Hyve — ITE Group — FY2018 Earnings Presentation
54 slides from Hyve's earnings presentation, Dec 4, 2018
Slide 1: Preliminary Results
ITE Group plc Preliminary Results Year ended 30 September 2018 4 December 2018
Slide 2: This is ITE
CONNECTING 1 YOUR BUSINESS
Slide 3: Introduction
Introduction Mark Shashoua 2/
Slide 4: Agenda
Preliminary results: year ended 30 September 2018 Agenda › FY18 - a year of transformation Mark Shashoua and growth › Preliminary results Andrew Beach › TAG programme update Mark Shashoua Mark Shashoua & › Q&A Andrew Beach 3/
Slide 5: FY18 - a year of transformation and growth
Preliminary results: year ended 30 September 2018 FY18 - a year of transformation and growth TAG programme is delivering › LFL revenues up 11.4%1 › Profit growth ahead of revenue growth Expect to reach most TAG targets earlier than planned Improved quality of portfolio › Closed 28 less profitable ev
Slide 6: Preliminary results
Preliminary results: year ended 30 September 2018 Preliminary results Andrew Beach 5/
Slide 7: Financial highlights
Preliminary results: year ended 30 September 2018 Financial highlights FY18 FY17 Revenue £175.7m £152.6m LFL growth 11.4% Headline PBT £35.4m £31.6m LFL growth 20.4% one-off £7.0m £5.0m TAG costs Within guidance ongoing £7.3m £2.8m Net debt £82.7m £49.7m 113% cash conversion; 1.4x EBITDA2 Headline d
Slide 8: Revenue bridge
Preliminary results: year ended 30 September 2018 Revenue bridge (£2.8m) £15.6m £16.3m (£11.8m) £5.8m £175.7m £m £m £m RUB (5.8) Russia 5.9 £152.6m Ascential 17.1 TRY (1.9) Turkey 1.8 TradeLink (2.0) UZS (1.8) Breakbulk 1.2 Net Other 0.5 Other (2.3) Other 7.4 FY17 Net Biennial Acquisitions Launches
Slide 9: Our Top 10 shows drove higher rates of revenue growth
Preliminary results: year ended 30 September 2018 Our Top 10 shows1 in FY18 drove higher rates of revenue growth Top 10 35% Rest of portfolio LFL growth LFL growth Average yield Average yield TOP 10 TOTAL TOP 10 TOTAL 14% 11% £275/sqm £254/sqm 1 Excluding acquisitions. 8/
Slide 10: Headline PBT bridge
Preliminary results: year ended 30 September 2018 Headline PBT bridge £0.1m (£1.8m) £2.8m £5.6m £1.5m (£4.4m) £m Revenue translational (11.8) £35.4m Cost translational 7.8 £m Trading impact (4.0) £31.6m Ascential 3.5 B/S transactional FY181 1.9 TradeLink (1.2) B/S transactional FY17 0.3 Net other 0.
Slide 11: TAG cost update
Preliminary results: year ended 30 September 2018 TAG cost update One-off FY18 Ongoing (Not included in Headline results) (Included in Headline results) £8m-£10m £7m £14m-£17m £12m £8m-£9m £7.3m Guidance FY18 Actual FY18 Guidance to date Actual to date Guidance FY18 Actual FY18 > Total TAG one-offs
Slide 12: Create a scalable platform targets ahead of plan
Preliminary results: year ended 30 September 2018 “Create a scalable platform” targets ahead of plan In-year net operating profit after tax (“NOPAT”) 1 Plan Within 3 years (FY20) Positive ROI Update Within 2 years (FY19) Positive ROI in FY 2019 2 Plan Within 4 years (FY21) ROI > WACC1 Update Within
Slide 13: Ascential events costs in line with guidance
Preliminary results: year ended 30 September 2018 Ascential events costs in line with guidance 2.5 months of trading Revenue £17.1m PBT £3.5m FY18 Total Total guidance Exceptional costs actual forecast (July 2018) rights issue £9.0m £9.0m Acquisition costs £15.0m other £6.0m £6.0m Integration costs
Slide 14: Ascential events integration on track
Preliminary results: year ended 30 September 2018 Ascential events integration on track Synergies Investment plans Integration to drive FY20 growth (£4m-£5m annualised) (£2m-£2.5m annualised cost) On track On track On track 13 /
Slide 15: Driving sustainable revenue growth and operating profit margins
Preliminary results: year ended 30 September 2018 Driving sustainable revenue growth and operating profit margins 4 Like-for-like revenue growth % LFL revenue growth 11% Entry Velocity 2017 Low single digit 5% -10% -8% -12% Exit Velocity 2022 High single digit 5 Operating profit margin % Operating p
Slide 16: Ahead of plan on most TAG targets
Preliminary results: year ended 30 September 2018 Ahead of plan on most TAG targets Target Original plan Status 1 Positive ROI Within 3 years Ahead 2 ROI>WACC Within 4 years Ahead 3 Cash payback Within 4 years Ahead 4 LFL revenue growth High single digit from FY22 Ahead 5 Operating profit margins Hi
Slide 17: FY19 contracted revenue
Preliminary results: year ended 30 September 2018 FY19 contracted revenue LFL increase of 11% £147m3 (of £217.5m) £89m 1,2 = 68% of (of £147.0m2) consensus = 61% of total pro forma revenue FY18 FY19 1 Booked at 30 November 2017 at actual event FX rates. Expressed as a % of actual revenue. 16 / 2 Exc
