to thrive within the digital commerce
economy. We will help address the changes and challenges
within this environment through our best-in-class
solutions for Product Design, Sales and Marketing.
STRUCTURAL
GROWTH
Demand for information, data
& analytics driven by growth
of digital commerce.
Growing markets
Digital commerce is forecast to become an increasingly
significant channel for retail over the next five years. This
will make optimisation in this arena ever more critical
to brand manufacturers, as they seek the most timely,
accurate and relevant insight from their partners.
Our strategy
Page 20
Market review
Page 16
4 / Ascential plc Annual Report 2019
MARKET
LEADERS
We are leaders, with a unique
blend of specialisms, in the high
growth areas in which we operate.
Critical partner
In many of our businesses we are the key point of
reference and a critical partner for our customers.
This position is underpinned by a mixture of trusted
expertise, proven analytical models and global reach.
Segmental review
Page 24
ATTRACTIVE
FINANCIAL
PROFILE
Track record of high single digit
revenue growth, strong margins
and cash generation, supported
by sound capital allocation.
Financial resilience
On a proforma basis*, growth in each of the last five
years has been 9% or higher, while margins have grown
from 26% to 30% and operating cash flow conversion has
exceeded 85%. We have established a record of adding
high growth businesses to the Group, funded largely
through the disposal of non-core, lower growth assets.
*Growth is on a proforma basis, as if all acquisitions and disposals in the period
2015-19 were acquired/disposed at 1 January 2015.
ROBUST
BUSINESS
MODEL
High recurring and repeat revenue,
geographically diversified.
Resilience
More than 50% of our revenues are highly recurring in
nature, derived from digital subscriptions and platforms,
with over 80% of all revenue in 2019 from subscriptions
and other repeat customers. Our geographical
diversification is illustrated by the fact that over 60% of
revenues arise outside the UK and Europe, while our top
10 customers account for just 11% of our revenue.
Financial review
Page 26
Business model
Page 18
Ascential plc Annual Report 2019 / 5
Strategic reportGovernance reportFinancial statements Our stakeholders
STAKEHOLDER ENGAGEMENT
AND S172 COMPANIES ACT 2006
The 2018 UK Corporate Governance Code reinforces the
importance of Section 172 of the Companies Act 2006, which
requires directors to act in a way that promotes the success of
the company for the benefit of shareholders as a whole, whilst
having regard to the interests of its other stakeholders.
This section of the report serves as our Section
172 (1) Statement, setting out how Directors
have taken into consideration the interests of
material stakeholders in their decision making.
Effective stakeholder engagement helps us
gain a better understanding of the impact of
our decisions on stakeholder interests as well
as understanding their needs and concerns.
By understanding our stakeholders, we can
factor into Board discussions the potential
impact of our decisions on each stakeholder
group and consider how best to act fairly
between members as a whole.
We consider our key stakeholders to be
our customers, our people, our suppliers
and business partners, our investors and
wider society.
Our methods and outcomes
The methods we use to engage with each of these stakeholder groups and the
outcomes from that engagement are set out in the following pages. In addition to
this information on stakeholder engagement, other sections of this Annual
Report are relevant to this statement and should be read in conjunction:
Business model – this identifies and explains the
key relationships that our business depends upon
(page 18)
Principal risk disclosure – this identifies threats
to the relationships which could disrupt the
long-term success of the Company (page 40)
Strategy – this summarises our long-term strategy,
and the progress we have made in implementing
that strategy (page 20)
Business model
SMART DECISION-MAKING FOR
THE MOST AMBITIOUS BUSINESSES
Enabling our clients to thrive in the changing digital commerce economy,
through best-in-class product design, marketing and sales.
Our differentiators
People
— Thought leadership on the digital
revolution
— Deep specialist knowledge of industries
and markets in which we operate
— Global network
— Forward-thinking, challenging
and visionary culture
Intellectual
— Robust and scalable
technology platforms
— Use of best-in-class data
harvesting technology
— Proprietary analytics algorithms
— Value from accumulation
of consumer trading data sets
— Content archives
— Individual brand values and
market leading positions
Relationships
— Long-term relationships with
some of the world’s top consumer
product and services companies
and platforms
— Holistic proposition across the
consumer value chain provides
potential to leverage broader
customer relationships
— Global reach of partner relationships
Financial
— Good operating cash generation
— Strong organic growth rates
— Robust balance sheet
— Access to substantial
committed bank facilities
— Clear capital allocation priorities
The customer journey
We work with the world’s best consumer brands and
their ecosystems, connecting them with their customers
throughout the purchase journey. We enable our customers
to deliver superior products, marketing and sales in
a digital-driven world.
P
R
O
D
U
C
T
D
E
S
I
G
N
We deliver trend
forecasting and insights,
enabling customers to
design for tomorrow’s
consumers.
ALES
S
We deliver data, analytics
and industry-specific
intelligence to maximise our
customers digital commerce,
optimising distribution
strategy, product portfolio,
pricing, search and
payments strategy.
We enable customers to
create, execute and measure
the effectiveness of marketing
campaigns, leveraging
creativity to create a
world-class brand experience.
MA R K E T I N G
BUILT ENVIRONMENT & POLICY
Our BEP brands
Groundsure provides location intelligence,
enabling property professionals to make
decisions based on environmental risks
such as land contamination, flooding and
ground stability.
Glenigan is a partner to construction
companies, material suppliers and
organisations, delivering construction
project sales leads, industry data, analysis,
forecasting and company intelligence.
Our business model is robust, with high recurring and
repeat revenue, with more than 50% revenues from
digital subscriptions and platforms, across a diverse
global customer base:
ADVISORY
Revenue by type
EVENTS
DIGITAL SUBSCRIPTIONS & PLATFORMS
Repeat revenue
NEW BUSINES
SUBSCRIPTIONS AND REPEAT BUSINESS
Geographic
diversification
NORTH & SOUTH AMERICA
UK
EUROPE
APAC
REST OF THE WORLD
Customer
concentration
TOP 10
TOP 20
TOP 100
15%
33%
52%
18%
82%
50%
22%
15%
11%
2%
11%
16%
32%
Outcomes
Customers
We help our customers to succeed
in the digital economy, measuring
our success through Net Promoter
Scores and retention rates.
CANNES LIONS 2019 NPS:
69
Our people
We offer our people a rewarding career,
with clear opportunity to grow and develop.
We measure our success through our
annual employee engagement survey.
OVERALL ENGAGEMENT SCORE
79%
Communities
We support our communities though
charitable donations, working towards
operating sustainable events, and
operating responsibly with our suppliers,
partners and other stakeholders.
CHARITABLE DONATIONS AND
MILLION MAKERS FUNDRAISING
£1.1m
Shareholders
— Long-term sustainable returns.
— Dividend policy – targeting 30%
of adjusted earnings per share.
DIVIDEND AS A % OF ADJUSTED
PROFIT
De Havilland allows public affairs professionals
to deliver critical information, through political
monitoring, campaigning tools, and research
services across the UK and Europe.
Over 97% of BEP brand revenue is generated
by subscriptions and digital platforms with
3% of revenue generated by advisory work.
30%
18 / Ascential plc Annual Report 2019
Ascential plc Annual Report 2019 / 19
Principal risks
PRINCIPAL RISKS AND
UNCERTAINTIES
We assess our principal risks in terms of their potential impact
on our ability to deliver our strategic objectives.
The Board has made a robust assessment
of the principal risks facing the business
including those related to its business model,
future performance, solvency or liquidity, and
considered them in the formulation of the
Long-Term Viability Statement.
As part of this assessment, the Board considered
an updated impact analysis of the risks
associated with Britain exiting the EU. The
assessment conducted in 2018 was updated to
reflect any changes in our business model and
operations as well as any clarifying information
that has been made public. The conclusion of
the updated analysis remained that the most
significant threat to Ascential is the increased
broader economic uncertainty including
risk of recession. The impact of this threat
continues to be mitigated by the diversification
of Ascential’s business, both geographically
and across sectors and industries (see the
business model and market review sections for
more detail). Additionally, recession planning
forms part of Ascential’s risk management
process and the influence of Brexit on recession
risk has been considered and monitored as
part of this process. A range of reasonably
possible outcomes was also considered when
performing sensitivity analysis on long range
financial projections (see the long-term viability
statement for more detail).
The Board is actively monitoring the unfolding
situation in respect of the Coronavirus outbreak.
While China is an important long-term strategic
growth market for Ascential, revenues from
Chinese customers are today a relatively small
part of the Group (less than 5%) and we have
not yet seen any material impact on trading
from the situation. As a precaution and to
reflect travel difficulties in the region, we have
previously communicated to participants that
we have moved the date of Money20/20 Asia
in Singapore from March to August 2020. We
continue to monitor the potential impact of
travel restrictions for Chinese delegates and
sponsors to events in Europe (such as Retail
Week Live in London in March). We are also
mindful of the impact that the Coronavirus
might have on the business performance of
our customer base in areas such as fashion but
again have seen no significant impact to date.
Our business continuity plans are enabling the
majority of our approximately 200 staff in China
to remain both safe and productive.
The Board considers the following to be the Company’s principal risks:
Risk
1. Customer end-market development
2. Economic and geopolitical conditions
3. Competition/substitution
4. Execution of new product and capability development
5. Acquisitions and disposals
6. People
7. Reliance on data providers
8. Cyber threat and information security
9. Venue availability, security and access
10. Business resilience
11. Financial risk
12. Regulation and compliance
40 / Ascential plc Annual Report 2019
Change
Stable
Increased
Stable
Increased
Stable
Reduced
Reduced
Stable
Increased
Stable
Stable
Stable
Our strategy
STRATEGY FOR FOCUS
Business and strategic
1. Customer end-market development
Description
Our customers operate in a variety
of end markets, each with their own
competitive pressures affecting
customer preferences and spend.
Growth for our customers is anchored
in understanding in great detail the
many paths to purchase consumers
will take as they watch, buy and
communicate online. Achieving
an integrated consumer to product
view is becoming increasingly critical.
Examples of risks
• Failure to develop an appropriate pipeline of successful products
to meet and anticipate the needs of our customers
• Change in how consumers watch, buy and communicate online
may necessitate further product development
Actions taken to manage risk
• Prioritisation of digital products within capital allocation
• Expansion of our Strategic Sales capability to increase the number
and depth of our strategic customer relationships
• Strategic focus on customer retention gives early indication
of changes to perceived value of products
2. Economic and geopolitical conditions
Description
Across our business we are exposed
to the effects of political and economic
risks. These include the impact of
Brexit, changes in the regulatory
and competitive landscape and the
impact of international trade policy.
Examples of risks
• Financial recession in our key markets leading to reduced
spending power for customers
• Global political uncertainty regarding trade policy
• Exchange rate volatility
• Change in US Administration’s approach to trade policy
Actions taken to manage risk
• Recession modelling gives early visibility of recession,
enabling recession plan to be implemented to mitigate
risk of sustained financial loss
• Brexit impact assessment conducted
• Monitor geopolitical landscape to develop plans to
respond to specific threats or opportunities
3. Competition / substitution
Description
We are exposed to a varied and dynamic
competitive landscape, ranging from
niche providers and new entrants
in eCommerce analytics to data
aggregators and consultancy firms.
Examples of risks
• Loss of market share from increase competition / substitution
• Consultancy firms entering agency review space
• National financial technology festivals
• Aggregators of data analytics companies
Actions taken to manage risk
• Development of Ascential path-to-purchase proposition increases
value of our proposition beyond the sum of parts
• Full integration of Edge by Ascential into single platform offering
total eCommerce capabilities
• Close monitoring of competitive landscape and emerging
technology to identify threats and opportunities
Link to strategy
Our strategic objective to be
a market leading specialist
information company relies
heavily on our ability to
anticipate and respond to our
customers’ changing needs.
Risk movement from 2018
Stable
Link to strategy
Our strategic objective to
accelerate organic growth
requires us to operate
effectively within different
global political situations
which change constantly.
Risk movement from 2018
Increased
Link to strategy
Our strategic objective to be
a market leading specialist
information company relies
on our ability to differentiate
our products and services
from our competition.
Risk movement from 2018
Stable
Ascential plc Annual Report 2019 / 41
Key to KPIs
1 / Revenue
Key to risks
1 / Customer end-market development
2 / Adjusted EBITDA
2 / Economic and geopolitical conditions
3 / Adjusted EBITDA margin
3 / Competition/substitution
4 / Leverage ratio
4 / New product and capability development
5 / Acquisitions and disposals
6 / People risk
7 / Reliance on data providers
8 / Cyber threat and information security
9 / Venue availability, security and access
10 / Business resilience
11 / Financial risk
12 / Regulation and compliance
Strategic objectives
2019 strategic priorities and progress
Performance metrics
Priorities for 2020
Further content
Market
leading
Be a market leading information
company enabling our customers
to excel in the digital economy
in product design, marketing
and sales.
1. High execution focus for our 2019 growth brands
— Strong revenue growth in our digital brands, particularly from WGSN and Flywheel.
— Key initiatives have driven the build-out of our cross- Ascential strategic client programme.
2. Integration of Edge by Ascential
— Good progress with the integration programme, (running second half 2018 to first half 2020).
— First phase of team organisation and CRM integration complete in June 2019.
— Significant progress unifying the product, technology and business systems platforms
at December 2019.
Accelerate
organic
growth
Accelerate the organic growth
of our revenues and optimise
margins and profits.
3. Marketing segment back to growth
— Marketing segment returned to growth in 2019 following strategic re-alignment in 2018.
— Cannes Lions growth driven by the increasing participation of brands in the Festival,
across all three revenue streams with record levels of feedback from participation.
— For MediaLink, focus on brand-led business (project-based and retainer) was successful
in delivering a more sustainable business.
4. Achieve outstanding customer service programmes
— Strong, and in some cases record, NPS scores across our business.
Capital
allocation
Apply a tightly focussed capital
allocation process, to achieve
our goals and to maximise value
creation for our shareholders.
5. Continuing policy of focused capital allocation
— Acquisition of Yimian.
— Investment in Hudson.
— Share re-purchase programme announced of up to £120 million.
DIGITAL COMMERCE
SUB-SEGMENT REVENUE
GROWTH (PROFORMA)
21%
Return the Sales segment to
strong growth
— Enable Edge by Ascential to make a major contribution,
along with Money20/20, Flywheel and our newly acquired
Yimian business in China, to drive higher growth in revenue
and profits in 2020 and beyond.
Market review
Page 16
Link to KPIs
1 / 2
Link to risks
1 / 2 / 3 / 4 / 5 /
7 / 8 / 9 / 10 / 12
KPIs
Page 22
Risks
Page 40
INTEGRATION
PROGRAMME
On
schedule
ORGANIC REVENUE
GROWTH
6.4%
CANNES LIONS
2019 NPS SCORE
69
NET DEBT LEVERAGE
(PROFORMA)
1.0X
Increase customer retention through
service excellence
— Increased focus on excellence through customer service,
aiming for strong sales growth across all brands.
— Reduction in customer churn.
Market review
Page 16
Link to KPIs
1 / 2
Link to risks
4 / 6 / 8 / 10
KPIs
Page 22
Risks
Page 40
Drive product superiority to enable
premium pricing
— Further enhance product suite to drive market leadership.
— Leverage our cross-group unique data assets.
— Accelerate use of Decision Science capabilities across every
product to enable premium pricing in the market.
Work smarter and drive further
operating efficiency
— Focus on making ourselves more efficient, particularly
as we become more global.
— Focus on cost control across the business leveraging
simplification measures rolled out across the Group.
Market review
Page 16
Link to KPIs
1 / 2 / 3
Link to risks
3 / 4 / 7 / 8 / 12
KPIs
Page 22
Risks
Page 40
Market review
Page 16
Link to KPIs
1 / 2 / 3
Link to risks
4 / 6 / 10
KPIs
Page 22
Risks
Page 40
Continuing policy of focused
capital allocation
— Make on-market purchase of ordinary shares, to be reviewed
on an ongoing basis based on the competing opportunities for
capital deployment.
Market review
Page 16
Link to KPIs
4
Link to risks
11
KPIs
Page 22
Risks
Page 40
20 / Ascential plc Annual Report 2019
Ascential plc Annual Report 2019 / 21
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Chief Executives’ statement – this explains how
our key decisions in the year have supported
our long-term strategy (page 12)
Chief Executive’s Statement
OUR STRATEGIC FOCUS:
STRONG ORGANIC
GROWTH
In 2019, we enjoyed a year of consolidation and progress. This follows
a reshaping of our business in 2018 to support long-term growth,
notably through the sale of the Exhibitions business, the acquisitions
of WARC, BrandView and Flywheel Digital and the re-set of Cannes
Lions and MediaLink's strategic re-alignment. We are pleased to
report a successful performance in 2019, growing both revenue
and profit and delivering well on the priorities we set out.
Duncan Painter
Chief Executive Officer
Market review – this describes the trends in our
macro environment that are likely to affect our
performance and achievement of our long-term
strategy (page 16)
12 / Ascential plc Annual Report 2019
Market review
DIGITAL REVOLUTION
Over the past 12 months the markets in
which we operate have continued to develop
at pace.
In Product Design, we are seeing increased demand for data-driven
product insights, with the pressure from agile Direct-to-Consumer brands
encouraging global Consumer Packaged Goods ('CPGs') to consider speed
to market and ability to address changing consumer attitudes.
In Marketing, there have been continued shifts in spend, with Amazon
growing over the last two years to become the third largest platform for
online advertising in the US (from an estimated 2% share in 2017 to 9%
in 2019), demonstrating its ability to further monetise its retail platform.
Separately, the large advertising Holding companies remain under
pressure and continue to execute transformation programmes to better
address client needs in an increasingly digital driven world.
In Sales, online spending continues to disrupt traditional channels,
with high streets under more pressure than ever as consumers choose
to buy via mobile. Spend online continues to consolidate to a small
number of ‘mega platforms’ (for example Amazon, JD, Tmall) and those
with substantial last-mile advantages (for example Walmart), requiring
CPGs and retailers to develop and deploy new strategies and execution
approaches. Spend is also consolidating towards 'set-piece' trading days
such as Prime Day and Singles Day, which is requiring consumer brands to
be hyper focused on success in these important and short windows.
In Built Environment & Policy, reduced uncertainty over Brexit and a
majority government are likely to bolster the housing and construction
markets, at least in the short term, and increase the velocity of new and
significant legislation.
Consumers are now hyper-connected
to the digital economy, increasingly
through the lens of mobile and
voice. In this world of ‘see now,
buy now’, consumers expect pace
and convenience. Companies need
to harness the power of this data
and react to the speed of changing
consumer demands.
eCommerce-related channels are expected to lead retail growth over the next five years
Corporate Governance Report –
the section on culture explains how the Directors
monitor culture and support the achievement of
the desired culture necessary for the achievement
of our long-term success (page 64)
6 / Ascential plc Annual Report 2019
)
%
(
4
2
0
2
-
9
1
0
2
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G
A
C
s
e
a
S
l
l
a
t
o
T
Channel avg: 5.3%
Discount
Convenience
Pharma & Health
Department Stores
Home Specialists
Supermarkets &
Neighbourhood Stores
Consumer
Electronics
Hyper-Stores
eCommerce
Size of bubble
represents
expected total
retail sales
in 2024
Channel avg: 4.4%
16%
14%
12%
10%
8%
6%
4%
2%
0%
0%
5%
10%
15%
20%
25%
30%
Store-based channels
Share of Total Chain Retail Sales 2019
Source: Edge by Ascential Retail Insight, 2020
16 / Ascential plc Annual Report 2019
Corporate and social responsibility report
CORPORATE AND SOCIAL
RESPONSIBILITY REPORT
2019 was a year of progress for Corporate Responsibility at Ascential.
As well as establishing a vision and clear framework for delivering
that vision, we have established an internal network of champions.
Our new framework:
This year saw the launch of our new Corporate Responsibility framework,
outlining a new way of organising our work to make the maximum impact.
We used a tried and tested model to organise our activity and focus on
what is important to us, splitting our work into three areas:
SIGNATURE
ACTIVITY
STRATEGIC
ISSUES
3/
2/
1/ SOLID
FOUNDATIONS
A focus which is unique to us based on what
we do, how we do it and where we operate.
Things that we believe will provide us with
a competitive/brand advantage.
Things that all companies need to do,
but done with real commitment.
The framework incorporates our Solid
foundations activity, as well as positioning
our two Strategic issues: Sustainability (for
our customers and internally) and Diversity &
Inclusion. Our Signature activity is focused on
helping young people to thrive in a digital world.
To deliver this framework, we formed a global
network of Corporate Responsibility champions,
comprising four hubs led by Executive sponsors,
in our key regions of EMEA, North America,
Latin America and Asia Pacific. Our VP Talent
Development has taken responsibility for the
function, working closely with the Corporate
Communications team and regional Corporate
Responsibility hubs.
You can read more about our plans for 2020
on page 15, as we work towards firm targets
against each area of the framework, as well as
forming partnerships with global organisations
who can help us achieve our goals.
Moving towards signature activity
By stating a clear focus for our efforts, we are
able to galvanise our global business and make
the biggest impact. Our focus area connects
deeply to our business and current challenges
faced around the world: to support social
mobility and employability of young people
in a digital world.
In the UK, we already partner with the Prince’s
Trust, raising £387,835 in 2019, enabling the
Trust to fund employability programmes. Three
young people have directly felt the benefit of the
“Get Hired” scheme, with both permanent roles
and work experience in our Tech team.
To be globally impactful and locally valuable, we
are looking for similar, meaningful partnerships
in all our global regions. The core principles for
all regions looking for partners are that they:
• have a youth focus, providing skills, jobs or
experience for future employability
• have a digital focus e.g. coding skills or digital
wellbeing
• have a social mobility focus, providing
opportunities that young people may normally
struggle to access
• harness our expertise and resources e.g.
enable our employees to guest teach, offer
work experience
• help solve a business challenge as well as
being good for society e.g. brand awareness,
recruitment, retention
As a business that makes a difference to our
customers in the digital economy, we know we
can do so much more. That’s why our Corporate
Responsibility strategy focuses not just on how
we manage our impacts now, but how we really
give back and drive digital literacy in the next
generation.
Duncan Painter,
CEO, Ascential
48 / Ascential plc Annual Report 2019
Strong organic growth and good
cash generation
We delivered strong organic growth, with both
revenue and Adjusted EBITDA up 6%, and
Adjusted diluted earnings per share up 21%. Our
Adjusted EBITDA margin was in line with 2018,
at 31%, with the planned investments made
to position the Digital Commerce products in
our Sales segment as the number one platform
in the market funded by strong operating
leverage in our Product Design, Marketing and
Built Environment and Policy segments. This
investment, along with acquisition payments and
capex investment of £131.6m, was funded by
good operational cash generation with operating
cash flow conversion of 88% (2018: 106%).
Execution on key priorities for 2019
We have delivered well against the priorities
we set for the year, in particular:
• We are pleased with the levels of Execution
demonstrated by our market leading digital
information products such as WGSN and
Flywheel Digital and have built on the
important initiatives that we have put in place
to develop our cross-Ascential strategic client
programme.
• We have made progress with the integration of
Edge, which commenced in the second half of
2018 and will run until the end of the first half
of 2020. The major focus for the forthcoming
year is to return the Edge business back to
good billings growth, in the second half.
• Following the re-set for Cannes Lions and
MediaLink's strategic re-alignment in 2018,
Marketing segment growth was robust.
• We have made progress in developing the
Ascential Operating Model, with key changes
implemented in our Finance, Marketing, Data
Science and Product Development functions.
These changes will drive efficiency and cross-
sell and accelerate the development of our
products.
Evolution of the operating model
In 2018, we adopted a new operating model,
aligned to our strategy of serving customer
needs in the functions of Product Design,
Marketing and Sales. We have now further
developed this model to highlight the particular
specialisms within each of the segments in which
we serve our customers.
After the year end, we have made some changes
to the responsibilities of our key leaders to align
our management structure more closely to our
core segments of Product Design, Marketing
and Sales, as well as Built Environment and
Policy. Given the importance of returning the
Edge business to strong growth, I shall be taking
personal responsibility for leading the Digital
Commerce sub-segment (within the Sales
segment) in 2020.
Key trends
Key trend 1/
HYPER-CONNECTED CONSUMERS
Consumers are now hyper-connected to the
digital economy, increasingly through the lens
of mobile and voice. In this world of ‘see now,
buy now’, consumers expect pace and
convenience – there is no longer a delay
between what is seen on the catwalk, or
shared by an influencer, and the speed in which
consumers expect to be able to buy the product.
Trends are increasingly inter-connected and
influenced across sectors, with overarching
drivers like sustainability coming to the fore
and impacting all markets. With this connectivity
comes a proliferation of data. Companies need
to harness the power of this data and react to
the speed of changing consumer demands.
Significance for Ascential
These trends are at the heart of our vision of
expanding our vertical coverage with WGSN,
integrating further data sources into our product
design intelligence services and investing in our
Decision Science capability.
Key trend 2/
CONTINUED TRANSFORMATION
OF THE ADVERTISING MARKET
Global advertising spend has remained strong
and grown for the tenth consecutive year in
2019, with digital sales continuing to grow
double digit and reaching more than half of
total spend for the first time. Social media is
still the fastest-growing digital format, and
search remains the number one digital channel,
indicating growing advertiser reliance on ‘walled
gardens’ that combine paid advertising and
payment tech or eCommerce fulfilment.
The promise of a more visible link between
marketing investment and sales performance is
a key driver, but concerns around brand safety,
political advertising and stronger data protection
rights are counterbalancing factors. Marketers
also seek to reverse the drift to short-termism
with a renewed focus on longer-term brand-
building and investment in customer experience.
Meanwhile, agencies and consultancies continue
to transform and converge towards digital
transformation, data and experience, with
ownership of first-party data being a decisive
contest between the largest Holding companies
and MarTech players.
Significance for Ascential
Our range of solutions helps brands across
these trends: MediaLink supports marketing
transformation; Cannes Lions and WARC
provide best practice for creativity and
effectiveness; Flywheel enables us to capture
growth in marketing spend on Amazon by
directly managing it for our clients.
The planned investments
we made to position
the Digital Commerce
products in our Sales
segment as the number
one platform in the
market were funded by
strong operating leverage
that was delivered in
our Product Design,
Marketing and Built
Environment &
Policy segments.
Product Design
In another successful year for Product Design
we achieved Organic growth of 8%, led by an
exceptional performance from the advisory
practice. This was supported by continuing solid
growth from the core subscription business
through a combination of high retention rates
and successful product launches, with WGSN
Beauty a recent example.
Marketing
Following re-sets for both Cannes Lions and
MediaLink in 2018 the segment returned
to strong Organic growth of 9% in 2019.
For Cannes Lions, this was driven in part by
the increasing participation of brands in the
Festival, across all three revenue streams. For
MediaLink the focus on brand-led business,
both project-based and retainer, was successful
in delivering a more sustainable business. The
higher profile presence of MediaLink at the
Cannes Lions festival also illustrated the benefit
of collaboration and cross-selling initiatives that
are an area of increased focus across Ascential.
Continued growth of our digital revenue
streams, such as The Work, together with that
of WARC and the recent strategic investment
in the media buying platform, Hudson MX, point
to continuing diversification of the Marketing
segment’s business model in favour of recurring
and repeat revenues.
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OUR OPERATING
MODEL
Business segments
The way we categorise
our business activities.
Our offering
The unique consumer insights
that we offer our customers.
Business model
Page 18
P
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We deliver trend
forecasting and insights,
enabling customers to
design for tomorrow’s
consumers.
ALES
S
We deliver data, analytics
and industry-specific
intelligence to maximise our
customers digital commerce,
optimising distribution
strategy, product portfolio,
pricing, search and
payments strategy.
We enable customers to
create, execute and measure
the effectiveness of marketing
campaigns, leveraging
creativity to create a
world-class brand experience.
MA R K E T I N G
Ascential plc Annual Report 2019 / 13
Key trend 3/
GROWTH OF ‘SET-PIECE’
TRADING EVENTS
Mega trading days such as Singles Day, Prime
Day, and Black Friday, have become a significant
force in digital commerce. On Singles Day,
Alibaba saw total Gross Merchandise Volume
sales of $38.4bn in 24 hours. Prime Day total
sales were estimated at $7.16bn (+71% vs.
2018).
The impact of these mega trading days, however,
extends far beyond the days themselves. The
impact of optimisation and marketing activity
associated with these days is frequently felt for
weeks or months after, with winning brands
remaining high in the search rankings. Hence,
brands must increasingly plan their business
cycles around these holidays if they have any
hope of hitting their revenue goals.
Significance for Ascential
Due to the high volume of transactions in a
short period of time, data capture becomes
much more difficult. At the same time, there
is more demand from customers for data and
for these key periods, increasing demand for
Edge by Ascential solutions. Our investment in
Decision Science and the use of sophisticated
algorithms and machine learning applications,
ensures that Edge and Yimian are equipped
to offer the most advanced optimisation
tools for Amazon and Alibaba/JD, particularly
surrounding these high-volume trading days.
Flywheel leverages its expertise on the Amazon
platform to ensure clients meet their goals on
these important days.
Key trend 4/
PRIORITISATION OF
CUSTOMER EXPERIENCE
Customer experience continues to rank as a
priority for brands and is a key driver of their
digital transformation agenda. Increasingly,
consumer goods companies are focusing
on what “brand” means within a customer
experience. They want to make their brand
distinct and resonate with their customers, while
delivering it in a consistent way across a wide
range of digital touchpoints.
Significance for Ascential
In an increasingly complex digital ecosystem,
all organisations face the challenge of delivering
consistent, connected and differentiated brand
experiences. Edge by Ascential helps brands
achieve consistency across multiple eCommerce
retail sites through its digital shelf products,
and MediaLink advises on brand strategy and
transformation.
Key trend 5/
REGIONAL ECONOMIC TRENDS
There are headwinds in certain segments of
the China market due to the trade war and
regulatory changes in peer-to-peer lending.
Uncertainty around Brexit resulted in a hold up
of capital spending in the UK and a slowdown in
housing and construction markets but these are
in the process of reversing. Meanwhile, loose
monetary policy in the US and other countries
resulted in a favourable impact on their
economies and financial markets.
Significance for Ascential
In China, the trade war and regulatory changes
around lending drove our decision to defer
Money20/20 China. However, eCommerce
growth remains strong despite these factors,
supporting Edge.
Ascential plc Annual Report 2019 / 17
2019 update
1/ Framework element
SOLID FOUNDATIONS
Region
GLOBAL
Key initiatives
We have refreshed our Health & Safety Policy
to achieve more consistency of approach to
managing health & safety risks across the
business. We have also established a Safety
Committee, chaired by the Chief People Officer,
to formalise our governance structure for
managing health, safety & wellbeing. The Safety
Committee is supported by Safety Champions
who represent our different office locations
and provide on the ground expertise and point
of contact for all of our employees.
We have implemented a formal compliance
framework which encompasses good
operational governance, acting with integrity
and people policies. More detail on the
compliance framework is explained in
the ‘operating responsibly’ section of this
report below.
In our recent Engagement Survey 91% of people
said they “can talk to my manager about my
health and wellbeing and get support when
needed”. In 2019, we set up the Ascential
Wellbeing initiative to sustain this good result
on mental health. Ultimately, this activity is to
evolve and maintain how we encourage dialogue
around the topic, and create and maintain a safe
space where people can thrive both personally
and professionally with clear support pathways
if people are in need.
Our full disclosure on our greenhouse gas
emissions is set out on page 53. Emissions for
the year have decreased significantly over the
three years of reporting, and most notably for
2019 compared to the prior year. This is driven
primarily by corporate activity (acquisitions
and divestments), a significant reduction in the
size of the Company vehicle fleet, and lower
fossil fuel use in the electricity mix supplied to
a number of our offices, particularly in the UK.
Supporting gender equality
in the industries we serve
2/ Framework element
STRATEGIC ISSUE –
DIVERSITY & INCLUSION
Region
GLOBAL
Key initiatives
All of our major events are addressing gender
inequality in their industries: Retail Week’s Be
Inspired supports women in the UK retail sector,
Rise Up is Money20/20’s annual programme
designed to empower female leaders through
actionable skills, tools and mentorship, driving a
greater gender balance in the FinTech industry;
Cannes Lions’ See It Be It initiative facilitates
future female creative leaders with the tools
and support networks they need to thrive.
2019 saw Retail Week’s Be Inspired programme
cement its reputation as one of the most
influential and impactful diversity initiatives in
the UK. The programme offers women in retail
access to senior female leaders in the industry,
to address the gender inequality at boardroom
level. 2019’s attendance increased by 55%, with
speakers including the President of TJX Europe
and former Rugby World Cup Champion Maggi
Alphonsi, delivering an exceptional NPS score
of 75. 2019 also saw the launch of Be Inspired
Stories, a monthly podcast amplifying the
initiative’s message to a global audience.
Now in its second year, the Money20/20 Rise
Up programme advocates for gender equality
in the financial services and FinTech industry.
The programme is now global, launching for the
first time in both Asia and Europe in 2019, and
returning for a second year in the USA. During
each programme, a cohort of 35 women are
chosen to take part in an invitation-only curated
agenda, designed to give them actionable
insights and skills through bespoke content
sessions, one-to-one mentoring and networking
opportunities with respected industry leaders.
In 2019 Rise Up has inspired women from 51
countries, across six continents, to apply to be
a part of the programme. In 2019, Rise Up took
it one step further and launched the ‘Breaking
the 19’ campaign, challenging organisations and
their leadership to reduce the 19% pay gap in
the US.
Key to Framework
1 / Signature Activity
2 / Strategic Issues
3 / Solid foundations
See It Be It, the Cannes Lions initiative that
provides executive training, mentoring and
exclusive networking opportunities for mid-
level creative women from across the world,
ran successfully again in 2019. The curated
programme, launched in 2014, focuses on
supporting future female creative leaders
with the tools and support network they need
to succeed and thrive. In 2019, See It Be It
once again partnered with Spotify, and this
brand partnership led to a number of curated
events globally. See It Be It has now reached
4,000 women globally through its events. In a
commitment to improving diversity and gender
balance in the jury rooms, 48% of jury members
were female in 2019, up from 46% in 2018, 43%
in 2017 and 40% in 2016.
In 2019, Cannes Lions continued its mission
to celebrate creativity that changes the world
for the better with the introduction of updated
jury guidelines in the judging process. The new
criteria urged the jury members reviewing all
entries submitted into the Awards to consider
whether the work perpetuated negative
stereotypes and inequalities. The revised
guidelines build upon the Objectification
criteria introduced in 2017: Jury members were
challenged to use empathy when analysing a
piece of work, reflecting upon how they might
feel if the person portrayed was someone they
know and care about; they were also asked to
consider whether the work represented deep-
rooted stereotypical portrayals of gender, age,
race, ethnicity, disability or other biases.
Ascential plc Annual Report 2019 / 49
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1 /
Our customers
We provide solutions to consumer product
manufacturers and their ecosystems to help
them succeed in the changing digital economy.
We do this across their product design,
marketing and sales functions.
Customer forums & feedback
How we engage
• We place customers at the heart of all we do,
regularly engaging with customers across our
product brands and geographies. Our account
management and client service functions are
in constant contact with customers to ensure
they get the best value from our services.
• We run a Customer Day programme
where we encourage our people to spend
a day with customers to understand
their day to day business challenges.
• We run NPS surveys across
the majority of our brands.
• We conduct research (involving online
surveys, telephone calls and face to face
interviews) on a project basis in advance
of major product developments.
Outcomes from engagement
Net Promoter Scores are shared across the
business, leading to refined internal policies,
processes and procedures on an ongoing basis
to take into account customer feedback.
Our Customer Day survey asks our people
what they learnt, enabling us to capture that
intelligence to inform our decisions.
At our events the content topics and themes
have been directly informed by the qualitative
and quantitative research and NPS surveys.
Our people
Page 46
Key accounts
How we engage
• We are in the process of harmonising
how we approach key accounts across our
business, as part of an ongoing programme
to look at customer segmentation and a
Company-wide approach to account-based
selling and marketing.
• During 2019, we launched an Enterprise
programme to focus support for Ascential’s
key customers.
• In 2019 we developed an Accelerator
programme which helps customers understand
how they are engaging with Ascential brands
and to make sure their engagement with us is
more joined up and efficient. We are dedicating
client partners to support those relationships
at an Ascential experience level rather than
brand engagement.
• Our brands have a variety of account
management programmes, which focus on
ensuring customers get the best from our
services through regular engagement and
that customers can feed back any concerns
or issues.
Outcomes from engagement
Feedback from our Enterprise programme has
been positive and acknowledges the enhanced
value that customers receive. We will be
extending this to more customers during 2020.
Segmental review
Page 24
Ascential plc Annual Report 2019 / 7
Strategic reportGovernance reportFinancial statements Our stakeholders /CONTINUED
2 /
Our people
We have an experienced and dedicated
workforce which we recognise as a key asset
of our business. Key tenents of making
Ascential a great working environment are an
emphasis on health and wellbeing, investment in
personal development and career progression,
support for flexible working, diversity and
inclusion, promoting equal pay and honest
communications.
Health & Safety
How we engage
• We have established a Safety Committee,
chaired by the Chief People Officer,
to formalise the Health & Safety
governance structure.
• Safety Champions have been appointed
as representatives of our office locations
across the Group.
Outcomes from engagement
The presence of Safety Champions in each
office will make sure there is a direct route
for our employees to raise Health & Safety
concerns.
Our people
Page 46
Internal comms
How we engage
• Our business-wide internal communications
framework ensures that our people are kept
up-to-date with business strategy, activity
and progress across the Group. This includes
monthly newsletters and monthly videos
from the Chief Executive, as well as dedicated
communications around our financial results
and ad hoc communications to support our
change programmes and acquisitions.
Building a dialogue with our people
How we engage
• To inform the ongoing development of the
Ascential culture across all brands and
geographies, we ran a global engagement
survey in 2019 and our aggregated
engagement score improved again, up by
5.5pts to 79.5 (our target being 80 out of
100) with scores around Manager and Leader
Quality, Inclusion, Motivation and Loyalty
indicators all at 85+.
• We hold our all-company conference in
• We have a set of seven Ascential Behaviours
January each year enabling more
than 1,400 individuals to hear and engage with
strategy, plan and goals from the beginning of
each annual cycle. This aligns objectives
and interests, as well as giving our people
an exceptional opportunity to network,
share learnings and collaborate in relation
to our business goals. Our annual
conference and Gala Awards night has
become an important part of our journey
to a more informed and connected Ascential.
Outcomes from engagement
We include surveys in all of our all-staff
newsletters to gather regular feedback
on content, format and frequency of our
communication.
Each year we shape our annual conference
based on a post-conference survey that goes
to all attendees. This survey informs the format,
content agenda and speakers for the next event.
which underpin our culture, which scored 90+
when our people were asked whether their
managers and leaders act in accordance
with them.
• We invest in development, and as well
as our “Ascential LearnFest” event at the
2019 conference, we introduced refreshed
Leadership and Manager Development
programmes.
• Each area of the business also regularly hosts
face-to-face all-staff meetings, webinars and
team briefings to share news and progress
against priorities.
• We have developed and executed a state-
of-the-art Senior Leadership development
programme for our 80 most senior managers
around the world, as well as a global Sales
Leadership programme for all Sales Leaders
across the business and an extended
curriculum of Management Fundamentals
training.
Ascential New York office.
Our people
Page 46
8 / Ascential plc Annual Report 2019
Outcomes from engagement
In response to employee feedback we launched
a global campaign around career development in
2019. This accompanied the development and
communication of defined and structured career
paths for our professional communities. These
campaigns made promotional opportunities
more widely visible to employees, as well as
equipping them with career management
skills to go on and capitalise on the wider
opportunities now presented.
Overall, we are pleased with our progress
on staff engagement and we have a clear
plan to drive further improvement across all
engagement areas in 2019 and are targeting
a score above 80 next year.
Our people
Page 46
Diversity & Inclusion
How we engage
• In 2019 we ran a benchmarking exercise
to understand how we compare to our
competitors. Our next step is to gather data
from the business to see who makes up our
business to understand where we need to
focus our attention, and where we have a lack
of representation.
• We accelerated our Women in Leadership
programme during the year led by the
Managing Director of WGSN.
• We launched three Company-wide key
initiatives to support the Women in Leadership
programme: a campaign to promote flexible
working; a mentoring scheme where all senior
leaders took on two mentees with a focus on
women leaders; adopted an active policy of
transparently advertising and promoting all
vacancies across the business.
• We contribute to the Hampton-Alexander
Review, which aims to drive an improvement
in the gender balance in FTSE leadership.
The review has a stated target of 33%
representation of women on FTSE 350 Boards
and Executive Committees, as well as in the
Direct Reports to the Executive Committee,
by the end of 2020. The November 2019
review once again showed that Ascential
ranks number 2 in the FTSE 350 for women
on boards, with 57% women on our plc Board.
We also exceed the 33% target for the wide
leadership population, with 36.6% women
in the combined group of the Executive
Committee and their direct reports.
Ascential Hong Kong office.
Outcomes from engagement
In our most recent global engagement survey,
we added new questions on inclusion and
wellbeing to inform our priorities. 87% of
our people agreed that anyone can thrive
at Ascential regardless of their background,
identity or beliefs (external benchmark norm:
83%). Using a cluster of survey questions
to compare ourselves against the Mercer
Global D&I Index, Ascential ranks as a top
quartile company.
Our flexible working campaign resulted in 88%
of our people now agreeing that they feel they
have permission to work flexibly.
While we are happy with the gender mix of our
Board, there is more work to be done. We do
still have a gender pay gap and we are focused
on addressing this. For us, the gap exists
because while 54% of our employees are
women, only 44% of those in our Leadership
grades are female. We therefore need to
recruit, encourage, support and promote
more women into our senior leadership
group to address the gender pay gap.
Corporate Responsibility
Page 48
Staff networks & forum
How we engage
• This year we supported two growing staff
networks – our Pride and Edge Women’s
Network, offering them support for
communications, planning, and a space
at our annual conference to promote
themselves to staff.
• We agreed to establish the Ascential
Employee Forum with nominated
representatives for every office around the
world. The purpose of this Forum is to further
amplify the voice of our people, in particular
giving front line employees the opportunity to
share their views and ideas directly with senior
leaders (including plc Board members via the
designated Non-Executive Director) across
a wide-ranging set of issues. The Forum was
formally established in January 2020 and will
hold its first meeting in the first half of 2020.
Outcomes from engagement
We continue to support our networks and
use them as counsel for projects including
HR policy review.
The output from the Ascential Employee Forum
will be reported to the Board via a designated
Non-Executive Director.
Our people
Page 46
Ascential plc Annual Report 2019 / 9
Strategic reportGovernance reportFinancial statements Our stakeholders /CONTINUED
3 /
Our investors
Our investors value: sustainable growth,
responsible capital allocation and investment
decisions, a progressive dividend policy and
clear communication of strategy, supported
by robust financial reports.
How we engage
• We hold a range of Investor meetings
throughout the year: post-results roadshows;
at investment conferences; and on-demand
individual meetings, totalling over 500
individual engagements in 2019, covering
190 institutions (both holders and
non-holders).
• We run product deep dive demonstrations
for investors and analysts.
• We deliver twice yearly analyst results
presentations, as well as holding additional
meetings and calls throughout the year,
totalling over 150 interactions in 2019,
across our coverage base of 12 analysts.
• We hold an Annual Capital Markets Day for
our coverage analysts and major holders, to
provide more granular detail on our progress
with strategy, performance and future plans.
• We hold an Annual General Meeting which
all shareholders are entitled to attend,
and ask questions of the Board.
• The Board has set an explicit dividend policy
to aid transparency.
Outcomes from engagement
We provide the investor community with
clear updates on our trading performance
and strategic direction.
Analysts and investors have the opportunity
to feed back to management on the above
and engage in Q&A.
Strategy Page 20
KPIs Page 22
Market review Page 16
Business model Page 18
10 / Ascential plc Annual Report 2019
4 /
Our partners and suppliers
Our partners want us to work with them
to develop productive and fair working
relationships, with open terms of business
and fair payment terms.
How we engage
• We hold Quarterly Business Reviews with
all key suppliers to review progress on key
activity as well as sharing business updates
and strategy.
• We operate and publish a Third-Party Code
of Conduct which sets out the key ethical
and business principles we look for in all
third parties we work with.
• We operate a prompt payment policy
and disclose our payment practices and
performance via the UK Government
payment practices reporting portal.
Outcomes from engagement
We have reviewed our standard contracts
over the past 12 months, to ensure they
are balanced and fair.
We listen to feedback from suppliers about any
challenges in engaging with us, to constantly
improve the way Ascential operates with its
supply chain.
We have audited payment terms to ensure
fair and equitable treatment in line with
agreed contracts.
Strategy Page 20
KPIs Page 22
Market Review Page 16
Business Model Page 18
5 /
Wider society
We take our corporate responsibility as an
employer and FTSE 250 listed company very
seriously. Beyond our charitable fundraising
partnerships and local community support, this
year we launched a new framework to galvanise
the whole business behind a signature activity.
Corporate Responsibility framework
How we engage
• In 2019 we launched a new Corporate
Responsibility framework that focuses our
efforts on a signature activity: supporting
young people to thrive in the digital economy,
with two strategic areas of focus: Sustainability
and Diversity & Inclusion, and Solid
Foundations.
• We launched the framework to the business,
and subsequently established a network
of Corporate Responsibility regional hubs to
focus on priorities and agree and track against
targets.
Outcomes from engagement
Each Corporate Responsibility hub is led by a
member of the Executive Team, who feed back
into the Corporate Responsibility Committee.
This ensures that all colleagues are able to
input and participate into our Corporate
Responsibility programme.
Corporate Responsibility
Page 48
Volunteering day
How we engage
• Our global policy gives all employees one
day per year to volunteer at local community
projects. We are always looking for new
volunteering organisations to be involved
with, now with a focus on our signature
activity theme of supporting young people
to thrive in the digital economy.
Outcomes from engagement
Employees gained a much better understanding
of the specific needs of their local communities,
as well as bonding with colleagues.
Corporate Responsibility
Page 48
AMOUNT RAISED
£387,835
Ascential Team Aspire were the winners of
the National Million Makers competition in
2018-2019.
Fundraising
How we engage
• We have had a longstanding relationship with
The Prince’s Trust, fundraising as part of the
Million Makers competition, and sponsoring
the Educational Achiever award for the third
year of the annual Prince’s Trust Awards.
• In 2019 we raised £387,835, a record-
breaking amount for any Million Makers Team.
Ascential Team Aspire were the winners of
the National Million Makers competition in
2018-2019.
• We also supported Just Like Us, a UK-based
charity that trains LGBT+ role models to talk to
school age students about their experiences of
coming out and being LGBT+.
Outcomes from engagement
• We continue our focus on The Prince’s Trust
fundraising in the UK and EMEA, and we
are additionally looking for partnerships to
galvanise fundraising efforts in North America
and APAC.
Corporate Responsibility
Page 48
Ascential plc Annual Report 2019 / 11
Strategic reportGovernance reportFinancial statements
Chief Executive’s Statement
OUR STRATEGIC FOCUS:
STRONG ORGANIC
GROWTH
In 2019, we enjoyed a year of consolidation and progress. This follows
a reshaping of our business in 2018 to support long-term growth,
notably through the sale of the Exhibitions business, the acquisitions
of WARC, BrandView and Flywheel Digital and the re-set of Cannes
Lions and MediaLink's strategic re-alignment. We are pleased to
report a successful performance in 2019, growing both revenue
and profit and delivering well on the priorities we set out.
Duncan Painter
Chief Executive Officer
12 / Ascential plc Annual Report 2019
Strong organic growth and good
cash generation
We delivered strong organic growth, with
both revenue and Adjusted EBITDA up 6%,
and Adjusted diluted earnings per share up
21%. Our Adjusted EBITDA margin was in
line with 2018, at 31%, with the planned
investments made to position the Digital
Commerce products in our Sales segment as
the number one platform in the market funded
by strong operating leverage in our Product
Design, Marketing and Built Environment and
Policy segments. This investment, along with
acquisition payments and capex investment of
£131.6m, was funded by good operational cash
generation with operating cash flow conversion
of 88% (2018: 106%).
Execution on key priorities for 2019
We have delivered well against the priorities
we set for the year, in particular:
• We are pleased with the levels of Execution
demonstrated by our market leading digital
information products such as WGSN and
Flywheel Digital and have built on the important
initiatives that we have put in place to develop
our cross-Ascential strategic client programme.
• We have made progress with the integration of
Edge, which commenced in the second half of
2018 and will run until the end of the first half
of 2020. The major focus for the forthcoming
year is to return the Edge business back to
good billings growth, in the second half.
• Following the re-set for Cannes Lions and
MediaLink's strategic re-alignment in 2018,
Marketing segment growth was robust.
• We have made progress in developing the
Ascential Operating Model, with key changes
implemented in our Finance, Marketing, Data
Science and Product Development functions.
These changes will drive efficiency and
cross-sell and accelerate the development
of our products.
Evolution of the operating model
In 2018, we adopted a new operating model,
aligned to our strategy of serving customer
needs in the functions of Product Design,
Marketing and Sales. We have now further
developed this model to highlight the particular
specialisms within each of the segments in which
we serve our customers.
After the year end, we have made some changes
to the responsibilities of our key leaders to align
our management structure more closely to our
core segments of Product Design, Marketing
and Sales, as well as Built Environment and
Policy. Given the importance of returning the
Edge business to strong growth, I shall be taking
personal responsibility for leading the Digital
Commerce sub-segment (within the Sales
segment) in 2020.
The planned investments
we made to position
the Digital Commerce
products in our Sales
segment as the number
one platform in the
market were funded by
strong operating leverage
that was delivered in
our Product Design,
Marketing and Built
Environment &
Policy segments.
Product Design
In another successful year for Product Design
we achieved Organic growth of 8%, led by an
exceptional performance from the advisory
practice. This was supported by continuing solid
growth from the core subscription business
through a combination of high retention rates
and successful product launches, with WGSN
Beauty a recent example.
Marketing
Following re-sets for both Cannes Lions and
MediaLink in 2018 the segment returned to
strong Organic growth of 9% in 2019. For
Cannes Lions, this was driven in part by the
increasing participation of brands in the
Festival, across all three revenue streams.
For MediaLink the focus on brand-led business,
both project-based and retainer, was successful
in delivering a more sustainable business. The
higher profile presence of MediaLink at the
Cannes Lions festival also illustrated the benefit
of collaboration and cross-selling initiatives that
are an area of increased focus across Ascential.
Continued growth of our digital revenue
streams, such as The Work, together with that
of WARC and the recent strategic investment
in the media buying platform, Hudson MX, point
to continuing diversification of the Marketing
segment’s business model in favour of recurring
and repeat revenues.
OUR OPERATING
MODEL
Business segments
The way we categorise
our business activities.
Our offering
The unique consumer insights
that we offer our customers.
Business model
Page 18
P
R
O
D
U
C
T
D
E
S
I
G
N
We deliver trend
forecasting and insights,
enabling customers to
design for tomorrow’s
consumers.
ALES
S
We deliver data, analytics
and industry-specific
intelligence to maximise our
customers digital commerce,
optimising distribution
strategy, product portfolio,
pricing, search and
payments strategy.
We enable customers to
create, execute and measure
the effectiveness of marketing
campaigns, leveraging
creativity to create a
world-class brand experience.
MA R K E T I N G
Ascential plc Annual Report 2019 / 13
Strategic reportGovernance reportFinancial statements Chief Executive’s statement /CONTINUED
Sales
For the Sales segment, following several key
acquisitions and event launches in 2018, 2019
was a year of consolidation with growth of
3% on an Organic basis, or 11% Proforma
including the contributions of Flywheel Digital
and BrandView. The Digital Commerce brands
within the Sales segment (Edge, Flywheel Digital
and Yimian) grew by 9% on an Organic basis, or
21% Proforma.
2019 was an important year for the integration
of the four brands that comprise Edge. The initial
phases of integration, covering organisational
structure and CRM systems, were completed
by June 2019. Progress has also been made
on the underlying platform consolidation, with
the phased roll-out of digital shelf catalogue
systems to market share customers completed
on schedule in December 2019 and the recent
launch of the new market share platform.
Reflecting our efforts to deepen our relationship
with key customers it was pleasing that Edge
was appointed as the preferred partner to Coca-
Cola for its worldwide eCommerce operations.
In December we also completed the acquisition
of Chinese eCommerce analytics business
Yimian that will provide a more holistic
offering for Edge in China, with its sales and
share expertise. Yimian's expertise in China
provides an excellent fit with that of our Edge
business across US and European marketplaces.
Additionally, Yimian's capability in semantic
analysis and record of innovation offers exciting
opportunities for new product development.
Flywheel Digital had an outstanding year. Having
joined the Group in 2018, it made significant
strides, expanding its business into Europe,
Australia and Japan, while also launching a
service offering for Walmart in the US. Flywheel
Digital enables us to not only report on the
performance of our customers but also provide
them with a real time trading platform to enable
and drive actual sales growth.
Money20/20's modest performance reflected
continuing strong growth from its European
edition, offset by the competitive challenge in
Singapore and a combination of adverse macro
and local market factors that necessitated the
deferral of the Chinese edition.
Built Environment & Policy
The Built Environment & Policy segment
continued to trade solidly, with Organic revenue
growth of 5% and expansion of margin, despite
testing conditions in its UK-based markets,
a testament to the market leading products
in this segment.
Jumpshot
In July 2019 we acquired a 35% stake in Avast's
marketing analytics subsidiary Jumpshot. While
Jumpshot's business model was attractive in
its own right, we also benefitted from access
to their high quality information to refine and
improve the product algorithms within the Edge
business. This benefit persists, notwithstanding
Avast's post year end decision to close Jumpshot
as it was no longer core to their mission. In
January 2020, we sold our stake back to Avast
recovering all of our investment and expenses.
Focused capital allocation and share
repurchase programme
Consistently strong levels of cash flow
conversion, combined with our disciplined
capital allocation, has resulted in a net debt
leverage ratio of 1.4x at the 2019 year end.
Furthermore, following the sale of the Jumpshot
investment in January 2020, our Proforma 31
December 2019 leverage ratio is 1.0x which is
well below our historical norms.
While we have a pipeline of attractive bolt-on
investment opportunities, we recognise that the
delivery of shareholder value requires a return
of cash to shareholders if M&A cash needs are
not near term and when our balance sheet is
sufficiently strong to finance acquisitions
should they arise earlier than expected.
Having reviewed our capital allocation policy the
Board has decided to utilise part of its authority
to make on-market purchases of our ordinary
shares. We anticipate spending up to £120m in
a share repurchase programme, which we will
review on an ongoing basis based on the then
competing opportunities for capital deployment.
Our dividend policy which targets a 30% payout
ratio of adjusted profit after tax is unchanged.
14 / Ascential plc Annual Report 2019
REVENUE
£416.2m
OPERATING PROFIT
£19.9m
ADJUSTED EBITDA1
£128.5m
2020
As we enter 2020 we have four
core objectives:
1/ Increase the rate of Organic
revenue growth in the Sales
segment by accelerating
Money20/20 and by driving
strong billings growth in Edge
in the second half of 2020.
2/ Focus on our service offering to
further reduce customer churn.
3/ Deliver Product Superiority across
the Company allowing for further
premium pricing for our highest
quality products.
4/ Deliver greater simplicity and
efficiency throughout the
business, including new systems
and processes in our Finance,
Marketing and Sales functions.
Responsible business
This year we launched our new Corporate
Responsibility Framework covering all elements
of environmental, social and governance
activities. This comprises solid foundations
(such as health and safety), strategic issues
(environmental sustainability and diversity and
inclusion) and a signature focus on helping young
people thrive in a digital world. This programme
is designed to celebrate our existing activities,
as well as provide inspiration for our people to
launch new initiatives and to enable Ascential to
take a clear lead as a responsible business.
Coronavirus disease
The Board is actively monitoring the unfolding
situation in respect of the Coronavirus
outbreak. While China is an important long-
term strategic growth market for Ascential,
revenues from Chinese customers are today
a relatively small part of the Group (less than
5% overall and with just 2% of attendees of
Cannes Lions from China, for example) and
we have not yet seen any material impact on
trading from the situation. As a precaution and
to reflect travel difficulties in the region we
have previously communicated to participants
that we have moved the date of Money20/20
Asia in Singapore from March to August 2020.
We continue to monitor the potential impact
of travel restrictions for Chinese delegates and
sponsors to events in Europe (such as Retail
Week Live in London in March).
We are also mindful of the impact that
Coronavirus might have on the business
performance of our customer base in areas such
as fashion but again have seen no significant
impact to date. Our business continuity plans
are enabling the majority of our approximately
200 staff in China to remain both safe and
productive.
Outlook
Over the coming year we will continue to utilise
our unique insights and expertise to provide our
customers with ever more relevant and critical
information. With our product sets even more
closely aligned to customer requirements, we
believe we are well positioned to continue to
drive strong performance in our scaled and
structurally growing markets.
In 2020, we expect to deliver strong Organic
growth with Group revenue in the range of
£425m-£455m (using current exchange rates)
and adjusted EBITDA margins of between 30%
and 32%.
Duncan Painter
Chief Executive Officer
21 February 2020
1 Refer to glossary of Alternative Performance
Measures on page 33
Ascential plc Annual Report 2019 / 15
Strategic reportGovernance reportFinancial statements
Market review
DIGITAL REVOLUTION
Over the past 12 months the markets in
which we operate have continued to develop
at pace.
