hyve group plc relations...fy13 fy14 fy15 fy16 fy17 fy18 fy19 headline operating profit costs...
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Hyve Group plcPreliminary Results
Year ended 30 September 20193 December 2019
› Highlights Mark Shashoua
› Preliminary results Andrew Beach
› Transformation delivered Mark Shashoua
› TAG financials Andrew Beach
› Q&AMark Shashoua & Andrew Beach
Agenda
Preliminary results: year ended 30 September 2019 / 2
HighlightsFY19
› Another strong year driven by the TAG programme despite challenging macro-economic conditions
o LFL revenue growth 7%
o LFL profit growth 16%
Transformation delivered
› Portfolio transformed since launch of TAG - 15 acquired events fully integrated and 154 events closed or divested
› Ahead of plan on all TAG investment targets
› Built a centralised operating model and returned the business to sustainable growth
Preliminary results: year ended 30 September 2019 / 3
Preliminary resultsAndrew Beach, CFO
Preliminary results: year ended 30 September 2019 / 4
FY19 highlightsPreliminary results
/ 5Preliminary results: year ended 30 September 2019
FY19 FY18
Revenue £220.7m £175.7m LFL growth 7%
Headline PBT £50.4m £35.4m LFL growth 16%
Operating profit margin 25.3% 22.0% Increase of 3.3pp
TAG costs one-off £4.2m £7.0m
Within guidanceongoing £8.0m £7.5m
Net debt £111.7m £82.7m <2x EBITDA, within guidance
Headline diluted EPS 4.9p 4.9p In line with expectations
Dividend 2.5p 2.5p Maintained at 2x EPS cover
Revenue bridge
(£6.0m)
(£5.3m)(£2.3m)
£47.9m
£10.7m
£175.7m
£220.7m
FY18 Net Biennial& Timing
Acquisitions& Disposals
Launches &Cancellations
FX Impact UnderlyingTrading
FY19
£m
Ascential/ Mining Indaba
62.5
ITE Expo (Russia)/ Central Asia/Other
(14.6)
£m
TRY (1.4)
RUB (0.8)
INR (0.5)
Other 0.4
£m
Russia 6.6
AOW 1.2
Breakbulk 0.6
Other 2.3
Preliminary results
/ 6Preliminary results: year ended 30 September 2019
Top 10 TAG events drove higher revenue growth
25%Top 10 TAG
Rest of portfolio
LFL growthTOTAL 7%
LFL growth Top 10 TAG13%
Average yield Top 10 TAG £309/sqm1
Average yieldTOTAL £266/sqm1
1 Total group revenue / total group sqm (excluding AOW and Mining Indaba conferences)
Preliminary results
/ 7Preliminary results: year ended 30 September 2019
Headline PBT bridge
(£0.4m)
(£0.5m)
(£4.2m)
£15.4m
£4.7m
£35.4m
£50.4m
FY18 Net Biennial& Timing
Acquisitions& Disposals
Launches &Cancellations
FX Impact UnderlyingTrading
FY19
£m
Revenue Translational
(2.3)
Cost Translational 1.5
Translational (0.8)
Transactional (B/S) (3.4)
£m
Ascential /Mining Indaba
17.6
ITE Expo (Russia) / Central Asia / Other
(2.2)
Preliminary results
/ 8Preliminary results: year ended 30 September 2019
Preliminary results
Strong revenue visibility for FY20
1 Booked at 29 November 2019 at actual event rates for past events and at FX rates at 28 November 2019 for future events / 9Preliminary results: year ended 30 September 2019
£152m revenue booked
for FY201
Represents 66% of
consensus
LFL increase of 4%
Excellent FY20 revenue visibility
Financial summaryPreliminary results
/ 10Preliminary results: year ended 30 September 2019
Strong LFL revenue growth;
Top 10 TAG events double-digit
growth
Step change towards sustainable operating margins
Profit growth significantly above
revenue growth
Mark Shashoua, CEO
Transformation delivered
/ 11Preliminary results: year ended 30 September 2019
/ 12
Historical context prior to TAG programme
› Exhibitors demand Return on Investment
› Visitors demand Return on Time
› Greater emphasis on learning and
networking within a business community
FY13 FY14 FY15 FY16
Headline operating profit Costs
Revenue decline and unsustainable margins
29%36%35%31%
£134m£136m
£175m£192m
-11%CAGR
Transformation delivered
Changing customer expectations
Preliminary results: year ended 30 September 2019
Our vision
Transformation delivered
“To create the world’s leading portfolio ofcontent-driven, must-attend events
delivering an outstanding experience and ROI for our customers.”