Slide 18: Financial takeaways
Preliminary results: year ended 30 September 2018 Financial takeaways Revenue growth Profit growth above Operational cash Ascential events ahead of FY22 TAG revenue growth flows remain strong integration target progressing well Excellent FY19 Early delivery revenue visibility expected on most TAG ta
Slide 19: TAG programme update
TAG programme update Mark Shashoua 18 /
Slide 20: Setting the context
TAG programme update Setting the context May 2017 -11% CAGR +9%1 CAGR 192 TAG › Limited organic growth 175 153 176 136 134 › Decentralised model › Large, unfocused portfolio › Underinvested Revenue (£m) FY13 FY14 FY15 FY16 FY17 FY18 19 / 1 Excluding Ascential Events.
Slide 21: Our vision
TAG programme update Our vision “To create the world’s leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for our customers.” 20 /
Slide 22: TAG - the Transformation and Growth programme
TAG programme update TAG - the Transformation and Growth programme TAG Programme Create a Manage Product-led Scalable Platform the Portfolio Acquisitions Underpinned by a performance-led culture 21 /
Slide 23: Create a Scalable Platform - best practice approach
TAG programme update – Create a scalable platform TAG programme Create a Scalable Platform – best practice approach Create best practice functions & teams Build a fit for purpose IT infrastructure & systems Change Operating Invest in show operations Model Drive a performance culture Build capability
Slide 24: Investing in show operations
TAG programme update – Create a scalable platform Investing in show operations Ongoing review Core Russia grew Customer success – Investing in high process for all core new business by over 5,000 contacts quality content to events established average of 15% over made to support attract key visitors
Slide 25: Breakbulk Europe 2018
TAG programme update – Create a scalable platform Breakbulk Europe 2018 › Sold 23% more space › Overall attendance increased 45% with key visitors increasing 26% YoY › Exhibitor Net Promoter Score improved 15% to +23 › 85% rebooked for next year’s event on site 24 /
Slide 26: MosBuild 2018
TAG programme update – Create a scalable platform MosBuild 2018 › Key visitors increased 14% › Visitor Net Promoter Score improved 70% to +17 › 27% growth in total revenue rebooked on site › MosBuild moves to Crocus Expo, Russia’s largest venue, in 2019 25 /
Slide 27: TAG milestones ahead of plan
TAG programme update – Create a scalable platform TAG milestones ahead of plan 30 September 2017 30 September 2018 FY 2017 FY 2018 FY 2019 Create ‘best New onsite rebooking strategy launched practice’ functions Design of the ‘ITE way’ Implementation of the ‘ITE way’ & teams Invest Setup of Customer
Slide 28: TAG programme - Managing the portfolio
TAG programme update - Manage the portfolio TAG programme – Managing the portfolio Higher Event Quality & Potential Lower Growth Mature Challenged 65 less profitable Market tailwind Stable, mature market Facing market or shows discontinued competitive threat since start of TAG Large >£1.0m revenue U
Slide 29: Ascential events integration update
TAG programme update - Product-led acquisitions Ascential events integration update 100-day plan Organisational design Aligned reporting All HR policies completed completed periods and aligned accounting policies Office move to Synergy savings on Paddington at track beneficial rates 28 /
Slide 30: Applying TAG best practice to acquired events
TAG programme update - Product-led acquisitions Applying TAG best practice to acquired events Product Reinvesting half of the synergies to drive 2020 growth Re-edit events to improve customer experience Focus on key accounts Grow international events to scale and investigate new markets Sector expan
Slide 31: Driving growth for FY20
TAG programme update - Product-led acquisitions Driving growth for FY20 Investment Phase Growth Phase FY19 FY20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 30 /
Slide 32: Product-led acquisition: Mining Indaba
TAG programme update - Product-led acquisitions TAG programme – Product-led acquisition: Mining Indaba › Meets all of our TAG programme acquisition criteria › Strong strategic rationale and complementary to Africa Oil Week › Acquisition of Investing in African Mining Indaba for £30m • Feb 2018 reven
Slide 33: Portfolio Evolution since May 2017
TAG programme update Portfolio Evolution since May 2017 65 269 60 15 159 Revenue Revenue per event1 per event2 £0.5m £1.4m May 2017 Closed Divested Acquired Dec 2018 32 / 1 Based on FY16 reported revenue of £134.4m. 2 Based on FY19 market consensus of £217.5m.