In Product Design, we are seeing increased demand for data-driven
product insights, with the pressure from agile Direct-to-Consumer brands
encouraging global Consumer Packaged Goods ('CPGs') to consider speed
to market and ability to address changing consumer attitudes.
In Marketing, there have been continued shifts in spend, with Amazon
growing over the last two years to become the third largest platform for
online advertising in the US (from an estimated 2% share in 2017 to 9%
in 2019), demonstrating its ability to further monetise its retail platform.
Separately, the large advertising Holding companies remain under
pressure and continue to execute transformation programmes to better
address client needs in an increasingly digital driven world.
In Sales, online spending continues to disrupt traditional channels,
with high streets under more pressure than ever as consumers choose
to buy via mobile. Spend online continues to consolidate to a small
number of ‘mega platforms’ (for example Amazon, JD, Tmall) and those
with substantial last-mile advantages (for example Walmart), requiring
CPGs and retailers to develop and deploy new strategies and execution
approaches. Spend is also consolidating towards 'set-piece' trading days
such as Prime Day and Singles Day, which is requiring consumer brands
to be hyper focused on success in these important and short windows.
In Built Environment & Policy, reduced uncertainty over Brexit and a
majority government are likely to bolster the housing and construction
markets, at least in the short term, and increase the velocity of new and
significant legislation.
Consumers are now hyper-connected
to the digital economy, increasingly
through the lens of mobile and
voice. In this world of ‘see now,
buy now’, consumers expect pace
and convenience. Companies need
to harness the power of this data
and react to the speed of changing
consumer demands.
eCommerce-related channels are expected to lead retail growth over the next five years
)
%
(
4
2
0
2
-
9
1
0
2
R
G
A
C
s
e
a
S
l
l
a
t
o
T
Channel avg: 5.3%
Discount
Convenience
Pharma & Health
Department Stores
Home Specialists
Supermarkets &
Neighbourhood Stores
Consumer
Electronics
Hyper-Stores
eCommerce
Size of bubble
represents
expected total
retail sales
in 2024
Channel avg: 4.4%
16%
14%
12%
10%
8%
6%
4%
2%
0%
0%
5%
10%
15%
20%
25%
30%
Store-based channels
Share of Total Chain Retail Sales 2019
Source: Edge by Ascential Retail Insight, 2020
16 / Ascential plc Annual Report 2019
Key trends
Key trend 1/
HYPER-CONNECTED CONSUMERS
Consumers are now hyper-connected to the
digital economy, increasingly through the lens
of mobile and voice. In this world of ‘see now,
buy now’, consumers expect pace and
convenience – there is no longer a delay
between what is seen on the catwalk, or
shared by an influencer, and the speed in which
consumers expect to be able to buy the product.
Trends are increasingly inter-connected and
influenced across sectors, with overarching
drivers like sustainability coming to the fore
and impacting all markets. With this connectivity
comes a proliferation of data. Companies need
to harness the power of this data and react to
the speed of changing consumer demands.
Significance for Ascential
These trends are at the heart of our vision of
expanding our vertical coverage with WGSN,
integrating further data sources into our product
design intelligence services and investing in our
Decision Science capability.
Key trend 2/
CONTINUED TRANSFORMATION
OF THE ADVERTISING MARKET
Global advertising spend has remained strong
and grown for the tenth consecutive year in
2019, with digital sales continuing to grow
double digit and reaching more than half of
total spend for the first time. Social media is
still the fastest-growing digital format, and
search remains the number one digital channel,
indicating growing advertiser reliance on ‘walled
gardens’ that combine paid advertising and
payment tech or eCommerce fulfilment.
The promise of a more visible link between
marketing investment and sales performance is
a key driver, but concerns around brand safety,
political advertising and stronger data protection
rights are counterbalancing factors. Marketers
also seek to reverse the drift to short-termism
with a renewed focus on longer-term brand-
building and investment in customer experience.
Meanwhile, agencies and consultancies continue
to transform and converge towards digital
transformation, data and experience, with
ownership of first-party data being a decisive
contest between the largest Holding companies
and MarTech players.
Significance for Ascential
Our range of solutions helps brands across
these trends: MediaLink supports marketing
transformation; Cannes Lions and WARC
provide best practice for creativity and
effectiveness; Flywheel enables us to capture
growth in marketing spend on Amazon by
directly managing it for our clients.
Key trend 3/
GROWTH OF ‘SET-PIECE’
TRADING EVENTS
Mega trading days such as Singles Day, Prime
Day, and Black Friday, have become a significant
force in digital commerce. On Singles Day, Alibaba
saw total Gross Merchandise Volume sales of
$38.4bn in 24 hours. Prime Day total sales were
estimated at $7.16bn (+71% vs. 2018).
The impact of these mega trading days, however,
extends far beyond the days themselves. The
impact of optimisation and marketing activity
associated with these days is frequently felt for
weeks or months after, with winning brands
remaining high in the search rankings. Hence,
brands must increasingly plan their business
cycles around these holidays if they have any
hope of hitting their revenue goals.
Significance for Ascential
Due to the high volume of transactions in a
short period of time, data capture becomes
much more difficult. At the same time, there
is more demand from customers for data and
for these key periods, increasing demand for
Edge by Ascential solutions. Our investment in
Decision Science and the use of sophisticated
algorithms and machine learning applications,
ensures that Edge and Yimian are equipped
to offer the most advanced optimisation
tools for Amazon and Alibaba/JD, particularly
surrounding these high-volume trading days.
Flywheel leverages its expertise on the Amazon
platform to ensure clients meet their goals on
these important days.
Key trend 4/
PRIORITISATION OF
CUSTOMER EXPERIENCE
Customer experience continues to rank as a
priority for brands and is a key driver of their
digital transformation agenda. Increasingly,
consumer goods companies are focusing
on what “brand” means within a customer
experience. They want to make their brand
distinct and resonate with their customers, while
delivering it in a consistent way across a wide
range of digital touchpoints.
Significance for Ascential
In an increasingly complex digital ecosystem,
all organisations face the challenge of delivering
consistent, connected and differentiated brand
experiences. Edge by Ascential helps brands
achieve consistency across multiple eCommerce
retail sites through its digital shelf products,
and MediaLink advises on brand strategy and
transformation.
Key trend 5/
REGIONAL ECONOMIC TRENDS
There are headwinds in certain segments of
the China market due to the trade war and
regulatory changes in peer-to-peer lending.
Uncertainty around Brexit resulted in a hold up
of capital spending in the UK and a slowdown in
housing and construction markets but these are
in the process of reversing. Meanwhile, loose
monetary policy in the US and other countries
resulted in a favourable impact on their
economies and financial markets.
Significance for Ascential
In China, the trade war and regulatory changes
around lending drove our decision to defer
Money20/20 China. However, eCommerce
growth remains strong despite these factors,
supporting Edge.
Ascential plc Annual Report 2019 / 17
Strategic reportGovernance reportFinancial statements Business model
SMART DECISION-MAKING FOR
THE MOST AMBITIOUS BUSINESSES
The customer journey
We work with the world’s best consumer brands and
their ecosystems, connecting them with their customers
throughout the purchase journey. We enable our customers
to deliver superior products, marketing and sales in
a digital-driven world.
P
R
O
D
U
C
T
D
E
S
I
G
N
We deliver trend
forecasting and insights,
enabling customers to
design for tomorrow’s
consumers.
ALES
S
We deliver data, analytics
and industry-specific
intelligence to maximise our
customers digital commerce,
optimising distribution
strategy, product portfolio,
pricing, search and
payments strategy.
We enable customers to
create, execute and measure
the effectiveness of marketing
campaigns, leveraging
creativity to create a
world-class brand experience.
MA R K E T I N G
BUILT ENVIRONMENT & POLICY
Our BEP brands
Groundsure provides location intelligence,
enabling property professionals to make
decisions based on environmental risks
such as land contamination, flooding and
ground stability.
Glenigan is a partner to construction
companies, material suppliers and
organisations, delivering construction
project sales leads, industry data, analysis,
forecasting and company intelligence.
Our differentiators
People
— Thought leadership on the digital
revolution
— Deep specialist knowledge of industries
and markets in which we operate
— Global network
— Forward-thinking, challenging
and visionary culture
Intellectual
— Robust and scalable
technology platforms
— Use of best-in-class data
harvesting technology
— Proprietary analytics algorithms
— Value from accumulation
of consumer trading data sets
— Content archives
— Individual brand values and
market leading positions
Relationships
— Long-term relationships with
some of the world’s top consumer
product and services companies
and platforms
— Holistic proposition across the
consumer value chain provides
potential to leverage broader
customer relationships
— Global reach of partner relationships
Financial
— Good operating cash generation
— Strong organic growth rates
— Robust balance sheet
— Access to substantial
committed bank facilities
— Clear capital allocation priorities
18 / Ascential plc Annual Report 2019
Enabling our clients to thrive in the changing digital commerce economy,
through best-in-class product design, marketing and sales.
Our business model is robust, with high recurring and
repeat revenue, with more than 50% revenues from
digital subscriptions and platforms, across a diverse
global customer base:
DIGITAL SUBSCRIPTIONS & PLATFORMS
Revenue by type
EVENTS
ADVISORY
Repeat revenue
NEW BUSINES
SUBSCRIPTIONS AND REPEAT BUSINESS
Geographic
diversification
NORTH & SOUTH AMERICA
UK
EUROPE
APAC
REST OF THE WORLD
Customer
concentration
TOP 100
TOP 10
TOP 11-20
TOP 21-100
52%
33%
15%
82%
18%
50%
22%
15%
11%
2%
32%
11%
5%
16%
Outcomes
Customers
We help our customers to succeed
in the digital economy, measuring
our success through Net Promoter
Scores and retention rates.
CANNES LIONS 2019 NPS:
69
Our people
We offer our people a rewarding career,
with clear opportunity to grow and develop.
We measure our success through our
annual employee engagement survey.
OVERALL ENGAGEMENT SCORE
79%
Communities
We support our communities though
charitable donations, working towards
operating sustainable events, and
operating responsibly with our suppliers,
partners and other stakeholders.
CHARITABLE DONATIONS AND
MILLION MAKERS FUNDRAISING
£1.1m
Shareholders
— Long-term sustainable returns.
— Dividend policy – targeting 30%
of adjusted earnings per share.
DIVIDEND AS A % OF ADJUSTED
PROFIT
De Havilland allows public affairs professionals
to deliver critical information, through political
monitoring, campaigning tools, and research
services across the UK and Europe.
Over 97% of BEP brand revenue is generated
by subscriptions and digital platforms with
3% of revenue generated by advisory work.
30%
Ascential plc Annual Report 2019 / 19
BUILT ENVIRONMENT & POLICY
Strategic reportGovernance reportFinancial statements
Our strategy
STRATEGIC FOCUS
Strategic objectives
2019 strategic priorities and progress
Market
leading
Be a market leading information
company enabling our customers
to excel in the digital economy
in product design, marketing
and sales.
1. High execution focus for our 2019 growth brands
— Strong revenue growth in our digital brands, particularly from WGSN and Flywheel.
— Key initiatives have driven the build-out of our cross- Ascential strategic client programme.
2. Integration of Edge by Ascential
— Good progress with the integration programme, (running second half 2018 to first half 2020).
— First phase of team organisation and CRM integration complete in June 2019.
— Significant progress unifying the product, technology and business systems platforms
at December 2019.
Accelerate
organic
growth
Accelerate the organic growth
of our revenues and optimise
margins and profits.
3. Marketing segment back to growth
— Marketing segment returned to growth in 2019 following strategic re-alignment in 2018.
— Cannes Lions growth driven by the increasing participation of brands in the Festival,
across all three revenue streams with record levels of feedback from participation.
— For MediaLink, focus on brand-led business (project-based and retainer) was successful
in delivering a more sustainable business.
4. Achieve outstanding customer service programmes
— Strong, and in some cases record, NPS scores across our business.
Capital
allocation
Apply a tightly focussed capital
allocation process, to achieve
our goals and to maximise value
creation for our shareholders.
5. Continuing policy of focused capital allocation
— Acquisition of Yimian.
— Investment in Hudson.
— Share re-purchase programme announced of up to £120 million.
20 / Ascential plc Annual Report 2019
Performance metrics
DIGITAL COMMERCE
SUB-SEGMENT REVENUE
GROWTH (PROFORMA)
21%
INTEGRATION
PROGRAMME
On
schedule
ORGANIC REVENUE
GROWTH
6.4%
CANNES LIONS
2019 NPS SCORE
69
NET DEBT LEVERAGE
(PROFORMA)
1.0X
Key to KPIs
1 / Revenue
Key to risks
1 / Customer end-market development
2 / Adjusted EBITDA
2 / Economic and geopolitical conditions
3 / Adjusted EBITDA margin
3 / Competition/substitution
4 / Leverage ratio
4 / New product and capability development
5 / Acquisitions and disposals
6 / People risk
7 / Reliance on data providers
8 / Cyber threat and information security
9 / Venue availability, security and access
10 / Business resilience
11 / Financial risk
12 / Regulation and compliance
Strategic objectives
2019 strategic priorities and progress
Performance metrics
Priorities for 2020
Further content
Market
leading
Be a market leading information
company enabling our customers
to excel in the digital economy
in product design, marketing
and sales.
1. High execution focus for our 2019 growth brands
— Strong revenue growth in our digital brands, particularly from WGSN and Flywheel.
— Key initiatives have driven the build-out of our cross- Ascential strategic client programme.
2. Integration of Edge by Ascential
— Good progress with the integration programme, (running second half 2018 to first half 2020).
— First phase of team organisation and CRM integration complete in June 2019.
— Significant progress unifying the product, technology and business systems platforms
at December 2019.
Accelerate
organic
growth
Accelerate the organic growth
of our revenues and optimise
margins and profits.
3. Marketing segment back to growth
— Marketing segment returned to growth in 2019 following strategic re-alignment in 2018.
— Cannes Lions growth driven by the increasing participation of brands in the Festival,
across all three revenue streams with record levels of feedback from participation.
— For MediaLink, focus on brand-led business (project-based and retainer) was successful
in delivering a more sustainable business.
4. Achieve outstanding customer service programmes
— Strong, and in some cases record, NPS scores across our business.
Capital
allocation
Apply a tightly focussed capital
allocation process, to achieve
our goals and to maximise value
creation for our shareholders.
5. Continuing policy of focused capital allocation
— Acquisition of Yimian.
— Investment in Hudson.
— Share re-purchase programme announced of up to £120 million.
DIGITAL COMMERCE
SUB-SEGMENT REVENUE
GROWTH (PROFORMA)
21%
Return the Sales segment to
strong growth
— Enable Edge by Ascential to make a major contribution,
along with Money20/20, Flywheel and our newly acquired
Yimian business in China, to drive higher growth in revenue
and profits in 2020 and beyond.
Market review
Page 16
Link to KPIs
1 / 2
Link to risks
1 / 2 / 3 / 4 / 5 /
7 / 8 / 9 / 10 / 12
KPIs
Page 22
Risks
Page 40
INTEGRATION
PROGRAMME
On
schedule
ORGANIC REVENUE
GROWTH
6.4%
CANNES LIONS
2019 NPS SCORE
69
NET DEBT LEVERAGE
(PROFORMA)
1.0X
Increase customer retention through
service excellence
— Increased focus on excellence through customer service,
aiming for strong sales growth across all brands.
— Reduction in customer churn.
Market review
Page 16
Link to KPIs
1 / 2
Link to risks
4 / 6 / 8 / 10
KPIs
Page 22
Risks
Page 40
Drive product superiority to enable
premium pricing
— Further enhance product suite to drive market leadership.
— Leverage our cross-group unique data assets.
— Accelerate use of Decision Science capabilities across
every product to enable premium pricing in the market.
Work smarter and drive further
operating efficiency
— Focus on making ourselves more efficient, particularly
as we become more global.
— Focus on cost control across the business leveraging
simplification measures rolled out across the Group.
Market review
Page 16
Link to KPIs
1 / 2 / 3
Link to risks
3 / 4 / 7 / 8 / 12
KPIs
Page 22
Risks
Page 40
Market review
Page 16
Link to KPIs
1 / 2 / 3
Link to risks
4 / 6 / 10
KPIs
Page 22
Risks
Page 40
Continuing policy of focused
capital allocation
— Make on-market purchase of ordinary shares, to be reviewed
on an ongoing basis based on the competing opportunities for
capital deployment.
Market review
Page 16
Link to KPIs
4
Link to risks
11
KPIs
Page 22
Risks
Page 40
Ascential plc Annual Report 2019 / 21
Strategic reportGovernance reportFinancial statements Key Performance Indicators
MEASURING OUR SUCCESS
Key Performance Indicators (KPIs) are used to measure both the
progress and success of our strategy implementation. The KPIs are
set out below, with a measure of our performance to date and an
indication of potential challenges to success where applicable.
Adjusted profit measures are used 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.
REVENUE
£416.2m
2017
2018
2019
292.9
348.5
Description
Income generated from normal, continuing
business operations.
Performance in 2019
Strong Organic growth of 6%, 9% on a Proforma
basis, was approximately twice the rate of the
European media sector*
Strategy
Page 20
Risks
Page 40
416.2
Target for 2020
Revenue of £425m - £455m**
* Average 3.0%, weighted by market capitalisation (Informa,
ITV, Mediaset, Pearson, Prosieben, Publicis, RELX, Ubisoft,
Vivendi, Wolters Kluwer, WPP)
**Assumes current FX rates vs £:Euro - 1.19, USD - 1.29
Description
Adjusted operating profit excluding depreciation
and software amortisation. See page 33 for
glossary of alternative performance measures.
Strategy
Page 20
Risks
Page 40
Performance in 2019
Organic grrowth in Adjusted EBITDA of 6%, 9%
on a Proforma basis, tracked revenue growth
(see above).
Target for 2020
30% - 32% of Revenue
ADJUSTED EBITDA
£128.5m
2017
2018
2019
94.7*
108.4
128.5
* Prior to the application of IFRS16
22 / Ascential plc Annual Report 2019
ADJUSTED EBITDA MARGIN
30.9%
2017
2018
2019
Description
Adjusted EBITDA as a percentage of
revenue. See page 33 for glossary of
alternative performance measures.
Strategy
Page 20
Risks
Page 40
32.3
31.1
30.9
Performance in 2019
Year on year movement in the margin was
minimal, allowing for the impact of lower margin,
high growth, businesses acquired in 2018.
Investment in Edge and Flywheel Digital (Sales)
was offset by operational leverage from the
Product Design, Marketing and BEP segments.
Target for 2020
30% - 32%
LEVERAGE RATIO
1.4x
2017
2018
2019
1.1
1.4
Description
The ratio of Net debt to Adjusted EBITDA.
See page 33 for glossary of alternative
performance measures.
Strategy
Page 20
Risks
Page 40
2.3
Performance in 2019
Leverage increased modestly in the year chiefly
as a result of the acquisition of a 35% stake in
Jumpshot. Post year-end, sale of the 35% stake
back to Avast returns leverage to around its level
at December 2018 (1.0x) on a proforma basis.
Ascential plc Annual Report 2019 / 23
Strategic reportGovernance reportFinancial statements Segmental review
DASHBOARD
Revenue streams by type
Growth review
REVENUE
£86m
REPORTED REVENUE GROWTH
11%
Product Design
DIGITAL SUBS & PLATFORMS
ADVISORY
90%
10%
Revenue
+11%
+8%
+8%
Adjusted EBITDA
+20%
+18%
+18%
Reported
Organic Proforma
Marketing
Sales
Built Environment
& Policy
REVENUE
£136m
DIGITAL SUBS & PLATFORMS
ADVISORY
EVENTS
REVENUE
£158m
DIGITAL SUBS & PLATFORMS
ADVISORY
EVENTS
REVENUE
£36m
REPORTED REVENUE GROWTH
17%
Reported
Organic Proforma
Revenue
+17%
+9%
+9%
Adjusted EBITDA
+25%
+20%
+19%
REPORTED REVENUE GROWTH
31%
Reported
Organic Proforma
Revenue
+31%
+3%
+11%
Adjusted EBITDA
+3%
(24%)
(14%)
11%
37%
52%
55%
3%
42%
REPORTED REVENUE GROWTH
5%
DIGITAL SUBS & PLATFORMS
ADVISORY
97%
3%
Revenue
+5%
+5%
+5%
Adjusted EBITDA
+19%
+19%
+19%
Reported
Organic Proforma
24 / Ascential plc Annual Report 2019
* Restated for application of IFRS 16 (see Note 27)
Proportion of Ascential Revenue1
PRODUCT DESIGN
MARKETING
SALES
BUILT ENVIRONMENT & POLICY
21%
32%
38%
9%
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
PROPORTION OF
ASCENTIAL REVENUE
Segmental performance overview
Group financial overview 2019
Group Total
Revenue
Growth3
EBITDA2
Margin2
2019
£416m
+9%
£129m
31%
1 2019 revenue Proforma for acquisitions: Yimian and WGSN
China JV.
2 2019 adjusted EBITDA (total includes Group costs of £15m).
3 Proforma revenue growth vs 2018.
Product Design
Revenue
Adjusted EBITDA
Adjusted EBITDA Margin
Marketing
Revenue
Adjusted EBITDA
Adjusted EBITDA Margin
Sales
Revenue
Adjusted EBITDA
Adjusted EBITDA Margin
Built Environment & Policy
Revenue
Adjusted EBITDA
Adjusted EBITDA Margin
* Restated for application of IFRS 16 (Seen Note 27)
Year ended 31 December (£’m)
2019
2018*
86.5
36.0
42%
135.9
50.7
37%
158.4
39.6
25%
35.9
17.0
47%
77.8
29.9
38%
116.3
40.5
35%
120.9
38.3
32%
34.3
14.3
42%
Ascential plc Annual Report 2019 / 25
i
F
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
Governance report
PRODUCT DESIGN
2019 was a successful year for our
Product Design segment, with Organic
revenue growth accelerating to 8%,
driven by advisory revenues, continued
strong retention and the launch of
WGSN Beauty.
Revenue and Adjusted EBITDA both grew well in the period,
with margin expanding despite product launch investment.
Through our WGSN product, we are a leading global supplier
of trend forecasts, market intelligence and insight, to design-led
businesses, helping them understand the future demands of
their consumers, and the underlying influences that shape the
preferences of different consumer communities. We have around
6,500 customers in over 90 countries. Information is delivered
primarily through digital subscriptions (c.90% of our revenue)
with growing specialist advisory and colour services, through
Mindset and Coloro respectively.
The Product Design segment has seen continued take-up of
products launched in recent years such as Insight (the broad
consumer trends product), Barometer (brand sentiment tool)
and Coloro (the colour system). These not only offer new growth
opportunities within the existing customer base but have driven
an expansion of the addressable market beyond apparel and
into newer product categories, as with the launch of Beauty in
April 2019. This offering, specifically for the beauty industry,
serves product developers with trend information based on four
key elements: Ingredients, Texture & Fragrance, Colour, and
Packaging. We now have over 200 customers signed up to Beauty,
achieving more than double our original year one targets.
Instock, our digital shelf product for apparel companies, continues
to gain traction with Financial Services companies interested in
utilising alternative data to inform their investment decisions and
we are focusing our efforts on this end market.
We will continue to explore opportunities to enter new market
segments where our expertise in trend forecasting can be
adapted, with a new product in the Food & Beverage market
targeted for launch later in 2020. We will also continue to use
data from other Ascential products to inform forecasts and
analysis including empirical innovations such as the Trend Curve,
launched in September 2019.
These initiatives position us well for continued mid to high single
digit revenue growth in this segment.
MARKETING
One of our key objectives for 2019 was
to re-establish the Marketing segment
as a pillar of sustainable growth after a
re-set year in 2018 for its two largest
businesses.
We are therefore pleased to report 9% Organic revenue growth
and 20% Organic Adjusted EBITDA growth for the year. Margin
grew to 37% as a result.
Through Cannes Lions we are the globally recognised
international benchmark for brand creativity, delivered via
the festival platform in June, and through year-round digital
products and consultancy engagements. Following the changes
implemented in 2018, including the new awards structure and
re-focus into a shorter, five-day period, the festival returned to
double-digit growth in 2019. Last year’s changes to the festival’s
format continue to be extremely well received by participants,
resulting in a 2019 NPS score of 69, the highest on record and
positioning Lions well for future growth. All three Cannes Lions
revenue streams grew in 2019:
• Award entries accounted for 36% of Lions revenue. We were
pleased with the launch year performance of the Entertainment
Lion for Sport and the Creative Strategy Lion while the Creative
Effectiveness category continued to expand. The new points-
based award for Creative Brand of the Year, won in 2019 by
Burger King, helped drive growth in entries from brands.
• Delegate passes accounted for 33% of the festival’s revenue.
We saw a good increase in the volume of delegates, driven in
part by growing popularity of the “Cannes Curated” product for
major brand groups.
• Partnerships and digital revenues accounted for 31% of Lions’
revenues, with The Work and Lions Digital Pass broadening
engagement with the creative community beyond the physical
environment of the city of Cannes. These Lions Intelligence
services have further developed the Marketing segment’s
year-round digital revenue streams helped by the growth
of the Lions Advisory offering of training programmes and
consultancy services for brands and media platforms.
Through the MediaLink offering Ascential develops partnerships
and strategy for customers operating at the intersection of the
media, marketing, advertising, technology and entertainment
industries. Over previous years we have refined the business
in favour of project work, particularly for brands, rather than
structurally weaker sectors such as digital publishing.
The first half of 2019, in particular, benefitted from several major
agency reviews and strong performance from the programme of
targeted content, curated experiences and hosted meetings at
The Consumer Electronics Show (CES) and Cannes Lions festival,
with more than 1,800 hosted meetings taking place (a record
for the business). In particular, the new location in Cannes (a
dedicated facility at the heart of the festival), proved extremely
popular with customers. The most high profile engagement this
year was the global media agency review for Disney, the largest
of its kind in the market in three years. Lastly, we were delighted
to see MediaLink’s founder and CEO, Michael Kassan, inducted
into the 2019 American Advertising Federation’s Hall of Fame in
recognition of his and the business’s work in the industry.
Through WARC’s digital subscription-based information we
help brands, agencies and media platforms measure marketing
effectiveness across all channels. Revenue grew strongly,
with a significant focus on product, content and marketing
enhancements. A notable development was the launch of
operations in China, supported by a Shanghai based team
delivering localised content in this increasingly important market.
Other highlights included the relaunch of the Gunn report as
‘WARC Rankings’, a benchmark for excellence in marketing based
on performance in the world’s most prestigious industry awards.
One of our aims within the Marketing segment is to further
diversify our revenue streams and build ever more recurring and
repeat revenues. To further that aim we have made a strategic
investment in Hudson MX, a New York based company building
a software platform that empowers buyers, agencies, and their
partners to reduce the operational costs inherent in the media
buying process.
2019’s growth rate in the Marketing segment clearly benefitted
from the foundations laid in 2018 as well as the return of a
key customer to Cannes Lions after a one-year hiatus. These
foundations position us well for mid-single digit revenue growth
in this segment.
SALES
Revenue in the Sales segment grew by
3% on an Organic basis or, including the
impact of 2018 acquisitions (principally
Flywheel Digital), by 11%.
The Organic and Proforma decline in EBITDA reflects high levels
of investment in the Edge and Flywheel Digital products in the
year as well as the expected decline in revenue from the smaller
World Retail Congress and Retail Week.
Digital Commerce
The Digital Commerce element of the Sales segment (comprising
Edge by Ascential, Flywheel Digital and Yimian) grew revenues by
9% on an Organic basis and 21% on a Proforma basis.
Through Edge by Ascential we deliver eCommerce data, insights
and advisory, comprising performance measurement, digital shelf
optimisation, pricing & promotion and retail strategy expertise.
As previously reported, following a period of rapid customer
acquisition for each of its major products, in the second half of
2018 this business commenced an integration programme which
will run until the first half of 2020. With a focus on unifying its go
to market approach, Product Leadership, Innovation, Technology
and Operations platforms, the programme will additionally scale
the organisation, processes and systems required to manage
significant numbers of global customers. With the initial phases,
covering organisational structure and CRM systems, completed
by June 2019, progress has also been made on the underlying
platform consolidation, with the phased roll-out of digital shelf
catalogue systems to market share customers completed on
schedule in December 2019 and the launch of the new market
share platform.
Edge acquired 89 new customers in 2019 (2018: 107), but, as
previously reported, revenue growth rates reduced. This was due
in part to the impact of our integration efforts, with cross-sell and
upsell opportunities dependent partly on our phased transfer
of customers to the new catalogue platform. However, we were
encouraged by trading during the first month of 2020 which was
ahead of plan, which was especially important as Edge renews
35% of its book of business in the month of January.
Through Flywheel Digital we provide managed retail and media
services to brands on Amazon and more recently Walmart,
Instacart and Kroger. Since acquisition in November 2018,
we have established these services in Europe, Australia and
Japan. The rate of revenue growth in 2019 has continued to
be extremely strong against a backdrop of good US market
conditions and Amazon’s strong growth, including its best
ever Black Friday in 2019 (online spend up by 16% over the
Thanksgiving holiday weekend). All three revenue lines (retainer,
retail commission and media commission) continued to grow
strongly, benefiting from expanding markets and continued share
gains while 28 new customers were added in the year.
In 2019 we were also pleased to launch both our Spotlight
operation in New York and our initial Walmart service offering,
being selected among the first Walmart Advertising Partners.
We invested heavily in scaling the overall business, while taking
the lead in building Ascential’s wider data science capabilities.
Most recently, in February 2020, we have expanded into the
active lifestyle category through the acquisition of Indigitous,
an Amazon-focused service provider based in Seattle.
Finally, in this sub-segment, after an extensive search and
considerable diligence, we were delighted to acquire the Chinese
eCommerce analytics specialist Yimian. With around 100 staff
based in Shenzen and Shanghai, Yimian helps its customers,
predominantly multi-national CPGs, optimise their sales on
eCommerce platforms. Its principal offerings comprise insight
on sales & share performance and pricing & promotion trends,
together with analysis of ratings and reviews on both retail and
social platforms.
SALES continued
Non-Digital Commerce
Through Money20/20 we are the leading hub worldwide for
digital payments product strategy. Our congresses focus on the
evolution of consumer payment and financial services through
mobile, retail, marketing services, data and technology, and,
despite a small decline for the Asia edition, achieved modest
growth overall in the year, driven by the European event.
At the Asian event in Singapore, over 3,000 attendees explored
the future of money. After an outstanding launch edition in 2018
that was two years in the making, the 2019 event saw a small
year over year revenue decline and we have spent significant time
redesigning and relaunching the 2020 show.
Meanwhile, in its fourth year, the European congress in
Amsterdam delivered strong growth, with increases in revenue
and volumes for both delegates and sponsors, reflecting the
quality of the product and location and the scale of the European
market. The event attracted more than 6,000 attendees while the
enlarged exhibition space in Amsterdam enabled an increase in
net square meterage sold.
Now in its eighth year, the US event took place in Las Vegas as
usual, with good growth in both exhibitor and delegate volumes
driven by a refreshed pricing strategy focusing on volume
over yield. A revised venue layout offered delegates a more
inclusive learning experience along with an improved networking
experience via our App (delivering over 4,000 meetings) and we
saw a strong improvement in NPS scores.
The planned second edition in China, due to be held in December
2019, was deferred due to a hiatus for international companies in
the Chinese FinTech market arising from a combination of macro-
economic trends and changes in local market dynamics including
significant changes in the Peer-to-Peer lending sector that
had been an important revenue source in 2018. We intend to
return the event to China in due course when market conditions
improve.
The final, and smallest, element of the Sales Segment is
delivered by the Retail Week and World Retail Congress
products. These brands saw a revenue decline in the face
of a highly challenged bricks and mortar retail environment
particularly in the UK.
We are targeting high single digit growth in the Sales Segment
going forward with that growth clearly skewed towards the
Digital Commerce sub-segment.
BUILT ENVIRONMENT
& POLICY
The Built Environment & Policy
segment comprises the Groundsure,
Glenigan and DeHavilland digital
information products. Revenue for the
year grew by 5% to £35.9m, with
all three products contributing growth.
Through Groundsure we are a leading provider of environmental
risk data to the UK residential property market. The product
grew well against a UK residential property market that
declined, as it continued to lead on product innovation, with
new products in the period focusing on coal mining and energy
& transportation, together with the refresh of the Groundsure
Homebuyers report. Shortly after the year end we reinforced our
commitment to product innovation with the acquisition of a small
specialist data provider and consultant based in Cornwall, Mining
Searches UK, through which we will add non-coal to our mining
searches portfolio.
Through Glenigan we provide construction project sales leads,
industry data, analysis, forecasting and company intelligence. The
business grew in the year and maintained good retention rates,
against a challenging market backdrop. The bespoke research
element of the product achieved good traction in the market
throughout the year reflecting our high standing with customers.
Finally, through DeHavilland, we are a leading provider of
political intelligence and monitoring services in the UK and EU.
The business achieved good growth in the year, improving its
retention rates, helped by the launch of a new data feed API
which allows clients to receive political contact data directly into
their CRM solutions. While Brexit undoubtedly drove some
increased customer need throughout 2019, we expect that this
will continue as the UK moves into the next demanding phase of
its exit from the European Union.
We are targeting the Built Environment & Policy segment to
continue to grow at similar levels to 2019.
Financial review
FINANCIAL REVIEW
2019 was another year of good Organic growth
in revenue and Adjusted EBITDA. Solid cash
generation resulted in closing net debt leverage
of 1.4x1, after continued investment in the
business and M&A.
Mandy Gradden
Chief Financial Officer
1 Please refer to Alternative Performance Measures for definition
26 / Ascential plc Annual Report 2019
Overview
The results for the year are set out in the
consolidated statement of profit or loss and
show, for continuing operations, revenue of
£416.2m (2018: £348.5m), a growth of 19.4%
(or 6.4% on an Organic basis, and 9.0% on a
Proforma basis), and operating profit of £19.9m
down 51.9% (2018: £41.4m). Adjusted EBITDA
was £128.5m (2018: £108.4m) representing
Organic growth of 6.2% or 8.5% growth on a
Proforma basis. We also delivered solid cash
flow in 2019 with free cash flow from continuing
operations after tax and capex of £91.5m (2018:
£84.8m), an operating cash flow conversion of
88% and a free cash flow conversion of 71%.
A core KPI and strategic goal of the Company
is Organic revenue growth rate. We believe
that 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 rate eliminates the
impact of acquisitions (counting them only once
they have been owned for 12 months) 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 on page 33. Proforma
growth rate is measured in a similar way to
Organic growth rate but assumes that the
Group’s acquisitions were all made on 1 January
2018 and is therefore a measure of the rate of
growth of the brands owned today.
Adjusted EBITDA is also an Alternative
Performance Measure and is used in the
day-to-day management of the business to aid
comparisons with peer 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
The results for the year ended 31 December 2019 are set out in the consolidated statement of profit or loss and summarised in the table below.
£’m
Revenue
Adjusted EBITDA
Adjusted EBITDA margin
* Restated for initial application of IFRS 16 (see Note 27).
2019
416.2
128.5
30.9%
2018*
348.5
108.4
31.1%
Reported
growth rate
Organic
growth rate
Proforma
growth rate
19.4%
18.5%
6.4%
6.2%
9.0%
8.5%
Segmental results
Following the sale of the Exhibitions Business in July 2018, the Group changed from two to four reportable segments to align the operating model to the
needs of the end customers we serve. The four reportable segments are Product Design, Marketing, Sales and Built Environment & Policy. Information
regarding the results of each reportable segment is included below.
2019
£’m
Revenue
Organic growth
Proforma growth
Adjusted EBITDA
Organic growth
Proforma growth
Adjusted EBITDA margin
Depreciation and software amortisation
Adjusted operating profit
2018*
£’m
Revenue
Adjusted EBITDA
Adjusted EBITDA margin
Depreciation and software amortisation
Adjusted operating profit
* Restated for initial application of IFRS 16 (see Note 27).
Product
Design Marketing
86.5
8%
8%
36.0
18%
18%
135.9
9%
9%
50.7
20%
19%
41.7%
37.3%
(4.2)
31.8
(7.5)
43.2
77.8
29.9
38.4%
116.3
40.5
34.8%
Built
Environment
& Policy
Corporate
costs
Continuing
operations
35.9
5%
5%
17.0
19%
19%
47.2%
(0.9)
16.1
34.3
14.3
41.7%
(0.5)
(14.8)
416.2
6.4%
9.0%
128.5
6.2%
8.5%
30.9%
(3.5)
(18.3)
(22.7)
105.8
(0.8)
(14.6)
348.5
108.4
31.1%
Sales
158.4
3%
11%
39.6
(24%)
(14%)
25.0%
(6.6)
33.0
120.9
38.3
31.7%
(4.0)
25.9
(5.5)
35.0
(3.0)
35.3
(0.7)
13.6
(3.0)
(17.6)
(16.2)
92.2
Revenue
The Company benefits from diverse revenue streams across its segments ranging from digital subscriptions to live events to advisory. Most of these
revenue streams have recurring or repeat characteristics and benefit from our focus on customer retention, with over 80% of all revenue coming from
recurring revenue types or repeat business.
Revenues from continuing operations grew to £416.2m (2018: £348.5m), an increase of £67.7m or 19.4%. Adjusting for currency impacts and
acquisitions, Organic growth was 6.4% driven by the Marketing segment and the Product Design segment. Proforma revenue growth, which is a
measure of how well the current portfolio of brands is growing, was 9.0% and was driven by the Sales segment.
Ascential plc Annual Report 2019 / 27
Strategic reportGovernance reportFinancial statements Financial review /CONTINUED
Adjusted EBITDA
Adjusted EBITDA increased by 18.5% to £128.5m (2018: £108.4m)
representing a 6.2% Organic growth rate, reflecting operational leverage
and flow-through from revenue growth in the Marketing and Product
Design segments in particular.
Adjusted EBITDA margin remained in line with the prior year at 30.9%
(2018: 31.1%), where declining margins in the Sales segment as a result
of investment in Edge and Flywheel Digital were offset by increases in
all other segments' Adjusted EBITDA margins. We continue to see the
evidence of the superior margin opportunities in scaled, mature, digital
subscription businesses.
Reconciliation between Adjusted EBITDA and statutory
operating profit
Adjusted EBITDA is reconciled to statutory operating profit as shown
in the table below:
£’m
Adjusted EBITDA
Depreciation and software amortisation
Adjusted operating profit
Amortisation
Exceptional items
Share-based payments
Statutory operating profit
* Restated for initial application of IFRS 16 (see Note 27).
2019
128.5
(22.7)
105.8
(35.8)
(41.6)
(8.5)
19.9
2018*
108.4
(16.2)
92.2
(30.6)
(14.0)
Amortisation of acquired intangible assets
The amortisation charge of £35.8m (2018: £30.6m) on acquired
intangible assets increased mainly due to full year charges for the acquired
intangibles of Flywheel Digital and WARC, offset by the impact of fully
amortised assets. The Company undertakes a periodic review of the
carrying value of its intangible assets of £760.7m (2018: £786.0m) which
are supported by value in use calculations. No impairments were identified
in the current or prior year.
Exceptional items
The charge for exceptional items in 2019 totalled £41.6m (2018: £14.0m
relating to continuing operations) as set out in the table below and further
explained in Note 5.
£’m
Deferred contingent consideration
Other acquisition and disposal expenses
Exceptional items relating to
continuing operations
2019
33.1
8.5
41.6
2018
8.1
5.9
14.0
The charge for deferred contingent consideration relates to acquisition-
related contingent employment costs on the acquisitions of Flywheel
Digital, MediaLink, One Click Retail and Clavis which, absent the link to
continued employment, would have been treated as consideration as well
as the revaluation of initial estimates of deferred consideration.
28 / Ascential plc Annual Report 2019
The substantial increase in charge in 2019 reflects the significant
outperformance of Flywheel Digital in 2019 compared to our original
expectations (a total charge of £36.9m).
Other acquisition and disposal expenses include £3.5m of costs relating
to transaction costs (diligence and legal fees) with the remainder
represented by integration costs offset by credits from the release of
provisions in respect of historical disposals.
Share-based payments
The charge for share-based payments of £8.5m (2018: £6.2m)
incorporates the Share Incentive Plan, the SAYE and the Performance
Share Plan and the increase is driven partially by this being the first full
three years since the IPO. As explained in the Alternative Performance
Measures section, we treat share-based payments as an adjusting item
because they are a significant non-cash charge driven by a valuation model
that references Ascential's share price and so is subject to volatility rather
than referencing operational activity.
Finance costs
The Adjusted net finance cost for the year was £10.3m (2018: £13.1m)
as set out in the table below:
Adjusted net finance costs £’m
2019
2018*
Interest payable on external borrowings
(6.2)
Interest receivable
41.4
Amortisation of loan arrangement fees
Discount unwind on contingent and deferred
consideration
Discount unwind of lease liability
Discount unwind of property provisions
Net foreign exchange gain/(loss)
Remeasurement of trade investments to fair
value
Adjusted net finance costs
* Restated for initial application of IFRS 16 (see Note 27).
(6.8)
0.9
(1.1)
(5.5)
(1.3)
(0.1)
2.0
(7.1)
0.6
(1.2)
(3.6)
(1.2)
-
(0.6)
1.6
(10.3)
-
(13.1)
The net interest expense on the Company’s net debt was £5.9m (2018:
£6.5m) with the decrease driven by the higher cash holdings throughout
the year and particularly in the first half with the reduction in interest
margin driven by reduced leverage offset by higher LIBOR.
Amortisation of loan arrangement fees relates to the unwind of fees
capitalised in respect of the borrowing facility taken out in 2016. In
January 2020, the Group entered into a new five year multi-currency
revolving credit facility (“RCF”) of £450m (see Liquidity section below
for further details). Upon completion of the new agreement, capitalised
arrangement fees of £1.2m relating to the previous facility will be written
off in 2020 as exceptional costs. We expect fees of £3.9m to be capitalised
as part of the new arrangements and these will be amortised over the
expected life of the facility.
Discount unwind on contingent and deferred consideration of £5.5m
reflects the full year impact of the discount unwind on the future expected
consideration of the acquisition of Flywheel Digital.
Net foreign exchange gain or loss includes credits arising on the
revaluation of monetary items (particularly cash) in the year. Finally, our
2019 net finance cost was also reduced by positive revaluations of £1.6m
on our equity investments in Hudson MX, Shoptalk and the WGSN China
joint venture.
Taxation
A tax charge of £20.6m (2018: £17.8m) was incurred on continuing
Adjusted profit before tax of £96.4m (2018: £79.7m) resulting in an
Adjusted effective tax rate for the year of 21.4% (2018: 22.3%) which
compares to the effective tax rate of 20.6% on reported profits as can
be seen in the table below.
Analysis of tax charge (£'m)
Adjusted PBT
Tax charge on Adjusted PBT
Effective tax rate on Adjusted PBT
Adjusting items
Tax credit on Adjusting items
Effective tax rate on Adjusting items
Reported PBT
Tax charge on reported PBT
2019
96.4
(20.6)
21.4%
(86.2)
18.5
21.5%
10.2
(2.1)
2018
79.7
(17.8)
22.3%
(50.8)
8.9
17.5%
28.9
(8.9)
Foreign currency translation impact
Ascential reports its results in pounds Sterling and following US
acquisitions and the significance of Cannes Lions (primarily Euro) and
Money20/20 (primarily US Dollar and Euro) reported performance is
sensitive to movements in the Euro and US Dollar against pounds Sterling.
For most of 2019, Sterling was in line with the 2018 average Euro
and US Dollar exchange rates but strengthened after the December
UK general election as can be seen in the table below:
Currency
Euro
US Dollar
Weighted average rate
2019
2018 Change
1.12
1.28
1.14
1.32
(1.8%)
(3.0%)
Year-end rate
2019
1.18
1.32
2018 Change
1.12
1.28
5.4%
3.1%
When comparing 2019 and 2018, changes in currency exchange rates
had a net favourable impact of £6.1m on revenue and £1.8m on Adjusted
EBITDA. On a segmental basis, the favourable impact of changes in foreign
currency exchange rates was as follows:
• Product Design: £1.0m impact on revenue and £nil impact on Adjusted
EBITDA.
• Marketing: £3.0m impact on revenue and £0.9m impact on Adjusted
EBITDA.
• Sales: £2.1m impact on revenue and £0.9m impact on Adjusted EBITDA.
Effective tax rate on reported PBT
20.6%
30.8%
• Built Environment & Policy: £nil impact on revenue or Adjusted EBITDA.
Cash tax paid was £3.2m (2018: £12.2m) reflecting refunds of prior year
overpayments. The Group benefited by £4.5m (2018: £3.1m) from the
utilisation of historic tax losses in the UK and US, which are expected to
continue to benefit the Group’s cash flow over the medium term.
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.
The Group has a total recognised deferred tax asset of £42.7m (2018:
£43.1m) relating to UK and US losses, accelerated capital allowances,
US acquired intangibles, and deferred and contingent consideration. The
majority of this asset is expected to convert into cash savings over the next
ten years with more than 75% being recovered over the next three years.
Meanwhile, our deferred tax liability amounted to £22.9m (2018: £24.8m)
and related to non-deductible acquired intangibles and is not expected to
convert into cash.
£'m
Increase in revenue/
Adjusted EBITDA if:
Sterling weakens by 1%
against USD in isolation
Sterling weakens by 1%
against EUR in isolation
2019
Revenue
2019
Adjusted
EBITDA
2018
Revenue
2018
Adjusted
EBITDA
1.9
1.2
0.8
0.8
1.5
1.0
0.7
0.7
Discontinued operations
There were no discontinued operations in 2019. Discontinued operations
in 2018 relate to the trading of the Exhibitions business in the first six
months of the year and its subsequent disposal. The overall result for
discontinued operations was as follows:
Furthermore, each 1% movement in the Euro to pounds Sterling exchange
rate has a £1.5m (2018: £1.5m) impact on the carrying
value of borrowings. Each 1% movement in the US Dollar has a circa £0.7m
impact on the carrying value of borrowings (2018: £0.8m).
Discontinued operations £’m
2019
Revenue
Adjusted EBITDA
Depreciation and amortisation
Amortisation of acquired intangibles
Exceptional items including gain on disposal
Share-based payments
Profit before tax
Taxation
Profit after tax
–
–
–
–
–
–
–
–
–
2018
54.6
19.8
(0.3)
(3.1)
176.5
(0.3)
192.6
(3.4)
189.2
Ascential plc Annual Report 2019 / 29
Strategic reportGovernance reportFinancial statements Deferred consideration
The Company’s preferred structure for M&A is to enter into long-term
earnout arrangements with the founders of acquired companies and to
link the earnout to both the post-acquisition performance of the acquired
company and the continuing employment of the founders. Accounting for
the earnout is complex and requires considerable judgements to be made
about the expected future performance of the acquired company at the
point of acquisition – especially difficult in the type of high growth, early
stage companies that Ascential acquires. The earnout is accounted for
in three ways:
1. A liability for deferred consideration is established on the balance
sheet at the point of acquisition based on that element of the earnout
which is not dependent on the continuing employment of the founders.
This amounted to £103.2m at December 2019 (2018: £96.7m). Any
change in estimate is recorded as an exceptional item. This amounted
to a charge of £13.0m in 2019 (2018: credit £5.2m) driven by the 2019
outperformance of Flywheel offset by the lower performance of One
Click Retail.
2. This liability is discounted to present value with the reversal of this
discount being recorded as Other finance costs within the interest
charge. This amounted to a charge of £5.5m in 2019 (2018: £3.6m).
3. Finally, that element of the deferred consideration that is contingent on
the continuing employment of the founders is charged to the income
statement as an exceptional item over the service life of those founders
(typically three years). This amounted to a charge of £20.1m in 2019
(2018: £13.3m), which was in addition to the charge for the revaluation
of the earnout of £13.0m (2018: £5.2m credit).
In total, the Company expects to pay out contingent consideration of
between £120m and £140m over the next three years for acquisitions to
date. This is mainly contingent on the future performance of the acquired
businesses which are estimated to grow their annual EBITDA by between
approximately £23m and £33m between now and 2022.
Financial review /CONTINUED
Earnings per share
Continuing Adjusted diluted earnings per share of 18.5p per share
is 20.9% ahead of the 15.3p per share recorded for 2018.
Continuing diluted earnings per share of 1.9p per share is below the prior
year figure of 4.8p predominantly due to exceptional charges revaluing
upwards the deferred consideration on Flywheel Digital following its
better than expected performance. Total diluted earnings per share were
1.9p (2018: 51.4p), with the decline driven in large part by the gain on
disposal of the Exhibitions business in 2018.
Acquisitions and disposals
We regularly assess opportunities to acquire high-growth products and
capabilities to serve our key end markets of Product Design, Marketing
and Sales, and in 2019 incurred initial cash consideration of £81.3m for
bolt-on investment opportunities. The cash consideration comprises
£64.5m on investments and £16.8m on acquisition of businesses net of
cash acquired, of which £18.7m is in relation to Yimian.
Jumpshot
In August 2019, we completed the acquisition of a 35% investment in
Jumpshot, Inc., an analytics business providing market leading insights on
digital consumer engagement. Cash consideration including subsequent
working capital contribution and acquisition expenses totalled £56.2m of
which £54.5m was paid prior to 31 December 2019. On 30 January 2020,
we agreed to sell our 35% ownership interest in Jumpshot back to the
majority owner, Avast plc, for cash consideration equivalent to our cost of
investment including expenses.
Yimian
In December 2019, we completed the acquisition of Shenzhen Yimian
Network Technology Co., Ltd ("Yimian") for initial consideration of £19.5m
with a further £8-10m expected to be paid as part of earnout consideration
relating to 2019 to 2022 revenue targets. Yimian provides services to help
clients optimise their digital marketing and sales on China’s e-Commerce
platforms.
Hudson
Hudson MX is an advertising software business providing media buying
and media accounting solutions through a cloud-based SaaS platform. In
2019 we invested £8.0m for a minor equity interest and, subject to certain
growth targets, agreed to increase our future holding for further cash
consideration of £8.0m. A gain of £0.9m was recognised within net finance
costs reflecting the upwards revaluation of our equity investment based on
third party participation in the transactions.
Infosum
In addition, the Group made a minority equity investment of £2.0m in
Infosum, a company that provides a decentralised environment to connect
customer data, conduct analysis and drive more effective marketing
campaigns, without any data exchange.
30 / Ascential plc Annual Report 2019
Cash flow
Continuing operations
The Company generated Adjusted operating cash flow from continuing
operations of £113.2m (2018: £114.4m), being an 88% operating cash
flow conversion (2018: 106%). The reduction in operating cash flow
conversion was driven mainly by the working capital impact of the very
high growth of the Flywheel business.
After continued investment in product development in our digital
subscription products, internal productivity tools and property, capex
remained consistent with the prior year at £18.5m (2018: £18.7m).
Tax paid on profits from continuing operations decreased from
£12.2m to £3.2m, driven by the shielding of current year charges
by historic losses and refunds of overpayments in prior years.
As a result, the Company generated free cash flow on continuing
operations of £91.5m (2018: £84.8m) as shown in the table below:
£’m
Adjusted EBITDA
Working capital movements
Adjusted operating cash flow from
continuing operations
% operating cash flow conversion
Capital expenditure
Tax paid
Free cash flow from continuing operations
% free cash flow conversion
* Restated for initial application of IFRS 16 (see Note 27).
2019
128.5
(15.3)
113.2
88%
(18.5)
(3.2)
91.5
71%
2018*
108.4
6.0
114.4
106%
(18.7)
(10.9)
84.8
78%
Discontinued operations
There were no significant free cash flows from discontinued operations
in 2019 while 2018 included discontinued free cash flows relating to the
Exhibitions business.
Total operations
The cash flow statement and net debt position are summarised below
and include significant proceeds from the Company’s business disposals in
2018 totalling £290.0m, as well as deferred and initial consideration paid
on the Company’s current and prior years’ acquisitions totalling £48.6m
(2018: £156.4m).
£’m
Free cash flow from continuing operations
Free cash flow from discontinued operations
Free cash flow from total operations
Acquisition of investments
Acquisition of businesses net of cash acquired
Deferred and contingent consideration cash
paid in the year
Exceptional costs paid
— Acquisition-related contingent employment
cost
— Other
Disposal proceeds received
— Cash proceeds received net of cash
disposed of
— Disposal costs paid
Cash flow before financing activities
Net interest paid
Dividends paid
Lease liabilities paid
Proceeds of issue of shares net of expenses
Debt repayment
Net cash flow
Opening cash balance
FX movements
Closing cash balance
Borrowings
Capitalised arrangement fees
Derivative financial instruments
Net debt
* Restated for initial application of IFRS 16 (see Note 27).
2019
91.5
-
91.5
(64.5)
(16.8)
2018*
84.8
2.1
86.9
(0.7)
(97.7)
(20.3)
(37.7)
(11.5)
(11.3)
(21.0)
(12.4)
-
(2.3)
(35.2)
(6.2)
(22.9)
(9.0)
1.2
–
(72.1)
182.0
1.8
111.7
(283.8)
1.2
0.3
(170.6)
296.4
(6.4)
207.4
(6.9)
(22.8)
(7.7)
0.4
(33.6)
136.8
45.8
(0.6)
182.0
(294.1)
2.3
–
(109.8)
Ascential plc Annual Report 2019 / 31
Strategic reportGovernance reportFinancial statements Financial review /CONTINUED
Returns to shareholders
The Board targets a dividend payout ratio of 30% of Adjusted profit after
tax. Consequently, the Board is recommending a final dividend of 4.0p per
share payable on 11 June 2020 to shareholders on the register on 15 May
2020 which, together with the Company’s interim dividend of 1.8p paid
in September 2019, makes a total dividend for the 2019 financial year
of 5.8p (2018: 5.8p) with the prior year benefiting from earnings from
discontinued operations.
Consistently strong levels of cash flow conversion, combined with
disciplined capital allocation, has resulted in a net debt leverage ratio of
1.4x at the 2019 year end. Furthermore, following the sale of the Jumpshot
investment in January 2020, our Proforma leverage is 1.0x which is
well below historic levels. While we have a strong pipeline of attractive
investment opportunities, we recognise that the delivery of shareholder
value requires a balanced approach to investing in growth and returning
excess capital to shareholders whilst maintaining a strong balance sheet.
Having reviewed our capital allocation policy the Board has decided to
utilise part of its authority to make on market purchases of our ordinary
shares. We anticipate spending up to £120m in a share repurchase
programme, which we will review on an ongoing basis based on the
competing opportunities for capital deployment.
Other financial matters
Accounting developments
IFRS 16, Leases, was effective from 1 January 2019 and we have taken
the decision to apply this standard retrospectively. We have consequently
adjusted our financial statements from the earliest point presented,
1 January 2018. The most significant impacts of the new accounting
standard are the recognition of operating lease liabilities on the balance
sheet and the reclassification of the lease charge from EBITDA to
amortisation and interest. In relation to these leases we recognised
£21.6m of right-of-use assets, £2.1m of investment property, and £26.8m
lease liabilities as at 31 December 2019. We also recognised £7.3m (2018:
£5.4m) of amortisation charges and £1.3m (2018: £1.2m) of interest costs
from these leases instead of an operating lease expense.
Capital structure
The Group manages its capital to ensure that entities in the Group will
be able to continue as a going concern while maximising the return to
shareholders through the optimisation of the debt to equity balance. The
capital structure of the Group consists of debt, cash and cash equivalents
and equity attributable to equity holders of the parent comprising capital,
reserves and retained earnings. The Group’s policy is to borrow centrally
to meet anticipated funding requirements. These borrowings, together
with cash generated from the operations, are on-lent or contributed as
equity to subsidiaries at market-based interest rates and on commercial
terms and conditions.
The Company’s 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 that allows a healthy mix of
dividends and cash for investment in bolt-on acquisitions.
Liquidity
In January 2020, the Group entered into a new five year multi-currency
revolving credit facility (“RCF”) of £450m with an accordion of up to a
further £120m or 150% of EBITDA. The maturity of the facility may
be extended at the option of the Group for up to two further one-year
terms subject to individual lender approval. The facility covenants include
a maximum net leverage of 3.25x with the benefit of an additional 0.5x
leverage spike for relevant acquisitions and a minimum interest cover of
3.00x and are tested semi-annually.
The previous facility, which operated through the 2019 financial year,
comprised term loan facilities of £66m, €171m and US$96m as well
as an RCF of £95m. All were due to mature in February 2021 and at
December 2019 were subject to interest at 1.50% over LIBOR . There was
a leverage covenant limit of 3.5x which was measured semi-annually. As at
31 December 2019 and 2018, all of the term facilities, totalling £283.8m
(2018: £294.1m) had been drawn and none of the £95.0m of RCF had
been drawn (2018: none).
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 51% in Euros with the balance
split between US Dollars (26%) and pounds Sterling (23%). The Company
reviews and protects a proportion of its exposure to interest rate rises
on the cost of borrowings through use of derivatives such as interest
rate caps where appropriate. Principal risks (including strategic,
operational, legal and other risks) are shown on pages 40 to 45.
Going concern
The Board is responsible for determining the nature and extent of the
principal risks it is willing to take in achieving its strategic objectives.
Ascential’s business activities, performance and position, together
with the factors likely to affect its future development, are set out on
pages 12 to 37. The financial risk management objectives, policies and
processes in place for assessment, management and monitoring of risks,
including the risks resulting from Brexit and the current outbreak of the
Coronavirus, are also described on page 40 and more fully in Note 29 of
the consolidated financial statements.