/ 13Preliminary results: year ended 30 September 2019
Transformation delivered
Transformation and Growth programme
Product-led Acquisitions
Managethe Portfolio
Create a Scalable Platform
Underpinned by a performance-led culture
TAG Programme
/ 14Preliminary results: year ended 30 September 2019
Transformation delivered
Scalable operating model created
/ 15Preliminary results: year ended 30 September 2019
Invested in show operations
Built capability & talent
Built fit-for-purpose IT infrastructure & systems
Drove a performance culture
Created best practice functions & teams
Transformation delivered
Breakbulk Europe
TAG improvements since FY16
› 37% more space sold
› Visitor NPS improved from +8 to +28
› Revenue per exhibitor up 55%
› Overall revenue up 67%
/ 16Preliminary results: year ended 30 September 2019
FY16
FY19
Transformation delivered
Africa Oil Week
TAG improvements since FY17*
› Delegate NPS (FY18-19)** improved from +18 to +32
› Paid delegates (FY17-19) up 33%
› Overall revenue (FY17-19) up 40%
/ 17Preliminary results: year ended 30 September 2019*Hyve took full ownership of AOW in May 2017, i.e. FY17**Delegate NPS figures first recorded in FY18
FY16*
FY20
Transformation delivered
Strengthened KPIs from our Top 10 TAG events
New customer service team helps exhibitors
maximise success
Systematic lead generation drives
growth
New business (FY18-19) increased by >25%
Exhibitor NPS (FY16-19) increased from +3 to +14;
industry average is -17*
New high quality content attracts
key visitors
Visitor NPS (FY16-19)increased from +14 to +28;
industry average is +7**
* UFI & Explori, Global Exhibitor Insights, November 2017 Edition**UFI & Explori, Global Visitor Insights, 2018/19 Edition
/ 18Preliminary results: year ended 30 September 2019
May 2017 Sep 2019
No. of events 269 130 52%
Revenue £134m2 £221m3 64%
Revenue per event £0.5m £1.7m 240%
Quality of portfolio improved since launch of TAG
Transformation delivered
1 Launch of TAG, May 20172 FY16 reported revenue3 FY19 reported revenue
269 events
130events
May 2017 Closed Divested Acquired Sep 2019
89
65
15
Manage the portfolio
Product-led acquisitions
/ 19Preliminary results: year ended 30 September 2019
1
Transformation delivered
A more balanced geographical footprint
12%
16%
14%
11%
47%
FY17 Revenue
ESE
Asia
Global Brands
Central Asia
23%
10%
9%
8%
28%
22%
FY19 Revenue
Russia
ESE
Asia
Global Brands
Central Asia
UK
Russia
/ 20Preliminary results: year ended 30 September 2019
Transformation delivered
Integration of acquisitions is complete
Focus on customer proposition between events
Operational integration with Africa Oil Week
Sector expansion in GermanyGrow international events to scale in ChinaLaunch hosted buyers programme Investigate new markets over the longer term
Re-edit events and add new sectorsVisitor acquisition teams to target online and major chains
Re-edit events to improve customer experienceFocus on key accountsGrow international events to scale Launch hosted buyers programmeInvestigate new markets over the longer term
/ 21Preliminary results: year ended 30 September 2019
Reinvesting half of the synergies to drive future growth
Integration
Synergies
Investment plans
1 Moda was an existing Hyve event
1
Division Acquired events FY19 FY20 FY21
UK Ascential events Inherited trajectory Stabilise Grow
Global Brands Ascential events Inherited trajectory Grow Grow
Global Brands Mining Indaba Inherited trajectory Grow Grow