Slide 34: A more balanced portfolio for the combined group
TAG programme update A more balanced portfolio for the combined group Portfolio Top 10 – Jun 2018 Portfolio Top 10 – Dec 2018 Top 10 as a % of our portfolio Previous portfolio Current portfolio1 1 MosBuild Russia 1 Spring Fair UK 2 Breakbulk Brands 2 Bett Brands 35% 48% WorldFood 3 Russia 3 MosBuild
Slide 35: Summary
TAG programme update Summary 11.4% LFL revenue Created smaller and Made acquisitions to Expect to be ahead on growth, profit growth stronger portfolio leverage our scalable 4 out of 5 TAG targets ahead of revenue whilst delivering platform growth growth 2019 trading in line with Board expectations 3
Slide 36: Q&A
Q&A 35 /
Slide 37: Preliminary results: Financial analysis
Preliminary results: Financial analysis Year ended 30 September 2018 36 /
Slide 38: Divisional structure and acquired events
Preliminary results: Financial analysis – year ended 30 September 2018 Divisional structure and acquired events Events Acquired from UK Brands Ascential Ascential Ascential Ascential Ascential Ascential Ascential Euromoney 37 /
Slide 39: Consolidated Income Statement
Preliminary results: Financial analysis – year ended 30 September 2018 Consolidated Income Statement Headline Results FY18 FY17 £m £m Revenue 175.7 152.6 Gross Profit 68.0 59.4 Gross Profit Margin 39% 39% Admin Expenses/Operating Income (39.1) (31.5) FX 2.2 0.3 Profit from Associates 7.6 6.5 Operati
Slide 40: Divisional analysis
Preliminary results: Financial analysis – year ended 30 September 2018 Divisional analysis FY18 FY17 Revenue HPBT Revenue HPBT £m £m £m £m > Strong performance of Core events, offset by currency impact Russia 73.3 24.3 71.4 26.3 > Largest allocation of TAG investment > Impact of biennial and acquisi
Slide 41: Revenue by division
Preliminary results: Financial analysis – year ended 30 September 2018 Revenue by division FY18 Pro forma1 UK FY17 Actual FY18 Actual 23% 27% Russia Central Asia UK Central 11% 14% 14% Asia 7% E/S Europe 11% Brands 21% Central Brands Asia 12% Asia 14% 47% Russia 42% Russia Non-core Brands 6% Asia 16
Slide 42: Volume & revenue by division
Preliminary results: Financial analysis – year ended 30 September 2018 Volume & revenue by division Metres Revenue 000s 000s £m £m FY18 FY17 FY18 FY17 Russia 293 274 73 71 LFL volumes up 4% Asia 176 160 26 24 LFL volumes up 2% Central Asia 67 64 24 22 LFL volumes up 7% East/South Europe 120 135 15 1
Slide 43: Performance analysis
Preliminary results: Financial analysis – year ended 30 September 2018 Performance analysis Metres Revenue Gross Profit 000s £m £m Results from events 680 152.6 59.4 Biennial (10) (2.0) (0.9) Timing (3) (1.1) (0.8) FY17 Non-recurring (26) (4.2) (0.5) Disposals (12) (2.7) (1.3) Recurring events b 629
Slide 44: Revenue by sector
Preliminary results: Financial analysis – year ended 30 September 2018 Revenue by sector FY18 (FY17 figures in brackets) Build & Interiors (28%) Food & Packaging (16%) 5% 3% 6% 23% Fashion (7%) 7% Oil, Gas & Energy (10%) Manufacturing & Industrial Tech (9%) 7% Transport & Logistics (7%) 8% 16% Trave
Slide 45: Adjusting items