The Directors believe that the Company is well placed to manage its
business risks successfully and have assessed the Group’s prospects and
viability over a three-year period. The long-term viability statement, which
provides further detail of this assessment, can be found on page 39. 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, including the period
exceeding 12 months from the date when the financial statements are
approved. Accordingly, the Directors continue to adopt the going concern
basis for the preparation of the financial statements.
Mandy Gradden
Chief Financial Officer
21 February 2020
32 / Ascential plc Annual Report 2019
Alternative performance measures
OUR ALTERNATIVE
PERFORMANCE MEASURES
Ascential 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 result 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.
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 (if any) are included in the same
period as the current year results.
Organic growth for continuing operations is calculated as follows:
2019
£’m
Revenue
2019 - reported
Exclude acquisitions
2019 – Organic basis
Organic revenue growth
2018 - reported
Exclude acquisitions
Currency adjustment
2018 – Organic basis
Adjusted EBITDA
2019 – reported
Exclude acquisitions
2019 – Organic basis
Organic EBITDA growth
2018 – as restated
Currency adjustment
2018 – Organic basis
* Restated for initial application of IFRS 16 (see Note 27).
Product
Design
Marketing
Sales
Built
Environment
& Policy
Corporate
costs
Continuing
operations
86.5
(1.5)
85.0
8%
77.8
–
1.0
78.8
36.0
(0.6)
35.4
18%
29.9
–
29.9
135.9
(6.4)
129.5
9%
158.4
(33.8)
124.6
3%
35.9
–
35.9
5%
(0.5)
–
(0.5)
416.2
(41.7)
374.5
6.4%
116.3
120.9
34.3
(0.8)
348.5
–
3.0
(2.5)
2.1
–
–
–
–
(2.5)
6.1
119.3
120.5
34.3
(0.8)
352.0
50.7
(1.0)
49.7
20%
40.5
0.9
41.4
39.6
(9.8)
29.8
(24%)
38.3
0.9
39.2
17.0
–
17.0
19%
14.3
–
14.3
(14.8)
–
(14.8)
(2%)
(14.6)
–
(14.6)
128.5
(11.5)
117.0
6.2%
108.4
1.8
110.2
Ascential plc Annual Report 2019 / 33
Strategic reportGovernance reportFinancial statements Alternative performance measures /CONTINUED
Proforma growth measures
Proforma growth is measured in a similar way to Organic growth but assumes that the Company’s acquisitions or disposals were all made on the first day
of the comparative accounting period and is a measure of the rate of growth of the brands owned today. Proforma growth is calculated as follows:
Marketing
Sales
Built
Environment
& Policy
Corporate
costs
Continuing
operations
Product
Design
86.5
3.0
89.5
8%
135.9
–
135.9
9%
77.8
116.3
4.3
–
1.1
5.6
–
3.2
158.4
3.3
161.7
11%
120.9
24.6
(2.5)
2.9
35.9
–
35.9
5%
(0.5)
–
(0.5)
34.3
(0.8)
–
–
–
–
–
–
416.2
6.3
422.5
9.0%
348.5
34.4
(2.5)
7.1
83.2
125.0
145.8
34.3
(0.8)
387.5
36.0
1.1
37.1
18%
29.9
1.5
0.1
31.4
50.7
–
50.7
19%
40.5
1.0
1.0
42.5
39.6
–
39.6
(14%)
38.3
6.4
1.2
45.8
17.0
–
17.0
19%
(14.8)
–
(14.8)
(1%)
128.5
1.1
129.6
8.5%
14.3
(14.6)
108.4
–
–
–
–
8.8
2.2
14.3
(14.6)
119.4
2019
£’m
Revenue
2019 - reported
Include acquisitions
2019 – Proforma basis
Proforma revenue growth
2018 - reported
Include acquisitions
Exclude acquisitions
Currency adjustment
2018 – Proforma basis
Adjusted EBITDA
2019 – reported
Include acquisitions
2019 – Proforma basis
Proforma EBITDA growth
2018 – as restated
Include acquisitions
Currency adjustment
2018 – Proforma basis
* Restated for initial application of IFRS 16 (see Note 27).
34 / Ascential plc Annual Report 2019
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
detail 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 position as these types of cost do not form part of the underlying business.
Amortisation of intangible assets acquired through business combinations and interests in associates
Charges for amortisation of acquired intangibles arise from the purchase consideration of a number of separate acquisitions and interests in associates.
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
Ascential runs a number of employee share schemes . Income statement charges are a significant non-cash charge and are driven by a valuation model
which references Ascential share price and so is subject to volatility rather than referencing operational activity.
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.
Ascential plc Annual Report 2019 / 35
Strategic reportGovernance reportFinancial statements Alternative performance measures /CONTINUED
Adjusted cash flow measures
The Company uses Adjusted cash flow measures for the same purpose as Adjusted profit measures, namely 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:
£’m
Cash generated from operations
Less: cash generated from discontinued operations
Add back: acquisition-related contingent employment cash flow
Add back: other exceptional cash flow
Adjusted cash generated from operations
*Restated for initial application of IFRS 16 (see Note 27).
£’m
Net cash from operating activities
Less: cash generated from discontinued operations
Add back: acquisition-related contingent employment cash flow
Add back: other exceptional cash flow
Less: capital expenditure
Free cash flow
*Restated for initial application of IFRS 16 (see Note 27).
£’m
Adjusted cash generated from operations
EBITDA
Operating cash conversion
* Restated for initial application of IFRS 16 (see Note 27).
£’m
Free cash flow
EBITDA
Free cash flow conversion
* Restated for initial application of IFRS 16 (see Note 27).
2019
90.4
-
11.5
11.3
2018*
84.4
(3.4)
21.0
12.4
113.2
114.4
2019
87.2
-
11.5
11.3
(18.5)
91.5
2019
113.2
128.5
88%
2019
91.5
128.5
71%
2018*
72.2
(2.1)
21.0
12.4
(18.7)
84.8
2018*
114.4
108.4
106%
2018*
84.8
108.4
78%
The Company monitors its operational balance sheet efficiency with reference to Operating Cash Conversion and Free Cash Flow.
36 / Ascential plc Annual Report 2019
Glossary of alternative performance measures
Term
Description
Organic revenue growth
Revenue growth on a like-for-like basis
Organic EBITDA growth
Adjusted EBITDA growth on a like-for-like basis
Proforma revenue growth
Proforma EBITDA growth
Exceptional items
Adjusting items
Revenue growth on a like-for-like basis assuming the Company's acquisitions or disposals were all made on the
first day of the comparative accounting period
Adjusted EBITDA growth on a like-for-like basis assuming the Company's acquisitions or disposals were all
made on the first day of the comparative accounting period
Items within Operating profit / (loss) separately identified in accordance with Group accounting policies
Exceptional items, Amortisation of intangible assets acquired through business combinations and investments
in associates, Share-based payments, Gains and losses on disposal and Tax related thereto
Adjusted operating profit / (loss)
Operating profit / (loss) excluding Adjusting items
Adjusted EBITDA
Adjusted operating profit/ (loss) excluding depreciation and amortisation
Adjusted EBITDA margin
Adjusted EBITDA as a percentage of Revenue
Adjusted profit/ (loss) before tax
Profit/ (loss) before tax excluding Adjusting items
Adjusted tax charge
Tax charge excluding Adjusting items
Adjusted effective tax rate
Adjusted tax charge expressed as a percentage of Adjusted profit before tax
Adjusted EPS
EPS calculated with reference to Adjusted Profit/ (loss) for the period
Adjusted cash generated from
continuing operations
Cash generated from operations with cash generated from discontinued operations, acquisition related
contingent consideration and other exceptional cash flows excluded
Operating cash conversion
Adjusted cash generated from continuing operations expressed as a percentage of Adjusted EBITDA
Free cash flow
Leverage
Net debt
Net cash generated from operating activities including capital expenditure. Net cash generated from
discontinued operations, acquisition-related contingent consideration and other exceptional cash flow are
excluded.
The ratio of Net debt to Adjusted EBITDA before, in both cases, accounting for the impact of IFRS 16
Net debt comprises cash and cash equivalents and external borrowings. Net debt excludes lease liabilities
Ascential plc Annual Report 2019 / 37
Strategic reportGovernance reportFinancial statements Risk management
UNDERSTANDING THE
RISKS AND UNCERTAINTIES
Managing business risks
Like all business, we face a number of risks and
uncertainties. Some come from outside our
business, and others from within. Successful
management of existing and emerging risks is
critical to the long-term success of our business
and to the achievement of strategic objectives.
In order to achieve our strategic objectives,
and seize market opportunities, risk must be
accepted to a reasonable degree within our risk
appetite and balanced by proportionate reward.
Risk management is therefore an integral
component of our corporate governance.
We have further developed our risk
management framework during the year to
more clearly articulate our risk appetite to allow
the Board and management to translate a large
set of choices and options into a sensible set of
investment decisions and priorities.
Risk governance
It is the responsibility of all of our colleagues to
manage risks within their domain. Ultimately,
accountability for risk management resides with
the Board which is responsible for ensuring
that there is an adequate and appropriate risk
management framework and culture in place.
Our risk governance framework is set out
below. At the top of the structure is our Board,
which holds overall responsibility for our risk
management and internal control systems.
The Board sets risk appetite and the tone
of risk management, as well as completing
an assessment of our principal risks.
Our Executive Committee prioritises principal
risks and allocates resources to manage risks
in accordance with agreed risk appetite. The
Audit Committee monitors the adequacy
and effectiveness of internal control and
risk management systems, as well as the
effectiveness of the Internal Audit function.
Our Operational Risk Committees identify
risks and risk owners, identify controls and
mitigations to manage risks, agree action
plans to strengthen controls or address
deficiencies, review progress with action
plans and identify emerging risks.
Risk governance framework
The Board
Audit Committee
— Holds overall responsibility
for Ascential’s risk
management and internal
control systems
— Sets risk appetite taking into
account strategic objectives
— Sets the tone and influences
the culture of risk
management
— Completes robust
assessment of principal risks
— Monitors the adequacy and
effectiveness of internal
control and risk management
systems
— Ensures that a robust
assessment of the principal
risks facing the Company
has been undertaken
— Monitors and reviews the
effectiveness of the Internal
Audit function
Executive Committee
— Prioritises principal risks
— Allocates resources to manage risks according to potential impact
— Communicates priorities to the business
— Reviews Risk Committee registers to agree aggregate risk register
— Identifies emerging actions where Groupwide action is required
Operational Risk Committees
— Identify risks and risk owners
— Score impact of risk on a mitigated and unmitigated
basis according to consistent risk scoring methodology
— Identify controls and mitigations to manage risk
— Agrees action plans to strengthen controls or address deficiencies
— Review progress with action plans and current risks
— Identify emerging risks
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38 / Ascential plc Annual Report 2019
Risk assurance
The Internal Audit function provides assurance
as to the effectiveness of the internal
control environment through its primary
responsibilities:
• reviews and assesses the internal control
environment with focus on control
effectiveness, quality and continuous
improvement;
• determines whether controls are appropriate
to provide financial, managerial and
operating information that is accurate,
reliable and timely;
• determines whether risks are appropriately
identified and managed;
• assesses whether assets are appropriately
safeguarded; and
• evaluates the systems established to ensure
compliance with those policies, plans,
procedures, laws and regulations which
could have a significant impact on Ascential.
The Audit Committee receives and analyses
regular reports from management and internal
audit on matters relating to risk and control
and reviews the timeliness and effectiveness
of corrective action taken by management. The
Audit Committee also considers the findings
and recommendations of the external auditor
throughout the year in relation to the design
and implementation effective financial controls.
Further detail on these activities is included
within the Audit Committee report on page 67.
Long-term viability statement
The Directors have assessed the prospects
and viability of the Group in accordance
with Provision C2.2 of the UK Corporate
Governance Code. This assessment has been
based on a three-year timeframe, covering
the period to 31 December 2022, which is
considered appropriate because it aligns with
the Company’s strategic planning and financial
forecasting horizon, and because, in relation to
viability, it provides a sufficiently long period
for stress testing scenarios to be modelled
through at least one complete business cycle.
The Company’s prospects have been assessed
mainly with reference to the Company’s
strategic planning and associated long-range
financial forecast. This incorporates a detailed
bottom-up budget for each part of the
business. The budgeting and planning process
is thorough and includes input from most
operational line managers as well as senior
management, and forms the basis for most
variable compensation incentives.
The Board also participates during the year
in both strategic planning and reviewing the
detailed bottom-up budgets. The outputs from
this process include full financial forecasts of
EBITDA, Adjusted earnings, cash flow, working
capital and net debt.
The Directors consider that the planning
process and forecasts provide a sound
underpinning to management’s expectations
of the Group’s prospects.
The Directors carried out a robust assessment
of the principal risks facing the Group,
including those that could threaten its
business model, future performance, solvency
or liquidity. This assessment was made with
reference to the Company’s current position
and prospects, strategy and principal risks,
including how these are managed.
The Directors also assessed the potential
impact on the Company’s prospects should
certain risks to the business materialise. This
was done by considering specific scenarios
aligned to the principal risks identified on
pages 40 to 45, applied to stress test the
long-range financial forecast. Of these, the
six scenarios considered to have the most
serious impact on the financial viability of
the Company were modelled in detail.
The specific scenarios were:
• a global recession, designed to capture
the impact of the most serious plausible
manifestation of macro-economic risks;
• a serious safety and security incident at
a major event;
• the loss of a major customer;
• a substantial breach of cyber security
and associated loss of data;
• a significant change in underlying data
sources resulting in reduced data availability
for our eCommerce services; and
• major events being cancelled at short notice,
for instance from disease outbreaks, with no
equivalent alternative available.
For each scenario, the modelling captured the
impact on key measures of profitability, cash
flow, liquidity and debt covenant headroom.
Scenarios included the effects of plausible
mitigation plans where appropriate. In all cases
modelled, the Group was able to continue
to fund its operations and to comply with
debt covenant requirements. Based on this
assessment of prospects and stress test
scenarios, together with its review of principal
risks and the effectiveness of risk management
procedures, the Directors confirm that
they have a reasonable expectation that the
Company will be able to continue in operation
and meet its liabilities as they fall due over the
period to 31 December 2022.
Ascential plc Annual Report 2019 / 39
Strategic reportGovernance reportFinancial statements Principal risks
PRINCIPAL RISKS AND
UNCERTAINTIES
We assess our principal risks in terms of their potential impact
on our ability to deliver our strategic objectives.
The Board has made a robust assessment
of the principal risks facing the business
including those related to its business model,
future performance, solvency or liquidity, and
considered them in the formulation of the
Long-Term Viability Statement.
As part of this assessment, the Board considered
an updated impact analysis of the risks
associated with Britain exiting the EU. The
assessment conducted in 2018 was updated to
reflect any changes in our business model and
operations as well as any clarifying information
that has been made public. The conclusion of
the updated analysis remained that the most
significant threat to Ascential is the increased
broader economic uncertainty including
risk of recession. The impact of this threat
continues to be mitigated by the diversification
of Ascential’s business, both geographically
and across sectors and industries (see the
business model and market review sections for
more detail). Additionally, recession planning
forms part of Ascential’s risk management
process and the influence of Brexit on recession
risk has been considered and monitored as
part of this process. A range of reasonably
possible outcomes was also considered when
performing sensitivity analysis on long range
financial projections (see the long-term viability
statement for more detail).
The Board is actively monitoring the unfolding
situation in respect of the Coronavirus outbreak.
While China is an important long-term strategic
growth market for Ascential, revenues from
Chinese customers are today a relatively small
part of the Group (less than 5%) and we have
not yet seen any material impact on trading
from the situation. As a precaution and to
reflect travel difficulties in the region, we have
previously communicated to participants that
we have moved the date of Money20/20 Asia
in Singapore from March to August 2020. We
continue to monitor the potential impact of
travel restrictions for Chinese delegates and
sponsors to events in Europe (such as Retail
Week Live in London in March). We are also
mindful of the impact that the Coronavirus
might have on the business performance of
our customer base in areas such as fashion but
again have seen no significant impact to date.
Our business continuity plans are enabling the
majority of our approximately 200 staff in China
to remain both safe and productive.
The Board considers the following to be the Company’s principal risks:
Risk
1. Customer end-market development
2. Economic and geopolitical conditions
3. Competition/substitution
4. Execution of new product and capability development
5. Acquisitions and disposals
6. People
7. Reliance on data providers
8. Cyber threat and information security
9. Venue availability, security and access
10. Business resilience
11. Financial risk
12. Regulation and compliance
40 / Ascential plc Annual Report 2019
Change
Stable
Increased
Stable
Increased
Stable
Reduced
Reduced
Stable
Increased
Stable
Stable
Stable
Business and strategic
1. Customer end-market development
Description
Our customers operate in a variety
of end markets, each with their own
competitive pressures affecting
customer preferences and spend.
Growth for our customers is anchored
in understanding in great detail the
many paths to purchase consumers
will take as they watch, buy and
communicate online. Achieving
an integrated consumer to product
view is becoming increasingly critical.
Examples of risks
• Failure to develop an appropriate pipeline of successful products
to meet and anticipate the needs of our customers
• Change in how consumers watch, buy and communicate online
may necessitate further product development
Actions taken to manage risk
• Prioritisation of digital products within capital allocation
• Expansion of our Strategic Sales capability to increase the number
and depth of our strategic customer relationships
• Strategic focus on customer retention gives early indication
of changes to perceived value of products
2. Economic and geopolitical conditions
Description
Across our business we are exposed
to the effects of political and economic
risks. These include the impact of
Brexit, changes in the regulatory
and competitive landscape and the
impact of international trade policy.
Examples of risks
• Financial recession in our key markets leading to reduced
spending power for customers
• Global political uncertainty regarding trade policy
• Exchange rate volatility
• Change in US Administration’s approach to trade policy
Actions taken to manage risk
• Recession modelling gives early visibility of recession,
enabling recession plan to be implemented to mitigate
risk of sustained financial loss
• Brexit impact assessment conducted
• Monitor geopolitical landscape to develop plans to
respond to specific threats or opportunities
3. Competition / substitution
Description
We are exposed to a varied and dynamic
competitive landscape, ranging from
niche providers and new entrants
in eCommerce analytics to data
aggregators and consultancy firms.
Examples of risks
• Loss of market share from increase competition / substitution
• Consultancy firms entering agency review space
• National financial technology festivals
• Aggregators of data analytics companies
Actions taken to manage risk
• Development of Ascential path-to-purchase proposition increases
value of our proposition beyond the sum of parts
• Full integration of Edge by Ascential into single platform offering
total eCommerce capabilities
• Close monitoring of competitive landscape and emerging
technology to identify threats and opportunities
Link to strategy
Our strategic objective to be
a market leading specialist
information company relies
heavily on our ability to
anticipate and respond to our
customers’ changing needs.
Risk movement from 2018
Stable
Link to strategy
Our strategic objective to
accelerate organic growth
requires us to operate
effectively within different
global political situations
which change constantly.
Risk movement from 2018
Increased
Link to strategy
Our strategic objective to be
a market leading specialist
information company relies
on our ability to differentiate
our products and services
from our competition.
Risk movement from 2018
Stable
Ascential plc Annual Report 2019 / 41
Strategic reportGovernance reportFinancial statements Principal risks /CONTINUED
Business and strategic continued
4. Execution of new product and capability development
Description
Development of new products
and capabilities is a key driver for
Organic growth, which is central
to our long-term sustainability.
Examples of risks
• Failure to deliver key new product development would negatively
impact our ability to provide full eCommerce capabilities to
our customers
• New products do not meet customers’ needs due to technical
or operational weakness
• New products do not generate sufficient financial return
Actions taken to manage risk
• Prioritised allocation of resources to critical product
development as part of the Edge by Ascential integration
• Formal project plans for all new product development,
with appropriate gating and milestones
• Performance against those plans is monitored by the
Executive Committee
Link to strategy
Our strategic objective to be
a market leading specialist
information company relies
heavily on our ability to
continue to develop products
and propositions that enable
our customers to win in the
digital commerce economy.
Risk movement from 2018
Increased
5. Acquisitions and disposals
Description
We continue to review how best to build
out our capabilities to better serve our
customers. Whilst we do this primarily
through Organic investment, we
continue to review potential acquisition
opportunities to accelerate our progress
or provide further unique information.
In other areas, we may divest brands
which are no longer core to our strategy.
Examples of risks
• Failure to identify appropriate acquisitions or to conduct effective
pre-acquisition due diligence
• Failure to achieve the expected benefits or synergies
• Failure to preserve sources of competitive advantage
• Failure to integrate acquired businesses effectively
Actions taken to manage risk
• We have a strong and experienced M&A team who take a disciplined
approach to identifying and testing acquisitions to ensure they are
appropriate, a strategic fit and are earnings enhancing
• Detailed cross functional due diligence is undertaken prior
to acquisition
• Integration of acquired business are subject to post-acquisition
review programme
Link to strategy
Our strategic objective to
apply a tightly focussed capital
allocation process to achieve
our goals and maximise value
creation depends on our
ability to identify the right
acquisitions, to conduct
thorough due diligence and
to integrate acquisitions
effectively.
Risk movement from 2018
Stable
6. People
Description
People management, effective
succession planning and the ability
to attract and retain talent are critical
to our ability to execute our strategy
and achieve our objectives.
42 / Ascential plc Annual Report 2019
Examples of risks
• Loss of key talent, high attrition and/or lack of appropriate
succession planning leads could lead to a strategic skills shortage
• Loss of intellectual capital due to poor retention of talent
• Inability to attract top talent
Actions taken to manage risk
• Improved employee engagement score by delivering on actions
identified from previous employee engagement surveys
• Structured development plans in place for key executives
• Talent pool assessments conducted with critical talent identified
• Career frameworks developed and rolled out to support cross
Ascential development
• Nomination Committee overseas succession plans for the Executive
Directors and the Executive Management team
Link to strategy
All of our strategic objectives
rely on us attracting and
retaining the right talent to
execute against our strategy
and meet the needs of our
customers.
Risk movement from 2018
Reduced
Operational
7. Reliance on data providers
Description
Our eCommerce analytics products
utilise data from a number of suppliers.
A change in availability of this data
or the structure of how the data is
provided can impact the accuracy or
availability of our products and/or
increase costs.
Examples of risks
• Product development required to respond to changes in data used
in eCommerce analytic products
• Data provider increases utility of the data they provide reducing
the competitive advantage of our eCommerce analytic products
Actions taken to manage risk
• Investment in Edge by Ascential integrated platform increases the
flexibility and speed with which Edge by Ascential can respond to
changes in data availability and structure
• Continue to build strategic relationships with data suppliers to gain
earlier visibility of changes
• Development of Ascential path-to-purchase proposition increases
value of our proposition beyond the sum of parts
Link to strategy
Our strategic objectives to
accelerate organic growth and
to be a market leader require
us to consistently deliver
accurate and valuable
eCommerce analytic products
that are differentiated from
competitor products.
Risk movement from 2018
Reduced
8. Cyber threat and information security
Description
An external cyber attack, insider threat
or supplier breach could cause service
interruption or the loss of confidential
data. Cyber threats could lead to major
customer, financial, reputational and
regulatory impact.
Examples of risks
• Loss of intellectual property
• Major data privacy breach
• Significant impact on business operations
from malware or ransomware attack
Actions taken to manage risk
• Maintenance and testing of network security,
network resilience and business continuity plans
• Monitoring of emerging threats to ensure our
preparations and responses are current
• Regular, comprehensive training programme for
our employees on information security practices
• Implementation of Data Loss Prevention software
• Adoption of additional authentication tools to
reduce the likelihood of remote attacks
• Regular penetration and vulnerability testing
Link to strategy
All of our strategic objectives
rely on our ability to operate
compliantly and to provide safe
and effective products and
solutions to our customers.
Risk movement from 2018
Stable
Ascential plc Annual Report 2019 / 43
Strategic reportGovernance reportFinancial statements Principal risks /CONTINUED
Operational continued
9. Venue availability, security and access
Description
Our events are held at specific locations
which may become unavailable for use
or available only on uneconomic terms.
Travel disruption or safety risks from
a variety of causes including natural
disasters, communicable diseases, civil
disorder, political instability or terrorism
may prevent both customers and our
employees from reaching the event
location or being unwilling to travel.
Examples of risks
• One of the locations for our events is destroyed or inaccessible
before or during an event
• An incident near an event location results in unwillingness
for key speakers and/or delegates to travel to the event
• An incident at an event results in personal injury
• An outbreak of a communicable disease may result in travel
difficulties or other impacts which may lead to the deferral or
cancellation of an event
Actions taken to manage risk
• We have comprehensive security and safety plans for each event
with appropriate mitigation incorporated into operational planning,
including contingency planning with local authorities and police
• We employ continuous threat monitoring and intelligence analysis
to identify potential causes of disruption
• We maintain close relationships with major venue providers
• We maintain insurance cover in respect of certain event
cancellation risks
Link to strategy
All of our strategic objectives
rely on our ability to operate
compliantly and to provide safe
environments for our events.
Risk movement from 2018
Increased
10. Business resilience
Description
Our operations may be disrupted by
an adverse event whether that be IT
service interruption, disruption to
physical locations or interruption in
the provision of service from our key
suppliers. We need to build resiliency
to reduce the potential impact of such
an event and be prepared to respond
to any such event effectively.
Examples of risks
• Significant performance issue and issue with failover process
at data centres
• Natural disaster impacts key operational location
• Key supplier failure
Actions taken to manage risk
• Group Crisis Management Plan to manage how Ascential’s
leadership team directs the business through any major incident or
crisis which might severely disrupt operations, threaten business
performance or damage reputation
• High Availability Programme includes resilience between data
centres for our core applications
• Long-term contracts with our key suppliers which are professionally
procured and include rigorous service level agreements
Link to strategy
All of our strategic objectives
rely on our ability to operate
resiliently and minimise the
impact of any significant crisis
or event.
Risk movement from 2018
Stable
44 / Ascential plc Annual Report 2019
Financial
11. Financial risk
Description
We have material exposures to different
currencies and fluctuations in these
currencies affect the reported financial
results. As a global business, we are
subject to many forms of taxation in
many different jurisdictions. Tax law
and administration is complex and
tax authorities may challenge our
application of tax law, potentially
leading to lengthy and costly disputes
and material tax changes.
Examples of risks
• Material fluctuations in currency (particularly US Dollar, Sterling
and Euro) affect reported profitability
• Challenge by tax authority on application of tax law
Actions taken to manage risk
• The impact of movements in US Dollar and Euro currencies
is calculated and reported to investors for transparency
• Approach to foreign exchange risk is set out in Note 29 to the
Link to strategy
Our strategic objectives to
accelerate Organic growth and
to be a market leader require
us to consistently deliver
accurate and valuable
eCommerce analytic products
that are differentiated from
competitor products.
financial statements on page 150
• Hedged borrowing structure
• Experienced tax function, supported by professional advisers
• Full, accurate and timely disclosures made in submissions to tax
authorities who we work with collaboratively to achieve early
agreement and certainty on complex matters wherever possible
Risk movement from 2018
Stable
Legal and compliance risks
12. Regulation and compliance
Description
As a global business, we are subject
to different regulation across multiple
jurisdictions. Operating across this
increasingly complex and dynamic legal
and compliance environment can lead to
fines, penalties, reputational
risk and competitive disadvantage.
The regulatory landscape can change
leading to our current business
model becoming less profitable
or unsustainable.
Examples of risks
• Violation of anti-corruption policy
• Breach of data privacy policy
• Change in regulatory landscape regarding data collection and usage
Actions taken to manage risk
• Experienced legal team supported by professional advisers monitor
changes in regulation and emerging best practice in the sector and
in key policy areas
• Global compliance programme, policies and procedures
• Group monitoring and auditing programmes in place
• Confidential independent reporting channels for employees
to report concerns
• Employee training and awareness programme
Link to strategy
All of our strategic objectives
rely on us to comply with
applicable laws and regulations
and to do the right thing as part
of our licence to operate.
Risk movement from 2018
Stable
Ascential plc Annual Report 2019 / 45
Strategic reportGovernance reportFinancial statements Our people
OUR PEOPLE
We work hard to attract and retain the best people in the industry. We aim to be
a destination employer in every one of our key operating territories and markets.
This year we agreed with the Board that we
would establish an Ascential Employee Forum
with nominated representatives for every office
around the world. The purpose of this Forum
is to further amplify the voice of our people,
in particular giving front line employees the
opportunity to share their views and ideas
directly with senior leaders (including Board
members) across a wide ranging set of issues.
The Forum will be established early in the new
year, and meet for the first time in summer.
Valuing the diversity our people bring
Our business success is driven by difference and
we value what everyone brings. We welcome
all employees without unfair or unlawful
discrimination and aim to inspire everyone to do
their best work and build their careers with us.
In our most recent global engagement survey,
87% of our people agreed that anyone can thrive
at Ascential regardless of their background,
identity or beliefs (external benchmark norm:
83%). Using a cluster of survey questions as a
proxy to compare ourselves against the Mercer
Global D&I Index, Ascential ranks in the top
quartile.
The Company has again contributed to the
Hampton-Alexander Review, which aims to
drive an improvement in the gender balance in
FTSE leadership. The review has a stated target
of 33% representation of women on FTSE 350
Boards and Executive Committees, as well as in
the Direct Reports to the Executive Committee,
by the end of 2020. The November 2019 review
once again showed that Ascential ranks well in
the FTSE 350 for women on boards, with 57%
women on our plc Board. We also exceed the
33% target for the wide leadership population,
with 37% female representation in the combined
group of the Executive Committee and their
direct reports.
Whilst we are happy with the gender mix of our
Board, there is more work to be done. We do
still have a gender pay gap and we are focused
on addressing this. For us, the gap exists because
whilst 54% of our employees are women, only
44% of those in our leadership grades are
female. We therefore need to recruit, encourage,
support and promote more women into our
senior leadership group to address the gender
pay gap.
This year, to drive our progress in tackling this
issue, we launched a significant new Women
in Leadership programme led by the Managing
Our people’s opinions matter
Our people’s opinions matter and we hold
regular updates to both inform them on business
progress and answer any questions they may
have, and gather their ideas on improving
customer and internal engagement.
We conduct and act upon our annual employee
engagement survey, which, along with face-
to-face feedback, helps us understand what
people think, and what they want to achieve
in their careers with us, to inform the ongoing
development of our “One Ascential” culture
across all brands and geographies. We run our
global engagement survey in October 2019 and
our aggregated engagement score improved
again, up by 5.5pts to 79.5 (our target being
80 out of 100) with scores around Manager
and Leader Quality, Inclusion, Motivation and
Loyalty indicators all at 85+. We have a set of
seven Ascential Behaviours which underpin our
culture, and we scored 90+ when asking our
people whether their managers and leaders act
in accordance with them. Overall we are pleased
with our progress on staff engagement and we
have a clear plan to drive further improvement
across all engagement areas in 2020.
Each area of the business also regularly hosts
face-to-face all-staff meetings (known as Town
Halls), webinars and team briefings to share
news and progress against priorities.
Setting direction –
The One Ascential Conference
We hold our all-company conference in January
each year and this enables more than 1,400
individuals to hear and engage in the strategy
and this year’s plans and goals for the business
from the very beginning of each annual business
cycle. It aligns objectives and interests, as well
as giving our people an exceptional opportunity
to network, share learnings and collaborate
in relation to our business goals. Our annual
conference and Gala Awards night has become
an important part of our journey to a more
informed and connected Ascential.
For the second year running in 2019 we devoted
the second day of the conference to “LearnFest”,
a highly effective, and hugely efficient way of
providing critical skills development to our
people so they are equipped to work well in the
dynamic and fast moving markets we operate
in. Training topics are reviewed and carefully
selected to be highly relevant to the challenges
we face as a business each year and include new
product and territory briefings as well as a large
organised hackathon for our technology teams.
Feedback on LearnFest remains exceptional and
we will refresh and repeat the idea annually.
The conference is a large investment by the
Company, but we believe it is key to continuing
to share, learn and connect with colleagues
and celebrate the great work of individuals and
teams across the business.
46 / Ascential plc Annual Report 2019
Director of WGSN. Three key initiatives were
launched during the year to support this agenda.
The first was a Company-wide campaign to
promote flexible working which resulted in 88%
of our people now agreeing that they feel they
have permission to do so. The second was a
new Company-wide Mentoring scheme where
all senior leaders took on two mentees with a
focus on mentoring for upcoming women. And
the third was an active policy of transparently
advertising and promoting all vacancies across
the business (where that didn’t compromise
confidentiality). Whilst obviously benefiting
women in our organisation, these initiatives
served all our employees well irrespective of
gender and we believe they made a significant
contribution to our material improvement in
overall engagement for the second year running.
Voluntary attrition (i.e. resignation) has also
reduced 25% in the same period.
Share ownership
One of our business beliefs is that when the
Company prospers, we want everyone who has
contributed to prosper.
When we floated the Company on the London
Stock Exchange in February 2016, everyone
employed by the business at that time was gifted
500 shares subject only to their continued
employment in 2019. We were delighted that
almost half of our employees benefitted from the
maturity of this scheme in 2019.
We also run UK and International Sharesave and
US Stock Purchase saving plans for employees
wishing to invest in Ascential plc shares on an
ongoing basis. These plans enable people in any
one of our offices around the world who wish to
enrol to save a set sum each month and in future
years buy shares at a discounted purchase price.
40% of all eligible employees participate.
Benefits
As part of an attractive overall employment
package, people are offered a range of benefits,
which they have the opportunity to amend
during the year. We seek to offer solutions that
suit our different generations, so benefits are
frequently reviewed and introduced, extended
or removed depending on demand and feedback.
Our goal is to have all employees in any given
country and any part of the business operate on
consistent terms and conditions and we have
harmonised many of our US employees onto
improved benefits during the year.
Employee development
Ascential is a fast-paced, international
business. We are a responsible employer and
are determined to attract and retain the best
in our industry by offering our people great
opportunities to develop and grow their skills
and careers with us. We invest seriously in
development, and as well as our uniquely
branded “Ascential LearnFest” event at the 2019
all-company conference, this year we placed a
particular focus on refreshing our Leadership
and Manager Development programmes. We
developed and executed a state of the art Senior
Leadership development programme for our
80 most senior managers around the world, as
well as a global Sales Leadership programme
for all Sales Leaders across the business and
an extended curriculum of Management
Fundamentals training for middle and junior
managers. We believe that in combination these
interventions, along with others, have taken
us to a place where our managers are rated
very highly by their teams. 87% of our people
would now recommend their manager to others
(Manager NPS), 91% agree their manager
supports their health and wellbeing at work and
92% agree their manager empowers them.
In response to employee feedback we also
launched a global campaign around career
development in 2019 which accompanied the
development and communication of clearly
defined and structured career paths for
most of our professional communities across
the business in July. These campaigns made
promotional opportunities much more widely
visible to employees, as well as equipping them
with career management skills to go on and
capitalise on this wider array of opportunities
now presented. Perceptions of career
development improved 20% in this period.
Employee recognition
We offer regular recognition and rewards linked
to performance.
The most hotly contested recognition scheme
each year is the Ascential Excellence Awards,
which is open to all employees. Judged by senior
leaders of the business, they are a fun and
effective way for the achievements of individuals
and teams to be recognised. The highlight of this
award programme is during the annual Ascential
conference when winners - including for the
top content and product creators, marketers,
business partners and highest sales achievers
in each business area – are announced. Perhaps
unsurprisingly, this year we had more entries
than ever before.
% OF EMPLOYEES PROUD TO WORK
AT ASCENTIAL
92%
Elite is a quarterly recognition and reward
programme that recognises the brilliant work of
our people: from sales and marketing excellence
to exemplary teamwork and above-and-beyond
performance in every discipline. Each quarter,
a small group of winners are recognised and
rewarded with an experience, which have
included tickets to exclusive venues, dinners
and sporting days out. This year 30 of our Q2
winners were taken on an educational trip
to immerse themselves in our World Retail
Congress event in Amsterdam in May. Key
learnings and insights were filmed and narrated
by participants and then communicated in a
series of live videos to all employees across
Ascential so that everyone might benefit from
the experience even if they were not there
personally.
Our values and leadership beliefs
The Ascential Beliefs were fully launched at
the 2018 conference and have gathered good
momentum since then. They allow us to define
how we do things at Ascential, supplementing
people’s understanding of what we do. These
Beliefs are now clearly presented on all key
websites including our Corporate site and
our Recruitment and Careers site, as well as
being directly incorporated into key people
processes such as Performance Appraisal and
Development Review. We believe that this
framework is an important contributing factor to
our very high scores for Organisational Integrity
(89%) in our annual engagement survey. They
give people extra confidence in their leaders,
where most agreed our Executive team led by
example in relation to these beliefs (92%), and
why so many of our people are proud to work
here (92%).
Ralph Tribe
Chief People Officer
21 February 2020
Ascential plc Annual Report 2019 / 47
Strategic reportGovernance reportFinancial statements Corporate and social responsibility report
CORPORATE AND SOCIAL
RESPONSIBILITY REPORT
2019 was a year of progress for Corporate Responsibility at Ascential.
As well as establishing a vision and clear framework for delivering
that vision, we have established an internal network of champions.
Our new framework:
This year saw the launch of our new Corporate Responsibility framework,
outlining a new way of organising our work to make the maximum impact.
We used a tried and tested model to organise our activity and focus on
what is important to us, splitting our work into three areas:
SIGNATURE
ACTIVITY
STRATEGIC
ISSUES
3/
2/
1/ SOLID
FOUNDATIONS
A focus which is unique to us based on what
we do, how we do it and where we operate.
Things that we believe will provide us with
a competitive/brand advantage.
Things that all companies need to do,
but done with real commitment.
The framework incorporates our Solid
foundations activity, as well as positioning
our two Strategic issues: Sustainability (for
our customers and internally) and Diversity &
Inclusion. Our Signature activity is focused on
helping young people to thrive in a digital world.
To deliver this framework, we formed a global
network of Corporate Responsibility champions,
comprising four hubs led by Executive sponsors,
in our key regions of EMEA, North America,
Latin America and Asia Pacific. Our VP Talent
Development has taken responsibility for the
function, working closely with the Corporate
Communications team and regional Corporate
Responsibility hubs.
You can read more about our plans for 2020
on page 15, as we work towards firm targets
against each area of the framework, as well as
forming partnerships with global organisations
who can help us achieve our goals.
Moving towards signature activity
By stating a clear focus for our efforts, we are
able to galvanise our global business and make
the biggest impact. Our focus area connects
deeply to our business and current challenges
faced around the world: to support social
mobility and employability of young people
in a digital world.
In the UK, we already partner with the Prince’s
Trust, raising £387,835 in 2019, enabling the
Trust to fund employability programmes. Three
young people have directly felt the benefit of the
“Get Hired” scheme, with both permanent roles
and work experience in our Tech team.
To be globally impactful and locally valuable, we
are looking for similar, meaningful partnerships
in all our global regions. The core principles for
all regions looking for partners are that they:
• have a youth focus, providing skills, jobs or
experience for future employability
• have a digital focus e.g. coding skills or
digital wellbeing
• have a social mobility focus, providing
opportunities that young people may normally
struggle to access
• harness our expertise and resources e.g.
enable our employees to guest teach, offer
work experience
• help solve a business challenge as well as
being good for society e.g. brand awareness,
recruitment, retention
As a business that makes a difference to our
customers in the digital economy, we know we
can do so much more. That’s why our Corporate
Responsibility strategy focuses not just on how
we manage our impacts now, but how we really
give back and drive digital literacy in the next
generation.
Duncan Painter,
CEO, Ascential
48 / Ascential plc Annual Report 2019
2019 update
1/ Framework element
SOLID FOUNDATIONS
Region
GLOBAL
Key initiatives
We have refreshed our Health & Safety Policy
to achieve more consistency of approach to
managing health & safety risks across the
business. We have also established a Safety
Committee, chaired by the Chief People Officer,
to formalise our governance structure for
managing health, safety & wellbeing. The Safety
Committee is supported by Safety Champions
who represent our different office locations
and provide on the ground expertise and point
of contact for all of our employees.
We have implemented a formal compliance
framework which encompasses good
operational governance, acting with integrity
and people policies. More detail on the
compliance framework is explained in
the ‘operating responsibly’ section of this
report below.
In our recent Engagement Survey 91% of people
said they “can talk to my manager about my
health and wellbeing and get support when
needed”. In 2019, we set up the Ascential
Wellbeing initiative to sustain this good result
on mental health. Ultimately, this activity is to
evolve and maintain how we encourage dialogue
around the topic, and create and maintain a safe
space where people can thrive both personally
and professionally with clear support pathways
if people are in need.
Our full disclosure on our greenhouse gas
emissions is set out on page 53. Emissions for
the year have decreased significantly over the
three years of reporting, and most notably for
2019 compared to the prior year. This is driven
primarily by corporate activity (acquisitions
and divestments), a significant reduction in the
size of the Company vehicle fleet, and lower
fossil fuel use in the electricity mix supplied to
a number of our offices, particularly in the UK.
Supporting gender equality
in the industries we serve
2/ Framework element
STRATEGIC ISSUE –
DIVERSITY & INCLUSION
Region
GLOBAL
Key initiatives
All of our major events are addressing gender
inequality in their industries: Retail Week’s Be
Inspired supports women in the UK retail sector,
Rise Up is Money20/20’s annual programme
designed to empower female leaders through
actionable skills, tools and mentorship, driving a
greater gender balance in the FinTech industry;
Cannes Lions’ See It Be It initiative facilitates
future female creative leaders with the tools
and support networks they need to thrive.
2019 saw Retail Week’s Be Inspired programme
cement its reputation as one of the most
influential and impactful diversity initiatives in
the UK. The programme offers women in retail
access to senior female leaders in the industry,
to address the gender inequality at boardroom
level. 2019’s attendance increased by 55%, with
speakers including the President of TJX Europe
and former Rugby World Cup Champion Maggi
Alphonsi, delivering an exceptional NPS score
of 75. 2019 also saw the launch of Be Inspired
Stories, a monthly podcast amplifying the
initiative’s message to a global audience.
Now in its second year, the Money20/20 Rise
Up programme advocates for gender equality
in the financial services and FinTech industry.
The programme is now global, launching for the
first time in both Asia and Europe in 2019, and
returning for a second year in the USA. During
each programme, a cohort of 35 women are
chosen to take part in an invitation-only curated
agenda, designed to give them actionable
insights and skills through bespoke content
sessions, one-to-one mentoring and networking
opportunities with respected industry leaders.
In 2019 Rise Up has inspired women from 51
countries, across six continents, to apply to be
a part of the programme. In 2019, Rise Up took
it one step further and launched the ‘Breaking
the 19’ campaign, challenging organisations and
their leadership to reduce the 19% pay gap in
the US.
Key to Framework
1 / Signature Activity
2 / Strategic Issues
3 / Solid foundations
See It Be It, the Cannes Lions initiative that
provides executive training, mentoring and
exclusive networking opportunities for mid-
level creative women from across the world,
ran successfully again in 2019. The curated
programme, launched in 2014, focuses on
supporting future female creative leaders
with the tools and support network they need
to succeed and thrive. In 2019, See It Be It
once again partnered with Spotify, and this
brand partnership led to a number of curated
events globally. See It Be It has now reached
4,000 women globally through its events. In a
commitment to improving diversity and gender
balance in the jury rooms, 48% of jury members
were female in 2019, up from 46% in 2018, 43%
in 2017 and 40% in 2016.
In 2019, Cannes Lions continued its mission
to celebrate creativity that changes the world
for the better with the introduction of updated
jury guidelines in the judging process. The new
criteria urged the jury members reviewing all
entries submitted into the Awards to consider
whether the work perpetuated negative
stereotypes and inequalities. The revised
guidelines build upon the Objectification
criteria introduced in 2017: Jury members were
challenged to use empathy when analysing a
piece of work, reflecting upon how they might
feel if the person portrayed was someone they
know and care about; they were also asked to
consider whether the work represented deep-
rooted stereotypical portrayals of gender, age,
race, ethnicity, disability or other biases.
Ascential plc Annual Report 2019 / 49
Strategic reportGovernance reportFinancial statements Corporate and social responsibility report /CONTINUED
2019 update CONTINUED
Driving inclusion and gender
equality in our business
2/ Framework element
STRATEGIC ISSUE –
DIVERSITY & INCLUSION
Region
GLOBAL
Key initiatives
In 2019 we have made good headway with our
Women in Leadership programme – led by the
Managing Director of WGSN – which looks at
how we recruit, encourage, support and promote
women into our senior leadership group. As
a result of our survey and focus groups, we
developed a clear plan of action. We launched a
refreshed policy around flexible working, which
led to 88% of our people saying that they felt
able to work flexibly, and we refined recruitment
practices (including introducing 50/50 male/
female shortlists for all roles).
At the 2019 Ascential Conference, we hosted
a neuroscience-based training session on
mitigating bias, asking our people to create
plans to change behaviour in our organisation;
and showcased a global creative campaign
from Coca-Cola that worked to change
attitudes towards LGBT+ community in Brazil.
We have since launched a global campaign
around International Women’s Day, a global
Ascential Pride network connecting our LGBT+
community and allies, and Edge by Ascential’s
international Women’s Network.
This year we also helped our people work
globally through the launch of a podcast on
global inclusive working, lunch and learn
sessions on business with China - a strategic
growth region- at our annual conference, and
launched the newsletter ‘China Insider’ to
educate our business on macro-economic
shifts impacting our business in the region.
50 / Ascential plc Annual Report 2019
WGSN and Just Like Us
2/ Framework element
STRATEGIC ISSUE –
DIVERSITY & INCLUSION
Making our events sustainable
2/ Framework element
STRATEGIC ISSUE –
SUSTAINABILITY
Region
EMEA
Region
GLOBAL
Key initiatives
WGSN furthered their partnership with Just
Like Us in 2019, the charity whose mission is to
educate school children about LGBTQ+ issues.
They work with university-aged young people,
training them as ambassadors who visit schools
across the country.
Volunteers from across WGSN worked with Just
Like Us on a bespoke package of presentation
training for the ambassadors, hosting them in
our London offices, and attending the launch
of School Diversity Week at the House of
Commons. The WGSN training session was
ranked by the charity’s attending team members
to have been among the most productive,
creative and interesting.
2020 will see more involvement and the
augmenting of the relationship, as WGSN look
to plug Just Like Us into other parts of Ascential
and help carry their message as far as possible.
Key initiatives
We are continually striving to create greener
and more sustainability-conscious events, and in
2019 we did the most we’ve ever done towards
this goal. Money20/20 Europe donated leftover
catering to the Salvation Army and a soup
kitchen, and provided a service where stand
holders can donate or recycle anything from
their stand post-show.
At Cannes Lions reducing waste and improving
environmental credentials was paramount to
the 2019 event: every delegate was offered a
reusable water bottle and water bottle refill
stations were placed throughout the venue;
lanyards and badge wallets were made from
recycled plastics, and all event bags were
biodegradable, made in 100% carbon neutral
factories. The Festival worked closely with
the City of Cannes to ensure that the award-
winning initiatives implemented throughout
the municipality were incorporated into
Festival activities.
Key to Framework
1 / Signature Activity
2 / Strategic Issues
3 / Solid foundations
Promoting sustainability in
the industries we serve –
WGSN & Cannes Lions
2/ Framework element
STRATEGIC ISSUE –
SUSTAINABILITY
Our partnership with
The Prince’s Trust
3/ Framework element
SIGNATURE MOVE – YOUNG
PEOPLE AND EMPLOYABILITY
Groundsure –
CodeBar
3/ Framework element
SIGNATURE MOVE – YOUNG
PEOPLE AND EMPLOYABILITY
Region
GLOBAL
Region
EMEA
Region
EMEA
Key initiatives
WGSN aimed to understand the sustainability
challenge facing the lifestyle sectors we serve.
By engaging with key stakeholders, we have
been able to identify how we can use our unique
position as a respected and influential voice
across our industries, to inform and support
sector transformation. Our content delivers
relevant and actionable value to our global
client base to enable them to create sustainable
products and services.
Cannes Lions operates two awards as part of
Lions for Good: The Sustainable Development
Goals Lions, and Glass: The Lion for Change.
Cannes Lions actively supports the UN
Sustainable Development Goals through the
Sustainable Development Goals Lions. In 2019,
the Grand Prix was won by The Lion’s Share
Fund, and proceeds of €279,000 from the
Award have been distributed to support the
Fund’s wildlife conservation and animal welfare
programmes. Glass: The Lion for Change is the
award that celebrates culture-shifting creativity.
Contributions from the award will be distributed
to relevant causes in 2020.
Launched at the 2019 Cannes Lions Festival,
Goal’s House, a partnership with Deloitte Digital
and SAP, brought industry leaders together to
engage in high-level discussions. Conversations
focused on scaling impact to meet the 17 UN
Sustainable Development Goals, helping to end
poverty, protect the planet, fight diseases, and
ensure prosperity for all by 2030. The Change
for Good Hackathon was a partnership between
Cannes Lions, Huge and Amazon that teamed
up with Earth Day Network and the Earth
Challenge 2020 global citizen science initiative.
At the 2019 Festival, they invited agencies to
design technological solutions that can help
citizens solve key environmental challenges
facing humanity in the 21st century.
Key initiatives
In 2019 we once again entered The Prince’s
Trust Million Makers competition, raising
£368,500, 3% more than 2018. This is a record-
breaking amount for any Million Maker Team.
Ascential Team Aspire were the winners for the
National Million Makers competition in 2018-
2019, raising an amount of £357,132.40.
For the third year, Ascential sponsored the
Educational Achiever of the Year Award at the
Annual Prince’s Trust Awards. Of the ten regions
that took part, eight judging days and regional
finals were attended by an Ascential Exec. We
also provided The Prince’s Trust advice and
guidance on their ticketing strategy for The
Prince’s Trust Awards.
Ascential sponsors the Million Makers
competition around the country, including
the Final awards event in London. Ascential
was nominated and shortlisted for Overall
Achievement Award 2018-19 at The Prince’s
Trust Partnership Awards. This award
recognises the partners that go above and
beyond in their support for The Prince’s Trust.
The Prince’s Trust visited Glenigan offices and
invited a Young Ambassador to attend to tell
their story. Glenigan committed six employees
and led various workshops for The Prince’s Trust
Team programme. Glenigan also hosted a
‘World of Work’ session, enabling young people
to get to know the different departments within
Glenigan including the marketing, research,
commercial and IT departments.
In our London offices, we organised a workshop
for The Prince’s Trust Get Started programme,
as well hosting four Strategy/Breakaway
Day events.
Key initiatives
Code Bar is a monthly event held in Brighton
to provide free code training to young people.
The workshop aims to teach programming in
a safe and supportive environment, allowing
experienced practitioners to share their
knowledge and coach our students. In 2019
35 students came to the Groundsure office
and improved their coding skills with members
of the Tech team.
GOALS 4 GIRLS
3/ Framework element
SIGNATURE MOVE – YOUNG
PEOPLE AND EMPLOYABILITY
Region
EMEA
Key initiatives
Goals 4 Girls is an award winning development
programme. raising the aspirations of young
women & girls, through football and education.
Founded by Francesca Brown through the
support of the Prince's Trust and who was also
the first Prince's Trust ambassador to work with
Ascential, we have continued to partner with
both Francesca and Goals4Girls to ensure that
the work that we start through the Prince's
Trust becomes sustainable long term. The
programme has proven to be very successful
supporting young girls in schools across London
and recently Goals4Girls worked with David
Beckham and Adidas London to launch their new
awards scheme across London.
Ascential plc Annual Report 2019 / 51
Strategic reportGovernance reportFinancial statements • The LGBTQ+ community will continue to have
a focus with the growth in membership/activity
of Ascential internal Pride network, ongoing
relationship with Just Like Us in EMEA, and
LGBTQ+ career fair(s) in China.
• The focus on sustaining a culture of positive
mental health will continue with the Ascential
Wellbeing initiative. 48 global employees
will be trained in January to becoming
Mental Health First Aiders (MHFA); this will
be complemented by a continued comms
campaign, and a session at our annual
conference.
Sustainability
• Ascential Events: We will continue to focus
our efforts on minimising the impact we leave
in the spaces we occupy year-on-year. We
will do this through our work with suppliers
and accurate measurement of the footprints
of our four largest events, allowing us to
create a specific plan to make each one more
sustainable.
• WGSN: We will continue to increase
WGSN’s sustainability impact by supporting
our customers to design/build their own
sustainable products; and by sharing these
learnings internally, starting with a session at
the conference to educate and influence
Signature Move
• In EMEA we will continue our partnership
with The Prince’s Trust, forming a new Million
Makers team to fundraise for The Prince’s
Trust. Using this partnership model, we will
find similar organisations to work with in
North America, Brazil & China, aligned to
our ethos of improving social mobility and
employability of disadvantaged young people
in our digital world. We will also continue
our global volunteering day, encouraging
our people to support initiatives that closely
align to our signature activity.
Corporate and social responsibility report /CONTINUED
Driving positive change in the industry –
MediaLink
MediaLink raised over $240,000 in 2019,
supporting a wide variety of charitable causes
both inside and outside of the marketing
industry. The range of emphasis spans social
movements supporting disenfranchised groups,
child advocacy, cures for chronic diseases and
patronage of the arts. MediaLink’s focus remains
on causes important to the marketing industry
at large as well as those important to our clients
and staff.
Every year, selection is based on historical
precedent as well as a handful of new charities
focused on timely issues that emerge as vital
to the health of the marketing industry, such
as equality in the workforce.
Within the marketing industry, MediaLink
executives dedicate service in the form of
board membership to several key not-for-profit
industry organisations like the Advertising
Council, Inc. and the Paley Center for Media, in
addition to providing charitable donations. The
Advertising Council, Inc. in particular is allocated
a high annual budget for its focus on public
service communications that raise awareness
and inspire action on numerous causes.
Volunteering across the business
In 2019 our volunteers in London supported
organisations including Let’s Get Cooking lunch
for the Bloomsbury Community Elderly and
Homeless, and support for local foodbanks
in Bournemouth. The year concluded with a
Christmas Festive lunch in December for more
than 50 members, the largest gathering for this
community, support for The Harington Scheme,
an Educational and Gardening School for young
people with education and lifestyle challenges,
and in New York 17 Ascential people slept out in
Times Square to support the 63,000 homeless
people in New York and to raise money and
awareness for homelessness.
Groundsure continue to develop their “HOT
Mapping” around the world. HOT mapping
is collaboration mapping for humanitarian
aid across the world - reaching those in need
through creating maps. Various NGOs and
charities across the world will request mapping
and set up projects on the HOT website - these
can range from mapping individual properties to
residential areas, as well as mapping roads and
paths - all from aerial imagery. This mapping is
then used to help improve access to healthcare,
to estimate populations for outbreaks and
emergencies following medical or natural
disasters, as well as helping preparedness for
future possible events. Groundsure ran eight
sessions this year, helping projects from mapping
52 / Ascential plc Annual Report 2019
buildings in Uganda to help fight the spread of
Ebola still happening in parts of Uganda and
DRC, to mapping buildings and roads in Papua
New Guinea.
At any time, our people can make regular
donations to a charity, or charities, in a tax
efficient manner through payroll. They can
choose to:
• Schedule regular donations to one or
multiple charities.
• Respond quickly to charity campaigns or
emergency appeals.
• Make one-off donations at any time.
• Sponsor friends and family who are
participating in charity events.
LOOKING AHEAD
TO 2020
Solid Foundations
• We will continue to assess our policies,
assessments, internal responsibilities, systems,
and public reporting using the Dow Jones
Sustainability Index (DJSI) as a framework to
create a prioritised roadmap. This will start
with data integrity, content integrity, carbon
emissions, operational fitness and culture.
• We will build inhouse capability by having
Ascential Corporate Responsibility employees
undertaking Corporate Responsibility
education programmes, and hiring a full-time
Corporate Responsibility Manager.
Diversity & Inclusion
• We will start 2020 with a prioritised three-
year roadmap of activity to sustain our strong
sense of inclusion and in turn build a more
diverse workforce at all levels.
• Launching apprenticeships in the UK, and
a global work experience framework, will
enable a more diverse pipeline into entry level
roles. In LATAM, we have begun to address
inclusion with our existing employees. As part
of the region’s diversity investment, they have
launched weekly classes in English and Spanish
proficiency, alongside a newsletter to promote
equal opportunity.
• In 2020, our mentoring network will continue
and be extended to Manager, Head of, and
Director levels. Through mentoring at these
levels, we will improve the pipeline of internal
female candidates for VP+ roles.
• We will launch, for the first time, an Ascential
elected employee advisory group of 20
employees from around the globe. This group,
hosted by a member of the Ascential Board,
will provide a forum to advise on future
initiatives.
OPERATING RESPONSIBLY
Greenhouse gas emissions statement
In line with the Companies Act 2006 (2013
Regulations), Ascential has disclosed its annual
Global greenhouse gas (GHG) emissions for the
past three years. We are required to report the
Company’s emissions of carbon dioxide (CO2) as
well as a CO2 intensity value, while stating the
methodology used to calculate these emissions.
Emissions for the year have decreased primarily
due to corporate activity (e.g. acquisitions and
divestments), a significant reduction in the
size of the Company vehicle fleet, and lower
fossil fuel use in the electricity mix supplied to a
number of our offices, in particular in the UK.
