Hyve Group plc: 2019 Preliminary Results Announcement.
ITE Group announced its change of name and new brand identity, Hyve Group plc.
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GMF news - World Trade Fair Guide. Turin, December 6, 2019 – Transformation & Growth Programme (TAG) delivered, driving sustainable revenue growth and margin expansion
Financial highlights | Year to 30 September 2019 | Year to 30 September 2018
Volume sales 783,000 SQM 766,000 SQM
Revenue £220.7m £175.7m
Headline profit before tax1 £50.4m £35.4m
Statutory profit/(loss) before tax £8.7m £(3.7)m
Headline operating profit margin1 25% 22%
Headline diluted earnings per share1 4.9p 4.9p
Diluted earnings per share 0.4p (1.6)p
Full year dividend per share 2.5p 2.5p
Net debt1 £111.7m £82.7m
• 7% like-for-like1 revenue growth
• £220.7m revenue (2018: £175.7m) up 26% largely due to acquisitions
• Top 10 TAG events1 grew 13% like-for-like following implementation of TAG initiatives
• Headline profit before tax of £50.4m (2018: £35.4m); 16% like-for-like growth
• Statutory profit before tax of £8.7m (2018: loss of £3.7m) after amortisation of intangible assets, transaction related costs and one-off TAG costs
• Full year dividend cover1 maintained at two times cover
• Net debt movement reflects acquisitions and TAG initiatives; maintained within two times EBITDA1
• Forward bookings1 of £152m already contracted for FY20, representing 66% of market consensus and up 4% on a like-for-like basis
Strategy update
• Integration of Ascential Events and Mining Indaba acquisitions completed
• Strengthened portfolio with the sale of 56 non-core Russian events and the closure of 24 small Russian and Central Asian events during the year
• Successful delivery of the transformation element of the TAG programme has led to an evolved vision, a new way of working and an invigorated culture, culminating in a new brand
• TAG has fundamentally transformed the business to:
- A more balanced international presence from a purely emerging-markets focus
- A centralised operating model from a decentralised federal organisation
- A premium product business from a geographic market-share led company
- A diverse portfolio of market-leading events from a portfolio of mixed quality
• The portfolio has halved since the launch of TAG – 269 events (May 2017) to 130 events – yet overall revenue has increased by 64%2
• Returned the business to sustainable growth
• On track to deliver all TAG investment targets ahead of schedule
Mark Shashoua, CEO of Hyve Group plc, commented:
“I am delighted that our first set of results as Hyve show like-for-like revenue growth of 7%, as well as a like-for-like increase in headline profit before tax of 16% and strong margin improvement. Double digit revenue growth from our Top 10 TAG Events was a key driver of this performance and is proof of the benefits of the TAG programme.
We are on a mission to deliver unmissable events, with a stronger and more diversified portfolio. The investments we have made to improve our portfolio through the TAG programme and our focus on must-attend events means that we are well-placed to continue to deliver further growth in FY20. While not immune from global economic and geopolitical uncertainties, including Brexit, forward bookings of £152m, representing 66% of market consensus, give us very good visibility as we enter FY20.
We are confident that with the investments we have made into our market-leading events, we are in a better position to face any potential global headwinds. We will look for opportunities to increase our customer market share, as during downturns customer spend often gravitates towards market-leading events.
Current trading for FY20 is in line with the Board’s expectations and we enter the new financial year with a stronger portfolio of events than ever before.”
Notes to Editors
1. In accordance with the Guidelines on APMs issued by the European Securities and Markets Authority (ESMA), additional information is provided on alternative performance measures (APMs) used by the Group in the Glossary. In the reporting of financial information, the Group uses certain measures that are not required under IFRS. These additional measures provide additional information on the performance of the business and trends to stakeholders and are defined in the Glossary.
