Hyve Group plc Preliminary Results Year ended 30 September 2019 3 - - PowerPoint PPT Presentation
Hyve Group plc Preliminary Results Year ended 30 September 2019 3 December 2019 Agenda Highlights Mark Shashoua Preliminary results Andrew Beach Transformation delivered Mark Shashoua TAG financials Andrew Beach Mark
3 December 2019
› Highlights Mark Shashoua › Preliminary results Andrew Beach › Transformation delivered Mark Shashoua › TAG financials Andrew Beach › Q&A Mark Shashoua & Andrew Beach
Preliminary results: year ended 30 September 2019 / 2
FY19 › Another strong year driven by the TAG programme despite challenging macro-economic conditions
7%
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 results: year ended 30 September 2019 / 4
Preliminary results
/ 5 Preliminary 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
£4.2m £7.0m Within guidance
£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
(£6.0m) (£5.3m) (£2.3m) £47.9m £10.7m £175.7m £220.7m FY18 Net Biennial & Timing Acquisitions & Disposals Launches & Cancellations FX Impact Underlying Trading 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
/ 6 Preliminary results: year ended 30 September 2019
25%
Top 10 TAG Rest of portfolio
LFL growth TOTAL 7% LFL growth Top 10 TAG 13% Average yield Top 10 TAG £309/sqm1 Average yield TOTAL £266/sqm1
1 Total group revenue / total group sqm (excluding AOW and Mining Indaba conferences)Preliminary results
/ 7 Preliminary results: year ended 30 September 2019
(£0.4m) (£0.5m) (£4.2m) £15.4m £4.7m £35.4m £50.4m FY18 Net Biennial & Timing Acquisitions & Disposals Launches & Cancellations FX Impact Underlying Trading 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
/ 8 Preliminary results: year ended 30 September 2019
Preliminary results
/ 9 Preliminary results: year ended 30 September 2019
£152m revenue booked for FY20
1
Represents 66% of consensus LFL increase
Excellent FY20 revenue visibility
Preliminary results
/ 10 Preliminary results: year ended 30 September 2019
Strong LFL revenue growth; Top 10 TAG events double-digit growth Step change towards sustainable
Profit growth significantly above revenue growth
/ 11 Preliminary results: year ended 30 September 2019
/ 12
› 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
Transformation delivered
Changing customer expectations
Preliminary results: year ended 30 September 2019
Transformation delivered
“To create the world’s leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for our customers.”
/ 13 Preliminary results: year ended 30 September 2019
Transformation delivered
Product-led Acquisitions Manage the Portfolio Create a Scalable Platform
Underpinned by a performance-led culture
TAG Programme
/ 14 Preliminary results: year ended 30 September 2019
Transformation delivered
/ 15 Preliminary 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
TAG improvements since FY16 › 37% more space sold › Visitor NPS improved from +8 to +28 › Revenue per exhibitor up 55% › Overall revenue up 67%
/ 16 Preliminary results: year ended 30 September 2019
FY16 FY19
Transformation delivered
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%
/ 17 Preliminary 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
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 / 18 Preliminary results: year ended 30 September 2019
May 2017 Sep 2019
269 130 52% Revenue £134m2 £221m3 64% Revenue per event £0.5m £1.7m 240%
Transformation delivered
1 Launch of TAG, May 2017 2 FY16 reported revenue 3 FY19 reported revenue269 events 130 events
May 2017 Closed Divested Acquired Sep 2019
89 65 15
Manage the portfolio Product-led acquisitions
/ 19 Preliminary results: year ended 30 September 2019
1
Transformation delivered
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
/ 20 Preliminary results: year ended 30 September 2019
Transformation delivered
Focus on customer proposition between events Operational integration with Africa Oil Week Sector expansion in Germany Grow international events to scale in China Launch hosted buyers programme Investigate new markets over the longer term Re-edit events and add new sectors Visitor acquisition teams to target online and major chains Re-edit events to improve customer experience Focus on key accounts Grow international events to scale Launch hosted buyers programme Investigate new markets over the longer term
/ 21 Preliminary 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 event1
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
Investment plans
/ 22 Preliminary results: year ended 30 September 2019
FY13 FY14 FY15 FY16 FY17 FY18 FY19
Headline operating profit Costs
Revenue and headline operating profit
29% 36% 35% 31%
£134m £136m £175m £192m
£153m £176m £221m
23% 22% 25% +18%
CAGRTransformation delivered
TAG
/ 23 Preliminary results: year ended 30 September 2019
Andrew Beach
/ 24 Preliminary results: year ended 30 September 2019
TAG financials
£20m
One-off Costs Mix
Capex Opex - Exceptional Best Practice Infrastructure & Systems Invest in Show Operations Performance Culture Capability & Talent
Investment by Transformation Lever
FY17 £6-7m FY18 £8-10m FY19 £4-6m Plan FY18 £7.0m FY19 £4.2m FY20 forecast £3.8m FY17 £5.0m Actual
/ 25 Preliminary results: year ended 30 September 2019
TAG financials
Target Original plan Revised Status Positive ROI FY20 FY19 Delivered early ROI > WACC FY21 FY20 Ahead Cash payback FY21 FY21 Ahead1
