Infor orma ma Announcement Presentation 30th January 2018 ......
INFOR ORMA Stephe hen n A. Carter, Group up Chi hief Execut utive Cha harlie McCur urdy, CEO, Global Exh xhibitio tions Pa Patrick Martell, CEO, Busine ness Int ntelligenc nce Gare reth Wri right, Grou roup Finan ance Dire rector or Ques Qu estions From Ian Ian Whittak aker, r, Liberu rum Will Pac acker, r, Exan ane BNP Pari aribas as Patrick Welling Pa ngton, n, Morgan n Stanl nley Chr hris Collett, Deutsche he Bank nk
In Introd roduction on Stephe hen n A. Carter, Group up Chi hief Execut utive Good morning everybody and thank you very much for coming and welcome to this morning’s presentation. I'm appreciative that there are a good number of people here in the room today given that this is relatively short notice. I would like to draw attention in particular to Tim Cobbold and Marina Wyatt from UBM. As is clear from today’s announcement this is a recommendation from the Boards of both companies. Just as a practical matter I’m going to give the presentation and Tim and Marina will be around afterwards at the end if folks want to ask them questions, but try and avoid throwing them hardball questions during the presentation - that would be great. I thought I’d start with the disclaimer for obvious reasons. And then really go to the beginning of the things that I’d like to say today. And if you’ll forgive me I’m not going to start with the numbers. I’m going to start with the reasons why we are excited about what we are proposing today and that’s because what we’re seeking to do is to create a fine company. Ours is 100% a people business, Tim’s business is 100% a people business and the purpose of putting the two companies together is to create a better people business. The numbers of people will be just over 11,000, the locations will be in really most parts of the world and materially in the major growth economies of the world. And in substance there will no material change to those numbers. You will have read in the statement we released today that there will be some synergies; we put a number out there of £60m. I’ll predict now there will be questions about how much, when, how fast, how much more? And behind that number lies people and some of those synergies will be people, there will be some head office jobs and administrative roles that are duplicative and that will move. But if you want to put some real people thoughts behind that our estimate of the number of roles that are duplicative and we won’t need in the new company, it is probably the equivalent to the attrition rate in the combined company every two months, the natural turnover of the business. So for those people who are watching this who are working in both companies the prize here isn’t the synergies, the synergies are important but the prize is what we create. And what we create is a business that I think will have real potential and real possibility and we’ll talk hopefully as much about that as we will about the short term important, but nevertheless, short term synergies. Both these companies many of you have been following for some time. I said jokingly to somebody who came in, what do you think? He said well you know I’ve always liked UBM and I said - I know so now you have to like us a little bit more too. Both these companies have been through a lot of changes in the last few years. In our company our Growth Acceleration Plan, we set out very clearly just over four years ago that we wanted to change the business, we wanted to become a much more US focussed
business. We wanted to build a position in the market that we now know As B2B Exhibitions. We wanted to repair our Information Services business. We wanted to take a view of our long held Conference business that there was value in there but to get to that value we had to make some radical changes to the portfolio and frankly to some of the processes and people. And at the same time Tim and Marina have been doing a similar task within UBM, that business has become much more focused, it’s become a pure play business with a very high quality portfolio of brands in multiple markets. I’ve said to a number of you here that if you look at the two companies, particularly the B2B events businesses it’s like a jigsaw puzzle where Tim has been given half the pieces and I’ve been given half the pieces and you put them together and you end up with a business that really looks first class. The complementarity of the portfolio is really first class. The other point is both these companies are having this conversation from a position of strength. We’ve put out today some trading numbers for 2017 which I’ll talk about a little more, but you’d be happy to present either of those sets of numbers. Both these businesses are on a track to growth and particularly on a track to growth in their B2B events business. And the deal will produce a range of benefits, some of which are up here and I’ve put the synergy number right at the front because when we were forced to put out - or advised to put out an announcement slightly earlier. They were obviously some missing information and for the market that’s always challenging because you’ve got half of the picture or 60% of the picture. We have been working collaboratively with Tm and Marina and their team and collaboratively with the independent party who has been verifying what these synergies really could be. And what you see today is a verifiable number of £60m of synergies which we can roughly split half and half between people costs and non-people costs. And in the document today it breaks it down to a level of granularity is what the source of some of those synergies can be. There are no numbers around the revenue synergies but we see revenue synergies and I’ll talk through those and I’ll give you a specific example of how we’ve approached that in other areas. So as I say both of the businesses are on a growth track, both at the revenue line and increasingly in the way in which the businesses are managing their cash position. The portfolio fit is near perfect, there is I think virtually no revenue leakage in the combination of these two portfolios and a high level of in market by geography and by vertical complementarity.
Both businesses are very productive in their generation of cash and Marina and Gareth have both been very focussed on improving the cash management, cash conversion and cash discipline in both businesses. The proposal will be earnings accretive; it will see a return on invested capital albeit a little further out than we would do for a transaction of a smaller scale. It gives the business a very nice quality of earnings, the predictability, the visibility of the earnings, the type of earnings and the spread of the earnings across the portfolio and I’ll unpick that a little bit. And we’ve stated very clearly that the combined company will be committed to its forward positon on the dividend. One of the advantages of being encouraged to make a statement to the market slightly earlier than we might have planned is it’s allowed us to have some feedback from shareholders and indeed from others about a series of questions, what’s in people’s minds. And I would say the key question that has come time and time again is - I think I could go as far as to say I don’t think anybody had questioned the industrial logic of the combination, indeed some people have suggested that we’ve been here before. Although I would make the point that when the companies have been here before, and indeed I’ve been involved before in one of these conversations, they were very different companies than they are today both in portfolio and in activity and to a degree in performance. But many people have asked the question, well why now, why is now the right time to put the companies together? And what we’ve tried to lay out here is some of the reasons why the fit is really compelling. The portfolio I have talked about, both of us have been I think quite selective in the way in which we have added brands and businesses and verticals in geographic positions over the last period. To a point whereby there really is a near perfect overlap. The markets are strong, I don’t mean the equity markets, I mean the markets we sell in to. B2B trading and selling, the industrialisation of distribution sales and cross border activity grows and grows particularly in the markets in which we trade. If you’ve spent time in Asia and in China, in the Middle East, in Africa, in South America, in North America, these markets are strong, they’re active, they’re industrial, they’re productive. And if you are in those markets in depth, the opportunity to provide more products and more services to your customers is compelling. Both businesses are on a growth track, both businesses have been building capability whether it be systems capability, people capability or brand capability. And the medium term view of the judgement we’ve made is that the track of opportunities ahead of us is attractive. And that leads us to the view that now is a good time to make the proposal we’re making today. Sadly in the nature of these things we haven’t only had one question, we’ve had many. And I’ve thrown up here about 20 of the questions which we will try and touch on - some of them in the presentation and I’m sure we’ll get to the remainder and maybe others in the Q&A.
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