hyve group plc relations...fy13 fy14 fy15 fy16 fy17 fy18 fy19 headline operating profit costs...

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 resultsAndrew Beach, CFO


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


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


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


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


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



/ 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


Changing customer expectations

Preliminary results: year ended 30 September 2019

Our vision


“To create the world’s leading portfolio ofcontent-driven, must-attend events

delivering 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



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


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

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


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


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


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


1


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



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


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


Targeted trajectory for recent acquisitions

Investment plans


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


TAG


Andrew Beach

TAG financials


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


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


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 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%


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


On track to deliver our 3-year guidance

FY18 FY19 FY20

Revenue growth

Margin growth

EPS growth

TAG financials


Mark Shashoua

Summary & Outlook


Summary & Outlook


£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


AppendicesPreliminary 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


Update Within 3 years (FY20)

Cash Payback


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)


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


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


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%


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


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


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


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)


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


Venue relationships

Appendices

Venue Loans / Prepayments FY19 FY18

£m £m

Russia - 4.7

Central Asia 0.2 0.2

Total 0.2 4.9


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


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


Managing the portfolio

Appendices


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


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