Transformation delivered
Targeted trajectory for recent acquisitions
Investment plans
/ 22Preliminary results: year ended 30 September 2019
Returned the business to sustainable growth
FY13 FY14 FY15 FY16 FY17 FY18 FY19
Headline operating profit Costs
Revenue and headline operating profit
29%36%35%31%
£134m£136m
£175m£192m
-11%CAGR
£153m£176m
£221m
23% 22% 25%
+18%CAGR
Transformation delivered
TAG
/ 23Preliminary results: year ended 30 September 2019
Andrew Beach
TAG financials
/ 24Preliminary results: year ended 30 September 2019
TAG financials
One-off TAG programme investment
£20m
One-off Costs Mix
Capex Opex - ExceptionalBest Practice Infrastructure &
SystemsInvest in Show
OperationsPerformance
CultureCapability& Talent
Investment by Transformation Lever
FY17 £6-7m FY18 £8-10m FY19 £4-6mPlan
FY18 £7.0m FY19 £4.2mFY20
forecast £3.8m
FY17 £5.0mActual
/ 25Preliminary results: year ended 30 September 2019
TAG financials
Ahead of plan on all TAG investment targets
1 Original plan delivery expected H2 FY21; revised to H1 FY21
Target Original plan Revised Status
Positive ROI FY20 FY19 Delivered early
ROI > WACC FY21 FY20 Ahead
Cash payback FY21 FY21 Ahead1
/ 26Preliminary results: year ended 30 September 2019
Industry-leading growth after years of decline
£192m
£175m
£136m £134m
£153m
£176m
£221m
£120m
£140m
£160m
£180m
£200m
£220m
£240m
FY13 FY14 FY15 FY16 FY17 FY18 FY19
Revenue
LFL growth / (decline) -10% -12% -8% +5% +11% +7%
TAG financials
/ 27Preliminary results: year ended 30 September 2019
Sustainable margins
31%
35%36%
29%
23%22%
25%26%
27%
20%
25%
30%
35%
40%
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24
Operating profit margin
TAG investment period
City consensus
Reinvestment
TAG financials
/ 28Preliminary results: year ended 30 September 2019
Net debt within guidance
TAG financials
1.41.3
2.0
1.9
1.4
1.0
0.5
1.0
1.5
2.0
2.5
FY16 FY17 FY18 FY19 FY20 FY21
Net debt :EBITDA
City consensus
TAG corridor 1.5x – 2.0x
Average cash conversion
FY17-19 > 100%
/ 29Preliminary results: year ended 30 September 2019
Operational delivery of TAG
FY19 FY16 Variance
Yield
Average yield (per SQM)1
– TAG £252 £187 +35%
Average yield (per SQM)1
– Total £225 £183 +23%
Yield growth versus inflation +3% -13% +16pp
Revenue visibility
Onsite rebook 47% 0% >100%
Forward bookings 62%2
53%3
+9pp
Sales performance
Revenue per employee £177k £95k +86%
Revenue per exhibitor4
£7.4k £6.0k +23%
TAG financials
1 LFL event revenue / LFL sqm (excluding AOW conference)2 For FY20 at 1 Oct 20193 For FY17 at 1 Oct 20164 TAG events excluding AOW conference
/ 30Preliminary results: year ended 30 September 2019
On track to deliver our 3-year guidance
FY18 FY19 FY20
Revenue growth
Margin growth
EPS growth
TAG financials
/ 31Preliminary results: year ended 30 September 2019
Mark Shashoua
Summary & Outlook
/ 32Preliminary results: year ended 30 September 2019
Summary & Outlook
/ 33Preliminary results: year ended 30 September 2019
£143m1
(of £158.6m2)= 90% of
total revenue
£200m3
(of £213.6m)= 94% of
consensus
£147m1
(of £220.7m2)= 67% of
total revenue
£143m1
(of £230.7m)= 62% of
consensus
Returned the business to sustainable
growth
TAG programme puts us in a strong position in current
environment
Expect margins to continue to grow
Focus is on continuous
improvement to drive sustainable organic growth
Will continue to look for
product-led acquisitions and further optimise
the portfolio
Trading currently in line with expectations