2. Compared to FY16 revenue, the last reported annual results pre-TAG.
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Chairman’s statement
Significant transformation and growth Performance
The last three years have seen significant change for Hyve Group plc. The management teams’ ambitious vision has led the company to centralise its operating model, improve its systems, complete significant acquisitions of market-leading events, integrate and restructure new teams, relocate its HQ, as well as sell or close a number of less profitable events. Finally, this culminated in the launch of an inspiring new corporate identity at the end of the year, to support the business going forward.
The TAG programme, which we announced in 2017 remains ahead of plan on all investment targets and l am happy to report that this has led to industry leading organic growth. As the TAG programme draws to a close in 2020, the business will consider this phase of its transformation complete.
Revenue for 2019 increased to £220.7m (2018: £175.7m), a 7% increase on a like-for-like basis, while statutory profit before tax increased to £8.7m (2018: loss of £3.7m). Headline profit before tax increased to £50.4m (2018: £35.4m), a 42% increase on last year, and headline diluted EPS was 4.9p (2018: 4.9p), in line with last year after the full-year impact of the additional shares issued through last year’s rights issue.
On behalf of the Board, I would like to thank every colleague who has contributed to the business over the last 12 months for their continued passion and dedication to this company and its events.
Shareholder returns
The Group maintains its dividend policy, with dividends declared and paid twice annually to shareholders. The Group’s dividend policy aims to achieve an appropriate balance between providing an immediate return to shareholders and reinvesting in the business to pursue growth opportunities and deliver a longer-term return. Prior to any dividend declaration, consideration is given to the availability of distributable reserves, the ability for the Group to remain within its available banking facility, stay compliant with its covenant targets and retain sufficient cash for working capital purposes. Dividend cover is typically maintained at greater than two times headline diluted earnings per share.
Board changes
Earlier this year, Neil England stepped down from his position as Non-Executive Director, following ten years on the Board. During this time, Neil held the post of Senior Independent Director and acted as Chairman for a period of nine months. I would personally like to thank Neil for his guidance and expertise throughout his time here and wish him well for the future.
We are pleased to welcome Nicholas Backhouse to the Board. Nicholas, who joined on 1st May 2019, brings extensive experience at Board level, including non-executive roles at Guardian Media Group plc, Hollywood Bowl Group plc and Loungers plc.
Following the AGM in January 2020, Nicholas will replace Stephen Puckett as Chair of the Audit Committee and continue the excellent work which Stephen has been leading. Stephen will remain on the Audit Committee and will also become the Chair of the Risk Committee, in addition to having taken up the role of Senior Independent Director and the employee representative on the Board.
It is the Board’s intention to seek to appoint an additional Non-Executive Director during 2020 to complement the skills of the existing Board Members.
Outlook
After the TAG programme, the Group will continue to benefit from the best practices, globally standardised ways of working and a centralised operating model introduced over the last three years. Having now professionalised the business and implemented best practice, the Group will now introduce innovative and efficient ways of operating to amplify the impact of the revenue growth being delivered.
This positions the Group well to continue to drive growth, both organically and through selective acquisition.
Despite uncertainty both economically and geopolitically across many of our markets, we remain confident in the future growth prospects of the Group. The focus on quality introduced through the TAG programme has increased the resilience of our portfolio and positions our market-leading events well to gain market share as customers refocus both their time and investment.
Chief Executive Officer’s statement
Our business is all about quality and globally consistent best practice
2019 has been a successful year and I’m pleased to be able to report strong year-end financial results. We have delivered a third consecutive year of growth, with revenues of £220.7m (2018: £175.7m), a like-for-like increase of 7%. Our top 10 TAG events have collectively delivered double-digit growth, which is attributable to our highly-successful Transformation and Growth programme.
We are reporting a headline profit before tax of £50.4m (2018: £35.4m) and a profit before tax of £8.7m (2018: loss before tax of £3.7m). This reflects the full year impact of the acquisitions we made in 2018 and 2019, combined with our strong underlying trading growth across most markets.
We have good visibility of our forward bookings for 2020, representing 66% of city consensus, and remain confident of continuing our growth trajectory.