Preliminary results: Financial analysis – year ended 30 September 2018 Adjusting items FY18 FY17 £m £m Amortisation of acquired intangible assets Non-cash (13.6) (14.1) Impairment of assets Non-cash (7.5) (14.3) Derecognition of goodwill on cessation of trade Non-cash (2.2) - Gain/(loss) on disposal
Slide 46: Headline diluted EPS bridge
Preliminary results: Financial analysis – year ended 30 September 2018 Headline diluted EPS bridge 0.1p (0.1p) (0.8p) 1.5p (0.8p) 5.0p1 4.9p FY17 TAG costs Increase in Decrease in Change in effective Change in no. of FY18 underlying profits NCI profits tax rate shares in issue 1 Restated for rights
Slide 47: Consolidated balance sheet
Preliminary results: Financial analysis – year ended 30 September 2018 Consolidated balance sheet FY18 FY17 £m £m Goodwill and intangible assets 469.1 154.4 Non-current assets Other non-current assets 50.5 51.8 519.6 206.2 Trade debtors 57.7 44.1 Prepayments 12.5 10.8 Current assets Other current as
Slide 48: Future consideration
Preliminary results: Financial analysis – year ended 30 September 2018 Future consideration Deferred Consideration – Cash Settle £m Financial Year Payable Puts & Calls - Cash Settle £m Financial Years1 ABEC 0.9 2019 Fasteners 0.2 2020 Ascential Events 2.5 2019 Indobuild 1.5 2019 Other 0.2 2019 Scoop
Slide 49: Banking facility
Preliminary results: Financial analysis – year ended 30 September 2018 Banking facility › Net debt - £82.7m › Available Facility – £170m (and £30m accordion) › 1.4x headline EBITDA › Drawn Facility – £134m1 At 30 September 2018 › Term loan £75m amortising at £10m / £17.5m / £17.5m / £30m; balance RC
Slide 50: Net debt bridge
Preliminary results: Financial analysis – year ended 30 September 2018 Net debt bridge Cash Flow from Cash & cash Operations Acquisition net equivalents September 2017 (excl. TAG) Dividends & Tax TAG of rights issue FX held for sale September 2018 (£20.2m) (£49.7m) £41.4m (£14.7m) (£82.7m) £m Divide
Slide 51: Venue relationships
Preliminary results: Financial analysis – year ended 30 September 2018 Venue relationships Venue Loans / Prepayments FY18 FY17 £m £m Russia 4.7 5.4 Central Asia 0.2 0.6 Eastern & Southern Europe - 0.1 Total (£2.8m < 1 Yr, £2.1m > 1 Yr) 4.9 6.1 50 /
Slide 52: Cash generated from operations
Preliminary results: Financial analysis – year ended 30 September 2018 Cash generated from operations FY18 FY17 £m £m Statutory operating loss (1.6) (4.2) Adjustments 22.1 32.7 Operating cash flows before movements in working capital 20.5 28.5 Working capital movements 7.8 13.8 Cash generated from o
Slide 53: Shareholder structure as at 31 October 2018
Preliminary results: Financial analysis – year ended 30 September 2018 Shareholder structure as at 31 October 2018 Country of Shareholder % of Total Shares No. of Shares (millions) Brandes Investment Partners USA 14.4 106.5 RWC Partners UK 13.4 99.6 Fidelity Management & Research UK, USA 8.5 63.2 In
Slide 54: TAG programme - Product-led acquisitions
TAG programme - Product-led acquisitions Example Screening Criteria Size Distinct Customer M&A Value Proposition funnel Structurally Attractive Market for Exhibitions High Growth Underlying Market Phase 1 Phase 2 Phase 3 Phase 4 Organic Revenue Growth Quick screening Thorough analysis Due diligence