an introduction to hyve group plc.../ 3 introduction to hyve group plc –december 2019 mark...

An Introduction to Hyve Group plc

December 2019

› Our Senior Executive team p3

› Our business model p4

› Market overview p7

› 2017 strategic review p10

› Transformation delivered p18

› TAG financials p30

› FY19 results p39

› Appendices p46

Contents

/ 2Introduction to Hyve Group plc – December 2019


Mark Shashoua – Chief Executive Officer

› Appointed CEO in September 2016

› Previously CEO of i2i Events Group, (events arm of

Ascential) from 2011, led the professionalisation

and diversification of the business, turning it from

double-digit CAGR decline to one of consistent

organic CAGR growth

› Second-generation and prominent figure in the international events

industry

› From 2001, he was a co-founder and Chief Executive Officer of

Expomedia Group Plc and from 2009-2011, Mark was the operating

partner of Advent International, a leading private equity fund

› One of the founding members of the Hyve group (then ITE) which

grew organically from 3 people to over 800 and 80 shows. He led the

floatation of the business in 1998 as CEO, and was a board director

until 1999.

Andrew Beach – Chief Financial Officer

› Appointed CFO in October 2016 and is Chairman of

Hyve’s Risk Committee

› Previously the Chief Financial and Operating

Officer of Ebiquity plc, spent nine years overseeing

the rapid expansion of the business to 20 offices in

14 markets, employing over 900 staff

› Prior to joining Ebiquity, he spent nine years at PwC as part of the

Entertainment and Media assurance practice where he qualified as a

Chartered Accountant (ICAEW) in 2000

› Andrew headed up the PwC UK Publishing sector knowledge network

and managed a portfolio of large media clients

Our Senior Executive Team

Our business model


Connecting peopleOur business model


EXHIBITORSuse our events to satisfy all of their marketing needs: to transact, market their brand, launch a product, educate the sector, deploy thought leadership or steer their industry.

VISITORScome to our events to

learn, experience, develop their skills,

find inspiration, meet new contacts or buy products.

Hyve Group provides market-leading , face-to-face platforms where communities can come together to achieve all of this within a high-

quality exhibition experience.

Our business model

Our revenue is generated through multiple streams

87% of our revenue is generated from exhibitors, with each exhibitor paying for floor space at an event, and many taking technical services (such as stand construction and furniture).

Usually, visitors attend for free (with a few exceptions). Some events benefit from sponsorship revenue.

We do things the Hyve way so exhibitors, visitors and sponsors choose us

MARKET-LEADING:We focus on market-leadingevents, so that we have the highest value propositionfor exhibitors and visitors

CONTENT-DRIVEN:We supply thought-provokingcontent thatattracts highquality visitorsand raises theprofile of ourevents

MUST-ATTEND:We offer the best of everything toensure we are the one event that our customers choose to put in their calendars

OUTSTANDINGCUSTOMEREXPERIENCE:We have arelentless focus on improvingevery part ofthe customerexperience and tailoring our communicationwith them

RETURN ONINVESTMENT:Our customersuccess teammakes sureexhibitors achieve their event goals so that they comeback next time

80%

7%

6%7% Exhibitor space

Technical services

Sponsorship

Other (including conference delegates)

Revenue streams managed the Hyve way


Market overview


/ 8

Market overview

Overview of the events industryCompetition

› M&A consolidation in traditional event organisers

› New market entrants focussing on sectors which are being disrupted

› Online business communities and DIY meet-up platforms challenging the traditional model

› Impact of new technologies - augmented reality, facial recognition, improved analytics tools provide opportunities to increase engagement, create better products and drive better ROI and ROT for customers 184

229

234

307

369

424

456

678

1625

1976

GL Events

Deutsche Messe

Hyve

Messe Dusseldorf

Messe Munich

Comexposium

Clarion

Messe Frankfurt

Reed Exhibitions

Informa

Top 10 international organisers by organising revenues, 2018, million USD1

1 Source: Organiser’s financial reports; AMR International, Globex 20192 Pre acquisition of Ascential and Mining Indaba. FY19 result approx. $285m

Introduction to Hyve Group plc – December 2019

2


Global exhibition market forecast

› Steady growth is forecast (4% CAGR to 2023), driven by stable underlying economies and consistent demand for face-to-face business interactions

› AMR International predict that face-to-face interactions enabled by exhibitions will remain a critical channel for buyers and sellers

› They further predict that alternative online channels will remain complementary, and may become sources of enhanced visitor and exhibitor experience.