Delivery on Transformation and Growth programme
This year has been all about delivery. We launched our Transformation and Growth (TAG) programme back in 2017, identifying three key pillars to drive our transformation. These three pillars were – building a scalable platform, managing our portfolio and making product-led acquisitions. We have now built our scalable platform, which encompassed creating a centralised operating model and defining consistent global processes and best practice ways of working. With TAG almost complete, we are starting to realise the return on the investments we have made.
At the same time, we have been working towards completion of the technology transformation, which has seen us implement new customer relationship management software, roll out a global, cloud-based people system, connect our international teams through Skype for Business and establish a 24/7 IT service. The end results of this are improved collaboration on a global scale, more intelligent management information enabling us to make better decisions, one global view of our customers which opens opportunities for international sales and flexibility to work anywhere, at any time and on any device.
Launch of Hyve brand
We also launched our new company brand, Hyve, to our 1,200 colleagues around the world, and our new company values. The values were created through a process whereby we listened to hundreds of opinions and voices from around the business and the final values were launched at the same time as our new brand. They’re already being used across the company and we look forward to them guiding how we work in the future.
Our business has a clear vision, well defined strategy and a renewed energy. These significant changes signify that we are now a fundamentally different business.
Our previous brand name and identity were no longer fit for purpose after our significant transformation, so it was time for a change. Our new name and identity are a better reflection of who we are now and capture our ambitions for our future.
The benefits we’re already seeing include an increase in pride within our teams, fantastic reactions and strengthened relationships from our customers and a much more effective employer brand which will support us when hiring the very best people across the world.
The Hyve icon is a mark of quality and reflects events which are premium quality, centred around human connections and forever improving. Our new corporate brand will strengthen our event brands, and this was clearly visible at the recent Africa Oil Week in Cape Town, which was the first Hyve event.
Product-led acquisitions
Over the course of the TAG programme we have greatly enhanced our portfolio through the product-led acquisitions we have made. We have strengthened our Global Brands division with the acquisitions of Bett, CWIEME and Mining Indaba, and have created a new UK division following the acquisition of Pure, Glee and Spring and Autumn Fair. The integration of these events is now complete.
We will continue to prioritise product-led acquisitions that will benefit from the scalable platform we have created and have been building a pipeline of potential opportunities. We will analyse that pipeline and actively look for future acquisitions which meet the criteria we outlined under the TAG programme.
Managing the portfolio
We will continue to review our portfolio to ensure that all of the shows we own are market-leading or have the potential to become market-leading. In October 2018 we completed the substantial sale of 56 smaller, regional Russian events and in December 2018 closed the loss-making Siberian business. This has given a greater focus to the must-attend shows in Moscow which have a better potential for continued growth.
We will continue to review the compatibility of all our events with our ambitions and, where deemed necessary, would consider selling or closing any events which no longer align with our strategy.
Strong platform for growth
Now that the TAG programme is largely complete, we are a fundamentally different business. Whilst the transformation component of the programme has ended, we will continue to work on our growth. Driving organic growth, making product-led acquisitions and managing our portfolio will remain our strategic focus.
As well as enhancing our portfolio of events, we are focusing on organic growth opportunities for our current portfolio of events. This could be through a variety of initiatives such as launching new adjacent sectors; one great example of this is the launch of Pawexpo, the new pet tradeshow, which will premiere at our next Glee event in September.
As an international events organiser we recognise that we are exposed to macroeconomic factors outside our control. However, we believe that due to the investment we have made into products, people and systems, the headwinds currently faced present opportunities for a business like ours since as, in times of economic uncertainty, there is a flight to quality. When times are harder and budgets tighter there is a move to attend just the market-leading show, as the one place where everyone wants to do business.
Of course, headwinds such as Brexit, geopolitical instability in Turkey and a global economic slowdown more generally, can affect our business and we are not immune to this. However, rather than see this as a threat to our prospects we are excited by the opportunities for winning customer market share that this presents.
Priorities for 2020
We have three strategic priorities for 2020.