/ 26
Preliminary results: year ended 30 September 2019
£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)
+5%
+11% +7%
TAG financials / 27 Preliminary results: year ended 30 September 2019
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 / 28 Preliminary results: year ended 30 September 2019
TAG financials
1.4 1.3 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%
/ 29 Preliminary results: year ended 30 September 2019
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%
+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 exhibitor
4
£7.4k £6.0k +23%
TAG financials
1 LFL event revenue / LFL sqm (excluding AOW conference) 2 For FY20 at 1 Oct 2019 3 For FY17 at 1 Oct 2016 4 TAG events excluding AOW conference/ 30 Preliminary results: year ended 30 September 2019
FY18 FY19 FY20 Revenue growth Margin growth EPS growth
TAG financials / 31 Preliminary results: year ended 30 September 2019
Mark Shashoua
/ 32 Preliminary results: year ended 30 September 2019
/ 33 Preliminary 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
Will continue to look for product-led acquisitions and further optimise the portfolio Trading currently in line with expectations
Mark Shashoua & Andrew Beach
/ 34 Preliminary results: year ended 30 September 2019
/ 35 Preliminary results: year ended 30 September 2019
Appendices
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/ 36 Preliminary results: year ended 30 September 2019
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)
/ 37 Preliminary results: year ended 30 September 2019
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
/ 38 Preliminary 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
Appendices
FY19
/ 39 Preliminary results: year ended 30 September 2019
Appendices
Metres Revenue Headline 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
(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%
/ 40 Preliminary results: year ended 30 September 2019
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
Appendices
35% Top 10 Rest of portfolio
May 2017 (launch of TAG) September 2019
/ 41 Preliminary results: year ended 30 September 2019
Appendices
(2.3p) 1.5p 0.7p 0.1p 4.9p 4.9p FY18 Increase in profits due to acquisitions Increase in underlying profits Decrease in NCI profits Change in no. of shares in issue FY19
/ 42 Preliminary 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
Derecognition of goodwill on cessation of trade Non-cash
(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 / 43 Preliminary results: year ended 30 September 2019
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)
/ 44 Preliminary results: year ended 30 September 2019
Appendices
Deferred Consideration – Cash Settle £m Financial Year Payable ABEC 1.0 2020 1.0 Puts & Calls - Cash Settle £m Financial Years1 Fasteners
Indobuild 1.9 2020 Scoop
1.9 Puts & Calls - Equity Settle £m Financial Years1 ABEC 13.0 2020 13.0
1 Earliest financial year Puts & Calls are exercisable/ 45 Preliminary results: year ended 30 September 2019
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/ 46 Preliminary results: year ended 30 September 2019
Appendices
(£82.7m) (£111.7m) £51.2m (£25.6m) (£12.1m) (£32.5m) (£0.2m) (£9.8m) September 2018 Cash Flow from Operations (excl. TAG) Dividends & Tax TAG Acquisitions & Disposals FX Net Other September 2019
/ 47 Preliminary results: year ended 30 September 2019
Appendices
Venue Loans / Prepayments FY19 FY18 £m £m Russia
Central Asia 0.2 0.2 Total 0.2 4.9
/ 48 Preliminary results: year ended 30 September 2019
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
/ 49 Preliminary results: year ended 30 September 2019
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/ 50 Preliminary results: year ended 30 September 2019
Appendices
Country of Shareholder % of Total Shares
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 34.1 Legal & 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
/ 51 Preliminary results: year ended 30 September 2019
Appendices / 52 Preliminary results: year ended 30 September 2019
Event Quality & Potential Higher Lower Growth Market tailwind Mature Stable, mature market Challenged Facing 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
Scale
Pricing, show value and content to drive yield and retention Manage pro- actively, solve issues across commercial, content and
Top priority Medium priority Low priority
89 less profitable
shows discontinued since start of TAG Successful disposal
and ITE Expo (Russian non-core) Continue to review all options for less profitable shows
Onsite re-booking, sales commissions
Core
Appendices
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)
/ 53 Preliminary results: year ended 30 September 2019
1 Now owned by Hyve Appendices
Phase 1 Quick screening Phase 2 Thorough analysis Phase 3 Due diligence Phase 4 Transaction Objective “be effective” “identify pearls” “don’t miss risk” “fair deal”
Activity Screen maximum #
... employing set of clear criteria Assessment of concrete potential for Hyve Strategic / market DD Financial DD Synergy estimate Integration planning Final price negotiation Deal 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 Growth and Profit Margin International Roll Out Potential ROIC EPS Accretion
/ 54 Preliminary results: year ended 30 September 2019