Methodology and scope
Carbon dioxide emissions data has been
collected, calculated, consolidated and analysed
following the GHG Protocol (Corporate
Accounting & Reporting Standard) following
the ‘operational control’ approach. Emissions
factors of supplied electricity for locations were
sourced from the IEA 2019 CO2 emissions from
fuel combustion figures based on country-level
factors. The boundary for reporting extends to
include all entities and facilities that are owned
or leased by Ascential and are also actively
managed by Ascential.
Global greenhouse gas (GHG) emissions
The table below includes combustion of fuel (Scope 1) and purchased electricity (Scope 2) at our
offices and in our Company-owned or leased vehicles for 2017 to 2019.
Emissions type
Scope 11
Scope 23
Total
Intensity factors
Total headcount
Total area
Carbon intensity 1:
Area
Scope 1 1
Scope 2 2
Total
Carbon intensity 2:
Headcount3
Scope1
Scope 2
Total
2017
2018
2019
Unit
% var
66.99
709.8
776.79
48.22
686.73
734.95
12.56
522.54
565.10
Tonnes of CO2
Tonnes of CO2
Tonnes of CO2
-74.0%
-19.5%
-23.1%
1,857
21,316
1,644
24,932
1,719
23,023
Full time equivalents
(FTE)
Square metres
4.6%
-7.7%
3.14
33.30
36.44
1.93
27.54
29.47
0.55
24.00
24.55
Kg of CO2 per m2
Kg of CO2 per m2
Kg of CO2 per m2
-71.5%
-12.9%
-16.7%
36.07
382.23
418.30
29.33
417.72
447.05
7.31
Kg of CO2 per FTE
321.43
328.74
Kg of CO2 per FTE
Kg of CO2 per FTE
-75.1%
-23.1%
-26.5%
1 Scope 1 emissions are calculated from fuel use in Company-leased or owned vehicles using the distance-based calculation
method (DEFRA GHG conversion factors 2016). Emissions from personal or privately-hired vehicles used for Company business
are considered to be Scope 3 (GHG protocol) and as such are not included in the ‘Operational control’ boundary approach (see
‘Methodology and scope’).
2 Scope 2 emissions are calculated from energy consumption at Ascential offices (excluding home workers). CO2 figures are based
on the energy consumption of Ascential’s operations with estimates used for the remainder based on office surface area. Where
the consumption of energy other than electricity (e.g. natural gas) is supplied as part of a leased building’s SLA and is not available,
this information has not been included in the data.
3 Total headcount includes 1,719 full-time equivalent employees. This includes headcount associated with office locations occupied
for part of the year.
Compliance framework
We have introduced a formal compliance framework to facilitate a structured and consistent approach to managing compliance throughout Ascential.
The framework is structured around 11 Compliance Pillars under which we focus our priorities. Where appropriate we have policies governing each
area, with the exception of a codified Code of Conduct which will be implemented in 2020.
People
Acting with integrity
Good operational governance
Code of Conduct
Whistleblowing
Competition Law
Anti-Bribery and Corruption
Financial Crime
Listing Requirements (inc.MAR)
Economic Sanctions
Data Security
Data Privacy
Health and Safety
Physical Security
Ascential plc Annual Report 2019 / 53
Strategic reportGovernance reportFinancial statements Corporate and social responsibility report /CONTINUED
Anti-bribery and corruption
We have a formal anti-bribery and corruption
policy which applies to all Ascential Group
companies, Ascential employees and associated
third parties. We define a bribe as anything of
value given in an attempt to affect a person’s
actions or decisions in order to gain or retain
a business advantage. We define corruption
as the misuse of a public office or power for
private gain or the misuse of private power
in relation to business outside the realm
of government.
Our anti-corruption policy prohibits the offering,
promising or giving a bribe; requesting, agreeing
to receive, or accepting a bribe; and bribing a
foreign public official to obtain or retain business
or a business-related advantage. The policy
highlights areas where there is a higher risk of
corruption:
• Journalists and editorial staff: specific risks
that certain conduct may amount to bribes, for
example the use of payments to improperly
receive information, influence editorial
decisions, write or publish an article with a
particular focus not in keeping with journalistic
integrity or reveal source information.
• Operations and procurement: employees who
contract with associated third parties to supply
services are required to be transparent about
gifts or free services offered to incentivise staff
to pick that supplier or venue over another and
must comply with the Gifts and Hospitality
policy.
• Facilitation payments: these are unofficial
payments made to public officials to secure
or expedite the performance of a duty
or function. Facilitation payments are
specifically prohibited.
• Due diligence and contract terms: all written
contracts with third parties should include
anti-bribery and corruption representations
and warranties allowing for immediate
termination of the contract if another
contracting party or their agent pays or
accepts bribes in connection with
our business.
• Gifts and Hospitality: we have a specific Gifts
and Hospitality policy which was refreshed in
2019 and Group-wide awareness training was
also launched this year. The policy and training
communicates to employees (i) that gifts or
entertainment given or received must not give
a feeling of an obligation or an incentive to
behave in a certain way, (ii) the value limits of
gifts and hospitality that employees may give
and receive, and (iii) the requirement, prior
to giving or receiving above certain limits, to
declare on a centrally maintained register and
obtain approval.
This policy has been communicated to
all employees along with training to raise
awareness, and to give examples of what is and
is not acceptable behaviour. The policy includes
details of how employees can ask advice or
report any suspected bribery or corruption to an
independent third party helpline, and explicitly
confirms that no employee will be penalised for
losing business by refusing to accept a bribe.
The Board of Ascential plc has appointed the
Audit Committee to review the implementation
of this policy and the Audit Committee
periodically monitors and audits compliance.
There were no reported breaches of the Bribery
Act during 2019.
Whistleblowing policy
We have a formal whistleblowing policy which
encourages all staff to report suspected
wrongdoing, in the knowledge that their
concerns will be taken seriously and investigated
appropriately, and that their confidentiality will
be respected. Wrongdoing includes failure to
comply with legal obligations or regulations,
including bribery and corruption. The policy also
aims to reassure staff that they should be able to
raise genuine concerns without fear of reprisals,
even if they turn out to be mistaken. We provide
details of a confidential helpline operated by
an independent third party, as well as contact
details for the Independent Chairman of the
Audit Committee within the policy. Our external
confidential Whistleblowing helpline provider
does not provide access to data. However,
whistleblowing incidents that are reported to
us are logged by the Compliance Director and
reported to the Audit Committee, along with the
actions taken to investigate the complaint and
the outcome.
Equal opportunities
We are committed to maintaining a working
environment underpinned by decency and
fairness and where equality and diversity are
recognised, encourage and valued. We actively
encourage equality of opportunity for all
employees and job applicants. We have a formal
equal opportunities policy which prohibits
discrimination against anyone on the basis of the
protected characteristics of: disability; gender
re-assignment; marriage or civil partnership
status; pregnancy or maternity; race, colour,
nationality, ethnic or national origin; religion
or belief; sex; sexual orientation; and age. The
policy defines different forms of discrimination
including direct discrimination, indirect
discrimination, harassment, victimisation and
failure to make reasonable adjustments. We
consider diversity and inclusion to be a strategic
issue for Ascential and more information on our
Diversity & Inclusion initiatives is given on
page 9.
Health & Safety
We have a formal Health & Safety policy,
owned by the CEO, which was refreshed
during 2019 to achieve a more consistent
approach to the management of Health & Safety
across our business and to formalise
the way we assess risk, report incidents and
drive improvements. We have developed our
Health & Safety governance structure with the
formation of a Safety Committee, chaired by
the CPO, as well as a Safety Working Group,
with representation by local champions from
all major locations across the business.
Our Health & Safety policy applies to all of
our employees and visitors to our premises.
The policy explains the arrangements in place
to manage Health & Safety as well as the
organisational structure for Health & Safety
management, including specific roles and
leadership responsibilities. Health & Safety
incidents and near misses are recorded on
a central register and reported to the Audit
Committee twice a year, along with any
lessons learned and actions taken.
Modern Slavery
We have a zero tolerance approach to Modern
Slavery of any kind. Our work to eliminate
Modern Slavery is supported by customers,
suppliers and Ascential employees. We assess
the risk of Modern Slavery in our internal
operations and our external supply chain against
criteria including: (i) geography (countries where
bonded labour is more prevalent); (ii) sectors
(the nature of product or service procured or
supplied and whether it is typically associated
with unfair labour practices); and (iii) the nature
of our business operations. Our assessments
are informed by sources such as the Walk Free
Foundation.
All high and medium risk suppliers have been
required to adopt our Third Party Code of
Conduct and to complete a questionnaire
designed to identify any areas of non-compliance
with that code, as well as confirm that our supply
chain is slavery and human trafficking free. We
reserve the right to terminate the business
supplier relationship without consequence or
liability if a supplier fails to fulfil the minimum
standards outlined in our Code. Our full Modern
Slavery Statement, which has been approved
by the Board of Ascential plc, is available on our
website ascential.com/aboutus
54 / Ascential plc Annual Report 2019
THIRD PARTY CODE OF CONDUCT
We have implemented a Third Party Code of Conduct which outlines our
ethical approach to doing business and explains the standards we strive
to ensure that all our suppliers should abide by, and we also expect our
suppliers’ suppliers to adhere to it. The main principles of this Code are:
Business integrity
• There is no tolerance of any form of corruption, bribery, fraud,
extortion or embezzlement and business is conducted in a manner
that avoids conflicts of interest.
• Fair competition.
No forced, involuntary or child labour
• There is no forced, involuntary or debt bonded labour in any form
including slavery or trafficking of persons. There are no workers under
the age of 15, or where it is higher, the mandatory school leaving age
in the local country. The use of legitimate workplace apprenticeship
programmes, which comply with all laws and regulations, is supported.
Freedom of association
• Workers, without distinction, have the right to associate freely, join or
not join labour unions, seek representation and join workers’ councils as
well as the right of collective bargaining in accordance with local laws.
Diversity and equality
• There is equality of opportunity and treatment regardless of physical
attributes or condition (including pregnancy), gender, religion (or
absence of such beliefs), political opinion, nationality, sexual orientation,
age or ethnic background. Equal pay for work of equal value is
supported. Discrimination or intimidation towards and between
employees is opposed, including all forms or threats of physical and
psychological abuse.
• Fair business, advertising and competition are supported.
Intellectual property, privacy and data security
• There is respect for and protection of intellectual property rights, data
and confidential information to safeguard it against and prohibit loss
and unauthorised use, disclosure, alteration or access. Our intellectual
property and confidential information is handled and data processed
on our behalf only for the purposes for which it was made available,
received or collected in accordance with the reasonable directions
provided by us.
Business continuity
• Any disruptions of business are prepared for (including but not limited
to natural disasters, terrorism or cyber attacks). Risks are frequently
assessed, and appropriate controls put in place and regularly tested.
Quality, health, safety and environment
• All required quality, health, safety and environment related permits,
licences and registrations are obtained, maintained and kept up-to-date
and their operational and reporting requirements are followed. Proper
provision is made for the health, safety and welfare of employees,
visitors, contractors, the community and the environment. Health,
safety and environmental risks are regularly assessed, and appropriate
controls are put in place bearing in mind the prevailing knowledge of
the industry and of any specific hazards.
The full Third Party Code of Conduct is
available on our website: ascential.com
Data privacy and security
We have a formal data protection policy which
applies to all personal data processed by
Ascential entities as a data controller for our
own purposes. The policy contains our eight
commitments to data protection:
• Being lawful
• Being fair and transparent
• Respecting individual rights
• Minimising data collection, keeping
accurate and up to date data, and
following retention policies
• Protecting personal data
• Appropriate safeguard for cross-border
data transfers
• Governance
• Accountability
Ascential processes personal data for specific
and lawful purposes which are defined and
explained to individuals when we process their
data. Our use of such personal data is limited to
those purposes and if personal data is going to
be used in a new way, we make sure that the new
purposes are provided to individuals prior to the
commencement of such processing.
We respect the rights that individuals have
in relation to their personal data and have
processes in place to recognise and respond to
individuals wishing to exercise these rights. We
ensure that personal data is kept up to date and
not retained for longer than the purposes for
which it was collected.
We have global information security policies
and procedures to manage and maintain
data security breaches. We are committed to
implementing leading data security safeguards
and continue to deploy technical solutions to
strengthen the management of data security
and data privacy risk. These include multi
factor authentication, data loss prevention,
access and controls to systems and regular
auditing of account access, and monitoring of
compliance with our cloud security framework.
All employees are required to undertake data
protection and data security training as part
of their induction and then on a yearly basis
thereafter. The importance of cyber security
is championed by the CEO, and we achieved
a 100% completion rate of the 2019 cyber
security training programme.
Tax strategy
The Board is ultimately responsible for
Ascential’s tax strategy and compliance and we
are committed to maintaining full compliance
with all relevant laws and regulations in the
countries in which we operate.
We take a low risk approach to tax planning and
we have a strategic objective to achieve a low
risk status as determined by HMRC’s Business
Risk Review process. We seek to obtain this
status through:
• Paying the right amount of tax on time
• Submitting all tax returns on a timely basis
• Ensuring that tax returns include sufficient
detail to enable the tax authorities to form an
accurate view of the affairs of the company
filing the return with an adequate supporting
audit trail and sign-off process
• Maintaining tax accounting arrangements
which are robust and accurate and comply with
local regulations and the Senior Accounting
Officer provisions in the UK
• Work closely with the tax authorities at
all times
We seek to ensure that our tax affairs are
transparent and sustainable for the long term.
We publish our tax strategy on our website
to allow stakeholders, including shareholders,
governments, colleagues and the communities
in which Ascential operates, to understand our
approach to taxation.
Ascential plc Annual Report 2019 / 55
Strategic reportGovernance reportFinancial statements 56 / Ascential plc Annual Report 2019
GOVERNANCE
REPORT
Contents /
Chairman’s introduction
Board of Directors
Governance framework
Audit Committee report
Nomination Committee report
Directors’ Remuneration Report
Directors’ Remuneration Policy
Annual Report on Remuneration
Directors’ Report
Independent Auditor’s Report
58
60
62
67
75
77
82
91
98
102
Ascential plc Annual Report 2019 / 57
Strategic reportGovernance reportFinancial statements Chairman’s introduction
CHAIRMAN’S LETTER
I believe that your Board remains effective
and continues to work well. We have the right
balance of skills, expertise and professionalism
to continue to deliver strong governance whilst
supporting the Executive Directors to execute
the approved strategy.
Scott Forbes
Chairman
58 / Ascential plc Annual Report 2019
Dear Shareholder,
Strong governance is essential
to building a successful
business that is sustainable
for the longer term.
We have been able to demonstrate our
commitment to corporate governance through
our full compliance with the UK Corporate
Governance Code (“the Code”) since our
IPO in February 2016 and this has continued
throughout 2019. The updated version of the
Code, published in 2018 and applying for our
financial year to 31 December 2019, gives effect
to the Government’s proposals for corporate
governance reforms in certain key areas. The
requirements of the Code are summarised on
page 62, along with a signpost to where we
set out in detail how we have complied with its
various provisions.
The Board recognises the importance of
considering the Company’s responsibilities to
both its shareholders and its wider stakeholder
group and this has always been an integral part
of our culture and decision-making process.
Details of how the Board takes account of
stakeholder interests are set out on pages 6 to
11 of the Strategic Report. Our employees are
one of our most important group of stakeholders
and we have continued to develop our ‘One
Ascential’ culture and make sure that we
are listening to the voices of our employees.
Whilst the engagement methods we have had
in place during 2019 have been effective, we
have concluded that the establishment of the
Ascential Employee Forum will further develop
the two-way communication process we have
with our employees. More information on the
new forum is given in the ‘Our People’ report on
page 46.
We have delivered well against the priorities
we set for the year by returning the Marketing
segment to growth, integrating recent high
growth acquisitions and leveraging the potential
of the information and expertise we possess
across Ascential. As well as strengthening
our positioning to drive strong growth in the
medium-term, we have delivered strong growth
in both revenue and profit in 2019. You can
read more about our performance in the Chief
Executive’s statement on pages 12 to 15.
Leadership
The Directors continue to provide strong
leadership, with an effective mix of experience
and capabilities. The Nomination Committee
regularly reviews the composition, balance, skills
and experience of the Board and has concluded
that the balance and composition of the Board
will continue to provide the right balance of
experience, expertise and challenge to ensure
good governance and leadership.
To ensure that the profile of the Board continues
to match the strategic priorities of our Company,
we undertook an externally facilitated Board
Strategy review to ensure that we have the
optimum Board composition for future periods.
As part of this process, we identified that the
breadth of existing Board competencies could be
strengthened by adding incremental leading-
edge eCommerce knowledge, consumer retail
and/or significant experience of operating in
Asia. Following a formal search process, which is
described in the Nomination Committee report
on page 75, we appointed a prominent global
board recruitment firm who are in a late stage
of the search process.
We have continued to focus on career
development and succession planning to ensure
that we have a healthy talent pipeline for senior
management, Executive Committee and Board
roles. The work we have done in this area is
explained in the Nomination Committee report
on page 75.
Effectiveness
It is a key part of good governance that
the Board and its Committees undertake an
annual evaluation to ensure that it continues
to operate effectively. In accordance with
the Code and our three-year performance
evaluation cycle, we engaged Korn Ferry to
facilitate the Board performance evaluation for
2019. The Board evaluation process confirmed
that the Board has worked effectively during
the year, with a committed Board who are
very engaged with the Ascential business. All
Directors will offer themselves for re-election
at the forthcoming Annual General Meeting.
Full details of the evaluation methodology and
its outcome are set out on page 76.
The Non-Executive Directors devote
considerable time to developing their knowledge
and understanding of the business.
Board overview
In addition to formal Board meetings, the
Directors attend an annual offsite meeting to
review strategy. These extended meetings also
give the Board the opportunity to hear directly
from external speakers, including key customers
or experts in a particular sector which is relevant
to Ascential’s growth plans. Details of the
Board’s engagement with the business are set
out on page 65
Upon the Company’s IPO, we were able to
meet our gender diversity objectives within
the first months of public company life. We
have since continued to rank in the top 3 of
the Hampton-Alexander Review with female
Board representation of 57.1%. We continue to
drive progress in improving gender diversity in
our senior leadership group and details of our
initiatives in this area are described on page 49.
Accountability
The Board considers principal and emerging
risks throughout the year, as well as formally
reviewing principal risks and the risk
management framework. The Audit Committee
reviews the system of internal controls and
reports this work to the Board, which then
reviews the effectiveness of internal controls
in place throughout the year.
You can read more about our principal risks and
risk management framework on pages 38 to 45,
and on the work of the Audit Committee
on pages 67 to 74.
Diversity
Our practice of conducting periodic internal and
externally facilitated Board Strategy reviews
has become a proven way of ensuring that our
Board is continuously composed of Directors
with a diversified range of capabilities as well as
business, board and life experience. We believe
that Directors with diversified experience best
position the Board to assist the Company in a
quest to achieve its evolving business strategy
and success. Our collective view is that diversity,
including gender diversity, immunises the Board
against ‘group think’ and promotes a culture
which keeps business practices current and in
tune with wider societal normal. A board that is
diversified both in gender and qualifications is
an ideal platform for recognising and adapting
to changing consumer behaviours and is better
prepared to respond to evolving industry trends
and act upon new business opportunities.
Relations with shareholders
As Chairman, I am responsible for effective
communication with shareholders and for
ensuring that the Board understands the views
of major shareholders. We run an extensive
investor activity programme throughout the
year. We have held and I have participated
in our annual Capital Markets event during
the Cannes Lions Festival. This June 2019
event included product deep dives on Edge by
Ascential, Flywheel, WGSN, and MediaLink. I
have continued to meet with major shareholders
during the year and the Board receives feedback
from me and the Executive Directors and is
further informed by the Company’s brokers
report on unattributed feedback from investors.
You can read more about how we engage with
our investors on page 10.
Conclusion
I believe that your Board remains effective
and continues to work well. We have the right
balance of skills, expertise and professionalism
to continue to deliver strong governance whilst
supporting the Executive Directors to execute
the strategy we have designed to deliver
sustainable long-term performance.
Scott Forbes
Chairman
21 February 2020
Length
of tenure
Board gender
diversity
Balance of
Executive and
Non-Executive
Directors
OVER 6 YEARS
3-6 YEARS
29%
71%
MALE
FEMALE
43%
57%
NON-EXECUTIVE
EXECUTIVE
CHAIRMAN
57%
29%
14%
Ascential plc Annual Report 2019 / 59
Strategic reportGovernance reportFinancial statements Board of Directors
OUR EXPERIENCED AND
EFFECTIVE LEADERSHIP
Scott Forbes
Chairman
Duncan Painter
Chief Executive Officer
Appointed
to the Board
January 2016
Meetings attended
6/6
Committees
N
Independent
Yes
Key areas of prior experience
Board and committee chairing, business
strategy, digital marketplaces, operations,
finance, mergers and acquisitions and
investor relations.
Current external appointments
— Chairman, Cars.com
Previous experience
— Chairman, Rightmove plc
— Chairman, Orbitz Worldwide
— Non-Executive Director, Travelport
Worldwide
— Managing Director, Cendant Corporation
Appointed
to the Board
October 2011
Meetings attended
6/6
Committees
–
Independent
No
Key areas of prior experience
eCommerce, digital media, consumer
intelligence systems, mergers & acquisitions
business integration, operations,
transformation.
Current external appointments
— ITV plc (NED)
Previous experience
— Managing Director, Sky plc
— Global Product Leader, Experian Plc
— Founder and Chief Executive Officer,
Clarity Blue
Rita Clifton
Senior Independent
Non-Executive
Director
Appointed
to the Board
May 2016
Meetings attended
6/6
Committees
A
N
Independent
Yes
Paul Harrison
Non-Executive
Director
Key areas of prior experience
Brands, branding, business leadership, global
account sales, CPG voice of consumer.
Appointed
to the Board
January 2016
Meetings attended
6/6
Committees
A
R
Independent
Yes
Current external appointments
— Non-Executive Director, Asos plc
— Non-Executive director, Nationwide
Building Society
— Chairman, Brandcap
Previous experience
— Vice Chairman and Strategy Director,
Saatchi & Saatchi
— CEO and Chairman, Interbrand
— Non-Executive Director, Sustainable
Development Commission
— Fellow, World Wildlife Foundation
Key areas of prior experience
Chartered accountant, corporate finance,
capital markets, financial restructuring,
audit, voice of consumer.
Current external appointments
— CFO, Just Eat plc
Previous experience
— Senior Independent Director and Chair
of Remuneration Committee, Hays plc
— Non-Executive Director and Chair of
Audit Committee, Hays plc
— CFO, Wandisco plc
— CFO, The Sage Group plc
60 / Ascential plc Annual Report 2019
Mandy Gradden
Chief Financial Officer
Appointed
to the Board
January 2013
Meetings attended
6/6
Committees
–
Independent
No
Judy Vezmar
Non-Executive
Director
Appointed
to the Board
January 2016
Meetings attended
6/6
Committees
R
N
Independent
Yes
The Board is committed to
maintaining very high standards
of corporate governance and ensuring
values and behaviours are consistent
across the business.
Key areas of prior experience
Chartered accountant, corporate finance,
mergers & acquisitions, financial restructuring,
transformation.
Current external appointments
– SDL plc (NED and Chair of the Audit
Committee)
Key to committees
Committee Chair
A Audit
N Nomination
R Risk
R Remuneration
p.67
p.75
p.38
p.77
Previous experience
— CFO, Torex
— CFO, Detica Group plc
— Dalgety plc
— Price Waterhouse
Gillian Kent
Non-Executive
Director
Key areas of prior experience
Remuneration, voice of consumer, talent
management, portfolio management,
global account sales.
Previous experience
— CEO, LexisNexis International
— Executive, Xerox Corporation
Appointed
to the Board
January 2016
Meetings attended
6/6
Committees
A
R
Independent
Yes
Key areas of prior experience
Digital media, marketing, brands,
remuneration, transformation, technology.
Current external appointments
— Non-Executive Director, Mothercare plc
— Non-Executive Director, NAHL Group plc
— Non-Executive Director, SIG plc
Previous experience
— Non-Executive Director, Pendragon plc
— Non-Executive Director, Coull Ltd
Ascential plc Annual Report 2019 / 61
Strategic reportGovernance reportFinancial statements Governance framework
GOVERNANCE FRAMEWORK
How we comply with the UK Corporate Governance Code
The UK Corporate Governance Code 2018 applies to Ascential for the
first time in the year ending 31 December 2019. This revised Code places
greater emphasis on relationships between companies, shareholders, and
stakeholders. It also promotes the importance of establishing a corporate
culture that is aligned with the company purpose, business strategy, and
promotes integrity and diversity. This section of the report explains how we
have complied with the Code by summarising the provisions of the Code
and linking to where we describe how we have complied in more detail.
Section 3: Composition, Succession and Evaluation
Appointments to the Board should be subject to a formal, rigorous
and transparent procedure, and an effective succession plan should be
maintained for Board and senior management. Both appointments and
succession plans should be based on merit and objective criteria and,
within this context, should promote diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths. (See the Chairman’s
introduction to governance on page 58 and the Nomination Committee
report on page 75 for more information).
Section 1: Board Leadership and Company Purpose
A successful company is led by an effective and entrepreneurial board,
whose role it is to promote the long-term sustainable success of the
company, generating value for shareholders and contributing to wider
society. (See the Directors’ biographies on pages 60 to 61 for more
information).
The board should establish the company’s purpose, values and strategy,
and satisfy itself that these and its culture are aligned. All Directors must
act with integrity, lead by example and promote the desired culture.
(See the governance framework on pages 62 to 64 for more information).
In order for the company to meet its responsibilities to shareholders
and stakeholders, the Board should ensure effective engagement with,
and encourage participation from, these parties. (See the stakeholder
engagement section on pages 6 to 11 for more information).
The Board should ensure that workforce policies and practices are
consistent with the company’s values and support its long-term sustainable
success. The workforce should be able to raise any matters of concern.
(See the sections on Our People on pages 46 to 47 and the Whistleblowing
section of the Audit Committee Report on page 74 for more information).
Section 2: Division of Responsibilities
The chair leads the Board and is responsible for its overall effectiveness
in directing the Company. They should demonstrate objective judgement
throughout their tenure and promote a culture of openness and debate. In
addition, the chair facilities constructive Board relations and the effective
contribution of all non-executive directors, and ensures that Directors
receive accurate, timely and clear information (See the governance
framework on pages 62 to 66 for more information).
The Board should include an appropriate combination of Executive and
Non-Executive (and in particular, Independent Non-Executive) Directors,
such that no one individual or small group of individuals dominates the
Board’s decision-making. There should be a clear division of responsibilities
between the leadership of the Board and the executive leadership of the
Company’s business. (See the governance framework on pages 62 to 66
for more information).
Non-Executive Directors should have sufficient time to meet their Board
responsibilities. They should provide constructive challenge, strategic
guidance, offer specialist advice and hold management to account.
(See the governance framework on pages 62 to 66 for more information).
The Board and its committees should have a combination of skills,
experience and knowledge. Consideration should be given to the length
of service of the Board as a whole and membership regularly refreshed.
(See the Chairman’s introduction to governance on page 58 and the
Nomination Committee report on page 75 for more information).
Annual evaluation of the Board should consider its composition, diversity
and how effectively members work together to achieve objectives.
Individual evaluation should demonstrate whether each director continues
to contribute effectively. (See the Chairman’s introduction to governance
on page 58 and the Nomination Committee report on page 75 for more
information).
Section 4: Audit, Risk and Internal Control
The Board should establish formal and transparent policies and procedures
to ensure the independence and effectiveness of internal and external
audit functions and satisfy itself on the integrity of financial and narrative
statements. (See the Audit Committee Report on pages 67 to 74 for more
information).
The Board should present a fair, balanced and understandable assessment
of the Company’s position and prospects. (See the Audit Committee
Report on pages 67 to 74 for more information).
The Board should establish procedures to manage risk, oversee the
internal control framework and determine the nature and extent of
the principal risks the Company is willing to take in order to achieve its
long-term strategic objectives. (See the Risk Management section on pages
38 to 45 for more information).
Section 5: Remuneration
Remuneration policies and practices should be designed to support
strategy and promote long-term sustainable success. Executive
remuneration should be aligned to company purpose and values, and
be clearly linked to the successful delivery of the company’s long-term
strategy. (See the Annual Statement from the Chair of the Remuneration
Committee on page 78 and the Directors’ Remuneration Policy on pages
82 to 90 for more information).
A formal and transparent procedure for developing policy on executive
remuneration and determine director and senior management
remuneration should be established. No director should be involved
in deciding their own remuneration outcome. (See the Directors’
Remuneration Policy on pages 82 to 90 for more information).
The board, supported by the company secretary, should ensure that it has
the policies, processes, information, time and resources it needs in order
to function effectively and efficiently. (see the governance framework on
pages 62 to 66 for more information).
Directors should exercise independent judgement and discretion when
authorising remuneration outcomes, taking account of company and
individual performance, and wider circumstances. (See the Remuneration
Report on page 91 for more information).
62 / Ascential plc Annual Report 2019
A strong governance framework
Role and operation of the Board
The Board has ultimate responsibility for the overall leadership of
Ascential. It oversees the development of a clear strategy, monitors
operational and financial performance against agreed goals and
objectives, and ensures that appropriate controls and risk systems
exist to manage risk.
Board roles
Chairman
The Chairman provides leadership to the Board, setting its agenda, style
and tone to promote constructive debate and challenge between the
Executive and Non-Executive Directors. He ensures that there is good
information flows from the Executive to the Board, and from the Board to
the Company’s key stakeholders.
The Board has agreed a schedule of matters reserved for the
Board’s decision:
• Strategy, annual budgets and medium-term plans
• Approval of the annual and interim results, material acquisitions,
disposals and contracts
• Evaluation of risk appetite, review of principal risks and approval of both
• Ensuring that a sound system of internal control and risk management
is maintained
• Changes relating to the Company’s capital structure
• Approval of a dividend policy
• Changes to Board composition
At the date of this report, the Board comprises seven Directors; the
Chairman, the Chief Executive, the Chief Financial Officer; and four
independent Non-Executive Directors.
With support from the Company Secretary, the Chairman sets the annual
Board agenda programme and Board meeting agendas. He ensures that
enough time is devoted, both during formal meetings and throughout
the year, to discuss all material matters including strategic, financial,
operational, risk, people and governance.
All directors make every effort to attend every meeting in person except in
extraordinary circumstances. In the unusual circumstances that a Director
is unable to attend a meeting in person, they are provided with all meeting
materials and provide their views to the Chairman, or other directors, in
advance of the meeting.
The Directors indicated as part of the Board evaluation process that the
board materials are relevant, clear and well-presented and contribute to
a constructive debate and strong Board engagement.
In addition to the schedule of formal Board meetings, the Chairman and
the Non-Executive Directors meet periodically without the Executive
Directors present, and the Senior Independent Director meets with the
other Non-Executive Directors without the Chairman present.
The Chairman leads an annual Board effectiveness review and is
responsible for ensuring all new Directors have an appropriate tailored
induction programme.
Chief Executive
The Chief Executive has day-to-day responsibility for the effective
management of the business and for ensuring that the Board’s decisions
are implemented. He leads the development of strategy for approval by
the Board, as well as working with the Chief Financial Officer to develop
budgets and medium-term plans to deliver the agreed strategy.
The Chief Executive is responsible for providing regular reports to the
Board on all matters of significance, to ensure that the Board has accurate,
clear and timely information on all key matters.
Chief Financial Officer
The Chief Financial Officer supports the Chief Executive in developing and
implementing strategy, as well as overseeing the financial performance of
the Group. She leads the development of the finance function to provide
insightful financial analysis that informs key decision making.
The Chief Financial Officer works with the Chief Executive to develop
budgets and medium-term plans to deliver the agreed strategy.
The Chief Financial Officer also leads investor relations activities and
communication with investors alongside the Chief Executive.
Senior Independent Director
The Senior Independent Director acts as an adviser for the Chairman and
is available to the other Non-Executive Directors, including acting as an
intermediary where necessary. She is also available as an intermediary to
shareholders if they have concerns which the normal channels through
the Chairman or Chief Executive have failed to resolve or would be
inappropriate.
Independent Non-Executive Directors
The Non-Executive Directors scrutinise and monitor the performance
of management, including the constructive challenge of the Executive
Directors. They bring independence and a different perspective to the
Board and oversee the integrity of financial information, financial controls
and systems of risk management.
Company Secretary
The Company Secretary supports the Chairman and is available to all
Directors to provide governance advice and assistance. She works with
the Chairman and the Chairs of the Board Committees to develop agendas
and ensures that the Board receives sufficient, pertinent, timely and clear
information. She also ensures compliance with the Board’s procedures and
applicable rules and regulation.
Ascential plc Annual Report 2019 / 63
Strategic reportGovernance reportFinancial statements Governance framework /CONTINUED
Governance Structure
The management and day-to-day running of the Group, including the development and implementation of strategy, monitoring the operating and
financial performance, and the prioritisation and allocation of resources, has been delegated to executive management. Certain Board responsibilities
are delegated to formal Board Committees, which play an important governance role through the work they carry out.
Principal Board Committees
Audit Committee
Chaired by Paul Harrison
Remuneration Committee
Chaired by Judy Vezmar
Nomination Committee
Chaired by Scott Forbes
Roles and responsibilities
• Reviews the Group’s financial reporting
and recommends to the Board that the
Reports and Accounts be approved
• Reviews and reports to the Board on
the effectiveness of internal controls
Roles and responsibilities
• Sets the Remuneration Policy for
the Group
• Sets the individual remuneration of
the Executive Directors and senior
management
Roles and responsibilities
• Reviews the composition of the Board
and its Committees
• Ensures that appropriate procedures
are in place for the nomination, selection,
training and evaluation of Directors
• Assesses the independence and
effectiveness of the internal and
external auditors
• Engages and consults with shareholders
on proposed material changes to
Remuneration Policy
• Has responsibility to review Executive
Directors and Senior Management
succession planning.
• Approves awards under the Group’s
share based incentive plans
Audit Committee Report
Page 67
Remuneration Committee Report
Page 77
Nomination Committee Report
Page 75
Reinforcing a Healthy Culture
Established reporting mechanisms within the corporate governance framework are key to Board oversight of cultural matters, which are
underpinned by our values and leadership beliefs: Forward Thinking (focus, facts, empathy), Challenging (creativity, transparency, openness)
and Transformative (all-in, no silos). Culture is established by leadership and by example but this also needs to be underpinned by clear policies
and codes of conduct.
Risk Management
Risk management is an integral component of our
corporate governance. We have a formal risk
management framework to manage risks in
accordance with the Board-set risk appetite. The
Audit Committee receives regular updates on risk
management and the Board reviews the principal
and emerging risks for the Group.
Ethics, Whistleblowing, Fraud, Bribery
Employees can report incidents of wrongdoing
through both internal and external mechanisms,
including an independent hotline operated by
Protect. The Audit Committee monitors and
reviews the Company polices, incidents and
trends arising from any such incidents and reports
its findings to the Board.
Our People’s opinions
We hold regular updates to both inform our
employees on business progress and answer
any questions they may have, as well as gathering
their ideas on improving customer and internal
engagement. We conduct and act upon our annual
employee engagement survey which helps us
understand what people think. We are
establishing the Ascential Employee Forum to
further amplify the voice of our people.
How the Board monitors culture
Measuring our culture
We measure compliance with our key policies and
procedures, as well as Health & Safety incidents.
Our employee engagement survey includes
specific questions that help us measure our
culture such as ‘we see leaders living our values’,
we feel listened to’ and ‘we feel proud to work
here’. We believe that this framework is an
important contributing factor to our very high
scores for Organisational Integrity (89%) in our
engagement survey.
Aligning remuneration and culture
The Ascential Beliefs were fully launched at the
2018 conference and have gathered good
momentum since then. These Beliefs are directly
incorporated into key people processes such as
Performance Appraisal (linked to bonus
attainment where a bonus is receivable) and
Development Review. Both of these processes
focus not just on what has been achieved, but how
our people act and demonstrate alignment to the
Ascential Beliefs.
Promoting the success of the Company
The Directors are very aware of their duty to
promote the success of the Company for the
benefit of the members as a whole, having regard
to the interests of employees, the impact of the
Company’s operations on the community and the
environment, and maintaining a reputation for
high standards of business conduct. The need to
balance the interests of sometimes conflicting
stakeholders is an inherent part of the Board’s
decision making processes.
64 / Ascential plc Annual Report 2019
Board activity during the year
The Board spent its time during the formal meetings held in 2019 on the
following activities:
Other
• Approved the 2018 Annual Report and notice of
2019 Annual General Meeting;
Strategy
• Held a two day offsite meeting to refine strategy and assess capabilities
and opportunities, with key focus on the Product Design and Marketing
segments, as well as the unitary brand strategy;
• Approved the 2020 annual budget and updated medium-term plans
in the context of the agreed strategy;
• Approved the strategic investment in Jumpshot Inc, and the increase
of investment in Hudson MX.
For more information on our strategy see page 20.
People
• Our Directors met with a range of senior management from across
the business, and met with a broad representation of Flywheel’s
management teams in their Baltimore office;
• Participate as jurors for the annual Ascential awards, designed to
recognise performance across the organisation and every geography
• Received updates from the Chief People Officer on people strategy;
• Reviewed the results of the engagement survey.
For more information on Our People see page 46.
Risk
• Reviewed and approved the principal risk register;
• Considered an impact analysis of the risks associated with
Britain exiting the EU;
• Reviewed recession dashboards to monitor likelihood of
macro-economic downturn; and
• Reviewed the effectiveness of internal controls, including but
not limited to a report from the Audit Committee.
For more information on risk management see page 38.
Shareholder engagement
• Reviewed reports from the Company’s brokers and advisers on
shareholders and analyst feedback following results presentations;
• Reviewed regular investor relations reports relating to share price,
trading activity and movements in institutional investor shareholdings;
• Held a Capital Markets Day with a focus on Flywheel, MediaLink WGSN
and Edge by Ascential;
• Received reports from the Executive Directors following meetings
with investors.
For more information on our investor relations programme see page 66.
Performance
• Monitored operating and financial performance against plans;
• Reviewed the year end and interim results;
• Conducted deep dive reviews of different brands across the Group.
For more information on our performance, see the Chief Executive’s
statement on pages 12-15 and the KPIs on page 22.
• Approved the 2018 final and 2019 interim dividends;
• Approved the capital allocation policy;
• Reviewed the Group’s annual insurance programme.
Board attendance during the year
We expect all Directors to attend every meeting in person except in
extraordinary circumstances, or where a meeting is called on short notice.
If a Director is unable to attend a meeting, he or she is provided with the
same information as the other Directors in advance of the meeting and
given the opportunity to express their views before the meeting, usually
to the Chairman who will share with the other Directors at the meeting.
In addition to the formal schedule of meetings, the Chairman and the
Non-Executive Directors meet periodically without the Executive
Directors present, and the Senior Independent Director meets with the
other Non-Executive Directors without the Chairman present. There
were six formal board meetings held during 2019. All Directors attended
all meetings.
Information flow at Board and Committee meetings
The Chairman agrees each meeting agenda with input from the Chief
Executive and the Company Secretary, using an annual forward agenda
as the basis to ensure that all important issues are addressed throughout
the year and a good balance is struck between operational and strategic
focus. Meeting agendas and supporting papers are circulated to the Board
at least five days ahead of the meeting. The Company Secretary ensures
that any actions arising from each meeting are tracked and completion of
these actions is reported to the Board. Board Committees operate a similar
process with the Chairperson of each Committee agreeing the agenda with
the Company Secretary and relevant members of senior management.
Any Board or Committee member can call for reports on additional
matters of interest.
Induction and development
There were no new Directors during 2019 so there are no specific
induction activities to report. There is an agreed induction programme that
takes into account any previous experience that a Director may already
have and typically includes meetings with senior executives across the
Group as well as information on the Group’s structure, business segments
and operations, and policies to develop each Director’s understanding of
the Group, its strategy, key risks and challenges.
The Board’s forward agenda is designed to include deep dive reviews on
all material aspects of the Group to develop Directors’ understanding of
the business and ensure they meet with a range of senior management.
The Board also receives specific updates on relevant developments,
such as the 2018 UK Corporate Governance Code.
Directors’ conflicts of interest
The Board has a procedure in place for Directors to declare conflicts of
interest and for such conflicts to be considered for authorisation. A Director
may be required to leave a Board meeting if a matter upon which a conflict
has been declared is discussed. External appointments or other significant
commitments of the Directors require prior approval of the Board. The
current external appointments of the Directors are set out on page 60.
Ascential plc Annual Report 2019 / 65
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Internal Control Statement
The Board acknowledges its responsibility for establishing and maintaining
the Group’s system of internal controls and it receives reports identifying,
evaluating and managing significant risks within the business. The system
of internal control is designed to manage, rather than eliminate, the risk of
failure to achieve business objectives and can provide only reasonable and
not absolute assurance against misstatement or loss.
The Board, assisted by the Audit Committee, has carried out a review
of the effectiveness of the system of internal controls during the year
ended 31 December 2019 and the period up to the date of approval of
the consolidated financial statements contained in the Annual Report. The
Board confirms that no significant weaknesses or failings were identified as
a result of this review.
Investor Relations
In addition to the activities explained on page 59, there is an ongoing
investor relations programme of meetings with institutional investors and
analysts, and participation in conferences covering a wide range of issues
within the constraints of publicly available information including strategy,
performance and governance. Ascential held a Capital Markets Day at its
Cannes Lions event in June , giving investors the opportunity to meet with
the senior management team and to gain a more in-depth understanding
of Cannes Lions, MediaLink, Flywheel, Edge by Ascential and WGSN.
The presentations are web cast and are available for viewing on the
Ascential website.
Annual General Meeting (“AGM”)
The AGM of the Company will take place at 9am on Wednesday 6 May
2020 at The Grove, Chandlers’ Cross, Herts, WD3 4TG. All shareholders
have the opportunity to attend and vote, in person or by proxy, at the AGM.
All proxy votes received in respect of each resolution at the AGM are
counted and the balance for and against, and any votes withheld, are
indicated. At the meeting itself, voting on all the proposed resolutions is
conducted on a poll rather than a show of hands, in line with recommended
best practice.
All Directors will be in attendance at the AGM and available to answer
shareholders’ questions. The Notice of the AGM can be found in a separate
booklet which is posted to shareholders at the same time as this report
and is also available on the Ascential website. The Notice of AGM sets out
the business of the meeting and an explanatory note on all resolutions.
Separate resolutions are proposed in respect of each substantive issue.
Results of resolutions proposed at the AGM will be published on the
Ascential website after the meeting.
UK Corporate Governance Code Compliance Statement
We have complied with all principles and provisions of the 2018 UK
Corporate Governance Code (“the Code”) throughout the financial
year ended 31 December 2019. This Corporate Governance Statement
and the cross-referenced reports within set out our approach to applying
the Code.
Institutional shareholders and analysts have regular contact with the
Executive Directors and the Head of Investor Relations. All shareholders
are kept informed of significant developments by announcements and
other publications on our website ascential.com/investors. There are
defined procedures in place to ensure that the requirements of the
Market Abuse Regulations are met.
Louise Meads
Company Secretary
21 February 2020
The Board receives regular reports from the Head of Investor Relations,
covering movements in the holdings of institutional shareholders and other
trading activity. The Board is also provided with current analyst opinions
and forecasts, as well as feedback from FTI and from its joint corporate
brokers Goldman Sachs International and Numis Securities Limited. This
includes direct feedback from investors and analysts on a non-attributed
basis. All of the Directors are available to meet with shareholders although
contact with the Non-Executive Directors would normally be through the
Chairman (Scott Forbes) or the Senior Independent Director (Rita Clifton)
in the first instance.
66 / Ascential plc Annual Report 2019
Audit Committee Report
REPORT OF THE
AUDIT COMMITTEE
Our main objective is to assist the Board
in fulfilling its corporate governance
responsibilities with specific oversight of
internal controls, financial reporting and
internal and external audit effectiveness.
Paul Harrison
Chairman of the Audit Committee
2019 Key activities
• Reviewed the significant financial judgements
made during the year
• Considered the accounting treatment of
acquisitions made during the year
• Conducted a review of the Annual Report and
Accounts to confirm that it was fair, balanced,
understandable, and provides the information
necessary for stakeholders to assess the
Company’s position, performance, business
model and strategy
• Reviewed the Viability Statement and the key
judgements included therein
• Recommended the approval of the 2018
Annual Report and the 2019 interim results
to the Board
• Reviewed the effectiveness of internal controls
and risk management framework
• Reviewed external and Internal Audit findings
• Conducted an audit tender process and
recommended the re-appointment of KPMG
to the Board
• Conducted a deep dive review of the revised
Compliance Framework
• Reviewed progress of the finance systems
transformation project
• Approved the internal audit plan for 2020
Ascential plc Annual Report 2019 / 67
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COMMITTEE CHAIRMAN’S
INTRODUCTION
Dear Shareholder,
I am pleased to introduce the Report
of the Audit Committee for 2019 which
describes our activities and areas of
focus during the year.
The Committee has continued to support
the Board in fulfilling its corporate
governance responsibilities, including
risk management and internal control
framework; internal audit process; financial
reporting practices; the preparation and
compliance of the Company’s Annual
Report and Accounts; and the external
audit process.
During the year we conducted an audit tender process with the ultimate
goal of appointing the audit firm that will provide the highest quality, most
effective and efficient audit. More details on the process we undertook
and the rationale for our recommendation to re-appoint KPMG as the
Company’s auditor are explained on page 72 of this report.
In addition to myself, the members of the Committee are Gillian Kent
and Rita Clifton. All members of the Committee are independent Non-
Executive Directors who bring a wide knowledge and significant business
experience in financial reporting, risk management, internal control and
strategic management. The Board considers that the Committee members
as a whole have competence relevant to Ascential’s sector and I also fulfill
the requirement to bring recent and relevant financial experience to the
Committee. You can read more about the experience of the Committee
members in their biographies on page 60 to 61.
All Committee members were present at our five meetings this year, one
of which was focused solely on the tender of our Group statutory audit.
At the invitation of the Committee, the Chief Financial Officer and senior
representatives of the finance management team also attend meetings,
as do representatives of both internal and external audit. The Committee
holds meetings with the external auditor and the Head of Internal Audit
independent of management, and these discussions assist in ensuring that
reporting, and risk management processes are subject to rigorous review
throughout the year.
The principal and emerging risks facing the Company are robustly
assessed by the Board as a whole. More detail on these risks and the risk
management framework is set out on page 38. The ongoing monitoring
and effectiveness review of the Group’s risk management and internal
control systems are described on page 72. The assessment of risk and
the review of the risk management systems feeds into the process for
assessing the longer-term viability of the Company, which is described
further on page 71.
The Committee conducts an annual evaluation of its performance. The
review of performance in 2019 was facilitated externally by Korn Ferry
in February 2020. The review confirmed that the Committee is working
effectively. More detail on the evaluation process can be found in the
Corporate Governance Report on page 76.
The key focus areas for the Committee are set out in the below report. It
is expected that these will remain key areas of focus for the Committee in
2020, as well as oversight of the finance transformation programme.
68 / Ascential plc Annual Report 2019
Audit Committee focus during 2019
Area of focus
Financial Reporting
Matters considered
The appropriateness and disclosures of accounting policies,
significant financial judgements and key estimates with a
particular focus on:
• Carrying value of goodwill and acquired intangible assets;
Outcome
The accounting policies, judgements and estimates are
appropriate and balanced.
The judgements and estimates to adopted IFRS 16, Leases,
were agreed and the resultant impact assessed.
• Acquisition accounting;
• Recognition and valuation of deferred and contingent
consideration;
• The implementation of IFRS 16, Leases;
• Recognition of deferred tax assets and disclosure;
• Alternative performance measures.
The Annual Report, taken as a whole, is fair, balanced
and understandable and is compliant with relevant
accounting standards and other legal or regulatory
financial reporting requirements, including the UK
Corporate Governance Code.
Area of focus
Risk and control
environment
Matters considered
The effectiveness of the Group’s systems of internal control.
The effectiveness of the risk management framework and
the processes for identifying and managing risks.
The process and assumptions underlying the going concern
and viability statements.
Outcome
Reported to the Board that an effective system of risk
management and internal control has been in place
throughout the year.
Reported to the Board that an appropriate process is in
place to make the going concern and viability statements.
Area of focus
Internal audit
Matters considered
The effectiveness of the Internal Audit function, its key
findings and resolution of those matters.
Outcome
An effective culture and process is in place for resolving key
findings of internal audit reviews.
The alignment of the internal audit plan to the key risks of
the Group.
The internal audit plan is well designed and aligned to the
key risks of the Group.
Area of focus
External audit
Matters considered
The approach, scope and risk assessments of external
audit and the effectiveness and independence of the
external auditor.
The extent of the non-audit services provided by the
external auditor.
Audit tender process.
Outcome
Approved KPMG’s audit plan and scope.
No concerns over the extent of non-audit services provided
by KPMG.
Conducted an audit tender process and recommended to
the Board that KPMG be re-appointed.
Ascential plc Annual Report 2019 / 69
Strategic reportGovernance reportFinancial statements Audit Committee Report /CONTINUED
Significant financial judgements in 2019
The key reporting judgements considered by the Committee and discussed with the external auditor during the year were:
Issue
Carrying value of
goodwill and acquired
intangible assets
Judgement
The Committee reviewed the carrying value of goodwill and other intangible assets for impairment, including a detailed
review of the assumptions underlying the “value in use” calculations for businesses identified as cash generating units
(“CGU”). The key assumptions underlying the calculations are primarily the achievability of the long-term business plan
including anticipated revenue growth rates, CGU specific discount rates, and long-term growth assumptions. For further
information, please see Note 12 of the consolidated financial statements on pages 134 and 136. The Committee reviewed
management’s analysis and underlying assumptions, and was satisfied with the conclusions which demonstrated that no
impairment has occurred or revision to useful economic life is needed. The Committee also reviewed the clarity and adequcy
of the impairment disclosure.
Issue
Acquisition
accounting
Judgement
Acquired businesses give rise to material assets and liabilities at the point of acquisition that are based on estimates and
judgements about future performance. The provisional recognition of goodwill, intangible assets, other assets and liabilities
and estimates of the fair value of consideration transferred were based on a number of assumptions. Often, significant
elements of consideration are deferred, contingent on future performance, and may be subject to other conditions such as
continued employment of key management personnel. Significant judgement is involved in assessing the relevant forecast,
and selecting the appropriate discount rates.
The Committee reviewed the acquisition accounting calculations and underlying estimates and assumptions for Shenzhen
Yimian Network Technology Co., Ltd. (“Yimian”), which was acquired during the year. The acquisition of our interests during
the year of Jumpshot Inc. and Hudson MX were reviewed to ensure that the acquisition accounting calculations, underlying
estimates and judgements were reasonable. The subsequent post year end disposal of Jumpshot was also considered in
regard to disclosure and adjustments to the year-end position.
Issue
Recognition and
valuation of deferred
and contingent
consideration
Judgement
Where an acquisition agreement provides for an adjustment to the consideration, contingent on future performance over
the contractual earn-out period, the Group accrues the fair value, based on the estimated additional consideration payable
as a liability at acquisition date. To the extent that deferred contingent consideration is payable as part of the acquisition cost
and is payable after one year from the acquisition date, the deferred consideration is discounted at an appropriate discount
rate and carried at net present value in the consolidated balance sheet. The liability is measured against the contractually
agreed performance targets at each subsequent reporting date with any adjustments recognised in the consolidated
income statement.
Acquisition-related employment costs are contingent on future performance of the acquired business against the
contractually agreed performance targets over the earn-out period but are also dependent on the continued employment
of the founders over the contractual earn-out period. Consequently they are treated as a remuneration expense
in the consolidated income statement.
The estimation of the liability requires the Group to make judgements concerning the future performance of related
business over both the deferred contingent consideration period.
In respect of acquisitions in previous years, the Committee reviewed the calculations in respect of deferred consideration
and acquisition-related contingent employment costs in light of changes in forecast performance, in order to ensure these
continued to be appropriate.
The Committee reviewed the proposed changes to the fair value of the deferred and contingent consideration which
is based on a Board approved three Year Plan and is satisfied with its valuation and recognition in the Financial Statements.
70 / Ascential plc Annual Report 2019
Issue
Value of recoverable
tax losses
Judgement
The determination of profits subject to tax is calculated according to complex laws and regulations, the interpretation and
application of which can be uncertain. In addition, deferred tax assets and liabilities require judgement in determining the
amounts to be recognised, with consideration given to the timing and level of future taxable income over multiple years. The
main area of judgement is the recognition of the US deferred tax asset on losses. The Committee reviewed a report on the
background to the Group’s historic US net operating losses, the extensive period over which they will be recovered in cash
and other significant judgements and rigorously challenged. The Committee also considered reports presented by KPMG
before determining that the amount recognised as deferred tax asset is appropriate.
The Committee reviewed the proposed disclosures on taxation in Note 15 and agreed that the presentation of taxation,
including deferred taxes, appropriately addresses the significant change in the international tax environment and that
sufficient and appropriately transparent disclosures are provided.
Issue
Adjusted
performance
measures
Judgement
The Group uses certain non-GAAP measures of performance, as, in the opinion of the Directors, this provides a better
understanding of the underlying performance of the business, and provides better comparability with other peer group
companies. The use and definition of these measures is a matter of judgement.
The Committee ensures that there is equal prominence given to adjusted and statutory performance measures,
and that there are full reconciliations between the two.
The Committee discussed these measures with both management and advisers, including KPMG, to ensure that the
measures were reasonable, and reviewed their use in the context of the overall Annual Report to ensure that this was
consistent with the Code requirement to be fair, balanced and understandable.
Viability Statement
We reviewed the process undertaken and conclusions reached to support
the Company’s Viability Statement which can be found in full on page 39.
Our review included:
• challenging management on whether the three-year time period
adopted remained appropriate and aligned with the long-term
forecasting of the Group;
• challenging whether management’s assessment of the principal
and emerging risks facing the Group and their potential impact
was appropriate;
• considering whether there were any additional risks which could impair
solvency or which, whilst not necessarily principal risks in themselves,
could become severe if they occur in conjunction with other risks;
Fair, balanced and understandable
The Board asked the Committee to consider whether the 2019 Annual
Report is fair, balanced and provides the necessary information for
shareholders to assess the Company’s position and prospects, business
model and strategy. In performing this review, the Committee considered
the following questions:
• Is the Annual Report open and honest with the whole story
being presented?
• Have any sensitive material areas been omitted?
• Is there consistency between different sections of the Annual Report,
including between the narrative and the financial statements, and
does the reader get the same message from reading the two sections
independently?
• considering the likelihood of the risks occurring in the time period
• Is there a clear explanation of key performance indicators and their
selected and the impact severity in the event that they
did occur; and
linkage to strategy?
• Is there a clear and cohesive framework for the Annual Report
• challenging management as to the appropriateness of the assumptions
with key messages drawn out and written in accessible language?
used in stress testing and modelling scenarios.
Following this review, and the incorporation of the Committee’s comments,
we were pleased to advise the Board that, in our view, the Annual Report is
fair, balanced and understandable in accordance with the requirements of
the UK Corporate Governance Code.
Ascential plc Annual Report 2019 / 71
Strategic reportGovernance reportFinancial statements Audit Committee Report /CONTINUED
Internal controls
The Board, with the assistance of the Audit Committee, regularly monitors
and reviews the policies and procedures making up the Group’s internal
control and risk management system. To support this monitoring, the
Audit Committee reviewed reports from senior management, Internal
Audit and KPMG.
The major components of the internal controls systems include:
• clearly defined operational structure, accountabilities and
authority limits;
• detailed operational planning and forecasting;
• thorough monitoring of performance and changes in outlook; and
• established risk management processes.
• Specific matters considered in relation to controls
effectiveness included:
• control self-assessment process and findings;
• adoption of a new compliance framework and regular
compliance report;
As part of our work to manage the external auditor relationship, and the
annual effectiveness review, we consider whether there are adequate
safeguards to protect auditor objectivity and independence. In conducting
our annual assessment, we consider feedback from the Chief Financial
Officer, the level and nature of non-audit fees accruing to the external
auditor, KPMG’s formal letter of independence, and the length and tenure
of the external auditor and of the audit engagement partner.
We have approved a formal non-audit services policy to mitigate any
risks threatening, or appearing to threaten, the external audit firm’s
independence and objectivity arising through the provision of non-audit
services which either create conflicts of interest between the external
audit firm and the Group or place the external audit firm in the position of
auditing its own work. The non-audit services policy sets out which services
are prohibited and cannot be provided by the external auditor. The auditor
is generally only engaged for audit and related activities (such as annual
covenant compliance audits). However, if there is a case to use the external
auditor to provide non-audit services, permission is required prior to the
engagement of the external auditor in accordance with the following table:
Value of non-audit services
Approver
Group Financial Controller or
Chief Financial Officer
• review of tax risks and compliance issues;
<£25,000
• review of treasury controls;
• refreshed risk assessment for corporate criminal offences;
• key developments in IT controls;
• fraud, ethical issues and whistleblowing occurrence;
• health and safety governance; and
• legal claims.
A formal control self-assessment process was in place during the year in
relation to financial controls. This process describes each control objective,
the controls required to meet the objective, the frequency of operating the
control and the evidence to be retained by management to demonstrate
the control exists. Management teams across the Group self-assess their
compliance with this framework.
Progress towards completion of actions identified to improve internal
control is regularly monitored by management and the Audit Committee,
who provide assurance to the Board. The Board considers that none of the
areas of improvement identified constitute a significant weakness.