Q&AMark Shashoua
& Andrew Beach
/ 34Preliminary results: year ended 30 September 2019
AppendicesPreliminary Results
Year ended 30 September 2019
/ 35Preliminary results: year ended 30 September 2019
Appendices
“Create a scalable platform” targets ahead of plan
Positive ROI
Plan Within 3 years (FY20)
Update Within 2 years (FY19)
FY17 FY18 FY19 FY20 FY21 FY22
TAG plan Update
In-year net operating profit after tax (“NOPAT”)
Positive ROI in FY 2019
1
ROI > WACC1
Plan Within 4 years (FY21)
Update Within 3 years (FY20)
Cash Payback
Plan Within 4 years (FY21)
Update Within 3.5 years (FY21)
2
3
1 Based on May 2017 WACC / 36Preliminary results: year ended 30 September 2019
Consolidated income statement
Appendices
Headline Results FY19 FY18
£m £m
Revenue 220.7 175.7
Gross Profit 87.4 68.0
Gross Profit Margin 40% 39%
Admin Expenses/Operating Income (38.8) (39.1)
FX (1.1) 2.2
Profit from Associates 8.3 7.6
Operating Profit 55.8 38.7
Operating Profit Margin 25% 22%
Net Finance Costs (5.4) (3.3)
PBT 50.4 35.4
EPS 4.9p 4.9p
Statutory Reconciliation FY19 FY18
£m £m
Headline PBT 50.4 35.4
Adjusting Items (41.7) (39.1)
Statutory PBT 8.7 (3.7)
/ 37Preliminary results: year ended 30 September 2019
Divisional analysis
Appendices
FY19 FY18
Revenue £m
HPBT £m
Revenue £m
HPBT £m
Global Brands 49.7 20.3 11.5 2.1 › Ascential Events and Mining Indaba acquisitions
Asia 23.2 9.4 25.7 10.2› Impact of biennial› Profit supported by strong growth from Sinostar joint venture
Central Asia 19.8 5.0 24.5 7.2› Timing differences› Some recovery from oil prices
E/S Europe 16.7 5.8 15.2 4.4› Impact of biennial, offset by FX impact› LFL growth in revenue
Russia 62.6 25.9 73.3 24.3› Strong performance of core events, offset by currency impact and non-core disposals› Largest allocation of TAG investment
UK 48.7 15.5 25.5 8.9 › Ascential Events acquisition
Other Income 0.9 0.9 › Management fee income from associates
Central Costs (25.9) (21.5) › Smaller proportion of enlarged Group’s cost base
FX (loss)/gain (1.1) 2.2 › Balance sheet retranslation of monetary assets and liabilities
Net Finance Costs (5.4) (3.3) › Increased interest cost from borrowings to fund Ascential Events and Mining Indaba acquisitions
Total 220.7 50.4 175.7 35.4
/ 38Preliminary results: year ended 30 September 2019
28%
16%
7%9%
7%
3%
10%
8%
6%6%
FY17
17%
15%
14%
8%8%
7%
7%
6%
5%
5%4% 4%
Build & Interiors
Retail
Food & Packaging
Education Technology
Fashion
Manufacturing Industrial Technology
Transport & Logistics
Connect
Energy
Travel & Tourism
Advanced Technologies
Beauty & Healthcare
Revenue by sector
Appendices
FY19
/ 39Preliminary results: year ended 30 September 2019
Appendices
Metres RevenueHeadline Profit
Before Tax
000s £m £m
FY18
Results from events 766 175.7 35.4
Biennial (26) (4.7) (1.7)
Timing (12) (4.3) (1.1)
Non-recurring (33) (5.3) (0.5)
Disposals (64) (14.6) (2.2)
Recurring events b 631 146.8 29.9
FY19
Acquisitions 139 62.5 17.6
Launches - - -
FX translation - (2.3) (4.2)
LFL change a (1) 10.7 4.7
FY19
Recurring events 769 217.7 48.0
Timing 2 0.6 0.6
Biennial 12 2.4 1.8
Results from events 783 220.7 50.4
LFL growth (a/b) 0% 7% 16%
/ 40Preliminary results: year ended 30 September 2019
Performance analysis
Event name Region
Spring Fair UK
MosBuild Russia
BETT (London) Global Brands
WorldFood Moscow Russia
Autumn Fair UK
CWIEME Berlin Global Brands
Mining Indaba Global Brands
MITT Russia
RosUpack Russia
Aquatherm Moscow Russia
Event name Region
MosBuild Russia