Market overview

1 Market size represents the size of the 14 main geographic markets analysed by AMR International and the six SEA countries added in 2017 Excludes ‘Rest of the World’ Source: AMR International, Globex 2019

28.5 29.6 31.0 32.2 34.0 35.3

2018 2019 2020 2021 2022 2023

Overall market forecast 2018-2023, $b1

4% CAGR

2017 strategic review


/ 11

Historical context prior to TAG programme2017 strategic review

Introduction to Hyve Group plc – December 2019

› 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

Changing customer expectations

/ 12

Portfolio challenges prior to TAG programme


› The portfolio had additional challenges beyond market conditions

› A number of events had underperformed the market

› There were some obvious stars to offset these challenges

Event performance vs underlying market

-100%

-90%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-50.0 -40.0 -30.0 -20.0 -10.0 0.0 10.0 20.0 30.0 40.0 50.0

Hyve Event Space Growth (%), 2014-16 CAGR

Un

derlyin

gM

arket Gro

wth

(%), 2

01

4-1

5

Underperformingthe market

Outperforming the market


/ 13

The May 2017 Portfolio: Events Ranked by Revenue


85%Core Events Revenue


Philosophies2017 strategic review


Retention-led business enabled by technology

Content-led –high on relevance

Market leading events – ROI / ROT

Customer insight and data

Customer service

Strong sales and marketing performance based culture


Hyve view of the exhibitions industry


Disrupters of Existing Shows(show formats or industry niches)

Product-led

Developed Market Regional Specialists

Emerging Markets Specialists

Global Portfolio

RegionalPlayers

Our vision


“To create the world’s leading portfolio ofcontent-driven, must-attend eventsdelivering an outstanding experience

and ROI for our customers.”



Transformation and Growth programme

Product-led Acquisitions

Managethe Portfolio

Create a Scalable Platform

Underpinned by a performance-led culture

TAG Programme


Transformation delivered



Scalable operating model created


Invested in show operations

Built capability & talent

Built fit-for-purpose IT infrastructure & systems

Drove a performance culture

Created best practice functions & teams


Strengthened key commercial KPIs


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

Managing the portfolioEvent 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

Scal

e

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




Integration of acquisitions is complete

/ 22Preliminary results: year ended 30 September 2019

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

Reinvesting half of the synergies to drive future growth

Integration

Synergies

Investment plans

1

1 Moda was an existing Hyve event


Targeted trajectory for recent acquisitions


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

Investment plans

Quality of portfolio improved since launch of TAGTransformation delivered


May 2017 Sep 2019

No. of events 269 130 52%

Revenue £134m2 £221m3 64%

Revenue per event £0.5m £1.7m 240%

269 events

130events

May 2017 Closed Divested Acquired Sep 2019

89

6515

Manage the portfolio

Product-led acquisitions

1

1 Launch of TAG, May 20172 FY16 reported revenue3 FY19 reported revenue


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

Returned the business to sustainable growthTransformation delivered


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

TAG


MosBuild


TAG improvements since FY16

› MosBuild moved to Crocus Expo, Russia’s largest venue, from 2019

› Much improved content programme with Perfect Home, VR design lab and MosBuild TV

› Volume up >50%

› Exhibitor NPS up from -7.0 to +8.3

› Visitor NPS up from +7.0 to +26.0

FY19

FY19


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%


FY16

FY19


Africa Oil Week


FY16*

FY20

*Hyve took full ownership of AOW in May 2017, i.e. FY17**Delegate NPS figures first recorded in FY18