External audit
The Committee is responsible for ensuring that the external auditor
provides an effective source of assurance for the Group’s financial
reporting and controls, including that the necessary independence and
objectivity is maintained. We are also responsible for recommending
the appointment, reappointment or removal of the external auditor, and
negotiating and agreeing the external audit fees.
KPMG attend each scheduled meeting of the Committee and present
their reports on our half-year and full-year financial results, as well as their
planning reports in advance of each audit. We meet with KPMG without
management present at least once a year. These sessions provide an
opportunity for open dialogue and we typically discuss KPMG’s relationship
with executive management and particular audit risks identified. We also
challenge KPMG on the independence of their audit. In addition, I meet
with the audit engagement partner outside of the formal Committee
environment at least once per year. We also meet with management
without KPMG present to discuss their view of KPMG’s effectiveness
and quality of work delivered, as well as reviewing the results of a survey
of finance staff throughout the Group.
72 / Ascential plc Annual Report 2019
£25,000 – £50,000
Chairman of the Audit Committee
>£50,000
Audit Committee
When considering whether permission should be granted, the approver
will assess whether the provision of such services impairs the auditor’s
independence or objectivity, whether the skills and experience make the
auditor the most suitable supplier of the non-audit service, the fee to be
incurred and the criteria which govern the compensation of the individuals
performing the audit.
A breakdown of total audit and non-audit fees paid to KPMG during 2019
is set out in Note 4 to the financial statements. These non-audit services
were pre-approved in accordance with the non-audit services policy.
Audit Tender
KPMG were appointed as the Group’s auditor in 2010. As a public interest
entity, the Group is required to conduct a tender for external audit services
every 10 years and rotate auditor after 20 years. The Audit Committee
decided that the second half of 2019 would be an appropriate time to
conduct an audit tender for the financial year ending 31 December 2020,
as this would allow sufficient time to run a fair and competitive process and
takes into account the benefit of a shadow working period (in the event of a
change of audit firm) and the operational rhythm of the Group.
Following the conclusion of a robust tender process, including
consideration of firms from within and outside of the “big 4”, detailed
in the below table, the Committee recommended to the Board the
reappointment of KPMG as external auditor. The Board accepted the
Committee’s recommendation and a resolution for the reappointment of
KPMG as external auditor will be put to shareholders at the 2020 AGM.
The Committee confirms that this recommendation is free from influence
and that no contractual terms have been imposed on the Company limiting
the choice of auditor. The Audit Committee considers that the Company
has complied with the Competition and Markets Authority’s Statutory
Audit Services for Large Companies Market Investigation (Mandatory Use
of Companies Tender Processes and Audit Committee Responsibilities)
Order 2014, including with respect to Audit Committee responsibilities for
agreeing the audit scope, fees and audit tender process.
The audit tender process
The Audit Committee oversaw the tender process taking into account
the ‘Audit Tenders Notes on Best Practice’ published by the FRC in
February 2017.
The process was split into two stages, as detailed below.
The key selection criteria to be used in determining the Committee’s
recommendation to the Board was:
• Audit quality and technical approach
• Expertise and experience of the proposed team
• Understanding of our business
• Fees
• Resourcing strategy, including ensuring team continuity/availability
• Input from management meetings
• Investor feedback
• Value added offerings
• References
Stage 1
Invitation
to tender
Expression
of interest
Preliminary
meeting
An invitation to tender was developed following
consultation with the Audit Committee, detailing
the tender process. This was provided to three
audit firms in total.
Having received the invitation to tender, each of
the participant audit firms completed a
confidentiality undertaking and a conflict of interest
and independence declaration and was asked to
affirm its intention to respond and participate in
the process.
The Chief Financial Officer and the Group Financial
Controller met with those firms that expressed
an interest to participate, to give an outline of
the tender process and key attributes the Audit
Committee expected from the lead audit partner
and senior members of the audit team. In addition,
the importance of audit quality was discussed at
these meetings.
Submission of
proposal
Participant firms were asked to submit a document
outlining key competencies and capabilities, in
particular:
• Experience and credentials of proposed lead audit
partners and identification of other key team
members;
• Geographic coverage and international ways of
working;
• Firm and team expertise, including sector and
industry audit experience; and
• Audit quality.
Evaluation and
assessment
Following the review of the submission and
meetings held, on agreement with the Audit
Committee Chair, two firms progressed through to
Stage 2 of the tender process.
Stage 2
Data room access Participant firms were granted access to
Meetings
Written
proposals
information about the Group, held within a secure
data room.
A series of meetings were held between the
participant audit firms and members of the Finance
leadership team, as well as the Audit Committee
Chair, Chief Financial Officer and Chief Executive
Officer, to supplement the data room material.
Participant audit firms made a final presentation
of their overall proposal, which was circulated in
advance of the session, to the Audit Committee.
The presentation was followed by a Q&A session.
Evaluations and
assessment of
proposals and
presentations
The written proposals and presentations
were assessed against the selection criteria as
predetermined and agreed by the Audit Committee
at the start of the process.
Recommendation
to the Board
by the Audit
Committee
Following the review of the submission and
meetings held, on agreement with the Audit
Committee Chair, the two firms making the
submissions progressed through to Stage 2 of the
tender process.
Board Decision
The Audit Committee recommended the
reappointment of KPMG to the Board.
The Board endorsed the recommendation made by
the Audit Committee and a resolution to reappoint
KPMG is to be put to shareholders at the Annual
General Meeting in May 2020.
Feedback
Feedback was provided to participant firms.
Ascential plc Annual Report 2019 / 73
Strategic reportGovernance reportFinancial statements Audit Committee Report /CONTINUED
Internal Audit
There continued to be a formal Internal Audit function in
place during the year, utilising EY as our co-source partner. The
purpose of the Internal Audit function is to consider whether the
system of internal control is adequately designed and operating
effectively to respond to the Group’s principal risks, and to provide
independent objective assurance to senior management and to
the Board through its Committees. Internal Audit accomplishes
its objectives by bringing a systematic, disciplined approach to
evaluate and improve the effectiveness of risk management,
control and governance processes. In order to provide a greater
level of independence for Internal Audit, its personnel as well as
the co-sourced party now report to the General Counsel, who
also acts as Director of Internal Audit and is accountable to the
Committee in respect of that role. The General Counsel attends
all Audit Committee meetings and has the opportunity to meet
independently with the Chairman of the Audit Committee.
The Committee approves the annual Internal Audit Plan,
and receives a report on Internal Audit activity and progress
against that Plan. We monitor the status of internal audit
recommendations and management’s responsiveness to
their implementation. We also challenge management where
appropriate to provide us with assurance that our control
environment is robust and effective.
Whistleblowing
The Committee has approved a whistleblowing policy which
encourages all staff to report suspected wrongdoing, in the
knowledge that their concerns will be taken seriously and
investigated appropriately, and that their confidentiality will be
respected. The policy also aims to reassure staff that they should
be able to raise genuine concerns without fear of reprisals, even if
they turn out to be mistaken. We provide details of a confidential
helpline operated by an independent third party, as well as my
own contact details within the policy. The Committee receives
reports on any whistleblowing incidents that are reported during
the year. Any significant issues relating to potential fraud would
be escalated to me as the Audit Committee Chairman immediately.
Paul Harrison
Chairman of the Audit Committee
21 February 2020
74 / Ascential plc Annual Report 2019
Nomination committee report
REPORT OF THE
NOMINATION COMMITTEE
Our Board evaluation confirmed that Ascential
is a highly effective Board and will benefit from
the appointment of the two new Directors with
specialist experience identified in the 2019
Board Strategy review.
Scott Forbes
Chairman
2019 Highlights
• Considered the succession planning
requirements for the Board and senior
management team
• Reviewed the post integration senior
management structure for Edge by Ascential
• Reviewed progress with plans to strengthen
Diversity & Inclusion
• Reviewed the outcomes of the annual
employee engagement survey
• Engaged in an externally facilitated Board
Strategy review to map the Board’s existing
experience and capabilities with Ascential’s
current strategic plan
• Interviewed candidates for open Non-
Executive Director role based on role
specification based on results of Board
Strategy review
• Reviewed and confirmed the independence
of the Non-Executive Directors
Role of the Nomination Committee
• Evaluates the balance of skills, knowledge
and experience, and size, structure and
composition of the Board and Board
Committees
• Considers retirements and appointments
of additional and replacement Directors
and Committee members
• Approves the design of the Board
evaluation process
• Assists the Board in the consideration and
development of appropriate corporate
governance principles
Confirmation of independence
• The UK Corporate Governance Code
recommends that a majority of the members
should be independent Non-Executive
Directors and that it is chaired by the Board
Chairman or a Non-Executive Director
• The Nomination Committee is chaired by the
Board Chairman, Scott Forbes, and the other
members are Rita Clifton and Judy Vezmar,
both independent Non-Executive Directors
Ascential plc Annual Report 2019 / 75
Strategic reportGovernance reportFinancial statements Nomination committee report /CONTINUED
Dear Shareholder,
I am pleased to introduce the Report of
the Nomination Committee for 2019.
The role of the Nomination Committee is
primarily to keep the structure, size and
composition of the Board and Committees
under review with the primary objective
of matching the skills, knowledge and
experience of Directors to our business
strategy and requirements.
The Committee has concluded that the
balance and composition of the Board will
continue to provide the right balance of
experience, expertise and challenge to
ensure good governance and leadership.
The Committee undertook an externally facilitated Board Strategy review
during the year to consider the composition of the Board and considered
experience and capabilities required on Ascential’s Board of Directors. As
part of this review process, we agreed to add two incremental Directors
in order to strengthen the Board’s eCommerce, data science, consumer
retail, diversity and/or experience of operating in Asia. We believe that
adding some or all of the identified capabilities and experience would be
beneficial to the Board’s ability to support management and our current
business. A prominent global board recruitment firm has been appointed
and has commenced a search for up to two new Non-Executive Directors
with these identified skills and experience.
The Committee has continued to focus on the development of talent and
succession plans for senior management across the business. Changes
to the executive team structure were implemented to streamline the
CEO’s reporting lines as well as align more appropriately to the Ascential
operating structure. Emergency and planned succession options for the
CEO and CFO were reviewed, including the development plan activity
that has been undertaken for potential successors.
The Committee also received updates from the Chief People Officer on
other strategic people matters including diversity, engagement levels,
retention levels and strategic skills and capability planning. We have
four female Board members, representing 57%, which exceeds the one-
third recommended by the Hampton-Alexander Review. We also meet
the Hampton-Alexander Review recommendation that there is a 33%
representation of women on Executive Committees and in their direct
report population. The work undertaken to drive diversity and inclusion
more widely across the business is explained in detail on page 46.
The Committee’s policy towards Board appointments
The most important priority of the Committee has been, and will continue
to be, ensuring that members of the Board should collectively possess the
broad range of skills, expertise and industry knowledge, and business and
other experience, necessary for the effective oversight of the Group. The
Committee takes account of a number of factors before recommending
any new appointments to the Board, including relevant skills to perform
the role, experience, knowledge and diversity.
The Committee has historically engaged external recruitment consultants
with whom the Group has no other relationship to assist with the
identification of suitable candidates, based on a comprehensive candidate
search brief. The shortlisted candidates met with members of the Board
on a one-to-one basis before the Committee made its recommendation of
the preferred candidate to the Board. It is the Committee’s intention
to continue with this policy.
Non-Executive Director appointments to the Board are for an initial term
of up to three years. Non-Executive Directors are typically expected to
serve two three-year terms, although the Board may invite the Director to
serve for an additional period on the recommendation of the Committee.
Non-Executive Directors are appointed under a formal appointment letter
which are available for inspection at the registered office of the Company
during normal business hours and at the AGM.
External Directorships
The Committee keeps under review the number of external directorships
held by each Director and performance evaluation is used to assess
whether the Non-Executive Directors are spending enough time to fulfil
their duties. Any external appointments or other significant commitments
of the Directors require the prior approval of the Chairman, or, in the case
of the Chairman, the Senior Independent Director.
All Directors received votes cast in favour of their re-election in excess
of 90% at the 2019 AGM.
Board effectiveness
The policy on Board effectiveness reviews is that an externally led
evaluation of the Board, Committees and individual Directors will be
conducted every third year. In accordance with this policy, Korn Ferry were
engaged to facilitate the Board and Committee performance evaluation for
2019. The evaluation, reviewed with Korn Ferry at the 20 February 2020
Board meeting, concluded that Ascential has a highly effective Board and
contributions from the Board would benefit from the appointment of the
two new Directors with specialist experience identified in the 2019 Board
Strategy review.
Attendance at Committee meetings
The Committee meets at least annually. During 2019, the Committee met
twice formally and all members were in attendance at both meetings as
well as discussions outside of the formal meeting cadence.
In addition to Committee members and the Company Secretary, the Chief
Executive and Chief People Officer often attend meetings at the invitation
of the Committee.
Scott Forbes
Chairman of the Nomination Committee
21 February 2020
76 / Ascential plc Annual Report 2019
Directors’ remuneration report
DIRECTORS’
REMUNERATION REPORT
2019 Highlights
• Strong reported revenue growth of 19.4%,
6.4% Organic basis and 9.0% Proforma.
• Strong Adjusted EBITDA growth of 18.5%
on a reported basis, 6.2% Organic and
8.5% Proforma.
• Bonuses earned at 26% of the maximum based
on stretching revenue and Adjusted EBITA
targets with the Chief Executive opting to
defer 100% of his bonus into shares.
• Good link between long-term performance
and remuneration with the 2017 PSP
award due to vest in March 2020 at 83%
of the maximum following delivery of a
compound annual growth rate in Adjusted EPS
of 18% (after adjusting for acquisitions and
divestments during the period), and a three-
year total shareholder return of 31%.
• Revised 2020 Directors’ Remuneration Policy
which has been updated to take account of
the 2018 UK Corporate Governance Code.
In this section
• Annual Statement from the Chairman
of the Remuneration Committee on
behalf of the Board
• Directors’ Remuneration Policy
• Annual Report on Remuneration
Confirmation of independence
• The UK Corporate Governance Code
recommends that the Remuneration
Committee comprises at least three
independent Non-Executive Directors,
and is chaired by one of these Directors.
• The Remuneration Committee is chaired
by Judy Vezmar, and the other members are
Gillian Kent and Paul Harrison, all of whom
are independent Non-Executive Directors.
1 Companies (Directors’ Remuneration Policy and Directors’
Remuneration Report) Regulations 2019 (No 970)
Ascential plc Annual Report 2019 / 77
The current Directors’ Remuneration Policy was
proposed to shareholders at the AGM in May 2017
after thoughtful debate and consideration. We were
pleased to receive over 98% shareholder support.
As the business has continued to transform and
in accordance with the Directors’ Remuneration
Regulations1, we are proposing a revised Directors’
Remuneration Policy for shareholder approval at
the AGM in May 2020.
Judy Vezmar
Chairman of the
Remuneration Committee
Strategic reportGovernance reportFinancial statements Directors’ remuneration report /CONTINUED
The Committee has reviewed the policy in detail during the year. We
consider our existing policy to be working well, given that the majority
of variable pay has been delivered in equity following the generation
of sustainable shareholder returns during a period of business
transformation. We are therefore proposing only modest revisions.
The revisions largely relate to the remuneration updates included in the
2018 UK Corporate Governance Code. The proposed policy remains
heavily weighted towards long-term performance through our long-term
incentive plan and the requirement to defer half of annual bonus into
shares. With regard to deferral, we are proposing to include flexibility in
the updated policy to enable Executive Directors to elect to voluntarily
defer up to 100% of any bonus earned into shares for three years. In
relation to the annual bonus for 2019, the Chief Executive intends to defer
his entire bonus into shares (subject to approval of the new policy). This
will provide greater potential alignment between the Executive Directors
and shareholders in future years and is consistent with our preference for
Executive Directors to build and maintain a significant shareholding which
has been practice to date.
Annual Statement from the Chair of the Remuneration Committee
A summary of the current policy and proposed changes is shown below, with the full proposed policy set out on pages 82 to 90.
As part of our policy review process, we consulted with our major investors who were largely supportive of our proposal.
Element
Salary
Element
Benefits
Element
Pension
Current Policy
Reviewed annually with the default being for increases
(if any) to align with the wider workforce. Greater
increases can be made to reflect changes in responsibility
or market positioning.
Comment
No change proposed
Current Policy
Standard suite of benefits provided with flexibility to
broaden the offering in line with wider workforce.
Comment
No change proposed
Current Policy
Pension and/or cash allowance in lieu of pension
set at 9% of salary.
Change to be made for new joiners:
Pension to operate in line with workforce with
Company contribution set at:
• 5% of salary: less than 5 years’ service;
• 7% of salary: less than 10 years’ service; and
• 9% of salary: greater than 10 years’ service.
Comment
Change proposed
The change reflects the updated UK Corporate
Governance Code recommending alignment in
pension across the workforce.
78 / Ascential plc Annual Report 2019
Comment
Change proposed
Introducing Committee discretion to adjust bonus
outcomes generated by mechanical application of targets
is consistent with the recommendations in the 2018 UK
Corporate Governance Code.
Enabling the Executives to defer a greater proportion of
bonus into shares provides the opportunity for greater
shareholder alignment.
Element
Annual Bonus
Current Policy
• Max: 125% of salary
• Target: 62.5% of salary
• 50% of bonus compulsorily deferred into shares with
dividend accrual
• Financial targets (>50% of total bonus) with discretion to
include strategic targets
• Recovery and withholding provisions apply for three years
in the event of a misstatement of the accounts, an error in
assessing any applicable performance conditions, or in the
event of misconduct on the part of the participant
Changes to be made from 2020:
1. Introduce a formal bonus ‘over-ride’ which will enable
the Committee to adjust bonus outcomes having had
regard to overall corporate performance; and
2. Enable Executive Directors to elect to voluntarily
defer up to 100% of any bonus earned into shares
for three years.
Element
Performance Share
Plan (PSP)
Current Policy
• Maximum 200% of salary (250% of salary in exceptional
Comment
No change proposed
circumstances)
• Minimum three-year performance period
• Two-year holding period on vested shares
• Dividends accrue on shares to vesting / end of holding
period
• Performance targets apply. At least 50% of awards must
be subject to financial performance measures
• Recovery and withholding provision apply as per the
annual bonus.
Element
Share Ownership
Guidelines
Current Policy
Share ownership guideline in employment: 200% of salary
(with a requirement to retain 50% of net vested shares
awards until that limit is met).
Comment
No change proposed
Element
Post-employment
share ownership
requirements
Current Policy
Executives leaving employment as ‘good leavers’ (e.g. due
to retirement) will continue to hold share awards until their
original vesting date.
Deferred bonus share awards and PSP awards will only be
eligible to vest at the normal vesting date (i.e. three years
from grant and subject to performance in the case of the
PSP). Vested PSP shares subject to a holding period will
remain subject to the holding period (i.e. vesting and release
would not be brought forward from year 5 to year 3). An
exceptional circumstances provision will apply so that these
provisions can be over-ridden (e.g. in the event of death).
Bad leaver share awards will lapse on cessation of
employment.
Comment
Change proposed
The Policy takes account of the principles of the 2018
Corporate Governance Code, the number of shares already
vested which are subject to a holding period and the
enhanced opportunity to defer bonus into shares. Having
had regard to these factors, the Committee concluded that
the proposed policy provides an appropriate ‘tail risk’ for
executives post cessation of employment.
Ascential plc Annual Report 2019 / 79
Strategic reportGovernance reportFinancial statements Directors’ remuneration report /CONTINUED
Performance and Reward in 2019
Ascential delivered strong results during 2019, with revenue from
continuing operations of £416.2m (2018: £348.5m), growth of 19.4% on
a reported basis or 9.0% on a Proforma basis. Adjusted EBITDA grew by
6.2% on an Organic basis to £128.5m (2018: £108.4m). We use EBITA and
revenue in the annual bonus to align with delivering growth in underlying
profits which is our key short-term objective. EBITA is the measure we use
to assess short-term profitability as it is well understood, cascades through
the organisation and is also closely correlated with the generation of cash
given it is prior to the amortisation of any intangible assets. The use of
revenue is strongly aligned with our internal culture of delivering Organic
growth. These annual bonus metrics are complemented by the metrics
we use in the long-term incentive plan which include an all-encompassing
measure of long-term profitability in EPS, and have targets that are aligned
to the long-term rates of return we pursue for our shareholders. EPS is
supplemented by the use of total shareholder return which is an output
metric which captures both the quality of the business we have created
and the rates of return we are focused on driving from the business over
the long-term. More details on the Group’s performance during the year
can be found on pages 12 to 15.
Reflecting the challenging nature of the bonus targets set, notwithstanding
the strong growth in revenue and Adjusted EBITA the Executive Directors
were both awarded an annual bonus in relation to 2019 performance
of 32% of salary (26% of maximum). More details on the targets set and
performance achieved can be found on page 92.
The 2017 award made under the Company’s Performance Share Plan
will vest in March 2020 at 83%. 25% of the award was subject to the
Company’s total shareholder return measured against a comparator group
comprising the constituents of the FTSE 250 Index, excluding investment
trusts. Ascential’s total shareholder return was in the second quartile over
the measurement period, resulting in 34% vesting for this element. 75%
of the award was subject to Adjusted EPS Compound Annual Growth
Rate (“CAGR”) for the three financial years commencing with the financial
year starting 1 January 2017. The actual Adjusted EPS CAGR for the
three-year period to 31 December 2019 was 18%, resulting in 100% of
this element of the award vesting. When reviewing the extent to which the
performance conditions had been satisfied, the Committee considered
whether any adjustments were necessary to ensure that material events
during the measurement period had not made the performance conditions
materially more or less difficult to satisfy. The Committee considered that
it was appropriate to adjust for material M&A activity during the period
by removing Ascential Exhibitions from the base year EPS, and adding
acquisition case EPS for Clavis, WARC, BrandView, Flywheel and the
revaluation of the investments in Hudson and Shoptalk to the 2019 target
EPS. These adjustments ensured that the targets that were set in early
2017 were no more or less difficult to achieve because of the subsequent
corporate activity during the performance period.
The Executive Directors are subject to a two-year holding period
for these vested shares, net of any shares sold to meet tax and social
security liabilities.
All employees in eligible countries were once again invited to participate
in the Group’s Sharesave plans, which give employees the opportunity
to benefit from the business success they help to create.
80 / Ascential plc Annual Report 2019
How the policy will be implemented for the 2020 financial year
We are proposing to increase the CFO’s salary from £372,000 to
£409,000. The successful execution of the Company’s post IPO strategy
has increased the complexity and breadth of the role of our CFO. The
increased globalisation of the Company has necessitated greater
centralisation of corporate functions as part of the Ascential Operating
Model. The greater globalisation of the Company has also resulted in more
complicated financial reporting requirements and this, allied to ongoing
M&A activity, has also necessitated greater direction from finance. As a
result of these factors, we are proposing to recognise the step change in
the finance function through a one-off 10% increase to the base salary of
the CFO (inclusive of an annual cost of living related increase) with effect
from 1 April 2020. This increase has not been derived from benchmarking.
However, for context, the increase results in the CFO being positioned
around the median of the FTSE 250 on a ‘target’ total remuneration basis
which is a market position the Committee is comfortable with given its
view of the importance of the role, its size and the calibre of the individual.
In line with the employee population, the base salary of the CEO will be
increased by 2.0% with effect from 1 April 2020.
The annual bonus plan will continue to be subject to a maximum of 125% of
base salary and measured against stretching financial targets. 50% of the
bonus will be based on Adjusted EBITA and 50% will be based on revenue.
Half of any bonus earned will be mandatorily deferred into shares, which
vest after a three-year period. Under the new Directors’ Remuneration
Policy, Executive Directors will have the option to defer up to 100% of their
annual bonus into shares with the shares vesting after three years as is the
case with the mandatory deferred shares.
Performance Share Plan (“PSP”) awards will be made to Executive
Directors at 200% of salary for the CEO and 175% of salary for the
CFO. 75% of the award will be measured against growth in Adjusted
EPS and 25% against relative TSR versus the FTSE 250 Index (excluding
investment trusts). In setting the performance targets, we reviewed the
range of Adjusted EPS targets in light of internal plans, macro-economic
conditions and performance expectations, and the range was re-calibrated
from 6% to 15%, to 8% to 14%. This range was considered to be similarly
challenging to the range set to apply to the 2019 PSP having taken into
account current circumstances. Full details of the performance targets to
be applied are set out on page 97.
Shares normally vest after a three-year performance period, subject to
a further two-year holding period whereby the Executive Directors will
be restricted from selling the shares which vest other than to settle any
associated tax.
The other changes to our Remuneration Policy detailed above will also
apply in the 2020 financial year subject to shareholder approval of the
policy at the AGM.
Committee consideration of workforce pay
The Committee had oversight during the year, and provided input, into
a rebalancing of remuneration structures across the Group. This largely
focused on increasing the certainty of reward for more junior employees
whilst retaining the performance focus in remuneration of the most senior
executives. These changes ensured remuneration remained competitive
and fair in that the changes ensured that employee personal success
was directly linked to the success of the Company in a manner that was
proportionate to their individual roles.
Key activities of the Committee
The Committee’s key activities during the 2019 financial year were:
• preparing a revised Directors’ Remuneration Policy following
consultation with major investors;
• reviewing base salaries for Executive Directors and senior management;
• approving the bonus outturn for Executive Directors and senior
management;
• setting bonus targets for Executive Directors and approving them for
senior management;
• engaged by management in relation to changes in remuneration policy
for the wider employee base;
• approving awards under the Company’s share plans; and
• approving the Directors’ Remuneration Report.
I hope that you find the information in this report helpful and I look forward
to your support at the Company’s AGM in May 2020.
Judy Vezmar
Chairman of the Remuneration Committee
21 February 2020
Ascential plc Annual Report 2019 / 81
Strategic reportGovernance reportFinancial statements Directors’ remuneration policy
DIRECTORS’
REMUNERATION POLICY
SUBJECT TO A BINDING VOTE AT THE 2020 AGM
This part of the Remuneration Report sets out Ascential’s Remuneration
Policy for its Executive and Non-Executive Directors. The policy has been
developed taking into account the principles of the 2018 UK Corporate
Governance Code, and guidelines from major investors. The Directors’
Remuneration Policy will be put to a binding shareholder vote at the AGM
in May 2020, and subject to shareholder approval, will take effect from
that date. A summary of the changes proposed in this revised Directors’
Remuneration Policy is shown on page 78 with the changes including (i)
aligning new Executive Director pension provision with the service-related
structure that operates in the UK, (ii) introducing Committee discretion
to adjust formula driven annual bonus outcomes, (iii) enabling Executive
Directors to voluntarily elect to defer 100% of their annual bonus into
Company shares for three years and (iv) introducing a policy on post
cessation of employment share ownership . The full details of
the Directors’ Remuneration Policy effective for the financial year to
31 December 2019 can be found on pages 58 to 64 of the 2017
Annual Report.
What is the role of the Remuneration Committee?
The Remuneration Committee (“the Committee”) has responsibility
for determining the overall pay policy for Ascential. In particular, the
Committee is responsible for:
• determining the framework or broad policy for the fair remuneration of
Ascential’s Executive Directors and Chairman, and certain other senior
management including the Executive Committee members;
• approving their remuneration packages and service contracts, giving due
regard to the comments and recommendations of the UK Corporate
Governance Code as well as the Financial Conduct Authority’s rules and
associated guidance;
• ensuring that the Remuneration Policy is adequate and appropriate to
attract, motivate and retain personnel of high calibre and provides, in a
fair and responsible manner, reward for their individual contributions;
• reviewing the ongoing appropriateness and relevance of the
Remuneration Policy, overseeing any major changes in remuneration and
employee benefits structures throughout Ascential;
• consulting with shareholders and their advisory bodies in advance of
significant changes to Remuneration Policy;
• approving the design of, and determining targets for, performance-
related pay schemes operated by Ascential and approving the total
annual payments made under such schemes; and
• reviewing the design of all share incentive plans for approval by the
Board and shareholders. For any such plans, the Committee determines
each year whether awards will be made and, if so, the overall amount
of such awards, the individual awards to Executive Directors and other
senior management, and the performance targets to be used.
Policy Overview
When setting the policy for Directors’ remuneration, the Committee takes
into account the overall business strategy and risk tolerance, considering
the long-term interest of the Company with a view to adequately
attracting, retaining and rewarding skilled individuals and delivering
rewards to shareholders. Consistent with these principles, the Committee
has agreed a Remuneration Policy which will:
• provide a simple remuneration structure which is easily understood
by all stakeholders;
• attract, retain and motivate executives and senior management in
order to deliver the Company’s strategic goals and business outputs;
• aromote the long-term success of the business;
• provide an appropriate balance between fixed and performance-
related, and immediate and deferred remuneration to support a
high-performance culture;
• adhere to the principles of good corporate governance and best practice;
• align executives with the interests of shareholders and other external
stakeholders; and
• consider the wider pay environment, both internally and externally.
Furthermore, the Committee is satisfied that the Remuneration Policy
and its application takes due account of the six factors listed in the UK
Corporate Governance Code:
• Clarity – our policy is well understood by our management team and
has been clearly articulated to our shareholders. A key part of our Chief
People Officer’s role is engaging with our wider employee base on all
our “People Matters” (including remuneration) and we monitor the
effectiveness of this process through the feedback received. The Board
is comfortable that our Remuneration Policy is clearly understood by our
employees.
• Simplicity – the Committee is very mindful of the need to avoid overly
complex remuneration structures which can be misunderstood and/
or deliver unintended outcomes. Therefore, one of the Committee’s
objectives is to ensure that our executive remuneration policies and
practices are as simple to communicate and operate as possible, while
also supporting our strategy.
• Risk – our Remuneration Policy is designed to ensure that inappropriate
risk-taking is not encouraged and will not be rewarded via (i) the balanced
use of both short and long-term incentive plans, (ii) the significant role
played by equity in our incentive plans (together with shareholding
guidelines) and (iii) malus/clawback provisions.
• Predictability – our incentive plans are subject to individual caps, with our
share plans also subject to market standard dilution limits. The scenario
charts on page 88 illustrate how the rewards potentially receivable by
our Executive Directors vary based on performance delivered and share
price growth.
82 / Ascential plc Annual Report 2019
• Proportionality – there is a clear link between individual awards, delivery
of strategy and our long-term performance. In addition, the significant
role played by incentive/“at-risk” pay, together with the structure of the
Executive Directors’ service contracts, ensures that poor performance is
not rewarded.
• Alignment to culture – Ascential has a relentless focus on delivering for
our clients and this is fully aligned with our Remuneration Policy in that
employee personal success is directly linked to the success of our clients
though the short and long-term incentive plans and targets we operate.
This is especially the case at the most senior levels within our business.
How are wider employment conditions taken into account?
The Committee seeks to ensure that the underlying principles which form
the basis for decisions on Executive Directors’ pay are consistent with
those on which pay decisions for the rest of the workforce are taken. For
example, the Committee takes into account the general salary increase for
the broader employee population when conducting the salary review
for the Executive Directors.
The Company operates UK and International Sharesave and US Stock
Purchase saving plans for employees wishing to invest in the Company’s
shares. A formal employee consultation on remuneration is not operated;
however, employees are able to provide feedback on the Company’s
remuneration policies to their managers or the Human Resources
department informally, as well as through the employee engagement
survey and formal performance review process. A formal workplace
forum will be established during H1 2020 which will provide an additional
What are the elements of Executive Directors’ Pay?
channel for consulting with employees on issues affecting them, including
Remuneration Policy. Fixed ratios between the total remuneration levels
of different roles in Ascential are not applied, as this may prevent us from
recruiting and retaining the necessary talent in competitive employment
markets. We have however adopted a formal job banding framework,
which helps to ensure that remuneration is appropriate and consistent
across the organisation.
The Executive Directors’ Remuneration Policy (as set out on pages 82 to
90) reflects differences compared to the broader employee base that are
appropriate to leadership to ensure alignment with shareholder interests.
A greater weight is placed on performance-based pay through the
quantum and participation levels in incentive schemes.
Are the views of shareholders taken into account?
The Committee values and is committed to dialogue with shareholders.
In preparing the 2020 Directors’ Remuneration Policy we have sought
feedback from our major shareholders and the shareholder representative
bodies IVIS and ISS. We will continue to carefully consider any shareholder
feedback received in relation to the AGM this year and in future. In
addition, the Committee will continue to engage proactively with
shareholders and ensure that shareholders are consulted in advance,
where any material changes to the Directors’ Remuneration Policy are
proposed. Through the process of review this year, the Committee Chair
has consulted with shareholders who in aggregate hold a majority of our
shares and they were largely supportive of our proposal.
Element
Base Salary
Purpose and link to strategy
Provides a competitive and
appropriate level of basic fixed pay
appropriate to recruit, retain and
reward Directors of a suitable calibre
to deliver the Company’s strategic
goals and business outputs.
Reflects an individual’s experience,
performance and responsibilities
within Ascential.
Opportunity
Increases will normally be in line
with the general increase for the
broader employee population,
taking into account factors such as
performance of the Company and
external factors such as inflation. More
significant increases than standard
may be awarded from time to time to
recognise, for example, development
in role and change in position or
responsibility, as are also considered
for the wider workforce for the
same reasons.
Current salary levels are disclosed in
the Annual Report on Remuneration.
Operation
Set at a level which provides a fair
reward for the role and which is
competitive amongst relevant peers.
Normally reviewed annually with
any changes taking effect from
1 April each year.
Set taking into consideration individual
and Company performance, the
responsibilities and accountabilities
of each role, the experience of each
individual, his or her marketability
and Ascential’s key dependencies
on the individual.
Reference is also made to salary levels
amongst relevant peers and other
companies of equivalent size and
complexity.
The Committee considers the impact
of any base salary increase on the total
remuneration package.
Ascential plc Annual Report 2019 / 83
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Element
Benefits
Purpose and link to strategy
Provides market competitive and
appropriate benefits package.
Element
Pension
Purpose and link to strategy
Provides a competitive and
appropriate pension package.
Opportunity
There is no overall maximum level
of benefits provided to Executive
Directors, and the level of some of
these benefits is not pre-determined
but may vary from year to year based
on the overall cost to the Company.
However, the Committee monitors
annually the overall cost of the benefits
provided to ensure that it remains
appropriate.
Operation
Benefits provided may include private
medical insurance, life assurance and
income protection insurance.
The benefits provided may be subject
to minor amendment from time to time
by the Committee within this policy.
In addition, Executive Directors are
eligible for other benefits which are
introduced for the wider workforce on
broadly similar terms. The Company
may reimburse any reasonable
business-related expenses incurred in
connection with their role (including
tax thereon if these are determined to
be taxable benefits).
Operation
Each Executive Director has the right
to participate in the pension scheme
operated by the Company either via
a contribution into the Company’s
defined contribution plan, or via an
alternative cash allowance.
Opportunity
Pension contributions and/or cash
allowances are set at 9% of base salary
for existing Executive Directors taking
into account their service in post and
the approach to pensions applied to
the wider UK workforce.
For Executive Directors who join
after the 2020 policy is approved, the
Company contribution will align with
the pension provision to the wider
UK workforce with executives eligible
to receive a maximum Company
contribution to a pension scheme or a
cash payment on the following scale:
• 5% of salary: less than
5 years’ service
• 7% of salary: less than
10 years’ service; and
• 9% of salary: greater than
10 years’ service
Opportunity
The schemes are subject to the limits
set by HMRC or appropriate tax
authority from time to time.
Element
All-employee
share plans
Purpose and link to strategy
Encourages employee share
ownership and therefore increases
alignment with shareholders.
Operation
Ascential may from time to time
operate tax-approved share plans
(such as HMRC approved Save As You
Earn option Plan and Share Incentive
Plan) for which Executive Directors
could be eligible.
84 / Ascential plc Annual Report 2019
Element
Annual bonus
Purpose and link to strategy
Incentivises the execution of
key annual goals by rewarding
performance against targets aligned to
delivery of strategy.
Compulsory deferral of a portion of
bonus into Ascential shares provides
alignment with shareholders.
Opportunity
The maximum bonus payable to
Executive Directors is 125% of base
salary with 50% of maximum payable
for on-target performance (62.5%
of salary). 0% of salary is paid for
threshold performance.
Dividends may accrue on DABP
awards over the vesting period
and be paid out either as cash or
as shares on vesting.
Operation
Paid annually, bonuses will be
subject to achievement of stretching
financial performance measures.
The Committee also has discretion
to introduce non-financial and/or
strategic measures in future years.
It is intended, however, that financial
measures will determine the majority
of the annual bonus opportunity.
50% of the bonus share will normally
be deferred into awards over shares
under the Deferred Annual Bonus
Plan (“DABP”), with awards normally
vesting after a three-year period.
Executive Directors have the flexibility
to voluntarily elect to defer up to
100% of any bonus earned into shares
for three years.
Recovery and withholding provisions
are in operation across the annual
bonus and the DABP in certain
circumstances, including where there
has been a misstatement of accounts,
an error in assessing any applicable
performance conditions, or in the
event of misconduct on the part of
the participant.
The Committee has discretion
to adjust bonus outcomes having
had regard to overall corporate
performance.
Ascential plc Annual Report 2019 / 85
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Element
Performance Share
Plan (“PSP”)
Purpose and link to strategy
Rewards the achievement of sustained
long-term performance that is aligned
with shareholder interest. Facilitates
share ownership to provide further
alignment with shareholders.
Element
Shareholding
guideline
Purpose and link to strategy
Encourages Executive Directors
to build a meaningful shareholding
in Ascential so as to further align
interests with shareholders.
86 / Ascential plc Annual Report 2019
Opportunity
The normal maximum opportunity is
200% of base salary. In exceptional
circumstances this may be increased
to 250% of salary.
During the policy period, the normal
award levels are expected to be 200%
of base salary for the CEO and 175%
of base salary for the CFO.
Dividends may accrue on PSP awards
over the vesting period and be paid out
either as cash or as shares on vesting
in respect of the number of shares that
have vested.
Opportunity
Not applicable
Operation
Annual awards of performance shares
that normally vest after three years
subject to performance conditions
and continued service. Performance
is normally tested over a period of at
least three financial years.
For the awards granted in 2020,
awards will be subject to targets based
on growth in Adjusted EPS and relative
TSR measures against the constituents
of the FTSE 250 (excluding Investment
Trusts).
Different performance measures
and/or weightings may be applied for
future awards as appropriate. At least
50% of future awards will be subject to
financial measures which will normally
be a profit measure. The Committee
will consult in advance with major
shareholders prior to any significant
changes being made.
Following vesting, a further two-year
holding period will apply to the awards
whereby Executive Directors will be
restricted from selling the net of tax
shares which vest.
Recovery and withholding provisions
operate in certain circumstances,
including where there has been
a misstatement of accounts, an
error in assessing any applicable
performance conditions, or in the
event of misconduct on the part of the
participant. These provisions apply for
at least three years from the date on
which an award vests.
Operation
Each Executive Director must build
up and maintain a shareholding in
Ascential equivalent to 200% of
base salary. If an Executive Director
does not meet the guideline, they
will be expected to retain at least half
of the net shares vesting under the
Company’s discretionary share-based
employee incentive schemes until the
guideline is met.
Element
Post-employment
share ownership
requirements.
Purpose and link to strategy
Ensures there is an appropriate
amount of ‘tail risk’ for executive
post cessation of employment.
Opportunity
Not applicable
Operation
Executives leaving employment as
good leavers (e.g. due to retirement)
will continue to hold share awards
until the later of their original vesting
date or the conclusion of a holding
period on the vested shares.
Deferred share bonus awards and
PSP awards will only be eligible to
vest at the normal vesting date (i.e.
three years from grant and subject to
performance in the case of the PSP)
and vested PSP shares subject to a
holding period will remain subject to
the holding period (i.e. vesting and
release will not be brought forward
from year 5 to year 3). An exceptional
circumstances provision will apply so
that these provisions could be over-
ridden (e.g. in the event of death).
Bad leavers’ share awards will lapse
on cessation of employment.
What discretion does the Committee retain in operating the
incentive plans?
The Committee operates Ascential’s various incentive plans according to
their respective rules. To ensure the efficient operation and administration
of these plans, the Committee retains discretion in relation to a number of
areas. Consistent with market practice, these include (but are not limited
to) the following:
• Selecting the participants;
• The timing of grant and/or payments;
• The size of grants and/or payments (within the limits set out
in the policy table above);
• The extent of vesting based on the assessment of performance;
• Determination of good leaver and, where relevant, the extent
of vesting in the case of the share based plans;
• Treatment in exceptional circumstances such as change of control, in
which the Committee would act in the best interests of Ascential and its
shareholders;
• Making the appropriate adjustments required in certain circumstances
(e.g. rights issues, corporate restructuring events, variation of capital and
special dividend);
How does the Committee choose performance measures
and set targets?
The performance metrics used for the annual bonus plan and PSP have
been selected to reflect Ascential’s key performance indicators.
The annual bonus is based on performance against a stretching
combination of financial measures, with the flexibility to include non-
financial performance measures if considered to be appropriate. The
financial measures are set taking account of Ascential’s key operational
objectives but will typically include a measure of profitability (such as
EBITA which is also closely correlated with the generation of cash) and/
or revenue (which reflects the Company’s growth focus) as these are key
performance indicators. In 2020, the annual bonus will be measured on
revenue (50%) and profit (50%) targets.
The performance conditions for the PSP will be weighted towards financial
performance and include metrics weighted towards long-term value
creation (e.g. a combination of Adjusted EPS and TSR performance).
Relative TSR has been selected for the 2020 awards as it reflects
comparative performance against a broad index of companies. It also
aligns the rewards received by Executives with the returns received by
shareholders. For the 2020 awards, this is the FTSE 250 constituents
(excluding investment trusts) as the Company is a constituent of that index.
• Cash settling awards; and
• The annual review of performance measures, weightings and setting
targets for the discretionary incentive plans from year to year.
A sliding scale of challenging performance targets is set for both of these
measures and further details of the targets applied are set out in the
Annual Report on Remuneration.
Any performance conditions may be amended or substituted if one or
more events occur which cause the Committee to reasonably consider that
the performance condition would not without alteration achieve its original
purpose. Any varied performance condition would not be materially less
difficult to satisfy in the circumstances.
The Committee will review the choice of performance measures and the
appropriateness of the performance targets and the TSR peer group prior
to each PSP grant.
Different performance measures and/or weightings may be applied for future
awards as appropriate. However, the Committee will consult in advance with
major shareholders prior to any significant changes being made.
Ascential plc Annual Report 2019 / 87
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What about pre-existing arrangements?
In approving this Directors’ Remuneration Policy, authority is given to
the Remuneration Committee to honour any commitments entered into
with current Directors that pre-date the approval of the policy. Details of
any payments to current or former Directors will be set out in the Annual
Report on Remuneration if and when they arise.
How does the executive pay policy differ from that for other
Ascential employees?
The Remuneration Committee considers the Executive Directors’
remuneration in the context of the wider employee population. All of the
Company’s employees have the opportunity to participate in share-based
rewards such as SAYE and SIP and the wider leadership team of the
Company participate in annual bonus arrangements. The Remuneration
Policy for the Executive Directors is more heavily weighted towards
variable pay than for other employees, to make a greater part of their pay
conditional on the successful delivery of business strategy. This aims to
create a clear link between the value created for shareholders and the
remuneration received by the Executive Directors.
How much could an Executive Director earn under the
Remuneration Policy?
A significant proportion of total remuneration is linked to Company
performance, particularly at maximum performance levels.
The chart below illustrates how the Executive Directors’ potential reward
opportunity varies under three different performance scenarios: fixed
pay only, on-target and at maximum. Illustrations are intended to provide
further information to shareholders regarding the pay for performance
relationship. Actual pay delivered will be influenced by changes in share
price and the vesting levels of awards.
The Executive Directors can participate in the two all-employee share
schemes on the same basis as other employees. The value that may
be received under these schemes is subject to tax approved limits. For
simplicity, the value that may be received from participating in these
schemes has been excluded from the below chart.
’
0
0
0
£
O
E
C
3500
3000
2500
2000
1500
1000
500
0
£608k
100%
Fixed
Total (including 50% share
price growth on LTIP):
£2,937k
£2,389k
46%
29%
25%
£1,635k
42%
21%
37%
On target
Maximum
Fixed Pay
LTIP value with 50% share price growth
Annual Bonus
LTIP
88 / Ascential plc Annual Report 2019
’
0
0
0
£
O
F
C
2000
1500
1000
500
0
Total (including 50% share
price growth on LTIP):
£1,840k
£1,517k
£1,043k
39%
22%
39%
43%
30%
27%
On target
Maximum
£408k
100%
Fixed
Fixed Pay
LTIP value with 50% share price growth
Annual Bonus
LTIP
What would a new Executive Director be paid?
The ongoing remuneration package for a new Executive Director would
be set in accordance with the terms of Ascential’s shareholder-approved
Remuneration Policy at the time of appointment and the maximum limits
set out therein. It is the Remuneration Committee’s policy that no ongoing
special arrangements will be made, and in the event that any deviation
from standard policy is required to recruit a new hire on an ongoing basis,
approval would be sought at the Annual General Meeting.
Base salary levels will be set in accordance with Ascential’s Remuneration
Policy, taking into account the experience and calibre of the individual.
Salaries may be set at a below market level initially with a view to increasing
them to the market rate subject to individual performance and developing
into the role by making phased above inflation increases.
Benefits will be provided in line with those offered to the other Executive
Directors, taking account of local market practice.
What would the ongoing incentive arrangements be for
a newly-appointed Executive Director?
Currently, for an Executive Director, annual bonus payments will
not exceed 125% of base salary and PSP awards would not normally
exceed 200% of base salary (not including any arrangements to replace
forfeited entitlements).
Where necessary, specific annual bonus and PSP targets and different
vesting and/or holding periods may be used for an individual for the first
year of appointment if it is appropriate to do so to reflect the individual’s
responsibilities and the point in the year in which they joined the Board.
A PSP award can be made shortly following an appointment (assuming the
Company is not in a close period).
What payments could a newly appointed Executive Director
receive beyond the policy?
The Committee retains flexibility to offer additional cash and/or share
based awards on appointment to take account of remuneration or benefit
arrangements forfeited by an Executive on leaving their previous employer.
If shares are used, such awards may be made under the terms of the PSP or
as permitted under the Listing Rules.
Such payments would take into account the nature of awards forfeited
and would reflect (as far as possible) performance conditions, the values
foregone and the time over which they would have vested or been paid.
Awards may be made in cash if the Company is in a prohibited period at
the time an Executive joins the Company.
The Committee may also agree that the Company will meet certain
relocation, legal, tax equalisation and any other incidental expenses as
appropriate so as to enable the recruitment of the best people including
those who would need to relocate.
What about an internal appointment?
In the case of an internal Executive Director appointment, any variable
pay element awarded in respect of the prior role may be allowed to pay
out according to its terms, and adjusted as relevant to take into account
the appointment. In addition, any other ongoing remuneration obligations
existing prior to appointment may continue. Where a temporary internal
promotion occurs base salary may be subject to an adjustment to better
reflect the temporary role or an additional allowance may be payable to
reflect the additional responsibilities for the period they operate.
Are the Executive Directors allowed to hold external
appointments?
Executive Directors are permitted to accept external appointments with
the prior approval of the Board and where there is no impact on their role
with Ascential. The Board will determine on a case-by-case basis whether
the Executive Directors will be permitted to retain any fees arising from
such appointments and, where any such fees are retained, they will
be disclosed in the Annual Report on Remuneration.
What are the Executive Directors’ terms of employment?
What are their notice periods?
The Executive Directors have entered into service agreements with an
indefinite term that may be terminated by either party on 12 months’
written notice. Contracts for new appointments will be terminable by
either party on a maximum of 12 months’ written notice.
What payments will an Executive Director receive when
they leave the Company?
An Executive Director’s service contract may be terminated summarily
without notice and without any further payment or compensation, except
for sums accrued up to the date of termination, if they are deemed to
be guilty of gross misconduct or for any other material breach of the
obligations under their employment contract.
The Company may suspend the Executive Directors or put them on a
period of garden leave during which they will be entitled to salary, benefits
and pension only.
If the employment of an Executive Director is terminated in other
circumstances, compensation may include base salary due for any
unexpired notice period, pro-rata bonus (normally based on performance
assessed after the year end), and any amount assessed by the Committee
as representing the value of other contractual benefits which would have
been received during the period. The Company may choose to continue
providing some benefits instead of paying a cash sum, representing their
cost. The cash element of any annual bonus paid to a departing Executive
Director would normally be paid at the normal payment date,
and reduced pro-rata to reflect the actual period worked.
Any statutory entitlements or sums to settle or compromise claims
in connection with a termination (including, at the discretion of the
Committee, reimbursement for tax or legal advice and provision of
outplacement services) would be paid as necessary.
Executive Directors’ service contracts are available for inspection at
Ascential’s registered office during normal business hours and will be
available for inspection at the AGM.
How are outstanding share awards treated when an Executive
Director leaves Ascential?
Any share-based entitlements granted to an Executive Director under
Ascential’s share plans will be treated in accordance with the relevant plan
rules. Usually, any outstanding awards lapse on cessation of employment.
However, in certain prescribed circumstances, such as death, injury,
disability, retirement with the consent of the Committee, the sale of the
entity that employs him/her out of Ascential or any other circumstances at
the discretion of the Committee, “good leaver” status may be applied.
For good leavers under the PSP, outstanding awards will normally vest
at the original vesting date to the extent that the performance condition
has been satisfied, and would normally be reduced on a pro-rata basis to
reflect the period of time which has elapsed between the grant date and
the date on which the participant ceases to be employed by the Company.
The Committee retains the discretion to vest awards (and measure
performance accordingly) on cessation and/or to disapply time pro-rating.
However, it is envisaged that this would only be applied in exceptional
circumstances in line with the Company “post cessation of employment
share ownership guideline”. For good leavers under the DABP, unvested
awards will vest at the original vesting date unless the Committee exercises
its discretion and allows the award to vest in full on, or shortly following,
the date of cessation. However, in line with the Company “post cessation of
employment share ownership guideline” it is envisaged this would only be
applied in exceptional circumstances.
In determining whether a departing Executive Director should be treated
as a “good leaver”, the Committee will take into account the performance of
the individual and the reasons for their departure.
What happens to their outstanding share awards if there
is a takeover or other corporate event?
Outstanding awards on a takeover or winding up of the Company will vest
early to the extent that the performance condition has been satisfied, and
would normally be reduced on a pro-rata basis to reflect the period of time
which has elapsed between the grant date and the date of the takeover or
other corporate event, although the Committee would retain discretion to
waive time pro-rating of an award if it regards it as appropriate to do so in
the particular circumstances.
In the event of a demerger, special dividend or other event which, in
the opinion of the Committee, may affect the current or future value of
shares, the Committee may decide that awards will vest on a basis which
would apply in the case of takeover. In the event of an internal corporate
reorganisation, awards will be replaced by equivalent new awards over
shares in a new holding company, unless the Committee decides that
awards should vest on a basis which would apply in the case of a takeover.
Ascential plc Annual Report 2019 / 89
Strategic reportGovernance reportFinancial statements Directors’ Remuneration Policy /CONTINUED
How are the Non-Executive Directors Paid?
Element
Non-Executive
Director fees
Purpose and link to strategy
To attract and retain a high-calibre
Chairman and Non-Executive
Directors by offering market
competitive fee levels.
Opportunity
The fees are subject to maximum
aggregate limits as set out in the
Company’s Articles of Association
(£2,000,000).
The Committee is guided by the
general increase for the broader
employee population, but on occasions
may need to recognise, for example,
changes in responsibility, and/or time
commitments.
Current fee levels are disclosed in the
Annual Report on Remuneration.
Operation
The Company Chairman is paid an
annual fee. The Non-Executives
(including the Senior Independent
Director) are paid a basic fee with
the Chairs of the main Board
Committees, the Senior Independent
Director and the Non-Executive
Director designated as the employee
representative, are paid additional
fees to reflect the extra responsibilities
and time commitments. If there is a
temporary yet material increase in the
time commitments for Non-Executive
Directors, the Board may pay extra
fees on a pro-rata basis to recognise
the additional workload.
The level of fees is reviewed
periodically by the Committee and
CEO for the Company Chairman,
and by the Company Chairman and
Executive Directors for the Non-
Executive Directors, and is set taking
into consideration market levels in
comparably sized FTSE companies, the
time commitment and responsibilities
of the role and to reflect the xperience
and expertise required. The Company
Chairman and the Non-Executive
Directors are not eligible to participate
in incentive arrangements or to receive
benefits save that they are entitled to
reimbursement of reasonable business
expenses and any tax thereon.
What would a new Chairman or Non-Executive Director
be paid?
For a new Chairman or Non-Executive Director, the fee arrangement
would be set in accordance with the approved Remuneration Policy
in force at that time.
What are the terms of appointment for the Chairman
and Non-Executive Directors?
All Non-Executive Directors have letters of appointment with the
Company for an initial period of three years (save for the Chairman
who is appointed for a nine-year term), subject to annual re-election
by the Company at a general meeting.
The appointment of each Chairman and Non-Executive Director may be
terminated by either party with three months’ notice. The appointment
of each may also be terminated at any time if he or she is removed as a
Director by resolution at a general meeting or pursuant to the Articles,
provided that in such circumstances the Company will (except where
the removal is by reason of his misconduct) pay the Chairman or
Non-Executive an amount in lieu of his or her fees for the unexpired
portion of his or their notice period.
Directors’ letters of appointment are available for inspection at the
registered office of Ascential during normal business hours and will
be available for inspection at the AGM.
Dates of Directors’ service contracts/letters of appointment
Executive Directors
Duncan Painter
Mandy Gradden
Non-Executive
Directors
Scott Forbes
Rita Clifton
Paul Harrison
Judy Vezmar
Gillian Kent
Date of service
contract/
appointment
Unexpired term
of contract at
31 December 2019
21 January 2016
Rolling contract
21 January 2016
Rolling contract
11 January 2016
12 May 2016
11 January 2016
11 January 2016
11 January 2016
90 / Ascential plc Annual Report 2019
Annual report on remuneration
ANNUAL REPORT ON
REMUNERATION
Subject to an advisory vote at the 2020 AGM
This report has been prepared in accordance with the provisions of the Companies Act 2006 and the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended). This report has also been prepared in line with the recommendations of the 2018 UK Corporate
Governance Code.
This part of the Directors’ Remuneration Report sets out a summary of how the Directors’ Remuneration Policy was applied during 2019. The policy in
place for the year was approved by shareholders at the 2017 AGM. This Annual Report on Remuneration will be subject to an advisory vote at the 2020
AGM. Various disclosures in this report about the Directors’ remuneration have been audited by Ascential’s independent auditor, KPMG LLP. Where
information has been audited, this has been clearly indicated.
What is the composition of the Remuneration Committee?
The Committee is made up of independent Non-Executive Directors and there is cross-membership with the Audit Committee, whose remit includes
review of risk management, to ensure that there is alignment between the Group’s key risks and its Remuneration Policy. Regular attendees include the
external remuneration adviser, Chief Executive and Chief People Officer. No attendee is present when their own remuneration is being discussed.
Committee attendance during the year
The Committee held five meetings during the year and all members attended all meetings.
Total remuneration for the financial year to 31 December 2019 (Audited)
The following table reports the total remuneration receivable in respect of qualifying services by each Director for the year ended 31 December 2019.
£’000
Executive
Duncan Painter
Mandy Gradden
Non-Executive
Scott Forbes
Rita Clifton
Paul Harrison
Gillian Kent
Judy Vezmar
Total
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Salary &
fees
Taxable
benefits1
Pension4
Total
Fixed Pay
Annual
Bonus2
Long Term
Incentive3
Total
Variable Pay
Total
Remuneration
548
535
370
361
178
173
57
56
62
61
52
51
62
61
10
9
5
4
-
-
-
-
-
-
-
-
-
-
49
47
33
33
-
-
-
-
-
-
-
-
-
-
607
591
408
398
178
173
57
56
62
61
52
51
62
61
177
134
120
90
897
1,442
537
846
1,074
1,576
657
936
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,681
2,167
1,065
1,334
178
173
57
56
62
61
52
51
62
61
1,329
1,298
15
13
82
80
1,426
1,391
297
224
1,434
2,288
1,731
2,512
3,157
3,903
1 Benefits include private medical insurance, life assurance, income protection insurance and use of a company driver.
2 Bonus was calculated as a percentage of annual salary received during the year, i.e. pro-rated for salary increase in April each year. Any bonus amounts to be deferred under the Deferred Annual
Bonus Plan are shown in the bonus figure for the year in which they were awarded.
3 The PSP award granted in March 2017 has a performance period ended 31 December 2019 and will vest in March 2020 at a level of 83.4%. As vesting is post the year end, an average share price for
Q4 2019 has been used to calculate the long-term incentive value in the above table. See page 92 for details of the performance conditions. The long-term incentive value of the prior year has been
restated using the actual share price on the vesting date of 23 March 2019 (£3.47).
4 Pension amounts are the cash allowance paid in lieu of pension contributions which are calculated as 9% of salary.
Duncan Painter is also a non-executive director of ITV plc and received fees totalling £69,997 in 2019 (2018: £43,369) from that external appointment.
Mandy Gradden is also a non-executive director of SDL plc and received fees totalling £57,000 in 2019 from that external appointment (2018: £55,000).