WorldFood Moscow Russia
MITT Russia
Aquatherm Moscow Russia
TurkeyBuild E/S Europe
Acetech Mumbai Asia
MIOGE Russia
RosUpack Russia
YugAgro Russia
Breakbulk Europe Global Brands
43%
Top 10 Rest of portfolio
Top 10 events by revenue
Appendices
35%
Top 10 Rest of portfolio
May 2017 (launch of TAG)September 2019
/ 41Preliminary results: year ended 30 September 2019
Headline diluted EPS bridge
Appendices
(2.3p)1.5p
0.7p 0.1p
4.9p 4.9p
FY18 Increase in profitsdue to acquisitions
Increase inunderlying profits
Decrease inNCI profits
Change in no. ofshares in issue
FY19
/ 42Preliminary results: year ended 30 September 2019
FY19 FY18
£m £m
Operating items
Amortisation of acquired intangible assets Non-cash (24.1) (13.6)
Impairment of assets Non-cash - (7.5)
Derecognition of goodwill on cessation of trade Non-cash - (2.2)
(Loss)/Gain on disposal Non-cash (3.2) 2.9
Transaction costs Cash (1.4) (8.0)
Integration costs and costs of realising synergies Cash (6.8) (2.7)
Restructuring costs Cash (4.2) (7.6)
Tax on income from associates and joint ventures Non-cash (1.9) (1.6)
Financing items Revaluation of assets and liabilities on completed acquisitions and disposals Non-cash (0.1) 1.2
Total (41.7) (39.1)
Appendices
/ 43Preliminary results: year ended 30 September 2019
Adjusting items
Appendices
FY19 FY18
£m £m
Non-current assets
Goodwill and intangible assets 480.6 469.1
Other non-current assets 52.8 50.5
533.4 519.6
Current assets
Trade debtors 36.0 34.7
Prepayments 17.5 12.5
Other current assets 8.8 19.4
62.3 66.6
Creditors
Net debt (111.7) (82.7)
Deferred revenue (80.0) (77.6)
Trade and other payables (34.4) (46.5)
Deferred consideration and equity option liabilities (13.9) (15.2)
Net deferred tax liabilities (32.1) (36.2)
Provisions (1.8) (3.1)
(273.9) (261.3)
Net assets 321.8 324.9
(60.9) (76.9)
/ 44Preliminary results: year ended 30 September 2019
Consolidated balance sheet
Future consideration
Appendices
Deferred Consideration – Cash Settle
£mFinancial Year
Payable
ABEC 1.0 2020
1.0
Puts & Calls - Cash Settle
£m Financial Years1
Fasteners - 2020
Indobuild 1.9 2020
Scoop - 2020
1.9
Puts & Calls - Equity Settle
£m Financial Years1
ABEC 13.0 2020
13.0
1 Earliest financial year Puts & Calls are exercisable / 45Preliminary results: year ended 30 September 2019
Banking facility
Appendices
£146m
£14m
At 30 September 2019
Drawn
Undrawn
› Net debt - £111.7m
› 1.9x headline EBITDA
› Available Facility – £160m (and £30m accordion)
› Drawn Facility – £146m1
› Term loan £65m amortising at £17.5m / £17.5m / £30m;
balance RCF
› Interest Rate – LIBOR + 2-2.75%
› 2.5x net debt:EBITDA covenant
› Term – November 2021
1 Shown on Balance Sheet as £145m, net of capitalised refinance fees / 46Preliminary results: year ended 30 September 2019
Net debt bridge
Appendices
(£82.7m)
(£111.7m)£51.2m
(£25.6m)
(£12.1m)
(£32.5m)
(£0.2m)
(£9.8m)
September 2018
Cash Flow fromOperations(excl. TAG) Dividends & Tax TAG
Acquisitions& Disposals FX Net Other September 2019
/ 47Preliminary results: year ended 30 September 2019
Venue relationships
Appendices
Venue Loans / Prepayments FY19 FY18
£m £m
Russia - 4.7
Central Asia 0.2 0.2
Total 0.2 4.9
/ 48Preliminary results: year ended 30 September 2019
Cash generated from operations
Appendices
FY19 FY18
£m £m
Statutory operating profit 14.2 (1.6)
Adjustments 29.4 22.1
Operating cash flows before movements in working capital 43.6 20.5
Working capital movements (3.2) 7.8
Cash generated from operations 40.4 28.3