The first is to embed our new company values: brilliant work, rich connections, fresh thinking and collective buzz. Already, these values have instilled a new sense of direction and purpose for our teams and we are seeing people make better decisions and create more innovative and collaborative team strategies as a result.
Secondly, we will work towards obtaining a greater customer market share. We will do this by continuing to invest in our events and helping our customers to define and realise a greater return on investment and time. We aspire to build loyalty and continue to grow retention among our existing customers as well as bring in new customers from competitor shows that do not offer the same returns.
Finally, we will optimise, simplify and innovate within our business model. As we reach the final stage of the TAG programme, our focus will shift more externally to improving the way we work with our customers. We will be analysing how we can make it even easier for our customers to do business with us and attend our shows, ensure our events are truly unmissable and create an environment that facilitates the richest connections possible between buyers and sellers at our events. We will also look to refine our new systems and processes to create further efficiencies.
Due to the progress we have made throughout the TAG programme, we have good visibility of our forward bookings for next year and are confident in our outlook for 2020.
Chief Financial Officer’s statement
Sustainable revenue growth at improved profit margins
Overview
Revenue
Revenue for the year was £220.7m (2018: £175.7m), up 7% on a like-for-like basis. This growth has been achieved despite headwinds in a number of the Group’s markets and demonstrates the benefits of establishing a strong portfolio of market leading events. Deferred income has increased to £80.0m (2018: £77.6m), despite having disposed of a number of events in Russia and Azerbaijan and closed our Siberian business but after adding Mining Indaba to the portfolio. On a like-for-like basis forward bookings at 30 September 2019 were up 4%.
Profit before tax
The Group reported a profit before tax of £8.7m (2018: loss before tax of £3.7m), after including adjusting items of £41.7m (2018: £39.1m). The return to a statutory profit before tax is attributable to the acquisitions of Ascential Events and Mining Indaba in 2018 combined with strong underlying trading growth. Share of results of associates and joint ventures have increased to £6.4m (2018: £5.9m), following strong performance from the Chinacoat event, operated by our joint venture, Sinostar, and the stronger biennial year for our Russian joint venture, ITE MF.
Headline profit before tax is an alternative performance measure used by the Group to measure underlying trading performance. After excluding adjusting items, headline profit before tax was £50.4m (2018: £35.4m). On a like-for-like basis headline profit before tax has grown by 16%, building on the growth achieved in the previous year, and is significantly ahead of the rate of like-for-like revenue growth.
Earnings per share
Basic and diluted EPS were 0.4p (2018: (1.6)p). The Group achieved headline diluted EPS of 4.9p (2018: 4.9p). Headline diluted EPS is unchanged despite significant profit growth year-on-year as a result of the full-year impact of the higher number of shares in issue following the rights issue to fund the Ascential Events acquisition in July 2018.
Cash flow
Cash conversion[1] for the year was 94% (2018: 113%). The reduction reflects slower cash conversion at the acquired Ascential Events business compounded by Brexit uncertainty, which is causing some customers to withhold cash payments until later in the cycle, closer to the event dates. Action has been taken to improve cash conversion toward the end of the year which has had a positive impact and this will remain an ongoing area of focus in 2020, particularly whilst we face increased global macroeconomic pressures. Despite lower cash conversion, due to the Group’s business model concerns over recoverability are limited.
Net debt at the year-end has increased to £111.7m from (30 September 2018: £82.7m) primarily as a result of additional drawn debt to fund the acquisition of the Mining Indaba event from Euromoney in October 2018 (total upfront consideration of £20.0m and deferred consideration paid in the year of £8.7m), and £2.6m of deferred consideration paid to Ascential plc. Excluding the net impact of acquisitions and disposals, cash flow from operations was sufficient to cover the Group’s dividends, tax paid and the TAG costs incurred in the period.
At 30 September 2019, £146.2m of a total available £160.0m was drawn on the Group’s banking facility. Bank loans presented in the Statement of Financial Position are £144.7m, net of £1.5m of capitalised borrowing costs.