Ascential plc Annual Report 2019 / 91
Strategic reportGovernance reportFinancial statements Annual Report on Remuneration /CONTINUED
How was the annual bonus payment determined? (Audited)
The bonus elements with targets for the year, performance against these targets, and the resulting payouts are set out below.
Financial metrics for the annual bonus plan are measured at constant currency and the targets have been adjusted from budget rates to
reflect the actual exchange rates that were in force during 2019.
The Committee therefore determined that in respect of the year to 31 December 2019, the resulting annual bonus awards were as follows:
Target
Weighting
Threshold
Target
Maximum
%
50
50
Required
result
Payout as %
of maximum
Required
result
Payout as a %
of maximum
Required
result
Payout as a %
of maximum Actual result
385.3
101.2
0
0
428.1
112.4
50
50
432.4
115.2
100
100
416.2
104.7
Revenue
EBITA*
Total
Actual
Payout as a %
of maximum
payout as %
of target
36.1
15.7
25.9
72.2
31.4
51.8
*EBITA was measured pre IFRS 16
The annual bonus is subject to mandatory deferral of 50% into shares which will vest after three years. Duncan Painter has elected to defer 100%
of his 2019 bonus into shares.
The Committee confirmed the level of bonus payouts were appropriate with respect to the 2019 performance. At the time of setting the targets the
Committee considered the target ranges to provide an appropriate balance between being achievable at the bottom end of the performance ranges and
providing a stretch target at the top end of the ranges. The targets were considered similarly demanding to those set for 2018 allowing for changes to the
Company’s portfolio of businesses and, for any bonuses to become payable, a threshold EBITA was set at £101.2m which was well ahead of the threshold
target set in 2018 of £107.6m after adjusting for the disposal of the Ascential Exhibitions business.
What equity awards have been included in the single figure table? (Audited)
The Executive Directors received an award in 2017 under the Performance Share Plan (“PSP”) which vests to the extent performance conditions are met
over the period to 31 December 2019. The 2017 award was based on EPS and relative TSR performance. Overall 83.4% of the award will vest based on
Ascential’s performance as summarised in the table below.
Performance measure
Weighting
Adjusted EPS growth
75% of award
Threshold
performance
8% p.a.
Threshold
vesting
25%
Maximum
performance
Actual
performance
Proportion of
award to vest
12% p.a.
18% p.a.
100.0%
Relative TSR vs FTSE 250
25% of award Median ranking
25%
Upper quartile ranking
Total
Rank: 83 out of
175 companies
33.6%
83.4%
With regards to the EPS performance target, the Committee considered whether any adjustments were necessary to ensure that material events during
the measurement period had not made the performance conditions materially more or less difficult to satisfy. The Committee considered that it was
appropriate to adjust for material M&A activity during the period by removing Ascential Exhibitions from the base year EPS, and adding acquisition case
EPS for Clavis, WARC, BrandView, Flywheel and the revaluation of the investments in Hudson and Shoptalk to the 2019 target EPS. These adjustments
were considered by the Committee to ensure that the targets were no more or less challenging than when they were set having had regard to the size
of the acquisitions involved. The Committee was comfortable having made the adjustments that the performance outcome reflected the underlying
performance of the business across the performance period.
The 2017 PSP awards will therefore vest as follows:
Director
Duncan Painter
Mandy Gradden
Shares
awarded
Number /
value on award
Percent
vesting
% of award
307,219
£919,998
184,081
£551,249
83.4%
Shares due
to vest
Number /
value on award
256,236
£767,324
153,535
£459,769
Value from share
price increase
£
£129,269
£77,456
Dividend
equivalents
Number /
value on vest
10,926
£38,231
6,547
£22,909
Total value
on vesting
Number /
value on vest
267,162
£805,555
160,079
£482,678
1 Value of share price increase based on a 299.46p share price at the time of grant of the award in March 2017, to the three-month average share price to 31 December 2019 of 349.91p.
2 Value of shares based on a three-month average share price to 31 December 2019 of 349.91p. This value will be restated next year based on the actual share price on the date of vesting.
The vested shares will be subject to the Company’s two-year holding requirement.
92 / Ascential plc Annual Report 2019
What equity awards have been granted during the year? (Audited)
The Executive Directors received the following awards under the Performance Share Plan (“PSP”) and the Deferred Annual Bonus Plan (“DABP”) during
the year. Awards made under the DABP relate to the mandatory deferral of 50% of the bonus payable to Executive Directors into shares.
Duncan Painter
Mandy Gradden
Type of award
PSP
DABP
PSP
DABP
Number of
shares
314,693
19,549
185,712
13,184
Face
value (£)
1,075,998
66,842
634,986
45,079
Face value
as a %
of salary1
200%
12%
175%
12%
Threshold
vesting
End of
performance
period
25%
31 December 2021
-
-
25%
31 December 2021
-
-
1 Face value as a percentage of salary has been calculated on the Directors’ annual salary at the date of grant in March 2019.
The 2019 PSP and DABP awards were both granted as conditional awards. The average closing share price for the five business days immediately
preceding the date of grant for both awards was £3.4192. Awards under the DABP are not subject to performance criteria as they are the element of the
2018 performance related to annual bonus paid as deferred shares which will normally vest three years after the date of grant. The 2019 PSP awards are
subject to the following performance criteria, which are measured independently:
Performance criteria
Weighting
Threshold
(25% vesting)
Stretch
(100%)
Measurement period
Adjusted EPS Compound
Annual Growth Rate (“CAGR”)
75%
6%
15%
Relative Total Shareholder Return1
25%
Median
Upper quartile
CAGR measured over the three financial years
to 2021, using 2018 as the base year
Average Net Return Index of Company and each
member of the constituent group (“Average Return”)
during the three-month period ending on 31
December 2018 to the Average Return during
the three month period to 31 December 2021
1 The Comparator Group for the purposes of the TSR performance condition is the constituents of the FTSE 250 Index (excluding investment trusts).
What other interests do the Directors have in Ascential share plans?
The Executive Directors both participate in the Ascential Save As You Earn scheme on the same terms as those open to the wide workforce. Share options
are granted at an option price which is a 20% discount on the share price on the date of offer. Options normally vest following the conclusion of a three-
year savings contract and will ordinarily be exercisable for a period of six months after the vesting date.
The table below summarises the outstanding awards made to the Executive Directors.
Duncan Painter
Scheme
PSP
PSP
PSP
PSP
DABP
DABP
DABP
SAYE
SAYE
SIP1
Total
Interests at
1 Jan 2019
402,500
307,219
263,078
Granted
in year
13,074
-
-
-
314,693
19,201
37,842
-
-
-
19,549
8,823
-
516
-
5,921
5
1,039,179
353,242
Lapsed
in year
Exercised /
Vested in year
Interests at
31 Dec 2019
Date of
grant
Exercise
price (£)
Vesting
date
Expiry
date
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
521
521
415,574
21-Mar-16
307,219
07-Mar-17
263,078
08-Mar-18
314,693
29-Mar-19
19,201
07-Mar-17
37,842
08-Mar-18
19,549
29-Mar-19
8,823
5,921
30-Sep-16
26-Sep-19
nil
nil
nil
nil
nil
nil
nil
21-Mar-19
20-Mar-26
07-Mar-20
06-Mar-27
08-Mar-21
29-Mar-22
n/a
n/a
07-Mar-20
06-Mar-27
08-Mar-21
29-Mar-22
n/a
n/a
2.04
3.04
01-Nov-19
30-Apr-20
01-Nov-22
30-Apr-23
-
10-Mar-16
nil
10-Mar-19
n/a
1,391,900
Ascential plc Annual Report 2019 / 93
Strategic reportGovernance reportFinancial statements Annual Report on Remuneration /CONTINUED
Mandy Gradden
Scheme
PSP
PSP
PSP
PSP
DABP
DABP
DABP
SAYE
SAYE
SIP1
Total
Interests at
1 Jan 2019
236,250
184,081
155,216
Granted
in year
7,674
-
-
-
185,712
13,099
25,606
-
-
-
13,184
8,823
-
516
-
5,921
5
623,591
212,496
Lapsed
in year
Exercised /
Vested in year
Interests at
31 Dec 2019
Date of
grant
Exercise
price (£)
Vesting
date
Expiry
date
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
521
521
236,250
21-Mar-16
184,081
07-Mar-17
155,216
08-Mar-18
185,712
29-Mar-19
13,099
07-Mar-17
25,606
08-Mar-18
13,184
29-Mar-19
8,823
5,921
30-Sep-16
26-Sep-19
nil
nil
nil
nil
nil
nil
nil
21-Mar-19
20-Mar-26
07-Mar-20
06-Mar-27
08-Mar-21
29-Mar-22
n/a
n/a
07-Mar-20
06-Mar-27
08-Mar-21
29-Mar-22
n/a
n/a
2.04
3.04
01-Nov-19
30-Apr-20
01-Nov-22
30-Apr-23
-
10-Mar-16
nil
10-Mar-19
n/a
835,566
1 The shares granted in the year were dividend shares.
The closing share price of Ascential’s ordinary shares at 31 December 2019 was 391.8p and the closing price range from 1 January 2019 to 31
December 2019 was 319.0p to 411.0p.
Ordinary shares required to fulfil entitlements under the PSP, DABP, SAYE and SIP may be provided by Ascential’s Employee Benefit Trusts (“EBT”).
As beneficiaries under the EBT, the Executive Directors are deemed to be interested in the Ordinary Shares held by the EBT which, at 31 December
2019, amounted to 701,086. Assuming that all awards made under Ascential’s share plans vest in full, Ascential has utilised 3.1% of the 10% in ten years
and 1.5% of the 5% in five years dilution limits.
What pension payments were made in 2019? (Audited)
The table below provides details of the Executive Directors’ pension benefits:
Duncan Painter
Mandy Gradden
Cash in lieu of contributions to DC
type pension plan (£’000s)
49
33
Each Executive Director has the right to participate in Ascential’s defined contribution pension plan or to elect to be paid some or all of their contribution
in cash. Pension contributions and/or cash allowances are capped at 9% of salary.
Were there any payments made to past Directors during 2019? (Audited)
There were no payments made to any past Directors during the year.
What are the Directors’ shareholdings and is there a guideline? (Audited)
Details of the Directors’ interests in shares (including those of their connected persons) are shown in the table below.
Director
Duncan Painter
Mandy Gradden
Scott Forbes
Rita Clifton
Paul Harrison
Judy Vezmar
Gillian Kent
Total
Beneficially
owned at
31 Dec 2019
3,636,081
772,294
206,050
-
2,820
50,000
-
Beneficially
owned at
31 Dec 2018
3,592,560
771,771
206,050
-
-
50,000
-
Shareholder
guideline
achieved?
Yes
Yes
n/a
n/a
n/a
n/a
n/a
Outstanding awards
PSP
1,300,564
768,933
DABP
76,592
51,889
SAYE
14,744
14,744
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,667,245
4,620,381
2,069,497
128,481
29,488
To align the interests of the Executive Directors with shareholders, each Executive Director must build up and maintain a shareholding in Ascential
equivalent to 200% of base salary. Until the guideline is met, Executive Directors are required to retain 50% of any PSP and DABP share awards that
vest (or are exercised) net of tax.
94 / Ascential plc Annual Report 2019
How does the CEO’s pay compare to Ascential’s performance?
This graph shows a comparison of Ascential’s total shareholder return (share price growth plus dividends paid) with that of the FTSE 250 (excluding
investment trusts) since Admission. This index has been selected as it comprises companies of a comparable size and complexity and provides a good
indication of Ascential’s relative performance.
)
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e
s
a
b
e
r
(
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£
(
e
u
a
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l
250
200
150
100
0
8 Feb 2016
31 Dec 2016
31 Dec 2017
31 Dec 2018
31 Dec 2019
Source: Datastream (Thomson Reuters)
Ascential plc
FTSE 250 (excluding investment trusts)
The total remuneration figure for the CEO for each year since IPO is shown below. The total remuneration figure includes the annual bonus which
was awarded based on performance in those years. Where that bonus was subject to deferral, it is shown in the year in which it was awarded.
Total Remuneration (£’000)
Annual bonus (% of maximum)
Long Term Incentive Plan (% of maximum vesting)
2016
565
20
n/a
2017
856
48
n/a
2018
2,167
20
100
2019
1,681
26
83
How does the change in CEO’s pay compare to that for Ascential employees?
The movement in the salary and annual bonus for the CEO, who is the highest paid Director, between the current and previous financial year compared
to that for the average UK employee is shown below.
CEO (£)
Salary
Bonus
Taxable benefits
LTIP (% of maximum vesting)
Average per employee (£)
Salary
Bonus
Taxable benefits
LTIP (% of maximum vesting)
Percentage change
2.4%
32.1%
No material change
(17.0%)
16.0%
(40.4%)
No material change
(17.0%)
The increase in average employee salary and reduction in average employee bonus reflects the rebalancing of remuneration structures across the
Group which focused on increasing the certainty of reward for more junior employees whilst retaining the performance focus in remuneration of the
most senior executives.
Ascential plc Annual Report 2019 / 95
Strategic reportGovernance reportFinancial statements
Annual Report on Remuneration /CONTINUED
What is the ratio of CEO pay to the average UK employee?
The below table sets out the CEO’s total remuneration as a ratio to UK employees’ total remuneration on the 25th, 50th and 75th percentile.
Year
1 January to 31 December 2019
Method
Option A
25th percentile
pay ratio
48:1
Median
pay ratio
33:1
75th percentile
pay ratio
22:1
The salary and total pay of the employee on each of the 25th, 50th and 75th percentiles are shown below:
Percentile
25th
Median
75th
Total Salary
£32,272
£40,080
£74,151
Total Pay
£34,854
£51,416
£77,858
We have adopted Method A to calculate the above ratios as it is the most statistically accurate. This means that we have calculated total pay for
all UK employees, using the same methodology that is used to calculate the CEO’s single figure, using 31 December 2019 as the reference date.
We will comment on changes in the median ratio in future years when prior year comparison data is available.
Our principles for pay setting and progression are consistent across the organisation as a whole. Underpinning our principles is a need to provide a
competitive total reward so as to enable the attraction and retention of high calibre individuals without over-paying and providing the opportunity
for individual development and career progression. The pay ratios reflect the changes in individual accountability which is recognised through our pay
structures which include greater variable pay opportunity for more senior positions. This is reflected in the fact that the CEO’s variable pay opportunity
is higher than those employees noted in the table reflecting the weighting towards long-term value creation and alignment with shareholder interests
inherent in his role. We are satisfied that the median pay ratio is consistent with our wider pay, reward and progression policies for employees.
All our employees have the opportunity for annual pay increases, career progression and development opportunities.
How much does Ascential spend on pay and dividends? (Audited)
Total employee costs
Dividend per ordinary share1
2019
£175.0m
5.8p
2018
£150.5m
5.8p
1 The 2018 figure of 5.8p is the total dividend per ordinary share paid in respect of the 2018 financial year.
The 2019 figure of 5.8p is the 2019 interim dividend and the proposed 2019 final dividend per ordinary share, which is subject to shareholder approval at the 2020 AGM.
What advice did the Committee receive?
Korn Ferry are the appointed adviser to the Remuneration Committee and provide advice and information on market practice, the governance of
executive pay and the operation of employee share plans. The total fees paid to Korn Ferry in respect of their services for the 2019 financial year were
£72,610 plus VAT. Korn Ferry provides other consulting services to the Board in relation to its structure and operation with this advice provided by an
entirely separate team independent from the team advising the Committee. As a result, the advice to the Committee is therefore considered independent.
Korn Ferry are signatories to the Remuneration Consultant’s Code of Conduct, which requires that advice be objective and impartial.
What votes were received in relation to the Directors’ Remuneration Policy at the 2017 AGM and the Annual Report on
Remuneration at the 2019 AGM?
Votes cast in favour
Votes cast against
Total votes cast
Abstentions
Remuneration
Policy
343,536,389
4,878,355
348,414,744
502
%
98.60
1.40
Annual Report on
Remuneration
356,606,145
3,072,116
359,678,261
349,196
%
99.15
0.85
How will the Directors’ Remuneration Policy be used in the 2020 financial year?
Base salary
As explained in the Annual Statement from the Chair of the Remuneration Committee, the base salary of the CFO will be increased by 10% from
£372,000 to £409,000. The base salary of the CEO will be increased by 2.0% in line with the wider employee group, taking Duncan Painter’s salary
from £551,450 to £562,479.
Both of the above increases will take effect from 1 April 2020.
96 / Ascential plc Annual Report 2019
Annual bonus plan
The annual bonus plan will continue to be subject to a maximum of 125% of base salary and measured against stretching financial targets. 50% of
the bonus will be based on Adjusted EBITA and 50% will be based on revenue. Half of any bonus earned will be deferred into shares which vest after
a three-year period.
The Committee has chosen not to disclose, in advance, the performance targets for the forthcoming year as these include items which the Committee
considers commercially sensitive. An explanation of bonus payouts and performance achieved, along with the targets set, will be provided in next year’s
Annual Report on Remuneration.
Performance Share Plan
The Committee intends to grant PSP awards to the Executive Directors in 2020 at 200% of salary for Duncan Painter and 175% of salary for
Mandy Gradden.
75% of the award will be measured against growth in Adjusted EPS and 25% against relative TSR versus the FTSE 250 Index (excluding investment
trusts). Each element will be assessed independently of each other.
The Adjusted EPS targets that are intended to apply to the 2020 PSP awards were set following the Committee’s review of internal financial planning
(which includes the announced share buy-back programme of up to £120m), external market expectations and current macro-economic conditions. The
range of targets to apply will require annual growth of between 8% and 14% per annum from the 2019 Adjusted EPS result. These targets are considered
to be no less challenging to the range of targets set for the 2019 awards, providing a realistic incentive at the lower end of the performance range, but
with full vesting requiring exceptional outperformance in the current commercial context.
A summary of the 2020 performance targets is set out below:
Performance criteria
Adjusted EPS Compound
Annual Growth Rate (“CAGR”)
Weighting
Threshold
(25% vesting)
Stretch
(100% vesting)
Measurement period
75%
8%
14%
CAGR measured over the three financial
years to 2022, using 2019 as the base year
Relative Total Shareholder Return
25%
Median
Upper Quartile
Average Return Index of the Company and
each member of the constituent group
(“Average Return”) during the three month
period ending on 31 December 2019 to the
Average Return during the three month
period to 31 December 2022
Vesting between threshold and maximum will be measured on a straight-line basis.
Shares normally vest after a three-year performance period, subject to a further two-year holding period whereby the Executive Directors will be
restricted from selling the net of tax shares which vest.
What are the current and future Non-Executive Director fees?
One of the consequences of the business transformation process that has been successfully implemented since IPO has been to increase the time
commitment required from the Company Chairman and Non-Executive Directors given the international footprint of the businesses that now form
Ascential. Accordingly, to better reflect their ongoing time commitment, the Board Chairman fee will be increased to £220,000 and the basic fee for
Non-Executive Directors will be increased to £55,000 per annum. The additional fee for the Senior Independent Director has also been increased to
reflect the increasing time commitment of the Senior Independent Director, taking into account the fact that she will also act as the Non-Executive
Director designated as the employee representative.
Board Chairman
Basic fee
Additional fee for Senior Independent Director
Additional fee for Committee Chairman
2020
220,000
55,000
10,000
10,000
2019
178,606
52,531
5,000
10,000
% Change
23.2%
4.7%
100.0%
-
Ascential plc Annual Report 2019 / 97
Strategic reportGovernance reportFinancial statements Directors’ Report
DIRECTORS’
REPORT
Index to principal Directors’ Report and Listing Rule disclosures
Relevant information required to be disclosed in the Directors’ Report may be found in the following sections:
Information
Business model
Principal risks and uncertainties
Disclosure of information to auditor
Directors in office during the year
Dividend recommendation for the year
Directors indemnities
Corporate responsibility
Greenhouse gas emissions
Section in Annual Report
Strategic Report
Strategic Report
Directors’ Report
Corporate Governance Report
Strategic Report
Directors’ Report
Strategic Report
Corporate Responsibility Report
Pages
18
40-45
100
60
32
98
48-55
53
Financial instruments – risk management objectives and policies
Notes to the Financial Statements
150-153
List of subsidiaries and branches outside of the UK
Future developments of the Company
Employment policies and employee involvement
Stakeholder engagement
Structure of share capital, including restrictions on the transfer of securities,
voting rights and interests in voting rights
Political donations
Rules governing changes to Articles of Association
Going concern statement
Post balance sheet events
Notes to the Financial Statements
Strategic Report
158
15
Strategic Report and Directors’ Report
46-47, 100
Strategic Report`
Directors’ Report
Directors’ Report
Directors’ Report
Strategic Report
Notes to the Financial Statements
6-11
98-99
100
99
32
160
The above information is incorporated by reference and together with the information on pages 98 to 101 forms the Directors’ Report in accordance
with section 415 of the Companies Act 2006.
Strategic Report
The Strategic Report is set out on pages 1 to 55 and was approved by the Board on 21 February 2020. It is signed on behalf of the Board by Duncan
Painter, Chief Executive Officer.
Cautionary statement
The review of the business and its future development in the Annual Report has been prepared solely to provide additional information to shareholders
to assess the Group’s strategies and the potential for these strategies to succeed. It should not be relied on by any other party for any other purpose.
The review contains forward looking statements which are made by the Directors in good faith based on information available to them at the time of the
approval of these reports and should be treated with caution due to inherent uncertainties associated with such statements. The Directors, in preparing
the Strategic Report, have complied with s417 of the Companies Act 2006.
Directors’ indemnities
The Company maintained appropriate insurance to cover Directors’ and Officers’ liability for itself and its subsidiaries and such insurance was in force
for the whole of the year ended 31 December 2019.
The Company also indemnifies the Directors under deeds of indemnity for the purposes of section 236 of the Companies Act 2006. Such indemnities
contain provisions that are permitted by the director liability provisions of the Companies Act 2006 and the Company’s Articles of Association.
Share capital and rights attaching to shares
Details of the Company’s share capital and movements during the year are set out in Note 23 to the financial statements, which is incorporated by
reference into this report. This includes the rights and obligations attaching to shares and restrictions on the transfer of shares. The ordinary shares
of £0.01 each are listed on the London Stock Exchange (LSE: ASCL.L). The ISIN of the shares is GB00BYM8GJ06.
All ordinary shares (this being the only share class of the Company) have the same rights (including voting and dividend rights and rights on a return
of capital) and restrictions as set out in the Articles.
98 / Ascential plc Annual Report 2019
Without prejudice to any rights attached to any existing shares and subject to relevant legislation, the Company may issues shares with such rights or
restrictions as determined by either the Company by ordinary resolution or, if the Company passes a resolution to so authorise them, the Directors.
Subject to legislation, the Articles and any resolution of the Company, the Directors may offer, allot (with or without conferring a right of renunciation),
grant options over or otherwise deal with or dispose of any shares to such persons, at such times and generally on such terms as the Directors may decide.
The Company may issue any shares which are to be redeemed, or are liable to be redeemed, at the option of the Company or the holder, on such terms
and in such manner as the Company may determine by ordinary resolution and the Directors may determine the terms, conditions and manner
of redemption of any such shares. No such resolutions are currently in effect.
Subject to recommendation of the Board, shareholders may receive a dividend. Shareholders may share in the assets of the Company on liquidation.
Voting rights
Each ordinary share entitles the holder to attend, speak and vote at general meetings of the Company. A resolution put to the vote of the meeting shall
be decided on a poll rather than a show of hands in line with recommended best practice.
On a poll, every member who is present in person or by proxy shall have one vote for every share of which they are a holder. The Articles provide a
deadline for submission of proxy forms of not less than 48 hours before the time appointed for the holding of the meeting or adjourned meeting. No
member shall be entitled to vote at any general meeting either in person or by proxy, in respect of any share held by him, unless all amounts presently
payable by him in respect of that share have been paid. Save as noted, there are no restrictions on voting rights nor any agreement that may result in
such restrictions.
Shares held by the Employee Benefit Trust (“EBT”)
The Group has an Employee Benefit Trust which can hold shares to satisfy awards under employee share schemes. At 31 December 2019, the EBT held
701,086 shares. Voting rights in relation to any shares held in the EBT are exercisable by the trustee; however, in accordance with best practice guidance,
the trustee abstains from voting.
Restrictions on transfers of securities
The Articles do not contain any restrictions on the transfer of ordinary shares in the Company other than the restrictions imposed by laws and regulations.
Interest in voting rights
Details of the share capital of the Company are set out in Note 23 to the Financial Statements.
As at 31 December 2019 and 21 February 2020, the Company received notifications in accordance with the FCA’s Disclosure and Transparency Rule
5.1.2 of the following interests in the voting rights of the Company.
Shareholder
Merian Global Investors (UK) Limited
Ameriprise Financial, Inc
Franklin Templeton Institutional, LLC
Black Rock Inc
AXA Investment Managers
T Rowe Price Associates, Inc
FMR LLC
Kayne Anderson Rudnick Investment Management,
LLC
As at 31 December 2019 Percentage of voting
rights over ordinary shares of £0.01 each
As at 21 February 2020 Percentage of voting
rights over ordinary shares of £0.01 each
17.97%
9.99%
5.11%
5.00%
4.95%
5.07%
Below 5%
3.13%
17.97%
4.92%
3.91%
5.00%
4.95%
5.07%
Below 5%
3.13%
Changes to the Company’s Articles
The Company’s Articles of Association may only be amended by a special resolution at a general meeting of shareholders. No amendments are proposed
to be made to the existing Articles of Association at the forthcoming AGM.
Authority to allot shares
Under the Companies Act 2006, the Directors may only allot shares if authorised to do so by shareholders in a general meeting. The authority conferred
on the Directors at a general meeting of shareholders held on 8 May 2019 expires on the date of the forthcoming AGM, and ordinary resolution 15 seeks
a new authority to allow the Directors to allot ordinary shares up to a maximum nominal amount of £2,689,031 (268,903,150) shares, representing
approximately two-thirds of the Company’s issued share capital at 21 February 2020, of which 134,451,575 shares (representing approximately one-
third of the Company’s issued ordinary share capital) can only be allotted pursuant to a rights issue. The Directors have no present intention of exercising
this authority, with the exception of shares to satisfy share-based incentive awards, which will expire at the conclusion of the AGM in 2021 or 5 August
2021 if earlier.
Ascential plc Annual Report 2019 / 99
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Political donations
The Company’s policy is to not make political donations and it has not done so during 2019, nor has it made any contributions to a non-EU political party
during the financial year.
Significant contracts
The only significant contract to which the Company is a party that takes effect, alters or terminates upon a change of control of the Company is the Senior
Facility Agreement dated 12 February 2016, which contains customary prepayment, cancellation and default provisions including mandatory repayment
of all loans provided on a change of control.
Employment practices
All employment decisions are made irrespective of colour, race, age, nationality, ethnic or national origin, sex, gender identity, mental or physical
disabilities, marital status or sexual orientation. For employees who may have a disability, the Group ensures proper procedures and equipment are in
place to aid them. When it comes to training, career development and promotion, all employees are treated equally and job applications are always judged
on aptitude. Further details on the Group’s policies on engagement and employment practices are set out on pages 46 to 47.
Auditor
Each of the Directors has confirmed that:
a. so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
b. the Director has taken all reasonable steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit
information and to establish that the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with section 418 of the Companies Act 2006.
Post balance sheet events
There were three events after the reporting date: refinancing, Jumpshot and share repurchase programme. Please see Note 30 for more detail.
Annual General Meeting
The AGM of the Company will take place at 9am on 6 May 2020 at the The Grove, Chandler’s Cross, Hertfordshire, WD3 4TG, United Kingdom.
All shareholders have the opportunity to attend and vote, in person or by proxy, at the AGM.
The Notice of AGM can be found in a separate booklet which is being mailed out at the same time as this report. It is also available at ascential.com.
The Notice sets out the resolutions to be proposed at the AGM and an explanation of each resolution. The Directors consider that all of the resolutions
set out in the Notice of AGM are in the best interests of the Company and its shareholders as a whole. To that end, the Directors unanimously
recommend that shareholders vote in favour of each of them.
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law they are required
to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs
as adopted by the EU) and applicable law and have elected to prepare the parent Company financial statements in accordance with UK accounting
standards, including FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant, reliable and prudent;
• for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
• for the parent Company financial statements, state whether applicable UK accounting standards have been followed, subject to any material departures
disclosed and explained in the parent Company financial statements;
• assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no
realistic alternative but to do so.
100 / Ascential plc Annual Report 2019
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s transactions
and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements
comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration
Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility Statement of the Directors in respect of the annual financial report
We confirm to the best of our knowledge:
• The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
• The Strategic Report includes a fair review of the development and performance of the issuer and the undertakings included in the consolidation
taken as a whole, together with description of the principal risks and uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Group’s position and performance, business model and strategy.
The Directors’ Report of Ascential plc was approved by the Board and signed on its behalf by
Louise Meads
Company Secretary
21 February 2020
Ascential plc Annual Report 2019 / 101
Strategic reportGovernance reportFinancial statements INDEPENDENT
AUDITOR’S REPORT
to the members of Ascential plc
Overview
Materiality:
group financial
statements as a whole
Coverage
Key audit matters
Recurring risks
Event driven
New risk
£2.0m (2018:£2.0m)
4.6% (2018: 5.4%) of normalised profit before
tax from continuing operations
86% (2018: 75%) of group revenue
89% (2018: 86%) of group profit before tax
from continuing operations
vs 2018
Revenue recognition
Valuation of contingent consideration
for Medialink, OCR, Flywheel and
Yimian acquisitions
Impairment assessment of goodwill and
intangible assets in respect of the Edge
cash generating unit (CGU)
n/a
Parent company
recurring risk
Recoverability of cost of investment in
subsidiaries and intra-group debtors
1. Our opinion is unmodified
We have audited the financial statements of Ascential (“the Company”)
for the year ended 31 December 2019 which comprise the consolidated
statement of profit and loss and other comprehensive income, the
consolidated statement of financial position, the consolidated statement
of changes in equity, the consolidated statement of cash flows, the parent
company statement of changes in equity, the parent company statement of
financial position, and the related notes, including the accounting policies in
notes1 & 2 respectively.
In our opinion:
• the financial statements give a true and fair view of the state of the
Group’s and of the parent Company’s affairs as at 31 December 2019
and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards as adopted
by the European Union;
• the parent Company financial statements have been properly prepared
in accordance with UK accounting standards, including FRS 102 The
Financial Reporting Standard applicable in the UK and Republic of
Ireland; and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are
described below. We believe that the audit evidence we have obtained
is a sufficient and appropriate basis for our opinion. Our audit opinion is
consistent with our report to the audit committee.
We were first appointed as auditor by the directors on 16 July 2016.
The period of total uninterrupted engagement is for the four financial
years ended 31 December 2019. Prior to that we were auditor to the
group’s previous parent company, but which, being unlisted, was not a
public-interest entity. We have fulfilled our ethical responsibilities under,
and we remain independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to listed
public interest entities. No non-audit services prohibited by that standard
were provided.
102 / Ascential plc Annual Report 2019
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit
matters, in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters
and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results are based on procedures
undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and
consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.
Revenue recognition
2019/2020 sales:
The risk
Our response
Our procedures included:
(Event based revenues (2019
revenue: £134.0 million; 2018
revenue: £121.4 million), subscription
based revenues (2019 revenue:
£170.3 million; 2018 revenue:
£139.2 million), sales segment
transactional revenue (2019:
£23.9 million; 2018 revenue £3.1
million) and advisory revenues
(2019 revenue: £12.4 million; 2018
revenue: £9.9 million))
Refer to page 118 (accounting policy)
and page 123 (financial disclosures).
We consider the risk in relation to revenue to
be whether revenue is recognised in the correct
accounting period.
The Group earns revenue from a variety of sources.
The resulting large volume of non-homogenous
transactions creates a risk of processing error.
In addition revenue is the most material figure in
the financial statements and is considered to be a
main driver of results, and as such had the greatest
effect on our allocation of resources in planning and
completing the audit.
For event based revenues, there is a significant lead
time in the billing of customers that can occur up to a
year prior to an event taking place. As such, there is
a risk due to error that revenue is recognised in the
wrong period, particularly for events held close to
the year end.
For subscription based revenues, sales segment
transactional revenue and advisory revenues,
contracts are entered into which span the 31
December year end. There is a risk, due to error,
that the deferral and recognition of revenues does
not appropriately match the underlying terms of
customer contracts, in particular the period over
which the performance obligations are met.
Test of details: For event based revenues, selecting
a sample of revenue transactions recognised in
the year and deferred revenue at the year end and
assessing whether the related revenue has been
recorded in the period in which the event occurred;
Test of details: For subscription based, management
services and advisory and marketing revenues,
selecting a sample of transactions recorded in
revenue in the year and deferred and accrued
revenue at the year end and assessing whether
the related revenue has been recognised over the
period in which the performance obligations are
met based on the underlying terms of the customer
contract;
Test of details: We obtained all journals posted
in respect of revenue and where possible used
data analytics to identify and investigate a sample
of unusual entries based upon the specific
characteristics of the journal, considering in
particular whether the debit side of the journal
entry was as expected, based on our business
understanding. Where data analytics was not
possible, we used sampling techniques to assess
whether revenue was recognised in the appropriate
period with respect to whether the performance
obligations are met based on the underlying terms
of the customer contract;
Test of details: We selected a sample of sales
invoices post year end to assess whether revenue
has been recognised in the correct financial
period, by checking the date, amount, description
and quantity to relevant documentation, such as
contracts or other third-party acknowledgement of
receipt.
Our results
The results of our procedures were satisfactory
(2018: satisfactory).
Ascential plc Annual Report 2019 / 103
Strategic reportGovernance reportFinancial statements Independent auditor’s report /CONTINUED
Valuation of contingent
consideration for the Medialink,
OCR, Flywheel and Yimian
acquisitions
(£68.4 million; 2018: £59.7 million)
Refer to page 70 (Audit Committee
Report), page 123 (accounting policy)
and page 144 (financial disclosures).
The risk
Our response
Forecast-based valuation
Our procedures included:
The Group has recognised significant contingent
consideration liabilities in respect of the Medialink,
OCR, Flywheel and Yimian acquisitions. There is
inherent uncertainty involved in forecasting revenue
and profit margins of the acquired businesses,
which determines the fair value of the liability at the
acquisition date and as at the balance sheet date.
The effect of these matters is that, as part of our risk
assessment, we determined that the fair value of the
contingent consideration liability has a high degree
of estimation uncertainty, with a potential range of
reasonable outcomes greater than our materiality
for the financial statements as a whole. The
financial statements (Note 20) disclose the range of
outcomes estimated by the group.
Assessing forecasts: For the business acquired
in the year (Yimian business), we compared the
forecast revenue and profit growth, used as the
basis for the calculation of the fair value of the
contingent consideration at the acquisition date
and as at the balance sheet date, with the forecasts
included in the due diligence reports obtained
prior to the acquisition, recent performance of the
business and current forecasts.
Assessing forecasts: For the previously acquired
businesses (Medialink, OCR and Flywheel), we
challenged the changes in the forecast revenue
and profit growth compared to the forecasts used
as the basis for the initial contingent consideration
calculation, current forecasts, and assessed against
the recent performance of the business, taking into
account changes in the agreements made in the
year.
Assessing valuer’s credentials: For the business
acquired in the year, we assessed the competence
and objectivity of the external experts who prepared
the due diligence reports used to support the
methodology and assumptions within the forecasts.
Benchmarking assumptions: For the business
acquired in the year (Yimian business) we assessed
the inputs into the calculation, with the help of our
own experts.
Test of details: Agreeing the basis of the earn out
calculation and values of key inputs such as potential
consideration values to signed agreements.
Assessing transparency: We assessed the
adequacy of the group’s disclosures about the
potential range of overall future payments, and the
estimates and judgements made by the Group in this
regard.
Our results
As a result of our work we found the carrying
amount of contingent consideration recognised to
be acceptable (2018: acceptable).
104 / Ascential plc Annual Report 2019
Impairment assessment of goodwill
and intangible assets in respect
of the Edge cash generating unit
(CGU)
(£118.4 million; 2018: £120.9
million)
Refer to page 70 (Audit Committee
Report), page 119 (accounting policy)
and page 134 (financial disclosures).
The risk
Our response
Forecast based valuation
Our procedures included:
We considered the carrying value of goodwill and
intangible assets of the Edge CGU and the risk over
potential impairment to be a significant audit risk
because of the inherent uncertainty involved in
forecasting and discounting future cash flows, which
are the basis of the assessment of recoverability. The
use of forecasts reaching 8 years, the discount rate
and the growth rates therein, as well as the terminal
growth rate, are key judgements and assumptions
used in the assessment.
In 2019 the risk of impairment relating to Edge is
heightened due to the disruption from integrating
several acquired businesses into the Edge business
model.
There is also a risk that the disclosures presented
are not sufficient to explain the key assumptions
that drive the value in use calculations, and the key
sensitivities that the Board has considered.
The effect of these matters is that, as part of our risk
assessment, we determined that the value in use
of goodwill and related intangible assets has a high
degree of estimation uncertainty, with a potential
range of reasonable outcomes greater than our
materiality for the financial statements as a whole,
and possibly many times that amount.
Assessing methodology: Assessing the principles
and integrity of the cash flow model are in
accordance with the relevant accounting standards;
Benchmarking assumptions: Challenging
management’s assumptions and obtaining support,
such as board-approved strategy plans and
eCommerce market growth rates, where available,
for the growth initiatives used in the cash flow
model, and any new contracts entered into since the
year end. We also benchmarked the terminal growth
rate assumptions against external sources.
Our valuation expertise: We independently
derived a reasonable range of appropriate discount
rates with the assistance of our valuation experts
and compared these to those calculated by
the Group.
Sensitivity analysis: Performing both breakeven
and reasonably foreseeable scenario sensitivity
analysis on the inputs noted above:
Historical comparisons: Evaluating the track
record of historical assumptions used against actual
results achieved, such as the performance of various
Edge brands since acquisition against the historical
results and budgets. We challenged the Group’s
ability to deliver forecast growth by assessing the
Group’s past experience in integrating a similar
business into Ascential group and increasing its
growth rate and evaluated how that experience can
be applied to Edge.
Assessing transparency: Assessing whether the
group’s disclosures reflected the risks inherent in
the valuation of goodwill.
Our results
As a result of our work we found the carrying
amount and related disclosure of goodwill and
intangible assets in respect of the Edge CGU to be
acceptable.
Ascential plc Annual Report 2019 / 105
Strategic reportGovernance reportFinancial statements Independent auditor’s report /CONTINUED
Recoverability of cost of
investment in subsidiary
and intra-group debtors
Investment (£452.8 million; 2018:
£452.8 million)
Intra-group debtors (£208.6 million;
2018: £148.3 million)
Refer to page 157 (accounting policy).
The risk
Low risk, high value
Our response
Our procedures included:
The amount of the parent company’s investment in
its subsidiary, which acts as an intermediate holding
company for the rest of the company’s subsidiaries,
represents 68% (2018: 75%) of the parent
company’s assets. The carrying amount of the intra-
group debtors balance comprises the remaining
31% (2018: 25%).
Tests of detail: Comparing the carrying amount
of parent company’s only investment with the
subsidiary’s draft balance sheet and whether its net
assets, being an approximation of their minimum
recoverable amount, were in excess of their carrying
amount and assessing whether the group headed by
the subsidiary has historically been profit-making.
Their recoverability is not at a high risk of significant
misstatement or subject to significant judgement.
However, due to their materiality in the context
of the parent company financial statements, this
is considered to be the area that had the greatest
effect on our overall parent company audit.
Tests of detail: assessing a sample of the highest
value group debtors representing 99% (2018:
99%) of the group debtor balance to identify, with
reference to the relevant debtors’ draft balance
sheet, whether they have a positive net asset value
and therefore coverage of the debt owed, as well
as assessing whether those debtor companies have
historically been profit-making.
Comparing valuations: Comparing the carrying
amount of the investment in the subsidiary to
the group’s market capitalisation as adjusted to
exclude the liabilities of the parent company, being
an approximation of the recoverable amount of the
investment.
Our results
We found the carrying amounts of the investment in
the subsidiary and the group receivables balance to
be acceptable (2018: acceptable).
We continue to perform procedures over the recognition of deferred tax assets in respect of US losses. However, given the recurring nature of this
matter, we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified in our report
this year.
106 / Ascential plc Annual Report 2019
3. Our application of materiality and an overview of the scope
of our audit
Materiality for the group financial statements as a whole was set at £2.0m
(2018: £2.0m), determined with reference to a benchmark of group
profit before tax, normalised to exclude this year’s acquisition related
contingent employment costs and capital costs (2018: group profit before
tax, normalised to exclude that year’s acquisition related contingent
employment costs and capital costs) as disclosed in note 5, of which it
represents 4.6% (2018: 5.4%).
Materiality for the parent company financial statements as a whole was
set at £1.0m (2018: £2.0m), determined with reference to a benchmark of
company total assets, of which it represents 0.2% (2018: 0.3%).
We agreed to report to the Audit Committee any corrected or uncorrected
identified misstatements exceeding £100,000 (2018: £100,000), in
addition to other identified misstatements that warranted reporting on
qualitative grounds.
Of the group’s 81 (2018: 71) reporting components, we subjected 10
(2018: 7) to full scope audits for group purposes and 5 (2018: 2) to
specified risk-focused audit procedures. The latter were not individually
financially significant enough to require a full scope audit for group
purposes, but were included in the scope of our group audit work in order
to provide further coverage over the Group’s results.
Profit benchmark
£43.3m (2018: £37.0m)
Group Materiality
£2.0m (2018: £2.0m)
£2m
Whole financial
statements materiality
£1.4m
Range of materiality at
15 components
(£0.2m-£1.4m)
(2018: at 10 components
(£0.2m to £1.5m)
£100,000
Misstatements reported
to the audit committee
(2018: £100,000)
Profit Benchmark
Group materiality
The components within the scope of our work accounted for the
percentages illustrated opposite.
Group revenue
Group profit before tax on
continuing operations
The remaining 14% of total group revenue, 11% of group profit before
tax and 12% of total group assets is represented by 66 of reporting
components, none of which individually represented more than 5% of
any of total group revenue, group profit before tax or total group assets.
For these residual components, we performed analysis at an aggregated
group level to re-examine our assessment that there were no significant
risks of material misstatement within these.
11%
8%
86%
(2018: 75%)
The component materialities ranged from £1.4 million to £0.2 million,
having regard to the mix of size and risk profile of the Group across
the components (2018: £1.4 million to £0.4 million).
67%
75%
The work on all components including the parent company was performed
by the Group team (2018: 1 of the 9 components had work performed by
component auditors).
Group total assets
11%
1%
87%
(2018: 92%)
86%
77%
5%
38%
89%
(2018: 86%)
81%
52%
Full scope for group audit purposes 2019
Specified risk-focused audit procedures 2019
Full scope for group audit purposes 2018
Specified risk-focused audit procedures 2018
Residual components
Ascential plc Annual Report 2019 / 107
Strategic reportGovernance reportFinancial statements Independent auditor’s report /CONTINUED
4. We have nothing to report on going concern
The Directors have prepared the financial statements on the going concern
basis as they do not intend to liquidate the Company or the Group or to
cease their operations, and as they have concluded that the Company’s
and the Group’s financial position means that this is realistic. They have
also concluded that there are no material uncertainties that could have
cast significant doubt over their ability to continue as a going concern for
at least a year from the date of approval of the financial statements (“the
going concern period”).
Our responsibility is to conclude on the appropriateness of the Directors’
conclusions and, had there been a material uncertainty related to going
concern, to make reference to that in this audit report. However, as we
cannot predict all future events or conditions and as subsequent events
may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of reference to a
material uncertainty in this auditor’s report is not a guarantee that the
Group and the Company will continue in operation.
In our evaluation of the Directors’ conclusions, we considered the inherent
risks to the Group’s and Company’s business model and analysed how
those risks might affect the Group’s and Company’s financial resources or
ability to continue operations over the going concern period. The risks that
we considered most likely to adversely affect the Group’s and Company’s
available financial resources over this period were:
• The impact of a UK and/or a global recession;
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that work we
have not identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report
and the directors’ report;
• in our opinion the information given in those reports for the financial
year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance with
the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act 2006.
Disclosures of emerging and principal risks and longer-term viability
Based on the knowledge we acquired during our financial statements audit,
we have nothing material to add or draw attention to in relation to:
• The postponement or cancellation of one of the group’s major events; and
• A significant change in underlying data infrastructures resulting in
reduced data availability for group’s eCommerce services.
• the directors’ confirmation within the Directors’ Statement of Viability on
page 39 that they have carried out a robust assessment of the emerging
and principal risks facing the Group, including those that would threaten
its business model, future performance, solvency and liquidity;
As these were risks that could potentially cast significant doubt on the
Group’s and the Company’s ability to continue as a going concern, we
considered sensitivities over the level of available financial resources
indicated by the Group’s financial forecasts taking account of reasonably
possible (but not unrealistic) adverse effects that could arise from these
risks individually and collectively and evaluated the achievability of the
actions the Directors consider they would take to improve the position
should the risks materialise. We also considered less predictable but
realistic second order impacts, such as the impact of Brexit.
Based on this work, we are required to report to you if:
• we have anything material to add or draw attention to in relation to the
directors’ statement in Note 1 to the financial statements on the use of
the going concern basis of accounting with no material uncertainties that
may cast significant doubt over the Group and Company’s use of that
basis for a period of at least twelve months from the date of approval of
the financial statements ; or
• the related statement under the Listing Rules set out on page 39 is
materially inconsistent with our audit knowledge.
We have nothing to report in these respects, and we did not identify going
concern as a key audit matter.
5. We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information presented in the
Annual Report together with the financial statements. Our opinion on the
financial statements does not cover the other information and, accordingly,
we do not express an audit opinion or, except as explicitly stated below, any
form of assurance conclusion thereon.
• the Principal Risks disclosures describing these risks and explaining how
they are being managed and mitigated; and
• the directors’ explanation in the Directors’ Statement of Viability of how
they have assessed the prospects of the Group, over what period they
have done so and why they considered that period to be appropriate, and
their statement as to whether they have a reasonable expectation that
the Group will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary qualifications or
assumptions.
Under the Listing Rules we are required to review the long-term viability
statement. We have nothing to report in this respect.
Our work is limited to assessing these matters in the context of only the
knowledge acquired during our financial statements audit. As we cannot
predict all future events or conditions and as subsequent events may result
in outcomes that are inconsistent with judgements that were reasonable
at the time they were made, the absence of anything to report on these
statements is not a guarantee as to the Group’s and Company’s longer-
term viability.
Corporate governance disclosures
We are required to report to you if:
• we have identified material inconsistencies between the knowledge
we acquired during our financial statements audit and the directors’
statement that they consider that the annual report and financial
statements taken as a whole is fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Group’s position and performance, business model and strategy; or
108 / Ascential plc Annual Report 2019
• the section of the annual report describing the work of the Audit
Committee does not appropriately address matters communicated by us
to the Audit Committee.
We are required to report to you if the Corporate Governance Statement
does not properly disclose a departure from the provisions of the UK
Corporate Governance Code specified by the Listing Rules for our review.
We have nothing to report in these respects.
6. We have nothing to report on the other matters on which
we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our
opinion:
• adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 100, the
directors are responsible for: the preparation of the financial statements
including being satisfied that they give a true and fair view; such internal
control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether
due to fraud or error; assessing the Group and parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to
going concern; and using the going concern basis of accounting unless they
either intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or other irregularities (see below), or error, and to
issue our opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud, other irregularities or
error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken
on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website
at www.frc.org.uk/auditorsresponsibilities.
Irregularities – ability to detect
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the financial statements from our
general commercial and sector experience, and through discussion with
the directors and other management (as required by auditing standards),
and from inspection of the group’s regulatory and legal correspondence
and discussed with the directors and other management the policies
and procedures regarding compliance with laws and regulations. We
communicated identified laws and regulations throughout our team and
remained alert to any indications of non-compliance throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the group is subject to laws and regulations that directly affect the
financial statements including financial reporting legislation (including
related companies legislation), distributable profits legislation and
taxation legislation and we assessed the extent of compliance with these
laws and regulations as part of our procedures on the related financial
statement items.
Secondly, the group is subject to many other laws and regulations where
the consequences of non-compliance could have a material effect on
amounts or disclosures in the financial statements, for instance through
the imposition of fines or litigation. We identified the following areas as
those most likely to have such an effect: data protection, anti-bribery and
employment law, recognising the nature of the group’s activities. Auditing
standards limit the required audit procedures to identify non-compliance
with these laws and regulations to enquiry of the directors and other
management and inspection of regulatory and legal correspondence, if
any. These limited procedures did not identify actual or suspected non-
compliance.
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements
in the financial statements, even though we have properly planned
and performed our audit in accordance with auditing standards. For
example, the further removed non-compliance with laws and regulations
(irregularities) is from the events and transactions reflected in the financial
statements, the less likely the inherently limited procedures required by
auditing standards would identify it. In addition, as with any audit, there
remained a higher risk of non-detection of irregularities, as these may
involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal controls. We are not responsible for preventing
non-compliance and cannot be expected to detect non-compliance with all
laws and regulations.
8. The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Company
and the Company’s members, as a body, for our audit work, for this report,
or for the opinions we have formed.
Ian Griffiths (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
21 February 2020
Ascential plc Annual Report 2019 / 109
Strategic reportGovernance reportFinancial statements 110 / Ascential plc Annual Report 2019
FINANCIAL
STATEMENTS
Contents /
Consolidated statement of profit or loss
Consolidated statement of other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Parent Company balance sheet
Parent Company statement of changes in equity
Notes to the Company financial statements
112
113
114
115
116
117
155
156
157
Ascential plc Annual Report 2019 / 111
Strategic reportGovernance reportFinancial statements Financial statements
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS
For the year ended 31 December 2019
(£ million)
Continuing operations
Revenue
Cost of sales
Sales, marketing and administrative expenses
Operating profit/ (loss)
Adjusted EBITDA
Depreciation and amortisation
Exceptional items
Share-based payments
Operating profit/ (loss)
Share of the profit/ (loss) of associates and joint
ventures accounted for using the equity method
Finance costs
Finance income
Profit/ (loss) before taxation
Taxation
Profit/ (loss) from continuing operations
Discontinued operations
Profit/ (loss) from discontinued operations, net of tax
Profit for the year
Profit attributable to:
Owners of the company
Non-controlling interest
Earnings/ (loss) per share (pence)
Continuing operations
– Basic
– Diluted
Continuing and discontinued operations
– Basic
– Diluted
* Restated for initial application of IFRS 16 (see Note 27).
Note
Adjusted
results
2019
Adjusting
items
Restated*
2018
Adjusting
items
Adjusted
results
3
4
3
3
5
7
4
14
8
8
9
10
10
10
10
416.2
(151.9)
(158.5)
105.8
128.5
(22.7)
–
–
105.8
0.9
(14.8)
4.5
96.4
(20.6)
75.8
–
75.8
75.6
0.2
18.8
18.5
18.8
18.5
Total
416.2
(151.9)
(244.4)
19.9
–
–
(85.9)
(85.9)
–
128.5
(35.8)
(41.6)
(8.5)
(85.9)
(0.3)
–
–
(86.2)
18.5
(67.7)
–
(67.7)
(67.7)
–
(16.8)
(16.6)
(16.8)
(16.6)
(58.5)
(41.6)
(8.5)
19.9
0.6
(14.8)
4.5
10.2
(2.1)
8.1
–
8.1
7.9
0.2
2.0
1.9
2.0
1.9
Total
348.5
(125.2)
(181.9)
41.4
–
–
(50.8)
(50.8)
–
108.4
(30.6)
(14.0)
(6.2)
(50.8)
–
–
–
(50.8)
8.9
(41.9)
(46.8)
(14.0)
(6.2)
41.4
0.6
(13.7)
0.6
28.9
(8.9)
20.0
173.7
131.8
189.2
209.2
131.8
209.2
–
–
(10.5)
(10.5)
32.9
32.3
5.0
4.8
52.2
51.4
348.5
(125.2)
(131.1)
92.2
108.4
(16.2)
–
–
92.2
0.6
(13.7)
0.6
79.7
(17.8)
61.9
15.5
77.4
77.4
–
15.5
15.3
19.3
19.1
The accompanying notes on pages 117 to 154 are an integral part of these consolidated financial statements. Adjusting items are detailed in Note 5.
112 / Ascential plc Annual Report 2019
CONSOLIDATED STATEMENT OF
OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2019
(£ million)
Profit/ (loss) for the year
Other comprehensive (expense)/ income
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange translation differences
recognised in equity
Cumulative currency translation differences on disposals
Total other comprehensive (expense)/ income, net of
tax
Total comprehensive income/ (expense) for the year
* Restated for initial application of IFRS 16 (see Note 27).
Note
Adjusted
results
2019
Adjusting
items
75.8
(67.7)
(8.2)
–
(8.2)
67.6
–
–
–
(67.7)
Restated*
2018
Adjusting
items
Adjusted
results
77.4
131.8
8.5
–
8.5
85.9
–
2.4
2.4
134.2
Total
8.1
(8.2)
–
(8.2)
(0.1)
Total
209.2
8.5
2.4
10.9
220.1
The accompanying notes on pages 117 to 154 are an integral part of these consolidated financial statements.
Ascential plc Annual Report 2019 / 113
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at 31 December 2019
(£ million)
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Right of use assets
Investments
Investment property
Deferred tax assets
Other investments, including derivatives
Current assets
Inventories
Trade and other receivables
Other investments, including derivatives
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Deferred income
Deferred and contingent consideration
Lease liabilities
Current tax liabilities
Provisions
Non-current liabilities
Deferred income
Deferred and contingent consideration
Lease liabilities
External borrowings
Deferred tax liabilities
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Group restructure reserve
Translation reserve
Treasury share reserve
Retained earnings
Non-controlling interest
Total equity
Note
2019
Restated*
2018
12
12
13
27
14
27
15
29
16
17
29
18
19
20
27
22
20
27
21
15
22
23
512.9
247.8
8.4
21.6
67.6
2.1
42.7
0.3
505.1
280.9
9.2
23.3
6.1
2.7
43.1
–
903.4
870.4
4.1
141.4
1.4
111.7
258.6
3.9
113.2
–
182.0
299.1
1,162.0
1,169.5
85.7
98.5
63.1
9.4
6.1
1.0
78.1
90.6
32.3
9.0
6.0
2.8
263.8
218.8
0.7
40.1
17.4
282.6
22.9
2.4
366.1
629.9
532.1
4.0
1.7
9.2
157.9
(35.2)
(0.1)
394.0
0.6
532.1
0.6
64.4
20.4
291.8
24.8
3.2
405.2
624.0
545.5
4.0
0.5
9.2
157.9
(27.0)
(0.1)
401.0
–
545.5
* Restated for initial application of IFRS 16 (see Note 27).
The accompanying notes on pages 117 to 154 are an integral part of these consolidated financial statements. The consolidated financial statements
were approved by the Board of Directors on 21 February 2020 and were signed on its behalf by Directors: Duncan Painter and Mandy Gradden.
114 / Ascential plc Annual Report 2019
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Attributable to owners of the Company
Share
premium
Merger
reserve
Group
restructure
reserve
Translation
reserve
Treasury
share
reserve
Retained
earnings*
Non-
controlling
interest
9.2
157.9
(37.9)
(0.1)
209.8
–
–
–
–
(1.3)
For the year ended 31 December 2019
(£ million)
At 1 January 2018
Adjustment on initial
application of IFRS 16,
net of tax
Restated balance at
1 January 2018
Profit for the year
Other comprehensive
income
Total comprehensive income
Issue of shares
Share-based payments
Taxation on share-based
payments
Dividends paid
Share
capital
4.0
–
4.0
–
–
–
–
–
–
–
0.1
–
0.1
–
–
–
0.4
–
–
–
9.2
157.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2018
4.0
0.5
9.2
157.9
Profit for the year
Other comprehensive
expense
Total comprehensive
(expense)/ income
Issue of shares
Acquisition of subsidiary
with NCI
Share-based payments
Taxation on share-based
payments
Dividends paid
–
–
–
–
–
–
–
–
–
–
–
1.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
equity
343.0
(1.3)
341.7
209.2
10.9
220.1
0.4
5.7
0.4
(22.8)
545.5
8.1
(8.2)
(0.1)
1.2
0.4
7.7
0.3
(22.9)
532.1
–
–
–
–
–
–
–
–
–
–
–
0.2
–
0.2
–
0.4
–
–
–
0.6
(37.9)
–
10.9
10.9
–
–
–
–
(27.0)
–
(8.2)
(8.2)
–
–
–
–
–
(0.1)
–
–
–
–
–
–
–
(0.1)
–
–
–
–
–
–
–
–
208.5
209.2
–
209.2
–
5.7
0.4
(22.8)
401.0
7.9
–
7.9
–
–
7.7
0.3
(22.9)
394.0
At 31 December 2019
4.0
1.7
9.2
157.9
(35.2)
(0.1)
* Restated for initial application of IFRS 16 (see Note 27).
The accompanying notes on pages117 to 154 are an integral part of these consolidated financial statements.