FY19 FY18
£m £m
Cash generated from operations 40.4 28.3
Interest received 1.0 0.6
Interest paid (6.4) (3.9)
Tax paid (11.5) (9.6)
Free cash flow from the business 23.5 15.4
/ 49Preliminary results: year ended 30 September 2019
Consensus forecast1
Appendices
Consensus Minimum Maximum
2020
Turnover (£m) 230.7 227.0 237.2
Headline profit before tax (£m) 55.1 54.5 55.7
Headline diluted EPS (p) 5.3 5.1 5.4
Net debt (£m) 91.1 83.6 97.4
2021
Turnover (£m) 240.3 235.6 248.6
Headline profit before tax (£m) 59.5 58.6 60.8
Headline diluted EPS (p) 5.7 5.5 5.8
Net debt (£m) 68.5 49.2 82.6
1 Based on analyst forecasts to 29 October 2019 / 50Preliminary results: year ended 30 September 2019
Shareholder structure as at 31 October 2019
Appendices
Country of Shareholder % of Total Shares No. of Shares (millions)
RWC Partners UK 15.3 113.5
Brandes Investment Partners USA 11.4 84.4
Fidelity Management & Research UK, USA 9.1 67.5
Bestinver Asset Management Spain 5.2 38.5
BlackRock UK 4.9 36.1
Invesco Canada 4.6 34.1Legal & General Investment Management
UK 4.5 33.2
Amiral Gestion France 4.1 30.7
JO Hambro Capital Management UK 4.0 29.3
Vanguard Group USA 3.2 23.9
Directors 0.3 2.0
Other institutions and individuals 33.4 248.4
Total Shares in Issue 100 741.6
/ 51Preliminary results: year ended 30 September 2019
Managing the portfolio
Appendices
/ 52Preliminary results: year ended 30 September 2019
Event Quality & Potential Higher Lower
GrowthMarket tailwind
MatureStable, mature market
ChallengedFacing market or competitive threat
Large>£1.0m revenue
Medium£0.5m-£1.0m revenue
Small<£0.5m revenue
Non-Core
Use full suite of transformational levers
Enable sales & marketing to drive volume growth
Invest in content and shows to drive great customer experience
Sc
ale
Pricing, show value and content to drive yield and retention
Manage pro-actively, solve issues across commercial, content and operations
Top priority
Mediumpriority
Lowpriority
89 less profitable
shows discontinued since start of TAG
Successful disposal of TradeLink, ECMI
and ITE Expo (Russian non-core)
Continue to review all options for less profitable shows
Onsite re-booking, sales commissions
Core
Source of acquisitionsAppendices
Acquisitions likely to come from the following sources:
£143m1
(of £158.6m2)= 90% of
total revenue
Non-core assets (e.g. Mining Indaba acquisition by Hyve)
Bolt-on market-leading events which
will accelerate our geo-clone strategy
(e.g. Bett Brazil acquisition by
Ascential Events1)
Owner-operated founders looking for someone to take the business to the next
level (e.g. Money 2020 acquisition by
Ascential Events)
/ 53Preliminary results: year ended 30 September 20191 Now owned by Hyve
Product-led acquisitions
Appendices
Phase 1 Quick screening
Phase 2Thorough analysis
Phase 3Due diligence
Phase 4Transaction
Objective “be effective” “identify pearls” “don’t miss risk” “fair deal”
Activity Screen maximum # of shows...... employing set ofclear criteria
Assessment of concrete potential for Hyve
Strategic / market DDFinancial DDSynergy estimate
Integration planning
Final price negotiationDeal structuring (e.g. earnout)
M&A funnel
Example Screening Criteria
Size
Distinct Customer Value Proposition
Structurally Attractive Market for Exhibitions
High Growth Underlying Market
Organic Revenue Growthand Profit Margin
International Roll Out Potential
ROIC
EPS Accretion
/ 54Preliminary results: year ended 30 September 2019