Headline reconciliation
In addition to the statutory results, headline results are presented, which are the statutory results after excluding a number of adjusting items, as the Board consider this to be the most appropriate way to measure the Group’s performance. In addition to providing a more comparable set of results year-on-year, this is also in line with similar adjusted measures used by our peer companies and therefore facilitates comparison across the industry.
The adjusting items presented are consistent with those disclosed in the previous year. The adjusting items have been presented separately in order to report what the Board consider to be the most appropriate measure of underlying performance of the Group and to provide additional information to users of the Annual Report.
ITE Group rebrands itself as Hyve Group
Hyve Group CEO Mark Shashoua Unveiled the new brand in London on 20th September. This rebrand reflects the evolution of the Group's business resulting from its Transformation and Growth programme (TAG) announced in May 2017 and now nearing completion.
The Group's vision, enabled through the TAG programme, is to create the world's leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for customers. Through the TAG investment we have built a dynamic scalable platform, improved processes and enhanced systems, completed the acquisitions of Ascential Events and Mining Indaba, as well as the disposal or closure of over 150 events. These significant developments have led to the creation of a stronger and more diversified portfolio, with a focus on market-leading events.
Introducing Hyve Group plc
Hyve Group plc is a next generation global events business whose purpose is to create unmissable events, where customers from all corners of the globe share extraordinary moments and shape industry innovation. Hyve Group is a fundamentally different business and has transformed into:
• A global presence not purely focused on emerging markets
• A centralised operating model not a decentralised federal organisation
• A premium product business not a geographic market-share led company
• A Group of market-leading events rather than a broad portfolio of mixed quality
Unveiling Hyve Group plc Mark Shashoua, CEO, said:
"Today, we launch our new brand identity, Hyve, to move us into the future, with a clear vision, well defined strategy and a renewed energy. We have transformed the Group into a next generation global events business, and our new name is a better reflection of who we are now and captures our ambitions for our future.
Since taking the helm in 2016, the Group has fundamentally changed from a portfolio of decentralised, emerging markets events into a global business, focused on running market-leading events, wherever they may be in the world.
We are now in a better position than ever before. Following four years of decline, FY18 was the second consecutive year of like-for-like growth, including double-digit growth from our Top 10 events, and was the first year of growth in both volume and yield since 2014.
As Hyve, we are on a mission to deliver unmissable events. We believe our model gives us a distinctive competitive edge as customer needs evolve and we aspire to set the standard for our industry."
Change of TIDM, website address and other information
It is expected that trading in the Company's shares will commence under the new name Hyve Group plc and the new ticker code "HYVE" with effect from 24 September 2019. The Company's ISIN (GB0002520509) and SEDOL number (0252050) remain unchanged. The Company's website will be available at www.hyve.group with effect from today.
The change of name will not affect any shareholders' rights. No new share certificates will be issued in respect of existing ordinary shares held in certificated form. Shareholders should retain their existing share certificates, which will remain valid.
The name change has been approved by the board of directors, in accordance with the Company's articles. The change of name was registered with Companies House on 20 September 2019 and is now effective.
For further information please contact:
Hyve Group plc
Mark Shashoua, CEO/ Andrew Beach, CFO/
Melissa McVeigh, Group Director of Communications
+44 (0)20 3545 9000
melissa.mcveigh@hyve.group
FTI Consulting
Charles Palmer / Emma Hall / Chris Birt
+44 (0)20 3727 1000
Numis
Nick Westlake /Matt Lewis
+44 (0)20 7260 1000
About Hyve Group plc
Hyve Group plc is a next generation global events business whose purpose is to create unmissable events, where customers from all corners of the globe share extraordinary moments and shape industry innovation. Hyve Group plc was announced as the new brand name of ITE Group plc in September 2019, following its significant transformation under the Transformation and Growth (TAG) programme. Our vision is to create the world’s leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for our customers.
Where business is personal, where meetings move markets and where today’s leaders inspire tomorrow’s.
https://hyve.group
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