Ascential plc Annual Report 2019 / 115
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
CONSOLIDATED STATEMENT
OF CASH FLOWS
For the year ended 31 December 2019
(£ million)
Cash flow from operating activities
Profit before taxation on continuing operations
Profit before taxation on discontinued operations
Adjustments for:
Amortisation of acquired intangible assets
Amortisation of software intangible assets
Amortisation of right of use asset
Depreciation of property, plant and equipment
Gain on disposal of business operations and investments
Acquisition-related employment costs and revaluation of contingent consideration
Share-based payments
Share of the profit of associates and joint ventures accounted for using the equity method
Net finance costs
Cash generated from operations before changes in working capital and provisions
Changes in:
Inventories
Trade and other receivables
Trade and other payables, net of interest payable
Provisions
Cash generated from operations
Cash generated from operations before exceptional operating items
Cash (outflows)/ inflows for discontinued operations
Cash outflows for acquisition-related contingent employment cost
Cash flows for other exceptional operating items
Cash generated from operations
Tax paid
Net cash generated from operating activities
Cash flow from investing activities
Acquisition of businesses net of cash acquired
Deferred and contingent consideration cash paid in the year
Acquisition of investments
Acquisition of software intangibles and property, plant and equipment
Disposal of businesses net of cash disposed of and disposal costs
Net cash used in investing activities
Cash flow from financing activities
Proceeds from external borrowings
Repayment of external borrowings
Proceeds from issue of shares
Interest paid
Lease liabilities paid
Dividends paid to shareholders
Net cash used in financing activities
Net (decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Effect of exchange rate changes
Cash and cash equivalents at 31 December
* Restated for initial application of IFRS 16 (see Note 27).
The accompanying notes on pages 117 to 154 are an integral part of these consolidated financial statements.
116 / Ascential plc Annual Report 2019
Note
2019
Restated*
2018
10.2
–
35.8
11.6
7.3
3.8
–
33.1
8.5
(0.6)
10.3
28.9
192.6
33.7
7.6
5.4
3.5
(180.6)
8.1
6.5
(0.6)
13.1
120.0
118.2
(0.3)
(25.2)
(1.3)
(2.8)
90.4
113.2
-
(11.5)
(11.3)
90.4
(3.2)
87.2
(16.8)
(20.3)
(64.5)
(18.5)
(2.3)
(122.4)
–
–
1.2
(6.2)
(9.0)
(22.9)
(36.9)
(72.1)
182.0
1.8
111.7
2.6
(8.6)
(26.7)
(1.1)
84.4
114.4
3.4
(21.0)
(12.4)
84.4
(12.2)
72.2
(97.7)
(37.7)
(0.7)
(18.7)
290.0
135.2
32.4
(66.0)
0.4
(6.9)
(7.7)
(22.8)
(70.6)
136.8
45.8
(0.6)
182.0
12
12
27
13
20
7
8
20
11
20
14
27
24
18
18
NOTES TO THE FINANCIAL
STATEMENTS
For the year ended 31 December 2019
1. Basis of preparation and accounting policies
Basis of preparation
These consolidated financial statements have 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 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 nature of the Company’s operations are business-to-business information services
which provide industry-specific business intelligence, insights and forecasting through data and digital subscription tools. The principal activities are
information services for product design, marketing, sales and built environment & policy.
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 consolidated financial statements have been prepared on a going concern basis (see page 32) and under the historical cost convention, with the
exception of items that are required by IFRS to be measured at fair value, principally certain financial instruments. 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 on page 39. 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.
Accounting developments and changes
The accounting policies applied by the Group in the financial statements for the year ended 31 December 2019 are the same as those set out in the
Group’s Annual Report and Accounts for the year ended 31 December 2018, with the exception of IFRS 16 Leases and IFRIC 23 Uncertainty over Income
Tax Treatments, which is effective from 1 January 2019.
The Group has initially adopted IFRS 16 Leases from 1 January 2019. IFRS 16 introduced a single, on-balance sheet accounting model for lessees. As a
result, the Group, as a lessee, has recognised right of use of assets representing its rights to use the underlying assets and lease liabilities representing
its obligation to make lease payments. As previously indicated, the Group has applied IFRS 16 fully retrospectively. The results for the year ending 31
December 2018 have been restated for the initial application of IFRS 16. The impact of IFRS 16 on consolidated financial statements is shown in Note 27.
The standard includes an exemption for leases of low-value assets and short-term leases. The Group has elected to take both.
The Group’s assessment of uncertainty related to income taxes follows the requirements of IFRIC 23 Uncertainty over Income Tax Treatments, which
became effective on 1 January 2019. No adjustments were made to opening reserves in respect of this change in accounting policy as any differences on
first application of IFRIC 23 are not material.
Accounting policies
The principal accounting policies applied in the preparation of the consolidated financial statements have been applied consistently to both periods
presented, with the new standard applied in the year for IFRS 16 ‘Leases’.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the parent Company, its subsidiaries and share of the results of its associates
and joint ventures drawn up to 31 December 2019 using consistent accounting policies throughout the current and preceding years.
The trading results of business operations are included in profit from continuing operations from the date of acquisition or up to the date of disposal.
Intra-group balances and transactions are eliminated in full on consolidation.
Foreign currency translation
The functional currency of subsidiaries, associates and joint ventures is the currency of the primary economic environment in which they operate.
The consolidated financial statements are presented in Sterling, which is the presentational currency of the Group and the functional currency of the
parent Company.
Foreign currency transactions are recorded at the exchange rate ruling at the date of transaction. Foreign currency monetary assets and liabilities are
translated at the rates of exchange ruling at the balance sheet date. All differences are taken to the consolidated income statement except for those on
foreign currency borrowings that provide a hedge against an investment in a foreign entity. These are taken directly to equity until the disposal of the
investment, at which time they are recognised in the consolidated income statement. Tax charges and credits attributable to exchange differences on
those borrowings are also dealt with in equity. Non-monetary items that are measured at historical cost in a foreign currency are translated using the
exchange rate in force at the date of the initial transaction.
Ascential plc Annual Report 2019 / 117
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
As at the reporting date, the assets and liabilities of overseas subsidiaries are translated into pounds Sterling at the rate of exchange applicable at the
reporting date and their consolidated income statements are translated at the average exchange rates for the period. The exchange differences arising
from the retranslation of foreign operations are taken directly to a separate component of equity. On disposal of a foreign operation, the cumulative
amount recognised in equity relating to that operation is recognised in the consolidated income statement as part of the gain or loss on sale. Goodwill
and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the
closing rate at the reporting date.
Changes in fair value of derivative financial instruments entered into to hedge foreign currency net assets, and that satisfy the hedging conditions
of IFRS 9, are recognised in the currency translation reserve (see separate accounting policy on derivative financial instruments).
Discontinued operations
The Group classifies an operation as discontinued when it has disposed of or intends to dispose of a business component that represents a separate major
line of business or geographical area of operations. The post-tax profit or loss of the discontinued operations is shown as a single line on the face of the
consolidated income statement, separate from the continuing operating results of the Group. When an operation is classified as a discontinued operation,
the comparative consolidated income statement is represented as if the operation had been discontinued from the start of the comparative year.
Revenue
Revenue is measured based on the consideration specified in a contract with a customer. If multiple performance obligations exist within a contract, the
revenue is allocated to the obligations based on the stand alone selling price, with any discounts allocated evenly across the obligations. For contracts
with rebates and therefore variable consideration, revenue is recognised based on the best estimate of the revenue net of the rebated amount.
Revenue is recognised when the Group satisfies the performance obligations, the timing of which is set out in Note 3.
Pre-paid subscription and event revenues are shown as deferred income and released to the income statement in accordance with the revenue
recognition criteria above.
Barter transactions are those where goods and services, rather than cash, are exchanged between two third parties and revenue is recognised at fair
value for the goods or services provided. Where goods or services are provided at a discount and dissimilar to the goods or services received, the
discounted price is recorded as revenue with the corresponding amount included in operating costs.
Alternative Performance Measures
The consolidated financial statements include Alternative Performance Measures, including Adjusted EBITDA, as another measure of profitability of the
trading performance of the Group. Adjusted EBITDA is a non-IFRS measure, defined as the Group’s operating profit before expensing depreciation of
tangible fixed assets and amortisation of software, exceptional items, amortisation of acquired intangible assets, impairment of tangible fixed assets and
software intangibles and share-based payments. Refer to pages 33 to 37 for further details on Alternative Performance Measures.
Exceptional items
Exceptional items are those which are considered significant by virtue of their nature, size or incidence. These items are presented as exceptional within
their relevant income statement category to assist in the understanding of the performance and financial results of the Group as these types of cost do
not form part of the underlying business. Examples of items that are considered by the Directors for designation as exceptional items include, but are not
limited to:
• Significant capital structuring costs, such as for the IPO, as these are material and not a reflection of the ongoing business.
• Costs incurred as part of the acquisition and integration of acquired businesses as these are considered to be material. Acquisition-related employment
costs, which, absent the link to continued employment, would have been treated as consideration are designed as exceptional items.
• Gains or losses on disposals of businesses are considered to be exceptional in nature as these do not reflect the performance of the Group.
• Material restructuring and separation costs within a segment incurred as part of a significant change in strategy as these are not expected to be
repeated on a regular basis.
If provisions have been made for exceptional items in previous years, then any reversal of these provisions is treated as exceptional.
Finance costs and income
Finance cost or income is recognised using the effective interest method. The ‘effective interest rate’ is the rate that discounts estimated future cash
payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset, or the amortised cost of the
financial liability.
Income tax
The Group is primarily subject to corporation tax in the UK, the US, Brazil and China and judgement and estimates of future profitability are required to
determine the Group’s deferred tax position. If the final tax outcome is different to that assumed, resulting changes will be reflected in the consolidated
income statement, unless the tax relates to an item charged to equity, in which case the changes in tax estimates on those items will be reflected in equity.
118 / Ascential plc Annual Report 2019
Income tax on the profit or loss for the period comprises current tax and deferred tax. Income tax is recognised in the consolidated income statement,
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is tax payable based on taxable profits for the period, using tax rates that have been enacted or substantively enacted at the reporting date,
along with any adjustment relating to tax payable in previous years. Taxable profit differs from net profit in the consolidated income statement in that
income or expense items that are taxable or deductible in other years are excluded, as are items that are never taxable or deductible.
Using the liability method, deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes, except for certain temporary differences, such as goodwill that is not deductible for tax purposes.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year in which the asset is realised or the liability is settled,
based on tax rates that have been enacted or substantively enacted at the reporting date.
The deferred tax assets and liabilities are only offset where they relate to the same taxing authority and the Group has a legal right to offset.
Business combinations
In accordance with IFRS 3 “Business Combinations”, the fair value of consideration paid for a business combination is measured as the aggregate of the
fair values at the date of exchange of assets given and liabilities incurred or assumed in exchange for control. The assets, liabilities and contingent liabilities
of the acquired entity are measured at fair value as at the acquisition date. When the initial accounting for a business combination is determined, it is
done so on a provisional basis with any adjustments to these provisional values made within 12 months of the acquisition date and are effective as at the
acquisition date. To the extent that deferred consideration is payable as part of the acquisition cost and is payable after one year from the acquisition date,
the deferred consideration is discounted at an appropriate interest rate and, accordingly, carried at net present value in the consolidated balance sheet.
The discount component is then unwound as an interest charge in the consolidated income statement over the life of the obligation. Where a business
combination agreement provides for an adjustment to the cost of a business acquired contingent on future events, the Group accrues the fair value of
the additional consideration payable as a liability at acquisition date. This amount is reassessed at each subsequent reporting date with any adjustments
recognised in the consolidated income statement. If the business combination is achieved in stages, the fair value of the acquirer’s previously held equity
interest in the acquiree is re-measured at the acquisition date through the consolidated income statement. Transaction costs are expensed to
the consolidated income statement as incurred.
Acquisition-related expenses include contingent consideration payments agreed as part of the acquisition and contractually linked to ongoing
employment as well as business performance (acquisition-related employment costs). Acquisition-related employment costs are accrued over the
period in which the related services are received and are recorded as exceptional costs.
The non-controlling interest at acquisition date is measured at the percentage of the identifiable assets purchased and liabilities assumed.
Intangible assets
Goodwill
Goodwill arises where the fair value of the consideration given for a business exceeds the fair value of net identifiable assets of the business at the date
of acquisition. Goodwill is allocated or grouped at the lowest levels, for which there are identifiable cash flows, known as cash generating units or CGUs.
The Group considers that a CGU is a business unit because independent cash flows cannot be identified below this level.
Goodwill arising on acquisition is capitalised and subject to impairment review, both annually and when there are indications that the carrying value may
not be recoverable. For goodwill impairment purposes, no CGU is larger than the reporting segments determined in accordance with IFRS 8 “Operating
Segments”. The recoverable amount of goodwill is assessed on the basis of the value-in-use estimate for CGUs to which the goodwill relates. Where the
carrying value exceeds the recoverable amount the goodwill is considered impaired. Any impairment is recognised in the consolidated income statement.
Other intangibles
Intangible assets other than goodwill are those that are distinct and can be sold separately or arise from legal rights. Intangible assets acquired as
part of a business combination are capitalised at fair value at the date of acquisition. Intangible assets purchased separately are capitalised at cost.
The cost of intangible assets is amortised and charged to the consolidated income statement on a straight-line basis over their estimated useful lives as
follows:
Brands
Customer relationships
Databases
Software
1-30 years
8-20 years
3-10 years
2-5 years
Useful lives are examined every year and adjustments are made, where applicable, on a prospective basis.
Website development costs (included under databases) relating to websites which are revenue generating are capitalised and amortised over three
to five years. Development costs relating to websites which are not revenue generating are taken immediately to the consolidated income statement.
Ascential plc Annual Report 2019 / 119
Strategic reportGovernance reportFinancial statements
Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost comprises expenditure directly
attributable to the purchase of the asset. Assets are depreciated to their estimated residual value, on a straight-line basis, over their estimated useful life
as follows:
Short leasehold property
Office equipment
over the period of the lease
2-5 years
Estimated useful lives and residual values are reviewed at each reporting date.
An item of property, plant or equipment is written off either on disposal or when there is no expected future economic benefit from its continued use.
Any gain or loss on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset)
is included in the consolidated income statement in the year the item is derecognised.
Investments in associates and joint ventures
The Group’s investments in its associates and joint ventures are accounted for using the equity method.
Investments in associates and joint ventures are initially recognised at cost and thereafter are carried in the consolidated balance sheet at cost less any
impairment in value. The consolidated income statement reflects the Group’s share of an associate or joint venture’s profit after tax. Where the Group’s
share of losses in an associate or joint venture exceeds its investment, the Group ceases to recognise further losses unless an obligation exists for the
Group to fund the losses. Where a change in net assets has been recognised directly in the associate or joint venture’s equity, the Group recognises its
share of those changes in the statement of changes in equity when applicable.
Adjustments are made to align the accounting policies of the associate or joint venture with the Group’s and to eliminate the Group’s share of unrealised
gains and losses on transactions between the Group and its associates and joint ventures.
Trade investments
Investments in equity instruments are measured at fair value through profit or loss.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost represents purchase cost, including attributable overheads, and is determined
using a first-in, first-out basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
costs necessary to make the sale.
Costs relating to future exhibitions, festivals and congresses are deferred within inventories at the lower of cost and net realisable value. These costs are
charged to the consolidated income statement when the exhibition takes place.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less loss allowances.
Loss allowances are calculated for lifetime expected credit losses. Expected credit losses are a probability weighted estimate of credit losses and are
calculated based on actual historical credit losses over the past three years and adjusted to reflect differences between the historical credit losses and
the Group’s view of the economic conditions over the expected lives of the receivables. The amount of the loss is recognised in the consolidated income
statement. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of
amounts previously written off are credited to the consolidated income statement.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the consolidated income
statement. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of
amounts previously written off are credited to the consolidated income statement.
Cash and cash equivalents
Cash and cash equivalents includes cash, cash in transit, short-term deposits and other short-term highly liquid investments with an original maturity
of three months or less. For the purpose of the consolidated cash flow statement, cash and cash equivalents are as defined, net of outstanding bank
overdrafts.
Other investments, including derivatives
Derivatives comprise interest rate caps. Derivatives are initially recognised and subsequently measured at fair value at each reporting date. Derivatives
that do not qualify for hedge accounting are classified as a separate asset or liability. The fair value is determined by using market data and the use
of established estimation techniques such as discounted cash flow and option valuation models. The method of recognising the resulting gain or
loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged as described below.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the consolidated income
statement as they arise.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not
expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
120 / Ascential plc Annual Report 2019
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated income statement over the period of the
borrowings using the effective interest method, with the exception of debt repurchases which are recognised in the consolidated income statement in the
year of the repurchase.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, when it is probable that an outflow of
resources will be required to settle the obligation and when a reliable estimate can be made of the amount of the obligation. Where the Group expects
some or all of a provision to be reimbursed, the reimbursement is recognised only when it is virtually certain. The expense relating to any provision is
presented in the consolidated income statement net of any reimbursement. If the time value of money has a material effect on quantifying the provision,
the provision is determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value
of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is
recognised as a finance charge.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan and the restructuring either has
commenced or has been announced publicly. Future operating losses are not provided for.
Share-based payments
Certain employees of the Company receive part of their remuneration in the form of share-based payment transactions, whereby employees render
services in exchange for shares or rights over shares. The cost of equity-settled transactions with employees is measured at fair value at the date at which
they are granted. The fair value of share awards with market-related vesting conditions is determined by an external consultant and the fair value at the
grant date is expensed on a straight-line basis over the vesting period based on the Company’s estimate of shares that will eventually vest. The estimate
of the number of awards likely to vest is reviewed at each balance sheet reporting date up to the vesting date, at which point the estimate is adjusted to
reflect the actual outcome of awards which have vested. No adjustment is made to the fair value after the vesting date even if the awards are forfeited or
not exercised.
Where the Company grants options over its own shares to the employees of its subsidiaries, it recognises an increase in the cost of investment in its
subsidiaries equivalent to the equity-settled share-based payment charge recognised in the subsidiary’s financial statements with the corresponding
credit being recognised directly in equity. In cases where a subsidiary is recharged for the share-based payment expense, no such increase in investment
is recognised.
Shares held by the Employee Benefit Trust
The Employee Benefit Trust (“EBT”) provides for the issue of shares to Group employees under share incentive schemes. The Company has control of the
EBT and accounts for the EBT as an extension to the Company in the consolidated financial statements. Accordingly, shares in the Company held by the
EBT are included in the consolidated balance sheet at cost as a deduction from equity.
Leases
Definition of a lease
Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange
for consideration.
On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions were leases. It applied
IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as lease under IAS 17 and IFRIC 4 were not
reassessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts entered into or changed on or after 1 January 2019.
As a lessee
The Group leases commercial office space and photocopiers. The Group has elected not to recognise right of use assets and lease liabilities for some
leases of low-value (photocopiers). The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over
the lease term. The Group presents right of use assets that do not meet the definition of investment property as a separate line item on the statement of
financial position.
The Group recognises a right of use asset and lease liability at the lease commencement date.
The right of use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for
certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the
Group’s incremental borrowing rate. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease
payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the
amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option
is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.
Ascential plc Annual Report 2019 / 121
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
The Group has applied judgement to determine the lease term for some lease contracts that include renewal options. The assessment of whether the
Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right of use
assets recognised.
The Group has applied the exemption not to recognise right of use assets and liabilities for leases with less than twelve months of lease term.
As a lessor
The Group sub-leases some of its properties. Under IAS 17, the head lease and sub lease contracts were classified as operating leases. On transition to
IFRS 16, the right of use assets recognised from the head lease are presented in investment property and measured at fair value on transition to IFRS 16.
The sub-lease contracts are classified as operating leases under IFRS 16.
Impacts for the year
The impact of initially applying IFRS 16 is shown in Note 27 and segmental information is shown in Note 3.
No depreciation is recognised for the right of use assets that meet the definition of investment property.
2. Critical accounting judgements and estimates
The preparation of these financial statements requires management to exercise judgement in applying the Group’s accounting policies. It also requires the
use of estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. The actual future outcomes may differ from
these estimates and give rise to material adjustments to the reported results and financial position of the Group. Estimates and underlying assumptions
are reviewed on an ongoing basis, with revisions recognised in the year in which the estimates are revised and in any future periods affected.
The areas involving a higher degree of judgement or complexity and assumptions or estimation are set out below and in more detail in the related notes.
Critical accounting judgements
Alternative Performance Measures
The Group uses alternative performance measures which are not defined or specified under IFRS and removes adjusting items to present an adjusted
result. 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. Note 5 provides an analysis of exceptional items.
Key sources of estimation
Business combinations
Initial recognition of goodwill and intangible assets (Note 12)
Accounting for a business acquisition requires an assessment of the existence, fair value and expected useful economic lives of separable intangible
assets such as brands, customer relationships and technology assets at the date of acquisition. The fair value of identifiable assets acquired and liabilities
assumed on acquisition is based on a number of estimates, including estimates of future performance of related businesses, as is determining the
expected useful economic life of assets acquired. The value attributed to these separable assets affects the amount of goodwill recognised and the value,
together with the assessment of useful economic lives, determines future amortisation charges.
Acquired brands are valued using the relief-from-royalty method which requires estimation of future revenues and estimation of a royalty rate that an
acquirer would pay in an arm’s length licencing arrangement to secure access to the same rights. The theoretical royalty payments are discounted to
obtain the cash flows to determine the asset value, which also requires estimation of an appropriate discount rate. A tax amortisation benefit is then
applied.
Acquired customer relationships are valued using the multi-period excess earnings method (“MEEM approach”) which starts with the total expected
income streams for a business or group of assets as a whole and then deducts charges for all the other assets used to generate income. Residual income
streams are discounted and a tax amortisation benefit is applied. The method requires estimation of future forecasts of the business and an appropriate
discount rate.
Content and technology assets are valued using a depreciated replacement cost method, which requires an estimate of all the costs a typical market
participant would incur to generate an exact replica of the intangible asset in the context of the acquired business. The depreciated replacement cost
method takes into account factors including economic and technological obsolescence.
122 / Ascential plc Annual Report 2019
In establishing the fair value and useful economic lives, the Group considers, for each acquisition and each asset or liability, the complexity of the
calculations, the sources of estimation uncertainty and the risk of such estimations resulting in a material adjustment to the carrying amounts of assets
and liabilities within the next financial year. Details of those estimations that have a significant risk and the at-risk assets/ liabilities are disclosed as
appropriate in Note 12; the significance of the risk will depend on the size of the acquisition. Such sources of estimation uncertainty include estimation
of future cash flows, the determined weighted average cost of capital and estimated useful lives.
Valuation of contingent consideration and acquisition-related employment costs (Note 20)
Where a business combination agreement provides for an adjustment to the consideration, contingent on future performance over the
contractual earn-out period, the Group accrues the fair value, based on the estimated additional consideration payable as a liability at acquisition date.
To the extent that deferred contingent consideration is payable as part of the acquisition cost and is payable after one year from the acquisition date,
the deferred consideration is discounted at an appropriate discount rate and carried at net present value in the consolidated balance sheet. The liability
is measured against the contractually agreed performance targets at each subsequent reporting date with any adjustments recognised in the
consolidated income statement.
Acquisition-related employment costs are contingent on both the future performance of the acquired business and also linked to continued employment
of the founders over the contractual agreed period. They are treated as an expense and recognised as such in the consolidated income statement.
The estimation of the likely liability requires the Group to make judgements concerning the future performance of related business over both the
deferred contingent consideration period and the period of employment.
Deferred tax (Note 15)
Deferred tax assets are recognised to the extent that their utilisation is probable. The utilisation of deferred tax assets will depend on the judgement
whether it is more likely than not that the Group will generate sufficient and suitable taxable income of the correct type and jurisdiction in the future,
taking into account any restrictions on the length of the loss-carry forward period. Various factors are used to assess the probability of the future
utilisation of deferred tax assets, including past operating results, operational plans and loss-carry forward periods. In particular, utilisation of our
US tax losses is subject to a limitation triggered by change of control rules in the US and this limitation is driven by the valuation of the US business
at the point of change in control. This is a key judgement area which remains uncertain until it is agreed with the tax authorities.
Non-financial assets recoverable amount (Note 12)
Recoverable amount is the higher of value in use or fair value less costs of disposal. Determination of these amounts is based upon multiple judgements
and estimates, including a forecast of future cash flows and judgements surrounding the appropriate discount rates to apply, terminal growth rates or
potential transaction multiples.
3. Operating segments
The Group has four reportable segments that are used to present information to the Board (Chief Operating Decision Maker) on a monthly basis.
End market risk and opportunities vary and capital allocation decisions are made on the basis of four reportable segments. The four reportable segments
are Product Design, Marketing, Sales and Built Environment & Policy. The reportable segments offer different products and services, and are managed
separately as a result of different capabilities, technology, marketing strategies and end market risks and opportunities. The following summary describes
the operations in each of the Group’s reportable segments:
• Product Design: global trend forecasting and insight (WGSN)
• Marketing: global creative benchmark, effectiveness measurement and strategic advisory (Cannes Lions, WARC, MediaLink)
• Sales: global eCommerce data, analytics and managed services, FinTech and retail intelligence (Edge, Flywheel Digital, Money20/20, RWRC, Yimian)
• Built Environment & Policy: Political, construction and environment intelligence brands (Groundsure, Glenigan, DeHavilland)
In addition, the discontinued operations reported in the 2018 comparatives represent the Exhibitions business, which was sold on 17 July 2018 .
Information regarding the results of each reportable segment is included below and restated for prior periods to enhance comparability. Reportable
segment profits are measured at an adjusted operating profit level, representing reportable segment Adjusted EBITDA, less depreciation costs
and amortisation in respect of software intangibles, without allocation of Corporate costs as reported 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.
Ascential plc Annual Report 2019 / 123
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
Product
Design Marketing
86.5
36.0
(4.2)
31.8
135.9
50.7
(7.5)
43.2
Sales
158.4
39.6
(6.6)
33.0
Year ended 31 December 2019
(£ million)
Revenue
Adjusted EBITDA
Depreciation and software amortisation
Adjusted operating profit
Amortisation of acquired intangible assets
Exceptional items
Share-based payments
Operating profit
Share of net profit in equity-accounted investee
Finance costs
Finance income
Profit before tax
* Corporate costs include a £0.5 million elimination for intercompany trading.
Year ended 31 December 2018, restated*
Built
Environment
& Policy
Corporate
costs*
Continuing
operations
total
35.9
17.0
(0.9)
16.1
(0.5)
(14.8)
(3.5)
(18.3)
416.2
128.5
(22.7)
105.8
(35.8)
(41.6)
(8.5)
19.9
0.6
(14.8)
4.5
10.2
Total
403.1
121.6
6.6
128.2
(£ million)
Revenue
Adjusted EBITDA as reported
IFRS 16 application
Adjusted EBITDA as restated
Depreciation and software amortisation
as reported
IFRS 16 application of amortisation
of right of use asset
Adjusted operating profit
Amortisation of acquired intangible assets
Exceptional items
Share–based payments
Operating profit
Share of net profit in
equity–accounted investee
Finance costs
Finance income
Profit before tax
Product
Design
77.8
28.1
1.8
29.9
Marketing
116.3
38.9
1.6
40.5
Sales
120.9
36.9
1.4
38.3
Built
Environment
& Policy
Corporate
costs**
Continuing
operations
total
Discontinued
operations
34.3
14.0
0.3
14.3
(0.8)
(16.1)
1.5
(14.6)
348.5
101.8
6.6
108.4
54.6
19.8
–
19.8
(1.8)
(4.1)
(2.1)
(0.5)
(2.3)
(10.8)
(0.3)
(11.1)
(2.2)
25.9
(1.4)
35.0
(0.9)
35.3
(0.2)
13.6
(0.7)
(17.6)
(5.4)
92.2
(30.6)
(14.0)
(6.2)
41.4
0.6
(13.7)
0.6
28.9
–
19.5
(3.1)
176.5
(0.3)
192.6
–
–
–
(5.4)
111.7
(33.7)
162.5
(6.5)
234.0
0.6
(13.7)
0.6
192.6
221.5
* Restated for initial application of IFRS 16 (see Note 27).
** Corporate costs include a £0.8 million elimination for intercompany trading.
Exceptional items of £41.6 million (2018: £14.0 million) include £nil million (2018: £0.3 million), £3.5 million income (2018: £1.3 million), £37.3 million
(2018: £14.7 million), £0.6 million (2018: £0.3 million) and £0.2 million (2018: £nil million) which are attributable to Product Design, Marketing, Sales,
Corporate costs and Built Environment & Policy respectively. Finance costs, finance income, share of net profit in equity accounted investees and
share-based payments are not allocated to segments, as these types of activity are driven by the Group corporate function.
124 / Ascential plc Annual Report 2019
Revenue and non-current assets by location
The revenue analysis is based on the location of customers. Non-current assets analysis (excluding deferred tax and financial instruments) is based on
geographical location of the business.
The Group does not have any customers from whom revenue exceeds 10% of total revenue. Included in revenue is barter revenue arising from the
exchange of goods or services of £2.6 million for the year ended 31 December 2019 (2018: £0.9 million).
(£ million)
United Kingdom
Other Europe
United States and Canada
Asia Pacific
Middle East and Africa
Latin America
Total
Revenue
Non-current assets*
2019
90.5
65.4
2018
81.0
56.1
191.7
149.0
44.3
8.8
15.5
40.1
8.4
13.9
2019
413.6
95.9
320.8
27.9
–
2.2
2018
390.1
106.7
322.7
5.9
–
1.9
416.2
348.5
860.4
827.3
*Non-current assets exclude deferred tax assets of £42.7 million (2018: £43.1 million) and other investments, including derivatives of £0.3 million (2018: £nil). Restated for initial application of IFRS 16
(see Note 27).
Additional segmental information on revenue
The Group’s revenue is derived from contracts with customers, and the nature and effect of initially applying IFRS 15 is disclosed in Note 1.
Disaggregation of revenue
The following table shows revenue disaggregated by major service lines, and the timing of revenue recognition:
(£ million)
Subscriptions
Advisory
Transactions
Product Design
Event related revenues*
Subscriptions
Advisory
Marketing
Event related revenues*
Subscriptions
Transactions
Advisory
Sales
Subscriptions
Advisory
Transactions
Built Environment and Policy
Intercompany sales
Revenue from continuing operations
* Event related revenues include Delegate fees, Stand Space, Sponsorship and Award entries.
Timing of
revenue
recognition
Over time
Over time
Point in time
Point in time
Over time
Over time
Point in time
Over time
Point in time
Over time
Over time
Over time
Point in time
2019
77.5
6.7
2.3
86.5
70.7
15.4
49.8
2018
70.6
4.6
2.6
77.8
60.0
8.7
47.6
135.9
116.3
66.3
62.2
24.7
5.2
67.5
45.6
3.5
4.3
158.4
120.9
15.2
0.5
20.2
35.9
14.3
1.0
19.0
34.3
(0.5)
416.2
(0.8)
348.5
Ascential plc Annual Report 2019 / 125
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
Contract balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers:
(£ million)
Receivables, which are included in “Trade and other receivables”
Contract assets - accrued income
Contract liabilities – deferred income
Note
17
17
2019
74.3
4.7
99.2
2018
64.2
7.4
91.2
Seasonality of operations
The Group’s results of continuing and discontinued operations are impacted by seasonality. Marketing revenue is particularly seasonal, with revenue
typically reaching its highest levels during the first half of each calendar year when Cannes Lions takes place. Product Design primarily generates
subscription revenue which is recognised over the life of the subscription contract. Consequently, there is less seasonal fluctuation in the revenue
of this reportable segment.
4. Operating profit
Amounts charged in arriving at continuing operating profit include:
(£ million)
Employee costs
Depreciation and software amortisation
Amortisation of acquired intangible assets
Impairment losses on trade receivables and contract assets
* Restated for initial application of IFRS 16 (see Note 27).
Fees paid to the auditor were as follows:
(£ million)
Fees paid to auditor for audit of the consolidated financial statements
Fees paid to auditor for audit of the Group’s subsidiaries
Fees paid to auditor for other services*
Fees paid to auditor for audit-related assurance services*
Total
Note
6
12, 13
12
17
2019
175.0
22.7
35.8
5.0
2019
0.6
0.1
-
-
0.7
Restated*
2018
142.5
10.8
30.6
2.8
2018
0.6
0.1
0.1
-
0.8
*Audit-related assurance services relate to the review of the half-year interim statements £39,620 (2018: £36,620) and covenant reviews £5,200
(2018: £5,000). Other services are transaction services in relation to the Group’s disposal of the Exhibition’s business.
Details of the Company’s policy on the use of the auditor for non-audit related services, the reason why the auditor was used and how the auditor’s
independence was safeguarded are set out on page 72.
5. Adjusting items
Adjusting items are those which are considered significant by virtue of their nature, size or incidence and are presented separately in the consolidated
statement of profit and loss to enable a full understanding of the Group’s financial performance. Adjusting items are not a defined term under IFRS
and include the share-based payment charge, amortisation of intangibles acquired through business combinations and exceptional items such as costs
incurred for acquisitions and disposals, integration, non-recurring business restructuring and capital restructuring.
Adjusting items included in continuing operating profit are:
(£ million)
Acquisition-related expenses
Acquisition transaction and integration costs
Exceptional items
Amortisation of acquired intangible assets
Share-based payments
Adjusting items in continuing operating profit
126 / Ascential plc Annual Report 2019
Note
20
12
7
2019
33.1
8.5
41.6
35.8
8.5
85.9
2018
8.1
5.9
14.0
30.6
6.2
50.8
Acquisition-related expenses include payments for deferred consideration agreed as part of the acquisition but linked to ongoing employment
of £20.1 million (2018: £13.3 million) and a revaluation of contingent consideration of £13.0 million (2018: £5.2 million revaluation credit).
Acquisition-related employment costs relate primarily to the acquisitions of One Click Retail, MediaLink, Clavis and Flywheel Digital, which,
absent the link to continued employment, would have been treated as consideration. Under the sale and purchase agreements between 25% a
nd 50% of deferred payments are contingent on both (i) the results of the business in the post-acquisition period and (ii) the continued employment
of the founders.
As part of the overall strategy of managing the Group’s portfolio, costs incurred as part of the acquisition and integration of acquired businesses are
considered to be material. Acquisition transaction costs include directly linked transaction costs such as legal and diligence fees as well as stamp duty
where applicable. Integration spend is in relation to transferring acquired businesses onto the Group’s IT and revenue platforms, merging of products
and rebranding.
6. Employee information and Directors’ remuneration
(a) Employee costs including Directors
(£ million)
Wages and salaries
Social security costs
Defined contribution pensions cost
Redundancy costs
Share-based payments and associated employment taxes
Total employee costs included in profit from continuing operations
Discontinued operations
Total employee costs including discontinued operations
Average employee costs per employee is £87,645 (2018 continuing operations: £89,056).
Note
7
2019
147.1
14.2
4.1
1.1
8.5
175.0
-
175.0
2018
120.9
12.4
2.5
0.5
6.2
142.5
8.0
150.5
(b) Retirement benefits
The Group operates a defined contribution pension scheme in the United Kingdom and in certain other countries. The assets of the scheme are held by
independent custodians and are kept entirely separate from the assets of the Group. The pension charge represents contributions due from the employer.
During 2019 the total Group charge amounted to £4.1 million (2018: £2.7 million). At 31 December 2019 there were £0.9 million of contributions
outstanding (2018: £0.7 million).
(c) Average monthly number of employees including Directors (continuing and discontinued)
(i) By geographical region
United Kingdom
United States and Canada
Rest of the world
Continuing operations
Discontinued operations
Continuing and discontinued operations
(ii) By job function
Cost of sales
Sales and marketing
Other administrative functions
Continuing operations
Discontinued operations
Continuing and discontinued operations
2019
1,016
615
366
1,997
-
1,997
2019
1,085
547
365
1,997
-
1,997
2018
914
463
313
1,690
134
1,824
2018
889
473
328
1,690
134
1,824
Ascential plc Annual Report 2019 / 127
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
(d) Remuneration of Directors and key management personnel
Further details of the Directors’ remuneration and share options are set out in the Remuneration Report on pages 77 to 97 which form part of these
financial statements. Key management personnel comprised the Chief Executive Officer, Chief Financial Officer and Non-Executive Directors of the
Group. The aggregate emoluments for key management are set out below:
(£ million)
Salaries, bonus and other short-term employee benefits
Share-based payments
Total
2019
2018
1.8
2.4
4.2
1.6
2.4
4.0
During the year ended 31 December 2019, no Directors (2018: no Directors) were a member of the Group’s defined pension contribution scheme.
Retirement benefits were not accrued for any Director at 31 December 2019 or 2018.
7. Share-based payments
Analysis of charge to the consolidated income statement
(£ million)
Share Incentive Plans (“SIP”)
Deferred Annual Bonus Plan (“DABP”)
Performance Share Plans (“PSP”)
Sharesave Scheme (“Sharesave”)
Total share-based payment charge included in profit from continuing operations
Total share-based payment charge including discontinued operations
2019
2018
0.2
0.2
7.7
0.4
8.5
8.5
0.3
0.1
5.5
0.3
6.2
6.5
The total share-based payment charge includes £0.8 million of employment taxes (2018: £0.8 million). As a result, the amount credited to equity was £7.7
million (2018: £5.7 million).
The number and weighted average exercise price of outstanding and exercisable share options and share awards are detailed below:
Outstanding at 1 January
Granted
Options exercised or shares vested
Surrendered or expired
At 31 December
Weighted average fair value per share / option granted during the year (£)
2019
2018
Number
of shares
/ options
000s
Weighted
average
exercise
price £
Number
of shares
/ options
000s
Weighted
average
exercise
price £
8,998
4,909
(1,744)
(706)
11,457
0.57
0.61
0.71
1.31
0.52
6,767
3,193
(198)
(764)
8,998
2019
2.79
0.65
0.55
2.14
0.82
0.57
2018
3.29
At 31 December 2019 and 31 December 2018, all of the outstanding shares awards and options had either no exercise cost or an exercise price which
was below the market price. At 31 December 2019 the market price was £3.92 (2018: £3.77) and the average share price for 2019 was £3.67 (2018:
£4.04). For the Sharesave, the range of exercise prices for shares and options outstanding at 31 December 2019 was £2.04 to £3.58 (2018: £2.04 to
£3.58). For the Deferred Annual Bonus Plan (“DABP”) and the PSP, all share options and share awards outstanding at 31 December 2019 had an exercise
price of £nil (2018: £nil) or were conditional share awards which do not require payment from the participant to vest. The free shares awarded under the
SIP do not require payment from the participant to vest.
For share awards and options outstanding at 31 December 2019, the weighted average remaining contractual life was 1.45 years (2018: 1.35 years).
128 / Ascential plc Annual Report 2019
Measurement of fair values
The SIP, PSP, Sharesave and DABP are equity-settled plans, the fair value of which is determined at the date of grant and is not subsequently remeasured
unless conditions on which the award was granted are modified.
The fair values of the SIP and Sharesave awards have been measured using the Black-Scholes model, while the PSP has been measured using Monte
Carlo simulations. Non-market performance conditions were not taken into account in measuring fair values. Expected volatility is usually calculated over
the period of time commensurate with the remainder of the performance period immediately prior to the date of the grant. The principal assumptions
required by these methodologies for 2019 awards were:
Expected life
Risk free interest rate
Expected volatility
Expected dividend yield
SIP
3 years
n/a
n/a
0%
PSP
Sharesave
3 years
0.66%
25.99%
1.36%
3 years
0.31%
25.99%
1.63%
Sharesave
(US)
2 years
0.38%
25.99%
1.63%
Additional information about share-based payments
a) Share Incentive Plan
In 2016, the Group established the Employee Share Incentive Plan and International Employee Free Share Plan (collectively known as the “SIP”) which
enables employees to acquire shares of the Company, subject to service conditions. Free shares awarded to UK employees are held by an Employee
Benefit Trust for the maturity period of three years. Conditional awards and cash equivalent awards granted to international employees also have a
three year maturity period.
In 2019, the Group made conditional awards over 25,480 (2018: 80,984) shares under the SIP.
b) Performance Share Plan
In 2016, the Group established the Executive Performance Share Plan (“PSP”), under which key management personnel and other senior employees are
granted conditional awards, share options or a cash alternative. Awards can be granted with or without performance conditions. Where performance
conditions have been set, 25% of the award is subject to a Total Shareholder Return (“TSR”) market performance condition and the remaining 75% is
subject to a profit related non-market performance condition. Executive Directors are required to hold their shares for a further two year period
(net of taxes) after vesting.
During the year to 31 December 2019, the Group granted conditional share awards over 3,402,442 (2018: 2,540,790) shares under the PSP. Of the
share awards granted during the year, 2,932,144 (2018: 1,964,089) are subject to a TSR market performance condition and an Earnings Per Share
non-market performance condition at a weighting of 25% and 75% respectively. The remaining share awards are not subject to additional performance
criteria beyond service conditions.
c) Sharesave scheme
In 2016, the Group established the Employee Savings Related Share Option Plan, the International Savings Related Share Option Plan and the US Stock
Purchase Plan (collectively known as the “Sharesave”) under which employees enter into a savings contract and are granted options to acquire shares of
the Company, subject to service conditions.
In 2019, the Group granted 968,456 (2018: 507,468) options under the Sharesave to qualifying employees. Under the UK and International plans,
the options vest after three years and are exercisable within a six-month period. Under the US plan, they vest after two years and are exercisable for
a three-month period.
d) Deferred Annual Bonus Plan (“DABP”)
Under the DABP a portion of Executive Directors’ annual bonus earned is deferred mandatorily into a share award, vesting after a three-year period.
Awards are structured either as a nil-cost option or a conditional share award. During the year to 31 December 2019, the Group granted conditional
share awards over 32,733 (2018: 63,448) shares under the DABP.
Ascential plc Annual Report 2019 / 129
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
8. Finance costs and finance income
(£ million)
Interest on bank deposits
Foreign exchange gain on borrowings
Remeasurement of trade investments to fair value
Foreign exchange gain on cash and cash equivalents
Finance income
Interest payable on external borrowings
Amortisation of loan arrangement fees
Foreign exchange loss on cash and cash equivalents
Discount unwind on contingent and deferred consideration
Discount unwind of lease liability
Discount unwind of property provisions
Finance costs
Net finance costs from continuing operations
* Restated for initial application of IFRS 16 (see Note 27).
Note
2019
0.9
0.1
1.6
1.9
4.5
(6.8)
(1.1)
–
(5.5)
(1.3)
(0.1)
20
27
Restated*
2018
0.6
–
–
–
0.6
(7.1)
(1.2)
(0.6)
(3.6)
(1.2)
–
(14.8)
(10.3)
(13.7)
(13.1)
9. Tax on profit on ordinary activities
The tax charge has been calculated by applying the full year rate to the results for the year, with specific tax adjustments for adjusting items (amortisation
of acquired intangible assets, share-based payments and exceptional items). The tax charge for the year comprises:
(£ million)
Current tax
UK current tax charge on income for the year at 19.0%
Overseas current tax charge on income for the year
Adjustments in respect of prior years
Total current tax charge
Deferred tax
Current year
Adjustments in respect of prior years
Total deferred tax (credit)/charge
Total tax charge from continuing operations
Total effective tax rate
* Restated for initial application of IFRS 16 (see Note 27).
2019
6.7
2.3
(2.6)
6.4
(3.2)
(1.1)
(4.3)
2.1
21%
Restated*
2018
6.5
2.2
(1.9)
6.8
1.2
0.9
2.1
8.9
31%
The effective tax rate on adjusted continuing profit before tax for the year to 31 December 2019 was 21% (2018: 22%). A tax credit of £18.5 million
was recorded in relation to adjusting items in 2019 (2018: £8.9 million). During 2019 the following was recognised in equity relating to share-based
payments.
(£ million)
Current tax credit
Deferred tax (charge)/credit
Total credit recognised in equity
2019
0.5
(0.2)
0.3
2018
-
0.4
0.4
130 / Ascential plc Annual Report 2019
The difference between the tax as credited in the consolidated income statement for the continuing operations and tax at the UK standard rate is
reconciled below:
(£ million)
Profit before tax
Expected tax charge/(credit) at the UK standard rate of 19.0%
Principal differences due to:
Impact of higher overseas tax rates
Trading losses not recognised for deferred tax purposes
Recognition of previously unrecognised trading losses
Non-deductible legal, professional and M&A costs
Non-deductible share-based payments expense
Non-taxable/deductible exchange (gains)/losses
Adjustments in respect of prior years
Total tax charge/(credit) for the year
Effective tax rate
* Restated for initial application of IFRS 16 (see Note 27).
2019
Loss on
Adjusting
items / tax
Total profit /
tax from
continuing
operations
Adjusted
profit / tax
Restated*
2018
Loss on
Adjusting
items / tax
Total profit /
tax from
continuing
operations
Adjusted
profit / tax
96.4
18.3
3.4
5.3
-
–
–
(2.7)
(3.7)
20.6
21%
(86.2)
(16.4)
(3.2)
–
–
0.4
0.7
–
–
(18.5)
21%
10.2
1.9
0.2
5.3
-
0.4
0.7
(2.7)
(3.7)
2.1
21%
79.7
15.1
3.3
1.1
(1.5)
0.8
–
0.6
(1.6)
17.8
22%
(50.8)
(9.7)
(1.6)
–
–
1.4
0.4
–
0.6
(8.9)
18%
28.9
5.4
1.7
1.1
(1.5)
2.2
0.4
0.6
(1.0)
8.9
31%
The Group’s effective tax rate is higher than the UK’s statutory tax rate mainly due to its mix of profits coming from the US.
The Group is subject to many different forms of taxation including, but not limited to, income and corporation tax, withholding tax and value added and
sales taxes. The Group has operations in 15 countries and multiple states in the US and sells its products and services into more than 100 countries.
Furthermore, the Group renders and receives cross-border supplies and services in respect of affiliated entities which exposes the Group to tax risk due
to transfer pricing rules that apply in many jurisdictions.
Tax law and administration is complex and often requires subjective determinations. In addition, tax audits by their nature, can take a significant period
of time to be agreed with the tax authorities. Therefore, management is required to apply judgement to determine the level of provisions required
in respect of its tax liabilities. The Directors’ estimates of the level of risk arising from tax audit may change in the next year as a result of changes in
legislation or tax authority practice or correspondence with tax authorities during specific tax audits. It is not possible to quantify the impact that
such future developments may have on the Group’s tax positions. Actual outcomes and settlements may differ from the estimates recorded in these
consolidated financial statements. The Group currently anticipates that the outcome of these uncertainties will only be resolved after more than one
year. However even where uncertainties may not be resolved within one year, material adjustments may arise as a result of a reappraisal of the assets
or liabilities within the next year.
Ascential plc Annual Report 2019 / 131
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
10. Earnings per share
Basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the year. Diluted earnings per share is calculated by dividing the net profit for the year attributable to ordinary
shareholders by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares
that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.
Profit attributable to equity shareholders of the parent (£ million)
Profit for the year – continuing operations
Profit for the year – discontinued operations
Profit for the year
Share number (million)
Basic weighted average number of shares
Dilutive potential ordinary shares
Diluted weighted average number of shares
Earnings per share (pence)
Basic earnings per share
Diluted earnings per share
Discontinued operations
Basic earnings per share
Diluted earnings per share
Continuing and discontinued operations
Basic earnings per share
Diluted earnings per share
Adjusted
results
2019
Adjusting
items
75.6
–
75.6
401.4
6.2
407.6
18.8
18.5
–
–
18.8
18.5
(67.7)
–
(67.7)
401.4
6.2
407.6
(16.8)
(16.6)
–
–
(16.8)
(16.6)
Total
7.9
–
7.9
401.4
6.2
407.6
2.0
1.9
–
–
2.0
1.9
Adjusted
results
2018
Adjusting
items
61.9
15.5
77.4
400.3
5.2
405.5
15.5
15.3
3.8
3.8
19.3
19.1
(41.9)
173.7
131.8
400.3
5.2
405.5
(10.5)
(10.5)
43.4
42.8
32.9
32.3
Total
20.0
189.2
209.2
400.3
5.2
405.5
5.0
4.8
47.2
46.6
52.2
51.4
11. Business combinations
Shenzhen Yimian Network Technology Co., Ltd
In December 2019, the Group acquired 100% of Shenzhen Yimian Network Technology Co., Ltd (“Yimian”), a limited liability company established
under the laws of the People’s Republic of China. The Group paid cash consideration of £19.5 million upfront and consolidated £0.8 million of cash on
acquisition, resulting in a net £18.7 million cash outflow on acquisition. There is a four-year revenue linked earn-out estimated to total £8.6 million based
on the Board approved acquisition case. Maximum total consideration is capped at £70 million. Half of the earn-out is effectively linked to the ongoing
employment of the founders and therefore recognised over the life of the earn-out.
The acquisition-related employment cost is being accrued over the period in which the related services are being received, recorded as exceptional
costs. To determine the estimated contingent consideration and the acquisition-related employment cost figures, the Directors are required to make an
estimate regarding the future results. Any subsequent revaluations to contingent consideration as a result of changes in such estimations are recognised
in the consolidated income statement and disclosed in Note 20.
CTIC WGSN China Limited
On 1 September 2019, the shareholding in CTIC WGSN China Limited (“CTIC”) increased from 49% to 51% and the Group gained a majority of
voting rights at the Board of directors. The existing shareholding was revalued to fair value resulting in step acquisition gain of £0.8 million and then
de-recognised. The Group consolidated the 51% controlling interest on 1 September 2019 and recognised a 49% non-controlling interest.
132 / Ascential plc Annual Report 2019
The fair values of the identifiable assets purchased and liabilities assumed of the acquired companies as at the date of acquisition were as follows:
(£ million)
Customer relationships
Technology
Deferred tax liability
Property, plant and equipment
Other investments
Trade and other receivables
Cash
Trade and other payables
Deferred income
Total identifiable net assets at fair value
Initial cash consideration
Contingent consideration payable in 2020 - 2023
Fair value of previously held equity interest
Non-controlling interest
Total consideration
Goodwill on acquisition
Acquisition of businesses (net of cash acquired)
Sales segment**
Product Design
segment**
Other*
2.8
2.2
(1.3)
0.3
1.7
1.8
0.8
(1.6)
-
6.7
19.5
3.3
-
-
22.8
16.1
18.7
-
-
-
-
-
4.5
2.4
(1.7)
(3.7)
1.5
-
-
1.6
0.8
2.4
0.9
(2.4)
-
-
-
-
-
0.2
0.1
1.3
-
1.6
0.6
-
-
-
0.6
(1.0)
0.5
Total
2.8
2.2
(1.3)
0.3
1.7
6.5
3.3
(2.0)
(3.7)
9.8
20.1
3.3
1.6
0.8
25.8
16.0
16.8
* Other includes working capital settlements in relation to prior year acquisitions, an acquisition within the Built Environment and Policy segment and the finalisation of the provisional fair values
presented in the 2018 Annual Report in relation to Peloton Holdings LLC (“Flywheel Digital”). All other fair values in relation to Flywheel Digital remain unchanged.
**The fair values provided for Yimian and CTIC are provisional figures, being the best estimates currently available due to the proximity of the acquisition dates to year end.
Of the £16.0 million (2018: £72.5 million) of goodwill acquired during the period, no goodwill (2018: £39.4 million) is expected to be deductible for
tax purposes.
The goodwill of £16.0 million arising on acquisitions is attributable to workforce in place and know-how within the business.
From the date of acquisition, the businesses acquired contributed £2.0 million (2018: £14.6 million) revenue and £1.0 million (2018: £4.3 million)
EBITDA. If the acquisitions had taken place at the beginning of the year, the business would have contributed £8.3 million (2018: £42.3 million) revenue
and £2.1 million (2018: £11.0 million) EBITDA.
The details of the prior year acquisitions are set out in the 2018 Annual Report.
Ascential plc Annual Report 2019 / 133
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
12. Intangible assets and goodwill
(£ million)
Cost
At 1 January 2018
Additions
Acquisitions of businesses
Disposals
Disposals of businesses
Transfers
Effect of movements in exchange rates
At 1 January 2019
Additions
Acquisitions of businesses
Disposals
Effect of movements in exchange rates
At 31 December 2019
Accumulated amortisation & impairment
At 1 January 2018
Disposals
Disposals of businesses
Amortisation
Transfers
Effect of movements in exchange rates
At 1 January 2019
Disposals
Amortisation
Effect of movements in exchange rates
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
Other Acquired Intangibles
Goodwill
Brands
Customer
relationships
Content
Technology
Software
Total
778.5
290.6
158.8
51.5
30.8
-
72.5
-
-
8.2
-
-
44.9
-
14.6
(117.7)
(131.4)
(75.1)
(5.6)
-
10.8
744.1
-
16.0
-
(8.2)
751.9
-
2.3
169.7
-
-
-
(2.1)
167.6
-
3.4
132.0
-
2.8
-
(3.2)
131.6
-
-
-
0.3
60.8
-
-
-
(0.9)
59.9
9.3
-
-
-
-
0.7
40.8
-
2.2
-
(0.8)
42.2
62.0
14.3
0.2
(2.9)
(2.1)
2.4
0.4
74.3
12.7
-
(18.9)
(1.2)
1,372.2
14.3
149.7
(2.9)
(331.9)
2.4
17.9
1,221.7
12.7
21.0
(18.9)
(16.4)
66.9
1,220.1
(289.4)
(112.2)
(89.9)
(42.7)
(17.3)
(49.0)
(600.5)
-
50.4
-
-
-
(239.0)
-
-
-
(239.0)
512.9
505.1
-
82.3
(14.0)
-
(0.2)
(44.1)
-
(14.9)
0.9
(58.1)
109.5
125.6
-
67.4
(11.0)
-
(0.4)
(33.9)
-
(11.0)
0.7
(44.2)
87.4
98.1
-
3.2
(5.5)
-
(0.2)
(45.2)
-
(5.7)
0.9
(50.0)
9.9
15.6
-
-
(3.2)
-
(0.1)
(20.6)
-
(4.2)
0.4
(24.4)
17.8
20.2
2.8
2.1
(7.6)
(1.0)
(0.2)
(52.9)
20.2
(11.6)
0.6
2.8
205.4
(41.3)
(1.0)
(1.1)
(435.7)
20.2
(47.4)
3.5
(43.7)
(459.4)
23.2
21.4
760.7
786.0
Included within software intangible assets at 31 December 2019 is £10.9 million (2018: £7.9 million) of assets under construction which were not being
amortised at 31 December 2019.
134 / Ascential plc Annual Report 2019
Goodwill
The Group’s CGUs have been assessed based on largely independently managed cash flows. The intangibles of each CGUs are assessed individually for
impairment each year and more frequently if there are indicators of impairment. No impairment charge has arisen in 2019 (2018: none).
The below table sets out the CGUs year on year and how they align to reportable segments:
2018 CGU
Product Design
Built Environment & Policy
Retail Week & RWC
Edge
-
Flywheel Digital
Money20/20
Lions
Warc
MediaLink
2019 CGU
Product Design
2019 Reportable segment
Product Design
Built Environment & Policy
Built Environment & Policy
Retail Week & RWC
Edge
Yimian
Flywheel Digital
Money20/20
Lions
Warc
MediaLink
Sales*
Marketing
* The intangibles of the Edge, Yimian and Flywheel CGUs have been assessed for impairment at both the individual CGU level and the aggregated Digital Commerce level, being aligned to
management’s revised approach in 2019 to monitoring these businesses at the aggregated Digital Commerce level for internal management purposes.
When testing for impairment, recoverable amounts for all of the Group’s CGUs are measured at their value-in-use by discounting the future expected
cash flows from the assets in the CGUs. These calculations use cash flow projections based on Board-approved budgets and approved plans. Fair value
less costs of disposal (“FVLCD”) is also considered as an alternative measure of recoverable amount based on revenue or EBITDA multiples compared
to recent market transactions. This is a level 3 measurement, based on inputs which are normally unobservable to market participants. Costs of disposal
have been assumed to be 10% of expected disposal proceeds. The key assumptions and estimates used for value-in-use calculations are as follows:
Future expected cash flows
Cash flows are typically forecast for periods of up to five years, however in 2019, we used an eight-year period for Edge where we expect that the
long-term growth rate will be achieved after this time. This reflects the nascent state of the eCommerce analytics market which is expected to enjoy
double digit growth in the short- to mid-term and our prior experience of similar integrations.
Cash flow forecasts are derived from the most recent Board approved plans, which have been prepared after considering the current economic
environment in each of our markets. Cash flows beyond the plan period are extrapolated using a long-term growth rate of 3% for Edge, Flywheel and
Yimian CGUs (Digital Commerce) and 2.5% across remaining CGUs (2018: 2%) in calculating the terminal value. This is in line with the IMF World
Economic Outlook published in October 2019, which represents the long-term rates of inflation expected in the economies in which we operate and the
Company’s best estimate of cash flow growth beyond the relevant plan period. The estimates of future cash flows are consistent with experience adjusted
for the Group’s estimate of future performance.
Ascential plc Annual Report 2019 / 135
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
WACC
The other inputs include a pre-tax discount rate, calculated by reference to the weighted average cost of capital (“WACC”) of each CGU, adjusted
to reflect the market and other systemic risks specific to each CGU and the territories in which they operate. Year on year movements in the pre-tax
discount rates for CGUs are largely reductions, driven by changes in market-based inputs and the company specific risk, which is assessed based
on economic outlooks.
The discount rates applied to the risk-adjusted cash flow forecasts, are set out below.