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%

TAG financials


TAG financials

One-off TAG programme investment


£20m

One-off Costs Mix

Capex Opex - ExceptionalBest Practice Infrastructure &

SystemsInvest in Show

OperationsPerformance Culture Capability & 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

TAG financials

Ahead of plan on all TAG investment targets

1 Original plan delivery expected H2 FY21; revised to H1 FY21 / 32Preliminary results: year ended 30 September 2019

Target Original plan Revised Status

Positive ROI FY20 FY19 Delivered early

ROI > WACC FY21 FY20 Ahead

Cash payback FY21 FY21 Ahead1

TAG financials

“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


Update Within 3 years (FY20)

Cash Payback


Update Within 3.5 years (FY21)

2

3

1 Based on May 2017 WACC / 33Preliminary 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


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


Net debt within guidanceTAG 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%

Operational delivery of TAGTAG financials


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%

1 LFL event revenue / LFL sqm (excluding AOW conference)2 For FY20 at 1 Oct 2019 3 For FY17 at 1 Oct 20164 TAG events excluding AOW conference

On track to deliver our 3-year guidanceTAG financials


FY18 FY19 FY20

Revenue growth

Margin growth

EPS growth

FY19 results(12 months to 30 September 2019)

Preliminary results: year ended 30 September 2019 / 39

FY19 highlightsFY19 results


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 bridgeFY19 results


(£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

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

FY19 results

/ 42Preliminary results: year ended 30 September 20191 Total group revenue / total group sqm (excluding AOW and Mining Indaba conferences)

Headline PBT bridgeFY19 results


(£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)

FY19 results

Strong revenue visibility for FY20 as at 29 November 2019


£152m revenue booked

for FY201

Represents 66% of

consensus

LFL increase of 4%

Financial summaryFY19 results


Excellent FY20 revenue visibility

Strong LFL revenue growth; Top 10 TAG events double-digit

growth

Step change towards sustainable operating

margins

Profit growth significantly above

revenue growth

Appendices


Revenue by sectorAppendices


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

FY19

Top 10 events by revenueAppendices


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

35%

Top 10 Rest of portfolio

May 2017 (launch of TAG)September 2019

Banking facilityAppendices

£146m

£14m

At 30 September 2019

Drawn

Undrawn› Net debt - £111.7m

› Available Facility – £160m (and £30m accordion)

› 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


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 (pence) 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 (pence) 5.7 5.5 5.8

Net debt (£m) 68.5 49.2 82.6

1 Based on analyst forecast reports to 29 October 2019 / 50Preliminary results: year ended 30 September 2019

Shareholder structure as at 31 October 2019Appendices

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 34.1

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


FY 2017 FY 2018 FY 2019

Create ‘best practice’ functions & teams

Invest in event operations

Build a ‘fit for purpose’IT infrastructure& systems

Drive a performance culture

Build capability & talent

TAG milestonesAppendices


Design of the ‘Hyve way’

New event content deployed

Roll out of event ‘blueprint’

Roll out of dedicated specific training programmes

Implementation of the ‘Hyve way’

Setup of Customer Success team Implementation of value-based pricing methods

Setup of dedicated Content team

Review of performance structure

Development of Sales leadership

Standardisation of Performance Management

Systems design & development Systems deployed in phased waves

Launch of integrated sales and marketing systems

1st new hardware roll out Launch of ‘one view’ back office systems

Recruitment of key organisational roles

Product-led acquisitionsAppendices

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


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)

/ 54Preliminary results: year ended 30 September 20191 Now owned by Hyve

Appendices

Ascential deal strategic rationale

£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

Product-led portfolio with global and

market leading brands

Further value through synergies

Significant potential under our management

as Core events


A more balanced portfolio for the enlarged group

Strong financial rationale; earnings enhancing in 2019

/ 56

Appendices

Mining Indaba acquisition

› Met the TAG acquisition criteria as the must-attend event in the African mining industry

› Strong strategic rationale and complementary to Africa Oil Week

› AOW and MI teams now merged to drive synergies

› Implementation of Hyve best practice will drive growth from FY20 onwards

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