Shares in specialist information and data analytics company Ascential (ASCL) shed 8% to 207p after it cancelled the Cannes Lions Festival, which generates over half its marketing revenues, and shelved the final dividend.

The firm's marketing division generated £136m of revenues last year, and broker Shore Capital reckons the June event accounted for around £73m.

Although the company didn’t provide a precise operating profit for the event, operating profit for the marketing division was £27m, equating to a quarter of 2019 group profits.

The annual festival has run since 1954 and brings together the world’s biggest brands and creative communications companies.

The company is working with partners and suppliers to minimise irrecoverable costs already spent on Festival, which will now take place in June next year.

The firm had already moved the date of its Money20/20 Asia event in Singapore from March to August 2020 due to travel restrictions in the region.

COST SAVINGS

While the cost base will be trimmed, management is mindful of the importance of maintaining the firm’s capability to deliver a strong event in 2021. The passing of the final dividend of 4p per share will save £15m.

Previously planned salary increases across the firm will be suspended and directors will temporarily take a 25% cut in fees. At the full-year results (24 February) the company announced a £120m share repurchase programme, which presumably will be suspended although there was no mention of it in today’s update.

Management had previously guided for strong organic revenue growth and 2020 revenues of £425m to £455m against £416m in 2019.

The company also forecast a margin on earnings before interest, tax, depreciation and amortisation (EBITDA) of 30% to 32% prior to the coronavirus outbreak.

Ascential refinanced its debts in January, putting in place a £450m revolving credit facility which matures in January 2025, and expects to operate well within its covenant limit of 3.3 times EBITDA at the next testing date in June 2020.

Net debt at the financial year-end was £171m, representing 1.3 times EBITDA.

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Issue Date: 03 Apr 2020