CGU
Product Design
Marketing
Lions
WARC
MediaLink
Sales
Edge
Yimian
Flywheel Digital
Money20/20
Retail Week & WRC
Built Environment & Policy
Total
Pre-tax
discount
rate%
9.5
2019
Goodwill
152.8
9.9
10.2
12.5
11.0
n/a
11.7
10.9
6.4
9.9
81.1
10.6
33.4
118.4
16.1
36.6
36.3
4.0
23.6
Other
Acquired
Intangibles
2.8
64.0
16.5
19.8
69.6
5.0
31.3
9.5
5.4
0.7
Pre-tax
discount
rate%
10.7
2018
Goodwill
153.6
10.9
12.1
14.1
12.4
-
14.7
11.3
11.0
9.9
81.1
10.6
34.6
120.9
-
39.4
37.4
4.0
23.5
Other
Acquired
Intangibles
4.2
67.5
19.7
23.5
86.6
-
37.8
13.6
5.7
0.9
512.9
224.6
505.1
259.5
Sensitivity to changes in assumptions
The calculation of value in use is most sensitive to the discount rate and long-term growth rates used. The Group has performed sensitivity analyses
across all CGUs which have goodwill and acquired intangible assets, using reasonably possible changes in the already conservative long-term growth
rates and pre-tax discount rates arising from reasonably possible trading and economic scenarios. The sensitivity analysis showed that no impairment
charges would result in any of the CGUs from these scenarios.
The Group has considered the Edge CGU further, as these cash flow forecasts have been constructed over eight years. The carrying value of Goodwill
and Other Acquired Intangibles in the Edge CGU was £188.0m and, based upon our value in use assessment, the headroom is over 40%. This headroom
is based upon our projections relating to the prospects of the business and the market it operates in. In addition to assumptions around the discount rate
(where we have used a pre-tax rate of 11.0%), and the long-term terminal growth rate of 3%, we have also assumed the business will capture a significant
portion of the double digit growth the eCommerce analytics market is expected to enjoy in the short- to mid-term. This remains consistent with our
assessment at the time we bought the businesses that now make up Edge. We have used 8 year cash flows (which are generated through our Board
approved plans), rather than 5 years for other CGUs. This is to reflect the nascent nature of the eCommerce analytics market and our prior experience
of similar integrations. The Board does not consider that there is a reasonably possible scenario that gives rise to a material impairment. Our view of
expected revenue growth rates over the next 8 years would need to fall by 16% (all other things being equal) in order for breakeven to occur. Currently,
there are no internal or market indicators that suggest that this will be the case. In accordance with accounting standards, we have also considered
fair value less costs of disposal, which – based on our assessment of current transaction prices – would again be comfortably above the carrying value
of the business.
136 / Ascential plc Annual Report 2019
13. Property, plant and equipment
(£ million)
Cost
At 1 January 2018
Additions
Acquisitions of businesses
Disposals
Disposal of businesses
Transfers
Effect of movements in exchange rates
At 1 January 2019
Additions
Acquisitions of businesses
Disposals
Effect of movements in exchange rates
At 31 December 2019
Depreciation
At 1 January 2018
Depreciation
Disposals
Disposal of businesses
Transfers
Effect of movements in exchange rates
At 1 January 2019
Depreciation
Disposals
Effect of movements in exchange rates
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
Short
leasehold
property
Office
equipment
16.2
1.8
0.9
(0.8)
(6.3)
(1.9)
0.3
10.2
2.4
–
(1.3)
(0.1)
11.2
(7.9)
(1.6)
0.6
3.7
0.1
–
(5.1)
(1.5)
(0.4)
0.1
(6.9)
4.3
5.1
11.5
2.1
0.7
(0.3)
(1.4)
1.4
0.2
14.2
2.8
0.2
(3.8)
(0.3)
13.1
(8.5)
(1.9)
0.2
1.1
(0.9)
(0.1)
(10.1)
(2.3)
3.1
0.3
(9.0)
4.1
4.1
Total
27.7
3.9
1.6
(1.1)
(7.7)
(0.5)
0.5
24.4
5.2
0.2
(5.1)
(0.4)
24.3
(16.4)
(3.5)
0.8
4.8
(0.8)
(0.1)
(15.2)
(3.8)
2.7
0.4
(15.9)
8.4
9.2
Ascential plc Annual Report 2019 / 137
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
14. Investments
(£ million)
At 1 January
Acquisition of investments cash flow
Remeasurement of trade investments to fair value
Share of the profit of associates and joint ventures accounted for using the equity method
Transaction costs capitalised
Dividends received from joint ventures
Disposal of investments
Write-off
Effect of movements in exchange rates
At 31 December
Investments as at 31 December 2019 are made up as follows:
(£ million)
Trade investments measured at fair value through profit or loss
Associates and joint ventures accounted for using the equity method
Convertible loan*
At 31 December
2019
6.1
64.5
1.6
0.6
1.8
(0.5)
(1.6)
–
(4.9)
67.6
2019
12.3
53.3
2.0
67.6
2018
5.1
0.7
–
0.6
–
–
(0.2)
(0.1)
–
6.1
2018
0.8
0.9
4.4
6.1
* The option to convert the loan issued to Huajia Shanghai to equity in Coloro Co. Ltd was exercised in part in the second half of 2019. The remaining balance of the loan is expected to be exercised in
the first half of 2020.
On 30 August 2019, the Group acquired an initial 35% ownership interest in Jumpshot Inc, the marketing analytics subsidiary of Avast plc, a leading
global cybersecurity provider. Subject to certain conditions, and no sooner than January 2021, the Group also has an option to take a majority ownership
position in Jumpshot. At 31 December 2019 the options for majority ownership remain executory contracts. On 30 January 2020, we agreed to sell
back our 35% ownership interest in Jumpshot to the majority owner, Avast plc for cash consideration equivalent to the cost of investment as disclosed
in Note 30.
On 1 September 2019, the Group increased its shareholding from 49% to 51% in CTIC WGSN China Limited and gained a majority voting rights at the
Board of directors. The joint venture interest was revalued to fair value resulting in step acquisition gain of £0.8m and then de-recognised. The Group
consolidated the 51% controlling interest on 1 September 2019 and recognised a 49% non-controlling interest. A £0.5 million dividend from CTIC
WGSN China Limited was declared prior to acquisition and received shortly thereafter.
138 / Ascential plc Annual Report 2019
The following table summarises the financial information of the Group’s associate.
(£ million)
Nature of investment
Acquisition date
Country of incorporation
Percentage ownership interest
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets (100%)
Group’s share of net assets
Goodwill and acquired intangible assets
Carrying amount of interest in investment
Revenue
Depreciation and amortisation
Interest expense
Income tax expense
Profit and total comprehensive income (100%)
Group’s share of loss and total comprehensive loss
Dividends received by the Group
15. Deferred tax assets and liabilities
The deferred tax balances shown in the consolidated balance sheet are analysed as follows:
(£ million)
Deferred tax assets
Deferred tax liabilities
Total
* Restated for initial application of IFRS 16 (see Note 27).
Jumpshot Inc
Associate
31 August 2019
USA
35.2%
7.2
14.6
(13.9)
(0.3)
7.6
2.7
48.6
51.3
10.6
(0.3)
–
–
(1.4)
(0.5)
–
2019
42.7
(22.9)
19.8
Restated*
2018
43.1
(24.8)
18.3
Ascential plc Annual Report 2019 / 139
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
The major deferred tax assets and liabilities recognised by the Group, and the movements in the year, are set out below:
(£ million)
At 1 January 2018*
Adjustment on initial application of IFRS 16
Credit/(charge) to the consolidated income
statement for the year
Credit to equity
Adjustments in respect of prior years
Acquisitions
Disposals
Foreign exchange movements
At 1 January 2019
Credit/(charge) to the consolidated income
statement for the year
Credit to equity
Adjustments in respect of prior years
Acquisitions
Foreign exchange movements
At 31 December 2019
* Restated for initial application of IFRS 16 (see Note 27).
Non-
deductible
intangible
assets
US deductible
intangible
assets
Share-based
payments
Property,
plant and
equipment
Tax losses
Other
(31.3)
–
3.6
–
(0.6)
(6.8)
10.1
0.2
(24.8)
3.0
–
–
(1.2)
0.1
(22.9)
13.6
–
(2.8)
–
–
–
–
0.2
11.0
6.6
–
–
–
(0.3)
17.3
0.9
–
0.8
0.4
0.1
–
(0.1)
–
2.1
0.5
(0.2)
–
–
(0.1)
2.3
9.0
–
(0.9)
–
(0.2)
–
(0.7)
–
7.2
(0.6)
–
(0.1)
–
-
6.5
23.5
–
(1.6)
–
(1.3)
–
–
0.8
21.4
(7.0)
–
0.4
–
(0.5)
14.3
0.1
0.3
–
–
1.0
–
–
–
1.4
0.7
(0.3)
0.8
–
(0.3)
2.3
The above deferred tax balances are expected to reverse:
(£ million)
Within 12 months
After 12 months
Total
Non-
deductible
intangible
assets
US
deductible
intangible
assets
Share-based
payments
Property,
plant and
equipment
Tax losses
Other
(3.1)
(19.8)
(22.9)
4.9
12.4
17.3
(0.2)
2.5
2.3
1.0
5.5
6.5
4.5
9.8
14.3
0.1
2.2
2.3
Total
15.8
0.3
(0.9)
0.4
(1.0)
(6.8)
9.3
1.2
18.3
3.2
(0.5)
1.1
(1.2)
(1.1)
19.8
Total
7.2
12.6
19.8
In presenting its deferred tax balances, the Group does not offset assets and liabilities as the Group has no legally enforceable right to set off the
arising current tax liabilities and assets when those deferred tax balances reverse. No deferred tax liability has been recognised in respect of temporary
differences associated with investments in subsidiaries and joint ventures as, where tax would arise on the realisation of those temporary differences,
the Group is in a position to control the timing of their reversal and it is probably that such differences will not reverse in the foreseeable future.
Following the UK General Election in December 2019, the UK Prime Minister announced his intention to reverse the enacted reduction in UK
corporation tax rates. This would have seen the rate fall from 19% to 17% from 1 April 2020. The proposed changes had not been enacted by the balance
sheet date and therefore our deferred tax balances remain valued at those rates currently enacted (i.e. at 17% for UK items scheduled to unwind after
1 April 2020). If this proposal becomes law, this would result in a deferred tax charge to P&L of £0.5 million, comprising an increase in the value of the
deferred tax liability on consolidated intangibles of £2.1 million offset by a reduction in the value of deferred tax assets of £1.6 million.
Non-deductible intangibles represent the value of the deferred tax liability which arises on the fair value of acquired intangibles which are not deductible
for tax purposes. The liability is valued at the tax rate applicable to the jurisdiction where the intangibles are located.
US deductible intangible assets represent the value of deferred tax assets on US tax deductible intangibles and deferred consideration. These deferred
tax assets are recognised at a US Federal and State tax rate averaging 26%.
Deferred tax assets have been recognised on the basis that sufficient taxable profits are forecast to be available in the future to enable them to be utilised.
140 / Ascential plc Annual Report 2019
At 31 December 2019, the Group has the following tax losses:
(£ million)
US net operating losses
UK non-trading losses
Irish trading losses
UK capital losses
Other Rest of World losses
Total
Recognised
2019
Recognised
2018
Unrecognised
2019
Unrecognised
2018
49.9
22.7
–
–
-
71.3
36.3
–
–
–
72.6
107.6
102.5
–
44.5
114.9
6.2
268.1
127.0
–
18.3
114.9
3.9
264.1
The above losses represent the following value at tax rates applicable at the balance sheet date:
(£ million)
US net operating losses
UK non-trading losses
Irish trading losses
UK capital losses
Other Rest of World losses
Total
Recognised
2019
Recognised
2018
Unrecognised
2019
Unrecognised
2018
10.5
3.7
–
–
-
15.0
6.4
–
–
–
14.2
21.4
25.6
–
5.6
19.5
–
50.7
26.7
–
2.3
19.5
1.1
49.6
Total
2019
152.4
22.7
44.5
114.9
6.2
340.7
Total
2019
36.1
3.7
5.6
19.5
-
64.9
Total
2018
198.3
36.3
18.3
114.9
3.9
371.7
Total
2018
41.7
6.4
2.3
19.5
1.1
71.0
The Group has tax losses in the US totalling £152.4 million (2018: £198.3 million). The movement from prior year arises as a result of expiry of losses
which can be carried forward for only 20 years. It has been agreed with the US tax authorities that these losses are available to offset against taxable
profits subject to a restriction following the change of ownership that was deemed to have occurred upon listing of Ascential plc in 2016. In line with the
US tax rules, the restriction of losses is, to a large extent, based on the valuation of the US tax group at the change of control date and this will be agreed
with the US tax authorities in due course. In prior years, our forecasting of the future available losses, and so value of the associated deferred tax asset,
had been driven by this limitation and so the valuation was a key source of estimation. Following additional earnout payments in the US, and a change to
mix of profits, this is no longer the case. Our ability to utilise losses in future years is primarily driven by the level of taxable profits arising in the US as the
increased earnout payments give rise to tax deductions which displace the loss utilisation. As a result, we have revised downwards our estimate of future
utilised losses which accounts for £2.6 million of the current year adjustment to the deferred tax asset in respect of losses.
16. Inventories
(£ million)
Deferred event costs
Physical stock
Total
2019
2018
2.1
2.0
4.1
1.9
2.0
3.9
Ascential plc Annual Report 2019 / 141
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
17. Trade and other receivables
(£ million)
Current
Trade receivables, net of the allowance for doubtful debts
Other receivables
Prepayments
Accrued income
Total
* Restated for initial application of IFRS 16 (see Note 27).
2019
74.3
50.0
12.4
4.7
Restated*
2018
64.2
29.2
12.4
7.4
141.4
113.2
The carrying amounts of trade and other receivables are denominated primarily in pounds Sterling and US Dollars. The Directors consider that the
carrying amount of receivables and prepayments approximates their fair value.
Trade receivables are non-interest bearing and are generally on 30 day terms and are shown net of an allowance for doubtful debts.
As at 31 December 2019, the allowance for doubtful debts was £5.0 million (2018: £3.5 million). Movements in the allowance for doubtful
debts were as follows:
(£ million)
At 1 January
Provided in the year
Utilised in the year
Disposal of businesses
Effect of movements in exchange rates
At 31 December
Trade receivables of the continuing operations, net of the allowance for doubtful debts, are aged as follows:
2019
2018
3.5
5.1
(3.6)
-
(0.1)
5.0
3.7
2.8
(1.9)
(1.1)
-
3.5
2019 (£ million)
Current (not past due)
1 – 30 days past due
31 – 90 days overdue
More than 90 days past due
At 31 December
2018 (£ million)
Current (not past due)
1 – 30 days past due
31 – 90 days overdue
More than 90 days past due
At 31 December
Loss rate
0.2%
0.9%
10.3%
55.8%
Loss rate
0.2%
1.5%
11.5%
41.7%
Gross
carrying
amount
53.6
12.2
6.2
7.5
79.5
Gross
carrying
amount
44.1
12.1
6.1
6.0
68.3
Loss
allowance
Credit note
allowance
Net trade
receivables
(0.1)
(0.1)
(0.6)
(4.2)
(5.0)
(0.2)
–
–
–
(0.2)
53.3
12.1
5.6
3.3
74.3
Loss
allowance
Credit note
allowance
Net trade
receivables
(0.1)
(0.2)
(0.7)
(2.5)
(3.5)
–
(0.6)
–
–
(0.6)
44.0
11.3
5.4
3.5
64.2
Loss rates are calculated based on actual credit losses over the past three years and adjusted to reflect differences between the historical credit losses
and the Group’s view of the economic conditions over the expected lives of the receivables. In addition to the loss allowance, there is a credit note
allowance of £0.2 million (2018: £0.6 million) in the net trade receivables balance.
142 / Ascential plc Annual Report 2019
The maximum exposure to credit risk for trade receivables by geographical region was:
(£ million)
United Kingdom
Other Europe
United States and Canada
Asia Pacific
Middle East and Africa
Latin America
Total
2019
17.6
12.3
31.7
6.8
2.5
3.4
74.3
2018
17.3
10.9
25.7
6.0
1.1
3.2
64.2
18. Cash and cash equivalents
Cash and cash equivalents at 31 December 2019 of £111.7 million (2018: £182.0 million) relate to bank balances, including short-term deposits with an
original maturity date of less than three months and cash in transit.
19. Trade and other payables
(£ million)
Current
Trade payables
Other payables
Accruals
Interest accruals
Taxes and social security costs
Total
* Restated for initial application of IFRS 16 (see Note 27).
Note
2019
Restated*
2018
10.6
42.8
24.2
0.4
7.7
85.7
10.3
30.4
32.2
0.4
4.8
78.1
Ascential plc Annual Report 2019 / 143
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
20. Deferred and contingent consideration
The Group has liabilities in respect of deferred and contingent consideration payments under various business acquisition contracts.
(£ million)
At 1 January 2018
Additions
Acquisition–related employment costs accrued in the year
Revaluation of contingent consideration recognised in the continuing consolidated income statement
Revaluation of contingent consideration recognised in the discontinued consolidated income statement
Discount unwind on contingent and deferred consideration
Acquisition–related employment cash paid in year
Deferred and contingent consideration cash paid in the year
Effect of movements in exchange rates
Disposal of business
At 1 January 2019
Additions
Acquisition–related employment costs accrued in the year
Revaluation of contingent consideration recognised in the consolidated income statement
Discount unwind on contingent and deferred consideration
Acquisition–related employment cash paid in year
Deferred and contingent consideration cash paid in the year
Effect of movements in exchange rates
At 31 December 2019
(£ million)
Current
Non-current
Total
Note
5
5
8
11
5
5
8
Total
97.9
43.4
13.3
(5.2)
0.3
3.6
(21.0)
(37.7)
2.3
(0.2)
96.7
3.3
20.1
13.0
5.5
(11.5)
(20.3)
(3.6)
103.2
2019
63.1
40.1
103.2
Level 3
59.4
33.8
–
(5.2)
0.3
3.6
–
(33.4)
1.4
(0.2)
59.7
3.3
–
12.8
5.5
–
(10.6)
(2.3)
68.4
2018
32.3
64.4
96.7
The total deferred and contingent consideration balance of £103.2 million (2018: £96.7 million) includes £68.4 million (2018: £59.7 million) which is
categorised as Level 3 in the fair value hierarchy. The significant unobservable inputs used in the fair value measurements are the determined weighted
average cost of capital and the forecast future profits, billings or revenue of the acquired businesses. The Group plan used to forecast future profits is
approved by the Board and assessed against market consensus on a regular basis. For details of deferred and contingent consideration on current and
comparative year acquisitions refer to Note 20.
The Directors consider that the carrying amount of deferred and contingent consideration of £103.2 million (2018: £96.7 million) approximate their fair
value.
21. Borrowings
The maturity profile of the Group’s borrowings, all of which are secured loans, was as follows:
(£ million)
Non-current
One to two years
Total borrowings
2019
2018
282.6
282.6
291.8
291.8
Borrowings are shown net of unamortised issue costs of £1.2 million (2018: £2.3 million). The carrying amounts of borrowings approximate their fair
value. The Group’s borrowings at 31 December 2019 were £66.0 million, $96.0 million and €171.0 million.
144 / Ascential plc Annual Report 2019
Reconciliation of movement in net debt
(£ million)
At 1 January 2018
Exchange differences
External debt drawdown
External debt repayment
Non-cash movements
Net cash movement
At 1 January 2019
Exchange differences
Non-cash movements
Net cash movement
At 31 December 2019
* Refer to the Glossary of Alternative Performance Measures for the definition of Net Debt.
Cash
26.7
(0.4)
–
–
–
23.1
49.4
1.7
–
27.9
79.0
Cash in
transit
Short-term
deposits
Interest
rate cap
Borrowings
Net
debt*
2.4
–
–
–
–
4.8
7.2
–
–
(6.0)
1.2
16.7
(0.2)
–
–
–
108.9
125.4
0.1
–
(94.0)
31.5
0.1
(317.4)
(271.5)
–
–
–
(0.1)
–
–
–
0.3
–
0.3
(6.9)
66.0
(32.4)
(1.1)
–
(291.8)
10.4
(1.2)
–
(7.5)
66.0
(32.4)
(1.2)
136.8
(109.8)
12.2
(0.9)
(72.1)
(282.6)
(170.6)
22. Provisions
(£ million)
At 1 January 2018
Acquisitions in the year
Disposal of subsidiaries in the year
Provided in the year
Released in the year
Utilised in the year
Effect of movements in exchange rates
At 1 January 2019
Acquisitions in the year
Provided in the year
Released in the year
Utilised in the year
Discounting of provisions
Effect of movements in exchange rates
At 31 December 2019
Provisions have been analysed between current and non-current as follows:
2019 (£ million)
Current
Non-current
Total
2018 (£ million)
Current
Non-current
Total
Property
provisions
1.3
0.4
(0.5)
0.5
–
–
–
1.7
–
–
(0.3)
–
0.1
–
1.5
Property
provisions
–
1.5
1.5
Property
provisions
–
1.7
1.7
Other
4.5
–
–
1.2
(0.2)
(1.2)
–
4.3
–
0.5
(1.7)
(1.1)
–
(0.1)
1.9
Other
1.0
0.9
1.9
Other
2.8
1.5
4.3
Total
provisions
5.8
0.4
(0.5)
1.7
(0.2)
(1.2)
–
6.0
–
0.5
(2.0)
(1.1)
0.1
(0.1)
3.4
Total
provisions
1.0
2.4
3.4
Total
provisions
2.8
3.2
6.0
The property provisions relate to dilapidation costs on properties in the United Kingdom. The weighted average maturity of these obligations is
approximately five years. Other provisions relate to onerous contracts and warranty costs relating to businesses disposed of. The average weighted
maturity of these obligations is approximately one year.
Ascential plc Annual Report 2019 / 145
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
23. Share capital and reserves
Share capital
(£ million)
403,274,977 ordinary shares of £0.01 each (2018: 400,818,595)
Total
2019
4.0
4.0
2018
4.0
4.0
During the year 1,876,652 (2018: 5,451) and 579,730 (2018: 193,446) ordinary £0.01 shares were issued to employees under the PSP and Sharesave
schemes respectively.
Treasury share reserve
Free shares awarded under the SIP are held by an Employee Benefit Trust (“EBT”) on behalf of UK employees for a holding period of three years.
Movement in own shares held by the EBT:
At 1 January
New shares purchased
Vesting of free shares
At 31 December
2019
2018
Number of
shares
393,893
873
(26,132)
368,634
Cost
£m
0.1
–
–
Number of
shares
448,744
1,996
(56,847)
0.1
393,893
Cost
£m
0.1
–
–
0.1
The market value of these shares as at 31 December 2019 was £1.4 million (2018: £1.5 million). The cost of these shares as at 31 December 2019
was £nil (2018: £nil).
Shares awarded under the PSP are held by another Employee Benefit Trust (“EBT”) on behalf of employees for a holding period of three years.
Movement in own shares held by this EBT:
At 1 January
New shares purchased
Vesting of free shares
At 31 December
2019
-
1,876,652
(1,175,566)
701,086
2018
-
-
-
-
The market value of these shares as at 31 December 2019 was £2.8 million (2018: £nil). The cost of these shares as at 31 December 2019
was £nil (2018: £nil).
24. Dividends
Amounts recognised and paid as distributions to ordinary shareholders in the year comprise:
Amounts recognised as distributions to equity shareholders
Final dividend for the year-ended 31 December 2017
Interim dividend for the year-ended 31 December 2018
Final dividend for the year ended 31 December 2018
Interim dividend for the year ended 31 December 2019
Dividend paid
2019
2018
£ million
Pence per
share
£ million
Pence per
share
–
–
15.7
7.2
22.9
–
–
3.9
1.8
5.7
15.2
7.6
–
–
22.8
3.8
1.9
–
–
5.7
After the reporting date, the Board recommended, subject to shareholder approval, a final dividend of 4.0 pence per ordinary share from distributable
reserves. The final dividend is not included in the consolidated statement of financial position as a liability at 31 December 2019.
146 / Ascential plc Annual Report 2019
25. Subsidiary and related undertakings
Full details of the subsidiaries, associates and joint ventures of Ascential plc at 31 December 2019 are set out in Note 6 to the parent financial statements.
26. Related party transactions
The aggregate value of transactions and outstanding balances with related party entities are as follows:
(£ million)
Asian Advertising Festival (Spikes Asia) Pte Limited
Dividends received
Recharges costs
Profit share
Motivate Publishing FZ LLC
Profit share
Huajia Textile Product Development (Shanghai) Co Ltd
Convertible loan*
CTIC WGSN China Limited
Dividends received
Profit share
Shanghai Coloro Technology Co. Limited
Share of losses
Jumpshot Inc
Share of losses
Licencing revenue
Purchases of data
Transaction value
2019
2018
Balance outstanding at 31
December
2019
2018
0.5
0.1
0.1
0.1
(2.1)
0.5
0.4
(0.2)
(0.5)
0.8
(0.2)
0.4
0.1
0.2
0.1
–
–
0.6
–
–
–
–
–
–
0.1
0.1
2.0
–
–
-
-
–
–
–
–
0.2
0.1
4.4
–
0.9
–
–
–
–
*The option to convert the loan into equity in a new associated company was exercised in part in the second half of 2019. The balance outstanding shown is the remaining balance outstanding on the
loan.
Other than the compensation of key management personnel, set out in Note 6, there are no other related party transactions requiring disclosure under
IAS 24 “Related Party Disclosures”.
Ascential plc Annual Report 2019 / 147
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
27. Leases
The results for the year ending 31 December 2018 have been restated for the initial application of IFRS 16. The impact on the continuing consolidated
financial statements is shown below. Discontinued operations have not been restated for the impact of IFRS 16.
(£ million)
Consolidated statement of financial position
Non-current assets
Right of use assets
Deferred tax assets
Investment property
Current assets
Trade and other receivables
Current liabilities
Trade and other payables
Lease liabilities
Non-current liabilities
Lease liabilities
Net liabilities and adjustment to retained earnings on initial application of IFRS 16
(£ million)
Operating profit
Depreciation
Finance costs
Loss for the year
Cash generated from operations
Cash flow from financing activities
Net change in cash and cash equivalents
2019
2018
21.6
0.3
2.1
23.3
0.3
2.7
(0.9)
(1.2)
2.3
(9.4)
(17.4)
(1.4)
3.0
(9.0)
(20.4)
(1.3)
2019
2018
8.5
(7.3)
(1.3)
(0.1)
9.0
(9.0)
–
6.6
(5.4)
(1.2)
–
7.7
(7.7)
–
Leases as lessee
The Group leases commercial office space and photocopiers. Previously, these leases were classified as operating leases under IAS 17.
Information about leases for which the Group is a lessee is presented below.
148 / Ascential plc Annual Report 2019
Right of use assets
Right of use assets are presented as a separate line item on the statement of financial position and tabulated below.
(£ million)
Cost
At 1 January 2019
Recognition of right of use-assets on initial application of IFRS 16
Adjusted balance at 1 January 2019
Additions
De-recognition of right of use assets*
Effect of movements in exchange rates
At 31 December 2019
Depreciation
At 1 January 2019
Recognition of right of use assets on initial application of IFRS 16
Adjusted balance at 1 January 2019
Depreciation
De-recognition of right of use assets
Effect of movements in exchange rates
At 31 December
Net book value
At 31 December 2019
At 31 December 2018
Right of use assets
–
43.1
43.1
6.8
(0.9)
(1.0)
48.0
–
(19.9)
(19.9)
(7.3)
0.3
0.5
(26.4)
21.6
–
*Derecognition of the right of use assets during 2019 is as a result of negotiating an early termination of a contract.
Extension options
Some property leases contain extension options after the non-cancellable contract period. The Group assesses at lease commencement date whether
it is reasonably certain to exercise these options, and if so, the optional period is included within the lease term and therefore the calculation of the lease
liability. The Group reassesses whether is it reasonably certain to exercise the options if there is a significant event or significant changes in circumstances
within its control.
The Group has estimated that the potential future lease payments, should it exercise all the extension options, would result in an increase in lease liability
of £5.0 million.
Leases as lessor
On transition to IFRS 16, the Group has reassessed the classification of sub-leases of certain properties which were all classified as operating leases
under IAS 17 and they have been classified as finance leases. The Group has therefore recognised the net investment in the sub-lease within investment
property. The following table sets out a maturity analysis of the lease receivables, showing the undiscounted lease payments to be received after the
reporting date.
(£ million)
Less than one year
One to two years
Two to three years
Three to four years
Total undiscounted lease receivable
Unearned finance income
Net investment in the lease
2019
2018
1.1
1.0
0.2
–
2.3
(0.2)
2.1
1.0
1.1
0.9
0.2
3.2
(0.5)
2.7
Ascential plc Annual Report 2019 / 149
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
The net investment in the lease is presented within Investment property in the statement of financial position. The following presents the reconciliation of
the investment property:
(£ million)
Balance at 1 January
Recognition of investment property on initial application of IFRS 16
Adjusted balance at 1 January
Additions
Payments
Interest
Balance at 31 December
2019
2018
2.7
–
2.7
–
(0.7)
0.1
2.1
–
3.2
3.2
0.2
(1.0)
0.3
2.7
28. Commitment and contingencies
Contracted commitments for assets under construction including software at 31 December 2019 totalled £0.4 million (2018: £0.2 million).
29. Financial instruments and financial risk management
Information about the Group’s objectives, policies and processes for measuring and managing risk, the Group’s exposure to the risks arising from financial
instruments, and the Group’s management of capital is disclosed below.
A. Market risk
a) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US
Dollar and the Euro. Foreign exchange risk arises from future commercial transactions to which the Group is already committed, recognised assets and
liabilities and net investments in foreign operations.
Foreign currency movements impact on the consolidated income statement together with its cash flow profile and leverage ratio position. The impact
depends on whether there is a surplus or deficit in each currency from operating activities together with the interest and finance charge in those
currencies. The Group’s policy is to protect its cash flow and leverage ratio position by maintaining a proportion of currency debt in proportion to its
currency earnings to obtain natural offsets.
Net debt by currency was as follows:
Pounds Sterling
US Dollars
Euros
Other currencies
Total
Interest
rate caps
2019
Cash and
borrowings
–
0.2
0.1
–
0.3
(45.8)
(38.2)
(97.7)
10.8
2018
Cash and
borrowings
63.2
(37.1)
(141.7)
5.8
Total
(45.8)
(38.0)
(97.6)
10.8
Total
63.2
(37.1)
(141.7)
5.8
(170.9)
(170.6)
(109.8)
(109.8)
For each 1% movement in the euro to pounds sterling exchange rate has a circa £1.5 million (2018: £1.5 million) impact on the carrying value of
borrowings. Each 1% movement in the US Dollar to pounds Sterling exchange rate has a circa £0.7 million (2018: £0.8 million) impact on the carrying
value of borrowings.
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.
(£ million)
Increase in revenue/Adjusted EBITDA if:
Sterling weakens by 1% against US Dollar in isolation
Sterling weakens by 1% against Euro in isolation
2019
Revenue
2019
Adjusted
EBITDA
2018
Revenue
2018
Adjusted
EBITDA
1.9
1.2
0.8
0.8
1.5
1.0
0.7
0.7
150 / Ascential plc Annual Report 2019
b) Cash flow and interest rate risk
Interest rate risk arises from medium and long-term borrowings to the extent that the underlying debt instruments are not at fixed rates of interest.
The Group has entered into interest rate caps to convert a portion of its bank borrowings from fully floating to capped rates to mitigate this risk. As at
31 December 2019, the total notional amount of outstanding interest rate caps to which the Group is committed is £165.2 million (2018: £115.2 million).
The fair value of the interest rate caps as at 31 December 2019 was £0.3m (2018: £nil).
These interest rate caps are measured at fair value through profit or loss and are Level 2 financial instruments. These derivative instruments were not
traded in an active market and the fair value is determined by using third party valuations based on forward yield curves. This technique maximises the
use of observable market data where it is available and relies as little as possible on entity specific estimates. All significant inputs required to fair value
an instrument are observable.
In the year ended 31 December 2019, if interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group’s
finance costs for the year ended 31 December 2019 would have increased or decreased by £1.4 million (2018: £1.4 million).
The effective annual interest rate for year ended 31 December 2019 was 1.9% (2018: 2.3%).
B. Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and
financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. The maximum exposure to
credit risk at the reporting date is the fair value of the financial assets in the consolidated balance sheet as disclosed below.
a) Treasury-related credit risk
The Group has treasury policies in place which manage the concentration of risk with individual bank counterparties. Each counterparty has an individual
limit determined by their long-term and short-term ratings by Standard & Poor’s and Moody’s as well as their individual five-year Credit Default Swap
price. As at 31 December 2019, cash and cash equivalents totalled £111.7 million (2018: £182.0 million), of which 87% (2018: 97%) was held with banks
or financial institutions with long-term ratings of A-/A3 or better or short-term ratings of A-1/P-1.
In accordance with the Group’s treasury policies and exposure management practices, counterparty credit exposure limits are monitored and no
individual exposure is considered significant in the ordinary course of treasury management activity. The Company does not expect any significant losses
from non-performance by these counterparties.
b) Trading risk
Risk arises principally from payment default by customers. The general policy of the Group is not to risk assess all new customers and so retail credit risk
information has not been included in these consolidated financial statements. The Company does not, however, expect any significant losses in respect of
receivables that have not been provided for as shown in Note 17.
C. Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity in the form of sufficient cash or funding from adequate credit facilities to meet such
liabilities under both normal and stressed conditions.
The Group’s major banking facilities in place as of 31 December 2019 are detailed below:
(£ million)
As at 31 December 2019
Facility A
Facility B
Facility C
Revolving credit facility
Total facilities
As at 31 December 2018
Facility A
Facility B
Facility C
Revolving credit facility
Total facilities
Facility
Local
currency
Drawn
£
Local
currency
Final
maturity
£
Interest
£66.0
$96.0
€171.0
£95.0
£66.0
$96.0
€171.0
£95.0
66.0
72.7
145.1
95.0
378.8
66.0
75.1
153.0
95.0
389.1
£66.0
$96.0
€171.0
–
£66.0
$96.0
€171.0
–
66.0
72.7
145.1
–
283.8
66.0
75.1
153.0
–
294.1
Feb-21
Feb-21
Feb-21
Feb-21
LIBOR plus 1.5%
LIBOR plus 1.5%
LIBOR plus 1.5%
LIBOR plus 1.25%
Feb-21
Feb-21
Feb-21
Feb-21
LIBOR plus 1.75%
LIBOR plus 1.75%
LIBOR plus 1.75%
LIBOR plus 1.5%
Ascential plc Annual Report 2019 / 151
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
The Group’s undrawn facilities totalled £95.0 million (2018: £95.0 million) and represented the unutilised balance on the revolving credit facility which
matures in 2021. Refer to Note 30 for detail on new facilities.
The Group is required to adhere to a net leverage ratio covenant which is measured at December and June. The covenant ratio fell to 3.5x in June 2019
where it will remain until maturity of the facilities. The Group operated within this covenant limit during 2019.
The Group has a margin ratchet on its interest rate based on the leverage position reported in its semi-annual covenant compliance certificate. Due to the
leverage ratio reducing below 2.0x at the annual compliance certificate for 31 December 2018, the margins were reduced by 0.25% from April 2019 and
these remained unchanged for the remainder of 2019.
The following is an analysis of the contractual undiscounted cash flows from continuing operations payable under financial and derivative liabilities:
(£ million)
At 31 December 2019
Non-derivative financial liabilities
Borrowings
Interest payments on borrowings
Trade payables, accruals and other payables
Lease liabilities
Deferred and contingent consideration
Derivative financial liabilities
Derivative contracts - receipts
Total
At 31 December 2018, restated*
Non-derivative financial liabilities
Borrowings
Interest payments on borrowings
Trade payables, accruals and other payables
Lease liabilities
Deferred and contingent consideration
Total
Less than
one month
Between one
and three
months
Between
three and
twelve
months
In one
to two
years**
In two
to five
years***
In more than
five years
–
0.5
77.6
0.5
0.1
–
78.7
–
0.6
75.9
0.4
5.0
81.9
–
0.9
–
2.2
–
4.0
–
7.4
22.1
44.2
–
25.2
–
1.2
–
2.0
22.5
25.7
(0.3)
55.3
–
5.4
–
8.1
4.6
18.1
283.8
0.8
–
7.3
36.6
–
328.5
–
7.7
–
8.6
49.0
65.3
–
–
–
9.4
11.1
–
20.5
294.1
1.2
–
14.0
24.5
333.8
-
-
-
6.3
-
6.3
-
-
-
7.2
-
7.2
Total
283.8
6.2
77.6
33.1
114.1
(0.3)
514.5
294.1
16.1
75.9
40.3
105.6
532.0
* Trade payables, accruals and other payables and Lease liabilities are restated for initial application of IFRS 16 (see Note 27).
The financial and derivative liabilities are shown in the period in which they are due to be repaid. The interest payments on borrowings due in less than
one month represent the actual interest due, while the interest due greater than one month is an estimate based on current interest rates and exchange
rates. Cash flows in respect of borrowings represent contractual payments under the Group’s lending facilities in place as at 31 December 2019.
Borrowings as disclosed in Note 21 are stated net of unamortised arrangement fees of £1.2 million as at 31 December 2019 (2018: £2.3 million).
Both contingent consideration and acquisition-related employment costs are based on the future performance of the acquired business to which they
relate. Performance is assessed using forecast profits and the current three-year plan which is updated annually. Forecasts are inherently a source of
management estimation, resulting in a range of outcomes. As disclosed in the 2018 Annual Report, the Flywheel Digital earnout is contingent on results
for the financial years 2019 to 2021 and is payable in 2020 to 2022. The Flywheel Digital earnout is subject to a contractual maximum and the remaining
consideration which is dependent on the results in 2020 and 2021 is capped at £280 million. A one percent increase in results in 2020 and 2021 would
result in an additional payment of around £2.0 million.
Undiscounted future payments (£ million)
Contingent consideration
Acquisition related employment costs to the extent to which they are accrued at 31 December
Deferred consideration which is not impacted by performance
Deferred and contingent consideration
Anticipated future payments on acquisition-related employment costs
Deferred and contingent consideration including anticipated future payments on acquisition-related employment costs
2019
82.6
30.8
0.7
114.1
14.2
128.3
2018
74.7
25.7
5.2
105.6
16.8
122.4
152 / Ascential plc Annual Report 2019
D. Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to
shareholders through the optimisation of the debt to equity balance. The capital structure of the Group consists of debt, cash and cash equivalents
and equity attributable to equity holders of the parent comprising capital, reserves and retained earnings. The Group’s policy is to borrow centrally
to meet anticipated funding requirements. These borrowings, together with cash generated from the operations, are on-lent or contributed as equity
to subsidiaries at market-based interest rates and on commercial terms and conditions.
Financial instruments by measurement basis
The carrying amount of financial instruments by category is as follows:
(£ million)
Financial assets
Financial assets at fair value through profit or loss
Other investments, including derivatives
Interest in trade investments designation at fair value through profit or loss on initial recognition
Financial assets not measured at fair value
Trade receivables
Other receivables
Cash and cash equivalents
Total
Financial liabilities
Financial liabilities at fair value through profit or loss
Contingent consideration
Financial liabilities at amortised cost
Trade payables
Accruals
Interest accruals
Other payables
Deferred and contingent consideration
Lease liabilities
Borrowings
Total
* Restated for initial application of IFRS 16 (see Note 27).
Note
2019
Restated*
2018
14
17
17
18
20
19
19
19
19
20
27
21
1.7
12.3
74.3
50.0
111.7
250.0
–
0.8
64.2
29.2
182.0
276.2
68.4
59.7
10.6
24.2
0.4
42.8
34.0
9.4
283.8
473.6
10.3
32.2
0.4
33.4
23.7
29.4
294.1
483.2
The fair value of each category of the Group’s financial instruments approximates their carrying value in the Group’s consolidated balance sheet. Financial
instruments in the category “fair value through profit or loss” are measured in the consolidated balance sheet at fair value. Fair value measurements can
be classified in the following hierarchy:
• quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
• inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (Level 2); and
• inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2019:
2019
2018
(£ million)
Other investments,
including derivatives
Trade investments
Contingent consideration
(Note 20)
Level 1
Level 2
Level 3
–
–
–
1.7
–
–
–
12.3
68.4
Total
1.7
12.3
68.4
Level 1
Level 2
Level 3
Total
–
–
–
–
–
–
–
0.8
–
0.8
59.7
59.7
There were no movements between different levels of the fair value hierarchy in the year.
Ascential plc Annual Report 2019 / 153
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
30. Events after the reporting date
Refinancing
On 14 January 2020, the Group entered into a new 5 year multi-currency revolving credit facility (“RCF”) of £450 million with an accordion of up to a
further £120 million or 150% of EBITDA. The maturity of the facility may be extended at the option of the Group for up to two further one-year terms
subject to individual lender approval. The RCF is subject to interest of between 1.20% and 2.50% per annum over LIBOR or EURIBOR as appropriate.
The margin increases over a range of 1.00x to 3.25x net debt to EBITDA. The facility covenants include a maximum net leverage of 3.25x with the benefit
of an additional 0.5x leverage spikes for relevant acquisitions and a minimum interest cover of 3.00x and are tested semi-annually. Upon completion of the
new agreement, capitalised arrangement fees of £1.2m relating to the previous facility will be written off in 2020 as exceptional costs. We expect fees of
£3.9 million to be capitalised as part of the new arrangements and these shall be amortised over the expected life of the facility.
Jumpshot
In August 2019, we completed the acquisition of a 35% investment in Jumpshot, Inc., an analytics business providing market leading insights on digital
consumer engagement. Cash consideration including subsequent working capital contribution and acquisition expenses totalled £56.2 million. On 30
January 2020, we agreed to sell back our 35% ownership interest in Jumpshot to the majority owner, Avast plc, for cash consideration equivalent to our
cost of investment including expenses.
Share repurchase programme
On 20 February 2020, the Board approved a share repurchase programme of up to £120 million.
154 / Ascential plc Annual Report 2019
PARENT COMPANY
BALANCE SHEET
As at 31 December
(£ million)
Assets
Non-current assets
Investments
Debtors – due after more than one year
Current assets
Debtors – due within one year
Cash
Liabilities
Current liabilities
Creditors – due within one year
Net assets
Equity
Called-up share capital
Share premium
Group restructure reserve
Reserves
Total equity
The accompanying notes on pages 157-160 are an integral part of these financial statements.
Note
2019
2018
6
7
7
8
9
452.8
0.9
453.7
208.6
-
208.6
70.7
70.7
591.6
4.0
1.7
157.9
428.0
591.6
452.8
0.7
453.5
148.5
0.1
148.6
2.1
2.1
600.0
4.0
0.5
157.9
437.6
600.0
Ascential plc Annual Report 2019 / 155
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
PARENT COMPANY STATEMENT
OF CHANGES IN EQUITY
For the year ended 31 December 2019
(£ million)
At 1 January 2018
Loss for the year
Issue of new shares
Share-based payments
Taxation on share-based payments
Dividends
At 31 December 2018
Profit for the year
Issue of new shares
Share-based payments
Taxation on share-based payments
Dividends
At 31 December 2019
Share
capital
4.0
–
–
–
–
–
4.0
–
–
–
–
–
Share
premium
0.1
–
0.4
–
–
–
0.5
–
1.2
–
–
–
Reserves
Group
restructure
reserve
157.9
–
–
–
–
–
157.9
–
–
–
–
–
4.0
1.7
157.9
Retained
earnings
455.9
(1.4)
–
5.7
0.2
(22.8)
437.6
5.5
–
7.7
0.1
Total equity
617.9
(1.4)
0.4
5.7
0.2
(22.8)
600.0
5.5
1.2
7.7
0.1
(22.9)
428.0
(22.9)
591.6
The accompanying notes on pages 157-160 are an integral part of these financial statements.
156 / Ascential plc Annual Report 2019
NOTES TO THE COMPANY
FINANCIAL STATEMENTS
For the year ended 31 December 2019
1. Corporate information
Ascential plc (the “Company”) is a company incorporated in the United Kingdom under the Companies Act 2006 and listed on the London Stock Exchange.
The registered office is located at The Prow, 1 Wilder Walk, London W1B 5AP. The registered company number is 09934451. Ascential plc is the parent
Company of the Ascential Group (the “Group”) and its principal activity is to act as the ultimate holding company of the Group.
2. Company accounting policies
Basis of accounting
The Company meets the definition of a qualifying entity under Financial Reporting Standard 100 (“FRS 100”) issued by the Financial Reporting Council.
The financial statements have therefore been prepared in accordance with Financial Reporting Standard 102 (“FRS 102”), the Financial Reporting
Standard applicable in the UK and Republic of Ireland as issued by the Financial Reporting Council.
The Company presents its financial statements under FRS 102 issued by the Financial Reporting Council. As permitted by FRS 102, the Company has
taken advantage of the following disclosure exemptions:
• Presentation of a statement of cash flows;
• Disclosure of key management personnel compensation;
• Disclosure of related party transactions between wholly-owned subsidiaries and parents within a group;
• Disclosures required under IFRS 2 “Share-Based Payments” in respect of Group settled share-based payments;
• Disclosures required by IFRS 7 “Financial Instruments: Disclosures”;
• Certain disclosures required under IFRS 13 “Fair Value Measurement”; and
• Disclosure of information in relation to new standards not yet applied.
The financial statements have been prepared on a historical cost basis and on the going concern basis.
The Company’s financial statements are presented in pounds Sterling being the Company’s functional currency.
Going concern
A principal objective of the Group (of which the “Company” is the holding company), is to manage cash and debt to safeguard the Group’s ability to
continue as a going concern for the foreseeable future. The Group retains sufficient resources to remain comfortably in compliance with the financial
covenants of its bank facilities. The Directors have also assessed the Group’s prospects and viability over a three-year period. The Directors therefore
consider it appropriate to adopt the going concern basis in preparing the financial statements.
3. Income statement
The Company has taken advantage of the exemption offered by Section 408 of the Companies Act 2006 not to present its income statement. The profit
for the year to 31 December 2019 was £5.5 million (2018: loss of £1.4 million).
Fees paid to the auditor during the year for the audit of the Company accounts were £20,000 (2018: £20,000). Fees paid by the Company to the auditor
for other services was £nil (2018: £nil).
4. Principal accounting policies
Investments in subsidiaries
Subsidiaries are entities that are directly or indirectly controlled by the Company. Control exists where the Company has the power to govern the
financial and operating policies of the entity so as to obtain benefits from its activities. The investment in the Company’s subsidiaries is recorded at cost
less provisions for impairment. Carrying values are reviewed for impairment either annually, or more frequently if events or changes in circumstances
indicate a possible decline in carrying values. The Company uses forecast cash flow information and estimates of future growth to assess whether
investments are impaired. If the results of operations in a future period are adverse to the estimates used for impairment testing, an impairment may
be triggered at that point.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates
to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments in periods different from those
in which they are recognised in the financial statements. Timing differences are not provided for differences relating to investments in subsidiaries to the
extent that it is not probable that they will reverse in the foreseeable future and the reporting entity is able to control the reversal of the timing difference.
Deferred tax is not recognised on permanent differences arising because certain types of income or expense are non-taxable or are disallowable for tax or
because certain tax charges or allowances are greater or smaller than the corresponding income or expense.
Ascential plc Annual Report 2019 / 157
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE COMPANY FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or substantively enacted
at the balance sheet date. Deferred tax balances are not discounted.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal
of deferred tax liabilities or other future taxable profits.
Share-based payments
Certain employees of the Company receive part of their remuneration in the form of share-based payment transactions, whereby employees render
services in exchange for shares or rights over shares. The cost of equity-settled transactions with employees is measured at fair value at the date at which
they are granted. The fair value of share awards with market-related vesting conditions is determined by an external consultant and the fair value at the
grant date is expensed on a straight-line basis over the vesting period based on the Company’s estimate of shares that will eventually vest. The estimate
of the number of awards likely to vest is reviewed at each balance sheet reporting date up to the vesting date, at which point the estimate is adjusted to
reflect the actual outcome of awards which have vested. No adjustment is made to the fair value after the vesting date even if the awards are forfeited or
not exercised.
Where the Company grants options over its own shares to the employees of its subsidiaries, it recognises an increase in the cost of investment in its
subsidiaries equivalent to the equity-settled share-based payment charge recognised in the subsidiary’s financial statements with the corresponding
credit being recognised directly in equity. In cases where a subsidiary is recharged for the share-based payment expense, no such increase in investment
is recognised.
Shares held by the Employee Benefit Trust (“EBT”)
The EBT provides for the issue of shares to Group employees under share incentive schemes. The Company has control of the EBT and accounts for the
EBT as an extension to the Company in the financial statements. Accordingly, shares in the Company held by the EBT are included in the balance sheet at
cost as a deduction from equity.
5. Directors’ emoluments
The Company has two employees other than the Directors. Full details of the Directors’ remuneration and interests are set out in the Directors’
Remuneration Report on pages 91 to 97.
6. Investments
(£ million)
At 1 January
Additions
At 31 December
2019
452.8
–
452.8
2018
52.8
400.0
452.8
In the prior year the Company subscribed for 400,000,000 Ordinary £1 shares in Ascential Financing Limited. The consideration for the allotment
and issue of these shares comprised full and final settlement of the £400,000,000 loan balance due to the Company.
The Company’s subsidiaries and joint ventures are listed below. All subsidiaries are indirectly wholly owned by Ascential plc, with the exception
of Ascential financing Limited which is directly owned.
Name
United Kingdom
Ascential Financing Limited
Plexus Network Limited
4C Dormant Limited
Ascential Information Services Limited
Ascential Group Limited
Ascential PrefCo Limited
Ascential Operations Limited
CLR Code Limited
De Havilland Information Services Limited
Ascential America (Holdings) Limited
Ascential America Limited
Flywheel Digital Limited
Ascential UK Holdings Limited
Ascential Radio Financing Limited
Glenigan Limited
Cornwall Mining Services Limited
158 / Ascential plc Annual Report 2019
Key
Name
United Kingdom continued
Groundsure Limited
Ascential Events (Europe) Limited
Clavis Insight Limited
MediaLink Europe Limited
Edge by Ascential Limited
Rembrandt Technology Limited
4C Information Limited
Siberia Europe Limited
WGSN Group Limited
Worth Global Style Network Limited
WGSN Limited
BrandView Limited
ePossibilities Global (Holdings) Limited ePossibilities USA Limited
The Gunn Report Limited
WARC Limited
World Advertising Research Center Limited
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
Key
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
Name
United States
MediaLink, LLC
Planet Retail (USA) LLC
Money2020, LLC
Flywheel Digital LLC
Siberia LLC
Ascential Inc
France
Ascential Events France SAS
Ireland
Clavis Technology Limited
Jersey
Ascential Jersey Financing Limited
Brazil
2WH Assessoria Empresarial Ltda
Ascential Serviços de Informação Ltda
Mindset Comunicacao Marketing Ltda
Sistema Use Fashion Comércio de Informações Ltda
Germany
WGSN GmbH
Planet Retail GmbH
Key
Name
Spain
WGSN Intelligence España SL
South Africa
WGSN (Pty) Limited
Hong Kong
Stylesight Limited
WGSN (Asia Pacific) Limited
China
WGSN Business Information Consulting (Shanghai) Company Limited
US1
US1
US1
US2
US1
US1
FR1
Clavis Information Technology (Shanghai) Ltd
IR1
Ascential Events (HangZhou) Company Ltd
Stylesight Information Technology (Shanghai) Company Limited
Shenzhen Yimian Network Technology Company Limited
Turkey
WGSN Group Trend Forecasting Moda Danismanlik Hizmetleri
Limited Sirketi
Joint ventures
Asian Advertising Festival (Spikes Asia) Pte Limited (50% owned)
CTIC WGSN China Limited (51% owned)
Shanghai Coloro Technology Company Limited (30% owned)
JE1
BR1
BR1
BR1
BR2
GE1
GE2
Key
SP1
SA1
HK1
HK1
CH1
CH2
CH3
CH4
CH5
TU1
JV1
JV2
JV3
Key
UK1
JE1
BR1
BR2
US1
US2
FR1
IR1
Address
The Prow, 1 Wilder Walk, London W1B 5AP
44 Esplanade, St Helier, Jersey JE4 9WG
Rua Tabapuã 841, Conjunto 15, 1º Andar, São Paulo, Brazil 04533-013
Av. Unisomos, no. 950, Condomínio Padre Rick – 410, São João Batista, City of São Leopoldo, 93022-970, Brazil
2710 Gateway Oaks Drive, Suite 150N, Sacramento, California, CA95833, United States
7 St. Paul Street, Suite 820, Baltimore, Maryland MD 21202 , US
6 Place du Commandant Maria, Cannes 06400, France
7th floor, O’Connell Bridge House, D’Olier Street, Dublin 2, Ireland
GE1
Venloer Strasse 310-316, 50823 Cologne, Germany
GE2 Weserstraße 4, 60329 Frankfurt am Main, Germany
SP1
Aribau 175. Piso 1o 1a A 08036 Barcelona, Spain
SA1 Workshop17, 32 Kloof Street Gardens, Cape Town 8000, South Africa
HK1
CH1
CH2
CH3
CH4
CH5
TR1
SI1
JV1
JV2
JV3
Suite 3201-03, 32/F, Tower 1, The Gateway, Harbour City, 25 Canton Road, Tsimshatsui, Kowloon, Hong Kong
Unit 39 of 7/F, No.2, Building 2, 999 Middle Huaihai Road, Xuhui District, Shanghai, PRC
Room 3301, No. 10 Yu Tong Road, Jing An District, Shanghai, People’s Republic of China
Room 601, 603, 6/F, Building 2, Jiang Ning Tower, 27 Ningtai Road, Ningwei Town, Xiaoshan, Hangzhou, Zhejiang, PRC
Room 617, 28 Tan Jia Du Road, Putuo District, Shanghai, PRC
Room 1408, VIA Building, 9966 Shennan Avenue, Yuehai Street, Nanshan District, Shenzhen , Guangdong, PRC
Cevdetpasa Caddesi, No. 31/7 Bebek, 34342 Istanbul, Turkey
63 Market Street #09-01, The Bank of Singapore Centre, Singapore 04892
21 Media Circle, #05-05 Infinite Studios, Singapore 138562
Floor 5, Building 29, No. 1 Lane 618, Dingyuan Road, Songjiang District, Shanghai, PRC
Floor 2-4, Building 4, 300 Dingyuan Road, Songjian District, Shanghai, PRC
For the year ended 31 December 2019, the below companies were exempt from the requirement for audit of individual financial statements
due to a parental guarantee as per section 479 of the Companies Act 2006. Ascential plc has indirect holdings in these subsidiary undertakings:
• WGSN Group Limited, registration number 8256689
• Rembrandt Technology Limited, registration number 11120186
• Ascential UK Holdings Limited, registration number 537204
• The Gunn Report Limited, registration number 6217950
Ascential plc Annual Report 2019 / 159
Strategic reportGovernance reportFinancial statements Financial statements /CONTINUED
NOTES TO THE COMPANY FINANCIAL STATEMENTS continued
For the year ended 31 December 2019
7. Trade and other receivables
(£ million)
Debtors – due within one year
Amounts due from Group undertakings
Prepayments
Debtors – due after more than one year
Other debtors
Deferred tax asset
Total
Amounts due from Group undertakings are non-interest bearing, unsecured and repayable on demand.
Deferred tax asset
(£ million)
At 1 January
Deferred tax credit in equity
Deferred tax credit in income statement for the year
At 31 December
2019
2018
208.4
0.2
208.6
–
0.9
0.9
148.3
0.2
148.5
0.1
0.6
0.7
209.5
149.2
2019
0.6
(0.1)
0.4
0.9
2018
0.2
0.2
0.2
0.6
The Directors consider that it is more likely than not that there will be sufficient taxable profits in the Group in the future such as to realise the deferred
tax asset of the Company and therefore the asset has been recognised in these financial statements.
8. Creditors – due within one year
(£ million)
Amounts due to Group undertakings
Trade payables
Accruals
Other taxation and social security
Total
2019
67.6
0.2
0.5
2.4
70.7
2018
–
–
0.5
1.6
2.1
Amounts due to Group undertakings are non-interest bearing, unsecured and repayable on demand.
9. Share capital
Refer to Note 23 of the consolidated Group accounts.
10. Dividends
Refer to Note 24 of the consolidated Group accounts.
11. Related party transactions
The Company has taken advantage of the exemption under FRS 102 and therefore has not disclosed related party transactions with wholly owned
subsidiaries. The Company has no other related party transactions.
12. Commitments and contingencies
The Company was a guarantor to the Facilities Agreement described in detail in Note 29 and is also a guarantor to the new facility described in Note 30.
During the year the Company was a member of the Group cash pooling arrangement. This allows the Group to combine the liquidity of companies within
the Group in order to distribute such cash centrally as required. The Company is registered with H.M. Revenue & Customs as a member of the Ascential
Group Limited group for Value Added Tax and Pay As You Earn purposes and is therefore jointly and severally liable on a continuing basis for amounts
owing by other members of the Group in respect of their value added tax, income tax and national insurance contributions liabilities.
13. Events after the reporting date
After the reporting date, the Board of Directors proposed a final dividend of 4.0 pence per ordinary share for the year ended 31 December 2019.
Refer to Note 30 of the consolidated Group accounts, for details of other non-adjusting reportable events since the year end of 31 December 2019.
There were no other reportable events after 31 December 2019.
160 / Ascential plc Annual Report 2019
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Ascential plc
The Prow
1 Wilder Walk
London W1B 5AP
ascential.com